samchain/econo-pairs-v1 huggingface dataset:
I think it is most important, in these times of uncertainty, for the Bank of Thailand to act as the linchpin to the public policy. We have to set the anchor that stabilizes the economy. It is fortunate that certain elements of our inflation targeting policy has been modified, allowing increased degree of management of the foreign exchange rate which facilitates trade and improves capital flows. The practice which was intended to take care of official reserves while the global economy is slowing down now happens to be the correct policy practice to be further enhanced to cope with addition weaknesses and uncertainties. More careful management of our international reserves is required so that we can fulfil our debt obligations under the IMF program, and still be left with a strong and healthy level of reserves. This will be achieved through a vigilant watch on the markets, keeping close dialogue with market participants, gathering intelligence and acting in a timely manner. Ladies and Gentlemen, I am here today not to give you a false promise that the BOT could provide policy measures that could lead to the recovery of the Thai economy, but to assure you that our existing policy measures are suitable with the situation and we would do our best not to allow Thailand another crisis of similar cause and magnitude as that of 1997.

Monetary policy and macro-prudential policy  Taking the role of the financial sector in monetary policy transmission more seriously reveals the macroeconomic consequences of microeconomic behaviour: the impact on inflation, growth and financial stability of the behaviour of financial institutions. As a result, a revised framework has important implications for both the conduct of monetary policy and for policies aimed at maintaining financial stability. Viewing recent experience through this lens demonstrates that the achievement of financial stability relies on more than traditional micro-prudential supervision of individual financial institutions. Clearly, policy needs to take into account the impact of such externalities in order to develop a framework supporting the stability of the financial system as a whole, rather than the individual institutions which constitute it. By the same token, the preceding analysis demonstrates that taking appropriate monetary policy decisions relies on an understanding of the behaviour of financial intermediaries and, in turn, on financial structure and innovation. From a policy perspective, the impact of monetary policy on the behaviour of the financial sector suggests that short-term interest rates are a potentially powerful tool to influence the evolution of systemic risk, and thus to support financial stability. However, as I discussed at the outset, monetary policy should not be overburdened with additional objectives. The primacy of the price stability objective must be retained. The well-known Tinbergen principle makes clear that a single instrument (short-term interest rates) is insufficient to achieve two goals simultaneously. 24 In such a context, additional policy instruments are required.
Each of these banks has had to structure their business models to ensure that they are independently viable, and have adequate and stable funding sources. The PRA has examined the banks’ financial projections, and these assessments fed into the approvals that formed part of the ring-fencing process. But banks should, as a matter of course, continue to examine carefully their viability and funding risks. For example, as part of their contingency funding planning, banks will need to consider what options are available to them to meet any unexpected outflows. These banks are able to access the full range of the Bank of England’s liquidity  5 6  See Independent Commission on Banking (2011), Final Report, para 3.91. See Bank of England (2018), Financial Stability Report, June, page 31. 6  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  6  facilities, including the Discount Window Facility, and they should consider the extent to which they have collateral that can be used to obtain liquidity should they need it. How will we supervise the ring-fence? The PRA’s work on ring-fencing does not end with the implementation of the new regime on 1 January. From this date the PRA’s focus moves from putting up fences to ensuring they remain fit for purpose. From 2019 the PRA has a statutory objective to ensure that ring-fenced banks do not threaten the continuous provision of core retail banking services.

No one knew how large the losses would be and whether the reserve capital would suffice. Funding ran short. Because what financiers in the market would want to give loans to a bank that appears unsteady? And who would want money in an account in this bank? I am sure you will remember the pictures of the queues outside Northern Rock’s branches in the United Kingdom. To restore confidence, the state and the taxpayers in many countries had to inject capital and go in as owners of the banks. This would not have been necessary if the banks had held more capital when the dark storm clouds gathered in summer 2007. The Basel Committee has taken note of this. The current capital requirements are being raised substantially. If I may go into technical details, the new regulations require that the  BIS Review 159/2010  3  banks should have a Tier 1 capital corresponding to at least 6 per cent of their assets, or more correctly their risk-adjusted assets. The risk adjustment means that for each asset one recalculates the value, depending on whether the value of the asset can be regarded as certain. One sign of this might be, for instance, that the value of the asset has varied a lot. The higher risk an asset is believed to entail, the more capital needs to be allocated. At present, the minimum requirement for Tier 1 capital is only 4 per cent of the total riskweighted assets.
If we are establishing a central decision-making body anyway, why act through 25 different authorities? Both the first and the second alternatives are half-way compromises trying to please different interests. My own view is that the third alternative, although radical, is the logical solution. There are two main arguments against the idea of a European Financial Supervisor – one relevant and one not very relevant. The not very relevant argument is that the supervisor needs proximity to have knowledge about the markets where the institution operates. First, this is already a problem with the home-host model. Second, this is an organisational problem that can be solved. An EU supervisor would certainly employ staff from all EU countries and have local offices in the national financial centres. For instance, for a regional cross-border banking group, I imagine the supervisory team to be based in the relevant region, perhaps in the same premises as the national FSA, and to consist of staff from that region. The relevant argument against an EU supervisor is that supervisory power ultimately needs to be backed by financial muscle. In the present set-up, the financial muscle derives from the national central bank’s ability to act as a lender of last resort and the government’s ability to raise taxes. The EU lacks such power. However, this problem is hardly unsolvable. For instance, one could think of the EU building up a deposit insurance fund for cross-border banks supervised by the EU supervisor, which would be able to handle all but the largest banking failures.

There is, of course, traffic in the other direction, but this is of a much more volatile, potent, demanding, and at times predatory nature, and it can sometimes - as we saw in the late 1990s - be difficult to cope with, to put it mildly. There is now a common desire among economies within the region to reduce dependence on the recycling of domestic savings through the developed markets, and therefore reduce vulnerability to financial shocks, by promoting greater regional financial intermediation. A number of regional initiatives are being implemented, the most notable of which is the Asian Bond Fund project, a collective initiative of 11 central banks and monetary authorities to develop bond markets in the region. A great deal of emphasis is also being placed on getting one's own house in order, by practising sound macro-economic policies and building robust institutions. Some attempts have been made at financial infrastructure integration: in Hong Kong, in particular, we have been operating US dollar and  BIS Review 19/2005  1  euro clearing systems and opening linkages with other jurisdictions and international systems. But it has to be said that, so far, these facilities have been serving domestic needs far more than regional needs. This is, I think, a reflection of the rather moderate level of financial system integration in the region. To take banking as an illustration, there may well be quite considerable integration across the borders of immediate neighbours: between Hong Kong and Mainland China, for example, or between New Zealand and Australia.
Another important development has been the rapid growth in the provision of Islamic Shariah compliant services to cater to the increasing demand by customers for such services. All Saudi banks offer a range of Islamic products including Murabaha, Mudaraba, Musharaka, Baie Ajel, etc. The significant growth, diversification and profitability of the Saudi banking system has been underpinned by a strong and and advanced regulatory system. Over the past two decades SAMA has introduced many modern supervisory standards compliant with international standards including risk based capital adequacy, liquidity, large exposures, risk management and others. In the past two years alone, SAMA has developed regulations relating to market risk, loan classification and provisioning, controls of consumer lending and updated the requirements for appointment in senior posts of banks. On the corporate governance front there is a heightened awareness in the world with standards emanating from OECD, Basle Committee and others. SAMA has been since the early 1980s inculcating these concepts in the Saudi Banks. In 1981, it issued a guidance document to the Directors of Saudi Banks defining the general framework of their roles and responsibilities. This was followed by regulations on Internal Controls in 1989, Prevention of Fraud (1994), Prevention of Money Laundering (1995) and the Role of the Audit Committee (1996). Furthermore, SAMA has promoted proper accounting standards to be followed by the Saudi banks in order to ensure more transparency in their financial statements. Saudi Arabia was among the first countries in 1992 to adopt the International Financial Reporting Standards by the Banking Industry.

Hamad Al-Sayari: World class banking sector Speech by His Excellency Hamad Al-Sayari, Governor of the Saudi Arabian Monetary Agency, during “The Future Building" Seminar, in cooperation with Euromoney, Riyadh, 9-10 May 2006. *  *  *  Ladies and gentlemen, It is a great pleasure for me to participate in this Symposium and share with my insights on “The Development of Banking Sector” in Saudi Arabia and have a glance over its development and role in supporting the growth of the Saudi economy to be more dynamic and attractive to domestic and foreign investments. At first, let me briefly cover the achievements of the Saudi banking sector since the establishment of SAMA in 1952. According to SAMA’s Charter, two of its most important objectives are to issue and strengthen the Saudi currency and stabilize its internal and external value, and to regulate commercial banks. On the basis of a historic review, we may judge how far these objectives have been achieved. The exchange rate has fluctuated in a very narrow band over the past six decades. This has contributed to attaining the ultimate goal of our monetary policy of achieving price stability. The inflation rate has remained very low and has generally remained, on average, below 1% per annum over the past 20 years. These stable conditions have contributed strongly to sustained growth in the overall economy with average real GDP growth of 3.2% per annum for the last decade.
If the central bank has cut the nominal policy rate to zero, one may find oneself in a situation where the real interest rate is too high to be able to stimulate the economy. The central bank must then bring up inflation expectations and thereby bring down the real interest rate. According to Lars, one means of creating expectations of higher inflation and escaping from this liquidity trap could be to introduce a temporary price level target, for instance in the form of an average inflation target where inflation must remain around the target over a five-year period. The central bank would then have the possibility to compensate for low inflation or deflation through a correspondingly higher inflation rate further ahead. The idea is that if the target is credible, inflation expectations will rise and the real interest rate will fall. My opinion is that we should not change the inflation target. We have invested so much in the credibility of the current inflation target and it has functioned very well. Inflation has on average been close to 2 per cent during the 14 years we have had an inflation target, and in the longer term inflation expectations are firmly anchored close to 2 per cent. Nor does Lars suggest that we should change the inflation target. He discusses a hypothetical situation where the policy rate is zero and inflation expectations are no longer firmly anchored around the inflation target, but are much lower.

Real house prices in the United States have remained largely stable from the 1950s until the mid-1990s. They then rose by approximately 80 per cent and are now falling rapidly. As long as they continue to fall, household wealth will fall and the banks’ losses will rise. I shall now move on to part three of my speech, which concerns the Swedish economy. GDP growth in Sweden will be negative this year Sweden is a small, open economy. We are therefore affected when growth abroad declines. It has a rapid impact on Swedish exports. The decline in the export of goods during the fourth quarter of 2008 is the largest measured in an individual quarter. Orders in the export market have also fallen substantially and point to a continued fall in exports in coming months. Manufacturing companies are very gloomy with regard to future prospects. Both the National Institute of Economic Research’s confidence indicator for the manufacturing sector and the purchasing managers index are at all-time lows. 2  The other four are Spain 1977, Norway 1987, Finland 1991 and Japan 1992. 3  Carmen M. Reinhart, and Kenneth S. Rogoff, “Is the 2007 U.S. Subprime Crisis So Different? An International Historical Comparison”. American Economic Review Vol. 98 No. 2: 339-344. (2008). 4  Carmen M. Reinhart, and Kenneth S. Rogoff. “The Aftermath of Financial Crises.” Essay prepared for presentation at the American Economic Association in San Francisco, 3 January 2009.
Businesses continue to have problems mobilising capital linked to the remaining risk in the business sector, the question of discipline of borrowers, and the need for prospective borrowers to adapt to the more sophisticated credit requirements of commercial banks. These factors restricted the expansion of commercial bank credits. On a positive note, the ability to maintain macroeconomic stability resulting from low inflation, has enabled monetary policy to remain accommodative and helped reduce the financial burden on businesses up to a certain level. Although in the year 2000 the economy grew less than forecasted, we have, however, managed to make considerable progress in tackling a number of important problems arising from the 1997 crisis, and some of these are bearing fruit. On financial institutions, overall financial position of the Thai banking industry has improved markedly. A number of banks are now showing profits while interest spread has improved to 1.57 by the third quarter. Commercial bank external debt has also declined substantially. More than 78 % of bank’s existing foreign liabilities have been new borrowings incurred after July 1997. This shows that Thai banks have no difficulties in raising funds abroad. All banks are expected to meet full 100 % loss provision requirement by end of the year as required by the Bank of Thailand. In the last three years some B890 billion has been raised as new bank capital, raising the BIS capital-adequacy ratio to 11.95 % for the industry.

A supervisory innovation: recovery planning The potential for rapid decay of asset and business line values unless assets and liabilities are transferred to a permanent owner quickly is a large part of what sets financial institutions apart from other companies entering insolvency. This difference motivates efforts to avert insolvency through supervisory action, as I described earlier. It also motivated U.S. banking supervisors in the early 1990s to ask some troubled banking companies not only to apply the three-part program but also to develop a meaningful contingency plan for reducing risk and raising capital if the first round of actions did not succeed. The supervisors incorporated the requirement to develop contingency plans in its supervisory agreements with those institutions. 2  BIS Review 140/2010  The CBRG has recommended that all systemically important financial institutions develop recovery plans. I believe the development of such plans by healthy institutions and their discussion by a college of the firm’s principal regulators constitute important innovations in the supervision of financial institutions. The Cross Border Crisis Management Group has provided momentum and a forum for discussion of progress and challenges as supervisors initiate discussion of recovery plans with firms. The discussions we have held in the United States involve the financial institution, its major U.S. regulators and the regulators of the foreign legal entities containing its principal business operations.
James McAndrews: Credit growth and economic activity after the Great Recession Remarks by Mr James McAndrews, Executive Vice President and Director of Research of the Federal Reserve Bank of New York, at the Economic Press Briefing on Student Loans, Federal Reserve Bank of New York, New York City, 16 February 2015. *  *  *  Accompanying tables and figures can be found at the end of the speech. Good morning and let me welcome you to our press briefing focusing on developments in the student loan market. My remarks will concentrate on the role of credit markets more generally during this economic expansion. As a reminder, these remarks reflect my own views, and not those of the Federal Reserve Bank of New York or of the Federal Reserve System. First, let me say a few words on the current economic outlook. Real GDP grew 2.4 percent over the course of 2014. As New York Fed President Dudley noted earlier this month, despite what appears to be a soft first quarter, we expect that real GDP growth will continue over the next couple of years at a similar rate, supported by solid underlying fundamentals and accommodative financial conditions. Unemployment should continue to decline and approach 5 percent by late this year. Because of the recent sharp fall in oil prices and the appreciation of the dollar, inflation will be very low over the coming months.

An increase in the repo rate would in this case contribute both to counteracting incipient inflation tendencies and to reducing the risk of financial imbalances, through a dampening effect on demand for credit and on asset prices. 5  BIS Review 50/2000
With the economy undershooting both our employment and inflation goals, monetary policy does not presently face a conflict in goals; actions that support employment growth also help move inflation up toward our target. Yet, as I look to the future and assess risks, I foresee a time when a policy dilemma might emerge: Namely, we could find ourselves in a situation in which the progress or risks to one of our goals dictate a tightening of policy while the achievement of the other goal calls for maintaining strong accommodation. BIS central bankers’ speeches  1  So what happens when a conflict emerges? In such cases, the FOMC has said that it will follow a “balanced approach” to achieving its policy goals. I will elaborate at length on this later, but let me summarize how I think we should operationalize this approach today. We should keep our focus on our policy goals and should be highly attuned to both the likelihood and the costs of missing those goals. To me, the risks imposed on an economy forced to operate at the zero lower bound on policy rates are paramount. Accordingly, before the Fed raises rates we should have a great deal of confidence that we won’t be forced to backtrack on our moves and face another painful period at the ZLB.

Since then, we have made significant progress in moving the unemployment rate back to a more normal number. Yet, at 6.1 percent, it remains too high. And, as we have heard all morning, other measures of labor market activity remain suppressed. We have underperformed on the inflation front as well. Since 2008, year-over-year total inflation as measured by the Personal Consumption Expenditures Price Index (PCE) has averaged just 1.4 percent, well below its 2 percent target. Today, PCE inflation stands at 1–1/2 percent and is expected to move up only slowly toward the FOMC’s target. Nonetheless, we have come a long way in healing the injuries the financial crisis inflicted. Certainly monetary policy has been doing some heavy lifting. The Federal Reserve responded quickly to the unfolding recession by cutting the fed funds rate to near zero by December 2008. At the zero lower bound (ZLB), we then turned to unconventional measures, such as large-scale asset purchases and forward guidance about the federal funds rate to provide further accommodation. In the fall of 2012, with the unemployment rate hovering stubbornly at around 8 percent and core inflation steadily drifting lower than our 2 percent target, the Fed introduced open-ended asset purchases and, later, forward guidance that related federal funds rate actions to thresholds explicitly expressed in terms of our policy goals. Together, these efforts have helped the economy make impressive progress toward our employment mandate and appear to be moving us closer to our 2 percent inflation target as well.