samchain/econo-pairs-v1 huggingface dataset:
Prasarn Trairatvorakul: Global risks and the outlook for Thailand Address by Dr Prasarn Trairatvorakul, Governor of the Bank of Thailand, at the Fitch Ratings 100th Anniversary Conference, Bangkok, 27 September 2013. *  *  *  Distinguished speakers and panelists, Ladies and Gentlemen, I would like to thank Fitch Ratings (Thailand) for inviting me to give an opening address at this year’s annual conference. Much has changed both at home and abroad since I gave an opening address at this event two years ago. In retrospect, however, it is interesting to look back over the past two years and notice how most global risks we talked about – for instance, fiscal drag and political gridlock in the U.S., sovereign debt crisis in the Eurozone, among others – are still with us today. Most of the risks have reduced in terms of magnitude and urgency, but they certainly have not disappeared. In fact, each of them took turn to appear in the media spotlight and became an object of market’s obsession. Victor Hugo once said, “No army can withstand the strength of an idea whose time has come.” And that sounds fitting for today’s financial market, where obsession with one idea could have a far-reaching implication for so many countries, at once, in an invasive way that is hard to shield against. A. The state of indecisiveness that we live in  It has been almost six years since the beginning of the global financial crisis.

It has to equip firms with capability to move toward higher  BIS central bankers’ speeches  3  product sophistication and flexibility to cater to changing global consumer demand. It has to nurture innovation, given that meaningful growth spurt tends to come from either new products or new ways of producing and delivering them. The strategic focus is thus to create the right environment and give the right incentive for firms to invest and innovate. Physical infrastructure is where we lack behind and suits to be the starting point. Hightech, capital-intensive industries tend to benefit greatly from knowledge spillovers and concentration of economic activities. Therefore, more specialized hubs and clusters – in the spirit of, for instance, Singapore’s Biopolis and Japan’s Tsukaba Science City – are needed. For industries with lower capital intensity, establishing industrial hubs and zonings of related industries would be beneficial, so that these industries can reap localized benefits such as the availability of specific inputs and better labor market pooling. Supporting these less capital- intensive industries will also serve toward the agenda of inclusive growth, for these industries contribute significantly to employment in rural areas. Last but not least, wellintegrated and cost-efficient logistics systems are called for, in order to ensure connectivity and efficiency of domestic production chains. Along with physical infrastructure upgrading, “soft” infrastructure has to be upgraded. In addition to educational reforms that I talked about earlier, improvements on the legal front are also needed.
And all these dynamics have been taking place in an era of digitalisation and rapid development of new technologies, in which massive information flows call for an internationally agreed response that allows the benefits of innovation to be reaped while ensuring that the potential risks are mitigated. Together, these developments amount to a new policy frontier that requires the promotion of mutual understanding and broad coordinated policy efforts, in much the same way as when the world first confronted the problem of managing increased trade and financial flows. However, this need for further coordination comes at a time when inward-looking populist and protectionist policies have re-emerged in some countries in combination with a greater emphasis on bilateral relations, somewhat questioning the current multilateral rules-based framework. I am certain that all these topics will feature highly in our discussions over the next two days. But before opening the full conference, allow me to start by recalling the underpinnings of the Bretton Woods agreements, the economic benefits they have facilitated and the limitations that have become apparent over the years. I would then like to discuss why reforms are key to the survival of multilateralism, with some ideas for a way forward to tackle current challenges in an increasingly interconnected and digitalised global economy. The benefits of multilateralism The Bretton Woods agreements of 1944 were the cooperative response to the unilateral actions taken in the early 1930s that led to a period of historic global economic contraction.

David Rule: Regulatory reform, its possible market consequences and the case of securities financing Speech by Mr David Rule, Executive Director for Prudential Policy of the Bank of England, at the Federal Reserve Bank of Chicago Annual International Banking Conference, Chicago, 6 November 2014. *  *  *  The financial crisis revealed fundamental weaknesses in pre-crisis bank regulation. The regulatory response internationally has been broad and deep. Whereas before the crisis, regulators struggled to keep up with financial markets innovation, since the crisis banks have struggled to keep up with regulatory innovation. That may continue for another year or so as reforms are finalised and implemented. But the broad shape of the new bank regulatory regime is now clear. And, as regulators, we should prepare for a period in which market innovation is likely to increase again – both the good kind that improves services for customers and the more ambiguous kind in which firms adjust their activities in response to regulatory constraints. We need to follow these adjustments closely in order to understand the overall effect of regulatory change on banks and financial stability, and to identify, and where appropriate address, any unintended consequences. I would like to use this time to explore some of the possible effects, and focus on securities financing transactions as one area where tougher regulation is both needed but might have wider consequences.
The blue line is a measure of the cost of finance for risky investments: it’s the profits of UK-quoted companies relative to their market value (debt as well as equity). The graph shows that, despite a protracted and significant decline in risk-free interest rates, firms have had to generate significantly more profits than in the past to raise a given amount of finance. The spread between the two lines is a measure of the risk premium on new investments, and it’s gone up significantly in the past few years, including since the EU referendum in 2016. Chart 11 carries a similar message. Here the orange line is a similar measure of that spread, between the rate of profit for private-sector firms11 and the yield on gilts. The blue line is the rate of growth of their investment spending. 10  In the simplified way that macro-economists sometimes use to describe the supply side of the economy, using a so-called “production function”, the elasticity of productivity with respect to the cost of capital – the proportionate response of the first to the second – is the product of two numbers: the share of national income going to capital (as opposed to labour), and something called the “elasticity of substitution” between the two inputs. In the data, the first is around one third; empirical estimates for UK put the second at around one half. Multiply the two and you get a figure of around one sixth. 11 The two charts use slightly different measures of profitability.

The spread between the rate of return on risky investments and the risk-free rate of interest has been historically high since the financial crisis. I think this has probably contributed to lacklustre investment and weak productivity growth over that period. But the risk premium seems to have taken another leg up since the EU referendum in 2016. And if you believe the surveys, the perceived downside risk in this case – the thing the firms seem to view most negatively – is a no-deal, no-transition outcome to Brexit. The economics also tells you that the value of waiting for relevant news – and therefore the disincentive to invest in the meantime – is higher if you think that news is going to arrive relatively soon. This helps to explain why the impact of Brexit uncertainty on investment seemed to intensify as we got closer to the assumed exit date of March 2019. It also explains why the firms most reluctant to invest have tended to be those that expect an early resolution to the Brexit process. It would be wrong to conclude from this that the best thing for investment is to resolve this uncertainty as soon as you can, by any means necessary. Deliberately choosing the outcome firms say they view most negatively is more likely to mean that capital projects that have so far been deferred are then simply cancelled. And however long the process actually lasts, investment is likely to perform better if firms don’t continually expect an early resolution in the meantime.
Industry players here have formed the Gulf Asia Shari’ah Compliant Investments Association (GASCIA) to promote and undertake initiatives to further grow the industry. Recently, a GASCIA member introduced Islamic finance training to a leading local Madrasah to increase the students’ awareness and promote interest in pursuing a career in the industry. MAS will continue to work with industry players and training providers to ensure that we have a ready supply of talent to meet the needs of the industry as it continues to grow. Conclusion Singapore’s success as an international financial sector stems from its high standards of regulation; deep and liquid capital market, the presence of international buy side players, and a critical mass of financial intermediaries with expertise to address a wide range of financing needs. We will leverage on these strengths to further support the growth of Islamic finance. The growing and deepening linkages between Asia and the Middle East will present significant opportunities. I am pleased to see more players from the Middle East, Asia and other regions at today’s conference. I hope you will take advantage of this event to explore new ideas to spur the further growth of cross border Islamic financing transactions between our two regions, and globally. Thank you. 4  BIS central bankers’ speeches

For example, if national central counterparty is not a viable and efficient model for a small economy, then the cost of hedging would increase with higher risk weight under Basel III. Meanwhile, if derivatives are cleared overseas, through regional or global central counterparties, we need to consider implication for cross-border supervisory coordination, financial stability, and development of local financial market and competition. On a related issue of Dodd-Frank Act, restriction on proprietary trading of US bank could impact the liquidity of US dollar markets abroad, as well as liquidity of foreign government bond markets which are the back-bone of their monetary policy operation. Another key issue going forward is the balance of authority between Home and Host regulators. There are concerns about the proposal of Financial Stability Board on cross-border resolution of Global Systemically Important Financial Institutions, or G-SIFIs. The concern is that some Host regulators may not be included by the Home regulator in the Crisis Management Group or resolution planning, even if the institution is systemically important in their jurisdictions. We are glad to see the FSB taking initiatives to identify potential problems. Now it is the time to work together on solutions in an inclusive manner. This is because the inclusiveness of the process assures acceptability and commitment, and reduces the uncertainty from unilateral action of individual countries. These international regulatory  2  BIS central bankers’ speeches  standards have no direct international enforcement power.
BIS Review 126/2010  9  Table 2 Economic growth and inflation (annual change, percent) 2010 (f)  2011 (f)  GDP Domestic demand Domestic demand (w/o inventory change) Gross fixed capital formation Total consumption Goods and services exports Goods and services imports Current account (% of GDP)  2008 3,7 7,6 7,5 18,6 4,0 3,1 12,2 -1,5  2009 -1,5 -5,9 -2,8 -15,3 1,8 -5,6 -14,3 2,6  5.0-5.5 16,1 11,3 21,2 8,3 -0,3 26,3 -1,1  5.5-6.5 6,2 7,4 13,6 5,3 6,1 6,4 -2,5  Average CPI inflation December CPI inflation CPI inflation in around 2 years (*)  8,7 7,1  1,6 -1,4  1,7 3,9  3,3 3,2  Average CPIX inflation December CPIX inflation CPIX inflation in around 2 years (*)  8,4 8,6  2,8 -1,8  0,8 3,5  3,6 3,5  Average CPIX1 inflation December CPIX1 inflation CPIX1 inflation in around 2 years (*)  7,8 7,7  2,8 -1,1  -0,3 1,5  3,0 3,2  2012 (f)  3,0  3,1  3,0  (f) Forecast. (*) Inflation forecast to the third quarter of 2012. Source: Central Bank of Chile.

It will therefore be critical to ensure, in the context of the EMIR implementation, that information-sharing within the colleges will effectively address not only the micro-prudential concerns of authorities but also the need for appropriate macroprudential analysis. Second, another important concern regarding the institutional setting is the fact that global cooperative oversight arrangements for central counterparties are still lagging significantly behind what has been agreed in the CPSS-IOSCO Principles for financial market infrastructures. Indeed, the respective gap between the EU level and the global level is striking in this regard. In the European Union, given the introduction of legally binding requirements for central counterparty supervisors to cooperate and consult with all relevant authorities – including central banks, supervisors of major clearing banks and supervisors/overseers of interoperable infrastructures – cooperative oversight arrangements for all EU central counterparties, in the form of EMIR colleges are currently being set up. At a global level, however, virtually no progress in cooperative oversight or even in terms of pure informationsharing has been achieved for several major global central counterparties outside the European Union. This is a key concern especially in the field of OTC derivatives, given the global nature and interconnectedness of these markets. Indeed, if we want to ensure that the introduction of mandatory clearing is implemented in a way that ensures that central counterparties manage systemic risk effectively, it is not enough that they are supervised and overseen in their home jurisdiction.
Allow me to come back to that in a moment and just say here that even in the event of such a more general price fall we do not deem there to be any immediate risk of problems for financial stability. The reasons again are those I gave earlier, chiefly that households on the whole can afford their homes and that experience shows that the household sector seldom causes any significant problems for the banks. So the Riksbank does not view the developments in house prices and household debt as a danger to the stability of the payment system. House prices, demand and inflation As I indicated in the beginning, developments in house prices are important to monitor also, and perhaps even mainly, because they have potential implications for the Riksbank’s second objective – price stability. If house prices fall, households’ willingness to consume goods and services – their demand– declines. If prices drop at a measured rate over a long period it does not have to be a problem. If the price decline occurs rapidly there is reason for greater vigilance. How then do house prices affect the activity level in the economy? This can happen through various channels. One such channel – which I only intend to mention in passing – is housing construction. The higher house prices are, the more profitable it is to build them, all other things being equal.

Lars Nyberg: House price developments and monetary policy Speech by Mr Lars Nyberg, Deputy Governor of the Sveriges Riksbank, at Evli Bank, Stockholm, 19 December 2005. *  *  *  Thank you for your invitation to Evli Bank. I intend to devote the bulk of my speech to a subject that has been under discussion for a fairly long time but that nevertheless has not become less topical or important, namely the developments in the housing market and the rise in household debt. These factors have potentially significant implications for both of the tasks assigned to the Riksbank – both the assignment of safeguarding financial stability and the monetary policy objective of price stability. That of course means that they also have consequences for the efforts to keep the real economy in good balance. Thereafter, I intend to say a few words about the current monetary policy situation and the decision that we took a few weeks ago to leave the repo rate unchanged. As you know, the Executive Board on that occasion – incidentally for the first time in over one and a half years – was not unanimous in its decision. Since I was one of those with a different opinion it may be appropriate for me to elaborate somewhat on my line of reasoning. I want to underline, however, that it was a question of subtle differences in our assessments which there is no reason to overdramatise.
The third and final focus area – building financial capability and elevating financial literacy is a shared responsibility Government agencies, schools, families, workplaces and the financial service industry – all play an important role in building financial capability and elevating financial literacy of our population. This is a long-haul journey and requires significant resources and perseverance by various parties. Hence, inter-agency collaboration -providing various touch points at different platforms – is needed to increase the impact of financial education initiatives for the Malaysian public. This motivates the establishment of the inter-agency Financial Education Network – which was set up in November 2016. Apart from Bank Negara Malaysia, AKPK and KWSP, the Financial Education Network – also comprises representatives from the Securities Commission, Ministry of Education, Ministry of Higher Education, Perbadanan Insurans Deposit Malaysia and Permodalan Nasional Berhad. I believe all members of the FE Network are here today to lend support to this important initiative, and potentially to further boost its impact for the benefit of Malaysians. The FE Network has the objective of co-ordinating and driving the National Strategy for financial education in Malaysia. The National Strategy – will identify key target groups; define priorities; set measureable and realistic goals; and conduct regular assessment on financial education initiatives. Long-term financial and retirement planning would be one of the key priorities under the proposed National Strategy. The collaboration between AKPK and KWSP – to establish the retirement planning module is indeed timely and in line with the FE Network’s objective.

Today – we have a total of 80 trainers from all over Malaysia, who have completed the Train-the-Trainers programme by AKPK and will graduate as facilitators for this module. I would like to congratulate you and wish to emphasise that you now have an important role – as change agents in creating awareness and promoting behavioural change in the long-term financial and retirement planning, among Malaysians. We also have representatives from the various government and private sector agencies here today. With such a comprehensive module in place, I would like to urge all of us to implement this module as internal training packages at our organisations for the benefit of our employees, including the younger employees during on-boarding programmes. In conclusion, it is our aspiration to see a brighter future, with all Malaysians being knowledgeable; forward looking and achieve financial well-being throughout their entire life stages. Hence – it is important for us to shape the future and make a difference, starting from now! On this note, I hereby officially launch the “Financial Management for Retirement Module”. 3/3  BIS central bankers' speeches
But those that have come further along the liberalization road have to face a different music. 4  From the new External Wealth of Nations Mark II (EWN II) dataset, compiled by Lane and Milesi-Ferretti (2006). 5  Ibid. BIS Review 99/2007  3  Rapid appreciation in the exchange value of the currency renders part of the domestic industries less competitive in the global markets. It is true that with this appreciation, commodity imports such as fuel and energy as well as metal and raw materials have become more affordable despite rising world price trends. But these benefits are spread-out while the cost is centered on labor-intensive, high domestic-content primary sectors, such as agriculture and low-end manufacturing. As a result, even for net primary commodity importing economies, the nature of the problem is as much political economy as it is economic. There are strong and vocal constituencies in emerging markets that are averse to currency appreciation and part of them averse to variability in the exchange rate itself. Meanwhile, hot money, or indeed large inflows in general, can fuel asset prices and encourage excessive risk-taking behavior. Central banks may wish to counter that excess in the interest of financial stability. If the central bank chooses to maintain a high interest rate stance, the pressure on the currency to appreciate will likely mount. Not unlike today’s political economy in advanced countries, emerging market politics also risks being less favorable to openness, but more partial to protection of selected industries or protectionism in general.

But calming global financial markets – and in the case of Switzerland, countering the heavy wave of safe-haven flows into Swiss francs – has been only one facet of the SNB’s policy response. The unique nature of the COVID-19 pandemic has also caused an unprecedented shock to the real economy. To mitigate this shock, central banks – in cooperation with the fiscal authorities – have created new instruments. The SNB during the COVID-19 crisis: same role, new tools Given the nature of the crisis, an important part of the policy response was to address the strains on the corporate sector, particularly among small and medium-sized enterprises (SMEs). In Switzerland, 99 percent of all firms are SMEs and they employ some 67 percent of the labour force. The lockdown measures resulted in a sudden stop for many businesses. There was real concern that economically viable SMEs, in particular, could be 1  The US dollar swap basis is an indicator of US dollar funding costs in foreign exchange markets. A large negative basis reflects a scarcity of US dollar funding. Page 3/10  forced into bankruptcy through no fault of their own. To address the problem, the Swiss Federal Council adopted a range of important measures, including the COVID-19 loan programme for companies. To be effective, financial support had to be fast and well targeted.