samchain/econo-pairs-v1 huggingface dataset:
We therefore took a series of measures aimed at immediately restoring the situation by dealing with all the problems within our sphere of competence and, in particular, we decided to intervene on securities markets whose abnormal functioning was jeopardising the implementation of monetary policy and financial stability. In this case, we targeted sovereign debt markets because they determine the financing conditions of the country’s other issuers. When sovereign debt markets cease to function, the financing needs of the country as a whole cannot be met. This type of intervention is not a quantitative easing operation since no particular amount is set beforehand and all the liquidity provided through the purchase of securities is sterilised in the interbank market via term deposits offered to banks. Neither is it a credit easing operation targeting a particular type of agent ; government securities are not purchased in the primary market and the securities in question may be issued by borrowers such as Greece that has almost stopped issuing debt due to the mechanism in place to ensure its financing by euro  area countries and the IMF. It was simply a measure to restore the monetary policy transmission channels via the debt markets. I believe that recent episodes clearly highlight what the markets may expect from central banks, that is to say resolute action to deflate positive and negative asset price bubbles if they interfere with monetary policy transmission channels.

  If the shape of the yield curve is evolving regardless of monetary policy decisions, if risk premia are uncorrelated with fundamentals, if market liquidity dries up, then the interest rate channel ceases to function.   When this affects banks’ funding, in particular via a freezing of the interbank market, the bank lending channel seizes up. In such circumstances, central banks must turn to non-standard measures such as direct aggressive interventions to ensure that their monetary policy decisions are effectively transmitted and that markets keep ticking over. Needless to say, the recent period has seen many such incidents as well as the implementation of many non-standard measures. Among the measures currently in place, some are based on “quantitative easing”, which involves the purchasing of securities primarily with a view to generating excess liquidity that in turn moves into all market segments and fosters a better refinancing of the economy; others are based on “credit easing” and aim to restore the functioning of certain particularly disrupted market segments. Seen from another angle, certain policies aim to restore the smooth functioning of the interest rate channel by directly impacting the yield curve, others aim to restore the bank lending channel by ensuring that banks can obtain funding beyond the very short-term maturities to which central banks usually confine themselves. In all events, central banks stand in for failing market participants or markets.
In the second half of my speech, I will address two ideas, which are the subject of current public debate and which would have a direct impact on the SNB were they to become reality: namely the creation of a sovereign wealth fund using the SNB’s foreign exchange reserves, and the sovereign money initiative. Economic developments Discontinuation of minimum exchange rate Let’s start then by casting our minds back to last year. On 15 January 2015, the SNB discontinued the minimum exchange rate of CHF 1.20 per euro. This had been introduced as a temporary measure in September 2011 in exceptional circumstances. The Swiss franc’s safe-haven status had caused it to appreciate rapidly and sharply against virtually all currencies. The consequent massive overvaluation of the Swiss franc had posed a threat to the Swiss economy and carried the risk of deflation. The minimum exchange rate put a stop to these developments. In the subsequent almost three and a half years until January 2015, the situation changed fundamentally. Global uncertainty eased and the Swiss economy gained ground once again. By contrast, recovery in the euro area continued to be sluggish. The euro had already steadily weakened against major currencies in the second half of 2014. Furthermore, at the start of 2015, there were signs of further easing of monetary policy in the euro area. Against this backdrop, the euro was expected to weaken further.

Benoît Coeuré: Interview in Les Echos Interview with Mr Benoît Coeuré, Member of the Executive Board of the European Central Bank, in Les Echos, conducted by Mr Nicolas Barré, Ms Catherine Chatignoux, Mr JeanPhilippe Lacour, Mr Etienne Lefebvre, Mr Guillaume Maujean, Mr Dominique Seux and Mr François Vidal, and published on 29 June 2015. *  *  *  Is Greece’s exit from the euro area now the most probable hypothesis? Greece exiting the euro area, which used to be theoretical, can unfortunately no longer be ruled out. It’s the result of the Greek government choosing to end discussions with its creditors and resorting to a referendum, causing the Eurogroup not to prolong the second adjustment programme. The ECB, like the other European authorities, wishes Greece to stay in the euro area. That’s the substance of the proposal made last week by the Commission, the IMF and the ECB in the form of a programme of reforms and a financing offer that is much more favourable than anything proposed in the past. Europe has never abandoned Greece. In what way were these proposals more favourable? They gave Greece the time and the freedom to reform its economy, for example its labour market, while envisaging a demanding budgetary path, but taking account of the deteriorating economic climate. The primary surplus requested was reduced to 1% of GDP in 2015, compared with 3% previously. We were also proposing larger cuts in military spending to create room for manœuvre elsewhere.
On the policy front, the central bank and Government in general will continue to pursue appropriate policies that promote financial sector growth so as to enable them to reduce the cost of financial intermediation and improve the delivery of high quality financial services. On its part the Government contributes to reducing the cost of capital through lower deficit spending. This frees resources for private sector borrowing. Chairperson, I wish to strongly encourage the accounting profession to join hands with the central bank and other Government organs in the task of reducing the cost of doing business. In answering the question: The Cost of Capital – Wither the Zambian Financial Markets? – I would say that Zambia has made significant achievements in making the financial markets as properly functioning as possible. In its current state, the banking system, being the dominant player in the financial sector, should embrace competition and offer products and services that can spun growth of the entire economy. The capital market has the challenging task of mobilising small number of participants and limited range of long-term investment products. Despite these challenges I am optimistic that working together, we can reduce the cost of finance in Zambia. The Bank of Zambia will continue to provide the required leadership and act as the catalyst for the emergence of viable and responsible markets to serve the interests of all investors. Ladies and Gentlemen, I wish you success in the deliberations of this conference and in the rest of your endeavours for 2010.

There is, I believe, broad-based support for the objective of setting interest rates to meet the inflation target. Quarterly opinion polls since November 1999, commissioned by the Bank of England and published in our Quarterly Bulletin, provide support for this proposition. But it is clear that the MPC still has much work to do to explain how interest rates affect the economy. Building a constituency for low inflation is a primary objective of the Bank, and one to which we attach great importance. Support for low inflation, and stability more generally, cannot be taken for granted, nor based solely on fading recollections of boom and bust. There is a new generation with little memory of the high and unstable inflation rates of the past. The Bank has, therefore, started an annual competition for schools in which students play the role of the Monetary Policy Committee. The first year's competition attracted over 200 entries, and culminated in the national final at the Bank of England in March. Next year's competition has just been announced, and I would encourage as many schools as possible to enter the competition and pit their wits against the MPC. I am delighted to report that Bassaleg  BIS Review 58/2001  3  Comprehensive School in Newport, who won last year's South Wales regional heat, were the first team in the UK to enter this year's competition.
This also entailed the building up of expertise in our own country, which would secure a full order book for many years ahead – not only off our own shore. The activities on the Norwegian continental shelf would provide a boost to other industries in Norway. 1  Alexander Kielland (1880): Garman & Worse (Translation by W.W. Kettlewell). BIS central bankers’ speeches  1  Developing a new industry and spending the associated revenues also entailed challenges. The challenges were discussed in a white paper in 1974, Report no. 25 to the Storting, entitled “The role of the petroleum industry in Norwegian society”. If room was to be provided for supplying the oil sector and for increased consumption of goods and services, other industries would have to give way. The mechanisms described in the white paper are well known. I quote: “A transfer of production and jobs between firms and industries can occur via increased domestic cost pressures.” “Labour market pressures provide increased opportunities (...) for wage earners to find higher paid jobs.” “Firms in export- or import-competing industries (...) may be forced to downscale (...).” The country was indeed braced for structural changes and the attendant costs. But the white paper made it clear that restructuring was a necessary precondition for reaping the benefits of economic growth. We now know, more than 40 years later, that the structural changes did indeed come to pass. The industry structure of our economy has changed.

Many emerging economies have successfully applied the lessons learned in past financial crises, capitalizing them as increased financial resilience and a reduced impact on growth than developed countries. One feature of world financial markets’ behavior of the past few months has been the increase in long-term interest rates on public instruments. These movements can be linked to an environment of reduced risks and expected increases in fiscal debt certificates, and to the fact that, for the first time in several months, there is incipient debate about the convenience of a not-so-expansionary monetary policy, given the medium-term inflationary risks. In the local financial markets, the interest rates on long-term Central Bank notes have also risen— albeit with swings—above the levels that prevailed at the time of our May Report. The steepening of the yield curve coincides with what has occurred in international markets, and may be signaling an increase in the markets’ appetite for risk. It may also be that they respond to more idiosyncratic factors, especially because of the big momentum showed by the local bonds market this year to date. The pass-through of MPR cuts to lending rates in recent months has been evident. While the latest data suggest that it may have moderated, transmission should continue, particularly as macroeconomic uncertainties phase out. The annual growth rate of credit volume has slowed, in a context where lending standards are still tight and there is less demand for credit due to a more cautious attitude among economic agents.
The write off from bank’s balance sheet is both healthy for the bank and useful for the economy, as it: –  provides a more realistic picture of the banks’ loan portfolio, releases the capital and improves their financial balance;  –  improves bank processes, thanks to a more efficient use of human, financial and technical resources, and redirects the focus of the bank toward new loans;  –  improves the overall functioning of the financial market, as it contributes to the market “exit” of non-competitive businesses. BIS central bankers’ speeches  1  –  contributes positively to the market participants’ assessment of the banking sector (ratings) and, subsequently, to the assessment of Albania’s economy;  –  provides conditions to better manage debt collection, but always accompanied with the necessary message that this does not imply forgiving the borrowers debt. In our case, the process of loan loss write off from banks’ balance sheet is not a detached process from real developments. On the contrary, it reflects the gradual improvement in nonperforming loans. In concrete terms, over the last two years, the growth rate of non-performing loans has decelerated at extraordinary rates, banks’ annual spending for provisions has fallen, and new loans, especially those denominated in lek, have been stable. On their side, banks have been increasingly committed to this process. Usually, it happens when the effectiveness of the process improves and/or banks expectations for lending improve.

2 Recent expressions of solidarity from all over Europe following the barbaric terrorist attacks on staff at the satirical magazine “Charlie Hebdo” in Paris show what a central role the rights to freedom of speech and freedom of expression occupy in our system of values. These values of freedom are central among those accorded great importance in newer Member States from the former Eastern bloc. With the awareness that the common currency within the EU is evidence of closer integration, the introduction of the euro – especially in countries such as Lithuania most recently – is also perceived as a demarcation from, and protection against, purportedly aggressive hegemonic powers. This shows that the European Union and the euro area are far more than an amalgamation of independent nation states. Shared values are all the more important when the cement that typically holds together the parts of a full political union is missing. Alongside a shared identity – a loose concept which has sometimes been maliciously abused in the past, yet one which cannot merely be reduced to a successful football team – or language, this is often long-term transfer payments to even out differences in living conditions. Germany has this in the form of horizontal financial equalisation among the federal states [Länderfinanzausgleich], as well as transfer payments to the states of former East Germany, which are financed by the solidarity surcharge [Solidaritätszuschlag]. It may well be that one day the political will considers fiscal transfers between the Member States of the euro area necessary and desirable.
What makes our task harder is that the goalposts are moving all the time. Ever increasing complexity  4  BIS Review 52/2006  and interlinkages in the international economic and financial system mean that legislators and standard-setters must run just to try to catch the moving train. In the European context, cross-border integration has progressed further than in other parts of the world, which strengthens financial development and presumably also stability. But integration means increased risks for contagion and we must be vigilant to identify and deal with any vulnerability in the system. Regional FSAP-type assessments are at the same time broad and focused and thus useful for this purpose. In my view, it would be totally wrong to regard the FSAP as a process where the IFIs are the providers, the countries the recipients and the other stakeholders form an interested but passive audience. We need an ongoing dialogue to understand and improve the process. Hence, I am particularly grateful to our Belgian hosts for having arranged this seminar which will give us an opportunity to discuss these important issues. Thus my final conclusion, which answers the question posed in the title of this speech, can be very short: Yes, I strongly believe that regional financial stability assessments in the EU and EEA areas can provide additional values to financial stability and to a better understanding of how the cross-border interlinkages between the financial groups and the infrastructural financial arrangements under certain circumstances may add to the vulnerability of the systems.

My point is that, in addition to analysing vulnerabilities in individual countries and general macroeconomic linkages between countries, you also need to look in particular at the major cross-border financial groups and financial infrastructure. The good news is that these are not so many, after all. Of the approximately 8,300 credit institutions in the EU, only nine are defined as truly pan-European and less than fifty have cross-border establishments in more than two countries. When assessing preconditions, regulation and supervision you need to look not merely at individual countries but also at whether there are major differences or gaps in the application between countries or between financial sub-sectors and if this might lead to vulnerabilities, in particular in a crisis situation. As we all know, a common European approach to bank problem resolution has so far not been developed. In a potential or actual crisis situation, we may face “the prisoners’ dilemma” in which the optimal solution may not be achieved since each country would tend first to look to its self-interest. Hence, it is important for a regional FSAP to identify vulnerabilities stemming from potential conflicts between home and host countries in the resolution of a failed financial group, which for instance might have systemic importance in the host country but not in the home country. The common thread in all this is that an FSAP should focus on two things: The weak spots as well as the channels for contagion of weakness. This is what the IMF is doing in its single-country FSAPs.
The interest rate reflects the price of today’s  1  Negative interest rates have been implemented not just in Switzerland, but also in an increasing number of other advanced economies, such as Denmark and Sweden. BIS central bankers’ speeches  1  consumption in terms of consumption in the future. It is a relative price. There is nothing untenable in tomorrow’s consumption being more valuable than today’s. Of course, while not untenable, negative nominal rates are not representative of a normal state of affairs. Rather, they mirror the current exceptional circumstances of the global economy and of Switzerland. To understand why Switzerland is experiencing a period of negative interest rates, it is necessary to step back and recall three structural features that characterise the highly integrated Swiss economy: its “traditional” current account surplus, its globally traded, freely floating currency, which is commonly perceived as a “safe haven”, and – as a result – its persistently lower interest rates, especially relative to the euro area. 2 In “normal” times, Switzerland’s traditional current account surplus is compatible with a stable currency, as it is compensated by net capital outflows of similar magnitude, with the negative interest rate differential providing the proper incentive for capital exports. This “benign” equilibrium has been severely tested by recent financial market developments. The financial crisis has exacerbated the global appetite for Swiss franc investments because of their safe haven status.

Mugur Isărescu: The Transatlantic renaissance – Romania as a faithful partner and ambitious player Opening speech by Mr Mugur Isărescu, Governor of the National Bank of Romania, at the Conference “The Transatlantic Renaissance: Romania as a Faithful Partner and Ambitious Player”, Bucharest, 9 December 2013. *  *  *  Prime Minister Ponta, Mr. Kennedy, Your Excellences, Ladies and gentlemen, It is a great pleasure for the National Bank of Romania, and an honor for me and the board members, to welcome such a distinguished audience. I salute the presence of Victor Ponta, Prime Minister of Romania, who will be the keynote speaker today and that of Craig Kennedy, the President of German Marshall Fund of the United States. Allow me to greet their Excellences, members of the diplomatic corps, as well as the other notable guests who represent an important array of successful domains of activity. A special welcome to Mircea Geoană, President of Aspen Institute Romania and his team of young, talented and hardworking professionals. Today’s gathering has a challenging topic: “The Transatlantic Renaissance: Romania as a Faithful Partner and Ambitious Player”. Here, at the National Bank of Romania, we take pride in having always been a forum for debating, in an open and profound manner, the themes and trends defining our age. Thus, it is the perfect venue to host such a conference as this one, which encourages individuals to reflect on ideals and ideas that define good society through leadership, dialogue, entrepreneurship and regional stability.
These are a key conduit for choice over time. An efficient capital market transfers savings today into investment tomorrow and growth the day after. In that way, it boosts welfare. Short-termism in capital markets could interrupt this transfer. If promised returns the day after tomorrow fail to induce saving today, there will be no investment tomorrow. If so, long-term growth and welfare would be the casualty. Yet, despite its potential importance for long-term growth, studies of short-termism in capital markets are relatively thin on the ground. There is a sharp disconnect between popular perception of rising myopia, driven by technology and neurology, and empirical evidence.4 This paper aims to provide some evidence on short-termism drawing on equity market experience. It is planned as follows. Section 2 reviews existing evidence on short-termism. Section 3 describes the theory underlying our test of short-termism and its adverse implications for investment choice. Section 4 presents the empirical results, drawing on cross-sectional and time-series data. Section 5 draws out the investment implications of the results and sets out a potential menu of policy options. 1  Haldane (2010). 2  Barton (2011). 3  Carr (2008). 4  A recent interim report on short-termism by a UK government department concludes thus: “Overall, respondents believe that short-termism exists in equity markets, but provided little evidence to demonstrate the scale of the consequences for companies and investors” (Department for Business, Innovation and Skills (2011)).

More formally, the expected return can be written as the sum of the risk free rate and a companyspecific risk premium for company j:18 (3)  The actual return on an investment is the sum of the capital gain and the dividend yield: (4)  Assuming an efficient market, actual returns differ only from expected returns due to a forecast error which is uncorrelated with expected returns.19 Using this assumption, we can substitute (4) into (3) to give an equation for the equity price. 17  The return is $ – $ = $ divided by the cost of investment. 18  This is the case with the capital asset pricing model (CAPM) (Lintner (1965), Sharpe (1964)) and arbitrage pricing theory (Ross (1976)). Under the CAPM, for example, the company specific risk premium is equal to the company specific beta multiplied by the market risk premium  . This means  . 19  That is, we assume that  BIS central bankers’ speeches  . 5  (5)  So the price of the security is simply the expected price and dividend in the next period, discounted by the sum of the risk-free rate and the company-specific risk premium.