samchain/econo-pairs-v1 huggingface dataset:
Thailand is an economy where despite the big shocks from COVID-19, the downside risks to the economy remain quite limited. That is the result of our low vulnerabilities in a lot of critical areas. First, our external position: the Thai economy has a very low external vulnerability. We are very resilient to the balance-of-payment-type shocks because we have a very low level of external debt and a relatively high amount of foreign reserves relative to external debt. Recently, we have seen a weakening of the baht by about 10 percent year-to-date, which has outpaced other regional currencies. Nonetheless, the resiliency of the Thai economy and the external front remains solidly intact. The reason underpinning the weakening of the baht is due to the current account, which traditionally has been in surplus, that has swung into a deficit as a result of the contraction in tourism. Meanwhile, the size of the current account deficit relative to the amount of international reserves is not worrisome. This year, on the current account side, we have observed a current account deficit of around 9 billion US dollars. On portfolio flows, we have seen outflows from the equity markets of around 3.2 billion US dollars. At the same time, there were inflows into the bond markets of 2.2 billion US dollars. Thus, on the net of portfolio side, there were outflows of around a billion US dollars. Adding together the current account deficit of 9 billion US dollars, there have been outflows of around 10 billion US dollars year-to-date.

Public finances are also perceived to be sound, where risks are relatively low and liquidity is high. Given that our external vulnerability remains low, although additional borrowing by the government will contribute to an increase in the current account deficit, risks on the external front and the implications of additional public sector borrowing will remain low and limited. Even though we have been hit hard and harder than other countries and that our recovery is likely to take longer and be more uneven, the resilient economy is there. The downside risks of seeing a sharp decline stemming from weaknesses on the balance of payment front, the banking front, or the public finance front thus remain quite limited. Page 3 of 9  Part 2: The Bank of Thailand’s Response to The Crisis Let me now turn to the second part of my remarks, which is what we, at the Bank of Thailand, have been doing. To summarize very briefly, the Bank of Thailand has taken a flexible and pragmatic approach to addressing the crisis. We are willing to do, have been willing to do, and remain willing to do what it takes to get us out of this crisis. The statement, which we have been using internally, is to say that all reasonable policy options are on the table to respond to this unmitigated crisis that we are facing now. First and foremost, we have tried to ensure that financial conditions remain accommodative to support and facilitate the recovery.
We expected that economies re-opening after the Covid restrictions and historically low unemployment would together restore healthy demand, and so it seemed reasonable to start scaling back monetary policy support while still keeping an eye on the lingering uncertainties hanging over from the pandemic. We decided that the pandemic emergency purchase programme (PEPP), through which the central bank provided support to the economy would end in March 2022. We also decided that any additional net purchases of securities by the central bank would be scaled down gradually over the year. These expectations were confounded though as the strict pandemic restrictions that China applied in winter 2021-2022 and Russia's invasion of Ukraine created new turmoil. The economy held up better than was at first feared, but inflation turned out to be much higher and more persistent than we expected. Inflation forecasts have time and again climbed higher, and by June there was no doubt that it was high time to speed up the normalisation of monetary policy. We ended net asset purchases and started to raise interest rates in July. When we started to sketch out the policy normalisation, the financial markets did not expect policy rates in the euro area to rise at all until 2024. Instead, we have now had to raise interest rates in the euro area faster than ever before in the history of the monetary union, by three percentage points in just six months. This may seem dramatic, but we must remember where we started.

First, conducting monetary policy based on the view that potential is permanently lower – without clear evidence that this is the case – could prove self-fulfilling and costly. The evidence increasingly shows that destroying demand also affects supply. Research on recessions over the last fifty years has found that deep contractions – including those driven by monetary policy – lead to long-lasting effects on real GDP compared to the pre-contraction trend. [20] This suggests that current macroeconomic policies should be designed to avoid unnecessarily heightening the risk that the increasingly likely contraction in coming months becomes a severe and protracted one, which would scar the economy. This requires that energy and fiscal policies remain targeted and contribute to dampen inflationary pressures, helping to keep inflation expectations anchored while preserving productive capacity. But it also requires that monetary policy does not ignore the risks of overtightening. [21] If we were to compress demand in an excessive and persistent manner, we would face the risk of also pushing output permanently below trend, irrespective of whether the initial shocks were temporary or not (that is, even if a harsh policy reaction was unnecessary). And that could not be easily reversed by subsequent policy easing, not least because expansions do not rebuild supply nearly as much as contractions destroy it. [22] Second, even if we were to conclude that supply shocks will lower potential durably, we would still need to examine their effects on demand before deciding our policy stance.
I do not mean that here in Sweden we cannot pursue an independent monetary policy. But monetary policy abroad obviously restricts our room for manoeuvre. It also means that macroprudential policy measures take on even more importance in situations where the global financial cycle is not adapted to Swedish circumstances. These are questions we have to drill down into and understand better. 34  In 1970, the sum of all capital flows between countries amounted to less than 2 per cent of global GDP. Just before the financial crisis in 2007, it amounted to 20 per cent of global GDP. Global external debts have increased from 30 per cent of global GDP in 1980 to about 200 per cent of global GDP today, see IMF 2016. 35  See Rey (2015). 36  The covariance between Swedish and international GDP growth is very high; if growth abroad increases by 1 percentage point, growth in Sweden increases by about 1.3 percentage points (quarterly data). For inflation, the covariance is about 0.5 and if German 10-year bond yields rise by one percentage point, Swedish longterm bond yields increase by the same amount. 16  BIS central bankers’ speeches  We have to live with financial crises – but we can increase our resilience Today I have talked about the many different tasks of a central bank: A central bank is the banks’ bank not just in financial crisis situations, but on a day-to-day basis, “24/7”.

We call upon the Fund to ensure that its support is available to all members in an evenhanded manner without exceptions, and that emergency financing lives up to its name. We look forward to further refinements of the Fund’s lending toolkit, including the introduction of a pandemic support facility. As the global economy is bracing for a challenging post-crisis recovery, the Fund must stand ready to assist members through financial support and tailor-made as well as country specific policy advice and capacity development to ensure that the transition and the subsequent recovery proceed smoothly. This could only be achieved by a strong, quota-based, and adequately resourced IMF, with the quotas remaining the core source of financing. With this mind, we are looking forward to an accelerated timeframe for the review of the overall size of the IMF quotas. We would also support an initiative discussed at the Executive Board to make better use of existing SDRs for the benefit of poorer members, and repeat our call for a new general allocation of SDRs. 2/2  BIS central bankers' speeches
The wealth management connect will enable Mainland residents to directly invest in offshore wealth management products for the first time. For fund companies, there will be opportunities in product origination by developing products in Hong Kong to tap into the Mainland investor base. Banks can base their sale and distribution operations in Hong Kong to reach out to your Mainland customers. Asset management and treasury operations will also benefit. We are working out the implementation details with the Mainland authorities and I hope to be able to share more details with you soon. Closing 18. To summarise my message today, we see before us the beginning of a huge wave of inflows going into Mainland China’s capital markets, propelled by index inclusion and increasing openness of the markets. And the best and safest spot to hitch a ride of the wave is via Hong Kong and the Connect schemes. 19. Hong Kong’s fundamental strengths as one of the best places to do financial transactions and manage assets are well in place. Capital flows freely into and out of the territory as guaranteed by Article 112 of the Basic Law. The Linked Exchange Rate System, 3/4  BIS central bankers' speeches  underpinned by $ billion foreign exchange reserve, continues to anchor our monetary and financial stability, as it has for the past 36 years. The resource and expertise of the biggest global and Mainland banks in the region are concentrated in Hong Kong.

On the cost side of the ledger: the drag on growth that comes the rest of the time from forcing banks to fund more of their lending with capital rather than deposits. The result of this careful cost-benefit analysis is a goal for how resilient the largest part of the banking system should ordinarily be. It’s expressed in the severity of the economic scenario we expect banks to be resilient to. So great are the costs of not having enough capital in the banking system that the scenario is of a rare level of severity, akin to the financial crisis. That means a scenario in which: unemployment rises to over 9%; the output of the economy falls by nearly 5%, the global economy enters a recession deeper than the financial crisis and house prices fall by one third. To ensure they can keep lending through such a scenario, the major banks typically need to fund around 13.5% of their risk-weighted assets with their own (Tier 1) capital. We’re clear that if, in the future, the economy becomes a more fragile place (as, for example, debt levels rise) our stress scenarios will get tougher and the capital levels needed to pass them will increase. And if a downturn materialises, we’re clear that capital buffers that have been built up should be run down to absorb losses without cutting lending. Our resilience target will flex to the circumstances in a way that it could not had it been hardwired into legislation.
As in the rest of the world, the upturn in Sweden in the period ahead will partly be driven by temporary factors such as highly expansionary fiscal and monetary policies and an inventory cycle. The forecast assumes that the world market will grow strongly, that private consumption will increase at a good rate despite the fact that the development of household incomes will be weak, that public consumption will increase and that investments will increase despite a low level of capacity utilisation and weak profitability. Naturally, there also exists the possibility that GDP growth will be stronger than we have estimated. However, even with a higher rate of GDP growth, resource utilisation will be low – and it is resource utilisation that is significant for inflation, not GDP growth. Resource utilisation can be measured in different ways, but I will not address this issue today. I will restrict myself to stating that resource utilisation can be measured by the GDP gap – that is to say, the difference between the GDP level and what can be considered a normal level. Even with a higher rate of GDP growth, the GDP gap will be negative and resource utilisation low for an extended period (Figure 17). The low resource utilisation does not only signify that inflationary pressures are low, but is also a reason in itself to conduct a looser monetary policy.

Since the inflation target was adopted in 1995, CPIF inflation has averaged 1.7 per cent per year, seldom dropping below 1 per cent or rising above 3 per cent. This is a significant change when compared with the high and sharply fluctuating inflation we experienced in the 1970s and 1980s. The changes made to the frameworks for wage formation are an important factor behind the lower and more stable inflation we see today. I am primarily thinking of the Industrial Agreement implemented in 1997, but also of similar but less far-reaching agreements in other areas of the labour market. I am also thinking of certain changes to the legislation and the establishment of the National Mediation Office. Another factor should be that resource utilisation has been kept at a lower level than previously, a level that is compatible with low and stable inflation. The increased credibility of monetary policy in terms of keeping inflation close to the inflation target of 2 per cent has probably also contributed. Inflation expectations over the longer term now lie close to the inflation target (Figure 24). Low wage increases during the forecast period This year, social partners will negotiate just over 550 collective agreements covering just over 3.3 million employees. The results of these negotiations will affect the wages of the  BIS Review 11/2010  5  majority of the country’s wage-earners, thereby being of great significance for economic development.
The results suggest that in those circumstances the tail of highly indebted households would be slightly larger than it currently is (Chart 4). And, were a downturn to hit, that the impact of debt on consumption would be a little larger than today. Looking forward, the impact of these policies will continue to depend on how house prices and incomes evolve. If house prices and incomes grow broadly at the same rate then the distribution of indebtedness in the flow of new mortgages will not change much – and hence the impact of policies on the flow will not be large. But we will continue to see a change in the distribution of the stock of mortgages for some time yet as newer, higher LTI mortgages gradually replace older, lower LTI mortgages. If though, house price growth outpaces income growth in the future then the policies will have a greater impact. Without the policies in place, if prices grew twice as fast as incomes – as they did over 2014 to 2016 – and activity rose to the pace we were forecasting in 2014, 40% of new mortgages would be at more than 4.5 times the borrower’s income (Chart 5). Over time, this would lead to a significant increase in the share of households with higher debt to income. The models show that in such a case the fall in aggregate consumption in the event of an adverse shock could be up to around 20% larger than we find with our policies in place.

(a) The 2018 H2 counterfactual for stock LTI ratios takes the 2018 H2 distribution shown in Chart 3 and removes the estimated impact of FPC policy on the flow of new lending to date. The impact of FPC policy is estimated with a combination of model outputs and analysis of trends in high LTI lending over time. Assessing what could have happened if we had not introduced these policies, or if the macro environment was different, is more difficult. But we can use the models to look at some counterfactuals, the ‘what ifs’ – modelling the stock under different macroeconomic scenarios and assumptions about lender and borrower behaviour and FPC policy.22 House prices and mortgage activity have been relatively subdued over the past 5 years – with house price and income growth slightly lower than the central forecast prior to the introduction of housing tools in 2014 and markedly fewer housing transactions than we were expecting. So the policy impact – both costs and benefits – have been relatively small to date. What would mortgage indebtedness look like if the policy hadn’t been there: if house prices, and activity, had followed the paths they actually followed but the FPC policies had not been in place? We can estimate the distribution of LTI in the stock of borrowers today if the 22  See Levina et al (2019) for more detail on methodology. 10  All speeches are available online at www.bankofengland.co.uk/news/speeches  10  policies had not been in place.
I will return to this in a moment. A too weak and blunt weapon? Another argument against “leaning against the wind” concerns the effectiveness of the interest rate in this context. To “lean against the wind” one must be able to count on dealing with the imbalances by making reasonable increases to the policy rate. One hypothesis is that the optimistic mood often prevailing during a boom in the property market means that significant increases in the policy rate are required to have an effect. Otherwise it would be rather like trying to bring down an elephant with a pea-shooter. The critics claim that the severe monetary policy tightening that would be needed could have serious effects on the rest of the economy. Here we also have the problem that the interest rate is a blunt weapon that affects the entire economy and cannot be aimed at an individual market. If you use a shotgun to take aim at a mosquito in a swarm you will probably also hit those around it, even if you weren’t aiming for them. From this aspect, there is a risk that the central bank could do more harm than good. I think the critics have a point here. As I mentioned earlier, trying to dampen a spiral of overoptimism and rising prices may be like trying to stop a runaway train with one’s bare hands.

So, in brief – if the policy rate is not the only and best weapon, what else do we have available in our arsenal? And which authority should have its finger on the trigger? One of the problems the crisis has brought to light is that there was too little focus on overall risks that could threaten the financial system as a whole – systemic risks. In many parts of the world they are now working on introducing a framework aimed at preventing such risks. This could contribute to preventing imbalances that would have consequences “merely” from a monetary policy perspective, even if this is not the explicit aim. One means of preventing an exaggerated upturn in house prices and lending, for instance, is to cut the permitted loan-to-value ratio – how much it is possible to borrow in relation to the market value of the underlying collateral. Another means may be to introduce an amortisation requirement. Two weeks ago, Finansinspektionen (the Swedish financial supervisory authority) presented a proposal for a recommended ceiling for the loan-to-value ratio for housing of 85 per cent of the property’s market value. Division of responsibility and other problems I asked earlier who should have their finger on the trigger. It is not entirely clear who should have the power of authority to introduce the type of measure I just mentioned. There may be good reasons to delegate this to the central bank, at least with regard to measures that affect the macro economy and are not aimed at individual banks.
Inflation forecast I shall now turn to the course of inflation and our new inflation forecast. Our inflation forecast of June 2002 (the green dash-dotted curve in the graph) shows that at that time we assumed, based on a stable three-month Libor rate of 1.25%, that inflation would gradually rise to 1.9% in the first quarter 2005. Year-on-year inflation, as measured by the national consumer price index, dropped to 0.3% in the third quarter 2002 from 0.7% in the second quarter. In October and November it rose to approximately 1%. These fluctuations are due mainly to changes in the exact points in time when data on clearance sales prices are collected. This is also the main reason why our forecast of June 2002 over-estimated the development of inflation in the third quarter 2002. Our new inflation forecast (red dashed curve) is based on the assumption that growth in the US will pick up again from the second quarter 2003 onward. The US economy is likely to achieve its growth potential stepwise until the beginning of 2004. In the EU, the upswing will take a little longer. We are not expecting a significant acceleration of growth before the end of 2003. We assume that the  BIS Review 73/2002  1  dollar/euro rate will remain at about the current level and that the oil price will be around $ per barrel.

Economic activity In Switzerland, economic activity has stabilised somewhat in the last two quarters despite the delay in the global economic upswing. After having been on a decline during four quarters, GDP slightly exceeded the previous period's level in the second and third quarters 2002. Positive stimuli emanated from the development of exports and from consumption. Nevertheless, the economic situation in Switzerland remains tight. The deterioration on the labour market and the fall in stock market prices are depressing consumer sentiment and available income. Incoming orders and the order backlog in the export sector remain at an unsatisfactory level, a sign that the recovery in exports is still uncertain. Capacity utilisation in manufacturing and in construction continues to fall short of the desired level, while corporate investment activity is currently at a very low ebb. The present growth slump in Switzerland can only be overcome if both exports and equipment investment increase consistently. We expect exports to grow markedly in line with the international economic upswing in the second half of 2003. Equipment investment should follow with a slight time lag. Until the middle of next year, however, the Swiss economy is likely to grow only very moderately. Until then, unemployment could therefore continue to rise. Private consumption, which has long been the mainstay of economic activity, will pick up only slowly next year. Real economic activity should increase by just over 1% in 2003, while for this year we expect zero growth.
Riksbank's asset holdings – no purchases beyond 2022 Nominal amounts, SEK billion 500 400  300 200 100 0 2015  2018  2021  Government bonds Covered bonds Treasury bills  2024  2027  2030  2033  Corporate bonds Municipal bonds  Note. Quarterly data. The figure shows a technical projection of the Riksbank's asset holdings if no reinvestments are made after 2022. Source: The Riksbank. 19 [19]

Promoting investments for a cleverer future, setting new models for a new world, more structured and with renovated industry, will be in its focus. The crisis will have its own winners. Winners will be those that will develop new policies, products, services and markets of a non-cyclic nature. BIS Review 30/2009  3