samchain/econo-pairs-v1 huggingface dataset:
Such very powerful and perverse feedback loops have been at work during critical phases of the crisis, over the last two years. The purpose of the banking union, decided on in June, is to break that link and create, as a first stage, a single supervisory mechanism in the euro area under the auspices of the ECB. It is essential that the banking union be rapidly implemented, covering all credit institutions. It will restore confidence in the banking system. It will re-establish the normal functioning of monetary policy. It will de-segment financial markets and allow for normal private capital flows within the euro area. It will ultimately allow for a disengagement of the euro system from interbank and financial intermediation. Moving decisively towards a Banking Union is one major contributing factor in reducing uncertainty and boosting confidence. Conclusion: the ability of monetary policy to fight uncertainty Uncertainty is a major cause of the current weak recovery. One may point to the paradox in the present environment characterised by very low interest rates, very large cash reserves in the hands of corporates, but very little investment. The good news is that a small spark could have huge effects. The bad news is that this spark has not occurred. Monetary policy cannot by itself remove economic uncertainty. It can contribute to limiting and attenuating its effects. It is also essential that other sources of uncertainty be dealt with, especially when they stem from government policies.

Replenishing their inventories, companies substantially increased their demand for commodities worldwide. Russia is a major producer of key commodities. High demand for Russian exports spurs economic growth this year. As companies complete their inventories, the effect of this factor will be tapering off gradually. The growth of oil export quantities will also be supported by the easing of the OPEC+ oil production cuts in response to the recovery of demand. Taking this into consideration, we have raised the oil price path in our forecast by 5 US dollars per barrel in the next three years. According to our preliminary estimates, the expansion of oil output under the new OPEC+ agreements will add about 0.1 pp to GDP growth this year and 0.2–0.3 pp next year. Another important growth driver is domestic demand, including both consumer and investment demand. Considering these trends, we have revised our economic growth forecast for this year upwards from 3–4% to 4–4.5%. After the recovery, the economy will expand at a pace close to its potential. We forecast that GDP will equal 2–3% in the next two years. The possibility to achieve higher economic growth rates will depend both on the expansion of production and logistics capacities and on labour resources, their expertise and performance. T hird. Monetary conditions have been progressively adjusting to the earlier increases in the key rate, but are still accommodative.
A deterioration in bank profits can reduce the supply of loans and mean that investments that would have been profitable do not get off the ground. In the worst possible scenario, systemically-important banks would suffer a bank crisis. Falling asset prices thus risk triggering processes that could eventually lead to a recession. Psychological factors strengthen both an upturn and a downturn in asset prices and real demand. Sweden, like many other countries, as you know has experience of this type of development. The costs to society during the years following the bank crisis were very high. However, rapidly rising asset prices do not constitute a problem in themselves that requires measures. Deciding factors here are whether there is reason to regard asset prices as fundamentally exaggerated and whether the bubble has led to excessive demand in the real economy, as well as misallocation of resources and excessive indebtedness. However, a financial bubble that only creates winners and losers among the financial operators without spreading to the real economy is hardly cause for concern, as long as the financial system can carry out its tasks efficiently. Inflation targeting stabilises production Although there may be reason in certain situations to counteract exaggerated asset prices and the imbalances they create, the question is what measures are available. There is always a risk that intervention by authorities may in itself create more problems than one is trying to solve.

If this was a business-as-usual recovery, with equilibrium real rates close to historical levels, the Taylor-rule would suggest a considerably more aggressive monetary policy response, and a tighter stance, than has been the case in practice.7 Of course, there are good reasons for believing this may not be a business-as-usual recovery. For one thing, medium-term real rates of interest are materially lower than in the past (Chart 12). If these expectations were to be mirrored in persistently lower growth rates in the economy, then that would imply a lower equilibrium real rate of interest.8 Assume that equilibrium real interest rates are not fixed at 2%, but move in line with the real forward rate curve shown in Chart 13. That would give the Taylor rule path shown in Chart 23. This is now consistently below the actual and market-implied path. In other words, if secular stagnation is the name of the game, the Taylor rule suggests interest rates could remain lower for longer than markets currently expect. So how should a policy-maker choose between these twin peaks and their implied paths? The optimal response could be to probability-weight the two peaks, updating the probabilities as new data arrives. Financial markets may be doing just that. Implied interest rates lie between the upper peak recovery of Chart 22 and the lower peak of Chart 23. Markets rates have coursed a path in the valley between the twin peaks. But this path is also shifting towards the lower peak.
The thresholds for establishing and operating companies have been lowered. Existing production processes can be made more efficient. The internet has made information more accessible and many firms can cut transaction costs. There is less need to hold large stocks that tie up capital. The same applies to consumers, who can quickly search the internet for cheap goods and services. So far, however, prices on the internet differ relatively little from shop prices. But this will presumably change as the internet continues to be developed and usage rises. Sweden, spearheaded by the telecom company Ericsson, is one of the countries where the IT sector is relatively large. This sector is also contributing a growing share of our annual output. But we are also one of the countries with a relatively high level of spending on the introduction of new information technology in various parts of the economy. The introduction and development of information technology in Sweden has been facilitated by an efficient capital market, particularly as regards the supply of venture capital. So, as I have tried to show, the favourable economic development at present has many aspects. But it should not be forgotten that the fundamental economic laws still apply, just as they did in the late 19th and early 20th centuries. That makes it important to prevent a build-up of imbalances that can create tensions and jeopardise a continuation of good economic growth and low unemployment. This brings me to the subject of stabilisation policy.

I shall not enter that discussion but simply note that a number of important decisions have been made in the past ten to fifteen years. They include the deregulation of credit and foreign exchange markets, the reform of the tax system, changes to components of the transfers system and the enhancement of competition. All this has helped the Swedish economy to function better. Moreover, price stability is now monetary policy’s statutory objective and the Riksbank, now also formally independent, has been made accountable for this. Other steps, in the form of a far-reaching consolidation of the government budget, provide a stable and credible framework for this objective. As a further move in the new direction of economic BIS Review 99/2000  2  policy, Sweden joined the European Union in 1995. This opened up sectors that previously had been protected from international competition. Competition grew in many fields and prices for some goods and services began to be adjusted downwards towards European levels. The economic policy realignment, which began some time in the 1980s, has coincided with larger changes in the global economic environment. The Swedish economy has therefore been in a position to benefit from the developments elsewhere and so far this has led to a favourable economic path. The realignment of economic policy and the ongoing globalisation were accompanied in the 1990s by a rapid development of the new information technology, globally as well as in Sweden. The innovations have been adopted successively in various segments of our economy.
I refer of course to the review of Solvency II, led by the Treasury with close involvement from us. This is a great example of an area where we can tailor a regime designed for 28 countries to work much better for the one we inhabit, cutting bureaucracy and supporting competitiveness while maintaining high standards. I am grateful to actuarial teams and other colleagues in firms who have been hard at work preparing quantitative and qualitative submissions which should allow us to understand the potential impact of any changes. It is important that this work moves forward at a good pace, but it is also important that we get it right – no one will thank us if we accidentally drill a hole in a perfectly sound tooth, or put a cap on the wrong one. Some of those in the debate whose job it is to promote the interests of shareholders favour a straightforward weakening of the regime. We, with a statutory objective to protect policyholders, are cautious on weakening. This difference of perspectives is of course entirely unsurprising and a natural part of the reform process. For our part though we have reached no firm views on any proposals at this point, because even before consulting we will need to be informed by the data which will shortly come back in from firms.

As a first step, Parliament has been debating: whose control? As control of the rulebook becomes a stronger reality now that we are moving away from the start-position in which we simply imported all the existing rules from the EU, what are the respective roles of Parliament, the government and regulators in this process? A lot has already been said on this by us and others so I will not repeat it here, but I will point out that we are busy preparing ourselves for whatever new role Parliament allocates to us. Indeed Parliament has already decided this for the latest round of Basel rules, and my colleague Vicky Saporta is leading our efforts to re-tool our policy-making function for this new era. We are also getting on with important reforms while that wider debate unfolds, rather than waiting for it to conclude. This is procedurally complex because the position we inherit from the onshoring of EU rules is one in which the location of rules sprawls rather uncomfortably across different levels of legislation and our rulebook. This messiness was necessary to get the onshoring done on time but it makes it complex and time-consuming to update rules – so I hope that we will be able to move to a more coherent structure through time, as proposed by the government in its Future Regulatory Framework consultation. In the meantime, it means that many of our reform efforts involve decisions not just for the PRA but also for government and Parliament.
BIS Review 92/2008  5  of the speaker. Some of my presentations are not accompanied by a written speech in which case your job is to pick up on the fundamental messages and my job is to know how to best transmit them. Our communications policy requires a fluid relationship with the press. We can hardly amplify our messages if we do not have access to the media. We have a Communications Manager who advises the Bank’s board members and executives on the intricacies of this relationship with the press. It is a complex relationship because it has to be carried on within the limitations imposed by the fact that we are a technical institution and our messages are highly sensitive for the market and for the general public. One principle we rigorously uphold is that all information that is the product of a Board decision or resolution is communicated simultaneously, which means that no media channel can obtain a scoop. There are strict internal rules on this matter and all contacts with Bank executives and staff must go through the Communications Management before following the corresponding course. We are not prolific in giving interviews, statements or press conferences. We speak little, maybe less than the press would like and, although some of you might disagree with me, we try to maintain equanimity in our dealings with the media.

BIS Review 92/2008  7  Meade, E. and D. Stasavage (2008), “Publicity of Debate and the Incentive to Dissent: Evidence form the US Federal Reserve”, The Economic Journal, april, pp. 696-717. Woodford, M. (2007), “The Case for Forecast Targeting as a Monetary Policy Strategy,” Journal of Economic Perspectives, Vol. 21, No. 3-24. 8  BIS Review 92/2008
Though thus far there have not been any cases of prices manipulation or banks exercising a dominant position in the market, I deem as necessary the promotion and vitalization of other financial market segments in general. This market requires real commitment in the efficient intermediation of financial resources in all its segments. Non-bank financial institutions need to become more active by expanding their activity in the market segments they operate in. With regard to the banking system, the Bank of Albania deems the revitalization of certain institutions, whose activity shares a small part of the banking market, as crucial. These institutions need to become more active, by taking more responsibility consistent with their business plans and they need to find new ways of organization and co-operation between them in order to enhance competition and provide a more symmetrical re-distribution of banking activity in our market. BIS Review 102/2007  3  4)  The system’s future challenges  Some sectors of economy, such as agriculture, continue to be credited at low levels or are not credited at all. The contribution of banking loans to production investments is still low. Moreover, considering the high share of loans for commercial purposes, it may be concluded that the largest share of loans is used to finance imports. The level of public accessing the banking system is not in the parameters set in the country’s economic development objectives. Furthermore, the level of cash in economy is extremely high.

Greek banks have been present in the market since 1996; the German and Italian investment has been present for quite a long time as well, while the latter has grown substantially and has become one of the market’s key actors. Austrian investments may be considered as the most dominant ones. Their ownership has resulted from the acquisition of the largest domestic state-owned bank. The long presence of foreign banks in the Albanian banking system has influenced the establishment of a stable banking system and its stable growth. Despite the financial collapse of 1997 or the panic crisis in 2002, in none of the cases was the system’s performance a source of crisis or instability. Previously, foreign banks were more conservative in terms of expanding their geographical activity; however, the entry of Raiffeisen Bank into the market pushed them to be more active. This fact may be evidenced by the variety of products provided in the market, the growth of lending and the employment of clear strategies to increase or maintain their market share. However, the economic benefits deriving from the presence of foreign banks have not reached the proper levels yet. The enhancement of the quality of information provided to the public at large and to the central bank, the lowering of the intermediation cost, the further improvement of risk management, and the standardization of the accounting and financial reporting systems are not in the desired levels yet.
The Second Quarter Speech given by  Andrew G Haldane Chief Economist Bank of England  30 June 2020  The views expressed here are not necessarily those of the Bank of England or the Monetary Policy Committee. I would like to thank Shiv Chowla and Andre Moreira for their help in preparing the text. I would like to thank Andrew Bailey, Daniel Gray, Jonathan Haskel, Gregory Kidd, Sevim Kosem, Clare Macallan, Becky Maule, Michael Saunders, Michal Stelmach, James Tasker, Silvana Tenreyro, Ryland Thomas, Jan Vlieghe and Tugrul Vehbi for their comments and contributions. 1  All speeches are available online at www.bankofengland.co.uk/speeches  I would like to discuss today the economic outlook in the UK in the light of the Covid crisis and the way monetary policy is responding to this crisis. There is a debate about which letter of the alphabet will best describe the path of the economy, with some scepticism about the V-shaped scenario path in the Bank’s May Monetary Policy Report (MPR). It is early days, but my reading of the evidence is so far, so V.  Covid-19 is, first and foremost, a global public health crisis. The measures put in place to contain the spread of this terrible disease have been necessary, but have had severe economic and financial consequences. As a result, most countries around the world are facing a twin crisis of public and economic health. The economy in the period ahead will continue to be shaped by the virus and policy responses to it.

Table 1: Google searches related to social consumption  Country  Peak YoY change, %  Italy  -67  Spain  -75  France  -73  Germany  -70  US  -58  Japan  -82  China  -73  UK  -69  Sources: Google and Bank calculations. Table 2: UK “fast indicators” of consumption categories  Category  Peak change, %  Social  -80  Work-related  -65  Delayable  -50  Staple  -5  Total  -30  Source: Bank of England and Bank calculations. GDP data so far broadly corroborates the message from these fast indicators. Compared with the fourth quarter of 2019, UK GDP fell by around 25% during the first four months of this year. The fall in UK-weighted world GDP is likely to have been similarly unprecedented. Unsurprisingly, these would be the sharpest four-month falls in GDP on record, in both the UK and globally. This contraction has affected almost every sector, if to differing degrees (Chart 2). The largest falls have been in the accommodation and dining sectors (over 90%). But sectors such as arts and recreation, construction and education have fallen by more than 40%. Utilities, food production and real estate have been among the least affected. Generally speaking, the greater a sector’s reliance on personal contact, the larger its fall. 4  All speeches are available online at www.bankofengland.co.uk/speeches  4  Chart 2: Falls in output by sector Industry output, hit to level, % Accomm.
In any case, the fact that bail-in is now on the table and can be used by the supervisor will probably be one of the reasons why the banks will be tempted to increase their capital base regularly over time, to demonstrate to the buyers of senior debt that they are sufficiently protected. It will also be a strong incentive for banks to limit and control their risks and clearly communicate to the market how they do so. EUROWEEK: Has all this done enough to break the pernicious and highly damaging loop between sovereign and bank risk that was so central to the crisis? Or is that loop one that is simply impossible to break? Noyer: I think we have reduced that risk. The work is not totally finished. We need to continue in the direction we have taken. But to my mind there were three decisive moves that have addressed the problem of this feedback loop. One was the action that was taken on the consolidation of public finances, because if you have stronger government finances then of course the risk for banks is reduced. The second was moving decisively on the banks’ capital bases, because clearly if you have stronger banks then the risk for governments is lower. And finally, the decision to move to a banking union starts with supervision and then allows us to advance to the second and third steps which will have to be a resolution scheme and a resolution authority and finally a euro area deposit guarantee scheme.

It is also important for us to learn from the bitter lessons experienced by others as our financial services industry too is tempted to provide low quality credit, which has been the root cause of the subprime issue. The topic therefore is very relevant and it is time to generate a wider discussion on Governance, Risk Management and Compliance – in short – GRC, which are considered to be the three key pillars or imperatives of financial management. 1. What is GRC? 1.1 By itself, GRC is not new or unknown. GRC has always been of fundamental concern to businesses, the financial service industry and to regulators and supervisors. All stakeholders realize that there are enormous benefits of observing GRC and that such benefits would outweigh the cost of putting in place processes, procedures and controls that enable effective implementation of GRC. 1.2 Governance is all about self-discipline. It is the process by which the Board of Directors sets the objectives for an organization and oversees progress towards achieving those objectives. Put it simply, it is the set of procedures and processes that keeps the organization alive and allows it to operate as a “going concern”. The higher the sophistication of the financial system, the higher would be the demand for governance as regulation and supervision cannot cover all risk elements in their supervisory processes. 1.3 The next critical pillar or imperative is Risk Management; i.e. identification, assessment, continuous monitoring of risks (real or hypothesized) and risk mitigation, while maximizing returns.