samchain/econo-pairs-v1 huggingface dataset:
Corporate sectors similarly remain fragile: recent debt restructurings have involved a high degree of debt rescheduling, and firms across the region remain burdened with significant amounts of debt. The relatively limited restructuring of corporate operations to date across the region raises questions about the medium-term sustainability of recent improvements in bank asset quality. The relative lack of breadth in the region’s recovery also creates vulnerabilities. Asia’s export orientation has long been a key focal point of strength, to which the recent recovery attests. However, too great a dependence on export-driven growth brings increased vulnerability to external shocks. While current account surpluses have been substantial, this potential engine of growth could be slowed over the medium term through pressures on domestic currencies to appreciate, and through the ongoing reversal of the dramatic import compression witnessed following the crisis. The recent pickup in domestic demand is a positive sign of more balanced growth - sustained by notable monetary and fiscal stimulus - which will need to be steadily unwound as recoveries take firmer root. Regional central banks will be particularly tested as they seek to implement new monetary policy anchors, in some cases with new-found independence. BIS Review 57/2000  2  Unfinished business Events of the recent past have amply illustrated that weak financial systems are an expensive and dangerous vulnerability, particularly for countries that rely on foreign capital to help support their investment and growth.

The Russian invasion of Ukraine has exacerbated some of these factors, amplifying the challenges that the world economy, and therefore the economic and monetary authorities, will now have to contend with. But beyond the impact on the global economic outlook, the war has struck the largest blow to the international economic order since the Second World War. This dramatic event has thrown into relief the need to reinvigorate and bolster the foundations of multilateralism, which are the set of rules and values that we have established to ensure peace and prosperity. But we should also view this as a chance to give fresh impetus to international cooperation, which has contributed so much to global progress in recent decades. Such impetus means strengthening the international institutions, many of  1  which date back to the mid-20th century, so that they can respond more effectively to the new crises, such as the global financial crisis and the pandemic crisis, which are more global in nature than the typically regional crises of past decades. International institutions should equip themselves, in their respective field of competence, with the appropriate tools to prevent and respond to systemic crises. In addition, the global nature of processes such as the green transition and digitalisation means these institutions must adapt in readiness to deal with these challenges and help attain the goals and fulfil the commitments we have set ourselves in these areas.
Peter Praet: Economic adjustment in the euro area Speech by Mr Peter Praet, Member of the Executive Board of the European Central Bank, at the Institutional Money Congress 2013, Frankfurt am Main, 27 February 2013. *  *  *  I would like to thank Arthur Saint-Guilhem, Melanie Ward-Warmedinger and Niels Bünemann for their contribution to the preparation of this speech. Ladies and Gentlemen, Introduction  Thank you for inviting me to share some thoughts with you on what has been achieved and what remains to be done in the process of addressing the economic challenges we are faced with in the euro area. I will give you a central banker’s view on the role of monetary policy in managing the current crisis, but I will also extend my discourse to cover the broader institutional landscape, including some thoughts on what policy-makers in other fields than monetary policy could contribute to improve the euro area’s resilience. Today, I will focus on three points: First, the European Central Bank – together with the national central banks of the Eurosystem – has acted forcefully within its mandate, in order to counteract any risks to price stability stemming from the crisis. The ECB’s monetary policy during the crisis has invoked both standard instruments such as interest rate changes and non-standard instruments to ensure that the standard instruments would have the intended effects. Second, the most distressed countries within the euro area have embarked on a correction of their policies.

Second, the perception that the central bank will always “pick up the pieces” might give incentives to excessive risk-taking and high leverage. Even in good times that perception could discourage sound fiscal policies and prudent financial behaviour. In the design of non-standard measures and in its communication, the ECB has taken great care not to give such adverse incentives to either banks or governments. The following elements, among others, serve as proof:   The non-standard measures are temporary in nature. Some of them will expire automatically, if not renewed. On top of that, we have all the necessary instruments to reverse the current situation of abundant liquidity provision.   The mandate of the ECB as stipulated by the Treaty has an unambiguous focus on price stability. In combination with the ECB’s monetary policy strategy it provides a clear guidepost and has proved effective in anchoring inflation expectations over time.   The monetary policy strategy gives a prominent role to the monetary analysis which captures money and credit developments and ensures a symmetric reaction to financial forces.   The design of the tool called Outright Monetary Transactions creates the right incentives for governments to improve their performance with respect to fiscal prudence and structural reforms. I will expand a bit further on this fourth point. OMTs will only be activated in cases where the benefiting country has signed up to strict and effective conditionality attached to an appropriate European Financial Stability Facility/European Stability Mechanism (EFSF/ESM) programme.
There is the rise in commodity prices relative to the global price of finished goods and services, which means that we have to pay more for the raw materials that we need. And there is the substantial depreciation of sterling, which is a counterpart to the necessary re-balancing of the economy, but which also implies that we have to pay more for our imported goods and services. The second, and related, point is that while monetary policy cannot ultimately insulate us from the associated hit to our living standards, it can affect the adjustment path. In particular, the MPC’s chosen approach has been to accept a temporary period of above-target inflation, rather than seeking to hold inflation as close to the 2% target as possible at all times. Achieving the latter would have required a markedly higher level of Bank Rate and with it most probably a somewhat higher level for sterling. That would have moderated some of the external inflationary impulses facing us, but would also have depressed activity and pay even more and retarded the requisite re-balancing of the economy.

Rather the let down has been on the import side, where there has been less substitution of domestically supplied goods and services for imports than past experience would have led one to expect. It is possible that increased specialisation means that demand is less responsive to price than it used to be. Alternatively, heightened uncertainty and the absence of UK suppliers for some sorts of goods and services may mean that it takes longer for import penetration to respond to the enhanced profit opportunities. In any case, the MPC still expects net exports to contribute substantially to the overall growth in demand over the next few years as the necessary rebalancing gradually takes place. The most recent trade figures indicate that net exports of goods boosted GDP by around 1¼ percentage points in the first quarter2, and suggest that we may at last be starting to see a more significant contribution to growth. Chart 4 shows the MPC’s current assessment of the outlook for four-quarter GDP growth, as published last week in the Bank’s latest Inflation Report and assuming that Bank Rate follows the gently rising path implied by market interest rates. The single most likely path lies within the deepest green band. The near-term path is somewhat choppy, reflecting the impact of factors such as the extra bank holiday associated with the royal wedding.
12  Figure 1  New daily confirmed cases of Covid-19 (*) (number of persons per million inhabitants)  Selected economies  225  U.S.  180  Latin America  225 300  Perú  180 240  Spain  300  Chile  240  Brasil  135  135 180  180  90  90 120  120  Italia  45  France  Alemania 0 15-03 15-Mar. 15-06 15-Jun. Colombia 60  45  60  0  0 21-mar. 03-21  México Argentina  0  21-jun. 06-21  (*) Moving 14-day average. Sources: European Centre for Disease Prevention and Control (ECDC) and Chile’s Ministry of Health. Figure 2  Annual GDP change and drops in mobility - 2020.Q2 (percent)  0 Korea  -5  U.S. Annual GDP change  -10  Chile  -15  -25  Mexico  France Spain  U.K.  -30  Germany Italy  Colombia  -20  -35  Japan  R² = 0.7678  Peru -80  -70  -60  -50  -40  -30  Drop in Google Mobility Index Drop in Google Transit Sources: Bloomberg and Google.

Several of these measures have had an impact on the Bank’s assets, either by reducing them (sale of foreign currency) or increasing them (purchase of bonds and loans to commercial banks). The adjustments on the asset side have counterparts on the liabilities side, either by active measures (repurchase of long-term bonds from the Central Bank), or by monetary sterilization or liquidity absorption, or finally, to respond to changes in the demand for cash. The net effect of these operations and portfolio revaluations has an impact on the Bank’s net worth. On aggregate, these operations have involved an 86% growth in the balance sheet in one year, the equivalent of almost 10 points of GDP. At the same time, there have been significant changes in the composition of the balance 6 For further detail on these measures, their operating margins and effective execution, visit https://www.bcentral.cl/web/banco-  central/medidas-excepcionales. 8  sheet (Figure 16). Now the Bank records on the assets side internal credit items (FCIC-LCL) and local securities. The latter yield more than international reserves, although with a somewhat higher credit risk compared to the sovereign securities that make up the former. On the liabilities side, the counterpart has implied an increase in short-term debt placements (PDBC) and the use of permanent facilities that drain the system’s excess liquidity. There has also been an increase in the monetary base, explained by an increased cash demand from the population.
Although the borrowing component in investment property financing tends to be lower than in owner-occupied real estate, domestically focused banks are exposed to this segment. One-third of new mortgages are issued for residential investment property, yet the affordability risk for such property owned by private individuals is roughly as high as for owner-occupied real estate. Moreover, a correction in this segment can affect other real estate market segments, via changes in market confidence and expectations (spillover effects). So we need to keep a close watch on the residential investment property segment. A second risk arises due to falling liability margins in an environment of low interest rates. To offset these, a bank essentially has two options – apart from increasing its lending interest rate. Both options are associated with higher interest rate risk, which in turn increases the risks to financial stability. First, it can grant a higher proportion of long-term loans at higher interest rates, as they generate higher interest revenue than short-term loans. However, this also increases the so-called maturity mismatch.6 The greater the maturity mismatch, the higher the interest rate risk, and thus the potential economic losses for the bank in the event of a sudden interest rate rise. This is because the larger the maturity mismatch, the quicker the rise in refinancing costs compared to long-term fixed interest income when interest rates go up. Second, a bank which has hitherto hedged against interest rate risk might be tempted to dispense with such hedging, and the associated costs.

For this reason, it is not always easy to determine when, and how strongly, it will influence the Swiss franc exchange rate. However, if all other factors remain the same, there is less demand for investments in Switzerland – and thus for Swiss francs – when Swiss interest rates decline. BIS central bankers’ speeches  3  But I am also aware that negative interest rates do not constitute business as usual. In addition to the interest rate differential, nominal interest rates will themselves also return to normal. For this to happen, economic conditions abroad will need to improve to the point that interest rates in Switzerland can rise without causing the Swiss franc to strengthen further. This is currently not the case. At the most recent monetary policy assessment, we decided to leave the target range for the three-month Libor unchanged at between −1.25% and –0.25%. The interest rate on sight deposits at the SNB remains at –0.75%. Despite a slight depreciation, the franc is currently still significantly overvalued. We are convinced that negative interest rates and the SNB’s willingness to intervene as required in the foreign exchange market will make investments in Swiss francs less attractive; both of these factors serve to weaken the Swiss franc. The provisional inflation forecast in chart 4 is also based on a depreciation, along with a Libor rate of –0.75%. The chart shows that, over the short term, inflation will be lower than forecast in June, owing to the lower oil price.
With a clear framework for resolving the FIDF problem in place, the next important piece of work is to move toward setting up a Deposit Insurance Agency to formally replace the current blanket deposit insurance by the government that will need to be phased out at an appropriate time. Such an establishment will ensure a level playing field among the banks in Thailand. What I have said so far is a review of the progress we have made in resolving the financial problems arising from the crisis of 1997. At this juncture it is fair to say that the Thai banking system is now in a sound position to move forward on its own strength. An important question is how can we be sure that, in spite of all the efforts that have been put to resolving the financial problem arising since 1997, a similar situation will not emerge in the future? What are the preventions? The best prevention is that macroeconomic management must aim to avoid the boom and bust cycle, as the burst of the bubble, as had happened, brought a heavy toll on the economy and society. What we must do is to strive for a steady-state growth path. Another important means of prevention is to ensure that banks have a good management system, are transparent, and most importantly, that there is an effective and efficient supervision system that meets international standards. The Bank of Thailand has made substantial progress on the latter point.

On this issue, the draft of the new Bank of Thailand Act has stipulated this condition. Even though there is a need to review the draft in order to make it more effective, the Bank of Thailand strongly endorses the importance of this Act because it will provide for an up to date framework for the development of the Thai monetary system in the future. In data dissemination, the Bank of Thailand has improved the process of data collection and dissemination to ensure that they are complete, correct, and expeditiously published, such as the improvement of the M3 data, the report on buying-selling of foreign currency especially the forms F.T. 3 and F.T. 4, as well as random checks on the correctness of the report. At this point, we would like to note that the purpose of this random check is not to emphasise the use of penalties but to create awareness amongst the financial institutions the importance of data reporting to the Bank of Thailand, so that the Bank of Thailand can have an up to date database for policy decision-making. On the external data, for the first time there has been a survey and announcement of the International Investment Position (IIP), in order to correctly monitor foreign currency exposure of the Thai economic system. Also, Thailand is the 21st country ranking in the world, in compliance with the International Monetary Fund's Special Data Dissemination Standard (SDDS).
But what fundamentally distinguishes today’s situation from, say, that of 2014–2015 is that regulatory easing was, in fact, just one additional comfort factor in a period of difficult conditions, and not “the last chance” or the only way to stay afloat. Undoubtedly, in the conditions of the epidemic, it helped greatly that Russian banks boast a high level of digitalisation. Almost all services were available online, and of those in demand on a daily almost all were available. Even before the epidemic, most banking customers extensively used remote services, but even those who previously rarely used remote services started using them without great difficulty. In my speech today, I would like to focus on two clusters of issues. The first deals directly with the impact the epidemic had on the banking business, the current situation, and the measures we are taking to ensure that going forward banks are resilient in their operations. The second concerns what comes next, how to develop the banking business with allowance for the long-term repercussions of the pandemic. How does the current situation look? In the last few months, we have seen a gradual recovery in business activity, the financial markets are stabilising, and lending is also recovering. It has to be said that the economy shrunk less than many expected. The recovery may be uneven, but it is proceeding broadly in line with our forecasts. In particular, this can be seen in our monitoring of sectoral financial flows, which we started conducting during the pandemic.

We can see that deviations from the normal level of payments vary by industry, fluctuating from week to week, but the overall trend towards normalisation is undeniable. 1/7  BIS central bankers' speeches  For example, in the last week, the total deviation of incoming payments down from the normal level was −7.1% compared to −7.3% the week before. But excluding mining, the production of petroleum products, and government activities, the deviation also decreased to total −1% after −4.4% a week earlier. The Bank of Russia transitioned to a loose monetary policy, cutting its key rate to 4.25% — a historic low. This is necessary to keep inflation on target against the backdrop of disinflationary risks linked with a significant drop in aggregate demand. But this monetary policy focus will also help the economy return to potential more quickly. That said, it is important to take into account that the structural changes in both the Russian and global economy, generated by the pandemic, have most likely affected the potential of the economy. How extensively — it remains to be seen and evaluated. The banking sector is supporting recovery processes: corporate loans have grown by 5.5% since the beginning of the year (growth was only 5.8% last year). Of course, this is also because companies that experienced a sharp drop in revenue experienced a need for debt financing. But the banking sector overall has continued to lend, and we estimate that lending growth will be up to 9% this year.
By March 18, 2008, the FOMC had reduced the federal funds rate by three percentage points to 2.25 percent – including two unusual 75 basis point reductions one on January 22, 2008, and the other on March 18. The FOMC was well aware of the impact that the financial crisis could have on the real economy and was actively trying to offset these adverse effects. The FOMC made an additional 25 basis point reduction in the federal funds rate on April 30, and then held the policy rate constant over the summer at 2 percent. The Panic of 2007 turned into the Great Recession of 2008 following the bankruptcy of Lehman Brothers on September 15 and the Fed’s emergency assistance to American International Group, Inc. In response, the Fed reduced the federal funds rate to essentially zero by mid-December, instituted swap lines to provide dollar liquidity to foreign central banks, added new liquidity facilities to target specific sectors of the shadow banking system and began to expand its balance sheet through asset purchases. To deal with problems in commercial paper market, the Fed introduced on October 27 the Commercial Paper Funding Facility (CPFF) to backstop issues of commercial paper. In an effort to restart the securitization market, on November 25, the Fed announced the Term Asset Backed Securities Loan Facility (TALF).

14 In December, the FOMC announced that it would begin to significantly expand its balance sheet through purchases of long-term assets including agency debt, agency mortgage-backed securities and long-term treasuries – the Large Scale Asset Purchase or LSAP program. Other interventions were taking place directed by different agencies and in conjunction with the Treasury. At the same time, fiscal policy was engaging with Congress approving the $ billion Troubled Asset Relief Program (TARP) program. Policy had entered the “whatever it takes” phase in an effort to keep the Great Recession from becoming something much worse. 15 By the spring of 2009, the various guarantees and backstop liquidity facilities covering different sectors of the shadow banking system were in place. The last element required to deal with the Panic of 2007 was to address the uncertainty over the viability of the large systemically important financial institutions. A horizontal review of the 19 largest financial firms was conducted to assess their capital needs under a “worse-than-anticipated economic scenario” – this was called the Supervisory Capital Assessment Program or SCAP (you can tell that we are fond of acronyms). There were two design features of the SCAP program that were essential for its ability to reduce the uncertainty in financial markets. First, the process was designed to be transparent with both the methodology published up front and the firm-by-firm results published at the conclusion. Second, if a firm was deemed to need capital but was unable to raise it in the  14  See Brian Sack. 2010.