samchain/econo-pairs-v1 huggingface dataset:
As a rule, small open economies that joined the club over the nineties felt that a managed float regime would serve them better. This was also the line pursued by the NBR when introducing inflation targeting in 2005, with the extensive technical support generously offered by the IMF and the Czech National Bank. At that time, inflation targeting seemed poised to become the monetary policy framework in most countries that did not have fixed exchange rate regimes in place – and this was still the case only a few years ago. However, the global crisis broke out and changed the order of priorities on policymakers’ agenda. It remains to be seen how inflation targeting will adapt to the post-crisis economic and financial environment, which also challenges the overriding importance of the low inflation goal. While monetary targeting failed to survive for reasons of the break in the monetary aggregates-inflation relation (in other words, the nominal anchor was unable to actually “anchor” inflation), inflation targeting will have to rely more on its flexible component, be it constrained, in order to be successful in an environment where financial stability needs particular attention. 2. Exchange rate arrangements: from managed float to corner solutions and back again  As I mentioned earlier, let me turn now to the developments in exchange rate arrangements. In the early nineties, when I became Governor, almost two thirds of the countries had some form of managed float. By the end of the same decade, their share had dropped to around one third.

Consequently, the focus of the public debate should be how to speed up the reform process and its beneficial effects and thus strengthen consumer and business confidence. The role of the euro in fostering reforms in product, labour and financial markets Has the euro been of help in pushing the reform agenda? At the time of the launch of the single currency, some observers had seen the euro as a “reform whip” that, together with the completion of the single market, would push in the direction of increased competition, higher productivity growth and greater market flexibility, which are essential for the smooth functioning of monetary union. After all, in a single currency area, the adjustment of domestic imbalances cannot be corrected by exchange rate policy any longer, but rather has to take place via prices and costs. The paper by Romain Duval and Jørgen Elmeskov, which will be discussed tomorrow, will provide empirical evidence about the determinants of the pace of the reform process. Our own ECB research, presented in the paper by Lorenzo Cappiello, Philipp Hartmann, Peter Hördahl, Arjan Kadareja and Simone Manganelli, will dwell on the impact of the euro on the integration of European financial markets, notably the equity and bond markets. This stock-taking exercise and associated analysis should also assist in identifying where, precisely, structural changes are most urgently needed and how to make the necessary reforms a success.
It is when the investors sell off assets that are seen as risky and return to safe assets. Typically, they sell off things in emerging markets then move their money to safe things like the US Treasury. We see that happening today but fortunately for us in Thailand, risk-off trade is not a very substantial risk because we are solid on the balance of payments or the external front. We have a low level of external debt compared to our high level of international reserves and are running large current account surpluses consistently in the years preceding the crisis. Therefore, our overall external position is strong. Unlike other countries in the region, which have lower international reserves or higher external debts, they are more vulnerable to these swings in investor sentiment and resumption of risk-off trade. This transmission channel is thus not very worrisome for us as we are in a good position to handle capital outflows given our external strength. The second channel is the impact on the real economy from trade and investment, both direct and indirect. The direct channel is very small as the share of Thai exports to Russia and Ukraine are only about 0.4 percent of total Thai exports, and the same applies to investment flows. The main issue we are more concerned about is the indirect effects that the situation will lead to supply chain disruptions or other impacts on the world economy that will have a knock-on effect on Thailand.

I will point out two but discuss only one in detail. To be sure that we still recognize that this is a risk, the first risk is the next Covid-19 variant, whatever comes after Omicron. Although the public health officials have indicated that we have a high proportion of the fully vaccinated population and that the chances are that another variant might be milder, we cannot be certain. Moreover, these Covid-19 variants tend to pop up during the winter months, when they are the high season of tourism in Thailand. If another variant appears and derails the tourism recovery that we expect to see this year, this will be a significant risk to our growth outlook. The outlook that we are expecting to see is the number of foreign tourists this year in the range of 5 to 6 million, a big increase from last year but still very far off from the 40 million that we usually see. These figures also give you a sense of why we think the recovery will be relatively slow in Thailand. The second risk is the Russia and Ukraine conflict, and there are three channels by which it can impact the Thai economy, and I will flag the most relevant ones. Page 3 of 8  The first channel is through the financial markets. When some unforeseen event occurs, the financial markets get hit and become highly volatile, and there is a risk-off trade.
The first point to acknowledge, which the opponents of the floating BRL often seem to forget, is that regardless of the exchange rate regime, the real effective exchange rate always floats. Or, putting another way, the relative price of tradeables to nontradeables changes continually. Thus, the relative prices that are relevant for production and consumption decisions for exporters, importers, households and enterprises always adjust, whether the nominal exchange rate is fixed by a group of, hopefully enlightened, civil servants, or set by the markets. But when the exchange rate is allowed to float, relative price adjustment tends to be faster, and the impact of external shocks on quantities, that is to say on income and employment, tends to be smaller than when the nominal exchange rate is fixed. The second point to highlight is that even controlling the nominal exchange rate can be a challenge, and comes at the cost of either the ability to pursue an independent monetary policy or of free capital flows. Countries cannot elude this constraint: nominal exchange rate management requires either severing linkages between the home economy and international capital markets, or shadowing some other country’s monetary policy. In sum, adopting a workable nominal exchange rate target (be it explicit or hidden, for the level or the path) imposes macroeconomic choices that fewer and fewer countries have been willing to make. It is somewhat heroic to assume that the State would be extremely competent at setting the nominal exchange rate.

The real effective exchange rate has also oscillated substantially, reacting to shifts in fundamentals such as the terms of trade, risk aversion and underlying capital flows. Compared with a long-term average of 100, the real effective exchange rate (measured in terms of BRL) has moved within 58, on October 2002, when the BRL was particularly weak, to 125 in August 2008, when it was stronger than the mediumterm norm. Regarding the balance of payments, the current account balance has averaged -1.0% of GDP, compared with a long-term average (since 1970) of -2.1%. Net FDI inflows have also performed relatively well, with an average of 3.0% of GDP, compared with 1.5% since 1970. Thanks to the improvement in the balance of payments the Central Bank has been able to accumulate sizeable foreign exchange reserves, which stand at about $ billion currently. The process of reserve accumulation did not impinge on the functioning of the floating exchange rate regime, as the Central Bank strove to buy foreign currency always through publicly announced auctions at the going market price. At inception of the floating exchange rate regime, the foreign sovereign credit rating was B+ (according to S&P) and Brazil had an active stand-by program with the IMF. Brazil is now investment grade, the sovereign credit rating stands at BBB- and the Central Bank has a currency swap agreement, as yet not drawn, with the US Federal Reserve. Of course, a floating exchange rate regime is a pre-condition for inflation targeting.
To be clear, in my view, supervisors should take a risk management perspective, not a social engineering one. It is beyond our mandate to advocate or provide incentives for a particular transition path. Rather, supervisors should focus on the risks that emerge along the path decided by the public at large and their elected governments. Supervisors can use our tools to ensure financial institutions are prepared for and resilient to all types of relevant risks, including climate-related events. To do this, we must continue to invest in research to better understand the economic and financial impact of climate-related events. For example, on Friday, the Federal Reserve Bank of San Francisco will host a conference on the economics of climate change. We can also continue to follow closely and learn from the approaches taken by other central banks, including the use of scenario analysis, stress testing and supervisory expectations to encourage institutions to factor climate risk into their risk management practices. Finally, we can seek to strengthen the data and modeling capabilities we need to assess climate-related risks as part of our forward-looking, data-driven supervision. Given the far-reaching impact of climate risk on the structure of the economy and the financial sector, I am confident that risk managers will respond appropriately and firms will continue to build resilience to all risks.

GARP, for example, is exploring this and has recently surveyed its members to better understand professional needs for “sustainability, climate risk, and ESG integration.”4 I am interested to hear from all of you about how your institutions are developing tools and practices to integrate climate risk into your risk management frameworks. Innovation and Culture It is no surprise to this audience that technological innovation, big data, and advanced analytics are transforming financial services. We can debate where we are on the maturity curve and what innovations are most likely to be transformative, but the direction of travel seems clear. I expect the afternoon session on “Technology, Big Data, and the Practice of Risk Management” will address core issues such as new approaches for model risk management in a world of widespread artificial intelligence; the inherent challenge of “explainability” and potential bias in algorithms; the strategic risks from new entrants; and the impact on human capital strategies. 2/4  BIS central bankers' speeches  I want to highlight a complementary, but different issue and focus on how firms manage these changes. More broadly, what type of corporate culture is needed to support a successful digital transformation? Over the past five years, the New York Fed has emphasized the importance of a healthy culture to reduce misconduct risk. In addition, I think there is likely a link between a firm’s culture and its ability to adapt to a changing environment, whether it is technological innovation, demographic change, new business models, or climate change.
I hope that we could learn a great deal from one another in this traditional session, particularly on how we should prepare ourselves for those potential risks in order to maintain internal as well as regional economic stability. In addition, I believe that the Meeting of SEACEN Board of Governors, tomorrow, will continue to play an important role in providing guidelines for future works and activities of  BIS Review 88/2007  1  SEACEN for the years to come. Our guidelines will be important for the SEACEN Centre to pursue its mission and become “a premier regional training centre for central banks in the Asia-Pacific region” according to its vision. Ladies and Gentlemen, This year is a very auspicious year for SEACEN over its 40 year-history as it marks the 25th year of the establishment of the SEACEN Centre. We are, therefore, very honored and privileged to host the Celebration of the Silver Anniversary of the SEACEN Centre, here again in Bangkok, where the Agreement to establish the Centre was signed back in 25 years ago. Over these past two decades, the SEACEN Centre has become increasingly important in promoting better understanding of the financial, monetary, banking and economic development matters. Its role does not benefit only the sixteen member central banks but also extends to several other countries throughout Asia and Pacific region. I would like to take this opportunity, therefore, to congratulate the SEACEN Centre for its work in helping bind together our community of central banks in the region.

And, I would like to invite all of you to tomorrow’s dinner to commemorate its achievements in the past quarter of a century together. Ladies and Gentlemen, May I take this opportunity to wish all of you a successful and fruitful deliberation, and an enjoyable stay in Thailand. Thank you. 2  BIS Review 88/2007
In this regard, payment systems researchers warn that if left unattended or unresolved these challenges could eventually overwhelm us and hinder the effectiveness of payment systems and hence commerce. Ladies and Gentlemen, I would therefore like to salute the SADC Payment Systems Project Team for showing good leadership. This has ensured that the basis of the evolution of payment systems in the region is collaborative and consultative, which is critical to the overarching objective of regional economic co-operation and integration. In this regard, not only have most SADC member country implemented real time settlement systems, but these developments have also been anchored on common and jointly developed business and technical specifications. Other developments include the introduction of automated clearing houses. This particular development has positively contributed to improving the processing efficiency and reducing risks associated with cheque transactions. Most importantly, perhaps, is that this development has enabled the introduction of systems such as direct deposits (or credits) and direct payments (or debits) which are truly convenient mechanisms for handling the direct deposits of salaries and wages of workers amongst others. These direct-credit and direct-debit systems are also used to handle regular monthly bills for utilities and could potentially be used in administering pensions and many other government benefits. It is also instructive to note that these developments are supported by sound legal bases that ensure that payment systems in the region are safe, practical and meet international best practice. Ladies and Gentlemen, payment instruments and mechanisms are not new in this region.

The major uncertainty, of course, relates to the situation in the United States - the world's largest economy - which had experienced a period of exceptionally strong economic growth with relatively low inflation until the latter part of last year, which itself played a vital part in buoying up the whole world economy through the Asian financial crisis. Briefly - and no doubt oversimply - this very strong performance was made possible by developments on the supply side of the US economy in the form of exceptional productivity gains, as the application of new information and communications technologies spread through the economy. This development - though extremely difficult to quantify promised a higher sustainable rate of growth in the US economy and higher corporate earnings growth. That expectation in turn contributed to a rapid rise in equity prices, especially in the "high tech" sectors, which helped stimulate both business investment in the US and consumer demand causing the private sector to move into financial deficit. It also attracted massive direct and portfolio investment inflows from abroad which over-financed an increasing current account deficit in the US and caused the dollar to strengthen against other currencies. But by the first half of last year the US economy was expanding at a rate of around 5%, which even on the most optimistic view of underlying productivity growth was clearly unsustainable.
With these structural adjustments or, as Schumpeter put it, “the process of creative destruction”, the chances of the phase of low economic growth gradually coming to an end have now increased. Indeed, although there are still some downside risks to this scenario, and ongoing balance sheet adjustments make a steep and swift rise in economic activity unlikely, the ECB expects a gradual recovery to occur in the course of this and next year, as imbalances that have built up are gradually unwinding. The ECB will continue to monitor these developments in view of its primary objective, i.e. to maintain price stability in the euro area. Thank you. 9  In W. Bagehot, “Estimates of some Englishmen and Scotsmen”, 1858. BIS Review 23/2003  5

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As a result, national governments and wage setters alike should be able to design and implement the policies under their responsibility in a manner that allows for the interdependencies of these policies with the single monetary policy. Obviously, if they take the single monetary policy’s credible commitment to maintain price stability as given, this will help to align expectations and condition their behaviour in a favourable way. National governments and wage setters, in turn, are reassured that monetary policy will respond favourably to appropriate fiscal polices and wage settlements which allow to maintain price stability over the medium term. Sustained stability - be it maintenance of price stability or stability in a wider sense - needs a sound institutional framework. As regards monetary policy the independence and clear mandate of the ECB provides the best possible arrangement. At the same time it is obvious that a monetary union which is not a mature political union also requires a framework for fiscal policy. This framework must respect the sovereignty of national governments and parliaments on the one hand and the need to ensure sound fiscal policy across the euro area on the other hand. Both, sound monetary and fiscal institutional arrangements are indispensable for a consistent and sustainable stability framework. The success of EMU rests not only on the ECB and its monetary policy but also on a robust framework for national fiscal policies.

Of course, safeguarding the soundness and discipline of fiscal policies that largely remain the competence of national governments presents a particular challenge. Ultimately, it must be ensured that twelve national budgets taken together are consistent with sustained stability for the euro area as a whole. In this regard the Stability and Growth Pact provides for a clear allocation of responsibilities between the Commission and the ECOFIN Council. The Commission is responsible for compiling the necessary information and analysis for effective multilateral surveillance, for formulating recommendations for decisions by the Council, and for overseeing the correct application of the Pact. The Council is responsible for taking the final decisions and it thus has the ultimate responsibility for enforcing the Pact. These two principles of surveillance and enforcement form the basic idea of the Stability and Growth Pact and must not be put into question. Having said that and in the light of the ongoing discussions on the future of the EU fiscal framework, let me re-affirm the ECB’s view that the Stability and Growth Pact is appropriate in its present form, but that there is scope for improving its implementation. Specifically, given that the experience with the Pact since 1999 has been mixed at best, there is a need to provide enhanced incentives to comply  BIS Review 71/2004  1  with the commitments under the Pact and to increase peer pressure towards enforcing the rules.
Kevin Stiroh: Emerging issues for risk managers Introductory remarks by Mr Kevin Stiroh, Executive Vice President of the Financial Institution Supervision Group of the Federal Reserve Bank of New York, at the GARP Global Risk Forum, Federal Reserve Bank of New York, New York City, 7 November 2019. * * *  Prepared for delivery  Introduction Good morning and welcome to the GARP Global Risk Forum. The Federal Reserve Bank of New York has been collaborating with GARP on this forum for a decade and it is always a pleasure to participate. This discussion provides real-time insight into critical issues at the center of the practice of risk management. A quick scan of today’s agenda highlights a number of topics of obvious importance—operational resilience, cyclical aspects of risk management, technology and big data. We are all thinking about these issues, and I look forward to your insights. I’d like to briefly discuss two topics where I expect risk managers will increase their focus in coming years—climate change and the cultural aspects of digital transformation. Both issues reflect potentially transformative trends for the economy and the financial system, and I believe they will take an increasing share of your bandwidth over the next decade. In both cases, the relevant questions from a supervisors’ perspective are: what new risks are introduced? How do firms manage them? And how do supervisors view them?

Technological progress, innovation, and new models of competition are changing the financial industry and there will undoubtedly be winners and losers. Understanding all of the factors that drive successful transformations will be a critical insight for both risk managers and supervisors. Conclusions 3/4  BIS central bankers' speeches  The financial sector is large, complex and constantly evolving due to a wide range of technological, business, and macro factors. Your job, and ours, is to be vigilant and open-minded in our thinking, constantly questioning our traditional assumptions and scanning the horizon to understand how the risk landscape is changing. The topics covered at today’s conference are some of the most important risks that the industry faces. Climate change and digital transformation are two powerful trends with the potential to fundamentally change financial services. We all need to be forward-looking and proactive in order to promote our ultimate goal of a safe and sound financial system that supports the sustainable provision of financial services and economic growth. Thank you for your attention. 1 NOAA National Centers for Environmental Information (NCEI), Billion-Dollar Weather and Climate Disasters  (2019), National Oceanic and Atmospheric Administration. 2 The Impact of Higher Temperature on Economic Growth, Riccardo Colacito, Bridget Hoffmann, Toan Phan and  Tim Sablik, Economic Brief, August 2018, No. 18–08; Climate Change and the Federal Reserve, Glenn Rudebusch, FRBSF Economic Letter, 2019–19, March 25 2019; Fourth National Climate Assessment, Volume II: Impacts, Risks and Adaptation in the United States, U.S. Global Change Research Program.