samchain/econo-pairs-v1 huggingface dataset:
Annual loan growth to the private sector has remained subdued, with the rate (adjusted for loan sales and securitisation) moderating in February to 1.1% year on year, from 1.5% in January. The annual growth rates of loans to non-financial corporations and loans to households (adjusted for loan sales and securitisation) stood at 0.6% and 1.8% respectively in February. The volume of MFI loans to non-financial corporations and households remained practically unchanged compared with the previous month. Money and credit data up to February confirm a broad stabilisation of financial conditions and thereby the avoidance of an abrupt and disorderly adjustment in the balance sheets of credit institutions, as intended by our measures. Funding conditions for banks have generally improved, and there has been increased issuance activity and a re-opening of some segments of funding markets. The demand for credit remains weak in the light of still subdued economic activity and the ongoing process of balance sheet adjustment in nonfinancial sectors. The full supportive impact of the Eurosystem’s non-standard measures will need time to unfold and to have a positive effect on the growth of loans when demand recovers. In this context, it should be noted that the second three-year longer-term refinancing operation was only settled on 1 March 2012. Following the stabilisation in the financial environment, it is essential for banks to strengthen their resilience further, including by retaining earnings.

These two countries have much in common, yet some things (and not only the Danube!) still separate us. As I have already mentioned on previous occasions, to a certain extent, the speed of convergence was, in the case of Romania, fuelled by the flexibility of our exchange rate regime. By contrast, adopting a currency board more than two decades ago, during a crisis, Bulgaria shifted to a fixed exchange rate regime, out of which the only exit strategy is joining the euro area. What we need in order to move forward on the convergence path towards euro adoption is, first of all, to understand there is no substitute for a coherent economic policy mix, which should remain so even in election years. We need economic convergence, but the process should be a balanced one, so as to preserve macroeconomic equilibria and safeguard competitiveness. It is important that Europe remains united. Therefore, I want to pay homage to Baron Snoy, who has been instrumental in promoting Romania’s and Bulgaria’s further integration into the Economic and Monetary Union. I have known him since the first event we hosted in June 2011, and have always found in him not only a wise man, dedicated to the European Project, but also a friend of Romania, with a vast knowledge of our history and culture. He has also played an important role in bringing together Europhile experts that are trying to find solutions to the daunting issues facing Europe nowadays.
8  https://www.bankofengland.co.uk/-/media/boe/files/prudential-regulation/supervisory-statement/2020/ss317-update-april-2020.pdf 6  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  6  A key challenge in Solvency II is that the FS has been calibrated for corporate bonds, but firms now hold ever increasing exposures to less liquid asset classes, with significant basis risks between asset exposures and the FS calibration data. We consider that there is potential merit in differentiating the FS by asset class, however, this needs to be balanced against the extent to which different asset classes are sufficiently homogenous, as well as the availability and credibility of data available to derive such calibrations. A more granular FS could therefore give rise to additional risks. Related to this, firms make their own delineation between financial and non-financial assets, and it is important that their assumptions are prudent. Risk Sensitivity of the FS The current construct of the fundamental spread has some advantages: it has been largely predictable under stress, and it promotes counter-cyclicality. However, it is reasonable to ask whether the FS has gone too far in this direction. The impact of the long-term average spread floor makes the FS a predominantly backwards looking measure, insensitive to current market signals. For example, in Chart 10 are the credit spreads for A-rated financial corporate bonds, set against the year- end 2020 FS9. Under stress, firms will only see the FS increase under a ratings downgrade, thus completely setting aside any information contained in market spreads.

And because we share similar experiences – still fresh in our memories – of major banking crises in the Nordic countries, we have perhaps a head start when it comes to recognizing and trying to deal with these challenges on a Nordic level, even if much worksstill remains. Here, I might add that integration on a pan-Nordic level has also come a long way in the area of securities exchanges and clearing and settlement facilities. Of course, the integration of the financial infrastructure poses similar challenges for authorities to cross-border banking and some additional complications as well. However, today I will focus on the challenges posed by cross-border banks. And I must stress that these challenges are not merely a regional problem. Due to the dynamic changes in the banking landscape, they will indeed require solutions on a European level. My main message today is that increased coordination is imperative, and, in this, it is vitally important that future arrangements for supervision, crisis management and crisis resolution of cross-border banks must be dealt with jointly as a package, and not in isolation from each other. It is apparent that the solutions in any one of these areas will depend on the solutions in the other areas. In particular, it will be necessary to address the issue of burden-sharing arrangements for the eventuality that a border-crossing bank becomes insolvent. If we don’t, there is a great danger that crisis management fails and valuable time will be lost.
In the phase of debt-financed balance sheet ballooning seen between 1995 and 2007, the amount of credit available did not rise accordingly, nor did it decline in the following period when debts were being cleared. This observation is even more striking, given that, in autumn 2008, the regulatory authorities stated that as of 2013 both big banks will have to have twice as much capital as the Basel II minimum international standard specifies: According to current findings, the capital adequacy rules did not have a negative impact on lending levels nor did they increase lending rates (cf. charts 5 and 6).6 With a view to other possible economic repercussions of tighter regulation of the big banks, the question also arises as to whether and to what extent employment and value creation in Switzerland are at all affected. A glance at the statistics covering the period when UBS and CS saw their balance sheets expanding between 1995 and 2007 shows, among other things, that there is no clear-cut positive connection between the size of a balance sheet, on the one hand, and jobs and contribution to value creation at these banks in Switzerland, on the other. This implies that reducing the balance sheet as a result of stricter regulation would not necessarily have negative consequences in these respects (cf. chart 7). To conclude, it appears that there are no theoretical or empirical grounds to indicate that the Swiss economy will be adversely affected by the proposed regulation.

Before implementation, we can never know with absolute certainty how our economy or society will react to changed framework conditions – there is therefore always an element of doubt. For instance, one objection to the package of measures is that the cost of taking such drastic action to achieve the transition to a more stable system would be too high. In addition, doubts have also been expressed concerning the rapid pace and the impact of the proposed reforms. Although we can understand such criticisms, the SNB believes them to be exaggerated and largely unfounded. Allow me to explain. I would like to begin by making three general preliminary observations. Firstly, regulation is never free of charge for every participant. However, analysis of the possible costs of regulation must always differentiate between the private and the social costs: in practice, regulation is bound to lead to additional costs for those regulated. This is part of the plan and makes economic sense provided that these additional costs are smaller than the benefits that regulation brings to the entire economy. If regulation leads to the elimination or reduction of market distortions – such as subsidies, for example – then an economically more efficient result is obtained. Secondly, regulation can be formulated in a more or less cost-efficient manner. Particular attention was paid to this element in Switzerland. For instance, the additional capital required here by systemically important banks can largely be held in the form of more cost-efficient convertible capital.
And it is also crucial to harness the upswing to bolster the financial sector, the soundness of which has enabled the world economy to better withstand the severe shocks it has undergone in recent years. The euro area Last year the euro area remained in a period of low growth that began in 2001. In the second half of the year the first signs of recovery were detected, which appear to have strengthened in early 2004. That said, the area remains far less buoyant than the rest of the main regions and its prospects are still considerably uncertain. This prolonged phase of relatively sluggish economic activity has been the outcome, among other things, of a series of global shocks and, more recently, of the pronounced appreciation of the euro amid heightening international financial imbalances. But the unsatisfactory results of recent years also appear to be indicative of the excessive vulnerability of the European economy to developments in its external environment and of the chronic weakness of its internal demand, which favourable monetary and financial conditions have been unable to counter. The performance of the euro area has proven somewhat disappointing when set against the expectations generated at the outset of Monetary Union over five years ago. Among other objectives, the Union was intended to increase the economic prosperity of European citizens. However, we should not ignore the progress made in overcoming some of the structural shortcomings during the process of monetary integration.

The interest rate reductions during the past year from 4.35% in June 1998 to 2.9% in March this year took place with a view to stimulating demand, increase employment and increase capacity utilisation in order in this way to bring inflation up to the goal of 2%. The Riksbank’s most recent inflation report makes the assessment that there are unused resources in the present situation but that the available resources will gradually be taken into use during the forecast period. The statistics published thereafter give a somewhat fragmented picture but, taken as a whole, do not occasion any change in the view of growth prospects in the economy. The assessment of the Riksbank is now that inflation in 1 to 2 years will be marginally higher than in the most recent inflation reports. In the light of this, the Riksbank made the assessment at its meeting on 11 November to conduct monetary policy in a less expansive direction. The repo rate was therefore increased by 0.35 percentage points to 3.25%. As has been said, the difficult balance to be struck in the present situation is to adjust the instrumental rate at a rate that does not interrupt the upswing in capacity utilisation but does it with sufficient foresight to avoid a drastic rise. We do not want to experience “stop-go” policies again. Let us not forget the late 1980s and early 1990s. That period represents a tragic failure for economic policy, a failure that cost Sweden destruction of both physical and human capital.
The Bank of Japan and the Riksbank of Sweden are two cases that fit the requirements. In their case a single board takes both monetary and financial stability related decisions. While both these aspects are still debated and different countries have found different arrangements based on their existing institutional setup, in most jurisdictions, the central bank plays a prominent role either directly or indirectly. This is not surprising considering that central banks, being at the core of a country’s financial system and having a macro perspective, have a privileged position for visualizing systemic financial risks. Our existing framework recognizes the relevance of the central bank’s role, and any further developments in our macroprudential framework also should. 4. Macroprudential policies in Chile  In Chile we have followed prudently from some distance how macroprudential policies have been implemented and used recently around the world. The main reason is pragmatic. Due to good macroeconomic management and adequate regulation and supervision, the Chilean financial system did not suffer a crisis or excessive stress at the height of the global financial crisis and subsequent years. We have not had either the perception of over-expanding credit. Specific developments in the housing market and bond issues abroad have been analyzed and addressed promptly.

Their forecast for global growth for 2019 is now 3 percent, which is the lowest since 2008–09, and it’s not hard to think of scenarios in which growth slows even further.1 In the old days, central bankers used to worry about inflationary pressures being too great. Old habits die hard, and I’m always on the lookout for signs that inflation is rising too fast. But in the current climate it’s inflation that’s too low that’s of greater concern. You see, my five-dollar cup of coffee masks an inconvenient truth: inflation in the United States is below target and has been for some time. Beyond sluggish inflation, we’re starting to see signs of slower global growth playing out in the U.S. data. While consumer spending is holding up, other parts of the economy—including manufacturing, exports, and business investment—have seen growth stall or experienced outright declines. Geopolitical Tensions The third and final issue I want to discuss—the rising geopolitical tensions around the globe— further complicates an already complex picture. When it comes to the economic outlook, the word of the day—and probably the year—is “uncertainty.” Trade negotiations, civil unrest, and tensions in a number of corners of the world are driving many businesses to take a wait-and-see approach to investment, thus putting a further dampener on growth prospects.
A basic challenge for the authorities dealing with cross-border banks is how to find an acceptable formula for sharing the burden and the costs of a crisis. Goodhart and Schoenmaker have in their paper suggested a number of keys that could be explored to create such a formula, for example the relative size of GDP, the ECB capital ratio, and the relative amount of bank assets in the country. As pointed out by Goodhart and Schoenmaker, the first question to be asked is whether one would want a general solution where all countries contribute according to some fixed key, or more specific burden sharing arrangements, where only the directly involved countries participate according to a more flexible key, presumably taking into account the geographic spread of the bank’s business. To achieve the latter, it would be necessary to find some commonly agreed criteria for assessing a bank’s systemic relevance to the financial system of a country. Merely using market shares as a criterion will probably not be adequate as other aspects, such as the bank’s relevance to the payment system, clearing and settlement, involvement in inter-bank securities markets and so on would also be important in this respect. At the same time, in a constantly changing banking landscape, it would be difficult to find criteria that are so clear-cut that assessments will not be “up for negotiation” in a sharp crisis scenario.

It will not be easy to achieve the necessary coordination and not least to deal with some potentially complicating conflicts of interests, and much more analysis is needed. However, I will at the end of my speech try to sketch some possible routes ahead. Coordination issues To make my points clear, I think a crisis scenario could be a useful starting point. Consider a large cross-border bank encountering some financial troubles, and suppose the bank is systemically important in at least one of the countries in which it operates. The number one concern for authorities would be to limit the social costs of a potential banking failure and to stop contagion to other parts of the financial system. For this, efficient crisis management is key. The successfulness of the crisis management, in turn, critically depends on a number of factors, such as coordination of information and decision-making, which in turn depend on how well conflicts of interests can be managed. Information First of all, you need access to relevant information on which to base your decisions. Ongoing supervision is instrumental in detecting weaknesses, vulnerabilities and risks that may trigger or enhance systemic crises in the first place. But it is also a key source of information in a crisis situation. Given the very complex nature of some cross-border banks, these institutions are also becoming increasingly opaque, and thus difficult to analyse.
Mr Heikensten talks about the interaction between monetary and fiscal policy and labour market developments Speech by Lars Heikensten, First Deputy Governor of the Sveriges Riksbank, the Swedish central bank, to the Landskrona Municipality in Landskrona, Sweden on 16 June 1999. For more than six years now, monetary policy in Sweden has been conducted with an inflation target. Sweden was one of the first countries, together with Canada, New Zealand and the United Kingdom, for example, to adopt an inflation targeting strategy. Other countries have recently displayed an interest in targeting inflation directly as the guideline for monetary policy. Examples are countries with strong economic growth in Asia, South America and Eastern Europe. In many respects, Sweden’s period with an inflation target has been one of good economic results. Inflation and interest rates have come down to levels that are historically low and growth since the crisis in the early 1990s has been relatively high and stable. Part of the explanation is, of course, that the recession left us with plenty of unutilised resources. But new production capacity has also been created at a rapid rate. Moreover, inflation expectations have been lowered, which gives a new and better environment for price and wage formation. International inflation has also been low. The picture of unemployment is more disappointing, though here too the recent trend points in the right direction.

Lower tax on productive capital or companies may lead to more companies being established and thereby raise potential output. Similarly, lower tax on labour or increased educational inputs may generate an increased supply of labour and also influence wage formation. These are examples of the numerous ways in which changes in tax and expenditure systems are likely to modify economic opportunities and promote conditions for good growth without the attendant capacity shortages that generate price pressure. Current fiscal policy The trade-off between monetary and fiscal policy — the policy mix, as we economists like to say — has improved considerably in the present decade. The rapid accumulation of government debt has ceased and the stock is now being reduced. While the consolidation of government finances has made the fiscal stance restrictive, it has been possible to lower interest rates and this in turn has stimulated investment, economic activity and employment lately. This is accordingly a considerable improvement compared with the early 1990s, for example, when factors such as very weak government finances led the Riksbank to keep interest rates up at a time when government debt was rising markedly. BIS Review 77/1999  2  Government debt and budget balance Per cent of GDP.
On the other hand, if a country is to benefit fully from adopting the single currency, then its economic structures must be compatible with those of the countries that are already using that currency. It is for this reason that the EU Treaty sets a series of eligibility tests, known as the Maastricht criteria. These include convergence of inflation and interest rates, sustainable fiscal positions and exchange rate stability. The exchange rate criterion requires participation in ERM II for a minimum period of two years prior to the adoption of the euro. This is an arrangement whereby the European Central Bank (ECB) and participating national central banks would not allow any currency to fluctuate beyond a given margin from its central euro rate. This margin at present can be as wide as 15%, but significantly narrower margins are being contemplated, with an often-cited reference value of 2.25%. Thus, participation in ERM II does not necessarily imply increased currency volatility. Indeed the rationale of this mechanism is to test the stability of a currency. As you know, the Maltese lira is pegged to a weighted average of three currencies, whose individual exchange rates against the lira can vary. In this regard, it is noteworthy that the fluctuations in the Maltese lira/euro rate over the past few years on average have not exceeded 3.5%. As for the inflation and interest rate criteria, Malta is well within the reference values.

The changes came into force on 1 January 1999. 1 [13]  In a moment I will look more closely at the new environment and discuss a few properties that characterise it and that monetary policy will need to relate to going forward. Lastly, I also intend to provide an overall picture of what might characterise the way forward. But before doing that, allow me to say something about what has brought us here. Where we are coming from I spoke earlier about 2018 being a year of celebration. Another anniversary, but one which does not give cause for any kind of celebration, is that it is also ten years since the collapse of the investment bank Lehman Brothers. The problems on international financial markets, which had been escalating for a long time, came to a head. Confidence in the financial system evaporated and the financial crisis was upon us. Much has happened during the ten years since then. The actions of central banks during this period have not just been about managing the direct crisis of 2008, even though many of the problems stem from there. It is more accurate to describe the actions as reactions to an interconnected series of crises, or, if you like, a crisis that consists of several phases. These have, in turn, formed the backdrop to the different phases of monetary policy that Sweden has gone through.