samchain/econo-pairs-v1 huggingface dataset:
Keynote address during a seminar organised jointly by the Bank of Thailand and the World Bank entitled “Good Governance for Financial Institutions” on 10 June 2000. 7  BIS Review 111/2000  There are, therefore, no one-size-fits-all solutions. Each country will have to pick up from the experiences of others, and adapt these experiences to their own conditions. Each will have to judge for itself the right balance and speed of changes to suit its own needs and circumstances. Nobody else has the same stake in the outcome. Conclusion The crisis has been a major setback for ASEAN and its member economies. Many external observers and investors still consider our economic prospects doubtful, and see ASEAN as an ineffective sunset organisation. These perceptions are political facts which can define political reality. If ASEAN economies do not deliver by way of structural reforms and strong, sustained economic recovery, and North East Asia continues to pull ahead, international investors will relegate us to the sidelines, and we will be marginalised. Perceptions, however, can be proved wrong. The best answer to them is real action and change. We must strengthen our economies and make ourselves more competitive, while safeguarding ourselves against external shocks. We must press on with economic cooperation among ourselves, and with the rest of the world. And each country must set its own house in order, by creating the political preconditions, restructuring its corporate sector, and reforming its banking system. Then the resilience of individual members will result in a strengthened ASEAN as a whole.

Lee Hsien Loong: ASEAN post-crisis - rebuilding confidence and prosperity  Speech by Mr Lee Hsien Loong, Deputy Prime Minister of Singapore and Chairman of the Monetary Authority of Singapore, at the Bank of Thailand, Bangkok, 30 November 2000. *  *  *  Distinguished Guests, Ladies and Gentlemen, Introduction I am honoured to be here today to deliver this lecture organised by the Bank of Thailand in conjunction with the 72nd birthday celebrations of His Majesty the King. On this joyous occasion, on behalf of Singapore and its citizens, I wish His Majesty good health and many happy returns of the day. The topic of my talk today is, “ASEAN post-crisis: rebuilding confidence and prosperity”. The Asian crisis is past, but its consequences are still with us. I propose to review the post-crisis environment which ASEAN faces today, and discuss some of the lessons to be drawn from the crisis. Then I will focus on what ASEAN and its member countries should do to restore confidence, long-term growth and prosperity in the region. Passing of the crisis The financial crisis swept through ASEAN economies like a tidal wave. Between 1997-99, the combined GDP of the original five ASEAN members fell about one-fifth, in $ terms. Unemployment rose, businesses folded, and governments and societies came under stress. Three years after the crisis struck, the region is stabilising. The worst passed much sooner than many expected. The recovery initially depended on expansionary fiscal policies, and strong exports especially of electronics products.
Asia does not have the equivalent of a London or New York. Tokyo is mainly domestic in orientation, while the smaller centres of Hong Kong and Singapore play more of a regional role. The economics of concentration This trend towards a mega financial centre complemented by smaller specialised centres in each time zone has persisted, even though technology has allowed market players to obtain information and transact on it, virtually anywhere. Why has this concentration in activity happened? Firstly, technology has itself created tremendous economies of scale. This is especially so in commoditised markets such as foreign exchange and electronic financial services, and in infrastructural facilities for payments and settlements, back-office processing and call centres. Secondly, critical mass of talent has become more important, with the growing complexity and multi-faceted nature of finance. Talented and enterprising investment bankers, fund managers and currency traders work best when they can interact with other equally bright and capable people, to strike deals, develop new products, exploit investment and business opportunities, and service clients. Executing financial deals requires a combination of top talent not only in finance and business, but also in law, accounting, project management, and information technology. Few centres have the full spread of necessary skills; fewer still have a critical mass of them. And for all the wonders of telecommunications and the internet, there is no substitute as yet for face to face interaction between two parties making a complex deal. Thirdly, issuers and investors in capital markets are placing a growing premium on liquidity.

The structural reforms, that we are badly in need of, must be implemented as rapidly as possible if we want Europe to be up to its historical challenges. The Chinese say “It is later than you think” has never been so true. In any case, history itself does not wait for us. And when I look back, over the last twenty years, it seems to me that an unfortunately well-founded criticism could be that we have constantly under-assessed the rapidity of the stream of history: the rapidity of the deterioration of the situation in the USSR, the rapidity of the collapse itself, the rapidity of the enlargement process, the depth, the strength and the intensity of the “desire of Europe” which is spreading in the countries in transition. Second word: stability. Economic and financial stability, in a period of excessive volatility and of wide boom-bust episode, financial and real stability appear to be a very precious asset. Over the last twenty years, we have constructed a new world: technology has permitted instantaneous communication and incredibly powerful real-time computation. Globalization has created new cultural, conceptual, commercial and financial links between all economies including previously centrally planned systems; together technology and globalization are progressively driving us to a unified planet of universal rules and regulations, code of conduct and practices, market procedures and market instruments, accounting standards, etc.
There’s always room for improvement and, at the ECB, we have called on Heads of State to strengthen governance procedures further, for instance by making sanctions more automatic in cases of non-compliance so as to prevent governments succumbing to the temptation of being excessively lax. This was seen in 2005 when the core countries failed to meet their deficit commitments and the Commission and the European Council agreed to change the rules so as not to sanction these countries. But the lesson whereby maintaining a monetary union is only possible if divergences remain within a moderate range must also be taken into  2  BIS central bankers’ speeches  account by the national governments of each of the euro Member States, because the policies that may prevent the emergence of these imbalances or help to correct them are, for the most part, the responsibility of national governments. Many tasks lie ahead for all the euro area countries in contributing to reducing divergences. But it is our duty to pay more attention to what Spain should do. Our country reacted a year back when the sovereign debt crisis broke, and it showed resolve in adopting far-reaching measures to correct our economy’s imbalances without resorting to aid from its fellow members. It was able to do so, firstly, because its divergences were not overall as great as those of the countries that have had to apply for external financial assistance.

Starting with fiscal discipline, public debt levels will be more closely monitored and countries will have better incentives to comply with their commitments, through the introduction of broader and transparent sanctioning arrangements, which will moreover be applied at an earlier stage and, as far as possible, automatically. Further, the reform of national fiscal frameworks is being promoted, so that budgetary policy rules and surveillance systems will be adopted that help curtail spending. Moreover, a new framework for the prevention and correction of macroeconomic imbalances is being established. The aim of this mechanism is the early identification of the emergence of potentially “excessive imbalances”. When imbalances are considered to be too big, an excessive imbalance procedure will be initiated which will include recommendations for the adoption of corrective measures. The third key element of EU economic governance reform is the creation of a permanent crisis-management instrument, the so-called European Stability Mechanism, which will come into force in mid-2013. Geared to lend up to € billion, this mechanism will provide funds to countries with liquidity problems under strict conditionality. Finally, a mention for the Euro Plus Pact, approved in March by the euro area Heads of State and of Government. This pact involves a commitment at the highest political level to adopt the measures needed to attain competitiveness and employment-promoting objectives, to contribute to the sustainability of public finances and to reinforce financial stability.
First, by the end of 2014, following the large-scale asset purchase programs, the Federal Reserve balance sheet was funded by about $ trillion in liabilities other than Federal Reserve notes, which were mostly in the form of reserves in excess of the amount banks were required to hold; in contrast, there were only $ billion of non-Federal Reserve note liabilities in June 2007, of which only about $ billion were excess reserves. As a result, reserves are now anything but scarce. Second, Congress granted the Federal Reserve an important new tool: the authority to pay interest on reserve balances, or IOR.11 In many countries, and in theory, a standing facility that pays IOR provides a floor on interest rates. The reason is simple: if a private counterparty can invest cash at the central bank, then given the safety and convenience of this investment, it will dominate any other overnight investment at that interest rate. Further, if banks can acquire funds in the wholesale market at rates below IOR, then competition for these funds will bid up these rates close to that paid on reserves. The Federal Reserve instituted interest on reserves in late 2008, and the interest rate on reserves turned out not to be a floor; market interest rates fell significantly below it.

Without any doubt, the distinguished economists and practitioners who have actively taken part in this conference have been its most valuable asset. * Turning to the rapid credit growth that has been observed in CEE economies over the past years, the first question that comes to an economist’s mind is the following: do these developments pose a threat to the macroeconomic stability of the countries of interest? In order to answer that question, one has to ask another: what forces have been the decisive factors behind the rapid credit expansion? Several papers presented at this conference have sought to provide answers to these questions. One approach, followed by the papers 1 presented in the first session, has been to estimate the equilibrium rate of credit growth and check whether the actual growth has been below or above that equilibrium path. The decomposition of credit growth into a convergence and a boom component has shown that for most of the CEE economies, the former component has been dominant, i.e. the rapid credit expansion can to a large extent be attributed to a continuous improvement in the macroeconomic fundamentals and the initial low credit volume in these countries.
Over the past five years, for example, PCE inflation has averaged 1.2 percent per year. The FOMC’s announced long-term inflation objective is 2.0 percent. Over a single year, the difference between 1.2 percent and 2.0 percent inflation is inconsequential. Over five years, though, that small difference cumulates to a 4.26 percentage point difference in the price level, which is not insignificant, perhaps, if back in 2008 you took out a mortgage with a fiveyear balloon. Alternatively, nominal GDP growth over the past five years has averaged 2.4 percent per year, when ordinarily one might have expected 4.5 percent average annual growth (2.5 percent real growth plus 2.0 percent inflation). Again, the difference is inconsequential in any given year. Accumulated over five years, though, the level of nominal income today is fully 12 percent below what might reasonably have been expected when mortgage and auto loan agreements were made back in 2008. Kindly note that I am not advocating any change to the FOMC’s 2 percent inflation target. My point is simply to highlight the longer-term consequences of what might appear to be smallish, shorter-term deviations from the norm. Business operators plan capital expenditure and payrolls not in one- or two- or even three-year increments; they plan and budget over longer-term horizons. The nominal stability that people need if they are going to negotiate  7  See “A Defense of Moderation in Monetary Policy,” by John C. Williams, Federal Reserve Bank of San Francisco Working Paper no. 2013-15, July 2013.

It has soared above 200 twice: for two months in 2011, coincident with that year’s debt-ceiling debate, and in December 2012, when a compromise implementation of sequestration was being hammered out. It’ll be interesting to see what happens with the index in the wake of the past week’s developments (or lack thereof) in Washington. The point is that starting with the collapse of Lehman Brothers in September 2008, economic policy uncertainty has been consistently high, and half the time it has been extraordinarily high. It’s difficult to prove “beyond a reasonable doubt” that this elevated uncertainty is causally related to the weak recovery we’ve experienced. But the hypothesis is surely sensible, the timing is certainly auspicious, and enough careful confirming analysis has been done to say that the preponderance of evidence favors the proposition that not just recent policy decisions, but also the manner in which those decisions were arrived at, have been a significant hindrance to economic expansion. The Kinky Stuff: monetary policy As to monetary policy, I would submit there are several links between monetary policy and economic uncertainty. First, though, some background. Ordinarily, monetary policy works by influencing the current and expected near-term levels of short-term interest rates. Once short-term interest rates hit zero, however, the Fed turned to unconventional policies. By using massive purchases of longer-term Treasuries and agency mortgage-backed securities, these policies helped hold down term premia and support the housing recovery.
Together we supply instruments of payment. The banks distribute the banknotes and coins we issue. They also hold current accounts connected to the giro system and  2  BIS Review 68/2004  operate charge card systems. The Riksbank supplies accounts in the RIX payment system that the banks can use to make large-value interbank payments. Another reason is that there is a correlation between the other objective of our operations - to maintain price stability. A stable financial system is a necessary condition for successful inflation-targeting. The Riksdag has therefore given the Riksbank has the task of “promoting a safe and efficient payment system”. How does the Riksbank work with financial stability? Our task can be said to consist of two parts - preventing crises and being prepared to manage them should they nevertheless arise. The preventive work involves overseeing the financial markets and the institutions active in them, and also participating in the design of the regulatory framework. Oversight The regular oversight of stability entails both detecting potential risks that can arise in the financial system and assessing the financial institutions’ strength to resist any problems that nevertheless arise. The Riksbank presents its analysis of possible risks and of the banks’ resilience in its Financial Stability Report, published twice a year. The next report will be published in two weeks’ time. The intention is to convey our view of the risks and the banks’ resilience to participants in the financial markets, as well as to others with responsibility for, or interest in, these issues.

We must look at the institutions active in the financial markets; monitor how borrowers and other operators who could affect the banks behave and how the infrastructure supporting the financial system functions. It is difficult to determine which problems could constitute a threat to the system. Let me take the IT bubble in 1999 and 2000 as an example. If the banks had financed the many newly-started IT companies, they would have been hard hit when the air went out of this market. This would in turn have had repercussions for the real economy. However, it was not the banks who acted as venture capitalists here. This meant that the risk of shocks in the economy as a whole was less. Another example is what happened at Barings Bank a few years ago, when one of their foreign exchange traders speculated and lost around SEK 10 billion. The Bank of England refrained from intervention and did not provide the bank with any support, although a major bank was suffering serious problems that eventually caused its failure. This is because Barings’ problems were not expected to have any serious repercussions for the system as a whole and thus were not a stability issue. As in other sectors, bankruptcies do occur. This is normal and also important for market discipline.
A rise in aggregate GDP in an economy need not necessarily mean higher welfare for all its citizens or regions, as the lady in the audience made clear. The more uneven the distribution of winners and losers, and the greater the skew in gains, the less likely it is aggregate social welfare will have risen. When it comes to evidence on the distributional impact of monetary policy, there are wide gaps in understanding and even wider gaps in perception. Even among policymakers and academics, work in this area remains embryonic and the results are often ambiguous. 16  If I were summarising this research  evidence, I would say it suggests monetary policy can and has affected inequality, but that these effects have probably been modest quantitatively. There are a number of reasons why existing research may not have been clear-cut in its conclusions. Studies have used different measures of monetary impulse (interest rates versus QE) and different methodologies (macro versus micro). Perhaps most importantly, these studies have tended to focus on different monetary policy transmission channels. Doing so can give quite different perspectives on the impact of monetary policy on overall inequality. The general public probably suffers from a particularly acute version of this problem. When asked to assess the impact of changes in monetary policy, they tend to focus on those channels which have an observable and immediate impact on their finances.

And it is differences in those judgements across the members of the MPC that lead to the finely balanced vote outcomes like that we saw last week. Guiding monetary policy by the stars In discussing those judgements – and, in particular, in converting them into monetary policy decisions about Bank Rate – I am often confronted by questions about ‘starred variables’ in the standard new Keynesian model. In highly stylised form, three starred variables lie at the heart of these models: Pi-star, the steady state rate of inflation; R-star, the Wicksellian neutral real rate of interest; and Y-star, the potential level of economic activity. Pi-star is the easiest to dispose of. Within an inflation targeting framework, the steady-state level of inflation is determined exogenously by the central bank’s mandate. In that context, the inflation target should be as clear as possible: uncertainty about the target only adds unnecessary – and costly – volatility into the economy. The UK’s inflation targeting framework delivers on this score. The inflation target is defined as an annual rate of CPI inflation of 2%, which is given primacy in the remit delivered to the Bank of England by the Treasury and deemed to hold at all times. 9  All speeches are available online at www.bankofengland.co.uk/news/speeches  9  While there are inevitably times – like those we are experiencing today – when unforeseen shocks to the economy drive inflation away from target. These circumstances beg questions about how quickly it is feasible and/or desirable to return inflation to target.
Otmar Issing: Should we have faith in central banks? Speech by Professor Otmar Issing, Member of the Executive Board of the European Central Bank, held at St Edmund’s College Millennium Year Lecture, Cambridge, on 26 October 2000. *  *  *  Ultimately, trust must be earned, it is granted temporarily, it must be checked, and it must be backed up by hard evidence, not be based purely on faith or belief. It is a great honour and a great pleasure for me to deliver the St. Edmund’s College Millennium Lecture on the topic of faith in central banking. I must confess that when Professor Heap first invited me to give a talk on “Faith and Finance in the New Millennium” as part of a series of lectures on the general theme “Faith in the Future” I suffered an initial instant of hesitation or lack of faith, if you will. As you can imagine “faith” is not a natural subject to discuss for a central banker and economist, who is trained to look at facts and hard evidence. To address such a difficult issue in such a distinguished seat of learning as Cambridge University would seem to require a good measure of courage. But then, of course, courage - if not faith - is an attribute that central bankers should undoubtedly possess. I am also much reassured and grateful for the faith, if I may say so, that you put in me by inviting me to talk about this subject.

If you look more closely at the dollar bill, you will find a further inscription which states “This note is legal tender for all debt, public and private”. This imposes an obligation to accept the note in the settlement of contracts and highlights the fact that money derives its value - whether imposed by a legal tender requirement or not - from the willingness of other economic agents to accept it to settle transactions. Each agent will only accept money, if he can be confident that it will in turn be accepted BIS Review 96/2000  2  by other agents in future transactions. Thus money is a social achievement as has long been recognised by economists for example by Menger. Money is a question of trust, its use requires trust and it reflects trust. This is especially true in the case of fiat money, i.e. the use of printed paper - which has no intrinsic worth - as a medium of exchange and as a store of value. Yet even commodity money requires trust and a well-founded expectation that it will be accepted for a wide range of transactions. Milton Friedman, in his book Money Mischief (1992), reports the well-known story of the monetary system of a small island in Micronesia which at the end of the 19th century used stone wheels as a medium of exchange and as a store of wealth.