samchain/econo-pairs-v1 huggingface dataset:
The amount due to and due from such overseas banks amounted to RMB 128 billion yuan and RMB 146 billion yuan respectively, a clear indication that banks from around the world are using the robust platform and large liquidity pool to offer RMB services to their customers at home. Looking ahead, we in Hong Kong will seek to broaden and deepen our offshore RMB market further, by enhancing our RMB infrastructure and encouraging participation. In doing so, we will continue to cooperate with other places along the way. From the end of next month, the operating hours of our RMB Real Time Gross Settlement system will be lengthened to 11:30 pm Hong Kong time, giving financial institutions in different parts of the world an extended window to settle offshore RMB payments through the Hong Kong infrastructure. Moreover, the Hong Kong – London Forum for promoting cooperation on the development of offshore RMB business just convened its first meeting yesterday. I am very pleased to note that the group had a very productive discussion, with concrete joint action plans set forth for enhancing offshore RMB market activities in both places. Meanwhile, we at the HKMA will also be continuing our efforts to raise awareness about the developments of offshore RMB businesses and the comprehensive services provided by Hong Kong in this regard.

One possibility could be to discuss the consequences of part of the infrastructure being temporarily out of order, and how the negative effects of this could be limited. The focus on consequences means that it would be possible for the business continuity and crisis recovery planning to manage a large percentage of possible crisis scenarios. Summary A payment system with effective resilience to shocks is of critical importance to the economy and to society. However, the resilience of the payment system depends on investments from individual agents, which each have their own objectives rather than those of the economy as a whole. This makes it important for the Riksbank to participate and work to ensure that the resilience of the payment system as a whole remains on a reasonable level with regard to the social economy. There is some gain for the commercial organisations to have a good resilience to shocks as recurring disruptions at one agent will lead to customers changing to a different agent. This also means that it is rational to invest in cooperation with those on whom the agent is dependent to supply its service. One can reason in a similar manner with regard to the resilience of the system as a whole. The advantages of an improvement in the resilience of the payment system will benefit everyone, but to achieve a sufficiently strong resilience it is necessary to cooperate. Here the Riksbank and other authorities have an important task in explaining and acting as catalysts for cooperation.
Though not taking a driving seat, a financial system that is safe and sound has an important role to support growth and sustainable development. When it comes to finance, three issues come to my mind. First, what should be the strategy for meeting the financing needs of the Subregion. Second, what role should the Thai financial system play as an intermediary and as a member of the GMS. Third, what are the regulatory and institutional challenges to ensure financial stability and sustainable development. On the first issue of financing, we generally observe that trade and direct investment flows are largely influenced by proximity and endowment. Finance, on the other hand, knows no boundary. Given the broad-based financing needs of the GMS which range from large scale project finance to commercial banking for SME, there is a role for all types of institutions: local, regional and global. (1)  For local financial institutions, their knowledge and understanding should give them a comparative advantage to support the traditional sectors that are the mainstay of the region, namely the agricultural sector, household and small entrepreneurs. In this way, they have a predominant role in promoting financial inclusion. Non-bank institutions or innovative financial services such as microfinance, mobile and e-banking and remittance services help promote financial access for households and enterprises. (2)  For larger corporate or infrastructural projects that local or regional banks might not have the financial capacity or know how, there is a role for global institutions to lead finance or underwrite.

And with the natural trade links and the people-to-people relations, there is a role for Thai banks in the payments and remittance services. These areas may not be commercially viable for global banks if the scale of the transaction is deemed too small. But for Thailand, such basic services can help support the robust growth of cross border trade and investments which are important for rural development and income distribution. •  With the fundamental trend where Thai businesses start to diversify investment and production base to neighboring GMS countries, it is natural for Thai financial institutions to follow their clients. Thai banks therefore have an important role in partnering Thai and GMS corporates. Areas such as project evaluation, business-set up, cross-border financial transaction are areas where the local know how matter and where Thai banks can meaningfully contribute. Through the vertical integration of these corporate finance services, Thai financial institutions naturally become an intermediary between Thai business and our GMS counterpart. As clients organize themselves around a regional supply chain, Thai banks become a natural partner to bring GMS business and investment to Thailand. Thai banks and their GMS correspondent banks or joint venture partners have a niche market advantage. They have close business links, geographical advantage, and access to funding in local currencies which are the natural means of payment for intraregional trade.
After that, I’ll be happy to answer any questions you have about what the Fed does and why, and about the economic outlook. As always, what I have to say reflects my own views and not necessarily those of the Federal Reserve System or the Federal Open Market Committee, also known as the FOMC. What the New York Fed does By way of introduction, I will briefly review what my colleagues and I do at the New York Fed on behalf of the Second District. I have the great fortune to serve as vice chair of the FOMC that meets eight times a year in Washington to set interest rates and make other decisions about monetary policy. The members of this committee all strive to set policy to advance the mandate given to us by Congress to promote the maximum level of employment consistent with price stability. Sometimes we have different views on the specific policy choice at hand, and you should view this as completely appropriate: these are hard questions – particularly during difficult economic circumstances such as we face today. In fact, I think we make better decisions as a committee because we don’t all think alike. But we are united in our commitment to our dual mandate and in our belief that Fed independence is essential to the public interest. That independence allows us to make tough decisions insulated from short-term political pressures. At FOMC meetings, each Committee member presents a current outlook for his or her region and the nation.

Across Upstate New York, the cycle of recession and recovery has been much less pronounced than in the nation, which means that the region has been more stable in recent years than many other places around the country. This has been particularly true in Buffalo, which experienced an employment decline of about 3½ percent during the downturn – a significant loss, to be sure – but well below the over 6 percent decline that occurred nationally. One reason why Upstate New York weathered the storm better than the nation as a whole is the resiliency of its housing markets. Like much of Upstate New York, Buffalo’s housing market has proven to be more stable than many other parts of the country. In fact, since the peak of the national housing market in early 2006, home prices in the Buffalo area have increased by about 10 percent, compared with a decline of more than 30 percent nationally. As a result, the drop-off in economic activity that is connected, directly and indirectly, to the performance of the housing sector has not been as severe here as in many other places around the country. 1  As measured by the 12-month change in core PCE deflator. 2  See for instance, the behavior of the three- and six-month changes in the core PCE deflator.
If one wishes, as a third alternative, to retain integration but at the same time reduce the risk of crises spreading across national borders, one must consider letting go of national sovereignty and allowing  9  Schoenmaker, D., “The Financial Trilemma”, Economics Letters 111, 2011, pp. 57–59. BIS central bankers’ speeches  9  more supervision and crisis management at European level (Figure 5). However, this is not a path that is considered politically viable at present. Figure 4  Figure 5  Financial stability  Financial stability  Financial integration  National sovereignty  Financial integration  National sovereignty  The Larosière group, which was given the task after the financial crisis of proposing how the financial system in Europe should be managed, tried to suggest a compromise: Continued integration, but slightly less national sovereignty and slightly more joint responsibility for supervision work. This led to the earlier “level 3” committees on banking, insurance and market supervision being transformed into authorities. The idea was to give them as much power as possible without changing the Treaty on European Union. At the same time, the European Systemic Risk Board, ESRB, was created. This can give warnings or recommendations when members – central bank governors and supervisory heads – assess that financial risks are building up in Europe. It is possible in both to vote in the authorities and the ESRB and the majority opinion applies.10 This has proved important in preventing the deadlocks that the otherwise common method of a consensus decision can entail.

Given the impressive amount of studies produced every month in these areas since the financial crisis broke out, I am fairly hopeful that it will be possible to gradually incorporate these aspects in a fruitful manner into practical inflation-targeting policy.7 But there clearly remains a lot to do. But what is important is that this is all about continuing to develop the inflation-targeting policy. The financial crisis should not be regarded, as some would appear to claim, as a sign that the inflation-targeting policy has been an unsuccessful monetary policy “experiment” and a blind alley – this is not the case. Important to plan crisis management in advance, but this is rarely the case I have so far mainly talked about preventing crises and in particular what role monetary policy should play. Let me now go on to focus on the challenges with regard to managing the situation once a crisis has occurred. How one manages cross-border financial crises – or not – is a question that is very topical right now and will probably remain so for a long time to come. My first thesis here is that when one allows a financial system to grow and the dependence between the financial agents in different countries increases, one should carefully consider what regulations and institutions are needed to manage different crisis situations.
Those buffers ensure that banks are able to provide financial services to euro area households and businesses, even in the face of adverse developments, thereby smoothing rather than amplifying the impact of negative shocks 1/5  BIS central bankers' speeches  on the real economy. Banks with poor structural profitability can face higher funding costs and may be tempted to take on more risk.2 Within the euro area, weak banks are more likely than healthy banks to be connected to unprofitable firms.3 This reduces the flow of lending to profitable firms that need funding to invest and grow. The resultant misallocation of capital 4 towards unproductive businesses weighs on long-run economic growth.5 Low bank profitability can also matter for monetary policy by impairing the accumulation of bank capital over time. Thinly capitalised banks stymie the ability of monetary policy to stimulate economic activity in downturns. Their capacity to lower the interest rates they charge their customers and increase the volume of lending to the real economy is constrained.6 This limits the effectiveness of an important transmission channel of monetary accommodation in the euro area, which relies on bank lending supporting consumption and investment. As the crisis showed, dislocations in the banking sector can deepen recessions and seriously impair the smooth transmission of monetary policy across the euro area. That risk remains today. We recently carried out what we call a macroprudential stress test, which assesses this amplification of shocks using a micro-macro model that feeds back individual bank reactions into macroeconomic outcomes.

Against this backdrop, I am going to focus my remarks today on bank profitability. Returning banks to sustainable rates of profitability is a key step towards ensuring that the sector remains resilient, particularly in the face of slowing economic momentum and the potential for market distress. Euro area banks have certainly improved their profitability in recent years. Their return on equity reached 6% at the end of 2018, up from 3% two years earlier. But their profitability remains below their long-run cost of capital, which most banks estimate to be in the range of 8-10%.1Low profitability prospects translate into low bank valuations, as observed in price-to-book ratios well below one, hindering the ability to raise capital, where needed. European bank profitability has been structurally weak since well before unconventional monetary policy measures were introduced. Broadly speaking, the sources of that weakness can be divided into cyclical factors, cost inefficiencies and competitive challenges arising from outside the sector. Before discussing these sources, let me begin by reminding you why bank profitability is important. Why bank profitability matters Clearly, bank profitability matters for financial stability. Profits are the first line of defence against losses from credit impairment. Retained earnings are an important source of capital, enabling banks to build strong buffers to absorb additional losses.
Moreover, a higher interest rate aimed at influencing the housing market would not eliminate the source of repeated credit cycles. There is a risk of a bubble in both the housing and the foreign exchange market when credit growth is high, as observed in Iceland and Hungary and perhaps even New Zealand in the years prior to the financial crisis. Interest rates were high in national currencies, but households and enterprises chose to borrow in low-interestrate currencies. 9 There was probably a sentiment of euphoria in the Norwegian housing market in 2006 and 2007, but the boom was financed by loans in NOK and not foreign currency. Should we seek to avert bubbles in the housing market even when medium-term inflation prospects are moderate? On this point, it is our judgement that a distinction must be made between giving greater weight to credit growth and house price inflation in the reaction function and defining house price inflation as an independent monetary policy objective. Socalled “leaning against the wind” would not require adjustments to Norges Bank’s approach, bearing in mind our reaction function which already gives weight to asset price movements and credit growth. 10  6  See for example Bernanke, Gertler and Gilchrist: “The Financial Accelerator and the Flight to Quality”, The Review of Economics and Statistics, 78(1), 1996, pp. 1-15. See also Nina Langbraaten (2001): “Formuespriser – konsekvenser for pengepolitikken? (Asset prices – consequences for monetary policy? )”, Penger og Kreditt No 4.

6 We must take account of developments in equity prices and property prices when projecting inflation and output. Norges Bank’s interest rate setting does not rely solely on one simple rule, such as the Taylor rule. 7 Instead, we seek to take account of all factors that influence inflation and output in the medium term, and the key policy rate is set on the basis of an overall assessment. Asset prices such as house prices, the exchange rate and credit growth therefore have a bearing on Norges Bank’s interest rate setting. A written formulation of Norges Bank’s monetary policy reaction function would be fairly comprehensive and include all the variables that are considered. 8 However, a reaction function must not be confused with the monetary policy target – our target function or loss function. The fact that we give weight to variables such as the exchange rate, house prices and credit growth in interest rate setting does not imply that there are specific targets for these variables. The operational target of monetary policy is annual consumer price inflation of close to 2.5 per cent over time. Interest rate setting in a small, open economy can be particularly challenging in periods of strong credit growth and a wide interest rate differential vis-à-vis other countries. A tightening of monetary policy in Norway specifically aimed at curbing property prices and credit growth can result in a rising krone exchange rate, a weaker labour market and excessively low inflation.
Since 1997, however, inflation expectations having shifted back inwards, restoring the Phillips curve to something closer to its position prior to 1970.5 Chart 11: The wage Phillips curve under different policy regimes in the UK  Chart 10: A long run estimate of the wage Phillips curve in the UK  1856-2014  1856-1970 1970-1997 1997-2014  Wage inflation 30  Wage inflation 30  20  20  10  10  0 0 -10 -10 -20 0  5 10 15 20 Unemployment rate (lagged 1yr)  Sources: Crafts and Mills (1994), Feinstein (1972) and ONS. Notes: Unemployment is measured here by the claimant count, and is lagged by one year. For more information on the long-run data used to construct this index, see Hills et al (2010, 2015). -20 0  5 10 15 Unemployment rate (lagged 1yr)  20  Sources: See footnote to Chart 10. If we look more closely at the most recent period, a second feature stands out (Chart 12). UK wage growth has been puzzlingly weak over the past few years, lying below the Phillips curve estimated since 1997. While UK unemployment has fallen more than 2 percentage points since 2013, wage growth has remained in the range 1–2% per year. This is, to a degree, a global phenomenon. For example, the US Phillips curve also shifted inward after the Volcker disinflation of the early 1980s (Chart 13).

These global disinflationary forces are, in large part, the result of shocks to world prices. Oil prices have fallen by over 50% since the middle of last year. By itself, this would be expected to lower temporarily UK CPI inflation by around ¾ percentage points. Beyond oil, agricultural commodity prices have fallen by 25% in the past two years due to good harvests. Global non-fuel export prices, on a UK trade-weighted basis, have fallen 2%. These weak external price pressures go a long way towards explaining the fall in global CPI inflation over the past two years. They also account for around two-thirds of the fall in UK CPI inflation over the same period. If these are one-off shocks to the price level, their impact on annual inflation measures should drop out after a year. Such temporary deviations of inflation from target should be “looked through” in setting monetary policy.2 This is not, however, the whole inflation story. The weakness of global prices is not wholly the result of one-off shifts in global supply. For example, although supply news is likely to have been the biggest driver of the recent fall in oil prices, a weakening outlook for world demand is also likely to have played a material role. Moreover, perhaps between a quarter and a third of the fall in inflation, globally and in the UK, is not explained by weak external prices.
This can be inferred, for example, from the responses of firms in the latest edition of the Banco de España’s Business Activity Survey (EBAE, by its Spanish initials), corresponding to the fourth quarter of 2021. According to the results of the survey, three-quarters of Spanish 4  Indeed, several simulation exercises carried out with the Banco de España’s macroeconomic models, show that, should second-round effects on inflation materialise as a result of significant wage rises or the maintenance of profit margins, the losses for the whole economy arising from a negative shock to the terms of trade would be much greater. 8  firms experienced a rise in their costs in this period as a result of higher input prices, while only 30% increased the prices of their products. Second, it is vital that any incomes agreement between workers and employers should facilitate the coordination of collective bargaining across its various areas, while avoiding measures to be implemented too broadly. In fact, taking into account the extraordinarily asymmetric impact of the current shocks on different groups of workers, businesses and sectors (which are themselves highly heterogeneous), it would be advisable to avoid solutions that will be excessively rigid for certain segments of activity and/or businesses.5  Third, it would also be desirable to avoid formulae that automatically link wages to past inflation or indexation clauses.6 If these clauses increase or become more prevalent the risk of a wage-price spiral will rise significantly.

In our part, last year the Bank of Thailand in collaboration with 15 Thai banks and the Electronic Transactions Development Agency, set up the Thailand Banking Sector Computer Emergency Response Team (TB-CERT) as a platform for banks and regulators to share information on cyber incidents and build standards and capacity for IT-personnel to handle new threats. Furthermore, to ensure that our legal framework fits with the current digital environment and can keep up with new innovations, the Bank of Thailand had proposed the New Payment Systems Act, which became effective in April of 2018. The Act unifies previously fragmented payment laws and regulations and empowers the Bank of Thailand to oversee development of the Thai payment systems and regulate new payment innovations and players. Moreover, our supervisory guidelines on management of information technology risks have also 4/6  been updated to ensure that banks have appropriate governance structure in place and can swiftly respond in the event of cyber attacks. These developments will contribute to safer environment for both service providers and customers. On inclusivity, despite high level of financial access in Thailand relative to other emerging countries, financial inclusion remains one of our top priorities. Various measures to promote financial inclusion have been implemented and many more are in the pipeline. The Bank of Thailand and the Thai Bankers’ Association will soon launch the Basic Banking Account scheme to improve financial access for vulnerable groups, especially those in the lower-income brackets.