samchain/econo-pairs-v1 huggingface dataset:
The local currency framework that Thailand concluded with Malaysia has been operational since 2016. We are now discussing a similar framework with Indonesia, which will be implemented by the end of this year. We also have a bilateral swap agreement in local currencies with China to facilitate the use of renminbi and Thai baht bilateral trade and investment. We hope that similar frameworks can soon be expanded to other GMS countries. *** Ladies and Gentlemen, 3. Let me now turn to my third message – the challenges and the role of policymakers to support businesses. While the GMS was first initiated by policymakers, it is now driven mostly by businesses. In order to further support business development, policymakers need to set proper incentives, governance structures and regulatory frameworks to foster closer market linkage. I see two ways we can address this. First, each individual country must ensure that its rules and regulations are sufficiently flexible to support innovative regional connectivity and technologies. To provide regulatory flexibility and to support FinTech in Thailand, we have allowed innovative FinTech products to be offered and pre-tested under the so-called “regulatory sandbox”, which is designed to be a safe space where businesses can test innovative products, services business models and delivery mechanisms. This arrangement will make it easier for firms to test their products, and for regulators to develop necessary regulatory requirements before these products are launched to the public.

And we will in this way manage to make the financial sector contribute actively and efficiently to the sustainable transformation of our economy. I trust the following discussions will prove interesting for you. We will talk about the important work by European institutions under way, about how financial institutions are adapting and about the way in which the adverse effects the energy transition may exert should be accommodated, in what has come to be known as the “fair transition” debate. Thank you. 5/5
The Protocol effort was built around the principle that entry into resolution in itself should not give counterparties the right to close out, at least not while a bank in resolution continues to perform. This encapsulates the new paradigm of resolution. We need to ensure that other market contracts and conventions are set up in a similar way. I want to mention one where we have just finished work in FSB and one where we are just starting. The former is operational continuity. Last autumn, FSB published for consultation draft guidance 5 for how shared services IT and operational processes should be set up in G-SIBs for them to be resolvable. Again this builds on resolution planning work in CMGs and identification via the RAP process of operational continuity as a generic barrier to resolution. The draft guidance not only addresses the setup of contracts and service level agreements (SLAs) with third parties and internal service companies to provide for continuity at point of entry to resolution but also restructuring or wind-down of services post bail-in. Relatedly we have started work in FSB on continuity of access to financial market infrastructures (FMIs 6). This is not only at the level of the FMI itself but also where G-SIBs connect to FMIs indirectly through agency banks or correspondent banks. The same principle should apply here – if the bank in resolution remains authorised and continues to perform on its obligations then it should be able to secure continuity of access to services provided by FMIs.

Parliament has enacted legislation to ensure there will be no doubt about the separation of retail activity in the major UK banking groups at the point of failure. The PRA now has the task of implementing that legislation to complete the work of making ring-fenced banks separable ex ante. Similar developments in the restructuring space are underway in other jurisdictions. The splitting off of domestic retail banks in Swiss G-SIBs and the requirement for large foreign banks in the United States to form Intermediary Holding Companies (IHCs) are examples. Another aspect being explored in resolution plans is the scope for orderly, solvent wind-down of trading books in investment banks in recovery or resolution. This goes to the general principle that it is important for us as resolution authorities to understand the options  7  6  Financial Stability Board (2015) ‘Guiding principles on the temporary funding needed to support the orderly resolution of a global systemically important bank (“G-SIB”)’. BIS central bankers’ speeches  we have to restructure critical functions if we need to in resolution. I can imagine that in time via planning in CMGs we will see more convergence in approaches in this area across jurisdictions. In conclusion, much has been done to achieve what is necessary to make G-SIB resolution work. TLAC is symptomatic of the distance travelled and represents a true game-changer.
In order to give appropriate consideration to financial stability aspects, we feel that the SNB should be involved in regulatory procedures at an early stage. In other words, in the conceptual phase. The authorities responsible for issuing financial market regulations should, therefore, be obliged to consult with the SNB early on in the process. Thirdly, the National Bank must have clearly defined decision-making powers with regard to regulations that either bear direct relation to monetary policy or to emergency liquidity assistance. I would like to take two current regulatory proposals to explain more clearly what I mean: the countercyclical capital buffer and the implementation of the TBTF regulations. The countercyclical capital buffer represents a capital requirement that can be adjusted over time. This buffer will be introduced within the framework of Basel III and has the important tasks of protecting the banking sector from the risks posed by excessive lending and of curbing the banking sector’s procyclical behaviour. In the event of excessive growth in lending, the capital requirement can be increased; then when growth in lending is weak, it can be lowered again or even reduced to zero. The countercyclical capital buffer thus has a direct impact on banks’ lending activities and can, as a result, strengthen or weaken the effect of the SNB’s monetary policy significantly. Therefore, whoever determines the level of this buffer also influences the effect of monetary policy.

The aim is not to infringe on FINMA’s jurisdiction. Instead, FINMA and the SNB need to clearly define how the new responsibilities and tasks arising from the urgent need for more rigorous analysis and regulation of systemic risk should be divided between them. At this point, I also want to stress that this macroprudential task does not call into question the SNB’s primary mandate, which is the maintenance of price stability. Instead, it supports the long-term fulfilment of this mandate. The SNB has also expressed its opinion – along the lines of this proposal – on the recommendations made by the business audit commissions of the National Council and the Council of States in their report on the financial crisis. 2  BIS Review 173/2010  SNB balance sheet risks In my following remarks, I would like to look at the SNB’s balance sheet risks. As the Chairman of the Governing Board, Philipp Hildebrand, has already mentioned, it was primarily the large-scale purchases of foreign currency that contributed to the expansion of our balance sheet to its current level of approximately CHF 280 billion. Of this amount, CHF 260 billion is made up of currency reserves, which comprise not only foreign exchange, but also gold and the IMF’s special drawing rights. If we add to that the SNB’s loan to the stabilisation fund, over 95% of our assets are denominated in foreign currency. Not only is the balance sheet longer as a result, it also carries more risk.
The Thai Economy: The Current State and the Way Forward Speech by Dr. Veerathai Santiprabhob Governor of the Bank of Thailand Japanese Chamber of Commerce (JCC) Thailand Dinner Talk 27 March 2019 JCC Board of Directors, JCC members, Distinguished guests, Ladies and gentlemen, Good evening to you all, Thank you very much for inviting me once again to give a talk at the Japanese Chamber of Commerce Thailand. This event is a great opportunity for us all to exchange our views and ideas on the Thai economy and its prospects as we move forward into the year 2019. Your opinions and feedback are undoubtedly valuable to policymakers, like myself, and I look forward to a very engaging session tonight. Japan and Thailand have been in long-standing diplomatic relations for more than 132 years—and even much longer from a trade perspective, dating back to as early as 1600s. Time has shown that while the Thai economy has encountered many challenging transitions, business partnerships between Japan and Thailand have continued to remain strong, fostering economic opportunities for both our nations throughout the present day. As you all know, this year is a very special one to all of the Thai people as well as the Japanese people as both our countries will hold national celebrations for our respective head of state in early May—to celebrate and honor the coronation of His Majesty the King Maha Vajiralongkorn and the ascension of Crown Prince Naruhito to the Imperial throne.

The second initiative is the promotion of regional currency usage for trade settlement and direct investment in our region. As we all know, regional currencies tend to move together and volatility of advanced countries’ currencies will continue to be high. The Bank of Thailand and the PBOC have been promoting the use of Thai Baht and Renminbi for bilateral trade settlement between Thailand and China. We have a THB/CNY bilateral swap agreement in place since 2011 with a Chinese bank serving as the Clearing Bank for Renminbi in Thailand since 2015. Additionally, the Bank of Thailand has worked with several central banks in the region to relax relevant foreign exchange regulations with a view to promoting the use of regional currency. Our local currency framework with Malaysia became operational in 2016. Discussions with Cambodia, Laos, and Indonesia are underway. Thus far, ASEAN countries have undertaken a number of initiatives to upgrade our financial infrastructure, but most of these initiatives are aimed for domestic usage. Much work remains to enhance closer financial connectivity at the regional level. Allow me to propose three key areas to strengthen our regional financial connectivity. The intended outcomes of these initiatives are to raise productivity, build immunity, and increase financial inclusivity for sustained benefits. 2  First, we need to embrace innovative financial technology to raise productivity. The rapid pace of technological innovations has changed how we trade and how financial transactions are conducted. Alipay and WeChat Pay have demonstrated the power of modern payment services in China.
Prasarn Trairatvorakul: Thai monetary policy in the environment of excess global liquidity Speech by Dr Prasarn Trairatvorakul, Governor of the Bank of Thailand, at the Thailand Focus 2011 – Enhancing Thailand’s Competitiveness over the Next Decades, Bangkok, 28 March 2011. *  *  *  Ladies and Gentlemen, It’s an honor to speak before you today at the Thailand Focus conference. Early this morning you heard Prime Minister Abhisit Vejjajiva speak on Thailand’s competitiveness; and later Finance Minister Korn Chatikavanij on fiscal policy. To close the circle, I will speak on monetary policy to complete your view on the investment opportunities and prospects of the Thai economy. As international investors, I believe, you want to have a firm understanding of the country’s policy environment. This is what I will discuss today – the monetary policy options going forward in light of my assessment of the global economy and the Thai economy. The assigned title of my talk today is “Thai Monetary Policy in the Environment of Excess Global Liquidity”. Let me stress that I have a different opinion on the issue of excess global liquidity than most. Global liquidity is currently problematic in the sense that it is fluid, rather than excessive. Let me discuss why. First, let me give you my assessment of the global economy. The global economy has entered a phase of fluid global liquidity amid uneven recovery and shifting risk appetite.

On a related point, there has been talk that the current environment of fluid global liquidity has led to depressed long rates in Asia, thereby complicating the conduct of monetary policy. This is indeed a possibility. However, capital inflows do not significantly weaken the interest rate tool of the Bank of Thailand. The Bank of Thailand focuses on short-term rates in conducting monetary policy as the Thai economy is bank-based and most short and long-term loans have freefloating interest rates. I have discussed how monetary policy should be poised and pre-emptive. Lastly, monetary policy must also be perceptive, or at least strive to be so, of medium and longer-term  BIS central bankers’ speeches  3  issues. Let me highlight three issues: beyond normalization, financial imbalances, and global imbalances. On the first issue, what lies beyond normalization? The prospect of further tightening depends on how far the balance of risks will shift to inflation and financial imbalances. A prolonged oil price surge may trigger inflation and tightening in Thailand. The downside risk scenario of high oil prices and global recession or global stagflation may materialize, depending on the complex interplay between uneven global recovery, fluid capital, supply shocks and policymakers’ response. The global environment is constantly changing. New information and developments force us to revise our views. In such a world, being poised is particularly important. For being poised allows for a timely response as long as we are aware that we are performing a balancing act on top of the US/Euro balancing act.
The global climate is now more inflationary and it seems unlikely that the margin of spare capacity in the UK economy will prevent current inflationary pressures from becoming embedded, without monetary policy being tightened. We have heard the news today that CPI inflation has risen again – to 4.4% – and it could easily rise above 5% later this year. Once businesses and individuals come to expect higher inflation – and there are increasing signs that they are beginning to do so – these expectations will be much harder to dislodge. In this environment, with inflation running very considerably above its target level and set to rise further, failure to take timely monetary policy action risks a more abrupt and destabilising rise in interest rates in the future. That is surely something which the businesses represented here today would not want to see. And that could be a much bigger threat to future economic growth than the gradual increases in interest rates which I have been arguing for since the middle of last year. 6  See Sentance (2011). 7  This is a point repeatedly made by Orphanides. See his recent comments in Orphanides (2011), for example. 8  BIS central bankers’ speeches  References Orphanides, A. (2011) “The role of central banks – lessons from the crisis” Panel remarks at the VI International Symposium of the Banque de France on 4 March 2011. Sentance, A.

Our role in the world market for oil exports is more modest. Back in the 1970s, policymakers’ handling of the newly discovered petroleum wealth got off to a rather weak start. Public spending surged before export revenues had started to kick in. Fiscal policy fuelled a boom and had to be reversed and tightened. By the late 1970s, Norway was in the midst of a deep recession. In the mid-1980s, the Norwegian economy experienced a new boom, this time fuelled by private debt growth. After the fall in oil prices in 1986, we experienced a collapse in housing prices, as well as a severe banking crisis and a soaring public deficit. The turbulence made clear how vulnerable a small open economy is to terms of trade disturbances. The downturn in the early 1990s was the deepest that Norway had experienced since World War II. The authorities realised that the old policy framework was no longer suitable. With a globalised economy and deregulated credit and capital markets, our economy was more vulnerable to external shocks than before. A number of major reforms were implemented to improve cost competitiveness and boost growth. And the establishment of the oil fund in 1990 and the reform of the monetary policy framework in 2001 made the economy more robust to external shocks. Chart: Norwegian exports The need for a robust policy framework is greater than ever: Petroleum products now make up more than 50 percent of exports, and – more recently – oil services exports have also picked up.
Despite more exchange rate volatility ahead, we could seize this opportunity to strengthen the fundamentals of the economy and reap long-term benefits that are likely to be greater than short-term costs of adjustment. For the banking sector, having a competitive and efficient banking sector is of extreme importance in the world where competition is borderless. For this, the Bank of Thailand is ready to provide an enabling environment for the Thai financial sector. Today, the Bank of Thailand has embarked on several important measures to enhance efficiency, strength and access of the Thai banking system. New banking licenses were granted, including new subsidiary license for foreign commercial banks who want to operate their businesses in Thailand. This should further increase competition, thereby raising the efficiency of the financial system. In addition, the Bank of Thailand has liberalized the opening of branches of Thai banks to allow them more flexibility in managing branch network and reducing costs. Further financial liberalization to facilitate regional integration is also considered. The ASEAN central banks are negotiating the common standard of Qualified ASEAN Banks (QABs). This will allow awarded banks to operate on a region-wide basis. And along with more liberalization, the Bank of Thailand has ensured that financial institutions are stable. So even though the Thai banking sector is already well-equipped with capital and sound positioning, the Bank of Thailand has strengthened their capital bases earlier this year, following Basel III, and in line with international standard.

As a result, the costs of the event were relatively low and order was quickly restored in both new currency markets. Despite the U-turn in decision-makers’ communication, the situation had been easy to read by markets, citizens and economic agents in general. A few years later, the Czech economy was hit by a severe currency and financial crisis. Until 1996, the Czech Republic maintained a fixed exchange rate regime and generally stabilisation-oriented (restrictive) macroeconomic policies. However, entry to the OECD and related capital flow liberalisation created an Impossible Triangle. This led to twin deficits and attempts to “half-free” the exchange rate regime similar to those made in the Bretton Woods case. Additional factors such as data errors and an insufficiently credible first reform package only exacerbated the problems. Serious worries of the Czech National Bank about its credibility and reputation contributed to its mistakes. A change of government made acts of government less predictable. The defence of the exchange rate was ended by the central bank without the knowledge of the government. This caused a wide rift to open up between these two authorities. A general lack of coordination of macroeconomic policies, and possibly too restrictive monetary policies, culminated in a severe financial crisis. The outcome was a very costly event that could, with the benefit of hindsight, be judged as avoidable to a significant extent. General U-turns made by policy authorities contributed to these high costs.
The aim would be to avoid a situation where gearing has gone up a lot alongside asset values so that subsequent falls in those values threaten the solvency of institutions and of individuals. But I believe it is unlikely that monetary policy – which most of the time means variations in the short-term nominal interest rate – is the most natural tool to use to achieve this. The reason is that – even when we set aside the issues about how effective interest rates can be in controlling asset prices and what effect on consumer price inflation and activity their use for that end would be – monetary policy tools are likely to be pretty poor at affecting gearing and leverage. And the main reason for this is that changes in the level of interest rates do not obviously alter incentives to use debt relative to equity. It is likely that factors other than the level of interest rates most influence the relative attractions of debt and equity: risk premia, the tax code, regulations (most obviously rules on maximum gearing). Higher interest rates will mean that the return that needs to be promised by the issuer, and expected by the provider of funds, needs to be higher. That will affect the cost of funds in general; it is not so clear how – if at all – it affects the relative cost of debt finance to non-debt finance.

A natural way to gauge the cost of higher capital requirements on banks is to estimate how much lower economic activity – GDP – might be as a result. I want to illustrate the cost of higher capital for banks using a very similar method to that used in the studies mentioned above. The calculation proceeds in steps. First, estimate how much the average interest rate charged by banks would have to increase to recoup any cost of an increase in their equity financing relative to use of debt. Then estimate how much a rise in the cost of borrowing from banks might change the required rate of return (or cost of capital) of investors. Finally use a production function to estimate the impact of such an increase in the cost of capital on desired capital and output. We can then express the cost of having banks hold more equity capital in terms of the present value of all future falls in output. This is the methodology used in the calculations reported in the Bank of England’s 2010 Financial Stability Review (FSR). Those calculations were based on conservative assumptions – understandably so, for fear of under-estimating the cost to the wider economy of imposing substantially higher capital requirements on banks. I will start from that FSR baseline estimate of the present value of output lost as a result of a 1pp increase in the capital ratio, which is 4.25% of current annual GDP.