samchain/econo-pairs-v1 huggingface dataset:
Tarisa Watanagase: Thailand’s economy and resiliency – 2008 and the road ahead Address by Dr Tarisa Watanagase, Governor of the Bank of Thailand, at the American and Thai-Canadian Chambers of Commerce Luncheon, Bangkok, 26 September 2007. *  *  *  Distinguished Guests, Ladies and Gentlemen, Good afternoon. I am delighted to join you at this luncheon gathering of prominent members of the American and Thai-Canadian Chambers of Commerce and business community in Thailand. After a sumptuous lunch, allow me to present you more food – for thought – on the prospects and challenges of the Thai economy going forward. And since most of you know Thailand and our economy very well indeed, I would like to take this opportunity to share with you my perspective from the policy making and implementation side. For policymakers, our bottom line is to best balance short-term pains and long-term gains. To ensure the sustainable progress of economic development, we cannot afford to misplace focus on short-term concerns but must instead weigh the short-term and long-term objectives very carefully. Moreover, the sustainable development progress is made up of numerous elements, of which I would like focus on three things today. First is maintaining the economic growth momentum together with internal and external stability. Second is building the economy’s resiliency to withstand volatilities and shocks. And, third is strengthening the rules of the games for trade and financial integration, including the international best practices for financial institutions.

But when there’s a high degree of uncertainty about forecasts, it could be best to tend toward the more cautious end of the spectrum - because a somewhat delayed action could be preferable to running the risk of tightening when it’s not warranted. Therefore, since most forecasts of output and inflation have been off the mark for several years, it has made sense to place less weight on the forecasts than we normally have in the past. It’s true that we began tightening policy before we saw any upward inflationary trend, and in that sense we were pre-emptive, in part because we knew interest rates would have to go up to some extent regardless of whether a demand shock or a supply shock was dominating. But the tightening phase started only a little more than a year ago, even though many forecasts have predicted rising inflation for several years. Moreover, we’ve been fairly cautious in raising rates by a total of only 175 basis points. I’d like to conclude by touching briefly on the issue of central bank credibility because I believe it’s been an enabling factor in our taking a cautious approach. Over the last twenty years, the Fed has built a reasonably good reputation for containing inflation. This credibility has allowed us some flexibility to delay raising interest rates - despite many forecasts that inflation would soon rise. Without this leeway, we might have faced a jump in inflation expectations with adverse reactions in financial markets.
The SNB must recognise changes in constraints at an early stage and analyse their impact. The key lies in thinking in terms of scenarios, and – as in a risk management approach – weighing these up against one another. With our monetary policy decisions, we must do our utmost to prevent negative developments. In light of the uncertainty, we must take robust monetary policy decisions that will ensure price stability in a broad range of scenarios. Page 6/16  To conduct effective and robust monetary policy in deflationary and inflationary environments alike, in addition to these analytical skills we also need a sensible institutional framework. Amid changing conditions with differing structural inflationary pressure, there are two factors that are particularly important in my opinion with regard to the institutional framework: first, seeking to achieve low inflation while at the same time allowing for a certain amount of leeway; and second, a narrowly defined monetary policy mandate that focuses on maintaining price stability while taking due account of the economic situation. III. Anchoring and flexibility By defining price stability or setting an inflation target, central banks provide an important signal for the general public and the markets. Not least because this determines how quickly and how strongly monetary policy reacts to shocks, or the extent to which the central bank seeks to fine-tune inflation.

As you know, many individuals inside our member agencies devoted substantial efforts to the Basel II process. We are indebted particularly to the leadership of Bill McDonough, our prior chairman and the former President of the Federal Reserve Bank of New York, who championed this new approach to capital supervision. We appreciate as well the leadership and excellent work of Danièle Nouy, the former Secretary General of the Committee’s highly professional Secretariat, and that of her successor, Ryozo Himino. Given that the capital framework serves as a cornerstone to the safe and sound operation of the banking system, we sought to conduct our discussions in a highly transparent process. We engaged in extensive discussions with many interested parties on the domestic and international levels, and I would like to thank in particular two groups of external organisations and individuals who supported our efforts. First, I should mention the countless representatives of banking organisations, industry associations, and other private sector bodies who devoted time and energy to sharing their views. They offered hundreds of comment letters, as well as data to test the quality of the rules, and they engaged in exhaustive hours of discussion with the Committee, its working groups and member authorities. Above all, banks and other private sector bodies helped us to ensure that supervision would be more closely aligned to sound industry practices.
This is partly because the financial crisis originated in the United States and the financial market turbulence has not been as severe as there. Another explanation is that the financial balance is better in Europe; public sector finances have improved in recent years and the current account is close to zero. We assumed in the Monetary Policy report that GDP growth in the euro area would slow down to 1.7 per cent in 2008 and 1.2 per cent in 2009, to reach almost 2 per cent in 2010. At the beginning of July we had seen little sign of the slower growth in the statistics on production and in the National Accounts. On the contrary, there had been several positive surprises. However, there were tangible signs of a future slowdown in other types of data, such as corporate and household confidence indicators. The quick figures for the second quarter now indicate that GDP in the euro area declined by 0.2 per cent compared with the first quarter, which was weaker than we had expected. Global growth still strong GDP growth in the world as a whole has been very strong over the last four years, around 5 per cent a year. Not since the early 1970s, prior to the first oil crisis in 1973, have we seen such strong growth in the world for such a long period of time.

In the Monetary Policy Report we assumed that GDP growth in Sweden will be 2.1 per cent this year and 1.2 per cent next year. Several factors indicate a slowdown in growth. For instance, Swedish exports will be negatively affected by the weaker international growth, particularly in the United States. Moreover Swedish households’ consumption will slow down for several reasons. Real disposable incomes will show weaker development and real wealth will be dampened. Households’ expectations are very pessimistic. At the same time, there are factors that may to some extent hold back a slowdown. The financial balance in Sweden is good; the current account shows very large surpluses and public sector finances are robust. The latter make it reasonable to assume further fiscal policy stimulation over the coming years. In addition, the Swedish financial sector has fared relatively well in the international financial turbulence, which reduces the risk of a serious credit crunch. But growth will nevertheless slow down. This means that the labour market will deteriorate towards the end of the year. We assumed in the Monetary Policy Report that the rapid increase in employment would come to a halt this year and that employment would fall slightly over the coming two years. We also assumed that the decline in unemployment would cease and that unemployment will increase slightly in the coming two years. BIS Review 100/2008  3  Inflation is high but expected to fall towards the target of 2 per cent Inflation was 4.4 per cent in July.
Nation states without these rules of the game have been found, historically, not to flourish but to fail.23 Without fire regulations and property rights, could a private market for home insurance have flourished after the Great Fire? Second, institutions cushion the adverse side-effects of technological disruption. Innovation brings destruction for businesses and joblessness for workers. If those costs are not cushioned, the social fabric is torn and new ideas risk being strangled at birth. Institutions can help protect those made redundant or obsolescent by innovation, helping repair the social fabric. And they can retool and reskill workers to prepare them to thrive, helping loom a new fabric. 19  Haldane (2015), Parliamentary Office of Science & Technology (2016). Clark (2007). 21 Acemoglu and Robinson (2012). 22 North (1990). 23 Acemoglu and Robinson (2012). 20  10  All speeches are available online at www.bankofengland.co.uk/speeches  10  As much as ideas, the three Industrial Revolutions are a story of institutions. Institutions that provided people with social insurance, such as public healthcare and public transport, social housing and social safety nets, central banks and charities, credit unions and trade unions. And institutions that provided people with the tools and infrastructure to reskill, such as guilds and professional associations, primary and secondary schools, colleges and universities. The Bank of England was founded before the Industrial Revolution. But it emerged as a public institution in the 19th century. The public good provided was (and still is) monetary and financial stability.

But it is human creativity nonetheless, just as Hamlet was the creation of Shakespeare not Guttenberg and the theory of relativity was the creation of Einstein not Lippershey. What applies to board games applies to other spheres of human endeavour. Driverless cars are not, in the main, driverless. Most have a human override for situations where the algorithm experiences circumstances outside its sphere of knowledge, the automotive equivalent of Move 78. Alexa hears better than me and learns faster than me. But I can still deliver a better talk about creativity to students at the GSA, even if I did draw on her knowledge in putting it together. If that ever changes, I can always pull the plug. Institutions for the 21st Century At the same time, this co-evolutionary path will not be an easy one. Even if (and it is a big if) as many jobs are created as are destroyed by the Fourth Industrial Revolution, there will be transitional costs and societal casualties to manage. As during past waves of innovation, making a success of this revolution will require a reworking of the social infrastructure if these costs and casualties are not to tear the social fabric. There are many possible dimensions of this reformation. One of the most important is close to the GSA’s heart – education. This is also an issue close to the Bank of England’s heart. Education on economic and financial matters is one of the public goods the Bank can provide and is providing.
A Memorandum of Understanding between the FSAG participants has been in place since 2014, to support its work on monitoring developments and risks to the banking and financial system and engaging in contingency planning and crisis preparation to prevent and address systemic risks. Thanks to prudent measures undertaken in coordination with all the relevant institutions, the Albanian economy enjoys a sound financial system, with healthy banks, ample liquidity and prudent behaviour in terms of risk-taking. The banking sector operates in a sound and stable macroeconomic environment, sustained by a well-functioning and robust financial system. We are happy to observe that credit quality has improved significantly and the banking sector is consolidating, though more is expected in terms of financial deepening and credit growth. Standing from this point of view, our future efforts will certainly aim towards maintaining sound prudential practices and policies and further developing market discipline to secure a resilient financial system. Staying in this line, the Bank of Albania and the Albanian Deposit Insurance Agency’s relationship has constantly evolved over the years to become a strong partnership and cooperation, allowing our institutions to fulfil their respective, but complementary, missions. The topic of the Technical Assistance Workshop is also of great interest to the Bank of Albania and certainly to other institutions responsible for financial stability. The Bank of Albania looks forward to hearing and learning about the different perspectives and approaches that will be 2/3  BIS central bankers' speeches  shared in this workshop or on the topic.

One person at the San Franciso Fed that we had a close working relationship with was Teresa Curran, who passed away last year. We will miss her, her professionalism, and her passion for the Asia-Pacific region. Since this is a symposium on Asian banking and finance, let me share some quick thoughts on the subject: how Asian banks have stepped up in recent years to play a greater role in the region; how they are dealing with the challenges posed by today’s environment; and how they are positioning themselves for a digital future. Asian banks have stepped up Asian banks emerged from the global financial crisis with stronger fundamentals relative to their global peers. The crisis revealed glaring weaknesses in many global banks. This led to the implementation of wide-ranging regulatory reforms. These weaknesses were less pronounced in Asian banks, which had already built up significant buffers following the Asian Financial Crisis. Asian banks’ strong deposit funding placed them in a strong position to meet the new, higher global standards. Helped by stronger fundamentals, Asian banks have stepped up in regional markets where global 1/5  BIS central bankers' speeches  banks have retreated. First, they have increased their lending to the region significantly. In 2007, Asian banks accounted for just a third of all international claims 1 to the region. Today, they account for more than 60% of non-local lending to the region2.
Finally, and crucially, in the aftermath of the financial crisis, we are working with Fed colleagues and other agencies to help put the nation’s financial system on a firmer footing. Yet, much remains to be done and we are determined to keep at it. I recognize fully that there can be no return to pre-crisis business as usual – whether on the part of the financial sector or on the part of regulators like ourselves. All in all, there is a lot to keep my colleagues busy. National economic conditions Now, let me update you on national economic conditions. Put simply, growth in 2011 has been disappointing. We entered the year with some momentum, spurred by fiscal and monetary policy stimulus. U.S. economic output grew at a 3 percent annual rate from mid-2009 through 2010. While hardly a blistering pace, it was sufficient to reduce the unemployment rate by a half percentage point during 2010. Then, during the first half of 2011, growth slowed so much that the unemployment rate rose back up to 9.1 percent. Growth slowed partly because of temporary factors. As these factors have subsided, growth has picked up. But the consensus expectation for 2.4 percent annualized growth in the third quarter is still disappointing. Looking forward, I regard continued modest growth as the most likely outcome. This sluggishness convinces me that other, more persistent factors must also be holding back growth.

The MPC therefore decided to cut the policy rate to provide as insurance to the economy in the face of greater downside risks to growth. With firmly anchored inflation expectations, the Bank of Thailand can today give weight to stabilizing economic developments when setting the interest rate. However, should the outlook for inflation, growth, or financial stability change in the future period, there will be room for maneuver to counteract such developments through monetary policy, as well as other policy tools in an appropriate mix deemed most suitable for achieving the overall macroeconomic stability. Limitations of monetary policy Let me now turn to a topic that I would like to highlight today, that is, the limits to what monetary policy can achieve. The global financial crisis has placed far greater demands on monetary policy around the world. In major economies where other macroeconomic policy tools are being impaired, monetary policy was under enormous pressure to support the economy. Central banks responded by expanding dramatically their traditional role as lenders of last resort and came up with innovative, unconventional ways to stretch beyond what monetary policy can normally do. In emerging markets, given large crisis repercussions in terms of excessive capital flows, monetary policy was at times expected to respond to external developments in dealing with global spillovers. Overall, monetary policy has been pushed into situations and actions that were previously unimaginable. Efforts by many central banks to overstretch its normal capacity may have led the public to expect too much from monetary policy.
In light of the current global and domestic developments, a common concern is that we may see a large and abrupt surge in risk premia, triggered or amplified by uncertainty about political actions or a shift in risk perception. At the same time, we are worried about the possible amplification of stress in financial markets through deleveraging and forced asset selling in a situation where asset prices are falling. Now that the banking sector is shrinking and becoming more resilient, our radar is shifting to the non-bank financial sector, which is more lightly regulated. In particular, we need a better understanding of the role of asset managers and of the broader vulnerabilities inherent to investment funds. The asset management sector now plays a much larger role in financial markets than it did ten years ago. It may harbour leverage and liquidity risks that could amplify any potential shock from a reassessment of risks in financial markets. I will now look in more detail at some longer-term developments and potential risks in the asset management sector. Risks associated with liquidity, leverage and interconnectedness in the investment fund sector One of the most notable developments since the financial crisis has been the rapid growth of asset management in the euro area and at global level. In the euro area, investment funds have been growing steadily, with total assets expanding by roughly 170% between 2008 and 2017 1, reflecting both continued net cash inflows and rising asset valuations.

It was maintained due to the continuation of positive values in net financial result. Addressing the non-performing loans issue has been one of the major engagements of the Bank of Albania throughout 2015. For the first time, after a four-year period, the level of nonperforming loans fell below 20%. Decisions taken by the Bank of Albania have constantly increased the pressure on the banking system, which, in turn, has added the efforts for managing non-performing loans through restructuring, execution, provisioning and their write off from the balance sheet, accordingly. 4  BIS central bankers’ speeches  The inter-institutional initiative materialised in the Plan of Measures for Reducing NonPerforming Loans, which consists in a multidimensional action of legal, fiscal and regulatory improvements, contributed to lowering the stock of non-performing loans to 18.2 % at the end of 2015. This plan includes other steps over the course of 2016, which will render the positive result even more visible in the system. Moreover, in 2015 the banking system was tested by the psychological pressure arising from the Greek crisis; however, it passed the test successfully. On the other hand, the situation served to test the effectiveness of prudential measures that the Bank of Albania had taken in due time. 4. Banking supervision  During 2015, we have worked on further bolstering banking supervision.
Diversity is not only about our physiological identity – our gender, ethnicity. It is also about our sociological identity – our background, experience – and our neurological identity – our personalities, how our brains are wired. When I joined the Bank of England 26 years ago, I was physiologically similar to others at the Bank, but quite different along these broader sociological and neurological dimensions. In fact, I was the beneficiary of one of the Bank’s first waves of diversity initiatives. And I am delighted to say that, following a sequence of initiatives over the years, the Bank today is a significantly more diverse place along all these dimensions. So too, I am sure, are all of your organisations. The numbers here speak for themselves with a steadily rising trend, over several decades now, of female and ethnic minority representation in the workplace and, admittedly more limited, evidence of a rising trend at senior executive and board level. That is good 3  progress, spurred on by initiatives such as Helena’s 30% Club , Jayne-Anne’s review of gender diversity 4  5  earlier this year and John Parker’s review of ethnic diversity just last week. But can we rest on our laurels? My answer to that – and I imagine Helena’s, Jayne-Anne’s and John’s too - is a resounding no. Many of our organisations have diversity policies, champions and initiatives. Yet this is still a subject owned by the HR department rather than the Boardroom or Executive Suite in many firms.

Moreover, there must be additional efforts to induce the entities in charge of clearing and settlement services to become more effective, as well as to popularize the use of electronic payment instruments, which will gradually reduce the use of paper instruments. The area of financial system regulation and organization will increasingly be focused on the following aspects: •  improvement of prudential rules and practices, aiming at maintaining the soundness of the financial system as a whole;  •  improvement of the analysis of several authorization processes related to financial institutions and alike;  •  creation and improvement of financial instruments and activities, including those intended to broaden and cheapen credit;  •  adoption of international standards and practices. Additionally, it is a priority to improve the regulation of mechanisms that broaden the population's access to the financial system, as in the case of “banking correspondents,” credit cooperatives, and credit concessions to small and micro firms. I would also like to acknowledge the employees of the Central Bank for their competence, “esprit de corps” and qualification. I have a human resources goal of qualifying and offering even more opportunities for this outstanding group of public servants. I thank President Luis Inácio Lula da Silva and Minister Palocci for their confidence in myself.