samchain/econo-pairs-v1 huggingface dataset:
But following the crisis and the emergence of a macroprudential approach, this need has become even more evident. Important issues to resolve in the coming years are how responsibility should be allocated between different authorities to facilitate this coordination, and what forms the cooperation should take. It is of central importance that the mandate is clear and the tools are well-defined, particularly to enable evaluation and to ensure accountability. An unusually interesting time I have now been a monetary policy decision-maker for quite a long time – almost 12 years. A lot has happened during this time, both in the Swedish economy and internationally – including normal upturns and downturns in economic activity and a number of crises in various parts of the world. The way we conduct monetary policy has also changed quite a lot. But, when seen in a broader perspective, the changes have perhaps mostly concerned details – that we have further developed the inflation-targeting policy that has always been at the core of our work. There is of course no doubt that the recent crisis has been the most dramatic one during this period. But I also have the impression that it has affected thinking about monetary policy and the central banks’ activities in general, in a way that I have not experienced before. It is not  8  BIS Review 164/2010  about us needing to throw away the old and find something completely new.

But in general one can say that it is not so much about inventing new tools, as it is about using traditional supervision tools in a new way – they will be more specifically aimed at signs of exaggerated credit expansion and indebtedness in the economy at large, at the systemic level. What are these tools in more concrete terms? What does a regulation lever consist of? I have already mentioned the possibility to vary amortisation requirements for mortgages. Another example is the countercyclical capital requirement for banks proposed in Basel III. The idea is that the capital requirement will increase if credit growth increases in relation to GDP. This entails a higher lending cost when credit growth is high, and also increases the banks’ resilience. A further example is a ceiling on loan-to-value ratios similar to the mortgage ceiling recently introduced by Finansinspektionen (the Swedish Financial Supervisory Authority). This kind of ceiling creates incentives for households to acquire a buffer that reduces the risk of their balance sheets being weakened if property prices fall. Regulation of the loan-to-value ratio could also contribute to slowing down lending and house price increases and thus counteracting a housing bubble. …but traditional supervision is still important But while the discussion now mainly concerns macroprudential tools, it is important that we remember to keep improving the more micro-oriented, traditional bank supervision. Just because it proved insufficient to prevent the financial crisis does not mean that it is unimportant.
In 2014, the FPC introduced limits on the flow of mortgages with a high loan to income (LTI) in order to guard against the buildup of highly indebted households. 12  All speeches are available online at www.bankofengland.co.uk/speeches  12  But the current low real interest rate environment at the medium and longer terms that are of interest to households and businesses are not, to my mind, primarily the product of central bank policy. Persistent longer term trends have been pushing down with increasing force on real long term interest rates for two to three decades now. 24  Low productivity assumptions are an important more recent part of this story  alongside demographic and income distribution trends. Chart 9: Yields on UK government bonds Per cent 2.5 2 1.5  Nominal  1  0.5 0 2018  2022  2026  2030  2034  2038  2042  -0.5 -1 -1.5  Real  -2 -2.5  -3  That pressure has been amplified in recent years by headwinds from the crisis. It may also have been amplified by the very structural uncertainties about the macro-economic ‘model’ in advanced economies and fears about secular stagnation that have been much of my subject today. I expect that if the slow healing continues, and some of the more extreme concerns about secular stagnation of our economies fade, we will see larger term premia and some increase in medium and long term returns.

The objective therefore is not solely to bring down inflation that is currently above target due to external pressures that are waning, but to ensure that inflation is neither above nor below target when those pressures have passed through of the economy. 6  UK GDP surpassed its 2018 Q1 peak in 2013 Q2. In the US, productivity growth initially appeared to be bouncing back after the crisis but from 2011 fell and failed to pick back up to precrisis growth rates. 8 Cunliffe (2016) 7  6  All speeches are available online at www.bankofengland.co.uk/speeches  6  The key question, therefore, is how much inflation is domestic economic pressures likely to generate over the next couple of years. Let me turn to that now. We do not yet have all the evidence. But the significant drop in activity in the UK in the first quarter of this year looks to have been largely an aberration, driven by poor weather. Retail sales – which declined in the first quarter of the year – have bounced back. GDP in the three months to May – the ONS’s first of its new monthly GDP releases – grew at 0.2%, with services growing at 0.4%, indicating a recovery over April. The soft data currently available also suggest that the economy recovered its end 2017 growth path in the second quarter of the year with the composite PMI for output back to its highest level since December albeit with somewhat different composition.
This conference series is also a good way to organise informed discussions on the Mainland's financial sector issues. The first part of the conference examines the experiences of Chile, India, Korea and Thailand in their capital account liberalisation, with the view of drawing useful lessons for Mainland China. The second part focuses on the Mainland, assessing the effectiveness of current policies in dampening the impact of capital inflows on the domestic economy, their costs, as well as policy options of outward investment. A final paper will gauge the current level of financial integration between the Mainland and Hong Kong, and discuss the policy implications. I am pleased that this conference has brought together a group of experienced researchers and policymakers from a wide range of central banks, international organisations and research institutes. As earlier noted, the recent global financial turmoil will probably turn out to be the most critical time in recent economic history which will shape future economic and policy thinking. I hope this conference can provide a useful platform for fruitful discussions on capital account liberalisation to enhance our understanding on the issue. I wish the conference great success. BIS Review 141/2008  3

The TAF program was designed to deal with the stigma problem associated with the discount window and also to make it easier for the New York Fed to sterilize the liquidity injections into the financial system. The TAF program auctioned off a fixed quantity of term funding to depository institutions using the same collateral to back up the loans as can be pledged at the discount window. Since the quantity of funding was set in advance, it made it much easier than for discount window borrowing to offset this liquidity injection. More important, however, was the design concept: term funding priced and distributed in a competitive auction would hopefully avoid any stigma for the winning participants of the auction. The TAF auctions were essentially a better way to dump more water on the same section of the forest covered by the discount window. However, the fire was still burning elsewhere. The inadequacy of the Fed’s traditional liquidity tools and their recent enhancement with the TAF came to the forefront in the spring of 2008. Conditions were deteriorating for several primary dealers, including Bear Sterns. The Board of Governors of the Federal Reserve System (all of the governors are appointed by the U.S. president and confirmed by the Senate) decided to activate a little known or used section of the Federal Reserve Act – section 13(3) – which gives the Fed the ability lend to any “individual, partnership or corporation” in “unusual and exigent circumstances”.
Now, we’ve all become very familiar with breathless reports on China’s “economic miracle,” so I won’t go over this at length. Still, the startling pace of growth does warrant underlining. In a little over a decade since the year 2000, the Mainland’s nominal GDP increased sixfold from 1.2 to 7.2 trillion US dollars; and its external trade expanded more than sevenfold, from less than 500 billion to over 3.6 trillion US dollars. At the same time, its cross-border direct investments rose fourfold, from just over 40 billion to approaching 180 billion US dollars. These are all impressive indicators of the vast amount of business opportunities present. It is perhaps even more astonishing that, by 2016, the Mainland is expected to contribute over a third of total world economic growth, according to the projections of the International Monetary Fund. Change in the international financial system Such shifts in the global economy have inevitably foreshadowed a change in the international financial system. As the Mainland economy has grown, its currency and financial sector have moved increasingly centre-stage. Over the last decade or so, policymakers, investors and others have shown more interest in using a greater mix of currencies for international trade and financial transactions. This trend has been accelerated by the recent Global Financial Crisis, as the need to reduce reliance on just one or two global currencies has grown. Taken together, these trends imply a greater role for the RMB in the Mainland’s trade and investment with the rest of the world.

I believe that, whilst liberalisation is important, the RMB becoming an international currency to a large extent is not a matter of policy alone – it is also subject to market forces. In other words, it would come from non-resident corporations and financial institutions deciding that the RMB served them well as a unit of account, means of payment and store of value for their international transactions. I’m not sure any of us are in a position to predict if and when this will happen. However, I feel that we can say with some confidence that the landscape of the offshore RMB market will change in two respects. First, we are likely to see the increasing maturity of the offshore RMB market, both in terms of the depth and breadth of the market and the efficiency of price-setting and allocation of RMB funds. In more granular terms, this means we will see an expansion and greater diversity of RMB financial activities:   Up till now, the intermediation of RMB funds has been primarily about placement of bank deposits by personal and corporate customers. In future, it will move more towards issuance and investment of bonds and a wider range of other financial instrument and products.   At the same time, I would expect that in future there will be more active borrowing and lending of RMB funds among banks. If so, this would lead to the emergence of a RMB interbank funding market.
With hundreds of billions of pounds of pre-positioned collateral and regular, flexible and widely accessible Bank of England liquidity auctions, markets stayed open and price discovery was smooth and effective. 15  Today marks a step change in our ability to provide the liquidity that the new finance may eventually require. With the Chancellor’s announcement tonight of a ground-breaking new financial arrangement and capital injection for the Bank of England, we now have a balance sheet fit for purpose and the future. 16  One that  reflects the Bank’s much wider range of responsibilities including banking supervision, macro-prudential policy and resolution. And the framework enhances our independence, transparency and accountability. The additional capital will significantly increase the amount of liquidity the Bank can provide through collateralised, market-wide facilities without needing an indemnity from HM Treasury to more than half a trillion pounds. 17  This lending capacity would expand to over three quarters of a trillion pounds when, as  designed, additional capital above the target level is accrued through retained earnings. The new framework will also strengthen the Bank’s ability to fulfil its monetary stability remit. In August 2016, the MPC launched the Term Funding Scheme (TFS) in order to reinforce the pass-through of the cut in Bank Rate to 0.25% to the borrowing rates faced by households and companies. The Bank required an indemnity from HM Treasury for the loans it extended under the TFS. 18  Today’s announcement increases the amount of risk the Bank can carry on its balance sheet.

2/2  BIS central bankers' speeches
The medium-term perspective is decisive for us, most especially the question of whether we are dealing with a temporary soft patch or with a more prolonged weakness. And your response, particularly in view of the continuing weak data since the last Governing Council meeting? First of all, the data since the January meeting have not only held negative surprises, they have also contained a few positive signs such as the further decline in unemployment. But it’s also true that growth in the third and fourth quarter of 2018 and most likely also in the first quarter of 2019 is well below the potential growth rate of the euro area economy. So growth will have been below potential for three consecutive quarters and that’s not good news. The question now is whether there will be a rebound in the second quarter and beyond. A rebound is likely, but it is too early to say by how much. So would you say that the ECB’s Governing Council is becoming less confident that we are now merely seeing a temporary economic dip? The economic slowdown is broader and more persistent than had been thought and growth in the short term is likely to fall short of previous expectations. But as I said, what counts for us is the medium-term outlook and we see positive and negative factors there. What does that mean in practice? On the positive side, the situation for households and so for consumption is still favourable. That is a key driver of growth.

Asset purchases are part of our current toolbox, President Draghi has been clear about that. But that doesn’t mean that they are the preferred option in current conditions. And it should be said that if forward guidance on interest rates is credible and steers expectations in the desired direction, further purchases may not be needed at all to ensure that financing conditions are appropriate. Observers increasingly expect the ECB to launch new longer-term refinancing operations for banks – TLTROs – and they make the case that this measure, especially in conjunction with an increase in the deposit facility rate, could improve the situation for banks and support lending. What would you say to that, especially in the light of your concerns about the procyclical behaviour of banks? Our TLTROs have been a very useful tool to deal with impairments in the transmission of monetary policy and are part of our toolbox. As the procyclical behaviour of banks is an important reason why economic cycles sometimes end badly, we do need to monitor the transmission of monetary policy through the banking system carefully. In March we will make an assessment of the current and expected state of bank transmission. You will be leaving the ECB at the end of May, having experienced and helped to shape a period of great change at the ECB.
Thus, the combination of the liquidity provided by the Bank, the State guarantees, various regulatory adjustments and the adequacy of the banking system, has contributed to commercial loans showing expansion rates above 10% by mid-year (Figure 12). This behavior of credit is very different from what was seen in past recessions. In fact, both in 1998 and in 2008, a few months after the period of negative activity variation started, commercial credit began to decline (Figure 13). Thus, to date, about 230 thousand loans have been granted to small and medium enterprises linked to these instruments. Also, almost 1.5 million restructurings have been made, 15% of which correspond to commercial credits. As reported in one of the boxes of this MP Report, the analysis at the individual firm level shows that a large number of these loans have reached the firms whose sales have been most affected by the pandemic. Evidence suggests that this access to credit has supported the operational continuity of these businesses and helped mitigate the drop in investment. For its part, the asset purchase program announced by the Central Bank in June has helped to improve financing conditions in the banking and corporate bond market. In this context, the outlook for investment has also improved with respect since the last MP Report, based on the recent evolution of imports of machinery and equipment, large-scale energy-related projects and the recently announced public investments and reactivation measures for the period 2021-22.

In particular, the current recession differs from past episodes in that its origin is not economic, so the fall in activity is not caused by problems in specific sectors or markets, but rather by the interruption of the normal functioning of businesses and activities to combat the spread of Covid-19. This implies that the economic measures adopted should seek to ensure that companies and individuals survive this period of confinement, avoiding more permanent damage. The key to mitigating the effects of the pandemic is to get credit flowing to businesses and allow them to cushion the major drops in their cash flows. Several measures have been implemented with this in mind, with some elements in common. First, central banks, along with lowering their benchmark rate to its lowest possible, have established special bank financing programs, conditional on their increased lending. Some examples are the programs of the Bank of England (Term Funding Scheme with additional incentives for SMEs, TFSME), the European Central Bank (Targeted Longer-term Refinancing Operations, TLTRO), and the Central Bank of Chile (FCIC). Second, governments have committed resources that serve as guarantees for loans, which in the Chilean case are the FOGAPE 1 guarantees (Table 1). In Chile, the sum of both programs is equivalent to just over 15% of GDP, comparable to the resources that have been committed in Brazil, but far above what has been done in other Latin American countries, such as Peru, Colombia, and Mexico.
Zeti Akhtar Aziz: Connecting ASEAN SMEs through financial integration Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the ASEAN SME Conference 2015 “Connecting ASEAN SMEs through Financial Integration”, Kuala Lumpur, 27 May 2015. *  *  *  It is my pleasure to be here this afternoon to speak at this inaugural ASEAN SME Conference. This conference takes place at a challenging and yet exciting time for the ASEAN region. While there continues to be uncertainty on the future prospects for the global economy, the ASEAN economies have demonstrated a high degree of resilience. The ASEAN economies have benefitted from the efforts for more than a decade to strengthen the foundations of our economies and financial systems. Our potential is now being further enhanced by steps to intensify regional economic and financial integration. In particular, ASEAN has taken the opportunity during our period of growth and stability within this decade to remain steadfast in advancing our efforts to forge greater economic and financial integration to unlock the immense opportunities for the region including for the SME business community. My remarks today will touch on three areas; the significant intrinsic potential of the ASEAN economic bloc, how the SME sector would stand to benefit from these prospects, and on how greater financial integration can serve as a catalyst for the growth and development of SMEs.

Intraregional trade now accounts for almost a quarter of the region’s total trade while intraregional investment activity has quadrupled to 17% of total investment since 2000. The vibrant SME sectors in the respective ASEAN economies have been an important part of this commendable economic progress. Indeed, going forward, the development and growth of ASEAN SMEs will have significant potential to contribute to the region’s prospects and become a key source for the future growth of the region. It is estimated that SMEs would account for between 20 to 50% of GDP across the ASEAN economies, constituting more than 96% of enterprises in the region, and contributing 50 to 80% of total employment. 1  International Monetary Fund World Economic Outlook (April 2015). BIS central bankers’ speeches  1  While SMEs continue to contribute significantly to domestic economic growth, intra-regional trade in ASEAN remains driven by large multi-national companies with the SME sector mainly having a supporting role in the regional production network. The next phase of the ASEAN economic integration process should therefore be focused on enhancing the role of SMEs in contributing towards greater cross-border economic activity. To realise this, policy initiatives are being geared to ensure that SMEs in our region will be plugged into the regional and global value chains. Leveraging on ASEAN’s growth prospects The recent drive for the greater economic and financial integration of ASEAN has paved the way for SMEs to expand and thrive.