samchain/econo-pairs-v1 huggingface dataset:
The answer lies in the current Bank of Thailand Act which does not spell out or lay down mechanism for the central bank to achieve its independence. Governor and Deputy Governor are political appointees. They are appointed by His Majesty the King upon the recommendation of the Minister of Finance and approved by the Cabinet. There is no definite term of office. There are no protective clauses in the Act which clearly spell out causes for removal. The most popular reason given by the government when firing governors was one of “suitability”. None of the nine governors had the chance to resign from the office in protest of the Government policies as advocated by Dr. Puey. In the past 7 years, we have 5 Governors including the present one who has been in office for just over 1 year. However, it is important to note as well that sometimes the relationship between Minister of Finance and Governor of a Central Bank turned sour not because of policy conflict but because of personality mismatch that led to eventual conflict. For instance, the current Minister of Finance and the present Governor work well together and have great respect for each other. What then is the solution? I think the best solution is to legalize Central Bank independence by spelling out clearly in the Central Bank legislation the power, duties, responsibility and accountability of a Central Bank.

A simple rough estimate can provide an impression of the effects on prices of a 15-per cent depreciation in the krona. Let us assume a pass-through to import prices equivalent to half of the change in the exchange rate. This means that they will rise by 7.5 per cent. 9 If one assumes that these prices constitute 30 per cent of the consumer price index (CPI), this means that consumer prices will rise by just over 2 per cent as a consequence of the change in the exchange rate. According to this rough estimate, the pass-through from the nominal exchange rate on the CPI is thus around 15 per cent. 10 As the exchange rate fluctuates substantially, it may nevertheless entail fairly large effects on inflation, although the calculations in the example can be taken with a pinch of salt. 11  9  We assume here that prices of imported goods in the consumer sector rise by 7.5 per cent. 10  A 50-per cent impact on import prices, which comprise around 30 per cent of the CPI, gives a 15-per cent exchange rate pass-through to the CPI. 11  See also the article “The path of the krona and inflation” in IR06:1  4  BIS Review 3/2010  The effects of the exchange rate on the real economy One can usually expect a weakening of the exchange rate to lead to a positive effect on net exports.
Lars Heikensten: Risks and financial stability Speech by Mr Lars Heikensten, Governor of the Sveriges Riksbank, at the Department of Business Studies, Uppsala University, Uppsala, 7 October 2005. *  *  *  Let me begin by thanking you for the invitation to your homecoming party, although I have never studied at the Business Studies Department at Uppsala University. I intend to take this opportunity to speak about the rapid developments in the financial markets over the past 10-15 years and to discuss the question of whether this entails risks being built up that will later result in serious setbacks. The trends and tendencies I intend to highlight today with regard to market agents’ behaviour may be primarily observed outside of Sweden’s borders – it is important to emphasise this. I have nevertheless chosen to discuss these partly because they can give us an idea of what might happen in Sweden in the long term, and partly because these tendencies may lead to problems in the international markets and thereby indirectly affect the Swedish market, too.1  What has happened on the financial markets? The financial markets have developed rapidly in recent years, and there are many reasons for this. Technological developments have radically altered the potential for making financial transactions. Developments in IT, for instance, have enabled large numbers of prices to be stored and extensive calculations can be made in various risk models.

Navigating the Great Transition: An Emerging Market Perspective Speech by Dr. Veerathai Santiprabhob Governor of the Bank of Thailand School of International and Public Affairs, Columbia University October 5, 2016  Ladies and Gentlemen, It is a pleasure for me to be here in New York and to have a chance to participate in the policy discussion at SIPA. Given the increasingly complex policy challenges facing the global community, the contribution that SIPA makes in educating future leaders to serve the global public interest is critical. I would like to thank Professor Ito for inviting me. He was one of my early mentors at graduate school and I have benefitted from his many insights ever since. This coming weekend I will be attending the Annual Meetings of the IMF and the World Bank. As you know, this is one of the biggest global forums for addressing issues related to the global economy and world financial market. The discussions will be especially pertinent this year given the complex and highly unpredictable state of the world that we face. Former premier Wen Jiabao once described China’s growth performance as “unstable, unbalanced, uncoordinated, and unsustainable”. This seems like an apt description of the global economy at this juncture. Unstable because the proliferation of popular discontent fueled by rising income inequality amidst ongoing international conflicts have greatly elevated geopolitical uncertainty. Unbalanced because with anemic recovery of advanced economies, much of the growth in 1  the global economy continues to be driven by emerging markets.
The goal of my speech, which is constrained in time to ten minutes is to stimulate discussion on what could be the implications of global imbalances on emerging markets, in particular what are possible EM scenarios in case of soft and hard landing of the global plane. As you will see later the range of possible outcomes depends on what is the actual cause of the emergence of the global imbalances. Let me briefly review the most popular hypotheses. How did we get into global imbalances? The need to identify the type of the flying airplane and its technical conditions implies that one has to understand the nature of global imbalances. And here we run into the first problem, as the top ‘aviation specialists’, including ‘pilots’ themselves cannot agree on that. I have identified at least ten major views about the nature of global imbalances, namely 2 : 1.  emergence of the new Bretton Woods regime 3 .

Even if the extraordinary context of the crisis might lead to further reflection on some of these established principles, the ECB has made a public commitment to respect these red lines, and for good reasons. Importantly, PEPP purchases are separate from and cannot be consolidated with APP purchases. This means that the PEPP remains a distinct monetary policy measure in comparison to the APP. In keeping with these safeguards the APP will also not inherit the features of the PEPP. The flexibility embedded in the PEPP cannot be unconstrained, and we must ensure that the ECB continues to operate within the limits of its competence. Collateral easing must be strictly temporary and not come at the expense of fragmentation Another aspect of our response to the crisis was the unprecedented set of temporary collateral easing measures that we announced in April 2020. These measures continue to support our liquidity operations and ensure continued collateral availability. For example, we decided to extend national additional credit claim (ACC) frameworks to include loans benefiting from public guarantee schemes related to the COVID-19 crisis even if they lead to increased fragmentation temporarily. We also took the decision to maintain the eligibility of issuers and marketable assets in the event of a deterioration in credit ratings during the crisis. The legality of these measures is ensured through compliance with all the generally applicable principles I mentioned earlier.
Broadly speaking, this operational philosophy is guided by the need to steer the short-term interest rates in the interbank market close to the key interest rate set by the monetary authority. As such, it serves better to keeping the short-term horizon of the interest rates’ curve under check, making the conduct of monetary policy more transparent and providing clearer signals for the economic activity. Steering our operations to the stability of interbank market interest rates will serve to a more relaxed functioning of the interbank market and lowering of risk premiums. In addition, this operational target is well-framed in our mediumterm steering and commitment to adopting the inflation targeting regime, making up an important link of its successful adoption. Concluding my theoretical discussion of this change, I would like to underline that our longterm commitment to keeping our foreign reserve at optimal levels to cope with the shocks Albania may be faced with remains an unquestionable objective of our monetary policy. In an institutional aspect, I would like to note that such a move does not only attest to the level of maturity of our interbank market. It also crowns our constant efforts in achieving its utmost efficient management. In this context, the Bank of Albania has made utmost efforts to develop liquidity forecast models, to dampen the impact of fiscal flows into the money markets and to develop optimal procedures and modalities of interbank market interventions.

The rapid transformation of economic structure and the development of interbank markets and economic agents were coupled with fundamental changes in the monetary policy transmission mechanism. The latter has now become more complex, involving more players whose sophistication is ever-increasing, and incorporating more instruments and financial contracts that are timely structured and indexed to different indicators. The Albanian economy is now economically and financially integrated into the global economy, having the characteristics of a market economy but at the same time featuring the typical challenges of economic management that such an economy entails. These changes have called for the constant monitoring by the monetary authority in order to make the necessary changes in the monetary policy regime and the operational aspects of its implementation. Against this background, the Bank of Albania has been committed to a process of constant evaluation of the interbank market performance and at the same time fine-tune its monetary policy regime. The Monetary Policy Document for the 2009–2011 Period was a major step in this regard. In this Document, the role of monetary aggregates as indicators of inflationary pressures in economy and as intermediate targets of monetary policy was complemented with a wide range of information provided by the real sector of the economy, which is systemized and finalized in the inflation forecast performance. This change was entirely based on the Albanian experience.
In Europe, a series of initiatives, led by the authorities, are under way to revive the moribund securitization market but also to develop the private placements markets. On securitization, incidentally, allow me to note that it suffered unduly in Europe from the US experience, while having been much less prone to default. More generally, the European Commission’s Capital Markets Union project will support the increase in funding flows, the diversification of risks and a better allocation of resources. BIS central bankers’ speeches  1  This shift towards more market-based financing entails two main implications from a financial stability perspective: –  First, the proliferation of regulation brings uncertainty to market participants. The analysis of the cumulative impact and the interactions between regulations is still in its early days but it must be continued. Vigilance is indeed required to ensure that the implementation of reforms does not result in a reduction of activities that are vital for financing investments and firms. I notably think of the market-making activity which shows signs of decline, partly due to the regulatory costs. This decline needs to be monitored in a financial system where we are promoting market financing and where market making is key for issuers and investors. –  Second, the development of alternative sources of funding, outside the banking system, brings a necessary diversification. Yet the risks associated to disintermediation are clear, notably a limited assessment of risks by investors or less ability to address difficult situations and gaps in supervision.

I suggest that each speaker delivers a 10-minute presentation before we start the actual discussion between the members of the panel and turn later on to the audience. Mrs Bair will speak first, followed by Mrs Novick, then Professor Philippon and eventually Mr Papiasse. Sheila, would you start? 2  BIS central bankers’ speeches
David Clementi: The entrepreneurial economy - a collaborative approach  Speech by Mr David Clementi, Deputy Governor of the Bank of England, at the ICAEW Conference, held in London, on 9 May 2000. *  *  *  Ladies and Gentlemen, I am delighted to have the opportunity to address you at the end of - what I am sure has been - a thought-provoking day. For the Bank, this conference has a two-fold importance. First, it has, we hope, helped to promote discussion and, more important, action to strengthen entrepreneurial activity in the UK economy. But secondly, we are delighted to have this opportunity to work closely with the ICAEW, especially given the important role of your President as Chairman of our Non-Executive Directors. The Bank’s interest A good place to start my remarks might be to ask why the Bank of England, as a central bank, is interested in this subject. In fact the Bank has for many years taken a broad interest in the efficient functioning of UK industry, and especially in the provision of finance to industry. This falls within the third of the Bank’s three core purposes. The first of our core purposes is to promote monetary stability in the United Kingdom. A huge number of column inches in the press and elsewhere are now devoted to watching our conduct of monetary policy, as the MPC seeks to meet the Government’s Inflation Target of 2½%.

While market failures in provision of small company finance will never wholly be removed, there is very little evidence to show that at least in the United Kingdom they are important in practice today. Nonetheless, it can only be helpful to improve the flow of information between business owners and finance providers, thereby ensuring a better appreciation by both of the relevant risks and rewards attached to particular business plans. The Bank has long been interested in the financing needs of small and medium-sized enterprises. Going back some way, an example of the Bank’s early involvement was our instrumental role following the Second World War in the formation of the Industrial and Commercial Finance Corporation - which evolved into 3i. We would not have described that then as seeking to promote the entrepreneurial economy, but that is precisely what it was. Our role has, of course, evolved since then, in particular highlighting the importance of information sharing and increased understanding between the relevant parties. The Governor has, since 1993, hosted an annual meeting bringing together some of the key players in the SME market. Finance providers, policymakers, business representatives and advisers join together to discuss the key issues relating to the financing of small firms. The main themes to arise from these meetings are published, under the editorship of Adrian Piper and his team, in our annual reports on ‘Finance for Small Firms’. The seventh such report was published in January this year.
In the same way as the figures for GDP growth we usually discuss refer to real growth, which is to say growth adjusted for inflation, there is namely reason to adjust interest rates in the economy for inflation – in particular, to determine how much stimulus monetary policy is supplying. There are good reasons to subtract the effects of inflation on debts and saving. For example, a loan for an investment becomes less burdensome to repay the more the price of the goods the borrower is selling has increased over the period in question. And the lender, correspondingly, has reason to consider how much the money is worth when the loan is eventually repaid. Another way of putting it is that those borrowing and lending must consider how much of the amount lent they expect to be ‘eaten up’ by inflation. The economically-significant real interest rate is therefore the usual nominal rate with a deduction for expected inflation: Real interest rate = nominal interest rate – expected inflation How expansionary the interest rate policy is, which is to say how low the real interest rate level is, is thus determined both by the nominal interest rate level and by expected inflation. This also means that how expansionary the level of interest rates can be made is not just determined by how far the nominal interest rate can be cut but also by how high inflation is expected to be.

MFIs’ lending to households for housing purposes and to non-financial companies, new loans and agreements, refers to monthly data. Repo rate refers to daily data and date of implementation. Sources: Statistics Sweden and the Riksbank  BIS central bankers’ speeches  9  Figure 3. Inflation expectations  Note. Per cent. Money market agents. Source: TNS Sifo Prospera  Figure 4. The development of the repo rate  Note. Per cent. Outcomes are daily rates and the forecasts refer to quarterly averages. Source: The Riksbank  10  BIS central bankers’ speeches  Figure 5. Bond purchases 240  240 200  200  65  160  200  160  135 120  45  45  50  50  120  80–90 80  80 40  40  40  30  30  30  30  10  10  10  10  10  February  March  April Policy meeting  July  October  10 0  40–50  0  Note. SEK billion. Government bond purchases will continue until the end of June 2016. Source: The Riksbank  Figure 6. Development of interest rates under a negative repo rate  Note. Per cent. Interest rate to households, lending rate refers to loans for housing purposes. Sources: Statistics Sweden and the Riksbank  BIS central bankers’ speeches  11  Figure 7.
Through the transfer of the risk, the insurer reduces its longevity capital and risk margin[1], but takes on an exposure to the failure of its reinsurance counterparty. Chart 1 [see Annex] illustrates the impact of the transfer on the insurer’s capital position. The combination of adequate collateral, a high credit rating, and sufficient capital resources from the reinsurer means that the resulting counterparty risk capital charge for the insurer is typically low – an attractive arrangement. Reinsurance is an important component of well-functioning insurance markets, where reinsurers themselves have the financial strength to absorb the risks they are taking on. From a risk management perspective, it allows insurers to achieve the balance of underwriting and credit risk in line with their risk appetite while continuing to deliver for their clients. It allows reinsurers to gain indirect access to diversification or natural hedges that might not arise on their own balance sheet. For example, a reinsurer with large books of protection business featuring mortality or morbidity risk might welcome longevity risk as a natural (albeit not perfect) hedge[2]. Diversification of different[3] sources of callable capital also enhances the efficiency of insurance markets. All of these factors could help to improve the pricing that insurers can offer. However, in recent years, the UK life market has become reliant on this method of freeing up capital to improve pricing. We estimate that over 80% of new business since 2016 has been reinsured at industry-level.

When this spread is high, it’s telling you that, unless you think rental prices are going to weaken, it’s prospectively cheaper to buy a house than rent one. You might in that environment expect the purchase price of housing to grow faster than usual. The blue line, which is average growth in house prices over the following five years, shows that this is what has tended to happen. For example, the house price boom in the early years of the millennium was preceded by a steep fall in longer-term real interest rates (driven, I would suggest, by a decline in the neutral rate of interest), through the second half of the 90s. That raised significantly the spread between rental yields and those on indexed government debt – when the spread was at its widest, in 1995, the gap between the two was 10% points. But that boom in house prices, in its turn, depressed rental yields significantly – to such an extent the spread over gilt yields fell to less than 4% points. Relative to gilts, houses were as expensive as they had been in the late 1980s. Even without the intervention of the financial crisis you might have expected much weaker growth of purchase prices over the following few years, and that’s what happened. However, we should be careful not to extend this pattern too unthinkingly.
This decline in our balance sheet will actually occur without the Fed taking any specific actions. But it will occur slowly, and absent any action of the Fed’s part, the balance sheet will remain elevated for years. This expansion of the Federal Reserve’s balance sheet raises concerns for some observers and commentators. An important side effect of our asset purchases has, necessarily, been a dramatic swelling of so called excess reserves in the banking system. When the central bank  4  If the relationship is weaker, as some researchers suggest, even stronger growth would be required to reduce the unemployment rate to 5 per cent by year end 2013. For example, if the reduction in the unemployment rate resulting from real GDP growth of 1 per cent above potential is one-third of a per cent instead of one-half of a per cent, then real GDP growth of 6.25 per cent would be needed to reduce the unemployment rate to 5 per cent by year end 2013. BIS Review 62/2010  3  purchases assets, it credits the selling institution with reserves. Over time, banks could choose to lend out these reserves, which would turn the reserves into broader money – and a rapid expansion of the broader money supply would be inflationary. However, as Figure 10 suggests, the current problem is not a rapid expansion in lending and the money supply. In fact, quite the opposite; banks have been reluctant to lend.

4 Such a growth rate has some historical precedent, as shown on the right side of the chart, but it is much faster than the growth rate in the past two recoveries. And to reach 5 per cent unemployment by 2015 would still take growth averaging 4.2 per cent per year – considerably faster than the average rate of growth after the 1991 and 2001 recessions. Given the need for very rapid growth to get unemployment back to 5 per cent, let me pose an oversimplified question – why would policymakers not keep monetary policy very accommodative, and fiscal policy very stimulative, until we had a sustained growth rate that brought the economy much closer to full employment? At least on the monetary side, one reason might be concern among policymakers that rapid growth would be inflationary. To explore that, let’s turn to Figure 7, which shows the total and core inflation rates, measured by changes in the CPI, with recession shading. What the chart shows is that inflation has declined in each recession, including this so-called Great Recession. It also highlights that inflation tends to continue falling in the early stages of a recovery. Figure 8 shows the change in the inflation rate from the business cycle peak. From the peak (shown at zero on the horizontal axis) the inflation rate is very restrained, and generally negative, for many months.