samchain/econo-pairs-v1 huggingface dataset:
Finally, we need a good system of consumer protection in order to ensure fair and transparent provision of financial services. I believe that financial regulators have an important role to play in all three areas. The fact that we are all here today, already signifies our commitment to addressing such issues, thus ascertaining the success of financial inclusion. Not just for our own sake, but also for the sake of our friends around the world. After having seen this morning’s agenda, I am certain that there will be plenty of great discussions among us today. I myself am very interested to hear us take the current policy challenges further, arriving at how best we think AFI can play a role in tackling such issues. Of course, us working together to ensure the sustainability of the AFI community together with our policy impact would also be key. BIS Review 87/2009  1  I look forward to discussing our proposals of potential AFI flagship projects, all of which, I believe would make significant contributions to the global efforts on financial inclusion. In this connection, the Bank of Thailand will be presenting our proposal on “Using survey data to design financial inclusion policy” for your consideration. The project findings would not only provide a useful international research contribution in the area of financial inclusion, but also an easily replicable exercise for anyone to conduct and repeat over time, thus adding to the stock of critical grass-root information on financial access.

A mix of standard and non-standard instruments, intensified communication with the public, a broad overview of financial stability risks and the effects of macroprudential regulation, regular monitoring of the external factors’ potential spillovers to the domestic economy, are probably the best options for securing effective implementation of the monetary policy. Although being far away from the acute stage of the crisis, the current global environment is marked with relatively weak and uneven growth outlook, especially in the advanced economies, which led to different paths of their monetary policy stance. While ECB has just started its large-scale quantitative easing program, FED is just about to exit the accommodative monetary policy stance. These contrasting growth prospects of the leading economies underpin the risk of global financial markets volatility in view of eventual rebalancing positions between the main world currencies. On the other hand, there is a group of emerging economies with better growth performances and prospects for the future, including the Macedonian economy, which in the recent years has shown sound recovery, taking into account the significant ongoing structural changes in the economy as well as the fiscal space from the previous years. A common feature for the current surroundings are disinflationary or deflationary pressures around the globe in light of the fall of oil prices, with potential impact on the monetary policy cycle, additionally increasing uncertainty about external environment.
As a result of this trajectory, there has been fresh headway in Spain's real convergence with the EU and with the euro area. On the latest provisional estimates available, Spanish per capita GDP stood in 2005 at over 98% of the EU average, more than five percentage point up on its level in 2000. There were also significant improvements in the form of greater labour market participation and a lower unemployment rate, aspects where the traditional differences with the core European countries have narrowed substantially. The decline in the unemployment rate is particularly noteworthy. It now stands  4  BIS Review 60/2006  at a similar level to that observed in the main European countries, following several decades in which a high unemployment rate was singled out as the most characteristic problem of the Spanish economy, even in cyclical upturns. The performance of the Spanish economy in 2005 and early 2006 reflects the continuity of the expansionary impulses operating on the growth rate and on job creation. Monetary and financial conditions have remained markedly loose in the light of the economy's domestic situation, having been determined by the prevailing price stability and sluggishness of activity in the euro area as a whole. The low levels of interest rates have continued to combine in Spain with the significant rises in financial and real-estate asset prices (although in the latter case they have tended to ease off), which has reinforced their impulse to spending.

In respect of corporate income tax it is intended, in addition to reducing the rate in line with international trends, to make more rational use of the system of tax allowances and deductions. Although it is estimated that the impact of tax reform on revenue will be small, its effect on activity will be slightly expansionary. Accordingly, if the economy retains its current dynamism, it might be necessary to introduce some compensatory adjustment. It should be recalled that the entry into force of the EU Financial Perspectives 2007-2013 will entail fewer financial flows from Community coffers. That all reinforces the need in the coming years to design budgets that add to the stabilising role of fiscal policy. On the public spending side, now most spending powers have been decentralised, the co-ordination mechanisms between the different tiers of government must be strengthened. I should moreover stress the importance, once very high levels of decentralisation are in place, of achieving a greater degree of commitment by all levels of government to budgetary stability. The failure by many regional governments to meet the budgetary stability target in 2005 and the deficit projections for 2006 are warning signs for potential shortfalls, which should be prevented and avoided. The new stability laws should contribute to identifying and correcting these potential situations, promoting prompt and transparent information on regional public finances. Lastly, some comments on the challenges posed to the sustainability of public finances over the medium and long term, derived from population ageing.
In trade in value-added terms (“TiVA”), more than one-third of the exports from the five economies of Northeast Asia and the eight economies of Southeast Asia 1 ends up in the region itself – this is nearly twice their exports to the US. ASEAN in particular is becoming a major economic force in Asia. It is a $ trillion market with over 630 million people. Based on current growth rates, ASEAN is expected to become the fourth largest market by 2030, behind the EU, China, and the US. ASEAN has emerged as a key global manufacturing region, with extensive supply chains linking the individual economies and to China. ASEAN is the world’s fifth largest manufacturing economy in value-added terms. So, in the face of rising trade protectionism, it is important for Asian economies to strengthen trade, investment and infrastructure networks to sustain long term growth. Indeed, the best response to trade restrictions is to further liberalise trade among willing economies. And this is exactly what Asia is doing. The Regional Comprehensive Economic Partnership (“RCEP”) is a good example. It brings together the ten ASEAN economies and China, India, Japan, Korea, Australia and New Zealand. It signals the region’s commitment to freetrade. Negotiations are ongoing, but when successfully concluded, the RCEP will create the world’s largest trading bloc, covering one-third of global GDP. And by the end of next month, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (“TPP-11”) will enter into force.

It is not as big as the RCEP but TPP-11 will eliminate most existing tariffs among the eleven economies across Asia and Latin America, simplify customs procedures, and introduce strong provisions to boost modern services and a digital economy. Trade and investment linkages between China and ASEAN, in particular, are deep and have been growing over the years. Bilateral trade between China and ASEAN has increased by an average 13% per annum since 2005. 2/5  BIS central bankers' speeches  China is ASEAN’s top trading partner and third-largest source of foreign direct investment. In short, the fundamentals for growth in ASEAN and China are strong. And if we can deepen and broaden the integration between our two regions, it will help soften the impact of external trade protectionsim and sustain Asia’s dynamism and long term growth. Key Achievements of the CCI Against this broader imperative to strengthen trade and investment connectivity between China and ASEAN, the CCI has made good progress. Mayor Tang has highlighted the key achievements of CCI. Let me highlight just a few examples which may be of interest to our friends from China here. Chinese firms continue to benefit from raising capital in Singapore’s financial centre. As of August this year, 51 CCI qualifying cross-border financing deals worth $ billion have been completed. The scope of cross-border financial services has extended beyond Chongqing to other parts of Western China, and new channels for cross-border financing have opened up.
In parallel, the pandemic has heightened uncertainty, causing a sharp downturn in agents’ confidence and a heavy decline in the price of many financial assets. As a result, this year will foreseeably witness the heaviest declines in GDP since the Second World War in the advanced economies as a whole and since the Civil War in Spain’s case. Seeing the forceful impact on our economy through the statistical evidence of the past weeks and the difficulties that we are beginning to discern ahead of any future recovery mean, in fact, that the scenarios projected a month ago of more moderate declines in GDP are now rather unrealistic, as I shall set out. Second, at issue here is a crisis caused by a factor which, at least in principle, is temporary in nature - though probably more lasting than initially expected - and unrelated to the inherent workings of the economy. The duration of the shock is uncertain. However, it should be limited and make way for a recovery once we have controlled the disease. Yet as I shall go on to stress, it cannot be ruled out that, despite its temporariness, the wake of the crisis will also see structural damages and/or changes. It is important we should identify these promptly. The third and final characteristic I wish to highlight is the global nature of this crisis, which is going to land a most severe blow on the world economy.

Against this backdrop, an exhaustive review of the various budget expenditure items should be undertaken in order to identify areas where there is room for efficiency improvements, as the Independent Authority for Fiscal Responsibility (AIReF) has done in recent years. 35  Turning to taxation, improving revenue-raising capacity and tax system efficiency should also be a priority, for which comparisons with other European countries can act as a guide.9 Once again, the review under way by the Independent Authority for Fiscal Responsibility of the numerous tax benefits in place should be useful for streamlining their use and enhancing their efficiency. It also seems reasonable to continue exploring, in a coordinated fashion internationally, certain possible tax reforms that have been the topic of recent discussions. Included here is the review of the taxation levied on certain multinationals, with a view to preventing the use of aggressive tax planning strategies to move tax bases to lower-taxation jurisdictions. In any event, irrespective of the structure in terms of receipts and expenditure, the anchoring of the gradual process of budgetary consolidation will be determined in the medium term by the prescriptions of the Stability and Growth Pact (SGP). In this respect, it is estimated that, under certain plausible assumptions,10 public debt will tend to decrease gradually as a percentage of GDP in all of the Banco de España’s scenarios outlined above. This is assuming that, once the effects of the crisis have faded, the structural deficit continues to fall in terms similar to those required under the SGP, i.e.
Melitz, J. and Zumer, F. (2002). “Regional Redistribution and Stabilization by the Center in Canada, France, the UK and the US: A Reassessment and New Tests”. Journal of Public Economic, 86, pp. 263–286. McCallum, J. (1995), “National borders matter: Canada-US regional trade patterns”, The American Economic Review, 85 (3), 615–623. McKinnon, R., (1963), “Optimum currency areas”, American Economic Review, Vol. 53, Sep, pp. 717–25. McKinnon, R., (2004), “Optimum Currency Areas and Key Currencies: Mundell I vs. Mundell II”, Journal of Common Market Studies, Vol. 42. Number 4. pp. 689–715. Mundell, R. (1961), “A theory of optimum currency areas”, American Economic Review, Vol. 51, Sep. Mundell, R. (1973), “Uncommon Arguments for Common Currencies”, in Johnson, H.G. and Swoboda, A.K. (eds). Persson, T. and G. Tabellini (1996), “Federal Fiscal Constitutions: Risk Sharing and Moral Hazard”, Econometrica 64(3): pp. 623–646. Rose, A. (2000), “One money, one market: estimating the effect of common currencies on trade”, Economic Policy, Vol. 15, April, pp. 7–45. Rose, A. and van Wincoop, E. (2001), “National money as a barrier to international trade: The real case for currency union”, American Economic Review 91(2), pp.386–390. Rose, A., (2009), “Is EMU becoming an optimum currency area? The evidence on trade and business cycle synchronization”, mimeo.

Third, a currency union requires a common fiscal backstop for its central bank. Central banks must be able to act as Lender of Last Resort, both to financial institutions that are solvent but experiencing an unwarranted loss of confidence and to provide bridging finance to institutions that are being recapitalised using new resolution regimes. Under the current governance arrangements in the UK, these operations require an indemnity from, and the approval of, the Chancellor, because they would put substantial public funds at risk. The existing banking union between Scotland and the rest of the United Kingdom has proved durable and efficient. Its foundations include a single prudential supervisor maintaining consistent standards of resilience, a single deposit guarantee scheme backed by the central government, and a common central bank, able to act as Lender of Last Resort across the union, and also backed by the central government. These arrangements help ensure that Scotland can sustain a banking system whose collective balance sheet is substantially larger than its GDP. The euro area has shown the dangers of not having such arrangements, as well as the difficulties of the necessary pooling of sovereignty to build them. An independent Scotland would need to consider carefully how to develop arrangements with the continuing United Kingdom that are both consistent with its sovereignty and sufficient to maintain financial stability. 20  That in turn contributed to the divergence in output growth between core and periphery (chart 8).
Figure 18: Interest Rates on Commercial Figure 19: Interest Rates on Consumer Loans* Loans* (Percent)  (Percent)  26.0  2.4 Corporate Sector  24.0  Housing Automobile Other  2.2  22.0  2.0  20.0 1.8 18.0  0609  0209  1008  0608  0208  1007  0607  0207  1006  0606  0609  0209  1008  0608  0208  1007  1.0  0607  10.0 0207  1.2 1006  12.0 0606  1.4  0206  14.0  0206  1.6  16.0  *Interest rates on consumer loans and commercial loans are calculated on monthly and annual basis, respectively. Source: CBRT. While the Gross Domestic Product went down by 13.8 percent in the first quarter of 2009 compared to the same period of 2008, seasonally adjusted data indicated that contraction intensified in this period (Figure 20 and 21). Despite the relative soundness of the Turkish financial sector, the contraction in economic activity became more severe. What underlies this consequence is the composition of exports, mainly of products sensitive to foreign conjuncture; susceptibility of production to global credit conditions and Turkey’s high capacity level at the onset of the crisis. During this period, besides the tightness in financial conditions, a sharp contraction in domestic demand was also experienced due to spreading perceptions of uncertainty and increasing precautionary saving tendency. In this context, the downside contribution of aggregate demand conditions to inflation increased evidently.

The willingness of savers to entrust their money to a bank presupposes that those savers have confidence in the financial integrity of the institution - in other words, that their savings will be BIS Review 27/2000  2  available when they need or want access to them. If that confidence is undermined, society’s ability to collect and deploy its savings will be impaired, and the principal means to economic growth and rising living standards - intermediation by banks - will be short-circuited. With this reality in mind, it must be acknowledged that, in the final analysis, commercial banks have only one asset that really matters public confidence. Sound lending - the key to preserving public confidence The key to maintaining the financial integrity of any banking company - and, therefore, to preserving the all-important asset of public confidence - is the credit process. If credit is extended carelessly, banks are likely to incur losses, which in turn will undermine their ability to honor deposit obligations. And if banks’ ability to honor deposit obligations falls into question, if the public’s confidence is undermined, households and businesses will likely rush to redeploy their savings, raising the specter of a flight to cash and real assets with all the associated implications for inflation and destabilizing runs on banks. The best defense against this serious and very real threat is for banks to extend credit wisely, objectively and impartially.
2  Monetary policy cannot prevent the weaker real income growth likely to accompany the transition to new trading arrangements with the EU. But it can influence how this hit to incomes is distributed between job losses and price rises. And it can support households and businesses as they adjust to such profound change. Indeed, in such exceptional circumstances, the MPC is required to balance any trade-off between the speed with which it returns inflation sustainably to the target and the support that monetary policy provides to jobs and activity. That is why last summer the Bank announced a series of monetary and macro-financial measures to support the economy during this transition. This stimulus is working. Credit is widely available, the cost of borrowing is near record lows, the economy has outperformed expectations, and unemployment has reached a 40 year low. As spare capacity erodes, the trade-off that the MPC must balance lessens, and all else equal, its tolerance for above-target inflation falls. Different members of the MPC will understandably have different views about 1  ‘A Fine Balance’ by Rohinton Mistry. The sterling ERI has fallen close to 20% from its November 2015 peak. Since then, UK-focused equity prices have fallen by over 2%. In contrast, broader equity price indices such as the FTSE 100 and S&P 500, which more heavily reflect global economic considerations, are almost 20% and 40% higher respectively (in sterling terms).

For these and other reasons, work at the IMF and the Bank suggests that changing the macro policy mix in systemic countries would at best reduce only about one third of their excess imbalances (Chart 4). 16  Why not just leave the rest to exchange rates? This might prove risky not just because exchange rates tend to move slowly then significantly, but also because IMF estimates of the required changes are greater than 17  have occurred in any year since the collapse of Bretton Woods. 12  See Rachel, L and Smith, T (2015), ‘Secular drivers of the global real interest rate’, Bank of England Working Paper No. 571. As Ben Broadbent has noted, as uncertainty rises, the option value of waiting also rises – with a simple model suggesting it can add around 10pp to the hurdle rate that firms need to meet. See ‘Uncertain times’, speech by Ben Broadbent at the Wall Street Journal, 5 October 2016, available at http://www.bankofengland.co.uk/publications/Documents/speeches/2016/speech929.pdf. 14 For example, consider the following comparison between the euro area and the UK. In the euro area, the private sector continues to generate surplus savings of 5% of GDP. Those must be recycled effectively to generate an expansion. The UK no longer faces that challenge. Its private sector is in balance. The euro-area unemployment rate of just over 9% is twice that in the UK. Gross general government debt in the euro area is roughly the same as in the UK and below the average of advanced economies.
At times where there was still high uncertainty, and there was a higher demand for safety and liquidity, the long-term interest rates of various public instruments in Chile went to record lows. As this uncertainty faded, the precautionary demand followed suit, pushing up long-term interest rates in pesos and in UF until the end of May. In the last couple of months, because of a string of episodes of higher and lower doubts about the true strength of the global recovery, long-term interest rates have fluctuated, but always above the levels of early this year. A similar pattern has been seen in long-term interest rates around the world (figure 2). We are not indifferent to the evolution of long-term interest rates. This is evident from the facts that, to enhance our last monetary policy measure, we have not only begun providing liquidity at the current MPR level for up to six months, but we have also suspended issues of instruments at one to two years’ terms. Furthermore, we permanently take into consideration bond issuance plans of the Treasury before defining our own programs. Nonetheless, it is necessary to undertake a careful analysis of the long-term interest rate levels to properly assess their implications. After all, very low long-term rates are a symptom of depressed prospects for long-term growth and strong demand for safety.

A full normalization of credit demand and supply conditions will have to wait until the dust settles in the international financial scenario, to allow more clarity about global and domestic growth prospects. These risk factors have a direct incidence on credit risk premiums implicit in banking operations. We can see that the monetary policy action has more than offset the increase in risk premiums, resulting in a significant drop in credit costs, thus mitigating the effects that the global crisis has had on our economy. One important aspect of the access to credit, aside from its cost, draws from the effect of the environment of uncertainty and economic weakness on the credit approval conditions and credit demand. In these dimensions, we have recently seen signs of stabilization. Internationally, the various indicators of uncertainty and risk in global financial markets, while remain relatively high, have continued to fall. Domestically, the evidence at hand from the Banking Credit Survey for the second quarter of this year reveals that, on average, banking institutions have already stopped tightening their lending standards and perceive early signs of a recovery of the demand for credit. This is particularly evident in the mortgage segment, suggesting that the levels of the long-term interest rates on these loans are not necessarily holding back the demand for housing credit (figure 5).