samchain/econo-pairs-v1 huggingface dataset:
6 Like the SLS, DWF drawings are typically structured as a liquidity upgrade – exchanging borrowers’ illiquid collateral for UK Government securities (gilts in the case of the DWF). The Bank is willing to accept a very wide range of collateral in the Discount Window – a much wider set than that which is normally eligible in the Bank’s regular open market operations. The Bank’s published documentation sets out four categories of eligible collateral (Level A to Level D). The contents of each are determined by the market liquidity of each eligible asset class. The least liquid collateral set includes own-name securities or pools of loans: that is where a borrowing bank itself has originated, or has some other close financial links to, the assets comprising the collateral. Other features of the DWF are very different from those underpinning the SLS. First, DWF borrowings typically have a term of 30-days. 7 The DWF is intended to act as a bridge in the event of a liquidity shock. For a relatively mild shock that might support a counterparty to the next regular ILTR, 8 or to planned debt issuance. For greater shocks, the solution might require more fundamental changes in the firm’s balance sheet (e.g. asset disposals). In any case, before it will agree to lend in the Discount Window, the Bank of England will need to be convinced that there is a credible path to a point where access is no longer required.

2  All speeches are available online at www.bankofengland.co.uk/speeches  2  (i) internal total loss-absorbing capacity (TLAC) or minimum requirements for eligible liabilities and own funds (MREL) and the underpinning it provides for cross-border co-operation; (ii) bail-in mechanics – having required banks to maintain TLAC or MREL, we need, as resolution authorities, to be clear how we would use it; and (iii) disclosure – resolution needs to be credible as well as feasible. With credibility comes market discipline ex ante and less disruption in a resolution (lower probability of default and loss given default in other words). All three areas build on the core work of resolvability that has already been done, illustrating the point that the process is incremental and resolvability is not binary but progressive. Resolvability of firms Let me start then by reviewing what has already been done. I will focus on the standards and guidance coming from the FSB. It is true that they have been drawn up for application to G-SIBs in Crisis Management Groups (CMGs). But in our view, they are equally applicable to domestic systemically important banks (D-SIBs) or other firms where bail-in is the preferred resolution strategy, especially where firms operate cross-border. The convergence at international level on bail-in as the appropriate strategy for large banks is itself significant. This transcends whether firms are single point of entry or multiple point of entry.
Ardian Fullani: Improving the performance of Albania’s banking sector Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the year-end event with the Albanian Association of Banks, Tirana, 17 December 2013. *  *  *  Dear bank executives, Your Excellency Ambassador Sequi, Dear Mr. Ilahi, Dear Mr. Pencabligil, It is a pleasure for me to participate in this year-end meeting, as we reflect about the challenges we faced and the objectives we accomplished in this year, and endeavour to identify issues that may arise over the next year. Given the celebrations time and the spirit of this meeting, I would rather not dwell upon all the issues I would have liked to. However, I will share with you my opinion on two issues I consider as important for a good performance of the banking sector over 2014. Before moving on, we should acknowledge that the year we are leaving behind was a difficult one for the banking sector. In its development cycle for over more than one decade, this year, the banking sector’s growth slowed down sharply and annual lending levels contracted. Deteriorated asset quality, dictated by credit, has led to lower financial profit due to higher provisions needed. These developments have reflected the overall economic slowdown and domestic demand drop resulting from lower private consumption and investments. However, other developments highlighted the banking sector’s capacity to properly respond to and cope with these challenges.

The banking sector has maintained ample liquidity and capital levels thanks to the further rise in public deposits and added capital by parent banks. In terms of non-performing loans, obvious efforts have been made to restructure credit and sell off non-performing loans to non-bank financial institutions. The Albanian Association of Banks has played an active role in discussing the problems with relevant authorities and identifying solutions through the regulatory treatment of nonperforming loans, notably, the legal amendments to collateral execution process, which entered into force in September 2013. Through its activity, the banking industry may transform 2014 into a better year for both the banking industry and the Albanian economy. I think that this may be achieved through harder work in the following aspects: The first aspect pertains to restoring lending to adequate levels in Albania. This objective may be achieved by interlinking these three elements: a)  Cleaning up balance sheets from non-performing loans. It is indispensible that you should mark evident progress during 2014 to write off loss loans from their balance sheets and engage in cautious credit restructuring, where necessary. The improvement in the fiscal handling of loan write-offs, in the near future, is expected to better support this process; however, this does not justify the sluggish and protracted action. I, therefore, call for your utmost commitment to successfully implement projects initiated with the World Bank in this regard.
Why does this historical detour matter? The five or six years since the outbreak of the financial crisis have seen signs of a reversal of some aspects of the greater openness we had seen in the 1980s and 1990s. And probably none more so than the decline in crossborder bank lending. Moreover, the UK experience in terms of lending has been amongst the more pronounced. But again, does this matter? My answer is yes. First, because many of us do believe in the economic benefits of free trade and capital flows, as well as the contribution of migration to balancing supply and demand in the economy. Second, and closer to home, the City of London and its financial markets benefit hugely from, and are at the hub of, the open world economy. For example, whatever you think about the more troublesome recent innovations of banking, basic trade finance remains a core, simple and essential service provided by banks, and the City has for a very long time been a leading centre for providing this finance to support world trade. International wholesale banking is therefore an important part of maintaining and developing the world economy, just as it was in the nineteenth century. Yet, we have to recognise that in the last five or six years of the crisis we have gone backwards. Cross-border bank lending has declined more sharply than overall lending – home preference has set in.

It limits the range of activities that branches can undertake, but not I think in ways that undermine the ability of such branches to undertake safer forms of wholesale banking, which is the preference of most banks in that position. We  BIS central bankers’ speeches  3  have a clear policy framework for taking these decisions and our approach to all branches will be consistent with our objectives of safety and soundness. Our stance is sensibly cautious, but not I think restrictive. And, let me reiterate that it is a general policy, not a China policy, and it is consistent with promoting the benefits of an open world economy. 4  BIS central bankers’ speeches
The external members are not full-time employees of Norges Bank, and their primary occupations are outside the central bank. In this respect, the Executive Board has an important control function. Its external members can act as a counterweight to any internal cultures of opinion that may arise at the Bank. 28 In some central banks, such as Sveriges Riksbank and the Bank of England, interest rate decisions are made by individualistic committees. Decisions are made by majority voting, with each member individually accountable for his or her vote. There are advantages and drawbacks to both individualistic and collegial committees. As I discussed in last year’s speech, individual accountability can provide good incentives. There is no one to hide behind. At the same time such accountability entails more work and probably full-time employment at the Bank. In that case, the former outsiders may quickly assimilate the internal culture. The control function of the external members might be lost. 6. How do we arrive at a decision? We also need to think carefully about how we should agree on a decision. There two approaches: premise-based or conclusion-based. 29 The two approaches may have different outcomes. Allow me to offer a stylised example. Assume that a three-member committee is to reach an interest rate decision. They base their decision on two premises: inflation and pressures in the economy. The first member believes that inflation has risen more than expected, but finds that the pressures in the economy are broadly as expected. The interest rate should therefore be raised.

The Minister of Trade and Industry at the time, Erik Brofoss, advocated following UK actions to the full, and was supported in this view by Gunnar Jahn, the director of Norges Bank. They feared a substantial loss of competitiveness if Norway was the only one among its trading partners not to follow the sterling devaluation. When the magnitude of the UK devaluation became known, Gunnar Jahn was attending the annual meeting of the IMF in Washington. He had received provisional authorisation from the government to inform the IMF that Norway would follow a moderate British devaluation. The expectation was a sterling devaluation of around 20 per cent. However, Erik Brofoss had informed Jahn that he favoured following the UK move regardless of how much they devalued. At an IMF dinner on the evening of 16 September Jahn received a business card with the date “18 September”, the number “30.5” and the words “Tell Bramsnæs” written on it (Bramsnæs was the director of Danmarks Nationalbank, who was also  BIS Review 147/2010  3  demand pressures were elevated. The krone devaluation triggered high inflation. 14 This time, the rule “do what the UK does” contributed to a less favourable outcome. 15 4. Groups often make better decisions than individuals  So what steps can we take to ensure that important decisions are the best they can be, even if they have to be made under uncertainty? In his novel L, Erlend Loe discusses advantages and drawbacks of different decision systems.
On the nominal side, our two countries' links with the euro area differ markedly. Swiss and euro area inflation have a correlation of 39%, which, although low, corresponds to the average correlation of inflation rates within the euro area itself. Israel's inflation shows a weaker link here, displaying a correlation with euro area inflation of only 19%. Comparing again the levels instead of the correlations, Switzerland has a long tradition of monetary stability with an inflation rate that has been clearly lower than those in Israel and the euro area. Over the last five years, the average inflation rates were 0.8% in Switzerland, 2% in Israel and 2.2% in the euro area. While for Switzerland, low and stable inflation is not particularly noteworthy, it is important to remember that price stability in Israel is a recent achievement and that inflation remains relatively volatile here. Overall, this quick look at the data suggests that Israel and Switzerland have different records in terms of stability, that both countries are highly integrated into the euro area, but that, for obvious reasons, Switzerland seems to be more "European" than Israel. If Switzerland is indeed as integrated as any regular euro area member, what advantages do we see in maintaining our monetary independence, while our neighbours have abandoned their national currencies in favour of the euro? Reasons for monetary independence As you well know, the large majority of European countries have come to the conclusion that adopting the euro is beneficial.

Consequently, the optimal path of  BIS Review 46/2006  3  monetary policy may differ. Monetary independence gives us the capacity to react to asymmetric shocks and to limit their negative impact on the domestic economy. To sum up my arguments thus far, monetary independence allows Switzerland, first, to live with a comparatively low rate of inflation and, second, to reduce the impact of Switzerlandspecific shocks, which limits the volatility of Swiss inflation and growth. The third reason for monetary independence, which I would now like to turn to, is the protection of the Swiss interest rate advantage. Continuity of the interest rate advantage One major attraction of adopting the euro for countries with a record of high inflation was that national interest rates would drop in the run-up to the monetary union and converge to the German level, which was the lowest among the euro's founding members. Swiss interest rates, by contrast, have historically been lower, even lower than those in Germany. The reason why Switzerland enjoys the lowest interest rate levels in Europe has nothing to do with the appeal of our bank secrecy, as many believe. Switzerland is not a net importer of capital, but rather a major capital exporter. Traditionally, the Swiss economy displays a large excess of savings over investments. In 2005, our current account surplus represented 14% of GDP and Switzerland exported more capital than the whole euro area.
By way of introduction, I would just like to go back over the three collective hypotheses at the heart of today’s debate, before nonetheless going on to examine a few factors that are indeed specific to France. * * * 1. Does the problem lie in the measurement of growth? The first theory is that there is in fact no slowdown, as we are not measuring growth properly due to the rise of the digital economy. On 16 January this year, the Banque de France held a conference1 that notably discussed this issue in relation to the US economy. The main sources of measurement errors were: first, the estimation of quality-adjusted prices for new technology, as falls in prices tend to be underestimated in US national accounts; and second, product entry and exit, which makes it difficult to estimate changes in prices over time. This could lead to a significant upward revision to US productivity since 1983: by 1.1 percentage points per year at the top end of estimates, according to Philippe Aghion and his co-authors. Nevertheless, even allowing for these corrections, there has still been a slowdown since the mid-2000s. Indeed, the measurement errors were just as significant before this period. That said, this work does provide some grounds for optimism. First, growth in hi-tech sectors, and therefore technological progress, is stronger than we previously thought. Second, some of the gains in well-being linked to new technologies fall outside the scope of the market economy and, as a result, are not recognised in national accounts.

* * * These questions aside, one thing is clear in the case of France – and 2016’s too-feeble growth of 1.1%, as published yesterday, confirms it: estimates from national and international institutions all point to low levels of potential growth, at around 1.2%, and relatively high levels of structural unemployment (the equivalent of the NAIRU in English-speaking countries), at around 9%. Clearly, we cannot be content with these levels. All of which brings us back, overwhelmingly, to our four key focuses for reform: Enterprise, Education, Employment and Expenditure reduction (public sector). Our northern European neighbours have shown by example that these reforms 2/3  BIS central bankers' speeches  are not incompatible with our shared European social model. Studies by the Banque de France show in particular that reforms to the goods and services market could boost the productivity of the French economy by between 3% and 5% in the long-term. Without further ado then, let me pass the floor to Fabrice Lenglart, and I wish you all a fruitful and enjoyable conference. 1 www.banque-france.fr/en/secular-stagnation-and-growth-measurement-conference-organised-banque-de-  france-and-college-de  3/3  BIS central bankers' speeches
Both when the bank aims at the quantity of money and inflation, it works with a so-called intermediary target, as inflation control has in view an inflation forecast that can diverge from actual inflation, just as the growth of the quantity of money can diverge from inflation. This shows that the difference is inconsiderable between the two approaches in practice. Banks with an inflation target also study changes in the quantity of money when they make inflation forecasts. Banks that say that they have a quantity of money target deviate from this without ceremony when it clearly leads in the wrong direction taking into consideration the inflation forecasts that the banks also work with. 4. Confidence There is great benefit in publishing an inflation forecast. The general public can then see how the bank assesses inflation in one or two years’ time, how well founded the forecast is, and how policy is carried out in relation to the forecast that has been made. The Riksbank’s task has been laid down by the Swedish people through a Riksdag decision, as I mentioned to begin with, namely to maintain a fixed monetary value. To that end, the Riksbank has been made autonomous, so-called autonomy of means. However, the Riksbank is responsible to the Riksdag for its policy by presenting an account of its policy twice a year to the Parliamentary Standing Committee on Finance.

Accordingly, we expect inflation will be, with 70 percent probability, between 6.0 percent and 7.8 percent (with a mid-point of 6.9 percent) at end2015 and between 3.7 percent and 7.3 percent (with a mid-point of 5.5 percent) at end-2016. We estimate that inflation will stabilize around 5 percent in the medium term (Chart 21). In the second quarter of 2015, exchange rate movements delayed the recovery in the core inflation trend, causing the year-end inflation forecast to be raised by 0.5 point. On the other hand, the improvement in import and food prices compared to the previous Report reduced the year-end inflation forecast by 0.1 point and 0.3 point, respectively. As a result, import and food prices are estimated to offset the adverse effects of core inflation figures in the second half of the year. Accordingly, we revised the end-2015 inflation forecast, which was set as 6.8 percent in the April Inflation report, upwards by 0.1 point. We kept the end-2016 inflation forecast, which was 5.5 percent in the previous report, unchanged. Considering that the downward revision in the average oil price assumption will pull down the end-2016 inflation by around 0.1 point, this effect will be compensated for by the effect coming from the rise in inflation forecast for end-2015, so we left the end-2016 inflation forecast intact (Chart 21). We are of the opinion that base effects will continue to determine the course of inflation for the rest of 2015.
The horizon will depend on disturbances to which the economy is exposed and the effects on the prospects for the path for inflation and the real economy. 2. Reasonable balance between the inflation gap and the output gap  Norges Bank conducts flexible inflation targeting, which implies that stabilising inflation around the target should be weighted against stability in the real economy. The chosen interest rate path should therefore imply a reasonable balance between the objectives if there is a conflict in the short term between stabilizing inflation around the target and stabilizing the real economy. What is meant by a “reasonable” balance is obviously a matter of judgment and is an important element in Board discussions. In the assessment, potential effects of asset prices, such as property prices, equity prices and the krone exchange rate on the prospects for output, employment and inflation are also taken into account. Assuming the criteria above have been satisfied, the following additional criteria are useful: 3. Robustness  Interest rate developments should result in acceptable developments in inflation and output also under alternative, albeit not unrealistic, assumptions concerning the economic situation and the functioning of the economy. 4. Gradualism and consistency  Interest rate adjustments should normally be gradual and consistent with the Bank’s previous response pattern. 5. Cross-checking  It is important to cross-check the Board’s judgments concerning the interest rate path against other information.

Petra Geraats argues that it is important not to delay policy decisions that are not expected by the market just in order to appear predictable. This, she argues, could impair the market’s understanding of the central bank’s reaction pattern and thus reduce predictability in the medium and long run. I fully share Petra’s view. As a general rule, the central bank should do what it considers to be the appropriate thing to do in a given economic situation. Predictability is not a goal in itself. However, one caveat to this rule is that in situations where there is unusually high uncertainty and turmoil in financial markets, it could sometimes be unwise to add more uncertainty through unanticipated policy decisions. In her survey, Petra Geraats points out that transparency can have both information effects and incentive effects. One incentive effect which is not mentioned in the paper, but which I believe is very important in practice, is the effect transparency has on the internal decision process. This effect is difficult to detect for outside observers, but I have observed how transparency has changed the motivation and discipline of the economists within Norges Bank. By publishing our own interest rate forecast, each sector expert will see how his or her judgment might affect policy. Moreover, by following the principle that what is communicated externally should reflect the internal decision process, we need to think extra hard about what we do internally. Transparency makes the public better capable of evaluating the central bank’s analyses and policy assessments.