samchain/econo-pairs-v1 huggingface dataset:
This argues for the authorities in all jurisdictions to review whether the liquidity standards that they currently impose are still appropriate, given the nature of firms and their activities. But globalization also means that there is a case to look again at consistency of liquidity standards across jurisdictions. As central banks or regulators we are each seeking to achieve a high level of soundness in our respective financial systems. But the soundness of any of the global firms that are a major part of those systems is a function of the standards imposed on the group and its major subsidiaries in many jurisdictions. None of this necessarily argues for full harmonization of liquidity standards in the way that capital standards have been harmonized. But each jurisdiction inevitably relies to a degree on liquidity standards imposed elsewhere to ensure the soundness of potentially systemically significant firms. Central banks and regulators need at least, therefore, to come to a common understanding of what they are individually seeking to achieve with liquidity regulation. Are we, for example, seeking with such regulation to limit the likelihood of crisis, or the impact of a crisis should one arise, or both? What sort of liquidity problems are envisaged in the regulation? Most importantly, we should seek a common understanding of the dividing line between ex ante insurance, and ex post resolution. 5. Conclusion  This is my last Financial Stability speech as Deputy Governor and I would like to leave you with several thoughts.

Moreover, the space for fiscal stimulus has narrowed, as a result of the orientation of the fiscal policy towards maintaining fiscal parameters stability. Under these circumstances, Albania’s economic growth will be determined mainly by the performance of consumption and private investment. The latter is expected to be driven by eased domestic lending terms during 2012, but will suffer, at the same time, from the uncertainty and hesitation of consumers and private businesses. The Bank of Albania deems that the second half of 2011 marked a turning point towards a more normal consumer behaviour, which should be encouraged and supported in 2012. *** Taking into consideration the information set out above, the Supervisory Council holds that pressures on consumer prices at home remain low over the monetary policy relevant horizon and they have shifted on the down side over the past months. On the demand side, below-potential economic growth will continue to generate low inflationary pressures as shocks from the supply side are expected to be moderate. At the conclusion of discussions, the Supervisory Council decided to cut the key interest rate by 0.25 percentage points bringing it down to 4.25%. This decision aims to provide the appropriate monetary conditions to meet the medium-term inflation target. In addition, the easing of monetary policy provides higher support for the development of the private sector’s demand in our economy. 2  BIS central bankers’ speeches
In this time perspective, it is structural factors, such as demographics and long-term growth rates, that affect developments. One striking feature over recent decades is the downward trend in real interest rates around the world. Various explanations have been put forward for this, including demographic trends. 3 One theory that has attracted major attention is that the decline is a sign of secular stagnation, where different factors have driven up saving but dampened the propensity to invest. This has led to a chronic A more detailed description of the decline in global real interest rates and feasible explanations can be found in my speech at the Swedish Economics Association in 2017. 3  4 [13]  condition of “excessively low” demand in the economy, which has contributed to a lasting decline in real interest rates. Others think that it is not necessarily a question of secular stagnation, but that the situation can, for example, be better described as a deep recession following excessively high debt accumulation in many countries. An environment with a lower average repo rate The major question is what we can expect going forward. For a small, open economy like Sweden's, the interest rate on a global level is important as it affects domestic rates. With free movement of capital, it is difficult to have real interest rates that deviate a great deal from the global level in the long run, even if differences in demographic trends or long-term productivity growth can naturally play a part.

If the level of debt is high in the initial position and confidence in the economy is weak, it may be difficult for monetary policy to affect demand and inflation in this situation, which has been the case in Japan in recent years. Some analysts consider that both prices and production would develop in a more stable way over time if monetary policy counteracted exaggerated price increases in shares and other financial assets. It is said that it is not much more difficult to determine when share prices indicate unrealistic future increases in profit than it is to determine how quickly production in an economy can grow in the long term. And such assessments are of key importance to all monetary policy decision-makers. Others think that besides it being difficult to determine when asset prices are exaggerated, it is doubtful how large an effect an increase in interest prices would have. This is particularly the case with regard to share prices in small countries since the stock markets are so internationalised. Clarity and flexibility What I have discussed here shows that monetary policy decisions cannot be made on the basis of mechanical rules of action. The transmission mechanism is complicated and probably not stable over time either. Regardless of the monetary policy strategy adopted, monetary policy decisions must rest on uncertain assessments. This may relate to assessments of the output gap and the correlation between growth and production, the rate of circulation of the quantity of money and the effects of large increases in asset prices.
This common view will be established in a set of rules and standards which will be laid down and developed by the EBA and the ECB itself. With the Single Rulebook as a basis, other instruments will also ensure that the same approach is used in the supervision of all banks. This will include the Supervisory Manual and ECB regulations, guidelines and general instructions. BIS central bankers’ speeches  1  Resolution of credit institutions Single resolution, the second pillar of the banking union, is a necessary complement of single supervision. It is essential that if a bank enters into difficulties, it may be efficiently resolved with no or minimal costs for European taxpayers and with little impact on the European financial system and on the real economy. The draft Regulation on Single Resolution, submitted by the European Commission to the Council and the Parliament last July, builds on the concept, envisaged by the European Council more than a year ago, that is, a resolution system comprising a single resolution authority and a single resolution fund. In such a system, resolution will be based, first and foremost, on common EU “bail in” rules, whereby banks’ shareholders and creditors should first bear the cost of a bank resolution. Only if this were not enough, would the single resolution fund – meaning, the Industry – step in, making the fiscal backstop the very last resort.

Such a step would be a natural development of the Single Market and would benefit all EU Member States. We believe that one area that deserves particular attention is the development of a wellfunctioning market for simple, transparent and real asset-backed securities (ABS). This would allow banks to still originate loans – notably to small and medium-sized enterprises (SMEs) – while preserving their balance sheet capacity. In order to achieve a well-functioning ABS market, it is important that the regulatory treatment of securitisation is proportional to the risk of ABS. In this respect, the ECB welcomes efforts to have a differentiated regulatory treatment of simple, transparent ABS built on real assets. Moreover, the provision of public guarantees should be considered to support lending to SMEs, as other countries do, such as the US. A further integration of corporate bond and equities markets is also essential to overcome the present fragmentation in the euro area and to ensure more robust cross-border lending and investment flows. To achieve this, we will have to streamline differences between countries, for instance, in the legal protection of borrowers’ and lenders’ rights as well as in national taxation and insolvency procedures. To sum up, structural policies are more multifaceted than they are often perceived to be in the political debate and can have a very significant impact on investment in a variety of ways. Growth-friendly fiscal policy Yet this is not the only area where governments can make a difference.
That is consistent with the need – now widely accepted – to eliminate the large structural fiscal deficit and to raise the national saving rate. It is part of a need for a wider rebalancing of domestic demand in the world economy away from those countries that borrowed and ran current account deficits towards those that lent and ran surpluses. Second, both the structure and regulation of banking in the UK need reform. Banks increased both the size and leverage of their balance sheets to levels that threatened stability of the system as a whole. They remain extraordinarily dependent on the public sector for support. That was necessary in the immediate crisis, but is not sustainable in the medium term. These two challenges are interrelated. In creating the crisis, imbalances in the world economy led to unusually low real interest rates and large net capital flows from the emerging market economies to the developed world. That provided the fuel which an inadequately designed regulatory system ignited to produce the financial firestorm that engulfed us all. If our response to the crisis focuses only on the symptoms rather than the underlying causes of the crisis, then we shall bequeath to future generations a serious risk of another crisis even worse than the one we have experienced. Tonight I want to focus on the second of those challenges – reform of the structure and regulation of the banking system.

Why were banks willing to take risks that proved so damaging both to themselves and the rest of the economy? One of the key reasons – mentioned by market participants in conversations before the crisis hit – is that the incentives to manage risk and to increase leverage were distorted by the implicit support or guarantee provided by government to creditors of banks that were seen as “too important to fail”. Such banks could raise funding more cheaply and expand faster than other institutions. They had less incentive than others to guard against tail risk. Banks and their creditors knew that if they were sufficiently important to the economy or the rest of the financial system, and things went wrong, the government would always stand behind them. And they were right. BIS Review 129/2009  1  The sheer scale of support to the banking sector is breathtaking. In the UK, in the form of direct or guaranteed loans and equity investment, it is not far short of a trillion (that is, one thousand billion) pounds, close to two-thirds of the annual output of the entire economy. To paraphrase a great wartime leader, never in the field of financial endeavour has so much money been owed by so few to so many. And, one might add, so far with little real reform. It is hard to see how the existence of institutions that are “too important to fail” is consistent with their being in the private sector.
On the other hand, we can take risk onto our balance sheet should we regard this as absolutely necessary in order to fulfil our mandate. In this respect, the lesson learned from the crisis is that, in good times, we need to ensure that our balance sheet is as robust as possible, so that we can burden it in bad times. Finally, in terms of staff, our independence is expressed by the fact that the members of the SNB executive bodies – the Governing Board members and their deputies – are appointed by the Federal Council for a fixed and comparatively long term of six years.5 Ladies and Gentlemen, our independence is not unlimited, however. First, it is not absolute but related only to our mandate. It is not we ourselves but the Swiss legislators who charge us with maintaining price stability. Incidentally, that also applies to mandates other than the monetary policy core mandate, which I will not be talking about today. The SNB has specified its monetary policy mandate and rendered it measurable. A situation of price stability prevails when the consumer price index (which is calculated by the Swiss Federal Office of Statistics, and not by us) shows an average annual rate of below 2%. Deflation is also regarded as a failure to attain the objective of price stability. Where we are independent is in our choice of the means by which we fulfil this mandate. Under article 9 of the National Bank Act, we may use a great many instruments, as needed.

This was due to exchange rate losses on the foreign currency holdings. These had increased substantially in the course of our foreign exchange market interventions, which we carried out in order to counter the deflationary threat identified by us. The loss and the increased risk in our central bank balance sheet is a matter which we take very seriously. The annual loss has provoked critical remarks, in particular as regards our independence and our ostensibly far-reaching powers. It is understandable that people will question the extensive measures we had to take to manage the financial crisis. That is all part of life in a democratic society. I am therefore grateful for this opportunity to present to you, in the next few minutes, my thoughts on the essence, the boundaries and the pitfalls of our independence. I hope I will be able to clarify one or two misunderstandings in the process. The reason why the SNB is independent is not because it happens to suit the members of the Governing Board, which is the body responsible for monetary policy. I can assure you that it would sometimes be easier if we could just accept instructions from a higher body. What actually happens is that we have to bear responsibility ourselves for the monetary policy decisions we take, and we take them – typically – under a veil of uncertainty. The reason why we are independent is so that we can better fulfil our mandate. In other words, our independence is purely a means to a higher end.
Perhaps this is because the structure of the European model - the only successful example - requires convergence as a pre-requisite. As I mentioned earlier, in many respects, Asia is much more heterogeneous than Europe, so that convergence realistically will take time, even if there is agreement to converge. But my view is that since it takes so long - 50 years in the case of Europe - we’d better start at least the thinking process early, hadn’t we? And we can also afford to be imaginative if it is something that aged people like us won’t see in our lifetime. The flexibility of Asia is well recognised. We only have to look at how individual economies bounced back after the Asian financial crisis. Perhaps they are flexible enough for convergence to be forced onto them by just plunging in. And to ease the way, how about an interim arrangement that provides intra-regional exchange rate stability through hard pegs to a synthetic, floating Asian currency unit? Perhaps the International Centre for Banking and Monetary Studies has wise observations to offer. I myself have found it difficult and a little frustrating to go beyond articulating the problems and the unsustainable nature of Asian finance, raising interests and asking questions. China Let me now turn to China. I notice that there is considerable interest in the international financial community in the banking and monetary developments there.

For example, we hear often that the Hong Kong financial markets provide a perfect hedge, or more modestly, a proxy hedge, for risks in the Mainland of China or the region. There is an element of truth in this. After all, this is one of the roles of an international financial centre. But it does mean that, in Asia, the dynamics of financial contagion can be quite complex. For example, financial crises do not necessarily erupt and manifest themselves at source - somebody sneezes and others get pneumonia. So, it is only prudent that Asian monetary co-operation should be on the agenda of discussions on Asian finance, and I have been urging for greater co-operation for some time. I am therefore glad that there has been increasing attention given to the subject in recent years. But, in terms of actual co-operative initiatives, progress has been slow and the scope rather narrow. To be fair, there is consensus on the need for diversification of financial intermediation channels, for enhancing efficiency and financial stability, and this consensus has been manifested in co-operative efforts to develop the bond markets in Asia. There are three clusters of initiatives:  2  "What is driving Asian exports? ", HKMA, August 2003.
Oil supply is traditionally slow to respond to changing prices – lead times for developing new fields are often around 3-7 years; and there are constraints on refinery capacity which may influence petrol prices. This is bound to have implications for the UK and for our European markets. Over the past decade, we have benefited from the downward pressure on imported goods prices exerted directly and indirectly by low cost production in Asia. Even if these trends continue, as in principle they could for some time, it is becoming increasingly clear that consumers may also need to contend with upward price pressures as world energy markets adapt to meet the needs of emerging Asia. The second key area of risk is global imbalances. These pose risks to foreign exchange markets and to world activity. Higher oil prices have intensified the scale of the problem. Yet we seem no closer to a denouement – indeed, as the US current deficit topped 6% of GDP, the dollar has tended to strengthen. What does this mean for the UK? I find it extremely hard to predict how sterling’s effective rate would be affected, were there to be a major re rating of the dollar. But a resolution of global imbalances which was accompanied by global recession would represent a major challenge for us – one to which, I suspect, we are now less well placed to respond than we were in 2001.

Pridiyathorn Devakula: Thailand - recent economic performance and the road ahead Speech by Mr M R Pridiyathorn Devakula, Governor of the Bank of Thailand, at the British Chamber of Commerce-Thailand special luncheon, Bangkok, 1 October 2003. *  *  *  Honorable guests, ladies and gentlemen, First of all, I would like to thank the British Chamber of Commerce for the invitation to speak today at this special luncheon. It is certainly a pleasure to have the opportunity to share with you my views on the economy, and on the prospects for the period ahead. These days, Thailand’s strong economic recovery, especially the growth outlook for the next year, has frequently hit the news headlines. One hears or reads about favorable economic outcome during the first half of this year even though the global environment was much troubled by uncertainties. Real GDP grew by 6.7 percent in the first quarter and was dampened only slightly by the repercussions of the Iraqi War and the outbreak of SARS to 5.8 percent in the second quarter. Such resilience to adverse external shocks is a testimony of the economy’s greater flexibility as well as its underlying strengths. With this, the National Economic and Social Development Board has revised upward the growth projection for 2003 by about half a percentage point to 5.8-6.2 percent. From the Bank of Thailand’s point of view, it is most important that the current recovery has been accompanied by a continued strengthening of economic stability both on the external and domestic fronts.
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.

The time horizon typically extends to two years, or a more ambiguous definition as “medium term.” As long as medium-term inflation expectations remain anchored, the monetary policy helps to reduce the volatility of other variables. In addition, a FIT regime also requires a flexible exchange rate, so monetary policy can be conducted independently. However, a proper FIT should help to stabilize the currency as long as monetary policy should move leaning against the wind. For example, a persistent depreciation of the currency, other things equal, should increase the inflation forecast, although much more moderately than in rigid exchange rate systems. This effect should call for a tightening of monetary conditions, reducing pressures against the currency. Many times it has been argued, especially in non-professional discussions, that inflation targets ignore output fluctuations. As I just argued, this is a mistake. Flexible inflation targets take into account activity and employment, and this is implicit in the choice of the time horizon. Moreover, a credible inflation target is efficient in terms of minimizing the tradeoff between output and inflation fluctuations, and also helps to reduce real exchange rate volatility. Indeed, a flexible inflation targeting regime can maximize welfare and perform much better than an exchange rate or monetary target. What variables should a central bank consider when setting the interest rate? In the regime I just described, the answer to this question is pretty simple: anything affecting inflation over a two-year horizon.