samchain/econo-pairs-v1 huggingface dataset:
ERM2 provides considerable scope for targeting monetary policy at price stability. This applies of course for the normal band widths of ±15 per cent, but would also apply for the narrower bands of ±2.25 per cent, which the European Commission has used in its evaluations. Just like today, there is therefore reason to continue publishing inflation reports and to hold regular monetary policy meetings. Swedish experiences from recent decades of fixed exchange-rate regimes have, as we all know, not been entirely positive. The events of 1992 are still fresh in our memories. But a lot has happened over the past ten years. Our economic policy has become credible and successful. In recent years, it has followed the same principles as those in the euro area and has been characterised by efforts to achieve price stability and sound public finances. Participation in ERM2 would not change the stance or objective of policy of course. Tensions stemming from a lack of competitiveness in the Swedish economy are also unlikely; the rate is set partly to ensure a reasonable level of competitiveness, while inflation over the coming years can be expected to be more or less in line with that of the euro area. Moreover, the process for other countries’ entry into monetary union was smooth in spite of the fact that the circumstances in many cases were less favourable at the time than in Sweden today. For instance, the uncertainty surrounding the implementation of the third stage and the introduction of the euro is now gone.

It is important that we have both insight and influence in this process in order to be able to do a good job at the Riksbank and also to be able to contribute to creating the best possible conditions for the Swedish financial sector. 8  BIS Review 29/2003  Finally, I mentioned the Riksbank’s own activities after a potential entry into monetary union. Media interest in the Riksbank would certainly diminish somewhat if we no longer set the repo rate. However, our work tasks and operations would not be affected that much. Most important would be changes in the area of monetary policy. Our perspective would have to become more European, while we would also be an important part of the domestic debate on economic policy. In conclusion, allow me to note that a “no” to the euro would not entail any major changes for the Riksbank’s day-to-day business. I expect that we would continue to conduct our operations in much the same way as before. There is a risk, however, that our significance in the international arena would diminish further. BIS Review 29/2003  9
Prasarn Trairatvorakul: Current topics of the economy and monetary policy of the Kingdom Speech by Dr Prasarn Trairatvorakul, Governor of the Bank of Thailand, at the Japanese Chamber of Commerce Dinner Talk, Bangkok, 25 March 2013. *  *  *  Good evening, Distinguished guests, Ladies and Gentlemen, I would like to thank the Japanese Chamber of Commerce (JCC) for inviting me to give a keynote speech at this special annual event. It is my honor to be back here again for the prominent institution that has its presence in Thailand over half a century, contributing to the development in trade and investment, as well as promoting Japan-Thailand friendship through cultural exchanges and technical support. For this special evening, I would like to reflect on recent developments in the global and Thai economy, and the challenges for monetary policy going forward. First of all, let’s look back to what happened last year. In 2012, Thailand faced a series of challenges from both domestic and external fronts. The global economy was subject to the main drag from the Euro debt crisis, while uncertainties remained on the recovery process of the US and Japan. These advanced countries faced a number of structural problems which would, of course, take time to resolve. However, it was encouraging to see the overall global economy continue on a gradual recovery path, with improving outlook particularly in the US and Japan, while China and Asia remained robust.

Ravi Menon: The Institute of Banking and Finance at forty Welcome remarks by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore and Chairman of the Institute of Banking and Finance, at the Institute of Banking and Finance 40th Anniversary Dinner, Singapore, 10 June 2014. *  *  *  Deputy Prime Minister and Minister for Finance, Tharman Shanmugaratnam, Pioneers of IBF, distinguished guests, ladies and gentlemen, On behalf of the Council and staff of IBF, let me welcome you to IBF’s 40th anniversary dinner. IBF is where it is today because of what previous generations of Council members and staff, industry practitioners and training providers accomplished together. They are the Pioneers of IBF, whose contributions and achievements we are gathered here to celebrate. It is the inspiring vision and tireless efforts of these Pioneers to build competencies in finance that helped create the international financial centre that Singapore has become today. I am delighted that several of them are here with us this evening. IBF was set up in 1974 with the support of the Monetary Authority of Singapore (MAS) and the Association of Banks in Singapore (ABS). Those were early days in Singapore’s development as a financial centre. The birth of IBF helped to fill a critical gap in the training of Singapore’s financial sector workforce. The subsequent growth of IBF has been a story of each generation building on the efforts of previous generations and helping to strengthen the capabilities of Singapore’s finance professionals.
Lars Nyberg: House price developments and monetary policy Speech by Mr Lars Nyberg, Deputy Governor of the Sveriges Riksbank, at Evli Bank, Stockholm, 19 December 2005. *  *  *  Thank you for your invitation to Evli Bank. I intend to devote the bulk of my speech to a subject that has been under discussion for a fairly long time but that nevertheless has not become less topical or important, namely the developments in the housing market and the rise in household debt. These factors have potentially significant implications for both of the tasks assigned to the Riksbank – both the assignment of safeguarding financial stability and the monetary policy objective of price stability. That of course means that they also have consequences for the efforts to keep the real economy in good balance. Thereafter, I intend to say a few words about the current monetary policy situation and the decision that we took a few weeks ago to leave the repo rate unchanged. As you know, the Executive Board on that occasion – incidentally for the first time in over one and a half years – was not unanimous in its decision. Since I was one of those with a different opinion it may be appropriate for me to elaborate somewhat on my line of reasoning. I want to underline, however, that it was a question of subtle differences in our assessments which there is no reason to overdramatise.

Let me briefly mention a few of the lessons from our experience in Covid-19. First the capital framework does not in practice support use of bank capital buffers in a stress as we intended7. And that would have mattered a lot in the absence of the substantial government support for the corporate sector. Second, we need to change our approach to stress testing in a stress if we are to avoid those stress tests further amplifying any downturn8. And third, in a shock of roughly half the size of the global financial crisis, it was only large-scale use of central bank balance sheets that calmed dysfunction in the system of market-based finance.9 We are continuing to learn through the Russia-Ukraine crisis too. We are exploring concentrations in, and interconnections across, energy and other commodity markets, the financial system, and the real economy, as well as the potential for feedback loops between them. And we have observed too that commodity markets are relatively opaque. We must now develop the macro-prudential framework to reflect the lessons from these recent stresses. Looking beyond recent events, neither the financial system nor the economy stands still: there are clear structural changes that macro-prudential policy must confront. 1.The rise of market-based finance: vulnerabilities that are as much global as domestic One key challenge is that many vulnerabilities are as much global as they are domestic.10 That includes non-bank, or market-based, finance. Non-bank financial institutions currently represent around 50% of global (and UK) financial sector 4/7  BIS central bankers' speeches  assets.
In the context of policymaking, the national programs, which have been supported by the international institutions and backed by the structural reforms, have brought about rule-based policy implementations. A major development in this regard has been the re-definition of the role of the public sector in the economy. The combination of the structural reforms and the prudent macroeconomic policies has also triggered efforts to reduce the size of the public sector in the economy. In the last five years, the private sector has been the engine of the economy and the main contributor of the high growth rates. The Public Fiscal Management and Control Law, the Public Procurement Law and the multi-year budgetary framework have been put into practice in order to enhance the fiscal policy and the incomes policy of the public sector. Hence, this structure has created a reliable base for the tight fiscal policy involved high primary surplus targets that have been achieved and maintained since 2003. The Banking Sector Reform, the FDI Investment Law, and the Law on The Protection of Intellectual and Industrial Property Rights are on the list of structural reforms that have produced macroeconomic and financial stability and increased the resilience of the economy against external shocks. Now, the Turkish economy is not one that is crisis prone. Distinguished guests, The good governance not only defines the rules of the game but also initiates and determines the structure of institutions.

Unlike many other countries dealing with a banking crisis, Norway did not set up a separate asset management company - or “bad bank” - to handle problem loans. There were several reasons why we chose not to do this: •  In none of the problem banks in Norway was the ratio of non-performing loans considered to be of such magnitude that it would require so much attention from the management of the bank that it would distract them from their main goal - to bring the bank back to profitability. •  The banks themselves knew their borrowers best and had experience in working out defaulted loans. Handling such loans will always be part of a large bank’s business, and transferring employees with this expertise to a separate company might have left the banks more vulnerable when they encountered new problem loans. •  Setting up an asset management company and transferring bad loans from the banks would have required complicated accounting and legal work. In particular it would have been very difficult to find a fair price at which the loans should be transferred. •  The responsibility of handling the problem loans should remain with those who had the most to gain from a successful handling - the banks. •  Last but not the least; such an asset management company would have had to be financed by government money. Thus, more taxpayers’ money would have been put at risk.
First of all, because of the minor role of the banks under resolution in the total banking sector. The 28 banks that became subject to resolution accounted for a mere 4 per cent of the banking sector’s liabilities. And we do not expect their importance to become any stronger. Further, as I have noted, resolution should result in the sale of banks in the market; therefore, we expect there to be no significant impact from the new approach on the correlation of public to private participation in bank capital. Further on, on conflict of interests, that is, the risk that the quality of supervision over banks reorganised by the Bank of Russia-controlled institution may deteriorate. With a view to avoiding this risk, we intent to construct a ‘Chinese wall’ to separate Bank of Russia supervision activities from the Fund’s management company. We would draw on our experience with such ‘Chinese walls’, for example, the one between monetary policy and supervision – a fully working arrangement. But, most importantly, the banks under resolution in the new model – once their capital is restored – would be obliged to comply with all regulations, and they should expect no easier ride. In such a way, we would get unprivileged supervision, that is, the one that grants no special status-related discounts to banks under resolution. Let me now pass on to regulation, where we plan to implement a number of meaningful initiatives. As you know, our efforts to implement Basel standards are ongoing.

In the run-up to the coming autumn Duma session we will come up with a package of amendments to legislation to allow the Bank of Russia to set up a special-purpose Banking Sector Consolidation Fund. This fund would be a participant in the equity of banks under resolution. Also, a dedicated management company would be created to provide operational management to a bank under resolution. In such a scheme, the central bank would oversee the bank turnaround programme. Capitalisation support would come in quickly, available immediately; where necessary, resolution would involve both reorganisation and merger. Either of these would be followed by sale of banks, recovered to a satisfactory financial condition. Thanks to the new model to migrate to, the processes of bank resolution are sure to become less inexpensive, faster, more manageable and overall more effective. We will see banks under resolution being reorganised so as to ensure that financial recovery yields maximum results and raises investment appeal of such banks. Concurrently, this will predetermine optimisation of the banking sector’s structure. Both commercial banks and private investors would be able to enjoy the outcomes as they acquire well performing banks and those with capital top-up. Apparently, the mechanism will be the subject for discussion with the bank community. Looking forward, I would like to tell you that we have looked into potential risks this approach involves. Here are our key findings. The risk of banking sector becoming nationalised. In our understanding, we are running no such risk, for two reasons.
If workers are surprised on the upside by inflation they will build that higher expected inflation into their bid for the next year and vice versa. It is this mechanism that drove the inflationary wage price spirals of the 1970s and disinflationary spirals of the 1980s. A drop in inflation expectations, in the inflation expectations adjusted Phillips curve framework, will therefore have the effect of shifting the curve downwards and reducing pay growth at any given level of unemployment (Chart 8). Some in the US have argued that a reduction in inflation expectations could lie behind much of the weakness in US pay growth at current very low, by historic standards, levels of unemployment. 13  In the UK, as I have noted, the current rate of inflation does not seem to have affected pay growth very much over the last 10 years. Indeed we have seen relatively large moves both up and down in real pay that do not seem to have been reflected much in nominal pay growth. One reason for this might be the stability of inflation expectations around the Bank of England’s 2% target. This is not a self-congratulatory point. Central bank credibility is crucial to anchoring inflation expectations. It was the de-anchoring and subsequent re-anchoring, through the establishment of central bank credibility – of expectations – that led to the inflationary and disinflationary spirals of the 1970s and 1980s.

One example is found in the high and smoothed payout ratios to both executives and shareholders of public companies even when underlying company profitability is low, perhaps even negative. Another is that longer-term cashflows from company projects appear to be “excessively” discounted (Davies et al (2014)). This can lead to projects which boost the long-run value of the company being wrongly rejected. Consistent with that hypothesis, privately-owned companies seem to invest more than otherwise-identical public companies (Davies et al (2014)). There is some debate about where the blames for this corporate myopia problem may lie. Some place it at the door of shareholders, driven to demand short-term returns by short 4  BIS central bankers’ speeches  holding periods. Others blame management for seeking short-term financial gain given their short tenure. This distinction may anyway be artificial. In a world where executive compensation is largely in stock, the two are one and the same, their incentives largely indistinguishable. So how does all of this link to inequality? If impatient (money-scarce) individuals are failing to invest sufficiently in skills, and impatient (short-termist) companies are failing to invest sufficiently in capital, this is a recipe for weak (human and physical) capital accumulation. This will show up in weak long-term investment and skills deficits. The most likely casualties from this are productivity and growth. If there are legs to this story, then one important element is corporate governance. This defines decision-making within firms – how much to invest, how much to distribute, and to whom.
Page 2 of 20  Central Bank of Chile September 2019  In 1981, annual output growth went from positive 9% in the first quarter, to 0% in the fourth quarter, and to minus 14% in 1982. That same year, unemployment reached a record of 25%, and businesses all over the country were seriously hampered, ultimately affecting their solvency. Banking profitability went quickly to negative territory and the delinquency rate quadrupled to 15% of the total portfolio, putting several banks at risk. Several factors contributed to the deterioration of the macroeconomic environment in 1982. External interest rates rose, the availability of external credit decreased, and terms of trade worsened in the wake of the escalation of oil prices. This put enormous pressure on the Chilean peso—which had been under a fixed exchange rate scheme since 1979. This regime broke down dramatically and spread to almost all business sectors, given large FX exposures, and heavily leveraged financial conglomerates. Page 3 of 20  Central Bank of Chile September 2019  All these factors interacted with one another to become an outright banking crisis. Nevertheless, whatever the causes of the crisis, unsustainable debt was mostly explained by internal vulnerabilities: inappropriate regulation, weak supervision, and lack of attention to excessive credit growth, leveraged on a fixed exchange rate scheme. The lessons learned from this crisis highlighted the fact that banking regulation and supervision needed to be substantially upgraded.

This requires compatible incentives in the system and a strong ethical foundation built within institutions which will ensure that insurers and takaful operators act responsibly within an environment that allows greater business flexibility. The strategic issues before us today concern the industry's responsibility to deliver a fair proposition to consumers, its relevance in the changing environment and its readiness in terms of capacity and infrastructure to support and sustain a successful strategy for growth. It is hoped that discussions at this dialogue will contribute towards the thinking on future corporate strategies as well as on the regulatory responses to ensure sound development. This will be an opportunity to engage actively in the discussions on these keys issues confronting the industry in moving forward. I wish you a successful and productive dialogue. Thank you.
Banks accounted, however, for around 20% of the € billion euro total investment in FinTech in 2014, and collaborations between banks and non-banks a further 20%. Non-banks accounted for the remaining 60% – a clear gap to close. 2 But should policymakers also take an interest in how this disruptive process unfolds? Or should they just stand back and let the market work? I would offer a somewhat nuanced view. In principle, I would always prefer as little interference as possible in the creative destruction process. History shows us that new entrants have brought many benefits to the retail payments market. For example, merchants were the initial drivers of the introduction of payment cards in the US in the 1930s and, just a couple of years ago, it was a mobile network operator in Kenya that succeeded in making mobile payments widespread in that country. PSD2 was introduced precisely because there is no good reason for the regulatory framework to protect the rents of banks. But policymakers also need to monitor carefully the system-wide impact of these technologies. Innovation should not come at a cost to consumer protection. We do not want a situation where unregulated non-banks create pressure for a race-to-the-bottom among more regulated banks, which might be detrimental consumer security. Nor do we want banks that must comply with higher consumer protection standards to be disadvantaged. So going forward, policymakers must ensure that the regulatory landscape is fair: neither stifling new operators, nor harming establishing ones.

We will not be able to do that without working constructively with the securities markets regulator and with infrastructure providers. Resilience, risks, and financial firm behaviour So far, I have spoken as if the external threats to the financial system from the business cycle and its capacity to withstand the crystallisation of those risks are essentially separate. That is not remotely true, of course. The behaviour of the financial system affects the weather. This is due to the particular features of the credit system. A credit boom leads both to borrowers becoming overindebted and, unless they have shed the risk, to lenders finding themselves overextended as well. As the probability of default rises, the capacity of lenders to absorb default typically becomes impaired. A double whammy. And a credit boom can fuel asset price rises, giving a boost to banks’ net worth and back into lending conditions, in an apparently virtuous circle, until it proves vicious.5 It matters enormously, therefore, that the system is prone to periods of exuberance in which credit conditions become loose, borrowers overextended and asset prices inflated. That owes a lot to myopia about tail risks.6 But incentives matter too. Whether the diluted incentives of bondholders to price risk in banks prudently, given a belief that they would be bailed out.