samchain/econo-pairs-v1 huggingface dataset:
Mr Yam discusses financial stability, region and international co-operation Speech by the Chief Executive of the Hong Kong Monetary Authority, Mr Joseph Yam, at the 32nd Asian Development Bank annual meeting, in Manila, the Philippines, on 2 May 1999. Introduction I am delighted and honoured to have the opportunity to speak to this distinguished international audience. The theme of the forum is regional monetary and financial co-operation. From the point of view of time, venue, sponsors, and participants, it would, I think, be very hard to come up with a more appropriate topic than this. In terms of timing, our region is currently, we hope, moving through the final stages of a period of financial and economic dislocation that has taught us a number of lessons. The most important of these lessons, in my view, and one consistent with the aims of this forum, is that we need to intensify international and regional co-operation to reduce the risk of such crises occurring again. The venue for this forum, Manila, is one of the oldest international financial centres in Asia: it has also been the starting point for a number of important modern regional initiatives. Manila has given its name to the recently established Manila Framework, within which central banks and finance ministries in the region meet to promote regional co-operation on financial matters. The beginnings of systematic economic co-operation can also be traced to Manila, with the establishment here, in 1966, of the Asian Development Bank (ADB).

Whether the bank system needs to borrow or deposit funds at the Riksbank has no significance, however, for the Riksbank’s capacity to steer the overnight rate. The fact that the bank system as a whole has a borrowing requirement with the Riksbank means that we lend funds to the banks. This weekly loan transaction can be described in two stages. In the first stage, the traders at the Riksbank make a forecast of the bank system’s borrowing requirement in the coming week. This involves making an assessment of the payments or flows that occur between the Riksbank and the banks, and affects the bank system’s total borrowing requirement with the Riksbank. The latter is an item in the Riksbank’s balance sheet. The forecast of the bank system’s borrowing requirement is therefore in practice a forecast of the most important changes in the Riksbank’s balance sheet over the coming week. On the whole, there are two items in the Riksbank’s balance sheet that are important in this context, one on the liability side and one on the asset side. On the liability side it is mainly changes in the general public’s demand for banknotes and coins that needs to be estimated. The Riksbank has a monopoly on issuing new banknotes and coins. Issuing banknotes and coins can be compared with issuing securities and arises as a liability in our balance sheet. Changes in the general public’s demand for banknotes and coins show a clear and stable seasonal pattern and are therefore relatively easy to forecast.
Getting an idea of resource utilisation thus requires that we, like other forecasters, look at many different types of measure and assess which conclusions regarding resource utilisation seem to be  1  For a more detailed discussion of how potential production can be defined and measured, see Palmqvist, S. (2007), ”Flexible inflation targeting – how should central banks take the real economy into consideration?”, Sveriges Riksbank Economic Review, no. 2, pages 91-105, Sveriges Riksbank. 2  BIS Review 111/2009  reasonable. Developing analysis in this area is important and such work is underway at the Riksbank. However, I do not think that we should expect it to be possible to find a measure that is so reliable that it can be used in a mechanical way in all situations to determine exactly how monetary policy should be designed so that it also stabilises the real economy. Another practical problem for forecasters is that it is difficult to identify turning points in economic activity. Here too we have to rely on different types of indicator. We monitor, for example, new orders, stock, the purchasing managers' index, confidence indicators, business tendency surveys and, not least, the Riksbank's own company interviews. At present, the confidence indicators are particularly important. The downturn began with a general crisis of confidence that affected both the financial sector and the publics' expectations concerning the development of the economy. It is therefore reasonable to believe that a turnaround requires the restoration of confidence.

The problems concerning how measures of resource utilisation relate to the normal level are, however, greater. It is difficult enough to measure resource utilisation, but it is even more difficult to measure what its normal level is. Instead we have to weigh together different measures and indicators in a reasonable way. This of course provides greater scope for a wider range of assessments. The financial crisis has, not least, also raised the question of to what extent monetary policy should take financial stability into account. This is an important question that should be analysed further. Let me conclude by saying that it appears that the fiscal policy and monetary policy stimulation measures that are being implemented throughout the world are beginning to have the desired effects. The situation in the financial sector has improved and an economic recovery is now discernable. But it is still uncertain whether the recovery is stable or whether there is a risk that it will come to a halt as soon as the fiscal policy and monetary policy stimulation measures are phased out. Deciding the appropriate time to begin the phase-out of the now very extensive monetary policy stimulation measures is a major challenge. If the phase-out begins too early there is a risk that the recovery will come to a halt. If we wait too long, there is a risk that we will need to increase the repo rate very quickly in order to meet the inflation target.
For instance, we could set the necessary incentives through the remuneration of digital euro holdings, to make sure the digital euro is an attractive means of payment, not a form of investment.14  What next? Exploring design options, consulting the public and working together Our report also describes the design options we are considering. We will explore all aspects of different options: whether they are technically feasible, whether they comply with the principles and policy objectives of the Eurosystem, and whether they satisfy the needs of prospective users. But introducing a digital euro is more than a technical question. The value of money – in both physical and digital forms – is rooted in citizens’ trust. Acceptance by the public is crucial. For this reason, today we are launching our public consultation. We are seeking feedback on the design and on the financial and social issues surrounding the possible introduction of a digital euro. We welcome everyone’s views: citizens, merchants, the non-financial sector, professionals from the financial industry, technology companies, and academics. We encourage everyone to take part. After the public consultation and a period of preparatory work, the ECB’s Governing Council will decide – towards the middle of 2021 – whether to initiate a fully-fledged project that should lead us to define the specific characteristics of a digital euro and get ready for a possible launch. This journey will require prudence and perseverance. Conclusion Let me conclude. Since the introduction of the euro, the ECB has been responsible for preserving citizens’ trust in our currency.

Legal considerations and possible challenges A digital euro would raise legal, technological and policy questions that we need to address. 2/4  BIS central bankers' speeches  Let me start with the legal basis. Today, only euro banknotes and coins are legal tender under EU primary law. This means they can be used to pay anywhere in the euro area.12 Therefore, a key issue discussed in the report is the importance for a digital euro to have legal tender status. Indeed, central bank money is a public good. Euro banknotes fulfil the core function of providing people with risk-free central bank money. It is crucial to ensure that, as a form of public money, a digital euro enjoys universal reach and acceptance, as the legal tender status provides. The introduction of a digital euro also raises technical challenges. Some are related to information technology and cyber risks, which will need to be managed effectively. Others are related to design choices. In this respect, we can leverage the experience gained in past projects that have put us at the frontier of payments.13 Finally, the design of a digital euro would have to be consistent with key policy objectives. In particular, its design should address the possibility that investors could rapidly move significant amounts of bank deposits into a digital euro, with potential adverse effects on the banking sector and financial stability. We are exploring design strategies to address this and other challenges, and we will assess them in depth.
We have seen shocks to credit markets in the last two summers which were swiftly reversed. Could recent events be the beginning of a more lasting change? There are some good reasons for doubting it. First the underlying economic and corporate fundamentals remain encouraging. Not only is world growth running at over 5% but it seems better balanced with the recovery of Germany and Japan and slightly lower growth in the US (although one of the explanations for the rise in longer term risk free rates has been a more optimistic view on US growth prospects). In the corporate sector overall gearing is not unusual, pension deficits have diminished, and profitability is high. Defaults in the prime housing market in the US have not shown dramatic increases. Losses on mortgage lending in the UK are still very low and there seems no prospect of a significant rise in unemployment that led to sharp rises in repossessions and defaults in the past. Equity markets remain strong at multiples of earnings which are little above average. Again, within financial markets, liquidity remains high overall (Chart 4). Against that background, there is a risk of becoming alarmed by good news. In our last Financial Stability Report we identified the low risk premia in credit markets as the principal vulnerability in financial markets because of the risk it carried of a swift and disorderly return to more normal levels.

In Switzerland, where we face similar issues in the framework of the bilateral treaties, we have introduced an instrument package called “accompanying measures” to ensure an orderly transition. The officially fixed transition periods offer a time window within which the corresponding reforms on product markets can offset an eventual decline in nominal wages. Second, European policy makers should focus on educational efforts to efficiently integrate the workers that are being brought back into productive activities through labour market reforms. We must not forget that many of these men and women have been unproductive for many years due to exclusionary labour market practices. Their skills are unlikely to be state of the art when they return to work. Continuing education and on the job training will therefore be crucial elements in bringing up their skills to a level commensurate with the new technologies they are likely to encounter in their newly found jobs. Let me conclude on an optimistic note. In 1994, Paul Krugman published “The Age of Diminished Expectations”, a beautifully written book that emphasized much of what seemed wrong with America at the time. We now know that 1994 can in many ways be viewed as the starting point of the great American boom of the 1990s. In his foreword, Paul Krugman expresses the hope that “America will eventually be roused from its slumber and once again begin to face up to problems instead of letting them slide.” It seems to me these words are propitious for the challenges that Europe has begun to tackle.
By 2010, middle-income consumers in China are expected to increase to 400 - 500 million thus making the China market comparable to that of the US. Five, rising intra-regional trade Rising economic integration has enabled the region to be more resilient in an increasingly volatile and uncertain external environment. The East Asian region has already developed a significant degree of economic integration as manifested in its fairly high level of intra-regional trade. The rise in intra-regional exports, which accounts for 34% of the East Asian region’s exports in 2002, stemmed in part from the higher contribution of domestic demand, which leveraged on the robust economic growth achieved by regional countries. Estimates indicate that about 30-70% of intra-regional trade is for final demand in the region. Of significance is the positive economic performance of China and India, which has generated increased sources of final consumer demand. Since 1993, China’s role in the region has reversed from a net exporter to a net importer in regional trade. Intra regional trade within ASEAN has also increased significantly to account for 24% of the region’s trade, exceeding the trade by the region with the United States. Six, supportive policies for endogenous sources of growth The region’s commitment to harness domestic driven growth has been reinforced with pro-active economic policies to provide an enabling environment to enhance the development of domestic businesses, in particular, small and medium scale enterprises.

This therefore, not only includes providing greater access to financing but the complete financial services solution to the small- and medium-sized enterprises. In addition, monitoring loan performance during the lifetime of the loan rather than only during the approval process will allow for early remedial action to be taken well before difficulties emerge. 4  BIS Review 43/2003  A further important contribution in emerging market economies is to enhance consumer literacy through consumer and investor education to increase the potential for well-informed financial decisions. Another area that is important is the investment in human capital to create a workforce that is skilled and competent, as this will bring substantial long-term benefits. Finally, foreign institutions that have a presence in the region need to recognise the meaningful role that can be realised in the region not only in meeting the requirements of the domestic environment but also to promote investment and business opportunities from their established networks in other parts of the world. The Asian Financial Crisis not only presented the opportunity to improve the region’s resilience to external shocks, but also underscored the importance of breadth in the financial sector, in particular, the development of alternative avenues of financing. Historically, bank loans, as well as funds raised through equity markets have assumed significant roles in Asia as the main sources of financing.
We in the Governing Council of the ECB discussed and debated at length the issue of what the European Central Bank should and had to do in such a situation in order to fulfil its tasks and responsibilities. Effective action The instrument being considered had to be effective, in order to eliminate the unfounded fears regarding the reversibility of Monetary Union and the resulting interference with our monetary policy mandate. In setting up the OMT programme, we learnt from our experience with the first bond buying programme from 2010 – the Securities Markets Programme (SMP) – and made the OMTs even more targeted. The OMT programme differs from the SMP in the following ways. First, there is strict conditionality because the OMTs are attached to a European Financial Stability Facility/European Stability Mechanism (EFSF/ESM) programme, thereby ensuring that the Member States concerned remain under considerable pressure to implement reforms and maintain fiscal discipline. The OMT programme seeks only to reduce unwarranted interest rate spikes. I would like to make it very clear at this point that the OMT programme was not aimed at harmonising the financing conditions of the Member States. The market mechanism will continue to operate. Another important point in this regard is that an EFSF/ESM programme is a necessary – but not a sufficient – condition for OMTs. There is no automatic follow-on. The Governing Council of the ECB will decide independently in each individual case, looking exclusively at the necessity of OMTs from a monetary policy perspective.

Ladies and Gentlemen, as we strive to achieve the Vision of becoming a middle income country by the year 2030, we shall no doubt be confronted with such and many more similar challenges both economically and politically. To be well prepared for such trying times ahead, we need to groom our best talents to assume leadership positions in all sectors of the economy. To achieve this vital task of nurturing our future leaders, the Government is trying its level best to provide education to all Zambians. The Government has done well thus far and should be implored to continue doing so. BIS Review 160/2008  1  However, providing education for the benefit of all citizens is never an easy task due to other budgetary pressures exerted by other competing sectors like Health, Agriculture, and Community Development etc. If we are to achieve education for the majority of our people, we need concerted efforts from all stakeholders including private institutions and charitable organisations like the Masomo Education Foundation. Mr President, I am informed that the objective of the Foundation is to educate young Zambians at local colleges. I am particularly pleased that the Foundation is utilizing local educational institutions. This should be commended as it demonstrates the confidence you have in the calibre of our learned colleagues at these institutions.
Ladies and gentlemen, the current economic situation is comparable to the one in 2001 in the sense that the economy at both times has fully recovered from the crises, namely, the 2008 global crisis and the 1997 Asian crisis. However, in 2001, the Thai economy still operated at the level far below the potential level. At that time, stimulus policies which encouraged spending were suffice to lift the country demand to the level closer to the potential output. Thus, the economy prospered without exerting much pressure on inflation. The present situation, on a contrary, characterized by rising inflation, reflects that the economy’s capacity is operating near the potential level. An expansionary fiscal policy is therefore no longer necessary. The situation today is not about bringing the economy to the potential level because we are already at it, but rather, it is about how to increase this potential level of output which has to be done by improving the country’s productivity. Increasing productivity is a topic which has been discussed in many forums, nevertheless, let me stress again that to achieve such a goal, adequate investment in both physical capital and human capital are necessary. In this regard, there are several challenges for all parties. For the new government, there will likely be three fundamental challenges. 2  BIS central bankers’ speeches  First, the government must find the right balance between public consumption and investment. Over the last decade, government consumption has been gaining its share of the budget, while public investment growth was somewhat moderated.

It aims to eliminate unnecessary regulatory burdens, increase competition and improve financial infrastructure as well as elevate financial literacy with sufficient consumer protection. The payment system is also being improved. The Imaged Cheque Clearing and Archive System or the ICAS, which allows physical cheques to be replaced by images in exchanges between commercial bank, is expected to be implemented within this year for the Bangkok and vicinity area and for the whole Kingdom at a later stage. This more efficient payment infrastructure will eventually make Thailand a “one-day cheque clearing country”, which is a way to reduce financial cost of the private sector. Ladies and gentlemen, all parties can help improving the country’s productivity and let me now end my talk by stressing that our good economic fundamental and diversity make this country resilient to negative shocks. Returning to normalcy is one resilient feature but  BIS central bankers’ speeches  3  moving the country forward in a global competitive arena will be ever more a challenging task. A strong will alone is not enough, all parties, including Thai and foreign, public or private entity alike, must communicate, coordinate and take action in unity. I believe that with everyone’s efforts, we can prevail with prosperity for all. Thank you. 4  BIS central bankers’ speeches
Those of us privileged to meet every fortnight in Frankfurt bear constant witness to the success of this undertaking, which is unique in the process of European construction. The Eurosystem blends centralised and decentralised decision-making, reflecting perfectly the common European project. On one hand the ECB takes centralised decisions for three hundred and thirty million citizens who have the euro as their common currency, while on the other, the Eurosystem operates in a highly decentralised and co-operative manner. The National Central Banks are involved in many joint projects. But allow me to discuss one with which I have been closely concerned in recent years: the launch and design of Target 2 securities which, behind this singular acronym, is an ambitious project that will facilitate securities settlement throughout Europe. This platform is being designed and constructed by four central banks: Germany, France, Italy and Spain. Any pro-European would be most satisfied to see officials of the banks from these countries working together every day on a common project. BIS Review 24/2009  1  Critics of the euro, who are quite frankly a minority today, try to argue that the divergences observed across the Monetary Union members in terms of inflation and growth during its first ten years have been a problem. But the figures are not on their side. Over the past decade, inflation and growth diversity among the EMU members has been very moderate compared with what had previously occurred.

But let us first highlight the huge benefits of EMU precisely in the current crisis. Can anyone imagine how the 16 euro area countries would have weathered the international financial storm had they retained their 16 currencies? Anyone can appreciate the scale and seriousness of the financial problems these countries would have faced had each one retained its currency. Remember what happened in the early 1990s when the effects of the US recession took some time to be felt in Europe, but eventually did so with unusual virulence. Amid the serious challenges arising from German reunification, the lack of a coordinated monetary policy response on this side of the Atlantic then led to massive speculation against exchange rates and to a major foreign exchange crisis, which some did not hesitate to call the collapse of the European Monetary System. This speculation ultimately imposed enormous costs for all the countries involved. This will not happen again now. At this time of enormous uncertainty, the key institution of the Monetary Union, the ECB, has reacted in an exemplary fashion. In the space of five months it has managed to reduce the Euribor from 5.3% to 2% through changes in monetary policy, despite the increases in spreads arising from the financial crisis. And it has further adopted a policy of unlimited liquidity provision, in coordination with other central banks, as illustrated by the agreements for liquidity provision in currencies other than the euro.