samchain/econo-pairs-v1 huggingface dataset:
Against this background, the authorities had two options: either to use the fact that Malta did not meet the fiscal criteria to maintain the status quo and delay the implementation of sensitive reforms, with the risk of undermining growth prospects; or to use the adverse impact of globalization on Malta’s current account and the vulnerability of the fixed exchange rate regime to highlight the urgent need for a faster pace of reform, while holding out the promise of the expected benefits of the euro. The authorities chose the latter approach, including a rather ambitious programme of fiscal consolidation and a unilateral commitment to maintain the Maltese lira/euro exchange rate at the central parity rate in ERM II. This appeared a natural way to buttress the economy’s long record of exchange rate stability, though it was also dictated by the need to counter harmful speculation at the time about the level of the exchange rate. Three years after EU accession, that bold decision appears to have paid off. Economic growth rose to 3.3% in 2005 and 2006, and is expected to stay around that level; the unemployment rate stabilised, then eased slightly; and FDI flows, which have always been important, strengthened further. The gap between productivity growth and wages narrowed to the point that unit labour costs are now increasing negligibly or falling, depending on the measure used.

These collections that have been built since the earliest days of our Bank over a period of more than five decades aim to foster greater understanding on the history of our currencies and of our economy and financial system, and also represents our support to contemporary art in Malaysia and thus contribute towards preserving the heritage of our country. Allow me now to invite Yang Amat Berhormat, Dato’ Sri Mohd. Najib bin Tun Haji Abdul Razak to deliver his address and to officially launch Sasana Kijang. 2  BIS central bankers’ speeches
In spite of this, due to satisfactory levels of capitalization and liquidity, the banking sector coped well with such developments. In terms of general developments, the banking sector asset annual growth slowed to 12 percent, compared to 19 percent of the previous year. In addition to a decline in loan growth, the loan quality also worsened and non-performing loans reached 6.6 percent of total loans. But the comfortable ratio of loans to deposits still supported a solid annual credit growth of around 35 percent. The financial result of the banking sector for 2008 was positive but lower than the previous year due to a slowdown in profit-making activities. The exchange rate of the domestic currency was stable over the year and with depreciating tendencies versus the euro and the American dollar over the first quarter. In relation to expected domestic developments for 2009, we expect economy to face greater challenges. Economic growth will be positive, but almost half of what was in 2008. The planned fiscal stimulus will be harder to reach, due to potentially higher difficulties in realizing revenues and in providing other sources for financing the expenditures. Hence, there might be a need to prioritize fiscal expenditures over the year. Financial intermediation of the banking sector, to the public and the private sector, could be lower and potentially with higher cost, due to supply and demand factors. Due to tighter financing conditions, businesses and households are expected to undergo a painful but necessary adjustment process in the short term.

It has benefited from economic reforms that have provided development opportunities for our business sector, have opened markets, have increased competition, have stimulated flexible labor markets and have increased social revenues. Both fiscal and monetary policies have been cautious in providing the necessary stimulus to the economic growth, by being consistent and disciplined in the pursuit of their objectives to achieve fiscal consolidation and ensure a low-inflation environment. The size of the annual budget deficit in relation to GDP has been between 3 %, leaping to 5.7 % for 2008, while the public debt has been stable, reaching up to around 55.6 % for 2008. The annual inflation growth rate has been for a long time within the corridor defined by the Bank of Albania of 2 4 percent (and close to the Bank of Albania target of 3 percent), indicating success in anchoring market participants expectations for price developments in the economy. This steady good economic performance has been supported by a flexible exchange rate that has been instrumental in supporting and maintaining a balanced growth, by maintaining the right incentives for interaction between domestic and foreign counterparties. Fundamental changes have occurred in the financial sector too, thanks to consistent and successful reforms in the last decade. Nowadays the banking sector in Albania counts 16 banks, all in private hands, where the foreign capital dominates.
In other words, the result is a secure credit supply and expansionary monetary policy. Figure 1. Yields on 5-year bonds Per cent  Sources: Macrobond and the Riksbank  1  Read about all the measures the Riksbank has taken on our website. Information on the measures is updated weekly. See https://www.riksbank.se/en-gb/press-and-published/updates-on-the-riksbank-and-the-coronaviruspandemic/the-riksbanks-measures-in-connection-with-the-corona-pandemic/. 2 [6]  Figure 1 shows the development in yields on different types of bond on the Swedish market. The economic crisis initially meant that bond yields rose. This was not a desirable development. But they have recently begun to fall back. To me, it is obvious that the Riksbank’s expansionary monetary policy measures have pushed down market rates. And if necessary, the Riksbank will do more. Inflation statistics difficult to interpret Under normal circumstances, monetary policy can be based on the analysis of a long line of economic quantities. As monetary policy is conducted with an inflation target, the statistics on inflation outcomes become particularly important. During the economic crisis an obvious problem with inflation statistics has been that there are no prices for the goods and services that cannot be consumed at present. This of course creates problems when calculating the consumer price index (CPI). Statistic Sweden (SCB) have clearly described their methods.2 For products that have no prices, they use the price development on similar products that do have prices. For products that do not have “similar” products, such as various types of foreign air travel, the annual percentage change in total CPI is used.

5 [6]  References Diewert, W.E and Fox, K.J. (2020), “Measuring real consumption and CPI bias under lockdown conditions”, NBER working paper series, No. 27144. Statistics Sweden (2020), press release (2020), ”Svårare beräkna inflation under coronapandemin”, (More difficult to calculate inflation during the corona pandemic) www,scb,se Statistics Sweden (2020), report to Consumer Price Index Board, ”Hantering av effekter av Corona-pandemin i KPI och HIKP”, (Managing the effects of the corona pandemic on the CPI and HICP) www,scb,se  Appendix Table 1. Products affected by lack of consumption Weight in CPI (per cent) Air package tours  1.2. Foreign air travel  0.6. Tickets to sporting events  0.4. Cinema tickets  0.2  Theatre tickets and entertainment  0.2  Entry tickets to entertainment  0.3  Total weight in CPI  2.9  Source: Statistics Sweden  6 [6]
The  BIS Review 30/2009  1  combined effect now is a painful deleveraging process that drives down asset prices, shrinks balance sheets, and feeds straight into the real economy in the form of credit contraction. Adverse feedback loops between the financial system and real economy have become entrenched. The Eurozone, which accounts for the second largest share of global GDP, has deep financial linkages with the US. Through these linkages, financial stresses were transmitted across the Atlantic rapidly. Many banks in Europe, as well as other financial institutions such as insurance companies and asset managers had large exposures to US assets. Many were over-leveraged and dependent on benign conditions for liquidity to continue flowing. So they got sucked into this vortex. We have a similar story of credit evaporating and strains being felt in the real economy. Over in Japan, recovery from a decade of economic growth stagnation has been derailed by the collapse of external demand with serious knock-on effects on domestic activity. Japan’s capacity to support the growth of other advanced and emerging economies is now diminished. So a global recession is now upon us. The three economic giants – the US, Europe and Japan – together accounted for just over 50% of global GDP in 2007. All three cylinders are sputtering. The impact has already been felt worldwide. How long and how deep this recession will be is still an unknown, though many economists are predicting a long L-shaped trajectory.

Exposures to emerging market economies are low and limited as credit and financial institutions have taken measures to protect their balance sheet from any undue risk. Despite the strong historical ties with the UK, studies carried out by the Central Bank of Malta indicate that the potential direct adverse effects of a ‘hard Brexit’ on the Maltese economy are deemed to be manageable. The robust economic developments together with the regulatory measures  implemented by domestic authorities have contributed to the further decline in credit risk and improving asset quality, with the non-performing loans ratio for the whole banking system falling to just 3.1% and comfortably below the EU average. Following a contraction phase of four years, lending to non-financial corporates finally turned the corner, increasing by an annual rate of 4.6% in September 2018. This is a welcome sign since it does not only hint that bank disintermediation is normalising, but it also augurs well for monetary policy effectiveness, given that banks are the conduit for its proper functioning. Although such signs are encouraging, we have yet to stimulate more usage of the current liquidity lying idle at the Central Bank. Here, banks play a crucial role in finding new viable business niches. Page | 7  Key performance indicators (KPIs) for domestic financial institutions are healthy but we must not become complacent. Vulnerabilities remain. Aggregate KPIs only give one side of the story masking the variability in operational performance at an institutional and sectoral level.
Modern international financial markets have possibly contributed to an earlier appearance of crises and to their spread, but financial crises almost always originate in an unsuccessful domestic economic policy and in the structure and regulation of the domestic financial system. It is striking that several countries most affected by financial turbulence in the 1990s were relatively new participants in the international financial system without having first established a sound domestic financial system and a sound economic policy. That applies to my own country, Sweden, which experienced a severe crisis in the early 1990s. One obvious insight is, and I quote Fed Chairman Alan Greenspan, “that participation in the international financial system with all its benefits carries with it an obligation to maintain a level of stability and a set of strong and transparent institutions and rules if an economy is to participate safely and effectively in markets that have become highly sensitive to misallocation of capital and other policy errors”. To say that the key to avoiding future crises in emerging markets must be found in domestic reforms is not to deny that part of the solution may still lie in measures that change the way in which international financial markets sometimes operate. While financial liberalisation and international financial integration bring unquestionable benefits, they can also be subject to episodes of excessive risk-taking. In recent years, there does seem to have been imprudent lending, and not just to emerging market economies but also to borrowers within the industrial world.

To paint with a broad brush, we can say that economic and financial developments in Iceland during the last decade or so are a combination of two separate but interrelated stories. On the one hand, there is Iceland’s boom-bust cycle and problems with macroeconomic management in small, open and financially integrated economies. This is a well known story that has played out in Iceland and other countries several times. On the other hand, we have the story of the rise and fall of three cross-border banks operated on the basis of EU legislation (the European “passport”). That story, at least for smaller countries, is much more unique than the first. In my remarks today, I will concentrate mostly on the second story, which is probably more suited to this audience, as I understand that the conference is oriented towards microeconomics and finance. However, it must be remembered that although these two stories are different, they interact in important ways. Thus the unsustainable boom that Iceland experienced during the years 2005–2007 was fuelled by a combination of favourable external conditions, macroeconomic mismanagement, and aggressive domestic bank lending. It may well be that the banks’ international activities and the easy access to foreign credit that came with those activities fuelled stronger growth in domestic bank lending than would have occurred in a more traditional small-country banking system.
Figure 4: Mean squared gaps The fact that the extended repo-rate path leads to a better stabilisation of both inflation and resource utilisation is confirmed by the mean squared gaps in Figure 4. The mean squared gap for inflation is the mean squared deviation between the inflation forecast and the inflation target during the forecast period. A lower mean squared gap for inflation entails a better stabilisation of inflation around the target and thus a better attainment of the inflation target. The mean squared gap for output and for hours worked is the mean squared gap for resource utilisation measured in two ways, that is using the output gap and the hours-worked gap during the forecast period. A lower mean squared gap for output or hours worked entails a better stabilisation of resource utilisation around a normal level measured as the output gap or the hours-worked gap. The closer to origo the mean squared gap for inflation and resource utilisation is, the better the stabilisation of inflation and resource utilisation. This case is special as there is no conflict between stabilising inflation and resource utilisation; the extended repo-rate path stabilises both better than the main scenario. This is of course already obvious in Figure 2, so the mean squared gap does not add much new information here. However, the normal situation is considered to be that there is a conflict between stabilising inflation and resource utilisation.

The legal rights of the parties in the financial market are important, at the same time as the authorities must be able to operate without the threat of legal countermeasures by the banks in the event of an intervention. The supervisory authority therefore needs to have adequate resources, the right competence and operational independence. There need to be clear rules as to how the authority responsible can take over and close a credit institution. This was not the case in Sweden at the time of the crisis, which of course delayed the rescue work. Creating confidence in the banking system – which does not become unconditional confidence if the central government acts as final guarantor – also requires a deposit insurance that  4  BIS Review 24/2006  clearly indicates how much of the customers' deposits the government is prepared to guarantee. The legislation must also cover more than just the banks – other institutions that receive deposits from the general public must also be under supervision. As I said, deregulation was necessary – it was rather the incapacity of the banks and the supervisory authorities to manage a competitive situation that contributed to the crisis. However, the economic policy conducted also contributed. Monetary and fiscal policy were not used to slow down developments at the end of the 1980s, which laid the foundations not only for increased borrowing, but also for the currency crisis. The combination of a fixed exchange rate and large budget deficit was devastating.
Second, we will be using tools to drain reserves that are new and that will have to be implemented on a scale that the Fed has never before tried. And third, we will be operating in a framework of interest on reserves that has not been fully tested in U.S. markets. All of that may sound risky. However, I believe the Federal Reserve is positioned to minimize any risks involved. Most important, we have worked hard to ensure that we have all of the tools needed to exit, and FOMC members have begun to describe a strategy for using them that is cautious along several dimensions. In addition, if we communicate effectively, the markets should be clearly informed and well prepared ahead of the exit. These are the points that I will emphasize in more detail. Liquidity facilities: a success story When discussing the Federal Reserve’s exit strategy, it is important to separate liquidity facilities from the stance of monetary policy. While the exit from the accommodative monetary policy stance has yet to begin, the exit from liquidity facilities is nearly complete. Let me begin with some comments on recent developments regarding the liquidity facilities, and then I will move on to monetary policy. As is well known, the Federal Reserve launched a number of liquidity facilities to provide short-term funding to the financial markets during the crisis, in order to meet the extraordinary demand for liquidity at that time.

I am rather doubtful myself, for several reasons. First, in the absence of single accounting standards, a comparison between banks belonging to different accounting universes will mean absolutely nothing. Second, that sort of ratio did exist in the United States and proved of no help, precisely in the country where the crisis emerged. Finally, in the present circumstances, it could add to the reluctance of banks to be active lenders in the interbank money market, therefore reducing market liquidity and still increasing the over-reliance of the banking sector on the central bank counterparty. That said, it is essential to enhance the counter-cyclical nature of capital requirements. For instance, implementing a forward-looking provisioning system and an additional capital requirement at the cycle peak would be effective measures to make capital requirements more contra-cyclical. In this regard and especially in the light of the profits announced by the major banking groups and the large payouts to traders, CEOs or shareholders in the form of dividends, I would like to stress that these profits should primarily be used to bolster capital ratios and allow banks to focus on their core task of financing the economy. All in all, I praise international standards in the field of prudential rules.
But these difficulties are not excuses for not trying. And we have tried; although I must confess, on the basis of the reaction from some of the politicians to the actions we have taken recently, that the returns on our efforts to promote a better general understanding of monetary issues in Hong Kong have not been impressive. 12. So we must try harder, and we will. There are then the questions on how and the areas in which we need to concentrate our efforts. On the former I shall seek advice from my colleagues. On the latter, the recent episode surrounding our operations in the stock and futures markets, culminating in the defeated Motion Debate in the Legislative Council on 30 September 1998 to review the HKMA, provides excellent guidance. If one filters away the noise from political posturing, including the rather unpleasant and unnecessary personal attacks, there are three areas that require attention. Basic Monetary Concepts 13. The first area that requires attention concerns various concepts in modern monetary management that need to be more effectively put across. This is essential if discussions on the technical issues are to be more meaningful. I am aware that this is not intended to be a lecture on monetary economics, so let me just bring out one or two of them here for illustration. 14. Under our linked exchange rate system, stability in the exchange rate is ensured through the control on what is called the monetary base.

In the old days, transactions were conducted predominantly with the use of physical cash. And so the focus of attention in currency board theory was merely that the issue of cash should be backed 100 per cent by foreign reserves and rather simplistically that cash arbitrage would keep the exchange rate stable. There was nothing much about the monetary base and the adjustment process in response to capital flows involving movements in domestic interest rates. The theory also did not take into account the many and much larger volumes of transactions nowadays conducted with the use of electronic money and settled electronically without the use of physical cash. As a result, the crucial part of the monetary base is no longer the amount of cash in circulation but a much smaller yet highly leveraged element in the form of the aggregate balance that banks have in their clearing accounts maintained with the currency board, that is the HKMA. 18. The old theory also did not take into account the need for the currency board to be controlling the interbank payments system and therefore performing the role as provider of liquidity to the banking system. As a result when our currency board arrangements were modernized through monetary reform in the past ten years, many of our actions were misunderstood even by leading monetary economists. But to be fair, even we ourselves were not entirely sure about a few things, as we moved into the uncharted waters of modern currency board theory and practice. 19.