samchain/econo-pairs-v1 huggingface dataset:
In spite of needing more flexible markets with its single currency, Europe faced stronger nominal rigidities than East Asia in labour and product markets.11 This limited the ability of euro area countries to adjust to asymmetric shocks, especially as cross-border labour mobility was low and public debt levels were already high. And finally, no mutual insurance mechanism was in place. But, and here comes the good news, unlike emerging Asia in the late 1990s, Europe had a well-established regional political framework to address its crisis. The framework of integration and cooperation among EU members is old and dense, building on the experience gained with the European Monetary System12. This made it possible to create the necessary instruments (the EFSF and ESM) for financial support for domestic adjustment programmes to come mainly from within the Union, with the IMF focusing on monitoring conditionality. 8  See Kochpar, K., P. Loungani and M. Stone (1998): “The East Asian Crisis: Macroeconomic Developments and Policy Lessons”, IMF Working Paper 98/128. 9  See Cavallo E.A. and J. A. Frankel (2008). “Does Openness to Trade Make Countries More Vulnerable to Sudden Stops, Or Less? Using Gravity to Establish Causality”, Journal of International Money and Finance, Volume 27, Issue 8, pp. 1430–1452. 10  See Loong, L.S. (2000). “Post crisis Asia – The way forward”, BIS William Taylor Memorial Lecture, 21 September 2000. 11  See Heinz, F.F. and D. Rusinova (2011): “How flexible are real wages in EU countries? A Panel Investigation”, ECB Working Paper No 1360.

The result is a greater divergence in bank funding costs and lending rates than would be warranted by the underlying economic fundamentals, and euro area companies being unable to tap a single pool of savings to fund their development. The third response is to explore avenues for non-bank financing – that is, to develop debt and equity capital markets in Europe. Around 75% of firms’ external financing in the euro area comes from banks, which makes the economy particularly vulnerable to crises that spread through the banking system. Measures are being introduced in Europe to develop capital markets for long-term financing and deepen markets for the securitisation of loans to small and medium-sized enterprises.16 However, having a well-functioning financial sector is only one part of the story. To leave the crisis behind us, we also have to ask: what in fact does that sector finance? Again, we can learn from the Asian crisis: we need to foster growth and total factor productivity with new business models. Fostering growth: new business models Due to its length and severity, the economic downturn has already caused a permanent loss in output and a rise in structural unemployment, and we cannot rule out that the growth rate of potential output has been affected too. To repair this damage, investment in both physical and human capital has to be a key component of the recovery. Clearly, there is spare capacity in the euro area economy. Total investment in the euro area is currently 17% lower than it was in 2007.
Gent Sejko: Achievements in 2022 and setting the milestones for 2023 Address by Mr Gent Sejko, Governor of the Bank of Albania, at the Year-end event organised by the Albanian Association of Banks, Tirana, 15 December 2022. *** Honourable AAB Chairman, Dear ladies and gentlemen, As every year, it is a pleasure for me to joint this special meeting with banking industry, sharing our achievements and efforts made throughout the past year, the most meaningful experiences, and setting the milestones for 2023. Let me first focus on the overall performance of the Albanian economy. The sharp upsurge of prices and inflation in international markets in the wake of Russia's war against Ukraine shaped the performance of the Albanian economy over the course of 2022. This supply-side shock caused another steep challenge for the Albanian economy, driving to the need for a review of public economic policies and business-plans in both private sector and banking industry. In this context, I would like to highlight that the Albanian economy was in sound positions when this shock hit, following the rapid rebound from the pandemic-related shocks in 2021. Also, the monetary and financial stability was consolidated. The sound financial balance sheets of Albania, the strengthened confidence in banking system, and the reduced risk premia reflect this stability. Also, the latter is anchored in the positive experience that we both, public institutions and you, as financial sector, have gained in tackling such shocks.

The implementation of these measures, beyond the approximation of our regulatory framework with the EU Acquis, ensures a stronger resilience of banking system against the above-stated shocks, and the continuation of the provided financial services, already being integrated in the daily life of citizens and businesses. The consolidation of banking system and the increase in the number of banks with a high share in the banking system impose differentiated addressing of the latter for mitigating systemic risks and the effects on the taxpayers' money in case of possible crisis in the future. Concluding, I take the opportunity to re-assure that the Bank of Albania, in carrying out its function as supervisor and regulator, will continue to support you and be your partner both in good and rainy days, by providing transparency, cooperation and objective assessment of your requests and proposals in every decision making. I wish you a successful and prosperous new year! 4/4  BIS - Central bankers' speeches
Mr Bäckström discusses the monetary policy situation in Sweden Speech by the Governor of the Bank of Sweden, Mr Urban Bäckström, at Stockholm Chamber of Commerce and Veckans Affärer on 2/2/99. Thank you for the invitation to attend this conference and talk about “The krona and the interest rate”. I shall be speaking mainly about the current monetary policy situation and the factors that may be crucial for the policy’s future formulation. However, now that the Riksbank is directed by the six members of the new Executive Board, which also makes the monetary policy decisions, the decision-making process has changed. So I shall begin by briefly describing how monetary policy will be decided and presented in this new environment. The new process for monetary policy decisions At 1pm on Thursday 11 February, the new Executive Board of the Riksbank will be convening for its first meeting specifically devoted to monetary policy. Compared with the Board’s ordinary sessions, the discussion at what are called monetary policy meetings is to cover monetary policy more comprehensively and conclude with a decision on the policy’s future stance. The discussion will be minuted and published in this form on 6April, around eight weeks after the event. Moreover, a brief account of the grounds for the decision will be presented in a communiqué on the day after the meeting, in this case at 9.30am on Friday 12 February.

This made it less probable that the global economy would remain weak for a number of years. Recent developments in Brazil have contributed to some recurrence of unrest in international financial markets. Once again there has been an international flight to securer assets but it has been more limited than last autumn. There has, however, been a substantial depreciation of the Brazilian currency. It is still difficult to tell just how crisis in Brazil may affect the world economy. The future course in Brazil, with the attendant risks of knock-on effects in Latin American and other parts of the globe, will depend on what the national authorities do to construct a sound foundation for the economy. It has been shown, not least by our own economic experience in the early 1990s, that changing from a fixed to a floating exchange rate does not by itself provide a lasting solution to economic problems. What is needed is rather a comprehensive programme for enhancing confidence, with budget policy as not the least important component. A clear target and a consistent approach in monetary policy BIS Review 14/1999  –4–  can also contribute to economic policy’s credibility. But it does seem likely that developments to date in Brazil will tend to subdue growth in Latin America and even to some extent in the OECD area as a whole. Despite the unusually long duration of the US economy’s upward phase, the situation there is still buoyant. Growth in the closing months of 1998 was very strong.
However, for the saving glut to result in growing imbalances, net savings have to be more and more asymmetrically distributed across nations. In addition, for more than a decade now, capital has been continuously flowing “uphill”, i.e. from poor to rich countries with current accounts surpluses in emerging economies mirrored in growing deficits in the US. This is one of the most salient and puzzling features of modern economic history and has attracted a lot of attention. Some explanations focus on the domestic drivers of private saving behaviours in both emerging and advanced economies. Cyclical factors, such as productivity shocks, or fiscal policies, have likely played a role (Bussière et al. 2010, and Henriksen and Lambert, 2009) But this can only be part of the story. It may well be that saving / investment imbalances are endogenous to the system itself.. According to the “Bretton Woods II” approach (Dooley et al. 2003, 2008, 2009), the pattern of capital flows results from a mutually beneficial equilibrium between two groups of countries. On the one hand, emerging economies which follow an export-led development strategy and seek to prevent appreciation of their real exchange rates by constant foreign exchange intervention (together with capital controls). As a consequence, they accept to accumulate increasing stocks of liquid assets denominated in dollars. On the other hand, the US is happy to get both reserve inflows to finance their deficits and cheap imports to fuel their demand for consumption goods.

It should therefore be possible to define and build a framework around the following principles: countries should self insure against idiosyncratic risk by holding a sufficient amount of reserves. Protection against systemic risk would come from a multilateral mechanism for international liquidity provision. Of course, the distinction between idiosyncratic and systemic risk may be difficult and involves a broad degree of judgment. But two basic rules should be guiding future work on a multilateral safety net: (1) conditions for access should be specified ex ante; and (2) those conditions should be fully delinked from the situation of individual economies. Rather, they should depend on the state of the global economy and international financial markets. From the point of view of an individual country, access should be fully unconditional, once global conditions are met. A considerable amount of work is currently devoted to devise instruments of contingent capital for financial institutions in times of crisis. The same intellectual framework can be extended to liquidity. What is needed is contingent liquidity i.e. liquidity available to nations in times of aggregate shocks to the international financial system. This raises two questions: where would such liquidity come from? How could it be mobilized? As to the source, a possibility would be to create a process of periodic general allocation of SDRs, according to a predetermined schedule .Those SDRs, however, would not be  BIS Review 76/2010  9  immediately available for use by their beneficiaries.
Stefan Ingves: Inflation targeting – the Swedish framework and experiences Speech by Mr Stefan Ingves, Governor of the Sveriges Riksbank, at the Reserve Bank of India, Mumbai, 15 November 2006. *  *  *  Let me begin by thanking you for the invitation. The theme of my speech today is the Riksbank’s monetary policy strategy and our experiences of inflation targeting. As you may know, the Riksbank belongs to the group of central banks that has a specific inflation target. This is a group that has increased in number in recent years. This of course reflects the fact that, on the whole, experiences of monetary policy with an explicit inflation target have been good. So good, in fact, that this policy has become an interesting alternative even for already well-functioning economies. When Sweden changed over from a fixed exchange rate to inflation targeting and a floating exchange rate in 1993, the situation was entirely different. We were in the midst of a deep economic crisis, where a total reform of the entire stabilisation policy framework was necessary. Monetary policy based on inflation targeting was at that time a relatively new phenomenon and there was considerable uncertainty as to whether it would work in Sweden. For those of us who were around during the crisis years, it is particularly pleasing to see how well the Swedish economy has developed over the past ten years, compared with the previous two decades.

Fernando Restoy: Europe in the aftermath of the crisis Closing address by Mr Fernando Restoy, Deputy Governor of the Bank of Spain, at the seminar “Europe in the aftermath of the crisis”, organised by the Association of Economic Information Journalists (APIE), at the Menéndez Pelayo International University (UIMP), Santander, 20 June 2014. *  *  *  Introduction Thank you very much, Miguel Ángel, for your introduction. And thanks again for inviting me to close the course organised by APIE at the UIMP. As in previous years, it is a real pleasure to be among you. I will take the opportunity to offer some thoughts on the situation of the Spanish banking system and the challenges it has ahead, two years after the approval of the financial assistance programme for Spain, and five months after the conclusion of this programme once its objectives were met. In particular, after discussing the macroeconomic environment and reviewing the transformation of the banking sector over the past two years, I shall focus on the public cost the process has entailed and highlight the main challenges facing both the financial industry and the financial authorities. 1.
The problem with both is that other policies, such as fiscal policy, will then have to take care of domestic economic stabilisation. But will they? Third, they can use FX intervention to reduce the effect of volatile capital flows on the exchange rate. Fourth, they can increase resilience and the ability to live with exchange rate fluctuations (reduce the fear of floating) by strengthening financial regulation and supervision or employing macroprudential tools. Fifth, if everything else fails, they can introduce tools aimed directly at the financial integration part in order to regain greater monetary independence and shift the effect of monetary policy more to the interest rate channel and towards the non-traded goods sector. These so-called capital flow management measures are probably most needed when countries are faced with large capital inflows at the same time as domestic conditions warrant significantly higher interest rates than among core rate setters. In Iceland, we have used many of these tools in recent years. We have used FX intervention to reduce short-term exchange rate fluctuations and, in recent years, to lean against strong appreciation pressures. We have introduced a liquidity coverage ratio and a net stable funding ratio in foreign currencies. In 2016 we were faced with strong capital inflows that flattened the yield curve as the policy rate was being increased and more was signalled. We then introduced a special 2  Rey (2013) and Obstfeld (2015) analyse this issue and provide somewhat different views on whether it is a dilemma or a trilemma.

The Riksbank discusses a number of possible measures in its latest Financial Stability Report. Firstly, the Riksbank tries to influence developments by communicating our views on what is happening publicly and in the form of a dialogue with the banks. The Financial Stability Report plays a central role in this context. The Riksbank can in certain situations provide a more comprehensive picture of the risks than the individual market players, as the latter attaches greater importance to evaluating developments in their own portfolios. If the Riksbank believes that an unhealthy build-up of risk is occurring and our assessment has not had the intended influence on the individual market players, there are other measures that the Riksbank can take. In extreme cases, quantitative regulations may be introduced, such as raised required capital adequacy ratios or a reserve requirement. Nor can an increase in the repo rate be ruled out if financial stability is threatened. However, these are more far-reaching measures and would only be used if the build-up of risk was assessed to constitute an acute problem. The assessment of the situation made by the Riksbank and other authorities will always be marred by a large measure of uncertainty, as it is extremely difficult to evaluate how serious the build-up of risk actually is. If drastic measures are to be taken, the assessment must be based on a strong foundation. The development we can see today is, as I mentioned earlier, far from requiring any intervention.
Vítor Constâncio: The governance of financial stability in the euro area Speech by Mr Vítor Constâncio, Vice-President of the European Central Bank, at the “ECB and its Watchers XIII” conference, Frankfurt am Main, 10 June 2011. *  *  *  Introduction Ladies and gentlemen, It is a pleasure to take part in this thirteenth edition of the ECB and its Watchers conference. I would like to use my intervention today to reflect on how the economic and financial crisis should alter policymakers’ conception of the governance of financial stability in the euro area. Prior to the crisis, financial stability was often viewed in a rather abstract manner, as a condition that flowed from other well-defined pre-conditions – for example, low inflation – or as a concept that could only be addressed after the fact – for example, once bubbles had burst. However, the crisis revealed that financial stability warrants much more prominent attention:   First, it became clear that financial stability depends on a much broader range of sources than was previously acknowledged, from both macroeconomic imbalances in the real economy and imbalances in the financial sector.   Second, it was revealed that the channels through which financial instability could spread are various and complex, with negative consequences for both the financial and real sectors, thus requiring ex ante and not only ex post policy responses.

Prior to the crisis, the lack of an institutional mechanism to translate the financial stability analysis made by central banks and the ECB into policy actions was a major lacuna. In response, the European Systemic Risk Board (ESRB) has been set up to monitor and assess macro-prudential risks. Given that the new framework began operating in January this year, it is difficult to assess its effectiveness comprehensively. However, it could be instructive to review ex ante the robustness of the analytical toolbox assigned to the ESRB, and consider ex post whether such a toolbox would have enhanced policymakers understanding of systemic risk prior to the crisis. Before doing so, I should make clear that the purpose of the ESRB is not to predict crises. The academic literature on early warning signal models, developed over the years, suggests that, for a number of reasons, the scope for error in predicting crises is substantial. Either the eruption of a crisis is missed or a period is wrongly identified by the start of a crisis. For this reason, the ESRB’s analytical toolbox is based on early warning models and indicators designed to identify emerging vulnerabilities or imbalances that could lead to financial instability. These models aim to perform three functions in particular. First, to identify the variables which are associated with financial instability.
Accordingly, if banks incorporate climate-related risks into costs and capital, they indirectly become “facilitators” of change, by reducing the cost of financing of activities that contribute most to the sustainable transformation of the economy, while at the same time discouraging more contaminating activities. The role of investors I also wish to refer to the role that investors should likewise play as facilitators of this transition. Interestingly, the emergence of “green bonds”, which was not in response to any official initiative, came well before the Paris Agreement, which could be considered to mark the beginning of the involvement of the banking sector. In fact the history of green bonds began in 2007 with the first issue by the European Investment Bank. As you know, green bonds must be used to fund projects that are directly linked to sustainability, preservation of the natural environment and transition towards a lowcarbon economy. To achieve the green bond certificate, issues must satisfy certain principles, such as the Green Bond Principles (GBP) issued by the ICMA in 2014, to be verified by external appraisal. In general, green bonds are placed among investors with higher demand and lower costs than equivalent standard issues. The market has been particularly active in recent years, especially since the GBP were published in 2014. At June 2019, green bonds outstanding amounted to an estimated USD630 billion. I believe it is highly significant that this market has developed aside of official initiatives, based entirely on private standards such as the GBP.

To sum up, keeping domestic and external imbalances in check is the only way the CEE economies will be able to cope with any strong volatility headwinds. 3/3  BIS central bankers' speeches