samchain/econo-pairs-v1 huggingface dataset:
BIS central bankers’ speeches  1  The other is the Executives’ Meeting of East Asia-Pacific Central Banks or EMEAP, which have helped develop the capital market in the region through the establishment of the Asian Bond Fund and many other initiatives. The increasingly important role of China to the Thai economy and financial system has brought about the need for broader and deeper understanding of the Chinese economy and a more proactive response from public agencies, including the Bank of Thailand, to seek a presence in China. Your Royal Highness, Ladies and Gentlemen, Following the initial foothold in the form of two representative offices in New York and London twenty years ago, the Bank of Thailand recently established a representative office here in Beijing. The Beijing office is our first representative office in Asia. I also believe that we are the first central bank from the ASEAN region to have its representative office in China. But, being the first is not the only measure of success for our journey here. Since its establishment last year, our Beijing representative office has fulfilled its objectives to further promote closer ties between the Bank of Thailand and the People’s Bank of China, as well as other Chinese government agencies. The office also aims to sharpen its focus and first-hand understanding of the economic and financial developments in China. This achievement is well-illustrated by the deepening financial cooperation between China and Thailand.

The future belongs to those countries which recognise and adapt quickly to these changes, so as to ride the new wave instead of being overwhelmed by it. The September 11th attacks in the US revealed another peril of globalisation - extremist terrorism. Soon after September 11th we discovered in Southeast Asia extremist groups, obtaining funding, training and support from Al Qaeda, and carrying out terrorist attacks in our own countries. The terrorist network is therefore a true MNC. Southeast Asian countries are mindful of the threat of terrorism to investors’ confidence, and are co-operating to battle against these extremist elements. This is a long-term, worldwide struggle. Despite these setbacks, Southeast Asian countries have not turned inwards, or tried to shut out the world. They continue to embrace globalisation as the best option for securing their future, and remain committed to plugging themselves into the global grid. Individually, they continue to promote FDI, encourage exports, and pursue linkages with the outside world. They know that to try to keep out new investments, technologies and competition and go it alone will condemn them to poverty and stagnation. As a group, ASEAN is strengthening economic cooperation among its members. Intra-ASEAN trade in manufactured goods is already practically tariff-free. Last October, ASEAN leaders went a step further, and committed to creating an ASEAN Economic Community by 2020. This will be a single market for goods, services, capital and professionals. Externally, ASEAN is negotiating an FTA with China, and is targeting to conclude the goods chapter by middle of this year.
Added to this, public finances are in good shape as far as debt is concerned, which reduces the political pressure on the SNB. The value of bank deposits in Switzerland is stable because the value of its central bank money is stable, because the banks are operating prudently, and because the regulation of the banking system is centred on stability. The strong capital base and high liquidity of the banks in Switzerland increase the resilience of the system in times of crisis and promote confidence among depositors. Both of these factors contribute to bank deposits retaining their value. Current monetary policy and the role of central bank balance sheets Our findings are therefore rather reassuring. In Switzerland, central bank money and bank deposits are essentially sound money. However, there is no guarantee that this will always be the case. Or, to put it in somewhat more pointed terms: will the expansionary monetary policy that the SNB has been following for some years jeopardise the solidity of the Swiss franc in the future? Issuing too much central bank money can indeed undermine the foundations of sound money, especially if the money is created to solve political or structural problems. However, the unprecedented expansion in the monetary base in recent years does not pose a particular threat to the stability of the Swiss franc’s value.

This would result in monetary policy no longer being centred on price stability and thus on sound money. 11 Switzerland has been able to manage the additional debt well thus far thanks to the fact that its public finances were in good order when the crisis hit. That said, the coronavirus crisis has fuelled aspirations here, too. There have been mounting calls for the SNB to make massive additional profit distributions. However, there are two things to bear in mind here. On the one hand, the size of any distribution depends on the earnings potential of our investments. And on the other hand, a central bank’s equity must be sufficiently high to cover the risks in its balance sheet. 12 Ladies and gentlemen, a monetary system has to take account of the changing needs of the economy and society over time, and the evolving environment in which it exists. However, it is also important to note that it is an order that has developed over the course of history and any ill-considered interventions could entail serious consequences for our country and the population as a whole. Swiss monetary history has been characterised by a wide range of changes, but the desire for sound money has been a constant throughout. Today’s paper money system with central bank money and banks’ book money has stood the test of time.
Given the long lags in monetary policy, central banks must look forward now and prepare a strategy for a smooth transition back to normalcy. Asian economies: dealing with desynchronised global macroeconomic cycles 31. The second key aspect in securing a return to normalcy is the adjustment of macroeconomic policies in the emerging market economies to spillovers from the advanced world. I will speak with reference to Emerging Asia. Continually shifting gears in monetary and fiscal policies 32. In the early stages of the financial crisis, most Asian countries responded with expansionary macroeconomic policies to dampen the effects of a collapse in exports. Between August 2008 and August 2009, policy rates across Asia were more than halved, on average. Substantial fiscal stimulus was injected, ranging from higher investment spending in China to significant tax cuts in Indonesia. Fiscal deficits across Asia widened from an average of 0.6% of GDP in 2008 to 3.0% in 2009. 33. From 2010 onwards, a two-speed recovery took hold in the global economy, with advanced economies growing sluggishly and Emerging Asia staging a vigorous rebound. Incipient inflationary pressures prompted central banks in the region to raise policy rates from mid–2010 onwards. Although renewed risks stemming from the Eurozone crisis led to a fresh round of easing in some economies in late–2011, policy rates in Emerging Asia are on average 75 basis points higher now vis-à-vis their troughs during the crisis. 4  BIS central bankers’ speeches  34. Fiscal stimulus has also been withdrawn progressively.

Real interest rates in Japan are probably higher than warranted by the state of its economy. But the effects of further monetary easing are not expected to be decisive. Nor is it clear that fiscal stimulus will lift the economy on a sustained basis. 11. The biggest drag on the Japanese economy is its demographics. Japan’s working age population has been growing by just 0.2% per annum over the last ten years. Together with a declining participation rate, the labour force has contributed negatively to GDP growth in almost every year since 1998. A firm turnaround in the Japanese economy requires a sustained increase in productivity, which entails structural reforms to enhance product market flexibility and spur competition and innovation in the services sector. Emerging Asia: the rise of domestic demand 12. In comparison, Emerging Asia has weathered the financial storm best, with the region’s total production now one-third higher than what it was in 2008. 13. China secured a quick and vigorous rebound from the depths of the global trade collapse in early 2009. It has since reined in inflationary pressures and indications are that it has achieved a “soft landing” of its economy, registering an estimated 7.8% growth last year on the back of solid consumer demand and infrastructure investment. While China faces significant economic restructuring challenges, its impressive growth trajectory appears intact for now. 14. India too rode through the global financial crisis comfortably but is now going through a weak patch.
Central banks can reduce payment-related risks very effectively. By establishing security and confidence, they contribute decisively to the efficiency of the payment system. Today, money changes hands mainly via transfers or direct debits, with payments being booked directly to the commercial banks’ accounts at the central bank. Settling in electronic central bank money is equivalent to settling in cash; it is final and irrevocable. This approach reduces credit risk and inspires confidence – both in the payment system and in money itself. On the slide, this is the third phase: the transition from private promises to pay to central bank money – in other words, to today’s banknotes and the electronic sight deposits that commercial banks hold with their central bank. RTGS systems – a milestone in the evolution of cashless payments Let us now turn to Switzerland. For many years, the postal cheque service of Swiss Post was at the heart of the cashless payment system. This area only began to become attractive for banks as well from the middle of the 20th century. Around this time, so-called ‘bank clearing’ – Switzerland’s first interbank payment system – came into existence. This was an important step in the development of the cashless payment system. However, the predominantly manual nature of the system made it cumbersome. It could take up to four days to execute a payment, making efficient liquidity management virtually impossible for the participating banks. Furthermore, in the ‘bank clearing’ system, payments were settled on a net basis.

Inflation and the transitory effects The CPI is used by the Riksbank to target inflation mainly because it is familiar, published monthly with a short time lag and seldom has to be revised. However, using the CPI as a target variable is liable to face monetary policy with explanatory problems. The past year is a case in point. The low rate of inflation stemmed mainly from transitory effects; the consolidation of government finance and increased confidence in economic policy helped to strengthen the exchange rate. During 1996 it proved possible to lower the instrumental rates almost 5 percentage points. Altogether, in 1996 decreased interest costs and the stronger exchange rate had a downward effect on the CPI of around 1 percentage point. In some countries the inflation target is assessed in terms of the CPI with various components excluded, for example indirect taxes and subsidies or mortgage interest costs. It may then be asked whether the CPI is the most appropriate target variable and whether some measurement of underlying inflation might be preferable. An advantage of focusing on a single underlying indicator is that it might help the Riksbank in its contacts with the general public and make monetary policy more transparent. Analysis and debate would be concentrated on factors that monetary policy influences. BIS Review 32/1997  -2-  This, however, presupposes the existence of an underlying yardstick that can take every conceivable transitory effect into account. Such measurements are difficult to construct.
A century ago, depositors could lose confidence in the banks and rush to withdraw their savings. However, deposits stabilised when guarantee schemes were established in the 1930s. Loans to households make up a third of banks’ assets. Residential mortgage loans are longterm loans. At the same time, funding for Norwegian banks has changed. Market funding has assumed a more important role. In recent years, both short-term market funding and funding  BIS Review 8/2010  1  in foreign currency have grown in Norwegian banks. Banks have increasingly transformed short-term deposits from international money markets into long-term domestic lending. This is the main reason for the strain on liquidity experienced by Norwegian banks when foreign funding came to a halt in 2008. For Norwegian banks, the financial crisis has primarily been a liquidity crisis and not a solvency crisis. The authorities all over the world are currently reviewing the regulation of banks’ liquidity. The Basel Committee on Banking Supervision presented recommendations on quantitative liquidity requirements in December 2009. The UK, Switzerland and New Zealand have introduced, or are in the process of introducing, stricter rules. Norwegian banks must also expect the regulation of liquidity to be more stringent in the future. It will be more difficult to base housing finance on short-term funding. Issuing covered bonds may be an alternative.

Legal systems and competitiveness of financial centres  Fundamentally, the legal system should ensure that contract and property rights are sufficiently clear and predictable; if there is a dispute, participants in the contract do not feel  1  I wish to thank L. Stracca, M. Svoboda, S. Kerjean, F. Recine and C. Zilioli for their contribution. 2  Mishkin (2005). 3  Precisely through its negative impact on the quality of institutions and law enforcement. BIS Review 122/2007  1  the need to take legal action unless as a last resort. Moreover, if there is litigation, the court is independent and able to resolve the claim effectively and in a reasonable time. Furthermore, the judgment, once delivered, has to be quickly enforced. To underline the importance of this aspect let me give the example my own country. There is a growing literature suggesting that one of the reasons for the relatively slow pace of financial development in Italy is the slowness of the civil courts, with the result that, for example, mortgage debt is still a fraction of what it is typically in other advanced countries. 4 At this point it should be clear that an efficient legal system is a key ingredient of competitiveness among financial centres. One of the reasons of the traditional lead of US financial markets over Europe (and the rest of the world) is greater standardisation of legal norms and systems, while the European financial system is still characterised by considerable fragmentation of legislation, regulation and enforcement.
Another central aspect of macroprudential supervision and regulation takes account of the build-up of systemic risks over time, and especially the procyclical effects in the financial sector. Discretionary action could be taken to cushion the growth of such risks over time – for instance, by imposing an obligation to build up additional capital in phases of excessive credit growth, in other words a countercyclical capital buffer. A key aspect here is that such measures help prevent possible imbalances within the financial system. Another way of achieving the required countercyclical effect is, for example, imposing direct restrictions on loan-to-value ratios if there are signs that a bubble could be forming in certain markets, such as the mortgage market. The difficulties of applying macroprudential supervision and regulation should not be underestimated, however. First and foremost, experience of discretionary instruments is still fairly limited. For example, there is not yet any conclusive research showing which indicators could be used to reliably identify systemic risks. Moreover, it is not easy to assess the point beyond which credit growth should be regarded as excessive. Furthermore, the interaction between macroprudential and monetary policy instruments could make implementation more difficult. In particular, monetary policy transmission channels could be affected. The impact of a change in interest rates on lending could vary depending on the level of a bank’s capital buffer.

Muhammad bin Ibrahim: Development and deployment of Malaysia’s ATM network Speech by Mr Muhammad bin Ibrahim, Deputy Governor of the Central Bank of Malaysia, at the launch of MEPS (Malaysian Electronic Payment System) ATM Initiative, Kuala Lumpur, 21 October 2013. *  *  *  Pooling of resources through MEPS The launching of MEPS’ ATMs marks an important milestone as this will be the first time that MEPS, a non-bank entity owned by the banking industry, is deploying ATMs, instead of by individual banks. This initiative is indeed a welcomed move as it facilitates the pooling of resources by the banking industry for a common objective of developing and deploying industry-wide banking infrastructure. It promotes efficiency and cost effectiveness. Widening the ATM network through shared resources will also benefit the public by having more convenient points of access to banking products and services. MEPS had in the past a history of coordinating industry-wide infrastructure development efforts. An outstanding achievement was made when it coordinated the industry-wide migration of the ATM cards from magnetic stripe to chip-based technology in 2001 to eradicate the numerous fraud involving magnetic stripe technology. This move was a significant strategy for the country, as Malaysia was amongst the first, to adopt a chip-based technology to reduce fraud and boost public confidence in the use of the ATM and payment cards. MEPS should continue to perform this role, as builder of payment infrastructure for the banking industry.
The themes are broad. That reflects the diversity of our agenda. They focus on the interactions and intersections between policy areas. They emphasise new challenges and new directions, while recognising that familiar questions facing central banks remain no less important. Today’s conference is organised around them. The first theme covers “policy frameworks and interactions” The re-emergence of macroprudential instruments as part of the policy armoury raises fundamental questions about the interaction of monetary policy, macroprudential policy, and microprudential policy. It is essential to improve our understanding of the relationship between credit cycles and systemic risks. Since credit market developments both affect and reflect potential growth in the broader economy, they – and macroprudential measures to influence them – require careful study by financial and monetary policymakers alike. The advent of a new, enhanced policy toolkit raises vital questions about the effectiveness of individual policy tools; their joint operation; and how they interact domestically and across borders. The second theme covers “evaluating regulation, resolution, and market structures” The financial crisis precipitated a radical overhaul of the approach towards regulation, supervision and resolution. Regulatory policies have shifted from a near-exclusive focus on microprudential resilience to a more balanced emphasis on minimising systemic risk. In the whirlwind of essential change, there has been, however, relatively little assessment of the overall effect of reform on the financial system as a whole. Moreover, our understanding of the “system” must extend well beyond the banking sector to encompass the whole of market-based finance.

Nevertheless, much of the criticism has been based on this assumption, for instance, the claim that the Riksbank’s policy of leaning against the wind after the crisis has cost 60,000 jobs. As I have shown, the general view among forecasters at the time when the repo rate had been raised to 2 per cent was that it would be necessary to continue to raise the repo rate – and for traditional monetary policy reasons. The increase from 0.25 to 2 per cent was thus not perceived as particularly remarkable or as purely justified by concern for household debt. I also hope I have convinced you that the low inflation rate in Sweden today does not reflect an economy that has developed very poorly since the crisis as a result of misguided, tight monetary policy. On the contrary, the Swedish economy has developed relatively well and has definitely not been in a state of deflation driven by a weak real economy. The main focus for the monetary policy conducted after the crisis has been to support the recovery and bring inflation back towards the target. Giving consideration to the risks linked to developments in household debt and housing prices has been part of the assessment but has not played a major role. The fact that inflation has been low is to a large degree, as always, a reflection of events over the course of time that have been difficult to predict.
The third is that the Bank of Thailand will begin integrating the depository system as well as the clearing and settlement system for all debt instruments with the TSD under a multi-year migration plan. This is aimed at enhancing market efficiency and reducing transaction costs in the debt market. The integrated system will also provide an important foundation for future regional linkages of the clearing and settlement system. Fourth is the development of hedging instruments. With the current upward trend in domestic interest rates, hedging instruments particularly interest rate swaps will provide the bond market with additional instruments that will be useful in an environment of market volatilities. The interest rate swaps market can help diversify and reallocate risk among various groups of bondholders. The fifth focus is our plan to improve the functioning of primary dealers as market makers. This is to say that their obligations and privileges will be reviewed so that they will be in a strong position to perform their functions as market makers. And the sixth is the ongoing project to strengthen the regional bond market through the Asian Bond Funds Project. For the past years, development of the local and regional bond markets has been given an unprecedented emphasis by various regional fora. The most notable is the launching of ABF1 project by eleven EMEAP central banks. That efforts is now being followed by the ABF2 project.

In order to ensure a level playing field, financial players must be regulated according to what they do and not what they are. Addressing the growing influence of borderless technology on the financial system will also require an international coordination effort. Such are the challenges that the public authorities will have to meet. *  *  *  To discuss these important issues, we are extremely fortunate to have an excellent panel today, including: •  Mrs Sarah Dalhgren, Partner at McKinsey, formerly Head of the Financial Institution Supervision at the Federal Reserve Bank of New York (FRBNY). Dear Sarah, your expertise in supervision, which you demonstrated through most of the financial crisis, will be extremely useful to assess the current situation of financial institutions in the context of financial innovation. •  We also have Mrs Sandie O’Connor, Manager Director and Chief Regulatory Affairs Officer at JPMorgan Chase & Co. Dear Sandie, you are deeply involved in your firm’s regulatory strategy and your views on how financial innovation should affect regulation from the industry’s point of view will be extremely valuable. •  I would also like to introduce Mr Alain Papiasse, Deputy Chief Operating Officer (COO) at BNP Paribas, representing the group in North America. Alain is a top market practitioner with extensive experience in both asset management and investment banking. So, dear Alain, I hope you will provide us with “insider” and complementary views on what the fintech industry can usefully bring to banks.