samchain/econo-pairs-v1 huggingface dataset:
During the crisis, the impaired banking system and dysfunctional corporate debt markets muted the transmission of monetary stimulus and led to inefficiencies in risk-sharing and capital allocation. Ultimately, companies and households bore a heavy cost. Strains in monetary policy transmission were particularly pronounced in the euro area, where the fragmentation of markets along national lines meant cuts to the ECB’s policy rates were not passed through equally in all countries. Households and companies of comparable credit worthiness faced different borrowing rates depending on their location. These problems worsened over 2012, when markets began to price in some redenomination risk in a few euro-area countries. It fell to Benoît and his fellow members of the ECB’s Governing Council to fix the problem. 5  All speeches are available online at www.bankofengland.co.uk/news/speeches  5  Throughout the crisis, the ECB rightly and swiftly injected huge quantities of additional reserves into the system, as asset-backed commercial paper and the interbank markets dried up. In response to the worsening sovereign debt crisis in 2012, the Governing Council created Outright Monetary Transactions, a programme whose very existence eliminated the unwarranted and self-reinforcing fears of a euro-area break-up and restored sovereign bond spreads to levels more consistent with credit rather than currency risk. During this time, Benoît added his voice to the calls for a capital markets union, not least because it would broaden the transmission mechanism and increase the potency of monetary policy. He also recognised that the ECB’s actions could only tackle the symptoms of financial market fragmentation.

These two regulations must naturally be enhanced by proposals on the deposit guarantee fund and the crisis resolution mechanism, which are the two other essential pillars of the banking union. The ECB, and all the other national authorities concerned, must now continue the preparatory work so that the Single Supervisory Mechanism can become operational as soon as possible. The Banque de France and the ACP provide an important contribution and intend to play an active role in the new mechanism. This is particularly the case given that around a dozen major French banking groups will be subject, according to the criteria set out in the regulation, to direct supervision by the ECB, even though the ACP will remain responsible for day-to-day supervision. 2. Resolutely pursuing efforts to strengthen the resilience of the financial system by preparing for and implementing new regulations  The international financial regulatory framework evolved substantially in 2012, and will continue to do so in 2013. It is therefore particularly important to adapt to these changes. 2.1  The insurance sector must continue, in France and Europe, to prepare itself for the application of the new prudential regime, Solvency II  Admittedly, 2012 was marked by tough discussions about the Omnibus II Directive and in particular the question of the treatment of insurance products with long-term guarantees. These discussions were unfruitful and will delay the entry into force of Solvency II.
Brooke, M, et al (2015), ‘Measuring the macroeconomic costs and benefits of higher UK bank capital requirements’, available at http://www.bankofengland.co.uk/ financialstability/Documents/fpc/fspapers/fs_paper35.pdf. Elliott, D (2013), ‘Higher bank capital requirements would come at a price’, The Brookings Institution, February, available at http://www.brookings.edu/research/ papers/2013/02/20-bank-capital-requirements-elliott. FSA (2011), ‘The Failure of the Royal Bank of Scotland’, Financial Services Authority Board Report http://www.fsa.gov.uk/pubs/other/rbs.pdf. Kashyap, A, Stein, J and Hanson, S (2010), ‘An analysis of the impact of substantially heightened capital requirements’, Mimeo, May, available at http://chifl.shufe.edu.cn/upload/htmleditor/File/120919100455.pdf. Miles, D, Yang, J and Marcheggiano, G (2013), ‘Optimal bank capital’, Economic Journal, Vol. 123, pages 1–37. BIS central bankers’ speeches  11

An issue that has been widely discussed in the last two years is whether other parts of the world would be able to avoid a recession despite the weak development of the US economy, that is if so-called decoupling could arise. We can now note that the rest of the world is following in the wake of the United States into an economic downturn and the debate on decoupling has faded. Measures to counter the crisis Sweden has so far been able to manage the problems caused in the financial system by the global financial crisis. The Swedish banks are profitable and have substantial buffers following a number of good years. They have not granted loans as hastily as the banks in the United States and they have not been exposed to any great extent to the type of financial products that have been part of the problem. The TED spreads have not been as large as in the United States and the euro area. The interbank market for overnight loans has functioned well in Sweden throughout the crisis, unlike in many other countries. But the Swedish banks have nevertheless experienced problems with funding and this has required that a number of measures be taken by Swedish authorities. The Riksbank has implemented a large number of measures to safeguard financial stability and mitigate the negative effects of the financial crisis. These measures have largely related to the provision of liquidity.
The wage agreements contained guarantees on the development of prices, wages and earnings, as well as renegotiation clauses, which contributed to a situation in which prices and wages chased each other in an upward spiral. The levels stipulated in the agreements were often minimum levels above which there was considerable wage drift. Several factors have contributed to the improvement in wage formation. In March 1990, the government appointed the so-called Rehnberg Commission. On the basis of the Commission's proposals, stabilisation agreements were signed in most areas of the labour market. These helped to reduce the rate of wage increases from around 10 per cent in 1990 to 3-4 per cent per year in 1992-1993, and to ensure that the agreements no longer contained any flexibility clauses. In March 1997, the social partners in the industrial sector signed a new cooperation agreement, the so-called Industrial Agreement. This covered regulations on the conduct of collective bargaining and established the partners' joint responsibility for wage formation in their part of the labour market. Similar agreements, although not as far-reaching, have followed in other areas. In 2000, the new National Mediation Office began work. This established a third, independent party on the labour market with the task of promoting an effective wage formation process. The National Mediation Office was also given increased powers to take action in connection with collective bargaining. The National Institute of Economic Research was given the task of annually producing reports on the economic conditions for wage formation, the "Wage Formation in Sweden" reports.

The growth of productivity was surprisingly strong; certainly much stronger than many of us expected when the agreements were negotiated. Productivity has now fallen in seven consecutive quarters (see Figure 6). My impression is that the recent development of productivity is in all essentials a result of weaker economic activity. Growth has declined rapidly while the number of people in employment has continued to increase. If we study how GDP and employment vary over the economic cycle it becomes clear that there is a time lag in the cyclical fluctuation in employment in relation to production. It also appears that this time lag has increased since the beginning of the 1990s (see Figure 7). The Riksbank's assessment is that a recovery in the growth of productivity is probable over the next few years. This is indicated, for example, by the historical links that I have just mentioned. However, we do not expect the rate of growth to be as high as between 2002 and 2006. In the latest Monetary Policy Update, the assessment is that the growth of productivity in 2010 and 2011 will average over 2.5 per cent. It is more difficult to assess the growth of productivity in the longer term. A number of explanations have been put forward for the rapid development of productivity up to and  BIS Review 154/2008  5  including 2006.
Dear Ladies and Gentlemen, The financial system and the banking sector at the heart of it play a unique role for economic development and welfare in Albania. This system provides payment instruments, contributing to the free circulation of products and services. It also offers savings and credit instruments for households and enterprises, promoting therefore development and enhancing welfare. The financial system helps households, enterprises and the economy to withstand shocks, by undertaking risks on its balance sheets and offering products to insure life, business activities and against natural disasters. Therefore, the efficiency, stability and sophistication of the financial system are essential preconditions for rapid, stable and comprehensive growth. The development level of an economy is inter-related and inter-dependent on the development level of its financial system. This has been extensively illustrated by the Albanian experience over the last three decades. The progress marked in the first decade of transition was conditioned by, among other things, embryonic developments in the banking and financial sectors. In the second decade, the activity of the banking sector expanded and competitiveness in this sector increased, setting the stage for crediting and economic growth to gather speed. This performance was disrupted by the global financial crisis effects spilled over to Albanian economy. However, unlike in many countries of the region, the crisis did not trigger recession or a proper financial crisis in Albania. Yet, indirect effects were present both in the economy and in the financial system.

The risk premium in the interbank market has generally driven up the 3-month LIBOR which serves as the reference rate for the pricing of  15  Georgios Chortareas, David Stasavage, and Gabriel Sterne, 2002, “Does it pay to be transparent? International Evidence from Central Bank Forecasts”, Review of the Federal Reserve Bank of St. Louis, July/August, 99-117. 16  Frederic S. Mishkin, 2004, “Can Central Bank Transparency Go Too Far?”, NBER Working Paper No. 10829, p. 25. 17  In fact, the Bank of England would have preferred to act covertly, but the market abuses directive prevented this (http://www.guardian.co.uk/business/2007/sep/21/14). BIS Review 141/2007  5  credit. At the same time, interest rates on risk-free securities such as Government notes have declined. The result is a significant increase in the TED spread (the difference between an uncollateralized interbank loan and the risk free rate of the same maturity). With the 3-month LIBOR rising, central banks faced an important monetary policy decision. In countries where the official target rate is a central bank rate, for instance, the euro zone, the 3-month LIBOR became increasingly disconnected from the official target rate (typically a repo rate of two weeks or less). As you can see from Graph 1a, the ECB held its official target rate (the two-week repo rate) constant and therefore tolerated an increase in the 3month LIBOR.
Or is there “fiscal dominance” over the central bank, which is then forced to subordinate its own objectives to those of the fiscal authority? Because they naturally respond to the economic cycle, looking at the instruments of policy on their own (fiscal and monetary measures) doesn’t really help you that much in distinguishing one situation from the other. A better method might simply be to look directly at the institutional arrangements themselves (are monetary and fiscal policies determined by independent agencies? how is that independence safeguarded?). As this is ultimately a question of ends rather than means, a better measure still is the behaviour of objectives of policy. If inflation rises materially above its target, and if it tends to do so in particular when the public finances are under strain, that may be evidence of “fiscal dominance”. If, on the  1  See https://www.bankofengland.co.uk/research/bank-of-england-agenda-for-research. 2  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  2  other hand, easier monetary policy is necessary simply to stabilise inflation, and succeeds in doing so, it’s hard to see how it can qualify as “monetary finance”, no matter how the fiscal balance is behaving2. That’s not to say the fiscal position is wholly irrelevant because higher inflation may help – if only to a degree, and at a wider economic cost – in easing fiscal constraints. Very high levels of debt could therefore test those institutional arrangements.

Weimar Germany in the 1920s is one well-known example. Post-revolutionary France, in the 1790s, is another. There are more recent instances in some emerging economies. Hyperinflations of this sort are essentially fiscal events. Chart 1, taken from the well-known book about financial crises by Reinhart and Rogoff4, shows that waves of formal defaults on governments’ debts have broadly coincided with waves of rapid inflation. Nor do you have to go to such extremes, or away from these shores, to find episodes in which the nominal anchor has been abandoned (if only for a time) in the face of big increases in government spending. Britain 4  Reinhart and Rogoff (2009) 4  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  4  suspended the gold standard during the Napoleonic wars and again at the onset of the First World War. Prices rose significantly, particularly during WWI, and yields on government debt did so as well. But the relationship between debt and inflation isn’t a simple one, nor is it readily apparent in the long-term UK data. For example, if there was “monetary finance” during these two episodes it’s not something that endured because, in both cases, Britain restored the original price of gold after those wars had ended. If rising price levels had conferred any fiscal benefit while they were being fought, that was then reversed, via deflation, once peace was established. Any long-lasting reduction in government debt had to be achieved by running a tighter fiscal policy.
The origins of the crisis We are all aware that the sub-prime mortgage crisis in the US during 2007 and the subsequent collapse of Lehman Brothers in September 2008 sent shock waves to the financial markets that plunged the global economy into the most severe recession since the Great Depression of the 1930s. However, although these two events did trigger off the international financial crisis, the sovereign debt crisis in Europe was largely home-grown, characterised by cases of excessive risk-taking by banks, imprudent fiscal policies on the part of a number of governments as well as shortcomings in the institutional framework of Economic and Monetary Union. With the adoption of the euro, most euro area countries benefitted from the greater credibility that the monetary policy, decided collectively by the Eurosystem, offered within a legal framework that ensured its independence and promoted price stability as its primary objective. In addition the advent of the single currency also meant a significant step forward towards the completion of the EU single market, which was viewed as an important element in bringing about faster economic growth in the European Union. The establishment of the euro area led to a significant reduction in both nominal and real interest rates, especially for the fiscally weaker member states, as these converged to German benchmark levels.1 This reduction in interest rates, coupled with stronger economic growth expectations in the euro area, gave rise to faster growth in, and cheaper interest rates on, credit to both households and non-financial corporations in many of these countries.

Thus, in terms of labour cost competitiveness, Malta has kept pace with the euro area average. However, to maintain competitiveness a further focus on the wage setting process may be appropriate. In particular the basic principle must be to emphasise that productivity improvements are at the basis of sustained wage increases, and that these are best negotiated at firm level, where improvements in productivity can be best gauged. Consequently, any cost of living adjustments should form part and parcel of the collective agreement and not be superimposed on collective agreements by legislation as happens today. Indeed, already a number of collective agreements incorporate the COLA increase, and I suggest that this should be the norm. Another important message that has emerged from the sovereign debt crisis is the need for fiscal prudence, which provides the space for countercyclical fiscal policy during a downturn. In the euro area, fiscal policy is the major macroeconomic management tool at the national level. Thus, in periods when economic activity is relatively strong, policy needs to be sufficiently prudent to build the necessary fiscal buffers that would be utilized during periods of weaker growth. BIS central bankers’ speeches  5  In the aftermath of one-off expenditure during 2008, the deficit ratio in Malta declined in 2009 despite the recession of that year and narrowed slightly further in 2010. The debt ratio generally declined until 2008, but then picked up in 2009, partly in response to the contraction in the economy.
Let me conclude with a reflection on monetary policy. The economy is bouncing back rapidly, which is good news. With that has come a rise in inflation, and we expect that rise to continue in the near term as we go through the rest of this year, such that CPI inflation is expected to pick up further above the target, owing primarily to developments in energy and other commodity prices. I have set out the reasons why we expect this rise in inflation to be a temporary feature of the bounce-back. The reasons for taking this view are well-founded, it is not a vain hope or a matter of whistling in the wind. It is important not to over-react to temporarily strong growth and inflation, to ensure that the recovery is not undermined by a premature tightening in monetary conditions. But it is also important that we watch the outlook for inflation very carefully, which of course we do at all times, particularly for signs of more persistent pressure and for a move of medium term inflation expectations to a higher level. And if we see those signs, we are prepared to respond with the tools of monetary policy. Over the last sixteen months we have used monetary policy decisively to respond to an unprecedented crisis which was disinflationary. We were able to act in this way because the framework of monetary policy and the record of its use are robust. This credibility gave us the scope to act in a crisis.

At the end of last year, the gap was 7¼%, on the latest numbers to end April it’s around 5%, and we expect the gap to be closed by the end of this year. Although that would still represent two years of lost growth, relative to the expected path of activity prior to the pandemic. The good news is that the economy is only around 5% smaller than it was eighteen months ago – and in view of what we have experienced, that is good news – and the gap is closing quite rapidly. But let’s pause for a moment on the good news that the economy is only 5% smaller. In any conventional time, even in the depths of a recession, that would scarcely qualify as good news. Let me add a second leg to this unconventional point. In a typical recession – to the extent there is such a thing – there is a hit to demand relative to the supply capacity of the economy which leads to an output gap, higher unemployment and weaker inflation. For crises such as wars or natural disasters, there can be a large decline in both demand and supply. But the effects on supply capacity are typically more persistent, for instance as a result of the destruction of physical capital. During the Covid crisis, we have seen a simultaneous and substantial fall in both demand and supply. But, all the indications are that for both demand and supply the decline will be temporary.
I hope that Standard Chartered Bank will lead the way in establishing affordable products and services for our small scale farmers throughout our country. I encourage you Madam Managing Director in your capacity as the Deputy Chairperson of the Bankers Association of Zambia to expand your horizon and collectively join hands with all stakeholders in addressing this problem. I thank you for your attention. 2  BIS Review 34/2009

13.12.2019  Session: “Central banks, financial inclusion and digitalization: harnessing technology for inclusive growth” Conference “Financial integration and inclusive development: A view from the Mediterranean Countries”/Banco de España e Instituto del Mediterráneo (IEMed) Pablo Hernández de Cos Governor  Good morning. It is a privilege for me to chair this panel on the importance of financial inclusion and how digitalisation can contribute to it. It’s all the more a privilege given that the panel includes governors from four countries with broad experience in promoting financial inclusion, where significant initiatives in this area have been launched with the central bank taking the lead. Access to financial services continues to be a primary problem globally. On the latest World Bank estimates, almost 1.7 billion adults do not have access to an account offering basic functionalities and, therefore, they are excluded from basic services such as payments, credit and saving. This has obvious repercussions for economic and social development, as there is a positive correlation both with growth and employment1, and it is thus essential to understand the causes behind it. In this respect, most studies have highlighted the fact that, although there may in specific cases be voluntary factors relating mainly to cultural or religious aspects, the explanation for this lack of access to financial services is usually to be found in involuntary factors.