samchain/econo-pairs-v1 huggingface dataset:
First, the larger the intermediation offered by the central bank, the smaller, ceteris paribus, the incentives are for banks to reduce liquidity risk (for example, to reduce the maturity mismatch of assets and liabilities). After all, they can turn to the central bank if they need to. Of course, while central bank intermediation increases the incentives for banks to take liquidity risk, it also increases the liquidity insurance available to banks. That is, as long as a bank does not adjust its balance sheet when the central bank offers more intermediation, its net liquidity risk exposure may in fact decrease due to the increased liquidity risk insurance provided by the central bank. But which effect is stronger: the incentive or the insurance effect? Second, larger central bank intermediation can crowd out market activities. This might be perceived as a cost-reducing development by private banks. If the central bank lends larger volumes in longer-term operations, this might provide a boost to private lending at the same maturities: some banks might consider offering funds in the term money market only if they themselves can refinance such activities by participating in longer-term central bank operations. This may make term money markets more liquid in the end. However, this is not what the Japanese authorities observed in the first half of this decade.

The UK is the exception: since the mid-1990s, the country has emerged as the growth model for Europe. For Switzerland, the sluggish development in Europe is especially regrettable, as the Swiss export sector usually serves as the engine for economic recovery. All in all, Switzerland's export industry is well positioned to benefit from higher demand from abroad. Switzerland has been able to reduce its production costs per unit in the past few years, and the Swiss franc even depreciated slightly versus the euro since the launch of the single currency. As regards domestic demand, consumer sentiment remains satisfactory overall, but this should not be expected to stimulate growth decisively. While construction activity is robust, it has lost some of its momentum. Investment in equipment is still brisk, and the recent modest slowdown should not last too long. On the whole, the Swiss economy is still on its growth trajectory, but it lacks stimuli from abroad. This situation is the same as the one underlying the National Bank's interest rate decision of December 2004. Even though Switzerland is particularly affected by the lacklustre performance of the European economy, overall prospects are not gloomy. Growth in the rest of the world remains dynamic, and this is expected to benefit Europe in due course. For Switzerland, a growth rate of 1.5-2% is still realistic. With the Swiss economy thus continuing to grow below its potential, the labour market will not see any sustained improvement. BIS Review 11/2005  1
Gent Sejko: Albania’s banking sector progresses but four key challenges remain Address by Mr Gent Sejko, Governor of the Bank of Albania, to the third AAB Conference on Banks for Sustainable Development, Tirana, 14 May 2019. * * *  Your Excellency Madame Minister1, Dear Chairman of the Albanian Association of Banks, Dear representatives of the banking sector, dear guests, Let me first congratulate the Albanian Association of Banks on its 20th anniversary. The Association, which came into being as token of emancipation in the banking sector, has become now a genuine platform of communication and coordination within the banking industry, and a key player in the economic and financial life of the country. I would also like to congratulate the organisers for this event, which helps the banking sector, regulators and policymakers alike, to identify the challenges lying ahead and explore the best alternatives for addressing them. Dear ladies and gentlemen, The banking system in Albania has made considerable progress over the last two decades. To illustrate my point, I would like to bring to your attention some facts and figures. Over the span of two decades, the portfolio of bank credit has expanded significantly, leaping from 5% to 35% of the country’s GDP. Similarly, the volume of deposits – in other words, the volume of savings of the Albanian public administered by the banking sector – has grown from 45% to 70% of the GDP.

It was precisely under the extreme pressure that the financial system proved its stability. The market participants mastered the crisis situation spontaneously and networked their efforts: for example, the tasks that would normally have been performed in downtown Manhattan were carried out in New Jersey or in London. Or they agreed to extend the settlement period to five days and to conclude general money market trades at the official Fed rate (instead of fixing prices via brokers, some of whom could not be reached due to the collapse of technology). Furthermore, market participants practised restraint in stock sales and abstained from taking personal advantage of the general state of emergency. Creditors, notably the banks, also endeavoured to fulfil merely implicit commitments as far as possible and to ensure the functioning of the markets. All this would not have been possible without the tireless creative and networked efforts of thousands of shocked and grieving staff of the enterprises concerned and of the international financial community. The private measures for overcoming the crisis were also actively supported by the central banks, first and foremost by the Fed, which had fully retained its capacity to act from the outset despite being located in the immediate vicinity of "Ground Zero". It injected additional liquidity into the market and allowed the rate for one-day repos to fall to 1%. It also opened its counters to foreign banks operating in the United States and, when necessary, offered foreign central banks one-month dollar swaps.
History shows that there is no long-term trade-off between higher growth and higher inflation. An economic policy that fuels inflation does not generate higher economic growth. On the contrary, it paves the way for subsequent recession and unemployment. After the Second World War, there was a long period of trying to achieve price stability by means of intermediate targets such as a fixed exchange rate and a target for growth in the money supply. The first explicit inflation target was introduced in New Zealand in 1990. Canada followed in 1991, the UK in 1992, and Sweden and Australia in 1993. Pursuant to the Regulation on Monetary Policy laid down by the Government on 29 March 2001, the operational objective of monetary policy is low and stable inflation. Pursuant to the Regulation, Norges Bank’s mandate is as follows: “Monetary policy shall be aimed at stability in the Norwegian krone’s national and international value, contributing to stable expectations concerning exchange rate developments. At the same time, monetary policy shall underpin fiscal policy by contributing to stable developments in output and employment. Norges Bank is responsible for the implementation of monetary policy. Norges Bank's implementation of monetary policy shall, in accordance with the first paragraph, be oriented towards low and stable inflation. The operational target of monetary policy shall be annual consumer price inflation of approximately 2.5 per cent over time. […]” The first paragraph of the mandate sets forth its intentions. The last paragraph specifies what Norges Bank is required to do.

In order to achieve nominal stability, monetary policy must provide a nominal anchor. Since the Second World War, there have been several monetary policy reforms in Norway. In the period between 1972 and 1986, monetary policy was to a limited extent focused on stabilising the rise in prices. During this period, inflation was high and variable. Consumer prices rose almost twice as much as in Germany. At the same time, the value of the Norwegian krone against the German mark was almost halved, contributing to high imported inflation. From the mid-1980s, during and after the credit bubble and the cost shock, it was recognised that a substantial revision of economic policy would be necessary and that the problems created by inflation had to be taken seriously. From 1986 to 1992, Norway operated a fixed exchange rate regime. The fixed exchange rate was the anchor for inflation in Norway. The difference between inflation in Norway and Germany narrowed substantially. Deteriorating competitiveness due to high wage growth would no longer be remedied by means of devaluations. Instead, imbalances in the labour market would be addressed by means of a counter-cyclical policy. Substantial emphasis was placed on the importance of wage formation for employment. Only when wage growth dropped below the level of our trading partners did unemployment begin to fall and the manufacturing sector began to pick up. Thus, the fixed exchange rate policy was not introduced in order to strengthen the internationally exposed business sector.
In 2012, that figure rose to 22%. By 2017, Western firms expect Asia to contribute 32%. However, this will still be below Asia’s estimated 35% share of the global economy in 2017.” 5. The use of RMB is now catching up with China’s rising economic clout. Starting from scratch in 2009, the portion of China’s trade settled in the RMB quickly surged to 20% in 2014, amounting to 6.6 trillian yuan, equivalent to more than $ trillion. And, in the same year, over 30% and 16% of China’s inward and outward direct investment respectively were denominated in the RMB. Increasingly, MNCs will find it advantageous and necessary to trade with their Asian counterparts, and to conduct the related financing, investment and hedging activities in the RMB. 6. In parallel, riding on her rapid economic growth in the past decades, Mainland China now has a growing cluster of home grown MNCs in a wide range of sectors. Chinese companies now account for 95 of the Fortune 500 companies. These MNCs are now flexing their muscles in the international arena, typically starting with trade and eventually venturing into mergers and acquisitions and global portfolio investment. We can safely assume that they will take even bolder steps with the supportive policies under the “One Belt, One Road” strategy, bringing new business and business partners for other global MNCs. 7. These favourable macro trends are indeed good news to the corporate treasurers.

Yet, in shaping strategies to capture these opportunities, there is also a realization that the business environment has become significantly more challenging after the global financial crisis. 8. The quantitative easing by the G3 economies is causing wide swings in exchange rates, asset and commodity prices which have heightened the need for hedging and risk management. The ultra-low yields of their treasuries (for example, yields of government bonds of Germany and France of maturity less than 6 years and 4 years respectively are in the negative zone) in turn has made cash management and portfolio investment difficult. The  BIS central bankers’ speeches  1  alternative of searching for yields in emerging markets has resulted in more risks to manage. The interbank market as a source of liquidity also can no longer be taken for granted. 9. Compounding the challenge of treasury management is the regulatory landscape after the global financial crisis. The capability of banks in providing funding and making market for hedging tools has become more constraint due to deleveraging and implementation of the global regulatory reform, in particular the Basle III requirements on capital and liquidity. The increased market volatility has also made the raising of funds in the capital markets more challenging. 10.
Ardian Fullani: Competition versus risk-taking in the banking sector in SEE countries Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the conference on “Competition versus risk-taking in the banking sector in SEE countries”, organized by the Central Bank of the Republic of Kosovo, Prishtina, 5 October 2012. *  *  *  Honourable Governors, Dear participants, Regular regional meetings are a good opportunity to discuss economic and financial developments in our countries. They help identify the similarities and differences among us, and the economic and financial policies we need for solving the problems we encounter. The geographic position and economic relations with the same trade partners are factors that have led to similar economic and financial developments across our countries. They have determined the nature and size of contamination from the global economic crisis, in general, and the euro area crisis, in particular. The impact of the crisis on our countries has often been the main topic of discussion in such meetings. Macro-financial difficulties and uncertainties in the euro area render the actual European crisis the main focus of this meeting as well. Actual operations and commitments of the European Central Bank consist in a wide range of instruments that European authorities may use to support financial markets and institutions. Investors, however, are still waiting on additional decisions which will be more harmonised and stronger politically. The economic situation, especially in Greece and Spain, remains difficult, whereas Portugal and Italy have undertaken additional fiscal consolidation programmes.

Rapid demand growth; commodity price volatility; the influence of a broad range of global conditions on wages: all these factors can trigger large changes in relative prices, and this makes the job of capturing underlying inflation harder. So we have to be careful not to focus too narrowly on one particular measure. Instead we need to look at many. And indeed here in the United States we look at a range of different measures of core inflation, for example, that take energy and food prices out of the overall index. We look at these over different time horizons. We look at a variety of other measures that use different statistical techniques to strip out the more volatile parts of the index. These all have limitations, and their relative merits may change over time. Central banks approach this challenge of capturing underlying inflation differently, but ultimately we are all judged by what happens to overall inflation over time. These issues are common to central banks everywhere. But economic and financial integration has brought particular challenges for monetary policy makers in emerging market economies. The broad pattern of exchange rate and monetary policy regimes in emerging market economies has shifted dramatically over the past decade. Most now operate a more flexible exchange rate regime, though a significant number have moved to the opposite extreme, relinquishing monetary sovereignty in favor of full monetary integration.
A longer time horizon can contribute to clarifying monetary policy considerations and thereby enable us to better explain the way we work. If, for example, we see that inflation is slightly above two per cent at the end of the forecast horizon, our policy rule says that we should raise the repo rate to hold back demand and thereby inflation. However, if demand nevertheless falls and inflation beyond the forecast horizon is below the two per cent level, the conclusion is not so obvious. Then it may be time to discuss lowering the interest rate. Extending the forecast horizon may in some situations explain why increased flexibility is needed in monetary policy. These are some reflections on the time aspect and the monetary policy operational framework. However, there are also other important factors indicating that the inflation target and the policy rule must be interpreted with a measure of flexibility. It is easy to have a blind faith in monetary policy’s scope for economic fine tuning, but we should be sceptical of this for at least two reasons. One is that our forecasts and other reports on which the interest rate decisions are based contain a large measure of uncertainty, because of gaps in statistics, information lags regarding economic trends, incomplete knowledge of how companies and households will react and structural changes, such as increased globalisation. Reactions to monetary policy may also vary considerably over time, partly, but not completely, due to economic activity.

However, it also identifies two circumstances under which the Riksbank can depart from this aim; namely transient effects on inflation  BIS Review 37/2005  1  and large deviations from target. The main idea behind this is that we do not focus solely on inflation in every situation; we should also be able to regard developments in growth and employment when these do not conflict with the inflation target. Transient effects refers to certain determined factors which affect the inflation forecast one to two years ahead, but which will then subside without having any lasting effect on inflation trends. This was the case, for instance, in 2002-2003, when large fluctuations in oil prices had a significant effect on inflation. We made it clear then that monetary policy should disregard these transient effects. Large deviations from target refers to when inflation deviates so far from the target level that there may be justification for bringing it back to the target level over a longer period of time than the usual two-year horizon. A more rapid return to the target could cause undesirable fluctuations in, for instance, production and employment and thereby lead to large costs for the real economy. Since the decision on the clarification was taken in 1999, it has become increasingly evident, in my opinion, that there are a number of good reasons for allowing deviations from the inflation target during short or long periods of time.
2  2  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  2  One of the key ways central clearing counterparties – CCPs – help prevent panic is to be sure that as markets move, firms quickly pay for changes to their derivatives contracts, and insure against likely further changes. First, when derivatives contracts change value, the holders of those contracts exchange money right away. Losses and gains are promptly allocated to the firms on either side of the trade. This limits the chance that, if one side of the trade defaults, the other firm is left holding the bag for the defaulter’s bad trades. This is called variation margin. Second, CCPs require firms to place pre-paid self-insurance with the CCP to cover the predicted liquidation costs in the event of their default. Because derivatives markets can be fast moving, a key factor in how large this self-insurance needs to be is how volatile the markets are. This is known as initial margin. Importantly in times of market turbulence, both losses and gains of individual participants and required pre-paid self-insurance will rise. They are inherently pro-cyclical. As Deputy Governor Jon Cunliffe said last summer, this is a feature, not a bug.5  So did the simpler, post 2008- system work? In March and April 2020, we saw some of the biggest two-day price moves for some cleared products in the past decade. In a number of products the price moves were much larger than ever seen before.

Like so many of the impacts of climate change, this cost would be borne unequally: 45% of the mortgage impairments in the scenario are accounted for by just 10% of the country. [12] And there is evidence that in areas particularly at risk of flooding, many homes could become uninsurable. Finally, the CBES exercise is a measure of the progress banks and insurers are making in their climate risk management. Overall, this is a good news story: we were encouraged by the progress  Page 7  firms have made. But there is still much more to do. We will give firm-specific feedback to participants, but key themes include: The need for more data on, and understanding of, customers’ current emissions and transition plans. This can include looking through complex chains of financial relationships between clients and counterparties to see the underlying emissions. The need to invest in modelling capabilities and doing more to scrutinise data and projections supplied by third-parties. The need for some firms to consider more deeply how they would respond strategically to different scenarios, including thinking through the implications of different paths for climate policy. More generally these results bring home the fact that uncertainty around the impact of climate change – even given a pre-determined scenario – remains extremely high. As you will see if you read the report, the error bands around all these estimates are very wide.
Although projections of GDP growth for 2009 had been revised downwards to 4.3% on account of the effects of the global financial and economic melt-down, preliminary data indicates that the economy posted a real GDP growth rate of 6.3% compared with the 5.7% recorded in 2008. Almost all key sectors of the economy recorded positive growth except for restaurants and hotels which saw negative growth due to lower tourist and business travel arrivals during the financial crisis. Annual overall inflation slowed down, reverting to single digit level of 9.9% in December 2009 from the 16.6% recorded in December 2008, and was in line with the original end-year target 1 of no more than 10%. This outturn was attributed to the decline in both annual food and non-food inflation. In the external sector, Zambia’s external position showed remarkable improvement as reflected in the build-up of gross international reserves to 5.1 months of import cover in 2009 from 2.1 months of import cover in 2008. Zambia’s overall balance of payment position is expected to remain favourable in 2010 due to the rebound of copper prices on the international market as well as the expected increase in copper production as some mines increase production to full capacity and the resumption of production at some mines. The rebound in the international price of copper in the second half of 2009 and the return of foreign portfolio flows resulted in an appreciation of the exchange rate of the Kwacha by 4% at the end of the year.

These zones are expected to enhance the country’s efforts of promoting value addition to raw materials which will in turn boost the manufacturing sector. They are also consistent with the budget themes for 2009 and 2010 of “Enhancing Growth through Competitiveness and Diversification”. In collaboration with the development partners, Government will provide the necessary support institutions, infrastructure and services conducive to efficient and competitive manufacturing. I would like to strongly encourage Zambian firms particularly members of ZAM to take advantage of the opportunities created under this initiative. Mr President, as I conclude my remarks, I wish you and your members a prosperous 2010. I thank you for your attention. BIS Review 53/2010  3