samchain/econo-pairs-v1 huggingface dataset:
Kate Barker: Monetary policy – from stability to financial crisis and back? Speech by Ms Kate Barker, Member of the Monetary Policy Committee, Bank of England, at the National Institute of Economic and Social Research, London, 8 March 2010. *  *  *  I would like to thank Matthew Corder and Jake Horwood for research assistance and I am also grateful for helpful comments from other colleagues. The views expressed are my own and do not necessarily reflect those of the Bank of England or other members of the Monetary Policy Committee. It is a particular pleasure for me to have the opportunity to return to NIESR, where I worked in the early 1980s in the aftermath of a previous recession, to talk in my present role as a policy-maker. At that time, one of my responsibilities was to monitor and project world trade – I am very thankful that I didn’t have to deal with the analysis of a fall in trade of the magnitude seen in this recession, when world trade 1 fell by a cumulative 18% over the fourth quarter of 2008 and the first quarter of 2009, before starting to recover – up 11% on the low point by the end of 2009.

Thailand has advantages to be a hub for regional headquarters of multinational companies; a hub for logistics and distribution activities; a sourcing hub for regional markets; and a financial hub for regional markets. However, to remain competitive as a regional hub is a challenging task. 2  BIS central bankers’ speeches  14. To remain as the preferred hub and entry point of the region, we perceive an opportunity for investment from China which has the advantage in capital, construction capacity and technology. As the advantage of low cost factor of productions is rapidly declining, China is facing an urgent need to re-orient supply chains through Thailand to enter ASEAN and the Greater Mekong Subregion (GMS) in particular. China and Thailand should therefore make every effort to grasp this opportunity and construct win-win solutions for both sides. Ladies and gentlemen, 15. Let me conclude that China economic prosperity and advancement provides wide range of untapped opportunities for Thailand. They are right here where we are now, in our region. We should seize it and not miss it. And I am confident that so long as we work hand in hand with China, unite together, and embrace the merit of economic integration, the synergy of the two will surely give its fruit on the growing tree. Thank you. BIS central bankers’ speeches  3
Prasarn Trairatvorakul: Financing the Greater Mekong Subregion Keynote address by Dr Prasarn Trairatvorakul, Governor of the Bank of Thailand, at the Euromoney Greater Mekong Subregion Investment Forum, Bangkok, 20 June 2012. *  *  *  Excellencies, Honorable speakers Distinguished guests; Ladies and Gentlemen It is an honour to be a part of the Greater Mekong Investment Forum and a great pleasure to commemorate the 20-year anniversary of the Asian Development Bank Greater Mekong Subregion (GMS) Economic Cooperation Program. I would like to thank the Euromoney for inviting me to speak today. The shift in the world’s center of gravity towards “rising Asia” has been widely recognized and well documented. But within the Asian region lies the Mekong Subregion which the ADB has been financing and providing technical assistance for more than two decades. Today this region is getting much of the world’s interest and attention. The rich human and natural resource endowments as well as the complementary diversity of the Greater Mekong Subregion have made it the new frontier of South East Asian economic growth. The GMS stands among the world’s fastest growing areas, registering a 10-year-average growth of around 8%, followed by the BRIC nations at 6.7% and Sub-Sahara Africa at 5.5%. The global attention and interest on this region means prospects for increasing trade and investment. Financial services as we all know are derived demand from the needs of the real economy for trade and investment opportunities.

Without these measures, the euro area would have been in outright deflation last year and prices would have fallen at an even quicker pace this year. Growth would have been significantly lower. BIS central bankers’ speeches  1  Second, while our measures were deemed effective, they were also judged to be insufficient in view of the deteriorating outlook for price stability. There was a concrete risk that without increasing the quantitative stimulus, the date by which inflation would settle around levels below, but close to, 2% would once more be pushed back beyond any relevant definition of medium term. Therefore we decided to recalibrate our monetary policy stance. We cut the deposit facility rate further to –0.3%, we extended the envisaged end-date for our monthly purchases to the end of March 2017, while maintaining its conditionality on the inflation outlook, and we announced that we will reinvest the principal payments of our purchased assets once they mature, for as long as necessary. We also decided to continue conducting the main refinancing operations and three-month longer-term refinancing operations as fixed rate tender procedures with full allotment for as long as necessary, and at least until the end of the last reserve maintenance period of 2017. Since our meeting in early December, conditions have once more changed. A moderate recovery of the euro area economy is under way, driven mainly by domestic demand. But downside risks have increased again amid heightened uncertainty about emerging market economies’ growth prospects, volatility in financial and commodity markets, and geopolitical risks.
One of the tasks of this board, which will be located at the ECB, will be to gather and analyse information that may be of significance to the stability of the financial system in the EU. If the work of the council is to be effective, it is important that it will be able to be forthright about the risks it sees and that the message it delivers is not obscured by political considerations. In order to strengthen the coordination of financial supervision in the EU, the existing committees for collaboration on the supervision of banking, securities and insurance operations are now being converted into authorities. This will give these bodies greater powers to intervene. Concluding thoughts So, it is clear that financial crises are nothing new. What distinguishes this crisis from earlier ones is its global extent and extreme complexity. Basically, it is about the fact that the flows in the financial system have increased dramatically at the same time as the system has become increasingly complex and difficult to oversee. The mutual dependence of the various markets has increased. This means that crises can more quickly and more forcefully hit an increasing number of economies at the same time. The current crisis has demonstrated this in no uncertain terms. This crisis has probably already passed its peak. Extensive efforts are now underway around the world to design a regulatory and supervisory system that will reduce the risks of a new major financial crisis. We need a better insight into the build-up of global risks.

Global imbalances laid the foundations for the current crisis If we now move on to the current global financial crisis we can see that there are both similarities and differences compared to the Swedish bank crisis of the 1990s. The circumstances that formed the background to the outbreak of the current crisis in the summer of 2007 included the considerable global imbalances that had developed, with an enduring savings surplus in some countries and deficits in others. The surplus was invested on the global financial markets and the substantial capital flows there helped to push down interest rates. As a result, demand and prices on many asset markets around the world increased explosively and there was a general fall in the premiums for credit risk. The explosion in asset prices was fuelled by a rapid expansion in credit. Money was lent more carelessly than previously. Housing bubbles developed in several parts of the world. In the USA, the development of such bubbles was reinforced by the inadequate regulation of the mortgage market and a political agenda that aimed to promote house ownership among people on low incomes. The search for yield drove investors to borrow more in order to achieve greater leverage in their investments. Financial innovations also helped to drive this development. A steady flow of new and increasingly complex instruments were created to satisfy the demand for investments with a higher yield.
Irma Rosenberg: Monetary policy and the labour market Speech by Ms Irma Rosenberg, First Deputy Governor of the Sveriges Riksbank, at Simra, Stockholm, 22 May 2007. *  *  *  Introduction Thank you for the invitation to come here! After the economic crisis and the changeover in economic policy at the beginning of the 1990s, the Swedish economy has functioned much better than anyone could have imagined. GDP growth has been higher than in the 1970s and 1980s, inflation has been low and more stable and real wages have increased much more quickly than during both of the previous decades. However, developments in the labour market have not been as favourable. Unemployment rose tangibly in connection with the crisis in the 1990s and has since then remained at a higher average level than before. Inflation has on average been slightly lower than the Riksbank’s inflation target since it was introduced in 1985. During the years 2004-2005 inflation was noticeably below the target. It may therefore be relevant to claim that the high unemployment is largely due to incorrectly balanced monetary policy. There are also debaters who have implied that an economic policy that aims at low inflation can in itself contribute to unemployment being higher than necessary. I intend to devote my speech today to explaining my views on this.

Instead, imbalances in the labour market would be counteracted by means of a counter-cyclical policy. Substantial emphasis was placed on the importance of wage formation for developments in employment. Only when wage growth dropped below the level of our trading partners did unemployment begin to fall and the manufacturing sector began to pick up. Thus, the fixed exchange rate policy was not introduced in order to strengthen the internationally exposed business sector. On the contrary, it was a breach in the approach whereby monetary policy and “exchange rate policy” had been oriented towards safeguarding these sectors. The fixed exchange rate was an intermediate target for achieving low and stable inflation. The exchange rate remained stable until the autumn of 1996, partly because wage growth was low and aggregate demand did not contribute to pressures in the economy. Gradually, the krone began to fluctuate more. The experience of the last half of the 1990s showed that monetary policy cannot fine-tune the exchange rate. Developments in international financial markets provided fertile ground for more pronounced fluctuations. And more fundamentally, when labour market pressures rose and incomes policy failed, exchange rate developments were no longer providing signals for wage formation and fiscal policy. High petroleum revenues, fiscal slippage and expectations of increased use of petroleum revenues contributed to this. Therefore, the exchange rate was no longer suitable as a nominal anchor. The introduction of new guidelines for economic policy in March 2001 and the conduct of fiscal policy have altered the interplay between economic policy components.
The opposite holds if productivity growth remains weak: unemployment falls more quickly, but we would then also need to begin raising Bank Rate earlier. Shorter-term market interest rates have moved higher since guidance was introduced, but no more so than is justified by a string of unexpectedly strong activity indicators. And there is persuasive survey evidence that businesses have both understood the message (Chart 3), and that it has made them more prepared to hire and invest (Chart 4). In the event, though, unemployment fell rather faster than expected, reaching the 7% threshold in the data release for the three months to February. In anticipation of that, in our February Inflation Report, we provided further guidance, not only on the conditions that would lead the Committee to begin tightening, but also the likely trajectory thereafter. Regarding the first question, while unemployment provides a useful conditioning variable for not tightening, the decision of when to tighten needs to take account of other margins of slack as well. These can arise in both the labour market – for instance, discouraged workers temporarily out of the labour force and those who are underemployed – and inside firms. The amount of slack in an economy is necessarily a fuzzy concept, as potential output cannot be observed and can be inferred only indirectly. Nevertheless, given the transmission lags, monetary policy makers cannot avoid forming a judgement about the level of activity consistent with inflation sustainably remaining at target, and thus of the margin of economic slack.

Third, reduced technology sharing and collaboration will hamper the widespread adoption of best practices, thereby reducing efficiency and increasing costs. Fragmentation in the real economy will also have an impact on capital flows and financial markets. Geoeconomic fragmentation elevates financial market risk and disruption, as capital flows become more regionalised and less global. Consequently, this reduces market liquidity and returns and increases market volatility. The impact of disruptions in cross-border capital flows falls disproportionately on the less developed countries. In short, no country will emerge unscathed with rising geoeconomic fragmentation, with emerging market economies set to bear the brunt of reduced trade and capital mobility. In the last decade, emerging market financial assets benefitted from the rising tide of capital inflows that created a virtuous cycle of capital market reforms, deeper liquidity, and vibrant market development, which in turn drew in more capital inflows. The impact of a slowdown in capital inflows would be felt most acutely in those countries with the least developed capital markets and rely the most on foreign capital, putting them at risk of financial or balance of payments crises. Emerging markets that have already reached a more advanced stage of development, included in global indices, and run healthy external balances may be more resilient. LONG TERM: CLIMATE CHANGE  Perhaps the most significant financial risk for investors over the long term is climate change. This risk can materialise in two ways.
The latest Financial Stability Report, published in May 2022, includes simulations of the impact on institutions of a scenario in which some of the current risks materialise. Specifically, the scenario assumed additional energy price increases and more persistent bottlenecks in global trade, generating fresh upturns in inflation and a further tightening of monetary policy, alongside a deterioration in agents’ confidence and greater risk aversion. These were very severe stressed scenarios, since they entailed cumulative deviations from the baseline GDP growth in 2022 and 2023 of between 2.8% and 5.4%. The results show that the sum of the different transmission channels in these stressed scenarios would generate a negative impact on bank solvency of between 1.8 pp and 3 pp for Spanish banks as a whole. By component, while net interest income would increase, the worsening of the credit quality of loans to the private sector would lead to greater losses. 5  Moreover, the simulated interest rate hike entails a slight reduction in the value of bond holdings on banks’ balance sheets. There is nonetheless some heterogeneity across banks, owing to differences in factors such as the weight of short-term and/or variable-rate lending, the accounting classification of debt securities, their international presence or the extent of their lending under the ICO programme.

They are indispensable to avoid any room that may be used for abusive actions that would impair the institution. I therefore request that you take the necessary measures in terms of financial, human and technological capacities in order to ensure the safety of each banking operation. In pursuing its supervisory function, the Bank of Albania will have this matter under close focus and I assure you that any decision that may have hampered the safety of the activity will be handled with utmost stringency by the law. In a broader context, banking activity, in addition to operational risks, is faced with other financial-related risks. We will therefore increase the regulatory requirements for banks to be engaged in an integrated process of risk evaluation and management proportionate to the level of development and sophistication. In a more practical approach, this implies that banks should have specific functional structures that monitor risks in the main activity areas and endeavour to anticipate their possible evolution and impact on banks’ activity. These structures must be  2  BIS Review 174/2010  in place in the largest banks and their products should be an integral part of the decisionmaking process. Dear participants, We are leaving behind a challenging year but other numerous challenges will follow for banking activity. They provide us the opportunity to put our vision into practice, in order to ensure a stable banking activity as a precondition for conducting an efficient intermediation activity with remarkable contribution to economic development at home.
When central government debt increased dramatically during the first half of the 1990s, when, at the same time, unemployment increased to a very high level and large fluctuations in long interest rates and the exchange rate indicated great uncertainty in inflation prospects in the mid-1990s, there were probably not many who could imagine that we would so quickly have such a positive development as we are at present experiencing. Central government finances have improved markedly and we are now one of the best in the EU with regard to the size of central government debt and the central government budget balance. For some time now, growth has been strong and we expect unemployment to fall towards 4% during the coming year. And despite this, inflation expectations remains at a stable level close to the target. We can therefore note that the Riksbank has been very successful in creating support and credibility around the price stability target. Without such a responsible fiscal policy, it would not have been possible to reduce inflation expectations in the way that has happened, however. The prohibition BIS Review 48/2000  2  against financing the budget deficit at the central bank was a step in that direction. The rule that the Government and Riksdag adopted and which means that fiscal policy is to strive towards a surplus of an average of 2% over a business cycle furthermore supports the price stability target and creates good conditions for growth.

In fact, the spill-over effects transmitted from one region of the world to another via interest rates, exchange rates and equity prices, for instance, can be mitigated through closer regional integration. By reducing the relative degree of economic and financial openness of the regions concerned, such integration can be an effective instrument to shield them from external shocks, thereby obviating the need for trade or capital restrictions. The European experience shows that regional integration can be beneficial in this respect. The euro area weathered well the economic slowdown and financial market uncertainties arising from the series of balance of payments crises seen between 1997 and 1999. Likewise, provided that the current economic slowdown in the United States does not develop into a hard landing, the euro area is expected to record in 2001 above-potential growth for the second year in a row. To be sure, sheltering domestic economies from external shocks was not the primary consideration of European integration when it was initiated almost 50 years ago. Nor were the creation of the euro and the setting-up of the European Central Bank (ECB) objectives at that time. These are, in fact, only the latest developments in a long process of regional integration that started and is continuing with a strong political commitment.
If this estimate is correct, it would mean that the majority of today’s reserves are unusable and thus have no economic value. The assets have, in other words, become “stranded”. Oil and gas companies are major borrowers on international bond markets and a rapid transition may therefore create financial risks and instability. For banks, the value of collateral can fall and credit losses can rise, which could reduce their capital, impair liquidity and thus weaken the banking system. The insurance sector is related part of the economy that may be hit hard by a rapid transition. Tighter insurance requirements and increased liability could have a very adverse effect on the insurance sector. We can already see that it has become more common for insurance companies not to insure certain climate risks. Figure 2 also provides a description of how the effects of transition risks may spread to the financial sector and threaten financial stability.5 Figure 2. Physical risks and transition risks affect financial institutions and hence financial stability. PHYSICAL RISK  Gradual global warming  Extreme weather events  TRANSITION RISK  Adaptation to less fossilbased economy  Climate taxes  Tougher regulation  Changed consumption patterns  COMPANIES, AGRICULTURE AND HOUSEHOLDS Lower productivity Falling asset prices Lower profits  FINANCIAL INSTITUTIONS   Tighter insurance requirements  Investment losses  Credit losses   Increased risk weights  Source: Danmarks Nationalbank (2019)  Third, I would like to highlight the risk of extreme outcomes, so-called threshold effects.

Findings show, for example, that an effective climate policy need not be expensive and that allowing for extreme events is inexpensive insurance against substantial but uncertain future climate costs, see Chart 1.22 The blue line indicates that the costs of overestimating the effects of climate change are not particularly prohibitive. This is because the carbon tax is an effective tool to reduce climate change at a low cost. The red line indicates, on the other hand, that the cost of underestimating climate change can be very substantial. Chart 2. Global warming for various carbon taxes. Degrees Celsius 9  9  8  8  7  7  6  6  5  5  4  4  3  3  2  2  1  1  0  0 2020  2060  2100  2140  2180  Temperature without a tax  Carbon tax in the EU (200 SEK/ton)  Global carbon tax (200 SEK/ton)  Global "swedish" carbon tax (1100 SEK/ton)  Source: Hassler et al. (2020)  Chart 2 shows estimates of the global temperature increase in four different scenarios. The first scenario (blue line) indicates what happens if we don’t implement any political measures. The temperature will then have increased by almost 3O C by 2100, and by around 9O C by 2200. The red line show that a carbon tax only within the EU has a very small effect on global warming.