samchain/econo-pairs-v1 huggingface dataset:
And, in this regard, the link between the access to funds and the implementation of reforms should be seen as a crucial incentive. Allow me to also highlight the importance of insisting on a European, medium-term, economic growth-enhancing agenda. In this context, recent energy market developments and the global value chain bottlenecks highlight the importance of reflecting on the principles and way forward for achieving a European “strategic autonomy”. EU-wide structural policies promoting European integration and strengthening the single market will also make our economy more competitive internationally. The Important Projects of Common European Interest, developing new batteries and microelectronics, and those under way in the fields of Hydrogen and Cloud Infrastructure and Services, supported by NGEU funds, are good examples of this. Nevertheless, while it is important to promote these developments from a 8  European perspective, we should also keep in mind that increasing the scale of these projects might generate divergences across Member States. In order to make this compatible with a level playing field and to extract the advantages of economies of scale, it is therefore necessary to fundamentally improve our risk-sharing mechanisms and move further and faster towards a frictionless single market, both for capital and for labour. Banking union and capital markets union The final elements of reform I would like to mention today relate to the completion of the banking and capital markets unions.

The upsurge of current and capital expenses over this period, financed by the expansion of the state deficit and the growth of public borrowing, affected considerably the economic activity, however in a short-term. Through the twice cuts of the key interest rate and the ongoing injection of liquidity, the monetary policy of the Bank of Albania manifested also a simulating character over 2009 and during the early months of 2010. The monetary conditions at home, under the presence of the exchange rate depreciation during this period, have progressively provided ground to the aggregate demand. However, monetary conditions have been and continue to remain in line with the medium term and long term stability of prices at home, serving also to the well functioning of financial markets and to the maintenance of financial systems stability. BIS Review 50/2010  1  In terms of the respond to the easing monetary policy and to the decrease of risk primes in economy, monetary indicators show improvement signs during the two first months of 2010. A decreasing trend of currency outside banks is materialized and a correspondent growth of deposits in the system. The resulted improvement of liquidity indicators of banking system and the reduction of the demand for funds of public sector are followed by the decrease of Government securities yields. The exchange rate also appears relatively stabilized, reflecting a slight correction of foreign trade indicators and of the country current deficit during the last two quarters.
But it will make the financial system much more vulnerable when the bust does occur. Occurring with less frequency, the bust will be a bigger surprise to market participants. They will be less well-prepared with the capital buffers and liquidity cushions needed to traverse an adverse economic environment. 2  BIS Review 28/2009  The complete breakdown in trust across markets has been remarkable. Essentially, it has gone like this: Even if I think you are a good credit, I am not going to lend to you, because others may not share the same opinion. The problem is if no one else thinks you are good, I may not be able to get my money back if I need it. Conversely, others are not willing to lend to you, even though they think you are a good credit, because they are not convinced that I will do so. The result is that no one lends, financial conditions tighten and this exacerbates the downward pressure on the economy. As economic conditions deteriorate, this undermines the financial strength of the major financial institutions, further reinforcing the downward spiral in confidence. Another bad dynamic that exacerbated the crisis has been the reluctance of some banks to raise the additional capital they might need should the economic outlook deteriorate sharply. Repeatedly over the past 18 months we have heard – from the GSEs, from the investment banks, from the commercial banks – now is not a good time to raise capital.

Although the terms and conditions of the PPIF have not yet been announced, this facility should help put a floor under the prices of lower-quality assets and provide a means for banks to shed such assets from their balance sheets. Despite all these efforts, I don’t want to give you the impression that all will be well soon – that seems unlikely. It will take time for the deleveraging process to come to an end and, as the recent employment data have underscored, the economy has considerable momentum to the downside. But the Federal Reserve is prepared to do whatever it takes, within the bounds of its legal authority, to keep markets working and credit available and affordable. Finally, what are the lessons to be learned from this crisis? What do we need to fix in order to make our financial system more robust and our economy less vulnerable? Let me offer up a short list of seven areas that we might focus on – recognizing that this list is by no means complete or exhaustive. •  We need more transparency and homogeneity in securities. The difficulty in valuing opaque and heterogeneous securities has led to greater illiquidity, price volatility and market risk, bigger haircuts and more forced deleveraging. Opacity has also led to an undue reliance on credit ratings. •  We need central counterparties or CCPs for over-the-counter derivatives in order to reduce settlement risk.
However, they will continue to grow above their 2000–2007 average. The change in composition and weight of this group of countries, where emerging economies – especially China – have sharply increased their share, explains this result. While in 2000 emerging economies weighed less than one third in the group of Chile’s trading partners, they are expected to be closer to one half in 2011 (figure 12). On the other hand, a drop in the terms of trade is expected. This last projection is based on a copper price of $ per pound in 2012 and $ in 2013, and a WTI oil price averaging around $ per barrel in 2012–2013 (table 2). In this scenario of reduced external impulse, the Chilean economy is forecast to grow in the range of 6.25% to 6.75% this year, in line with June’s projections. Up to the second quarter, output was growing above the trend and above expectations in the June Report; consumption was slowing down from its strong expansion but not as much as foreseen; the labor market continued to give signs of being tight and financial conditions were still favorable, with credit showing an increasing growth rate (figure 13). Our present scenario foresees that domestic demand will grow 9.1% this year, more than forecast in the last Report. This will reflect the impact of increased gross fixed capital formation of the first half, especially in machinery & equipment, as well as greater inventory accumulation.

Many of the mortgages are also interest-only loans. This means that there is a risk that housing prices and indebtedness will now be driven up to unsustainable levels. For those of us making the monetary-policy decisions, the key issue is what measures will be taken to slow down the build-up of debt and, not least, what effects these might have on household consumption and ultimately on inflationary pressures in the Swedish economy while our monetary policy is taking effect. This is an important source of the uncertainty we have to deal with. Unfortunately, there is so far little experience to learn from with regard to the effects of socalled macroprudential policy measures. This makes it difficult for those making decisions and for those of us assessing what the decisions will be and what effects they may have. 1  “Results from a survey on company pricing”, Economic Commentary No. 4, 2014. 2  The Riksbank’s Business Survey, September 2014. BIS central bankers’ speeches  3  One trade-off concerns “dosage”. What one wants to achieve is that the growth in debt and housing prices slows down, but at the same time one wants to avoid a heavy fall in housing prices. This is a delicate task. Another question concerns the fact that macroprudential policy involves getting banks and borrowers to behave in ways that they would not otherwise, for instance, amortising their loans quicker than they do now.
In our view a package which did not tackle the issues we have identified with the Matching Adjustment would be seriously unbalanced. It would simply remove bits of regulation that insurers don’t like without taking proper account of risks to policyholders, and would not provide a solid basis for investment. I worry that some might consider such a thing to be a free lunch, but in fact less capital, fewer checks and fewer restrictions on assets, with no steps to strengthen the part of the regime where that is needed, means more risk for pensioners and other policyholders. In our view leaving the EU should not lead us to lower standards of financial regulation in the UK. We should change regulations to work better for the UK, including by stripping away unnecessary bureaucracy we have inherited from the EU and taking steps to support investment,  Page 11  competitiveness and long-term growth. But changing prudential regulations in the UK should not be simply a one-way street, particularly where that would mean weakening protections for business which serves groups such as pensioners. There are areas where the regulation we have inherited from the EU is too strong for UK, and others where it is too weak. We should be willing to make changes in both directions where the evidence supports it. Industry will of course have strong views on any changes – we should attach significant weight to these and be willing to adapt our thinking in light of evidence provided.

If central banks assume responsibility for such objectives, there is a serious danger of other state institutions refraining from taking necessary and effective – but potentially unpopular – measures to achieve these goals. Expanding the monetary policy mandate can therefore be counterproductive. Second, a broad mandate can blur the clear focus of monetary policy on price stability and create unnecessary conflicts of interest. This can in turn give rise to doubts as to whether the central bank is at all times taking the necessary measures to ensure price stability. Such doubts can ultimately weaken the anchoring of inflation expectations, and so make conducting monetary policy more difficult. And third, a broad mandate or one that is interpreted too broadly can jeopardise the independence of a central bank over time. Even if central banks did have suitable instruments at their disposal, taking steps to address climate protection or wealth redistribution is a political decision. When it comes to matters of a political nature, the democratic process is  Page 10/16  essential and must not be circumvented by broadening the interpretation of the central bank’s mandate. Independence also requires accountability, and rendering proper account is only possible if the objectives entrusted to the central bank can be achieved within a reasonable timeframe. Independence can only be legitimised if the central bank has a narrowly defined mandate that it can achieve and can then give due account of having done so.
To take a parochial UK view for a moment, my own read is that – in line with recent MPC communication and my own comments in previous talks and interviews – the elevated level of UK inflation stems largely from the impact of external shocks, rather than excess money growth in the past. Higher international energy and goods prices have raised UK inflation via the usual direct and indirect effects. The overshoot of the 2% inflation target is substantial largely because the magnitude of these external shocks has been substantial. Aggregate GDP is only now reaching pre-pandemic levels, lending credence to the view that it is weakness in supply rather than strength in demand that is driving the current strength of inflation. Given the tightness of the UK labour market and perceived strength of pricing power in large parts of the corporate sector, the threat exists that higher headline inflation leads to second round effects in prices, wages and costs that exacerbate the magnitude and, crucially, the persistence of the target overshoot. The current challenge for UK monetary policy is to contain those second round effects and return inflation to target as global energy and goods prices stabilise or revert in the coming years. As the MPC stated last week, in doing so it will be ‘particularly alert to indications of more persistent inflationary pressures, and if necessary act forcefully in response’. Just to emphasise for anyone listening in from London today: no news in my assessment of the outlook for monetary policy here.

In order to avoid the negative impacts of such a situation, the Central Bank could lower its borrowing and lending interest rates – provided that the inflation outlook is stable – so as to encounter the pressure created by liquidity shortage on overnight interest rates. However, such an interest rate cut would only mean a technical arrangement stemming from the change in liquidity conditions. Therefore, such a move should not be perceived as loosening of monetary policy. The Central Bank does not foresee any significant changes in the general framework of the liquidity management for 2008. Accordingly, 2008 liquidity management strategy will be as follows: i)  The Central Bank will continue to announce overnight borrowing and lending rates between 10:00-12:00 and 13:00-16:00 in the Interbank Money Market within the CBRT. In case of a liquidity shortage during the day, banks will be able to borrow at the Central Bank’s lending rate against collateral within their limits. In the event of a fall in interest rates due to increasing liquidity, banks will be able to lend New Turkish Lira to the Central Bank at the Central Bank’s borrowing rate without any limit. ii)  The Central Bank extended the transaction hours of Late Liquidity Window Facility from 16:00-16:30 to 16:00-17:00 and on the last working day of the required reserve provision to 16:00-17:15 as of July 9, 2007 in order to increase the flexibility and effectiveness of the liquidity management of banks.
All in all, it can be noted that the Riksbank overestimated the outcome for inflation in 2009 to approximately the same extent as the average for other forecasters, although with the exception of July and September 2008 when the Riksbank’s forecasts overestimated the prospects for inflation to a higher degree than other forecasters (see Figure 8). This was because energy prices increased more than expected during the spring, which led to inflation reaching over 4 per cent in the summer of 2008. The Riksbank thus saw a risk that the substantial increases in the prices of food and oil would also lead to rapid increases in other prices. Unusually high inflation expectations also contributed to this assessment. With regard to the outcome for GDP growth, the Riksbank’s overestimation was approximately the same as the average of the other forecasters. All of the forecasters continued to overestimate GDP growth for 2009 even during the first quarter of 2009. In other words, no forecaster predicted the economic downturn sooner than any other. How accurate are the Riksbank’s forecasts? As monetary policy is based on forecasts it is important that the Riksbank’s forecasts are acceptably accurate. However, it is not possible to assess accuracy by analysing the forecasts for a single year. Even forecasters with a good average accuracy may be less successful in an individual year. A fairer assessment requires a longer observation period.

On these occasions, the Riksbank’s forecasts overestimated the prospects for inflation to a greater degree than those of other forecasters. As I said earlier, the overestimations were due to concern on the part of the Riksbank that significant increases in the prices of oil and food during the spring, in combination with unusually high inflation expectations, would lead to an increase in inflation. The credibility of the inflation target Confidence in the inflation target in the form of stable inflation expectations close to the target is fundamental to the Riksbank’s efforts to achieve price stability and stable resource utilisation. This is because inflation expectations affect wage formation and pricing. Stable inflation expectations thus contribute to stable inflation. A high level of credibility for the inflation target also increases the possibility of the Riksbank to stabilise resource utilisation. If an increase in inflation was rapidly reflected in higher inflation expectations, the Riksbank would be forced to act more quickly and more forcefully than would otherwise have been necessary to dampen demand and prevent the inflationary impulse gaining a lasting foothold. The fluctuations in the real economy would thereby be greater than if inflation expectations were better anchored. Establishing credibility for the belief that inflation will be keep low and stable is therefore important in the effort to increase macroeconomic stability.
We need, therefore, to assess the extent to which spare capacity is dragging down on prices. In this particular context, we can take some comfort from the growth of earnings (wages and staff bonuses etc) being subdued, below 2%. But with productivity growth having been incredibly low for a while now, it is possible that the rate of earnings growth consistent with achieving the 2% inflation target has been below the 4–4.5% we typically used as a rough benchmark in more normal conditions before the financial crisis and subsequent recession. How and when businesses in aggregate will again generate productivity improvements will be at the heart of the Committee’s deliberations. To be clear, this is about the path inflation takes back to target, not whether it will return to target. The MPC will ensure that it does return to target and that medium-term inflation expectations are anchored to the target. Conclusion To conclude, UK companies are having to adjust to a different pattern of demand, to profound shifts in world trade and prices, and you are having to cope with this while the financial system both recovers itself and adapts to new “rules of the game”. Given some threats to stability linger, the Financial Policy Committee’s primary focus has to be on encouraging continued progress in building resilience in the banking sector. That will pay dividends in the longer run.

Some export industries were also affected by weak demand in Europe and high cost levels. Growth in household demand was moderate in 2013. Household saving increased further and is now at a historically high level. Unemployment edged up through 2013. Capacity utilisation in the economy is still assessed to be close to a normal a level. Chart7: The krone exchange rate After appreciating over a longer period, the krone showed a pronounced weakening in 2013. Both domestic and international conditions contributed to the depreciation. Signs of weaker growth in the Norwegian economy probably had an impact. An improvement in the economic situation in the euro area may also have contributed. Although the krone has appreciated somewhat thus far in 2014, it is still clearly weaker than at the beginning of 2013. Chart 8: Consumer prices in Norway Inflation has increased. As measured by the CPI-ATE, inflation averaged 2.5 percent in the first quarter of 2014. The krone depreciation has contributed to a faster rise in prices for imported consumer goods. Prices for domestically produced goods and services also rose at a faster pace in 2013, at just below 3 percent in the latter half of the year. The rise in house rents and food prices through 2013 partly reflects a revision of the calculation method for these goods items in the CPI. In the coming months, inflation is projected to edge down, partly reflecting the unwinding of temporary effects.
During the first three quarters of the year, the Albanian economy ensured a positive growth, thus preserving the financial stability and the key indicators of macroeconomic stability: price stability, public debt level and balance of payments sustainability. The global economic and financial crisis, which was significantly intensified during the first half of the year, put in question the financial system sustainability, the macroeconomic stability and the long-term development prospects of the world economy. The determined response of public authorities, increased coordination of economic policies and keeping open the world trade channels, helped preventing any negative economic spirals. The latest data on the global economy indicate a recovery of economic activity in the third quarter onwards. The monetary and fiscal stimulus packages resulted successful in terms of stabilizing the global economy. However, the sustainability of global economic growth will remain fragile, as long as the economic activity continues to rely on significant monetary and fiscal stimuli. In particular, the public debt sustainability, which is burdened by fiscal stimulus bill to exit the crisis, is becoming a more and more aggravated problem for many countries. In this complex situation, choosing the right moment for withdrawing the economic stimuli will have a decisive importance in the future economic performance. In a more structural aspect, the recent crisis is expected to leave visible traces in the economic development. In a long-term horizon, it seems that new economic and strategic balances are being determined, thus re-dimensioning the poles of global economic growth.

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