samchain/econo-pairs-v1 huggingface dataset:
The UK, Sweden and Denmark have so far chosen to remain outside EMU. Sweden and the UK have inflation targets and floating exchange rates, while Denmark’s monetary policy is oriented towards a fixed exchange rate against the euro. These three countries are important to Norway, both because of their geographical proximity and because they account for close to 40 per cent of Norway’s foreign trade. If these countries join EMU some time in the future, it is possible that the use of the euro by Norwegian households and businesses will increase somewhat. However, extensive use of the euro as a means of settling domestic payment transactions is unlikely. In those cases where we have seen partial or total currency substitution, such as in some countries in Eastern Europe and Latin America, it has usually been a result of strongly deteriorating confidence in the local currency. Confidence can deteriorate when inflation is high and variable or when government finances are on the verge of collapse. By influencing the volume of NOK in circulation, Norges Bank will always be able to ensure that the internal value of the Norwegian krone is maintained in line with the guidelines for monetary policy. If the introduction of the euro increases efficiency and economic growth in the participating countries, this will have positive spillover effects on the Norwegian economy. Stable economic developments in the euro area are also very important for the Norwegian economy. Thank you for your attention. 8  BIS Review 90/2001

Ardian Fullani: Overview of Albania’s latest economic and financial developments Speech by Mr Ardian Fullani, Governor of the Bank of Albania, on the Monetary Policy Decision-Making of the Bank of Albania’s Supervisory Council, Tirana, 27 November 2012. *  *  *  Today, on 27 November 2012, the Bank of Albania’s Supervisory Council reviewed and approved the monthly Monetary Policy Report. Based on the latest monetary and economic developments in Albania, and following the discussions on their future outlook, the Bank of Albania’s Supervisory Council decided to keep the key interest rate unchanged, at 4.00%. The Supervisory Council deems that the current monetary conditions are adequate to meet Bank of Albania’s inflation target in the medium term. These conditions ensure the necessary monetary stimulus to support the domestic demand. Let me now proceed with an overview of the economic developments and key issues discussed at today’s meeting. *** Annual inflation fell for the second consecutive month, down to 2.4% in October. Its performance was driven by food price developments, which account for almost 70% of the inflation rate. Prices of other consumer basket items moved in different directions, retaining their contribution at the same levels as in the previous months. From the macroeconomic viewpoint, inflation rate continued to be determined by temporary externally-generated supply factors and structural changes in the domestic market. The slow performance of economic activity is associated with low increase in producer costs and low pressures on inflation.
But if such a rule were followed, the results would depend on the inflation target and the GDP growth target. If the inflation target is perhaps 2½% and potential output growth in the 2½–3% range, it would be around 5–6%. In Chart 7, we can see that the countries fall into three categories. First are the countries significantly below this level. All of them have relatively low policy rates in accordance with the rule. Then we have the countries that are more or less on the right track and, finally, three countries above that. Iceland is in this last group, and the other two are emerging countries with much more GDP growth potential than developed industrialised economies have. It is interesting to note that Iceland is in third place as regards nominal GDP growth and in fifth place as regards the policy rate. All of this comparison points in the same direction. It simply cannot be argued that Iceland is out of sync with other countries because of excessive monetary restraint. Quite the contrary: some indicators suggest the reverse. I know that I am not addressing all possible criticism with these points, but I hope that those listening to me will begin to ponder whether some of that criticism has perhaps been somewhat unbalanced. Some criticism of monetary policy is more pertinent, however, and I would like to address three points. It has been asked why the Monetary Policy Committee raised interest rates when the Bank has forecast that inflation will subside markedly next year.

BIS central bankers’ speeches  1  Chart 1  Chart 2  Chart 1 shows, on the one hand, how the economic recovery looks so far and how it compares with the Central Bank’s forecast through 2014 and, on the other, developments in unemployment over the same period. According to these data, GDP was similar to Q4/2006 levels in Q3/2011 but will rise back to the peak of the boom years towards the end of the forecast horizon. At the same time, unemployment will decline steadily to 4½% near the end of the forecast horizon, and according to the forecast, the slack in the economy will have vanished by 2014. It is highly uncertain, however, just how much slack exists at this juncture. But inflation is the big change from the outlook around this time last year. Instead of falling slightly below target and remaining there for some time, inflation has taken quite a jump in 2011. It did fall below target, but it stayed there only three months before taking off again, peaking at 5.7% in September. That figure actually corresponds to over 6% inflation, however, if one takes into account the change in treatment of broadcasting fees earlier in the year. According to the Bank’s forecast, inflation will remain at this level until early next year and then begin to taper off. It will be reasonably close to the inflation target around the end of 2012.
The tax and transfer fee incentives pertaining to purchase of real estate expired at the end of 2003 has helped encourage consumers to take up mortgage, adding extra boost to its growth. BIS Review 22/2004  1  As for the credit card segment, in addition to the factors cited above, some relaxed subscription conditions during the economic slump and early stage of recovery have contributed to high growth of credits in this segment. Findings from studies on the financial services in the banking sector Now, allow me to move on to the assessment of the services provided by the banking sector - what our customers have to say about their needs - what our customers really want. The assessments are based on the studies and surveys commissioned by the Bank of Thailand as part of the formulation of the Financial Sector Master Plan. In order to move forward, we need to have a clear grasp of what is needed and missing in the financial sector, and we found that the following issues are key: •  financial service availability;  •  consumers’ preference of channel of service distribution;  •  expectations on financial services; and  •  factors driving them away from using bank financial services. Quantitative and qualitative gaps in both credit to personal sector and small enterprise sector Quantitative gap: individual customer group Allow me to elaborate a little further on these findings. Financing facility is the most dissatisfied aspect in terms of financial services provided by financial institutions.

If we do the exercise of asking ourselves where would the lending rate be in a hypothetical scenario without the global financial crisis, we find that it would be between 50 bp and 350 bp below its present level, with the larger effect on the interest rates on commercial and consumer loans. In the specific case of mortgage loans, the increase in the interest rate occurred between September and December 2008 can be largely linked to the implications of the external conditions on the local perception of risk (figure 4). All the above is a clear illustration of how the severe uncertainty and high risks that were unleashed last September are affecting the domestic economy. Non-bank financing sources Notwithstanding the key role played by domestic banks in funding households and firms, especially smaller ones, for the bigger companies there are other equally important credit sources. Thus, around 45% of total corporate borrowing is non-bank, with external debt and domestic bonds at the top of the list. Therefore, it is important to understand the behavior of the interest rates on these credits before offering a global outlook of financial conditions. The Central Bank of Chile has no direct effect on external financial conditions. Like banks, Chilean firms have seen their borrowing conditions tighten under the changed state of affairs. Still, our banks and firms continue to enjoy normal access to world financial markets, owing  2  Berstein and Fuentes (2003). 3  Becerra et al. (2009).
These innovations have resulted in notable developments in the financial sector, such as: (i)  Growth in Investments in Loans and Leases: total loans and leases have increased to K10,182 billion as at 31st May 2011 from K1,079 billion as at 31st December 2001. The 843% increment has resulted in the introduction of various credit facilities, for example employer backed salaried loans, trade finance products, vehicle finance leasing, SME loans, invoice discounting, mortgages, etc;  (ii)  Growth in Bank’s Total Assets: total assets have increased by 614% to K24,693 billion as at 31st May 2011 from K3,460 billion as at 31st December 2001. (iii)  Growth in Deposits: total deposits have increased by 661% to K18,297 billion as at 31st May 2011 from K2,405 billion as at 31st December 2001. (iv)  Growth in Branch Network: currently there are 237 branches and agencies countrywide. Ten years ago, there were a total of 161 outlets. (v)  Continuous Improvement of Risk Management Systems resulting in the creation and update of the range and quality of the products and services; for example hedging products, derivatives, credit risk rating systems, interest rate risk management. (vi)  Introduction of the Credit Reference Bureau is expected to provide key information to lenders on borrower’s credit history. (vii)  Access to credit has been further enhanced through the Country’s membership in international multilateral financial institutions such as the African Development Bank, the African Export-Import Bank, PTA Bank and the International Finance Corporation (IFC).

It is essential to realise that for the most part, the financial system is not an end in itself but a means to an end and the measure of the success of the financial system must relate to its success in accomplishing broader societal functions. Innovations in the financial system that help it perform these tasks better and at lower cost almost surely lead to increased societal well-being, and to the extent that our GDP measures capture these benefits, in higher measured growth. Notwithstanding the benefits of innovation, it is important to note that the opening up to new activities and products, particularly the expansion of the credit portfolio, brings in a myriad of new risks associated with the new activities. Studies have shown that increasing financial innovation and deepening of financial markets brings with it challenges and risks, which if not well addressed, can threaten the health of the financial system and may cause havoc to the stability of a financial system. 2  BIS central bankers’ speeches  4.0  The role of the Bank of Zambia in promoting innovation and competition  The Bank of Zambia (BoZ) acknowledges that a stable, sound and efficient financial sector has to be underpinned by infrastructure development. The BoZ achieves this by creating an enabling environment through the legal and regulatory frameworks that promote financial systems stability and development.
The interlinkages between financial institutions amplify risk in the financial system. In our assessments, it is important to be aware of any build-up of systemic risk. Residential mortgages provide a good illustration of the difference between the individual risk for a bank and systemic risk. Even during the 1990s banking crisis, Norwegian banks’ losses on residential mortgages were low. Today’s low risk weights for residential mortgages provide strong incentives for banks to extend these mortgage loans. However, housing market fluctuations, which go hand in hand with shifts in saving behaviour, are nonetheless a source of business cycle fluctuations and substantial losses when banks have to write off loans to firms selling goods and services to households. 8  BIS Review 131/2009  The Norwegian housing market is vulnerable. Both a high level of tax incentives for house ownership and a large volume of adjustable-rate mortgages contribute to wide fluctuations in activity and prices. 8 The rise in house prices in the past two decades has also been very strong compared with countries where housing bubbles have burst. To finance strong growth in residential mortgages, banks have to rely to a great extent on borrowing, thereby increasing their vulnerability to a liquidity squeeze. Thus, low risk weights for residential mortgages also lead to higher liquidity risk in the banking system as a whole. It is important to be aware of the similarities between developments in the Norwegian housing market and bank lending and developments in the countries most severely affected by the crisis.

The will to pursue a given business activity and succeed is critical if promising ideas are ultimately to evolve into marketable products or processes. Switzerland cannot be truly ambitious without ambitious entrepreneurs, and surveys suggest that the country still has room for improvement here. Against this backdrop, steps should be taken to cultivate innovative drive and entrepreneurial thinking early on, for instance by encouraging high school students to do projects in which they found their own small companies. Various universities already run programmes designed to assist young researchers in bringing innovative products and services to market. Private initiatives also play a significant role in nurturing entrepreneurship in Switzerland, helping young people learn how to transform an idea into an innovation and operate a business. 1/1  BIS central bankers' speeches
After all we have heard today, I think it is safe to say that none of us disputes the idea that digital technologies are at the very heart of all serious present-day attempts to achieve any kind of sustainable, cutting-edge innovation. Moreover, in the aftermath of COVID-19, it is fair to expect that the financial services industry will have no choice but to continue to navigate the unchartered waters of digital transformation, on the lookout for a safe harbour that will provide shelter and, hopefully, a gateway to a booming market place. As central bankers with a clear public policy agenda and mandate, we cannot refrain from meeting our obligations in this context. Consequently, as the need for a major makeover becomes more pressing, I believe that financial authorities should take a proactive stance towards digital innovation. We should do so by striking the right balance between responsible parties, assignments and the necessary guardrails whilst ensuring optimal provision of what the BIS General Manager Agustín Carstens likes to call “central bank public goods”. For this reason, central banks must try to stay ahead of the curve and be ready to embrace experimentation and research on these topics as soon as possible, while building bridges with all the relevant stakeholders and closely scrutinising the progress that their initiatives achieve in related fields. Only this strategy will pay dividends in the long run and pave the way for a future that best serves the needs and maximises the welfare of our society.

A very large base of the pyramid, so to speak, that’s not well served by the financial sector in Asia. So there’s tremendous scope for innovation in finance as a way of reaching out to far more people and meeting their needs. And there’s a new generation of tech-savvy individuals in Asia like elsewhere. They are also averse to paying fees. They too are a prime market for FinTech in Asia. We are promoting innovation in finance in a comprehensive way in Singapore. It requires a whole ecosystem. It requires bringing a whole range of players together – the technology players, finance players, start-ups, and both global and local Singapore players. We are also looking at every segment of the financial business. There is scope for innovation across the business – in credit, savings, investing, payments and so on. BIS central bankers’ speeches  1  But importantly too, we intend to be right there at the frontier with regard to the common technology platforms, or the utilities that can be a very important enabler for innovation in finance – the common platforms that help individual players, produce network effects as more players come on board, and help the market work better. We are looking at each of the industry verticals to see what common platforms might be needed. Ravi will talk more about this. In trade finance, for example, where we are making good progress. There are also the horizontal infrastructures that can underpin innovation in a range of industry verticals.
This move by the HKMC to issue USD denominated bonds fits very well into the efforts by the Hong Kong Monetary Authority to promote the development of a safe and efficient financial infrastructure for Hong Kong, based on a multi-currency, multi-dimensional platform. In Hong Kong’s banking system, we have around $ trillion in HK Dollar deposits. Our banks also have the equivalent of over $ trillion in foreign currency deposits. About 70% or $ billion are US Dollar deposits. The loan-to-deposit ratio for Hong Kong Dollar deposits is 87%; the equivalent for US Dollar is only around 26%. We reckon that a significant portion of the sizable US Dollar deposits is held by retail investors and some would wish to diversify and look for investment products to increase their return. One could of course look for opportunities overseas but, as an international financial centre, Hong Kong should also try to provide more such investment products locally. In the past there have been very few local issues of US Dollar retail bonds, and the most recent one appears to have been issued as far back as in September 2003. Today’s HKMC US Dollar bond issuance would help to meet part of such investment demand. Perhaps in times to come there will be more foreign currency bond issuance in Hong Kong. This bond issuance would add to the diversity of financial intermediation channels and complement the HKMA’s effort to promote the development of a multi-currency, multi-dimensional financial system in Hong Kong.

I would like to offer a few thoughts to launch our discussion today. I will start with the risks and vulnerabilities caused by excessive volatility and procyclicality of capital flows; I will then turn to the policy responses, including means to address the volatility of capital flows directly and issues related to the GFSN (or Global Financial Safety Net). I. Regarding international capital flows, it is fair to acknowledge that we do not have a good benchmark on what would constitute an appropriate level of these flows. There is a trade-off between the costs and the benefits that they bring, and this trade-off varies across countries and over time. Yet, the fluctuations in gross global capital flows do seem to be very procyclical and volatile. If we look at gross inflows in advanced economies for instance, we see that they rose considerably in the years preceding the Global Financial Crisis, from less than 10% in the early 2000s to more than 20% in 2007. Subsequently, they plunged to virtually 0% in 2008 and 2009 and have remained low ever since. Not all types of flows show the same dynamics over time: FDI and portfolio equity flows have been fairly resilient, while bank flows and debt portfolio flows have been very significantly affected, resulting in a marked changed in the composition of gross flows. These sharp fluctuations are clearly not optimal.
On scale first, a recent estimate put the total number employed in “City” jobs, including supporting professions like lawyers and accountants as well as bankers and asset managers, at around 340,000. That amounts to about 9% of the total in London; significant but still lower than the number in distribution or in government services. And the growth of employment will continue to be the net result from the expansion of activity and from the economies made possible by IT and by the relocation particularly of back office work to cheaper areas elsewhere in the UK or abroad. The jobs figures understate the importance of the sector in the economy because on average pay may be twice as high in the financial sector as in the rest of the economy; 9% of wages and salaries in the year to March compared to 4% of employment. And within London its share is even greater. The average earnings of someone working in London’s financial intermediation sector in 2006 were around £ On that basis, the financial sector might account for around 20% of remuneration in London. However it is still far from the only game in town. For example the Work Foundation’s fascinating new report on the creative industries suggests that their growth has contributed at least as much as the City to London’s overall performance. Moreover, while the trend is upwards, there is a marked cycle in the financial sector.

Elsewhere the commercial property in the UK looks to be at or close to its peak (Chart 17).The housing market is showing some glimmers of a slowdown in activity but prices are still rising fast, especially in London; indeed the rate of increase of house prices is higher today in nearly every region than it was last autumn. And there is no sign of a slowdown in corporate lending. Overall lending to PNFCs is accelerating (Chart 18), investment is high, and on a global basis we are seeing spectacular growth in the LBO market (Chart 19) and the emergence of lower prices and conditions with so called “covenant lite” loans. Against that background the question is whether we have done enough. In reaching a judgement, of course, we need to take account of the full range of information on the real and nominal economy. We know that the full impact of past increases in rates has yet to come through. Yet we cannot be sure how much of a restraint current rates will be at this point in the cycle. It is not surprising therefore that there are different views on the MPC or that those views change in response to more information. My stance in recent months has reflected a judgement on the balance of risks taking account of both probabilities and likely impacts.