samchain/econo-pairs-v1 huggingface dataset:
This is reflected on the increase of Government securities yields of these countries, as well as on the enhanced sensitivity of investors against fiscal developments. The economic activity is assessed to have recorded a progressive slowdown of the growth pace, these last six months. The latest indicators of real economy, as sales’ indicators, the monetary and confidence indicators, signal further hampering of the economic growth during the fourth quarter of year 2009 and in the early months of 2010. The stoppage of investments from the major part of businesses, the low exploitation of capacities, the decrease of capital goods’ import, and the low increase of loans for investments, reveal a slower performance of private investments even in the early months of this year. On the other hand, the more moderated growth paces of employment and wages, the shrinking of consumer loans, the weak performance of retail sales, as well as the indices on the increase of consumers’ preferences for savings, show a hampering even of the current and expected consumer in the short-term period. External sector of economy has manifested positive signals during January, characterized by an exports’ growth of 30 % and a tightening of trade deficit by 13%. This welcomed development remains however insufficient to direct the Albanian economy on the path of the persistent economic growth. The high fiscal incentive transmitted over the first three quarters of 2009, has affected the increase of public debt at 59.5 percent of GDP.

The recent developments of inflation have reflected the statistical impact of the comparison to a relatively low prices base in 2009, the more full transmission of exchange rate depreciation on consumer prices and the administrative increase of energy, since January 2010. The later factor provided an effect of about 0.5 percentage points on inflation level, being the main reason of exceeding the level of 4%. On the other side, the increasing tendency of food goods inflation is owed to the global conjuncture of goods prices, which is revealing a gradual monthly increase since the half of 2009. Our analysis recommends that the increasing trend of inflation owes mainly to supplying factors, which are estimated to manifest an uneven nature and a short-term action in time. The Bank of Albania expected these developments, being factorised on our projections regarding inflation and communicated timely and in terms of transparency to the public. In medium term period, the growth under potential of the Albanian economy owing to the slowdown of the domestic and external demand, shall establish an environment of low inflationary pressures, which are expected to balance the pressures deriving from the supply direction. This assessment is also supported by the sustained developments and at low historic rates of the long-term component of non-tradable goods inflation, as the most directed transmission of inflationary pressures generated from the internal demand in economy. The rates of both key inflation and of the non-tradable goods in February pointed to 1.1 and 2.3%, respectively.
One of the problems with joining a common currency area might be that real interest rates in this area will be lower than the natural rate of the new member. Recent research shows that this might be the case for Poland, where the natural rate has remained in the past above the euro area level (BrzozaBrzezina 2006). For Poland, entering the eurozone means lower nominal interest rates (the spread on long-term rates still exceeds 100 basis points) and higher inflation (due to appreciation of the real exchange rate related to the catching up process, with no longer available nominal exchange rate channel). Together this means a drop in real interest rates, which could induce people and enterprises to substantially increase borrowing, and spend the loans on consumption and investment goods. What could be the consequences of this? First, if borrowing accelerates massively, banks may start extending loans without properly checking their customers’ creditworthiness – this could result in bad debt problems. It is a well known phenomenon (e.g. Demirgüç-Kunt, Detragiache 1998, Gourinchas et al. 2001) that lending booms are often followed by banking sector crises. Fortunately, recent research on the potential for lending booms in Poland after euro area accession forecasts a rather moderate increase in lending (Schadler et al. 2005, Brzoza-Brzezina 2005), and shows that the expected credit growth is rather an equilibrium phenomenon – a structural adjustment that should not have negative consequences (Kiss at al. 2006).

And thus, Willem Buiter and Erik Nielsen in their recent paper (2007): “Mundell on His Head: Asymmetric shocks are good for you, thanks to Economic and Monetary Union in Europe”, argue that home bias has been receding in the Eurozone, so an increasing number of households and companies now hold a Euro-wide portfolio. In finance it is good when returns on particular assets are negatively correlated, because it helps you to diversify risk and achieve the better risk-return tradeoff. Therefore, if asymmetric shocks hit monetary union, it will result in negatively correlated returns on euro-zone assets portfolio, so such portfolio holders will be better off in comparison with a scenario of a symmetric negative shock. Of course this train of thought may seem too narrow, since it boils down merely to the capital income analysis and loses sight of other effects of asymmetric shocks, such as those on the labor market situation. Nevertheless, this example provides a clear evidence that our cost and benefit analysis may change every so often in tandem with new ideas that smart people come up with. However, before I proceed, I would like to make two important points. First, I would like to note that views presented here are my own and they do not represent the official position of the National Bank of Poland. Second, my economic background allows me to speak in terms of standard economic variables: output, consumption, prices etc. On the other hand, I do not feel competent to speak about highly immeasurable values like national pride.
PRA Policy Statement 6/21 ‘Operational Resilience: Impact tolerances for important business services’, March 2021 6. PRA Consultation paper 5/22 ‘The Strong and Simple Framework: a definition of a Simpler-regime Firm’, April 2022 7. PRA PS7/19 ‘Credit risk: The definition of default’, March 2019 And PRA CP21/19 ‘Credit risk: Probability of Default and Loss Given Default estimation’, September 2019, 3 CP24/19 ‘Asset encumbrance’, September 2019 8. ‘New banks authorised since 2013’, February 2022 9. ‘The future of international insurance in the UK − speech by Alan Sheppard’, April 2022 10. HM Treasury ‘Review of Solvency II: Consultation’, April 2022 11. London scores highly in industry rankings of financial centres based on quantitative metrics. See for instance the Global Financial Centre Index. Research shows that human capital is a key determinant of financial centre success. See Karyal, I E and Karan, M B (2012), ‘The research on the distinguishing features of the international financial centres’, Journal of Applied Finance & Banking, 2(5), pages 217-238. Robust institutions and the rule of law are identified as important factors for maintaining competitiveness in Moosa, I, Li, L, and Jiang, R (2015), ‘Determinants of the Status of an International Financial Centre’, The World Economy, 39(12), pages 2074-2096. This conclusion is also reached in Eichengreen, B and Shah, N (2019), ‘The correlates of international financial-center status’, Review of International Economics, 28(1), pages 62-81. 12. Academic literature shows that large global financial centres with deep and specialised financial markets benefit from agglomeration effects and gain an ongoing advantage over smaller financial centres.

The stress test in the face of an adverse macroeconomic scenario also showed satisfactory results for the Spanish banking sector. On average, the adverse scenario would have involved a reduction of 144 pp in Spanish banks’ CET1 ratio, without the minimum established capital ratio having failed to be met in any case. In the case of European banks, this average impact would have amounted to 300 bp. These results confirm that the financial reform undertaken in Spain has managed to satisfactorily correct the shortcomings in our banking system, thus placing it in a favourable starting position as the SSM has commenced operating. The latest profitability figures confirm the ongoing normalisation of the sector. Following the losses posted in 2012, against the background of the strong increase in provisions for asset impairment, deposit institutions, which had restored positive results in 2013, recorded profits after tax of almost € billion in 2014. Profitability in terms of equity, ROE, stood at 6.6% at December 2014, having increased by almost 1.5 pp on the previous year (5.2%). That said, profits in the industry, which are still modest in historical terms, are largely based on lower provisioning as a result of the cyclical improvement in the economy and also on the gains and losses on financial assets and liabilities.
the Ministry of Finance) will not willingly accept that it has to pay for the costs of banking crisis resolution. Second, the management of the banks will try to change the banking problem resolution and not shoulder the costs of their actions. They have clear vested interests in the bank as it is (their high salaries, their influence through credit allocation, the wish to hide previous decisions, etc). Third, depositors (households and companies) will make every effort to minimize their losses and get someone else to bear the costs of the problem. Fourth, the owners of banks will try to put political pressure on the government to bail them out. Fifth, there is the personnel of the bank, because they know that either all or part of them will lose their jobs. Sixth, politicians will try to minimize the problem in the hope that it will not hurt their “image”. Every decision on the bank resolution problem is a redistribution problem. There are always welfare losses for some interest groups, so we should be aware that such decisions will create very strong lobbying, corruption, ruthless behaviour, a fight to preserve vested interests, etc. Needless to say, all such behavioral patterns mean using scarce resources to influence the outcome in a redistributive way, and not use them to produce new wealth. To overcome this problem policymakers must make sure that they have the “incentives right” and have a clear set of rules to diminish the scope of discretionary decision-making which always gives room for rent-seeking.

Therefore it seems reasonable to  3  BIS Review 43/2000  argue that transition economies should pay special attention to formal education, and other forms of training and research. As the empirical evidence suggests (Flanagan, 1998), return to schooling began to rise rapidly during the transition. Relatively soon, they approximated those in many market economies. Under central planning, the main distortions in human capital formation were the overvaluation of vocational training and the undervaluing of university education. However, the transition process has quickly started to correct this shortcoming of socialism. Formal schooling need not be the main factor in developing human capital. Let me just mention that according to Lucas (1993), the most central feature of human capital accumulation for growth is learning on the job (learning by doing). For this to happen, we need both managers and workers to be constantly exposed to new challenges, to move up on the “quality ladder”. In the globalized world of today it seems that one of the best ways to be exposed to new challenges is by exporting. An old Latin saying could be paraphrased into: “Exportare necesse est, vivere non necesse est”.2 By opening up the economy, we are promoting human capital, which in turn is essential to growth. A similar approach can be used to argue for more foreign direct investments (FDI) in transition economies. FDIs bring not only physical capital, but: new organization, know-how, etc which then increase “domestic” human capital.
Indeed, this is the prevailing course of action at present, routed through, for example, the ECB Banking Supervisory Committee or the recently created Committee of European Banking Supervisors, a “level 3 committee” set up in application of the Lamfalussy approach to the banking sector. The functions of the Committee of European Banking Supervisors include promoting convergence of the supervisory practices of the EU Member States and increasing and improving co-operation between supervisors. Growing supervisory co-operation will become unavoidable as further headway is made in the necessary process of integration of the single financial market. In this respect, we cannot ignore that the pace of integration is far from homogeneous. Thus, the integration of the interbank market can be classed as full, particularly in the euro area, and very high in the wholesale, the securities issuance and the large company and bank financing markets. By contrast, the retail market remains markedly local in nature and it will only become integrated insofar as its cultural and idiosyncratic barriers are progressively lifted. The same is so of cross-border activity. Mergers and acquisitions of credit institutions have raised to forty the number of institutions with operations in various EU countries. If profitability is adequate, this trend will foreseeably continue and European institutions will keep exploring the opportunities for profitability and lower costs offered by operations of this type. Despite this, the more than 8,000 deposit institutions in the EU continue to exhibit a markedly local nature.

Fiscal stability and fiscal discipline are basic assets of Spanish economic policy which, however, are not always easy to manage, as shown by the vagaries of the European fiscal framework. It is thus very important that the review of the Fiscal Stability Law and of the Autonomous (Regional) Government Financing system should not lead to a weakening of fiscal discipline. In a situation in which it is necessary to make headway simultaneously in job creation and in productivity gains, the role of supply-side policies geared to improving the workings of the economy and expanding its potential growth is crucial. One of the main messages in the Annual Report presented today is precisely that it will become increasingly difficult for the Spanish economy to keep raising its levels of well-being if it does not make progress on both these fronts. Maintaining high levels of job creation is, and will continue to be, a powerful means of expanding the economy’s growth potential, but it will be impossible to sustain economic momentum in the long term if the economy does not improve its competitive position in the increasingly dynamic international setting. And to do this, it is essential to significantly improve the poor performance of productivity. Under this approach, labour market reform heads the list of transformations that are needed.
In a market economy, it is the task of the price system to communicate information about household preferences and, for instance, to provide signals as to where productivity is to be best developed. Besides the task of safeguarding price stability, the Riksbank is also responsible for the country’s payment system. It is a prerequisite for the functioning of a modern economy that payments can be carried out in a safe, efficient way. In order for payment systems to function, it is important that financial stability is maintained, which, for instance, means that bank crises shall be avoided. There are close connections between the responsibility of the central bank for price stability and its responsibility for financial stability. In order for the instrumental rate to have the desired effect on interest rate formation, it is, for instance, important that the payment system functions efficiently and securely, since monetary policy instruments operate via the payment systems. Price stability can further be threatened by financial imbalances and by financial instability. At the same time a monetary policy focused on price stability per se probably reduces the risk for financial instability. It is not meaningful to draw a sharp boundary between what is regarded as the central bank’s monetary policy tasks and what is included in the responsibility for a secure, efficient payment system. I confine myself here to stressing that price stability and financial stability are both required to create good growth conditions in an economy. And the central bank plays an important role in achieving both these goals.

In the most recently published inflation assessments, it was assumed that the price stability target was not threatened during the forecast period despite the growth of demand being so strong that use of capacity was under strain at the end of the period. The majority view of the Executive Board was therefore that there was no reason to increase the repo rate. This assessment was based on free resources in the initial situation, good productivity growth, low price increases on certain recently deregulated areas, low import prices and finally low inflation expectations. It is not per se strange that GDP can increase as much as 3-4% for a couple of years without inflation sharply accelerating, if the use of resources is low initially. If the pattern from previous cyclical upswings was to be repeated, price pressure should now increase. However, it has proven difficult to identify any exact and very stable correlation. As I mentioned earlier great changes have taken place in the Swedish economy. While there are still considerable deficiencies in competition in many areas, it is nevertheless not probable that inflation will accelerate strongly in the next few years. An important reason for this is that the price stability target has now  BIS Review 48/2000  4  obtained such strong support that inflation expectations are not increasing despite a cyclical upswing that is stronger than for a very long time.
Equally important are the risks associated with the circulation of banknotes and coins and the lesser value means of payment that are part of the day to day lives of every Chilean. The autonomy of the Central Bank also means that the quality of its institutional management is a special responsibility. Although it is not part of the State’s administration, it is equally owned by every Chilean, who rightfully demand an efficient use of their resources. To undertake all these tasks, it is important to recognize that trust in a central bank also rests on its prudence. An institution responsible for price stability and financial stability cannot afford to improvise or experiment. In this regard, it is important to acknowledge the potential, but also the limits of monetary policy. In particular, we must reaffirm that it does not have the capacity to affect the mediumterm trends of the economy and not even completely eliminate the cyclical variations that affect it. Our main contribution to the country’s development is, in line with the mandate of our Organic Law, to keep inflation low and stable, reducing economic volatility and financial risks, with the expectation that by reducing uncertainty we will facilitate investment, employment and consumption decisions that shorten the cycle. The right mix of prudence and determination is not easy to calibrate. Prudence is necessary to correctly assess the implications of changes in the economic environment, resisting the temptation to look for the easy way out, which can prove very costly in the medium term.

All considered, the Board estimates that the balance risk is unbiased for both activity and inflation. Summing up, we now face a scenario where inflation has dropped faster than expected— but will stand at 3% at the end of the projection horizon—and where activity continues to grow slowly. Both domestic and external risks have increased. Let me now turn to the issues we explored in our Financial Stability Report. 5 / 19  BIS central bankers' speeches  The Financial Stability Report Our Financial Stability Report, which we publish in June and December of each year, presents recent macroeconomic and financial developments that might influence the financial stability of the Chilean economy. On the external front, the risks presented in the FS Report are the same of the Monetary Policy Report I just described. Worth mentioning is the uncertainty surrounding how the worsened external financial conditions and the Chinese situation will affect us. In China, private credit is still on the rise, as is the banks’ exposure to the real estate sector, where house prices continue to grow at two-digit rates in the high demand cities. The quality of banks’ portfolios has deteriorated further, in line with the poor behavior of the corporate sector. This situation could worsen further with a rise in financial costs, again if international trade policies move towards protectionism, given the still high dependence of the Chinese economy on its exports.
Monetary policy must then be adapted in order to counter inflationary pressures. A higher interest rate compared with other countries may result in a nominal appreciation. This leads to deteriorating competitiveness and contributes to reducing employment in the exposed sector. How quickly this takes place will depend on the monetary policy tightness required to counter price and wage pressures. Conclusion We live in an uncertain world. The economy will constantly be exposed to shocks of different types. We must be prepared for changes in the functioning of the economy over time. No one knows precisely how different shocks will affect the economy or what effects fiscal and monetary policy instruments will have. A stable operating environment in the form of a predictable monetary and fiscal policy contributes to reducing some of this uncertainty. This is a benefit for economic agents. Monetary policy decisions are also made under uncertainty. This is the most important challenge we face in the formulation of monetary policy. Given the phasing in of petroleum revenues now being planned, fiscal policy will be expansionary for many years ahead. This will contribute to stimulating domestic demand and thus influence monetary policy’s scope for manoeuvre in the medium term. Monetary policy must be tighter than it otherwise would have been. The consequences of using a growing portion of petroleum revenues will be a challenge to many, including the labour market, the business sector and political, decision-making bodies.

Petroleum revenues are gradually phased into the economy, approximately in pace with the expected real return on the Government Petroleum Fund.” The first sentence can be seen as a justification for a gradual phasing in of petroleum revenues. A phasing in of revenues based on using the expected real return on the Petroleum Fund must be said to be reasonably controlled and gradual. Another aspect is that the plans do not call for using the actual wealth. However, the expansionary impetus to the economy in any one year will depend on the time profile for the accumulation of capital in the Petroleum Fund. 8  BIS Review 7/2002  There was broad support in the Storting for the guidelines. Both the previous and current Government have placed considerable emphasis on adhering to these guidelines in the government budget for 2002. The use of petroleum revenues is calculated on the basis of the structural, non-oil deficit. This means that, in general, changes in activity levels in the economy do not influence the use of petroleum revenues. This also implies that fiscal policy will contribute to curbing fluctuations through automatic stabilisers. In years with a high level of activity, the actual budget deficit will be smaller than the structural deficit. In years with a low level of activity, the actual deficit will be higher. It is the level, and not changes in economic activity, that influences the structural deficit.