samchain/econo-pairs-v1 huggingface dataset:
Michael C Bonello: Financing the small business sector – constraints and opportunities Speech by Mr Michael C Bonello, Governor of the Central Bank of Malta, at the European Federation of Ethical and Alternative Banks and Financiers Seminar, St.Julian's, 15 April 2010. *  *  *  The holding of a seminar on credit for small businesses is both appropriate and timely given the important role played by these enterprises in modern, free-market economies and the contribution they are likely to make in the recovery phase as economies emerge from recession. It is perhaps not widely known that of the almost 20 million enterprises active within the European Union (EU) in 2005, 99.8% were small and medium-sized enterprises (SMEs), defined as businesses that employ fewer than 250 persons. 1 In turn, more than nine-tenths of these were micro enterprises, with a workforce of fewer than 10. In 2005 SMEs accounted for 58% of the value added generated in the EU and 67% of all employment, compared to 55% in the US. 2 Small businesses are a major source of dynamism in the Maltese economy too. SMEs constitute the overwhelming majority of businesses, accounting for over 99% of the total and two-thirds of total employment. The vast majority are micro enterprises. These small operations act as customers of, and suppliers to, larger companies and are an essential source of entrepreneurship and innovation.

In the euro area, credit growth has indeed slowed progressively during the past year. The latest figures, for February, suggest that loans to the private sector contracted by 0.4% from a year earlier. The annual growth rate of loans to all NFCs – large, medium and small – fell from a peak of almost 15% in April 2008 to –2.5% in February. With regard to credit flows to SMEs, a recently published ECB survey, which however does not include the five smallest countries in the euro area, including Malta, shows that SMEs were generally less successful than large companies in obtaining bank loans in 2009, even if the majority received part or all of what they had applied for. In the second half of 2009, 75% of all SMEs reported successful approaches, slightly less than in the first half of the year. The main reasons given by the banks were the general economic and the firm-specific outlook, together with a reduced willingness to extend credit. It would appear, therefore, that both demand and supply factors explain recent credit developments in the euro area. This conclusion is corroborated by the evidence from the Bank Lending Survey, which points to factors associated with the weak macroeconomic conditions, such as a lower demand for credit due to less fixed investment, combined with supply side factors such as the tightening of credit standards.
In that respect, however, I must at once admit to having no clear answer to the question of how the situation will develop. In conclusion I shall be touching on the consequences for economic developments and inflation in Sweden. In that context it is not just international economic activity that is important but also such factors as wages, productivity and the exchange rate. That will bring me to the challenges which monetary policy now faces. The longest upswing ever First let me take you back a number of years. A look at the exceptional performance in the past nine years can, I believe, help us to understand the problems which now have to be handled in the United States. Today we know that the upswing which began in the early 1990s and became successively stronger is the longest period of continuous expansion the U.S. economy has ever experienced. At first this came to be known as the Goldilocks economy: not too hot and not too cold, as the fabled girl commented on the three bears’ porridge. This referred to the phenomenon of high growth without any signs of overheating. Later there was talk of a ‘new economy’ where investment in new technology and growing use of the internet were the primary factors behind a more efficient performance with rising productivity. Firms that utilised the new technology functioned better and competition increased, partly because the internet made price comparisons easier, stocks could be slimmed and distribution became more efficient.

Jean-Pierre Roth: More growth a must Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank, at the Swiss Economic Forum, Thun, 27 May 2005. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  Since the mid-1970s now, economic growth in Switzerland has been significantly lower than that of other industrialised nations. In terms of per capita GDP among OECD countries, Switzerland lost its leading position during this time, falling back into the main field. Economic growth is vital, however, for the sustainability of our social security institutions. Demographic shifts will cause the ratio of pensioners to contributors to double in the next 30 years, with the result that tomorrow’s generation will be faced with a heavy burden – one that could be considerably lightened by higher growth rates. The soft growth in Switzerland is primarily attributable to the lack of competition in the domestic market. There are numerous known ways to boost growth which have proven successful in many other countries. So far, however, Switzerland unfortunately has neither grasped the importance of implementing these measures, nor does it have the political will to do so. Stronger economic growth can only be achieved by opening our domestic market to competition, contributing to the attractiveness of Switzerland as a business centre and strengthening our human capital.
Then comes monetary policy; policy makers are therefore assumed to be able to react to movements in the real economy and in credit markets within the quarter, which does not seem unreasonable. House prices come last. For the United States, the variables in the vector auto-regression are: CPI inflation; GDP growth; the effective Federal Funds rate; the difference between the Merrill Lynch corporate BAA and 10-year Treasury yields; the growth in total private credit market debt outstanding deflated by CPI; the rate of change of house prices (the National Association of Realtors existing homes price index to 1975 linked to the Federal Housing Finance Agency thereafter) deflated by CPI; and the macroeconomic volatility index. For the United Kingdom, the equivalent variables are: CPI inflation; GDP growth; Bank Rate; the difference between the investment-grade corporate bond and 10-year government bond yields; the growth in M4 lending (excluding securitisations and loans to intermediate OFCs) deflated by CPI; the rate of change of house prices (the Nationwide house price index to 1983 linked to the Halifax measure thereafter) deflated by CPI; and the macroeconomic volatility index. The data are quarterly, there are two lags of each variable, and the sample runs from 1966 Q3 to 2010 Q1. A good case can be made for employing only more recent data, on the grounds that monetary policy reaction functions have evolved during this time. But the cost of that is reduced precision and estimates over just the latter part of the period turn out to be rather less well defined.

Based on a joint assessment of financing conditions and the inflation outlook, the Governing Council judges that favourable financing conditions can be maintained with a moderately lower pace of net asset purchases under the pandemic emergency purchase programme (PEPP) than in the previous two quarters. We also confirmed our other measures, namely the level of the key ECB interest rates, our forward guidance on their likely future evolution, our purchases under the asset purchase programme (APP), our reinvestment policies and our longer-term refinancing operations, as detailed in the press release published at 13:45 today. We stand ready to adjust all of our instruments, as appropriate, to ensure that inflation stabilises at our two per cent target over the medium term. I will now outline in more detail how we see the economy and inflation developing, and then talk about our assessment of financial and monetary conditions. Economic activity The economy rebounded by 2.2 per cent in the second quarter of the year, which was more than expected. It is on track for strong growth in the third quarter. The recovery builds on the success of the vaccination campaigns in Europe, which have allowed a significant reopening of the economy. With the lifting of restrictions, the services sector is benefiting from people returning to shops and restaurants and from the rebound in travel and tourism. Manufacturing is performing strongly, even though production continues to be held back by shortages of materials and equipment.
As history tells us, a national currency and an individual monetary policy are both important symbols of an independent, sovereign country. EMU is breaking with this tradition. The reasons for so doing are numerous: First, a single currency is a desirable addition to the European single market. Cross-border transactions will no longer be impeded by the need to exchange one currency for another or by uncertainties about the future development of exchange rates. Second, the current influence on monetary policy in the EU is unevenly shared among the member states. Germany stands at the center of the European Monetary System and is thus able to significantly influence the course of monetary policy in the EU. EMU will decrease Germany’s influence and will increase the influence of other countries, notably France. Third -- as is hoped and expected by officials in the EU -- the advent of the Euro will strengthen Europe’s role in the international monetary arena. It will thus put the continent on a more level playing field with the United States. And fourth, achieving monetary integration is viewed as an important step towards achieving ever closer cooperation in Europe. Given the various reasons for replacing national currencies by a single European currency, it comes as no surprise that EMU is burdened with high expectations. A failure to achieve it according to the time-table laid down in the Maastricht Treaty is often viewed as a serious threat to further integration in Europe. Now, EMU is certainly an important project.

Real convergence encompasses factors such as labor mobility, price and wage flexibility, exposure towards external shocks, industrial structures, and so on. Judged by these factors, convergence among future members of the EMU still has a long BIS Review 102/1997  -3-  way to go. This is important because to be successful a European monetary policy depends exactly on these factors. Without a high degree of real convergence, monetary policy is bound to have different effects in different parts of the monetary union. The very idea of a single European monetary policy would thus become unrealistic. The ECB would come under political pressure to accommodate mutually incompatible wishes from different parts of the monetary union. The result could only be a less than optimal monetary policy and rising inflation and interest rates. For EMU to be successful the member states of the EU should therefore make determined efforts to further real convergence. The convergence criteria as laid down in the Maastricht Treaty require member states of the EU to achieve certain goals by spring 1998. Convergence, properly understood, can however never be something that can be pinpointed to a certain point in time, but must be an ongoing process. It does not make sense to require countries to get their fiscal situation under control by a certain date, just to let them go unpunished on a public spending spree shortly afterwards. Prudent fiscal policies should not only be a requirement for becoming, but also for remaining part of the EMU.
Mr Latter gives an overview from Hong Kong of eight Asian economies Keynote address by Mr Tony Latter, a Deputy Chief Executive of the Hong Kong Monetary Authority, at the Asian Financial Markets Conference held in Hong Kong on 26-27 April 1999. Thank you for inviting me to address your conference today. It is encouraging to see such a wide and distinguished representation here from the financial and commercial communities. Indeed, when I looked down the advance attendance list, I quickly realised that there would be very little which I could tell you about market developments in Hong Kong that you didn’t know already. So, if you will allow me, I should like to spend some of my time standing back a little from specific market topics and looking instead of some of the macroeconomic forces which shape their development. I shall focus my analysis on eight Asian economies [see table]. You will note that the list does not include Japan, Hong Kong or Singapore. That is because they can already be regarded as having relatively mature financial infrastructures and they are largely free of capital controls. Thus, for reasons which will become apparent as I proceed, they do not fit into the story. The table shows the level of physical capital investment within each economy (specifically, gross domestic fixed capital formation as a percentage of gross domestic product) for the ten years to 1997.

On the other hand, operators of financial market infrastructures are expanding into the core business of banks. For example, a number of central securities depositories and their participants are providing loans and liquidity facilities. Although this is done primarily to facilitate the settlement of securities transactions, the line of demarcation from traditional financial intermediation is becoming increasingly blurred. Also, by granting remote access or by establishing more efficient connections between the individual central securities depositories, they are offering serious competition to the traditional custodians. Technological progress has been the driving force behind this blurring of roles between financial market infrastructures and banks. Technology has enabled large banks to break into the operational field of infrastructure operators without much additional expenditure. Indeed, they have been virtually obliged to do so, in order to utilise their IT platforms to full capacity and to run them efficiently. On the demand side, the smaller financial institutions also benefit. As they outsource their back office functions to larger banks or specialised institutions, they can better focus on their core business. The infrastructure operators, in turn, are finding themselves in a situation where hardly anyone is willing to pay for traditional transaction services that have taken on a commodity character. Consequently, they are diversifying and providing services that generate a higher added value. Those infrastructure operators that are organised as profit-oriented public companies, in particular, are likely to further intensify competition with the banks in the future. This development is confronting the regulators with new challenges.
Princeton, NJ: Princeton University Press Rey, H. (2013), “Dilemma not Trilemma: The Global Financial Cycle and Monetary Policy Independence”, Paper for a symposium sponsored by the Federal Reserve Bank of Kansas City, at Jackson Hole, Wyoming, on August 21-23, 2013 Schularick, M and Taylor, A (2012), “Credit Booms Gone Bust: Monetary Policy, Leverage Cycles, and Financial Crises, 1870–2008”, American Economic Review 102(2): 1029-1061  16  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  16  Thing Global, Act Local  Speech given by Minouche Shafik, Deputy Governor for Markets and Banking On the 24th October 2016 At the joint Bank of England, IMF & Hong Kong Monetary Authority conference on  Monetary, Financial and Prudential Policy Interactions in the Post-Crisis World, Hong Kong  Chart 1 Greater capital openness has facilitated an increase in gross external liabilities of advanced and emerging economies  Source: Hoggarth et al (forthcoming), IMF International Financial Statistics, IMF World Economic Outlook and Bank of England calculations. Chart 2 Correlation of credit growth across countries has increased in recent decades  Source: Cesa-Bianchi et al. (forthcoming). Note: Bars show average correlation of each country’s domestic credit growth with the average of domestic credit growth in the rest of the world. Chart 3 Reciprocity allows countries to reduce the probability of a crisis by more than if they were acting alone  Source: Aikman et al (forthcoming) and Bank of England calculations.

Michael Gondwe: Women’s access to financial services in Zambia Opening remarks by Dr Michael Gondwe, Governor of the Bank of Zambia, at the “Women’s Access to Financial Services in Zambia – Dissemination and Consultation Conference”, Lusaka, 24 June 2014. *  *  *  •  Permanent Secretary, Ministry of Finance;  •  Permanent Secretary, Ministry of Gender and Child Development  •  Permanent Secretary, Ministry of Commerce  •  Bank of Zambia Board Members  •  Your Excellences, High Commissioners and Ambassadors to Zambia present;  •  The United Nations Development Programme Country Director, Ms Viola Morgan;  •  The African Development Bank Country Representatives; Dr Freddie Kwesiga;  •  Representatives from the International labour Organisation (ILO);  •  Deputy Governor Administration, Bank of Zambia Dr. Tukiya Kankasa-Mabula  •  New Faces, New Voices Representative, Ms Nomsa Daniels  •  Chairpersons of the Boards of Commercial Banks,  •  Chief Executive Officers of Banks and Other Organisations;  •  Senior Staff and Colleagues from Bank of Zambia;  •  Members of the Press;  •  Distinguished Guests, Ladies and Gentlemen. It is my honour and privilege to welcome you all to this conference on Women’s Financial Inclusion in Zambia. May I extend a special welcome to delegates that have come from abroad. I wish you a good stay and hope you will have time to visit the various places of interest and sample the food that Lusaka offers.
In reaction to the taper tantrum, former Governor Jeremy Stein examined the large effects that can be produced if beliefs are dispersed and if ex-ante marginal investors receive information  46  The specific question was: “Please indicate the percent chance you attach to the dollar level of the SOMA portfolio falling within the following ranges at year-end 2014 for each of three hypothetical unemployment rate scenarios.” See the June 2013 SPD survey. 47  “If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability.”  48  Bernanke (2015, 549). 49  To quote Bernanke again, “In effect our PhD economists surveyed their PhD economists. It was a little like looking in a mirror. It didn’t tell us what rank-and-file traders were thinking”. BIS central bankers’ speeches  13  that leads them to strongly revise their views about how much risk to take. The outcome could be that the new marginal investor driving market prices has a very different set of beliefs and risk appetite.

While there are signs of a certain reversal in this process, a failure in this respect would be particularly harmful for the European project, since integration is at the core of the European Union itself. The policy actions of the ECB and other European authorities, including the decisive drive towards a Banking Union, have been able to overcome or dissipate the worst fears, but the road ahead is still long and difficult. Finally, the role of central bankers should be highlighted in this new context. We are big players in the financial arena, both from the regulatory and monetary policy standpoint; and the framework for our actions – and reactions – must necessarily change and adapt to the new environment. The renewal of the set of instruments to address the price stability  BIS central bankers’ speeches  1  mandate, be it in a situation of low growth, as happens to advanced economies, or in a situation of large capital inflows, as happens to emerging market economies, is one aspect of that change. The need to take on board financial stability considerations is another aspect widely discussed. You will devote the final part of the day to this quest. And I do not want to take more time out of the tight agenda you will follow now. Thank you very much for your attendance to this Conference. I wish all of you and excellent day and a good discussion. 2  BIS central bankers’ speeches
Turmoil on the financial markets The financial storm of the last nine months has challenged our assessment criteria. Such turmoil poses considerable risks for the future. Before I deal with these issues, please allow me first to look at the factors which have brought us to this situation. After several years of rising home prices in the United States, there was a trend reversal to the downside which hit the high-risk sub-prime mortgage segment hard. It was when credit rating agencies began a massive downgrading of sub-prime mortgage-backed securities that the global financial markets realised the full enormity of what was happening. During the summer months of 2007, the prices and liquidity of these securities plummeted. This turn of events alarmed investors. Risk premiums subsequently increased, with uncertainty as to the extent of the losses incurred by banks triggering a general crisis of confidence among financial market participants. Liquidity on the major monetary markets became scarce and there was a return to volatility on the stock markets. Repercussions for Switzerland Switzerland quickly felt the storm due to the exposure of its financial sector. First, our two big banks saw their profitability fall sharply in the second half of 2007. Losses made in connection with their investment activities in the United States were a decisive factor in this respect. One of the big banks even required fresh injections of capital, such was the extent of the losses it suffered. The private banking sector and domestic banking activities continued to flourish, however.

Final domestic demand thus rose 2% in 2007, compared to 1.7% in the prior year. Thanks to burgeoning demand, employment was up sharply, with the unemployment rate edging down to 2.6% in seasonally adjusted terms by December. The Swiss economy is thus  BIS Review 50/2008  1  experiencing a period of virtually full employment and has been able to benefit from the flow of workers from the European Union and the flexibility this brings. The economic figures for 2007 are all the more pleasing given that prices have remained stable despite the hike in commodity prices. Over the year as a whole, prices increased by 0.7% on average. However, by December, inflation was up 2% – an acceleration primarily attributable to the sharp jump in the price of oil. In such a favourable climate, it was important for monetary policy not to stimulate the economy any further. By persisting with excessively low interest rates, we could have aggravated inflationary risks and thereby disturbed the macroeconomic equilibrium. The SNB therefore maintained its monetary normalisation course by lifting the Libor target range by 25 basis points on three occasions. The three-month Libor thus rose from 2.1% at the beginning of the year to 2.75% in September. In view of the considerable financial uncertainty and the effect this was having on growth prospects for 2008, we subsequently left the target range unchanged and stabilised the Libor at the 2.75% mark. We have since maintained this position.