samchain/econo-pairs-v1 huggingface dataset:
At the same time, China is improving the global renminbi settlement and clearing system through a wider network of renminbi clearing banks and the upcoming Cross-Border Interbank Payment System (CIPS) to lower the transaction costs for the renminbi relative to other major currencies. Currently, there are at least five hundred global investors, including sixty or more foreign central banks and sovereign wealth funds, that have gained direct access to China’s financial markets. Many more have access through the Hong Kong-Shanghai Stock Connect. Malaysian institutional investors seeking to internationally diversify their investments would need to intensify the learning curve process in the Chinese financial markets to realise its benefits. Malaysia: A pioneer in the cross-border use of the renminbi Malaysia was one of the earliest countries to recognize the potential role of the greater crossborder use of renminbi. Given China’s significance as Malaysia’s largest trading partner, the settlement of trade and investment in renminbi significantly lowers costs and promotes greater cross-border trade and investment activity. In turn, fund-raising activity in renminbi has become a means for Malaysia to utilise the renminbi liquidity obtained through trade settlements. Malaysia has a comparative advantage in this area, as the largest debt securities market in Southeast Asia and as a leading centre for sukuk issuance. As an early pioneer of renminbi initiatives, Bank Negara Malaysia (BNM) was the first ASEAN central bank to sign a currency swap agreement with the People’s Bank of China (PBC) in February 2009.

Zeti Akhtar Aziz: Renminbi and China’s global future Keynote address by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the HSBC Reminbi Forum “Renminbi and China’s Global Future”, Kuala Lumpur, 17 August 2015. *  *  *  The increasing role of the renminbi in the global financial system from a trade currency to an investment currency and now its potential role as a global reserve currency will have significant global implications. I am delighted to be here this morning to speak at this Renminbi Forum. The renminbi sphere has indeed extended beyond the Asian region, extending to other continents, to Europe, Latin America and the Middle East. The renminbi is no longer an Asian story, but it has now become a global story. It reflects China’s importance and influence in the changing contour of the global economic and financial landscape, and the steps that have been taken to enhance its international role. My remarks today will focus on the increasing trend of the internationalisation of the renminbi despite the recent challenges faced in the Chinese economy; the implications of this trend to the region and finally on the steps that Malaysia has taken as the region transitions into this environment. Long-term prospects for the Chinese economy and the renminbi After decades of rapid growth, the Chinese economy is now transitioning to a growth path that is more sustainable.
2  BIS central bankers’ speeches  The former include most notably the pick-up in the world economy since last summer. The turnaround has chiefly been based on the better performance of the advanced economies, including the European countries, which remain our main trade partners. Conversely, the emerging economies are losing some of their momentum. Indeed, investors and analysts have shifted their chief concerns in recent months towards this group of economies. The incipient recovery in Spain is also benefiting from the easing of financial tensions in European markets. In particular, measures by the European Central Bank and the headway made in correcting the weaknesses detected in the governance of the euro, and in creating a banking union within the area, have contributed to improving the financing conditions of the Spanish economy. That said, the cost our households and firms still have to pay for their credit remains overly high for the accommodative stance of monetary policy, revealing that it is not yet appropriate to talk about the full normalisation of the single monetary policy transmission process in the euro area. Undoubtedly, however, domestic impulses are playing a decisive role in improving perceptions of the Spanish economy, and in laying the foundations for a sustained path of recovery. These include most notably the progress in correcting imbalances and in adopting reforms in different areas. As regards imbalances, the most visible achievement has been in restoring competitiveness and in correcting the balance of payments deficit.

As the recovery takes root, this positive restructuring of credit will foreseeably step up, and lending at the aggregate level may also be expected to normalise. It will be then that the process of clean-up, recapitalisation and restructuring of the Spanish banking system will be in a position to yield its full benefits. Once the problems of oversizing and risk concentration are overcome, our banking system will be better placed to meet the solvent demand for credit that will emerge with the economic recovery. So far I have talked about the main aspects of the ongoing re-balancing of the Spanish economy and the factors underlying the path of recovery. Allow me to conclude with some thoughts on the complexity of the current economic juncture and the challenges that must be overcome to ensure that the incipient recovery leads to an increase in our long-term growth capacity. The most likely outlook for recovery in the coming months involves relatively moderate growth in activity. Foreseeably, domestic demand will continue to gain in weight, albeit moving on a very gradual course of recovery, in line with what is forecast for its attendant determinants. Investment in construction will join this recovery, albeit taking into account its somewhat more negative position at the start of this year, lagging the other domestic demand components. External demand, meanwhile, will maintain its positive contribution to GDP, but with lower contributions than during the crisis years. Several risk factors cloud this central scenario of recovery.
Yves Mersch: Policy needs, knowns and unknowns in the aftermath of the crisis Keynote speech by Mr Yves Mersch, Member of the Executive Board of the European Central Bank, at UBS, Zurich, 4 February 2016. *  *  *  I would like to thank Valerie Jarvis for her assistance in preparing this speech. Ladies and Gentlemen, I would like to thank Valerie Jarvis for her assistance in preparing this speech. Coming out of a crisis, one of the biggest challenges that policymakers face is uncertainty about the state of the economy. We can respond to this, of course, by looking at stylised indicators, such as inflation or employment. But for a forward-looking monetary policy, that’s not sufficient. We need to know the strength of the inflation pressures building up over the medium-term – that is, whether the economy is over-heating or under-cooking relative to its underlying potential. It is for that reason that central banks have traditionally used the concept of potential output – the level of output consistent with price stability – to gauge inflationary pressures. 1 If actual output is above potential output, there is a positive “output gap” and we can expect upward pressures on inflation. And if actual output is below potential, the opposite will be the case and disinflation will follow. In general terms, I see nothing wrong with this way of thinking. The economy is vastly complex and we need simplifying frameworks for assessing “how it’s doing” overall.

Therefore, we have a small increase in bad loans, which reached about 12 percent. I think this process will slowly wind down. Then, together with the reduction of the risks that banks see in the real sector, and which will come to the surface now after the positive signals from the European economy, lending to companies will become a little more intensive. In one of its reports NBRM has pointed out that one of the limiting factors for higher credit growth are some conservative strategies in the local banking groups. What specifically did you mean? Yes, we pointed out the conservative strategies. And it is no secret that here we primarily think of the problems that some of the banks present in Macedonia have in their home countries. Banks in Slovenia and Greece are in serious problems, even though their banks in Macedonia are among the best, by both the quality of corporate governance and the credit risk management, and also the level of capital and liquidity they have is the highest in our  BIS central bankers’ speeches  1  banking system. So, their banks in Macedonia have no impediment to normally work and grant loans. But don’t they grant loans normally? Well, some of them are quite restrained. We constantly talk to them and they promise to be more active in the market. Which of them are restrained? Stopanska Banka has been quite restrained in recent years, but it always had positive rates of credit growth. It has never cut lending.
In fact, internationally, it is very difficult to find countries with similar or lower unemployment rates than Thailand. The tightness of the labor market has manifested itself in the form of rising unit labor costs which in the first quarter of this year rose higher than productivity growth. This could be a sign of possible wage-price inflation. Intuitive as it may seem, the cake eating analogy as well as several simple analogies you may have heard from our critics is not the whole story. What is missing in them is the reference to inflation expectations. Our critics seem to have completely disregarded the important and long-lasting role of inflation expectations. Strangely, concerns on inflation expectations, which feature prominently in the public discussion in other countries, seem to be relatively absent in this country. With your help, we can raise the level of public discussion about the forces underlying inflation here. Again, central banks may be accused of being concerned on issues like inflation expectations that seem more academic than real. On this, I wish to emphasize that a valuable lesson from the previous two oil shocks thirty years ago is the role of inflation expectations in inflation developments. It is now well established that, independent of demand and supply shocks, an increase in the public’s long-term inflation expectations leads to higher inflation and lower output. Failure to keep inflation expectations in check will lead to persistent increases in the price level well after supply shocks vanishes.

The weakest area of the economy at the moment is probably private investment which has been continuously decelerating for a few months now. But the surging inflation has also put private consumption increasingly at risk. Indeed, the latest issue of Asia Pacific Consensus Forecasts shows Thailand’s GDP growth falling over the next three quarters before recovering in the second quarter of 2009. Against this backdrop, the policy priority is to head off the rising inflationary pressure while keeping a close eye on downside risks to growth. This is normally already very difficult in the presence of cost-push shocks that create a short-run trade-off between inflation and output stabilization. What further complicates the current situation is that a prolonged period of oil shocks and inflation tends to divest funds from, as well as discourage, fixed capital investment and hence deteriorates what economists refer to as the economy’s potential output. This issue is especially important when the economy is energy inefficient. Let me elaborate further. Conceptually, potential output is the level of output which can be sustained over an extended period without exerting upward or downward pressure on inflation. When the actual level of output is above potential output, inflation tends to rise. Conversely, when the actual level of output is below potential output, inflation tends to fall.
In the second part, I will touch on the current situation, and describe the three key steps that I believe we need to take to return to the path of economic stability. Lessons of the financial crisis The financial crisis has taught us painful lessons. It has revealed fundamental weaknesses in our global financial system. In the years that led up to the crisis, the European Central Bank was among those institutions that warned against the under-pricing of risk in financial markets. But the growing complexity of the global financial system and specifically its international linkages made it difficult to predict how and when developments would turn. With hindsight we know a great deal about the causes of the crisis. Financial innovation led to the development of new instruments that were intended to expand the diversification of risk for savers and investors. In retrospect, we know that instead they contributed to a common exposure to systemic risk. Gradually, the focus of finance shifted in the recent past. From its traditional role of helping the real economy to cope with economic risk, finance became a self-referential activity. The notion of “financial engineering” is a striking illustration of the shift of attitudes that spearheaded the changing focus of finance. When I started my professional career, no one would have used this expression. Engineering is about building tangible structures that support human endeavours. Some of the structures that were invented in finance turned out to be neither tangible nor helpful to society.

Compared with other countries it is perhaps above all the changes in fiscal policy that have made Sweden stand out, in spite of the fact that the limits in the fiscal policy framework have been stretched somewhat in recent years –  1/7  inflation targeting is, after all, now conducted in some twenty countries around the world and there also are other reasons than inflation targeting that have contributed to lower price increases globally. The comparatively sound central government finances have been a great strength for our country over the past ten years. In the years ahead demands will rise even further if we are to meet the challenges posed by an ageing population. More surprising, in a positive sense, has perhaps been wage formation. It is not that long ago since Swedish wage formation used to be highlighted in economic circles as a warning to other countries. But with the odd exception wage formation in Sweden since the mid-1990s has worked well from a macroeconomic perspective. I think the fact that the Swedish Trade Union Confederation has said that “the Riksbank is a wage-earner’s best friend” clearly shows that something has happened. Real wages have grown positively in negotiations that have set out from stable inflation expectations (Figure 4). That is not to say that wage formation and the way the labour market functions are perfect. The future is likely to involve even greater requirements for a more productivity-based local or individual wage formation.
In Anglo-Continental Guano Works v Bell (Surveyor of Taxes), Mr Justice Cave summed up thus: “It seems to me... that the gains of the trade are quite independent of the question of how the capital money is found… [One] cannot take into  BIS central bankers’ speeches  5  consideration the fact that the firm or trader has to borrow some portion of the money which is employed in the business... If you did that it would land you in very extraordinary results”.12 Indeed, it might land you in the guano. But banking was about to buck this trend. In Farmer (Surveyor of Taxes) v Scottish North American Trust, Limited, Lord Atkinson referring to the Anglo-Continental case concluded: “It does not appear to me that the reasoning on which this decision is based can apply to a bank whose business is the borrowing and lending of money”.13 From early in the 20th century, debt interest became a legitimate deductible from bank profits. Where banks led, non-financial firms followed. This debt bias has persisted in the century since.14 The scale of tax-induced debt bias is generally greater the higher the rate of corporation tax and the lower the rate of personal taxation of equity. The IMF (2009) has recently estimated the scale of debt bias in a selection of developed countries. For low or tax-exempt investors, such as pension funds and non-residents, debt is typically between 30–40% cheaper than (new or retained) equity.15 For high-tax investors, the biases are smaller but still significant.

In the light of long-term considerations, it is also important to reverse the sharp rise in government spending during the crisis. In 2020, NOK 300 billion was transferred from the Government Pension Fund Global (GPFG) to cover the central government budget deficit. The decision to tap the GPFG has been the right one. An economic shock of the scale that we have witnessed requires potent medicine. The GPFG is intended to act as a buffer when the economy is exposed to shocks. At the same time, it is an intergenerational investment fund to be distributed across current and future generations. The pandemic is the third large economic shock to hit the Norwegian economy in the space of a few years. Each time, transfers from the GPFG to the central government budget have increased, but without being substantially reduced afterward. Chart 10 Before the crisis: One krone in six transferred from the GPFG Transfers from the GPFG as a share of public spending. Percent 30  30  25  25  20  20  15  15  10  10  5  5  0 2001  0 2006  2011  2016  2020  Sources: Ministry of Finance, Statistics Norway and Norges Bank  12  In 2020, one krone in four of all central government budget spending came from the GPFG. But even in more normal years, transfers have been considerable.
Today, I intend to discuss my view of monetary policy and explain in more detail why I entered a reservation at the latest monetary policy meeting. Much of the reasoning is the same as when I advocated a lower repo-rate path. 2 The new points that I want to make here today relate to the reasons why I entered a reservation in favour of the extended repo-rate path rather than a lower repo-rate path with a reduced repo rate. Let me begin by presenting my general view of monetary policy. 1  One may ask why the focus should be on the CPIF and not the CPI. In a situation in which significant reporate changes have very large direct effects on the CPI, I consider it to be more appropriate to focus on stabilising the CPIF around the inflation target, instead of the CPI. 2  See also the speech “Why a lower repo rate?” that I made at Umeå University on 24 February this year for a detailed account of that reasoning. BIS Review 60/2010  1  Flexible inflation targeting stabilises both inflation and resource utilisation When discussing what repo-rate path one should choose it is natural to take the Riksbank’s monetary policy objectives as a starting point. The Sveriges Riksbank Act and its preparatory work stipulate that monetary policy focuses on stabilising inflation around the inflation target and resource utilisation around a normal level. This is what is referred to as flexible inflation targeting.

However, at the latest monetary policy meeting in April 2010 I chose not to advocate a lower repo-rate path but instead an “extended” repo-rate path. In this extended path, the period in which the repo-rate is 0.25 per cent is extended to the end of the fourth quarter of 2010 instead of to the end of the second quarter as the majority decided. I thus supported the decision to leave the repo rate unchanged at 0.25 per cent, but entered a reservation in favour of the extended repo-rate path. My reason for this was that such a repo-rate path has the same effects as the lower repo-rate path; that is a higher level of resource utilisation and a level of CPIF inflation closer to the target. 1 An expansionary monetary policy can thus be achieved either with a lower repo-rate path in which the repo rate is reduced now or with an extended repo-rate path in which the repo rate is maintained at a low level for a longer period of time. Some of my colleagues have had certain doubts about a repo-rate level below 0.25 per cent. As you know, I do not share these doubts. In this context, the extended repo-rate path has the advantage that these doubts are no longer relevant. It also has the advantage that it reduces the monetary policy decision to the question of when the repo-rate should be increased.
The energy begins with having great clarity of the vision and a great sense of purpose on the objective that needs to be achieved and the results that needs to be delivered. It also involves mobilising energies of the organisation to be aligned to achieving these results. It is having the ability to generate and ride on the positive cycle of leadership energy. In the actions pursued towards achieving the outcome and in the achievement of the desired outcome, it generates a second round of energy burst from others in the group or in the organisation. This continuous positive energy loop provides continuous motivation and momentum that can drive the organisation. It is a mutual reinforcing phenomenon that I have experienced in the Bank time and again. Let me conclude my remarks. The demands on leadership going forward will be immense. It requires tremendous leadership energy that needs to be sustainable. This leadership energy summit will hear from successful individuals on the source of their energy in generating outcomes and results that have made a difference. We will also learn about other sources of energy from which we can tap on and strengthen. This is the challenge of the new generation of leaders if they will truly be able to make lasting and meaningful changes in their environment. On this note, let me wish you an enriching and highly energised Summit. 2  BIS central bankers’ speeches

Moreover, the effect of bank market power on financing constraints increases in financial systems that are more bank dependent. 13 This underscores the general need, as I mentioned earlier, to create a more balanced financing mix between banks and capital markets. But it also points again to the particular importance of securitisation. With well-functioning securitisation markets some of the benefits of cross-border banks – for instance risk-sharing – can be replicated by having small, local banks originate-to-distribute loans while larger, global banks securitise and market them. In  9  See for example Anna Kovner, James Vickery, and Lily Zhou, “Do Big Banks Have Lower Operating Costs?,” Federal Reserve Bank of New York Economic Policy Review, Volume 20, No. 2, forthcoming. 10  “Financial Integration in Europe”, March 2007. In line with this, Carletti, E., Hartmann, P., and Ongena, S. (2007), “The economic impact of merger control: What is special about banking?”, ECB Working Paper No 786, July, find empirical evidence that the opacity of national bank merger reviews entered elements of inefficiency in banking relative to non-financial corporate sectors. 11  For a discussion on why retail bank integration may be a particularly attractive risk-sharing mechanism, see e.g. Fecht, F., Grüner, H.P. and Hartmann, P. (2007), “Welfare effects of financial integration,” CEPR Discussion Paper No. 6311. 12  See for instance Reinhardt, D. and Riddiough, S. (2014), “The two phases of cross-border banking flows”, mimeo, Bank of England.