samchain/econo-pairs-v1 huggingface dataset:
John C Williams: When the facts change… Remarks by Mr John C Williams, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the 9th High-Level Conference on the International Monetary System, Zürich, 14 May 2019. * * * Accompanying Figures of the speech. Introduction John Maynard Keynes is credited with saying, “When the facts change, I change my mind. What do you do, sir?” Over the past decade, policymakers across the globe have been focused on getting their economies and financial systems back in order. But at the same time, a sea change in supply-side realities has taken place. These changes have redefined what is achievable, and challenged conventional wisdom on monetary policy. Shifting demographic trends and a slowdown in productivity are driving slower trend growth and historically low levels of real interest rates across the globe. This new set of facts requires us to rethink what we once knew, reassess how to best foster strong and stable economies, and ready ourselves for the future. With that start, it’s time I remind everyone that the views I express today are mine alone and do not necessarily reflect those of the Federal Open Market Committee or others in the Federal Reserve System. The Road to Recovery Following the global financial crisis, central banks took bold and decisive actions to right their economies and bring them back to health. Short-term interest rates were brought to near zero— in some cases below zero—and held there for many years (Figure 1).

Mohd Razif bin Abd Kadir: Economic outlook and business opportunities in Malaysia Opening remarks by Mr Mohd Razif bin Abd Kadir, Deputy Governor of the Central Bank of Malaysia, for Malaysia Country Showcase at the IFSB Summit: "Economic Outlook and Business Opportunities in Malaysia", Dubai, 14 May 2007. *  *  *  I would like to welcome you to the Malaysia Country Showcase held in conjunction with the 4th Islamic Financial Services Board Summit. On behalf of the Malaysian delegation, I wish to thank you for your presence here on this important occasion as it gives us an opportunity to share the Malaysian business proposition and to nurture strong trade and investment ties in the region. We are fortunate to have with us distinguished panel of experts who will be engaging in an interactive discourse. Today's forum provides a platform for greater awareness of the economic climate and outlook as well as the business potentials and opportunities in Malaysia. A decade after the financial crisis, the Malaysian economy including the financial system is at its strongest position. Malaysia has greater economic flexibility to shift to new areas of growth and thus sustain the development momentum. Economic growth has been achieved with relative price stability, low unemployment and strong external balances. The level of savings remains high at 37 percent as a percentage to the GDP and the level of external reserves remains strong at USD91 billion.
The Fund should be a forum in which countries can discuss these risks. It should also hold countries to account. In these ways, it can indirectly support global monetary stability. With countries naturally reluctant to cede any control over their own monetary and fiscal policies, it is likely that the IMF will have as instruments only the powers of analysis, persuasion, and, in Keynes’ own favourite words, “ruthless truth-telling”. That phrase does not conjure up many memories of any of the many international meetings I have attended. But unless the IMF has the self-confidence to play  4  BIS Review 11/2006  that role, its deliberations and statements will carry little weight. The Fund requires an independent, respected and clear voice. The Fund should focus its work on the international monetary system around three tasks. First, it should provide and share information about the balance sheets of all major countries, their composition and size, and the links between them. The Fund has been in the forefront of the analysis of balance sheets for emerging market economies, and it needs to extend this approach to its surveillance of the industrialised world. In conducting this analysis, the Fund must look at countries’ exchange rate choices. But no one price is a sufficient statistic for the effect of one country’s policies on the rest of the world - even one as important as the exchange rate. Balance sheet analysis should be at the heart of the surveillance process.

Some of the more idealistic aspirations for Bretton Woods – such as the creation of an international central bank and new currency – were never likely to be adopted and look impossible absent a world government. But an arbiter of the international monetary system can play a more limited role – not so much the referee brandishing the yellow and red cards of the football pitch, more the cricket umpire warning the players not to attack each other verbally and making it clear publicly when they believe the players are not abiding with the spirit of the game. Invoking the MCC’s “spirit of cricket”, when a country knows that a policy such as an exchange rate regime requires modification, the player should walk. Indeed, the players might in time come to realise that most games benefit when played according to a clear and agreed set of rules. So although it is not an international central bank, and the SDR is not a currency, the IMF still has a role to play. Given that most systemically important countries allow their exchange rates to float, the Fund cannot have an independent remit for global monetary stability. Hence, the Fund’s role should be to support national policy makers by providing expert analysis about external risks to their domestic monetary policy objectives. National policies which appear sustainable in terms of countries’ own objectives may interact and, through the resulting balance sheet effects, create risks to those same countries further ahead.
The lesson that the foundations for resilience are built during good times was earnestly embraced. Therefore, once stability was restored, the Bank embarked on a comprehensive restructuring and reform of the financial sector. This included the consolidation of domestic financial institutions; the strengthening of corporate  4  BIS Review 12/2009  governance, risk management and the institutional capacity of domestic financial institutions; as well as the deepening of the bond market. These efforts have put the Malaysian financial system in a much stronger position to weather the current global financial crisis. Regional cooperation From the beginning, the Bank has had an active engagement in the region and was from the very beginning part of the SEACEN grouping which is the oldest and most inclusive regional grouping. Starting in 1967, SEACEN has been a valuable regional forum. While it is a group of highly diverse economies, this did not prevent it from being a cohesive grouping. The permanent secretariat of SEACEN resides in Kuala Lumpur since 1979. The Bank is also part of other groupings including EMEAP and the Asian Consultative Council (ACC) of the BIS. Collaborative efforts in surveillance, regional financial market development and sharing of information have been extensive. In Islamic finance, the Bank is a founding member of the Islamic Financial Services Board to promote and enhance the soundness and stability of the Islamic financial services industry. Modernisation of the Central Bank In the 50 years, the Central Bank has also been fundamentally transformed.

These institutions join us today in celebrating the long tradition of cooperation to meet the common purpose. Specialised development financial institutions were also established to promote access to financial services to sectors that are not being serviced by existing financial institutions. Financial inclusion, to ensure all economic activities and all segments of society have access to financial services, has been a key priority. Currently, about 80% of our population have some forms of banking accounts Other financial infrastructure established by the Bank to support the intermediation process includes the comprehensive centrally coordinated credit information system at the national level which allows for better-informed credit decisions by financial institutions. In addition, the Credit Guarantee Corporation was established to provide support for small businesses. Cagamas, the national mortgage corporation, was established by the Central Bank to ensure a steady flow of funds to the housing industry and develop a secondary mortgage market. At the centre of the financial infrastructure is the payments infrastructure which has been enhanced and modernised over the years to achieve greater efficiency and reliability of the payments system. The payments landscape has evolved from one that was mainly paperbased to include a range of new electronic forms of payment. Internet banking which was not available in Malaysia as recent as 10 years ago is now widely used by the entire population  2  BIS Review 12/2009  of internet subscribers in the country.
The additional liquidity infused into these economies occurs at a time when it is necessary to withdraw economic stimulus and normalize or even tighten monetary policy. This is an example of the inconsistency between global liquidity and regional economic cycles. 3. The second issue is the current international monetary system which is not aligning with the changing structure of the global economy. As we all know, one outcome from the current crisis is the growing role of emerging market economies, particularly in Asia. This multi-polar economic landscape is something for policymakers to consider whether there is a need to move to a multi-polar currency system. The end goal should be to retain the efficiency of the current system while enhancing its stability going forward. 4. The third issue is, despite the shortcomings of the current international monetary system, the international community has not been able to make a transition to an alternative system. In practice, it is difficult to identify a currency to compete with the US dollar as there are certain criteria to qualify as reserve currency. First, a reserve-issuing country has to illustrate a good track record of prudent macroeconomic policy. Second, such country must have an open capital account regime supported by deep and liquid financial markets. Should these two criteria are satisfied, such currency has a potential to be widely accepted and used in private international transactions. Today, it is difficult to find an alternative currency which satisfies these conditions.

Prasarn Trairatvorakul: Towards a multi-polar currency and reserve system Speech by Dr Prasarn Trairatvorakul, Governor of the Bank of Thailand, at the High-Level Conference on the International Monetary System, Zurich, 10 May 2011. *  *  *  Governor Hildebrand, Managing Director Strauss-Kahn, Distinguished Speakers, Ladies and Gentlemen, 1. I would like to thank the co-hosts, the Swiss National Bank and the International Monetary Fund, for inviting me to speak at this high-level conference. So far in this session, we have listened to a number of insightful presentations by well-known speakers. To avoid repeating what has been said, I will try to frame my talk from the perspective of a small emerging market economy. My focus will be on the three problematic issues facing emerging market economies and the current international monetary system, and how we may think of what needs to be done to put our international monetary system on a more sustainable path. 2. Let me start with the first issue. As of now, excess global liquidity generated under the current international monetary system is complicating the conduct of macroeconomic policy in many emerging market economies. Although the expansion of the global economy has strengthened in the past few quarters, economic cycles and thus monetary policy stance among various regions greatly differ. This has been widely regarded as a key push factor for international capital flows into emerging markets.
All business executives worth their salt organize their teams and resources to minimize uncertainty of factors under their control; and they develop contingencies and operating tactics and strategies for factors over which they have no direct control. Obviously, the less-clear external influences are, the greater the degree of angst about budgeting and planning for the future. Even the saltiest of helmsmen cannot confidently navigate a ship in a dense fog. Going back to the earliest days of the current recovery, my business contacts have regularly complained of the fog of uncertainty emanating from Washington: They have consistently cited fiscal and regulatory uncertainty as major impediments to capital investment and expanding payrolls. Given uncertainty about the implications for overhead of the Affordable Care Act and other government mandates, they’ve complained of not knowing what their all-in labor and other costs will be and of how that lack of knowledge has made long-term employment planning nearly impossible. I’m sure that many of you have heard similar complaints – or have voiced them yourselves. What you may not realize is that until quite recently, economists who study business cycles and monetary policy paid scant attention to the effects of uncertainty on aggregate job and output growth. The profession’s standard models assume that the economy is populated with households and firms that are identical to one another, or that people and businesses can insure away individual risk and so are effectively, theoretically, identical.

Interbank GIRO (IBG) grew at a higher rate of 36% in 2014 and this strong growth rate was sustained at 36% in the first 9 months of this year compared to an average rate of 19% between 2011 and 2013. Instant Transfer (IBFT), the real-time fund transfer service on the other hand, has consistently maintained its high growth rate of over 60% since 2011. This contributed to an increase in Malaysia’s e-payments per capita which is projected to increase from 43 per capita in 2010 to an estimated 80 per capita in 2015. BIS central bankers’ speeches  1  To reduce the country’s dependency on cash usage, Bank Negara Malaysia has implemented the Payment Card Reform Framework this year with the objective to create an enabling environment for the expansion of payment card terminals and higher usage of debit cards at affordable and reduced costs. In this regard, encouraging progress is seen in the area of deployment of payment card terminals. Payment card terminal growth which had slowed from 14.6% in 2011 to 4.5% in 2014, is likely to rebound to an estimated growth rate of 12.0% for 2015. This would increase the number of payment card terminals from 8 per 1,000 inhabitants in 2014 to 9 per 1,000 inhabitants in 2015. We envisage that with the implementation of a Market Development Fund by the payment card industry, about RM455 million funds would be used to deploy additional terminals and spur the expansion of the terminal network.
Clearly, these estimates are only illustrative and should be understood as a ceiling for the actual effects, as it is probably difficult to achieve such a low non-performing loan ratio in a setting of lower indebtedness and with significant changes in credit portfolio composition. 17/29  And also because part of the increase in banks’ costs are the result of technology investments, which are allowing banks to adapt to the new environment and are therefore essential. They are also indicative of the measures that banks should be prioritising. Fourth, the role that consolidation can play as a mechanism for harnessing economies of scale and improving efficiency and, therefore, for increasing profitability, is regularly discussed. Added to this is the cost pressure associated with the high IT investments being made to address changes in a competitive environment with new competitors. And also the need for banks to have preferential access to international capital markets to be able to respond efficiently to the implementation of the new post-crisis banking regulations and, especially in Europe, to comply with the MREL requirements. In the last decade the Spanish banking sector has already undergone a very significant consolidation process. Specifically, since 2009 the number of banks has fallen by more than 30%. Looking ahead, potential future consolidation processes should be led by the market, in other words, by value creation for shareholders, while we supervisors should ensure that these processes do not undermine financial stability.

In view of this situation, central banks have responded by further easing monetary conditions. In the case of the European Central Bank (ECB), at our September meeting we resolved to launch a package of measures which included cutting the deposit facility interest rate by 10 basis points (bp) to -0.50%, strengthening forward guidance on interest rates and improving the financing conditions of quarterly targeted longer-term refinancing operations (TLTRO-III). We also decided to resume net purchases under the asset purchase programme at a monthly pace of € billion as from 1 November and without a defined time limit. Our analysis indicates that this package of monetary policy measures provides a substantial monetary stimulus which will help to further ease the conditions of lending to households  2/29  and firms and thus assist the economic recovery of the euro area and, consequently, the sustained convergence of inflation towards our medium-term target. In any event, from the financial stability standpoint, the downward revision of the growth and inflation outlook and the resultant higher expectation that interest rates will remain very low, or will even be negative for a further period pose challenges of at least two types for credit institutions. First, this macroeconomic context will represent a challenge for deposit institutions to recoup levels of profitability more in line with the cost of capital. Indeed, in the last few months market expectations for growth of bank profits have declined.
In a world where attention to our analysis is limited, it may be preferable to keep our ‘audience’ focused on the MPC’s analysis of the outlook for output and inflation. Sometimes that analysis lends itself naturally to a contingent statement, by individual members, of a possible path for policy. I have already referred to one such example around the end of 2003/beginning of 2004. In a similar vein, circumstances may arise where we explained the broad path for inflation we were trying to deliver. For example, a shock to the economy might be sufficiently nasty that returning inflation to target on the usual timetable would threaten undesirable volatility in output. We might then want to set policy in a way that accepted deviations from the inflation target for a period, while committing to achieve the target in the medium run. Related to that, our mandate makes specific provision for communication if inflation outturns were to miss our target of 2% by more than one percentage point. In those circumstances, the Governor of the Bank would be obliged, as part of the Committee’s public accountability, to write an open letter to the Chancellor of the Exchequer explaining why inflation had deviated from target, the Committee’s plan for returning to target, and its time horizon for doing so. Such circumstances have not yet arisen, but they illustrate that provision is made for theCommittee to explain what commentators would call its strategy.

Government has also set a financial access target of 50 percent by the end of 2009 under the Performance Assessment Framework (PAF). The holding of this Conference is therefore, consistent with our aspirations to increase levels of financial access in the country. As earlier alluded, the aim of this Forum was to bring together practitioners and regulators of microfinance to learn from each other in order deepen and broaden financial services provision. In this regard, the forum has a number of eminent persons who will share with us their unique experiences. 2  BIS Review 46/2009  Ladies and Gentlemen: This FIA programme is customized and among the issues that will be addressed include the following: 1. Emerging best practice in microfinance;  2. Self-help group models for microfinance, which may be viable for countries in our region;  3. Microfinance product development knowledge and risk management strategies; and  4. Specific micro-credit practices for agricultural-related businesses, which is relevant for most our countries’ strategies to diversify into agriculture. Distinguished Participants: We consider the timing of this workshop appropriate given the impact of the on-going global financial crises. I therefore, call upon all of you to take advantage of this unique opportunity to learn and share experiences, so that we can come up with efficient and effective ways of advancing financial inclusion in our respective countries.
In these respects it is also possible to produce various numerical examples and simulations. Alternative assumptions can be made, for example, about what would be a reasonable exchange rate in the long run and test them against different underlying cyclical developments. An important issue for the Riksbank here is the effect on inflation. If it is found that inflation would be unduly high, for example, fiscal policy might have to be tighter. The interaction of the business cycle, for example, and the choice of fiscal policy and exchange rate can be studied in this way. The discussion would benefit from several independent analyses of this kind. Economic policy in ERM2  If Sweden becomes a full participant in the monetary union, the conditions for Swedish stabilisation policy will change. The task of conducting a stabilisation policy for Swedish needs would then rest - to the extent that it is considered desirable - entirely on the Swedish parliament or Riksdag and the Government. I want to underscore that this change already takes place essentially during the period in ERM2. It should be noted that a good state of readiness is absolutely essential. At the Riksbank we usually reckon that it takes between 1 and 2 years for changes in monetary policy to elicit their maximum effect on the rate of inflation. We do not know exactly what the corresponding time lag is for the real economic impact of fiscal policy.

Purchasing power parity, which is the simplest exchange rate theory and presupposes, it is important to note, that the real exchange rate is constant over time, states that movements in nominal exchange rates are explained by differences in relative rates of inflation. It turns out, however, that Sweden's higher average rate of inflation in this period compared with the euro area explains only half of the krona's depreciation (Table 1). In other words, purchasing power parity tells us that one euro ought to cost about 6.75 kronor, which is quite a lo ng way from the current SEK/EUR rate. The rest of the krona's depreciation accordingly mirrors a weakening of Sweden's real exchange rate with the euro area, that is, a trend where Swedish goods become cheaper than goods produced in the euro area. The path of the real exchange rate is influenced by a number of so-called fundamental variables. Since the real exchange rate is basically an 'ordinary' relative price, the explanatory variables are, of course, the fundamental conditions for demand and supply in the domestic economy relative to the rest of the world. Relative GDP growth or relative productivity growth are commonly used. The hypothesis is that real exchange rates appreciate in countries where growth and productivity gains are higher than elsewhere. The mechanisms behind this relationship differ somewhat, depending on the model, but it does seem to be supported empirically. This can be summarised by saying that, as Swedish tourists often discover, "Goods are more expensive in rich countries".