samchain/econo-pairs-v1 huggingface dataset:
Bank research suggests that the spillover from tightening in US monetary policy to foreign GDP is now twice its 1990-2004 average, despite the US’s rapidly declining share of global GDP. Financial instability in advanced economies also causes capital to retrench from EMEs to ‘safe havens’, as it did during the 2008 financial crisis and the 2011 euro-area crisis (Chart 6). Connally’s dictum “our dollar, your problem” has broadened to “any of our problems is your problem”. Moreover, the structure of the global financial system – or the “pipes” – is increasingly amplifying capital outflows from EMEs when these push shocks occur. For EMEs, market-based finance has accounted for all the increase in foreign lending since the crisis, as bank lending has declined and FDI has stayed fairly constant (Chart 7).21 While this shift has brought welcome diversity to the financial system, it also reduces the sustainability of capital flows, as market-based flows are particularly sensitive to changes in global risk appetite and financial conditions. Investment fund flows are particularly flighty (Chart 8), especially under stress. The increasing role of “push” factors and the “pipes” of the system means fast-reforming EMEs could soon be running to stand still in their quest for more sustainable capital flows (Chart 9). Bank researchers estimate that the growing shares of FX-denominated debt and market-based finance have increased the sensitivity of “Capital Flows-at-Risk” to push factors by 50% since the crisis, largely using up the selfinsurance purchased by EMEs.

1  3  All speeches are available online at www.bankofengland.co.uk/news/speeches  3  The combination of these factors means that US developments have significant spillovers onto both the trade performance and the financial conditions of countries even with relatively limited direct exposure to the US economy. These dynamics are now increasing the risks of a global liquidity trap. In particular, the IMFS is structurally lowering the global equilibrium interest rate, r*, by: -  feeding a global savings glut, as EMEs defensively accumulate reserves of safe US dollar assets against the backdrop of an inadequate and fragmented global financial safety net;  -  reducing the scale of sustainable cross border flows, and as a result lowering the rate of global potential growth; and  -  fattening of the left-hand tail and increasing the downside skew of likely economic outcomes. In an increasingly integrated world, global r* exerts a greater influence on domestic r*.2 As the global equilibrium rate falls, it becomes more difficult for domestic monetary policy makers everywhere to provide the stimulus necessary to achieve their objectives. These dynamics are directly relevant to the current risks of a global slowdown. At present, there are relatively few fundamental imbalances in terms of capacity constraints or indebtedness that would of themselves portend a recession.3 However, the combination of structural imbalances at the heart of the IMFS itself and protectionism are threatening global momentum.
When Governing Council members adopt monetary policy decisions and perform other functions of the Eurosystem, they are not acting as representatives of their countries or respective central banks, but rather on a personal and independent basis with the obligation to safeguard the interests of the Union as a whole. Membership of this decision-making body is personal and inalienable. 2  The President of the EU Council or of the Eurogroup and one European Commission member may attend Governing Council meetings, albeit without the right to vote. Quorum and voting regime at the Governing Council Governing Council decisions are generally adopted by consensus. If its members have to resort to voting, the Statute provides specific voting rules for each subject, although the general rule is voting by simple majority. Governing Council meetings require a quorum of two-thirds of the members having a voting right. Therefore, 14 voting rights would be needed out of a total of 21 (the Executive Board Members hold six voting rights and the other 15 voting rights are rotated among the 19 governors).3 If the quorum is not met, the President may convene an extraordinary meeting at which decisions may be taken without regard to the quorum. The ECB can adopt its decisions by simple or qualified majority, weighted simple or qualified majority, or unanimously. In accordance with Article 10(2) of the Statute, the unweighted simple majority regime is the default procedure generally applicable and takes into account the rotation system.

If such compression in expected forward short-term rates were to persist even after the FOMC begins to raise short-term interest rates, then, all else equal, it would be appropriate to choose a more aggressive path of monetary policy normalization as compared to a scenario in which forward short-term rates rose significantly, pushing bond yields significantly higher. In closing, I agree with the authors that it is very much premature to accept the hypothesis that we have entered a sustained period of secular stagnation. That said, however, I do think that the real potential GDP growth rate will be lower over the medium term, held down by much slower growth of labor input and an anticipated continuation of lackluster productivity growth performance. If I am correct, this does have implications for the longer-run value of r*. My point estimate is that the longer-run value of the federal funds rate is 3½ percent, well below its long-run historical level of 4¼ percent. At the same time, I also have little confidence about the accuracy of this specific estimate. So you see that I come out in a very  BIS central bankers’ speeches  3  similar place as the authors of this year’s Monetary Policy Forum paper. They suggest that the long-run equilibrium real federal funds rate might be in the range of 1 to 2 percent. Add on 2 percent inflation, you end up in just about the same place as my current long-term 3½ percent nominal federal funds rate point estimate.
The SET plan tackles another important problem, namely the underdevelopment of  4  BIS Review 62/2002  Thailand’s capital markets. If its implementation is successful, Thailand will have a balanced and diversified financial system that is more robust and stable than the one today. The third area that needs to be addressed is good governance. We need to move fast to ensure that firms follow proper accounting standard and information disclosure, to improve the protection of minority shareholders’ right, and especially to assure independence of board of directors from management. For financial institutions in particular, the Bank of Thailand, with the assistance and cooperation from the World Bank and several domestic stakeholders, has assembled a manual entitled the Directors’ Handbook, which provides guidelines of practice for directors of financial institutions. Regulations on the required structure of Board of Directors would follow within “November”. Most important point was the regulation announced in July 2002 which imposes strict conditions on lending to related companies, which was one of the major cause of NPLs in the past. Moreover, the Government has also set up a National Committee on Good Governance, responsible for campaigning for good corporate governance on various inspects simultaneously, with the SET as the secretariat. Instilling the value of good governance in the public sector is as important as in the private sector. On this issue, the current government has expressed an intention to tackle the problem that has long plagued the Thai public sector.

More conservative fiscal policy would have done what monetary policy could not accomplish; namely, to cool down the overheated economy. Ladies and Gentlemen, These lessons have been expensive ones. Thailand, as a nation, has spent the last five years dealing with the problem with some severe hardship and grave consequences. Although it is probably safe to say that the height of the problems is now behind us, we still face an enormous uphill battle. A new set of challenges seems to emerge everyday, some with very important repercussions on the Thai economy. Here, what spring to my mind are the delay in the global economic recovery and China’s WTO entry already mentioned, as well as the current global equity slump. This is just to name a few. To prepare Thailand for these future challenges, we need to get the fundamentals right on all of the four areas that I have just discussed. In brief, we need to raise productivity in the real sector, rebuild our financial infrastructure, instill the value of good governance in both the private and public sectors, and develop a comprehensive macroeconomic strategy. Needless to say, comprehensive real sector reform is at the core of the new paradigm for sustainable growth. And this requires a carefully planned national agenda. In essence, Thailand needs to  BIS Review 62/2002  3  distinguish itself quickly in the fast-evolving global competitive landscape.
In a world with many banks, it is inefficient for every agent in the economy to have an account with each and every bank. One solution is for each bank in the economy to have an account with all the other banks and to net obligations bilaterally with them. In a world with many banks, this will tend to result in an inefficiently large number of interbank accounts. A more efficient solution is for a hierarchy of banks to develop, with banks at the bottom of the hierarchy having accounts with correspondent banks in its upper tier, which in turn have accounts with banks at the apex of the hierarchy. These banks at the top of the hierarchy were naturally and literally “central” banks. Indeed, there is plenty of historical evidence that hierarchical structures evolved naturally in a free-banking environment without the need for the state to superimpose and/or guarantee a “settlement institution” at the apex of the hierarchy. One example is in fact the Bank of England. The status of a central bank at the top of the hierarchy derived also from the fact that it was perceived to be “safe” – that is, an institution with a large capital base, holding high-quality assets. Such a central bank would also need to be concerned about its own soundness. This led the central bank to be careful about to whom it should provide settlement accounts and to monitor these banks.

If you are the treasurer of a bank and plan for the end-of-day settlement of your accounts, uncertainty about whether expected incoming payments will actually be received is obviously a major issue. It does not make an immediate difference if expected incoming payments are at risk for payment system reasons, or because the payments may not have been initiated. In both cases, the treasurer will need to look for alternative funding, and if there are no internal buffers, will turn to the interbank market for overnight funds. There, the treasurer will be ready to pay a premium and will thus bid up rates. If uncertainty about incoming payments generally increases and affects all banks, be it for payment system or other reasons, banks will all tend to enter the interbank market on the buy side and will bid up the overnight rate accordingly. This is a monetary policy issue and will imply the need for the central bank to inject excess reserves into the system to bring interest rates down again. While payment system disruption may hence potentially have an impact on monetary policy, central banks have found ways of safeguarding price stability, while at the same time ensuring the smooth functioning of the payment system. This is achieved by drawing a clear line between providing intraday liquidity for payment system purposes and providing credit for monetary policy implementation. Let me therefore turn briefly to these two types of liquidity provision by central banks.
However, I call upon the institutions of the Paris financial centre to continue demonstrating prudence and responsibility in their search for client resources. The Banque de France and the Prudential Supervisory Authority will be vigilant in this respect. It is vital that market conditions be fully accounted for in setting the level of interest on financial products, whether offered by banks or life insurers. It is also best if preference is given to the collection of long-term savings that are indispensable for financing the economy. Indeed, I am actively seeking the support of the government with regard to this objective. The Bank will seek to ease the individual adaptations required by these numerous new regulatory frameworks. In particular we will strive to facilitate the management of liquidity and collateral, notably by continuing to support the mobilisation of lending to the economy via refinancing operations with the central bank, but also via markets. In this perspective, and at the initiative of the Banque de France, a Paris financial centre working group has been set up to develop innovative and safe securitisation mechanisms that should allow banks to make better use of the pool of claims on their balance sheets and to strengthen their financing capacities. The Bank will also continue to mobilise all parties concerned, and in particular companies, in order to accelerate and successfully implement France’s migration to SEPA payment instruments that should be finalised by 1 February 2014 for credit transfers and direct debits.

In order to counter the fears of the recessionary impact on loan distribution that the first version of the text might have prompted, a transition phase has been introduced to give banks more time to conduct their adaptations. Moreover, the calibration of the liquidity requirements has been refined to better reflect experiences of the crisis, while the list of assets that can be held to satisfy the liquidity requirements has been extended. Even if adjustments are still possible in the framework of the European observation period, the banks need to integrate this new standard into their liquidity management policies as of today. This means that as we now have clear rules, the necessary structural changes must be undertaken. In 2013 we will pursue our efforts on the 1-year liquidity ratio, but also on the links between monetary policy and the liquidity ratio. 2.3  In the field of savings, the reallocation of household’s financial investments towards bank savings products in 2011 continued in 2012. The raising of the ceiling of the “A” passbook savings account and of the sustainable development account led to two months of significant inflows for these products in October and November, and the ceiling of the “A” passbook savings was again raised on 1 January of this year. I am perfectly aware that these adjustments to France’s regulated savings generate tensions for the collection of bank resources and life insurance premiums.
§  6  Increases and decreases in financial flows - - and the fluctuations in pricing that naturally accompany positive or negative trends in policies and economic and financial performance - - are a reflection of, and act as a natural brake on, the development of imbalances. BIS Review 61/2002  §  G  But an assertion of control by the international community risks diverting attention from the policies of the local authorities. As a result, denial and delay, aggravating factors in almost every crisis, may well continue and be exacerbated. And then, as a practical matter, once market processes have been stopped, how and when do you get things started again, particularly if needed corrective policies still have not been convincingly and transparently implemented? To sum up, I believe the one-size-fits-all disposition inherent in a preemptive approach risks making situations much worse than they need to be. The only thing that strikes me as predictable under such an approach would be that market access would be harmed across the board. Just as bailouts risk encouraging too much risk taking, efforts to orchestrate preemptive bail-ins may encourage too little. •  Underlying the suggestions that I have made is a firm belief that the success of our approaches to crisis management needs to be viewed and assessed with a wide focus. Certainly, there is the question of efficacy in containing the crisis at hand, and the balance between this and the costs, actual and potential, to the public sector.

Financial institutions should provide easy access to funds to reduce cost of doing business. The multiple drivers of informality should be tackled through integrated policy packages that promote a gradual transition to formal activities. Ladies and gentlemen, this is the challenge I give all stakeholders that are involved in skills development, youth empowerment and development of MSMEs. Thank you. BIS central bankers’ speeches  3
However, four simple arguments form the basis of this recommendation: preserve, thanks to the confidence of investors, low medium- and longterm market interest rates, generate the financial resources necessary for productive sector investment, strengthen the confidence of the personal sector and bolster that of the corporate sector. It should be added that all Monetary Union member countries have to have budgets that are close to balance or in surplus, precisely in order to allow public finances to act, where necessary, as “automatic stabilizers” when economic conditions deteriorate. This point is essential, most particularly in the event of “asymmetric shocks”, i.e. particular economic difficulties affecting one member country, but not the others. –  Last, as it has done constantly in recent years, the Monetary Policy Council calls attention to the need to gradually reduce the ratio of public expenditure to GDP. According to OECD methodology, in France public spending amounts to 54.2% of GDP, well above the euro-area average of 48.7% and the Group of Seven leading industrialized countries average of 38.1%. Bringing this ratio back below 50% is a primary objective, even though it is timid in comparison with the performances of France’s partners. This greater rectitude in the management of public finances is a vital condition of competitiveness, growth and the development of employment in France.

These would lead all euro-area countries to introduce at home reforms experimented in another economy of the area that meet the following three criteria: first, they are the subject of a multipartisan consensus; second, they have been implemented on the basis of an agreement between the social partners; third, they have actually helped create jobs. The Council does not doubt the fact that France, like all the economies of the euro area, could benefit greatly from the extension of such consensual and effective reforms. The competitiveness of the economy Last, as it has done in each of the previous years, the Monetary Policy Council emphasizes the importance of cost containment in the economy and the need to provide an environment that favours the competitiveness of businesses. In Europe, before the single currency, any poorly conducted national economic policy was swiftly and severely punished by depreciation of the currency on the foreign exchange markets and rises in market interest rates. With the creation of the single currency, these indicators have disappeared along with the swiftly applied sanctions associated with them. In the new euro area, any economic policy errors leading to lost competitiveness would result, more slowly and insidiously, in weaker growth and job creation. For this reason, even more so than in the past, unit production costs and more generally the quality of the competitive environment of businesses need to be very closely monitored.
But we have to see how this continues and develops, and whether there are some market segments that do not improve sufficiently or remain impaired. FT: But that means it will be weeks or months before you took such steps… CN: We are working on that. We will see what we feel might be necessary. FT: But if there were measures taken, they would be “credit easing” targeted a specific problems, not blanket quantitative easing in the way that the Bank of England is doing it? CN: Well the Bank of England is apparently concerned about the monetary base. But we don’t have the same problems for the time being with the monetary base in the euro area. I don’t know if it has something to do with the fact that banking intermediation in the euro area as a whole plays a bigger role than in the US or even in the UK. FT: Some of your colleagues on the governing council want to make a very clear distinction between fiscal policy and monetary policy – whereas in the UK and US they have become blurred. Does that prevent the ECB from doing QE? Would you have to go to governments first? CN: No, we have the ability to decide on the instruments that we feel we need to use to implement our monetary policy. The only thing is that of course we are attentive to the level of risks that we are taking as a central bank.

Ravi Menon: Asia – short-term bumps along long-term growth path Remarks by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the opening of Korea’s National Pension Service Office, Singapore, 17 September 2015. *  *  *  Dr Choi Kwang, Chairman and Chief Executive Officer, National Pension Service Ladies and gentlemen, good afternoon I am delighted to join you to celebrate the opening of the Singapore office of Korea’s National Pension Service (NPS). This is an exciting development for Singapore’s asset management industry. •  NPS manages one of the largest pension funds in the world, with KRW 500 trillion of assets under management. The decision by NPS to set up an office here is significant. •  This will be NPS’s first overseas office in Asia and its third in the world after New York and London. In setting up an overseas office in Asia, NPS is affirming the long-term growth prospects for the region. NPS is clearly taking a strategic view of Asia against the backdrop of recent market volatility and moderation in growth. Asia’s recent tantrum: what does it mean? Financial markets, including those in Asia, have experienced a surge in volatility over the past several weeks. •  Equity markets have taken a beating. The stock indices in Emerging Asia are down by an average of 18% since their highs in Q2 this year, with the Chinese stock market correcting the most, by about 40%. 1  •  Currency markets saw sharp movements.