samchain/econo-pairs-v1 huggingface dataset:
This preamble is not to give my biography, but just to mention some of the things I have done in my professional life, and to add that one of my most difficult and rewarding jobs so far was to organize the LACEA conference in 1999. As a university professor we have access to limited funds, so fundraising becomes a tedious, but necessary task. Then, organizing the program and all the details is tough, and above all it is a task that has a strict deadline and everything has to happen in just a few days. I had the privilege to meet and work with the cochairman, Dominique Hachette, an extraordinary economist and friend. Our weekly meetings in his house were really a pleasure, and we miss him a lot. So, let me start by expressing my sincere congratulations and gratitude to the organizers. However, I will not talk about organizing conferences, but about central banking. In particular, I will refer to the new challenges facing central banks after the crisis and their role in securing price and financial stability. Central banks and price stability Many years ago we reached consensus that central banks should focus mainly on ensuring low inflation. Moreover, there were some scholars and practitioners that argued that price stability should be the only objective of central banks, so the goal would be more credible and monetary policy more effective in achieving stability. However, we didn’t know how exactly or operationally to achieve this target.

Each of us constitute a vital link for building the proper international regulatory framework The presence of so many different institutions at this conference demonstrates the need and interest to talk and work together because we share a lot of similar concerns and goals concerning depositor protection and financial stability. We are united by a common goal: to strongly mitigate contagion and make liquidation operationally possible. Depositors must perceive the DIS as a well-funded and reliable partner able to satisfy their claims in a timely manner. But continuous efforts are required. I know for instance in France the permanent working relationship between the ACPR, the FGDR and the Treasury to make the French DIS ever more effective with regard to these goals. I am wholeheartedly convinced that working together, especially at the international level, is a key factor of success. BIS central bankers’ speeches  3
I won’t enter into the details. Just bear in mind the three following elements. First, authorities are extending guarantees to banks’ refinancing so that they can, in turn, properly finance the economy. Second, very significant reforms of accounting rules are now being implemented. Basically, these reforms allow banks to transfer instruments previously marked to market value to portfolios where that will no longer be the case. They also provide for greater flexibility in marking to market value assets whose market has shut down. Third, and lastly, governments have confirmed their willingness, when warranted, to step in and support banks’ capital. What about France’s actions? The Government and Parliament very quickly put meat on the bones of the European principles. A new bill has been passed, which provides for two things. First, it sets up a EUR 320 billion funding vehicle to guarantee banks’ medium-term refinancing (i.e. up to five years). This vehicle is strictly supervised by the French Government and the Banque de France. The guarantee is granted for a fee, so that the beneficiaries pay costs corresponding to normal market conditions. Second, the law also creates a state-owned company empowered with EUR 40 billion and entitled to subscribe to  2  BIS Review 143/2008  banks’ subordinated debt issues or preferred shares. As you know, six banks have expressed that they will issue subordinated debt and the Government announced that it will subscribe to these issues for EUR 10.5 billion.

The general principle is straightforward: it consists in ensuring that supervision manages to limit risks for the stability not only of a particular institution, but also of the entire financial system. Its implementation, however, is complex. For the moment, we are only at a preliminary stage, contemplating which tools a macro-prudential policy could be based on, and how these tools could be used. As regards supervision, this crisis has shown three things. First, it has highlighted the merits of having the banking supervisor close to the central bank. The point is not to claim there is an optimal supervisory structure that fits any country’s circumstances. Rather, it is to note that a system such as the one we have in France has proved very useful in allowing for an in-depth knowledge of the banking sector and the various financial institutions. It also allowed for very swift and timely exchanges of information, and, as a result, allowed us at the central bank to quickly pass sensitive judgments, not least on the usefulness of injecting liquidity. Second, the crisis also revealed that, as far as supervisory infrastructure is concerned, simple, robust and pragmatic plans have shown their efficiency. Thirdly, the crisis stressed the need for supervisory structures to adapt to their environment. This is very true for Europe. I guess it is also true for other countries and regions.
Reforms to the Banking System There now appears to be widespread agreement that efficiency needs to be improved in the banking system in order to lower costs and make domestic banks more competitive in relation to foreign competitors, which will seek a market share in Iceland. It is necessary to take advantage of the opportunity provided by the incorporation of the state banks into limited liability companies and the prospective sale of shares in them. Certain goals need to be kept in mind. Effective competition on financial markets needs to be secured, although the merger of institutions should not be excluded if it can improve efficiency and profitability. The important question arises whether the state as owner of three strong institutions should take the lead in the necessary restructuring or whether powerful institutional investors are needed to do the job. Foreign investors with experience in banking are one option. The latter approach may, however, prevent the Treasury from realizing the full value of its assets in the banking institutions. The wide distribution of share holdings will also undoubtedly be an issue in the debate. This is by no means a simple matter and desirable goals may not be fully consistent. The main goal must be to ensure effective competition and efficiency improvements in the operation of credit institutions.

Thus, it can be said that slow export growth is as much the cause of the current account deficit as the expansion of domestic demand. Business Profitability and the Labour Market The external conditions of the economy in 1997 were largely unchanged from 1996, and were on the whole favourable. Business profitability seems to have been fairly good, although not as favourable as in 1996, because of the wage increases at the beginning of the year BIS Review 42/1998  -2-  and large depreciation and interest charges related to the high levels of investment in recent years, especially in the fisheries. The labour market situation improved further and unemployment declined to 3.9 percent on average, having come down from a peak of 5 percent in 1995. Real wages grew by 5.7 percent in the course of 1997, and were at year-end at their highest level since 1989. Prices Inflation remained subdued in 1997, or 2.2 percent in the course of the year, and 1.8 percent on average between 1996 and 1997. The Central Bank had, in the wake of the wage settlements, forecast somewhat higher inflation but wage increases did not translate into price increases to the extent shown by past experience. Productivity growth was higher than expected and the rise in import prices lower. In addition, the Central Bank’s measures restrained price increases, as I will discuss in greater detail shortly.
Like many central banks in central Europe, the Riksbank has accordingly moved from a situation that pointed to the likelihood of a relatively quick succession of continued interest rate increases to one where the need of higher interest rates in the near future seems to have disappeared. With the bright inflation prospects and a strict interpretation of the Riksbank’s rule for monetary policy decisions, today there may even be grounds for considering a minor downward repo rate adjustment. What the Riksbank now has reason to consider is whether such an adjustment would lead to good conditions for stable economic development in the future.

The Swedish economy appears to be growing at a rate that is reasonable and broadly expected. At the same time, inflation is lower than expected. The prospect that the Riksbank faced last autumn, of inflation two years hence being half a percentage point above the target, no longer seems probable. For monetary policy, the outlook has accordingly changed. The present inflation prospects clearly imply that the need to raise interest rates has disappeared for now. A strict interpretation of the Riksbank’s rule that monetary policy is to focus primarily on the second of the coming two years could even indicate some downward adjustment of the instrumental rate. What the BIS Review 47/1998  -7Riksbank now has reason to consider is whether a minor downward interest rate adjustment would lead to good conditions for a stable economic development in the future. 4. Conclusion Stabilisation policy in Sweden was realigned in the early 1990s and focused on low inflation. The background was our own and other countries’ experience in the 1970s and 1980s. Repeated attempts to stimulate demand, with a view to boosting employment, and accept the associated increase in inflation had failed to produce the intended results. On the contrary, economic activity had become more unstable and growth in the longer term had, if anything, weakened. In recent years the results of the policy realignment have been good in many respects. Economic growth in Sweden has been higher than in the latter part of the 1980s and it has proved possible to combine this with low inflation.
[6] In the absence of evidence that capital requirements actually work as a way of directing lending, it seems unwise to incur these costs – particularly when we have not been given any mandate to do so. Our focus is therefore on ensuring the financial system can withstand the risks arising from climate change. This raises some fundamental questions. How can we tell whether the capital regime is effectively capturing climate risks? There are two kinds of gap we might need to fill. The first is ‘regime gaps’. These occur when the design, methodology or scope of the capital framework does not adequately cover risks from climate. To give one example: some aspects of the Pillar 1 capital framework for banks use a one-year time horizon for calculating potential unexpected losses. Of course, as policymakers, we do not have a one-year time horizon: we will need a viable banking and insurance sector right through the transition and beyond. The one-year horizon is, in effect, a modelling assumption. It may be reasonable for many risks, but seems particularly ill-suited for climate change, a risk which is structurally building over time and will not fully crystallise in a one-year horizon. [7]  Page 4  The second type of gap takes the form of ‘capability gaps’. Even if we were satisfied that climate risk was captured by the regime in theory, do firms and regulators have the data and modelling abilities to ensure it is captured in practice?

So early action is important to lower the cost of the transition. If we are ever to reach net zero, a number of sectors are going to have to adapt their business models on a fundamental level. As  Page 6  the report sets out, it will be in the collective interests of financial institutions to support counterparties that have credible plans to adapt – and ultimately reduce their exposures to those sectors of the economy that are inconsistent with a net zero policy. [10] At the same time, the financial sector cannot run ahead of the real economy: we need real change to make the economy more energy efficient and expand the provision of renewable energy. While that process takes place, banks and insurers need to provide finance to more carbon-intensive sectors of the economy, precisely in order to allow them to invest in the transition. Cutting off finance to these corporates too quickly could prove counterproductive, and have wide-ranging macroeconomic and societal consequences, including through elevated energy prices – potentially akin to those whose negative effects we are experiencing today. Another key point for me is that no action on climate delivers the worst outcome from our scenarios. A naïve comparison of loss rates in the two net-zero scenarios and the NAA scenario might suggest otherwise; in fact for banks, credit losses were lower under no action than for late action. But this is misleading because of the very different end-points of the scenarios.
Tarisa Watanagase: The road ahead for central banks – meeting new challenges to financial stability Luncheon talk by Dr Tarisa Watanagase, Governor of the Bank of Thailand, at the Foreign Correspondents Club of Thailand, Bangkok, 20 July 2010. *  *  *  Distinguished FCCT Members and Guests, Ladies and Gentlemen, First of all, I would like to thank the FCCT Board for inviting me to deliver this luncheon talk as part of the Club’s newly established Speaker’s Lunch Series. To this, I am honored as well as delighted to be back. It was exactly two years ago when I was here for the Club’s dinner program in July 2008, and let me tell you that I very much enjoyed our Q&A session then. I certainly look forward to participating in such a lively exchange again this afternoon. The topic of my talk today is “The Road Ahead for Central Banks: Meeting New Challenges to Financial Stability,” in which I will share with you my views on the roles of central banks regarding the maintenance of financial stability, with particular reference to those at the Bank of Thailand during the past few years and going forward. This talk will be divided into three parts. The first part will be about the changing global view on financial stability policies as a result of the recent global financial crisis. The second part will be a summary of what the Bank of Thailand has done with regard to the maintenance of Thailand’s financial stability.

Finally, there is a need to watch the developments in international regulatory reforms very closely. It is true that a plethora of proposals have been discussed in the world stage, but some may impose more costs than benefits to Thailand. After all, many regulatory pitfalls that gave rise to the recent global financial crisis do not apply to us, for example, those related to securitization. In addition, some proposals may be more stringent than necessary given the nature of financial transactions in Thailand. For example, the currently proposed leverage ratio requirement treats banks’ letter of credit (L/C) the same as complex derivatives, which will impose substantial costs on Thailand’s trade finance business. The challenge here is therefore to weigh carefully the benefits, the costs, the necessity, and the appropriate timing for the adoption of the new international standards so as to ensure that our financial system is not overburdened by unnecessary rules. Again, this highlights the tradeoff between financial stability and financial efficiency Ladies and gentlemen, In closing, let me reiterate that the Bank of Thailand gives great care to both price stability and financial stability. The policy responses undertaken by the Bank over the past few years have helped preserve the Thai financial system’s resiliency which in turn contributed to the economy’s turnaround. Despite challenges in the period ahead, we will try our best to ensure  4  BIS Review 96/2010  that Thailand’s economic and financial stability continues to remain intact so as to support the economy’s sustainable long-term growth.
From an investment perspective, the volatility in the Asian markets in recent years has allowed long-short and other strategic plays to outperform regional indices. The relative inefficiency of the regional markets also presents arbitrage opportunities. From a demand standpoint, US and European investors are expected to turn to alternatives in Asia as capacity (and quality) in their home markets diminish. Further, the improving economic climate in South East Asia should help foreign fund managers and investors to refocus their attention on the region. Hedge funds look set to play a larger role in Asia. The role of hedge funds in Singapore In Singapore, hedge funds form part of the expanding menu of products offered by the asset management industry. This industry grew rapidly over the last ten years: assets under management increased eightfold from just over $ billion in 1992 to more than $ billion last year. For the reasons mentioned earlier, asset managers and investors alike are finding a place in their overall strategies for alternative investments including hedge funds, commodities and real estate. (Of course, judging by concerns about Singaporeans over-investing in property, one wonders whether real estate can indeed count as an alternative investment here.) That aside, hedge funds can contribute to the development of Singapore as an international financial centre in a number of ways. First, as evidenced in other major financial centres, hedge funds can attract a mix of supporting professionals such as fund administrators, prime brokers and product specialists skilled at structuring new instruments.

Yeo Lian Sim: Hedge funds - a mainstream alternative Keynote address by Ms Yeo Lian Sim, Deputy Managing Director (Market Conduct) of the Monetary Authority of Singapore, at the Hedge Funds World Singapore 2002, Singapore, 19 September 2002. *  *  *  Good morning, Ladies and Gentlemen  A decade of controversy and rapid growth Ten years ago this month, speculation that Europe’s Exchange Rate Mechanism (ERM) would be realigned gained momentum and the British pound came under intense pressure in the foreign exchange markets. The rest, as they say, is history. Hedge funds have come a long way since the Sterling attack. They have been linked to other instances of market turmoil, like the Mexican Peso meltdown in 1994-95 and the Asian financial crisis of 1997-98. Studies have revealed little evidence that hedge funds were mainly responsible for those episodes. But their participation is not in dispute. Also in 1998, we saw the near collapse of Long Term Capital Management and its subsequent recapitalisation by a consortium of banks brought together with the help of the New York Fed. The incident raised questions about the risks that large and highly leveraged hedge funds pose to systemic stability. It was to address these concerns that the Financial Stability Forum (FSF), of which Singapore is a member, set up a working group on Highly Leveraged Institutions (HLIs).
1 ASEAN-4 (Malaysia, Indonesia, Philippines, Thailand)  4/4  BIS central bankers' speeches

Employment growth was also influenced by the substantial inflows of labour from central Europe following EU enlargement in 2004. Employment did not start to increase until the end of 2005, and has since increased markedly. Our projections for capacity utilisation have been adjusted upwards, reflecting stronger-than-expected growth in both output and employment. Capacity utilisation is now estimated to be about 2 per cent higher than a level that is sustainable over time. 4  BIS Review 47/2007  In this upturn, it has also taken a long time for inflation to pick up. In the upturn in the 1990s, the rise in prices for domestically produced goods and services picked up in pace with capacity utilisation and with a lag of about four quarters. Correspondingly, inflation fell after the downturn early in this decade. During the present upturn, inflation has remained low so far in spite of solid growth and rising capacity utilisation. Why has inflation remained that low in an environment of strong economic growth? There are probably several reasons for this. 1 First, Norway’s terms of trade have improved. Prices for oil and gas, freight, fish, industrial commodities and engineering products have risen markedly. In addition, growth in foreign markets has provided considerable outlets for Norwegian export goods. At the same time, Norwegian importers have gained access to new markets in central Europe and Asia which provide substantially cheaper consumer goods. Norway’s terms of trade have improved by about 40 per cent since 2002.
BIS Review 18/2006  1  The other surprising feature of the current economic environment is the pattern of global imbalances, and the size and persistence of the U.S. current account deficit. As Alan Greenspan has explained, the greater dispersion in external imbalances can be seen as the inevitable result of fundamentally healthy changes in the world economy. As the world progresses toward increasingly integrated financial and goods markets, other things being equal, one might expect to see an increase in the number of countries with surpluses or deficits, and potentially larger surpluses and deficits, as flows of both financial assets and goods work to equalize desired saving and investment around the world. If one were confident that observed imbalances simply reflected a more efficient allocation of the world’s stock of saving to its most productive uses, that relative prices adjust freely in response to changing fundamentals and that economies are flexible and agile in adapting to those changes, then we might also reasonably expect these imbalances to resolve themselves through smooth and gradual adjustments in relative prices and flows of goods and services. These conditions do not fully exist today. We do not yet live in a world of perfect capital mobility, one in which savings move across borders to their most productive use without constraint in the form of capital controls or without distortions affecting the behavior of private actors.

If the effects of these policies are large enough to alter or distort the relationship between asset prices and the underlying fundamentals in our economies, and this seems likely to be the case, then we can take less comfort from traditional relationships between those variables. The fact that official purchases of financial assets are driven by different factors than those driving private investors suggests that we would probably see a somewhat different combination of capital flows, exchange rates and interest rates in the absence of official intervention. This makes the task of assessing the probable trajectory of growth and inflation more complicated. It makes it harder to assess the likely evolution in financial conditions and asset prices. And it makes it harder to assess the effects of the present stance of monetary policy on aggregate demand and inflation. To the extent that these forces act to raise asset prices, lower interest rates and reduce risk premia, it is harder for the markets to assess how much of the very favorable conditions are likely to reflect fundamentals and prove more durable. This can contribute to an increased willingness to raise leverage in the investment community and to take on more exposure to risk.