samchain/econo-pairs-v1 huggingface dataset:
Petroleum activities have contributed to technological developments in the shipbuilding industry and the offshore sector. The current cost level in the Norwegian business sector is adapted to an expansion of the petroleum sector and a steady phasing-in of petroleum revenues into the mainland economy. In the long term, the exchange rate tends to adjust so that both the domestic economy and the current account are in balance. After a period, we will be able to cover a smaller share of our imports using current petroleum revenues and by drawing on the Petroleum Fund. Competitiveness will then have to be improved. It may have to be brought back to around the level prevailing at the end of the 1960s prior to Norway’s emergence as an oil nation. Rough estimates3 suggest that the real exchange rate that ensures balance in the external account when petroleum wealth no longer has the same significant role in the economy is more in line with the real exchange rate that we started with. This is shown in the chart, where the real exchange rate in the very long term will revert to the level prevailing before petroleum extraction began. In conclusion, the Petroleum Fund and the fiscal rule shield the economy from fluctuations in oil prices and extraction rates. With an inflation target, inflationary pressures are steered using the interest rate, while the value of the krone fluctuates.

As elsewhere, a regulatory regime of constrained discretion has given way to one with too much unconstrained indiscretion. This calls for regulatory repair. Without change, the current regulatory system risks suffering, like the Chicago teachers and the LIBOR fixers, reputational damage. Fortunately, there are early signs that regulatory change is afoot to place tighter constraints on this (in)discretion. The emergence of self-regulation To understand how we ended up here, it is useful to explore the historical contours of the regulatory debate. This is a history in roughly four chapters. Chapter 1 covers the period prior to the agreement of the first Basel Accord in 1988. Until then, a patchwork of national regulatory frameworks for capital adequacy operated. Some countries set capital adequacy standards based on simple measures of bank equity to assets – a leverage ratio. Others, including in the US, used risk-based standards with risk weights set by regulators for a small set of asset categories. Chapter 2 begins with the introduction of the Basel Accord. This was a landmark agreement: the first-ever genuinely international banking accord, based around an 8% bank capital ratio, with internationally-set risk-weights applied to a small set of banks’ assets. The Accord was explicitly designed to lean against an international “race to the bottom” in capital adequacy standards (Goodhart (2011)). It also helped ensure a level international playing field. Chapter 3 commences with the Market Risk Amendment to Basel I in 1996 and continues through to the Basel II agreement of 2004.
Such lending can tide a bank over while it is taking steps to remove the cause of the concerns that generated a run or lack of confidence. But it can also serve to conceal the severity of the underlying problems, and put off the inevitable day of reckoning. I hope it is now understood that the provision of central bank liquidity, while essential to buy time, is not, and never could be, the solution to the banking crisis, nor to the problems of individual banks. Central bank liquidity is sticking plaster, useful and important, but not a substitute for proper treatment. Just as a fever is itself only a symptom of an underlying condition, so the freezing of interbank and money markets was the symptom of deeper structural problems in the banking sector. So let me explain why a major recapitalisation of the banking system was necessary, was the centrepiece of the UK plan (alongside a temporary guarantee of some wholesale funding instruments and provision of central bank liquidity), and was in turn followed by other European countries and the United States. Securitised mortgages – that is collections of mortgages bundled together and sold as securities, including the now infamous US sub-prime mortgages – had been marketed during a period of rising house prices and low interest rates which had masked the riskiness of the underlying loans. By securitising mortgages on such a scale, banks transformed the liquidity of their lending book. They also financed it by short-term wholesale borrowing.

In itself that  2  BIS Review 128/2008  does not affect the ability of banks to fund lending, but confidence has been badly shaken after the traumatic events of the past few weeks. New sources of funding will develop only slowly, although the temporary government guarantees of new lending to banks will help. So it will take time before the recapitalisation leads to a resumption of normal levels of lending by the banking system to the real economy. And we cannot assume that there will not be problems in other parts of the financial system and in some emerging market economies to be overcome before the crisis can truly be described as over. With the plan for recapitalisation in place, the focus of attention has moved to the outlook for the UK and world economies. Over the past month, the economic news has probably been the worst in such a short period for a very considerable time. The most recent activity indicators for the second of half of the year have fallen sharply. In the UK, unemployment continues to rise and, over the past three months, has risen at the fastest rate for seventeen years, albeit from a relatively low level. House prices declined by about 5% in the third quarter and are 13% lower than a year ago. The recent weakness of the housing market is likely to continue. And if the news on the domestic front were not sufficiently discouraging, the rest of the world economy also appears to be slowing rapidly.
Ardian Fullani: Current development stage of the Albanian economy Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the regional meeting of the Bank of Albania, Fier District, 31 January 2012. *  *  *  Dear guests, It is an honour and great privilege to be here with you today to share some reflections and ideas on the current development stage of the Albanian economy in general, and your region in particular. Regional meetings have now become a consolidated tradition in our public communication philosophy. We believe that meetings of this kind serve to accomplish the Bank of Albania’s objectives by ensuring a better explanation of the monetary policy-making. In addition to enhancing the transparency of our decision-making, this direct communication also embodies another function, that of public education. We ultimately believe that this communication contributes to a greater efficiency in transmitting the monetary policy decisions to the economy. I cannot, however, refrain myself from sharing some personal impressions I have made over the years on Fier and its people. Your city is an important crossroad connecting the lower part of Albania to the south, including the Ionian Riviera. I think this makes a strong point in favour of Fier, a comparative advantage relative to many other cities in Albania. And not just that. Fier opens wide into the Adriatic Sea, beginning from the embouchure of Seman River in the north to that of Vjosa River in the south.

In my speech today I would like to touch upon main elements of the forecast which are of key importance from the point of view of the decision we took today and for understanding the logic behind our future actions. I will start from the assumptions. We assume the Urals crude price this year at around 50-55 US dollars per barrel. We have reasons to expect oil prices to rise to 70–75 US dollars per barrel by 2017, but nonetheless remain significantly below the levels observed during several past years. We also assume that access of the Russian companies to the global capital markets will be restricted throughout whole forecast period. A long period of relatively low oil prices will force Russian economy to adapt to the new conditions. As a result, GDP is expected to decrease by 3.5%-4% in 2015 and 1%-1.6% in 2016. Moreover, as I have already mentioned, the structural constraints of the economy will be supplemented by factors of cyclical nature. Despite the drop in oil and other commodity prices, the net export will make a positive contribution to GDP dynamics due to the effects of the ruble depreciation on imports and Russian exporters’ competitiveness. However, net export dynamics will not be able to fully offset the reduction in consumer and investment activity during two coming years. As in 2009, contraction in the domestic demand will primarily influence durable goods, including imports, and also some services sectors.
All these considerations allow us to underline the notion that the achievement of financial stability must be based on a broad range of tools which we should all seek to strengthen. Achieving a coherent approach to financial stability may be challenging, if only because it requires a consistent combination of macro and micro elements and because of the large number of interested and participating parties. Also, it should foster financial innovation, and ensure a level playing field. I believe that prudential supervisors should analyse the extent to which conditions are in place so that the banking system can remain resilient in the face of internal and external shocks. This should contribute to the proper functioning of the economy under a wide range of circumstances. Basel II and financial stability That leads me to my third topic, which is a discussion of the impact the new capital framework will have on financial stability. You are probably not surprised to hear that I believe the framework will enhance stability. But let me elaborate on several areas where I believe Basel II will foster stability. Incentives for better risk management First, I believe that Basel II is a major step forward in strengthening the incentives for the ongoing improvement of banks’ risk measurement and management systems. The new capital framework is an incentives-based system and it is a risk-based framework.

Basel II, in my view, is fundamentally about better risk management and corporate governance on the part of banks, as well as improved banking supervision and greater transparency. It is also about increasing the stability of the global financial system, to the benefit not only of banks, but also consumers and businesses. The new capital framework attempts to achieve these objectives with three mutually reinforcing pillars. The first pillar aligns minimum capital requirements more closely with banks’ actual underlying risks. Qualifying banks may also rely partly on their own measures of those risks, which will help to create economic incentives to improve those measures. In concept the first pillar is similar to the existing capital framework in that it provides a measure of capital relative to risk. What is new are the second and third pillars. The second pillar – supervisory review – allows supervisors to evaluate a bank’s assessment of its own risks and determine whether that assessment seems reasonable. It is not enough for a bank or its supervisors to rely on the calculation of minimum capital under the first pillar. Supervisors should provide an extra set of eyes to verify that the bank understands its risk profile and is sufficiently capitalised against its risks. The third pillar – market discipline – ensures that the market provides yet another set of eyes. The third pillar is intended to strengthen incentives for prudent risk management. Greater transparency in banks’ financial reporting should allow marketplace participants to better reward well-managed banks and penalise poorly-managed ones.
However, the main drivers of this third-quarter fall in inflation were energy and core goods. Annual inflation continued to decline across the core goods category thanks to decreased negative effects of exchange rate developments. Regarding underlying inflation trends, there has been a significant improvement in the core goods category. Meanwhile, the services category produced a relatively negative outlook. In the third quar ter, the core inflat ion tren d reco rded a decli ne  BIS central bankers’ speeches  5  following the favorable impact of the macroprudential measures and our tight monetary stance (Chart 11). Accordingly, the marked first-half inflation increase in core indicators was reversed in the third quarter. Yet, I would like to note that underlying trend indicators are still above the target-consistent levels. In this period, international commodity prices, especially oil, fell in line with the weak global growth outlook and USD-denominated import prices dropped. In addition to this favorable outlook of import costs, aggregate demand conditions and the relatively slow pace of growth in consumer loans alleviate the pressures on inflation. In fact, excluding food products and associated services subcategories, we see that annual consumer inflation declined considerably in the third quarter (Chart 12). In sum, the negative effects of cumulative exchange rate developments continued to wane in the third quarter, yet food prices remained on a relatively unfavorable track. The prolonged high level of consumer inflation and the ongoing deterioration in inflation expectations adversely affect pricing behaviors in certain categories, particularly services.

Despite waning external demand, exports continue to support the balanced growth. The macroprudential measures and our tight monetary stance have had positive implications for the core inflation trend. A sizable amount of the significant first-half increase in core inflation indicators was reversed in the third quarter. Annual core goods inflation continues to slow down as the negative effects from exchange rate changes diminish. Moreover, falling oil prices restrict the inflationary pressures on energy items. However, elevated food prices cause inflation to hover significantly above the target. We expect significant disinflation for 2  BIS central bankers’ speeches  the upcoming year. The continued decline in cumulative exchange rate effects, the return of food inflation to the average level of previous years and the fall in commodity prices, especially oil, will be the main factors contributing to disinflation. Moreover, we believe that the tight fiscal stance set out in the Medium Term Program (MTP) will support the decline in inflation. 1. Monetary policy and monetary conditions  Distinguished Guests, The Central Bank implemented a front-loaded and strong monetary tightening in the first quarter of 2014 and then lowered policy rates gradually amid reduced domestic and external uncertainty in the second quarter. During the third quarter, we firstly cut the one-week repo auction rate from 8.75 to 8.25 percent, and the overnight borrowing rate from 8 to 7.5 percent in July.
In fact, two areas that we recently reviewed that require attention include basic IT asset management and strengthening patch and vulnerability management practices. These are necessary hygiene steps and should be a fundamental for a sound cyber security defense program. As part of good risk management, firms also need to start considering how to assess the costs of cyber and connect the pricing of cyber risk to the businesses. You must ask yourself “what is my cyber exposure?” And, you need to think about how you should price it, because until cyber is priced, it may not get the attention it needs. 3. It’s not just the banks  Cyber isn’t just about the banks – it’s about the entire financial sector, as well as the connections between the financial sector and other sectors like the utilities, retail, and others. We know that every area of the industry is interconnected; and it’s not just financial firms. As the old saying goes, we are only as strong as the weakest link. In the financial system, that weak link could be a weak firm, a weak vendor, a weak point of vulnerability in a payments or clearing system, etc. A weakness in any of these areas exposes the entire system, because the interconnections mean that you are all linked to each other, to non-financial firms, and to every system that supports the operations and structure of the industry.

Conversely, at the height of the crisis, financial conditions tightened sharply even as the Federal Reserve aggressively pushed its federal funds rate target down toward zero. As a result, monetary policymakers need to take the evolution of financial conditions into consideration. For example, when financial conditions tighten sharply, this may mean that monetary policy may need to be tightened by less or even loosened. On the other hand, when financial conditions ease—as has been the case recently—this can provide additional impetus for the decision to continue to remove monetary policy accommodation. While I agree with Hélène in most respects, there are a few points where I am less convinced. While the global financial cycle complicates policymakers’ ability to guide financial conditions in their own economies, I’m not persuaded that the trilemma has been replaced by a dilemma—that is, essentially an “either/or” choice between an independent monetary policy versus an open capital account. While there is no panacea to insulate countries from financial spillovers—particularly when policy in some areas is constrained by the effective lower bound on interest rates—I think a combination of exchange rate flexibility, a credible monetary policy framework, sufficient foreign exchange reserves, and a strong financial system can help mitigate the effects of such spillovers. Moreover, it strikes me that market participants have become more discriminating over time about the circumstances of different countries, rather than painting all EMEs with a similar broad brush.
BIS central bankers’ speeches  7  fixed-rate, full allotment regime in its refinancing operations, offering unlimited liquidity to banks at a predictable cost against an expanded set of eligible collateral. The widening of collateral might be seen as a way to mitigate the adverse and destabilizing effects of shortterm funding “runs” relating to a deterioration of asset liquidity, but it can also be seen as a way to prevent large recourse to central bank liquidity by banks, who would otherwise be subject to funding outflows at a later stage of the crisis. Such a widening has to be accompanied by proper risk management measures, such as haircuts, to mitigate the increase of the risk profile of the central bank. The challenge for the central bank is to “buildin” the possibility to expand the set of eligible collateral while mitigating the incentives for banks to abuse it.20 Similarly, the LOLR’s function of providing emergency liquidity assistance has been criticised for provoking moral hazard by banks. Indeed, support that is considered as appropriate during the crisis might have perverse effects on the incentives of banks at a later stage. Banks may ex ante decide to take an excessive exposure to risk, knowing that the central bank will intervene if that risk materialises. Moreover, there is a fine line between liquidity and solvency needs, which in a crisis is often blurred. Central banks should therefore be particularly wary not to substitute for capital support that should be provided by shareholders, investors, or in last resort by governments.

From a practical perspective, for the BNB this means reorganising the management, administrative, IT, and budget processes in these two areas, as well as an increase in the number of employees involved in these activities. So far the banking supervision and bank resolution activities have been funded by the BNB’s monetary income. From 2021 the BNB will move on to the principle of the ECB and SRB to fund the relevant activities by collecting fees from credit institutions. 4/4  BIS central bankers' speeches
Therefore, the Central Bank targeting a variable such as FX rate, growth or current account deficit is out of the question. The Central Bank shares with the public the general framework of the current exchange rate policy and FX buying auctions in the press releases it has issued each year since the start of 2002. As also stated in these press releases; (i)  In the current floating exchange rate regime, exchange rates are determined by supply and demand conditions in the market and the Central Bank does not have any exchange rate target. (ii)  Since there is no exchange rate level to maintain in countries with floating exchange rate regimes, the level of foreign currency reserves is much less significant compared to countries with fixed or flexible exchange rate regimes. However, especially in emerging economies such as Turkey, a strong FX reserves position is significant in removing the unfavorable effects of potential internal and external shocks and boosting confidence in the country’s economy. In addition, taking into account the foreign debt payments of the Treasury and the need to gradually reduce the number of high-cost remittance accounts in the long-term, which are peculiar to Turkey and make up a significant part of the liabilities side of the Central Bank’s balance sheet, the Central Bank holds foreign exchange buying auctions to build up reserves at times where foreign exchange supply constantly increases compared to foreign exchange demand.

In the case of the Bronx, we found evidence both for and against the proposition. In either case, we take seriously the feedback from local businesses that they perceive access to credit to be a problem. The question then becomes what can be done to improve the situation going forward. Not surprisingly, most loans to small businesses tend to be small. Microloans – defined $ or smaller – make up 90 percent of all loans to small businesses. These loans tend to be labor intensive and costly to underwrite relative to the returns they generate. This combined with the higher risk associated with these loans present challenges to banks. Community development financial institutions (CDFIs) can help fill this space. CDFIs are specialized financial institutions that target their efforts to areas underserved by traditional financial institutions. They provide a range of financial products including capital for investments to start-up or expanding businesses in low-income areas. Most CDFIs tend to be nonprofit organizations, but some are regulated institutions such as community development banks and credit unions. Examples of CDFIs operating in the Bronx include the Bronx Overall Economic Development Corporation, the Bethex Federal Credit Union and Spring  4  BIS central bankers’ speeches  Bank. However, CDFIs tend to make loans smaller than $ A challenge, then, is bridging the gap between the maximum loan amount typically provided by a CDFI and the minimum loan amounts typically provided by a bank.