samchain/econo-pairs-v1 huggingface dataset:
This means that there is still a distinct public interest in the activities of institutions that are engaged in banking - as defined - whether as free-standing entities or within a broader group structure. That interest includes a micro-prudential concern to provide some measure at least of protection to public depositors, reflected in the supervision of individual banking institutions and in deposit protection schemes. But it includes also a macro-prudential concern with the stability of the banking system as a whole, because of its peculiar vulnerability to contagious - systemic - disturbance, reflected in central banks’ preparedness to provide liquidity to the system where that is judged to be necessary. Other forms of financial activity also perform distinctive functions, and have distinctive characteristics which make them special in their own different ways. And these special features equally may - and often do - give rise to special public interests. The public interest in these other financial activities may be driven by a social concern to protect consumers (for example the prospective beneficiaries of pension funds or life insurance policy holders, or investors, whether in collective funds or individually, through different kinds of intermediary, in capital markets), which is similar to the social concern relating to depositor protection. And it may extend to other aspects of the particular activity, including aspects of business conduct as well as the financial integrity of the institutions involved.

Let me give you six good reasons. First, Thailand does not have any imbalances in the economy, and hence there is no bubble to speak of. Second, the country’s external position is much stronger now with surpluses in the external current account, low level of foreign debt, and a large international reserves position. Third, our banking sector is sound and resilient, and is functioning normally with good liquidity. Fourth, the corporate and household sectors are not highly leveraged. They have low debt and strong balance sheets. Fifth, the ability of the economy to adjust to external shock has improved markedly from before, given the flexibility that we now have in our economic and financial systems. The most crucial is a more flexible policy regime, especially the exchange rate. And sixth is the low level of public sector debt, now at 39 percent of GDP. This low debt gives ample room for the authorities to use fiscal policy to support growth. Such room will give the authorities better leverage to cope with any further fallout from the global turmoil. The last point I want to make is to assure you that despite the ongoing global credit crunch, and the tightened conditions in the international financial markets in terms of funding access, our policy on cross-border capital flows will remain open and liberal, and our policy on  2  BIS Review 45/2009  access to domestic funding by non-residents will also remain unchanged.
There is a broad spectrum of regulations around the financial system; everything from rules on consumer protection to rules on how to act if an agent – a bank, company or household – becomes insolvent. If these micro-oriented rules are not properly designed, the risk of a credit-financed bubble increases, and the consequences can be even greater. This means there is an even greater need to actively counteract this type of development by pulling on the more macrooriented regulation lever, and this may entail rather difficult considerations. One could say that well-designed supervision can support a macroprudential policy in a similar way to a well-designed macroprudential policy supporting monetary policy. Does macroprudential policy require support from monetary policy? So will improvements in regulation and supervision be able to solve all of the problems? Unfortunately, I don’t think so. Quite regardless of which solutions we use, I am quite sure that we will not be totally immune to financial crises in the future. What I hope we can achieve is to ensure they are rarer and less severe. I also believe that there will always be situations where the regulation and supervision may need support from a monetary policy that “leans against the wind”. One reason is that experience shows that it is difficult to construct regulations that cannot be circumvented in one way or the other. The policy rate is certainly a blunt instrument, as it affects all lending in the economy.

But following the crisis and the emergence of a macroprudential approach, this need has become even more evident. Important issues to resolve in the coming years are how responsibility should be allocated between different authorities to facilitate this coordination, and what forms the cooperation should take. It is of central importance that the mandate is clear and the tools are well-defined, particularly to enable evaluation and to ensure accountability. An unusually interesting time I have now been a monetary policy decision-maker for quite a long time – almost 12 years. A lot has happened during this time, both in the Swedish economy and internationally – including normal upturns and downturns in economic activity and a number of crises in various parts of the world. The way we conduct monetary policy has also changed quite a lot. But, when seen in a broader perspective, the changes have perhaps mostly concerned details – that we have further developed the inflation-targeting policy that has always been at the core of our work. There is of course no doubt that the recent crisis has been the most dramatic one during this period. But I also have the impression that it has affected thinking about monetary policy and the central banks’ activities in general, in a way that I have not experienced before. It is not  8  BIS Review 164/2010  about us needing to throw away the old and find something completely new.
With regard to the hedge funds’ own activities, the concerns are based on three beliefs: •  Hedge funds’ activities are opaque. •  Hedge funds borrow substantially. •  Hedge funds are speculative and prone to herd behaviour. Let me comment on these points one by one. It is true that in most countries hedge funds’ activities are less than transparent (although not in Sweden). The authorities in many countries have little or no information about the funds’ activities or the persons active in them. This applies in particular to funds that are located off-shore, such as in Bermuda or the Cayman Islands. This creates not only a risk that risk concentrations build up, but also facilitate illegal activities. The number of cases where hedge funds are suspected of being involved in various forms of fraud has grown dramatically in the United States in recent years. My opinion on this point is clear: Hedge funds should of course be subjected to the same disclosure requirements as other financial institutions. The second source of concern concerns indebtedness. Unlike more regulated institutions, hedge funds can in principle have unlimited leverage. This may be worrying from a stability perspective. A high level of indebtedness naturally increases both the probability of and the effects of a failure. The debt/equity ratio varies, but the fact is that most hedge funds are not heavily leveraged. To get a rough idea of the indebtedness of a fund one may simply divide the fund’s market value by its equity.

Today, the euro area’s banks continue to grant more than 90% of credit to firms resident in the same country, with only 5% going to firms in other euro area countries. In the case of loans to households, the bias is even greater. Expanding this foreign activity is essential for the sound working of the euro area. In this respect, there is still a long way to go before we achieve a pan-European banking system and a more complete Banking Union. The need to complete Banking Union Since Banking Union was launched in 2012, substantial institutional progress has been made towards the creation of a new common supervisory and resolution framework. The aim has been to restore lost confidence and ensure protection for depositors, irrespective of their nationality. The first pillar of Banking Union – the Single Supervisory Mechanism (SSM) – has indeed been completed. Today, the European Central Bank (ECB) directly supervises significant credit institutions, which account for almost 82% of all banking assets in the euro area. Progress has also been made in the case of the second pillar, with the creation of the Single Resolution Mechanism (SRM). The SRM establishes uniform resolution criteria according to the principle of the lowest possible cost to the taxpayer. However, for completion of the Banking Union important institutional challenges remain. First, the creation of a common financial backstop for the Single Resolution Fund (SRF), to ensure that it has sufficient resources to withstand future banking crises without destabilising the public finances of the countries concerned.
A recent paper examines how economists and commentators, when confronted with a flattening curve in the past, often argued that “this time is different”. [31] That is, they claimed that special factors were contributing to the flatter curve and that these compromised the standard interpretation of the curve as a harbinger of recession. As I mentioned at the beginning, the current euro area yield curve is indeed quite flat from a historical perspective, with the spread between ten-year and one-year yields amounting to about 30 basis points, which is around 1 percentage point lower than on average. [32] I will certainly not make a binary statement on whether this time is different. In particular, a sound assessment of the future growth outlook should be based on a wide range of indicators and models, rather than the yield curve alone. Moreover, there are two further issues to consider. First, the current flattening of the curve has mainly been induced by the long end of the curve coming down, rather than by the short end coming up. This constellation is different from previous episodes of yield curve inversion, as is shown in Chart 11. Hence, the inversion of the yield curve observed this time is not occurring in a context of monetary policy contraction raising the short end of the curve. Chart 11 Decomposition of change in the slope of the yield curve (percentage points)  Sources: Bundesbank, OECD, Thomson Reuters and ECB calculations. Notes: Update of the corresponding chart in De Backer et al. (2019).

Both these problems restrain the attraction of foreign investments and impede the country’s development. Third, efficiency in using the economy funds should be improved even at micro level. This implies the need for improving private businesses’ management and control systems, enhancing analytic and forecasting capabilities, as well as transparency. Allow me to further deal with some of the above-mentioned issues. Stable economic development of the country As we have continuously underlined in our periodical reports, the economic growth over the recent years has been strongly supported by the banking system lending. The growth of banking lending has provided an impulse of about 7 percentage points of GDP in the last five years, making a pronounced and evident contribution to the growth of consumption and investments in economy. Their growth has provided room for expanding the production basis and improving the welfare. However, it has also generated macro and microeconomic imbalances. At macroeconomic level, the high consumption and investments were followed by increasing inflationary pressures and higher trade and current account deficit. These signs of overheating were clear signals that that level of consumption could not be kept for a long time, hence calling for controlling measures by the monetary authority. This is also the key to understand our prudent monetary policy during the period 2006–2008. The institutional investment we have made during these years in terms of consolidating macroeconomic and financial stability was rewarded with a much more moderate and milder impact of the global crisis than in the regional countries.
I regard the policymaking process as a systematic effort to investigate what policy setting would deliver the best achievable set of economic outcomes,3 taking into consideration all available information, including risks not fully summarized in the base case point forecasts. Our approach is not greatly different from those of central banks that operate inflation  1  But, of course, predictability is not an end in itself. A policy could be completely predictable, but also incompatible with the central bank’s goals. 2  The policy response to the extreme shock of the financial crisis was predictably vigorous, even if its detail was hard to specify in advance, and the knowledge that the Federal Reserve would act “as needed” to promote the dual mandate anchored inflation expectations and helped to avoid a deflation outcome. 3  In formal terms, this approach would be described as a target-rule or forecast-targeting rule. BIS central bankers’ speeches  1  targeting regimes, but in our case we explicitly seek to promote both aspects of our dual mandate.4 The basic question is how the FOMC should implement monetary policy to best push the economy back to its dual objectives. Prescriptions from simple policy rules such as Taylor Rules, named after Stanford economist John Taylor, have a legitimate role to play in this evaluation as do more complex simulations such as optimal control rules.

•  Second, maintaining price stability does not guarantee financial stability. In the euro area, the inflation mandate has always been fulfilled, but has not prevented the emergence of crises in the region. These crises have forced central banks to broaden their mandates to include financial stability in order to ensure the functioning of the monetary policy transmission channel as well as to guarantee the smooth financing of the economy. Stable inflation and financial stability are therefore two objectives that monetary and macroprudential policies respectively seek to achieve. •  Third, the Lehman episode and the euro area crisis have confirmed that financial crises do not stop at borders. Consequently, financial system regulation must be the fruit of international cooperation. These lessons, in the post-crisis world, are at the heart of policy-makers’ actions. Financial crises have led us to renew our approach to financial system regulation, and notably to supplement it with a macroprudential perspective. But what is a macroprudential policy? How can we define clear objectives? What are the policy instruments? How can we organise it? What imbalances need to be redressed? These are only some of the numerous issues that contributors address in this Review. In particular, the broad scope of policy action is a major challenge. We especially need to anticipate all possible conflicts with other economic policies, such as microprudential, monetary or fiscal policy. I will now identify at least two prerequisites to ensure that macroprudential policy is effective: First, if conflicts arise between macroprudential policy should prevail.
The report was the first of its kind and has received international recognition. The statistics in the report are based largely on voluntary reporting from the key participants in the Norwegian payment system, and we are very grateful for their cooperation. It is the banking industry that makes decisions about the use of standards and about infrastructure development. Norges Bank will closely monitor the work and emphasise that standards and infrastructure be designed in a way that does not inhibit competition. Which requirements should be satisfied by new payment systems? Innovation and development of new payment systems that satisfy new needs are important to maintaining efficiency in the Norwegian retail payment system over time. This requires that banks continue to develop their range of payment services. When new payment services are developed, it is desirable to retain the common infrastructure. This implies that all systems are based on the same technology or that there is a common interface that allows the systems to communicate without any problems. To ensure efficiency in the market, open solutions which allow competition for production and delivery of services will be an advantage. Competition for production of services may conflict with exploitation of economies of scale. Norges Bank will place considerable emphasis on the existence of competition for delivery of these services to the users. We want new payment services to be priced according to the same principles as today. In other words, prices should reflect the expected unit costs in the long term.

BIS Review 71/2002  7  Nevertheless, there is also general agreement on the fact that the gap, in terms of average GDP per capita, between the accession countries and the euro area, although diminishing, remains still quite significant. The size of the gap, combined recently with a rather limited growth differential between the two groups of countries, suggests that the process of real convergence will be very gradual and will have to continue much beyond the tentative dates for EU accession. Although differences in income levels are not incompatible with EU and even EMU membership, it is extremely important for accession countries to increase real convergence. Indeed, real convergence is essential to create economic cohesion within EMU and promote integration between Members States, thereby helping to minimize the risk and the effects of asymmetric shocks, in the best interest of accession countries themselves. Let me stress seven points of particular relevance for the Eurosystem, and for accession countries themselves on the road towards achieving catching-up and convergence with the EU. •  Firstly, we should never forget that nominal convergence must be sustainable and therefore not only constitutes an objective that must be met at a given point of time but rather a goal that must be achieved continuously. Strict compliance with the Maastricht criteria will be key for joining the euro area.
Governor’s Speech - the Budapest Eurasia Forum 2022 “Challenges facing small, open economies in the changing global landscape” Dr. Sethaput Suthiwartnarueput, Governor, Bank of Thailand Magyar Nemzeti Bank, Budapest, 19 September 2022  Excellencies, distinguished participants,  It is a great pleasure and privilege to be here at the Budapest Eurasia Forum. While the global landscape is constantly changing, the speed and scale of the changes happening now are particularly large and rapid. Many of these changes pose particular challenges for small, open economies. I would like therefore to focus my remarks on three key challenges facing small, open economies in this changing global landscape. Part 1: The first challenge is rapid and synchronized monetary policy tightening •  We are going through one of the most rapid and concerted monetary policy tightening cycles in recent memory. About this time last year, the Fed Funds rate expected for the end of this year was under 0.5%; markets now expect it to be around 4%. Almost all central banks have raised rates as part of what one might call the “Great Policy Normalization”. This reflects the rapid return of inflation. Two years ago, of the 60 countries tracked in the BIS database, 42 had inflation below 2%. Today, that number is zero. •  Adding to the challenge, the prevailing initial conditions under which the major economies are embarking on this “Great Policy Normalization” are far from ideal.

And it would be all too easy to give into protectionism. But as we learned in the 1930s, that road leads neither to equity nor prosperity. Raising barriers to trade disproportionately hurts the least well off through higher prices and fewer opportunities. 27  27  Fajgelbaum, P.D. and Khandelwal, A.K. (2016), ‘Measuring the Unequal Gains from Trade’, Quarterly Journal of Economics, Vol. 131, Issue 3, shows that past episodes of trade liberalisation have disproportionately benefited poor households, in every country, through reductions in consumer prices and increases in product variety. 13  All speeches are available online at www.bankofengland.co.uk/speeches  13  Escaping the low inflation / low wage / low growth trap requires more than a textbook rebalancing of macro policies across the major regions. It demands comprehensive structural reforms and a new approach to trade policy. Such changes could more than make up for the dramatic fall in the real incomes that UK households have experienced in the decade since the crisis. 28  The Brexit negotiations will be the test. May the hundreds in this room pass it by working towards innovative, cooperative and responsible solutions to the benefit of the tens of millions outside. 28  As my colleague Andy Haldane noted in his speech ‘Productivity Puzzles’(available at http://www.bankofengland.co.uk/publications/Documents/speeches/2017/speech968.pdf), if productivity growth in the second, third and fourth quartiles of the distribution of UK firms’ productivity could be boosted to match the productivity of the quartile above, then arithmetically that would deliver a boost to aggregate UK productivity of around 13%.
Our central view is that the third cause will fade out over the coming quarters, but the exact timing is uncertain. Some prices, such as those of timber and ferrous metals, have already passed their peak and are falling sharply. But as tensions remain acute in shipping and semi-conductors, we cannot rule out that supply-side bottlenecks will push out the date at which inflation starts to come back to its trend. At the same time, we see few signs of general wage increases, in line with subdued services inflation. Moderate wage increases in the euro area, in some sectors of the economy, would certainly be warranted to make jobs more attractive and reduce labour shortages. But there are few signs of a wage-price spiral at the current juncture. Indicators of long-term inflation expectations of professionals, both market-based and survey-based, have picked up but remain below our 2% target. According to the ECB staff's latest macroeconomic projections, euro area inflation would decrease to 1.5% in 2023. Some may question the latter figure and call it too conservative. Let me take a practical approach here. There might be some upside risks by a few decimal points on our 2023 forecasts, but what matters for monetary policy is the distance of realized inflation from our target of 2%. From this point of view, it is clear that the risk remains that we fall short of our inflation target in 2023 rather than exceed it. This calls for a continued accommodative monetary 2/5  BIS central bankers' speeches  policy.

But we are carefully monitoring inflation developments. If ever inflationary pressures should turn out to be long lasting, we would have the means and the willingness to anchor inflation at 2% in the medium term. III. Some reflections accordingly on our instruments This brings me to the last part of my talk, about the use of our instruments consistent with the new strategy and the inflation outlook. Some of our instruments were designed to be temporary and to respond to specific risks associated with the pandemic, such as the Pandemic Emergency Purchase Programme (PEPP). The Governing Council will probably decide on the future of its monetary policy instruments in December. So we have significant time left to monitor economic and financial data; and one shouldn’t give too much credit to rumours and speculations floating at present, including on an allegedly earlier calendar of ECB rate hikes. However, I would like today to dispel some misperceptions about how our instruments might evolve and mention some of the lessons I tend to draw from our successful crisis management. 1. The transition out of temporary anti-crisis measures is not the end of our  accommodative monetary policy Let me start by recalling that the transition out of the PEPP itself is different from our other instruments because it is conditioned on the end of the coronavirus crisis rather than on the inflation outlook, which guides our other instruments.