samchain/econo-pairs-v1 huggingface dataset:
The challenge facing the UK economy in the years ahead is to ensure that the private sector can once again become an engine of job creation and growth as the public sector rebalances, repeating the positive experience of the 1990s recovery. 6  Public sector net borrowing was 7.7% of GDP in 1993/4, moving towards a surplus of 0.5% in 1998/9, a swing of 8.2% in the public sector financial balance as a share of GDP. The Budget plans show a 9 percentage point swing – from borrowing of 10.1% in the current financial year to 1.1% in 2015/6. 7  From Q3 1991 to Q4 1998, public sector employment fell by 827,000 – a fall of around 14% of the total. The Office for Budget Responsibility projects a fall in 600,000 over the present consolidation, a fall of around 10%. BIS Review 134/2010  7  There is, however, one important difference between the situation now and the mid-1990s in that the flow of finance to support the growth of private sector businesses has been affected by the impact of the financial crisis on the banking sector. For many businesses and individuals, the terms on which they can access lending are much less favourable than before the crisis. In one sense, this is very appropriate in that credit was too freely available in some parts of the financial system in the mid-2000s and this created the conditions for the global credit boom which preceded the financial crisis.

Australia is one example. Fluctuations in commodity prices entail changes in countries’ terms of trade, which measures the ratio of export to import prices. Changes in the terms of trade have an impact on the exchange rate, which in turn dampens the impact on profitability. The exchange rate acts as a buffer. In the 1990s, the  BIS Review 20/2002  1  fluctuations in Norway’s terms of trade were especially wide. Changes in oil prices were an important reason for this. The krone exchange rate has not fluctuated much compared with other countries. The Petroleum Fund acts as a buffer against fluctuations in the oil price, because the Fund’s capital is invested abroad. This contributes to stabilising the krone exchange rate. We must, nevertheless, be prepared for fluctuations in the krone that are more in line with the fluctuations observed in other countries. Changes in the global economy can affect the krone exchange rate. The exchange rate may also react to and contribute to curbing the effects of domestic disturbances. The floating exchange rate is by and large a well-suited instrument for absorbing unforeseen disturbances to the economy. A stronger krone may, for example, prevent demand pressures from translating into higher price inflation. As history and the experience of other countries have taught us, the real economic losses associated with eliminating high inflation and curbing inflation expectations are considerably higher than those associated with a variable nominal exchange rate.
Countries are expected to anchor fiscal prudence in national rules, creating a much more “vertically integrated” concept of governance. All these measures were unthinkable four years ago. If we look at the conclusions of Euro Summit on 26 October – dismissed by some observers as insufficient – we see even more radical steps envisaged for the future. Euro area countries have committed to adopt balanced budget rules. They have agreed to base their budgets on independent growth forecasts. They have agreed to stick to the recommendations of the Commission when implementing the Stability and Growth Pact. Countries in the Excessive Deficit Procedure – which is currently 14 out of 17 euro area countries – will allow the Commission to examine draft national budgets and monitor budget execution. Although some of the recent governance reforms, like those that formed part of the so-called “Six-pack” proposed by the European Commission, fall short of the “quantum leap” that the ECB had long advocated for the euro area, they still represent significant progress relative to the situation prevailing before the crisis. The creation of the European Financial Stability Facility and future European Stability Mechanism could also not have been imagined in 2007. The euro area has institutionalised the provision of sovereign liquidity and agreed to a Treaty change to ensure its legality. As the new facilities have developed, they have acquired a range of tools.

A critical success factor for the cross-border promotion of Islamic finance is the harmonisation of the governing shariah frameworks between our jurisdictions. In this regard, Indonesia's extensive history of scholarly achievement in the subject matter relevant to the principles of Islamic finance can be leveraged upon for the benefit of the region. We are most hopeful for substantive convergence of interpretation and application of the shariah laws and guidelines for the region. The greater collaborative engagement between our respective scholars would indeed facilitate the process. Ladies and Gentlemen: The large gathering of senior representatives of the public and private sectors here today hints to the significant interest to capitalise on potential of the Nusantara economies. The efforts of the private and public sectors in building a collaborative platform as a resilient base for a network of linkages to the wider world, with God's grace, insyallah, will contribute to advancing the Nusantara Agenda that would unleash the potential of the region for a greater shared prosperity. Thank you. BIS Review 73/2007  3
Tanya Sirivedhin: The New Capital Accord and E-Banking Opening remarks by Mrs Tanya Sirivedhin, Deputy Governor of the Bank of Thailand, at the FSI Workshop for SEANZA's Forum for Banking Supervisors, Chiang Mai, Thailand, 3-7 December 2001. *  *  *  Distinguished Resource Persons and Participants, Ladies and Gentlemen: I would like to take this opportunity to personally extend a warm welcome to everyone here today, and to express our deepest appreciation to our distinguished speakers and panelists who have kindly agreed to share with us their knowledge and experience concerning the New Capital Accord and EBanking. I would also like to thank the Financial Stability Institute of the Bank for International Settlements, for their efforts in co-hosting this workshop on frontier issues. As is well known, the New Capital Accord is scheduled for implementation in 2005. Reflecting comments on the second consultative package, the draft third consultative package is scheduled for release early next year. Judging from the comments submitted in May, the new draft promises to be interesting and controversial. This is not surprising since it will mark what will be no less than the beginning of a worldwide revolution in the way financial institutions are managed, and especially how risks are supervised. The sophistication that comes with enhanced risk-sensitive capital charge should be an important incentive to drive financial institutions around the world to upgrade their expertise, organizational structure, database, IT system, and most of all their risk management process.

Because of the openness of its economy and the vitality of its business environment, Hong Kong serves as an important reference point for the world. Hong Kong has captured the world’s attention artistically as well, especially through the recent work of the screenwriter and director Wong Kar-wai. His recent film, 2046, has rightly enjoyed acclaim, but it is the film’s unique perspective on time that might be interesting to contemplate today. In his film, as many of you may know, an author writes a book about the future, but gradually we realise that he is actually exploring his past. With apologies to Mr Wong and with deep respect for his beautiful film, I might venture to say that we can draw some parallels with our discussion today. As I have just suggested, I believe that in order to secure financial stability in the future, we must explore and understand the risks that have endured since the past. If I may draw on my own artistic license, I’d like to reinterpret the premise of Mr Wong’s film slightly. Let’s consider an author, perhaps a central banker or a supervisor, who lives in the year 2046 and has the benefit of the perspective provided by the passage of the first half of this century. What might such an author write about the main determinants and evolution of financial stability during the first five decades of the twenty-first century?
Perhaps, the greatest challenge is to achieve a lasting peace. Economic growth and peace are interlinked. Therefore, the process to accelerate economic growth and the peace process need to move in tandem. Further, structural reforms have to be continued. In this connection it is necessary to convince all stakeholders of the need for reforms to enhance the efficiency in the economy. Macroeconomic management has to be strengthened further to contain macroeconomic imbalances. In this regard, we have had the benefit of considerable assistance from international financial institutions, in particular, the IMF, World Bank and the ADB. Not only have they provided funds at critical times, but they have also been most helpful in providing technical assistance and advice. Sound macroeconomic management requires that the fiscal consolidation process be continued as required in the Fiscal (Responsibility) Management Act, to enhance public investment, attain a sustainable level of public debt, and reduce inflationary pressures. This has to be accompanied by the continuation of a monetary policy that would maintain price stability and avoid the emergence of inflationary pressures that are highly injurious, particularly to the most vulnerable groups in society. The Central Bank will continue to focus on this area. In addition, reforms in the financial sector need to be pursued vigorously to ensure a vibrant and stable financial environment that would be able to take advantage of the links to the international markets and support growth. The high international price of fuel is a major concern.

The issue, therefore, underscores the inadequate risk management, covering the entire process: from the lack of proper risk measurement, especially with regard to complex product, as well as liquidity risk, to inadequate risk management and control, and to micro-prudential risk-based supervision. In addition, there is now greater attention being paid to the importance of macroprudential approach, in recognition of the risk from procyclicality and interconnectedness of institutions, especially the large and highly complex financial institutions. Also, greater recognition is given to the problem of the unregulated shadow banking sector, like the hedge funds, which are also key in systemic risk process. All these issues pose a major policy challenge, as indeed the various working groups and committees of the BIS are now working on the guidelines, and on the key issues such as accounting, valuations, procyclicality, and adequacy of capital and provisions. In view of the depth of the current problem, and the fact that it may be quite sometime before the global standards on these issues can be settled, regulators, in my view, must be ready to take the needed action to ensure that we address these risks in our financial systems systematically. This is why Pillar II is all the more important, because the essence of Pillar II is to ensure that financial institutions have adequate risk management process and capital, commensurate with their risk profiles.
Moreover, the euro area has considerably enhanced its fiscal discipline framework: national budgets have become subject to European Commission monitoring, sanctions are more automatic, and early warning mechanism more appropriate. A new framework for surveillance of macroeconomic imbalances and competitiveness developments has also been put in place. I now wish to recall two points. First, excessive public debt is not solely a European problem. The sovereign credit rating of the United States was downgraded last summer and its fiscal policy framework does not appear to be much more simple or rapid than that of the euro area. Second, in aggregate terms, the euro area’s government deficit is one of the “least bad” of developed countries. It is expected to stand at around 4.5% at end-2011 whereas those of the United States and the United Kingdom are double for example. Naturally, this is not a reason to slow down reforms, quite the opposite. But it shows that our situation is not as bleak as some market developments might suggest. Measures taken by the G20 in response to the crisis We have seen that there is a close link between the US episode that started in 2007 and the European episode. This clearly shows that the different regions of the world are facing common challenges and that the solutions must be shared. To this end, the G20 has grown in prominence since 2008, and has already made significant changes. The French presidency of the G20 came to an end with the Cannes Summit in early November.

This was especially true in the last recession for the more highly indebted households who cut spending substantially than did less indebted households. That is, the distribution of debt also matters. Similar effects were seen in other countries. And there is considerable evidence that recessions that follow debt financed housing booms are worse. The IMF estimate that for each additional 10 percentage point rise in household debt prior to the global financial crisis, the consumption loss (as a percent of pre-crisis trend) was larger by 2.6 percentage points. Other studies have come to similar conclusions.13 Conclusion Since the 1980s the UK has seen a sharp and very material increase in the credit to GDP ratio and in the stock of household debt relative to income. This was particularly pronounced in the 10 year upswing of the last financial cycle when credit grew over twice as fast as GDP. This surge in credit did not finance an economic boom. Indeed, it showed little in the conventional indicators of economic activity. It comprised in the main secured lending to households for housing, driven by house prices rising consistently faster than earnings. The rise in secured debt and the increase in house prices reflected in part structural reductions in interest rates. Many of the forces that pushed down on rates over the period are long lasting and are unlikely to be reversed. To that extent, they have probably raised the sustainable level of credit to GDP.
Perhaps I should add that we do have a rough idea of the level of the exchange rate that seems reasonable in the longer run. We have not intervened since the occasion during the financial turbulence in 1998 when the krona weakened in a way that both then and in retrospect seemed unreasonable. Assessments of the coming 1–2 years are crucial It takes time for monetary measures to affect inflation. Some effects of an interest rate adjustment may indeed occur very quickly. The stock market, for instance, is influenced as soon as an adjustment is announced and this can have immediate consequences for household consumption, for example, and thereby a quick impact on certain prices. Monetary policy can also elicit exchange rate movements and quickly affect prices for exports and imports. Normally, however, there is a time lag between monetary measures and their effects. For example, an interest rate hike leaves households with less money for other expenditure and also reduces the return on investments. By gradually influencing consumption and investment, this leads in time to changes in total demand. With weaker demand, firms then have more difficulty in raising prices and that leads to lower inflation. Interest rate adjustments accordingly affect inflation through a variety of channels that economists refer to as the transmission mechanism. We know more about some channels than we do about others. It is not clear just how long it takes for the effects to materialise.

Starting from appraisals of global economic  The inflation puzzle International developments ■  ■  ■  etc  BIS Review 24/2001  Development of GDP Interest rates and exchange rates Oil prices  Swedish economy ■  The krona  ■ ■  ■  etc  Development of GDP Productivity Utilisation of resources Wages  Other ■  Inflation expectations  Inflation ■  Taxes and subsidies  3  developments, various international prices, for oil for example, the exchange rate, interest rates and what is happening in the domestic economy, we estimate a picture of economic activity and resource utilisation in Sweden. Normally it is resource utilisation that is crucial for inflation. To this we add an assessment of inflation expectations as well as estimates of factors with effects that may be more or less transitory, such as changes in interest rates and taxes. The combined result is a forecast of inflation. The large model is made up of a number of relationships, The equations for calculating exports are one example. Swedish exports are estimated as a function of, for example, global economic developments and the path of the krona’s exchange rate or some other measure of relative prices. But as some important relationships are not particularly stable, we have to make judgements on the basis of other experiences. Sometimes, moreover, there are grounds for supplementing a model-based calculation with more specific information. There may be indications that investment activity, for example, will be higher than historical relationships indicate.
Mojmír Hampl: Outlook for global interest rates Speech by Mr Mojmír Hampl, Vice Governor of the Czech National Bank, at the Official Monetary and Financial Institutions Forum (OMFIF) Roundtable for Public Sector Asset Managers, London, 30 January 2018. * * * My contribution to today’s discussion on global interest rates will focus on the equilibrium real rate of interest. The equilibrium rate, which determines the development of interest rates in the long run, has decreased around the world by about 4 percentage points since the 1980s, as documented, among others, by the influential studies of Holston, Laubach, and Williams (2017) and Rachel and Smith (2017). Very recently, it seems to me, the process has started to reverse, but any progress toward a higher rate is likely to be slow. Equilibrium values do not change abruptly. Seven principal reasons have been identified for the decrease in this parameter observed in the past: The first is a decrease in growth expectations caused primarily by the Great Recession and the ensuing process of de-leveraging. Gloomy prospects depress demand for capital and, in consequence, also the equilibrium interest rate. Currently, however, notions of secular stagnation are losing steam, and growth expectations have slowly been recovering to pre-crisis levels. It is perhaps useful to remind ourselves that secular stagnation has been declared many times in the past – by Malthus, after the Great Depression, and during the 1970s and 1980s – only to be refuted by continued growth.

“Measuring the Natural Rate of Interest: International Trends and Determinants,” Journal of International Economics, vol. 108(S1), pages 59–75. Rachel, Lukasz & Smith, Thomas D., 2017. “Are Low Real Interest Rates Here to Stay?” International Journal of Central Banking, vol. 13(3), pages 1-42. World Bank, 2016. “Poverty and Shared Prosperity 2016: Taking on Inequality”. World Bank Group report. 2/2  BIS central bankers' speeches
Eddie Yue: Asian Development Bank – working to reduce poverty in Asia Statement by Mr Eddie Yue, Deputy Chief Executive of the Hong Kong Monetary Authority, and Head of Delegation, Hong Kong, for the 49th Asian Development Bank Annual Meeting, Frankfurt am Main, 3–5 May 2016. *  *  *  I would like to thank the Government of Germany for hosting the 49th Annual Meeting of the Asian Development Bank (ADB), and the Management and staff of ADB for the excellent arrangements of the event. I would also like to congratulate ADB for the successful conclusion of the Eleventh Replenishment of the Asian Development Fund, which would provide critical resources to ADB to further its work in poverty reduction in Asia. ADB is approaching its 50th Anniversary this year. Over the past fifty years, Asia has undergone tremendous development. The economic miracle in Asia, together with the important work of the Bank, have lifted millions of people out of poverty and substantially improved our standard of living. After decades of rapid growth, however, there have been signs that the trend growth of the region is slowing. This reflects, to a considerable extent, supply-side constraints on potential output. In particular, a number of emerging economies in the region have been held back by infrastructure bottlenecks. As I have noted during the past few Annual Meetings, to sustain growth and propel the economy to the next stage of development, boosting infrastructure investment is a top priority for many developing members in the region.

The infrastructure demand in Asia is huge. ADB estimates put the overall infrastructure investment needs of Asia at $ billion per annum over the 2010–2020 period. In the meantime, there is no lack of investors interested in infrastructure investment or financing. Despite a generally longer investment cycle, infrastructure projects can offer relatively stable returns and a hedge to inflation. That is why sovereign wealth funds, insurance funds and institutional investors have shown a growing interest in infrastructure investment in recent years. However, despite this increasing interest in infrastructure investment, there are significant impediments in channeling savings into infrastructure financing in emerging Asia. Put it in the language of bankers, there is a shortage of “bankable” projects, due to lack of a credible public-private partnership (PPP) framework; deficiency in regulatory regime and legal environment for contract enforcement; lack of transparency for monitoring project implementation; and political uncertainty. The above impediments call for coordinated efforts to facilitate financial intermediation, lower barriers to investment, enhance PPP standards, and improve project governance and delivery. A number of international and regional efforts have been made on this front, including but not limited to the establishment of the Global Infrastructure Hub by G20, the launch of the Global Infrastructure Facility by World Bank, and the setting up of the new Asian Infrastructure Investment Bank focusing on promoting infrastructure development in the region.