samchain/econo-pairs-v1 huggingface dataset:
Monetary and fiscal policy must be complementary in order to curb cyclical fluctuations. BIS Review 20/1999  16  Fiscal policy must be credible in the long term. The welfare society is dependent on solid government finances. The authorities must exercise caution in establishing fixed long-term priorities in the government budget. Measures aimed at countering an increase in unemployment must not be irreversible and undermine long-term credibility. The conditions for addressing the challenges are favourable. Employment is high and the population is well educated. However, our economy is also exposed and vulnerable. In recent years fiscal policy has been too expansionary. This year the fiscal stance is appropriate. A continued tight fiscal policy can contribute to restoring credibility and confidence so that interest rates can gradually be reduced. Let this be my hope for future developments. 17  BIS Review 20/1999

Outstanding bank lending to corporates is rising at a faster pace in France than anywhere else in Europe: +4.5% year-on-year at end-November 2015, compared with +2.1% in the United Kingdom, +1% in Germany and an average of +0.9 % for the euro area as a whole. In fact, based on the responses given by business leaders to our surveys, it seems that applications for investment loans are generally accepted fairly readily, and the same seems to apply, more or less, to cash loans. Although difficult to measure, firms’ willingness to apply for loans appears to be strong. Surveys conducted by the ECB show similar results, and rank France on a par with Germany in terms of access to credit and willingness to apply for loans, well ahead of the other major countries in the euro area. Interest rates on loans are also lower in France than anywhere else in the euro area – by around 1 percentage point in the case of individual loans of up to EUR 250,000. With regard to today’s topic, however, there are a number of important distinctions that need to be made. Access to credit is markedly more difficult for VSEs than for other SMEs: –  fewer than 60% of applications for cash loans were accepted (i.e. granting of 75% or more of the requested amount) in the third quarter of 2015, compared with 74% for SMEs.
•  Would it be necessary to promote a certain tactical flexibility in the conduct of monetary policy, so that central banks might carry out adjustments in terms of objectives as well, not only instrument-wise? Such an approach would diminish the predictability of monetary policy, but would allow, when need be, for financial stability considerations to prevail over the inflation objective. •  Is the reassessment of the desirable level of inflation suitable? How low is too low? The same as for capital inflows, we can ask ourselves in the case of price stability as well: how much of a good thing is too much? •  Will the policy instruments which have been resorted to in the context of the global crisis become an integral part of the new conventional framework? If macroprudential tools are here to stay, the future of non-conventional monetary policy instruments is less certain. Will the central banks keep using these instruments or will they abandon them at some point in time? I fully share the belief of the Governor of Banco de España Luis Linde (2013) that monetary policy – conventional or not – cannot solve the ultimate causes behind the loss in investors’ confidence or the tensions in financial or banking markets; in fact, its main role is to provide time to adopt the necessary measures to reform and/or adjust. 4  BIS central bankers’ speeches  •  How much room for trade-off among different goals is available?

After all, the danger of inflation is hardly a pressing concern nowadays (but rather the lack of it) and the pursuit of financial stability is ultimately a shared responsibility, since it implies close cooperation with the government and other authorities and may ultimately involve recourse to public funding. I share Stanley Fisher’s view that it would be a costly mistake to give up central bank independence. That would mean “the benefits of having a central bank that can take a longer term and apolitical view of what is good for the economy and take actions in support of that view will be lost”. If a long-term perspective and a shield against political pressure are required for achieving price stability, these may be even more important if explicit concern for financial stability is added. And frankly, I do not see the need for close cooperation with the government as something that implies abandoning central bank independence, but rather as a pre-requisite – which has always been there – for promoting effective policies. Irrespective of how well-designed the policies of the central bank may be, they cannot substitute for a consistent macroeconomic policy mix, and in the absence of this consistency they are likely to achieve at best sub-optimal outcomes. Having said that, I think there are a few questions worth asking – I must confess I do not have the answers, but I believe that the future of central banking hinges upon them.
Alexey Zabotkin: Monetary Policy Guidelines for 2022–2024 Speech by Mr Alexey Zabotkin, Deputy Governor of the Bank of Russia, at the press conference on Monetary Policy Guidelines for 2022–2024, Moscow, 2 September 2021. * * * Good afternoon, At the beginning of September, we usually release the first draft of the Bank of Russia’s strategic document on monetary policy — the Monetary Policy Guidelines for the next three years. Today’s event is held to present this document. Monetary policy goals and principles The goal of monetary policy is to maintain price stability. The Bank of Russia implements its monetary policy within the inflation targeting regime, seeking to ensure the annual growth rate of the consumer price index of around 4%. We influence the economy primarily through money market rates keeping them close to the key rate. The effect of monetary policy and key rate decisions on the economy and price movements has a significant time lag. Therefore, when making our decisions, we always rely on the comprehensive analysis of the current situation and the medium-term macroeconomic forecast. Moreover, it is crucial to take into account the balance of risks in the baseline forecast and other possible developments of the situation. According to economists, this is what is called a robust policy. Another important instrument of our policy is communication. We adhere to the principle of communication transparency to implement our monetary policy efficiently.

Short-term inflation fluctuations around the central bank’s target, for instance, those observed in Russia in 2017, 2018, and 2019, with inflation expectations being relatively stable and even lowering, do not contradict price stability. Conversely, high inflation expectations that might entail a longer-lasting deviation of inflation upwards from the target involve significant risks to it. These are the risks of a decline in the purchasing power of incomes and savings, which is especially sensitive for the most economically vulnerable groups of the population. Monetary policy should mitigate such risks. Therefore, already in March 2021, as the economy bounced back to its pre-pandemic level, the Bank of Russia started to raise the key rate from its record-low of 4.25% to 6.5% p.a. following the July meeting of the Board of Directors. The Bank of Russia will make decisions on its further moves depending on the path of economic development and the trends of inflation and inflation expectations. Baseline scenario I would like to remind you that the Bank of Russia updates its medium-term baseline forecast four times a year in the course of the Board of Directors’ core meetings on the key rate. The forecast presented in the draft Guidelines was released earlier following the meeting held on 23 July 2021, but this draft extends the forecast horizon to 2024.
Recessions are actually often credited with improving average levels of efficiency, as less productive firms are forced out of business and others drive through productivity gains in order to stay afloat. Only the fittest – and the most efficient – survive. But this recession differed to those in our recent experience since it was triggered by a financial crisis. Banks’ ability to lend was reduced. Credit conditions tightened. The implications of this for the efficiency with which companies operate are potentially far reaching. Many smaller companies and new businesses, which are a critical source of innovation in our economy, have struggled to secure the finance they need to grow and expand. Company start-ups fell sharply during the recession, and evidence from the Bank’s Agents suggests that many smaller businesses are still struggling to access funds at affordable rates. In that context, it is worth recalling that small companies, employing less than 100 employees, hold over 40% of UK patents, even though they account for less than 20% of total investment.12 Even for those companies that are able to borrow funds, the tightening in credit conditions is likely to have impeded the efficiency of supply. Some companies have become more cautious, preferring to hang onto liquidity or pay down debt rather than invest in increased levels of training and R&D. The increased cost of working capital has led many firms to cut back substantially on their inventory levels, disrupting the efficiency of supply chains.

Fortunately, this has not happened so far in reality. The economic cycle experienced by Portugal in recent years has, nonetheless, been a challenging experience. I do not want to suggest that the materialisation of such, or even more severe, financial stability challenges linked to euro adoption is the most likely future scenario for the acceding countries. There may be many country-specific characteristics influencing the balance of risks in a favourable way. For example, countries that have operated currency board regimes for many years have got used to living without their own monetary policies and with low interest rates ahead of euro area accession. The acceding countries have in general made substantial progress with nominal convergence by now. It is also important to stress that the future development of the financial systems in acceding countries may be strongly influenced by the large presence of foreign capital in both their financial and corporate sectors. I also do not mean to say that the challenges of euro adoption outweigh the benefits in terms of financial stability. First, the challenges are linked to scenarios which may have rather low probability and are at this stage being discussed only as part of prudential analyses. Second, the actual comparison of the benefits and challenges may differ from one acceding country to another. For instance, countries with currency boards or other fixed exchange rates are likely to face more serious currency mismatches in their financial sectors and economies, as hard peg regimes discourage hedging against exchange rate fluctuations.
Mugur Isărescu: 130th anniversary of the National Bank of Romania Speech by Mr Mugur Isărescu, Governor of the National Bank of Romania, at the Gala Concert of George Enescu Philharmonic Orchestra, Bucharest, 5 September 2010. *  *  *  Mister President of Romania Your Excellencies Distinguished audience Dear guests and friends of the National Bank of Romania Please allow me to welcome Mr Jean Claude Trichet, the President of the European Central Bank, our honoured guest here, at the Romanian Athenaeum, to the final act of our anniversary event. I would also like to greet President Ion Iliescu and Mr Emil Boc, the Prime Minister of Romania. I appreciate your honouring our invitation. My thanks go also to you all, governors, representatives of central banks and international financial institutions, and to all our Romanian and foreign guests. We are very happy to have you here with us this evening. We celebrate the 130th anniversary since the establishment of the National Bank of Romania, the 16th central bank in the world, according to the most widely accepted chronology. The birthday of our institution is on 29 April 1880, a day on which the Law on the establishment of the NBR was published in the Official Gazette. The commissioning of the Bank required a longer process that spanned over the entire 1880. On 5 September 1880 – precisely 130 years ago, the Bank’s Board held its first meeting.

In this context, what I would like to say is that the National Bank of Romania will strengthen its historical ties with the Romanian Academy with a view to drawing up extensive works, meant to be a “point of reference” inspiring strategies or programmes and entwining the visions and ideals of coexisting generations in contemporary Romania. Actually, one of the conclusions revealed by the troubled 130 year history of the National Bank of Romania, as well as by the universal history is that every time public debate descends from the field of free confrontation, among scientific, well-grounded hypotheses, into an arena of noisy or authoritarian arguments, irrespective of the immediate outcome, it will eventually take its toll on all walks of life. The current global economic and financial crisis has given us a warning once again that there is no valid substitute for consistent economic policies. Everywhere in the world, the correction of economic policy errors is painful and most of the time hard to understand by the general public and inherently tardy. The sustainable development of Romania hinges on the consistency of economic policies and the euro adoption strategy in the following years may represent a catalyst for achieving this coherence. Ladies and Gentlemen, In 1881, the year when the National Bank of Romania actually started its activity, George Enescu, a music genius, was born. He was an outstanding composer and violinist boasting a brilliant international career. This evening, we will enjoy his wonderful music.
The budgetary plan projects maintaining the weight of public investment as a percentage of GDP, following the cuts seen in recent years; that said, the cuts would be prolonged in the case of the State. Likewise, the envisaged revision of pensions is set at 0.25%, in line with the floor set in the draft law defining the sustainability factor. As in previous years, the main challenges surrounding the budgetary projections arise from the course public revenue may take; despite the projected gradual recovery in activity and some re-balancing of the attendant growth factors, revenue will remain considerably influenced by the greater relative weight of exports and by the moderation of wage income, which will limit the response by public revenue to greater activity. To conclude, I have a comment on public debt and its implications for the fiscal drive still to be made. On official projections, the public debt/GDP ratio might rise to 98.9% in 2014 and stand above 100% in 2015, beginning to turn down in subsequent years. Placing public debt below the ceilings set by the Stability and Growth Pact and the Stability Law will, in any event, require that high primary surpluses be maintained over a prolonged period of time. This is the indicator that best illustrates the scale of the challenges still ahead for us. It also highlights the importance of successfully seeing through fiscal consolidation and structural reform, so that the ongoing reduction in budgetary imbalances may combine with an improvement in our potential growth.

That reflects the strong dynamism of exports, driven in recent months by the improvement in Spanish competitiveness and the buoyancy of the euro area markets; but it is also indicative of the weakness of domestic expenditure, giving rise to the contractionary behaviour of imports. As a consequence of these developments, Spain will show a net lending position against the rest of the world of around 2% of GDP, an unprecedented and record figure in recent decades. Over the past months, inflation, proxied by the CPI, has been declining notably, essentially as a result of the tapering off of the effects of the VAT increase over more than a year back. Thus, in October, the CPI fell by 0.1%. Foreseeably, however, positive though moderate rates of change will resume in the coming months, therefore proving compatible with the necessary continuation of the ongoing improvement in competitiveness our economy requires. For 2014, a central scenario has been outlined in which the factors that have been affecting domestic demand progressively slacken. It is projected that the processes of adjustment in the economy, and most particularly the redressing of private-sector debt and the ongoing fiscal consolidation, will continue to influence the pace of recovery of demand and activity; but, at the same time, the reduction in uncertainty and the culmination of the restructuring of credit institutions, along with their improved results, will lay the foundations for improving financial conditions for the resident sectors.
But the avoidance of default during the crisis does not come without the willingness to use the means available to avoid that outcome, even in very adverse situations, and the ability to endure the temporary hardship that comes with it. In addition, Iceland – like Ireland, probably – was helped by a relatively good fiscal position prior to the crisis. The fiscal consolidation that began in 2010 and has already resulted in a significant primary surplus was subsequently an important factor in restoring external confidence, which fell to what, in retrospect, seems an unjustifiably low level. In Iceland’s case, the overall effort was made easier by the outside assistance of the IMF, the Nordic countries, and Poland. The same consideration applies to the hardest-hit EU countries and should be kept in mind when assessing their probability of default. Finally, let me say a few words about credit ratings and market perceptions in the Icelandic saga, which broadly conforms to more general patterns. Both the sovereign and the private Icelandic banks were assigned triple-A ratings by Moody’s for a period prior to the crisis (the sovereign from October 2002 to May 2008 and Kaupthing Bank from February 2007 to April 2007). In the case of the banks, the stated argument was that the Government would stand behind them in times of difficulty. We now know that this was nonsense, given the size of the banks and the scale of their international activities. In case of the sovereign, this rating was not so bad after all!

Már Guðmundsson: Sovereign risk – a world without risk-free assets? Remarks by Mr Már Guðmundsson, Governor of the Central Bank of Iceland, in a policy panel at a seminar on “Sovereign risk – a world without risk-free assets?”, Bank for International Settlements, Basel, 8–9 January 2013. *  *  *  I would like to cover three issues in my remarks. First, I will reflect a bit on the title of the seminar and some of the more specific questions directed at this panel. Second, I will discuss the nexus between sovereign risk and banking fragility, using Iceland as a case study – after all, the Icelandic experience is probably the reason that I am taking part in this interesting seminar in the first place. Third, and again with reference to the Icelandic case, I will reflect on the connection between sovereign ratings of advanced countries and actual sovereign defaults. The title of this seminar is Sovereign risk: a world without risk-free assets? As has been repeatedly pointed out, there is, strictly speaking, no such thing. The default probabilities of even the strongest sovereigns are not zero, and they increase as the horizon gets longer. Furthermore, the real income stream of nominal government bonds is uncertain.
In addition, we reiterated our intention to continue reinvesting, in full, the principal payments from maturing securities purchased under the APP for an extended period of time past the date when we start increasing interest rates, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation. The net purchases and longer reinvestment horizon reinforce the accommodative impact of our other measures, thereby further easing the funding costs for businesses and households in the euro area. In addition, these measures help keep down longer-term interest rates by mitigating the undue tightening that would otherwise mechanically arise from the reduction in the average maturity of our portfolio. Finally, net purchases also signal our commitment to use all instruments in pursuit of our price stability objective, which can have a powerful effect on the formation of inflation expectations. As a complement to the policy measures I just outlined, we also decided to change the modalities of the new series of targeted longer-term refinancing operations (TLTRO III) that we announced in June. Banks can now obtain this long-term funding at lower rates with a longer maturity. This will also help to ensure that our accommodative policies pass through entirely to the funding costs of households and firms. Finally, we also announced a two-tier system for reserve remuneration, in which part of banks’ excess reserves will be exempt from our negative rates.

Enriching the array of financial products and payment instruments In addition to its primary function, intermediation of funds, the banking sector has an essential role to play in providing payment services to the economy. The scale and efficiency of accomplishing this role is in proportionate correlation to the scale of financial inclusion of the population, the overall efficiency of the economy, and – why not – the level of its formalisation. In the framework of its role as overseer of payment systems, the Bank of Albania has undertaken a series of measures to further improve legal and regulatory frameworks. These improvements aim to accommodate innovative technological developments in the field of payments, enhance effectiveness by promoting competition and ensure transparency and consumer protection. Acknowledging the role of other institutions, the Bank of Albania, together with the National Payment Systems Committee, have drafted for the first time the National Retail Payments Strategy, which identified market needs and relevant measures for intervention. The goal of the Strategy is to improve the retail payment market by providing Albanian citizens with more choices for their daily transactions, in an easy-to-use cost-effective way, as well as to increase financial inclusion. The Strategy has a detailed action plan; the Bank of Albania is fully committed to its implementation. In this framework, I would like to emphasise a notable achievement, the finalisation of the draft law on “Payment services”, which transposes the Revised EU Directive on Payment Services (PSD2). The draft is currently subject to public consultations.