samchain/econo-pairs-v1 huggingface dataset:
Closer to the region, a recent report by the Asian Development Bank (ADB) highlighted that South East Asian countries require funding worth USD3.1 trillion for climate-adjusted infrastructure in the region by 20301. In Malaysia, among other means, green financing is being rolled out through schemes such as the Green Technology Financing Scheme (GTFS). Some institutions are allocating capital and steering financial flows towards more low-carbon, climate resilient activities. However, considerable funding gaps remain. Public finance will likely be inadequate for this task and there is inevitably a need to draw in private capital. The renewable energy sector for example, requires a total of RM33.5 billion of funding by 20252, based on the projections provided by the Sustainable Energy Development Authority (SEDA) Malaysia. There is no ready panacea to the funding issues that we face. We need to understand the root cause to come up with possible solutions. In my view, one of the most critical issues is the mismatch in funding demand and supply; and information asymmetry. We need to find a way to bridge the language and information gap between scientists, government and financiers. What science says about climate effects, what climate action the Government is prioritising, what industries are providing and investing in – are quite incongruent at this point. While there is now a stronger demand for green financing, it is not matched by the supply side, due to information gaps between financiers and green promoters.

In the EU countries that are not using the euro, the effects from monetary conditions in the euro area led to improving macroeconomic environment, loosening financing conditions, and high bank liquidity. That stimulated lending and, in turn, the increase in residential property prices. However, these developments also increased cyclical risks. The Bulgarian National Bank conducted research into Bulgaria’s financial cycle. Our findings showed that we are currently in an upward phase of cyclical risk accumulation. Hence, we activated and then raised the rate of the countercyclical capital buffer. We have so far taken two decisions. In 2018, we set the countercyclical capital buffer rate applicable to credit risk exposures in Bulgaria at 0.5%, with effect from October 1 2019. In early 2019 we raised the rate to 1.0%, with effect from April 1 2020. The rate is applied to the overall credit stock of banks and not to the volume of newly issued loans. We announced that we could increase the rate to a higher level earlier if credit growth significantly accelerates. Our decisions were taken despite the fact that the standard metric of how the credit-to-GDP ratio deviates from its long-term trend remained deep in negative territory. Furthermore, we strengthened the macroprudential powers of the Bulgarian National Bank. The key element here was the introduction into Bulgarian law of a framework of borrower-based measures – requirements such as loan-to-value (LTV) and loan-to-income (LTI) – in addition to the existing capital-based measures.
Once macroprudential policy is in place, monetary policy can focus on attaining the inflation target and stabilising resource utilisation a couple of years ahead. An analysis of the target versus the means thus does not advocate the repo rate as a tool for dampening household debt. It would be costly to society as a whole to use monetary policy for something it is not particularly well-adapted to influence. The trade-offs must also include the risks of deviating from the inflation target My final objection to the monetary policy conducted recently is that the trade-offs have not sufficiently taken into account the costs and risks linked to deviating from the inflation target over a long period of time. Flexible inflation-targeting means that the central bank can deliberately allow inflation to deviate from the target out of consideration for developments in the real economy. This is possible as long as the deviation is assessed as temporary, and households and companies perceive that the central bank aims to bring inflation back to the target level. However, a situation where monetary policy leans against the wind does not really fit into this description. Here the central bank allows target attainment for both inflation and the real economy a couple of years ahead to stand back, out of consideration for the risk of a really poor target attainment, probably far ahead in the future.

We did so not because we wanted to help the firms, but because allowing them to collapse in a disorderly fashion in the midst of a global crisis would have harmed households and business throughout the United States. All the Fed’s loans were collateralized and we are confident they will be repaid in full. Second, we took aggressive steps to ease monetary policy in order to support economic activity and employment. By the end of 2008 we reduced short-term interest rates to virtually zero – the lowest level in the history of the Fed. In order to provide still further support for the economy, we bought more than $ trillion of long-term assets – principally mortgage bonds guaranteed by Fannie Mae and Freddie Mac with the support of U.S. Treasury – between December 2008 and March 2010. When the Fed buys long-term assets, it pushes down long-term interest rates. This supports economic activity in a number of ways, including by making housing more affordable and boosting consumption in households that can refinance their mortgages at lower rates. In addition, low long-term rates reduce the cost of capital for businesses, thereby fostering more hiring and investment spending (on equipment, construction and machinery, for example) for any given economic outlook. National economic conditions So where are we today? Let me start my discussion of economic conditions with a few comments about national economic conditions. As I discussed in a recent speech, the Great Recession has been followed by a tepid recovery.
The SNB is treating this issue as a high priority, and will continue to monitor the mortgage market carefully. We will analyse the risks in greater detail – in close cooperation with FINMA and the banks themselves – and examine whether there is a need for action. In any case, caution should be exercised in lending. When assessing affordability, it must be taken into account that interest rates are, by historical standards, exceptionally low. It is essential that loan-to-value ratios be set conservatively, especially for regions and property types that have seen prices rise sharply in recent years. Outlook We expect the global economy to continue recovering this year. This recovery, however, is fragile, for it has until now been based largely on the support measures deployed by governments and central banks. Uncertainty is still at an above-average level. Downside risks have gone up again in recent months due to the financing difficulties faced by some  2  BIS Review 85/2010  European countries. Urgently needed cost-cutting measures and rising risk premia could jeopardise the recovery and trigger another lengthy period of higher credit default rates, and even renewed turbulence on the financial markets. A development of this kind would present the Swiss banking sector with a serious challenge: besides an economic slowdown and a slump in the financial markets, a further destabilising influence could be the spread of problems throughout the global banking system.

Table 1  The fiscal rule was drawn up in 2001. Today, the situation is different. In 2001, a real return on the Fund of 4 percent, or a little higher, based on the then prevailing distribution between equities and bonds, was a reasonable assumption. Today, calculations yield a lower figure for expected real return. 1 The real return on bonds in the Fund’s portfolio can now be estimated at 1 percent. With a normal risk premium on equities, the real return on the whole Fund can be quantified at 3 percent. There is a possibility that the real return will be higher, but it may also be lower. If we spend more than the annual return on the Fund, we will be eating into the savings portion. The conclusion is that a more robust approach would now be to base fiscal policy on an annual expected real return on the Fund of 3 percent. Such an adjustment would underpin the main principles that were behind the establishment of the fiscal rule – stability and sustainability. 1  8  See Norges Bank Staff Memo 6/2012. BIS central bankers’ speeches  Chart 8  In 2011 the structural non-oil budget deficit was about 3 percent, which is close to such a new path. Adapting petroleum revenue spending to a lower expected return should not therefore be particularly demanding. If we wait, a necessary policy adjustment later could be far more painful.
These three sources of risk call for different policy actions. The first approach for dealing with asset price misalignments is for authorities to communicate their views on the extent of potential asset price distortions and their consequences for financial stability. These “verbal interventions” are relatively common regarding the exchange rate. I see no reason why we should not use them also for other assets such as bonds and equity, since they are relevant variables from the point of view of macroeconomic and financial stability. Indeed, recent experience has shown that central banks need to be more assertive and communicative about the conduct of financial systems. In our last Financial Stability Report we indicated that evidence pointed to some overvaluation of stock prices in Chile, but we also indicated that financial stability was not threatened by potential corrections, even sharp corrections, in these prices. Of course, making this assessment is not a trivial task – as modeling asset prices is complex – and it is not the role of central banks to communicate continuous assessments of asset prices. For this reason, this kind of communication must be done exceptionally, and in the context of discussing the potential implications of these price developments on current and future  BIS central bankers’ speeches  3  financial stability. In addition, communication must be done in a timely manner, before vulnerabilities build up.

Anita Angelovska Bezhoska: Opening and closing address presentation of the EBRD Transition Report 2021-22 Opening and closing address by Ms Anita Angelovska Bezhoska, Governor of the National Bank of the Republic of North Macedonia, at the presentation of the EBRD Transition Report 2021-22, Skopje, 24 March 2022. ***  Opening address Dear colleagues, ladies and gentlemen, At the beginning let me thank you for the kind invitation to address you at the launch of the latest Transition Report that analyses and measures the progress of transition economies on their way towards higher income levels. It is indeed my privilege. For us, in the transition world, the Report has always been an important guideline, both with respect to advices on how to address the deep-seated structural issues, but on cutting edge maters as well. In the current context, it even gets more prominence by providing valuable insights in the extent to which the unprecedented shock have derailed policymakers from structural agenda, which is a key precondition for faster transition. Similar to most of the countries in the world, the emergence of the pandemic has hit Macedonian economy severely. Although it caught us on a strong footing with solid economic fundamentals and absence of any significant disequilibria, the economic activity plunged by 6%-which has not been observed in the last two decades. Despite the rebound during last year, not all economic losses were recovered.
The first one is more fundamental and concerns the closer degree of financial and economic integration between countries. Globalization of the world economy has been driven by a variety of forces including rising trade in goods, increased international capital flows, greater technological spillovers, and growing labor mobility. While these factors have brought about a more efficient allocation of resources across national borders and facilitated higher growth and development across countries, they have also created a world environment in which shocks have become more global in nature and where crisis in one country can easily affect others. The end product of greater international economic interdependencies, especially in financial markets, is therefore the enhancement of the underlying international business cycle linkages. Which brings me to the second aspect of the world economic environment that I would like to touch on today. This aspect concerns the immediate state of the world economy. The globalization of information technology (IT) production has meant that the correction of the unsustainable boom in IT spending has had a particularly widespread impact on the world economy. All the major industrialized countries are experiencing a synchronized slowdown in their business cycles, adversely affecting countries in the Asian region who rely heavily on exports of high-tech products. These developments have been accompanied by a steep decline in the growth in world trade. Falling commodity prices and increased competition in world markets have also put pressure on the external sector as exporters grapple with both weaker volume and lower prices.

You may take this as an official response, as I have already discussed this issue with our Minister of Finance. Conclusion Ladies and gentlemen, Before ending, I would like to emphasize again that Thailand has gained significant ground since the aftermath of the 1997 crisis. Macroeconomic stability has been restored, progress has been achieved in financial restructuring and strengthening bank supervision, and external vulnerability has been substantially reduced. At this juncture, however, there is no room for complacency. The key challenge facing the authorities is to maintain macroeconomic stability while accelerating the pace of reforms amidst the global slowdown and heightened market uncertainty. Through careful management of domestic policies, greater regional cooperation, as well as consolidation of restructuring efforts, Thailand and the surrounding region should weather the global slowdown and return to a sustainable growth path. I would like to thank you once again for the opportunity to address this distinguished forum and wish you all the best. Thank you. 4  BIS Review 99/2001
4  Perhaps I should point out that the academic discussion between advocates of the efficient market and those with somewhat different views is still in progress; the advent of the Behavioural Finance school has not left the former at a loss for words. 5  For an introduction to Behavioural Finance, see Shleifer, A. (2000), Inefficient markets, Clarendon Lectures in Economics, Oxford University Press. See also Shiller, R.J. (2001), Bubbles, human judgment and expert opinion, Cowles Foundation Discussion Paper 1303, Yale University. The senior economist at Föreningssparbanken has written an introduction to the subject that has also attracted attention: Fromlet, H. (2001), Behavioural finance – theory and practical application, Business Economics (July), pp. 63–69. 6  See Shiller, R. (1981), DO stock prices move too much to be justified by subsequent changes in dividends, American Economic Review 71, pp. 421–436. BIS Review 5/2002  3  explanation for these findings is that stock markets frequently over-react both upwards and 7 downwards. Something that no doubt helped to question the explanatory power of the efficient-market hypothesis was the stock market crash in 1987, when the Dow Jones index plummeted 22.6 per cent – the largest-ever one-day fall in the United States. This dramatic event demonstrated that share prices can fall even though nothing more fundamental has happened; a thorough search failed to detect any specific or unexpected development that might account for the crash.

For example, we do not have a system where the private sector will share risks across borders, where capital and liquidity are fungible in pan-European financial institutions. A common deposit insurance would help, but it’s important to allow a European bank to be able to operate in the euro area as a single entity. Not all banks would be able to do that, but we need to have a timetable where we say, four or five years from now the banks that qualify in terms of quality and quantity of capital will get a European license. You need to put a very serious, technical, timetable for that, and announce it. That would create a new environment for banking. Is there a challenge to the ECB’s credibility because of the change of stance on the effective lower bound of rates? The story of the lower bound is a very simple one. For all non- standard measures there is not much historical experience, there was very little academic literature until recently. Many central banks thought the zero lower bound is zero, and when we initially decided to go for –0.1, we were not fully sure of the total impact on financial conditions in general and especially on banking. The negative deposit rate, like most non-standard measures – the forward guidance of July 2013, the LTROs starting in 2011, the TLTRO and the APP – delivered more than we expected in terms of their impact on financial conditions.
This sound performance of foreign sales, along with the marked cut in the rate of increase of imports, has seen the external sector make a positive contribution to GDP growth for the first time since 2001, partly cushioning the slowdown in national demand. Net external demand is therefore providing a buffer of support against the widespread weakening trend. On the supply side, the fact that the sharp adjustment in employment is taking place just when labour costs are posting high increases is of particular relevance. This is because collective bargaining is taking on board the deterioration in inflation expectations and because the activation of indexation clauses is passing through last year’s inflation deviation to wages. Unfortunately, there is a risk that this will occur again in 2009, potentially causing second-round effects in an economic situation in which the behaviour of employment is very important, as I stated, for regulating the cyclical downturn in the economy. Furthermore, this increase in wages has not been accompanied by productivity gains on a similar scale. Therefore, the increases in unit labour costs continue to be higher than those of our trading partners. If, moreover, business margins were to continue widening as they have in the past, the difficulties for the economy of competing abroad would increase, undermining one of the potential sources of recovery. Inflation posted a rapid increase in the first half of the year, despite the loss of momentum of activity.

For the moment, however, I shall simply reiterate that one of the aspects highlighted by the current financial crisis is how important it is for central banks to have the appropriate instruments with which to manage their liquidity provision policies with sufficient flexibility. 2  BIS Review 122/2008  And all the more so in the presence of turmoil which, as at present, is profoundly altering the operation of the channels through which liquid resources are normally re-distributed among the various banks that apply for them. In this respect, it is widely acknowledged that the Eurosystem’s monetary policy operational framework is allowing euro area banks' liquidity requirements to be met, thereby preventing the emergence of additional pressures that might exacerbate the situation on financial markets. In any event, returning to the most important macroeconomic developments that will influence the performance of the Spanish economy, it is clear that financial conditions in the euro area, as in the rest of the world, have tightened notably. Such tightening has compounded the adverse effects of the oil and commodities shocks on agents' real incomes and output capacity. The latest data, for the second quarter of the current year, show how the growth rate in the euro area has weakened to 1.4%, standing below potential. The latest ECB projections pointed to increases of between 1.1% and 1.7% this year, and between 0.6% and 1.8% in 2009, subject to considerable uncertainty and to downside risks that have increased in recent weeks.
But coincident with lower risk are lower returns to banks’ activities, due to the combined effects of stricter regulation, misconduct fines, low levels of interest rates and increased competition. This leaves banks a riskier proposition for equity investors than before the crisis, as the residual claimant on profits. But, by and large, improved solvency standards have reduced risk among bond-holders and depositors in banks. “By and large” because, accompanying these changes in banks’ capital standards, has been a move towards putting losses from default onto bond-holders. This can be seen in the evolution of the implied “support ratings” given to banks by rating agencies. In 2010, holders of the major UK banks’ debt enjoyed around 4 notches of implied ratings uplift owing to expectations of government support (Chart 12). By 2016, that had fallen to less than one notch of support. A similar pattern is evident among other global banks. Calibrating Regulatory Standards  Is the calibration of these new regulatory standards too tough, too lax or just right? That has been among the most animated of the regulatory debates over the past decade. One standard for comparison is historical experience. There has been a significant evolution in the levels of both capital and liquidity ratios of the major banks over the past century.

With this development comes the promise of greater consumer choice, improved access to credit for some borrowers, and greater efficiency and productivity in the traditional intermediary sector. There are also potential resilience benefits from increasing diversity in the provision of financial services (Carney (2017a)). While the sector is probably too small at present to pose a threat to financial stability, there is ample historical experience of risks emerging rapidly in fast-growing sectors if left unchecked. Such future risks might include: conventional vulnerabilities associated with excessive use of leverage and maturity, liquidity and credit transformation; the emergence of new highly-interconnected entities; and cyber and other operational risks. There is also the potential for these developments to make traditional universal banks less resilient, if they are forced to rely on less stable funding sources, for example. A challenge for policymakers is to ensure that the regulatory regime, and the wider policy framework – including the scope of central banks’ liquidity facilities – adapts to keep pace with these developments (Lagarde (2017)).