samchain/econo-pairs-v1 huggingface dataset:
When supervisors engage in a more active dialogue about those processes, we expect that banks will apply greater resources to identify and analyze more comprehensively the risks that they face, seek more accurate measures of the potential costs of those risks to their businesses, and develop more sophisticated mechanisms to mitigate those risks, including maintaining sufficient capital funds. I must emphasize that the supervisory review of capital is intended neither to replace the judgement and expertise of bank management nor to shift responsibility for capital adequacy to supervisors. On the contrary, the Committee recognizes that bank managers are in the best position to understand and react to the particular risks that their institutions face. Supervisory review seeks to evaluate the quality of management’s judgement. As an added benefit, better dialogue through supervisory review will strengthen supervisors’ understanding of the risks that banks face. When problems do occur, having greater insight into the risk profiles and the control mechanisms in place will help supervisors to understand which institutions are most exposed and enable more rapid corrective action to protect systemic financial stability. Market discipline The third pillar of the new capital adequacy framework, market discipline, is an important ally of official supervision and can create powerful incentives for banks to manage their risks appropriately. Marketplace participants, including investors, creditors, and other financial counterparties, can reward sound management or penalize weak management through their influence on the value of a bank’s equity and debt and on its access to credit.

In the EU we have about 5.3 scientists and researchers per 1000 workers, which compares to the US figure of 9 per 1000. 17 In addition, ICT investment, which is an indicator of the diffusion of innovation, represented 6% of GDP in the US over the period 2000-2004 compared to only 3% in the euro area. ICT diffusion appears to be particularly relevant in the services sector given the higher potential for employment creation in that sector combined with the evidence that there is no apparent trade-off in the medium term between labour productivity and employment growth at the level of the sector as a whole. As a result, the key issue for the larger euro area countries is how to increase their future capacity to promote the diffusion of innovation and, in particular, technological changes in the service sectors, a field in which the Nordic EU countries have performed particularly well 18 . The state of structural reforms If euro area countries would now summon up their strength and ambitiously push forward with structural reform, this will support and broaden the improvement in economic activity in the euro area. This is why the ECB has always encouraged the implementation of structural reform within the Lisbon strategy. Five years later, progress has been made in some areas - as also indicated by an increase in the euro area employment rate. Still, all in all the reforms have not been far-reaching enough 19 .
The rapid development in the financial markets means moreover that the conditions for monetary policy are continually changing. It is therefore natural for the rules of action and strategies that govern monetary policy to be discussed and evaluated. I am going to begin by giving a short review of how the transmission mechanism is usually described and to discuss the changes that have taken place. Against this background, I will then briefly describe how the Riksbank conducts its monetary policy. What is the role of money? The quantity theory describes in a simple way how inflation is determined. In this theory, the price level is determined by the quantity of money in the economy. Production is determined over a somewhat longer period by access to labour and by the development of productivity; monetary policy does not affect production in the long term. It is intuitively easy to understand that at a given level of production the price level will increase if the quantity of money increases and vice versa if the quantity of money decreases. In an economy where only banknotes and coins serve as means of payment, the central bank can control inflation by determining the quantity of banknotes. This is conditional on the central bank knowing how much is required at a given price level in order for a particular quantity of goods to be produced and circulated - the speed or velocity of circulation must be known in order for a money quantity target to be used to control price movements.

Financial stability is a much more difficult concept to define. You know it by its absence of course. But by then it is usually too late. So it is fair to say that over the first years of the FPC we have been ‘learning by doing’, building out our thinking on what we should care about as we have been identifying and mitigating risks – and setting out our thinking so that stakeholders understand why we have acted as we have and how we are likely to act in the future. Based on 17 possible UK financial crises between the Bank’s foundation and 1846/1847 cited in Ashton (1959), Hoppit (1986) and Dimsdale and Hotson (2014). 2 Huang and Thomas (2016). 3 Anson et al (2019) and Anson et al (2017). 1  2  All speeches are available online at www.bankofengland.co.uk/news/speeches  2  Almost exactly five years ago the FPC took its first action directed at housing related debt and, crucially, action aimed at the resilience of borrowers rather than lenders. In doing so, the FPC adopted a broad view of its responsibilities – one that went beyond the risks and resilience of the financial system to the risks of leverage in the economy more generally. I want to look today at the reasoning behind that action and the evidence that has accumulated since about the risks the FPC was aiming to contain and the effectiveness of the action it took.
The flow of liquidity has improved slightly, and interbank rates have fallen. In the US and Europe, these rates were more than 2 percentage points above the key rate in October last year, but now the gap has been halved. As a result, the low rates set by central banks are having a greater effect. In the US, mortgages and corporate loans have become cheaper after the Federal Reserve began to purchase bonds and commercial paper issued by mortgage banks and firms. In Germany, Sweden and Denmark, mortgage rates have decreased markedly. And in Norway, borrowing rates have fallen and credit to homebuyers is flowing again. Equity and commodity prices are still fluctuating widely, but the decline is no longer steep. BIS Review 16/2009  9  Lower key rates, higher public expenditure and reduced taxes will push up demand for goods and services, gradually stabilising output and employment and preventing inflation from becoming too low. There are also strong self-regulating mechanisms in market economies that can easily be underestimated when times are at their bleakest. Corporate profitability is being squeezed, but the rise in unemployment will result in lower wage growth, which will curb the impact on earnings. Investment is falling sharply, but there will in time be a need for new houses and commercial buildings and to replace obsolete machinery. Households all over the world are now increasing their saving and reducing debt. When debt eventually reaches a sustainable level, consumption will pick up.

The first clear signs that these developments were not sustainable emerged in 2007 – in the US housing market, in the money market and in banks. BIS Review 16/2009  7  Few countries benefited more than Norway from the economic upturn, which drove up prices for oil, gas and other export commodities. At the same time, an increasing number of cheap consumer goods were imported from new EU countries and from Asia. In addition, EEA enlargement provided Norway with large inflows of labour, particularly from Poland. Moreover, Norwegian firms were also quick to make use of new technology and organise their activities effectively. Norway’s disposable income increased by more than 50 per cent from 2002 to 2007, more than that of any other western country. Not surprisingly, economic agents in Norway were optimistic about the future. Saving fell, and euphoria spread through the housing market. Household and corporate debt surged. Inflation slowed for a long period. Norges Bank reduced the key rate when inflation fell and approached zero in 2003 and 2004. Production capacity had increased markedly, providing scope for strong growth in demand for goods and services. Low interest rates underpinned the solid growth capacity of the economy. Well before inflation picked up, the Bank began to raise the key rate in 2005. The pace of the interest rate rise was gradually increased. 8  BIS Review 16/2009  The economic turnaround in Norway occurred just over a year ago. Growth in consumption came to a halt and house prices began to fall.
Global economic recovery continued as expected in recent months, with the main drivers being the US, the UK and China. In the euro area, by contrast, growth lacked momentum and inflation slowed considerably more than expected. In many emerging economies, too, economic activity was rather sluggish. The outlook for the global economy has not changed significantly since the September monetary policy assessment. Our forecasts suggest that growth will pick up gradually in the  BIS central bankers’ speeches  1  coming quarters. Further recovery is likely to be underpinned by a number of factors, including stable international financial markets, a less restrictive fiscal policy and a very expansionary monetary policy in the major advanced economies. Europe, however, will continue to experience below-average growth, with banks’ restrained lending policies and ongoing uncertainty hampering investment activity. In addition, the high level of unemployment in this region will also hold back private consumption. Uncertainty about the continued recovery of the global economy remains high overall. In many advanced economies, room for manoeuvre in economic policy is being constrained by the fact that interest rates are already very low and government indebtedness is high, making the global economy especially prone to shocks. We expect that the euro area will overcome the crisis in the medium term. However, the forthcoming assessment of banks’ balance sheets could cause some ripples. Furthermore, exiting from unconventional monetary policy measures is as yet uncharted territory.

In line with these assessments, the monetary policy should remain stimulating in the period ahead. The monetary stimulus will support the recovery of domestic demand and ensure the return of inflation to target. In January, the Bank of Albania lowered its key interest rate to 2.0% and signalled the continuation of this monetary policy trend for some quarters ahead. The monetary stimulus increased progressively through the lowering of the key interest rate, through the continuation of eased conditions of liquidity injecting operations, and through forward guidance to the public. This policy is aimed at cutting the costs of lending to the economy with the ultimate goal supporting demand growth and return of the economy to equilibrium. It has also signalled the commitment of the Bank of Albania to comply with its inflation target. Taking into consideration the time lag, the structural problems and the various shocks on financial markets and economic activity, the transmission of the monetary policy has been adequate, but not yet complete. The monetary stimulus has been transmitted to the financial markets, but the response of the economy to better lending terms continues to remain weak. The accommodative monetary policy is reflected in lower interest rates for lek loans and has contributed to the constant growth of this loan’s portfolio. Credit expansion, however, remains low as a result of the sluggish demand for credit and banks’ conservative lending policies.
Mark Carney: Putting the right ideas into practice Speech by Mr Mark Carney, Governor of the Bank of England and Chairman of the Financial Stability Board, at the Institute and Faculty of Actuaries General Insurance Conference, Wales, 25 September 2014. *  *  *  Introduction It is an honour to be invited to address you today. Insurance is at the core of the new Bank of England. As regulator, we are tasked with ensuring the safety and soundness of the UK’s insurance companies and the protection of their policyholders. To discharge these responsibilities, we draw on the entire resources of the Bank. Fully one third of our regulatory staff – over 200 supervisors and 50 actuaries – are engaged in supervising insurance companies. But that is just the start. Our supervisors are supported by hundreds of credit risk analysts, scores of monetary policy experts and macro-financial analysts. As a central bank with responsibilities for both monetary and financial stability, we have a view of both the asset and liability sides of your balance sheets. And as a highly active participant in global financial reform, we influence the measures that are reshaping the global system. In all of our actions, we recognise the importance of insurance to the economy. The UK insurance industry makes a major, direct contribution: £ to annual GDP and 300,000 high-paying jobs including many of the 14,000 members of the Institute & Faculty of Actuaries. It is a major exporter with about 30% of premiums earned overseas.

3/4  BIS central bankers' speeches  We are publishing the first issue of the report today and are going to release it on a regular basis, eight times a year, prior to the quiet period. We hope that this material will be interesting and useful to a wide range of readers. 4/4  BIS central bankers' speeches
Risk premiums in money and bond markets fell in autumn 2012, easing access to funding for debt-laden European countries. The effect of the improvement in financial markets has not so far fully fed through to credit conditions for the household and business sector. In several southern European countries, banks are still facing difficult funding conditions, keeping bank lending rates high and dampening growth in consumption and investment. This is affecting small and medium-sized businesses in particular. Although the improvement in money and bond markets also resulted in an improvement in funding conditions for Norwegian banks, it had little effect on bank lending rates for households and enterprises. In the course of spring, banks have raised lending rates for households and enterprises as a result of expectations of higher capital requirements. BIS central bankers’ speeches  1  Growth in the Norwegian economy has remained solid for the past 18 months, supported by higher activity in the petroleum sector and construction industry, favourable terms of trade and high population growth. At the same time, some segments of the export industry are feeling the impact of lower demand from Europe and a high domestic cost level. Unemployment has remained low and there has been a moderate rise in household consumption. Household debt is high and is rising faster than incomes. At the same time, households are saving more. Debt growth is being driven by a sustained rise in house prices. However, debt and assets are unevenly distributed. This increases household vulnerability.

Although these imbalances declined slightly in 2016, they are still at levels similar to those in 2014, when the sectoral countercyclical capital buffer (CCyB) was set at 2%. 1 Final requirements refer to the requirements that will apply after expiry of all transitional provisions, and in particular to the qualitative requirements for going-concern capital. Page 2/3  Berne, 15 June 2017 Fritz Zurbrügg  News conference  Second, the average interest rate margin of domestically focused banks decreased in 2016, having stabilised at a low level in the previous year. This renewed reduction in the interest margin highlights the considerable pressure which these banks continue to face in their core business, in an environment of exceptionally low interest rates. At the same time, however, banks’ net interest income and reported profits increased. This is mainly because the growth in mortgage volume more than offset the reduction in the interest rate margin. Third, the resilience of domestically focused banks remains adequate. In terms of both riskweighted assets and leverage ratios, they are well capitalised by historical standards, and their capital surpluses currently exceed the regulatory minimum requirements. SNB stress tests indicate that the surpluses at most of these banks are large enough to absorb losses under adverse scenarios. That is the SNB’s evaluation of the current situation at domestically focused commercial banks; but what about our assessment of the outlook? Here, the predominant feature is again the margin pressure that I have just mentioned.
I have always found it very useful, instructive and a genuine pleasure to participate in the events organised by both of these institutions, so today is a double pleasure, and I would like to thank everyone for the excellent collaboration that we have built up over the past few years. Thank you very much. BIS Review 45/2006  5

The economic activity at home is backed up by an improvement of the overall global climate, during the last two months, by attempting improvement signs of lending activity and by the seasonal effect of summer time. Global economy is being characterised by a more moderated downturn of the economic activity at industrialised countries, accompanied with a growth of the world trading activity and low inflationary pressures at global level. Nevertheless statistical data regarding the Albanian economy still remain at low level, the indirect indicators suggest this later is characterised by a positive economic growth, but slower compared to the succeeding years. The low pace of both retail sales and budget revenues increase, the exports slowdown, the lower expansion of lending to the economy and business and consumer’s confidence indexes show that Albanian economy is going through a slower growth phase relative to the one of previous year. This situation is also mirrored on the low inflationary pressures, revealed by the low level of core inflation, which is a proper appraiser of the domestic demand pressures. In August 2009, annual inflation pointed to 2.2 percent, remaining within the targeted band of the Bank of Albania, but close to its lower limit. Seasonal tendency of prices’ behaviour was confirmed to have the same intensity even during this period, by keeping the inflation value at the same rate with that of the preceding month.
Perhaps we have also made less than full allowance for the imbalances that remain even though the economy is developing well in the right direction. The Swedish economy still has unutilised resources and external debt is both high and above the level in many other countries. The major part of Sweden’s external debt accumulated in the Seventies and Eighties in connection with large and continuous current-account deficits. Such deficits need not be a problem if, for example, they stem from high investment. In those decades, however, they were mainly generated by unduly high consumption. As a result, a proportion of our gross domestic product has to be reserved today for servicing foreign debt. The economy’s capital stock and production capacity are not larger than they would have been without the debt burden. Neither can the current-account deficits and low saving be attributed to demographic factors. BIS Review 48/1999  6  Since the krona’s depreciation in 1992, the current account has shown sizeable surpluses. They reflect the combination of good export growth and a markedly subdued increase in domestic demand; the latter came in turn from a series of years with high interest rates and the extensive measures to consolidate government finances. The financial surpluses are reasonable in view of the large interest burden from high external debt and the circumstance that some way into the next century the economically active proportion of Sweden’s population will be shrinking.

The situation in Sweden’s financial markets then improved as the measures for consolidating government finances began to bite, prospects for Sweden’s economy brightened and international developments became more stable. During 1995 the Swedish krona became markedly stronger and long-term interest rates declined. This trend continued during 1996, when the Riksbank rapidly lowered the repo rate. At the end of 1996 the level of the TCW exchange rate index was 114, which was inside the Riksbank’s estimated interval for long-term equilibrium. For about two years, from the summer of 1996 to the summer of 1998, the krona stayed inside a relatively narrow interval in relation to the German mark, about 3 per cent around a mean level of 4,40. In effective TCW terms, however, the krona weakened. There are good reasons for supposing that this was due to other factors than problems with credibility. The link between exchange rate movements and the long-term interest rate differential was no longer discernible, which indicates that the krona’s path now had less to do with aspects of credibility. The main explanation for the weaker exchange rate in this period lay rather in cyclical differences. Stronger economic growth in the UK and the United States caused the dollar and sterling to appreciate against the krona. Turbulent autumn In the autumn of 1998 the krona weakened again, mainly, in the Riksbank’s opinion, on account of international turbulence.