samchain/econo-pairs-v1 huggingface dataset:
Much progress has been accomplished, but there remain many more things that we can and should do to further promote more connected financial system. As we have done in the past decade, the Bank of Thailand will stand ready to work with our CLMV partners in various ways from development of human capital and regulatory frameworks to infrastructure building. If we can build strong domestic financial systems and regional financial connectivity, we will be able to reduce costs and create positive spillovers to several other industries. Livelihoods of our people will improve. Workers and investors can more easily and cheaply remit funds across countries. Merchants will find it easier to trade cross-border. The tourism sector will gain even more momentum. SMEs will be able to utilize e-commerce and e-payment in selling their products regionally and globally. Financing of infrastructure projects can also be supported by long-term financial products with proper risk management features. Furthermore, financial inclusion and financial literacy will equip households and small businesses with the needed resilience to go through the increasingly volatile world. Ladies and Gentlemen, Just ten years ago, the low-cost airlines were still at their infancy. The airlines were not household brands, and it would be difficult for most of us to imagine how fast they would grow only in one decade, not to mention the positive impacts they would create to other industries and the wider public.

The questions I would like to focus on today is what could we learn from the success of the airline industry? And, how will we make this happen in other areas of the service sector that have potentials to serve the region? BIS central bankers’ speeches  1  For the first question, the fast development of the airline industry can be mainly attributed to two factors: the right business model for our market and the enabling infrastructure and eco-system. On the private sector’s part, the low-cost airlines know the region’s untapped market and come to serve the large unmet demand with the right business model. Needless to say, they offer customers with simple products, including no-frills service with a single cabin class. Their business model is successful at minimizing operating costs by using a single aircraft model and by choosing the most fuel efficient plane type to reduce fuel and maintenance costs. The airlines also revolutionized the ticketing system by first offering internet booking, paperless tickets and mobile check-ins for greater convenience and lower costs. Apart from the right entrepreneurial spirit of the private sector, policymakers are to be credited with the creation of the airline network in our region. There are at least five factors policymakers have contributed to the success of the regional airline industry.
But experience showed that this was not an available option. An attempt to increase output beyond the level that is consistent with stable inflation will over time lead to steadily rising inflation. Economic agents will eventually incorporate higher inflation into their inflation expectations. In the long run, the result will only be higher inflation, not higher employment. Output and employment will return to their potential level. Another important lesson from the 1970s and 1980s was that economic agents look to the future when they make decisions about consumption and investments, wages and prices. They will take into account not only current economy policy, but their expectations of future economic policy. If economic agents expect that tomorrow’s policy will result in high inflation, the cost of reducing inflation may be high in terms of increased unemployment. Therefore, it is important to establish confidence in monetary policy and the objective of price stability. There must be consistency between the stated objectives of economic policy and what is actually done to achieve these objectives. This is the most important reason why the implementation of monetary policy has been delegated to the central bank in Norway, as has been the case in other comparable countries. In Norway, responsibility for interest rate decisions was delegated to Norges Bank through the 1985 Norges Bank Act and through adaptations in practice in 1986. However, confidence in the inflation target also requires that government finances are in order.

In the academic literature, some have suggested that the central bank can increase economic stability or reduce the negative effects of slow price adjustment by stabilising an index with fewer prices and weights other than those in the consumer price index.3 Prices that adjust slowly should have a relatively higher weight than prices that change quickly. Prices for goods and services where labour costs are a major component often adjust slowly.4 Labour costs are very important in these indices not only because they change slowly but also because they react to cyclical movements and are seldom exposed to extraordinary disturbances. 3  See Aoki, Kosuke (2001), “Optimal Monetary Policy Responses to Relative Price Changes,” Journal of Monetary Economics, Vol. 48, pp. 55-80, Arrazola Maria and José de Hevia (2002), “An Alternative Measure of Core Inflation,” Economics letters, Vol. 75, pp. 69-73, Mankiw, Gregory and Ricardo Reis (2003),“What Measure of Inflation Should a Central Bank Target?” Journal of the European Economic Association, Vol. 1, pp. 1058-1086, and Woodford, Michael (2003), Interest & Prices – Foundations of a Theory of Monetary Policy, Princeton University Press. 4  Angeloni, Ignazio, Luc Aucremanne, Michael Ehrmann, Jordi Gali, Andy Levin and Frank Smets (2004), “Inflation Persistence in the Euro Area: Preliminary Summary of Findings”, presented at the ECB’s conference on inflation persistence in the euro area, Frankfurt am Main , 10-11 December 2004. BIS Review 43/2005  3  Another topic currently of interest to academic research is whether a price level target may be better than an inflation target.
On the MPC, we are certainly not indifferent to the re-pricing of financial assets we have seen over the past few days. Indeed, we cannot be indifferent. For a small, open market economy like the UK, changes in asset prices have an important impact on macro developments though a variety of channels: via the cost of financing; via the cost of imports; and via their impact on both aggregate demand and aggregate supply. We need to factor the impact of asset price changes through all these channels into our overall assessment of the economic outlook and prospects for price developments. That forms the basis on which we formulate policy decisions to reach the 2% inflation target. This is the lens through which the MPC has viewed, and will view, recent market developments. Because I can assure you that the MPC has a very good understanding of both its mandate – to maintain price stability – and of its remit – to return inflation back to target. As I think – or at least hope – is widely recognised, the past year has proved to be a challenging time for monetary policy makers. And, to be frank, recent market developments have created their  Page 5  own, additional challenges. But, despite these challenges, the MPC’s commitment to achieving its target is unwavering.

As a Welshman now working in Threadneedle Street, I appreciate that the Bank of England can appear a remote institution, apparently focused on the City of London and far away from the day-to-day concerns of people living elsewhere in the UK. The work of the Agencies provides a bridge between the Bank and the households, businesses and communities it serves. Through my discussions over the past couple of days, I have learnt about how Brexit has affected trading relationships on the island of Ireland and across the Irish Sea. And our Citizens Panel on the cost-of-living emphasised the distinctiveness of the retail energy market in Northern Ireland, which has been in focus of late given the sharp rises in utility bills. I am not going to discuss those issues this evening – although I realise that they are important, as well as politically and economically sensitive. I have been in listening mode, and can now take some of the lessons learnt back to our deliberations at the Bank. I originally hoped to spend the bulk of my time exploring the macroeconomic motivations underlying MPC decisions in the past few months. I hope to return to those issues in a moment. But given recent events and actions, it would be remiss of me not to address market developments. Over the course of the past week, there has be a significant repricing of financial assets. Part of  Page 3  that re-pricing reflects broader global developments.
Financial risk management – though always core to the Bank’s thinking – was not a particularly complex or resource-intensive activity. 1  For more on this issue, see for example ‘Central bank financial strength, transparency and policy credibility’ by Peter Stella (IMF Staff Papers, Vol. 52, No.2), available at https://www.imf.org/external/pubs/ft/wp/2002/wp02137.pdf and ‘Central bank finances’ by David Archer and Paul Moser-Boehm (BIS Papers, No.71), available at www.bis.org/publ/bppdf/bispap71.htm. 2 See page 31 of the Bank of England Report and Accounts 1985 (http://www.bankofengland.co.uk/archive/Documents/historicpubs/ar/1985accounts.pdf) and Balluck, K, Galiay A, Ferrara, G and Hoggarth, G (2016), ‘The small bank failures of the early 1990s’ (http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2016/q1/a5.pdf). 4  All speeches are available online at www.bankofengland.co.uk/speeches  4  Chart 2: Bank of England balance sheet  Chart 3: Federal Reserve and Bank of England balance sheets compared  Percentage of annual nominal GDP(a) 30  30  Percentage of annual nominal GDP  30  World War II  World War I  25  25 25  20  US Federal Reserve (b)  25  20 20  15  15  10  10  5 0 1830  30  1860  1890  1920  1950  1980  2010  Sources: Bank of England, ONS (a) Data as at February. Final data point shows the latest published balance sheet data, at 29 February 2016, plus the increase in the loan to the Asset Purchase Facility since this time. Excludes TARGET balances held at the Bank by European central banks in 1999-2001.

Companies can also come forward and test their ideas in Bank Negara’s Regulatory Sandbox, and we will facilitate a safe environment for companies to develop viable solutions to identified problems. This is the time for MSB companies to be forward-looking, not hold on to the past; to be agile and responsive to change, not slow to evolve; to be bold and ambitious, not reactive; and to be secure in strong professional and ethical standards for conducting business, and not exposed to practices that can harm the industry’s image and reputation. The Bank has every confidence in the industry’s ability to grow and develop further from strength to strength, well supported by a dynamic Association that has had a key role in driving many of the accomplishments that have brought the industry to this point. On that note, thank you for having me here this evening. Congratulations to all the recipients of the customer service excellence awards, and all MSB companies that are present here for supporting the important work of the Association. On the part of the Bank, we look forward to the implementation of the industry’s five-year strategic blueprint up to 2020. Bank Negara Malaysia will continue to engage constructively with the Association and industry on these initiatives to develop a modern, dynamic and progressive industry. 3/3  BIS central bankers' speeches
And the auctions are responsive to market conditions, with the amount of liquidity available rising automatically if there is greater demand. Reflecting the improved financial positions of banks and building societies, and the liquidity provided to the market through QE, the Bank’s liquidity insurance facilities saw relatively modest usage over the year covered by the most recent annual report. More recently, however, usage has increased, as banks sought to make use of the liquidity insurance provision on offer by pre-emptively securing term funding ahead of a  BIS central bankers’ speeches  1  period of potential uncertainty around key events, such as the UK general election, and Greece. This pattern of usage is encouraging and welcome, as it demonstrates that banks are prudently managing their liquidity position ahead of potential risks, and that the ILTR is an active part of their liquidity management. Despite the increase, however, demand has remained relatively low, with just over £ billion allocated in the May operation: a high water mark for the expanded ILTR operation. Looking back to 2007, before the crisis, the cumulative changes we have made to the SMF have been transformative. The SMF now has 164 members, more than double the number signed up in 2007, with banks and building society SMF members accounting for 98% of total sterling deposits. The drawable value of collateral delivered to the Bank for actual or potential use in the Bank’s facilities has increased dramatically, and stood at £ billion at endJune 2015.

Frankly, I understand that the general public is not familiar with concepts like overheating or positive output gap, but I believe that annual growth rates to the tune of 20% for retail sales and in excess of 10% for wages are more than self-explanatory. Still, with all the obvious signs – even for non-economists – that the economy is growing fast, we are criticised for not fighting deflation. The recent experience has made us painfully aware that – despite the large amount of information provided through a wide range of communication vehicles – our messages get through to a much lesser extent than we had thought. Therefore, we should enhance our efforts in escaping the professional jargon and trying to be as accessible as possible when explaining to the public the rationale behind our monetary policy decisions. If I were to conclude on Romania’s experience with inflation targeting, I would say that it worked quite well, even though the concept of inflation targeting has not been immune to criticism, especially in the post-crisis period. I would mention here Axel Weber, who suggested in 2015 that inflation targeting is a simplistic framework that could not stabilise the value of money in a complex and constantly evolving economic environment. However, his opinion is not shared by other well-known economists.
One thing is certain: the sooner we start the transition, the better to ensure longterm sustainable growth and price stability. * In economic and financial matters, there is always a degree of uncertainty. In French, the word “espérance” has two meanings: hope, and mathematical expectation. “Espérance” has been the driver for Europe and the euro, in both its meanings. Daring decisions made by visionary men and women in the past decades have proved winning bets. They were guided by the same conviction as another French writer, Georges Bernanos, who wrote in 1941 in his Letter to the English: “It is in my reason, not my heart, that lies the principle of my invincible hope”.iii I thank you for your attention. Page 10 sur 9 i  State of European Tech Report, December 2021 Schnabel, I., speech, “Looking through higher energy prices? Monetary policy and the green transition”, 8 January 2022 iii Bernanos, G., in Letter to the English, 1941 ii

Another reason why we envisaged a slowdown in economic activity in Sweden was that the increased financial unease would reduce sentiment among Swedish households and companies and in this way have a negative effect on consumption and investment. However, at the same time, our assessment was that the slowdown in economic activity would be alleviated by the fact that the Swedish is competitive, has sound public finances and resilient banks. Our forecast was that GDP growth in Sweden would be weak for some time to come and that unemployment would increase somewhat. As the unease in the euro area subsides next year, economic activity will strengthen, unemployment will decline again and resource utilisation will increase. Inflation will rise at the same time, after being held back by a low cost pressure and a stronger krona since the financial crisis 2008–2009. 2  BIS central bankers’ speeches  Repo rate remains low to stimulate the economy With regard to monetary policy, our assessment was that it needs to be expansionary to support economic activity and give an inflation rate in line with the target of 2 per cent. We therefore decided to hold the repo rate at 1.5 per cent and assessed that it needs to remain at roughly this low level for just over a year, and should then be raised gradually. The deterioration in international economic prospects meant that we revised down the repo-rate path somewhat, in relation to the assessment made in April.
The implication, as my colleague Silvana Tenreyro emphasised in a recent speech[13], is that it makes more sense to think of the impact of the policy through the lens of prices – what it does to bond yields – than quantities. This was also the recommendation of the Bank’s Independent Evaluation Office in a report issued a couple of years ago: “Rather than explaining QE in terms of ‘injecting’ or ‘printing’ money, QE could be framed as a continuation of conventional monetary policy that pushes down long-term interest rates …Framing QE as a change in an interest rate rather than the creation of a quantity of money may also reduce the perception that QE is a transfer of wealth to the rich or to banks.” I think this makes a good deal of sense. The demand for commercial bank money: If desired holdings of central bank money can move around (even for given levels of aggregate spending and economic activity), the same appears to be true of commercial bank deposits. As we’ve seen, the supply processes aren’t the same: in the case of broad money it’s the commercial banks themselves (not the central bank) that directly create the deposits, and effectively accommodate such shifts in demand[14]. But the basic intuition is the same.

On one view (the “buffer stock” approach) people are relatively tolerant of small variations in their money holdings and respond – whether by spending more on goods and services, buying other financial assets or paying down debt – only once deposits hit certain thresholds. If this is right it’s the level of money that matters and the fact that, on this measure, there still seem to be “excess” deposits will continue to support consumer spending for a while yet. If, on the other hand, you believe that people respond more rapidly to an increase in the supply of money, the large accumulation of deposits during the pandemic is increasingly irrelevant and what matters more are the more recent, negative trends. I’m not sure if this is the critical judgement when it comes to our forecasts (it’s certainly not the only thing affecting household behaviour). But it is, at least, illustrative of one point – that, as with just about every other economic indicator, changes in money holdings need some interpretation and their significance is not always 100% obvious or “inevitable”. Thank you. I’ve received many helpful comments from colleagues at the Bank of England. I’d like to thank Andrea Alati, Navreen Teja and Mo Wazzi for their help in preparing the speech. Particular thanks are due to Ryland Thomas, Huw Pill and, for his comments and excellent research assistance, Fabrizio Cadamagnani. Page 31 1.
We are in such a complementary environment today. At present we see no evidence that low interest rates are contributing to leverage-driven financial imbalances in the euro area. Indeed, the most serious financial stability risks tend to be associated with excessive developments in bank credit, and there are no signs of that in the euro area on average today. However, were we to enter a conflicting environment, the logic of the Tinbergen rule would become more apparent. On the one hand, if for example a bond bubble were emerging but inflation was still low, raising rates to combat that financial stability risk would run contrary to our price stability objective. On the other hand, if inflation were rising banks but banks in the euro area were still repairing their balance sheets, raising rates could have damaging consequences for the banking sector. Given the hierarchical nature of the ECB’s mandate, if we were to face such conflicts, where price stability and financial stability point in different directions for the path of interest rates, we would have to put price stability first. This is our legal obligation. And from an economic point of view, in circumstances where financial stability effectively becomes a distinct objective from price stability, the Tinbergen rule implies there have to be instruments other than interest rates to address it. Those instruments are of course macro-prudential policies.

In normal times my preference would naturally have been to look through such a development provided that it did not feed into medium-term expectations. Indeed, we had seen inflation fall into negative territory driven by oil prices in 2009, and we had not reacted because we were confident that it would be transitory. The conditions we faced in January this year, however, gave us no such comfort. Our analysis showed that the persistence of low inflation across a range of statistical metrics was higher than in 2009. Measures of core inflation were also less sticky. But for me what was decisive was the loosening in the anchoring of inflation expectations we were witnessing, even at maturities and at horizons that we would normally expect to be more resilient to short-term inflation dynamics. This was in stark contrast to 2009 where inflation expectations hardly moved, even at the short end. The public sector purchase programme It was in this context that we launched the third part of our response, the ultima ratio decision to purchase assets, including public ones, as a tool of monetary policy. It was absolutely crucial that we lifted and re-anchored inflation expectations and warded off these potential second round effects. This is not only because stable inflation expectations are vital for medium-term price stability. It is also because, with interest rates at the effective lower bound, any fall in inflation expectations implies a rise in real interest rates, counteracting the credit easing we were trying to engineer.