samchain/econo-pairs-v1 huggingface dataset:
Along the way, the problems faced by the main source of funding in Europe (i.e., banks) should not be forgotten. Banks do not seem to have liquidity problems; enough steps have already been taken by the Eurosystem to provide liquidity, in such a way that a typical balance of payment crisis was avoided in several countries. But investors are suspicious about the reported balance sheet of banks. Thus, the steps towards the banking union, the major leap Europe has given to deepen financial integration, including the underway comprehensive assessment, must be credible. Losses should be recognized so as to definitely resolve the uncertainty and bring back investors. Once this is done overly cautious capital requirements ought to be relaxed. In Europe, banks’ assets account for the bulk of financial wealth. And it is expected that banks will continue for a long time to be the most important intermediaries between borrowers and savers. In fact, it is not easy to change from a bank-based  BIS central bankers’ speeches  1  economy to a capital market-based economy nor it is clear that this is the best thing to do. For instance, European firms will have to go through several changes before such shift (if any) occurs, namely in terms of size, access to information, transparency; in general a different corporate culture will be necessary. Forcing a shift may be counterproductive.

At the same time, more prudent transformation ratios (say, loans to deposits), coupled with a lower capacity of banks to attract savings would imply, at least in some countries, that the ability of banks to lend would decrease; but their willingness would not necessarily decrease, since they keep the advantaged standpoint to screen and monitor loans. This means that the implied gap might be filled by actors (insurance companies, pension funds) with greater capacity to attract savings although with limited capacity to lend directly. Securitisation of bank loans can be the privileged vehicle through which the gap is filled. Securitisation is also key when one thinks at impediments to capital relief and at tools to decrease the perilous geographical concentration of assets in banks’ balance sheets. In fact, if the right incentives are given, securitisation markets are the best way to more rapidly guarantee that loans are available for capital markets to invest while decreasing the home bias in banks’ balance sheets and ensure that credit is channeled to the best projects at the minimum cost. That is, securitisation could also have a decisive role in the integration and deepening of European financial markets, by allowing the transfer of risk from the originator to investors of any type located in other jurisdictions, in the context of a still very fragmented banking sector, lacking for instance relevant pan-European banks.
Before I go into the major socio-economic contexts, I thought I might begin with an anecdote from a smaller context, a personal experience from one of my most recent visits to Hradec Králové, in Bohemia, Czech Republic, the region where my relatives come from. Every time I return there I am pleased and surprised at the changes that have taken place, but during my most recent visit last year I was quite astonished. There, in the small provincial town of Hradec Králové, with only around 100,000 inhabitants, they now have a shopping mall worthy of Stockholm's smartest shopping area, as well as a couple of large discount stores and a D.I.Y. store, all selling goods of better quality but a fraction of the price of those in Sweden, and all full of shoppers. When I left the shops loaded up with shopping bags to take home to Sweden, I remembered how things used to be, when we in Sweden sent parcels to family and friends containing clothing, medicine and even decent soap and washing powder, along with various other things that weren't available in Czechoslovakia then. And here I was doing all my shopping there! This is just a fragment from daily life, but to me it illustrates two things that are typical of our relationship to the coming new members of the EU. One thing is how quickly these countries have changed, how rapidly they are integrating with and moving closer to western Europe.

The positive example is actually none of the strong economies in eastern Europe, not Estonia, Poland or Hungary, but Ireland – which made good use of all opportunities to compete with its cheaper and increasingly well-educated labour force after EU membership, while gradually reforming its tax and subsidy system. During the 1990s, Ireland doubled its growth rate from just over 3.5 per cent a year to over 7 per cent – well in line with the most dynamic Asian economies – and GDP per capita, which was 40 per cent below the EU's average as recently as in the 1970s, is now above. We must hope for the sake of both the EU and the candidate countries that the new members will follow the example of Ireland and not that of the former GDR. It is important to focus the enlargement process on what is relevant to the real economy. What is important for the candidate countries and the current EU economies is that the new members are given the chance to catch up with the EU. Free trade (as in the Europe agreement), stable institutions (adopting and applying the EU's fundamental regulations, what is known as the "acquis") and a wise macroeconomic policy are the things we should hope for and expect – no more than that.
Moreover, this framework should be flexible enough to allow countries to give a response according to the features of the crisis specific to the respective country. Anyway, clear principles for preventing legal bottlenecks and the cross-country spillover of negative effects should be put in place, and countries should share the fiscal burden of a cross-border crisis in line with those principles. BIS Review 56/2009  3  6. The IMF strengthened its role after being criticised for not having foreseen the Asian crisis. A few years ago, many economists expected a sharp decline in the IMF's role in the current economic context. Against the background of the current crisis, the world seems to rediscover the role of the IMF. The institution's funds have recently been increased in order to meet the requests of different countries for financial and technical assistance. The statements of the G20 leaders are indicative of the fact that the IMF will assess regularly the measures taken and the global actions necessary to be initiated. Furthermore, a close cooperation between the IMF and the Financial Stability Board (FSB), which will include all G20 countries, members of the Financial Stability Forum, Spain and the European Commission is envisaged. Together, the IMF and the FSB will convey early warnings on macroeconomic and financial risks and will indicate the necessary actions to address such risks. My opinion is that the current financial crisis highlights the fact that in such difficult times, an institution having an image of each economy in the global context is required.

While the leu was strengthening, up until the summer of 2007, the issue of adopting the euro was not on the agenda of economic agents. The crisis highlighted the fact that the leu was overappreciated and the market made the necessary correction. Over a relatively short period – from July 2007 to date – the leu weakened by around 35 percent. Over the same period, the prospects of economic growth changed dramatically: from an almost 9.4 percent growth rate in 2008 Q3 to a most likely significant decline in 2009 Q1. The monetary and fiscal policies will be resorted to with a view to adjusting to the new environment. In face of the crisis, the relatively large stock of private foreign debt and the increased market volatility made some economic agents believe that the early adoption of the euro could supersede the need for economic policy adjustments. Yet this is not a viable option, as adopting the euro prior to having achieved the main stages of convergence with the EU might pose serious threats in the future. The adoption of the euro today would mean to relinquish monetary policy before having ensured convergence sustainability, namely before removing all the imbalances we are facing today. The outcome would consist in monetary policy being designed by the European Central Bank (ECB). But the ECB policy might prove inadequate from the standpoint of the specific problems facing the Romanian economy.
And the G20 fulfilled the most optimistic anticipations as it reacted promptly and strongly to the crisis. Beyond this, the G20 has also agreed on an ambitious policy agenda, aiming for the long run. The G20 Roadmap does not only aim at one particular aspect of the global economy; it is very encompassing. One aspect of it is macrorebalancing, another is on financial regulation and global financial safety nets. The G20 agenda is focused on crisis prevention by coordination in order to avoid, or at least dampen overheating and boom/bust cycles. How are these issues related? First I will briefly tackle the important question of the link between the financial crisis and global imbalances. Second, I will go through the main implications of this link and outline the key features of the policy agenda of the G20. In this second part I will mostly focus on the so-called “G20 Framework for a Strong, Sustainable  BIS Review 93/2010  1  and Balanced Growth” and on financial safety nets. In the last section I will focus on financial regulation issues more specifically. Why and how do the financial crisis and global imbalances interact? An overwhelming body of research has established the clear relation between global imbalances and financial issues, some of which were behind the financial crisis. Indeed, global imbalances were not just the result of cyclical factors, such as business cycle fluctuations, changes in oil and other commodity prices, etc.

Effects of the 2008/09 global financial crisis and Asia’s response The recent crisis had the global financial system badly shaken with widespread effects of an unprecedented scale across the world. The Asian region has however demonstrated remarkable resilience during the crisis as most countries in Asia entered the crisis period with a sound set of economic and financial fundamentals, mainly attributed to the lessons learned from the Asian financial crisis of the late 1990s. It was painful. It was a bitter lesson. We embarked on a bold reform that fundamentally alters the landscape of our financial system. But the payouts have been tremendous. The governments of the Asian economies have now the flexibility to implement large stimulus, given the strong economy and low public debt levels in the region. Credit flows to the private sector remain undisrupted as financial institutions in the Asian countries were strong and well capitalised. The household and corporate sectors in Asia were also not over leveraged. Furthermore, Asia was not confronted by widespread unemployment. The various reform measures had enabled the Asian economies to build more shock absorbers and reduced the number of shock amplifiers in their economies following the 1997/98 financial crisis. What we have learnt is that there are no short cuts in reforming a broken system. We also learnt that we should always have an open mind in looking at probable solutions. Just like what a good doctor would prescribe, some time, administering bitter medicines are the only way to go.
Ardian Fullani: Recent economic and monetary developments in Albania Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the press conference on the Monetary Policy Decision of the Bank of Albania Supervisory Council, Tirana, 1 March 2012. *  *  *  Today, on 29 February 2012, the Supervisory Council of the Bank of Albania reviewed and approved the monthly Monetary Policy Report. Based on the analyses of Albania’s latest economic and monetary developments and following discussions on their performance outlook, the Supervisory Council of the Bank of Albania decided to keep the key interest rate unchanged at 4.50%. The Supervisory Council deemed that this decision provides the appropriate monetary conditions to meet the inflation target over the medium term. Moreover, it provides the necessary monetary stimulus to the economy in Albania. (Let me now proceed with an overview of economic developments and main issues that were discussed at today’s meeting). *** Annual inflation rate was 1.6% in January, slightly down by 0.1 percentage points compared with the previous month. The annual inflation rates have been pursuing a downward trend since the second half of 2011, reflecting the mitigation of inflationary pressures from the supply side: cancelling out of effects from administered price rise; increase of domestic agricultural production; and slowdown of imported inflation. The downward annual inflation in January reflected the further decrease of imported inflation from the external sector of the economy, materialised in the lower contribution of the prices of processed goods and foods.

The expansion of money has been sustained by the increased demand of the public sector for funds at end-2011, as well as the stable contribution of the demand by the private sector. The latter continues to reflect developments in the real economy, being conditioned mainly by weak demand for loans by businesses and households. In December, the loan portfolio of the banking system to the private sector was 10.4% higher than a year earlier. Similar to the most part of 2011, it has reflected the demand of the private sector to fund its liquidity, consumption and investment needs, materialising also the hesitation of the private sector to commit to long-term projects. In addition to demand factors, the supply of loans is assessed to have been more tightened in the second half of 2011, reflecting the added prudence of the banking system in lending. Latest developments in financial markets are influenced by the normal and quiet performance of demand and supply, which is in line with the monetary policy signals. The key interest rate cut to 4.50% is reflected in eased borrowing costs for banks, while it is expected to be completely transmitted to other higher-maturity market segments. Overall, risk, liquidity and inflation premiums in financial markets remain contained. Projections for the expected performance of the economy support the assessment for positive, though below potential, growth of the Albanian economy for the year ahead. Foreign demand is expected to continue to provide positive, but more moderate, contribution to aggregate demand increase.
So far the path of consumer spending is not inconsistent with this benign outcome. The second possibility is that the level of debt taken out by households - the debt-to-income ratio is now at an all-time high - makes households sensitive to any adverse future shock to their employment or income prospects. In that event the risk is of a sharper adjustment of consumption to the shock than might otherwise have occurred. Monetary policy would respond, but a large negative demand shock might result in an undershoot of the inflation target for some considerable time. The third possibility I touched on earlier. Households may adjust more quickly to the implications of a low inflation world for the prices of goods and services than for nominal interest rates or the future growth of nominal incomes. A mistaken underestimate of real interest rates or overestimate of nominal income growth may raise borrowing, spending and asset prices temporarily. Eventually households learn and consumption adjusts, again possibly sharply. The policy dilemma is that by allowing consumption and demand to grow rapidly there is a risk that there will be a sharp correction of demand later. The essence of the argument is well put by Borio and Lowe who, in a BIS Working Paper, argued that, “lowering rates or providing ample liquidity when problems materialise, but not raising them as imbalances build up, can be rather insidious in the longer run.

Table 2 Short and long interest rates in the UK Short rate  Long rate  Mean  St. dev  Mean  St. dev  1950-1959  2.87  1.67  4.40  0.88  1960-1969  5.51  1.31  6.58  1.07  1970-1979  8.92  2.81  11.94  2.41  1980-1992  11.28  2.23  10.83  1.88  1993-2002  5.58  0.88  6.38  1.59  1950-2002  7.09  3.59  8.19  3.32  Note: Short rates are three-month treasury bill yields. Long rates are 20-year gilt yields. Data are monthly, and use the rate at the close of the last business day of the month. Data up to September 2002. Source: Global Financial Data, Inc.; Bank of England calculations. BIS Review 68/2002  3  Chart 2 Total inflation premium expected in ten years time, UK 1997  Note: The total inflation premium is measured as the difference between implied forward nominal rates on conventional gilts ten years hence and implied real rates on index-linked gilts ten years hence. Source: Bank of England. So price stability appears to have led to a more stable macro economic environment, with fewer surprises to inflation, less inflation uncertainty, and a lower level of real interest rates. Has this improved nominal performance led to greater stability of the real economy? Table 3 shows that since 1992, output has grown at a little above its forty year average, and has been much more stable than before.
Chart 4: UK financial market implied measures of inflation expectations and the inflation target Per cent  5yr5yr inflation implied from index-linked gilts  9  Inflation targets  8 First inflation target and ERM exit  Operational independence and creation of MPC  Switch to 2% CPI inflation target  7 6 5 4 3 2 1  1985  1989  1993  1997  2001  2005  2009  2013  0  Source: Bloomberg and Bank calculations. Notes: Inflation targeting periods: 1–4% from 08 Oct 1992, 2.5% from 14 Jun 1995, 2% CPI from 10 Dec 2003. The light blue line is adjusted down by 1pp to take account of the RPI-CPI wedge. 18  BIS central bankers’ speeches  Chart 5: UK inflation and output gap variances 4  Inflation variance  3  Pre-independence 1955-1997  2  1 Great moderation 1998-2007  0  0  1  Post-independence 1998-2014  Great recession 2008-2014  2 Output gap variance  3  4  Source: Bank calculations. Notes: The methodology is based on King (2013). The inflation variance is calculated as the variance of quarterly inflation rates based on the GDP deflator. The output gap variance is calculated as the variance of deviations of real GDP from a simple HP filtered trend.

37 In the setting of monetary policy, the Bank’s role from the end of the second world war through to the 1990s was as implementer, not decision-maker. The Bank had little, if any, independence in the setting of monetary targets or instruments. That changed progressively in the 1990s and decisively after 1997. Through the Bank of England Act 1998, the Bank was granted operational independence for the setting of monetary policy in the UK, to meet an inflation target set by government. Specifically, monetary policy came to be set by a nine-person Monetary Policy Committee (MPC), meeting monthly and comprising five Bank “internals” and four “externals”. 38 In the light of the crisis, the UK’s policy framework has been further changed. The Financial Services Act 2012 vested the Bank with further responsibilities, creating a new 10 person Financial Policy Committee (FPC), meeting quarterly to execute macro-prudential policy. The  31  Asch (1951). 32  Janis (1972, 1982). 33  Hughes and White (2010). 34  Kaplan (1964). 35  Tuckett (2011). 36  Janis (1982). 37  Capie, Goodhart and Schnadt (1994). 38  King (2010), Lambert (2005). BIS central bankers’ speeches  5  FPC sets regulatory policy to ensure the stability of the financial system as a whole. Like the MPC, it comprises both internals and externals. 39 The Financial Services Act also gave the Bank responsibility for micro-prudential supervision – ensuring the safety and soundness of individual financial firms.
The European and French economies are therefore likely to suffer a significant slowdown next year, and the possibility of a limited recession cannot be excluded. But growth is expected to resume in 2024. I turn now to our assessment regarding the recent developments of inflation in the euro area. The rise in consumer prices has amplified in recent months in the euro area, reaching 9.1% in August according to the harmonised index of consumer prices. In France, inflation levelled at 6.6%, the lowest level in the euro area, thanks in particular to the tariff shield, but still stands at three times the inflation target of the Eurosystem. The flash estimates for September didn't bring a fundamental change to this landscape as inflation reached 10% in the euro area, and the mild levelling off in France was confirmed with a figure of 6.2%. In our view, the current surge in inflation has its roots not in excess liquidity, but in supply bottlenecks stemming from the faster-than-expected rebound in activity in the aftermath of the pandemic, and the sharp rise in energy and food prices, which was greatly exacerbated by the war in Ukraine. The inflation we are currently seeing is largely imported, and much of it - about twothirds for the euro area - is driven by energy and food prices. The recent surge in international gas prices has led the ECB to predict a peak in inflation by the end of 2022.

In 2017, the TCFD published its recommendations in terms of reporting. These guidelines take into account the double materiality of climate matters: both the information on the exposure of the company to climate change, and the information on the impact of the company on climate must be considered significant. Nonetheless, more progress is necessary concerning climate disclosure. A first step is the shift from ‘voluntary’ to ‘mandatory’ reporting. On June 7, G7 nations came to an agreement to make climate-reporting mandatory in line with TCFD recommendations. Mandatory requirements have been enforced in the EU since 2014, and will be extended to a larger set of corporates when the Corporate sustainability reporting directive (CSRD) will enter into force (expected to apply as of October 2022). It will also be completed by the development of a comprehensive set of EU sustainability reporting standards. The first set of standards would be adopted by October 2022. We expect that the international standards to be developed by the International Sustainability Standards Board (ISSB) will ensure interoperability with regional standards and offer common building blocks across jurisdictions and sectors. ***** Let me conclude in highlighting that we are just at the starting point of what we can do with and what we draw from those scenario analyses. Further collective work is needed to improve them. I have no doubt that we will succeed in doing so. Financial institutions need to step up their  effort to combat climate changes.