samchain/econo-pairs-v1 huggingface dataset:
Higher oil revenues towards 2000 led to calls for higher spending. The fiscal rule was established in response to this development. A fiscal rule based on the permanent income from petroleum wealth would require agreement on what this number should be. Since 2001 we have seen large revisions in the estimated permanent income, as oil prices and resource estimates have changed. The future development of the value of the fund is also uncertain, but at least the value of the fund at a given point and the actual return from year to year are observable. It is also worth noting that the proposed rule enabled a smooth transition from the actual level of spending at the time. In comparison, a permanent income rule would have implied a very large increase in spending back in 2001. In 2017 the estimated real return on the fund was revised downwards from 4 percent to 3 percent. This spurred no significant debate and was largely considered more of a technical matter. This serves to illustrate the broad political consensus regarding the fiscal framework. The 5/6  BIS central bankers' speeches  framework has served us well for 17 years, and seems set to continue to do so. CONCLUSION Graph: Conclusion The Norwegian economy has benefited tremendously from the oil and gas resources. Public and private consumption have increased. Solid public finances have provided scope to make active use of fiscal policy to counter external economic shocks.

The accumulated wealth in the fund is approaching three times mainland GDP, enabling a lasting annual income contribution to future welfare of 6-8 percent of mainland GDP in the coming decades. The present guidelines allow temporary income flows to be transformed into permanent gains, benefiting all future generations. They are simple and robust. They take account of the effects on the rest of the economy and on the economic policy debate. Norway’s experience serves as an example of why temporary shocks in general, and more specifically discoveries of natural resources, justify deviations from a balanced current account. Deficits used to finance investments that generated high returns have served us well. I guess there is no such thing in the real world as an “optimal spending rule”. In the Norwegian case, there were definitely lessons to be learned during the first two-three decades of resource development. Still, over the years, and in particular with the present fiscal rule, I think we have struck a reasonable balance. Thank you for your attention. 1 Bergsten, C.F. and Gagnon, J. (2017): Currency Conflict and Trade Policy. A New Strategy for the United States,  Peterson Institute for International Economics 2 Gagnon, J. (2018): Can a Country Save Too Much? The Case of Norway, Policy Brief 18–7, Peterson Institute for  International Economics 3 Corden and Neary (1982): Booming Sector and De-Industrialisation in a Small Open Economy. The Economic  Journal (92), pp. 825–848. 4 This is measured as the sum of labour costs, intermediate consumption and fixed capital investment.
First, with regard to significant Spanish banks, the Banco de España, in addition to providing its experience and most of the staff of the joint supervisory teams, will shoulder the weight of on-site inspections, it will participate in the preparation of all the decisions to be adopted by the ECB Supervisory Board and it will be active in the exercise of its sanctioning powers. As regards the sanctioning regime, it should be stressed that the European Central Bank will be responsible for imposing sanctions, provided that three requirements are met: that the sanction is imposed on the credit institution, i.e. on the legal person; that it stems from noncompliance with directly applicable European Union legal rules; and that the sanctions are of a pecuniary nature. In the remaining cases, power will continue to be exercised by the national supervisory authorities, without prejudice to the ECB being able to demand that the appropriate proceedings be initiated. Second, as stated, the Banco de España will continue to be fully responsible for the supervision of the 81 credit institutions deemed less significant.

The banks of the countries participating in the SSM have been divided into two groups of significant and less significant institutions. The ECB will exert “direct supervision” over the former; as regards the latter, it merely assumes “indirect supervision” functions, as the national authorities will in fact continue to be responsible for their effective supervision. A list of 120 significant banking groups has been drawn up, accounting for approximately 85% of euro area bank assets. 15 of these are Spanish groups, representing around 90% of the assets of our country’s deposit institutions. It should be borne in mind that when we talk about 120 groups, we are referring to consolidated groups; that is to say, the number of individual banks is far higher. In total there are 1,244 individual institutions, which is essentially explained by the importance of cooperative banks in certain euro area countries, in particular France, the Netherlands, Austria and Finland. To directly supervise the significant banks, the ECB has created two directorate generals, which shall perform the continuous monitoring of the 120 groups. DG I will supervise the 30 biggest banks in terms of balance sheet and activities, while DG II will cover the remaining 90 significant banks. However, the supervision of specific aspects or matters, what is known as on-site inspection, will be carried out by different teams. The ECB has thus adopted a different model to that place at the Banco de España to date: functionally separating the continuous monitoring of banks and inspection visits.
Interestingly, industry-funded deposit insurance was not adopted in the UK until 50 years later; the Bank of England preferred to rely on the ‘Governor’s eyebrows’ for both supervision and for dealing with failing banks – using suasion to get the industry as a whole to provide support, such as the ‘Lifeboat’ which was created in 1973.4 With the liberalisation and globalisation of banking at the end of the last century, banks became larger, more complex and more interconnected. It became increasingly unclear whether the longer-term creditors could be made to pay and whether large banks could be allowed to fail. The case of Continental Illinois demonstrated that deposit insurance was not enough. The danger of loss of confidence and contagion made the authorities reluctant to bail in longerterm uninsured creditors. It was in giving evidence on the subsequent bailout – which cost over $ – that the then Comptroller of the Currency admitted that the largest eleven banks in the US were ‘too big to fail’. The market got the message. For the largest, most complex banks, the answer to the question ‘who pays?’ was likely to be the taxpayer. Despite central banks’ attempts to engender uncertainty over whether banks would be bailed out, despite the cases of BCCI and Barings in the 1990s in which two medium-sized banks were allowed to fail, expectations that banks would be bailed out became entrenched.

9  The average cost of liabilities is the ratio of net interest expense to financial liabilities. 10  The risk-free interest rate benchmark. 10  (CoCos). A more diverse set of banks made such issuances last year, giving rise to greater cost dispersion.11 There was also a significant increase in unsecured debt issuances in 2021, in this case at a slightly higher cost than in 2020. Meanwhile, deposits at Spanish banks continued to grow in recent quarters, albeit at slower rates than a year earlier.12 After falling in 2020, the cost of capital rose in the first ten months of 2021,13 but then fell back again, to 8.1% at December 2021. This is below the sector return on equity (ROE) (10.5%), even without taking into account extraordinary items (9%).14 In the initial months of 2022, the cost of capital continued the downward pattern of late 2021 to stand at 6.8% at May, likewise below the ROE for 2022 Q1 of listed Spanish banks (11.7%). In terms of solvency, the common equity tier 1 ratio (CET1) of Spanish banks held relatively stable in 2021, after increasing in 2020.15 The CET1 ratios of the main European countries’ banks were also relatively stable, meaning that the Spanish banking industry, on average, remains in last place in terms of this solvency indicator. This difference owes largely to Spanish banks’ higher asset density, influenced by structural factors such as the more widespread use of the standardised approach to calculate asset risk weightings.
•  In these cases, the “certainty equivalence principle” (Poole, 1970) calls for policy to respond to the best estimate of variables in the same way that it would to perfectly measured variables, were they to be observable. b. Be cautious  •  This is an approach popularised by Brainard: “parametric” uncertainty gives grounds for addressing economic disturbances cautiously, supporting a gradualist approach (Brainard, 1967). Furthermore, transmission uncertainty related to the fact that, according to Milton Friedman, “monetary policy works with long and variable lags”, cautions against trying to “fine-tune” the economy through monetary policy intervention. •  Moreover, a central bank should not adjust policy simply because the market expects it 1 : -  the behaviour of financial markets is mimetic whilst central banks are very cautious;  -  markets are sensitive to speculative bubbles while central bankers focus on fundamentals;  -  markets are short-term oriented whereas central banks are medium- to long-term oriented. •  However, erroneous decisions may be made in private markets if monetary policy does not match the policy anticipated. This requires the central bank to be intertemporally consistent. A usual policy guideline in this context is to gradually adjust the policy rate. •  Thus, from a practical point of view, gradualism has many advantages: -  it reduces the risk of having to quickly reverse policy decisions;  -  it reduces the probability of financial market disruptions;  -  it is particularly beneficial in the face of major risks.

2)  The Eurosystem faces general but also specific sources of uncertainty  •  As regards the general sources of uncertainty, one can mention uncertainties related to:  •  II  -  macroeconomic data, which may be unobservable (output gap) or subject to revisions (GDP);  -  the nature and the persistence of shocks: e.g. oil and commodities shocks, the degree of pass-through to prices, etc. ;  -  the transmission of monetary policy to the real economy, since Milton Friedman showed that “monetary policy works with long and variable lags”;  -  the potential asset prices misalignments and wealth effects. But uncertainty may be more pronounced in the case of the euro area: -  the available time series are short;  -  the euro area has potentially experienced a regime shift à la Lucas;  -  the euro is a catalyst for structural changes. How to deal with uncertainty? The economic literature has proposed some monetary policy guidelines (II/1) and approaches (II/2) to address uncertainty. BIS Review 63/2006  1  1)  Monetary policy guidelines  a. Disregard uncertainty  •  If the uncertainty is related to data or shocks (the so called “additive” uncertainty), it may be optimal to take decisions as if there were no uncertainty at all.
Michael C Bonello: Launch of the Forum for Financial Stability Introductory remarks by Mr Michael C Bonello, Governor of the Central Bank of Malta, at the launch of the Forum for Financial Stability, Valletta, 23 May 2011. *  *  *  Ladies and Gentlemen, I should first of all like to thank you for having accepted our invitation to today’s launch of the Forum for Financial Stability. I would also like to extend a special welcome to our guest speakers, the Chairman of the MFSA, the Secretary General of the MBA and Mr John Fell, Deputy Director General of the ECB’s Financial Stability (Directorate General). In my own introductory remarks I shall attempt to provide a context for the creation of this Forum, in which I trust your respective institutions will play an active role. In this regard it is important to note that central banks have an intrinsic interest in financial stability. Indeed, this interest is recognized in statutory instruments. Thus while the Treaty states that the ECB’s primary objective is to maintain price stability, it also stipulates that it should contribute to the stability of the financial system. Echoing this thinking, our own Central Bank of Malta Act, while giving primacy to the implementation of the ECB’s monetary policy, also enjoins us to ensure the stability of the financial system. The concern of central banks with the health of the financial system is explained by the fact that price stability and financial stability complement one another.

At a time when we are witnessing an increase in corporate nonperforming loans, I reiterate my call for the banks to expand their provisions commensurately with this heightened credit risk. At the same time, dividend policies must be mindful of the need for higher levels of retained earnings in order to further strengthen capital buffers, also in view of the more onerous requirements of Basel III. Finally, I would encourage risk officers to go beyond simple compliance with regulations and proactively espouse prudent risk management practices and good judgement. BIS central bankers’ speeches  3  Before I hand over the floor to Professor Bannister, I would like, on this my last official meeting with the financial community, to express my sincere appreciation to you all for the cooperation and understanding I have benefited from over the past twelve years. Thank you. 4  BIS central bankers’ speeches
Ardian Fullani: Bank of Albania – progress during 2006 Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the “Round Table on Target Inflation 2”, Tirana, 8 December 2006. *  *  *  Ladies and gentlemen, I want to conclude this Round Table by thanking you all for your contributions. We are really happy that you came to Tirana for discussing the monetary policy strategy of the Bank of Albania. This Round Table on Inflation Targeting was an excellent follow-up of the Open Forum. At the Open Forum last year in December we globally discussed the many preconditions for Inflation Targeting. During these two days of the Round Table, yesterday and today, we went far deeper on these complex issues. These issues need to be solved before the Bank of Albania can put a fully fletched Inflation Targeting regime into place. At this Round Table we have discussed the progress that the Bank of Albania has been making during 2006. One of the discussed topics was the econometric modeling and forecasting. The Bank of Albania uses now a reliable analytical framework that provides information useful to the monetary policy decision making. Under Inflation Targeting more information would be needed about the expected inflation developments in the future. As laid down in the central bank law, the primary objective of the Bank of Albania is to achieve and maintain price stability in Albania. For keeping prices stable we need to be able to forecast the development of prices in the future.

The main issue of this block is how effectively the monetary policy pursued achieves its operational objective, which is to keep money market rates close to the key rate. We will also consider whether we need to adjust our operational procedure given the evolution of the Russian financial market. Work stream 3. Retrospective assessment of the effectiveness of the monetary policy pursued. This block of topics is probably the most challenging one technically. Within this work stream, we will try to estimate, relying on our model-based approaches, what results we could have achieved through our monetary policy if we had known what we know now when making our earlier decisions. I would like to stress straight away that we will not assess our actual decisions as they were made when we had less information than today. Nevertheless, this is a very useful practice to analyse the robustness of the monetary policy pursued, which will provide helpful insights for the future. Work stream 4. Communication as a monetary policy instrument. I may say straight away that we have been consistently developing our communication practice throughout the entire period of inflation targeting and continue to improve it now. We are to assess how well the society understands our communication, how predictable our actions are, and what areas of our communication we should prioritise in the future in order to strengthen confidence in the policy pursued. Work stream 5. Monetary policy and financial stability.
When companies’ scope to reduce their prices as a result of, for instance, deregulation and increased competition, begins to be exhausted and demand pressure is finally expressed in rising prices, there is a risk that the price increases will be both greater and introduced more rapidly than expected by us analysts. Monetary policy must be based on forecasts of inflation and resource utilisation. If monetary policy is based on an overly optimistic assessment of the interplay between growth and inflation, it can lead to monetary policy becoming overly expansive. If inflation expectations have become more slow moving, it could mean that there is time for considerable imbalances to build up before policy has an impact in the form of higher inflation. Examples of this are Japan in the 1980s, the USA in 1927-29 and again in the 1990s. The example from Japan indicates that even if inflation does not rise during the forecast period with which monetary works, it is important to take a broader outlook both throughout the entire economy and further forward in time, and to envisage the risks that could exist with regard to financial stability. In Japan the cost of borrowing was very low during a long period of time to borrow money to invest in shares and property. As the productivity of the economy increased, confidence in the future grew and this made both investors and credit institutions more willing to take risks. The result was that asset prices were pushed up.

Michael Gondwe: Encouraging local content and business linkages – role of the financial sector Opening remarks by Dr Michael Gondwe, Governor of the Bank of Zambia, at the 2013 SME Local Content and Business Linkage Forum, Lusaka, 28 November 2013. *  *  *  •  The Guest of Honour, Minister of Finance, Honourable Alexander B. Chikwanda, MP;  •  The World Bank Country Director, Ms Kundhavi Kadiresan;  •  Senior Government Officials and Development Partners present;  •  Heads and Representatives of Financial Institutions;  •  Business Industry and Associations represented;  •  Distinguished Invited Guests;  •  Members of the Press;  •  Ladies and Gentlemen. On behalf of the Bank of Zambia and indeed on my own behalf, I wish to extend a very warm welcome to you all to this very important Forum. Some of you may recall that in June last year, together with the World Bank, we organised a strategic forum for small and medium enterprises (SME) on the “role of finance for unleashing the potential of local Zambian businesses”. The objective of that Forum was to facilitate strategic policy dialogue between the Government, Bank of Zambia, the financial sector and the private sector on issues central to facilitating access to finance by Zambian businesses including SMEs. As Bank of Zambia, we believe that it is important to sustain this dialogue to facilitate an inclusive strategy in the financial sector development.
This is putting pressure on lending margins, most obviously in the residential mortgage market where pricing has now reached more than 2.25% below prime rate. In 2000, the impact of this on the banks’ overall net interest margin was mitigated by the fact that the ample liquidity kept funding costs low and the prime-HIBOR spread at record levels. But the net interest margin is likely to come under increased pressure as more loans are refinanced at cheaper margins and if funding costs rise relative to lending rates. Interest rate deregulation So conditions for the banks are, as they will tell you, currently quite tough. And they could become tougher when the final stage of interest rate deregulation takes place. This is due to happen at the beginning of July and will involve removing the interest rate cap on savings accounts and the prohibition on the payment of interest on current accounts. This move is a central feature of the reform  BIS Review 29/2001  1  measures that we announced in 1999. But it is part of a continuing process that began in 1994 with the progressive removal of the interest rate controls on time deposits. Deregulation is undoubtedly the right thing to do. While the interest rate controls did serve a useful stabilising function in the past they have become increasingly outdated in a mature banking system like Hong Kong’s.

They have imposed rigidities and inefficiencies in the setting of deposit rates and have inhibited the development of new products on the liabilities side of the balance sheet. The removal of long-standing controls is not however an easy process, and may bring with it certain risks and drawbacks. From the banks’ point of view, the obvious problem is that they may have to pay higher interest rates, or interest for the first time, on the previously regulated deposits. The effect on margins will be exacerbated if deregulation leads to a price war with banks aggressively bidding for deposits. At this point, the banking regulator may also become concerned if it appears that the banks are neglecting the management of their interest rate risk and liquidity risk. This is obviously something that is a potential concern with the impending deregulation. But the banks have had plenty of time to prepare. Moreover, the current excess liquidity in the system means that the incentive to bid too aggressively for new deposits should be reduced. Having said that, some banks will no doubt see deregulation as an opportunity to expand their customer base, and will price their deposits with this objective in mind. This brings me on to the impact of the deregulation for consumers. There has perhaps been too much of a tendency in some quarters to see deregulation as something that would bring benefits for all. This was not the view of the HKMA.