samchain/econo-pairs-v1 huggingface dataset:
William C Dudley: Regulation and liquidity provision Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the SIFMA Liquidity Forum, New York City, 30 September 2015. *  *  *  The charts can be found at the website (Federal Reserve Bank of New York). The financial crisis and the ensuing recession exacted a high cost on the country. Real gross domestic product (GDP) declined by over a half of a trillion dollars. Total nonfarm payroll employment declined by 8.7 million jobs, and 5.8 million households lost their homes to foreclosure. Extraordinary fiscal and monetary policy efforts were required to prevent a collapse of the financial system and the onset of a world-wide economic depression. In the aftermath, new regulations, such as Basel III and the Dodd-Frank Act, were implemented to strengthen the financial system and to limit the risk of a future financial crisis. Some opponents of tougher bank regulation claim that the increased regulatory requirements, such as the higher capital requirements and new liquidity standards, that have been imposed on large financial institutions in the aftermath of the financial crisis have reduced these firms’ market-making capacity. As a result, so the argument goes, this is leading to less liquidity for trading securities, and to more illiquidity events in which the prices of financial assets move sharply and become temporarily unmoored from their fundamental valuations.

In Japan, the impact of the first arrow of monetary stimulus is at risk of being blunted by the recent consumption tax hike. •  The Bank of Japan has just announced a further expansion in stimulus – an openended asset purchase at a rate of about 15% of GDP a year until the inflation target of 2% is met. •  Meanwhile, the third arrow remains largely in its quiver. In China, the challenge is to strike a delicate balance between implementing the reforms necessary for long-term sustainability while supporting short-term growth and stabilising the property market. •  The reform agenda that emerged out of the Third Plenum offers a credible and comprehensive blueprint for the way forward. •  The leadership is keenly aware of what needs to be done and is committed. •  But significant execution risks remain. In India, there is a new government in place committed to improving the business environment for investment and building the infrastructure necessary for a strong manufacturing sector. •  But India needs to accomplish this while taming inflation and reducing its fiscal deficit, not to mention recalibrating the dynamic between the centre and the states that is critical for reforms to take root. BIS central bankers’ speeches  1  Reverting to mean or different this time? The weak and uneven global recovery post-Crisis has raised concerns about the pace of future economic growth and what it means for returns on investments.
Any significant increase in net external leverage or a recurrence of entrenched macroeconomic imbalances on the back of the large investment projects could weaken Iceland’s creditworthiness. These were the main points highlighted by Standard & Poor’s and there is every reason to take them seriously. Of course it is crucial for the Republic to enjoy a good credit rating. It is important for the Treasury’s access to markets and investors, and for its credit terms. Iceland’s sovereign rating also represents the ceiling for ratings of Icelandic banks and other rated institutions. Favourable ratings are vital for the banks’ expansion abroad and for their growing need for easy access to foreign credit. Thus the Treasury and the banks share an interest in Iceland being able to maintain its good credit rating. Ladies and Gentlemen As I mentioned earlier, the Central Bank raised its policy interest rate by 0.25 percentage points last week. The Bank has thereby raised its policy rate by 3.7 percentage points since its first hike in May last year. These measures reflect the Central Bank’s view that, given the current economic situation and the scenario two to three years ahead, it is much more effective to ensure a sufficiently tight stance in good time rather than to wait and take action later. Belated measures to tighten the monetary stance entail a risk of higher inflation afterwards, and thereby a far greater risk for the financial system, businesses and households.

The only conclusion that can be drawn from the massive growth in lending by the banks is that they have overstepped the mark. There is no question that this surge in lending is a major contributor to the current expansionary forces in the economy, which have fuelled inflation and call for a higher policy interest rate than otherwise. The banks are a pillar of the Icelandic economy. They insist that the Central Bank and the Government should act with restraint and promote economic stability, so they also have to make comparable demands towards themselves. In the long run, no economy can sustain this huge expansion in credit that originates in the banking system. Last week the Central Bank published its quarterly Monetary Bulletin in which it discusses economic and monetary developments and prospects and has published its new macroeconomic forecast. Without going into detail here, the broad finding is that robust private consumption will continue and investment will increase, especially business investment, for reasons including that aluminium-related projects have been stepped up for this year, as I mentioned earlier. Public consumption growth is expected to be modest, however. GDP growth will be 6.4% this year. It will be marginally less next year, when growth of private consumption and investment will also slow down. The positive output gap will widen considerably this year and in 2006. This year the current account deficit will peak at 12% of GDP, then shrink next year, contrary to previous forecasts.
Working with the Bank of England’s Resolution team, the PRA will need closely to integrate recovery and resolution planning within its supervision; and in my view should embed a proactive intervention framework akin to the US Prompt Corrective Action within its supervisory approach to deal with the inevitable situations where firms get into the danger zone. Above  2  BIS Review 121/2010  all, these tools should support competition in the industry, by accepting that there will be winners and losers. In two years’ time, we will have a new system of financial regulation in the UK. Those of us involved can assure you that the transition is not a small task, but I can also assure you that the Bank is fully committed to working with the FSA to ensure a smooth transition. There is a great deal to be done to implement the new system of regulation, to articulate and build the public interest in financial stability, and thereby to improve the stability of the system itself. Basel III, macroprudential tools, countercyclical buffers, are all things that Adair and I get excited about. They are important foundations of good policy. But on their own they don’t win the public interest argument for financial stability. To do that, we have to build the case that the industry will serve the needs and interest of the public. The authorities cannot do this alone. Building confidence in the financial system takes effort and time. It is a common goal and in the interest of everyone.

While the ONS have suggested that the official data are likely to be better at picking up small retailers and unconventional shopping channels, such as internet purchases, the conformity of the picture given by the Distributive Trades survey with other potential indicators of spending, such as consumer confidence and the Agents reports, have led us to place less weight on the official data on retail spending for the present. 2  BIS Review 95/2008  The surveys will not always provide the best coincident guide, however. For instance, during the 1999-2002 period, the official data suggested greater swings in manufacturing output growth than did the Industrial Trends survey (see Chart 3). Now, during this period, we know that there was a rapid expansion in ICT-related activities, followed by a sharp contraction. The simple balance of “ups” over “downs” in the Industrial Trends survey could therefore be expected to have failed to reflect adequately the sharp movements in that sub-sector’s activity. So, for this period, the official data probably gave a better picture of what was going on. BIS Review 95/2008  3  A second use of surveys is in the application of forward-looking questions to form a view of the near-term outlook. In that regard, questions on business and consumer confidence, and on the trend in orders and backlogs, can give some indication of likely trends in output and spending.
Gent Sejko: Supervisory policies after the start of the Banking Union – initial experiences and outlook for CESEE economies Intervention by Mr Gent Sejko, Governor of the Bank of Albania, in 6th ECB Conference on CESEE: “CESEE, old and new policy challenges”, session’s topic “Supervisory policies after the start of the Banking Union – initial experiences and outlook for CESEE economies”, Frankfurt am Main, 10 June 2015. *  *  *  Dear participants: I am honored and pleased to be in this important conference among distinguished professionals of banking and financial industry! I want to start by thanking the organizers for the invitation to be here, but also to congratulate the ECB on its new building: I wish it is as functional, as it is beautiful! Coming from the banking industry, I have been feeling the impact on the banking activity arising from the changing economic and financial environment due to recent global financial crisis. Since my appointment as the new Governor of the Bank of Albania at the beginning of this year, I have been seriously estimating the challenges we face in order to maintain the stability of our banking sector and ensure that it is fit to play its role in support of Albania’s economic growth. In my intervention today, I would like to share with you how we see the impact of changes in the financial landscape, including those in supervision superstructure, on the financial system of CESEE countries and more specifically on Albania’s one.

Indeed, it will take only a few seconds to authenticate our currency notes. For example, to apply the simplest “Look” technique, what is needed is only for us to hold the currency notes against a light. This will allow us to verify simultaneously at least four important security features in all of our currency notes; the 3D Agong’s watermark, bright electrotype numeral, perfectly register see-through mark or windowed colour shifting security threads with texts. This technique is the easiest and the simplest manner as no special gadget is required. Coupled with a few other techniques contained in the My Ringgit apps we can make a firm conclusion on the authenticity of the currency notes. BIS central bankers’ speeches  1  Similarly, our new coins are also sufficiently protected by unique security features. In the course of designing the coins, the Bank had engaged with various stakeholders to ensure that the new coins are not only practical but sufficiently protected as well. Each coin denomination is unique in term of size and security features to ensure no fake coins can pass through the coin authentication machines. As part of our financial education effort, Bank Negara today is launching a mobile application called My Ringgit. This application enables the general public to learn about the most practical and easiest techniques to authenticate our currencies and learn in greater detail the security features found in our currency notes.
In an ideal world, the global capital market should be one integrated whole, with no restraints on the movement of capital. Then savings could be channelled to their most productive uses and countries could fund their investment needs at the lowest possible cost. But in reality many economies still lack the institutional framework to deal with free capital flows. Furthermore, investors are prone to herd behaviour which can result in large surges of capital into and out of countries. These surges cause bubbles and crashes which can do great harm to economies, especially small and vulnerable ones. The liberalisation of capital accounts must thus be treated with caution. It must not proceed faster than the strength of countries’ domestic financial systems and institutional capability. Controls on “hot money” are difficult to administer and subject to evasion, but they can help make countries less vulnerable to volatile financial markets. For instance in Indonesia, following the liberalisation of the banking sector in the late 1980s, companies made large short-term borrowings in foreign currencies. They circumvented rules intended to prevent this. When the crisis struck, the Indonesian government did not know how much the companies had borrowed. Yet the total was almost $ 50 billion1, more than double Indonesia’s gross foreign reserves. The effects of the capital controls which Malaysia imposed in September 1998 are still being debated. But even Malaysia, which is implacably opposed to speculators out to make a quick profit, still welcomes foreign investors including portfolio investors buying Malaysian shares.

A managed float has not totally eliminated speculative pressures on the $ but for our circumstances it is the most appropriate approach. The best exchange rate regime depends on the specific circumstances of each economy. While it is important to get this right, the exchange rate does not exist in a vacuum. Ultimately, it is the strength of the country’s economy, the soundness of its fiscal and monetary policies and the confidence of both foreign investors and its own citizens in the country that determines whether or not the currency is stable. If these fundamentals are out of kilter, no technical fix of the exchange rate regime will avert a crisis. Hedge funds Perhaps the most controversial issue to have arisen from the crisis is that of hedge funds. They undoubtedly took positions successfully against the Thai baht. The Malaysian Government is certain that hedge funds were behind the collapse of its stock market and currency. Hong Kong and Australia are similarly convinced that hedge funds led attacks on their currencies. BIS Review 93/1999  4  On the other hand there is some evidence that except in Thailand the hedge funds may have been wrong footed in the crisis. George Soros has denied being short on the ringgit, during and several months before the crisis2. A spokesman for Soros Fund Management said in October 1997: “Recent volatility in world financial markets is reflected in the volatility of the Quantum Group’s performance”, a nice cryptic way to say that they had incurred substantial losses.
However, the main reason is that the financial cycle has “gone off the rails” – first through a rapid expansion in credit and debt, and then through a sudden contraction when conditions and expectations have changed. If one had been able to prevent or mitigate the upturn, the economic downturn would not have been so deep. Stabilising the financial cycle is therefore an important part of the general stabilisation policy. There is fairly good empirical support for this description. The more households and companies borrow during an economic upturn, the greater the risk appears to be that the upturn will be followed by a deep recession and a slow recovery.4 The cost to society when financial imbalances are to be corrected is often very substantial. The cost of the global financial crisis has been estimated at between 1 and 3.5 times the total production of goods and services in the whole world during one year.5 One argument put forward after the financial crisis is that it is mainly macroprudential policy that is responsible for stabilising the financial cycle, while monetary policy shall focus on stabilising the economic cycle and inflation. Personally, I am very doubtful as to whether one can make such a division. My doubts are based on both theoretical arguments and assessments of what one can physically achieve with different policy instruments. I will now take up some theoretical arguments, after which I will make the discussion more concrete by giving some examples. 2  See, for example, Borio (2012).

For instance, the Riksbank’s analysis of the financial sector became more structured and systematised, and from 1997 we began to present our analysis in the form of Financial Stability Reports. This financial stability work was, however, far from fully-developed when a new financial crisis broke out just over six years ago, this time on a global scale. For instance, we still lacked a system for crisis management. We also failed to prevent a too rapid credit boom in the Baltic region, at the same time as Swedish banks proved to have liquidity problems when the dollar market froze. As the new crisis was deeper and affected a much larger number of countries than the crisis at the beginning of the 1990s, it also acted as a stronger and more worldwide signal that major efforts were needed to avoid financial imbalances causing problems in the economy as  BIS central bankers’ speeches  1  a whole. The most concrete expression of this opinion was the emergence of the policy area that came to be known as macroprudential policy, which aims to take the overall view of the financial system as a whole that was lacking prior to the crisis. In this context, it is worth pointing out that in Sweden the boundary between macroprudential policy and supervision of individual banks, microprudential policy, is not particularly distinct because of the market structure we have, with four dominant major banks.
Based on the latest microeconomic information available,17 it is estimated that the increase in interest rates since the start of this year (of 1.6 pp for the 12-month EURIBOR,18 the main interest rate to which the stock of mortgages in Spain is linked) will lead to a rise of almost 2 pp in the proportion of households with a high net interest burden.19 This effect would be most pronounced among indebted households between the 20th and 40th percentiles of the income distribution.20  17  This exercise was conducted drawing on information from the 2017 Spanish Survey of Household Finances (EFF by its Spanish abbreviation). The latest Financial Stability Report includes the results of the exercise for various interest rate hike scenarios. It was found that the proportion of households with a high net interest burden would rise by 1.2 pp, 2.3 pp and 3.9 pp, respectively, if interest rates were raised by 100 bp, 200 bp and 300 bp. 18  The 12-month EURIBOR has risen from -0.501% at 31 December 2021 to 1.091% at 20 June 2022. 19  The net interest burden is considered to be high when the ratio of (debt service expenses - interest income from deposits) to household income is over 40%.

However, given the sizeable volume of repayments and the relatively small share of new loans as a proportion of the total stock (owing to the long duration of mortgage loans), the stock of mortgage credit rose by just 1.4% year-on-year in March 2022. In turn, the stock of credit to construction and real estate development continued to decline. Indeed, new housebuilding has not recovered with the same strength as demand for housing, and this is probably being reflected in house prices. Specifically, in 2022 Q1, housing investment accounted for 5.4% of GDP; this compares with 6.2% in 2020 Q1 and is less than half the figure recorded during the real estate boom in the run-up to the global financial crisis. 2  Average debt-to-GDI and debt burden-to-GDI ratios increased in 2020 owing to the decline in GDI. The recovery in GDI drove down these ratios in 2021. 5  Indicators of price imbalances on the real estate market have been showing some minor signs of overvaluation since early 2020. These indicators climbed slightly in 2021 and could increase further if the acceleration in house prices observed in 2022 Q1 takes a firm hold.3 Yet prices are close to their equilibrium levels and distant from the levels reached in the runup to the global financial crisis. In any event, they will have to be closely monitored in the coming quarters. The ongoing macro-financial developments may affect this variable in opposite directions.
A medium-term analysis of the relationship between productivity, wages and unit labour costs suggests that this is indeed the case. Between 2000 and 2008, productivity grew by 3.6 per cent but nominal wages increased seven times faster, by almost 28 per cent. As a result, unit labour costs rose by more than 23 per cent during this period, compared with 15 per cent in the euro area. Thus, despite the more moderate pace of relative cost growth during the last few years, Malta must still recover the ground lost in the early years of this decade. In the absence of relevant data, a sectoral diagnosis is not possible, but given that the export sector is a price taker and continues to attract investment, it is likely that the greatest effort must be made by other, mainly non-traded, sectors, including the public sector. To a large extent, Malta’s weak productivity record explains why per capita GDP in relation to the euro area average has stagnated at around 70 per cent since 2003. It is true that this subdued productivity performance was partly offset by higher labour utilisation in the past two years, but the latter is still some 88 per cent of the euro area level. This analysis suggests that the economy’s growth potential can indeed be raised. This should be a key objective. As things stand, for example, should the Commission’s growth projections prove accurate, in 2011 Malta’s real GDP would only have recovered to its 2008 level.

Pridiyathorn Devakula: Monetary policy in Thailand: current challenges and prospects Speech by M.R. Pridiyathorn Devakula, Governor of the Bank of Thailand, to the APFA 2001 Conference held in Bangkok, 24 July 2001. *  *  *  President of APFA, Distinguished Guests, Ladies and Gentlemen, It is an honour to address the 8th Asia Pacific Financial Association Annual Conference, and to welcome the distinguished members of the Asia Pacific financial community. Judging by the attendance I trust that this three-day event will prove most fruitful and rewarding for all participants. I would like to discuss today the current challenges facing monetary policy in Thailand and what we, at the Bank of Thailand, have set out to do to meet those challenges. In so doing, I will briefly review the progress of the past few years, and look forward to some key emphases of our current policies. The current situation On July 2nd this year newspapers in Thailand ran headline stories to remind us of the four-year ordeal since the floating of the baht and the ensuing economic and financial crisis. These have been difficult years as the economy fought hard to regain macroeconomic and financial stability, and the confidence of financial markets. Economic growth shrank by more than 10 percent in 1998. Underlying this was a sharp correction in the current account in response to the depreciation of the exchange rate. The correction was substantial.