samchain/econo-pairs-v1 huggingface dataset:
But monetary policy cannot solve deeper structural problems or lift growth potential of the economy. That needs to come from real progresses that increase productivity and relax supply-side constraints. Sure, demand stimulating can buy time by cushioning the economy from short-term economic shocks. But this may possibly delay necessary adjustments of the economy to longer-term challenges. For example, keeping interest rate too low for too long and keeping exchange rate undervalued, beside encouraging risk taking and storing up financial instability problems for the future, may also temper incentives for businesses to improve efficiencies, and may slow the reallocation of capital and labor to more productive uses. In the context of Thailand, one of the most important structural issues facing the Thai economy at the moment is that of the labor shortage. Through our business contact and recent surveys, the labor shortage has scored one of the top concerns by both domestic and foreign businesses operating in Thailand. Underlying causes of labor shortage include the demographic change and education and skill mismatch. Clearly, there is little monetary policy can do to solve this supply bottleneck. It can help foster macroeconomic stability conducive to business investment, but most of the efforts to address supply-side impediments still need to come from a broader and more balanced set of economic policies including fiscal, industrial, technology, and labor market policies.

The MPC therefore decided to cut the policy rate to provide as insurance to the economy in the face of greater downside risks to growth. With firmly anchored inflation expectations, the Bank of Thailand can today give weight to stabilizing economic developments when setting the interest rate. However, should the outlook for inflation, growth, or financial stability change in the future period, there will be room for maneuver to counteract such developments through monetary policy, as well as other policy tools in an appropriate mix deemed most suitable for achieving the overall macroeconomic stability. Limitations of monetary policy Let me now turn to a topic that I would like to highlight today, that is, the limits to what monetary policy can achieve. The global financial crisis has placed far greater demands on monetary policy around the world. In major economies where other macroeconomic policy tools are being impaired, monetary policy was under enormous pressure to support the economy. Central banks responded by expanding dramatically their traditional role as lenders of last resort and came up with innovative, unconventional ways to stretch beyond what monetary policy can normally do. In emerging markets, given large crisis repercussions in terms of excessive capital flows, monetary policy was at times expected to respond to external developments in dealing with global spillovers. Overall, monetary policy has been pushed into situations and actions that were previously unimaginable. Efforts by many central banks to overstretch its normal capacity may have led the public to expect too much from monetary policy.
Third, hydrogen will be an important new hope for decarbonisation. This involves using renewable energy to split water molecules to produce both hydrogen and oxygen. The hydrogen can be burnt as a fuel emitting only water vapour or be put into a fuel cell to make electricity on demand. It can also be used as a feedstock to make more energy-dense compounds such as ammonia, which can serve as a fuel itself. Hydrogen and ammonia can be critical to the transition to a net-zero world given their potential role in decarbonising hard-to-electrify sectors, such as steel production; fuelling trucks, ships, and other heavy vehicles. All of this is technologically possible but making it economically efficient will require further innovation. In Singapore, our aim is to progressively decarbonise the power sector. We do not have the land for large solar or wind farms or fast flowing rivers for hydro-electric power. But it helps that Singapore is already less carbon-intensive in power generation than many other countries that still use coal. We are working to increase the carbon efficiency of natural gas which today accounts for 95% of electricity generation and is likely to remain the dominant energy source for some time. We are accelerating solar deployment across the island and building viable energy storage systems. Using our reservoirs, we are opening one of the world’s largest floating solar energy systems. We are using transmission lines linked to neighbouring countries to import the renewable energy they produce. Singapore has already started importing from Laos energy from hydroelectric power.

Singapore will do well to prepare for a future where CBAMs cover a significant part of world trade. CBAMs are likely to be a reality, especially if several major economies agree on a global minimum carbon price. The EU has already proposed a CBAM. A well-designed CBAM that does not raise barriers to trade, is compliant with W TO rules, and gives some relief to the poorest countries who are also small emitters, is not a bad outcome. CLEANER ENERGY The second imperative for the net zero transition is a decisive shift towards cleaner energy. According to the IPCC, to have a good chance of limiting global warming to 1.5 degrees Celsius, global consumption of coal, oil, and gas must start declining immediately and steeply. This is unlikely to happen. The growth in renewable energy has been spectacular but not sufficient to meet growing energy demand. Despite a 50-fold increase in the supply of new renewable energy in the last two decades, fossil fuels continue to account for more than 80% of global primary energy consumption. One of the reasons is that about 750 million people in the world still lack access to electricity. For them, the priority is having the lights on at an affordable price, not how much carbon dioxide is emitted in its production. Most of the people living in sub-Saharan Africa in 2020 consume no more energy per capita than the people of France and Germany did in 1860.
However, insurers are also sensitive to the risk of prolonged low interest rates, and, together with Bernard Delas, I can only call for further moderation in the rates on life insurance contracts. As regards financial stability, we must draw all the consequences of a rejection by the British Parliament of the draft Brexit agreement. There is strong political uncertainty in Britain: we can still hope for the best, but we must actively prepare for the worst scenario, that is a “No Deal Brexit". I would like to welcome the efforts that you have made to anticipate these consequences. The Banque de France and the ACPR, in liaison with the European authorities, will by the end of March take all necessary measures in the framework of the draft law “empowering the Government to take steps to prepare for the withdrawal of the United Kingdom from the European Union”, which will be re submitted to the French Senate tomorrow. Beyond Brexit, each sector faces its own regulatory issues: Basel III and Solvency II. For banks, the key issue of the CRR/CRD package is the transposition into European law of the Basel III agreement, which was obtained after much wrangling on 7 December 2017 and properly completed with market risks on Monday in Basel. It will have to take into account European specificities – including those of French banks – while maintaining the principle of maximum harmonisation, which is essential to the deepening of the Banking Union.

4 That means that the majority of panelist submissions each day are based solely on “expert judgment.” Although actual transactions underlying LIBOR have diminished, its use as a benchmark has become ubiquitous. The gross notional value of all financial products tied to U.S. dollar LIBOR is around $ trillion—about 10 times U.S. GDP. 5 That includes $ trillion of business loans, $ trillion of floating-rate notes and bonds, another $ trillion of securitizations, and $ trillion 1/8  BIS central bankers' speeches  of consumer loans held by about four million individual retail consumers, including around $ trillion of residential mortgage loans. The remaining 95% of exposures are derivative contracts, which we learned in the financial crisis have consequences for both Wall Street and Main Street. So, every day, the payments on $ trillion of exposures are calculated based on a handful of transactions worth a few hundred million dollars at most. That’s like a very tall, very broad building built on a very narrow foundation. Imagine an upside-down pyramid. It’s not stable, and, as we will discuss shortly, it’s getting more rickety by the day. You don’t want to be standing near it when it comes down. There is, thankfully, a coordinated global effort to address LIBOR’s shortcomings. That work has focused on creating more reliable alternatives. The Financial Stability Board (FSB)6 and the International Organization of Securities Commissions (IOSCO)7 have published roadmaps for reform. Their shared principle is that benchmarks should be based on observable, arms-length transactions rather than estimates.
A monetary policy that “leans against the wind” may contribute to greater stability in the longer term, as the purpose of trying to prevent financial imbalances from building up is that they should not cause problems with financial or macroeconomic stability at some point in the future. Most people agree that monetary policy should not have the main responsibility for preventing financial imbalances, but that this should rest on micro- and macroprudential policy and a well-designed regulatory framework. A central issue is, however, what support to prudential policy and the regulatory framework monetary policy needs to provide so that they can fulfil their tasks. 5 I do not believe it is possible to completely ignore financial stability when conducting monetary policy. Different views in research and among central banks There is on the one hand a growing research-related literature on whether central banks should “lean against the wind” – or conduct “prudential monetary policy”, as it is sometimes called and which perhaps is a more telling term. 6 There is on the other hand a more practical policy discussion.

Simon Potter: Reducing the size of the Federal Reserve's balance sheet - the benefits of moving gradually and predictably Remarks by Mr Simon M Potter, Executive Vice President of the Markets Group of the Federal Reserve Bank of New York, to the National Association of Securities Professionals, New York City, 16 November 2017. * * * Good afternoon and thank you for the kind introduction. I would also like to add my warm welcome to the New York Fed. We very much value the National Association of Securities Professionals' (NASP) efforts to promote professional excellence and encourage economic empowerment for people of color and women on Wall Street, and for our community, and are pleased to host this year’s kickoff to the NASP's 21st Annual Symposium.This year’s symposium is organized around the timely theme of “Keeping Pace when Market Dynamics Shift”. In that vein, I welcome the opportunity to discuss with you some important changes that are in train with respect to the Federal Reserve’s balance sheet, and how these may impact financial markets. As always, the views I will express today are mine alone and do not necessarily reflect those of the New York Fed or the Federal Reserve System.1 Before I discuss the Fed’s balance sheet I would like to briefly review some pilot programs we conducted over the last few years and their impact on our counterparty policy.
This should also help to reduce pressure on the rental market, where there is evidence that from being at the lower end of cross-country rent-to-wage ratios, we have moved relatively quickly to being close to ratios found in the most expensive European cities. Besides the impact that this rise could have on our capacity to attract foreign workers, we need to consider its impact on Maltese tenants, which in turn will impact on the broader costs of doing business and, consequently, competitiveness. We believe that, going forward, if we continue to grow at the rates observed in recent years, we will need to have a much more dynamic housing market. But before discussing private provision, let us discuss social housing. Recent developments have reinforced the case for replenishing our social housing stock. However, this expansion needs to be accompanied by a change in approach. In recent years, most of Malta’s benefit system has been changed so as to create clear incentives to shift from benefit dependence to participation in the formal labour market. The only area where this is not happening yet is social housing, where the tendency remains that, once allocated, social housing tends to become a lifetime entitlement. We need to change this so that social housing schemes act to activate individuals and empower them rather than encourage passivity. Such a transition could itself be helpful in financing the expansion of social housing.

The forecasters would not have known about these subsequent revisions. Nevertheless the results were certainly better than expected. Let me give you a couple of examples. In December 2015 the Central Bank projected real GDP growth for 2017 at 3.2%. Two years after, we believe economic growth has reached 6%, or nearly double what we had originally projected. Back in December 2015 we had anticipated 2017’s unemployment rate as 5.4%. Now we know it will be closer to 4%, or a quarter less. More striking is the divergence in fiscal projections. Back in December 2015 we thought Government would close 2017 with a deficit of 1.1% of GDP. Today we believe there will be a surplus of 0.9%. Two years ago we thought our national debt-to-GDP ratio would be 64% of GDP in 2017. Now we think it will be nearly ten percentage points less than that. Page 2 of 10  Malta’s current economic performance Two weeks ago, in the concluding statement following their annual official staff visit to Malta, the IMF said that “Malta’s economic growth remains one of the strongest in Europe” and projected that this robust performance will continue on the back of rising incomes and historically-low unemployment, complemented by buoyant services exports. They also concluded that Malta will remain a surplus economy, both in terms of government finances and external transactions. This is, broadly speaking, the same assessment as that made by the European Commission in their Autumn 2017 forecasts.
Mr Clementi comments on the systemic aspects of the Basel proposals  Speech given by Mr David Clementi, Deputy Governor of the Bank of England, at a Financial Services Authority Conference, held in London on 2 December 1999. *  *  *  Ladies and Gentlemen, I am delighted to be given this opportunity to address you today. I must first express my admiration for the pro-active and thorough way that the FSA is seeking views from the industry on these important proposals. I know that as well as this conference, their efforts have encompassed briefing sessions, circulars to banks, advisory group meetings, and a dedicated website. There will no doubt be a few focus groups springing up in due course! The Bank of England is in turn holding regular meetings with the main trade bodies, while various of the Basel Committees involved in developing the proposals have conducted surveys and received presentations from banks and others. I hope that, at the end of the process, if differences of opinion remain between the authorities and the banking industry, this will be the result of rational divergence between our different perspectives, and certainly not through any failure of communication. I intend to direct my comments to the systemic aspects of the Basel proposals. The Bank has a close interest in this subject and I will start by outlining the relationship between the design of the regulatory system and the Bank’s core purposes.

We are not sure, however, that the answer lies in making the framework less sensitive to risk, perhaps by smoothing over bad news in some form, for example by ignoring or delaying recognition of rating changes. This would involve the same dangers that I recall from the days of hidden reserves in UK banks, when the knowledge that unwelcome events could be hidden from view led occasionally to a lack of rigorous risk assessment in business decisions. In fact, part of the underlying problem of procyclicality is that risks are not recognised early enough, in time to allow lenders to exert a more gradual and beneficial discipline on borrowers. The capital framework - and, equally important, bank provisioning policies - need therefore to be as forward looking and dynamic as possible. Since ratings - whether external or internal - are influential in provisioning and will in the future be influential in capital, they in turn have to be more forward looking. This is why in the sovereign context we place particular emphasis on the importance of countries adhering to international transparency standards. No rating can be reliable without adequate information on the economic and financial situation of the country. The Basel paper does of course propose that compliance with the IMF’s Special Data Dissemination Standard is a pre-condition of a lower risk weight.
The fundamental goals of the program are: •  to eliminate inflation,  •  to achieve a sustainable fiscal position,  •  to establish a more equitable and efficient distribution of resources,  •  and to increase the growth potential of the economy. 1  BIS Review 9/2000  The program will accomplish these goals through a number of policy reorientations. The primary fiscal balance will shift, in the first year, from deficit to a surplus position consistent with long-term fiscal sustainability, and will remain high until the price stability has been established in the economy. To reinforce program credibility and support the fiscal stabilisation, the program’s design is front loaded, with most of the required structural measures being taken at the outset. A first priority will be to diversify the financing of the deficit. Net external financing for the public sector will increase, and this, together with the primary surplus and other measures, will make it possible to lower the level of real domestic interest rates. A strong and credible exchange rate policy, established at the beginning of the program, will break the cycle of the public’s inflationary expectations based on past experience. Both monetary policy and public sector wage policy are being subordinated to the exchange rate target. Now let me go into some details of this strategy. Action to eliminate, quickly and permanently, the high public sector deficit is among the priorities of the program.

This calls for continuously upgrading our regulatory regime. Accordingly, we in Kuwait, like our colleagues in the region, have not only refined our existing regulations to reflect the best global practices, but have also introduced a host of new measures. This journey brought its own set of challenges, and I would like to point out one in particular, to benefit from the presence of our esteemed colleagues from the BIS. Similar to other jurisdictions with dual banking system, we have a sizeable presence of Islamic banks in Kuwait. Yet we found limited relevant guidance for the application of Basel III on Islamic financial institutions, if at all. For the most challenging aspects of Basel III reforms, it has been left to the discretion of individual regulators to figure out how best to apply the proposed rules to Islamic banks. However, the use of discretion, though well intended, is bound to create differences across countries, and more so in the case of Islamic finance where the lack of consistency in Sharī`ah interpretations makes the task even harder. Consequently, we may witness diverging approaches to regulation of Islamic banks across jurisdictions, with the risk of regulatory arbitrage. Going forward, we also need to recognize that ensuring stability, of a constantly adapting banking system, cannot be left to regulation alone. Therefore, we need to strengthen our supervisory capacity, to suitably complement our revamped regulatory regimes. Only through effective supervision can we ensure that banks are truly compliant with our regulations.
The question is why we didn’t see the problems in the Stability and Growth Pact from the beginning? Perhaps because we were fortunate to have something that could work as a temporary replacement for rules: clear objectives, strong leadership and the market as a quickly reacting judge. Most countries wanted to meet the convergence criteria and thereby join the euro area. Germany led the way, both in terms of its economic size and its example of fiscal discipline. Now the objective of joining the euro has been achieved for many countries, and, in addition, Germany has lost its leading role and the markets react less to fiscal laxity. Instead of national leadership towards clear objectives we have seen the opposite – the political exploitation of the gap between the national and European level. The requirements of the Pact are blamed on heartless “accountants in Brussels”, and when a majority within the countries puts narrow national political interests first the agreed rules become moot – “peer pressure” becomes ”peer protection”. Incorrect facts have been more or less deliberately sent to the Commission ahead of sensitive elections. A study by Barclays Capital shows that during the years 2000-2003 growth projections were overestimated by 1.5 percentage points on average each year by the euro area countries, leading to fiscal balances turning out worse than expected on average by about 1% of GDP per year.

The problems are tackled by strengthening Eurostat and allowing it to make methodological visits in the member states, to discuss budget issues. A new high level group with a mandate to advise Eurostat will be established. As Eurostat monitors the member states’ compliance with the agreed practice, the high level group also, indirectly, advises the member states. My view is that all the reforms in this area of the Stability and Growth Pact go in the right direction since they encourage fiscal prudence. However, given the complicated process and the short time since the Pact was changed, it is too early to determine whether the changes have been a complete success. Changes in the preventive arm Changes in the preventive arm have been made in the area of medium term objectives (MTO) for the budget balance. Member states are divided into groups depending on their debt level. Stricter MTOs are required for countries with higher debt. The MTOs for the euro area and the ERM2 countries range from a deficit of 1% of GDP to balance or surplus depending on the debt level. The countries that have not achieved their MTOs are supposed to follow an adjustment path to the objectives. The path requires more consolidation in good times. For the euro area and ERM2 states, the adjustment requirement is a yearly improvement of the cyclically adjusted deficit net of one off effects by 0.5% of GDP.