samchain/econo-pairs-v1 huggingface dataset:
While we are doing what we can to keep the side effects to a minimum, the financial industry must play its part and adapt as far as possible. The recovery has started. However, for it to be sustainable, we must first and foremost address the causes of this global low interest rate environment. But monetary policy cannot manage this on its own – not least because our measures are not intended to become a permanent feature of the system. The economic recovery cannot be sustained by monetary policy alone; it also needs support from politicians. The main objective is to bring about a turnaround in global growth. This involves stepping up fiscal policy measures where there is scope and need. We also require reforms that increase productivity. But even these political measures won’t be effective if the virus of isolationism is rife. Because 4/5  BIS central bankers' speeches  the plague of protectionism only creates losers. 1 Eucken, W. (1990), “Grundsätze der Wirtschaftspolitik”, 6th edition, J.C.B. Mohr (Paul Siebeck), Tübingen, p. 257. 2 See Rostagno, M., Bindseil, U., Kamps, A., Lemke, W., Sugo, T. and Vlassopoulos T., (2016), “Breaking through  the zero line: the ECB’s negative interest rate policy”, Brookings Institution, Washington DC, 6 June. The presentation is available on the website of the Brookings Institution. 3 Borio, C., Gambacorta, L., Hofmann, B., (2015) “The influence of monetary policy on bank profitability”, BIS  Working Paper October. 4 Mersch, Y.

Yves Mersch: Behaving responsibly in a low interest rate environment - a central banker's perspective Speech by Mr Yves Mersch, Member of the Executive Board of the European Central Bank, at the Stiftung Marktwirtschaft: Expertentagung "5th Kadener Gespräch", Alveslohe, 10 February 2017. * * * The policy of the European Central Bank (ECB) is often said to be at the root of the current problems in the banking and financial sector. Particularly in Germany, there’s the added accusation of monetary policy “expropriating” savers. A closer look quickly reveals that such hasty judgements fail to appreciate the complexity of the matter. Today, therefore, I shall examine carefully the underlying reasons for our monetary policy action. By focusing on the reasons for our actions we can understand more easily how to get back to a normalisation of monetary policy. Low natural interest rates Why are interest rates so low? The growth trend has been declining in many mature economies not just since the crisis, but for several decades. This slowdown in growth has led to lower long-term interest rates. The structural causes of this trend of slowing growth is a subject of controversy among specialists. Demographic and technological developments are mentioned, as are the effects of the financial cycle, which may be out of sync with the business cycles. I do not want to pre-empt this ongoing discussion.
Moreover, although the minimum 8% bail-in envisaged in the regulation and the € billion resolution fund established by the Intergovernmental Agreement accompanying the SRM Regulation will probably provide a sufficiently large buffer to meet resolution costs in most cases, it remains to be ensured that a suitable public backstop – for instance in the form of an ample credit line for the Singe Resolution Fund – would also be available, following the example of other jurisdictions, such as the US. 4  Lessons from the Spanish experience  Finally, let me comment on some of the lessons learnt from the Spanish experience. Amid intense debate on the precise specifications of the resolution framework, but before the BRRD was approved, Spain passed in 2012 a relatively ambitious legislative reform which anticipated many of the main features of the Directive. That new legal framework allowed the Spanish authorities to employ new resolution powers – alongside public support – to resolve as many as five financial institutions and to restructure four more under the financial assistance programme. In all cases, previous shareholders were almost completely wiped out (in six institutions) or suffered considerable dilution. Junior debt holders were also bailed in to generate around € billion in new capital. In addition, all nine banking groups receiving State aid were required to transfer problematic assets to an external asset management company at prices that were administratively set.

That minimum requirement must however be well-parametrised to take into account the special nature of the different institutions while preserving a level playing field both nationally and internationally. 3  The European case  Let me now expand a bit more on the European resolution framework which has played a key role in the policy response to the financial and institutional crisis in the EU and is subject to relevant specific challenges. The involvement of national governments in the resolution of the financial crisis established a perverse destabilising link between sovereign and financial risks which was at the root of the severe turmoil in public debt markets that started in 2010. That turmoil challenged the very existence of the single currency as it caused the reemergence of a country risk component in all relevant asset prices and impaired the correct functioning of the monetary union. The reaction by the authorities was to adopt an ambitious common framework not only for the prevention of banking crises – through the creation of the Single Supervisory Mechanism (SSM) – but also for the resolution of those crisis through the newly founded Single Resolution Mechanism (SRM). The SRM ensures not only that the resolution framework will be harmonised in the euro area – as provided by the BRRD – but also that resolution policy, at least for SSM countries, will be managed centrally by a Single Resolution Board (SRB), which will enjoy a high degree of 2  BIS central bankers’ speeches  autonomy.
At the macro-economic level, concern has been expressed that greater use of fair values could have a procyclical impact. Banks’ assets might be marked up in booms, as perceived credit risk declined, so boosting banks’ capital base and capacity for further lending. However, for the concerns about intensifying economic cycles to be realised two linkages would need to operate. First, the impact on bank capital would have to increase the volume of bank lending and, second, the increase in bank lending would need to have significant implications for real activity. Neither linkage can be taken for granted, and in any case discretionary policy action, whether monetary or prudential, by the authorities may mitigate any pro-cyclical effects. As I have indicated, we do, however, need to avoid accounting rules which introduce spurious volatility. An example, to which I will return in a moment, is the hedge accounting under IAS 39. The “mixed attribute” model The drawbacks of fair values in some contexts have led to widespread support in the banking industry for retaining the current “mixed attribute” accounting approach. While IAS 39 requires trading instruments, derivatives and many securities to be measured at fair value, bank loans generally continue to be measured at historic cost. However, the debate about IAS 39 has highlighted some difficulties with this mixed approach as it is presently formulated. The area of greatest difficulty has proved to be hedges which straddle the two measurement bases, where so-called hedge accounting comes into play.

Mervyn King: Monetary policy – practice ahead of theory Text of the Mais Lecture 2005 by Mr Mervyn King, Governor of the Bank of England, at the Cass Business School, City University, London, 17 May 2005. The references can be found on the Bank of England’s website. I am indebted to James Proudman, Gertjan Vlieghe, Tony Yates and Richard Harrison who have worked closely with me on this lecture and are effectively co-authors. Alan Mankikar and Tim Taylor provided excellent assistance in preparing the empirical and historical research that support this lecture. *  *  *  Introduction Monetary policy is aimed at maintaining price stability. That may seem self-evident. Thirty years ago it was not. From the end of the second world war until the mid to late 1970s, the majority view of academic economists and policy-makers alike was that monetary policy had rather little to do with inflation, and was largely ineffective as an instrument of demand management.1 The intellectual basis for that view was never clear. And painful experience taught us that price instability led to costly fluctuations in real output and employment. Far from being ineffective, a monetary policy aimed at price stability has proved to be the key to successful management of aggregate demand. Fortunately, the theory and practice of monetary policy in the UK have changed out of all recognition in the past twenty-five years.2 We have moved from the Great Inflation to the Great Stability.
The transformation in the exports profile of Malta, labour market developments, the modus operandi of the banking sector and the prudent management of public finances have been the main determinants of this resilience. The post-EU accession period witnessed a sharp rise in export-oriented services. Liberalisation of various sectors, the higher availability of better educated human resources and a targeted strategy to attract foreign direct investment opened new service sectors. The strong shift of the Maltese economy towards services could in fact explain the rising unit labour costs observed in the past decade. The service sector engages higher quality employees and is less capital intensive than the more traditional parts of the economy. Although this could increase unit labour costs, it does not necessarily imply a loss of competitiveness. The labour content per unit of output is higher in the changed composition of output of the economy. The resilience of the Maltese economy can also be attributed to its banking sector, which operates in a sound and liquid framework and is profitable. The prudent business model adopted by the core domestic banks is the backbone of our financial system’s resilience. 4  BIS central bankers’ speeches  Finally, the prudent management of public finances, and the stable funding of Maltese government debt, have also contributed positively. Around 94% of local sovereign bonds are held by residents, largely with a buy-to-hold mentality. What are the challenges ahead of us? How to strengthen resilience further?

In a very direct way, policies aimed at promoting the transition towards a carbon-neutral economy are likely to affect the volatility of headline inflation and, more indirectly, climate change and the remedial actions needed to tackle it could affect our ability to achieve price stability through their impact on the so called natural interest rate, which is an important benchmark for inflation-targeting central banks when setting our interest rates. 2/6  It is still not clear the way climate change affects monetary policy and thus more analysis is needed to address the implications of climate risks on the economy and on monetary policy. Therefore, we have to step up our efforts to develop the tools and models needed for such an analysis. And, finally, climate change will affect the risks of the assets held on our balance sheets. Monetary policy implementation exposes us to such risks directly through holdings of assets and indirectly through collateral pledged by counterparties. In this regard, and very much related to my previous comments on the implications of climate change for the financial sector, central banks also have to step up their efforts to incorporate climate change into their risk management models and frameworks. And this, together with climate-related disclosure requirements, can decisively contribute to the correct pricing of climate-related risks by financial markets.
Indeed, developments in recent years have demonstrated that monetary policy and financial stability, in many ways, are more intimately connected than we may previously have imagined. One of the challenges I intend to address today deals with the difficulty of assessing the effects on potential output and growth of the financial crisis and the regulations following in its wake. Another challenge concerns the impact of these regulations on monetary policy’s transmission mechanism. Finally, I will also discuss the possibility of preventing a credit-driven property boom. One highly current and significant challenge is that of preventing the central government finance problems primarily facing Greece, but also a number of other countries, from leading to new problems on the financial markets. The solution to this must primarily be sought on the international political level. This is a matter both of implementing measures to maintain confidence and of solving the most acute problems. The comprehensive support package for countries with serious budget problems, recently presented by the EU countries and International Monetary Fund, should be considered one such measure. Of course, a more lasting solution will also require the problem to be tackled at its root – for the regulatory framework for central government finances to be reviewed so that similar situations can be avoided in the future. Discussions on how best to do this have also been initiated. Hopefully, this will be enough to restore calm and for the process of recovery and normalisation following the financial crisis to continue.

In the medium to long term, the interest rate that domestic policymakers must set to meet their inflation targets and keep a balance between demand and supply is strongly influenced, through the integration of capital markets, by such global rates. These are the product of real global factors. For the past thirty years, a number of profound structural changes in the world economy have pushed down on the level of world real interest rates perhaps by as much as 450bps. Researchers at the Bank of England have estimated a decomposition of these changes, suggesting, in declining order of importance: slowing potential growth, the rise in saving due to demographic forces; higher credit spreads, lower desired investment given a lower relative price of capital, changes in income distribution; excess saving in emerging markets, and declining public investment. Collectively these factors could account for the lion’s share of the 450bp fall observed in the past 30 years and suggest that global real rates may remain low – perhaps around 1% – in the long term. 25 In the short run, the domestic real rate that balances demand and supply can deviate from this long-term global level reflecting a range of transitory factors – including demand and supply shocks from fiscal policy, credit markets and exchange rates. It is critical domestic policymakers judge the scale and persistence of these factors and take them into account to meet their domestic objectives.
Macedonia had its glory days during the build-up of its ancient empire ending with the sudden death of the Alexandar III of Macedonia (also known as Alexander the Great). Afterwards, the Romans established the province of Macedonia, which in time of Diocletian was divided between Macedonia Prima ("first Macedonia", on the south) and Macedonia Secunda ("second Macedonia" on the north). Most of the country's modern boundaries fell within the latter, with the city of Stobi as its capital. We will have the opportunity to take a brief look on this period of the Macedonian ancient history on Wednesday afternoon, when we take you to visit Stobi archeological site. The history of Macedonia later on was influenced by other great empires in which the country was part of, creating a treasury-trove of Byzantine, Slav and Turkish history, with a host of forgotten monasteries, mosques and castles. After the II World War, the Republic of Macedonia was one of the six republics that have formed Yugoslav Federation. As sovereign parliamentary democracy, we have gained our independence in 1991, and the monetary independence in 1992, with Denar as a national currency. Part of the rich history of Macedonia can be seen in Skopje, the capital city of the country. In that respect, the old fortress Kale, that overlooks the modern city center, offers an insight in the first Neolithic settlements, while Old Bazaar, with its narrow streets and craftsman shops, is a snapshot of the Ottoman rule.

2  BIS central bankers’ speeches  •  Fourth, the range of instruments that allow long-term investment is limited: in many countries, bond, equity and securitisation markets that provide alternative avenues for long-term finance are underdeveloped. If finance is to play its role as an enabler of economic growth, it will be important to develop new avenues for long-term funding. Singapore’s value proposition as a financial centre MAS has been closely studying these trends in global finance and finetuning its strategies to develop Singapore as a premier financial centre. The emerging financial landscape plays to Singapore’s strengths. Singapore’s value proposition in this new landscape rests on four pillars: •  smart regulation;  •  diverse ecosystem;  •  pan-Asian focus; and  •  deep talent pool. I will take stock of Singapore’s strengths in each of these four areas and outline how we have refreshed our strategies and approaches. Smart regulation First, smart regulation. Since the global financial crisis, a higher premium has been placed on well-regulated financial centres like Singapore, which set high standards but implement them in a way that makes business sense. MAS has always required banks to meet high prudential standards, exceeding international norms in several areas. During the global financial crisis, this ensured that adequate safeguards were in place and confidence sustained. Post-crisis, our banks are well-placed to meet the new global capital and liquidity standards. Maintaining high standards is compatible with fostering a vibrant financial centre.
We have also continued to supply the banking system with the required liquidity to support the public and private sectors’ activity. In parallel, our communication with the public has aimed at guaranteeing the economic agents and financial markets on maintaining of an easing monetary policy in the future. Overall, our monetary policy has been successful in preserving macroeconomic balances; however, its effect on stimulating the economy has been more limited. The financial market and the banking system have not fully reflected the key interest rate cuts in their main products – loans, deposits and Government securities – while the Albanian consumers and businesses have slightly responded to monetary stimulus and lower interest rates. To our opinion, this performance reflects two core problems that our economy and macroeconomic policies are facing: These two problems are: the first is the structural vulnerability of the Albanian economy, and the second is the restriction of conventional instruments of economic control, monetary and fiscal policy, in boosting the aggregate demand and economic growth. Addressing them in a differentiated way requires the formulation and implementation of necessary structural reforms that support entrepreneurship, enhance productivity, improve competition and support economic growth. In addition, it points out that need to take unconventional measures to boost lending and support the economy. Let me now briefly dwell on structural concerns/vulnerabilities/problems and focus on the Bank of Albania’s initiative to address the second challenge.

In parallel, this process should be treated at its roots, to establish a transparent and stable mechanism that addresses factors, which contribute to the increase of public sector liabilities toward private companies, and avoids their increase in the future. Furthermore, the Bank of Albania will amend the regulatory framework to urge banks to support borrowers’ request for credit restructuring, from the moment the credit is considered as good. If the banks realise this in an effective manner, they will have a lower cost as regards requirements for credit risk provisioning. This element would enable banks to address more prudently and proactively their best clients, who may be showing their first signs of credit repayment problems due to factors that are beyond their control. As an element to keep this action in check, the regulatory framework will envisage that this loan stay temporarily under this category (or in the substandard category), and will immediately fall in a lower category, if the loan quality deteriorates after restructuring. After broad consultations with the banks, the Bank of Albania has drafted the relevant instructions that will guide them in the debt restructuring process. BIS central bankers’ speeches  5  Similarly, the Bank of Albania finds that a part of the non-performing loans, mainly the loss loans, remain in the balance sheets of the banks owing to different interpretation by the banking industry and the tax authorities about the commencement and completion of the legal proceedings against a debtor.
The 1930s’ deflation and the 1970s’ double-digit inflation clearly indicate that the nation is well-served by the Fed having a long-run inflation objective and making sure it achieves that objective within a reasonable period of time. The employment mandate is more nuanced. Because maximum employment is determined by nonmonetary factors that affect the structure of the labor market, we can’t have a simple, time-invariant goal. We do, however, project where we think the longer-run normal, or “natural rate,” of unemployment is currently. Today, our estimates for this rate generally range between 5.2 percent and 5.6 percent. Such assessments can vary over time. However, the most important determinants of the natural rate change only slowly, so today’s assessment is an important input into policy. Being explicit about it contributes greatly to our accountability. Accountability is key. Much as corporations require corporate scorecards and earnings calls to explain quarterly performance, the Fed needs to regularly communicate its policy strategy and evaluate how it’s doing. And, when we are missing our policy goals, the public needs to know what we are doing about it. We need to decide on the appropriate actions to achieve our objectives and communicate them to the public. To that end, in our longer-run strategy statement we’ve said that when the economy deviates from price stability or maximum  2  2  Federal Open Market Committee (2014c). BIS central bankers’ speeches  employment, we’ll take a balanced policy approach that achieves both goals within a reasonable period of time.

MAS, MOF, and Ministry of National Development will continue to keep a close watch over developments in the property market. Mas’ financial performance MAS’ profit and loss position in the financial year 2015–16 (FY2015/16) showed a profit of $ In the financial year 2014–15 (FY2014/15), MAS recorded a profit of $ billion. Holding the $ exchange rate constant to strip out currency translation effects, foreign investment gains amounted to $ billion in FY2015/16, compared to $ billion in FY2014/15. The lower foreign investment gains reflected the decline in global equity markets in FY2015/16. The financial centre: robust and resilient Singapore’s financial centre has grown handsomely in recent years and is today regarded as one of the top five centres in the world. MAS’ role is to work closely with the industry to ensure that Singapore’s financial centre is robust and resilient; clean and trusted; and dynamic and purposeful. Let me speak briefly on each of these dimensions. Our banks and the financial sector remain robust and resilient despite the challenging global economic conditions. The banking system’s ratio of non-performing loans (NPLs) was 1.7% in the first quarter,, up from 1.3% a year ago. Exposures to regional economies and the oil and gas industries, which are experiencing slowdowns, have contributed to this rise in NPLs. This is to be expected: when economic conditions weaken, it is only natural that NPLs will rise. What is important is that the NPL ratio remains low and banks are resilient against any rise in NPLs.