samchain/econo-pairs-v1 huggingface dataset:
Hence, we took early preemptive action by lowering the policy rate and it stands at 0.5 percent now, which is the historical low for Thailand and lower than other countries in the region. This is to ensure that financial conditions are not a constraint to the recovery. We have also taken steps to ensure that aggregate liquidity in the system remains ample and is not a constraint to the economic recovery. However, while the aggregate liquidity remains ample as reflected by various liquidity indicators and the banking system has undertaken its shock absorber function and continued to extend credits to many sectors of the economy, we have seen credit growth that remains positive for large corporates, growing at about four percent year-on-year. The continued credit growth also extended to the retail and household sectors. However, the area where credit growth is below expectations is the SME sectors. This reflects increased perceptions of risk associated with the SME sectors which have made banks reluctant to lend to SMEs despite aggregate liquidity being ample. Therefore, in terms of a policy response, we have taken a flexible and pragmatic approach and try to address the real constraints to credit growth to SMEs which is the issue of high perceived risks among SMEs by introducing a credit guarantee facility. This is to accompany our lending facility to encourage banks to lend to SMEs.

We are a country that is, in terms of population and employment, quite significantly dependent on agriculture, about 30 percent of our labor forces is tied to agriculture. So obviously, higher temperatures and higher risk of droughts and floods will severely hit the agricultural sector. Thailand is also highly dependent on tourism, the beach tourism, and so substantial rises in sea levels will hit our country very hard. Therefore, as a country that is very vulnerable to climate change, I think it is beholden upon us to take much stronger initiatives on the climate change and the green front. Page 6 of 9  On Thailand’s development on the green front, I welcome a lot of initiatives that happened in Thailand, especially in the capital markets. We have seen the Stock Exchange of Thailand launching the Thailand Sustainability Index, which is an index composing of green and sustainable listed firms. We have seen our colleagues at the Security Exchange Commission undertaking welcomed initiatives with the Environmental, Social and Governance (ESG) bonds, which are seeing a significant growth in Thailand. I would also like to see that progress on the banking side catching up that of the capital market as the banking side, both in Thailand and globally, still lags in terms of green and climate initiatives that have already been undertaken by capital market participants. Thus, we, at the Bank of Thailand, will do our best to make sure that the banking sector catches up and does play its role as needed.
Since the crisis, euro area nominal GDP has increased by a mere 5% in almost seven years. Consumer price inflation is already below zero. Core inflation has been running at or below 1% for over a year. This is potentially dangerous. Low nominal growth is intensifying the euro area’s debt burden (Chart 4). 15 The fear of stagnation is holding back spending and investment. The ECB’s actions last week were timely and welcome. They were also important not least because they removed any residual concerns about whether it has the will or means to meet its price stability mandate. By doing so, the ECB has reduced tail risks associated with the debt overhang to the extent monetary policy can or should. 14  Unit labour costs rose by 0.5% in the year to 2014Q3, and unit wage costs rose by 0.9% over the same period, based on the MPC’s backcast for UK GDP. 15  Aggregate euro-area household debt was 61% of GDP in 2007 and stood at 64% in 2013. The corresponding figures for non-financial corporates were 94% in 2007 and 100% in 2013 and 66% and 92% respectively in the aggregate government sector. BIS central bankers’ speeches  5  However, the ECB alone cannot eliminate the risks of a prolonged stagnation. These exist primarily because, in most respects, the current construction of the euro area is unfinished. 16 With limited cross-border banking in the euro area, savings don’t flow to potential investments.

In addition, greater direct market-based debt financing could also help share risks. For historical reasons Europe has a much less well developed system of market-based finance, with banks dominating the provision of credit. 22 This need for diversity is one reason why the Bank of England and the ECB are working towards proposals to revive the European securitisation market. 23  21  See ECB (2014), “Aggregate report on the comprehensive assessment”, October. 22  In the euro area, banks have historically played an important role in financing the real economy. Banks loans account for around 50% of firms’ external financing, which is very different from the US where around 80% of firms’ financing comes from capital markets (equity and debt securities). 23  Had debts taken the form of corporate bonds or proper securitisations with real risk transfer, defaults by borrowers in the periphery would have been passed to the creditors in the core and this would have meant the financial system was more reliably available post crisis. BIS central bankers’ speeches  7  To achieve this, the significant home bias in equity investment within Europe will need to be reduced, through measures such as the removal of national restrictions on investments by funds, greater provision of cross-border borrower information and greater pre and post trade transparency of prices and investment terms. These reforms hold out some promise of helping to prevent a repeat of the crisis. Unlike banking union, they do not require institutional changes.
It is argued that similar operations should be done rather by the Ministry of Finance against issuance of the public debt. The Federal Reserve is probably aware of the delicacy of current situation and Chairman Ben Bernanke recently tried to assure the economic society that the Federal Reserve is prepared to close the respective funding windows when necessary. 2 However, a question that remains to be answered is how this will work in reality? Ladies and Gentlemen, instead of a conclusion let me please assure you that in spite of all the frontiers we face today the Czech National Bank does its business as usual and we will do whatever is necessary to meet our ultimate objective of price stability. Finally, I would like to wish to all of us for the year 2009 to be less challenging than the previous one. 2  See speech of Chairman Ben Bernanke: “Crisis and the Policy Response” at the Stamp Lecture, London School of Economics, London, on January 13, 2009. 2  BIS Review 20/2009

However, with regard to leveraged finance, risk managers find it difficult to appropriately and effectively play their role in a market environment characterised by fierce competition. More specifically, there are three areas where we are currently pushing for improvement. First, with regard to procedure, historical credit norms are beginning to weaken and more market-friendly structures have been adopted – I already mentioned the covenant-lite issue. In that regard, the thorniest aspect is the credit approval process. The speed of credit approval has become a cornerstone of competitiveness in the market for leveraged finance. In order to increase their market share, banks have significantly shortened their internal validation process. Anecdotal evidence suggests that many deals are presented by the borrowers as “take it or leave it”. In some cases, potential borrowers requested approval within 48 hours. To me, it seems rather challenging to properly understand a deal within 48 hours – both for the front office as well as for risk management. Second, with regard to limits, risk managers need to be alert regarding a shift towards structures that support an expanding business. Most banks have limits in place with regard to exposures held on their own books. However, these limits have sometimes been shifted upwards to accommodate business needs and the prospect of rewarding transactions; the underwriting limit, for instance, has on average increased by 49% between 2012 and 2014. In such circumstances, risk managers should ensure that stress tests adequately reflect the higher limits.
All these factors have acted simultaneously, mutually reinforcing one another in such a way that it is difficult to assign a specific weight to any of them. Let me refer first to the demographic impulse, to which particular attention is devoted in the Annual Report presented today. Migrant flows, drawn by the substantial and constant expansion of demand, have been in turn a key factor in supply dynamics. This is because the rise in the immigrant population has increased the economy’s productive capacity by means of the incorporation of abundant labour resources, while it has at the same time contributed to sustaining domestic spending growth. The Report highlights the fact that the contribution of immigration to income generation has been greater than that arising from the mere increase in population, also helping to raise per capita income. The Report also indicates that the effects on the expenditure side seem to help galvanise investment and that, in the labour market, they have introduced elements of wage flexibility and boosted mobility. Furthermore, the dynamic effects of immigration have been bolstered by the impact of the growing participation of women in the labour market. With regard to demand-side impulses, it should be stressed that economic buoyancy has continued to be underpinned by monetary and financial conditions which, despite their gradual normalisation over the course of last year and in 2007 to date, remain loose for the Spanish economy.

Since the number of homes cannot adjust quickly, rising demand during a boom typically leads to rapid rises in prices and unregulated rents. Eventually, of course, the amount of housing supplied responds to changes in demand. So, how did the economic expansion and contraction affect New York City’s housing market? For a mature city, the city saw an unusually strong boom in housing sales, construction and prices. This expansion actually began in 1996 and continued even in the aftermath of the 9/11 attack. Since 2007, however, New York City’s market has turned down. This decline started later than the nation’s and prices have fallen less sharply. Now, prices appear to have stabilized. This pattern can also be seen in Manhattan’s rental market. After a long period of rising rents, the market weakened substantially from 2007 to 2009, and rents have rebounded moderately in 2010. New York City has not been spared from the high rates of mortgage delinquencies characteristic of this recession. Manhattan’s delinquency rates are elevated although they remain markedly below the national average. By contrast, pockets of distress are much more prevalent in the outer boroughs, all of which have delinquency rates, per owner-occupied unit, above the national average. The relatively mild recession and the recovery in the City are lending support to both home prices and sales. Also positive, compared with the rest of the country, are the City’s low mortgage leverage rates and a low share of homes with underwater mortgages.
Just as our operations have had to adjust, at speed, so too has the way we interact with one other. Face-toface meetings – the lifeblood of central banking, sadly – have been seamlessly replaced with audio and video calls. Indeed, over 12,000 of them every day (Chart 17)! The challenges we have faced are minor compared with those of healthcare professionals and other key workers in recent months – and many other organisations have achieved similar feats. But for an institution as traditional as the Bank of England, the experience has been profound. 13  All speeches are available online at www.bankofengland.co.uk/news/speeches  13  Chart 16: no. of market operations per week  Chart 17: The impact of remote working  Contingent Term Repo Facility (CTRF) Indexed Long-Term Repo (ILTR) Term Funding Scheme with additional incentives for SMEs (TFSME) Asset Purchase Facility - Corporate Bonds & Gilts No.

It is crucial for long-term financial stability that those who make long-run debt commitments are fully aware of this reality and that they plan accordingly. What about inflation risk? Personally, I do not share the view that the current period of central bank activism will be followed by a resurgence of inflation. First, contrary to common assertions, persistent - as opposed to unanticipated - inflation is limited in its capacity to reduce sovereign debt burdens. Second, the low levels of inflation we are currently experiencing are the result of improved monetary policy, combined with a general acknowledgement that inflation does not buy durable economic performance. Neither of these factors are affected by recent events. We can therefore anticipate that, with current or enhanced levels of understanding of monetary mechanisms, and central bankers’ continued preference for price stability, future inflation levels will resemble those of the last 20 years. References Bernanke, Ben S. 2005. The Global Savings Glut and the U.S. Current Account Deficit. Remarks at the Sandridge Lecture, Virginia Association of Economists, Richmond, Virginia. 10 March 2005. Borio, C., and P. Disyatat. 2011. “Global imbalances and the financial crisis: link or no link?” Bank of International Settlements. Working Paper No. 346. May 2011. Gagnon, J., Raskin, M., Remache, J. and Sack, B. 2010. “Large-scale asset purchases by the Federal Reserve: did they work?” Federal Reserve Bank of New York Staff Report No. 441. IMF. 2005. Building Institutions. World Economic Outlook (International Monetary Fund). September 2005. Joyce, Michael, Ana Lasaosa, Ibrahim Stevens and Matthew Tong. 2010.
Central banks are meant to provide liquidity support only to solvent firms so that the central banks avoid taking on credit risk. An overreliance by firms on access to central bank liquidity can expose the central bank to the risk of loss. Finally, in some cases, central bank liquidity provision can become stigmatized. In this case, financial firms are prone to underutilize this source of liquidity – a decision that can have adverse consequences for markets and the availability of credit. Liquidity buffers reduce the likelihood that this stigma constraint will become binding. The on-going Basel discussions have focused on a short-term liquidity requirement – the Liquidity Coverage Ratio (LCR); and a longer-term liquidity requirement, the Net Stable Funding Ratio (NSFR). The intention of the LCR is for banks to hold sufficient high-quality, liquid assets that can be easily and quickly converted to cash to cover expected liquidity outflows in a stress scenario over a 30-day period. Unlike illiquid assets, the conversion of these high quality liquid assets into cash should not create any fire sale dynamics. However, it is important that banks actually use this liquidity buffer when there are liquidity outflows, rather than attempting to maintain their LCR at 100 percent by selling other assets. The OTC derivatives markets remain another important source of potential instability.

Let me elaborate on these two themes: why liberalise the financial sector, and why liberalise at a measured pace. In doing so, I will draw partly from Singapore’s experience. Singapore and Myanmar are two very different economies and it would be unwise to apply Singapore’s experience directly to Myanmar. But I think the overall lesson is relevant: It is critical to open up, but open up at a measured pace. Why financial liberalisation is important A well-developed financial sector can be a catalyst to spur and sustain economic growth. It will lead to more effective mobilisation of domestic savings, help to harness foreign savings, and improve the efficiency of investment allocation. And opening up the financial sector to foreign participation can play a critical role in catalysing the sector’s growth and development. A basic purpose of banking is the provision of credit for economic and social development. Large segments of the Myanmese economy and population do not have access to affordable funding. Foreign financial institutions can complement the local banks in effective credit intermediation. It will deepen the financial sector, thereby helping to raise household savings and divert funds away from the shadow financial system. Foreign financial institutions can provide a channel for Myanmar to tap into foreign savings to drive its growth, even as the country ramps up the mobilisation of domestic savings. This is  BIS central bankers’ speeches  1  particularly relevant for financing infrastructure development, which is critical to drive Myanmar’s economic growth.
Also see “The Riksbank’s inquiry into risks on the Swedish housing market,” 2011, and “Financial imbalances in the monetary policy assessment”, article in the Monetary Policy Report, July 2013. 7  See Andersen, A.L, Duus C. and Lærkholm Jensen T., “Household debt and consumption during the financial crisis: Evidence from Danish micro data”, Working Papers 89, 2014, Danmarks Nationalbank, Dynan, K.,” Is Household Debt Overhang Holding Back Consumption?”, Brookings Papers on Economic Activity, 2012, and Mian, A. Rao, K. and Sufi, A., ”Household Balance Sheets, Consumption, and the Economic Slump”, Quarterly Journal of Economics 128(4), pp. 1687–1726, 2013. 6  BIS central bankers’ speeches  Figure 7 The relationship between indebtedness and the development of consumption among Danish households during the financial crisis Per cent 4  4  2  2  0  0  Change in -2 consumption between 2007 and 2009, in relation -4 to income in 2007  -2  -6  -6  -8  -8  -10  -4  0  50 100 150 200 250 300 350 400 450 500 550 600 650 700 Debt-to-income ratio in 2007  -10  Source: Andersen, A.L, Duus C. and Lærkholm Jensen T., “Household debt and consumption during the financial crisis: Evidence from Danish micro data”, Working Paper, Danmarks Nationalbank. One hypothesis argues that highly indebted households particularly increased their indebtedness before the crisis with the aim of increasing consumption, based on, for example, optimistic expectations.

Measures which set an upper limit for individual household indebtedness can therefore be effective in terms of reducing the risk of weak macroeconomic growth, even though the effects of the total debt-to-income ratio would be limited. The Riksbank’s previous analysis has also shown that a debt-to-income limit (that is to say a limit for how large debt can be in relation to disposable income) could be an effective complement to the current loan-to-value limit. 16 This is due to the fact that incomes grow in a more stable way than housing prices. Whenever housing prices increase sharply, there is a risk that debts will continue to increase in relation to incomes if the only limitation is a loan-tovalue limit. A debt-to-income limit is also more effective in terms of preventing interest payments taking up too large a share of incomes in the future. So those are the measures we could take. But what would happen to household indebtedness if no further measures were taken? A few different scenarios for household indebtedness Normally, the Riksbank creates forecasts regarding household indebtedness three years ahead. Making an assessment any further ahead than this would involve considerable  16  See the article “Debt-to-income limit as a policy measure” in the Financial Stability Report 2015:1, and Alfelt, G., Lagerwall, B. and Ölcer, D. (2015) “An analysis of the debt ratio ceiling as a policy measure”, Economic Commentary no. 8, 2015. Sveriges Riksbank. BIS central bankers’ speeches  13  uncertainty.
And it would also allow non-viable firms to fail faster, supporting reallocation to more productive ones. This is the message of a recent analysis from the European Commission, which finds that a good insolvency framework is associated with speedier adjustment of non-performing loan ratios.12 Symmetrical rebalancing That said, it is also clear that sustainable rebalancing cannot only involve measures in crisishit countries. Rebalancing has to be somewhat symmetrical, i.e. surplus countries also have a contribution to make. Such a contribution is partially about strengthening domestic demand, though we know that spillovers to crisis-hit countries through higher imports are likely to be small.13 But what is more important, in my view, is the role of surplus countries in supporting euro area price stability – i.e. an inflation rate of below but close to 2%. This would allow the remaining relative price changes within the euro area to take place against a higher nominal bar. And that would in turn avoid deflationary nominal adjustments that raise real interest rates.14 So how could this be achieved? As I already mentioned, wages have been rising more robustly in surplus countries, which is welcome and consistent with rebalancing. Yet some argue that more is still needed in terms of demand-side policies. Such measures would no doubt support euro area price stability. But they would have very limited impact on potential output and the permanent income of households. One can therefore question how much they would, in isolation, contribute to a sustainable rebalancing over the medium term.

Another factor in favour of focusing on productivity is that the types of reforms that will deliver productivity growth are likely to have less negative effects when monetary policy is at the lower  9  See Cœuré, B. (2014), “Structural reforms: learning the right lessons from the crisis”, keynote speech at the Economic conference, Latvijas Banka, Riga, 17 October. 10  See https://www.imf.org/external/pubs/ft/sdn/2015/sdn1522.pdf. BIS central bankers’ speeches  5  bound. That is because they act more on fixed costs than marginal costs, and hence have less impact on prices and real rates. For example, measures such as judicial reform or opening up closed professions are likely to primarily boost investment – and hence productivity – with little disinflationary effect. For all these reasons, and as I have said on several occasions11, seeing rebalancing as all about cutting costs – which is what policymakers often think of as “competitiveness” – is misguided. Productivity growth is central to competitiveness and to growing out of debt. This is confirmed by the IMF exercise I just mentioned: the benefits of wage moderation diminish as more countries engage in it, whereas if all countries engage in structural reforms to raise productivity the benefits are large and uniform. Among the structural reforms that reduce fixed costs, one that is likely to have the strongest impact in the current environment is improving insolvency regimes. This would help tackle the debt overhang for viable firms by reducing the costs of debt workout.