samchain/econo-pairs-v1 huggingface dataset:
My second lesson from the crisis was that we need to think about resilience much more broadly. Reflecting that, economic policy makers now think as much about stability over the financial cycle as we do over the business cycle – a broader definition of resilience. One major response to the financial crisis was the creation of a new Financial Policy Committee as part of the Bank of England, giving it an explicit mandate to identify, monitor and take action to remove risks to the financial system. The Committee’s goal is to ensure the financial system is resilient to shocks, so that it doesn’t again act as an amplifier, worsening the impact on households and businesses in the real economy, as it did in the crisis. My MPC colleague SIlvana Tenreyro sets out these arguments in detail in her spech “The fall in productivity growth: causes and implications”, available online at https://www.bankofengland.co.uk/-/media/boe/files/speech/2018/the-fall-in-productivity-growth-causesand-implications.pdf. 4  6  All speeches are available online at www.bankofengland.co.uk/news/speeches  6  The FPC has been active in pursuing this goal. We have a mandate to ensure the safety and soundness of the financial system as a whole. To do that, one of the things that we do is to regularly reassess and actively adjust the amount of loss-absorbing capital that banks, who are at the heart of the financial system, are required to hold as our assessment of the level of risks changes. (Our tool for doing this is called the counter-cyclical capital buffer rate, or CCyB.)

What ASEAN central banks are aiming for is to enable businesses and individuals to make and receive electronic payments more conveniently yet less costly. A prominent example here is the “Asian Payment Network” which translates to full regional ATM interoperability. Through this initiative, an ASEAN  1  World Bank website (2014) (http://data.worldbank.org/indicator/BX.KLT.DINV.CD.WD)  2  ASEAN-6 includes Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore and Thailand. BIS central bankers’ speeches  1  resident, for instance, can use his or her local ATM card to withdraw cash from a machine in another ASEAN country without having to pay the fees charged by third-party payment providers. 8. We can see that the upcoming realization of the AEC is a springboard for a more vibrant GMS region. However, the benefits for the region go beyond the AEC. I can see some points where tangible outcomes will take place in the near future. 9. The first one is the more integrated production networks of the main industries which dominate the GMS. We all know that the region has a comparative advantage in primary industries which are demanded by other ASEAN countries. This is why we have observed the large inflows of investment into agro-industry, garment and mining sectors. Realizing the high potentials of these sectors, we have also seen contract farming practices in Laos, where key commodities such as corn and sugarcane are produced using advanced technology and practices. 10. The other point concerns the development of infrastructure.
Svein Gjedrem: The economic outlook for Norway Address by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), for Norges Bank’s regional network, Region East, 19 November 2008. Please note that the text below may differ slightly from the actual presentation. The speech is based on the assessments presented at Norges Bank’s press conference following the Executive Board’s monetary policy meeting on 29 October and Monetary Policy Report 3/08. *  *  *  Financial market imbalances The first signs of an emerging crisis in financial markets came into evidence in early 2007. The crisis intensified in August last year and entered a new phase in March this year when the US authorities had to bail out the investment bank Bear Stearns. What began as isolated losses in a small segment of the US housing market gradually had substantial spillover effects on the global financial system. The crisis took a new and dramatic turn when Lehman Brothers, the fourth largest US bank, filed for bankruptcy on 15 September this year. The failure contributed to a weakening of confidence between financial market participants, and many financial markets abroad, but also in Norway, almost stopped functioning. Confidence was further eroded when the crisis spread to US commercial and savings banks. Among other things, bondholders suffered losses after the largest US savings bank – Washington Mutual – was split up and partially acquired by JPMorgan Chase in the wake of heavy mortgage losses.

In such decision-making situations it may be appropriate to implement measures that can reduce the uncertainty and stave off particularly adverse outcomes for the economy. This now implies a more active monetary policy than normal, both in interest rate setting and through liquidity policy measures. When setting the key policy rate, we must also take account of developments in premiums in money market rates, other bank funding costs and bank deposit and lending rates. Weight has been given to moving forward the reduction in the key policy rate so that lending rates for households and firms can gradually be reduced. Norwegian banks, households and some businesses have increased their borrowings considerably in recent years. It is important that the necessary deleveraging does not take place too abruptly. Lower interest rates, combined with liquidity measures, may curb the impact of the financial crisis on output and inflation. At the monetary policy meeting on 29 October, Norges Bank’s Executive Board decided to reduce the key policy rate by 0.50 percentage point to 4.75 per cent. The Executive Board's assessment was that the key policy rate may lie in the interval 4-5 per cent in the period to the publication of the next Monetary Policy Report in March 2009, unless the Norwegian economy is exposed to new major shocks. Thank you for your attention!
Svensson also took up the possibility, as a last resort and in a hypothetical situation with a zero interest rate and very low inflation expectations, of introducing a temporary exchange rate target to bring up inflation expectations. This method would involve first introducing a price level target and then depreciating the currency to attain this price level target. It would in theory make inflation expectations rise and inflation accelerate. The real interest rate would therefore be lower, which would stimulate production and employment. My own opinion is that the Riksbank should not even temporarily hold the krona exchange rate at an artificially low level. When the repo rate is cut, this normally means that the krona weakens. But the current weakening of the krona began back in August last year before the repo rate cuts were made and ought mainly to be due to the financial crisis. There are primarily three reasons against temporary interventions to keep the krona at a low level. The first is that there is no reason to do this, as underlying inflation and inflation expectations are close to 2 per cent. The second reason is that the current problem is that this is a global crisis and all countries cannot depreciate their currencies at the same time to stimulate production and push up inflation. The third is that our experiences of trying to solve problems by depreciating the currency are not positive.

6/8  BIS central bankers' speeches  • Digital bonds have many advantages: - they can be issued in smaller denominations; - primary issuance settlement times can be shortened; and - coupon and redemption payments can be automated. Decentralised Finance Web 3.0 can potentially disrupt the world of Finance. This is the phenomenon of decentralised finance or DeFi, where end-users perform financial transactions directly with one another using smart contracts, without the need for financial intermediaries. It is a fundamentally different approach to financial infrastructure, compared to the centralised systems of today. DeFi is already a growing reality, albeit nascent. Crypto tokens are bought and sold on decentralised exchanges, without the need for intermediaries to clear and record the trade. Another example is borrowing and lending, where anyone can lend and borrow directly to others via a liquidity pool managed by a smart contract. DeFi has the potential to yield significant economic and social benefits. By replacing intermediaries and central counterparties, these open crypto networks can potentially reduce the cost of finance. When firms of all sizes, and even individuals, can directly access financial infrastructure, it could mean more competition and inclusion. But DeFi is not without risks and vulnerabilities. These open crypto networks are not at the stage where they can meet the high standards of governance, security, and resilience that are required of critical infrastructure by central banks and regulators.
Unlike inflation, where falling behind the curve would entail a degree of pain down the road when policy eventually needs to catch up, there is no catching up if we fall behind the curve on climate change. It is a one-shot game. And the consequences of getting it wrong would be catastrophic. Responding to climate change is not simply about taking into consideration the effects of the green transition on inflation, nor the possible repercussions of physical and transition risks on financial stability. But it is also about actively taking steps that helps influence the incentives and willingness of society to alter their behaviours in such a way that mitigates adverse climate change. The most impactful channel for central banks in this respect is through the financial system. Incentives, mindsets, and expertise in the financial sector must be geared so as to ensure that sufficient resources become available to finance the green transition. This requires a collaborative approach, both among agencies within a country, as well as internationally. Initiatives being pursued by bodies such as the Network of Central Banks and Supervisors for Greening the Financial System are therefore critical. Forging ahead amidst shifting grounds Mervyn King once said that central banking should be boring. There was a time when that was true. There may come a day when it is true again. But that is not today. The task at hand is far from straightforward. Maintaining economic and financial stability amidst the shifting fault lines will require a steady hand.

To see through the noise of rapidly changing circumstances and distill the essence that policy should respond to. It will require humility in our understanding of the world so that we can adapt to incoming information and seek broad input from all stakeholders. And it will require staying focused on achieving our core mandates, ensuring that expectations for our policy goals are commensurate with the tools we have while recognizing the potential unintended side-effects of those tools. For 80 years, the Bank of Thailand's commitment to growth, stability and prosperity of the Thai economy has been unwavering. We will remain steadfast to this commitment in  3/4  BIS - Central bankers' speeches  navigating through the uncertain terrain ahead. Thank you all again for being part of this conference and I look forward to learning from your insights. 4/4  BIS - Central bankers' speeches
As regards interest rates, both real and nominal rates have fallen continuously since the mid 1990s. For households this has entailed significantly lower mortgage costs. At the end of 1992 the banks' average nominal lending rate to households was just over 15 per cent and inflation stood at just over 2 per cent. Now, the average lending rate is around 6 per cent, while inflation has remained at about the same level. So households can incur more than double the amount of debt today and still have lower debt-servicing costs. The favourable economic climate from the mid 1990s also contributed to a drop in unemployment, on the one hand, and an increase in wages on the other. All in all, this led to a rise in household disposable income. Moreover, disposable income has continued to increase during the period of relatively weak economic activity in recent years. This has been mainly due to unemployment remaining low, in spite of the economic slowdown. So low interest rates and high growth in household disposable income are two fundamental factors that could explain the rise in prices in the housing market. Furthermore, there is no excess supply in the housing market similar to that seen at the beginning of the 1990s when housing construction was encouraged through various kinds of grants and tax subsidies. Instead, there is very little construction of housing today, and discussions are concerned rather with how to step this up.

Lars Nyberg: Developments in the property market Speech by Mr Lars Nyberg, Deputy Governor of Sveriges Riksbank, at the seminar on properties, Malmö, 2 September 2003. *  *  *  I would like to begin by thanking you for the opportunity to come to Malmö and speak about the Riksbank's view of developments in the property market. Of course, these developments are not only of interest to those of us present today. They are important to all people, as movements in property prices have significance both for the real economy and financial developments in Sweden. When property prices rise, we feel more financially secure and increase our consumption, which leads to a rise in employment and growth. We might even borrow a bit more from the bank if we can. Normally, there is no harm in this. But there is a limit, of course, to the burden of debt households can bear without giving rise to worrisome risks. Should the debt of commercial property companies also swell, it could entail risks for the stability of the entire banking system, a point that was illustrated so well during the crisis at the beginning of the 1990s. On account of this, the Riksbank monitors developments in the property market carefully. We usually divide it into two segments, which give rise to different questions and reflections. The first segment is the housing market. Since 1997, housing prices have risen by just over 50 per cent, measured in current prices.
Greater substitutability between money and bonds – something which might be seen as symptomatic of ‘well-functioning markets’ where financial frictions are modest – will reduce the overall impact of QT since less capital gain is required to sustain the higher holdings of bonds after implementation, but implies that a larger proportion of QT’s overall impact on asset prices occurs upon announcement rather than implementation. I appreciate that this description of the model’s intuition is a little hard to digest. So let me simply draw out three positive implications of the modelling exercise. First, the exercise is consistent with the view – already embodied in the Bank survey paper that I mentioned – that the impact of QT (or QE) works via its impact on asset prices. Crucially, asset price developments – at least for core assets such as gilts – are observable in real time on open markets. Although the mechanisms at play in this interpretation of QT are fundamentally derived from monetary quantities and portfolio behaviour, they find practical expression in the market yields and spreads on which monetary policy decisions are normally conditioned. Second, the exercise sheds light on the issue of whether QT (or QE) works mainly through its impact on the stock of assets held at the central bank or via the flow of purchases made by the central bank.

[11] They identified a number of channels through which QE influences asset prices and yields, including: (a) increasing demand for longer maturity or riskier assets (the ‘portfolio balance’ channel); (b) lowering market liquidity premia (the ‘liquidity’ channel); and (c) influencing expectations of future policy rates (the ‘signalling’ channel). For a moment, I will focus on the portfolio balance channel. QE entails buying government bonds from the market using central bank reserves created for the purpose. Let’s imagine for the time being that these bond purchases are made from asset managers such as insurance companies or pension companies (NBFIs), who indeed hold large quantities of such instruments. The implementation of QE shrinks NBFIs holdings of longer-term bonds and substitutes them with liquid, short-dated and capital certain assets (bank deposits) on NBFI balance sheets. For NBFIs to be willing to hold a larger proportion of money in their overall portfolio, other things equal the return to holding bonds rather than money must decline, implying a rise in government bond prices and thus a decline in sovereign bond yields. To the extent that NBFIs try to diversify out of money into other longer-term assets, they will also increase the price of those assets (and thereby raising equity prices and lowering corporate bond yields). In short, portfolio rebalancing in the aftermath of a QE operation weighs on yields and eases financial conditions. What is striking about this account of the transmission of QE is its fundamentally ‘monetarist’ nature.
It will be even worse, according to the banks advocating this level playing argument, if their national supervisor imposes capital or liquidity requirements that exceed the international standards. 14. Pillar 2 of the Basel Accord was of course introduced, at least in part, to do just this by enabling supervisors to make adjustments in minimum required levels of capital to reflect individual bank risk profiles, but even here we are met with “level playing field” arguments – complaints that other jurisdictions don’t use Pillar 2 to the same extent – or at all – and so we should not use Pillar 2 aggressively or else we will “damage” or “ham-string” our banks. But if this is the case, then if all banks seek to maximise their profits, by pushing down or “optimising” their capital and liquidity levels and taking on more risk – focused on the Basel standard as the ultimate benchmark – then do we not risk the standard actually encouraging a “race to the bottom”? Is it a race that may lead to higher profits or RoE for banks and their shareholders only in the short term? Is it a race that could create, in the longer term, serious problems for the safety and soundness of the banks concerned and financial vulnerabilities for society as a whole? 15. I don’t profess to know all the answers to the questions I have just raised. No matter what, there is a clear and indisputable need to enhance the resilience and robustness of the global financial system.

Thus, according to the IMF, we deal with a global investment drought 10 , considering the fact that during the five years following the Asian crisis of 1997-1998, the  8  A series of articles on the topic was commenced with the work of M.Dooley, D.Folkerts-Landau and P.Garber „An Essay on the Revived Bretton Woods System“, NBER Working Paper 9971, September 2003. 9  A hypothesis of a global savings glut was formed for the first time by Ben Bernanke in March 2005 in his speech at a meeting of Virginia economists’ association. 10  For example in speeches by the IMF Managing Director Rodrigo Rato and the IMF Research Department Director Raghuram Rajan in January and February of 2006. BIS Review 19/2006  3  level of investments was about 7 percentage points lower than during five years before the crisis. Therefore, an appropriate recommendation for these countries is not limiting their savings rate but enhancing their investment climate. According to other hypotheses, the major factor behind the global imbalances is the low level of savings in the US household and public sectors 11 , i.e. the fact that Americans spend more than they earn and that the budget deficit, from a substantial surplus in the year 2000, turned into a level estimated at 4.7% of the GDP in 2004.
In the years leading up to the start of the crisis there was a dearth of prudential supervision, but I am quite prepared to acknowledge that there have been periods where the opposite has been true. My point here is that I don’t think the system of integrated regulation demonstrated the ability to deliver a stable equilibrium of conduct and prudential supervision. Third, there is something of an inbuilt tendency within integrated regulation to play down the active debate of issues where conduct and prudential regulators find themselves with potentially conflicting objectives. Of course, it can be said that the “twin peaks” approach that we are introducing could lead to endless debate and no outcomes. My own view is that that is not correct, and that the benefits of clarity in defining the objectives of the PRA and the new Conduct Authority, the FCA, will dominate any other consequences. There are several important reasons why reform of financial regulation will, in my view, be an important step forward, starting with establishing very clear public policy objectives for financial regulation to which we, as the regulators, are fully committed. For both banks and insurance companies, the PRA will have the objective of promoting the safety and soundness of firms. Consistent with this objective, it will focus on the potential harm that firms can cause to the stability of the financial system in the UK. We define a stable financial system as one that is resilient in providing the critical financial services that the economy needs.

This is a lesson of history, and one that should not have been forgotten. But, forgotten it was. At present the FPC is pursuing two important objectives: seeking to increase the resilience of the UK banking system, including to the threats emanating from the euro areas; and, subject to being content with the path towards greater resilience, supporting the creation of credit in the UK economy. I am in no doubt that if banks take reasonable steps to enhance their resilience, they will be better placed to sustain the availability of credit to the economy by lowering their cost of funding and reducing their vulnerability to unanticipated events. Macro-prudential regulation takes a system-wide view of the risks we face and the buffers of capital and liquidity that banks should hold against possible stress events. This is very clearly the resilience objective for the system, to which the FPC attaches great weight. Banks in the UK have made substantial progress over the last four years in building that resilience, from of course a very low base. We believe that there is further to go on capital, and the FPC has set this position out, but in doing so we should not forget the distance that has been travelled. We should also remember that more capital cannot be conjured from thin air, particularly as there are at present quite severe constraints around the rate of return earned by banks due to low interest margins and redress for past misdeeds on conduct issues.