samchain/econo-pairs-v1 huggingface dataset:
See also the Bank’s paper: “The role of macroprudential policy: A discussion paper”, November 2009. 8  BIS central bankers’ speeches  The benchmark instrument, in the sense that it will definitely exist, will be the countercyclical buffer (CCB) in the Basel 3 Capital Accord. In the UK, it will be the FPC that decides whether to switch off the semi-automatic application of the CCB when triggered by the ratio of credit to GDP and other indicators exceeding certain thresholds. (It is not altogether clear, by the way, who will have that responsibility in other countries; the function requires a system-wide perspective and a macroeconomic capability and so is not exclusively in the domain of microprudential regulators.) Beyond the one instrument agreed internationally so far, the UK government is also considering whether to give the FPC a variety of other instruments. These include varying liquidity requirements; and varying capital requirements against specific types of exposure (“risk weights”) and/or minimum haircuts for specific types of secured lending, whether financing hedge funds etc or Loan-To-Value ratios for property-related lending. The availability of such targeted instruments might be especially useful where the FPC wished to mitigate risks from overexuberance and collective imprudence in lending to a particular sector without necessarily affecting credit conditions more generally. Targeting a specific area of business might also sometimes help to resolve a collective action problem sustaining a bubble if enough lenders themselves thought risk was being underpriced.

This effort can often be successful because the agent is a relatively small group of people who hold all the relevant information and share very similar motivation, while principals tend to be much more numerous and less informed and their objectives are often highly differentiated. And so, corporate managers are often able to push through their will even if it goes against the interests of many shareholders; international organisations often take steps that their founding members do not like to see; and by the same token the EU administration is able to shape the integration process in ways that differ from what many member states previously intended. To give you just one banal illustration of this process: the remuneration of employees of international organisations and of Eurocrats is invariably higher than the remuneration they would be able to earn in similar positions at home. Therefore, the principals watch – with little joy, of course – a brain-drain in favour of their agent. Thus, an agent gets dominance over its principals and principals even contribute to this dominance. The observation that agents try to become more powerful than their principals is usually considered to be beyond the boundaries of political correctness, so we rarely hear about it. The same holds for another hindrance to proper execution of the European integration idea, namely the asymmetry among different principals, that is, among different member states of the EU.
The current economic situation The Norwegian economy is in a period of strong expansion after a marked upturn began in summer 2003. The upturn followed a period of slow growth from 1998 and a mild recession in 2002 and into 2003. So far in the cyclical upturn, the mainland economy has grown by an average of just over 4 per cent annually. This year, growth appears to be over 5 per cent. Growth is very strong for such an advanced stage of the economic cycle. This is clear from a comparison with the upturns in the 1980s and 1990s. There has been a sharp increase in the utilisation of production resources since 2003. The level of capacity utilisation is particularly high in the building and construction industry. Order backlogs in this industry and in some manufacturing sectors are full, and many companies say they cannot take on any new assignments. There are shortages of many inputs, not just labour. Contacts in our regional network frequently report purely physical production constraints. There is a shortage of rigs and equipment in the petroleum sector, and periodic shortages of planks, concrete, insulation and scaffolding in the building and construction industry. High capacity utilisation is placing limits on growth. Pressures in the building industry are reflected in building costs, particularly the cost of materials, which has risen sharply. Building a detached home (in wood) today results in ten per cent less house per krone than it did just one year ago.

In comparison with other countries, this is particularly the case for banks and other service sectors, reducing their production costs. The business sector has been quick to adapt and change, and to make use of new technology that is available in an international market. This is probably due to the 1980s and 1990s’ modernisation of the way the economy functions, which resulted in more efficient markets. In addition, growth in labour productivity reflected a marked fall in sickness absence in 2004. The latest figures nonetheless indicate that productivity growth is falling back. Although we do not have satisfactory current statistics for central government and local government productivity, government agencies have probably also become more efficient. New technology and new organisational structures have certainly provided opportunities to increase efficiency. Wage-earners and enterprises have both fared well. Low import prices have resulted in a slow rise in consumer prices and a solid increase in wage-earners’ real wages. High export prices have contributed to holding down the rise in real wages. Combined with high productivity growth, this has resulted in high corporate earnings and solid growth in employment. It remains to be seen whether the combination of low unemployment and a low wage share is sustainable. This partly depends on whether positive supply-side conditions persist. There is probably symmetry here. First, should Norway’s terms of trade deteriorate, productivity growth slacken and foreign workers return to their home country, the wage share will increase, profits fall and  4  BIS Review 139/2007  unemployment will rise.
My appeal today for you is to embrace a different philosophy of thinking and acting, more modern and forward-looking, obviously always capitalising on our best national values and traditions. My advice is: never absent yourselves from knowledge and books. Education is a never-ending experience and process, and will accompany you throughout your carrier, notwithstanding your specific engagement, a bright member of the academia, a successful entrepreneur in the private sector or an expert of important public or international institutions. To be on the top list, you should always update your knowledge on the most recent theories, trends and findings, which explain the most basic laws and functioning of markets and economy. As the administrator of an important institution in the field of the economic and financial policies decision making, I have always believed and supported the involvement of the new generation in the daily activity of the institution. Beyond the fact that the new generation dominates the human resources in the Bank of Albania, we try to maintain the interest and the inclusion of students in our everyday activity, through a range of various educational and informative programs. The Bank of Albania is open for all students studying in finance and economics or other related fields for internships, continuously supporting the scientific and research work of the students.

Gent Sejko: Bank of Albania’s support for new graduates and the importance of ongoing education Address by Mr Gent Sejko, Governor of the Bank of Albania, to the graduation ceremony of the students of economics, University of Tirana, Albania, 7 November 2019. * * * Dear students, Distinguished members of the Faculty, Dear parents, relatives and friends, Thank you for inviting me here and for the wonderful welcome. It is a great pleasure for me to have the opportunity to address this audience on this special day for you, your families and the academic staff of the Faculty. Today, you have the absolute right to be proud, enjoying the reward of your laborious efforts and sacrifices throughout the years of your studies, from the first grade to the completion of university studies. I take this opportunity to wish you all successes in the long and challenging journey of postuniversity life. Starting tomorrow, you will not return to university auditoriums, you will start making your own journey, as new perspectives and opportunities open up. Starting tomorrow, you will enter into a new stage of your life, characterised by complex and rather challenging relationships. This is the big truth of human life, and I hope that you have already grasped it. Looking at your achievements, the appraisal of your professors and the results from your internships at the Bank of Albania, I can only be optimistic about your ability and sagacity to find the right path in life.
That is consistent with the need – now widely accepted – to eliminate the large structural fiscal deficit and to raise the national saving rate. It is part of a need for a wider rebalancing of domestic demand in the world economy away from those countries that borrowed and ran current account deficits towards those that lent and ran surpluses. Second, both the structure and regulation of banking in the UK need reform. Banks increased both the size and leverage of their balance sheets to levels that threatened stability of the system as a whole. They remain extraordinarily dependent on the public sector for support. That was necessary in the immediate crisis, but is not sustainable in the medium term. These two challenges are interrelated. In creating the crisis, imbalances in the world economy led to unusually low real interest rates and large net capital flows from the emerging market economies to the developed world. That provided the fuel which an inadequately designed regulatory system ignited to produce the financial firestorm that engulfed us all. If our response to the crisis focuses only on the symptoms rather than the underlying causes of the crisis, then we shall bequeath to future generations a serious risk of another crisis even worse than the one we have experienced. Tonight I want to focus on the second of those challenges – reform of the structure and regulation of the banking system.

While the PRA has not yet consulted on a reform package, it has recently published a Discussion Paper[5] seeking views on a range of areas that are likely to be key in forming such a package. Our intent lies in finding a set of reforms that protects policyholders and enables even greater investment flexibility than we have seen already, whilst reducing any misaligned investment incentives. To achieve this intent, the Solvency II reform package we develop must address the two significant deficiencies in the current regime: a risk margin calibration that is overly sensitive to interest rates; and an allowance for retained risk – the FS - that varies very little, if at all, as credit risk premia vary across assets and over time. The risk margin is currently pulling more than its weight in the current Solvency II construct – the resulting incentive being for insurers to reduce the insurance risk they are taking. However, the MA as currently formulated rewards taking certain non-insurance risks, potentially in significant quantum, and with a set of incentives that may be misaligned. We therefore see quantitative reform of both the risk margin and Matching Adjustment, as integral to any package. The PRA seeks a calibration package that is better able to capture how liability transfer values are likely to be impacted by the assets held to back the business. Such a package should also take account of different financial and economic conditions that might pertain at the point that a transfer became necessary, including times of stress.
4  See the Financial Times article “Draghi attacks bankers over ECB fears” from 9 February 2012. 5  Philippon, T., and P. Schnabl, (2013) “Efficient Recapitalization”, Journal of Finance, 68(1), 1–42. 2  BIS central bankers’ speeches  bank resolution, which are founded on a strong change of culture – from easy public bailouts to a new culture of private bailing-in 6 – clearly go in the direction of preventing these distortions, while retaining the possibility of direct recapitalisation to safeguard financial stability. 7 The new resolution framework that is going to be implemented in Europe will help to support a sustainable growth of the financial sector by inducing financial institutions to internalise the negative spillovers originating from their failures. Thomas Philippon and his co-authors – among whom is the winner of the 2011 Germán Bernácer Prize, Lasse Heje Pedersen – have also contributed to the literature on systemic risk, a topic of particular policy relevance in which the ECB has also invested considerable research efforts. 8 In this paper, the authors argue that a financial institution’s contribution to systemic risk might be measured by its propensity to be undercapitalised when the system as a whole is undercapitalised – the “systemic expected shortfall”. They also advocate the introduction of a “tax” proportionate to each bank’s systemic expected shortfall which should cover losses in the event of a crisis. Let me now turn to Thomas’s second research area, namely dealing with the efficiency of the financial sector.

A feature of the current stage of the development of the euro money market, which is particularly worthy of note, is that differences in overnight interest rate spreads mainly reflect differences in the credit standing of banks rather than that of the country in which the transaction takes place. 1  BIS Review 63/1999  These structural developments are, of course, positive. For the Eurosystem (i.e. the ECB and the national central banks of the 11 countries participating in the euro area) the existence of a deep and liquid money market enhances the efficiency of monetary policy operations. In this respect, I should like to draw your attention to the “market friendliness” of the framework applied by the Eurosystem to the conduct of monetary policy operations. By this I mean that the framework is based on tenders in which markets decide who receives the liquidity. The standing facilities are open and recourse to the marginal lending facility is not subject to scrutiny. In addition, the list of eligible collateral is extensive. Prospects for the development of financial markets in the euro area Looking now at the financial markets from a broader perspective, it is important to remember that the financial markets of the euro area began the process of integration before the start of Stage Three of Economic and Monetary Union. An indication of the pace of integration before January 1999 is provided in particular by the evolution of spreads between yields on the bonds issued by the various central governments of the euro area.
As you know, the Toledo Pact has already been in place for more than 13 years. Over that period demographic and, until recently, macroeconomic developments made for a significant improvement in the Social Security system's financial position. Since the signing of the Pact, the Spanish population has grown strongly by more than 6 million, most of whom immigrants. Immigration has been significant not only in terms of volume but also of its composition, insofar as it tends to be concentrated in the younger age groups. In parallel, macroeconomic developments enabled this strong growth in population to be absorbed by the labour market. Notable in this connection was not only the contribution of the foreign population but also the significant role played by female nationals progressively joining the labour market. These developments occurred against a background of very low growth in the number of pensioners as retirement was centred on the generations born during the Spanish Civil War and the post-war period. As a result, Social Security registrations far outgrew pensions in recent years, which explains how the Social Security system ran growing surpluses, rising to 1.3% of GDP in 2007. These surpluses were assigned, in part, to the Reserve Fund, which reached a significant size of close to 5% of GDP at the end of 2008. In the past year, however, the impact of the economic crisis has also been felt in the Social Security accounts, meaning there has been a rapid deterioration in this surplus, which could even disappear within a year.

Once again, the time perspective is important here. The long-term view that should underpin any analysis of the sustainability of the pension system is perfectly compatible with the fact that many of the reforms needed to improve employment and, above all, productivity in the economy can only bear fruit after a relatively lengthy period of time. 2  BIS Review 51/2009  These two pillars of the strategy are evidently important. And tackling the problem of the impact of population ageing on the pension system in the long run will also require reforms. Further, these pension system reforms will complement the structural reforms mentioned earlier, in particular those relating to the labour market, and the reform to maintain healthy public finances. It is this matter which is central to this Committee’s mission. It has been working intensely in this connection over the past decade, particularly on how to modify the pension system’s current parameters to ensure its long-term sustainability. That brings me back to two other key aspects of the strategy to be agreed: the speed and scope of the changes to be made. Although the emergence of the first deficit in the system may appear a long way off, it should be borne in mind that the reform planning and implementation horizon is also long. Accordingly, the reforms should be discussed without delay so that, following their gradual implementation, they may prove fully effective when population ageing begins to exert a more virulent effect. Pension system reforms must also be sufficient.
6 By many measures, the global banking system is more resilient. For example, compared to earlier this decade, Common Equity Tier 1 risk-weighted assets of internationally active banks stand at around 13%, from about 7% before. Their leverage ratios average about 6% now, from less than 2% previously. Implementation of post-crisis regulatory reforms 7 We should also remember that the global banking regulatory standards are minimum requirements. National supervisors can use other levers of the Basel framework to apply higher standards or additional requirements on their banks, as appropriate, based on idiosyncratic considerations. 8 There is a general consensus that the financial system is safer than before. But the followon question can be: safer, yes – but is the system safe enough? 9 To say that regulators have addressed all that can go wrong would be great hubris. Indeed, this will be contrary to the evolving and adaptive nature of financial activity. The reality is a recurrence of financial crises in economic history. I would add that no amount of regulations and supervision can prevent crises; what regulators seek to do is to reduce the likelihood and negative impact from one. This will require banking regulators to remain vigilant against emerging risks, and hence the importance of forward-looking supervision to complement regulations. 10 On the other hand, with the last global financial crisis becoming a distant shadow of sorts, there are already calls that “this time it is different” and to dial down the enhanced regulatory requirements – just as all the crises before it.

More fund-based schemes will generate a positive stimulus to the Norwegian securities market, even if an appropriate risk diversification would imply that a large portion of the capital in pension funds is  8  BIS Review 48/2002  invested abroad. A rising share of fund-based schemes in other countries will also increase investment in Norway. The statutory regulation of pension fund investment will also be of importance. For example, today most countries have relatively stringent restrictions on the equity portion in pension funds’ portfolios. However, a proposed new EU directive would make it possible to increase this portion, which may have an impact on demand for securities. Recent developments in financial markets have shown that a substantial measure of uncertainty is associated with the return on such investments. This uncertainty is related to future economic developments, which will also apply to the pay-as-you-go system. It is true that Government can influence this through tax changes. Adverse economic developments will, however, put the ability and willingness to increase taxes in order to honour pension obligations to the test. This uncertainty will be even greater in a country like Norway that is highly reliant on one or a small number of industries. Government finances are, for example, still vulnerable in the face of a sustained decline in oil prices. The uncertainty about future developments is continuously reflected in a fund-based system. An essential question associated with a fund-based system is who is to bear the risk related to returns.