samchain/econo-pairs-v1 huggingface dataset:
This follows from Macroeconomics 101: the current account position is the mirror image of the balance of savings and investment. External rebalancing achieved through, for example, raising savings and depressing domestic investment, might not be compatible with robust growth or high levels of employment. The second aspect is the interaction between flows and stocks. Rebalancing has traditionally been seen as resolving flow imbalances, e.g. the current account. But it is also about sustaining sufficient flows over time to stabilise stock imbalances. That is because, even with a balanced current account, excessive net external liabilities create instability and may be unsustainable. And as is the case today in many euro area economies, an internal debt overhang slows down the economic recovery and hence impedes internal rebalancing. BIS central bankers’ speeches  1  The third aspect is the role of surplus and deficit countries. Rebalancing could, in theory, be achieved by all euro area countries adjusting vis-à-vis the rest of the world. But, in reality, as 50% of euro area trade is intra-area, it must involve rebalancing within the euro area as well. And to be sustainable, that rebalancing cannot take place solely through demand depression in deficit countries in a way that prevents their internal balance. It requires symmetrical adjustment in surplus countries too. “Symmetrical”, of course, does not mean that all countries should have a perfectly balanced current account, but rather that both excessive deficits and excessive surpluses should be adjusted. The fourth aspect is the cyclical and structural drivers of rebalancing.

The result is a greater divergence in bank funding costs and lending rates than would be warranted by the underlying economic fundamentals, and euro area companies being unable to tap a single pool of savings to fund their development. The third response is to explore avenues for non-bank financing – that is, to develop debt and equity capital markets in Europe. Around 75% of firms’ external financing in the euro area comes from banks, which makes the economy particularly vulnerable to crises that spread through the banking system. Measures are being introduced in Europe to develop capital markets for long-term financing and deepen markets for the securitisation of loans to small and medium-sized enterprises.16 However, having a well-functioning financial sector is only one part of the story. To leave the crisis behind us, we also have to ask: what in fact does that sector finance? Again, we can learn from the Asian crisis: we need to foster growth and total factor productivity with new business models. Fostering growth: new business models Due to its length and severity, the economic downturn has already caused a permanent loss in output and a rise in structural unemployment, and we cannot rule out that the growth rate of potential output has been affected too. To repair this damage, investment in both physical and human capital has to be a key component of the recovery. Clearly, there is spare capacity in the euro area economy. Total investment in the euro area is currently 17% lower than it was in 2007.
That day is etched on my memory. I had the incredible good fortune to be sitting on the Bank’s foreign exchange dealing desk that day, watching agog as we lost around £ billion in foreign exchange reserves defending the pound – at the time, real money – despite announcing interest rate rises of 5 percentage points in a single day. How the world has changed. Currently, financial markets expect UK interest rates to rise by an average 5 basis points each six months for the next 10 years. The UK’s exit from the ERM led to a new nominal anchor being needed. And almost immediately, one was adopted – an inflation target. It had one obvious merit: it was the only monetary framework not to have already been tried in the UK. But the track record of inflation-targeting was close to non-existent. At the point the new target was announced, expectations for UK inflation were high (over 5%) and expectations for the framework lasting were low. The collapse in sterling following sterling’s ERM exit, and the expected sharp rise in inflation, meant the wheelie bin beckoned for inflation-targeting. In the event, inflation failed to pick up as much as expected after the ERM debacle. And, behind the scenes at the Bank, the machinery of monetary policy was changing. Data, analysis and models suddenly became more central to judgements on inflation and the appropriate monetary stance. Accompanying this, economics and economists began playing a more central role in formulating the Bank’s judgements.

In the years 2005 and 2006 three key laws were enacted, namely, The Convention on the Suppression of Terrorist Financing Act, The Prevention of Money Laundering Act, and the Financial Transactions Reporting Act. The FTR Act created the institutional body of the FIU within the Central Bank, with regulatory powers and a mandate, inter alia, to formulate policies and guidelines to meet the Financial Action Task Force (FATF) 40 + 9 recommendations. The enactment of the necessary AML/CFT legislation in Sri Lanka, early last year and the establishment of the Financial Intelligence Unit soon after, demonstrates Sri Lanka’s strong commitment to the global efforts to fight financial crime and terrorism. Naturally, therefore, in this effort, the areas of vulnerability have been identified and adequate measures taken to deal effectively with the weaknesses. The stakeholders also need to be adequately equipped to discharge their responsibilities effectively. We therefore, see today’s effort at building capacity and processes, as one of the most important pre-requisites for the implementation of an effective AML/CFT regime, and we commend the World Bank and all others who are involved in this endeavour. My dear friends, Sri Lanka has been ever mindful of its obligations in this regard and has been a pioneer in this field. Long before the advent of the AML and CFT legislation, certain safeguards to insulate our financial system from money launderers and terrorists were in fact put in place by us. This was done through legislation such as the Exchange Control Act, the Banking Act and the Customs Ordinance.
3  If b is the ratio of debt to income then its growth rate is given by r − g − s/b, where r is the ex post interest rate, g the growth rate of income and s the proportion of income used to pay off debt. So if g falls and r does not either debt starts rising faster than income or debtors must save more; if r and g change by the same magnitude b and s don’t have to. e  BIS central bankers’ speeches  3  than the interest rate, and therefore when servicing debts requires much more of their incomes than people had expected, that problems can arise 4. When (mild) deflation doesn’t matter: a high neutral real rate I think you can see the importance of these considerations in the UK, both in recent history and, as it happens, over a much more distant period. In the second half of the 19th century, and up until the First World War, Britain and much of the advanced world were on the Gold Standard: the price of gold was fixed at £ Deflation was commonplace. Discoveries of gold occurred only intermittently, and because the global economy – and therefore the demand for currency – was generally expanding, its real price often came under upward pressure. With the nominal price fixed, the only way that could happen is if the denominator of that real price – the price of goods and services – declined.

Svein Gjedrem: Hearing before the Standing Committee on Finance and Economic Affairs Introduction by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), at a public hearing before the Storting's Standing Committee on Finance and Economic Affairs, together with Mrs Kristin Halvorsen, Minister of Finance, and Mr Bjørn Skogstad Aamo, Director General of The Financial Supervisory Authority of Norway, Oslo, 13 February 2009. *  *  *  Government finance fund and government bond fund The crisis in the banking sector was initially a problem of liquidity. In October and November, there was considerable turbulence and fear was spreading among banks. Credit premiums were high. The situation has improved. The improvement is to a considerable extent the result of action taken by the authorities. The swap arrangement whereby banks can exchange covered bonds for government paper has been important. The arrangement is oriented towards larger banks, and a number of banks have made use of this facility, in an amount so far totalling more than NOK 70 billion. Norges Bank has proposed an extension of the arrangement to provide banks with funding at 5-year maturities. Maturities so far have been up to 3 years. The extension is important to ensure that maturity dates do not all fall within a short period. The arrangement provides banks with Treasury bills. Banks have used these as collateral for loans, sold them or kept them as liquidity reserves. There has been high demand for Treasury bills.
Prices for credit insurance and funding costs have risen, although to a smaller extent than for many US and European institutions. As a result, Norwegian banks now have to put more effort into procuring deposits and a little less into selling loans. Such a change in banks' behaviour may help to curb growth in demand and output in the period ahead. In addition, there may be further repercussions for the Norwegian economy if weaker developments in the US lead to a broad-based pause in global growth. First, a downturn in the world economy may have a negative impact on activity and profitability in export industries and perhaps even the oil sector. It may be more difficult to sell goods in a falling market, and prices for domestically produced goods may fall. Second, turbulence and the prospect of weaker growth may increase uncertainty among Norwegian households and businesses. As a result, new projects and investments may be postponed, or enterprises may be reluctant to recruit new employees. Third, the financial market turbulence has a more direct impact on the business sector. Banks and investors now apply a higher premium and higher prices for providing capital for acquisitions, restructuring and investment, and highly leveraged companies have to pay high loan risk premiums. We still do not know what the full impact of the turbulence will be. The US authorities have taken measures, both fiscal and monetary, to address weaker growth prospects. Interest rates are shifting down in the US and many other countries.

And thirdly, the level and complexity of interconnectivity of various types of financial institutions have increased very rapidly, and with this, increased counterparty risk and systemic risk implications. Much of this is in the OTC derivatives markets which are hard to monitor, and presents huge problem in unwinding during a crisis, even with standard agreements such as the ISDA Agreements. The overhaul of international regulatory framework is a major challenge, but as we all know, this process will not be immediate, as the regulators of major economies are still focused on solving the turmoil. In the meantime, it is up to all of us to be aware that conforming to minimum standard, even one prescribed by international best practices, may not be adequate if the risk profiles dictate a higher level of vigilance, risk management, and capital adequacy. In this regard, given the complex nature of financial conglomerates in emerging markets in Asia today, a robust framework of risk management and supervision on a consolidated basis is a must. In the case of Thailand, we have undergone the Financial Sector Assessment Programme (FSAP) of the IMF and the World Bank in 2007. FSAP assessed the regulatory framework of banks, capital market, insurance, the payment system, against international best practices such as the Basel Core Principles for Effective Banking Supervision, as well as the Insurance Core Principles of IAIS. Overall, the FSAP team found the Thai financial system to be resilient and with the regulatory framework broadly conforming with international best practices.
While risk-based divestments concern companies that we prefer not to invest in, there are other companies that we want more of. These are companies that, in our opinion, provide opportunities for solid returns in the longer term. In the mandate, the Ministry of Finance has also set a requirement for the Bank to establish separate environment-related investment mandates. At the end of 2019, these mandates amounted to NOK 79 billion invested in 77 companies and bonds. In 2019, the Ministry also decided to permit unlisted investments in renewable energy infrastructure. NBIM has a group in place that has begun to seek out opportunities in this sector. We set the same risk and return requirements for the investments under these mandates as for the rest of the fund’s investments. Everything we do in the area of ownership is, and must be, a result of an active approach. In our active management, we seek at all times to make the most of analyses we have performed and the knowledge we have acquired over the past 20 years. Our internal asset managers closely follow the largest European companies in particular. Knowing the companies well puts the fund in position where it is possible to earn excess returns. External management In emerging markets, we benefit greatly from our use of external asset managers. Knowledge of and proximity to markets are essential for being able to assess the risk of investments. In view of challenges associated with responsible investment, a passive investment strategy is not really appropriate in these markets.

Petar Goshev: Promotion of the European Fund for Southeast Europe – EFSE in the Republic of Macedonia Welcoming speech by Mr Petar Goshev, Governor of the National Bank of the Republic of Macedonia, at the first official presentation of the European Fund for Southeast Europe in the Republic of Macedonia, Skopje, 1 March 2007. *  *  *  Distinguished ladies and gentlemen! Allow me to express my pleasure, more precisely the pleasure of all employees of the National Bank of the Republic of Macedonia for being hosts of the first official presentation of the European Fund for Southeast Europe in the Republic of Macedonia. Therefore, I greet the representatives of the European Fund for Southeast Europe, wishing them a warm welcome to our country, where, I sincerely assure them, they could fully, equally, safely and more ambitiously offer their financial services to the market of the highly open Macedonian economy, also encouraged, of course, from their previous positive experience they acquired through their cooperation with the Export and Credit Bank, AD Skopje. I would also like to especially welcome all of you that responded to the invitation by attending this presentation, thus de facto showing respect and interest in yet another new financial initiative in the Republic of Macedonia. Certainly, there is a deep reason for such respect and interests.
Furthermore, while the reserves are expected to intermediate capital flows in the short run, we must not forget that the floating exchange rate framework is an important adjustment mechanism that can buffer volatile capital flows. Lastly, Malaysia’s external debt cannot be judged based on the aggregate level alone. Onethird is denominated in ringgit and is not subjected to valuation changes from exchange rate movements, limiting the risk of currency mismatches. The remainder are subject to prudential management and hedging requirements. What is more important is that more than half of the total external debt is skewed towards medium- to long-term debt, while shortterm debt poses limited claims on reserves. Taking all these factors into consideration, Malaysia’s external debt remains manageable. As we can see, the reality is far different from the perception. It is important that conclusions are made based on facts rather than perceptions and sentiments. Without us delving into the details and without the availability of critical information, the probability is high that our perception and sentiment would be inaccurate. Because of this ‘reality gap’, the central bank needs to show its presence in the market when it is needed. Part III – Ringgit Exchange Rate and Interventions For this reason, interventions by central banks on the odd occasion becomes necessary. Interventions can take different forms. Many of you may focus on market or operational interventions. Indeed, this is important to ensure the market has sufficient liquidity in stressed conditions.

At that point, any additional monetary stimulus would require non-standard measures designed either to shape agents’ expectations as to future  2  BIS central bankers’ speeches  interest rate behaviour or to change the size and composition of the central bank’s balance sheet. Balance sheet expansion through programmes to purchase public and private securities is unquestionably an exceptional measure, but it is not exclusive to the euro area, and has already been adopted by other central banks. Between 2010 and 2014 the Federal Reserve, the Bank of England and the Bank of Japan doubled the size of their balance sheets after running out of room to further reduce interest rates and after having resorted to announcing their commitment to hold official interest rates at very low levels for a sufficient time. The design and implementation of programmes to purchase public and private debt securities must not fail to take into account the institutional characteristics of the area in which they are applied. Monetary policy in the United States or in the United Kingdom acts in a fiscal union, which makes it easier to resolve potential problems associated with the allocation of any costs incurred by the central bank in its monetary policy operations. In this respect, the unique characteristics of the euro area meant that complex technical adjustments had to be made when designing the announced programme.
Mr George looks at past, present and future challenges for the City of London  Speech given by Mr Eddie George, Governor of the Bank of England, at a City University Conference at the International Maritime Organisation in London 7 December 1999. *  *  *  Mr Chairman, Ladies and Gentlemen, As we approach the end of every year we naturally tend to look back at the past, to take stock, and to look forward to the challenges ahead. The temptation to do that this year on the brink of the new Millennium, is almost irresistible. But take courage - I will at least try not to dwell upon the historical origins of the City this morning. Instead, I will start from where we are now - which is a good place to start because by and large the City is in pretty good shape. It is, of course, the hub of the financial and business services industry of this country, which, broadly defined to include shipping and real estate as well as other forms of intermediation, and the accountancy and legal professions, contributes directly something like a quarter of total national output - with some 7-8% coming from the financial services sector alone.

And why, for countries where there have been larger and faster increases in household debt levels, recessions have tended to be deeper still. The Financial Policy Committee has already acted in response to the growing momentum in the housing market. As well as the general strengthening of bank capital, the FPC, in conjunction with other regulators and the Treasury, withdrew both the cheap funding and favourable capital treatment of mortgage lending introduced after the crisis to help support the housing market. And, we have asked the FCA that when lenders test whether prospective borrowers can afford, through time, the mortgages they seek they should bear in mind future Financial Policy Committee recommendation on the appropriate interest rate stress test to use in assessments of affordability. Whether and how to act further if, following the pause of the last couple of months, momentum continues to build will be the most challenging judgment the FPC will have to take in the coming months. The FPC’s response will depend on the nature of the risks to stability identified. The FPC’s powers of direction in relation to the capital banks and building societies bear most directly on mortgage lenders’ ability to weather a downturn and housing bust once it has emerged. Others, like the FPC’s powers to make comply or explain recommendations to the PRA and FCA could bear more directly on the crucial underwriting standards and affordability constraints like debt service to income, loan to income and loan to value.
The first panel will be moderated by Mr. Liviu Voinea, Deputy Governor and will approach the theme of investments and investment finance in 2018. The second panel will be moderated by Ms. Lara Tassan Zanin, Head of The European Investment Bank Office in Romania and will focus on the support of sustainable growth in Romania, shifting from consumption to investments. Ladies and gentlemen, Romania and the European Investment Bank share a long and fruitful cooperation that started in 1990. It got closer in 2007 when Romania became a member of European Union and implicitly of European Investment Bank. This joint partnership has boosted investments in Romania in areas of significant importance for the national economy, such as the infrastructure, small and medium enterprises, environment and innovation. These coordinates are totaling more than 13 billion EUR allocated to around 130 projects financed by the European Investment Bank, besides other 70 projects financed by the European Fund for Strategic Investments. These figures alone speak about the priorities, however I would like to point out that the financial impact transcends beyond the sum of total loans. There is significant potential for development and improvement. Romania is a net beneficiary of EU funds, the latest data showing a positive aggregate balance with more than 32 billion EUR as net received funds.

Given the healthy public finances in Thailand (with 9 years of fiscal surplus prior to 1997), the expanding foreign private sector debt was interpreted as a sign of euphoria and confidence in the emergence of a new tiger of Asia. In Europe, a similar story of mispricing occurred when some peripheral nations were able to access financing at a much cheaper rate than the country’s underlying credit rating would have allowed them to do so - and this was made possible out of sheer membership of the Euro zone. A single currency and a convergence in risk rating, like our  BIS central bankers’ speeches  1  fixed exchange rate, gave the market a false sense of security that encouraged borrowing beyond our means and without proper risk management. Second, both crises occurred as a result of a failure to fulfill the necessary “pre-conditions”. In Asia, they were preconditions for liberalization, and in Europe they were preconditions for integration. A number of Asian countries embarked on ambitious liberalization programs with insufficient safeguards, appropriate infrastructure and policy tools. Liberalizing capital flows while still maintaining a fixed exchange rate system eventually ran up against the impossible trinity. The country must give up control over monetary policy. Recourse to macroprudential policies to stem the excessive bank credit expansion and asset price inflation, was not well-known then. Along the same line, the currency union proceeded without the necessary preconditions for integration.