samchain/econo-pairs-v1 huggingface dataset:
For instance, Norges Bank (2012) writes: “At the same time, interest rate setting should be robust and counter the buildup of financial imbalances in the economy.” The Reserve Bank of New Zealand (2012) has the following wording: “In addition, the PTA’s [Policy Targets Agreement] stronger focus on financial stability makes it clearer that it may be appropriate to use monetary policy to lean against the build-up of financial imbalances, if the Reserve Bank believes this could prevent a sharper economic cycle in the future.” The Bank of Canada (2012) makes it clear that these deliberations can imply that it takes longer for inflation to attain the target: “[A] tighter monetary policy that keeps inflation below target longer than usual could help to prevent excessive borrowing and a broader buildup of financial imbalances.”25 In countries where the housing market collapsed in connection with the financial crisis, and where housing prices have already fallen heavily, the deliberations have of course been somewhat different. There, the monetary policy discussion has mainly concerned ways to stimulate the economy and get out of the deep recession.

Therefore, to improve financial stability by a lower degree of financial integration would certainly be the wrong measure. We should not undo those reforms which have paved the way to financial integration and revert back to a retrenchment within the national borders. This is certainly not the right strategy for the euro area, and it would be undesirable at global level. Admittedly, financial integration generates greater interconnectedness, which in turn may increase the risk that failure in one part of the system may trigger chain reactions in the formation of expectations which could have a destabilizing effect. But financial isolation – the opposite of financial integration – is not the rational answer to such a risk. We nowadays live in a global world, where not only financial, but also economic and cultural links have become increasingly tighter. News spread instantaneously and shape global market sentiments; products are designed, assembled and sold in different countries; political events in a small region can send shockwaves around the world. It would be naïve to think that a country could isolate itself financially. And even if it were possible, the costs in terms of lost efficiency and productivity would far outweigh any possible benefit. 2  BIS Review 81/2010  2. Financial development – opportunities and risks  If financial integration is both an irreversible process and a process we do not wish to reverse, finance per se is not always good in any form and size. This is where we can and should have a reasonable and fruitful discussion.
There are really three key areas: •  First, there is uncertainty about what in fact is happening on the supply-side of the economy, that’s to say how rapidly can aggregate demand be allowed to increase before it begins to run ahead of supply and put upward pressure on inflation or, alternatively how rapidly must demand increase in order not to run below supply-side capacity and cause inflation to fall significantly short of the inflation target. The target is, of course, symmetrical;  •  Secondly, and specifically in relation to the labour market, at what point does the growth of employment or the fall in unemployment lead to a rate of increase in pay settlements, or earnings growth, which would subsequently lead to accelerating inflation in goods and services markets; and  •  Thirdly, what is happening or is likely to happen to the rate of growth of aggregate demand in the economy anyway. Now, as I said earlier, there is not a great deal that we – through monetary policy – can do directly to affect the first two of these areas of uncertainty, which relate to the supply-side of the economy. The major challenge for us in these areas is in assessing – or quantifying – their impact. And that’s not at all easy because, while the effects gradually become apparent over time, many of the relevant developments cannot be directly observed or measured; nor therefore can they be predicted with any great confidence.

Also, the banks with Albanian capital have expanded their network and have properly utilized the advantages of better recognition of the domestic market. As a result of active business development policies, the banking sector has experienced a steady growth of deposits and credit expansion. It suffices to say that at end-2004, total loan accounted for only 7% of GDP, while today it accounts for approximately 40%. About two-thirds of loans are extended to the private sector, while the rest to households and individuals. In business sector, loans are extended to the most important and fast-growing sectors, such as trade, other services, transport and construction. Almost all business loans are extended to private sector, though recently an increase in loans for public sector’s projects / investments is registered. On the other hand, the expanded banking network and better use of new technologies have enabled the pursuit of more competitive policies, attracting a high number of depositors and providing valuable services to citizens. Deposits continue to represent the main source of banking sector financing, an element that highlights its stability. Interest rates on loans and deposits have reflected the banks’ targets on financial indicators, the monetary policy at home and in the countries of the major currencies, as well as the country risk margin. We deem that over this period, these interest rates have been appropriate for a sustainable development of the banking financial intermediation. During the last 2–3 years, the country’s economy was affected by the global economic and financial crisis.
See May 2020 Monetary Policy Report and ‘Millennium of Macroeconomic data’ See 2015 report on the impact of climate change to the insurance sector and 2018 report on the impact to the banking sector 3 Record-breaking temperatures of 38°C were reported in Verkhoyansk, Siberia, Russia on 20 June 2020 1 2  2  All speeches are available online at www.bankofengland.co.uk/news/speeches  2  While these risks manifest as the credit, market and operational risks we know well, they have distinctive characteristics and therefore require a different approach if we are to manage them well. First, they are far-reaching in breadth and scope. They will affect every consumer, every corporate, in all sectors and across all geographies. Their impact will likely be correlated, non-linear, irreversible, and subject to tipping points. They will therefore occur on a much greater scale than the other risks we are used to managing. Second, these risks are simultaneously uncertain and yet totally foreseeable. It is difficult to say now what exact combination of physical and transition risks we will experience. But what is absolutely certain is that some combination of these risks will materialise - either we continue on our current emissions pathway and face physical risks or we change our emissions pathway and face transition risks. And we cannot let that uncertainty lead to inertia and inaction.

Role of the Bank of England  That brings me to the role of the Bank. Our work is focused on building resiliency to the risks from climate change into the financial system, so that it can steward the real economy to an orderly transition to net-zero. Being resilient means pro-actively managing climate risks and pre-emptively reducing them. This is central to the Bank’s mission. Indeed earlier this year climate change was made one of the Bank’s strategic priorities.8 I became the Executive Sponsor for the Bank’s work on climate change in 2016, at a time when there was only a handful of people at a handful of central banks working on climate-related issues. But since then the scope and depth of our work and that of other central banks has expanded significantly. We are working domestically and internationally with key stakeholders including government, industry, investors, regulators, and climate scientists to further this critical agenda. 8  Bank of England Annual Report 2020 4  All speeches are available online at www.bankofengland.co.uk/news/speeches  4  Climate action at the Micro-level: Disclosure and Risk Management  So what are we asking financial firms to do? Put simply, they need to make financial decisions that take the risks and opportunities from climate change into account. The first step in achieving that is to have the right information. That is why the Bank has been making the case for some time for consistent, comparable, and comprehensive climate disclosures.
Credit scoring, advanced statistical analysis, and financial modelling are among the ever expanding range of tools that credit officers and others use to lend more rigorous insight into risks that were once thought not readily quantifiable. The businesses of banking and risk management will always be more art than science. Still, the metaphor of the crossroads of subjects related to numbers reminds us that, for our system of supervision to remain relevant in the twenty-first century, it must reflect the industry’s advances in quantifying risk and in developing other tools to measure and manage risk. At the conclusion of this seminar, I hope that all of us will return to our home countries with deeper insight into Basel II and into our own readiness for a new approach to banking supervision. A Spanish proverb reminds us to “drink nothing without seeing it; sign nothing without reading it.” It is in that spirit that I would like to begin the substance of my remarks with my thoughts on why we need Basel II. Do we need Basel II? As you know, Basel II has attracted much more attention, from more segments of society, than probably any other reform of bank supervision. Mainstream newspapers have reported extensively on it. Politicians of all views have addressed it. Even non-financial business owners have discussed it extensively. The level of public debate reminds us that banks are charged with a special public trust and that capital requirements are intended to safeguard their ability to discharge that trust.

Paraphrasing Einstein ‘a good framework should be as simple as possible, but not simpler’ Much of the complexity in Basel II actually stems from the diversity existing in real world and from the many options that the rules provide. Many of those options reflect banks’ own requests to address the rich variety of risks and practices in existence today; some banking organisations thought that a “blanket rule” would unfairly burden them. By providing a range of options, we are better able to fit the regulatory framework to each bank’s profile, rather than the other way around. Similarly, some of the complexity in Basel II stems from the details we provide to clarify expectations for banks and supervisors and to promote a more level playing field. Many bankers and supervisors asked the Committee to provide greater details where they thought a danger existed for differences in interpretation to arise across jurisdictions. We have worked hard over the past years to clarify the rules, to simplify those thought to be the most complex, and to provide options for those wishing to use a simpler approach. In fact, as the Basel Committee demonstrated in an annex to the third consultative paper, supervisors can select options that would result in a very simple set of rules that can be specified in just 12 pages of text. That is approximately equal in length to the original 1988 Accord.
In the United States there seems to have been a further extension of the upward phase this year and a slowdown may be softer and more cautious than anticipated earlier. Even with stronger international growth, external price pressure is likely to be weak. For one thing, after the Asian crisis there is still some unutilised capacity on the whole in the global economy. Other factors are increased price competition and an expected appreciation of the krona. Economic prospects in Sweden also look brighter. Besides the positive cyclical signals from abroad and their expected effects on the Swedish economy, there is the stronger growth of domestic demand. Firms as well as households are optimistic about the future. There are a number of reasons for this. Real wages and employment are rising rapidly and public sector finances are becoming stronger. Fiscal policy in 2000 and 2001 is now assumed to be somewhat more expansionary. All in all, GDP growth is judged to be 3.6% in 1999, 3.8% in 2000 and 3.0% in 2001. These assessments are based on the technical assumption that the repo rate is kept unchanged. The strong growth trend means that in the coming years the economy’s unutilised resources at present will be utilised more quickly than the Riksbank envisaged earlier. Inflation is accordingly judged to move up somewhat faster than the Riksbank assumed earlier. In the main scenario the underlying rate of inflation, measured as UNDIX, is judged to be 1.8% twelve months ahead and 2.1% after twenty-four months.

The main scenario in the Inflation Report that is published today does not represent a future development of inflation that threatens price stability. But every inflation forecast contains an element of uncertainty and the risk spectrum also has to be considered when formulating monetary policy. The present Report concludes that higher inflation compared with the main scenario is more probable than lower inflation. Remember, moreover, that to be most effective, monetary policy has to focus on the situation one to two years ahead. This suggests that the Riksbank is moving towards a situation in which the repo rate will be raised. Yesterday, however, the Executive Board decided in favour of an unchanged repo rate. But sooner or later, if developments continue along the lines in the present assessment, a repo rate increase will be called for. If some kind of international shock with a probable downward effect were to occur, or if indications of more subdued economic activity or prices were to be observed, that would naturally be taken into account in our future assessments. Why a higher repo rate? A repo rate of 2.90% is probably too low over a complete business cycle, even in an economy where inflation expectations have settled down around the targeted rate of 2%. Under such circumstances, the direction of monetary policy can be described as expansionary. This is not countered by a restrictive fiscal policy.
We will continue to carefully monitor – as we always have done – the possible side effects of accommodative monetary conditions. It is crucial to remain vigilant and to use the available micro- and macroprudential policy tools as necessary. I will say more on this during the hearing in my capacity as Chair of the European Systemic Risk Board. The low yield environment needs to be understood in the context of the protracted decline in real yields we have witnessed since the 1980s. And this trend is not unique to the euro area. It largely reflects more structural factors such as a slowdown in productivity growth, which can be reversed through an ambitious structural reforms agenda. In other words, we need a coherent economic strategy in the euro area that complements and enhances the effectiveness of monetary policy. This is why there was unanimous consensus in the Governing Council that fiscal policy must make a more decisive contribution. In view of the weakening economic outlook and the continued prominence of downside risks, governments with fiscal space that are facing a slowdown should act in an effective and timely manner. Where fiscal sustainability is ensured, the potential effectiveness of countercyclical fiscal policy is reinforced in the current environment, given that 4/5  BIS central bankers' speeches  fiscal multipliers are higher in a low interest rate environment. At the same time, governments in countries with high public debt should pursue prudent policies and deliver on structural balance targets.

As I argued in my introduction, the best way to preserve the ECB’s independence is to ensure a commensurate degree of central bank accountability. During the past eight years, our accountability practices have evolved and intensified in response to the quest for scrutiny that emerged from the crisis.2 I have always appreciated the ability of this Parliament to react to citizens’ demands, support, concerns and channel them in a constructive manner during our discussions here. And I would like to personally thank you for this. I am confident that this Parliament – and this Committee in particular – will continue the good work it has done during my term as ECB President. This, in turn, will further strengthen the effectiveness of the ECB’s actions and citizens’ trust in the EU project. Thank you for your attention. I am now at your disposal for questions. 1 See Draghi, M. (2011), “Hearing at the Committee on Economic and Monetary Affairs of the European  Parliament”, Brussels, 19 December. 2 See Fraccaroli, N., Giovannini, A. and Jamet, J.- F. (2018), “ The evolution of the ECB’s accountability practices  during the crisis”, Economic Bulletin, Issue 5, ECB. 5/5  BIS central bankers' speeches
(Indeed, the mere chance that this may occur may be diminishing the degree of accommodation in place today.) The economic thresholds I am proposing put a higher and more predictable standard on the removal of accommodation. Conclusion I would like to conclude by noting that I have undoubtedly generated some discomfort in the room tonight by saying that even with the large degree of accommodation already in place, monetary policy can and should take additional steps to facilitate a more robust economic expansion. Central bankers naturally worry about such statements. We think back to the 1970s, when our failure to appreciate the changing structure of the economy led to over-stimulative policy and eventually to stagflation. It’s in our DNA to have these concerns; and they remind us of the need to continually do our best to calibrate important markers such as the natural rate of unemployment, keep close tabs on inflation expectations and have our eyes open for early warning signs of financial instability. But I believe a greater risk today is that we buy too quickly into thinking that the equilibrium rate of unemployment has jumped 2 or 3 percentage points or that long-run inflation expectations have become so fragile that they are on the verge of spiking well above 2 percent. I just don’t see the evidence out there supporting this view. But if we do buy into it, then we’ll end up following overly restrictive policies that could unnecessarily risk condemning the U.S. economy to a lost decade – or even more.

W A Wijewardena: Why inflation tax is an evil? Article by Mr W A Wijewardena, Deputy Governor of the Central Bank of Sri Lanka, published in Sunday Times on 10 June 2007. *  *  *  A popular folk story talks of a villager making a chance meeting of a demon in the forest and using his craftiness to get the demon to work for him. Understandably, the demon being an untiring person proves to be a marvelous worker. His contribution to the villager far exceeds that of even a thousand workers. According to the story, everything is well and good as long as the villager is able to keep the demon under his control. But, on the day the villager loses his grip over the demon, it would set upon the villager and devour him. So, though the villager would have a jolly-good life in the short run, he runs the great risk of losing everything, including his life, in the long run. Governments’ use of inflation as a tax to force-mobilize resources for funding government projects has been equated to the fate of the villager in that folk story. In the short run, a government could forget about all its fiscal problems and enjoy the temporary solace provided by it. But in the long run, when inflation becomes uncontrollable, it will have to sacrifice all its temporary gains. When an initially mild inflation degenerates into an uncontrollable hyper-inflation later, it has been termed as a mass killer.
In particular, wages in the private sector rose by an average rate of 12.2% in 2022. Lastly, allow me to point out that progress was also recorded in 2022 in terms of improvement in the stability of both foreign and public sector's balance sheets. In more concrete terms, Albanian exports grew by 42% in 2022, driven by a growth in tourism income, which opened the way for the reduction in both the trade deficit and the current account deficit of the country. The latter dropped to 6% of GDP in 2022 from 7.8% of GDP in 2021. Along with the rapid increase in foreign direct investments and the stability of domestic financial markets, they paved the way for a strengthening of the lek exchange rate over the year. Also, the budget deficit of Albania, according to fiscal data, dropped to 3.7% of GDP in 2022 from 4.6% of GDP in 2021. Public debt was reduced to 64.6% of GDP in 2022 from 74.5% in 2021, while public debt was reduced to 64.6% of GDP from 74.5%. This improvement reflected both an increased effect of the nominal base of revenues and the fiscal consolidating stance implemented throughout 2022. Honourable Members of Parliament, The Bank of Albania is confident that the normalisation of monetary policy is the right monetary policy stance, in compliance with our legal obligations and for the purposes of safeguarding the macroeconomic balances of Albania and for the sustainable and longterm growth of society's welfare.

In fact, economic indicators for July showed the continued expansion on both production and demand sides. Farm income from major crops was up by 69.5 percent from the same period last year, due to expansion of both production and prices of paddy rice, rubber, and oil palm. Manufacturing production also registered a satisfactory growth of 11.3 percent during the first seven months. On the demand side, private investment and consumption continued its recovery trend. Exports also expanded well in line with production expansion. Meanwhile, imports accelerated, partly in response to improvement in domestic demand. Even though this resulted in a current account deficit, strong external stability has been reflected by high level of international reserves and low external debt. For the entire 2008, the central bank’s July Inflation Report has projected a growth rate of 4.8-5.8 percent with a more moderate growth in the second half, in line with the global economy. While this forecast has already taken into account a number of key risk factors, potentially prolonged political tension and uncertainty remain a prominent one, with little known about when and how it will unwind. This is reflected in the recent plunge in consumer confidence index. In a pessimistic extreme scenario, the government budget disbursement may delay if the upcoming budget process in parliament is disrupted and mega-project investment could fall behind schedule. Prolonged disagreement could also soften domestic demand and tourism, which would be unfortunate given that the tourism high-season is approaching.