samchain/econo-pairs-v1 huggingface dataset:
Our research shows that the gains from structural change can be considerable although adjustment costs, in terms of the reallocation of labor and capital, will also be significant. Now we arrive at the third and final question. Given the euro crisis and Thailand’s prospects for growth, what should monetary policy do? The dilemma here is how to bridge short-term stabilization with long-term goals of structural change. The challenge for policy is to maintain an overall framework where the trend of increasing economic integration can continue while containing crises. Given our baseline scenario of a prolonged recovery without a liquidity seizure we lean towards long-term goals – for example, maintaining capital flow liberalization, financial sector liberalization and market-led exchange rates – but with a readiness for monetary stimulus should a clear need arise. Let me discuss the policy tools at our disposal and how they fit into our overall policy objectives. On the interest rate, the policy rate has been on hold at 3.00 percent since January this year. At the moment we view it as supportive of growth amid global risks and consistent with our inflation target. However, I must stress that the interest rate is poised to go either way depending on developments in the advanced economies, in particular the euro area and the impact on the overall Thai economy. We recently saw how the impact of the euro crisis is spreading to Asia in the form of a broad-based slow-down in Thai exports.

The one thing I strongly desire is the involvement of as many domestic and regional researchers. I would like to guarantee all the interested persons that we are open in this direction. On the other hand, I am confident that the collaboration we made official today, shall provide a sensitive contribution towards the education and establishment of professional capacities at national level. Please allow me to close my speech returning once more to the argument of professional technicians. I still think that   We need to educate our technicians;    Furthermore, we should make them independent financially and politically;    And afterwards, we should educate them again. On the other hand, the building of capacities is not an “individual” issue; it is an institutions’ issue; in fact it is a process independent from human resources. This because capacities should be based on “processes” and not on people, for long-living. The good anchors are not used only from institutions which relate policies with them. They are instruments in the hand of public, as strong arguments to encourage government’s agencies towards the compilation and implementation of long term sustainable polices. I believe that the European values may play decisive role in this direction, by strengthening and supporting the establishment of respected institutions, where the criticism occurs  4  BIS Review 117/2010  independently from the political processes and targets. That is the reason we have chosen the collaboration with the Oxford University. BIS Review 117/2010  5
This does not yet account for the losses relating to under-reported taxes which is directly enabled by a cash economy – a cost borne by society as a whole. A 2005 study estimated this figure to be USD100 billion annually in the United States alone The task of calculating the relative total cost of cash and cashless payments is a difficult one. Apart from the methodological challenges, the findings for each study are also likely to differ according to the nuances of each country. Nonetheless it is a worthwhile endeavour. Policy makers around the world have made positive progress in this area, and I believe we will see more efforts on this front in the coming years. This leads to another dimension of the social cost consideration, which is the impact on financial inclusion. Millions of people live in rural areas globally, with little or no access to the modern infrastructures necessary to facilitate cashless solutions. The availability of cash is therefore paramount in ensuring that they continue to be seamlessly included in the financial system. At the same time, the success of mobile payments operator M-Pesa in rural Kenya has demonstrated that cashless alternatives can in fact be a means to promote financial inclusion for the unbanked. Here in Malaysia, where mobile banking transactions have tripled in the past year, there is potential to leverage the high mobile penetration rate to improve financial inclusion. Stability The third element is stability.

Data on developments in foreign trade of economy reveal a contracted trade exchange in the first five months of 2012. Value of exports marked a low annual growth of 1.3% in this period, reflecting the moderation of foreign demand and price developments in global markets. In this period, imports shrank by 2.0% in annual terms. These developments resulted to a decreased trade deficit in the first five months of the year by the annualised rate of 4.2%. Developments in foreign trade were determined mostly by electrical energy trade exchanges in this period. Excluding this effect, the growth in exports would be higher and the contraction in imports deeper, resulting in a contracted trade deficit, at 18.1%. The performance of monetary indicators was in line with the developments in the real economy and our analysis show contained monetary pressures on inflation. The annual growth of M3 was 8.7% in May, maintaining the average rates of the previous month of the current year. The growth paces of money supply slowed down compared to a year earlier, reflecting the lower demand of economic agents for money. The consolidated fiscal position  2  BIS central bankers’ speeches  was coupled with a decrease of public sector borrowing, whereas private agents of economy reflected a low demand for financing. Lending to the private sector rose by 7.5% in May, pursuing the slowing trend, which has started since the end of previous year.
This would lead to more bargaining power, and hence less  BIS central bankers’ speeches  3  sensitive to exchange rate fluctuations. Stronger domestic consumer base would also help lessen the dependence on external demand. All reforms I mentioned require concerted efforts from all public and private stakeholders. Policymakers should provide economic environment and infrastructure conducive to reforms. Particularly, financial literacy and risk management awareness should be fostered at all levels and sectors. Financial institutions also play a crucial role in developing financial products to facilitate transactions and risk managements. Businesses should upgrade productivity to enhance industry’s resilience to shocks. Advanced preparations will surely pay off. Lessons learned, challenges ahead, and policy implications Ladies and Gentlemen, As we are approaching the end of my talk, let me now share some final thoughts on lessons learned and challenges ahead. First, for countries that want to maintain autonomy on interest rate policy, exchange rate flexibility is a pre-requisite to living with capital flows. Nevertheless, extreme exchange rate fluctuations may cause misalignments. A trade-off between flexibility and stability thus requires policymakers to identify the exchange rate framework suitable for the economy. This can be a daunting task in practice, as the target is often country-specific and subject to dynamic economic developments. Keep in mind that monetary policy can do little to influence real exchange rates in the long term. Attempts to give the exchange rate more weight in monetary policy deliberations will also reduce the autonomy in controlling interest rate, leading to more interest rate volatility.

In addition to wanting to see firms that are adequately protected against cyber-attacks and prepared to respond should they occur, we are equally as concerned with the overall safety and soundness of the financial system – as a whole. No one firm or agency is going to come up with the one and only permanent solution or protection against cyber-attacks. I see how we approach cybersecurity similar to how we approached Y2K – I’m sure you all remember that. •  We need an approach that everyone agrees to adopt. •  We need to see more public/private partnerships in the development of that approach. •  We need to come together to identify the vulnerabilities that are shared and what needs to be done. •  We need to agree on a path forward and how we test it. •  We need to acknowledge that, unlike Y2K, this does not have an expiration date. Cybersecurity is a “new normal.” It is going to become part of our vocabulary in nearly every exam we conduct, conversation we have with senior management, and conversation about the future of financial services. To be successful, we have to agree that we have common goals; although we can approach them from different angles and think creatively about solutions, we should all be working toward understanding the threats we are facing. The threat landscape is shifting constantly, and we are all responsible for keeping up with the changes and adapting our controls accordingly.
[12] As I will explain, that could relate to wrong way, risk, market dynamics, the behaviour of other market players, even operational details. I think further progress on both these fronts is needed if we are to be confident the counterparty channel is fully managed. Are these risks unique to non-banks? I think it’s helpful at this stage to ask whether these issues are unique, or if we’ve tackled them before in other contexts. And with that in mind, I’ll draw a very brief comparison to a market which has already been widely studied and embedded in the macroprudential toolkit: the mortgage market. Banks manage their exposures to mortgagors, through affordability testing, leverage limits and collateral. And that’s important from a financial stability perspective, given the feedback and amplification mechanisms that have been seen during stresses in the past. For example, stress test scenarios cover house prices falling and borrowers defaulting, and so can capture the potential for amplified price moves and a self-reinforcing price dynamic, as a result of forced sales by bank lenders into a falling housing market. Perhaps correlated falls in asset prices and leverage can create amplifying price dynamics in non-bank financial institutions as well as with households. In addition, in our financial stability analysis of the mortgage market, we recognise that reductions in spending by highly indebted mortgage borrowers as they keep up with debt repayments can create negative spillover effects to the rest of the economy.

And so pooled LDI funds became forced sellers of gilts at a rate that would not have been absorbed in normal gilt trading conditions, never mind in the conditions that prevailed during the stressed period. Other LDI funds, with segregated mandates, were more easily able to raise funds from their individual pension scheme clients. However, given their scale, at 85-90% of the market, some of these funds were also contributing to selling pressure, making the task at hand for pooled LDI funds even harder. And of course if the pooled funds had defaulted, the large quantity of gilts held as collateral by those that had lent to the funds would potentially be sold on the market too. With the gilt market unable to absorb such forced sales, yields would have been pushed even higher, making the scale of the selling need even larger still. This is the self-reinforcing spiral that the Bank intervened to prevent. The Bank’s 13 day and £ billion intervention was made on financial stability grounds. It was the first example of us acting to deliver our financial stability objective through a temporary, targeted intervention in the gilt market. But let me emphasise: the asset purchases were a means to an end. They were designed to create the right conditions in the right part of the gilt market for long enough so that the LDI funds could build resilience so that their leverage would be well managed once the asset purchases had ceased and should gilt market instability return.
But interest rates and exchange rates cannot shoulder entirely the burden of adjustment to large and volatile capital flows. Asian countries have been experimenting the use of so-called macroprudential tools to complement the more traditional macroeconomic tools in dealing with capital flows and asset price inflation. These include the use of loan-to-value ratios, taxes and stamp duties on asset market transactions, and minimum holding periods for assets, all of which serve to dampen demand for domestic assets. Asia needs to continue refining these tools, learning from experience and adapting to different circumstances. Deepening and broadening financial markets Third, Asia must deepen and broaden its financial markets. Asia must do a better job in effectively intermediating its considerable savings pool as well as capital inflows towards  BIS central bankers’ speeches  3  more productive investment in the region. Deeper financial markets will help to absorb or redeploy more effectively capital from abroad. Broader financial markets will help minimise the flow of capital to unproductive investments by offering a wide range of investment instruments. The ADB has estimated that some $ trillion will be needed in Asia to finance infrastructure projects through 2020. Capital markets provide an efficient way to intermediate flows and can reduce the cost of borrowing. In fact, the financing needs of Asia – in infrastructure and other high fixed capital investments – are particularly amenable to capital market solutions, given the size of the financing tranche and the need for credit risk diversification.

So, the phenomenon of large capital inflows into Asia is here to stay and we should learn how to handle it. Large capital inflows pose two risks. First, these flows can potentially overwhelm Asia’s ability to channel them to productive use, and create asset market bubbles – especially in real estate. Residential property prices in some Asian markets have increased by more than 50% since 2009, outpacing income growth. To be sure, there are underlying structural factors supporting housing demand, such as urbanisation, growing populations, and the rise of the middle class. But surplus liquidity and rapid credit expansion fuelled by low global interest rates and large capital inflows have exacerbated asset price inflation in Asia. The unwinding of asset bubbles can be rapid and extremely unpleasant. Second, large capital inflows can turn into sudden outflows. Sharp capital flow reversals can cause exchange rates to weaken, trigger panic in funding markets, and even result in destructive wealth effects. The unwinding of long positions in Asian markets as global investors sought to de-risk their portfolios was partly responsible for the sharp selloff in many Asian currencies in recent months. The most effective way to manage capital inflows is to allow interest rates or exchange rates to go up so that capital is priced appropriately. Indeed, as emerging Asia continues to grow, allowing the exchange rate to steadily appreciate over the medium term is vital to ensuring that capital inflows are moderated and allocated to productive investments.
Regulation has been put in place to curtail banks’ ability to take excessive risk and to rely on short-term wholesale funding. 8  See Mcleay and Thomas (2016 forthcoming). 9  Changes in capital regulation may also have had an impact on mortgage lending spreads. BIS central bankers’ speeches  5  Debt servicing Another lens through which we can look at the sustainability of the increases in debt and asset prices during the upswing of the last financial cycle is the debt servicing ratio or “income gearing”. The aggregate household debt service ratio in the UK rose to 13% in 2007 but is now at its 2001 level of around 8% (Chart 6).10 That is a little below its historic average since 1988. But while the ratio is back at 2001 levels, its composition is now very different. In 2001, the debt stock was around £ billion and the interest rate was 6.7%. Today it is over £ trillion and the rate has fallen to 3.6%. These debt service numbers do not include consumer finance which add to the household debt stock. The stock is small relative to secured lending, at around 10–15% of the stock of secured lending. But it is growing quickly at around 9% per year. High levels of consumer finance tend to be associated with households that have high overall debt service levels.

On the other hand, some of the factors which affect preferences for desired saving and investment (demographics and the income distribution, for example), are likely to lift the sustainable level of debt and asset prices. Credit spreads and credit supply The interest rate charged to borrowers and by which risky assets are valued reflects more than just the risk free rate. It includes the spread above the risk free rate charged by the lender to reflect the costs and risk of lending. If reductions in the spread above the risk free interest rate are long lasting, they too will raise both the sustainable level of debt relative to income and the sustainable level of asset prices. In the run up to the recent crisis, the spread over the risk free rate fell. For example, lending spreads on new UK mortgage lending fell from around 100bps in around 2000 to a low of around 30bps in 2007. More generally, shifts in credit supply may occur through increased bank competition over nonprice factors (such as increasing the availability of credit to borrowers with high LTIs and LTVs), or because of regulatory and other policy changes that affect banks’ ability to lend. These shifts in credit supply may appear as direct increases in the credit to GDP ratio but show up less obviously in lending rates. Such shifts may show up as increases in deposit rates rather than falls in lending rates if they affect competition for retail and wholesale funds.
The main arguments against a more expansionary policy that have been put forward lately are that this type of policy would be too risky, given the size of household debt.3 Let me therefore use this argument as a starting point for my reasoning. The discussion among the Executive Board members to a large extent reflects a broader international debate on the relationship between monetary policy and financial stability, on whether household debt is too high and, if so, whether monetary policy should be used to try to limit indebtedness – although the Swedish debate does contain a number of specific characteristics. In brief, one can say that those who believe the repo rate should be held extra high appear to think as follows.4 If the interest rate is too low, households take on too much debt. A large share of the loans households take on are used to buy housing, which also pushes up housing prices. If indebtedness and house purchases are based on overly optimistic calculations, there is a risk of a heavy fall in housing prices when the mood changes, for some reason. If prices were to fall, many households would find themselves in a situation where their assets have substantially declined in value, while their debt remains unchanged. They may then want to pay off some of their debt to come down to a more suitable level. This means they will prioritise saving over consumption. Demand in the economy will then decline and unemployment will increase.

Lars E O Svensson: Monetary policy, debt and unemployment Speech by Prof Lars E O Svensson, Deputy Governor of the Sveriges Riksbank, at a meeting at SNS – Centre for Business and Policy Studies, Stockholm, 14 November 2012. *  *  *  I would like to thank Karolina Ekholm, Kerstin Hallsten, Per Jansson, Christina Nyman, Ulf Söderström and Anders Vredin for valuable discussions and comments. Mikael Apel, Gabriela Guibourg and Staffan Viotti have contributed to this speech. The views expressed are my own, and are not necessarily shared by the other members of the Executive Board or by other employees of the Riksbank. It can scarcely have escaped the attention of those who follow monetary policy in Sweden that the members of the Executive Board have held differing opinions for some time now. Most people have probably also noted that a minority of the Executive Board members – consisting of my colleague Karolina Ekholm and myself, in case anyone was not aware of this – has advocated a more expansionary monetary policy than the one that has been conducted and that the Riksbank intends to conduct in accordance with the repo-rate path advocated by the majority during the coming period. However, I am not as convinced that everyone has a clear idea of exactly what the differences of opinion entail.
Eva Srejber: Future scenarios for housing finance Speech by Ms Eva Srejber, First Deputy Governor of the Sveriges Riksbank, at the Institute for Housing and Urban Research, Gävle, 19 March 2003. *  *  *  Introduction Housing finance in Sweden constitutes a significant part of the Swedish financial system. At the beginning of this year, total lending from banks and mortgage institutions amounted to approximately SEK 2200 billion, which was fractionally higher than Sweden's GDP. Mortgage institutions account for just over 50 per cent of this lending, which is why it is vital that financial market players understand the housing finance market, its participants and how it affects and is affected by the Swedish economy. For this reason the seminar today can play an important role in advancing knowledge within the field. There are several factors that affect housing finance. These include demand factors, supply factors and structural factors. I will not be mentioning all of these but will instead be focusing on three important factors, namely internationalisation, changed regulations and adjustments of household and corporate balance sheets. I will also be attempting to make a connection to how changes in these three broad areas influence the financing of housing. Allow me to begin by outlining the developments of recent years as a point of departure for future prospects. A process of internationalisation has been ongoing for many years now and is driven by several factors. The process is particularly evident in the capital and financial markets.

Deposit insurance, like other forms of insurance, is there to deal with low probability events that have a major impact if they occur. To make an obvious analogy, you still take out fire insurance even if you do not expect your house to burn down. Hong Kong stands out as one of the few developed banking centres which does not have a DIS. There is of course no reason why we should follow the rest of the world just for the sake of it. But we should at least keep our safety net arrangements under regular review to ensure that they are still appropriate to changing market circumstances. This is what we did last year when we engaged an external consultant to consider whether the existing deposit protection arrangements in Hong Kong were sufficient, and if not how they should be changed. The conclusion was that an explicit and limited form of deposit insurance should be introduced. We subsequently undertook a public consultation on this proposition and on the detailed design features of the proposed scheme. This consultation generated a heated, albeit civilised, debate. Not surprisingly, some of the large banks vehemently opposed the scheme. Opinion in the community as a whole was however generally supportive.