samchain/econo-pairs-v1 huggingface dataset:
I will briefly deal with the general approach, then discuss the instruments available to mitigate procyclicality. General approach As in many matters of public policy, there is a choice between rules and discretion in dealing with procyclicality. The rule based approach can be built on "automatic stabilizers" which would constrain institutions in their behaviour, regardless of their own individual situations. Examples would include contra cyclical capital requirement, for instance, as well as dynamic provisioning. Alternatively, discretionary action could consist in "top down" interventions from macro prudential authorities. They would step in and impose (or relax) constraints whenever they come to the conclusion that dangerous imbalances are building up (or unwinding). We probably cannot dispense of this second approach. The difficulty to date cycles makes it dangerous to rely purely on automatic mechanisms, which cannot be precisely calibrated. Financial cycles, in particular, are driven by changes in risk appetite which are impossible to predict. Actually, one essential objective of macro prudential supervision may be to "regulate" (not in the legal sense, but economically) the aggregate level of risk appetite inside the financial system. This unavoidably involves some degree of discretionary judgement. How that judgement is made will determine the relevance and effectiveness of macro prudential supervision. The prudential apparatus has worked in the past on the presumption that all movements in asset prices were based on fundamentals. This approach may prevent supervisors from dealing with excessive procyclicality until it is too late. The existence of bubbles, for instance, is impossible to prove until they burst.

If assets market are booming and perceived returns are high, banks will always find the necessary capital, whatever the regulatory requirement. They will be able to both meet those requirements and distribute profits. Conversely, capital dries up during downturns, when it is  4  BIS Review 94/2009  most necessary 9 . There is clearly an asymmetry with strong equity outflows in boom times and no inflows in bad times. It is not clear that Introducing counter cyclical capital requirements will suffice to counteract this very powerful dynamic, especially in bad times. It may be necessary to look at other tools in order to address procyclicality and pre-empt the build up of imbalances. Those tools have to act more directly on individual and collective incentives. This is where accounting may matter most. Economically, it will always remain difficult, when looking at revenues drawn from a financial investment, to distinguish excess return from additional risk taking. But financial reporting may be conceived in such a way that this distinction is prudently introduced. There is no reasonable or practical alternative to fair value accounting for tradable securities. This does not mean, however, that any single valuation gain or loss should instantly be recognized as a profit (or loss) and financially treated as such. There is a possibility to delink valuation from income / profit recognition.
As a last resort the law therefore allows the Riksbank to provide financial support for banks that are viable but in temporary difficulties. The provision of credit is a very important instrument in the management of systemic crises. The Riksbank focuses on the banks, particularly the largest ones, because one of the main systemic risks stems from problems with the settlement of large-value payments. It is therefore important that the Riksbank analyses the overall stability of the bank sector in order to identify banks that may encounter temporary difficulties. In this way, our oversight of the payment system is extended to include much of the financial system. The continuous analysis of the financial system by the Riksbank currently focuses on three aspects: 1. Each institution’s efficiency and earning capacity, as this is liable to influence the institution’s risk behaviour. 3  BIS Review 23/1999  2. Credit risks, particularly those connected with the payment system, that is, counterparty and settlement risks. The analysis of these risks is intended to give the Riksbank a general picture of the whole system and enable the timely detection of any problems in some stage of the payment process. 3. Systemic risks from factors outside the payment system. Problems may be caused by uncertainty and a lack of confidence in the financial system. This involves other players besides the banks. Historically, it is macroeconomic imbalances that have caused confidence to decline in this way.

As virtually all economic transactions involve some form of payment, one of the financial system’s principal components is the payment system. This is clearly expressed in a statement in the main report from the Banking Law Committee, to the effect that concern for the payment system is the primary reason for supervising and controlling financial institutions. BIS Review 23/1999  2  In Sweden it is the Riksbank that provides and is accountable for the central payment system. This RIX system handles 1,500 interbank payments a day with a total value of SEK 350 billion. While it is often the central bank that is responsible for a country’s payment system, there is nothing to prevent this function being performed by some other player. In countries where that is the case, the payment system is not a central bank concern. Nonetheless, one reason for assigning the task to the central bank is the payment system’s importance for the transmission of monetary policy. Another reason is that a central bank is in a unique position to provide the liquidity that the smooth functioning of the system constantly requires. Players are liable to need a temporary supply of liquidity in order to smooth the flow of payments with other participants. The payment system can be said to consist in turn of two components: the payment infrastructure and the financial firms, mainly banks, with access to the system. The stability of the system is dependent on the proper functioning of both these components.
Sources: WB, IMF, BIS and Central Bank of Chile, based on data from Financial Markets Commission; IMF REO Western Hemisphere, 2016. Regarding the risk at the public sector, in normal times the fiscal space is determined by the fiscal rule and public indebtedness. Fiscal policy in Chile is based on a structural (cyclically-adjusted) balance rule adopted in 2000, but after seven years of strict compliance of a 1% surplus target, a tacit escape clause was called at the time Page 8 of 12  Central Bank of Chile September 2019  of the GFC, raising the structural deficit from 0.5% of GDP to 3.1%. Despite fast economic normalization afterwards, the actual structural balance never returned to pre-crisis levels and even softened targets were frequently not met in the ensuing 10 years. It is currently conducted based on an explicit commitment of the fiscal authority to attain a previously defined target. However, during times of crisis and periods of emergency Chile’s experience suggests that the space of fiscal policy is limited. In fact, the fiscal impulse of 2009 generated a fiscal deterioration that is still under consolidation. Nonetheless, in the current juncture, the Chilean economy appears to be prepared to face external shocks, but with some gaps to be filled in the fiscal front. For these reasons, several measures are being taken to achieve fiscal consolidation.

In the consumer portfolio, NBLs include retailers, family compensation funds (CCAF), savings and loan associations (S&Ls), factoring and leasing companies (F&Ls), and car dealerships. The mortgage portfolio includes endorsable mortgage loans (“mutuos hipotecarios”) issued by banks and mutual societies included among the assets held by life insurance companies (LICs). Finally, factoring and leasing companies mainly provide trade credit to businesses. Therefore most, if not all, of the lending activities of this sector is done in local currency. Having said that, we monitor this sector carefully, since the household debt issued by NBLs has increased a share of total consumer debt. Nonbank loans had a real annual growth rate of 11.5% in the fourth quarter of 2018. The contribution of debt with retailers was 4.5%; car dealership, 3.9%; CCAFs and F&Ls,1.2%; and S&Ls, Page 5 of 12  Central Bank of Chile September 2019  0.8%. In the same period, bank consumer loans grew around 5.7%. Nonbank consumer loans together were equivalent to about 58% of total bank consumer loans. This rate has been stable since 2012, although the composition has changed. Specifically, the share of retailers has been steadily increasing since mid-2013, while the share of companies oriented toward car financing has expanded more recently. As of December 2018, retailers accounted for 24.3%; car dealership, 12.1%; CCAFs, 12.1%; S&Ls, 6.6%; and F&Ls, 2.8%. High-level Policy Seminar on Integration or Fragmentation?
This matters because the size and nature of pass-through is likely to depend on the monetary policy regime. Moreover, pass-through from changes in the exchange rate to import prices, and then to consumer prices, has varied considerably over time. As my fellow MPC member Adam Posen pointed out recently, a range of studies suggest that exchange rate passthrough declined during the period of Great Stability (Posen 2010). Even ex post, the impact of the depreciation on consumer prices is hard to assess. The peak impact of the exchange rate depreciation on CPI inflation was probably somewhere in the range of 2 to 3 percentage points. While the scale of the total pass-through to retail price inflation appears broadly similar to past experience, companies seem to have passed through increases in import cost more quickly than in the recent past. 3 That quicker passthrough is likely to help explain why inflation over the past year or so has been higher than the MPC had anticipated. What evidence is this based on? The production of goods (excluding energy) tends to be more import-intensive than that of services, so the relative trends in goods and services price inflation can help to assess the impact of the depreciation on consumer prices. Between 1997 and 2008, annual non-energy industrial goods price inflation averaged around 6 percentage points lower than services price inflation. But that wedge closed during 2009, as non-energy industrial goods price inflation soared and services price inflation fell to below its historical average (Chart 1).

Together these factors can more than account for the strength of inflation. The impact of the rise in oil prices and the changes to VAT have been discussed quite extensively elsewhere and so I will not expand on them further this evening. 2 However, it is perhaps worth spending a few minutes considering the effects that the substantial depreciation of sterling has had on companies’ costs and prices. Sterling has depreciated by close to 25% since mid-2007. To get a sense of the potential impact this depreciation may have had on inflation, it is worth recalling that imported goods and services account for around a quarter of the consumer price basket. So a simple thought experiment in which import costs increased in line with the fall in the value of sterling and these increased costs were fully passed-through into retail prices would imply an increase in the price level of around 6 percentage points. Now there are many reasons why this simple thought experiment is likely to be misleading. But it does serve to emphasise the potential size of the effect associated with sterling’s depreciation and how different judgments concerning its impact could have very different implications for inflation. It was difficult to judge in advance the extent to which sterling’s depreciation was likely to feed through into consumer prices. In part, that was because this was the first example of a large exchange rate depreciation since the UK had started inflation targeting.
Opening the capital account exposes countries to increased financial volatility. The impact, however, is different for capital importers and exporters. Capital importers face the possibility that flows would abruptly dry up, thus inflicting damaging shocks to their financial systems and national economies. Capital exporters accumulate claims on the outside world and, therefore, run the risk of valuation losses (through exposure to country and exchange rate risk). Ideally, an international open capital account regime would protect both capital importers towards sudden liquidity shocks and capital exporters toward abrupt changes in the value of their assets. These are potential avenues for progress and debate. International liquidity The crisis is a powerful reminder that liquidity – both domestic and international – can never be taken for granted. The provision of international liquidity has been severely disrupted. How will it be provided in the future, and by whom? These are not new questions. In the recent period, Governor Zhu, from the People Bank of China has raised the issue of reserve currencies. According to Governor Zhu, current arrangements for liquidity provision are a source of instability and have played a role in causing the crisis. Governor Zhu has mentioned, in particular, the intrinsic contradiction embodied in the famous “Triffin dilemma”. Because the dollar is the major reserve currency, international liquidity supply depends on the US running a sufficiently large current account deficit which, by itself, aggravates global imbalances and creates instability.

Jacqueline Loh: The FX Global Code – one year on Keynote address by Ms Jacqueline Loh, Deputy Managing Director of the Monetary Authority of Singapore, at the 14th FX Week Asia Conference, Singapore, 29 August 2018. * * * Ms Eva Szalay, Editor, FX Week, 1 Ladies and gentlemen, good morning. How time flies. It did not seem too long ago when I was invited to speak at last year’s conference and I am very happy to be here again at the 14th FX Week Asia Conference. 2 Last year, I shared the launch of the FX Global Code (or the Code), its unique features and the elements that have been put in place to promote industry adherence. One year has passed, and it is timely to review developments since the launch of the Code and its impact on the global FX industry. More importantly, I would like to share with you, the priorities ahead to further embed the Code within the global FX market. FX Global Code: Overview 3 I am sure that by now, most of you would have heard of the Code. But for the benefit of those who may not have, let me provide a quick overview. 4 The Code was launched in May last year by the Bank for International Settlements (or BIS) as a single, global code of conduct for the wholesale FX market. It was developed over 2 years through a public-private partnership between central banks and key FX market participants.
Tarisa Watanagase: The prospects of the Thai economy and monetary policy Speech by Dr Tarisa Watanagase, Governor of the Bank of Thailand, at the Japanese Chamber of Commerce (Bangkok) Dinner Talk, Bangkok, 16 March 2007. *  *  *  President Banno, fellow bankers, distinguished business leaders, ladies and gentlemen, good evening. "First of all, I would like to thank the Japanese Chamber of Commerce (JCC) for inviting me to speak at this dinner." Japan's relationship with Thailand has a long history and encompasses many aspects – as a trading partner, investor and major contributor to Thailand's economic development. Japan is ranked as Thailand's number one trading partner and investor. In 2006, Japan contributed 16.3 percent to Thailand's total trade, while net foreign direct investment (FDI) from Japan constituted 32.6 percent of Thailand's total net FDI inflows. It is therefore my pleasure to be here and share my views on the Thai economy – the outlook and challenges, as well as our monetary policy, with all of you. I would like to structure my talk to cover three key areas. First, I will touch briefly on the overall condition of the economy. Secondly, and in relation to the first one, I will elaborate on recent monetary policy decisions. Finally, before concluding, I will share my views on the prospects and challenges facing the Thai economy. Let me begin with the economy. The past year was one of the more challenging times for Thailand, in terms of both political and economic aspects.

2  BIS Review 27/2007  Ladies and gentlemen. I would like to reassure you that we have always welcomed genuine foreign capital flows and investors and will continue to do so. The measure implemented in December was not meant to affect genuine investors and this was clear from the beginning. The measure announced on 18th of December clearly stated that capital inflow in the form of foreign direct investment (FDI) was exempted from the reserve requirement. And later on, as it turned out that genuine flows were still affected by the measure, we attempted to find an alternative option to alleviate pressure on the baht and adverse effects on productive sectors. To date, the exchange control measure has effectively slowed down the appreciation of the baht. On average, the nominal effective exchange rate in February strengthened by only 0.5% relative to January, compared to an appreciation of 1.7% between November 2006 and the first half of December – before the measure was implemented. After we have successfully slowed down the one-way appreciation momentum, we have allowed greater flexibility to the measure without compromising the needs to contain excessive volatility – by providing the fully-hedging option for all categories of inflows that are covered under the reserve requirement measure. We will closely monitor the hedging requirement. If its implementation is effective, we can lift the reserve requirement and keep only the hedging requirement. In safeguarding economic stability and fostering long term growth, the BoT also looks beyond the immediate horizon.
But the Taylor rule is a good test because, other things being equal, the policy rate should be reasonably well in line with it unless there are convincing reasons for a deviation. With this in mind, let us turn to the November interest rate decision. The Monetary Policy Committee decided to raise interest rates by 0.25 percentage points. That decision, of course, was based on the most recent statistics and the indications in the Bank’s forecast. First of all, inflation is far above target and is forecast to continue rising until early in 2012 before tapering off as the year progresses. Second, available measures of inflation expectations indicate that longer-term expectations are considerably above target. These measures of inflation expectations are flawed, of course – perhaps especially so at this time. Survey measures have a tendency to take excessive account of recent inflation, and bond market measures of inflation expectations are skewed by a variety of market imperfections at present. But flawed though they may be, these are the only measures we have, and it would be irresponsible simply to ignore them. Third, indicators suggest that domestic demand was strong in Q3 in spite of the global situation, and that the economic recovery is strong enough not to be derailed by resistance to inflationary pressures through modest rate interest hikes. Fourth, we have the global situation, which is mainly a risk factor at this juncture and has not yet had a measurable impact on domestic economic developments. But we did not merely raise interest rates.

The inflation target will be fully reached towards the end of 2013, which is broadly in line with last year’s forecast. The difference is that the target will be reached from above, and not below. What caused such a radical change? First of all, there were increases in oil and other commodity prices. Second, the króna depreciated by 6½% in the first half of the year, bottoming out in mid-July before reclaiming about 4% of that loss. Third, house prices rose. Fourth, wages rose far in excess of productivity increases. Early in the year, it was primarily external – and presumably transitory – factors that caused the spurt in inflation. But as the year progressed, domestic cost pressures played a progressively larger role – wage increases in particular. For example, unit labour costs are expected to increase by 5½% this year and core inflation 3 excluding tax effects was up by 4½% in October, as opposed to just over 1% at the beginning of the year. Now let us look at monetary policy year-to-date. At the Monetary Policy Committee’s first meeting of the year, in February, it was decided to cut the Bank’s interest rates by 0.25 percentage points and communicate a neutral bias regarding the future interest rate path. This proved to be the last interest rate cut of the year. What we call the “effective policy rate”, which is where the Bank’s interest rate spectrum has maximum effect on short-term market rates, was then 3.6%.
That is already pulling down on inflation and will continue to do so until spending recovers. To put money spending back on a desirable trajectory is likely to require a pick up in the growth rate  4  BIS Review 129/2009  of broad money in the economy. That is precisely what our asset purchase programme, by injecting more money directly into the economy, aims to achieve. In deciding when and by how much our present programme of asset purchases should be either expanded or reduced, the Monetary Policy Committee will continue to base its decision each month on a judgement of the action required to meet the 2% target for inflation. Before the financial crisis, a generation of households and businesses had accepted that the discipline of a market economy was the most promising route to prosperity. Uncomfortable though it seemed, the importance of more flexible labour markets, greater competition in product markets, regulation of privatised utilities and allowing unsuccessful businesses to fail, came to be widely understood. Then, out of what must have appeared to many of you to be a clear blue sky of economic stability, arose a financial firestorm that wreaked substantial damage to the real economy, and we have not yet seen its full consequences. The case for market discipline is no less compelling for banking than for other industries. So I am sure that we can turn this crisis to our long-run advantage by reviewing and reforming the structure and regulation of banking.

Therefore, I would say that this risk is less acute than at the moment of our previous key rate meeting. Furthermore, investment from the National Wealth Fund and geopolitical risks are still in the focus of our attention. Disinflationary factors are much weaker. A rich harvest might result in a more significant seasonal decrease in food prices. The pandemic situation is still uncertain. The spread of new coronavirus strains worldwide might force countries to introduce new restrictions and disrupt production and supply chains, which in turn might slow down global economic recovery. For Russia, this would involve a decrease in external demand and intensify disinflationary risks, on the one hand. On the other hand, if borders are closed, domestic demand will remain elevated longer, which might become a proinflationary factor. In conclusion, I would like to comment on monetary policy prospects. Beginning from March, we have raised the key rate by a total of 2.25 percentage points. We will assess how our earlier decisions have been influencing monetary conditions, aggregate demand, and inflation. We will also consider how quickly supply-side constraints have been weakening and, accordingly, what level of the key rate is needed to bring inflation back to the target. According to our revised forecast, the average key rate next year will equal 6.0–7.0% per annum. Further on, as inflation expectations go down and inflation decelerates, the key rate will return to its long-term neutral range.