samchain/econo-pairs-v1 huggingface dataset:
Evidently, the Business Sentiment Index or BSI, surveyed by the Bank of Thailand, which has lingered below the 50 benchmark, slid further in the past few months. In addition, tourism has been adversely impacted by travel warnings as the Thai political developments made global news. This latest dent on confidence has added to the list of challenges facing the economy since the end of last year, including inflationary pressure from volatile oil and commodity prices, tightening domestic monetary policy, as well as potentially more downside risks to global economic growth in light of recent US economic developments. The headline and core inflation in July rose at decade-high rates of 9.2 and 3.7 percent from a year ago, respectively. The rising inflation largely stemmed from soaring oil prices. At their worst, oil prices set new records almost on a daily basis, led by a combination of growing demand for fuel of emerging markets, geopolitics of the oil-exporting countries, and the depreciation of the US dollars. Even though, in August, headline and core inflation went down to 6.4 and 2.7 percent, respectively, due to moderating commodity prices as well as government measures, the risk on inflation from high and volatile commodity and oil prices remains, particularly given the constraint in supply adjustment. In the meantime, the risk of global economic downturn seems to have accumulated as the bottom-out of US subprime problem is still uncertain.

Sound economic fundamentals continue to provide support for favourable growth and collective efforts should be focused on raising the economy’s potential output in order to achieve price stability and sustainable growth in the long run. 2  BIS Review 119/2008  By old book, growth comes from utilization of the country’s resource endowment with available technology. However, with the advent of global economic and financial integration, growth is no longer constrained by endowment. In today’s world economy, outsourcing for inputs abundant in other countries and exchange of technology and skills allow for lower production costs and greater potential to grow. Potential output in this era is thus free from conventional hindrance. From the Bank of Thailand’s latest research, the Thai economy has a potential output growth rate of around 5.5 to 6.0 percent per year from 2008 to 2015. This is based on an assumption that investment can grow at the same rate as the economy, and therefore, the ratio of real gross investment to real GDP needs to increase from 22 percent today to 28 percent within the next 8 years. Prior to 1997, Thai economy grew satisfactorily on the back of high level of investment as well as increasing utilization of labor. During this period, sufficient capital formation allowed for an increase in labor productivity. However, in the post crisis era, potential output gradually declined as real investment did not fully resume its pre-crisis level, which was 31 percent of real GDP.
At this point in time, Romania is fulfilling three out of the four Maastricht criteria, namely the sustainability of the fiscal position, convergence of long-term interest rates and exchange rate stability (although we are not technically in the Exchange Rate Mechanism). Meeting the price stability criterion is probably just a matter of months, until the recent low inflation numbers feed into the 12-month average rate used as a reference. I am fully aware that we still have a long and difficult road ahead, as several years of relentless efforts are needed in order to ensure a lasting fulfilment of the Maastricht criteria, to make further progress in the catching-up process in the area of real convergence, as well as to push forward the structural reforms required for enhancing the resilience and flexibility of the domestic economy. BIS central bankers’ speeches  3  Banking Union Obviously, euro adoption automatically implies Banking Union membership and therefore, since Romania has already set the changeover target date, joining the Banking Union is merely a matter of timing: should it occur on the euro adoption date or as soon as possible? There are strong arguments in favour of rapidly joining the Banking Union. First and foremost, I believe it is always preferable to have a voice in the setup of a mechanism the working of which will affect all EU countries anyway, irrespective of whether they are members or not.

Liquidity management in the Islamic financial system and the institutional arrangements for resolution are among the other areas that need further development. Of critical importance is for the board and management of Islamic financial institutions to institute higher standard of leadership and a comprehensive governance culture and framework. Mutual recognition in Shariah and human capital challenges On this occasion, I would like to touch on two areas confronting Islamic finance firstly on, the issue of mutual recognition in Shariah and secondly the human capital development in the industry. Malaysia takes cognisance of the diversity of Shariah views within the region and among jurisdictions. Although Islam welcomes diversity of views, there is also a need to promote greater harmonisation among jurisdictions on the specific issues relating to Islamic finance. Such convergence is important for the long-term sustainability of the sector. Malaysia has taken the initiative to organise Regional Shariah Scholars Dialogue in 2006 and 2008 as part of the efforts to foster greater engagement among the Shariah scholars in the region. Indonesia has been active in these dialogues. Moving forward, the newly established International Shariah Research Academy (ISRA) has been entrusted to intensify the regional Shariah Dialogues as well as to enhance further the international engagement among Shariah scholars in our pursuit for Shariah harmonisation. Most encouraging is the greater appreciation and understanding that has been achieved in these deliberations of the Shariah practices that are peculiar to the respective jurisdictions.
But we regulate the activities that surround virtual currencies if these pose specific risks. An example would be the Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) requirements that we have imposed on intermediaries providing virtual currency services. We are assessing if additional regulations are required for investor protection. Another example is the wave of new payment services that have been enabled by new technology. Consumers are increasingly making and receiving payments through digital payment platforms, which fall outside of our existing regulatory frameworks. In recognition of the risks that these digital payment platforms can pose to the system as a whole if they are not adequately secure, MAS will be issuing a new Payment Services Bill (PSB). This will streamline the regulation of payment and remittance service providers under a single regulatory framework, and calibrated to whether an entity offer one, some or all parts of the retail payments value chain. It will also seek to enhance user protection and facilitate the adoption of electronic payments. 3/5  BIS central bankers' speeches  20 Regulations should not stifle innovation. The reality is that innovations will always move ahead of rules. The key is in understanding whether a particular innovation or new business model is simply a regulatory arbitrage. If so, we should deal with that directly such as by bringing that activity within the regulatory ambit or even banning it altogether. Another consideration is whether an innovative business model while purposeful will create incoherence or inconsistency of treatment.

This is also why exchanges with fellow regulators during supervisory colleges are very helpful and important too. 13 I have earlier mentioned that rules and regulations should be risk proportionate. This is true as well for banking supervision. It is impossible for supervisors to review and inspect all the 2/5  BIS central bankers' speeches  financial institutions under our charge to a wide and deep extent given finite resources and time. This is neither feasible nor desirable. 14 It is more logical and effective to differentiate our supervisory intensity according to the risk profiles of each bank. In recent years, MAS has also moved towards greater use of thematic reviews and inspections. This means that we inspect a peer group of institutions at a time in a specific risk area. We find that such a peer group approach also facilitates better identification of vulnerabilities, and allow for industry benchmarking as well as the sharing of best practices. 15 An effective supervisory process should also involve a preparedness to take tough enforcement actions. It is a practical reality that no amount of regulations and supervisory reviews can catch all possible potential misdemeanours or excessive risk-taking. To do so, a financial regulator would have to be regularly and extensively intrusive to a point that a bank would find it hard to function. Ultimately, a bank’s Board and Management must be responsible for its business conduct and risk management.
National demand is estimated to hold on a mildly slowing path, and there will be further improvements in the contribution of net external demand. This profile would be in line with the macroeconomic scenario on the basis of which the State budget for 2007 has been prepared, although the starting point is somewhat higher growth rates in 2006. As to inflation, although the growth of the CPI in 2007 on average will be far below that of the current year if cheaper oil takes root, it is clear that there will only be significant headway in inflation rate convergence with the euro area if this reduction in energy prices feeds through permanently to agents' expectations. We are therefore faced with a picture of sustained growth and some gradual correction to certain imbalances in the Spanish economy. Yet this scenario is not free from risks in the medium term. On the international front I have already mentioned risks relative to the outlook for the world economy and the uncertainty over the intensity of the European recovery. Furthermore, oil prices are subject to the influence of numerous economic and geopolitical factors, any changes in which may prompt a reversal of the fall seen in recent months. Within Spain, both the persistent inflation differential with the euro area and the high indebtedness of Spanish households harbour uncertainties that economic policy should contribute to dispel. The maintenance of price increases higher than those in the euro area over a lengthy period is a cause for concern.

Ravi Menon: Islamic finance – continued growth Remarks by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the 5th World Islamic Banking Conference Asia Summit, Singapore, 3 June 2014. *  *  *  Distinguished guests, ladies and gentlemen, good morning. And to all our foreign guests, a warm welcome to Singapore. The sun is shining on Islamic finance. Let me highlight three promising global developments. First, Islamic finance continues to grow rapidly. The industry grew at double digits last year, as it has for the previous five years, despite global economic uncertainties and market volatility. Global Islamic financial assets are estimated to have reached $ trillion by the end of 2013, from $ trillion in 2012. Second, global regulatory standards and best practices are being established for Islamic finance. The Islamic Financial Services Board (IFSB), the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), and the International Islamic Financial Markets (IIFM) have been at the forefront of this effort, helping to narrow differences in market practices and regulatory treatment. Common standards are good for facilitating cross border transactions. They help to address risks that are idiosyncratic to Islamic finance, such as Shariah non-compliance risk. In so doing, these standards serve to bolster confidence in the safety and soundness of the Islamic finance industry. Third, more countries are catering for Islamic finance. In Asia, Indonesia has set out to significantly grow its Islamic banking sector and develop its Islamic capital markets.
Another important example of delegation to experts has been the creation of independent central banks to decide on monetary policy to deliver an inflation target set by government. Frustration with high inflation in the 1970s made many countries move towards de-politicizing decisions about monetary policy and interest rates. Research suggested that political pressure led to an ‘inflation bias’ in policymaking, which could be 8  solved by delegating responsibility for price stability to independent central banks. The following decades  1  Source: Ourworldindata.org Source: World Health Organisation 3 Source: The World Bank 4 Where poverty is defined as living on less than $ a day at 2011 prices. Source: World Bank (http://data.worldbank.org/topic/poverty) 5 Source: World Bank 6 Source The Food and Agriculture Organisation (FAO) of the United Nations 7 Until 46 BC, the calendar used in the Roman Empire consisted of 12 months of a total of 355 days, with the intention that an additional month would be added in some years so as to keep the calendar in line with the solar year (of 365¼ days). The pontifices had some discretion over the calendar, meaning they could use it for political advantage by lengthening or shortening the terms of Roman magistrates who were supposed to serve for a calendar year. This led to considerable confusion for ordinary citizens as to what date it was. Moreover, by the 40s BC the Roman calendar was three months ahead of the solar calendar.

10 See for example, Grilli, Masciandaro, and Tabellini (See “Political and Monetary Institutions and Public Finance Policies in the Industrial Countries”, Economic Policy, 1991), Cukierman, Webb, and Neyapti (1992), Alesina and Summers (“Central Bank Independence and Macroeconomic Performance: Some Comparative Evidence”, Journal of Money, Credit and Banking, 1993), Cukierman, Miller, and Neyapti (“Central Bank Reform, Liberalization and Inflation in Transition Economies - An International Perspective”, Journal of Monetary Economics 2002) and Dincer and Eichengreen (“Central Bank Transparency and Independence: Updates and New Measures”, International Journal of Central Banking, 2014). 11 IMF, “The Functions and Impact of Fiscal Councils,” Paper to the IMF Board, 16 July 2013. 12 Besley, T and Hennessy, P. (2009) The Global Financial Crisis – Why Didn’t Anybody Notice?, British Academy 13 In a recent speech, my colleague Andy Haldane also argues that economics needs to draw more heavily on approaches and models used in other disciplines. See Haldane, A The Dappled World Speech at the GLS Shackle Biennial Memorial Lecture 4  All speeches are available online at www.bankofengland.co.uk/speeches  4  Another catastrophic example is South African President Thabo Mbeki’s rejection of consensus expert opinion on the treatment of HIV/AIDS in favour of the views of a professor at the University of California who argued it was caused by malnutrition rather than a virus. Mbeki’s refusal to believe and fund mainstream treatments for HIV resulted in 300,000 lives lost and the birth of 35,000 HIV positive children whose infections could have been avoided.
Academic research is progressing on this front and, hopefully, at some point in time, workable and operational models will be developed that allow for more realistic settings where the complex interactions between the real and financial sectors of the economy are acknowledged in full and where financial variables (notably money and credit) play an active role in the monetary transmission mechanism. When this has been achieved, it will be possible to turn the two pillars of our analysis into a larger, single pillar as Vice President  BIS Review 132/2007  5  Lucas Papademos 7 has put it. Or, if you prefer another metaphor, we could join the two pillars with an arch, thus forming a solid bridge to support our monetary policy decisions. But policy is an ongoing activity. Policy-makers cannot afford the luxury of waiting for research advances to happen. Empirical evidence supporting these advances is itself frequently uncertain and provisional, open to revisions. Constantly confronted with the burdens of judgment, we are very much like sailors in Neurath’s boat. And, in this respect, I believe that the Eurosystem’s monetary policy strategy has been particularly useful in helping us navigate through the deep waters of pervasive uncertainty and to make decisions in real time. In my view, the Eurosystem’s concept has clear strengths. It permits a diversified approach to the assessment of economic developments and the outlook for price stability. It encourages cross-checking between different forms of analysis. It is a pragmatic and robust approach intended to help avoid major policy errors.

The Exchange Rate In small, open economies, the exchange rate has an important influence on inflation. At the same time, it is a variable that has fluctuated considerably in recent years for reasons which have not always been easy to foresee and interpret. How changes in the exchange rate should be handled in practical policy depends above all on how lasting a change in the exchange rate is judged to be. More enduring changes that have an effect on inflation forecasts obviously have to be taken into account In order to decide on the duration and what is a reasonable reaction, one normally has to know what brought about the change. Several different cases can be discerned: A nominal change in the exchange rate can be a result of a change in the real equilibrium exchange rate. This case is in principle simple to manage since it normally does not lead to a changed picture of inflation and thereby does not occasion any specific policy measures. Changes in the real equilibrium exchange rate have not been an especially common reason for changes in the exchange rate in recent years, at any rate since the krona fell in connection with the changeover to a flexible exchange rate in 1992. A change in the nominal exchange rate may also have to do with a change in the long-term view of the steadfastness in economic policy, or what is termed credibility.
Mr George elucidates the new monetary policy arrangement in the United Kingdom and in the euro-zone Speech by the Governor of the Bank of England, Mr E A J George, at The Chartered Institute of Bankers in Glasgow on 18/1/99. Mr President, Secretary of State, Lord Provost, my Lords, Ladies and Gentlemen. It would be a masterly understatement to describe the past two years, since the last CIB Scotland Dinner, as eventful. Here in Scotland, following the referendum and last year’s legislation, you are now actively preparing for the elections to the Scottish Parliament in May. In my own neck of the woods, we have seen responsibility for the implementation of monetary policy devolved upon the Bank’s new Monetary Policy Committee. And elsewhere in Europe, 11 countries have merged their separate currencies into the single euro, thereby passing responsibility for monetary policy from national authorities to the new European Central Bank. These are truly historic events. I have no wish to become embroiled in the matters of Scottish politics this evening – I’m more than happy to leave that to the Secretary of State. I simply wish you all well, and look forward to developing a constructive dialogue with the new Parliament as we have with the Scottish banking and business communities. But let me say a few words about the new monetary policy arrangements here in the United Kingdom and in the euro-zone.

The real significance of those arrangements – in both cases – is that in introducing them the respective governments confirmed their common commitment to achieving and maintaining effective price stability in their respective currency areas. That role for monetary policy is not simply an end in itself, in some abstract, doctrinaire way. On the contrary it recognises that consistently and reliably low inflation, into the medium and longer term, is a necessary means to the end of sustainable growth of output and employment, which are, of course, the truly good things of economic life that we are all seeking to achieve. Our own new legislation defines the MPC’s objective as to maintain price stability and, subject to that, to support the Government’s economic policy, including its objectives for growth and employment. The Maastricht Treaty defines the primary objective of the European Central Bank as to maintain price stability, and without prejudice to that objective to support the general economic policies of the European Union. There are significant differences between the two statutory frameworks. In our case, for example, the precise definition of the stability objective is determined by the Government; and there are much more rigorous requirements for transparency of the MPC process and public accountability for MPC decisions. I am convinced that our arrangements are wholly appropriate to our particular circumstances. But the essence of what we and the ECB Governing Council are mandated to do is very much the same.
This can lead to lower rents than those the construction cost estimates were based on and thus give rise to payment difficulties for construction companies and property companies. As I have said, the demand for properties in the Baltic states is very low at present. Eventually, however, the countries will recover and demand will return. There is also a strong underlying demand for property in these countries as much of the property there is old (it was built in the Soviet era) and in need of renewal. As property prices are already so depressed, this may mean that prices will increase rapidly when the economic turnaround finally comes. Property also has a lasting value, providing that it is maintained. To the extent that the banks in Estonia, Latvia and Lithuania have taken properties as collateral it is probable that these properties will not be sold until there is an upswing in demand. This is what happened following the Swedish property crisis in the early 1990s when Securum and other companies were specifically set up to manage the settlement of bad loans with property as collateral. The increasing market value of property in the Baltic states will also eventually lead to an increase in the supply of new properties. An important precondition for all this is, however, that the internal reform programmes of the Baltic states are successful so that costs do not begin to rise once more.

1  2  Source: Federal Reserve Bank of New York (https://www.newyorkfed.org/medialibrary/Microsites/arrc/ files/2016/ARRC-roundtable-slides.pdf); Money Market Liaison Committee Sterling Money Market Survey; European Central Bank Euro Money Market Survey. BIS central bankers’ speeches  This view has been formalised in numerous studies that have found the leverage ratio was a better predictor of bank failure during the crisis than the risk-weighted capital ratio (Chart 5) 2. And recent studies (such as Fender and Lewrick (2015) and Grill, Hannes and Smith (2015)) suggest that a calibration of 3–5% maximises the benefits to society in the form of greater financial system resilience relative to the impact of higher bank funding costs. However, despite my belief in the utility of the leverage ratio, I also recognise that no regulation is perfect. And that if we policymakers spot opportunities to minimise regulation’s adverse impact on the liquidity of core financial markets without compromising the positive effect on resilience, we should take them. Reducing unintended consequences The FPC actively seeks out these improvements – a process we refer to as “snagging” in reference to the process by which a newly constructed building is checked for protruding nails and screws which could snag and tear one’s clothing. (If only all architects were so diligent.) As a result of one such snagging exercise – our annual statutory review of the leverage ratio Direction – this month we made the decision to exclude central bank reserves from the exposure measure of the leverage ratio framework.