samchain/econo-pairs-v1 huggingface dataset:
In light of the poor consumption and investment levels, which have reflected in the decline of imports by 8.1% during this period, this tendency has improved the external position of the Albanian economy further. BIS central bankers’ speeches  1  Albania’s trade deficit shrank 32.5% in January. The developments in the external sector of the Albanian economy reflected in improved foreign currency demand and supply ratios, contributing, in turn, to a stable exchange rate. The Albanian government pursued an accommodating fiscal policy in the first two months of 2013, expressed in the increase of public expenditure and widening budget deficit. Budget expenditure increased at an annualised rate of 1.3% in January and February. This increase was reflected in both current and capital expenditure. Amidst the sluggish economy, budget revenues continued to contract, registering an annualised fall of 0.8% over the months under review. This performance of public expenditure and revenues increased the fiscal deficit by about 5.1%. Reflecting upon the expected economic and financial developments, the Bank of Albania has been pursuing a stimulating monetary policy. Through the constant key rate cuts and liquidity injections into the banking market, the Bank of Albania has aimed at ensuring more appropriate monetary conditions to meet its inflation target in the medium-term period. The financial market evidences low liquidity and inflation pressures, which, in turn, have enabled the pass-through of monetary easing into the money and primary market.

We value highly human and civil rights ranging from gender equality, data protection, to the condemnation of torture, including the rejection of capital punishment. The protection of these values and rights relies on the vigilance of the legal professionals here in this room and elsewhere. This is even more important vis-à-vis a reality of extreme and obsessive forms of nationalism. The EU has also increased personal choices. The ability to travel, work and live across borders has been enhanced. The European Health Insurance Card permits European citizens to obtain healthcare wherever they are. 1.5 million people, perhaps including some of you here today,  BIS central bankers’ speeches  1  have completed part of their studies in another member state as part of the Erasmus programme. More than 15 million EU citizens have moved to other EU countries to work or to enjoy their retirement. This wider range of options increases people’s wellbeing. These reasons, and the other positive aspects of membership, have been drowned out in debate by concerns over migration and the large wave of refugees from troubles in the Middle East and elsewhere, the impact of the crisis, disaffection with high levels of unemployment – especially youth unemployment, and a perceived lack of accountability and legitimacy of the EU institutions. I fully recognise that Europe in its current state is not perfect. The crisis has shown that Economic and Monetary Union is incomplete, and further work is required, particularly in the areas of banking and credit markets.
Some years later, by 2012, the FOMC was indicating not only a time horizon for low rates but had added two important extra ingredients – first, the recognition that policy was “highly accommodative” and second, that it would remain so even after a fuller economic recovery had taken hold: “The Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens. [It]…currently anticipates that exceptionally low levels for the federal funds rate are likely to be warranted at least through mid-2015.” I suppose you could still quibble about how committed this language really is. But the clear dovish skew puts it more firmly in the Odyssean camp than the earlier statements. This is also the view of Del Negro and co-authors, in a 2015 paper looking at the effects of this guidance. [11] In any event, to my mind it’s hard to find guidance from other central banks that has come as close as this. If you squint a bit you could perhaps see some of the same in the ECB’s new strategy, published last autumn. The ECB said that, when rates were close to the lower bound, policy should respond “forcefully and persistently” and that “This may also imply a transitory period in which inflation is moderately above target”[12]. But this is about the ECB’s general strategy, not a particular path for policy. Even a “red”, discretionary policymaker would in practice recognise that the proximity of the lower bound can affect appropriate policy.

Non-performing loans continued to decline in 2015, falling by more than € billion (against the fall of € billion in 2014). At end-2015 the proportion of NPLs on Spanish banks’ balance sheets was 22% down on the previous year. This trend has been seen both in credit to non-financial corporations and in that to households. Profitability is unquestionably a fundamental challenge facing European and Spanish banks. In 2015, consolidated income at the global level for the sector as a whole was close to € billion, almost 13% down on the previous year; and the return on equity fell from 6.9% in  BIS central bankers’ speeches  1  2014 to 5.6% in 2015. In terms of domestic business, profitability was worse than for consolidated activity at the global level, with the ROE in 2015 standing at 4.4% (against 5% in 2014). The main factor bearing down on the sector’s profitability may be said to be the environment of very low interest rates, and this environment might be expected to hold as long as inflation expectations justify the highly expansionary monetary policy stance in the euro area. The spread between the return on assets and liabilities in domestic business is at levels very close to all-time lows. Also, there is little room for further downward movement as regards the cost of funds; accordingly, if asset-side rates continue falling, net interest income may continue declining. But we should mention another two factors bearing down on profitability.
The factors underlying this evaluation can be listed as follows: (i) Analyzing the supply-side sources of growth, continuance of productivity gains, which is a key element of non-inflationary growth, enables the reduction in unit labor costs, thus restricts the impact of the rises in other costs. (ii) The demand-side sources of growth points to an increasing share of investments in the GDP. The ongoing strong growth trend in investment expenditures limits inflationary pressures through its support for the increases in partial labor productivity via capital deepening. Accordingly, the composition of domestic demand secures the simultaneous achievement of rapid growth and disinflation. (iii) Although the strong position of the YTL against foreign currencies is a factor that supports domestic demand growth, it restricts the impact of rapid growth on prices not only by its direct effect on prices but also by stimulating investment demand, which in turn induces productivity gains. Graph 13. Output Gap (Percent) 6 4 2 0 -2 -4 -6 -8 06-I  05-III  05-I  04-III  04-I  03-III  03-I  02-III  02-I  01-III  01-I  00-III  00-I  -10  Source: CBRT. Despite the fact that the recent data provide signals for an ongoing strong course of domestic demand, within the framework of non-inflationary rapid growth analysis explained above, the output gap is expected to support the disinflation process in the first half of 2006 as well. Nevertheless, our view that the contribution of supply-demand conditions to the disinflation process has diminished is still valid.

Despite the adverse effects of the recent global economic crisis, the country recorded an impressive real GDP growth of 6.3% in 2009. This is at a time when other countries in the region and world over were posting negative growth rates. The country also attained a single-digit inflation level of 9.9% at end December 2009 while the exchange rate of the Kwacha against major currencies has remained relatively stable. In addition, the financial sector has been stable with improvement in banking services. These impressive economic trends suggest that the reform programmes that the Government has implemented are now bearing fruit. The reforms have focused on  BIS Review 51/2010  1  the restructuring of the economy, to let markets determine key decisions so as to allow the private sector take the lead in providing investment in the economy. However, despite the progress noted above, we are still far from achieving many of our developmental objectives. We are alive to the fact that we cannot achieve our development ambitions if we close ourselves from the rest of the world. The economy faces enormous financing needs especially in view of the high levels of poverty among our people. We are also alive to the fact that these challenges do not just end at obtaining a good sovereign rating or raising low-cost finance, but more importantly prudently deploying funds raised to projects with a high rate of both social and economic return. This is the challenge we face.
This is largely attained by the banks having the opportunity to calculate their risk-weighted assets, and thus capital requirements, using internal models. When the financial crisis broke out, however, it became clear that these models often underestimated the risks in the banks’ exposures. This meant that the capital requirement was lower than was appropriate. Many actors, both regulators and market participants, have therefore expressed doubts as to how well these models actually reflect the risks. In 2013, the Basel Committee therefore published a number of reports analysing what capital requirements the banks’ internal models generated. The reports show that there are major differences in the banks’ capital requirements. They also show that these differences cannot be explained by the differences in the underlying risk in their assets, but are instead due to the way the banks measure risk. The fact that this is so not only makes it difficult to compare capital requirements between the banks, it also reduces the credibility of the international capital regulations. The Committee’s current work therefore concerns to a large extent ensuring that the models used by the banks are reliable and reflect the risks in their operations in a correct manner. This work includes revising and to some extent limiting the banks’ scope to use internal models to calculate their risk-weighted assets and thereby their capital requirements. For instance, the Basel Committee is planning to introduce floors for a number of the parameters the banks estimate themselves.

Now that the Basel Committee is completing Basel III and the minimum requirement will thus have better cover, it is also reasonable that national authorities where necessary review their national capital requirements. That being said, I would like to stress that the Basel Committee’s work involves establishing a global minimum standard that ensures that banks around the world are better equipped to manage losses. Having a regulatory framework that is robust and that is implemented will play a decisive role in reducing the risk that we will have to experience further financial crises that result in large production losses, high unemployment and permanently lower growth. 2  See, for instance, BIS (August 2010), The long-term economic impact of stronger capital and liquidity requirements 3 See, for instance, BIS (December 2010), Assessing the macroeconomic impact of the transition to stronger capital and liquidity requirements 4 Gambacorta and Shin (2016)  4 [5]  References BIS (August 2010), The long-term economic impact of stronger capital and liquidity requirements BIS (December 2010), Assessing the macroeconomic impact of the transition to stronger capital and liquidity requirements Gambacorta, Leonardo and Hyun Song Shin (2016), Why bank capital matters for monetary policy, BIS Working Paper No. 558  5 [5]
I have covered just some of the questions which seem to us to be particularly relevant at present – and as markets evolve no doubt new topics and questions will present themselves. I encourage those of you with an interest in this area to keep running with it –your input is of great value to us. Keeping up with fast markets isn’t easy. But with your help I’m sure we can rise to the challenge of ensuring that fast markets are there to serve the real economy, both in good times and bad. Thank you. 20  For example, see Schooling Latter (2016), ‘Electronification of trading’. 9  All speeches are available online at www.bankofengland.co.uk/speeches  9  Chart 1 Recent episodes of heightened shortterm volatility in liquid markets  (a)(b)  S&P 500 Index: 100 = intraday trough 10-year US Treasury yield 120 Sterling/US dollar exchange rate 115  110  105  60  30  0  -30  -60  -90  -120  -150  -180  100 Minutes since trough  Sources: Bloomberg and Bank calculations (a) Sterling flash event 7 October 2016 (blue), US equity markets flash-crash 6 May 2010 (magenta), and US Treasury market flash-rally 15 October 2014 (orange).

12  So whilst these behaviours are presumably rational – and cost-effective – for individual market  participants, we are mindful that an aggregate reduction in transparency has the potential to hamper efficient price discovery. 13  Moreover, the steps some participants are taking to conceal information raises questions  about how the aggregate efficiency benefits from faster markets are shared. Finally, the occurrence of flash crashes indicates that, even if fast market prices are more efficient in general, they are not always so. Collectively, these observations suggest we should at least temper the headline conclusion that fast markets are more efficient: as is often the case, the story here is somewhat nuanced. Fast markets and market resilience I want to look now at the implications for resilience, both of individual firms and of markets – that is, whether they can function effectively in bad times as well as good. Again, fast markets may bring some important benefits. For example, because they place less reliance on risk warehousing by intermediaries, they were generally resilient during the 2008-09 financial crisis. Stresses were concentrated in those markets that had relied on dealer balance sheets: in our case the Bank of England introduced a ‘market maker of last resort’ scheme for corporate bond markets in 2009 to offset 7  A regulated multilateral trading system, subject to a range of regulatory requirements relating to: pre and post-trade transparency and non-discriminatory access. 8 A trading venue where counterparties can post trading interest without making such information publicly available.
BIS central bankers’ speeches  3  The baseline scenario reflects those events that are believed to be the most likely with the information at hand at the closing of this Report. There are risk scenarios, however, which if materialized, may reshape the macroeconomic environment – in some cases, significantly – and therefore, may alter the course of monetary policy. On this opportunity, having evaluated the alternative scenarios, the Board estimates that the risk balance is unbiased for both output and inflation. In the world economy, the main risk continues to be the situation in the Eurozone. On one hand are the difficulties in implementing agreements. On the other, like I said, as time has passed, the economic situation of the most affected countries has complicated further, while core European economies seem to be taking a turn for the worse. A sharper deceleration in Germany or France could aggravate the problems in the region and amplify pass-through channels to other economies. Neither can this analysis rule out episodes of volatility in the financial markets that could be more severe than the ones considered in the baseline scenario. However, the potential effects on Chilean banks of a deepening of the crisis in the Eurozone are still bounded. While banks’ profitability and solvency indicators have dropped most recently, stress tests show that the banking system’s level of capital is appropriate to absorb the losses caused by a risk scenario of this kind.

Fourth, we have thoroughly analysed the issue of nonperforming loans (NPL), both at banking system level and at an individual bank level, and we are developing comprehensive measures which would create conditions for reduction of these loans, including strengthened loan-loss provisions, higher NPL write-offs, improved collateral valuations, enhanced disclosure practices, and strengthened data collection. Fifth, we are continuing the efforts to bring the regulatory framework fully in line with the EU law. For example, we are drawing up a completely new law on payment services and payment systems which, inter alia, would strengthen the requirements for security of payments made electronically and via Internet. I mention all these priority tasks of the BNB because for their performance we would largely rely on our constructive partnership with you, as we have done so far. Of course, we are well aware of the specific challenges that you too are facing. The strong pressure on profitability with a still weak, though increasing, and demand for loans requires that you keep seeking solutions for greater efficiency. The topics of credit risk management and costs policies would more and more be high on the agenda also because it is likely that we would witness another cycle of rising interest rates, given the worldwide trends and the expectations of such a development in the euro area sooner or later. These are topics that we will continue to discuss. Thank you for the good cooperation, and congratulations on the 25th anniversary! 2/2  BIS central bankers' speeches
Mario Draghi: Hearing at the Committee on Economic and Monetary Affairs of the European Parliament Introductory statement by Mr Mario Draghi, President of the European Central Bank, at a hearing before the Committee on Economic and Monetary Affairs of the European Parliament, Brussels, 19 December 2011. *  *  *  Dear Madam Chair, Dear Honourable Members, È per me un estremo piacere partecipare per la prima volta come Presidente della Banca Centrale Europea a questa riunione. Il dialogo monetario trimestrale con l’ECON rappresenta un’opportunità fondamentale e la pietra angolare per un rapporto costruttivo tra le nostre due istituzioni. Cet échange a lieu quelques semaines seulement après que d’importantes décisions ont été prises à la fois par le Conseil des Gouverneurs de la BCE et par les Chefs d’Etats et de Gouvernements. Dans ce contexte, notre discussion promet d’être particulièrement riche et fructueuse. Zur Einführung werde ich zunächst auf die aktuellen wirtschaftlichen Entwicklungen im Eurogebiet eingehen. Anschließend werde ich mich den von Ihnen gewünschten Themen zuwenden, nämlich dem Instrumentarium zur Krisenbewältigung einerseits, sowie den Rating-Agenturen andererseits. I. Economic and monetary developments  Since the last regular hearing in October with former President Trichet, the ECB has taken a number of steps to ensure that it will continue to deliver price stability in the medium term in an environment that remains challenging. These steps relate both to changes in our interest rates and to non-standard measures.

As you know, regarding interest rates, the Governing Council early December decided to lower the key ECB interest rates by 25 basis points, following a 25 basis point decrease on 3 November 2011. As regards the short-term growth outlook for the euro area, the intensified financial market tensions are continuing to dampen economic activity in the euro area and the outlook remains subject to high uncertainty. Euro area economic activity should recover, albeit very gradually, in the course of 2012, as also projected by Eurosystem staff in early December. Substantial downside risks to this economic outlook nevertheless remain. With regard to price developments, inflation was 3.0% in November. Inflation is likely to stay above 2% for several months to come, before declining to below 2%, which view is also broadly confirmed in the December staff projections. Given the environment of weaker growth in the euro area and globally, underlying cost, wage and price pressures in the euro area should also remain modest. Risks to the medium-term outlook for price developments remain broadly balanced. The latest monetary data reflect the heightened uncertainty in financial markets. Looking beyond short-term volatility, the monetary analysis indicates that the underlying pace of monetary expansion remains moderate. The Governing Council of the ECB is determined to ensure that inflation expectations continue to be firmly anchored in line with our aim of keeping inflation rates below, but close to, 2% over the medium term. BIS central bankers’ speeches  1  Let me now turn to the latest non-standard measures.
It may also be inferred from this symmetry that, since inflation has been below-target in recent years, fulfilment of the aim in the medium term may require it to be above the aim at some time in the future. Consequently, the ECB Governing Council has announced that it stands ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner. Against this background, we have tasked the relevant Eurosystem Committees with examining options, including ways to reinforce our forward guidance on policy rates and options for the size and composition of potential new net asset purchases. There is a possibility that durably low or even negative interest rates may have effects on financial stability and bank profitability. It is true that Eurosystem estimates suggest that so far the positive effects, in terms of greater economic activity and improved credit quality, offset the adverse effects on banks’ net income. But it is necessary to monitor this matter continuously in order to determine whether measures are needed to mitigate the adverse effects of low rates on the banking system’s intermediation capacity. The Governing Council has thus also requested that the Eurosystem’s technical committees analyse a potential tiered system for reserve remuneration. It should be recalled that, in March, new quarterly longer-term financing operations were announced.

The effect is smaller, although significant, by around 0.13-0.16% for Tier 2 instruments or for senior debt. The findings are, in my opinion, perfectly logical and rational. Evidently, a higher capital ratio is a guarantee for those debt-holders situated lower in the hierarchy of credit tranches. As a result, investors are prepared to buy debt at lower rates than those that are demanded of institutions showing lower CET1 levels. As I pointed out, showing a high level of capital is not a disadvantage. In addition to MREL eligibility, a high level of capital evidently enables the bank to reduce its funding costs, likewise improving its external rating and its access to markets. Improving profitability Apart from improved solvency, there are other levers that can help improve profitability. First, headway in reducing non-earning assets is important. Spanish banks have managed to significantly reduce their portfolios of NPLs and foreclosures, although we remain above the figures posted by other European Union banks and the level continues to be clearly above what it was pre-crisis. As their name suggests, these assets are “unproductive“. But, moreover, maintaining them entails high costs in terms of human, financial and – in the case of property – tax and upkeep resources. Evidently, their disposal allows costs to be cut and resources to be freed up and used for other productive activities. In this setting of low margins and high competition, bank mergers are an alternative for gaining competitiveness.