samchain/econo-pairs-v1 huggingface dataset:
In this sense, after deciding to defer implementation by one year so as to increase banks’ operational capacity, all members of the Basel Committee on Banking Supervision (BCBS) have committed to its full and consistent implementation on the new date agreed. The economy and financial system will thus have sufficient time to absorb the main effects of this crisis and to progressively rebuild any buffers that may have been used. Further, it should be noted that the BCBS is carefully assessing the impact of the reforms, including the lessons learned from the COVID-19 crisis. This analysis will be based on rigorous empirical evidence and will serve to determine whether any additional regulatory aspects need addressing. Low banking sector profitability  Fifth, I would like to reflect on what I consider to be one of the main challenges for the banking sector in the short, medium and long term, namely the low profitability of the banking business. It was already low in many European countries before the coronavirus crisis, but the present crisis will put it under further pressure. To address this challenge, banks need to continue to make efficiency gains, cutting costs and making more use of new technologies. 8  Consolidation processes in the industry could be an appropriate way to achieve this aim. Specifically, there appears to be room for consolidation both in Spain and in other European jurisdictions where the indicators point to some surplus capacity.

Elisabeta Gjoni: Role of money in wartime Opening remarks by Ms Elisabeta Gjoni, First Deputy Governor of the Bank of Albania, at the Second Conference of the Museum of the Bank of Albania, Tirana, 20 September 2018. * * * Dear guests, participants, researchers, academics, numismatists, collectors, students, Welcome to the Bank of Albania! It is a special pleasure for me to open the proceedings of the Second Conference of the Museum of the Bank of Albania on “Role of money in wartime”. The rich collection of coins and banknotes and other items exhibited in our Museum becomes more meaningful when supported by the historic background of the period of the country of issue. The organisation of this Conference, an annual one, contributes to the both the historic and educational role of the Museum. This conference is also an excellent opportunity to share experiences with representatives of the main institutions of culture in Albania and museums of central banks and other prominent foreign institutions in this field. I am happy to see in this room both old and new collaborators, whom we wish to be “permanent consultants” of the Bank of Albania. We aim to create and cultivate a solid and productive relationship with the best experts in numismatics, museology, cultural heritage and research. Dear participants, Today’s presentations will address the mutual, complicated and multi-dimensional relation between money and war. Wars have had an impact on the economy and development of human kind from the birth of civilisations to modern times.
Peter Praet: The role of the central bank and euro area governments in times of crisis Speech by Mr Peter Praet, Member of the Executive Board of the European Central Bank, at the German Federal Ministry of Finance, Berlin, 19 April 2012. *  *  *  I would like to thank Maximilian Freier and Gianluigi Ferrucci for their contribution in the preparation of this speech. Introduction Since 2007, we have constantly been confronted with exceptionally tense financial and economic conditions. When the tensions in the financial markets first emerged in the summer of 2007, they were perceived as a liquidity shock. However, the collapse of Lehman Brothers in September 2008 – the first climax of the crisis – revealed more fundamental fragilities in the global financial system. The accumulated credit excesses, paired with the complex cross-country linkages in the financial markets, quickly exacerbated the financial market tensions on the other side of the Atlantic, transforming them into a crisis of global dimensions. The resulting Great Recession of 2009 affected virtually all industrialised countries and caused other weaknesses in the economic and financial system to be crystallised. Specifically, the severe economic contraction worsened the fiscal positions in many countries around the world, particularly in those that already had sustained public or private debt imbalances before the crisis. The subsequent tensions in some sovereign debt markets have spilled back into the financial markets. As safe assets, sovereign bonds play a key role in financial systems.

Regarding the tighter liquidity requirements (modeled as a 25% increase in the holding of liquid assets, combined with an extension of the maturity of banks’ wholesale liabilities) MAG’s estimations point to a median increase in lending spreads of 14 basis points and a fall in lending volumes of 3.2% after four and a half years. This is estimated to be associated with a median decline in GDP in the order of 0.08% relative to the baseline trend. An IMF study dating as of February 2012, reports similar results to MAG’s research, finding that in the absence of any monetary policy response, a permanent synchronized global increase in capital requirements for all banks by  1  For instance the EBA requirements and the Volcker Rule, within the Dodd-Frank Law in US. 2  Banco Bilbao Vizcaya Argentaria. 4  BIS central bankers’ speeches  1 percentage point would cause a peak reduction in GDP of around 0.5 percentage points, of which around 0.1 percentage point would result from international spillovers. Their findings show somewhat higher losses in EMEs as compared to AEs (0.74 percentage point loss in GDP in EMEs as compared to 0.46 percentage points in AEs) due to higher estimated spillover effects. The third point of transmission relates to development of financial markets EE’s. The development of deep domestic financial markets can improve the economy’s ability to absorb shocks and manage financial risks.
And, in parallel, the various  4  flexibility mechanisms available to firms should be ensured, as their role is particularly useful for allowing potential structural adjustments derived from the crisis. Third, new measures should be taken in several areas, such as those relating to active labour market policies and to training for the unemployed and for temporarily furloughed workers. The aim of these measures would be to maintain their employability and smooth their reinsertion into sectors or firms with greater growth capacity. The suspension of face-to-face education risks prompting an adverse impact on students’ academic performance, particularly in lower-income households. Consequently, the education system requires mechanisms allowing students to acquire the necessary skills and qualifications, albeit in the absence of presence-based education. Likewise, there is a pressing need to review restructuring, insolvency and debt burden-relief processes for firms. Flexible and simplified administrative procedures must be set in place. Specifically, ailing debt-laden firms should have the capacity to move into a preventive framework enabling them to pursue their business activity while they are still viable. Fourth, a fiscal impulse should be added in the initial phases of the recovery, also giving support to the restructuring of our productive system. Here it would be advisable to prioritise the use of any future European recovery fund for specific investments that contract more at times of uncertainty and financial difficulty. Such is the case of investment in technological capital and in training.

Adopting this culture of assessment in economic policy design should be one of its pillars. Allow me now to give you a brief overview of the impact of the pandemic on economic activity. Subsequently, I shall briefly address the content of the economic policy strategy I have just outlined. Details of this content are, in any event, in a document I forwarded to the Chair of this Committee to be distributed among its members. 2. The economic crisis caused by the coronavirus pandemic The pandemic has had an extraordinarily acute impact. In Q1, China saw the biggest decline in its GDP in history. In the United States, the unemployment rate rose to record highs. And euro area GDP fell by 3.6% in the same period. In Spain, despite the fact the lockdown measures only affected the last fortnight of Q1, GDP slumped by 5.2%, also the biggest quarter-on-quarter decline in our recent history. The fact that virtually all of the restrictions linked to the state of alert have been in force for more than half of Q2 will necessarily mean a significantly sharper decline in activity in this 2  period. On Banco de España estimates, this contraction in GDP might stand at between 16% and 22% relative to its Q1 level. The severity of the crisis has been particularly visible in employment. The adjustment from mid-March to end-May affected more than 26% of total employment. In parallel, the number of firms registered in Social Security records has undergone the biggest fall in its history.
[17] The experience from these two crisis episodes shows that central bank liquidity provision can stimulate market functioning and lower money market rate dispersion. [18] During the pandemic, this was also clearly visible, as exemplified by the impact of our measures on term money market and commercial paper rates. [19]  After 2015, excess liquidity was primarily driven by the Eurosystem’s large-scale asset purchases. Although excess liquidity reached new highs with the implementation of asset purchases and financial stress remained at relatively low levels, the dispersion index rose substantially in 2015 and 2016. One factor that could cause such a rise is an uneven distribution of excess liquidity across countries or across banks and non-banks, similar to what had happened in US money markets in September 2019. [20] However, in recent years, the divergence across overnight money market rates was primarily driven by repo rates secured by high-quality collateral. Research suggests that this increase in the dispersion index can be linked to scarcity effects, as asset purchases and the increased regulatory demand for safe government bonds withdrew collateral assets from the financial system. [21] To alleviate these scarcity effects, the Eurosystem introduced the securities lending programme in April 2015. However, the programme was initially only sparsely used. Only when the ECB introduced the cashcollateral option in December 2016, securities lending increased and contributed to lowering the dispersion of money market rates, thus supporting monetary policy transmission (Slide 7).

The spillovers from these projects are also benefiting the real estate market. Demand for properties continues to expand as we see mortgage loans growing at around 10 percent year on year in recent months. Financing conditions have also been favorable. Monetary policy stance remains accommodative and in full support of economic recovery. And, despite the slow economic growth, the overall credit and corporate bond issuance to the private sector continues to grow at around 7 percent. The Bank of Thailand would ensure that the cost of funds is conducive to the ongoing recovery, while also keeping a cautious eye on risks to financial stability. On the fiscal front, the government has become more effective in disbursing and implementing investment projects. Government relief and stimulus measures are also essential at difficult times, especially for those severely affected by adverse economic situations, such as from the current drought. But while taking care of the short-term issues, we must not forget to reckon longer term challenges facing the Thai economy. Thailand is in need of serious initiatives to upgrade and unlock our economic potential in the long term. In this context, we welcome many new initiatives by the government to push ahead with structural reforms. This brings me to the last part of my talk tonight on the way forward for the Thai economy, and how we and our partners like Japanese businesses may ride together toward sustainable prosperity.
I tend to believe that the end of the cycle of heavy capital inflows is followed by a short-term bout of inflation (basically on account of the exchange rate channel), while the subsequent decline in inflation is triggered by the recession and the downbeat expectations that are typical of the periods following capital flow bonanzas. This view may be explained by a relatively large nominal depreciation. However, over the following years, inflation reverts to levels more or less similar to those seen prior to the stop in the heavy capital inflow episode. The stylised profile is depicted in Chart 3, Figure I. Chart 4, Figure I sets out the stylised trajectory of the exchange rate. If massive capital inflows span over several years, the real appreciation on an annual basis tends to be significant, so that the cumulated appreciation is also significant, leading to the downward path in the chart. Nevertheless, the end of the episode of large capital inflows results in a cumulated real depreciation even higher than the cumulated appreciation. The literature shows that in most cases real depreciation becomes manifest via a nominal depreciation of the currency. In the stylised trajectory shown in Chart 4, Figure I, real depreciation is driven by the drop in prices no earlier than the first year after the end of the episode. 4  BIS Review 5/2010  Figure I 2. Real GDP (annual change) percent  percent  1. Current account deficit (% in GDP)  No. of years after LCI  No.

The measure failed to deter capital inflows, which managed to find ways of circumventing the restriction. Despite higher required reserves, commercial banks’ foreigncurrency-denominated liabilities advanced EUR 4.8 billion in 2006, then EUR 7.8 billion in 2007 and a further EUR 5.8 billion in 2008. Nearly 75 percent of the increase in foreign banks’ liabilities during 2005–2008 occurred after required reserves had been raised to 40 percent. Chart 7 Required reserve ratio percent  percent  42 40 38 36 34 32 30 28 26 24 22 20 18 16 14  42 40 38 36 34 32 30 28 26 24 22 20 18 16 14  foreign currency  Dec.08  Aug.08  Apr.08  Dec.07  Aug.07  Apr.07  Dec.06  Aug.06  Apr.06  Dec.05  Aug.05  Apr.05  Dec.04  domestic currency  Source: National Bank of Romania  The constraint deriving from the large capital inflows was severe enough for the NBR to opt for maintaining a managed float regime of the domestic currency. This led to criticism by some analysts who claimed that the inflation targeting strategy adopted in 2005 involved the free float of the domestic currency in order to avoid potentially conflicting targets. The NBR explained that it would not target a particular exchange rate, but rather seek to deter its movements towards unsustainable levels.
However, inflation does not solely depend on our domestic resource utilisation; it is also influenced by supply shocks, international inflation, exchange rate trends, and so on. In certain situations it is necessary to find a balance between stabilising inflation and stabilising the real economy, for instance, when a severe cost shock pushes up inflation while the real economy is weakened. The typical result of weighing up these considerations is that – unless it would threaten credibility – the central bank will allow much longer time for inflation to return to target level than if the rate of price increase had been pushed up by  2  BIS Review 39/2005  increased demand. The negative effects on the real economy will therefore be much less significant than if the central bank had merely reacted to the higher inflation and used an aggressive policy to rapidly bring inflation back in line. Considerations of this nature have been made by the Riksbank on several occasions during its decade of inflation targeting. There are examples from the end of the 1990s when deregulation contributed to very low inflation and the Riksbank chose not to fully utilise the scope for interest rate cuts that might been offered by a stricter interpretation of the inflation target. There are also examples of the reverse from 2001 and 2003, when temporary supply factors pushed up inflation and the Riksbank did not react by raising the interest rate.

To be even more explicit; when we formulate our policy we have on several occasions deliberately chosen to allow deviations from the inflation target for short or long periods of time. When the consequences of the deviations have been lower interest rates than would have been the case with a stricter interpretation, there has been practically no criticism. However, it has been rather different with regard to deviations in the other direction. Neither the Riksbank nor any other central bank using inflation targeting can be described as an “inflation nutter”, to borrow a famous phrase from Mervyn King, now Governor of the Bank of England. That is, we do not focus solely on stabilising inflation; we also take into consideration the real economy – conducting what is usually termed flexible rather than strict inflation targeting policy. This is also entirely in line with our task as laid down in law. There are also other types of consideration that need to be made in monetary policy. One that is immediately apparent is how financial stability will be affected by the interest rate decisions. Over the past year, and also on a few earlier occasions, there has been extensive discussion of developments in the credit market at our monetary policy meetings. We have relatively short experience of how credit cycles affect the economy; up until the 1980s the financial markets were strictly regulated. Our knowledge of the risks entailed in a rapid increase in indebtedness and asset prices is thus limited.
On the other hand, raising the interest rate more rapidly would increase the risk of a stronger krone, which could prevent inflation from reaching the target of 2.5 per cent. The projections indicate that the interest rate will rise by about 1 percentage point in the course of the next year. This is consistent with expectations in the money and foreign exchange market. At the 2-3 year horizon, we expect a further, gradual rise in the interest rate. Norges Bank’s projected interest rate slightly further ahead is somewhat higher than forward rates in the financial market, but market rates in Norway and other countries may have been pushed down by extraordinary factors in the world economy. Norges Bank has assumed that money market rates among our trading partners will also increase gradually over the next three years. The interest rate path in Norway and abroad may be consistent with an approximately unchanged krone exchange rate. With interest rate developments as outlined above, CPI-ATE inflation is projected to increase gradually from about 1½ per cent today to close to 2 per cent at the beginning of 2007. There are prospects that inflation will increase further and reach the target of 2.5 per cent in the second half of 2008. With a gradual reduction in unemployment, Norges Bank expects wage growth to pick up after a period. At the same time, profit margins are expected to edge up in pace with rising demand and capacity utilisation.

The assessment of our near future and our current situation may change as time passes and as more accurate statistics become available. The functioning of the economy could also change. Monetary policy is oriented towards stabilising inflation and output growth. If unexpected disturbances arise and new information concerning the functioning of the economy emerges, the Executive Board must assess whether a different interest rate path may be more appropriate in order to achieve our  BIS Review 79/2005  5  objectives. The interest rate outlook may therefore change over time. The fan charts illustrate the uncertainty that can be expected based on recent history. The Executive Board discussed the main content of Inflation Report 3/05 before the report was published. On the basis of the analysis and the Executive Board’s discussion, the Board assessed the consequences for the future interest rate path and approved the monetary policy strategy for the period to the next Inflation Report in March. The interest rate path presented in the Inflation Report will, in the assessment of the Executive Board, provide a reasonable balance between the objective of bringing inflation up to target and the objective of stabilising developments in output and employment, conditional on the information Norges Bank had at the time the Report was published. The interest rate may gradually – in small, not too frequent steps – be brought back towards a more normal level. The objective of bringing inflation back to target and anchoring inflation expectations nevertheless implies that monetary policy remains expansionary.
Unlike currencies, the value of gold does not depend on a national sovereign. Moreover, payment transactions with gold are fully under a central bank's control. These are two important reasons why gold, more than any other type of investment, serves to ensure the capacity to act in extreme crisis situations. From an investment viewpoint, the price of gold often moves in the opposite direction to other financial assets, in particular to the US dollar. The price for this 'insurance function' is reflected in the fact that gold is less profitable in the long term than other financial assets. It is not surprising that Switzerland, a small open developed country with a highly integrated financial sector and an ageing but relatively wealthy population, continues to invest a significant proportion of its reserves in gold. At present, the SNB holds 1,290 tonnes of gold or roughly 30% of its assets. Price fluctuations in both directions are to be expected and may be strong and sustained. As was the case in the past, such price fluctuations will modify the proportion of gold on our balance sheet from year to year. These short-term fluctuations should not give rise to great concern. Experience has shown that extreme movements in markets tend to level out in the long run. BIS Review 61/2006  5

The new macroprudential toolkit is being accompanied by higher permanent capital requirements and new regulations on banks’ capital structure. The aim is to make the financial sector more resilient to shocks and to prevent or mitigate the build-up of systemic risk. As the new regulatory regime has been introduced, another dimension has been added to the discussion. The question being asked is the following: do reformed banking regulation and the new macroprudential instruments relieve monetary policy of any responsibility for financial stability? A good starting point for the discussion is Tinbergen’s basic principles, which state that a wider set of policy instruments makes it possible to achieve a wider set of objectives and that each instrument should be assigned to the objective it can achieve most effectively. 1 The comparative advantage of monetary policy is to control inflation and smooth fluctuations in output and employment. The first line of defence against shocks in the financial system is, on the other hand, regulation and monitoring of financial institutions. Macroprudential policy is part of this defence. We should also bear in mind that experience of the new regulatory regime and the macroprudential toolkit is still limited. It is too early to assess the effectiveness of the new instruments. On the other hand, we do know that interest rates affect house prices and debt. This suggests that monetary policy should take into account the risk of financial imbalances.