samchain/econo-pairs-v1 huggingface dataset:
Veerathai Santiprabhob: Monetary and financial sector policy – moving forward Speech by Dr Veerathai Santiprabhob, Governor of the Bank of Thailand, at the Foreign Correspondents’ Club of Thailand (FCCT), Bangkok, 1 June 2016. *  *  *  Members of the FCCT Executive Committee, Distinguished guests, Ladies and gentlemen, Good evening to you all, It is my pleasure to be here with you tonight. Although this is my first time speaking at the FCCT, I can feel the vibes of active journalism, which underpins the club’s foundation and its long history in the community of journalists in Thailand. As one of the oldest press clubs in Southeast Asia, I would like to thank you for your continued commitment and contribution to the Thai economy and the Thai society. Public perception and expectation indeed play a large part in establishing credibility and effectiveness of economic policy. As public opinion influencers, journalists greatly contribute to achieving desired policy outcome. As we progress half way through the year, today I would like to share with you the Monetary Policy Committee’s latest economic assessment and monetary policy stance to support the current economic recovery and safeguard stability of the Thai financial system. After that, I will turn to the Bank of Thailand’s financial sector development policy, with a view to facilitating Thailand’s economic transition towards strong, sustainable and inclusive growth. Let me start by talking about recent developments in the global financial markets.

As fundamental parts of infrastructure development, we adopt international best practices on the security and prudential standards to ensure confidence as the country moves from a cashbased economy towards a digital economy. The third area of financial sector development policy is the Capital Account Liberalization Master Plan, Phase II. The plan aims to deepen Thailand’s financial markets by allowing greater flexibility and diversification in products and services offered to residents and non-residents, and to support the growth and development of the Thai economy. So far, a number of regulations on foreign-exchange management have been relaxed for greater flexibility and lower transaction costs. This year, the Bank of Thailand plans to further relax foreign-exchange regulations by allowing qualified investors to invest in securities abroad directly within a certain limit without the need to go through local intermediaries. We also plan to allow securities companies to buy and sell foreign currencies with their clients within the scope of their brokerage business. Lastly, foreign corporations located in neighboring countries are to be permitted to borrow direct loans in Thai baht from domestic financial institutions to invest in Greater Mekong Subregion (GMS). We have also started to see the results of the increased flexibility, which helps MultiNational Companies to establish Treasury Centers (TC) and International Headquarters (IHQ) in Thailand. As of now, there are 13 companies holding Treasury Center licenses, of which 4 have been granted in the past 3 months, with one more awaiting approval from the Ministry of Finance.
They result from errors or omissions in the data which inevitably occur given the many different data sources for such statistics. Capital transfers should also be taken into account, but they have been excluded here for the sake of simplicity. Page 4/13  surplus increased significantly until the onset of the financial crisis. During the crisis, the current account balance fluctuated sharply. In recent years, the surplus has stabilised at 8–11% of GDP, and in 2016, as I said earlier, it stood at some 10%. Since Switzerland consistently generates a current account surplus, one would expect the net international investment position to rise over time. However, chart 2 shows quite clearly that this is not the case. The chart depicts Switzerland’s net international investment position during the period 2000–2016, again relative to GDP. We can see large fluctuations from year to year that cannot be explained by developments in the current account surplus. If these fluctuations are factored out, it becomes clear that the net international investment position has not increased significantly over the observation period. The high fluctuations illustrate how important the other influencing variables already mentioned are in the development of the net international investment position. I will go into this in more detail later. Let me just add something here: Although the net international investment position has not increased, Switzerland’s gross claims and liabilities abroad have continued to rise, particularly since the 1990s.

Conclusion The persistently high current account surplus in Switzerland is not a reflection of an overly weak Swiss franc. Rather, this surplus can be explained by three factors. First, statistical distortions mean that Switzerland’s current account surplus tends to be overstated. A considerable percentage of multinational companies in Switzerland are held in free float by foreign investors. If these companies reinvest their profits, they are entirely attributed to Switzerland, even though a large proportion actually belongs to the foreign investors. The higher nominal interest rates abroad inflate the current account surplus in Switzerland. The reported balance is too high because the nominal appreciation of the Swiss franc is not taken into account. Overall, these statistical distortions have the effect that Switzerland’s net international investment position does not steadily increase despite persistent current account surpluses. Second, there are structural reasons for the current account surplus or savings surplus in Switzerland. These include, in particular, the rapidly ageing population. If the statistical distortions are factored out of Switzerland’s current account balance, it shows a savings surplus, which in light of the demographic developments and a well-financed pension system is entirely justified. Third, the size and development of the current account balance in Switzerland are driven by two industries whose net exports are relatively insensitive to exchange rate fluctuations and whose importance for the current account is considerably larger than it is for the economy as a whole.
Note that the capital of banks acts as a buffer that allows potential losses to be absorbed in adverse scenarios, so that these intermediaries can continue to offer financial services to households and firms, thus contributing to smoothing – rather than amplifying – negative shocks to the economy. Also, a high level of capital entails a stronger link between the personal wealth of the owners and the economic performance of the banks, thus contributing to mitigate the risk profile 6/13  that the latter are prepared to assume and, therefore, the likelihood that they will overreach themselves and will subsequently require traumatic correction measures. All of this explains the concern of banking regulators that banks should hold sufficient capital. The last financial crisis showed that banks’ capital levels were clearly insufficient to address the economic and financial shocks that arose. In response to the crisis, international financial regulators tightened capital requirements, setting higher minimum levels and requiring capital of higher quality, as well as introducing requirements for minimum liquidity levels. As a result, the main international banking systems have gradually raised their solvency ratios in recent years. The Spanish banking system has gradually adapted to the new regulations and its capital ratios are currently in excess of regulatory requirements. However, in the case of ratios calculated in terms of risk-weighted assets, such as the CET1 ratio, average levels are comparatively low and have risen by less than in the main European banking systems.

As regards negative interest rates, although there is no conclusive evidence to date that they have adversely affected the supply of bank credit, we cannot rule out that maintaining rates at very low levels for an additional, potentially extended, period of time, could ultimately have some negative consequences for the bank-based transmission of monetary policy. In this regard, the mitigating measures adopted by the ECB, consisting of a tiered system for remunerating excess liquidity holdings, are intended to soften the negative impact on bank profitability of the new reduction in reserve remuneration, and thus ensure the expansionary effect on activity and inflation of any additional cuts to interest rates in the current setting. 2. Banking sector profitability This is the economic environment that banks, economic agents and, in particular, financial institutions will face in coming years. If I may, I will now move on to analyse the developments in Spanish banking sector profitability and the determinants thereof. Profitability is one of the main variables that characterise the financial position of banks and it provides the first line of defence against adverse shocks. Indeed, the volume of a bank’s profits determines the return its owners can earn on the capital invested. This, duly adjusted for the risks assumed, will affect the bank’s valuation. Moreover, profit levels determine the margin these agents have available to address shocks. Indeed, low profitability reduces the possibility of generating capital internally through retained earnings.
Jarle Bergo: Oil revenues, monetary policy and economic cycles Lecture by Mr Jarle Bergo, Deputy Governor of Norges Bank (Central Bank of Norway), at the Telemark University College, Bø, 13 November 2002. The text below may differ slightly from the actual presentation. The lecture is based on the assessments presented at Norges Bank’s press conference following the Executive Board’s monetary policy meeting on 30 October and on previous speeches. *  *  *  Petroleum activities constitute an important part of the Norwegian economy. A sound economic policy and high oil prices have contributed to the highest current account and budget surpluses that have been recorded in any OECD country. In 1998 when oil prices were down to USD 10 per barrel, we also recorded a surplus that came to 4 per cent of GDP measured in terms of government net financial investment. Societies that suddenly gain access to wealth have a tendency to spend the money and then fall into decline. Access to an abundance of natural resources can result in slower growth. The explanation may be that time and resources are spent on grabbing as large a share as possible of the acquired wealth. Historical experience therefore suggests that it is important to have decision-making systems to provide protection against individual groups gaining strong control over Norway’s petroleum wealth. In addition we must maintain and develop incentives to acquire knowledge and engage in innovative work.

This is broadly reflected in the latest December 2019 Eurosystem staff projections, which foresee inflation at 1.1% in 2020, 1.4% in 2021 and 1.6% in 2022. At the same time, annual HICP inflation excluding energy and food is expected to be 1.3% in 2020, 1.4% in 2021 and 1.6% in 2022. The monetary policy stance Against a backdrop that remains clouded, the euro area economy still needs strong support from monetary policy. The policy stimulus that is in place is working its way through the economy and is expected to support growth and job creation, a key precondition for inflation to move towards our medium term inflation aim. Hence, at the last meeting, the Governing Council confirmed its forward guidance on the ECB’s policy interest rates, asset purchases and reinvestments. According to our guidance, we expect to maintain the key ECB interest rates “at their present or lower level until the inflation outlook robustly converges to a level sufficiently close to, but below, 2% within the projection horizon.” While rate guidance has been effective in steering rate expectations along the short- to mediumterm portion of the term structure, our ongoing net purchases, at a monthly pace of € billion, act primarily on the longer end of it. We also continue reinvesting, in full, the principal payments from maturing securities purchased under the asset purchase programme for an extended period of time “past the date when we start raising the key ECB interest rates”.
The low interest rate environment is also bolstering momentum on the real estate markets. However, with all of these problems it is not so much the negative interest rate itself that is a major factor, but rather the exceptionally low level of interest rates that has prevailed worldwide for years, and which I referred to at the beginning of my speech. These challenges did not appear only when the SNB started charging negative interest, but rather reflect the protracted decline in global interest rates. In the current situation, interest rates would remain low even if we were to stop charging negative interest, and the knock-on effects would thus also persist. Page 5/8  Safeguarding Switzerland Ladies and Gentlemen, would the citizens of Switzerland be better off if the SNB did not impose its negative interest rate? Allow me to play through a brief scenario in this regard. What would happen if we were to simply stop charging negative interest in the current environment? Dispensing with the negative interest rate would have a substantial impact on the Swiss economy. Swiss short-term interest rates would again be higher than in other countries, which would clearly increase the attractiveness of Swiss franc investments. This is turn would cause the franc to appreciate, which would be detrimental to economic momentum in Switzerland and would see unemployment rise and inflation pushed into negative territory. If we stopped charging negative interest, would that at least be beneficial for savers, pension funds, life insurers and banks?

13  All speeches are available online at www.bankofengland.co.uk/speeches  13  The post crisis international reforms established machinery to enable all relevant authorities to agree and track the implementation of the resolution plans of systemic banks. Public reporting and assessment of resolvability should act to strengthen further confidence of other jurisdictions in the resolution plans of banks that operate in their jurisdictions. Confidence that an effective resolution of a clearing member can be effected will support a CCP and its supervisor ‘staying’ the default of that member, in line with the international guidelines. The Lehman episode with which I started is also an example of what can happen without such cooperation and confidence and when there is no resolution option available. The effectiveness with which Lehman’s default was managed by clearing houses was perhaps the only bright spot in a very sorry tale. I hope I have been able to set out today why the reforms we have put in place on clearing and the progress we have made on resolution learn the lessons of that tale and make the financial system today a substantially more resilient place. 14  All speeches are available online at www.bankofengland.co.uk/speeches  14
The 2002 wage settlement resulted in very high wage growth for the fifth consecutive year. The Norwegian economy was exposed to considerable unexpected disturbances from the end of 2002 and in 2003. Economic developments in other countries were an important factor behind the appreciation of the krone. In the autumn of 2002 and into 2003, growth in the global economy moved on a different path and was substantially weaker than Norges Bank and other observers had expected. Weak developments in the global economy resulted in lower interest rates abroad and a wider interest rate differential between Norway and other countries. Developments in international equity markets and the risk of higher oil prices also contributed to strengthening the krone. A persistent downturn abroad, the likelihood of lower wage growth in Norway and a strong krone have led to reductions in the interest rate of more than 5 percentage points since December 2002. The sight deposit rate has been 1.75 per cent since March this year. Monetary policy easing has been aimed at  2  BIS Review 61/2004  bringing inflation up towards the target of 2.5 per cent and stabilising developments in output and employment. The decline in interest rates since December 2002 has contributed to weakening the krone. Measured by an index of 44 trading partners (I-44), the krone depreciated through 2003 by almost 11 per cent from its strongest level in January of the same year. The krone has fluctuated moderately in 2004.

Jarle Bergo: Monetary policy and cyclical developments Speech by Mr Jarle Bergo, Deputy Governor of Norges Bank (Central Bank of Norway), at Sparebanken Sogn og Fjordane, Førde, 18 October 2004. The text below may differ slightly from the actual presentation. The address is based on the assessments presented at Norges Bank’s press conference following the Executive Board’s monetary policy meeting on 22 September, Inflation Report 2/04 and on previous speeches. The references and the  charts in pdf-format can also be found on the website of the Norges Bank. *  *  *  Price stability, in the sense of low and stable inflation, is the objective of monetary policy in a number of countries. Historical experience from Norway and other countries has shown that high inflation has resulted in unstable output and employment. In addition, a fall in the price level will often accompany a period of decline. The first inflation target was introduced in New Zealand in 1990. Canada followed in 1991, the UK in 1992, and Sweden and Australia in 1993. In Norway, the government issued a regulation introducing an inflation target in 2001. Monetary policy in euro area countries and Switzerland is also aimed at price stability, even though this is not referred to as inflation targeting in these countries. Inflation targeting has proved to be particularly appropriate in very open small and medium-sized economies. Commodity exports play a particularly important role in several of the countries that were the first to introduce inflation targeting.
Moreover, that base has contracted further in recent years, due to many factors, including regulatory reform and the quantitative easing programs initiated by central banks in many of the major advanced economies. Relative to the vast sums of U.S.-dollar LIBOR contracts I mentioned earlier, the median daily volume of unsecured three-month U.S.-dollar wholesale borrowing is minuscule, at around $ billion, and many days see less than $ million in volume.7 This lack of market liquidity means that these rates cannot be sufficiently transactionbased to be truly representative, and rates that are not transaction-based are more at risk to be manipulated. So, despite efforts to improve LIBOR in recent years—and there undoubtedly have been important changes that have strengthened its administration and governance—the lack of underlying market liquidity for nearly all currencies and maturities remains a problem, and there is no obvious solution.8 The setting of LIBOR still depends heavily on expert judgment. Even for U.S.-dollar LIBOR, actual transactions are the basis for only about one-third of the rate submissions for tenors of one and three months.

In this vein, the Committee’s second report discussed some of the term rate alternatives, and development of proposals for a term reference rate was recently added to its mandate. In this regard, I would also encourage market participants, academics, and other interested parties to contribute to the effort to develop a term reference rate. Another key area of focus—further motivated by Andrew’s warning—is the development of fallback contract language in the event that LIBOR ceases to be published. The absence of such language creates the potential for large-scale disorder in global financial markets should LIBOR go away. Put simply, this is an unacceptable risk. The International Swap Dealers Association (ISDA) has been working on this issue for the derivatives market and is expected to issue a consultative document soon that should prove instrumental in making further progress. The ARRC has also been coordinating a similar effort across cash products of all types. The goal is to achieve consensus on a consistent approach across markets whenever feasible. Looking Ahead As I have noted previously, LIBOR continues to have significant shortcomings despite strengthened governance in recent years, and uncertainty about its future will only grow over time. This uncertainty reflects the limited liquidity underlying LIBOR and the corresponding legal risks I discussed earlier. But, I am also skeptical about whether LIBOR can ever be adequately transaction-based. As Andrew highlighted, there is no guarantee that LIBOR will continue to exist beyond December 2021.
Chris Salmon: Remarks on the Sterling Monetary Framework (SMF) Annual Report Remarks by Mr Chris Salmon, Executive Director for Markets of the Bank of England, at the Money Markets Liaison Committee meeting, London, 13 July 2015. *  *  *  I would like to thank Eleanor Broughton, Ronnie Driver, Sarah John, Ben Martin and Ben Morley for their comments and contributions. The Bank will hold an Open Forum this autumn. The Forum will facilitate an open debate about the role of markets in society, and provide an opportunity to review how key financial markets are functioning. The Bank’s own mechanism for interacting with markets, when implementing monetary policy and providing liquidity insurance, is set out in the Sterling Monetary Framework (SMF). Markets work more effectively when participants are open and transparent about their activities, and the Bank aspires to meet that standard in relation to its own market operations, including through publishing an annual report on the effectiveness of the SMF. This Committee brings together key participants in sterling money markets and is a natural venue to discuss the operation of SMF. As such, today I want to summarise the key themes that were covered in our most recent annual reports and to sketch out some of the issues that the Bank is likely to confront in coming years. These are areas where your future feedback will be essential as we work to maintain the effectiveness of the SMF.

And the auctions are responsive to market conditions, with the amount of liquidity available rising automatically if there is greater demand. Reflecting the improved financial positions of banks and building societies, and the liquidity provided to the market through QE, the Bank’s liquidity insurance facilities saw relatively modest usage over the year covered by the most recent annual report. More recently, however, usage has increased, as banks sought to make use of the liquidity insurance provision on offer by pre-emptively securing term funding ahead of a  BIS central bankers’ speeches  1  period of potential uncertainty around key events, such as the UK general election, and Greece. This pattern of usage is encouraging and welcome, as it demonstrates that banks are prudently managing their liquidity position ahead of potential risks, and that the ILTR is an active part of their liquidity management. Despite the increase, however, demand has remained relatively low, with just over £ billion allocated in the May operation: a high water mark for the expanded ILTR operation. Looking back to 2007, before the crisis, the cumulative changes we have made to the SMF have been transformative. The SMF now has 164 members, more than double the number signed up in 2007, with banks and building society SMF members accounting for 98% of total sterling deposits. The drawable value of collateral delivered to the Bank for actual or potential use in the Bank’s facilities has increased dramatically, and stood at £ billion at endJune 2015.