samchain/econo-pairs-v1 huggingface dataset:
But, don’t get me wrong. We welcome the normalisation of monetary policy in the US. A timely and orderly exit from zero interest rate policy by the Fed should facilitate adjustments of macroeconomic imbalances and help deflate asset bubbles in the EMEs which have been fuelled by excessive global liquidity since 2008. As the Fed’s balance sheet is expected to stay elevated for some time while the ECB and the BoJ carry on with QE, global liquidity should remain abundant in the near term, which should help cushion the impact of a Fed rate hike to some extent. 4. That said, no one should safely assume that monetary policy normalisation in the US would be a smooth, painless process for the global economy. Even though the Fed has repeatedly signalled that its future rate hike path will be slow and gradual, its impact on global fund flows and financial stability is highly uncertain. This is particularly the case as many EMEs have built up varying extents of macroeconomic imbalances amid the exceptionally low interest rate environment in recent years. 5. To consider what may lie ahead for EMEs, it is perhaps useful to look back at past episodes of US monetary tightening. On the positive effects, Fed rate hikes were mostly associated with a pick-up in US growth momentum which could benefit EMEs’ exports, although we have observed that the strength of this support has weakened considerably after the Global Financial Crisis.

But, on the other hand, a tightening of US monetary policy and the resulting US dollar strength could expose the macroeconomic vulnerabilities of EMEs and potentially trigger financial instability. Experience of the Mexican peso crisis in 1994, the Asian financial crisis in 1997, the Brazilian currency crisis in 1999 and the Argentine economic crisis in the early 2000s clearly indicates EMEs that had accumulated significant macro-financial imbalances could be vulnerable during a strong US dollar cycle. 6. In fact, broadly speaking, most instances of financial turbulence in EMEs could be considered to be some form of balance of payments crisis, which were usually preceded by heavy capital inflows to EMEs that led to the build-up of macroeconomic imbalances, such as asset price inflation, strong credit growth and current account balance deterioration. These problems were particularly serious in the past when some EMEs violated the “impossible  BIS central bankers’ speeches  1  trinity” by pursuing at the same time, a de facto dollar peg, free movement of capital and an independent monetary policy. These conditions tend to encourage an accumulation of significant short-term external debts in the EMEs. Eventually, a combination of US rate hikes and strengthening US dollar generated momentum for capital outflows from the EMEs, exposing their fault lines and macroeconomic vulnerabilities as domestic liquidity conditions tightened. Those with weak fundamentals and significant external imbalances could face speculative attacks, sharp currency depreciation, a surge in value of their US dollar denominated debts leading to a financial crisis. 7. Would history necessarily repeat itself?
And interest rates have been lower and less volatile over this period than they have been for more than thirty years. Some people, it’s true, still say to me that all this has not had much effect on them - it’s not like it was in the boom times! And I recognise, of course, that economic conditions do vary across regions and sectors and between individual companies. More than ever before it’s a tough competitive world. But what most people say to me these days is that steady growth and low inflation is exactly what they want so that they can make rational, long-term, decisions in their own businesses, which is what enables them to face the global competition. The major preoccupations that I hear are about whether our recent, more stable, economic environment will continue, and about the implications - good or bad - for that environment of a move to a single European currency. Let me say a word first about our domestic economic prospects before turning to Europe. In fact, Mr. Chairman, we set out the Bank’s views on the domestic economy at some length in our quarterly Inflation Report only last month. But in summary we have seen a gradual pick-up in the pace of activity over the past year, driven by domestic demand - notably consumer spending - so that the money supply and both demand and output are now growing at above-trend rates. Other things equal we would expect that to continue.

Our working assumption is that banks and others active in the wholesale financial markets will in fact choose to transact most of their wholesale business in the euro-denomination more or less from the start. And we assume that they will wish to offer euro-denominated facilities to major business customers that wished to use them. So, for example, non-financial companies, including large retailing companies, with an active business in other euro-area countries may wish to be able to quote prices or undertake transactions in euros from an early stage, although they would certainly still need to transact most of their local business in national currencies for some considerable period. On the other hand, we would not expect there to be much demand for banking facilities denominated in euros either for individuals or for the vast majority of smaller local businesses much before euro banknotes and coins become available in late 2001 or early 2002. At that point, the conversion of retail facilities into euros might proceed quite rapidly during the subsequent six-month period when national currency notes and coin are to be withdrawn - but again the principle of no compulsion and no prohibition would apply. Retail conversion is of course a massive undertaking. But the timetable does at least provide some 4-5 years from now for people to prepare.
Similarly, Chinese investors and developers in Belt and Road projects who are facing unfamiliar legal, credit, and environmental risks in Southeast Asian markets, can leverage on the insurance expertise in Singapore to help manage these risks. A good example is the Belt and Road insurance consortium that was formed in Singapore last year. Comprising both Chinese and Singapore insurers, it serves as an avenue to jointly develop insurance solutions to meet the risk management needs of Chinese developers and contractors. The consortium aims to provide integrated insurance solutions across multiple countries, including for construction, project cargo,2 political risk and structured trade credit. Thus far, the consortium has pledged $ billion in insurance capacity for construction and project cargo risks. It has insured four projects, in Vietnam, Indonesia, Turkey and Pakistan. Fourth, strengthening FinTech collaboration. There is great scope to leverage on technology to strengthen connectivity between the Western Region and ASEAN. One potential application of technology solutions is along the Southern Transport Corridor (“STC”) which is being established to connect Western China and Southeast Asia. 4/5  BIS central bankers' speeches  STC can potentially shorten to 1 week the time it takes to transport goods between China and ASEAN, compared to 2-3 weeks using other routes. A successful STC will provide a further boost to increase trade and investment activities between the two regions. Beyond reducing physical distance, we should aim to reduce friction in trade processes.

I will list two important challenges: First is how we can share our resources and expertise to capitalize on the region’s growth. Second is how we can match regional demand with regional supply of savings and investment for the much-needed infrastructure development. 13. On the first challenge. Our resources will be better utilized if we regard our neighbors not as competitors but rather as partners in the regional production network. Here, we need to explore new opportunities to create industry clusters in the region by taking on our diverse comparative advantages and specialization. An existing example here is the cluster of industries relating to the garment industry, where one GMS country imports textile yarn from another country, manufactures it into apparels and then exports it to countries outside the region. 14. The second challenge concerns infrastructure financing. The projects that I mentioned earlier cannot be efficiently realized without proper funding mechanisms.
Nevertheless, the nature of the price shocks were such that, in my view, there was little that monetary policy should or even could have done to offset them. Rather, given that changes in Bank Rate (or asset purchases) take a long time to have their full effect on the economy, monetary policy needs to be forward looking, focusing on the medium-term outlook for inflation yet to come. Trying to respond to every short-term movement in prices would probably be futile and would certainly involve a lot of unnecessary volatility. The Remit we have from the Government allows for these circumstances: “The framework is based on the recognition that the actual inflation rate will on occasions depart from its target as a result of shocks and disturbances. Attempts to keep inflation at the inflation target in these circumstances may cause undesirable volatility in output”.1 To meet our remit we should ideally try to look through one-off price level shocks, in either direction, only responding if there are risks to the rate of inflation expected to prevail in the medium term. That theory is all well and good: but the one thing we know about the future is just how little we know for sure. 1  2  The Remit for 2011 is available at http://www.bankofengland.co.uk/monetarypolicy/pdf/chancellorletter110323.pdf  BIS central bankers’ speeches  Since I joined the Committee in March 2009 – the very week we announced the “quantitative easing” programme, buying gilts in large scale – I have voted with the majority at every meeting.

What is making it so painful is that one of the channels through which rebalancing is occurring is a significant squeeze on households’ real post-tax incomes. According to the latest data, the level of households’ real take-home pay in 2010 Q4 was the same as in 2007 Q4 (Chart 7). Put bluntly, real incomes have stagnated over the past three years. The main driver of the squeeze was the elevated rate of consumer price inflation reflecting, in part, the required increases in indirect taxation (VAT) needed to help rebalance the government budget, and increases in import prices relative to domestic wages and prices. But it also reflects the falls in labour productivity and the degree of slack in the labour market, which have weighed down on nominal earnings growth. During the depths of the downturn in 2009, nominal wage inflation fell sharply (and in many cases pay cuts were introduced), as companies sought to reduce costs and, together with their employees, reacted flexibly to the risk of severe cut backs in employment. Even so, the unemployment rate rose by 3 percentage points, peaking at 8% in February 2010. Normally, following a recession, one might expect household income to start recovering, once unemployment stops rising and productivity growth recovers. But not this time. Although the data released last week suggested that unemployment has continued to fall back a little from its peak, it has not moved much.
That can be to the advantage of all of us if banks help to underwrite the economy through the agreed lending targets and government underwrites the balance sheet of the banks. The insurance policy will be most cost-effective for taxpayers if all the major lenders sign up to lending targets. Nevertheless, the problems in the financial sector mean that 2009 will be a difficult year for all of us. A pronounced contraction in spending and output is underway. As expected, output in the UK economy fell in the third quarter of 2008, but the downward momentum intensified in the fourth quarter. Manufacturing output is falling, and the key service sector surveys have reached record low levels in recent months. Total output in the fourth quarter is expected to have fallen sharply. In the first half of this year, the rate of contraction is likely to continue to be marked, and our trading partners are experiencing similar problems. But the very significant policy actions taken in recent months will eventually stimulate a recovery in demand, output and employment. Bank Rate has fallen from 5% to 1½%. And, as I have explained, the Monetary Policy Committee has a range of options to stimulate the economy further if required. Fiscal policy has been eased. The banking system is receiving massive support to cope with the need to restructure its balance sheet. That will take time, but time is a great healer, even of banks.

How do these changes in the labor market occur in the midst of a recession and recovery? First, many jobs are destroyed rapidly and few created as the economy weakens. This pattern is a defining characteristic of recessions. Afterward, during the recovery, employment rises as layoffs subside and firms begin to hire more. As this process plays out, some hiring will be in different industries from the layoffs. For example, some auto manufacturing jobs may never come back, while health care providers continue to add jobs. Thus, employers are adding two sorts of jobs: new and old. Some jobs are in industries that continued to expand jobs throughout the recession and weak recovery, such as health care and education. We think of these as “new jobs.” These shifts in jobs are transformational. They are part of how our region adjusts to the evolution of technology, trade patterns and consumer preferences. In addition, now that we are in recovery, a broad set of industries are beginning to add jobs to replace earlier layoffs, such as administrative support and wholesale  BIS central bankers’ speeches  3  and retail trade. We think of these as “old jobs” because they restore their industries’ share of jobs as economic activity picks up. The two recessions before the current one saw an unusually high share of “new job” creation – in expanding industries, rather than rebounds of “old jobs” – compared with recessions in the 1970s and 1980s.
Due to consumption-orientated feature of this type of credit, this group of customers might develop a habit of living beyond their means, causing their debts compounding faster than income. Therefore, we will be on a careful watch of this segment of retail banking. Currently, the Bank of Thailand, in consultation with the industry, is in the process of issuing additional measures to ensure the integrity and soundness of personal credit sector. BIS Review 22/2004  5  Another area that alerts our attention is intense competition among non-bank credit institutions for credit card advances. Outside the purview of the current supervisory scope of the Bank of Thailand, they are part and parcel of the retail credit market. Their relaxed lending practices may attract irresponsible borrowing by undisciplined consumers who may bring themselves and their family to financial distress. It is in the interest of consumers that these credit institutions are prudently managed and sufficiently supervised - the role that will be better served by the Bank of Thailand empowered by the new Financial Institutions Businesses Act currently in legislative process. It is my belief that good corporate governance is key to safe and strong financial system because prudent and capable bank management that adheres to its professionalism overseen by independent and financial literate Board of Directors will be responsible to not only its shareholders but also depositors and consumers in all aspects of its business, including retail banking.

Germany has opened the debate; the Netherlands have shown the way with the announcement of the creation of an investment fund for the future. Low rates, here and elsewhere, can provide an opportunity to finance investments if – and only if – those investments deliver increased potential growth: the ecological transition, digitalisation, education and research. For that, we need – finally! – to focus our fiscal debate on the quality of our spending and investment, and not just on its quantity. At the European level, we have considerable borrowing capacity: we should use it, as soon as we know how to choose these priorities properly, beyond the success of the Juncker Plan or of InvestEU. **  Page 14 of 14  I shall conclude with a more “philosophical” consideration: interest rates are also the price of time. My generation created the euro and tried to tackle the financial crisis. Yours is inheriting a world that is equivocal, to say the least: the positive explosion of innovation and interdependencies, but also that of climate threats and inequality, and all with a worrying weakening, the world over, in public governance. A low price of time is as much a threat as an opportunity: a threat if we give in, in the short term, to the ease of abundant liquidity and allow financial instability to grow; an opportunity if we use low rates collectively to invest in the future, from the ecological transition to education. You can count on our determination to act on the monetary side.
MAS would like to see the sale of simple term life insurance products through the internet. BIS central bankers’ speeches  5  Commission-based remuneration and distribution structure But customised financial advice is still required for the more complicated insurance plans, tailored to suit individual and family needs and circumstances, and for those who want to supplement their term life insurance. To lower costs for such products, we must address some of the underlying inefficiencies in our remuneration and distribution structure. FAIR will fundamentally review the commission-based remuneration and distribution structure. In Singapore, insurance products are distributed through insurance agencies, banks, and financial advisory firms. The premiums for these insurance products include charges that cover mortality risk, as well as various expenses incurred by the insurer, such as distribution and management expenses. A substantial proportion of the premium in the earlier years goes to paying for distribution expenses. Over the life of a policy, this cost can account for as much as 8% of the total premiums paid. A key driver of this cost is the multi-tier distribution structure that is common in Singapore’s insurance companies and large FA firms. The commission-based, multi-tier distribution structure involves representatives in the upper tiers having a share of the commissions earned by lower-tier representatives who provide insurance and financial advice to the consumer.   Take for example a whole life insurance policy.

As for personal independence it should be also noted that the members of the Supervisory Board, apart from that of the Chair,[28] Vice Chair[29] and the ECB representatives[30] , are not protected under the SSM Regulation against arbitrary dismissal. There is also no legislatively protected minimum term of office for them. Second, the ECB’s accountability for its supervisory tasks is different from and more enhanced than that for its monetary policy task owing to the potential impact on taxpayers of the manner in which microprudential supervision is conducted. Throughout the financial crisis, taxpayers had to bail out banks supervised at national level. Even though, under the new EU resolution regime, the cost of bank failures is intended to be borne by bank shareholders and creditors, there is still a residual scope for public financial support, as we are currently witnessing. A further argument for a functional interpretation of the principle of independence is the principle of separation between monetary policy and banking supervision under the SSM Regulation. [31] Moreover, while the accountability obligations for monetary policy tasks are laid down in primary legislation,[32] the ECB’s accountability obligations for banking supervision tasks are subject to a specific regime set out in the SSM Regulation[33] and further detailed in an interinstitutional agreement between the European Parliament and the ECB[34] and a memorandum of understanding between the Council of the EU and the ECB.
This is due to increasing competition from fintech companies that are able to serve SMEs and the underserved market more effectively as compared to a traditional credit intermediating bank. Tawreeq, for example, a UAE-Luxembourg fintech platform, – offers supply chain finance solutions including Shariah-compliant trade finance securitisation – to SMEs and their corporate partners. How do we lessen the risk of being overtaken by such competitors? One way is for the Islamic finance industry, to tap into the expertise of fintech companies – by exploring mutually beneficial partnerships – to develop innovative financial solutions for the international business community. In Malaysia, the Regulatory Sandbox is supportive for industry players to explore innovative ideas and test prototype of technology solutions for trade finance. Increasing trade flow of halal products – also offers large opportunities for takaful operators to develop innovative solutions for trade-related risks. A good example is trade credit takaful. This however, necessitates the development of requisite expertise within the takaful industry and the need to increase awareness among traders on benefits of trade credit protection. Global large infrastructure financing needs The third and final trend that I would like to highlight today is the large infrastructure development taking place to cater to the needs of increasing global population. Global infrastructure development financing needs is expected to reach USD94 trillion by 2040 and close to USD52 trillion in Asia alone 7.

The One Belt, One Road initiative by China or recently known as the Belt and Road initiative – that covers areas primarily in Asia and Europe – would add a further USD1 trillion to financing needs in the region over the next 10 to 15 years. This opens up another area of opportunities for Islamic finance. Islamic finance has strong potential to mobilise funds for infrastructure and development needs all around the world – by exploring opportunities – to structure innovative funding modalities for infrastructure financing. The recent issuance of the world’s first green sukuk to fund a solar project in Sabah that amounts to RM250 million – is an example of an innovative financial instrument to tackle global infrastructure needs and green financing, at the same time. Enhanced collaboration with global Islamic finance players and multilateral development 3/4  BIS central bankers' speeches  institutions could also strengthen syndication capabilities, and expand investor base. As a start, Malaysia’s role as one of the founding members of the Asian Infrastructure Investment Bank – opens up new avenues for domestic Islamic financial institutions – to leverage on its extensive network, institutional expertise, and its good track record to reach out to more diverse investors. In closing, I would like to again mention that as Islamic finance enters the mainstream – the road ahead requires Islamic finance to seize opportunities in new growth areas and to deliver its promises.