samchain/econo-pairs-v1 huggingface dataset:
Amund Holmsen: The theoretical background for macroprudential policy Speech by Mr Amund Holmsen, Executive Director of Norges Bank (Central Bank of Norway), at Norges Bank’s Finance Workshop, Oslo, 9 October 2014. *  *  *  Thanks to Henrik Borchgrevink. This speech does not contain any assessments of the current economic situation or policy-related statements. Songs about financial stability are few and far between. But Odd Nordstoga has written a song about just that, entitled Lykkeliten (Happy Times) 1: “Happiness is a time without debt, and reading the end of a book when in bed”. That financial stability can be so directly associated with a feeling of happiness is an encouraging point of departure for macroprudential policy. Nordstoga has actually turned economic theory upside down. Happiness – or utility as we economists tend to call it – is usually associated with consumption. We can borrow to finance consumption. Credit provides an opportunity to advance consumption in time. In that respect, more credit engenders more happiness – not the opposite. But after the goods have been consumed, the loan still exists. Debt creates risk in the financial system. Nordstoga may then prove to be right. A time without debt may be a happier one. The business of banking is such that it can trigger or amplify an economic downturn. Subsequent to the financial crisis, macroprudential policy has evolved into a supplement to both traditional banking regulation and stabilisation policy.

In our monetary policy analysis, we must assess whether output and employment lie above or below their long-term trends; in our financial stability analysis, we must assess whether credit lies above or below its long-term trend. Both policy areas must give weight to the risk of a build-up of financial imbalances. The communication of monetary policy also offers some lessons. Whereas monetary policy was previously veiled in secrecy, we are now open about our view of the likely future interest rate path. The theoretical foundation for transparency builds on the notion that prices are sticky. Adjusting prices goes smoother if central banks’ response pattern is known. Market participants then have a solid basis for forming expectations about future interest rates. The same line of reasoning may be valid with regard to transparency about our advice on the countercyclical capital buffer. It takes time for banks to adapt to changes in capital BIS central bankers’ speeches  5  requirements. A predictable policy will facilitate the adjustment process. The size of the friction is difficult to assess. Banks tend to restrict themselves to a very limited number when they present their options for increasing capital ratios. If banks choose to raise new equity capital, the adjustment process will be considerably faster. Irrespectively, we believe that predictability will facilitate adjustment.
When we changed over from keeping the repo rate constant in our forecasting work to basing the forecasts on market expectations, we had made the assessment that the advantages of this system outweighed the disadvantages, compared with using a constant repo rate assumption. The assumption of a constant repo rate worked well in as far as it made communication simple, which I believe was particularly important when establishing the new monetary policy regime and building up credibility for the inflation target. At the same time, it was of course usually an unrealistic assumption that made it difficult for us to make good forecasts. This applied in particular in cases where there were expectations of substantial repo rate adjustments. Normally, changes in the repo rate are required to guide inflation towards the target. If we had kept to this assumption for the interest rate, these difficulties would have been particularly prominent when we changed over to making forecasts in a slightly longer time perspective. Of course, the assumption of a constant repo rate also made it difficult to compare our forecasts with those of other forecasters and to evaluate our monetary policy. But, perhaps even more importantly, it gave no clear guidance as to how we viewed interest rate developments in the long term. The general public’s and the markets’ expectations of the future interest path are at least as important for the way monetary policy influences the economy as the expectations around the decision on the current interest rate.

4  BIS Review 6/2007  economy was in a situation where inflation deviated from target. This would mean that when we conduct our monetary policy we must assess how quickly it is appropriate to bring inflation back to 2 per cent. Several factors need to be taken into account; the reasons for the deviation from target, the size of the deviation and how we expect real economy factors such as growth and employment to develop. The two-year horizon should be regarded as a restriction as to how much consideration can normally be given to real economic developments. Situations may arise where the deviations are substantial and it is reasonable to allow longer than two years for inflation to return to target. In this way we can avoid excessive fluctuations in real economic activity. However, I would like to emphasise that this kind of strategy only comes into question when it will not jeopardise the credibility of monetary policy. A desirable monetary policy should also be predictable in order to make it easier for households and companies to adapt to new economic conditions. Changes in the repo rate should therefore normally be made gradually and not in large steps, as I see it. Of course, there may be other reasons to avoid large changes in interest rates. Changing the interest rate gradually gives, for instance, some scope to give consideration to the real economy, while enabling us to wait for and analyse new economic information.
It is important, but especially if you have been tied to the euro for a very long period of time. It is of crucial importance that a country’s economic policy mix as a whole is credible and consistent. Based on our own experience, we can say that much of the impact was already felt even before formal euro accession in terms of the investment flows and in terms of the restoration of confidence. Finally, what have been some of the experience over the last more than two years? The precise impact of the adoption of the euro is very hard to determine as there were so many other things going on, most notably the global financial crisis. Future generations of economists, with the benefit of hindsight and data will be better placed than us to make a firm evaluation of costs and benefits. Nevertheless, we can point to several positive developments which appear to be related to the broader agenda of reforms and policies, including euro adoption. Most notably, the Estonian economy has successfully weathered a fragile global economy and come through the uncertainties within the euro area. Over the last few years, our export sector has led the economy to a path of relatively rapid and well-balanced growth. That has, in turn, created the scope for a still quite significant contribution from domestic demand to growth. Indicators of better balance include a much lower current account deficit, better consistency between productivity and wages and lower private sector indebtedness.

Durmuş Yilmaz: Recent economic and financial developments in Turkey Speech by Mr Durmuş Yilmaz, Governor of the Central Bank of the Republic of Turkey, at the press conference for the presentation of the Inflation Report, Ankara, 26 October 2010. *  *  *  Distinguished Guests and Members of the Press, Welcome to the press conference held to convey the main messages of the October 2010 Inflation Report. The report typically summarizes the economic framework addressed in monetary policy decisions, elaborates global and domestic macroeconomic developments and presents the medium-term inflation forecasts, which have been revised in view of previous quarter developments, along with the monetary policy stance. Before moving on to the Central Bank’s assessments of inflation outlook and economic activity, which I will share with you in detail shortly, I would like to summarize the current global conditions that continue to be determinant of the domestic economic outlook. Data released in the third quarter indicate that the recovery will be quite slow and gradual albeit a second contraction in global economic activity is not very probable. The marked decoupling between the developed and developing countries in terms of growth dynamics persisted through the second quarter; where global growth continued to be driven by developing countries (Figure 1). Meanwhile, the persisting negative outlook in the labor markets of developed countries confirms the slow pace of rebound in these economies on one hand; and leads us to believe that the improvement in employment conditions will take a long time, on the other (Figure 2).
Furthermore, developments in the global economy are likely to remain uncertain. In this environment, the minimum exchange rate continues to be essential in ensuring appropriate monetary conditions in Switzerland. The guiding principle for our decisions is the SNB’s mandate to ensure price stability while taking due account of the development of the economy. The financial crisis also showed us, however, that price stability alone is not sufficient to ensure that the financial sector remains stable. In this connection, the situation on mortgage and real estate markets – which are showing considerable momentum – has been cause for concern for quite some time now. Also, mortgage lending is still growing faster than GDP, with the result that aggregate debt is increasing further. The countercyclical capital buffer is a new tool with which the resilience of banks can be strengthened and imbalances on mortgage and real estate markets can be addressed. My colleague, Jean-Pierre Danthine, will now give you our assessment of the risks for financial stability. Ladies and gentlemen, thank you for your attention. BIS central bankers’ speeches  3

Although in my judgement the risk of liquidity problems in the run-up to the coming year-end is small, it is of course never possible to rule out the possibility that technical hitches might lead to temporary problems. One hypothetical issue that has been discussed is what would happen if a single bank, in spite of everything, encountered technical problems in sending out its payments. The banks that were to receive these payments would then run the risk of a temporary deficit that would have to be financed by the Riksbank. If it should prove impossible in that situation to present an adequate amount of collateral, the Riksbank would be able to make use of the existing legal option of offering loans on special terms, always assuming that those affected were solvent. The situations in which this option is to be used and exactly how this is to occur is considered on a case to case basis. The Riksbank always maintains a high level of preparedness for taking quick decisions about loans of this kind. The financial sector was early in paying attention to the millennium problems. Representatives of the financial sector meet in varying constellations for discussions and to make sure that adequate measures  2  Sveriges Riksbank: Finansmarknadsstatistik No. 6 (Sveriges Riksbank: Financial Market Statistics No. 6). 3  BIS Review 97/1999  have been taken to avoid problems.
An appreciation of the Swiss franc at the current time would again expose Switzerland to considerable risks and, once more, endanger both price stability and the stabilisation of the economy. Given this situation, the SNB will enforce the minimum exchange rate with the utmost determination. If developments in the international economy are worse than foreseen, or if the Swiss franc does not weaken further as expected, renewed downside risks for price stability could emerge. Should the economic outlook and the threat of deflation require it, the SNB is prepared at any time to take further measures. As you will probably have deduced from this account, seen from today’s vantage point, interest rates in Switzerland are likely to remain low for a while yet. This expansionary monetary policy is indispensable from the point of view of the economy as a whole. In that it has significantly reduced the threat to the economy and the threat of a deflationary trend, the current monetary policy is also contributing to financial stability – in the short term. Both a deep recession and a deflationary trend would pose a threat to the banking system. In the longer term, a period of low interest rates carries the risk that imbalances will build up. In Switzerland, the current low-interest-rate period has now lasted for over three years. We are – in fact – currently observing increasing signs of adverse developments in the Swiss mortgage and real estate market for residential property.

In doing so, we take account of the development of the economy and make a contribution to the stability of the financial system. The SNB pursues a monetary policy that serves the interests of the country as a whole, and we fulfil this mandate as an independent central bank. To do this, we continue to rely on the total commitment of our staff, whom I would like to thank – also in the name of my colleague,  4  BIS central bankers’ speeches  Jean-Pierre Danthine – for their hard work and their solidarity with the SNB. We thank our shareholders for their continuing support. And we thank you all for taking such a great interest in the activities of the SNB. Finally, we would also like to thank our former colleague and Chairman of the SNB Governing Board, Philipp Hildebrand, for the good collaboration we enjoyed over the years. We very much regret his resignation and the circumstances leading up to it. Thank you for your attention. BIS central bankers’ speeches  5
Unprecedented policy support has yielded in tangible results reflected in improved global financial conditions and improved economic prospects. However, financial conditions are far from normal and growth prospects are highly uncertain and dependent on a policy support. The fiscal room has substantially narrowed and access to private financing is uncertain amidst high budget deficits and rising public debt. To be able to respond to the demand for its services a capital increase and reconsidering priorities in the region seems inevitable. Although current situation calls for immediate assistance to protect poor and vulnerable people from the hardship they are faced with, the support in implementing structural reforms is of a vital importance. Structural reforms should not stall as they are crucial for paving a way for long-term sustainable growth  2  BIS Review 32/2010  and higher living standards, which is one of the main missions of the World Bank. Financial and technical assistance by the World Bank will play a key role in this process. Rising unemployment and growth in poverty asks for more “aggressive” role when it comes to social issues. But, also supporting reforms aimed at improving competitiveness, as well as addressing the issue of “climate change” should be priority on the agenda. Given the diversity of ECA region, assistance tailored to the specifics of the different groups within the region, remains important. It is my personal opinion that the World Bank should increase its contribution to the accomplishment of global financial stability.

Sweden remains a ‘pre-in’; we will have to consider euro adoption again at some point in the future. Therefore the evolution and enlargement of the euro area concerns us. Secondly, Sweden is probably one of the EU nations that will benefit most from the enlargement of the European Union. Our economy is one of the EU’s most integrated with acceding countries, with surging East-West trade and FDI. Also, should Estonia, Latvia and Lithuania adopt the euro, we would be directly affected because Swedish banks own most of the Baltic banking system. I would therefore like to share some reflections with you on two subjects of relevance to euro area enlargement: the risks associated with ERM II membership and long-term frameworks for fiscal policy. However, before doing this let me stress two things: First, the long-term advantages of euro area enlargement are evident. I believe the advantages would be roughly the same for acceding countries as they would be for Sweden: integration of trade and capital markets stimulates growth for both the euro adopter and the euro area. In the case of acceding countries, there are probably additional advantages of monetary integration; it gives added stability after the difficult years of transition and is important for their underdeveloped financial sectors. So the issue is not really euro area enlargement as such, but rather its timing and preconditions. Second, from the perspective of the euro area itself it is hard to see how acceding countries could pose any major risks to price stability.
The international economic scene has been marked throughout 2006 by the continuing robust growth in global trade and activity seen in recent years. Such growth has been particularly notable in that it has come about against a background of considerably high oil prices which have only eased in recent months. It is very likely that in the coming quarters this dynamism will be maintained in most of the main geographical areas. Nonetheless, signs have emerged lately of growth easing in certain areas, most notably in the United States, meaning that the pace of expansion of global activity as a whole should be somewhat more contained in the immediate future. Thanks to this global framework, the euro area's economic situation has improved substantially. On most available forecasts, GDP in the area could grow by around 2.5% this year, marking a significant acceleration on 2005. Accompanying this greater dynamism has been the recovery in internal demand, which should contribute to extending the length of this upturn. Prominent among the internal expenditure components is the robustness of investment, both in capital goods and in construction. The persistence of highly favourable financial conditions, companies' improved financial position and their higher earnings have contributed to buoyant corporate investment, in a setting in which capacity utilisation has reached the highest levels of the past five years and unit labour costs remain moderate. Household spending has recently gained some momentum and the course of the determinants of this variable paint a favourable picture.

We had recently issued a concept paper on Life Insurance and Family Takaful Framework. This Framework is set to transition the life insurance and family takaful industry into a new operating environment, characterised by changing market dynamics including demand for greater transparency, and driven by advancement in technology and changing consumer behaviour. The Framework’s main aim is to increase insurance and takaful penetration, and ensuring a fair deal to consumers. The framework is supported by three main pillars; the liberalisation of operating limits, diversification of delivery channels and strengthening of market conduct practices. The Framework will be implemented in two phases to allow the industry and the public sufficient time to adjust to the new operating environment before further liberalisation is  BIS central bankers’ speeches  1  considered. Under the first phase, greater operational flexibility is given to life insurers and family takaful operators to operate in a more competitive environment and allow greater product innovation to be delivered through a wider range of delivery channels. The Framework proposes for the current commission and other operating cost limits for investment-linked products to be removed. In addition, the commission limit for pure protection products, namely pure term, critical illness and medical and health is also proposed to be removed subject to certain preconditions. While allowing greater operational flexibility, the Bank will ensure consumers’ interest remains protected.
The Bank of Albania is an active supporter of financial and economic integration, considering it as one of the most important pillars to release the potential of the economy and boost its resilience to shocks. 3. On the Memorandum All the above, underlines the great importance of our economic and financial cooperation with Turkey. This cooperation imposes even us – the policy makers – to intensify the exchange of information and opinions, and seek to promote the finding of common solutions to common challenges. In this spirit, the Bank of Albania and the Central Bank of the Republic of Turkey are signing today this Memorandum of Cooperation, which may be well considered as the coronation of the insofar cooperation, as well as of our efforts to continue with drafting the relevant institutional framework for clarifying the operational cooperation protocols, in a series of central bank fields. This memorandum elevates the relations between our two countries to a new dimension. It confirms the will to elevate the level of cooperation and consolidate the ties between the two countries, providing for both institutions the necessary space for the intensification of mutual exchange of information and expertise in various fields of central banking, such as: supervision, financial stability, research, and financial education, and the regular dialogue at technical and political level. It is an important step for obtaining maximum benefits from the positive effects of integration and minimising the negative ones.

Gent Sejko: Intensifying mutual cooperation between Albania and Turkey Speech by Mr Gent Sejko, Governor of the Bank of Albania, at the signing of the Memorandum of Cooperation between the Bank of Albania and the Central Bank of the Republic of Turkey, Tirana, 6 November 2017. * * * Honourable Governor Çetinkaya, Your Excellency Ambassador Bayraktar, Dear members of the delegation from the Central Bank of the Republic of Turkey, Dear guests, Ladies and Gentlemen, I have the pleasure to have the Governor of the Central Bank of the Republic of Turkey, Mr Murat Çetinkaya, as our guest on a one-day visit to the Bank of Albania, on the occasion of the signing of a Memorandum of Cooperation. This memorandum is an expression of our common will and desire to continue and intensify the mutual cooperation that has been already in place for years. Opening addresses are supposed to be brief and I would rather not break with such tradition. However, I find it appropriate to share with you some thoughts on: (i) the international context surrounding the signing of this memorandum; (ii) the current level of the bilateral relations between Albania and Turkey; and, (iii) the main aspects of future cooperation. 1. International context Our institutions – the respective central banks – play a significant role in promoting and guaranteeing monetary and financial stability, supporting the sustainable development of our countries and the welfare of our citizens.