samchain/econo-pairs-v1 huggingface dataset:
On this occasion, I will briefly present my opinion on how the region has dealt with the crisis and the lessons learnt, leaving more time for panel discussion and for the presentations of the prominent representatives of international institutions and central banks in the region. How has the region been dealing with the crisis so far? In the recent five years of global economic crisis, generally we distinguish two subperiods. The first wave of crisis broke out in the US economy in the second half of 2007 and was primarily marked by the mortgage credit crisis and the collapse of large investment banks, destabilizing the international financial markets and deteriorating the expectations of economic entities. The second wave of crisis hit Europe in mid-2010 and was recognized as euro area debt crisis, causing new financial market disturbances, lower confidence among market participants, higher costs for financing and need of recapitalization of the banking sector. Apparently, the second wave of crisis broke out in the vicinity of our region. Yet, that the countries from the region get over this period relatively unwounded. One of the potential explanations is the fact that unlike the period of first wave of crisis, the countries from the region faced the second wave of crisis with fewer imbalances in their economies, i.e. better prepared to adjust to the external environment. Facing the outbreak of crisis in the euro area was relatively painless. Yet, it does not mean that the risks have passed.

Putting these adjustments into the Taylor 1999 formulation would pull the liftoff date to 2013 (Figure 9). So, why do I believe the policy that promotes the best achievable path back to our dual mandate objectives should be more accommodative than that implied by Taylor 1999 – adjusted or unadjusted? Taylor 1999, like other simple rules, does not take into account two key considerations:   The likelihood that the relationship between monetary policy and the economy has changed significantly following the financial crisis.   The need to apply a risk-management framework to policymaking at the zero bound. I don’t believe that the standard Taylor 1999 formulation is a good guide for policy right now because the neutral real rate assumption embedded in this rule of 2 percent simply doesn’t look plausible. This is important because the degree of stimulus depends not on the current policy setting but on the difference between the current level and the neutral level. For example, a short-term rate that appears highly stimulative under standard assumptions may in fact be much less so under alternative estimates of the neutral real rate. If the neutral real  8  In contrast, optimal control simulations using FRBUS put the federal funds rate liftoff in 2015; see Vice Chair Yellen’s speech of April 12 (http://www.federalreserve.gov/newsevents/speech/yellen20120411a.htm). 9  For more details on this forecast, go to: http://libertystreeteconomics.newyorkfed.org/2012/05/ just-released-the-new-york-fed-staff-forecast-may-2012.html. 10  This estimate should be considered very imprecise.
The reason is, if you look again at the characteristics and the nature of the Thai economy, and if we have asked ourselves what would we expect the impact of COVID-19 to be on the Thai economy. Many analysts, myself included, would have said we might have easily seen a contraction in economic activity of more than 6 percent. Let me share with you some numbers and just to give you a sense of why this is the case. Tourism accounts for about 11-12 percent of our GDP and we received about 40 million foreign tourists a year. Last year because of the COVID-19, we got only about 7 million tourists; that was a drop of over 80 percent in the numbers of tourists. So roughly speaking, 80 percent times 11 percent is already almost 9 percent of GDP loss. Furthermore, that calculation has not included the indirect impact both in terms of the drop in exports as the global economy was affected by the COVID-19 and the foregone losses in the income of people associated with the hit from the COVID-19. While tourism accounts for 1112 percent of GDP, it also accounts for about 20 percent of employment in Thailand. Therefore, a great portion of the income of the population was also hit. Adding all of these figures together, one might not have been surprised if we saw perhaps a double-digit contraction in GDP.

The rapid growth of recent years has brought the economy to full capacity, the unemployment rate has fallen below 1½%, resulting in substantial wage pressures in certain segments of the market. The sharp expansion has resulted in a rising rate of inflation. In the 12 months to the beginning of October, consumer prices rose by 5.3%. The Central Bank issues inflation forecasts every three months. The latest forecast was issued in July and it envisaged a 3% average rate of inflation in 1999 and a 4% inflation rate from the beginning to the end of the year. A new forecast will be issued in the beginning of next week. The deficit on the current account of the balance of payments has risen. In 1998 it equalled roughly 5½% of GDP. It is expected to be lower in 1999. During the upswing, the Central Bank of Iceland has followed a restrictive monetary policy as reflected among other things in the fact that at present the differential between Icelandic and trade weighted foreign money market rates is well in excess of 5%. The yield on 3-month treasury bills in the market is currently above 9%, and the so-called repo rate of the Central Bank of Iceland is 9%. That can be compared with the repo rate of the European Central Bank of 2.5%. Since September of last year, the Central Bank has raised its interest rates four times, by a total of 1.8 percentage points. In early 1999 it also levied a liquidity requirement on Icelandic credit institutions.
5  Moore’s Law refers to the observation by Intel co-founder Gordon Moore in 1965 that transistor density on integrated circuits had doubled every year since the integrated circuit was invented and the prediction that this would continue. BIS Review 95/2010  11  5. Explaining disaggregated returns to banking  A distinct, but complementary, explanation of high returns to banking is that they reflect structural features of the financial sector. For example, measures of market concentration are often used as a proxy for the degree of market power producers have over consumers. It is telling that measures of the concentration of the banking sector have increased dramatically over the course of the past decade, coincident with the rise in banking returns. Chart 35 plots the share of total bank assets of the largest three banks in the US since the 1930s. Having flat-lined up until the 1990s, the top 3 share has since roughly tripled. A similar trend is evident in the UK (where the share of the top 3 banks currently stands at above 50%) and globally (where the share of the top 3 has doubled over the past 10 years). At the same time, it is well known that market concentration need not signal a lack of competitiveness or efficiency within an industry or sector (Wood and Kabiri (2010)). Highly competitive industries can be concentrated and highly decentralised industries uncompetitive.

The SNB’s expansionary monetary policy contributed to the depreciation of the Swiss franc over the course of the year and thus also supported the economy. Inflation is currently negative, due to the appreciation of the Swiss franc following the discontinuation of the minimum exchange rate and to the reduction in commodity prices. We expect it to return to positive territory in 2017. We will keep our options open should other measures be necessary to fulfil our mandate. But, as always with monetary policy decisions, we need to carefully weigh up the pros and cons to serve the interests of the country as a whole. In the wake of the financial crisis and the use of unconventional measures, central banks have become the focus of intense public interest. Various reform proposals are being discussed and we welcome these public debates. New ideas need to be seriously considered and evaluated. The intentions behind the sovereign wealth fund and sovereign money projects are commendable. But, on closer examination, the drawbacks outweigh the benefits in both cases. Finally, on behalf too of my colleagues in the Governing Board, Fritz Zurbrügg and Andréa Maechler, I would like to take this opportunity to thank our employees for their hard work and dedication. We would also like to thank our shareholders for their solidarity with the SNB and for their loyal support.
BIS Review 67/2004  1  As a representative of the Riksbank, I have reason to be positive about the increasing competition since it improves efficiency in the market. Perhaps there is cause to hope that the competition in the future will also give rise to new instruments with which households can manage their interest rate risk. Here I think that the developments have much to offer. The factors discussed above, which affect supply and demand in the housing market and mortgage market, go a long way towards explaining the developments in both housing prices and household borrowing. This is not the case in all countries. In the markets where prices have risen sharpest, for example in Australia, the UK, Spain and Ireland, it is also very common to see housing as a financial asset, as opposed to somewhere the buyer intends to live. These countries have so-called buy-to-let markets, which involves buying a second house or apartment with a view to letting it. Buyers hope that the property will rise in value in much the same way as a share, yielding a return in the process. In Dublin the situation has got to the stage where rents have dropped in recent years, which should have resulted in falling house prices. But prices have continued to climb.

A jump in import demand for construction materials threatens to rekindle inflationary pressures on global commodities, reversing the current downtrend that began last year. Heightened commodities prices will add to higher input costs for global manufacturers, whose margins are already under pressure from elevated wages. If manufacturers pass on these higher production costs, we could see an increase in goods price inflation. At a time when services inflation is proving stubborn, a resurgence in goods prices will negate the hard-fought gains in the nascent disinflation process. The third uncertainty is fresh shocks to food and energy prices. Lower global food and energy prices have largely facilitated the fall in global headline inflation so far. But the nascent disinflationary trend may be interrupted by a rise in food and energy prices. For instance, in January this year, firm food and energy prices elicited strongerthan-expected inflation outturns. Upside shocks to food and energy prices can emanate from a few sources. Unfavourable weather conditions could dampen agricultural yields. This happened in Asia in January. The fall in OPEC oil output remains a factor underpinning some firmness in oil and gasoline prices. An escalation in geopolitical tensions could contribute to bouts of volatility in commodity prices. So, what does all this mean for financial markets? Financial markets may take a while to adjust to this new regime of higher interest rates, and that adjustment may not be smooth. We witnessed last year how such a disorderly adjustment could unfold, when central banks raised interest rates at an unprecedented pace.
How do we know, in an uncertain and everchanging world, what precise path of interest rates is necessary to stabilise inflation in the medium term? That raises questions about both what we do and what we say. (a)  What we do: The role of money and the nominal anchor  Let me start with what we do and how we provide an anchor to the price level in the long run. With a paper currency, expectations that the future price level will remain stable are an article of faith. Such expectations are the basis of the trust without which people will not willingly use paper money. They reflect beliefs about how the central bank will react to events. Given our current arrangements, the anchor for expectations of the future price level is the judgement and character of the men and women who currently, and will in the future, serve on the Monetary Policy Committee. That is a crucial difference between money as a standard of value, where its value is determined by the judgement of a group of experts, and the standards of weights and measures, such as the metre, kilo or second, which are based on objective scientific measurement. I hope that one day the Governor of the Bank of England will be regarded as occupying a position similar to that of the Chief Executive of the National Weights and Measures Laboratory.13 For the time being the value of money will depend upon the discretionary judgements of the MPC.

Otherwise, pockets of financial exclusion (for instance among our elderly) could arise, or the risks deriving from uninformed financial purchases could be compounded by those resulting from the use of an unknown digital channel. The videos presented have adequately captured the importance of the concept of responsible finance. This was, indeed, the central slogan of the 2020 Financial Education Day. However, not only have they captured the concept adequately, they have also been able to project it towards one of its most important components: responsible consumption. In this regard, I would like to highlight that exercising this responsibility involves all players. First, customers (all of us), as many videos have accurately illustrated, must exercise responsible consumption. This requires us to assess our own available resources and borrowing capacity. In short, the idea is to avoid excessive over-indebtedness, which we know generates highly adverse effects that influence our life decisions over an extended period of time. Second, such responsible behaviour must be demanded of financial institutions, which should practice what we call “responsible lending”. This entails properly assessing the creditworthiness of the potential customer before granting financing. Lastly, official authorities, and supervisors in particular, should promote this responsibility and monitor compliance as a key element in ensuring the stability of the financial system. And nor should they rule out the possibility of taking action if deemed necessary.
The output gap remains negative, so that there is no pressure on wages and prices in the foreseeable future. The outlook is favourable, since we expect that the gradual recovery of the economy in Europe will stimulate demand for Swiss exports. We anticipate growth of 1.5–2.0% for the current year. Dangers of a prolonged low-interest period What do these tentative global economic developments mean for monetary policy? Most central banks maintained their very expansionary course and the various unconventional measures. These measures were largely uncontested as long as they served to stabilise financial markets and the banks and subsequently to stimulate the economy. However, the longer the current low interest rate period continues, the greater the associated risks can be. I would now like to talk about two of these risks – the increasing price distortions in various investment categories and the decreasing motivation to undertake structural reform measures. Increasing price distortions: The very low interest rates affect aggregate demand in the economy both directly and also via the wealth effect. One of the effects which expansionary monetary policy abroad encourages is the quest for yield and, with it, the transfer of assets into more risky investments. However, low interest rates can result in misallocation on financial markets, particularly when they persist for a long period of time. It is possible that  4  BIS central bankers’ speeches  risks may be misjudged and, as a result, relative prices distorted.

It is estimated that more than a quarter of assets under management globally are now invested using the Environment, Social, and Governance or ESG principles5. Ladies and gentlemen, It is now up to all of us—financial institutions, policymakers, and leaders—to embrace sustainability and incorporate its guiding principles in our daily lives and business practices. The objective of the Bangkok Sustainable Banking Forum is to raise awareness of the various issues of sustainability and identify gaps within our financial sector. Seeing much enthusiasm from our high-level participants this morning, I am certain we can make positive changes for our future generations. I would like to take this opportunity to thank all of you for taking the time out of your busy schedules to be here with us. I would also like to thank the speakers, some of whom have traveled from different parts of the globe, for being here to share to with us their insights and best practices. Let me, once again, urge all of us to think wisely, maintain longterm focus, and take responsible actions now so that in the next decade we would not be standing here asking ourselves again how we have allowed these challenges to get out of hand. Ladies and gentlemen, The Bank of Thailand looks forward to collaborating with all of you on our sustainability journey. Thank you very much for your participation. 5  Bernow, Sara, Klempner, Bryce, Magnin, Clarisse. “From ‘why’ to ‘why not’: Sustainable investing as the new normal.” McKinsey and Company, October 2017. 6/6
A comparison with our European neighbours, which share the same social model, also points to some areas where  Page 15 sur 15 our public costs appear to be significantly higher: certain social benefits, economic aid – including tax credits – and the presence of multiple layers of local and regional authorities. None of the issues I have brought up here are easy. But everything is possible, and most of it depends on us. It doesn’t depend on anyone else, on globalisation, or even on Europe. A reform drive is guaranteed to produce results, as long as it is comprehensive, long-lasting – effective implementation over several years counts for more than the initial announcement – and fair. The gains then benefit everyone, and first and foremost those who are out of employment today and the most disadvantaged, who must be assured of a national solidarity that is finally financed over the long term. Our challenge is thus to finally project ourselves once again beyond the very short term. To conclude with Henri Bergson: "To act freely is to retake possession of oneself; it is to place oneself back in pure duration ". Good luck to our dear country, and thank you for your attention. I would like to thank Antonin Bergeaud, Marion Cochard, Marie Delorme, Antoine Devulder, Matthieu Lemoine, JeanFrançois Ouvrard, Katja Schmidt and Thomas Zuber for their contributions to this speech.

I am passionately convinced of the need for a public service, and affected by its current crisis: its necessary modernisation, its re-legitimisation, recognition for civil servants, is not incompatible with its capacity to perform and innovate, on the contrary. The transformation of the Banque de France is a modest but real example. The idea is not to reduce public spending overall, but to stabilise it. Bringing spending growth down to 0.5% per year from 2023 onwards would lower the debt ratio to 100% of GDP in ten years, assuming the rate of tax and social security contributions remains constant - I insist on this condition; stabilising our spending in volume terms would enable us to reduce our debt even further, to 90% of GDP. The target to be set is obviously a matter for democratic debate. But the most important thing is that the targets set for this "overall spending limit" actually be respected, which unfortunately our country has never been able to do in the long term. The choice of priorities or savings to be made also legitimately belong to the political debate. I would just like to point out that the key issue of the quality of spending is the blind spot in our budgetary debate, whereas it can guide us here. Economic analysis shows that spending for the future – most investment, education, research – has a much better "multiplier" effect on growth over time than simple current spending.
2 3  FSB Assessment of Shadow Banking 2017 Mark Carney letter to G20 leaders, 3 July 2017 3  All speeches are available online at www.bankofengland.co.uk/speeches  3  As a number of commentators have observed the recovery in the US was faster than in other countries, despite the damage to the banking system, in part because the market-based channel was less affected and able to continue to provide finance to the economy. 4  The banking systems in many of the crisis-affected countries have begun to lend again. But in the five years following the crisis, virtually all of the increase in lending to the private non-financial sector in advanced economies came through market-based finance. 5  The benefits however are not just diversification of the channels of financial intermediation. There is also the benefit of diversity for individual investors. And of course, market-based finance enables investors to invest in equity, which in financial stability terms is the most effective way to share risk. Market-based finance, generally speaking, is more able to share risk and pass losses back to investors than the banking system. Investment funds do not carry the same solvency risks as banks as investors are entitled only to the market value of their investments. In a crisis, the valuation of the assets and of the liabilities of investment funds broadly move in the same direction, whereas for banks assets can go down in value while the liabilities remain fixed. That is not completely true of course.

These factors combined have resulted in a large increase in the different measures of inflation, bringing CPI and CPIX1 (a measure of core inflation that excludes perishable foods, energy and regulated tariffs) annual change close to 4%. By contrast, labor cost pressures and other inflation trend indicators are nearer to 3%. Similar problems (i.e., increased inflation due to sudden rises in food prices) have been recently suffered in such diverse countries as South Africa, Brazil, Colombia and China. It is interesting to note that a price measure that excludes foods and energy prices, similar to the CPI core inflation calculation applied by the US, shows annual change below 2% in July (Figure 2). 2  BIS Review 97/2007  Figure 2: CPI, CPIX1 and CPI inflation excluding food and energy (annual change, percent)  Note: In brackets participation in total CPI basket. Sources: Central Bank of Chile and National Statistics Bureau. This phenomenon is not new. Given the supply-side or specific price shocks, the 2000s have seen annual inflation drop below 2% and climb above 4% during temporary episodes. In this picture of higher CPI inflation due to various supply shocks, short-term inflation expectations have increased substantially, but remain close to 3% for medium and long term. Because monetary policy affects inflation with lags that are largely unknown, but long – usually more than a year – not much can be done to reverse a short-term inflation jump.