samchain/econo-pairs-v1 huggingface dataset:
35–54, and Kaminsky, G. and C. Reinhart (1999). “The Twin Crises: Causes of Banking and Balance-of-Payments Problems”, American Economic Review, 89, pp. 473–500. A well known example of complacency about East Asian growth is the 1993 World Bank report on “The East Asian Miracle”. BIS central bankers’ speeches  1  banking and balance of payments crises, could not happen in advanced economies.2 And yet this is exactly what happened in Europe ten years after the Asian crisis (see Chart 2). It seems therefore useful to look also at East Asia’s response to its crisis and see what lessons can be learned. One lesson is that a deep and fundamental restructuring of the domestic financial sector is necessary Given the financial nature of the Asian crisis, this was a key element in resolving it. Nonviable financial institutions were closed, viable institutions recapitalised and strengthened, value-impaired assets dealt with and the corporate sector restructured, including through foreign investment.3 These measures were implemented decisively. They were associated with a painful adjustment process in the crisis countries but, at the same time, they made a swift recovery possible. This experience contrasts with Japan’s experience in the late 1980s. Following the bursting of Japan’s asset bubble, there was by and large no rapid write-down of non-performing assets. Due to the low profitability of banks, it was believed that an immediate write-off of bad loans would prevent compliance with capital requirements.

In a pre-emptive move, MAS further undertook a tightening of monetary policy in October 2007 and April 2008, even as there were heightened concerns over developments in the US economy. 7. Between April 2004 and June 2008, the $ appreciated by 12.2%. Against the $ the $ appreciated by 23.4%. The policy moves have had a clear restraining effect on CPI inflation. For example, while WTI oil prices in $ have increased by more than 70% from a year ago, domestic electricity tariffs and petrol prices rose by around 30% each. Similarly, while the IMF global food and beverage index has soared by 43% from a year ago, domestic food prices picked up by a more moderate 9%. The effects of our policy tightening will continue to restrain cost and price pressures going forward. 8. However, we cannot totally insulate ourselves from the increases in global food and oil prices. Hence, we must ensure that inflation expectations remain firmly anchored and that external price changes do not trigger second round effects. For monetary policy, our objective continues to be price stability over the medium-term. At the same time, other policy responses, as well as changes in household and business behaviour have been complementary toward this end. 9. MAS’ current monetary policy stance announced on 10 April 2008 remains appropriate given our assessment of current external economic developments. The next monetary policy statement will be released in October as scheduled. Financial stability 10.
However, what is quite certain is that the size of structural change required will be large, comparable to what Thailand experienced during the economic liberalization of the 1980s and 90s. This change, almost by definition, will not be easy. If Thailand overcomes this hurdle, it will benefit from exporting more goods, possibly more hi-tech, to the region while becoming part of the regional supply chain and enjoying a greater range of imports. But while the domestic outlook appears positive, the global environment remains uncertain. The lingering euro debt crisis and fragile US recovery continue to weigh on global growth. Why? Current technical solutions do not address deep-rooted long-term problems. As a result, resolution has been delayed, adding to uncertainty. Moreover, the longer the delay, the more interest rates and fiscal stimulus in both the US and euro area will be pushed to new limits. The tightened policy space means that new shocks will be hard to manage and could derail the ongoing recovery. In my view, it appears that the global economy currently lacks the clear leadership especially in regards to getting the advanced economies out of the woods. Countries which had previously provided the leadership for global macroeconomic management through, for example, the International Monetary Fund, are now caught in the dilemma of solving their own economic problems versus choosing policy options for the greater good of the global economy. This is a separate issue deserving of its own discussion.

Let me now turn to the policy options going forward, particularly from the perspective of BOT. Ladies and Gentlemen, As the global environment remains uncertain and without global economic leadership, it is even more important than before that the BOT policy strikes the right balance between accommodating the domestic recovery while ensuring stability in the long-term. Currently, monetary policy has shifted toward addressing domestic and global challenges to growth. The combination of domestic and external events has contributed to the MPC’s decision to lower the policy rate. On the domestic front, the key factor was the flood—its economic impact proved to be larger than expected. At the same time, domestic inflationary risks look to moderate. On the external front, risks to global economic growth increased due to the fragile US recovery and the lingering euro debt problem. While the policy rate has come down due to risks to growth, the MPC also has its eye firmly fixed on long-term macroeconomic stability. As such, the MPC views current interest rates as supportive of long-term economic stability. I would also like to say that in response to the challenging global landscape BOT will undertake policy actions that will serve to anchor long-term macroeconomic stability, enhance Thailand’s competitiveness, and augment economic adaptability. Here I want to stress that the BOT has consistently adhered to the principle of conducting policy that ensures long-term sustainable growth.
Ideally, risk management practices would lead us to ask things like “What will happen if the historical relationship breaks down?” and “What assumptions would need to change for them to break down?” Also, I will touch on the fact that challenging assumptions and understanding the risk inherent in relying solely on historical experience should not be the responsibility of the risk manager alone. These things also need to be better ingrained in CEOs, members of boards of directors, and regulators. I believe we need to do a much better job of using so-called stress tests to challenge commonly held views, so that boards of directors and regulators of firms better understand the fundamental drivers of risks in organizations and in the financial system. Financial myths in recent history Let me look back to the time period before the most recent crisis and share two examples of financial myths – and, unfortunately, their messy demise. And I would emphasize that these are just two of many examples of the phenomenon. First, I’ll note that during the late 1980s, New England began to experience substantial declines in residential and commercial real estate prices. My research at that time at the Boston Fed was focused on how problems at financial institutions could disrupt credit availability. Interestingly, in 1989 I was visited by a variety of Japanese academics and government officials. They wanted to understand how we had missed the signs of an overheating real estate market.

As Figure 1 indicates, it was shall we say an interesting time for researchers from Japan to ask such a question. However, when I inquired about the rapid increase in real estate prices in their country, I always received the same answer – Japan is an island nation and had limited buildable lots, and that prevented real estate prices from declining. This view was very widely held. However, as you can see in Figure 2, that widely held financial myth was soon shattered. Unfortunately, the result of this belief was eventually the crippling of some of the world’s largest financial institutions, a long period of subpar economic growth in Japan, and eventually a problematic deflation that Japan struggles with to this day. A second example is provided by the growth of the Internet, and in particular the growth in “dot-com” stock valuations, in the late 1990s. As Figure 3 shows, there was a substantial run-up in stock valuations during this period. At the time I had conversations with a variety of financial professionals in Boston who made the argument that traditional valuation measures no longer applied. The view assumed by many was that valuation of firms should be based on clicks of a computer mouse rather than earnings, either current or expected in the future. As Figure 4 shows, such enthusiasm for a new way of valuing companies was short-lived. But importantly, the substantial decline in Internet-related stocks did not create a financial crisis.
They say that it is not merely that the world has suffered an unusually large financial crisis and is now having to deal with the repercussions. Moreover, there is an underlying structural development that has meant that large parts of the world have entered a state of so-called secular stagnation. What this normally means, expressed simply, is that the neutral, or natural interest rate – the interest rate that has neither an expansionary nor a contractionary effect on the economy – has fallen and become very low, perhaps even negative. It may be difficult for monetary policy to stimulate the economy sufficiently in this type of situation, as it requires that the real interest rate – the nominal interest rate minus inflation – to be lower than the neutral one. Achieving this becomes more difficult when the nominal interest rate is at the “near zero lower bound” and when inflation is low and falling, which keeps the real interest rate up. 16 If the neutral interest rate is persistently low, monetary policy will more often hit the “near zero lower bound”. 17 However, it is an open question whether the world is suffering from the prolonged but nevertheless transitory after-effects of an unusually widespread crisis or is caught in a more lasting state of secular stagnation. 18 The difference between introducing a target and changing it The arguments in favour of raising the inflation target may appear fairly convincing on paper. But there are considerable practical objections.

They quickly restored market functioning and averted what could have been a much more severe pullback from markets and the flow of credit to households and businesses.8 Indeed, the rapid restoration of market functioning helped restore a robust flow of credit at historically low interest rates to the economy, which has provided a boost for the recovery. Lessons Learned I don’t like to be ominous or foreshadow the future. But, if another crisis were to occur, we must to be able to look back on this time and know that we learned everything we could from recent events. After the financial crisis of 2008, a significant amount of work both in the United States and around the world was invested in studying the causes of that crisis and finding ways to make the financial system more resilient. The ultimate goal of those reforms was to ensure that the next time the global economy was hit by a major shock, the financial system would be a source of support for the economy, rather than amplify weakness. Those efforts were hugely successful. The resilience of the U.S. banking system in particular has been a key factor in positioning our economy for a strong recovery, despite the enormous challenges posed by the pandemic. It’s crucial that our financial system can handle shocks and disruption.
Emerging market economies are very vulnerable to the reputational risk of non-compliance. Therefore we must take one step at a time. The infrastructure for compliance - legal, accounting and market - must be established and is an essential pre-requisite which underlies the success of these initiatives. BIS Review 84/2005  1  The implications on the several sub sectors of our economy from Basle II will have to be examined carefully with regard to access to finance and the pricing of risk. Uneven playing fields may arise as a result of the internationally active foreign banks adopting more advanced approaches, thereby improving their competitiveness over their local counterparts. Will the models developed by the foreign banks be relevant for the risks in our markets? These are the regulatory challenges which have to be addressed by the regulators. In meeting these challenges, the local banks must make best use of the existing resources to minimize the cost of full compliance. They can build on their existing data bases and leverage on the default data available in institutions such as the Credit Information Bureau. They can benefit from data pooling within the industry. All these resources must be harnessed. It is important that the banks do not lose sight of the long term benefits of Basle II of better capital allocation and consequently, better pricing, because they are embroiled in the details necessary to meet the deadline. The ultimate objective is financial stability.

Sunil Mendis: Basel II - preparation of implementation in the Asia-Pacific region Keynote address by Mr Sunil Mendis, Governor of the Central Bank of Sri Lanka, at the SEACEN Seminar on Basel II: Preparation of Implementation in the Asia-Pacific Region, Colombo, 7-10 December 2005. *  *  *  Dr Subarjo, Executive Director of the SEACEN Centre, Deputy Governors and Distinguished Guests, Thank you for the invitation to speak at this SEACEN Conference of Bank Supervisors and industry participants in the Asia Pacific Region, on a topic that is currently occupying centre stage in the regulatory arena – the implementation of Basel II and its challenges. Basle II has been the major preoccupation of bank regulators all over the world for the last seven years. This seminar is of particular significance as it brings together regulators and industry participants to a common arena to share experiences and challenges in the operational and policy issues involved in the implementation of this new capital accord. I am particularly happy because this first ever seminar bringing together the industry participants in a SEACEN programme on this important subject was a result of a suggestion made by me at the last SEACEN Governors’ Conference held in Fiji earlier this year and that it is held in my own country. Its implementation is seen as one of the most significant challenges facing the banking industry the world over, in recent times. Unlike Basel I, which was simple and user friendly, Basel II is complex.
There was consensus among the panelists that board members play a critical role in a firm’s governance structure and culture. Moreover, corporate boards independently assess whether management is setting the right tone and hold management accountable for any gaps between a firm’s values and its actual business practices. Proposed guidance from the Federal Reserve suggests that the responsibilities of an effective board of directors include setting strategy and risk tolerance, supporting independent risk management, managing information flows, ensuring appropriate expertise, and holding senior management accountable for effective execution.6 Behavioral indicators can help boards understand their firms’ cultures and identify potential trouble spots within the organization. Corporate boards use various methods to obtain information and assess culture, such as meeting with many levels of employees, receiving thirdparty assessments, and conducting 360 reviews of the CEO and top leaders. Organizations like the U.K. Banking Standards Board (BSB) can provide outside benchmarking data against which to measure the culture within one’s own firm. 7 Corporate boards for financial firms may also import practices and lessons from other industries. Finally, the board members that participated in the New York Fed’s workshop agreed that a board’s own culture matters; it needs independent 2/6  BIS central bankers' speeches  voices, diverse perspectives, and opportunity for debate.

As all risk managers know, you can’t manage what you can’t measure. This is equally true in the area of misconduct risk. At the same time, while hard data is important, I don’t believe it is sufficient to convey all of the complexities of a firm’s culture or all of the ways it can impact business outcomes. In recent years, we have seen firms develop dashboards that seek to bring together various metrics from across their organization. This is an important and necessary step. Data sources that we’ve seen include internal quantitative information such as compliance and policy violations, completed trainings, audit results, and risk metrics like limit breaches, policy violations and external metrics like customer complaints, stakeholder perceptions, and client surveys. There also are qualitative data based on employee surveys. Some firms have begun to do more frequent pulse surveys with small cohorts of staff. Other firms have found that long-term trends are more insightful than short term changes. These types of data, while necessary, are not sufficient to make progress. Supplementing hard data with interviews, focus groups, dialogue, and external benchmarking can greatly enhance an organization’s ability to manage and strengthen its culture. Measurement and metrics are best used as a starting point to spur further analysis and probing as boards and senior management seek to identify trouble spots and build strong cultures.
The next step is to look at skills upgrading, job placements, and career pathways in an integrated manner. The Institute of Banking & Finance, together with the industry, used the results of the study to develop a Skills Framework for Financial Services. Many financial institutions are using this framework to help plan career pathways, transitions in job roles, and training programmes. The third step is the most challenging: workforce transformation to support business transformation. Simply hiring those with the skills to fill emerging job roles and firing those who have become less relevant, will not work. We must invest in the existing workforce – building deep technical skills, broad lateral skills, and digital skills of the future. That’s what strategic human resource development means. Building a resilient workforce in the maritime industry will not be the same as in the financial industry – but there could be some potential take-aways. The maritime industry can consider doing similar granular analysis, to identify changing tasks and new skills in evolving job roles, map out skills gaps across the industry, and plan appropriate interventions. Maritime Singapore is off to a good start: the Skills Framework for Sea Transport, launched in 2017 and updated recently, identified skills in automation, engineering, data analytics, cyber security, and green shipping as growing in importance. The technology trends identified in the Skills Framework are bearing out.

B S B aims to link multiple platforms domestically and internationally, connecting buyers, suppliers, marketplaces, and service providers across economies If successful, the BSB experiment will demonstrate that the key to supply chain resilience is not to isolate and retreat behind borders, but to strengthen connectivity across borders even more. Resilient Industry The second dimension is a resilient industry – one that can continue to function in the face of disruptions and movement restrictions. Digitalisation is one of the ways in which an industry can build resilience. We have seen, amid the COVID-19 lockdowns, how firms which have gone digital earlier have managed to ensure business continuity, with the transition to working remotely and serving customers online. To ensure resilience, digitalisation needs to be end-to-end. If every part of a process is digitalised except one step which requires an in-person interaction, or a wet ink signature, or a payment in physical cash, then the “digital chain” is broken and resilience compromised. In financial services, this is what we have been aiming for: to be digital to the core. 3/7  BIS central bankers' speeches  Digital trade finance solutions are trying to achieve seamlessness, to help facilitate trade flows. At the Singapore FinTech Festival last year, a trade finance application portal was launched as a value-added service on Singapore’s Networked Trade Platform, which allowed traders and businesses to seamlessly apply for financing from nine banks.
Economic policy cannot shield the economy totally from shocks that may arise, but can dampen their impact. A framework that provides monetary policy predictability makes it easier to succeed. Thank you for your attention. 5/5  BIS - Central bankers' speeches

The problems have been manageable so far, but the larger share the Riksbank owns, the greater the problems are likely to be. It may also be the case that the expansionary effect of each further purchase gradually declines. Of course, the Riksbank will eventually taper its holdings, but probably at a slow pace. 17 The Riksbank will therefore most probably have a substantial holding of government bonds for a long time to come. All in all, this means that there are limits with regard to the opportunities to use purchases of government bonds as a monetary policy tool going forward. My assessment is that it will probably be possible to increase the purchases a little further but, as I said, there is a limit. Buying government securities is not a completely unnatural step for a central bank that normally tries to affect the economy by adjusting a short-term risk-free interest rate, the monetary policy rate. Buying government bonds means that one  14 The Federal Reserve and the Bank of England have on different occasions used conditional forward guidance. I myself applied this strategy a few years ago when I emphasised in the monetary policy discussion that I did not intend to vote in favour of raising the repo rate as long as CPIF inflation did not accelerate and exceed 1.5 per cent (see, for instance, Sveriges Riksbank, 2014). As is well known, this did not happen for some time.