samchain/econo-pairs-v1 huggingface dataset:
Meanwhile, the Bank of Thailand and other financial regulators have worked hand-in-hand to promote awareness, build industry’s capacity and foster commitment to incorporating sustainability practices into the culture of our financial industry. 6/7  Ladies and gentlemen, The Bangkok Sustainable Banking Forum 2019 presents another exciting opportunity for the Thai financial sector to learn from the experiences of our peers and partners who have dealt with the challenges and adverse implications of underpricing ESG risks; and see how financial institutions have used different approaches to internalize these risks. We will also learn of different countries’ experiences on advancing ESG agendas and the challenges that the Thai financial sector must overcome to make a leap in our journey towards sustainability. To end my remarks, I would like to take this opportunity to thank speakers, panelists, and the audience for your participation. I would also like to thank our organizing partners and the Bank of Thailand staff for your tremendous efforts. What we will learn together today will be an important stepping stone in Thailand’s journey towards sustainability, the journey that will improve Thailand’s financial resilience; limit financial sector’s negative externalities on our environment and society; and address our common challenges for the quality of life of future generations. Last but not least, the sustainability of our financial sector depends on the sustainability of public trust. We need to repeatedly remind ourselves that the sustainability of public trust can be upheld only when the financial sector looks far and wide beyond their immediate responsibilities. Thank you very much.

Third, that despite these improvements, inflation dynamics continue to depend on the continuation of our current monetary policy stance – a stance that is determined by the interaction between all three main policy instruments: interest rates, asset purchases and forward guidance on both. Monetary policy is working For a large part of the crisis, the story of the euro area was one of abortive recoveries. The rebound that took place from 2009 to 2011 was derailed by the onset of the sovereign debt crisis. We then saw a nascent recovery beginning in mid-2013, but it also lost steam by the summer of 2014 as the external environment became more uncertain. The euro area economy, in other words, was consistently struggling to gain momentum and seemed highly vulnerable to new shocks. This is not surprising given the severity of the crisis and the depth of the economic slump. Even today, the legacies of the financial crisis are still a drag on the recovery and the global environment remains uncertain. The balance of risks to the growth outlook remains tilted to the downside due to geo-political factors. But things have also been clearly improving. Since mid-2014, the recovery has evolved from being fragile and uneven into a firming, broad-based upswing. Quarterly GDP growth has been consistently between 0.3% and 0.8%. Employment has grown by more than 4.5 million people.
Legal systems and competitiveness of financial centres  Fundamentally, the legal system should ensure that contract and property rights are sufficiently clear and predictable; if there is a dispute, participants in the contract do not feel  1  I wish to thank L. Stracca, M. Svoboda, S. Kerjean, F. Recine and C. Zilioli for their contribution. 2  Mishkin (2005). 3  Precisely through its negative impact on the quality of institutions and law enforcement. BIS Review 122/2007  1  the need to take legal action unless as a last resort. Moreover, if there is litigation, the court is independent and able to resolve the claim effectively and in a reasonable time. Furthermore, the judgment, once delivered, has to be quickly enforced. To underline the importance of this aspect let me give the example my own country. There is a growing literature suggesting that one of the reasons for the relatively slow pace of financial development in Italy is the slowness of the civil courts, with the result that, for example, mortgage debt is still a fraction of what it is typically in other advanced countries. 4 At this point it should be clear that an efficient legal system is a key ingredient of competitiveness among financial centres. One of the reasons of the traditional lead of US financial markets over Europe (and the rest of the world) is greater standardisation of legal norms and systems, while the European financial system is still characterised by considerable fragmentation of legislation, regulation and enforcement.

But the ECB has had to take account, too, of domestic demand pressures within the euro area, and of the fact that, even on the core measure, Euro area inflation was moving up gradually to the top of the ECB's 0-2% range. Frankly I don't see how anyone can be confident whether the ECB had it precisely right or wrong - it is perfectly normal for even the best-informed people to disagree on these judgements, as anyone who reads our own Monetary Policy Committee meeting minutes will tell you. But I am wholly confident that the ECB is sensitive to the issues surrounding those judgements, including the downside risks in the US, as indeed it demonstrated a fortnight ago. So, too, are we in the United Kingdom. In our case, we again enjoyed relatively steady overall economic growth through last year, combined with a further fall in unemployment to its lowest rate for over 25 years. Inflation meanwhile continued to run below the Government's 2½% target - and is currently running at around 1½% on the eurozone measure of inflation. This relatively low inflation rate was partly a result of the dampening effect of sterling's surprisingly persistent strength against the euro. The problem for us - and it is a real problem which has been with us for some time now - is the sectoral (and associated regional) imbalance within our overall economy.
It can be done on a portfolio level at the outset, subject to some conditions being met. These conditions include the preparation of an Investment Mandate stipulating the types, risks and allocation of investments after taking into account all relevant circumstances of the client. The Investment Mandate should be explained to and agreed by the client, and a copy of the Mandate should be provided to and acknowledged by the client. The Investment Mandate should of course be reviewed and, if necessary, modified whenever there are material changes to the relevant circumstances of the private banking customer. Usually the review of client risk profile is expected to be conducted at least once every two years. However, we appreciate that private banks need to minimise demand on the time of customers and have regard to the fact that private banking services are normally conducted on a continuous basis. As a result, the HKMA agrees that private banking clients need not go through the biennial reviews if they can confirm that there is no material change in their circumstances that warrants updating or modification of the Investment Mandate. Moreover, private banks may choose to document the rationale for recommendations in writing instead of audio-recording a face-to-face interview with the clients. I am pleased to say that the above-mentioned measures, which are aimed at making private banking more user friendly, will be promulgated in an HKMA Circular to be issued later today.

In the pre-industrial era, the laws of motion and discovery of hydrogen were foundational achievements by UK scientists. They paved the way for future scientific progress – from autos to aerospace – so that present day heroes like Lewis Hamilton and astronauts Tim Peake and Helen Sharman truly “stand on the shoulders of giants” [Newton, 1675] and continue the legacy of UK-led innovation. The invention in the UK of the steam engine, electric motor and telegraph powered the first two industrial revolutions, bringing our world closer together and bringing prosperity to many. In medicine and biology, the discoveries of penicillin, x-rays and the double helix by UK scientists afforded people healthier and longer lives. Meanwhile, the creation of the world wide web by Tim Berners Lee brought the sum of human knowledge to the masses in the third industrial revolution. The UK is expanding this frontier in the fourth industrial revolution through the development of Artificial Intelligence with the likes of Demis Hassabis. Scientific terms like black holes in vitro and Higgs Boson particles are now part of our vocabulary thanks to pioneering UK scientists who have popularised science and brought it into the mainstream. This high regard of the sciences shows up in polls and currency alike. From Darwin to Newton, eminent UK scientists are regulars on top 100 Britons lists and have featured on some of our historic banknotes.
The risk associated with a regulatory capital ratio that is more sensitive to risk, and therefore potentially pro-cyclical, has also been advanced in some quarters. I shall, however, give five main reasons showing that these questions do not cast doubt on the benefits provided by the implementation of Basel II. Firstly, unlike the present solvency ratio, the Pillar 1 of Basel II stipulates down a specific calculation of regulatory capital to set against credit risk transfer transactions (such as securitisations and credit derivatives). This is essential in the framework of the “originate and distribute” model currently used by many financial institutions and that consists in transferring as quickly as possible the risks associated with the loans extended and not retaining them as in the past. The treatment set out in Basel II thus aims to ensure that securitisation transactions now have their own economic reality, rather than seeking regulatory arbitrage as was sometimes the case under Basel I. Based on two fundamental principles – first, the actual nature of risk transfer and second, the significant nature of these transfers – the treatment of securitisation in Basel II applies not only to banks acting as originators and investors but also as sponsors. This treatment also takes account of the many specific mechanisms in this type of transaction, such as early amortisation clauses and credit enhancement.

To support my point, I would like first to explain how we at the Banque de France and the ACPR approach this twofold issue (identify the challenges and adapt when necessary our policy framework) (1). I will then illustrate our approach by addressing the case of financial market infrastructures (2). 1. Identify the challenges and be ready to change our policy framework Technological innovation has the power to create new services for consumers but also to reshape financial market structures. I will not elaborate on a phenomenon that everybody can see developing in the financial sector. The whole value chain is being impacted by Fintechs as well as by Bigtechs, which are introducing almost every day new ways to pay, to provide credit, to get insurance and, of course, to invest within capital markets. By doing so, they are  also modifying the financial ecosystem that we supervise and may contribute to an increase or a shift of risks in the financial system. Data and consumer protection issues raised by new technologies, anti-money laundering challenges posed by new usages, operational risks specific to third party providers and cloud outsourcing, including cyber-risks, competition impacts: the list of issues is quite long! I should also mention the systemic threats that large actors can represent if they use their huge consumer base and leverage on worldwide networks effects without sufficient regard for financial stability consequences. Facing these changes, Central Banks and Supervisors need to adopt the right mindset.
But we are not the main players in driving long-term productivity growth. We do not invent new technologies or processes. And the necessary supporting policies such as product and labour market reform, infrastructure, education, ensuring the economy is open to competition including from abroad – these are issues for governments and elected politicians. Looking at advanced economies, particularly with aging populations, we are all going to have to work a bit harder on productivity growth in the longer term if living standards are to continue to rise. But the growth rate of productivity does matter to central banks. It is a very important factor in determining the supply side of the economy; the capacity of the economy to grow without generating inflationary pressure. And in recent years, it has become more important to us as the really hard questions about the economy have been as much if not more about understanding post crisis changes in the level of supply as about the level of demand. We spend more time now discussing the supply side in the MPC – mentions of ‘supply’ and ‘productivity’ in the minutes of MPC meetings have doubled, relative to mentions of other terms, between 2006 and 2014.Productivity is also a key determinant of the growth in real incomes and so affects the demand side of the economy as well. Drivers of the economic recovery Over the past two years, UK economic growth has averaged 2.5%; stronger than most of our G7 partners and we are forecasting that to continue.

The Icelandic authorities were assuming, however, that the banks were solvent. Their published CAD ratios were well above the 8% threshold, and as late as August 2008, the Icelandic Financial Supervisory Authority had deemed them able to withstand severe capital shocks. Now, however, we know that this was probably not truly the case, as there were hidden vulnerabilities in their capital positions. Be that as it may, with the solvency assumption in mind, the authorities tried to build defences against potential foreign currency liquidity problems at the banks by negotiating swap lines and tapping foreign capital markets, in both cases with limited success. 2  BIS central bankers’ speeches  There was also a failed attempt to nationalise one of the banks in late September. It was fortunate that it failed, as nationalising the bank would have turned a bank foreign currency refining problem into a sovereign problem, with the serious risk that the sovereign might have defaulted on such foreign currency payments. In this light, and given the lack of international co-operation, the Icelandic authorities were forced to consider radical solutions. Although they were not necessarily articulated fully at the time, these solutions entailed several goals: to preserve a functioning domestic payment system, ring-fence the state in the case of bank failures, limit the socialisation of private sector losses, and create the conditions for rebuilding a domestic banking system. The adopted solution included a declaration that all deposits in Iceland were safe and all deposits in Icelandic-headquartered banks were given priority over other unsecured claims.
And one segment where this may have a greater impact, and specifically alter the bankcustomer relationship, is that of payment services. Bank customers and technology: the payment services segment. Allow me to illustrate the changes emerging in this segment with a brief reference to the new Directive on payment services, known as PSD2, as I previously mentioned. 4/8  One of the most notable aspects of this Directive is that it definitively institutionalises the activity of the so-called third-party service providers, or TPP. The Directive acknowledges the right of holders of a payment account to expressly authorise a third-party entity, provided it is duly authorised, to order payments on their behalf and/or to consult certain information associated with this account. In the first instance, we are talking about what are known as “payment initiation service providers”, while in the second case they are called “account information service providers”. The latter offer users the possibility of gaining consolidated knowledge of the situation of the payment accounts the users have with different entities, thereby helping them with their financial planning. Conversely, payment initiation services arise as an alternative to the use of cards, for the payment of purchases made in e-commerce environments. They are consequently characterised by providing payment beneficiaries with the security that payment has been initiated correctly, acting as a spur for expediting the delivery of the good or service.

As I noted at the start of my address, I believe it is important that they should be mindful that, although technological developments open up a greater range of options for them in terms of conducting their transactions and financial operations, they also demand of them greater responsibility and involvement. It is necessary that customers fully understand the potential consequences of their choices and, in turn, take all due precautions so as not to be the victim of illicit actions, using in this connection the control tools offered to them by their banks. Customers must, for instance, strive to understand the true scope of the authorisation being granted to a TPP and accept, should they consider it appropriate, the possible commercial use of their information beyond the provision of a specific payment service. Evidently, this 5/8  will only be the case if the TPP wishes to seize the opportunity to obtain broader authorisation than is provided for under PSD2, but this is not a remote scenario given the growing value of data in a digitalised society. The fact that, owing to a lack of knowledge or of due attention, any user may ultimately authorise access to a volume of personal information which they would really have preferred to keep private is one of the concerns arising from the development of the new technologies, and it highlights the importance of assigning resources to familiarising customers with the existence of these new risks. Another concern is the area relating to cybernetic threats and fraud.
I am convinced that, under the circumstances, the SNB’s monetary policy is currently the approach that best serves Switzerland’s overall interests in the long term. At our most recent quarterly monetary policy assessment, we therefore decided to maintain our expansionary monetary policy. The interest rate on sight deposits at the SNB is unchanged at –0.75%. At the same time, the SNB will remain active in the foreign exchange market, in order to influence exchange rate developments where necessary. Despite a slight depreciation, the Swiss franc is still significantly overvalued and this is reflected in economic activity. Last year, the Swiss economy only recorded year-on-year growth of just under 1%. For this year, we expect growth of between 1% and 1.5%. Uncertainty is high, however, and conditions remain difficult. Last year, inflation was very low, at –1.1%, due in large part to the slump in oil prices and the appreciation of the Swiss franc following the discontinuation of the minimum exchange rate. The impact of both variables is temporary. For this year, we expect an inflation rate of –0.8%. In the SNB’s view, it is essential that, in the medium term, inflation returns to the range compatible with price stability. And, according to our current inflation forecast, that is what will happen. As you can see from slide 12, we are expecting that, given an unchanged threemonth Libor of –0.75%, the inflation rate will return to positive territory next year. This brings me to the end of my speech.

When voting and excluding individual equities, the SNB works together with external proxies. BIS central bankers’ speeches  5  That brings me to the third challenge – market liquidity. In some markets, liquidity conditions have deteriorated. Yet it is difficult to gauge how liquid the various financial markets really are, because there is no single measure that can fully capture all aspects of market liquidity. For example, we are seeing a worsening of liquidity conditions in corporate bond markets. The blue curve in slide 8, for instance, shows that trading volumes at traditional marketmakers in the US have more than halved since 2007, whereas the market has grown considerably over the same period. However, both for market participants and as regards financial stability, it is not only the level of market liquidity but also its resilience that is important. In recent years, we have repeatedly seen how market liquidity can fall sharply in times of stress. 3 There have, in particular, been a few days on which – for no apparent reason – there was a sudden surge in volatility. This was the case in October 2014 in the US, when ten-year yields dropped by 37 basis points in a single day. Japanese government bonds experienced something similar a few weeks ago, falling by 26 basis points in one day. The two charts in slide 9 use histograms to illustrate how unusual the price movements were on these days.
But, if the suggestion in some of the simpler textbooks is that the central bank can control the size of commercial banks’ balance sheets as easily and directly as its own, this is clearly not the case. Influence is not control and broad money certainly shouldn’t be considered an instrument of policy. Second, and whatever the process by which their supply is determined, quantities of money – whether narrow or broad – can also be affected by changes in the demand for deposits. If the private sector wants to hold more of its wealth in this form, for a given level of spending and economic activity, then accommodating that demand has little effect. Chart 9: Unless accommodated and matched by greater supply a rise in the demand for money is contractionary  (r’eq) shows the increase in the interest rate if the higher demand for money had not been accommodated by an increase in money supply. And third, I think the experience of QE has shown pretty clearly that, at least when it comes to central bank reserves, it’s not just the position of the MD line that can change, but its slope as well. If so, and if you accept any part of the idea that injections of central bank money work via interest rates and asset prices, this means that a given quantity of QE can have differing effects on demand and inflation. Let me start with the central bank’s balance sheet, taking the latter two points together.

Although the resulting impact on core goods prices began to fade through the second half of last year it was then supplanted – and superseded – by the effects of the war in Ukraine on the supply and prices of food and energy. And the huge squeeze in real incomes, resulting from these jumps in import prices, has subsequently led to second-round effects on domestic wages and prices. This, to me, sounds the more plausible explanation of the data we’ve seen. What would have been needed to control inflation? It is, of course, possible – with the benefit of hindsight – to imagine a different path for monetary policy over the past that would have kept inflation close to target even in the face of these subsequent shocks. Using the Bank’s economic model, Chart 16 plots the paths of unemployment and nominal wages necessary to keep price inflation roughly at 2% through 2021 and 2022. The simulation suggests that interest rates would have to have risen well into double digits. Another thing it makes clear is that, as I argued in a talk last autumn[16], there is no getting round the impact on real incomes of these jumps in import prices. One way or the other – whether as higher price inflation or lower wage inflation – increases on this scale are bound to result in a period of falling real pay (and also falling real profits for domestic companies).