samchain/econo-pairs-v1 huggingface dataset:
Ladies and gentlemen, over the past years, the Thai economy has been very resilient to numerous economic shocks, ranging from the oil price shock, natural disasters such as flood and drought, series of political uncertainties as well as the 2008 global financial crisis. Nevertheless, Thailand’s average annual growth rate for the last decade registered at 4.4 percent which is within the range of our estimated potential growth. The Bank of Thailand expects economic growth for this year to return to this normal trend, with moderate growth in the first half of the year and steady growth in the second half after the supply chain disruption unwound. This is the first aspect of returning to normalcy, or growth normalization, which is a feature of resilient economy. Such economic expansion is on the back of sound external and domestic demand. On the external side, however, risks to the global economy have increased recently due to damages caused by Japan earthquake, a weaker-than-expected US economy and concerns over Euro area fiscal crisis. These developments will have to be monitored closely. As of now, we expect a slightly lower global growth prospect but this should not change Thailand’s economic outlook to the extent that derails the economy from its present growth path. In particular, Thailand’s export remains robust. Supply chain disruption due to the Japan earthquake is proven to be limited and temporary; limited in the sense that impacts are mostly felt in the production and exports of vehicles.

Temporary in the sense that problems in Japan have been mitigated, at the same time, we see recovery in vehicle production for Thailand since late May. 1  JSCCIB stands for the Joint Standing Committee on Commerce, Industry and Banking. JFCCT stands for the Joint Foreign Chambers of Commerce in Thailand. BIS central bankers’ speeches  1  As for the domestic side, high income and confidence are supporting domestic economy going forward. Domestic demand, both consumption and investment have been and continue to be strong as underpinned by a high level of farm income, high employment, and good consumer and business confidence, complemented by a favorable credit condition. Tighter resource utilization also reflected these vibrant economic activities. The seasonallyadjusted unemployment rate fell to the lowest record in April. Meanwhile, the capacity utilization rate is expected to accelerate in the second half of the year following the recovery in the vehicle sector. Overall, the economic momentum in 2011 remains sound. Nevertheless, political stability remains a key factor to facilitate this ongoing momentum. Having an orderly outcome of the election is one step, but the underlying conflict must continue to resolve in order to further boost confidence and business climate in the economy. Given the current economic development, the Bank of Thailand is more concerned with inflation which is a common outcome in a good growth prospect environment. Increases in inflationary pressure have become a worldwide phenomenon particularly among emerging market economies. Thailand is no exception.
This labour has to be recruited from the exposed sector, or through the natural increase in the labour force finding its way to the sheltered sector. Over time, the size of the internationally exposed sector will be affected by the portion of the petroleum revenues that is absorbed into the Norwegian economy. The size of the internationally exposed sector is independent of monetary policy. An appreciation of the krone may, nevertheless, affect the speed at which changes occur in the business and industry. To maintain balance in the Norwegian economy, the phasing in of petroleum revenues must be countered by a monetary policy stance that is tighter than it would otherwise have been. This may be accomplished by keeping interest rates higher than they would otherwise have been, or by an appreciation of the krone, or both. A clear monetary policy target is a necessary complement to the fiscal guideline with a view to ensuring reasonable macroeconomic stability. Monetary policy is oriented towards low and stable inflation. The inflation target is set at 2½ per cent. BIS Review 66/2002  1  If evidence suggests that inflation will be higher than 2½ per cent with unchanged interest rates, the interest rate will be increased. If it appears that inflation will be lower than 2½ per cent with unchanged interest rates, the interest rate will be reduced. Inflation in Norway is determined by both domestic and international inflationary impulses. Domestic inflationary impulses are influenced by the state of the Norwegian economy.

Jarle Bergo: Oil revenues, monetary policy and economic cycles Lecture by Mr Jarle Bergo, Deputy Governor of Norges Bank (Central Bank of Norway), at the Telemark University College, Bø, 13 November 2002. The text below may differ slightly from the actual presentation. The lecture is based on the assessments presented at Norges Bank’s press conference following the Executive Board’s monetary policy meeting on 30 October and on previous speeches. *  *  *  Petroleum activities constitute an important part of the Norwegian economy. A sound economic policy and high oil prices have contributed to the highest current account and budget surpluses that have been recorded in any OECD country. In 1998 when oil prices were down to USD 10 per barrel, we also recorded a surplus that came to 4 per cent of GDP measured in terms of government net financial investment. Societies that suddenly gain access to wealth have a tendency to spend the money and then fall into decline. Access to an abundance of natural resources can result in slower growth. The explanation may be that time and resources are spent on grabbing as large a share as possible of the acquired wealth. Historical experience therefore suggests that it is important to have decision-making systems to provide protection against individual groups gaining strong control over Norway’s petroleum wealth. In addition we must maintain and develop incentives to acquire knowledge and engage in innovative work.
BIS central bankers’ speeches  13  References Aiyar, S, Calomiris, C and Wieladek, T (2012) “Does macropru leak? Evidence from a UK policy experiment” Bank of England Working Paper No. 445. Bean, C (2003) “Asset prices, financial imbalances and monetary policy: are inflation targets enough?” in A Richards and T Robinson (eds.) Asset Prices and Monetary Policy, 48–76. Reserve Bank of Australia: Sydney. Bean, C (2010) “The Great Moderation, the Great Panic and the Great Contraction”, Journal of the European Economic Association, April–May. Bean, C, Paustian, M, Penalver, A and Taylor, T (2011) “Monetary Policy after the Fall”, in Macroeconomic Challenges: The Decade Ahead, Federal Reserve Bank of Kansas City. Broadbent, B (2012) “Deconstruction”, Speech given at Lancaster University Management School. Dixit, A and Pindyck, R (1994) Investment under Uncertainty, Princeton University Press. Eggertsson, G and Woodford, M (2003) “The Zero Bound on Interest Rates and Optimal Monetary Policy”, Brookings Papers on Economic Activity, 1. Gagnon, J, Raskin, M, Remache, J and Sack, B (2011) “The Financial Market Effects of the Federal Reserve’s Large-Scale Asset Purchases”, International Journal of Central Banking, 7(1). Greenspan, A (2002) “Opening Remarks” in Rethinking Stabilization Policy, Federal Reserve Bank of Kansas City. Haldane, A and Madouros, V (2012) “The dog and the frisbee”, Speech given at the Federal Reserve Bank of Kansas City’s 36th economic policy symposium. HM Treasury (2012) “The Financial Services Bill: the Financial Policy Committee’s macro-prudential tools”, available at www.hm-treasury.gov.uk/d/condoc_fpc_tools_ 180912.pdf. IMF (2009) World Economic Outlook April 2009.

Such recommendations might be called for if there are structural developments – for instance, new financial instruments – taking place in the financial system that appear to increase the risk of financial instability. Second, once the Act has come into force, the FPC will be able to direct the prudential regulator to implement changes to a small set of instruments in order to achieve its objectives. On the basis of advice from the FPC, the Treasury is presently consulting on those instruments (HM Treasury, 2012). As it stands, the current proposals include three tools. First, there is a countercyclical capital buffer. Under the Basel III capital framework, banks will be required to hold a higher level of bank capital relative to their risk-weighted assets. But national regulators will be able to require an additional time-varying buffer that can be increased during the upswing of the credit cycle and released during the downswing. Under Basel III, the countercyclical capital buffer will be phased in from the beginning of 2016, becoming fully effective only at the start of 2019. But the Government has said that it plans to use whatever flexibility is available to give the FPC power over the buffer as soon as is practicable. There are two ways that such an additional capital buffer mitigates systemic risks. First, it provides a larger cushion against potential losses, so providing greater resilience in the face of a bust.
The traditional monetary trilemma limits policy choice to only two among the three dimensions: independent monetary policy, free capital mobility and exchange rate stability. However, the usefulness of exchange rate flexibility as the shock absorber has been increasingly questioned over time. A more sceptical view on the usefulness of flexible exchange rates has changed the trilemma into an “irreconcilable duo: independent monetary policies are possible  9  Gros, Daniel. (2011) What is holding Italy back?, CEPS Commentary, 8 November 2011. 10  Hassan F., G. I. P. Ottaviano (2013), Productivity in Italy: the great unlearning, VoxEU.org, 30 November. 11  Constâncio, 2015. ibid. 12  Stanley Fischer (2010): Myths of Monetary Policy, Israel Economic Review, 2010. 4  BIS central bankers’ speeches  if and only if the capital account is managed” (Ray, 2013) 13. Those who believe that exchange rate flexibility should not be abandoned, even in the cases of small open economies, have largely deflated their expectations of flexible exchange rates to act as shock absorbers 14. Therefore, the notion that “the global financial cycle constrains national monetary policies regardless of the exchange rate regime” has now become part of common knowledge. With supranational “one-size-fits-all” monetary policy, the role of national fiscal policy in stabilizing real activity and inflation has, accordingly, increased in euro-area member states. However, the configuration of single monetary policy, coupled with national fiscal sovereignty and the no bail-out clause, has generated suboptimal policies and frictions that threaten the monetary union.

BIS central bankers’ speeches  5  There are a couple of other difficulties related to the use of national policies. The shock absorbing capacity of fiscal policy is in too many instances limited by the narrow fiscal space existing before the crises. The recession has further eroded fiscal positions and fiscal rules have failed to tame unsustainable fiscal paths so that the ability of fiscal policies in the EU to deal with another blow of crises is quite limited. Also, a need for national macroprudential policy immediately opens the issues of harmonisation and coordination on the international level in order to avoid unintended consequences, which I will comment in more detail later on. Additionally, for macroprudential policy to be effective it must be intrusive, affecting the “normal behaviour” of agents and markets 19, yielding benefits in reducing long-term costs generated by the systemic risk that makes it hard to attenuate public interest thus creating a central bank’s legitimacy paradox 20. Unconventional expansionary monetary policy, which was pursued after reaching the zero lower bound, and out of the fear of “the risk of doing nothing” 21, may be risk-inducing by fuelling search for yield behaviour. Abundant liquidity and low borrowing costs have the capacity to generate bubbles, confirming a notion that rational individual decisions may lead to irrational social outcomes – albeit as a reaction to highly non-conventional policies.
Comparing the present situation with that a year ago, there has evidently been notable progress in restoring confidence in the Spanish economy. The growing normalisation of external funding flows and the fall in the sovereign risk premium clearly illustrate this. However, the pass-through of this improvement in overall financing conditions is still proving limited, whereby the financial restrictions continue to weigh down most significantly on private-sector spending and investment decisions in Spain. All told, the slowing trend in inflation has continued over recent quarters and further headway has been made in correcting the main imbalances. The increases in the annual rate of the consumer price index in the first half of this year have slackened as the effects of the tax rises and increases in administered prices from July to September last year have been stripped out. According to the flash estimate, the CPI rate stood at 0.3% in September. It is therefore likely that its annual rate of change will stand below 1% in December. Running such a moderate inflation rate evidently contributes to alleviating the impact of weak incomes on households’ and firms’ purchasing capacity. The legislation on the deindexation of the economy will be a valuable instrument for entrenching this trajectory. But the clearest example of the marked re-balancing the Spanish economy is undergoing is the elimination of the external deficit.

The signs of improvement in the sector are not free from risks. In a setting characterised by low economic growth, sluggish activity and relatively low interest rates, banking sector margins will continue to be subject to downward pressures. Foreseeably, moreover, doubtful assets will continue to increase in the short run, although their impact in terms of provisions will be less than in the recent past. Against this background, banks must persevere in their efforts to improve efficiency and contain operating costs. In particular, it is essential that banks subject to restructuring and recapitalisation plans strictly comply with the requirements established in those plans. Conclusions The difficulties the Spanish economy has been facing call for efforts to be made by all. The Budget you are to discuss is pivotal to the continuation of these efforts and to an exit from the crisis. The analysis I have attempted to convey seeks to show that these efforts are beginning to bear fruit in the gradual strengthening of the recovery. I believe if we manage to maintain the policy of expenditure control, structural reforms and the reinforcement of our financial system, the year 2014 may mark the start of the recovery in activity and employment. Thank you for your attention. BIS central bankers’ speeches  7
In fact, GDP had passed its pre-crisis peak in only two regions of the UK – London and the South-East. No other region in the UK had in fact experienced a “recovery”, whether Nottinghamshire or anywhere else. My “recovery” narrative, while true at the national level, had rightly fallen on sceptical ears at a regional level. Although the Bank’s policies only operate at a national level, this is important context for how we and others communicate about the economy. A second example came when I visited South Wales towards the end of last year. At the time, inflation was picking up as a result of the fall in the pound after the referendum, taking it above its 2% target. But this was a modest inflation overshoot by historical standards, with commensurately modest costs. Or so I thought. But when people in South Wales described for me its everyday consequences, the costs seemed anything but modest. Their personal inflation rates were running at closer to 10%. For some, that made for a stark choice between “heating or eating”. This made very concrete for me the benefits of the inflation target and monetary policy in supporting people’s everyday lives. A third example would be the narratives – that word again – I have knitted together from my various regional visits on the structural impediments to growth in communities, towns and cities across the UK. My deep hanging out has, to date, unearthed, six such impediments – the “big six”.

16  The curve has flattened  A lowering of the curve does not change the sensitivity of pay growth to unemployment, and changes in unemployment, will put pressure on pay growth in the same way. It will all just happen at a lower level. A flattening of the curve, however, reduces the sensitivity of pay growth to unemployment at all levels and to all rates of change of unemployment. This appears to have happened in some estimations of the post crisis estimations of the curve. 15  17  See Broadbent (2014)  16  This could result in a ‘double whammy’: pay growth would be accelerated higher demand for labour while at the same time the inflation adjusted curve would shift up, accelerating pay growth further. This can be seen in Chart 8: a fall in unemployment would result in moving from point A to point B (at higher inflation expectations) or point C to point D (at lower expectations). If those inflation expectations were to change at the same time that unemployment falls, the move would be from C to point B. See also Mishkin (2007). 17  See for example BIS (2017) and IMF (2013). Blanchard et. al. (2015) argue that since 1990 there is no statistically significant slope to a price Phillips curve in many countries, including the UK.
A large and growing sector that can systematically count on central banks absorbing large amounts of credit and duration risk on their balance sheets in periods of stress will create bad incentives. The depth and persistence of the current shock amplifies these risks: interest rates will stay low for even longer than anticipated before the crisis, spurring risk-taking behaviour in the non-bank financial sector. [22] Indeed, many funds started to take up liquidity risk soon after the March turmoil. It is also important to reduce the related but distinct risk of financial dominance – that is, the risk that financial stability concerns may over time distract monetary policymakers from their primary mandate of securing price stability. [23] Ensuring that central banks can pursue their mandates without risking financial stability requires a rethink of our current prudential framework. It must be strengthened from a systemic risk perspective to ensure that it can be an effective first line of defence. Let me highlight three areas where I see the need for further regulatory reforms. First, we need to reduce the risks of mismatch between funds’ asset liquidity and their redemption policies. Investing in illiquid assets is a central strategy of many types of fund. But such funds then need aligned redemption policies, in particular with respect to the length of notice periods, as well as substantial precautionary cash holdings. Without these buffers, they are unable to respond to short-notice redemptions or margin calls without engaging in forced asset sales.

See, for example, Lewrick, U. and Schanz, J.F. (2017), “  Is the price right? Swing pricing and investor redemptions”, BIS Working Papers, No 664, October; and Jin, D. et al. (2019), “  Swing Pricing and Fragility in Open-end Mutual Funds”, IMF Working Papers, No 19/227, International Monetary Fund, November. [20] D’Avernas, A., Vandeweyer, Q. and Darracq Pariès, M. (2020), “  Unconventional monetary policy and funding liquidity risk”, Working Paper Series, No 2350, ECB, January. [21] Even before the launch of the PEPP, purchases under the corporate sector purchase programme (CSPP) likely provided an important backstop to investors in less liquid markets and thereby contributed to the outperformance of CSPP-eligible bonds. Changes to the concentration limits for unsecured bank bonds have also helped alleviate market stress. See de Guindos, L. and Schnabel, I. (2020), “Improving funding conditions for the real economy during the COVID-19 crisis: the ECB’s collateral easing measures”, The ECB Blog, 22 April. [22] ECB (2020), Financial Stability Review, Chapter 4, November, forthcoming. [23] Garicano, L., Saa-Requejo, J. and Santos, T. (2020), “  Tackling inflation if it reappears”, VoxEU, 6 October; Diessner, S. and Lisi, G. (2020), “Masters of the ‘masters of the universe’? Monetary, fiscal and financial dominance in the Eurozone”, Socio-Economic Review, Vol. 18, No 2, April, pp. 315-335. For the related discussion about fiscal dominance, see Schnabel, I.
Launched in 2017, this network, which I am honoured to have chaired from the beginning, brings together central banks and financial supervisors to track supervisory developments and develop climate scenarios for central banks and supervisors. The network also explores paths to scale up green finance and monitor its market dynamics, thereby bridging data gaps and coordinating research in the fields of climaterelated and environmental risks. I am happy to mention that the NGFS has just welcomed its ninetieth member. The Basel Committee’s Task Force on Climate-related Financial Risks will continue working on the further integration of climate-related financial risks into the Basel framework and expectations. To help address the remaining challenges in terms of measuring climate-related financial risks, the ECB is working closely with the European Banking Authority (EBA) on the management and supervision of ESG risks. We have also provided our input to the European Commission’s EU taxonomy for sustainable activities and its non-financial reporting directive 4/5  BIS central bankers' speeches  (NFRD), which requires large European companies to disclose information on their policies in areas such as environmental protection and social responsibility. In particular, the ECB supports the ongoing work by the Basel Committee and the Financial Stability Board (FSB) on effective and consistent regulatory and supervisory approaches for dealing with climate risks. Conclusion Let me conclude. When dealing with the risks arising from climate change, we must be forward-looking, comprehensive and strategic. But we must also be swift.

In stress test parlance: this year’s test is “topdown”, whereas next year’s is “bottom-up”. As banks become better prepared to face the risks posed by climate change, they need to be led by people who are also better prepared to deal with these topics. When assessing the suitability of prospective members of the management body of banks, knowledge and experience of climate-related and environmental risks will be among the areas of general banking experience against which suitability will be assessed. Finally, we will seek to include an understanding of climate-related and environmental risks as a specific area of expertise within the collective suitability of a bank board. An environmental risk that is intimately connected to climate change, but also constitutes a risk in itself, is the loss of biodiversity. In our Guide on climate-related and environmental risks we single out biodiversity loss as one of the drivers of both physical and transition risk. It is becoming ever clearer that beyond climate-related risks, biodiversity loss could also be a source of material financial risks.9 More research needs to be done.10 At the ECB, we will follow these developments closely – and we encourage banks to do the same. Integrating international networks and European initiatives Much like the EBRD, the ECB is also part of global initiatives which promote international cooperation on joint solutions for climate change. Most prominently, the ECB is a member of the NGFS.