samchain/econo-pairs-v1 huggingface dataset:
On the whole, a moderate, temporary decline in household saving is expected in 2003. Next year, a normalisation of electricity prices will contribute to increasing real income growth compared with 2003. At the same time, we have assumed that a share of the increased use of petroleum revenues over the central government budget will entail increased transfers or tax cuts for households. These factors, combined with lower interest rates, may fuel relatively brisk growth in private consumption in the next few years. In the last few months, house prices have risen at a slower pace than in previous years. Activity in the housing market has declined and it takes longer to sell a dwelling. Growth in household borrowing remains high, but has eased somewhat recently. Weaker developments in house prices and reduced household optimism may further restrain credit growth in the future. Growth in mainland GDP is projected to be lower than trend growth, at 1¼% in 2003 and 2% in 2004. In 2005, growth is projected at 2¼%. The underlying rise in prices in the coming year will be marked by the appreciation of the krone over the last two years. Despite high wage growth, the year-on-year rise in consumer prices adjusted for tax changes and excluding energy products (CPI-ATE) will most likely range between 1½ and 2% until the summer. Subsequent developments will partly depend on externally generated inflationary impulses, changes in the exchange rate and how these changes feed through to consumer prices in Norway.

This is also due to the operations of major central banks, to their unconventional policies; policy reversals can cause major pains, especially where there is much external indebtedness, public and/or private. As Hélène Rey says, the trilemma (free capital flows, exchange rate stability and autonomous monetary policy) may have turned into a dilemma; and that the power of monetary policy rests with the ability to control capital flows – which is a huge tall order. The resort increasingly to macro-prudential tools shows that, de facto, some kind of capital controls revival is under way, for the sake of both monetary policy effectiveness and financial stability reasons. I would argue that exchange rate flexibility has been quite helpful for undertaking macroeconomic adjustment, in Romania, too. Under-development creates additional challenges for monetary policy since catching up is accompanied by higher inflation (the Balassa Samuelson effect). This may not be a problem right now in view of the overall context, but it will likely turn out to bother us in the not too distant future. Migration of human capital (which is a very intense in some of our countries, including Romania) 2/3  BIS central bankers' speeches  also puts a lot of pressure on wages and fuels inflation. Let me turn now to a few regulatory issues. It is widely accepted among professionals, among us, central bankers, that the European banking sector has cleaned up much of its balancesheets, that it is better capitalized.
The region will also be faced with an ageing population in the years ahead. With rising affluence, coupled with the need to achieve higher levels of income to support the increasing longevity, Asian consumers will increasingly demand innovative, better quality financial products and services. At another end of the product spectrum is the scope for enhancing financial inclusion and reducing inequality for the traditionally underserved, such as poor households and small and medium-sized enterprises (SMEs). To unlock the potential of this segment as a driver of growth not only requires product innovation that delivers cost-effective, high-quality and innovative instruments, but also the use of new business model and technology to expand the reach of financial services, especially in poor and remote areas. Second, the strong growth of Islamic finance across Asia in the recent years is another trend that is characterising the region. This dynamic segment will continue to offer strong growth  BIS central bankers’ speeches  1  prospect going forward, backed by its increasing importance as a tool for enhancing financial inclusion and reaching out to the underserved segments, the growing demand for sociallyresponsible investment and ethical financial services in this post-crisis era, and the increase in the wealth of individuals in Asia. Islamic finance has also proved to be a competitive and innovative financial intermediation channel that could strengthen global financial and economic linkages, led by the high growth segment of the sukuk market which has now become an important avenue for international fund raising and investment activities.

Muhammad bin Ibrahim: Forces of change profoundly influencing the Asia-Pacific region Speech by Mr Muhammad bin Ibrahim, Deputy Governor of the Central Bank of Malaysia, at the Asian-Pacific Association of Banking Institutes Conference 2013, hosted by the Institute of Bankers Malaysia, Kuala Lumpur, 7 October 2013. *  *  *  It is with great pleasure that I welcome you to the 2013 Asian-Pacific Association of Banking Institutes conference hosted by Institute of Bankers Malaysia. I would also like extend a special welcome to all overseas delegates, Selamat Datang, as we say in our national language. Given the greater economic and financial integration that is taking place today, it is indeed timely for institutions of learning that focus on the financial sector to come together to deliberate on contemporary issues and trends affecting the region, and its implication on talent needs and development going forward. My remarks today will focus on the forces of change that are profoundly influencing the economies of the Asia Pacific region, and by extension, our financial systems, as well as some thoughts on the implications of these changes to the banking industry, with a particular focus on human capital development. I want to touch on three forces that are reshaping the banking industry across Asia and the Pacific. The first is on emerging markets’ and in particular Asia’s emergence as a dynamic centre for the global economy.
Spain has a lower percentage of innovative firms5 and its industrial sector (traditionally the most innovative) makes less of a contribution to value added, while spending on R&D&I is lower across the different sectors of activity. But public investment is also slightly below the euro area average. Public policies should help to spur corporate innovation. In Spain, the most significant incentives for innovation take the form of corporate income tax credits. Although the subsidy implicit in these incentives is, in theory, among the highest in the Organisation for Economic Co-operation and Development (OECD, 2021), they are actually deployed notably less in practice (Independent Authority for Fiscal Responsibility (AIReF), 2020). Thus, the various analyses performed agree on the need for reform.6 In particular, evidence from around the globe shows that designing tax incentives that yield higher subsidies for start-ups leads to particularly effective policies.7 It may also be worth giving thought to measures that would allow innovative firms that do not make enough taxable profits to claim direct reimbursement for investments. As far as public support for R&D&I is concerned, as important as additional funding is, it must be properly directed towards projects that yield synergies with private initiatives. Part of this activity could, for instance, be channelled through venture capital firms, which have greater expertise in funding businesses at the start-up phase and innovative activities.

It is then of course essential that one also ensures that Finansinspektionen is equipped with the most efficient tools possible to be able to manage its task in a good way. And if one later discovers that there are doubts regarding some parts of the mandate, it is of course important that these are remedied without delay. 2  Finansinspektionen was intending to introduce an amortisation requirement from 1 August 2015. However, the administrative court of appeal in Jönköping, among other instances, questioned the legal authority of Finansinspektionen to decide amortisation requirements. Finansinspektionen decided not to go further with the amortisation requirement as the legal position was uncertain and at the same time observed that its mandate needed clarification; see press release from Finansinspektionen on 23 April 2015. BIS central bankers’ speeches  7  To avoid a future economic downturn from being deeper than normal as a result of the high indebtedness, it is therefore essential that the Government quickly ensures that Sweden has an efficient framework for macroprudential policy and that Finansinspektionen has a clear mandate. It is almost seven years since the financial crisis broke out. One of the major lessons learnt from the crisis is the importance of an efficient macroprudential policy that enables early identification of financial imbalances and rapid implementation of necessary measures. There is broad agreement on which imbalances have built up in the Swedish economy, but there also appears to be what is known as an inaction bias, which means that no authority has taken adequate measures.
In practice, however, determining the neutral stance of monetary policy is not an exact science. The potential output alone is never observed with precision, as it depends on our labor force productivity, our competitiveness in the global market, our demographic structure, and the degree of distortions caused by public policies and other market failures, to name a few. Uncertainties about these structural determinants make it difficult to ascertain precisely the output potential, and by implications, the neutral interest rate. Finding the neutral rate would depend on incoming information about both the demand outlook and supply-side factors. That said, I would also add that real neutral rate should be in or close to positive territory. Currently the real interest rate is negative. I have said that this year is the year of regaining poise, but regaining poise in an unbalanced world of fluid global liquidity is not easy. There may be more exchange rate volatility on the back of fluid flows. Hence, the Bank of Thailand has pursued a managed floating exchange rate policy to lessen volatility. Emerging markets in Asia have pursued varying degrees of capital controls. On this point, let me say that my view is that capital control measures are options in our toolkit but they have to be appropriately designed. The trend has shifted from controlling capital towards more friendly pre-emptive prudential regulation to manage flow types rather than barring overall flows.

Capital inflows helped fuel emerging market growth, contributing even more to the uneven global recovery. Looking a bit further ahead, as the recovery solidifies in the advanced economies and inflation risk rises in emerging markets, diminishing growth differentials will diminish, spurring volatility in capital flows. Choppy waters may be ahead. So I’ve given you my view of the current global environment of fluid, if not excess, liquidity. So if excess liquidity is not the main issue, what is? On top of the list we have oil prices, Japan crisis and geopolitical risk in the Middle East and how these risks interact with global fluid liquidity. Which naturally leads me to the next question – what are the global growth scenarios in such a context? BIS central bankers’ speeches  1  In our central scenario or most likely scenario, we see continued global growth. The US and Euro area shows signs of a firmer recovery, amid monetary and fiscal stimuli. Latest data show strong consumption and production. But structural obstacles do remain; for example, unemployment and real estate market issues in the US and sovereign debt problems in the Euro area. The growth prospects of Asian economies remain robust, underpinned by strong fundamentals. However, inflation risk is rising, and fast. On the tragic Japan crisis, our current view is that its impact on the global economy should prove temporary. History suggests that Japan will quickly rebuild and recover. And the main engines of global growth still remain.
This is because the private cost of an institution’s failure underestimates its social cost. In other words, the externality implies that the appropriate risk calculus, taken from the perspective of a single institution, leads to excessive risk-taking from the perspective of society. The institution’s failure may be the unfortunate consequence of risks that, in the best case, were justified from the perspective of the institution itself. But it imposes additional costs on other financial and economic institutions and market participants. These extra costs were not taken into account even if the decision-making process was privately optimal. In what follows, let me discuss the appropriate recipe in the presence of an externality. Economic theory mainly suggests two measures: either restoring the appropriate incentives via a Pigovian tax8 or applying direct quantity regulation. Limiting the size of the bank One extreme solution to the TBTF problem falling within the second category of measures is to adopt the following precept: if an institution is too big to fail, then it is too big to exist.9 According to this view, the state should limit the size and scope of banks to levels where the TBTF externality does not materialise. Renouncing the benefits associated with scale and scope is the price to pay for this radical solution.10 Potentially even more costly is the fact that all benefits associated with size and scope that might be discovered in the future are also forgone!

We need to improve our ability to distinguish between skill and luck. Simultaneously we need to draw the adequate conclusions from the difficulties that will always exist in signal extraction on this issue. Excessive risk-taking: lack of knowledge... Let me now turn to the question of financial risk-taking. Overall, there is no (expected) return and no growth without risk so we have to be careful to foster a sufficiently pro-risk society. But risk calculus – weighing the marginal advantages and disadvantages of taking more risk – is a difficult exercise. It is difficult because it entails probabilities, that are hard to assess, over future scenarios which are themselves often hard to describe fully and accurately. And the difficulty increases by an additional step if there is an externality, that is, if the private and social cost and benefit of additional risk-taking differ. One can plausibly  2  2  Wilmott, P. (2009) “Financial Modelers’ Manifesto”, available at www.willmott.com, January 2009. BIS central bankers’ speeches  argue that the recent financial crisis was, to some extent, the result of excessive risk-taking. For the proponents of this hypothesis, the ultimate cause is in question. One possibility is that this excessive risk-taking was the result of wrong incentives, with decision-makers wilfully taking more risk for themselves or their institutions than would have been privately or socially desirable. The alternative would be that a misperception of the probabilities and possible consequences of the decisions was the prime cause: a lack of knowledge or competence.
The stronger the increase in demand in relation to potential production, the greater the risk of prices and wage rising too fast, and vice versa. We must therefore analyse the entire economic outlook, despite the fact that inflation is our target variable. However, the Riksbank cannot affect potential production, i.e. how quickly the economy can grow without causing inflation. This is what structural policy can do. Structural reforms can promote both investments and labour supply and thereby have a favourable effect on the long-term growth capacity of the economy. A good structural policy can, for instance, contribute to a larger number of persons in various age groups choosing to work instead of remaining outside of the labour force. By improving the conditions for wage formation and price-setting, structural reforms can also contribute to increasing the economy’s capacity to adapt to different types of shock. Structural policy can thus be seen as a complement to monetary policy. The better the long-term growth capacity of the economy, the more  1  See the monetary policy memorandum “The Riksbank’s inflation target - clarification and assessment”, 4 February 1999, Reference no. 1999-00351 DIR. BIS Review 17/2003  1  quickly the actual growth rate can be without inflationary pressure arising, which would mean that the Riksbank had to react by raising the repo rate. Structural reforms are thus important from a welfare perspective. A high growth rate in the long term increases the possibility to pay high wages, extend welfare or invest more in infrastructure and education.

When the hinterland is in difficulty, the financial centre will be adversely affected, but it still plays an important role in facilitating the process of recovery. As confidence recovers and investor interest returns, the financial centre will be an important conduit for the funds required for rehabilitation and growth. Thus as Asian economies make progress in putting themselves in order, they will need access to global capital for corporate restructuring and new investments. Singapore's financial centre will be ready to play that role, whether the capital is to be raised through loan syndication, debt securitisation, private equity, or bond issuance. Financial centres in Asia Looking ahead, the trend towards concentration of financial institutions and activities in fewer major centres is likely to persist. However, it is not easy to predict which specific cities will emerge as leading centres. This will depend not only on the static comparative advantage of the different cities, but also on the dynamic competitive advantages created by their policies and strategies. Incumbents will always have an advantage, but no lead is totally unassailable, as London found to its dismay in 1998 when within a few months Frankfurt snatched away the trading of German bund futures. London and New York will continue to be key global players. In Asia, while Tokyo will always be big and significant, the role of the other centres is still unclear. Hong Kong, Singapore, Sydney, and in the longer term Shanghai are in play.
Chart: The real interest rate minus the neutral real interest rate However, both in 2004 and following the financial crisis in 2008, the real interest rate was almost 2 percentage points lower than the estimated normal interest rate, with a somewhat larger gap after the fall in oil prices in 2014. Looking back, we can safely say that the Norwegian economy fared relatively well through these downturns, with some help from other factors. After the financial crisis, high oil investment cushioned the downturn, and in 2014 a weaker krone gave the economy an extra boost. In addition, fiscal policy provided substantial support in both cases. A future severe downturn could have a greater impact, with more pronounced declines in both employment and inflation. We must therefore take into account that situations could arise that require measures other than cutting the policy rate towards zero. So we should examine the contents of the monetary policy toolkit in Norway and ask not only when the tools should be used, but also how far the limits of monetary policy should be stretched in such a situation. The policy rate The policy rate is the key monetary policy instrument. Monetary policy is effective when changes 2/9  BIS central bankers' speeches  in the policy rate pass through to market rates. Monetary policy is more effective when central banks successfully influence interest rate expectations. A downturn in the Norwegian economy should initially be countered by lowering the policy rate.

The weakest area of the economy at the moment is probably private investment which has been continuously decelerating for a few months now. But the surging inflation has also put private consumption increasingly at risk. Indeed, the latest issue of Asia Pacific Consensus Forecasts shows Thailand’s GDP growth falling over the next three quarters before recovering in the second quarter of 2009. Against this backdrop, the policy priority is to head off the rising inflationary pressure while keeping a close eye on downside risks to growth. This is normally already very difficult in the presence of cost-push shocks that create a short-run trade-off between inflation and output stabilization. What further complicates the current situation is that a prolonged period of oil shocks and inflation tends to divest funds from, as well as discourage, fixed capital investment and hence deteriorates what economists refer to as the economy’s potential output. This issue is especially important when the economy is energy inefficient. Let me elaborate further. Conceptually, potential output is the level of output which can be sustained over an extended period without exerting upward or downward pressure on inflation. When the actual level of output is above potential output, inflation tends to rise. Conversely, when the actual level of output is below potential output, inflation tends to fall.
Joseph Yam, JP: The Hong Kong Monetary Authority’s main initiatives in the area of banking supervision Speech by Mr Joseph Yam, JP, Chief Executive of the Hong Kong Monetary Authority (HKMA), at a lunch with representatives of the Finance Constituency organised by Dr David Li, held in Hong Kong on 15 January 2001. The speech outlines the latest state of play on the HKMA’s current initiatives in the area of banking supervision, as well as responding to some points raised by Dr Li on behalf of the Finance Constituency. *  *  *  1. I would like to thank David Li for arranging today’s lunch with representatives of the Finance Constituency. The number of live issues in the realm of bank supervision, some of which have been set down in David’s letter in advance of this lunch, is currently quite considerable, so it is useful to have this opportunity to get together to exchange views. As you will know, it is very much our style to work in close collaboration with the banking industry on developing our policies rather than to adopt a confrontational approach, and long may this continue. 2. Let me run through what I see as the HKMA’s main initiatives in the bank supervision area in the next twelve months, in the course of which I will try to pick up some of the points made in David’s letter.

I have not said anything on the bankruptcy laws or tax issues, which were two issues I was asked to addresss, but I don’t think there is much I can say on these areas except that we appreciate the banks’ views and will reflect these to the appropriate authorities as appropriate. Certainly we are aware of the rising trend in personal bankruptcies and the possible impact of this on delinquencies, and this is something we are watching closely. We are also in dialogue with the Privacy Commissioner and other parties to try to get the scope of the credit data that can be released to credit agencies increased, which would perhaps help in this area. 14. I hope these comments have been of interest to you all. Let me end on a positive note. We are all part of a highly successful industry here in Hong Kong. As banking regulator, it is the HKMA’s objective to promote a safe and stable banking system. To achieve this we need the banking industry to be successful, profitable, competitive, innovative, and responsive to change, and this surely is your objective too. So let’s continue to work together on initiatives such as those I have discussed today so as to ensure the continued prosperity of our industry. 15. Thank you. BIS Review 3/2001  3