samchain/econo-pairs-v1 huggingface dataset:
The ERPT could be higher in case of large and rapid baht depreciation, especially if coupled with rising oil prices. This could trigger a non-linear passthrough to inflation and could have a contractionary effect to the economy. This has not materialized. We will keep close monitoring. c. In Thailand, there is less chance of wage-price spiral given that there remains slack in the labor market. Moreover, the nature of the labor market structure in Thailand, where there is flexibility in labor movement and a lack of labor bargaining power, has helped suppressed wage pressure and prevented broad-based and persistent increases in inflation. On the contrary, a tight labor market such as in some AEs could also set a wage-price spiral effect in motion. In such circumstances, bold rate hikes are necessary to prevent a shift to a high-and-entrenched inflation regime. • Thailand has low share of wage earners at 44% and little wage indexation. • Labor cost is relatively low at 15% of total production cost. (2) Limited risks from Fed tightening to derail a smooth take-off 1. Depreciation of the baht (and most other Asian currencies) has been influenced by the US dollar. 2. Interest rate differential is not causing the capital outflow. Thailand actually saw net capital inflows of 4.8 billion USD YTD. In the past 8 months, only 3 of out 8 months that saw net capital outflows. 3.

Bank analysis suggests that such reductions in the spread over the risk-free rate played an important role in raising credit growth relative to GDP during both of the surges in the credit to GDP ratio since 1980.8 The spread over the risk free rate appears to have fallen due to three main factors – improvements in “intermediation technology”, greater risk appetite by banks, and greater access by banks to wholesale funding.9 How long should we expect these factors to exert downward pressure on the spread over the risk-free rate? Reductions in the business cost of intermediation pushed down on rates and up on credit growth relative to GDP during the financial liberalisation of the 1980s. They continued to have an effect, though to a lesser extent, during the 2000s. Such reductions will almost certainly be long lasting. The underlying drivers such as technological innovation in information gathering and rising competition are unlikely to go into reverse. Indeed, we might expect technology and competition to drive intermediation costs down further. The other factors that pushed down the spread over the risk-free rate in the upswing have proved to be much less sustainable. The increase in banks’ willingness to take risks and in investors’ willingness to provide wholesale funding both unwound sharply in the crisis. This is likely to have been one factor behind the fall in credit to GDP. Following the post-crisis repair phase, banks’ risk taking and lending spreads now appear to be at a more standard level.
To generate this estimate we first need to estimate how much long-term rates have been pushed down because of the Federal Reserve balance sheet programs. Although there is considerable uncertainty, New York Fed staff has estimated that the Fed’s programs have pushed down the term premium by about 50 basis points. The question then becomes how much would the federal funds rate have to fall to generate the same result? That depends on how changes in the federal funds rate pass through to longer-term interest rates. If reductions in the federal funds rate were viewed as permanent, then the pass-through would presumably be 1 to 1. However, if the federal funds rate reductions were viewed as fully transitory, then there would be virtually no pass-through. Econometric estimates indicate a value of about 4 to 1, a four basis points reduction in the federal funds rate would lead to a one basis point reduction in long-term rates. However, this degree of pass-through seems too low in the current environment in which the reductions in the federal funds rate have been in place for some time and are expected to continue for several more years. If one assumes a parameter value of 3 to 4 and uses 50 basis points as the estimate of the balance sheet impact on longer-term rates, then this implies that these actions have been equivalent to a 150 to 200 basis point reduction in the federal funds rate currently.

In particular, a well-articulated framework for policy that explains our goals and how we use our tools to promote these goals helps market participants, businesses, and workers to anticipate how the Federal Reserve will respond under different circumstances and plan accordingly.1 This helps to anchor private sector expectations in ways that make it easier to achieve the dual mandate objectives. In contrast, if we acted in an unpredictable way, policy would be ineffective at anchoring expectations and this shortcoming would disrupt the transmission of the monetary policy impulse to the real economy. Over the years, this logic has led the Federal Reserve to become increasingly transparent and systematic in its decisionmaking.2 In January, the Federal Open Market Committee took another important step in this direction, endorsing a public statement of longer-run goals and monetary policy strategy. This document articulated a 2 percent inflation objective and committed the FOMC to a “balanced approach” with respect to promoting the dual mandate objectives. For me, the key issue is how to interpret these principles and put them into practice. I interpret the strategy document as expressing a relatively straightforward proposition: The Fed should seek the policy setting that generates the best achievable path back to full employment and price stability following shocks that push us away from either of our objectives.
This is patently unfair, and scrapping such 21 5/7  BIS central bankers' speeches  policies would help increase economic mobility. 21I really don’t see how our best universities can continue to justify this practice. Yes, fund-raising might suffer slightly over time—but I suspect the impact would be very small. More importantly, do we really want to encourage what is essentially a “donate to admit” policy at our major universities? Such an approach only preserves the status quo and constrains economic mobility. The research shows that upward mobility differs substantially across colleges. Ivy League schools are good at producing top earners, but, as I noted, they accept very few lower-income students, so their impact on income mobility is small. Meanwhile, other schools with economically diverse student bodies produce few high earners, and their impact is likewise small. Then there are certain schools—some of which can be found in the CUNY and California state systems—that manage to produce a large number of high earners from economically diverse student bodies. Learning exactly how they do it and how it can be replicated strikes me as a first-order question for further study. While I am distressed by the high and increasing levels of inequality and diminished mobility that our economy has delivered over the last several decades, I remain optimistic about the future. There is more attention now to inequality and low intergenerational mobility than I can recall at any time during my professional life.

These percentage changes have then been weighed together using TCW weights to a percentage change in the TCW index compared with the value of the index at the date of the survey. 16  A classical study of this is Meese and Rogoff (1983). See also Cheung, Chinn and Pasqual (2005). 17  This is known as covered interest parity, and means that the forward rate in relation to the current exchange rate corresponds to the interest rate differential between the countries. The reasoning is as follows: If one exchanges kronor for dollars, invests in a US one-year bond and then in one year’s time exchanges them back to kronor according to the current forward rate, the investment contains no exchange rate risk. The yield is therefore the same as that given by investing in a Swedish one-year bond. Uncovered interest parity means that the interest rate differential corresponds to an equally large expected change in the exchange rate. In our example this means that one exchanges the money for kronor in one year’s time at the current exchange rate, which entails an exchange rate risk. 18  See, for example, Froot and Thaler (1990). 19  This phenomenon has been called the forward premium puzzle. BIS Review 3/2010  7  in the carry trade, for instance, in connection with the Asian crisis in 1997–98, when “high interest rate currencies” in Asia weakened drastically against the dollar and the yen, and the carry positions had to be settled quickly.
These, and the series of internationally agreed standards for payments, securities, foreign exchange settlement systems set by central banks, securities regulators, and the private sector, have engendered a remarkable set of changes to improve safety and soundness and operational resilience in this increasingly global system. These are the types of efforts where the return is almost never quantifiable, for the pay-off comes in the avoidance of crisis and a better balance between efficiency and risk. By reducing settlement periods and moving more of the world to real time gross settlement, delivery versus payment and payment versus payment systems, these changes have made a major difference. They have significantly improved the capacity of the financial system to absorb shocks, to handle stress, and to reduce the risk of broader damage or contagion from financial failure in any part of the system. This is and must be a collective effort. It requires collaboration between the official sector and the private sector here in the United States and in the other major economies. And it requires collaboration among the major central banks. Because of the shared interest of participants and the central banks in finding the right balance between efficiency and risk, and because of a widespread recognition of the more integrated nature of national financial systems, success in this area would not have been possible in the past and will not be possible in the future without continued close cooperation between the official and private sectors, within and across national borders.

5  Central Bank of Chile 29 June, 2017  Slide 8  Insurance companies coverage: international comparison Penetration of the insurance industry, 2015 (direct gross premiums as a percent of GDP) 40 35 30 25 20 15 Life  10  Non-life  5 LU IE KR US DK UK FR SZ JP IT SE PT DE BE AU NO AT FI ES NL SI IL CL CA NZ EE CZ BR PL AR SK CO IS HU LV MX GR PE TR  0 Source: OECD. [SLIDE 9] The development of finance in developed countries of course didn’t prevent them from getting into a big crisis a decade ago. But if you think that was big you should consider crises in developing countries, like the debt crisis of the early 1980s, the Tequila crisis of 1994 or the economic and political crisis in Argentina in 2001. [SLIDES 11 and 12] They devastated the entire financial system of those countries, evaporated or froze deposits, brought countries into deep recessions and massive unemployment and were only resolved after massive bailouts and debt write offs.
Christine Lagarde: Hearing at the Committee on Economic and Monetary Affairs of the European Parliament Introductory statement (by videoconference) by Ms Christine Lagarde, President of the European Central Bank, at the ECON Committee of the European Parliament, Frankfurt am Main, 28 September 2020. * * * Madam Chair, Honourable members of the Economic and Monetary Affairs Committee, Ladies and gentlemen, Thank you very much for giving me the opportunity to speak to you today and to have a frank and timely discussion about the ECB’s monetary policy, as befits the topics you have chosen for this hearing. After a few words on the euro area economic outlook, I will focus my remarks today on the ECB’s monetary policy and in particular on the role of asset purchases, before sharing some reflections on the ECB’s accountability arrangements. The euro area economic outlook The impact of the coronavirus (COVID-19) pandemic is still being felt across the euro area. Businesses are facing difficulties, people are losing their jobs, and prospects about the future remain uncertain. While euro area economic activity rebounded in the third quarter, the recovery remains incomplete, uncertain and uneven. Consumer spending has resumed significantly, but consumers remain cautious owing to anxiety about their job and income prospects.1 Similarly, business investment has been picking up, but weaker demand and elevated uncertainty continue to weigh on firms’ investment plans. In this context, job retention schemes and national guarantees on bank loans remain critically important factors in reducing uncertainty and softening the impact of the pandemic.

Next year, the Swiss electorate will probably be asked to vote on the "COSA initiative", which proposes allocating the first billion Swiss francs of our current profit to the cantons, with the balance going to the state Old Age and Survivors' Insurance scheme (AHV/AVS). The National Bank has consistently taken the line of not intervening in domestic political debates unless the fulfilment of its constitutional mandate is in jeopardy. Two years ago, I mentioned to you that the COSA initiative threatened to undermine our autonomy. Linking the National Bank's profits to the financing of a key element in our country's social security system would create a mechanism that would force the SNB to manage its reserves for the purpose of generating the highest possible returns rather than for performing its monetary mandate. This would weaken our international credibility and hence also the credibility of our policies. No other central bank of an industrialised country is faced with a similar situation. All of these banks deliver their profits to the state, and the SNB is no exception. Our main argument against the COSA initiative, however, is that it rests on an illusion – namely, that a central bank is able to transfer profits of over CHF 1 billion every year. Once this illusion has been dispelled, it will become clear that the initiative makes no sense, as nothing would remain for the state pension scheme. And, as we have often stated in the past, the current disposable profit of CHF 2.5 billion Swiss cannot be sustained.
The government tried on several occasions in the first decade after WWII to turn Norges Bank into a subordinated agency. If the history of Norges Bank was written in a vacuum with no international references, one might have thought that this was unique for Norway. Not so, similar developments were observed in many countries who previously subscribed to the gold standard. Political control over central banks was tightened in many countries with one notable exception, the Bundesbank in West Germany which was established as the most independent central bank in the post-WWII period (Sejersted, 1994). 3 Norges Bank was in fact not as dependent as believed. The truth may lie somewhere in between. Recent research on the role of Norges Bank during the first decade after WWII (Ecklund, 2008) 4 suggests that Norges Bank maintained a relatively high degree of operational independence in this period. Norges Bank’s independence was gradually restored. In 1986 Norges Bank was granted instrument autonomy and started to set short-term interest rates to sustain the prevailing fixed exchange rate regime. The current inflation targeting regime was introduced in March 2001 and Norges Bank now sets short-term interest rates aimed at keeping inflation around 2.5% over time. Greater independence demands adequate accountability. Along with greater degree of autonomy and independence Norges Bank has become more open and transparent in its monetary policy communication. Increased openness by Norges Bank is not only a way of achieving accountability to its constituents, but is also instrumental to enhance policy effectiveness.

The crucial factors for this are quite different, such as capital formation, demographic trends, advances in technology and education, how the economy functions, etc. Some scope for stimulating the economy may exist in the short run but this presupposes an established confidence in economic policy’s commitment to price stability. If economic agents have doubts about economic policy, attempts to stimulate demand will be liable to elicit an upward shift in the rate of inflation that is expected by firms, households, trade unions and others. Wages and prices may then start to chase each other as they did in the 1970s and 1980s. The longer market rates of interest, which the Riksbank can influence only marginally, will begin to move up and the ultimate effect on demand may be the opposite of what was intended. The outcome may be a combination of low growth and high inflation. Much accordingly depends on the confidence that the price stability policy enjoys. In an economy where a low inflation policy is firmly established, it is easier to lower the interest rate without eliciting uncertainty about monetary policy’s long-term commitment. There is, quite simply, more room to manoeuvre. But this does of course presuppose that the outlook for future inflation condones such a policy. Independence and accountability The institutional framework for monetary policy is important for underpinning confidence in long-term economic policy.
Competition both on and between platforms has generated an extraordinary array of FX execution choices for market participants to choose between. Whether to seek opportunities to net offsetting trades with others before transacting in the market. Whether to trade by voice or electronically. Whether to prioritise speed or diversity of execution. Whether to use algorithmic or trade-by-trade price selection – on firm or indicative prices; with wider or narrower groups of counterparties; in full view (‘lit’) or anonymously (‘dark’); or with more or less sophisticated ‘Transaction Cost Analysis’ (TCA) tools. Shifting patterns of demand for different bundles of these services, coupled with aggressive price and non-price incentives, have driven dramatic swings in market share between platforms (Chart 4). 4  Electronic Broking Systems line measures trades executed via automated matching systems for dealers. Electronic Trading Systems lines measure trades executed (predominantly by or for customers) via single-dealer proprietary platforms or a multi-dealer systems. 6  All speeches are available online at www.bankofengland.co.uk/news/speeches  6  Chart 4: Multi-dealer FX platforms – buyside market share  Source: Euromoney FX surveys. Some implications of fragmentation: the good, the bad and the ugly  Is fragmentation here for good? Some suspect it will eventually hit the buffers, as the declining marginal benefits of ever-greater product diversity, and the growing cost of navigating it, become more evident.

But this discussion does reveal a catch-22 – which is that participants on both sides of the market typically want two inconsistent things: (a) they’d like everyone else’s information in a publicly-visible price so they can trade in full knowledge of their positions, but (b) they want to keep their own information out of that same price, to avoid driving it against them. One response to this, which TCA may itself recommend, is to take trades ‘dark’. But that risks undermining the robustness of that TCA (by reducing the quality of the market data on which TCA assessments are based), and may also harm the efficiency and resilience of the market, if it increases market fragmentation. I can’t help feeling that a highly fragmented world in which everyone pays up individually to secure information privately through TCA tools and market data that they could have publicly under a market-wide public disclosure standard seems deeply suboptimal and costly. Such a standard is clearly not feasible to impose by edict in a global market – but it is worth reflecting on whether current developments are heading in the right direction. 16  State of Transaction Cost Analysis 2019, quoted in https://www.fixglobal.com/home/mifid-ii-boosts-tca/. 11  All speeches are available online at www.bankofengland.co.uk/news/speeches  11  Underpinning many of my remarks today is a sense that the buyside has so much to gain, and to offer, from a more active collective participation in FX markets. And that is where we need more of you sign up to the Global Code.
Stefan Ingves: Introduction on monetary policy Speech by Mr Stefan Ingves, Governor of the Sveriges Riksbank, at the Riksdag Committee on Finance, Stockholm, 26 February 2009. *  *  *  In September last year the global financial crisis gained a serious hold on the Swedish financial markets. Since then the Riksbank has cut the repo rate by a total of 3.75 percentage points to 1 per cent – the lowest level since the inflation target came into force in 1995. We have had outstanding loans to the banks of on average around SEK 370 billion since the end of September, slightly more than half of which has been loans in US dollars.1 We are offering loans at longer maturities than normal. We have extended the types of securities that can be used as collateral for loans in the Riksbank. We have provided special liquidity assistance to two financial institutions; Kaupthing Bank Sverige and Carnegie. Since the end of September we have implemented measures that have meant our balance sheet total has almost tripled! This sounds rather dramatic. At least in relation to the past 15 years. But managing our tasks, attaining the inflation target and safeguarding financial stability, makes different demands under different circumstances. The circumstances in recent months have required tools we do not normally need to take out of our toolbox. They have also required greater flexibility, speed and force in our actions.

Let me go back a little way to 18 September last year when the market for treasury bills was put on hold. I spoke that day with the Director General of the Swedish National Debt Office, Bo Lundgren, with whom I worked during my time at the Swedish Bank Support Authority in the 1990s. It was not without some feelings of déjà vu. But at the same time I felt then – and still feel – confident that a lot of things are different. That is, better! Of course we are an export-dependent economy and of course economic activity abroad looks worse than it did at the beginning of the 1990s. The effects of the global financial crisis contribute to considerable uncertainty and also make the situation very difficult to assess. One example of this is the economic downturn and adjustment the Baltic countries still have to work their way through, something that of course affects the Swedish banks with operations there. But there is on the other hand a lot in our favour. We do not have a "homemade” bank crisis now as we did at the beginning of the 1990s. Swedish banks have on the whole been much more responsible in granting credit, compared with the lending merry-go-  6  BIS Review 23/2009  round that followed the deregulation of the credit markets in the 1980s. We have not entered into an economic downturn with an economy that it out of balance, as we did then.