samchain/econo-pairs-v1 huggingface dataset:
And we have the tightening of provisioning arrangements, which has entailed stricter requirements in respect of asset valuation criteria. I would also like to highlight the efforts to reinforce transparency, through the disclosure of exhaustive information on all Spanish institutions’ exposure to assets considered doubtful. The latest measure of significance was the approval in Parliament of a Royal Decree-Law (RDL), whose aim was to dispel doubts about our banking system. These doubts emerged essentially as a result of the contagion of the mistrust stemming from the sovereign debt crisis in certain euro area countries. Three months later, this RDL may be said to have contributed significantly to allaying fears about the soundness of our banking sector and to substantially speeding through the restructuring of our savings banks. The RDL reinforces the solvency of all Spanish institutions, requiring of them a core capital ratio of at least 8%, with a further 2% required for unlisted banks and those more reliant on wholesale markets, which are those in which the main doubts were concentrated. The RDL also stipulates that institutions receiving public aid should pursue their financial activity through a bank, which will better enable them to obtain funds on markets and will contribute to enhancing their transparency in the face of investors. The process laid down in the RDL is unfolding as scheduled.

This concern was at the forefront of UK and international prudential regulators’ minds and motivated the various interventions they made at the time to make clear that regulatory buffers could and should be used.6 So today and in the spirit of John Dewey, I want to reflect on the lessons from the Covid stress so far for the prudential framework for banks and in particular for the regulatory buffers within it. What we worried about during the early Covid stress With hindsight, this banking system resilience is evident. But during the stress of March and April 2020, we were concerned that it was, to use the words of the Chair of Financial Stability Board, Randal Quarles, “a close run thing”.7 One concern was a potential decline in capital ratios at the time. There were two effects in play. First, banks were increasing provisions as their expectations about the state of economy and credit quality declined. This affected capital resources. Second, capital requirements were increasing. This was because risk weights in some parts of the capital framework are sensitive to current market conditions, which had worsened; and total assets were increasing, as firms drew down pre-existing credit facilities. Third, liquidity requirements and resources were sensitive to market conditions too. Mechanisms designed to capture potential liquidity needs related to derivatives activity produced estimates that were too low going into the shock and then increased rapidly after the shock had crystallised.
A fixed exchange rate means that the central bank, with the aid of currency market interventions or its policy rate, stabilises the exchange rate around a target, e.g. a price for the dollar, gold or an average of currencies, whereas under a floating exchange rate regime the exchange rate is determined by supply and demand in the currency market. With a fixed exchange rate, you avoid some of the uncertainty in world trade when countries exchange currencies with each other. There is a limit to how much a currency’s exchange rate can vary, which is good for importers and exporters when they are forecasting income and expenditure. The fixed exchange rate can also be seen as a way to achieve price stability. With a fixed exchange rate, inflation in the long term cannot be higher or lower than the inflation rates in the countries with which you have tied your exchange rate. For example, a fixed exchange rate against the dollar would ”force” us to maintain the same inflation rate in the long run as the US and the other countries whose currencies are pegged to the dollar. Were that to fail, our current account balance would deteriorate and we would have to devalue. BIS Review 84/2005  1  Sweden devalued five times between 1976 and 1982 under a fixed exchange rate (1976, twice in 1977, 1981 and 1982). That was because Sweden in the 1970s and 1980s had higher inflation than the other countries.

When the new regime with a floating exchange rate and inflation target was introduced in the beginning of the 1990s, it entailed new macroeconomic conditions for collective bargaining agreements. During the 1970 and 1980s, inflation averaged around 8 per cent and real wage growth was almost non-existent. The slowdown in inflation coupled with a relatively stable rate of increase in nominal wages meant that real wages rose sharply between 1995 and 2004, see Table 1.3 Not since the 1960s has there been such a long period of regular real wage increases. In 2004, around 450 collective bargaining agreements were concluded for some 2 million employees, most of them spanning three years. This year, approximately 70 collective bargaining agreements will be signed for just over 1.3 million employees. Municipalities and county councils account for 1.1 million of these, and an agreement covering just over two years has already been concluded for them. Recently, agreements have been signed for some 75 000 workers in the construction sector and about 60 000 employees in banking and insurance. The latter group received more than what has become the norm in the current agreement period. Worth noting is that almost the entire economy has an agreement period that runs up to some time in the middle of 2007.
A number of factors should help accomplish this rebalancing, and monetary policy has an important role to play. First, with the omicron wave now ebbing and COVID vaccines and treatments much more widely available across the globe, we should see a gradual restoration of supply and a resolution of associated bottlenecks and shortages. Over time, consumers should also start to cut back on buying goods that are in short supply and switch back to in-person activities like travel, dining, and entertainment, where supply is less constrained overall. Together, these developments should contribute to more balance between supply and demand in the economy. The second factor is fiscal policy, which provided a huge boost to the economy during the past two years but is unlikely to be as significant a source of demand this year. This is true not only for the United States, but also for many other economies. Last—but definitely not least—is monetary policy. After providing maximum support to the economy for the first year and half of the pandemic, the FOMC is adjusting the stance of monetary policy with the aim of bringing demand in balance with supply and thereby bringing down inflationary pressures. The same is true for many other central banks, which either already have moved in this direction or are expected to this year.

While omicron was milder for many—and thankfully the wave subsided relatively quickly—it still caused terrible hardship for countless families. You can see the economic effects of the pandemic right here in New Jersey. What struck me this week as I met with New Jersey business, community, and political leaders was the different ways that COVID-19 affects local economies. Just a few miles from Jersey City, Port Newark and Port Elizabeth are humming with activity. But across the Turnpike, Newark Liberty International Airport has seen a big reduction in the number of flights and passengers relative to pre-pandemic trends. Likewise, the pandemic has led to empty office buildings and fewer travelers in New York City, which affects businesses here in New Jersey as well. Today I’m going to talk about how the economy has continued to recover despite the many disruptions and imbalances that COVID-19 has caused. I’ll also discuss the labor market and the rise in inflation. Then, I’ll describe how the Federal Reserve’s monetary policy is working to help restore balance and stability to the economy during these uncertain times. Economic Outlook Since it’s the Friday before a holiday weekend, I won’t test any of you on the functions of the Federal Reserve System. But I do want to take a moment to discuss the Fed’s dual mandate of promoting maximum employment and price stability. U.S. monetary policy is set by the FOMC, which is made up of the Board of Governors and five of the 12 presidents of the Federal Reserve Banks.
Chart 8 Euro area output gap  Measures of the euro area output gap across a suite of models (percentage of potential output)  Sources: European Commission’s Autumn 2022 European Economic Forecast, OECD’s June 2022 Economic Outlook and IMF’s November 2022 World Economic Outlook. Quarterly estimates are interpolated from annual data. An alternative way of analysing whether supply capacity has fallen is to examine the possible effects of individual adverse supply shocks. ECB staff recently conducted a series of studies which suggest that shocks analogous to those seen in recent months are likely to have limited effects on potential. The studies found that even significant hypothetical negative shocks such as deglobalisation[15] – and the associated global supply chain disruptions – or a permanent and large increase in oil prices[16] would induce only a moderate downward revision in the level of potential output in the euro area after four years, ranging from -0.3% in the first case to -0.8% in the second compared to the baseline scenario without these shocks. [17] These effects need to be set against a projected cumulative increase in potential output of around 5% over the same period, as estimated by the European Commission. Similarly, analyses focusing on the euro area labour market suggest that the shocks we have seen in recent years – in particular, the pandemic – do not seem to have left lingering scars on labour supply and potential output, for instance, by triggering early retirement. [18] As always, such estimates are surrounded by considerable uncertainty.

The productivity gains to the economy can be more long lasting than the petroleum industry itself. And never forget: The real test of how a petroleum producing country has managed its fortune, will come when the boom in the petroleum industry ends. Oil and gas resources do not last forever. Emphasis should therefore be given to further development of human capital as the primary source of long-term prosperity and wealth. Thank you for your attention. 4/4  BIS central bankers' speeches
There were also distorted  3  The idea that inflation targeting implies that the inflation forecast can be seen as an intermediate target was introduced in King (1994). The term “inflation-forecast targeting” was introduced in Svensson (1997), and the term “forecast targeting” in Svensson (2005). See Woodford (2007a, b) for more discussion and analysis of forecast targeting. 4  Several central banks that do not call themselves inflation targeters effectively do conduct flexible inflation targeting, although they may not be quite as transparent about their inflation target, the role of stability of the real economy, etc. 5  See, for instance, Taylor (2007). 6  See Bean (2009) for an extensive and excellent discussion of the crisis, including the credit expansion and housing boom, the macroeconomic antecedents, the distorted incentives, the information problems, the amplification and propagation of the crisis into the real economy, the policy responses and the lessons for monetary policy and economics generally. The Bank for International Settlements (2009) provides a more detailed account of the possible macro- and microeconomic causes of the crisis. BIS Review 16/2010  5  incentives to exercise less due diligence in loan origination because of securitisation and to conduct regulatory arbitrage by setting up off-balance-sheet entities, which for various specific reasons ended up still effectively remaining on the balance sheet. There were also distorted incentives for traders and fund managers to take excessive risks because of myopic and asymmetric remuneration contracts.

4  BIS Review 16/2010  the inflation target and resource utilization around a normal level. In the event of conflicting objectives, it achieves a reasonable compromise between the stability of inflation and the stability of resource utilization. Different central banks express this in slightly different words. The Riksbank has often used the term “well-balanced” monetary policy. 3 The forecasts of inflation and the real economy are then conditional on the central bank’s view of the transmission mechanism, an estimate of the current state of the economy and a forecast of important exogenous variables. The central bank uses all relevant information that has an impact on the forecast of inflation and the real economy. In this framework, the central bank takes financial conditions such as credit growth, asset prices, imbalances, potential asset price bubbles and so on into account only to the extent that they have an impact on the forecast of inflation and resource utilization. Inflation and resource utilization are target variables, that is, variables that the central bank tries to stabilize. Financial conditions are not target variables. Instead, they are only indicators, as they provide information to the central bank about the state of the economy, the transmission mechanism and exogenous shocks. Financial conditions then affect policy rates only to the extent that they have an impact on the forecast of inflation and resource utilization. 4 Now, is there any reason to modify this view of monetary policy given the experience of the financial crisis so far?
The Bank of England – Financial Policy Committee and Prudential Regulation Authority – believe that a regime of concurrent stress testing of banks is an important part of the answer. Following a recommendation from the FPC earlier in the year, the Bank has today published a Discussion Paper setting out plans, to be implemented progressively over a number of years, for just such a stress-testing regime for the United Kingdom. In broad terms, each year the FPC would design a (set of) common scenario(s) that it judges the banking system needs to be able to survive; the PRA would apply those scenarios to the major banks, dealers and building societies, alongside more firm-specific scenarios; drawing on analysis from across the whole institution, Bank staff would analyse capital adequacy under stress drawing on a range of models, including firms’ own models. The results would inform judgments by the FPC and the PRA Board on whether remedial measures were needed. In some degree, both the stress scenarios and the results would be published. That very brief summary leaves a lot of questions unanswered, but suffice to say that we believe that a stress-testing regime can enhance the quality of the Bank’s macro and micro prudential supervision and, over time, underpin confidence in the banking system. In addition, I believe that a stress-testing regime will be very important for another reason: accountability to the public via Parliament.

Concluding, I would like to underline that the Bank of Albania shall always be at the position the public expects it to be, in order to satisfy, at any given time, its legal responsibilities for price level and banking sector stability. In this process, state authorities, in particular the judiciary, would be needed to offer their indispensable cooperation and consider banking system issues a high priority, with the knowledge that a stable economic development of the country depends on it. The Bank of Albania calls on all relevant factors to accelerate their structural reforms on property title and execution of collateral as well as undertake a number of other administrative and bureaucratic regulations which affect banking system costs. Inviting you to openly discuss on these issues, I thank you for your attention! BIS central bankers’ speeches  3
Mohamed S Fofana: Managing Sierra Leone’s post-conflict economy Keynote address by Mr Mohamed S Fofana, Deputy Governor of the Bank of Sierra Leone, at the opening ceremony of the Regional Forum on Economic and Financial Management for Legislators, Freetown, Sierra Leone, 12 July 2004. *  *  *  Mr Chairman, Hon. Minister of Justice, Your Excellency, the High Commissioner of The Gambia, Hon. Members of National Parliaments of WAIFEM Countries, Director General of WAIFEM, Directors of the Bank of Sierra Leone, Distinguished Guests, Facilitators and Participants, Ladies and Gentlemen, Introduction It is my honour and privilege to extend a hearty welcome to all of you on behalf of the Government and people of Sierra Leone, Governor JD Rogers who is unavoidably absent today, the Board, Management and staff of the Bank of Sierra Leone and on my own behalf, on the occasion of the opening of the Regional Forum on Economic and Financial Management for Legislators organized by WAIFEM. As host, I would like to urge you to take time out of your crowded programme to visit Freetown and behold the many attractions of this rejuvenated city. Ladies and Gentlemen, permit me to briefly dwell on the state of the West African Economy.

Suffice it to say that efforts to address the resultant problems underpin the current far-reaching reforms undertaken by governments in the sub-region. These include financial sector reforms, public sector reforms and the privatization of public enterprises. Following several years of persistent reforms, some modest improvement has been registered in recent times. Real GDP growth rates of most countries in the sub-region averaged 4.3 percent in 2003, compared with 3.7 and 1.9 percent in 2001 and 2002 respectively. The average fiscal deficit to GDP ratio improved significantly, from 4.2 percent in 2002 to 0.7 percent in 2003, although most of the economies remained fiscally fragile. Inflation rate accelerated marginally to 6.0 percent from  BIS Review 43/2004  1  5.5 percent in 2002. Overall, the external sector of the sub-region improved somewhat as the current account position recovered from a deficit to GDP ratio of 4.3 percent in 2002 to 1.7 percent in 2003, driven by the significant turnaround in the export growth of 4.5 percent in contrast to the decline of 3.0 percent in the preceding year. Managing a post-conflict economy Here in Sierra Leone, the government has stayed the course in its reform programme with an accent on reconstruction and rehabilitation. Helped by the quick repossession of the agricultural and mining belts by government, real GDP grew steadily from 5.4 to 6.6 and to 7.0 percent in 2001, 2002 and 2003 respectively. The marked recovery in the export of cocoa and diamonds contributed significantly to GDP growth.
The Hong Kong-based company that operates our container port facilities is expanding its operations into the newly modernising ports of the mainland. In new sectors, such as internet services, Hong Kong companies have been among the first to grasp the opportunities on the mainland. The outlook for Hong Kong investment on the mainland is one of both sectoral and geographical diversification: from the mainly manufacturing activities that grew up in the Pearl River Delta in the 1980s, to a variety of activities spread over a much larger region. And, like the establishment of the Special Economic Zones close to Hong Kong nearly a quarter of a century ago, China’s entry into the WTO will underline the truism that the more China opens to the world, the more Hong Kong benefits. The implications for banking and financial service Physical trade and the less visible trade in services require a financial infrastructure in the same way that new buildings need plumbing and electrical wiring. We expect that the “creation effect” of WTO entry will result in a surge in banking business on the mainland. There are two main elements in this process. The first is the greater demand for banking services, resulting from the growth induced by the effects of WTO accession. The second is the financial deepening, stimulated by more rapid financial liberalisation, greater banking competition, and product innovation induced by the terms of WTO accession.

More recently, the current issue of speculation surrounding the renminbi - and one which is far more grounded in reality - is the question of whether its exchange rate will be given greater flexibility in the near future. This revives the old question of how far the Hong Kong dollar will be affected by movements in the renminbi, which has some connection with China’s prospective WTO accession, and it is therefore worth examining the rationale behind it, and the implications. First, however, since there is some confusion on this point, it is helpful to clarify the difference between flexibility and convertibility. Convertibility means the ability of a currency to be freely exchanged into foreign currencies, either for trade (current account convertibility) or for investment (capital account convertibility). The renminbi enjoys current account convertibility but is not freely convertible for capital account transactions. Flexibility means the degree to which the exchange rate is allowed to fluctuate before there is intervention by the central bank. At present, there is flexibility in the exchange rate of the renminbi, in that the exchange rate is determined by “market” supply and demand, although the central bank remains the ultimate banker in the market. The renminbi has indeed been trading within a very narrow band in the past few years. The narrowness I think reflects China having acted responsibly, against the background of financial turmoil in Asia, in not allowing greater flexibility in the renminbi exchange rate to add destabilising volatility to Asian currencies.