And fiscal policy was expansive for too long – we created a dangerous entitlement economy in which the state was the rich uncle who helped with almost everything. When an economy such as this one (especially one with a huge surplus of money and incomplete price convergence) was hit by a strong supplyside shock after the lockdowns, the Czech Republic ended up with the highest core inflation in the EU (from November 2021 to October 2022). We address the causes of inflation in the Czech Republic in our blog article (Adam and Michl, 2022). Bullard (2023) also wrote an article on this topic last week. The central bank's large balance sheet can lead to changes in monetary policy transmission. This is also because when key interest rates are raised, monetary policymaking expenses increase. We pay interest to commercial banks for their excess liquidity deposits. To give you an idea, the CNB paid CZK 14.7 billion to the banks in interest on deposited liquidity in April 2023, which may amount to CZK 180 billion for 2023 as a whole. This can lead to a change in the behaviour of banks, i.e. how and to whom they provide loans, by how much they raise deposit rates. In a system with excess liquidity, banks easily buy government bonds and government debt is monetised. An important lesson for me is that we will try not to repeat 2017 at the CNB and conduct monetary policy in a conventional manner.
The establishment of the credit bureau is likely to increase credit business, lead to more competitive pricing of credit facilities and lower credit loan defaults and delinquency rates. To address the concerns over the treatment of credit data, MAS would follow two broad principles. 1  Refers to the submission of customer’s payment histories on their credit facilities. Positive data refers to timely payment (i.e. a good customer) and negative data refers to overdue payments. 2  BIS Review 7/2002  First, it is important that individuals have access to their own credit files and to have any inaccurate information corrected. Any dispute resolution process should be timely and effective, and should also be covered in the Consumer Banking Code that ABS is currently working on. Second, it is also important that individual privacy is respected and customer data are not misused for purposes other than what they were originally intended for. A good starting point is the principle of reciprocity on data usage, which all participating members to the bureau will need to adhere to. High standards of confidentiality is also expected of both the bureau operators and participating members. The ABS will continue to work with MAS to ensure that these principles are observed. The launch of the consumer credit bureau will mark the beginning of a new risk management process in Singapore. It will further bolster the integrity and transparency of Singapore’s financial sector.