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in credit intermediation is not disrupted. i hope the analysis and observations i have shared today can assist with a process of learning, evolving, and improving that will prevent future disruptions. thank you. bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches	richard byles : update and outlook for the jamaican economy monetary policy press statement by mr richard byles, governor of the bank of jamaica, at the quarterly monetary policy report press conference, kingston, 21 february 2024. * * * introduction good morning and welcome to our first quarterly monetary policy report press conference for 2024. the year has started with inflation being above the bank's inflation target. statin reported last week that headline inflation at january 2024 was 7. 4 per cent, which is higher than the outturns for the previous three months, and above the bank's target of 4 to 6 per cent. core inflation, however, which excludes food and fuel prices from the consumer price index, was 5. 9 per cent, which is lower than the 7. 1 per cent recorded in january 2023. the inflation outturn at january is higher than the bank had projected in november 2023. as we communicated then, in the wake of the announcement by the minister of finance and the public service of the temporary two - phase reduction in jutc fares, we had estimated that the announced measure would have had a material impact on tempering the inflationary pressures of the ppv fare increases. inflation was consequently projected to generally remain within the target range, except for december 2023 and a few months in 2024. upon review, the bank now recognises that it had overestimated the impact of the reductions in jutc fares. the two - phase reduction is now estimated to have an offsetting impact of only 0. 2 percentage points on annual inflation, with the first reduction already evident in the cpi data for january 2024. notwithstanding the welcomed and offsetting reduction in jutc fares, the higher than targeted headline inflation at january continued to largely reflect the impact of the increase in the ppv fares as well as the effect of wage increases throughout the economy. the inflation outturn also reflected high agricultural food inflation which has been the result of the adverse weather conditions that affected the island in 2023. with this brief background, i will now speak in further detail about the bank's latest monetary policy considerations and decisions. monetary policy decision the bank's monetary policy committee ( mpc ) met on the 16th and the 19th of february and was advised that inflation is projected to remain above the bank's target range until june 2025, largely because of the impact of the temporary price shocks which i outlined earlier, including the projected impact of the second phase of	0
european central bank : press conference - introductory statement introductory statement by mr jean - claude trichet, president of the european central bank, frankfurt am main, 4 may 2006. * * * ladies and gentlemen, let me welcome you to our press conference and report on the outcome of today ’ s meeting of the ecb ’ s governing council. the meeting was also attended by commissioner almunia. on the basis of our regular economic and monetary analyses, we have decided to leave the key ecb interest rates unchanged. overall, the information which has become available since our last meeting broadly confirms our earlier assessment of the outlook for price developments and economic activity in the euro area, and that monetary and credit growth remains very dynamic. against this background, the governing council will exercise strong vigilance in order to ensure that risks to price stability over the medium term do not materialise. such vigilance is particularly warranted in a context of ample liquidity and still very low levels of nominal and real interest rates across the whole maturity spectrum, implying an overall accommodative monetary policy stance. for monetary policy to make an ongoing contribution towards supporting growth and employment in the euro area, inflation expectations must be firmly anchored. let me now explain our assessment in more detail, turning first to the economic analysis. the data that have become available since the start of the year point to a re - acceleration of economic growth in the first quarter of 2006, following the moderation observed in the last quarter of 2005. in addition, the latest indicators and survey information point to continued growth in the second quarter and lend support to the scenario of a gradual broadening in economic activity as embodied in the march 2006 ecb staff projections. business confidence is particularly buoyant, which, in principle, bodes well for investment, and the recovery in consumption and employment appears to be proceeding, albeit still gradually. looking further ahead, the conditions remain in place for continued growth over the coming quarters. activity in the world economy is expected to remain strong, providing continued support for euro area exports. investment growth should benefit from an extended period of very favourable financing conditions, balance sheet restructuring, and gains in earnings and business efficiency. consumption growth should also strengthen over time, in line with developments in real disposable income, as the labour market situation continues to improve. this favourable outlook for economic growth is broadly in line with available forecasts from international organisations and the private sector. considering the information available, risks to this scenario	vitor constancio : strengthening european economic governance – surveillance of fiscal and macroeconomic imbalances speech by mr vitor constancio, vice - president of the european central bank, at the brussels economic forum, brussels, 18 may 2011. * * * thank you very much for the invitation to participate in this panel today. the session is intended to focus on “ surveillance of fiscal and macroeconomic imbalances ”, which arguably is the most important strand of the economic governance package. but one should consider that this package – beyond the 6 legislative acts – also contains three other strands : the euro plus pact, the creation of the european stability mechanism and the setting - up of the european system of financial supervision. a fundamental strengthening of economic governance in the euro area requires simultaneous progress in all three areas. the first strand is necessary to prevent and correct imbalances ; the second to ensure the conditions for future growth and competitiveness ; the third to provide a last resort backstop if crises still occur, the fourth to guarantee financial stability, in particular in the banking sector. that said, prevention and correction of fiscal and macroeconomic imbalances must be given priority as it is the pre - condition for sustainable economic growth and financial stability. as the ecb has stressed on a number of occasions, here a “ quantum leap ” forward is needed in strengthening the stability and growth pact and creating an effective new framework for surveillance of macroeconomic imbalances. important negotiations are ongoing between the commission, the council and the european parliament to reach agreement on the legislative package of economic governance reforms. for this agreement to reach the necessary “ quantum leap ”, the following elements are essential. first, greater automaticity is needed in all surveillance procedures, including the new macroeconomic surveillance framework. the council should have less room for halting or suspending procedures against member states. strict deadlines to avoid lengthy procedures and the deletion of escape clauses would also contribute to automaticity. this is critical to ensure the credibility of the new framework and address spillovers in a timely manner. second, enforcement tools need to be more effective. in addition to financial sanctions, political and reputational measures would help foster early compliance, as would the application of earlier and more gradual financial sanctions within the macroeconomic surveillance framework. discretion to reduce or suspend financial sanctions is undesirable as it strongly reduces effectiveness and sets the wrong incentives. third, more ambitious policy requirements would better match the current reality of the euro area.	0.5
. innovation is already altering the power source of motor vehicles, and much research is directed at reducing gasoline requirements. at present, gasoline consumption in the united states alone accounts for 11 percent of world oil production. moreover, new technologies to preserve existing conventional oil reserves and to stabilize oil prices will emerge in the years ahead. we will begin the transition to the next major sources of energy perhaps before midcentury as production from conventional oil reservoirs, according to central tendency scenarios of the energy information administration, is projected to peak. in fact, the development and application of new sources of energy, especially nonconventional oil, is already in train. nonetheless, it will take time. we, and the rest of the world, doubtless will have to live with the uncertainties of the oil markets for some time to come.	oil industry to build inventories, demand from investors who have accumulated large net long positions in distant oil futures and options is expanding once again. such speculative positions are claims against future oil holdings of oil firms. currently, strained capacity has limited the ability of oil producers to quickly satisfy this markedly increased demand for inventory. adding to the difficulties is the rising consumption of oil, especially in china and india, both of which are expanding economically in ways that are relatively energy intensive. even the recent notable pickup in opec output, by exhausting most of its remaining excess capacity, has only modestly satisfied overall demand. output from producers outside opec has also increased materially, but investment in new producing wells has lagged, limiting growth of production in the near term. crude oil prices are also being distorted by shortages of capacity to upgrade the higher sulphur content and heavier grades of crude oil. over the years, increasing demand for the environmentally desirable lighter grades of oil products has pressed refiners to upgrade the heavier crude oils, which compose more than two - thirds of total world output. but refiners have been only partly successful in that effort, judging from the recent extraordinarily large increase in price spreads between the lighter and heavier crudes. for example, the spread between the price of west texas intermediate ( wti ), a light, low - sulphur crude, and dubai, a benchmark heavier grade, has risen about $ 10 per barrel since late august, to an exceptionally high $ 17 a barrel. while spot prices for wti soared in recent weeks to meet the rising demand for light products, prices of heavier crudes lagged. this temporary partial fragmentation of the crude oil market has clearly pushed gasoline prices higher than would have been the case were all crudes available to supply the demand for lighter grades of oil products. moreover, gasoline prices are no longer buffered against increasing crude oil costs as they were during the summer surge in crude oil prices. earlier refinery capacity shortages had augmented gasoline refinery - marketing margins by 20 to 30 cents per gallon. but those elevated margins were quickly eroded by competition, thus allowing gasoline prices to actually fall during the summer months even as crude oil prices remained firm. that cushion no longer exists. refinery - marketing margins are back to normal and, hence, future gasoline and home heating oil prices will likely mirror changes in costs of light crude oil. with increasing investment in upgrading capacity at refineries, the short - term refinery problem will be	1
by the governors of the four non - euro area national central banks. the signing of this agreement by the latter parties implies their acceptance of the operating procedures. it does not, however, imply their participation in erm ii. for the currency of each member state participating in the mechanism, a central rate against the euro and a standard fluctuation band of ±15 % will be defined, in principle supported by automatic unlimited intervention at the margins, with very short - term financing available. however, the ecb and the participating non - euro area national central banks could suspend automatic intervention if this were to conflict with their primary objective of maintaining price stability. in line with the resolution of the european council, exchange rate policy co - operation may be further strengthened, for example by allowing closer exchange rate links between the euro and other currencies in the exchange rate mechanism, where, and to the extent that, this is appropriate in the light of progress towards convergence. 2. general documentation on escb monetary policy : instruments and procedures last friday, 18 september 1998, the ecb published a report entitled “ the single monetary policy in stage three : general documentation on escb monetary policy instruments and procedures ”. this report contains a detailed description of the monetary policy instruments and procedures to be applied by the escb in stage three of emu. hence it provides credit institutions with the information they need in order to prepare for participation in escb monetary policy operations as from 1 january 1999. the report expands upon and updates the material contained in an earlier version which was published by the emi on 23 september 1997. the report first sets out the criteria to be fulfilled by credit institutions in order to be eligible as counterparties to escb monetary policy operations. it then presents the features of the different types of open market operations which might be conducted by the escb and the escb ’ s two standing facilities ( the marginal lending facility and the deposit facility ). the report also contains a detailed description of the procedures related to the various types of operations, and specifies the eligibility criteria and the risk control measures to be applied to assets underlying the escb ’ s liquidity - providing operations. moreover, the report includes the description of the features of the escb ’ s minimum reserve system and sets out specific provisions to be applied for the escb ’ s monetary policy instruments and procedures in the transition to stage three. in this context i should also mention that on 11 september 1998 the governing council of the ecb endorsed the statistical	shocks, hicp inflation has been above - and sometimes significantly above - 2 % for quite some time. but inflation always bounced back following these shocks and today the outlook for price stability is once again favourable. a second related point i would like to mention is the medium - term orientation of our policy. as a central bank, we only affect prices with long lags and we cannot steer trends in prices with high precision. our focus on the medium term helps to avoid overly ambitious attempts to fine - tune inflation developments. you might ask what “ medium term ” means exactly. it is certainly not a fixed time horizon, as some have argued. experience in recent years has taught us that flexibility in this respect is very important. from this point of view, the ecb ’ s monetary policy strategy is different from pure forms of inflation targeting. this leads me to my third issue, which is that one cannot simply rely on a single inflation forecast to conduct monetary policy successfully. experience suggests that it can be very misleading to summarise the assessment of medium - term inflationary pressures in one single figure, even when a measure of statistical error is attached to it. unfortunately, monetary policy is not so simple and the repeated significant forecast errors by all major institutions over the last few years provide evidence of this. indeed, i agree with alan greenspan who once said that central bankers should be less reluctant to admit that they sometimes do not know. instead of relying on a single forecast, our monetary policy strategy emphasises this fundamental uncertainty. our strategy builds on several forecasts and indicators and includes a cross - check of the information from the economic analysis, which is relevant from the short to medium - term perspective for inflation, with that from the monetary analysis, which is important for the medium to long - term outlook. in this respect, the fourth point that i would like to discuss today is that over the last few years we have seen that monetary analysis is not only an important, but also a complex business. i have no doubt that inflation is a monetary phenomenon over the long term and that we are right in attributing a prominent role to monitoring monetary developments in our monetary policy strategy. a fifth point i would like to make is that it was difficult to gauge the effects of global interdependencies when we began to conduct the single monetary policy. what we have learnt, in particular, is that global linkages go well beyond the international trade channel, which was traditionally considered to be the main,	0.5
pursued will be of importance for how the adjustment takes place. in norway, monetary policy is geared towards keeping inflation low and stable. the operational target of monetary policy is consumer price inflation of close to 2. 5 percent over time. the inflation target provides the economy with a nominal anchor. when inflation expectations are firmly anchored, monetary policy serves as the first line of defence when the economy turns down. over time, monetary policy can only influence inflation. monetary policy cannot assume a primary responsibility for delivering the necessary structural changes in the norwegian economy. but via the exchange rate channel, monetary policy can help facilitate the necessary restructuring process. without our own national currency the situation would be more challenging. the social partners would have to go it alone. the experience of some european countries shows that this can be demanding. with a floating exchange rate, the necessary adjustment of the cost level can take place faster, and may prove less painful. the krone exchange rate can function as a stabiliser. the depreciation of the krone through autumn last year indicates that this mechanism is functioning ( see chart 8 ). the monetary policy credibility built up over the years is now of considerable benefit. continued confidence that inflation will remain low and stable over time is a necessary precondition for a pronounced weakening of the krone concurrent with a low key policy rate. the benefit associated with a currency of our own disappears if the temporary rise in inflation associated with a krone depreciation is countered by higher wage increases. the result would be a higher key policy rate and a stronger exchange rate than would otherwise be the including reserves that have been approved for development by holders of oil rights and other proven resources in fields and discoveries. source : the shelf in 2014, norwegian petroleum directorate. bis central bankers ’ speeches case and, not least, higher unemployment. the social partners have a particular responsibility in this regard. in december last year, norges bank lowered the key policy rate by 0. 25 percentage point to 1. 25 percent. norges bank gave weight to the weakening of the growth outlook for the norwegian economy observed through autumn. already last winter, oil companies announced a period of downscaling, with cuts in investment, headcounts and costs. this tendency is being reinforced by the sharp fall in oil prices, which is having adverse spillover effects on the mainland economy and may lead to higher unemployment. low interest rates may increase the risk that debt and asset prices reach unsustainable levels. financial imbalance	##fg has grown in size. oil prices have fallen sharply over the past six months. even if prices edge up again, we have been reminded of the uncertainty associated with future revenues. lower oil prices imply slower growth in the gpfg than previously estimated. in the longer term, this means less money in the national coffer, with an attendant reduction in norway ’ s fiscal space. at an oil price of around usd 60 per barrel, transfers to the gpfg may come to a halt. rather, it seems that at today ’ s level of petroleum revenue spending there will soon be a need to make transfers from the gpfg to the fiscal budget. measured as a share of gdp, the gpfg may have already reached the peak. calculations in the national budget for 2015 illustrate this point ( see chart 15 ). the broken red line shows the trajectory for fiscal space assuming a real return of 4 percent. the estimation is based on the oil price level prevailing late last summer. if the return is closer to 3 percent, there will be little room for increasing petroleum revenue spending over the fiscal budget. on the contrary, in the course of a few decades, petroleum revenue spending as a share of gdp will have to be reduced, that is to say fiscal policy will have to be tightened. if, in addition, the oil price settles more permanently around the level observed so far this year, fiscal policy must be adjusted earlier. if petroleum revenue spending follows the real return, we will be heading for a period of sizeable fiscal retrenchment each year. in addition, pension obligations will show a pronounced rise further ahead. the fall in oil prices has been a reminder of the uncertainty surrounding future petroleum revenues. the same applies to the return on gpfg capital. the three paths illustrate the uncertainty we are facing, but they also illustrate another important point. spending the return will ultimately lead to a flattening of the gpfg, which will then decline as a percentage of gdp. it has always been clear that this will happen at some point in the bis central bankers ’ speeches future. what is new is that this may be the case here and now. at today ’ s oil price, the gpfg may have reached the peak. in that case, petroleum revenue spending as a percentage of gdp must be reduced to avoid using more than the return on the gpfg. even if the oil price and the rate of return follow a path that allows the gp	1
back to. practically everything we need is in there. and it ’ s a respectful document. it gives each of us the responsibility of exercising good judgment. and more importantly, it says that we trust each other to do so. i ’ m really proud to be in an institution where we can operate that way. and the fact that we can is something i believe each of you should take pride in. because, let ’ s face it, it ’ s not something that happened by itself. it ’ s not a coincidence. it was your ideas that shaped the compass. and it ’ s no coincidence that the compass is even more relevant today than when we put it together. so, congratulations not only for creating it, but for living by it.	david a dodge : the bank of canada ’ s commitments to canadians remarks by mr david a dodge, governor of the bank of canada, at the town hall meeting, ottawa, 18 may 2004. * * * good morning everyone and welcome. welcome also to those of you joining us by videoconference. today ’ s gathering is very important, so i ’ m glad you have taken the time to attend. before i begin i want to say hello to the members of the management forum and executive management committee who are with us today. these town halls are becoming a bit of a springtime tradition. the snow melts and the time comes for us to get together. we take stock of where we are, where we ’ re going, and how we want to get there. as you know, many institutions, both governmental and private, are currently concerned about governance structures, accountability and rules of behaviour. of course we focused on these issues a couple of years ago when we established our compass. and it ’ s our compass i ’ d like to focus on now. it is an amazing document. i think it captures the essence of who we are. and one of the truly great things about it is how it came to be. creating the compass was a comprehensive exercise. it was top down, bottom up and side to side. staff had an opportunity to take part in the consultation, debate, and careful consideration that went into the making of it. together, we produced a remarkable set of commitments to canadians, to excellence, and to each other. we really don ’ t need to worry about producing something new. but it is useful as we get together, to remind ourselves of what it is that we created. our commitment to canadians placed our legislated mandate into very concrete terms. canadians need to have confidence in the value of the money they earn and the quality of the bank notes that they carry around. they need to have confidence in canada ’ s financial system. they want to know that the bank is managing the government ’ s funds with integrity. and that we are communicating and being accountable for what we do. when we say we are committed to canadians, we ’ re saying we ’ re committed to fostering their confidence in our integrity as a central bank. our second commitment is to excellence. it reflects the high standards we set for ourselves in our work on behalf of canadians. it goes hand in hand with the statement we made when we launched the compass and the medium term plan	1
y v reddy : some perspectives on the indian economy address by dr y v reddy, governor of the reserve bank of india, at the peterson institute for international economics, washington dc, 17 october 2007. * * * mr. chairman and friends, i am greatly honored by the invitation extended to me by the peterson institute for international economics to share some of my thoughts on the indian economy. this meeting is reflective of the recently observed growing interest and confidence in the status and future of the indian economy. today, i intend to submit that, since independence in 1947, the indian economy has been on the whole, on a path of gradually self - accelerating development accompanied by reasonable stability. there has been a noticeable acceleration in the level of confidence and the performance of the indian economy in the 21st century. the short - term prospects, despite recent global uncertainties, continue to be, by and large, benign for india. over the medium - term, there are several challenges and opportunities. the public policy may, therefore, have to specially focus on these aspects in order to meet not only the expectations of the global community, but also, and more importantly, the aspirations of millions of people in india, particularly the poor and the underprivileged from diverse backgrounds. i. self - accelerating growth since independence and in the new millennium before independence, during the first five decades of the 20th century ( 1900 - 01 to 1946 - 47 ), the annual average growth performance of the indian economy was dismal, averaging 0. 9 per cent. since the beginning of the planned development process in the early 1950s, the gdp growth displayed a self - accelerating tendency reaching a level of around 6. 0 per cent in the 1990s. two exceptions during this phase were the dipping of the growth rate in the 1970s to 2. 9 per cent and during the crisis year of 1991 - 92 1 when the growth was as low as 1. 4 per cent. the record of inflation in india has been satisfactory. since independence, the wholesale price inflation, on an average basis, was above 15 per cent in five out of fifty years. in thirty six years, out of fifty, inflation was in single digit and on most occasions high inflation was due to external and domestic shocks such as sharp rise in fuel and food prices. in the new millennium, the gdp growth rate has accelerated further averaging 6. 9 per cent during the seven - year period 2000 - 01 to 2006 - 07, while the growth rate in the last four	his business will still flourish. let me bring up some statistics to highlight the importance of the exportoriented sector in the mauritian economy and the extent to which they are exposed. the eoe sector plays a key role in our economy and its sustainability and competitiveness are a matter of national interest. to take 2010 figures, the eoe sector represents around 6 per cent of gdp, accounts for 58 per cent of total export of goods, and provides employment to nearly 56, 000 persons, which in turn represents a little over 10 per cent of total employment. however, the eoe sector and external demand - led sectors as a whole are subject to some structural weaknesses which make them particularly vulnerable to external shocks. a full two - thirds of our total export of goods was directed to european markets in 2010. this bis central bankers ’ speeches pattern of dependence on europe is also evident on the services front. two - thirds of our tourists also come from europe. to complete the picture, half of total fdi inflows into mauritius came from europe in 2010. this geographical concentration on europe for exports of goods and services, and inward investment, is not replicated on the import side. europe provided only one quarter of our imports of goods. we are not only highly exposed to the european market ; we also have to cope with the imbalance in the currency in which our trade is conducted. on the one hand, it is estimated that 41 per cent of our export proceeds is denominated in euros. the share of the us dollar and pound sterling stands at 39 per cent and 14 per cent, respectively. on the other hand, our imports are invoiced mainly in us dollars, with a share of 67 per cent. the euro represents 21 per cent and the pound sterling less than 2 per cent of imports. at one point in time, the combination of a downward slide of both the euro and the pound sterling on global currency markets, coupled with a stronger us dollar, raised serious concern in view of the negative implications of such a trifecta on a wide spectrum of economic activity in the country, including the sugar, textiles, tourism and bpo sectors. today, fortunately the rupee has stabilized. we cannot, however, pretend that we are protected from all external instability, as the value of our currency in the domestic foreign exchange market is largely driven by the interplay of domestic and international factors. after almost 84 weeks of non - intervention in the foreign exchange market, the	0
yves mersch : prospects of islamic finance – the view of a central bank in europe closing keynote address by mr yves mersch, governor of the central bank of luxembourg, at the islamic finance conference, frankfurt am main, 18 november 2010. * * * ladies and gentlemen, it is my pleasure to talk to an audience of such distinguished financial specialists. before i embark on what islamic finance means for central banking in europe, i will have a look at the growing importance of the phenomenon, its characteristics in the context of financial stability in general and its performance during the financial crisis in particular. finally, i will present the achievements within my own constituency to overcome the obstacles for an accelerated and safe spreading of islamic finance in europe. islamic finance : growing importance the development of modern islamic finance roughly started more than four decades ago. at the very beginning it occupied a small niche visible in islamic countries. in malaysia the pilgrim fund ( tabung haji ) was established in 1969 as an islamic savings institution. more recently islamic finance has expanded out of this niche. worldwide, the assets of islamic finance institution have grown at double - digit rates for a decade. even some conventional banks have embarked into the provision of shari ’ ah compliant financial assets reaching an estimated 509 billion usd at the end of 2007 according to moody ’ s 1. today, there are at least 70 countries that have some sort of islamic financial services. almost without exception, the major multinational banks offer some kind of these services. with the rise of the importance of sovereign wealth funds ( swf ), islamic finance was pushed further. about a decade ago, many emerging countries started to accumulate huge foreign exchange reserves, most of them benefiting from rising oil, gas and other natural resources ’ prices, being supported by favorable macroeconomic policies. with assets under management of an estimated 3, 000 bn usd in 2009, swf represent twice the wealth of hedged funds. muslim countries, oil exporters in particular, account for more than 50 % of all swf ’ s assets – not all of which are islamic finance products, though. while islamic banking remains the main form of islamic finance, islamic insurance companies ( takaful ), mutual funds and islamic bonds ( sukuk ) have witnessed strong global growth. the sukuk markets in particular have gained importance. in recent years, the issuance rose from less than 8 bn usd in 2003 to 50 bn usd by mid - 2007. 2 after a sharp decline during the financial crisis, private	), “ understanding the great recession ”, american economic journal : macroeconomics, vol. 7 ( 1 ), 110 — 167. 21 see gertler, m. and p. karadi ( 2015 ), “ monetary policy surprises, credit costs, and economic activity ”, american economic journal : macroeconomics, pp. 44 – 76. 22 clerc, l., a. derviz, c. mendicino, s. moyen, k. nikolov, l. stracca, j. suarez and a. p. vardoulakis ( 2015 ), “ capital regulation in a macroeconomic model with three layers of default ”, international journal of central banking, pp. 9 - 63. 23 see : blanchard, o. ( 2016 ), “ do dsge models have a future? ”, peterson institute for international economics policy brief 16, 11 august ; blanchard, o. ( 2016 ), “ further thoughts on dsge models ”, peterson institute for international economics realtime economic issues watch, 3 october ; blanchard, o. ( 2017 ), “ the need for different classes of macroeconomic models ”, peterson institute for international economics realtime economic issues watch, 12 january. 6 / 6 bis central bankers'speeches	0
. policy actions have typically been explained solely in terms of inflation : for example, reducing the risk that inflation will undershoot the target in the medium term or extending the horizon over which we intend to return inflation to target. although, technically accurate, such explanations don ’ t speak to the distress of businessmen and women worrying about the future of their companies or to the anxiety faced by families unsure as to whether they will still be in a job next week. make no mistake : inflation targeting provides the flexibility for policy to respond to such anxieties. and we have fully exploited that flexibility over recent years. but it doesn ’ t provide a natural framework – a ready vocabulary – in which this flexibility can be clearly communicated. this almost exclusive focus on inflation in our communications didn ’ t matter for much of the first 20 years of inflation targeting in the uk. indeed, arguably it was one of its attractions. prior to the introduction of inflation targeting in 1992, the uk had searched – in vain – to find a credible anchor for monetary policy and inflation expectations. the simplicity and clarity provided by a numerical target for inflation helped to establish the credibility of monetary policy and was instrumental in fostering the period of stable growth and low inflation enjoyed in the decade or so prior to the financial crisis. but in the aftermath of the crisis and faced with five years of almost no growth, it is natural for people to ask what monetary policy is doing to help get the economy going. the control of inflation is important but so too is supporting the creation of jobs as unemployment rose to its highest level for almost twenty years. there was a real risk that this would start to erode the trust and support of inflation targeting ; to damage its democratic legitimacy. this was arguably evident earlier this year in the discussions in the media and amongst some commentators as to whether the framework of monetary policy should be altered, say to adopt a nominal gdp target or for the mpc to have an explicit objective for growth. a subtext of that discussion was that the inflation target was in some way acting as a constraint on the support that monetary policy could provide to the faltering recovery. to repeat : such criticism is misplaced. the credibility provided by the inflation target is a prerequisite for monetary policy to be able to respond so aggressively to the fallout from the crisis. and with inflation being above target almost consistently over this period, it is hard to argue that monetary policymakers have somehow been fixated by inflation. but the forward guidance provided	gdp peaked sources : ons and bank calculations. notes : the chart plots real business investment. the range includes the recessions of 1973, 1979 and 1990. all speeches are available online at www. bankofengland. co. uk / speeches chart 3 : uk real business investment to gdp ratio is falling percent of gdp source : ons. chart 4 : investment consistently weaker post - crises average financial recession cumulative change ( per cent ) average normal recession - 5 0 - 10 years - 15 - 20 - 25 - 30 source : jorda, o., schularick, m. and taylor, a. ( 2013 ), ‘ when credit bites back ’, journal of money, credit and banking, vol. 45, issue s2. notes : the chart shows the cumulative change in per capita investment. the grey shaded area shows a 95 % confidence interval around the average normal recession. all speeches are available online at www. bankofengland. co. uk / speeches chart 5 : uk, us and euro - area capital overhangs being worked off uk capital to output ratio euro area capital to output ratio euro area trend capital to output ratio us capital to output ratio us trend capital to output ratio per cent per cent uk trend capital to output ratio 1995 1999 2003 2007 2011 2015 1995 1999 2003 2007 2011 2015 sources : bea, oecd, ons and bank calculations. chart 6 : zombie firms rising in aes, falling in the uk ( a ) per cent of firms 12 % per cent of firms 30 % 10 % 25 % 8 % 20 % uk measure ( rhs ) ( c ) 6 % 15 % global measure ( lhs ) ( b ) 4 % 10 % 2 % 5 % 0 % 0 % source : european commission, ameco database ; imf, world economic outlook ; datastream worldscope ; the conference board ; bis calculations ; bureau van dijk and bank calculations. ( a ) zombie firms are defined as firms with a ratio of earnings before interest and taxes to interest expenses below one. ( b ) sample includes listed firms aged 10 years or more. shown is the median share across au, be, ca, ch, de, dk, es, fr, gb, it, jp, nl, se and us. ( c ) sample includes both publicly listed and private uk firms. only firms whose turnover reached £1 million in one of the past ten years are included. there are around 17, 200 firms per year	0.5
, exchange - traded market when the trading halt ends? what kinds of problems might domestic specialists and market makers have in restarting if the market has moved away from them during the halt? recent changes to shorten the duration of the circuit breakers likely would ameliorate these concerns somewhat, but the worry remains. - 3another important change in the financial landscape in the years since the crash has been a greater focus on risk management by both market participants and supervisors. developments of new instruments, both on and off exchanges, and of new methods for evaluating risk, have given market participants powerful new tools to allow them to absorb market shocks. similarly, risk management tools have been enhanced at clearing organizations. regulators must respond to these new tools. to fully utilize their benefits, regulators will need to approach regulation and supervision in different ways. a good example is to be found in the approach by banking supervisors to developing a capital requirement for market risk. after initial fits and starts, the basle supervisors ’ committee embraced the concept of using banks ’ internal models as a basis for a capital requirement for market risk. the federal reserve has taken this process of employing new approaches to regulation a step further with its pre - commitment proposal. pre - commitment allows banks to commit to the maximum loss they will experience over the next quarter in their trading portfolio ; this commitment becomes their capital requirement. the proposal gives banks incentives to establish the commitment in a prudent fashion through fines and disclosures if it is violated. economists in the audience will recognize this proposal as an application of an incentive - compatible approach to regulation. i suspect that there are far more areas in our regulatory structure in which incentive - compatible approaches could be implemented. self - regulatory organizations also may find such an approach beneficial, particularly in this era in which sros are being asked to assume more and more regulatory responsibilities. incentive - compatible regulation essentially tries to harness the self - interest of market participants to achieve broader public policy goals. by using such an approach, our overall goal is to make individual market participants more resilient and better able to withstand shocks. this, after all, is the most basic ( and probably the most effective ) protection for firms faced with events such as the 1987 crash. at a macroeconomic level, public policies also should ensure that markets and the economy itself can withstand shocks. while the 1987 crash did not have significant, real economic effects, this is not always the case with stock market crashes. such episodes are generally accompanied by dramatic increases	, resulting in greater reliance on remote work, reductions in nonessential travel, and changes to cre usage and valuations. - 7in downside scenarios, there could be some persistent damage to the productive capacity of the economy from the loss of valuable employment relationships, depressed investment, and the destruction of intangible business capital. a wave of insolvencies is possible. as the federal reserve board ’ s may financial stability report highlighted, the nonfinancial business sector started the year with historically elevated levels of debt. 10 already this year, we have seen about $ 800 billion in downgrades of investmentgrade debt and $ 55 billion in corporate defaults — a faster pace than in the initial months of the global financial crisis. several measures of default probabilities are somewhat elevated. it remains vitally important to make our emergency credit facilities as broadly accessible as we can in order to avoid the costly insolvencies of otherwise viable employers and the associated hardship from permanent layoffs. finally, in keeping with the global nature of the pandemic, foreign developments could impinge on the u. s. recovery. the international monetary fund estimates that real global gross domestic product dropped at an annual rate of about 18 percent in the second quarter after falling nearly 13 percent in the first quarter. while the potential for a fiscal response across the euro area is positive and important, there has been some renewal of tensions between the united states and china, and the outlook for many emerging markets remains fragile. the federal reserve moved rapidly and aggressively to restore the normal functioning of markets and the flow of credit to households and businesses. the forceful response was appropriate in light of the extraordinary nature of the crisis and the see board of governors of the federal reserve system ( 2020 ), financial stability report ( washington : board of governors, may ), https : / / www. federalreserve. gov / publications / files / financial - stability - report20200515. pdf. - 8importance of minimizing harm to the livelihoods of so many americans. with the restoration of smooth market functioning and credit flows, our emergency facilities are appropriately moving into the background, providing confidence that they remain available as an insurance policy if storm clouds again move in. while it is welcome news that 7. 5 million jobs were added in the past two months, it is critical to stay the course in light of the remaining 14. 7 million job losses that have not been restored since the covid	0.5
a broader range of individuals and institutional investors. for islamic banks, the iap creates a differentiated product that presents a new source of income and funding profile. there is also the potential for institutions with specific mandates including government agencies to strategically collaborate with the iap and islamic banks to form public - private partnerships to facilitate the efficient channelling of grants or funding and to facilitate financing opportunities for identified strategic ventures. the role of the iap that is launched today is envisaged to transcend beyond our domestic borders to become an effective channel to further enhance financial interlinkages in the regional and global economy. it can also be enhanced to become a multi - currency investment platform to provide a marketplace for local and international investors to invest in real economic activity and projects denominated in various currencies and financed by islamic banking institutions from different jurisdictions. this will be a first of its kind shared global platform for islamic finance. in facilitating cross - border transactions, the iap will also contribute towards drawing new foreign investors while also allowing for participation in the financing of projects outside the country. the iap, together with the existing components of financial intermediation will form a more complete, and yet mutually complementary financial ecosystem. to ensure its success, there has to be greater awareness and understanding on the key features of the iap and its embedded mechanisms by all the stakeholders. of importance is for islamic banks, investors and entrepreneurs to have a clear understanding on the risk and return relationships that are embedded in the variations of shariah contracts used in such investment account products. expectations need to be aligned with the various approaches adopted to managing these relationships according to the contractual and operational requirements. it is also paramount for islamic banks to uphold the best practices in the conduct of discharging their fiduciary duties and in performing its administration. of importance is the required due diligence, performance monitoring, suitability assessment and investment management. this would ensure that the iap is always a trusted medium of investment that is transparent and competitive in providing a seamless experience for investors. this would address the concerns of investors on the risks associated with the asymmetry of information. such features would contribute towards strengthening the ability of the iap to attract a wider range of investors, therefore enabling the platform to cater for different types of risk profiles of the different ventures. this shared infrastructure for advancing the delivery of the investment account product offerings represents an important platform to take this proposition forward. i wish to congratulate the six financial	institutions that include four islamic banks and two development financial institutions on their collective effort to initiate this platform. i understand there is bis central bankers ’ speeches interest from other islamic banks to take part in this platform. this platform will have the potential to create a more extensive network of sponsoring banks to meet the more diversified demands of investors and ventures. this would further enhance the potential for the value proposition of the iap as a shariah compliant investment vehicle and a fund raising avenue that would bring benefits to the economy. on that note, it is my great pleasure to officially launch the iap. i wish it every success. thank you. bis central bankers ’ speeches	1
business lines in a situation of financial stress. work has also been initiated to implement this in malaysia. financial institutions are expected to develop a menu of options for recovering from events of severe stress in order to restore business to a stable condition. these plans must be regularly updated to reflect changes in a firm ’ s business model and operational arrangements. at its most basic level, recovery plans are helping financial institutions to better understand their operational and financial interdependencies and how this can affect recovery options that are available to the institution. some institutions are finding through this process that their operations have become far too complex to support credible recovery strategies. these institutions are taking or considering steps to restructure parts of the business to achieve wider options for recovery. indeed, an important development emerging in the recent period has been the more explicit consideration of implications for recovery plans in key strategic decisions, such as decisions to hub operations at a particular location or service provider. as much as organisational resources are put into enhancements of business continuity management, it is important for businesses to always keep in mind the inherent limitations of bis central bankers ’ speeches business continuity plans and not be lulled into a false sense of confidence that these plans may provide. scenarios featured in these plans are often based on assumptions, which are a simplification of reality at best. such scenarios should always be rigorously challenged to account for changing conditions. business recovery or resumption actions should also contemplate a range of conditions to build agility within the organisation to execute required, but potentially untested, responses. firms should expect that they will rarely get to a point of precision in their scenario planning and bcm responses. this does not mean that bcm is necessarily reduced to an exercise in futility. a commitment to continuous improvements in bcm is almost certainly likely to prepare firms better for disasters and tail risk events even if those specific events were not exactly contemplated. this is because the organisation will be naturally better at coming together in a crisis, and would be able to leverage on some of the core elements of response plans that have already been developed and tested. the world today is encountering more extreme disasters such as epidemics and unpredictable weather - related calamities. in our own country, the worst flood disaster experienced in decades last year saw over 250 thousand people displaced with estimated costs of more than two billion ringgit to repair damaged infrastructure. this presents a sober reminder of the responsibility of all corporations to ensure that they are well prepared for	and remain resilient against calamities, not just for their own survival, but in the interest of employees and the community that depend on them. role and prospects of the insurance industry in advancing risk management the cost associated with negative tail - risk events will only escalate as business networks grow in complexity. the use of insurance continues to be an important way in which companies can reduce this cost by transferring risks to insurance providers. insurers are well - placed to assume such risks given their long standing history in risk analytics which enables them to effectively exploit the law of large numbers and benefit from risk pooling. among emerging economies, however, there is still a sizeable protection gap in spite of the increased frequency and severity of weather related disasters and other natural catastrophes. in 2014, insured losses in asia only covered about 10 percent of total losses incurred as a result of natural and man - made disasters. combined insurance premiums written from emerging markets accounted for only 18 percent of global premiums in 2014, against 82 percent recorded from the advanced economies. given the concentration of growth and development in emerging economies, going forward, the extent of underinsurance is a concern. in many of these economies, efforts are being aggressively pursued to increase awareness of the importance of insurance protection in helping one manage risks, and to develop an effective insurance market to meet these needs. the insurance industry in malaysia currently stands at crossroads of implementing important reforms being introduced by bank negara malaysia both in the general and life insurance sectors. the objective of the reforms is to further enhance the competitiveness of the industry, ensure its continued resilience, and encourage greater innovation in solutions offered for households and businesses to better manage risks. to this end, two aspects of the reforms are significant. the first is the progressive strengthening of prudential standards that aim to improve underwriting and risk assessment capabilities within insurance companies, while substantially strengthening incentives for insurers to differentiate themselves in the market. the second is the structural changes that are being introduced to reduce market distortions and drive efficiency improvements. beyond domestic borders, the bank also continues to pursue further liberalisation in the cross border provision of insurance in certain sectors, such as the marine, aviation and goods in international transit ( mat ) sector, both to enhance capacity and reduce costs for businesses. this is primarily being advanced under regional integration plans, focusing in particular on asean. taken together, the reforms are expected to result in wider product offerings and delivery channels, service quality	1
stanley fischer : monetary policy - by rule, by committee, or by both? speech by mr stanley fischer, vice chair of the board of governors of the federal reserve system, at the 2017 us monetary policy forum, sponsored by the initiative on global markets at the university of chicago booth school of business, new york city, 3 march 2017. * * * in recent years, reforms in the monetary policy decisionmaking process in central banks have been in the direction of an increasing number of monetary policy committees and fewer single decisionmakers – the lone governor model. 1 we are only a few months away from the 20th anniversary of the introduction of the bank of england ’ s monetary policy committee, just a few years after the 300th birthday of the venerable old lady of threadneedle street. the bank of israel moved from a single policymaker to a monetary policy committee in 2010, while i was governor there ; more recently, central banks in india and new zealand have handed over monetary policy to committees. the federal reserve is not part of this recent shift, however. the federal open market committee ( fomc ) has been responsible for monetary policy decisions in the united states since it was established by the banking act of 1935, two decades after the founding of the fed itself. 2 the movement toward committees reflects the advantages of committees in aggregating a wide range of information, perspectives, and models. despite the prevalence and importance of committees in modern central banking, the role of committees in the formulation of policy has not attracted nearly as much academic attention as has the research on monetary policy rules. 3 the literature on monetary policy rules stretches back to at least adam smith and includes important contributions from david ricardo, knut wicksell, and milton friedman. more recently, john taylor has moved the research agenda forward with his eponymous rule, and a large number of academic papers have been written examining the effectiveness and robustness of policy rules. 4 in contrast, as noted, study of the role of committees in making monetary policy has been fairly light, notwithstanding the insightful work of alan blinder and others. 5 committees and rules may appear to be in opposition as approaches to policymaking. one might even argue that if a central bank ever converged on a single monetary rule, there would be no need for a monetary policy committee. in practice, the fed operates through a committee structure and considers the recommendations of a variety of monetary rules as we make monetary policy decisions. our decision is typically whether to raise or reduce the	proximity can often mean economic and financial linkages. but even economies on the other side of the globe, with few direct linkages, can be affected for no other reason than that they are classified as “ emerging markets ”. such countries might well have some weaknesses such as those noted above which, given time and a measure of economic and financial stability, might be adequately addressed. but under conditions of widespread desire to shed risk, they become immediate stumbling blocks for markets. this can put intense pressure on the policy authorities and economies of these countries - pressure which few countries can withstand easily. for these reasons, the picture looks different from the perspective of the emerging market economies. what is good for us after a long period of evolution need not be good for another country at a much earlier stage of that evolution. in modern parlance, it is essential to get the sequencing right. countries have to attain a high standard of financial infrastructure and regulation before they can submit themselves to the potential instability inherent in the totally free movement of capital. in the meantime, they should integrate themselves as closely as they can into the international capital market and, as their markets evolve towards maturity, they can take additional steps progressively to liberalise their regulatory regimes. to expect them to do it in the other order is to ask them to run before they can walk. 3. what should we do about it? fortunately, there is now a widespread agreement that something has to be done to improve the international financial system. the degree of instability, if it continues unchecked, could lead many participating countries to question the whole legitimacy of the system. the severity of the contractions in asia is the most striking example, but so is the sudden recognition that a hedge fund can become so important that its failure could pose a systemic threat to the united states and international economy. the fact that the second most important exchange rate in the world the us dollar - yen rate - could move by 20 per cent in a month without there being a material change in fundamentals has also caused concern. i think there is now agreement that something has to be done, and it is heartening to see that the united states has taken a leadership role, including by convening the group of 22 and its three working parties. i also think that the australian government has played a very useful role - first by its representations to the imf urging more flexibility in its handling of the indonesian crisis, and secondly by its attempt to keep the momentum of apec heading in the	0
system and in the real economy. a year ago, the uk housing market was clearly developing significant momentum. prices were growing much faster than incomes. borrowers were increasingly driven to borrow a greater amount relative to their annual income. the amount of such new mortgages at high loan to income ( lti ) ratios – borrowers borrowing over 4 times their annual income – had exceeded its pre - crisis peak. the risk the committee saw was that if the number of high lti mortgages continued to grow, there would be increasing numbers of highly indebted households very vulnerable to a change in economic circumstances. this would increase both macroeconomic volatility and systemic risk. the committee came to the view that this was a macroprudential risk that needed to be insured against. it recommended the introduction of limits on the proportion of new mortgages at high lti ratios. the momentum in the housing market cooled and the limits have not so far been reached. it is impossible to say how much this was a result of the committee ’ s action ; a number of other important factors were also in play. but it is an example of the fpc ’ s approach to adjusting policy to respond to changing risks. and it is also an example of the committee taking a broad view of financial stability that goes wider than direct risks to the banking system. a further example of how macroprudential risk can develop outside the banking system is the lending and investment that happens through financial markets rather than through banks. to take one example, the global asset management sector has grown by 60 % since 2003 and is now a similar size to the global commercial banking system. this will probably be one the july 2015 fsr identified the following major risks facing the uk financial system : the global environment notably greece and china ; market liquidity ; uk current account deficit ; uk housing market ; misconduct ; and cyber risk. bis central bankers ’ speeches of the new frontiers of macro ( and micro ) prudential regulation. the fpc is exploring whether there are significant risks from changes in these markets and in particular how asset managers manage liquidity to meet redemptions in times of stress. there is also work underway on this internationally. macroprudential policy is still a work in development. over the past few years much of the fpc ’ s work has been learning by doing. as we learn, we will have to set out clearly and publicly the development of our overall policy framework – how resilient we believe the	implementation of the new capital accord requires higher specialised skills in banks. in fact it requires a paradigm shift in risk management. the governance process should recognise this need and make sure that the supervised entity gears up to it. risk awareness has to spread bank - wide, the manner of doing business that measures risk adjusted returns needs to permeate the system. top management and the human resource development policy of banks thus need to get tuned bis central bankers ’ speeches to this requirement. we in the reserve bank also need to hone up our skills in regulating and supervising banks under the new system. we see this as an ongoing process and are continuously working towards skill improvement. governance 18. one can have the capital, the liquid assets and the infrastructure. but corporate governance will be the deciding factor in the ability of a bank to meet the challenges. bcbs has added a separate principle on corporate governance in its core principles for effective banking supervision which were revised in 2012. it is interesting to note that before 2012, there was no separate principle on corporate governance. i think global community is recognising the importance of corporate governance and is trying to fix the issues. thus while strong capital gives financial strength, it cannot assure good performance unless backed by good corporate governance. element of conservatism in minimum standards 19. several speakers mentioned about the super equivalence issue. let me add my bit to that discussion before i conclude. there is a general feeling that we have put in place a more stringent framework than what basel norms require. of course one would point out to the 9 percent crar, the 4. 5 leverage ratio, the slr running parallel with lcr, the higher ccf for otc derivatives and the like. we need to see this in a context. i have already dealt with the slr - lcr issue. on capital, all i can say is that in the ultimate analysis, on an aggregate basis, it does not make much difference. we must also appreciate that relatively much longer recovery process of defaulted loans, shorter history of ratings assigned by rating agencies in indian conditions putting certain constraint on benchmarking them against the international standards, relatively large population of unrated borrowers especially in mid and sme corporate sectors, market risk factors exhibiting more volatilities, etc. add challenges. besides, pillar 2 process and related add - on capital requirements is also yet to be fully stabilised. the higher prescription of 9 % minimum requirements in comparison to basel minimum of 8	0
and the development of a level playing field in international financial transactions, and it is therefore a threat to international financial stability. the caribbean is requesting that the imf, through its membership of the fsb, insist that the fsb refocus its engagement with the caribbean to concentrate on issues where the fsb can reinforce the efforts which the caribbean has been engaged in for many years, to upgrade and maintain surveillance of domestic and international financial sectors which offer international financial services of the highest quality and integrity. these activities are undertaken with the assistance of and in collaboration with the imf, the world bank and other international institutions, and the fsb should support already established processes. in this connection, the caribbean identifies the statistical data gaps as a priority for attention.	per cent. an additional important feature of the measures is that a certain amount of new lending is allowed above the specified thresholds. 17 these allowances recognise that higher loan - tovalue or loan - to - income mortgages can be appropriate in certain circumstances, as laid out in the banks ’ own credit policies, and can help to ease some valid concerns about market access difficulties, without permitting excessive leverage or credit risk to build up across the system as a whole. in addition, in december 2015, the bank announced the first settings of both the countercyclical capital buffer and other - systemically important institutions ( or o - sii ) capital buffer. 18 these measures are part of the capital requirements regulation toolkit which is applicable in all eu member states. the countercyclical capital buffer is a prudential tool designed to respond to fluctuations in the economic cycle and stabilise lending activity. when credit growth picks up, banks will be required to hold additional capital. when the economic cycle turns, banks will be able to release this, allowing stable lending to the real economy, through the cycle. although at present, following the central bank ’ s assessment, we have set this buffer at zero per cent for irish exposures. the o - sii buffer is an additional capital buffer applied to banks that are systemically important for the domestic economy. the central bank has set this buffer at 1. 5 per cent for its systemic institutions, to be phased in over the period 1 july 2019 to 1 july 2021. it is very clear to me that if these measures had been in place fifteen years ago, the scale of financial crisis experienced in ireland would have been much more limited. this time, our measures have been introduced early in the cyclical recovery in the market in order to prevent the recovery from becoming destabilised by excessive leverage being taken on by households. the mortgage rules in particular are designed to limit the risk of a house price – credit cycle emerging once again. while the parameters may in the future be amended, either tightened or loosened, in response to cyclical conditions, these measures, which seek to underpin prudent lending standards, have been introduced as permanent, structural features of the irish mortgage market. moreover, the evidence threshold to justify adjustments to these rules is significant. the loan - to - value measures include a maximum loan - to - value ratio of 80 per cent for non - first - time buyers of a primary residence, while for first -	0
from the crisis that buffeted its economy and banking sector. state intervention is much more limited in italy than in almost all other european countries, helping to remove the market ’ s perception of a risk considered high for the entire banking system. the costs for the public purse will be reduced by burden sharing among equity holders and subordinated bond holders. it will be possible to offset them against the proceeds of future sales of shareholdings. a necessary condition for benefiting from public precautionary recapitalization is the approval by the european commission of a restructuring plan drawn up by the bank. the injection of public funds into banca monte dei paschi di siena will presumably use up about a third of the €20 billion set aside by the government. there is more than enough room to address the recapitalization needs of any other italian banks that meet the conditions laid down in the decree, in the first place those relating to the results of a stress test. however, for other measures to be implemented the banks must be willing to apply for public support and to deal with the ensuing commitments. following the capital strengthening carried out under the fondo atlante, the senior management of banca popolare di vicenza and of veneto banca have been drawing up an industrial plan for their further recapitalization and relaunch, which will soon be presented to the supervisory authorities. the feasibility of a merger will be examined with a view to achieving cost savings and synergies capable of ensuring a return to profitability. the challenges for the banking system aside from the difficulties of some banks in particular, the banking system as a whole is called on to face new and demanding technological and market - related challenges, on which we have often reflected. this is not only a necessity for italy : a return to higher and lasting profits is a must for all european banks. the way in which branch networks are structured, services provided, and technologies used, must all be reviewed in a bold and innovative spirit. value creation in the banking industry has changed and continues to do so ; italian banks can no longer put off much needed restructurings and strategic reviews. only in this way can they continue to successfully attract investors ; only then can they continue to compete effectively and maintain their stability. in some cases capital strengthening on the market will need to continue, as is already happening for some large banks ; experience has shown that if requests for new capital are based on clear, ambitious and, at the	reached its lowest level since 2008 ; from the end of 2015 the stock of outstanding npls also began to diminish, albeit gradually. nonetheless, they continue to weigh heavily on the balance sheets of italy ’ s banks and there have been repeated calls for better, firmer and more comprehensive management of these exposures. last june bad loans and other npls on the balance sheets of italian banks amounted to €191 billion net of write - downs, that is 10. 4 per cent of total loans. including write - downs, npls came to €356 billion, a figure frequently quoted in debates, which refers to the face value of the exposures and accordingly does not represent their actual weight in banks ’ balance sheets. out of €191 billion of npls, net bad loans, i. e. exposures to insolvent debtors, amounted to €88 billion or 4. 8 per cent of loans. the remaining €103 billion pertained to situations in which regular repayments may resume, especially if the recovery gains momentum. the bad loan recovery rate effectively recorded by italian banks averaged 43 per cent over the ten years 2006 - 15, a proportion largely in line with banks ’ balance sheet figures. our studies point to a wide dispersion of recovery rates : for many banks the margin for improvement is considerable and must be rapidly exploited. the first two rounds of new bad debt reporting received and analysed by the bank of italy last year revealed that there is still some way to go in creating detailed and easy - to - access databases. in the two years 2014 - 15, recovery rates dropped to an average of 35 per cent. this was partly due to an increase in the number of positions closed following ‘ en bloc ’ market sales to specialized investors : in the ten years considered, the average recovery rate for these sales was 23 per cent, against 47 per cent for positions closed following standard procedures. the market prices of exposures should be assessed bearing in mind that they reflect the very high yields demanded by oligopolistic buyers, which also factor in the possibility of long recovery times ; in some cases the existence of a large proportion of long - standing bad debts, already amply written down, explain the particularly low selling prices. the large volume of italian npls has drawn the close attention not only of the supervisory authorities but also of international markets and observers. it requires careful management. the majority of bad loans are held by banks in a sound financial	1
compensation structure is reconsidered, the psas need to be amended or renegotiated in order to facilitate more workouts. finally, psas should clarify the situations in which loan modifications and other mitigation strategies should be pursued. one tool that could aid in providing such clarity, and has received substantial attention over the last few years, is the net present value model. requiring servicers to take mitigative actions that are net - presentvalue positive to the investor could encourage the fair and consistent treatment of borrowers. investors also need tools that will allow them to better monitor servicer performance and take action accordingly. these tools should be developed and described in the contract. currently, metrics that allow investors to measure servicers ’ execution are not widely available. such metrics could include customer satisfaction ratings, delinquency and cure rates, the average time that a homeowner waits on the phone to talk with the servicer, and servicer error rates. indeed, one can even imagine the development of a uniform servicer scorecard. to be meaningful, the ability to transfer servicing from low - performing servicers to high - performing ones would have to be enhanced. the creation of common back - office systems across servicers would make transfer less prone to error and less costly, and any contractual or legal barriers would need to be reduced to allow investors to “ fire ” a lowperforming servicer. a new contractual regime designed along these lines would represent a significant change from the existing world of servicing, but it could help create a system in which servicers compete on the quality of their performance and are more accountable to both investors and consumers. representations and warranties i turn next to the problem of representations and warranties contained in the psas. underwriting standards declined dramatically in the middle part of the previous decade as the housing bubble approached its peak. for example, the median combined loan - to - value ratio on subprime mortgages originated for home purchases rose from 90 percent in 2003 to 100 percent in 2005 – meaning that more than one - half of borrowers who purchased homes with subprime mortgages put no money down. the share of mortgages in which borrowers did not document fully their income or assets also increased. in addition, the number of mortgages that defaulted in the first year after origination – commonly considered a gauge of poor underwriting – rose appreciably as the bubble approached its peak. 4 the “ originate	government policies to drive structural changes. 2 / 2 bis - central bankers'speeches	0
jean - claude trichet : award acceptance speech for the grand cross 1st class of the order of merit speech by mr jean - claude trichet, president of the european central bank, at the award of the grand cross 1st class of the order of merit by the president of the federal republic of germany, berlin, 3 april 2008. * * * mr president, dear eva, your excellency, dear friends, i will not attempt to conceal the fact that i am extremely touched : touched to be here with you, mr president, in this magnificent palace of yours ; very touched to have such a prestigious honour bestowed on me by the federal republic of germany ; and touched to find myself surrounded by so many friends with whom we have worked with such energy in deepening and strengthening the friendship that exists both between france and germany and across europe as a whole. mr president, thank you from the bottom of my heart for awarding me this grand cross, which i regard as an honour bestowed on the whole of the executive board and the governing council and all of the staff of the european central bank. mr president, dear horst, being here with you today, i am inevitably reminded of certain shared experiences, events that are now etched firmly in my memory as landmarks in what has been a truly historic period. • my first memory is of the fall of the berlin wall in 1989. you were tasked with organising the reunification of germany as state secretary at the federal ministry of finance. i remember accompanying you in 1990 on a long journey by helicopter over east germany to berlin, during which you explained to me the colossal economic and financial stakes involved in reunification. • my second memory is of the soviet union itself suffering serious financial problems prior to its collapse in 1991. we were in moscow together with our partners, the other g7 state secretaries, to negotiate with the kremlin – which had, by then, lost all of its power and had an “ end of empire ” feel to it – with a view to rescheduling the soviet union ’ s debt. • my third memory is of the decision in europe to enter into intergovernmental negotiations with a view to establishing the single currency. you were negotiating on behalf of germany. we met many times in order to prepare the text of the maastricht treaty. i will always remember a long discussion we had in 1991, when i remember having the impression that we had convinced each other that our respective countries really wanted to go through with this – but	the values for the financial sector are ultimately solidified by private sector forces. in particular, professional bodies have a crucial role to play. this role includes – but is not limited to – promoting competence within the financial sector. beyond training, these organisations are uniquely positioned to build for financiers, a sense of pride and societal purpose toward their vocation. the asian institute of chartered bankers ( aicb ) is making substantial progress in this direction for the banking profession. i am pleased to note that its flagship chartered banker curriculum dedicates a significant emphasis on professional ethics. this stands alongside various other efforts for training and standard - setting, including those by aif, iclif, sidc, fide forum, ppkm and fspb. i wish to take this opportunity to specifically commend the aif and fspb for their initiatives, including today ’ s event. these draw the much needed attention by the industry to this important subject. the system of values affecting behaviour does not only depend on the sector - wide legal and regulatory frameworks and the vibrancy of the professional community. also, of crucial importance, is the role of the board and senior management in each organisation. as has been often repeated, these leaders set the tone from the top. this is established through official decisions and formal statements, including the corporate values and various codes of conduct. however, their role goes much further than that. more than their words, the board and senior management determine the prevailing values of the organisational ecosystem through their attitudes, actions and decisions – especially those relating to professionalism and integrity. do they give the impression that the ends always justify the means? how vigorously do they question sudden surges in a business unit ’ s profitability? are they willing to overlook ethically questionable actions so long as the firm is technically within the bounds of the law? how do they react to ethical failures and misconduct? how does compromising the policies of the organisation affect bonuses and promotion? apart from the board and senior management, the system affecting each organisation is also determined by the shareholders. the capitalist system depends on owners of capital to promote sustainable value creation through market discipline. is it simply short - term profits that matter? are there other social or environmental purposes that must be safeguarded? to this end, the securities commission ’ s malaysian code for institutional investors articulates the stewardship 3 / 5 bis central bankers'speeches role that shareholders ought to play. ultimately, shareholders need to	0
in 2016 will be the weakest in seven years. south africa, like other commodity - exporting nations, is facing a terms - of - trade shock as a result of the persistent decline in commodity prices since 2011. this has been exacerbated by periods of protracted labour unrest and electricity supply shortages. more recently, the severe drought conditions have begun to weigh on activity in the agricultural sector. at an aggregate level, corporate profit growth in the third quarter of 2015 ( known as the gross operating surplus ) was at its lowest level on record at 0, 3 per cent year - on - year. this was due to declining profitability in agriculture, mining, and manufacturing. pressure on corporate income suggests that investment, consumption, and hiring by the private sector will be muted in 2016. sarb ’ s leading indicator of economic activity has declined on a year - on - year basis for the past 12 months. this supports our view that the risks to the growth outlook are skewed to the downside. meanwhile, the inflation outlook has also deteriorated. after averaging 4, 6 per cent in 2015, inflation is expected to accelerate to 6, 8 per cent in 2016 and 7 per cent in 2017. the elevated inflation trajectory is largely as a result of multiple supply - side shocks which are expected to feed into consumer prices over the forecast horizon. these include a sharp depreciation of the exchange rate, a spike in domestic maize prices, and above - inflation electricity tariff increases. the domestic drought conditions have forced south africa to import maize, which means that the depreciated exchange rate is now a determinant of the local maize price. as a result of this double whammy, food inflation is expected to reach 11 per cent this year. even the sharp drop in the international oil price is unlikely to provide much reprieve to consumers as the rand ’ s depreciation means that petrol prices are likely to be slightly higher this year than in 2015. persistent weakness in the south african economy poses very real risks to employment and investment growth over the longer term. ultimately, this means that the collective gains in prosperity which we as a nation have achieved are at risk of being eroded. monetary policy against this difficult economic backdrop, the reserve bank must continue to execute its mandate of protecting the value of the currency in the interest of balanced and sustainable economic growth. protecting the value of the currency means that we aim to maintain its purchasing power. the purchasing power of the rand is influenced	remember that the structures of financial markets differ across countries, and hence a policy tool that appears appropriate in some jurisdiction may not necessarily be the most desirable one in a different country. furthermore, empirical evidence does not, so far, suggest that the volatility of south african financial assets has meaningfully diverged from those of markets in countries where such policy tools have been implemented. it is, however, important that investors remain assured and convinced of the firm commitment of south african authorities to price stability and sustainable public finances, irrespective of the challenges that the country faces in the pursuit of sustained economic growth and development. in that respect, the bank ’ s commitment to flexible inflation targeting, monetary policy transparency and predictable implementation, remain crucial to limiting any rise in financial market uncertainty and volatility. the monetary policy committee at its november meeting judged that an unchanged policy rate was consistent with its mandate at this stage. in order to maintain the integrity of the inflation targeting framework, however, it would not hesitate to take appropriate action, should the medium - term inflation outlook deteriorate significantly. at the same time, a reduction in public deficits as per the framework laid out in the october 2013 medium - term budget policy statement, together with the implementation of measures agreed upon in the national development plan, aimed at unlocking the country ’ s longer - term growth potential, would substantially assist the bank in carrying out its mandate of price and financial stability, in the interest of sustained economic growth and development. 6. conclusion let me then finish by answering the question of whether there is still a case for investing in emerging markets with a “ yes ”. while challenges remain and headwinds in the form of uncertainties around fed tapering, lower growth in key emerging market economies, and continued volatility are likely to be with us for some time, and the need to address certain structural challenges by emerging economies is beyond question, the much better fundamental backdrop of emerging markets and continued prospects of higher growth than in advanced economies, especially in regions such as sub - saharan africa, appear to suggest that it would be a mistake to write off emerging markets. by rather adopting a somewhat medium to longer - term investment horizon with appropriate diversification strategies, and looking through some of the temporary turbulence, investors that maintain their loyalty to this asset class are likely to reap the benefits. emerging markets appear to be adjusting both bis central bankers ’ speeches cyclically and structurally from spectacular levels of growth observed previously to more sustainable levels	0.5
carolyn wilkins : opening remarks - “ toward the 2021 renewal of the monetary policy framework ” opening remarks ( delivered virtually ) by ms carolyn a wilkins, senior deputy governor of the bank of canada, at the bank of canada workshop “ toward the 2021 renewal of the monetary policy framework ”, ottawa, ontario, 26 august 2020. * * * bonjour tout le monde, et bienvenue a notre colloque virtuel. thank you all for joining our workshop on the renewal of the bank of canada ’ s monetary policy framework in 2021. renewal is just around the corner — hard to believe. bank researchers have made a lot of progress since we kicked off our workplan in 2018. that seems like a thousand years ago given the current health and economic context. at that time, in a speech at mcgill ’ s max bell school of public policy, i laid out the main challenges confronting us as we did our work. we are looking forward to the conference they will host on this topic in september. one challenge i laid out in that speech has become crystal clear today : central banks are likely to run out of conventional firepower if we see an economic downturn in a low - interest - rate world. another challenge is that long periods of low interest rates encourage investors to take on risk that may be excessive. we see that now with high levels of indebtedness, not only in canada, but around the world. global debt - to - gdp is nearly 350 percent — much higher than at the time of the global financial crisis. these challenges led us to focus our research on three questions : first : can we articulate another framework that will do a better job than the inflation - targeting framework that ’ s been in place for over 25 years? to answer this, we are running a horse race among alternative frameworks for monetary policy. these include average inflation targeting, price - level targeting, an employment - inflation dual mandate and nominal gdp growth and level targeting. another possibility is to raise the inflation target. we are evaluating these frameworks against a clear set of criteria. of course, we are looking to see how well they can achieve stability in the economy and in prices so that businesses and families can make decisions with more confidence. we ’ re considering the implications for accountability, communications and credibility. we ’ re also looking at more novel criteria : how each framework impacts the distribution of income and wealth, and how robust the frameworks are in good economic times and bad. you	important financial market utilities. more recently, we have also created an office of financial stability policy and research at the federal reserve board. this office coordinates our efforts to identify and analyze potential risks to the broader financial system and the economy. it also helps evaluate policies to promote financial stability and serves as the board ’ s liaison to the fsoc. international regulatory coordination as a complement to those efforts under dodd - frank, the federal reserve has been working for some time with other regulatory agencies and central banks around the world to design and implement a stronger set of prudential requirements for internationally active banking firms. these efforts resulted in the agreements reached in the fall of 2010 on the major elements of the new basel iii prudential framework for globally active banks. the requirements under basel iii that such banks hold more and better - quality capital and morerobust liquidity buffers should make the financial system more stable and reduce the likelihood of future financial crises. we are working with the other u. s. banking agencies to incorporate the basel iii agreements into u. s. regulations. more remains to be done at the international level to strengthen the global financial system. key tasks ahead for the basel committee and the financial stability board include determining how to further increase the loss - absorbing capacity of systemically important banking firms and strengthening resolution regimes to minimize adverse systemic effects from the failure of large, complex banks. as we work with our international counterparts, we are striving to keep international regulatory standards as consistent as possible, to ensure that multinational firms are adequately supervised, and to maintain a level international playing field. thank you. i would be pleased to take your questions. bis central bankers ’ speeches	0
welcome address luigi federico signorini, deputy governor of the bank of italy cepr international macroeconomics and finance ( imf ) programme meeting webinar, 10 - 11 december 2020 ladies and gentlemen, it is my privilege to open this meeting of the cepr ’ s international finance and macro group. in these unusual times, one must forgo the benefits of informal, realworld interaction. we are now all of us well accustomed to making the most of virtual discussions. nevertheless, i do hope that we shall soon be able, and have the opportunity, to welcome you here in rome in person. globalisation is one of the key themes for this group. for over two decades, starting from the mid - eighties, the world saw cross - border movements of goods and ( especially ) capital increase apace, much faster than gdp. it was not, of course, the first instance of such a sustained process. it had happened during the ‘ belle epoque ’ of globalisation, between 1870 and the outbreak of the first world war, and again after the second. often, increased exchanges went hand - in - hand with accelerating economic growth, the dissemination of productivity - enhancing technology, the spread of new cultural models, and an internationally open mind - set, especially among the elites — in a knot of reciprocal causation links that is not easy to disentangle. globalisation was even stronger last time. at the onset of the global financial crisis, world exports amounted to more than a quarter of global gdp, against 13 per cent just before the great war. even more importantly, this time globalization went beyond europe, north america and other traditionally advanced economies, unleashing powerful forces for economic development in much of continental asia, for instance, and contributing to an astonishing reduction in global poverty. after embracing globalisation, each in its own way, the two largest countries in the world started a process of convergence with advanced economies that scarcely anybody would have thought possible fifty years ago. many other economies did the same. institutions and the rules for multilateral cooperation, strengthened after the end of the cold war, accompanied and supported this process. eras of globalisation, however, seem to end abruptly. the belle epoque waltzed unconscionably into the great war. the post - ww2 era came to an end with the dissolution of bretton woods, the oil crisis and stagflation. the latest period of globalisation closed with a global financial crisis	volatility of short - term interest rates around a given level of official interest rates. i would also emphasise that the actions undertaken were not in any way motivated by an attempt to mitigate losses for those who had taken excessive credit market risks. rather, the substantial injections of liquidity by central banks were intended to contribute to stability in the interbank market at a time of significant strain. the situation in ireland in the recent financial stability report of the central bank and financial services authority of ireland, we have concluded that while the risks to financial stability have increased since last year, the stability and health of the banking system here remain robust when assessed by the usual indicators of financial health such as asset quality, profitability, solvency, liquidity and credit ratings. however, like their international peers, irish banks have been operating in an environment where liquidity is not as readily available as heretofore. in addition, notwithstanding the fact that the larger institutions have diversified their businesses outside the irish economy, the banking sector is operating in an economy where growth will be slower by comparison with recent years. investor sentiment towards the banking sector globally has been negative in recent times and irish banks have not been immune from this. however, the current situation and outlook for irish banks, based on an assessment of developments so far, is positive. firstly, the sector's shock absorption capacity has been largely unaffected by the turbulence in international financial markets. a survey of the exposures of irish banks published in the financial stability report shows that the domestic banking system has no significant direct exposures to us sub prime mortgages and essentially negligible exposures through investments and through links with other financial companies or special purpose vehicles. in addition, the exposure of domestic institutions to hedge funds and private equity is very low by international standards. secondly, given the extent of the disruption to normal market functioning internationally in recent months, it is inevitable that access to liquidity in the interbank market by irish banks, like all banks, would be affected. however, the comprehensive liquidity framework within the eurosystem and the significant volumes of collateral held means that irish banks are well positioned to access eurosystem liquidity. also, a fuller assessment of the funding patterns of irish banks indicates that there is a significant medium - term element to much of their funding, as well as a relatively wide range of funding options available to them. finally, our stress - testing of the banking system and our extensive financial stability analysis indicate that irish	0
be made to the collective bargaining system so that settlements are more closely related to the specific situation of firms. it is also necessary to increase the incentives for the stable hiring of employees, reducing the segmentation and duality brought about by the still - high numbers of temporary employees as a proportion of the total labour force, despite the fact this proportion has fallen in recent years. in this respect, the reform of hiring arrangements in the past has been in the right direction, as it has reduced the differences in terms of costs between temporary and permanent employment contracts. stepping up investment in capital goods and establishing conditions conducive to the incorporation of technological progress, especially in the ict field, are vital factors for boosting productivity gains in the economy. nevertheless, as the experience of other countries ( particularly the united states ) has shown, to reap the potential benefits of the incorporation of new technologies through investment also requires setting a more flexibly working economy in place, pushing through structural and liberalising reforms, and designing an appropriate regulatory framework. structural reforms aimed at promoting flexibility, innovation, human capital formation and competitiveness should not be considered as having only medium - and long - term effects. the recent history of the spanish economy illustrates the relative speed with which their effects have become visible, when they have been applied with perseverance and consistency. this is because they alter the expectations of agents, who incorporate the new framework into their behaviour almost immediately. the foregoing takes on special importance in the face of the challenges eu enlargement entails. the similarities between the productive specialisation of our economy and that of the accession countries, combined with their low - cost and highly trained labour, pose a challenge to the spanish economy, which has to face stiff competition in those industries in which spain is more specialised. it will be necessary to bolster the competitive capacity of the spanish productive structure through productdifferentiation and quality - enhancing strategies, by improving its endowment of technological and human capital and by developing the technologically most advanced industries. but spanish companies must also set in train strategies enabling them to harness the opportunities of enlargement and to increase their presence in the new areas of the single market, channelling their foreign direct investment efforts in that direction. financial aspects of the spanish economy some of the financial features of recent developments in the spanish economy are of particular importance. as i have said, monetary and financial conditions remained generous in the spanish economy and, in step with this, financing received by households and	stood at end - 2002 at 4 %. this increase in inflation has been partly reversed, thanks to the improvement in recent months which has seen this rate cut by around one percentage point. however, the bout of rising inflation last year fed through in part to wages, highlighting the importance of reinforcing wage moderation. in fact, the inflation differential with the euro area, despite narrowing recently, has remained persistent. and that may pose a risk for future competitiveness. in the area of price formation, a cause for concern is the differences that continue to be seen in business margins, depending on whether industries exposed or not to competition are involved. in the former, mainly export - geared companies, the rate of change of prices has been virtually zero for over a year, reflecting the efforts exporting companies have to make to compete in markets experiencing a particularly delicate situation. in parallel, other industries less exposed to competition continue to increase their operating margins considerably. the spanish economy ’ s resilience in the face of the adverse external environment in 2002 offers bright prospects for short - and medium - term developments, having placed it in a sound starting position for more dynamic growth as the international climate improves. however, the expansionary impulses stemming from emu membership will tend increasingly to have a lesser effect, while the economy will have to address new challenges arising from the stiffer competition that eu enlargement will entail. consequently, the growth pattern may not reside so much on consumption and construction but will have to be underpinned to a greater extent by investment and exports, meaning that dynamism will depend particularly on their profitability and competitiveness. national economic policies will thus have to be geared to strengthening these elements by promoting macroeconomic stability, business profitability and the competitiveness of the productive system. as earlier indicated, budgetary policy has contributed to domestic stability by means of fiscal consolidation and the control of the budget deficit. if in the future, against a background in which european monetary conditions will remain relatively generous for the requirements of the spanish economy, demand pressures were to persist and contribute to sustaining an inflation differential unwarranted by the process of real convergence, it might be advisable to move towards a budgetary surplus position. that would additionally help tackle the problems of the long - term sustainability of the pensions system. maintaining competitiveness, which is one of the main long - term challenges, will require continuing wage moderation and higher productivity gains. to do this, certain changes must	1
to improve bank transparency, as well as strengthen the effectiveness of liquidity risk management and derivative products will complement these regulations farther. under such a policy, all players in the banking industry, including shariah, is expected to have sufficient space to maintain its intermediary function, as well as continue the implementation of prudential principles and risk management as a priority. distinguished guests, as i mentioned earlier, the cornerstone of our defense against a crisis is the banking sector. the economy is crisis resistant if its banking sector is crisis resistant. the banking sector i allude to is based on two pillars, namely good governance and good supervision. regarding good governance, i would like to stress one pivotal aspect. with the circumstances found pervading our financial and banking sectors lately, i am even more assured that human integrity and character, above all else, are determining factors. we can adopt a sophisticated risk management system and put in place a good supervision system, however, in the end the result is subject to the integrity and character of the administrators. no matter how good a system is it will not work if the administrators seek loopholes to abuse and exploit. in the future, bank indonesia will strengthen its screening process based on the character and integrity of our bankers, and certainly, our supervisors. bank indonesia will also impose strict sanctions for those who abuse their authority. psp and bank management must take full responsibility, bound by prevailing laws and regulations, for incidents that occur at their respective banks. improvements to bank resilience closely correspond to the quality of bank supervision. with this in mind, i am happy to report that bank indonesia is currently undertaking steps to augment bank supervision. the repositioning and revitalization of personnel is currently underway. supervisory procedures and methods are constantly reviewed to focus on issues that determine the wellbeing of a bank. in 2009, we plan to boost the effectiveness of bank supervision through two key measures. the first is to complete the risk - based supervision framework by improving the risk assessment process, oversight, auditing and system surveillance. ameliorating the quality of risk management, particularly liquidity management and control over new products and bank activity, represents the mainstay of ongoing endeavors. this is considered sufficiently urgent to be handled during the current financial turmoil. second is to improve the function and organization of supervision both at head office and all branch offices of bank indonesia. we will continue to strengthen the correlation between findings and actions ; between audit results and management steps	. we will form a panel team to improve audit quality and managerial steps. this year, we will also increase our budget for training. these measures are expected to secure our pathway through this crisis period as well as also build more solid foundations for better bank supervision in the mid term. closing distinguished guests, this brings me to the end of my speech here this evening. the ship that represents our national economy is currently navigating a tempestuous ocean. the ship itself is relatively robust, certainly stronger than the ship we sailed eleven years ago. however, the current weather front dwarfs that of eleven years ago. notwithstanding, i am convinced we can weather the storm. the key is that the ship ’ s crew and passengers are unified and open to help one another based on trust. i am confident that this is our joint resolution, as the alternative is too expensive for our country, as transpired eleven years ago. i sincerely wish you all a productive year ahead and once again, happy new year for 2009. hopefully during this new year, god almighty will bless us and light our way towards a better and more prosperous future. thank you. wassalamu ’ alaikum wr. wb.	1
swedish economy continued to grow at a good rate during the first six months of this year. 1 this is partly because the development of domestic demand has been relatively stable. there are several reasons why sweden has coped so well. sweden ’ s stable public finances, for example, have meant that fiscal - policy consolidation, which has otherwise dominated the economic - policy agenda in several other countries, has not been necessary in sweden. competitiveness has also developed well. this can be seen very clearly if we look again at figure 6. there are also a number of explanations for this positive development. we have had a period in which productivity grew very strongly in sweden for several consecutive years, inflation has been low and stable and pay formation has improved significantly compared with the period prior to the introduction of the inflation target. the fact that the swedish economy has been strong has also led to a resilient swedish labour market, and the number of those employed has continued to increase somewhat during the year. however, the supply of labour has also increased, so that the fall in unemployment we have seen since the start of 2010 was interrupted at the end of 2011. unemployment in sweden is now just below 8 per cent per cent ( see figure 9 ). … but high household indebtedness constitutes a risk another reason why the swedish economy has coped so well is that we have not suffered a crash on the housing market or in other areas of the financial sector. nevertheless, developments in sweden have given cause for concern. housing prices have risen significantly in sweden over the last 15 years in both an international and historical perspective ( see figure 5 ). the same applies to household indebtedness ( see figure 6 ). it is not surprising that there is a link between these factors as a large proportion of the banks ’ lending to households has been used to buy housing. i and several of my previous colleagues on the executive board warned about the risks associated with household indebtedness and housing prices in sweden long before the financial crisis. one could say that the crisis has given these issues renewed and increased currency. a positive factor is that the rate of increase in lending to households has slowed down recently following the very high rates of increase we saw in the years before the financial crisis. housing prices have also levelled out recently. both monetary policy and the mortgage cap have probably played a role in subduing lending to households. 2 however, the debt ratio, that is debt as a percentage of disposable income	currency and banking crisis show that threats to the financial system may indeed emerge suddenly, and that authorities must react very quickly - if not within minutes, at least within hours. the growth and increasing globalisation of financial markets, the high volatility in these markets and the increasing complexity of financial institutions, are all examples of factors that increase the risk for sudden crises and increase the probability that such crises will spread from one market to another. 1. ela as part of general crisis management and resolution should a financial crisis occur, there are a number of measures that may be used by authorities to limit the consequences of the crisis. in addition to ela, examples of these measures are financial support to protect the solvency of institutions, brokering of private sector support to or acquisitions of troubled institutions, management of deposit insurance schemes and insolvency procedures for financial institutions. in general, these measures may be undertaken by different authorities. a consequence of this is that cooperation between authorities is an important element of crisis management. the authorities must have a common strategy for how the crisis should be managed in order to avoid excessive support to the financial sector. excessive support may lead to undue costs to taxpayers and to unsound incentives for the financial sector. in this context, it is important to emphasise that these effects can arise from all kinds of official support. thus, the authorities must limit the support that is offered. support may be warranted only when there is a considerable risk for a systemic crisis that may lead to a severe decline of real economic activity. typically, real economic activity is affected by a breakdown of payments systems or restrictive granting of credit, a credit crunch. traditionally, ela provided by central banks has been seen as a measure to deal with pure liquidity problems in banks that essentially are solvent. in practice, situations where pure liquidity problems arise seem to be rare. in most cases where banks face liquidity problems, there is some uncertainty about the solvency of the institutions involved. typically, it takes time to make an assessment of the solvency of an institution. in the swedish banking crisis, it took many months to fully assess the financial situation of the troubled institutions. not even the institutions themselves had a good picture of how large their problems were. recent developments in the financial system, such as consolidation, the emergence of geographically dispersed financial conglomerates with activity in many product lines and a greater complexity of financial products, make this task even harder. it is unlikely that central banks or	0.5
dialogue between risk managers and the insurance industry, parima will help to enhance risk culture and risk management capacity in asia. develop the marketplace i will now move on to our efforts to develop the insurance marketplace in singapore. we have three key thrusts for marketplace development. first, expanding the broker network. singapore already has a vibrant broking cluster, which has played a central role in facilitating business flows. we play host to over 70 insurance brokers. four of the top five brokers in the world have their regional hubs in singapore. today, brokers are not just intermediaries, but also high - value service providers who drive innovation and collaboration in the industry. • many brokers provide a wide range of risk management services. these include dynamic financial analysis, risk management and actuarial consultancy, portfolio and financial modelling, and catastrophe modelling. • some brokers have also begun to tap alternative risk transfer solutions to manage more complex and larger risk exposures and liabilities. we are keen to encourage brokers to use singapore not just as a placement centre, but also as a centre of excellence for innovation. • a good example of this is aon, which recently established its analytics and innovation center in singapore to provide analytics solutions to the group ’ s business units on a global basis. second, encouraging a subscription market. to underwrite large and complex risks, insurers need to collaborate. risk sharing enables market participants to diversify their portfolios. we want to promote a true subscription market, where insurers not only share risks, but also expertise. the subscription concept leverages both the deep expertise of the lead insurer and the supporting capacity of the other insurers to cover a variety of large and complex risks. bis central bankers ’ speeches such deep collaboration requires contract certainty. contract certainty ensures the finalisation of terms and conditions of the policy prior to inception of risk and therefore, serves to minimise ambiguity and disputes over claim and coverage. • i am pleased that our industry players have come together to form a workgroup, which issued earlier this year a set of guidelines and best practices for reinsurance contract certainty. • the workgroup is now monitoring the industry ’ s progress in achieving contract certainty via monthly submissions by industry players on the level of contract certainty in their reinsurance transactions. • this is a sterling example of industry collaboration. mas supports this initiative and has been working with the industry to implement the new standards. third, creating more platforms to bring buyers and sellers	, there is room for private credit to provide non - dilutive financing that can complement equity and debt financing, by providing flexibility through customised deal structures. 3. ultimately, we need a variety of funding instruments – including seed funds, short - term loans, venture debt and equity financing – to build and sustain the wide range of early - and late - stage companies in the region. singapore – a hub for enterprises and financing just as how changi airport plays a key role as a hub for regional and global air connectivity, singapore plays a key role in intermediating capital flows and investment opportunities. we have a strong ecosystem here in singapore, which can help the private markets community tap on and unlock asia's potential. 5 / 7 bis - central bankers'speeches a. first, we will continue to maintain a conducive environment for businesses to set up in singapore. i. over the years, we have built up a reputation for our regulatory environment, stable and efficient infrastructure, access to financial intermediation and services, and strong rule of law. ii. we hope this will not only attract more companies in our region to set up in singapore, but also encourage private equity managers to promote singapore as a springboard into the region for their portfolio companies. 1. one such example is straive, which the partners group had a majority stake in from 2017 to 2021. 2. under the ownership of partners group, straive transformed from a provider of content services into a technology - driven content, data and edtech solutions company. 3. as part of its transformation, straive moved its headquarters to singapore, and now serves over 300 customers in 30 countries worldwide. b. second, we will continue to offer various fund structures and investment platforms to reduce costs and improve efficiency for both investors and fund managers. i. for example, in 2020, we launched the variable capital company ( vcc ) structure, a flexible corporate structure for investment funds. ii. the vcc has given fund managers greater flexibility, as it allows different investment strategies – such as real estate, private equity, and public and private credit – to be employed in different sub - funds, but overseen by a single board of directors. iii. to date, we have more than 1, 100 vccs set up by traditional and private market managers for a variety of use cases and fund strategies. iv. the availability of vccs also facilitates the co - location of fund vehicles with their singapore - based	0.5
this should be weighed against the significant benefits and operational savings from the more accurate allocation of capital to risk. mas will work closely with the local banks to implement the new accord. business and strategic considerations next, banks have to decide how to grow and position their businesses over the longer term, especially the local banks. maintaining margins and cutting costs is necessary in the short term, but beyond that, banks need longer term strategies for staying viable and competitive. after a period of domestic consolidation, the local banks have made several regional acquisitions, but they still remain small by international standards. competition will intensify, within the domestic market because of liberalisation, and internationally because globalisation is continuing. the local banks may well find that in order to hold their own and be viable, they need to grow bigger. possibilities for domestic growth are limited other than through further consolidation. but the region offers considerable opportunities. asia is poised for sustained growth, having emerged from the crisis as one of the most promising regions in the world. countries have gone through a period of structural reforms and transformed their financial sectors. now they are progressively opening up their economies to greater foreign participation. this is attracting interest from major regional and global players. our local banks cannot ignore this game. they need to consider their options carefully. is the way forward to remain a niche player, sizeable in the domestic market, but small by international standards? or must they achieve greater scale by expanding into the region? if so, what strategy will minimise the risks and maximise the benefits of operating in different countries? how can they build strong management teams, to execute a sound strategy well? each bank must answer these questions for itself. their long term profitability and viability depends on their finding the right answers. challenges for the financial sector let me move on to some of the opportunities and challenges for the financial sector. i will discuss three issues - developing the wealth management industry, growing our capital markets, and increasing our human capital. wealth management the asia - pacific is the fastest growing market for private banking in the world. rapid development is producing large numbers of wealthy individuals, and huge amounts of private wealth to be managed. asian savers and investors are increasingly sophisticated and are seeking best of breed products and managers. non - asian clients are increasingly demanding geographical diversification for their assets. institutional assets in asia will also grow progressively as countries reform pensions, and deregulation frees up assets from insurance companies and other corporates for professional management. these	in the countries of the region. our strong legal system and the availability of international legal expertise and product structuring teams equip us to structure complex cross - border transactions. the growing wealth management industry will also generate a steady source of funds for regional investment products. human capital a major issue that concerns all parts of the financial sector is human capital. a distinguishing characteristic of a successful financial centre is that it attracts talented and dynamic professionals from a broad range of disciplines and experiences. they make the financial centre what it is. deepening and broadening our talent pool will be a continuing challenge for the financial sector and for mas. mas and industry players have taken steps together to address this. the institute of banking and finance had been re - organised to better meet the needs of the industry as a financial training intermediary. it will also serve as a platform for the industry to provide regular feedback on manpower needs and issues. the industry has established the financial industry competency standards committee, which will develop internationally aligned competency benchmarks for the whole financial industry. mas is also working with specific industries to address their human resource needs through a manpower conversion scheme. this scheme will help mobilize, train and channel resources to support growth areas quickly. mas will work with financial institutions to build and upgrade talent in the financial sector workforce. singapore has always welcomed talented individuals to live and work here. they have contributed much to the vibrancy of our financial sector. singapore must remain open to talent and continue to be a conducive environment to work and live in, so that we can continue to attract talent here, and also retain able singaporeans. conclusion mas is committed to the vision of singapore as a leading global financial sector, one which is competitive, fosters enterprise and innovation, and maintains high regulatory standards. we have made steady progress toward this goal and must continue to do so. we must never become complacent and satisfied with the status quo, or else we will soon be overtaken and left behind. mas will strive to create an environment where market forces, enterprise and innovation can thrive. we will stay abreast of market developments, and be sensitive to the needs of the industry, without compromising on supervisory standards. our experience has shown that the two are not incompatible ; indeed listening to industry players, without being overwhelmed by them, helps us to become better regulators and supervisors. i am grateful for the full support and cooperation which the industry has extended to mas, and	1
ambiguities and possible breaches of the contract will enhance competitiveness, both at the institutional level as well as for the financial system as a whole. in malaysia, islamic finance disputes are adjudicated in civil courts and not the shariah courts where the jurisdiction is limited to matters relating to muslim individuals. if the dispute concerns a point on the ascertainment of shariah, the courts and arbitrators are required to refer to the shariah council at bank negara malaysia to facilitate the ruling. the shariah councila€™s authority is the ultimate body responsible for shariah in banking and financial matters that is within the purview of bank negara malaysia. this referral system provides an enabling platform for preserving consistency and predictability in interpretation and application of shariah principles for financial transaction in malaysia. concluding remarks allow me to now conclude my remarks. the inherent strengths of islamic finance amid the global financial crisis has heightened interest in islamic finance across the world. the level of innovation, scale and complexity of islamic financial transactions is also increasing at a tremendous pace. going forward, it is envisaged that the legal services in islamic finance will become even more significant in the continued advancement and efficiency of islamic finance. in this regard, your thought leadership in addressing the legal issues embedded in islamic finance holds important element in the continued growth of the islamic financial services industry. here, i would like to take this opportunity to congratulate the islamic financial services board for organizing this timely seminar. i trust it will continue to be a constructive platform for the legal and industry practitioners to deliberate on effective and pragmatic solutions to the legal issues in islamic finance. on this note, i wish all of you a productive and successful seminar.	zeti akhtar aziz : legal issues in the islamic financial services industry speech by dr zeti akhtar aziz, governor of the central bank of malaysia, at the 4th ifsb seminar on legal issues in the islamic financial services industry, kuala lumpur, 28 september 2009. * * * it is my great pleasure to speak at this 4th ifsb seminar on legal issues in the islamic financial services industry that has brought together so many international experts and industry practitioners to discuss legal issues in islamic finance. such dialogue is important to achieving a common understanding and solutions to issues in islamic finance, thus contributing to its overall development. islamic finance has continued to expand and demonstrate its resilience in the current more challenging international financial environment. this advancement has been in terms of the increased range of islamic financial products and services, the development of the islamic financial infrastructure and institutions, the greater maturity of the islamic financial markets and the more comprehensive supporting legal and regulatory framework. more recently, the international dimension of islamic finance has gained significance with the move to further liberalise domestic islamic financial system and the strengthening of the international islamic financial architecture. in malaysia, islamic banking assets at the end of the second quarter of this year, now constitutes close to 19 % of total banking assets. total financing now amounts to rm118 billion and accounts for 20. 1 % of the total financing portfolio of the banking industry. net nonperforming financing remains low at 2. 4 %. islamic securities has also maintained its dominance in the malaysian bond market, accounting for 58 % of total bond market. and almost two thirds of the equity market comprises shariah compliant securities. growth has also been experienced in the takaful sector in which the funds asset has registered an increase by 8. 2 %. this recent decade has also seen the increase in number of islamic financial institutions including full - fledged islamic banks, development financial institutions that engage in islamic banking, takaful, re - takaful and capital market intermediaries. several of these players have strategic partnerships with foreign players. in april this year, as part of the liberalization initiatives announced, new mega islamic banking licenses and up to two family takaful licenses will be issued this year. on the global front, islamic financial assets are projected to grow to usd1. 6 trillion by 2012 while the global sukuk outstanding valued to date at approximately usd152. 8 billion. in the third series of this seminar in 2007, the vital role of a strong	1
a new format focused on issues with long - term strategic implications that need to be addressed in the current environment. it is designed to encourage deliberations from the different perspectives between industry participants and bank negara malaysia. the dialogue will also serve as a platform to reflect on recent economic and financial developments and the major policy initiatives by bank negara malaysia. allow me to take this opportunity to share some thoughts with you in these areas. the outlook for the malaysian economy continues to remain favourable, despite some signs of moderating growth in the global economy arising from the higher oil prices. malaysia has had a track record of solid and steady growth for a number of years now. the diversified economic structure and sound macroeconomic fundamentals have been important in supporting this trend. of importance is that this growth is private sector driven. while price pressures have been contained by improvements in labour productivity and capacity expansion, domestic inflation has begun to edge upwards, largely due to cost - related factors. in balancing these trends, monetary policy has continued to remain supportive of growth. growth in asia has also remained strong with mutually reinforcing effects for regional economies, including malaysia, as regional integration continues to intensify. the global environment, however, is clouded by uncertainties amid the persistence of global imbalances. the united states continues to record large deficits in its external accounts. there is significant discussion in the global community on how these imbalances may be unwound. the consensus, however, is clear that the adjustment should be orderly. there has however, been an over focus on realignment of exchange rates to facilitate this adjustment. but this may risk destabilizing adjustments. ultimately, the structural imbalances have to be addressed by some combination of adjustments in demand, prices and exchange rates. in particular, the rebalancing of global growth can be expected to be a major factor contributing to an orderly adjustment to these imbalances. indeed, it would require more than just adjustments in exchange rates. the nature and breadth of the adjustments will be important to achieve a long - term solution. with its young workforce, growing productivity, competitive and dynamic economies, there is great potential for the asian economies to contribute towards the re - balancing of global growth. with rising income levels in regional economies, particularly among the growing middle income group in china, india and the asean economies, there is potential for an expansion of demand within the region. the rebalancing of global growth across the world will eventually	evolved a vibrant sukuk market, more asian countries have turned to the sukuk market for financing large - scale projects including for infrastructure development. several countries in the region are currently reviewing their legislation and taxation to enable debut sukuk issuance. the asian sukuk market has also been progressive in the innovation frontiers. there has also been a growing trend for multi - currency sukuk issuances. this provides greater prospects for tapping a wider pool of investors, including from the middle east and europe. in malaysia and more recently, in indonesia, sukuk issuances have also aimed at retail investors. this is to take advantage of the high levels of surplus savings in asia, whilst providing wider investment options to retail investors that have traditionally invested in bond funds and unit trusts. the trend for greater regional economic and financial integration will also provide substantial opportunities for islamic financial institutions to facilitate the integration process in the region and with other parts of the world, and thus have a greater role in financing asia ’ s future growth. priorities for strengthening financial stability and growth let me turn to the priorities for strengthening financial stability and growth. whilst there needs to be continued efforts at the national level to develop the institutional foundations for islamic finance that will foster effective and efficient financial flows, and ensure that financial stability is preserved, the new wave of internationalization for islamic finance requires increased collaboration across jurisdictions to strengthen the international financial infrastructure of islamic finance. going forward into the future, this will be particularly important given that the international environment has become more challenging. this is to ensure that the greater internationalization of islamic finance takes place in an environment of financial stability. at the national level, the first priority relates to trend for the domestic islamic financial system to become more integrated allowing for risks to be rapidly transmittal across the financial system. this requires the development of enhanced regulatory, supervisory and legal bis central bankers ’ speeches frameworks that are also adaptive and effective to the innovative dynamics and unique mix of risks in islamic finance. fundamental to this is the implementation of the international regulatory and supervisory standards and best practices for islamic finance. the islamic financial services board ( ifsb ) has introduced prudential standards for the islamic financial services industry – in all key areas of capital adequacy, risk management, corporate governance and shariah governance. their implementation would in turn promote more consistent regulatory and supervisory frameworks across borders. importantly, the adoption of these international prudential standards which are aligned to the core principles and	0.5
interest rates in january 2015. and, as companies cut their investment intentions further, we lowered interest rates again the following july. to be clear, our economic models correctly predicted that the collapse in oil prices would be a serious blow. specifically, our main policy model gave us invaluable insights into how the shock would affect the economy and how the subsequent adjustments would unfold. but the fact that everything we were hearing was supporting these insights increased our confidence that cutting rates was the right course of action. adjusting to lower oil prices obviously, the drop in oil prices was a significant detour for the canadian economy. we knew that the shock would trigger a complex series of adjustments and create significant hardship for many people. basically, our models projected that the economy would go through the reverse of its experience in 2010 – 14, when high oil prices led to strong increases in business investment and national income. provinces where the energy sector is relatively more important, such as newfoundland and labrador, would feel these effects most acutely. this underscores one of the fundamental challenges for policy - makers, that economic shocks can have very different effects across canada ’ s regions. in terms of adjustments, we anticipated that lower oil prices would mean not only a decline in the energy sector, but also a pickup in growth in the non - energy sector. we expected exports to be boosted by a lower canadian dollar. and, as exporting companies reached their capacity limits, we expected to see business investment increase. stronger exports and investment would complement household spending, and growth would become more broadly - based and selfsustaining. certainly, adjustment in the energy sector has been painful. beyond cuts to investment spending, oil companies restructured operations and laid off workers. employment in the resource sector fell by roughly 50, 000 jobs from the beginning of 2015 to the middle of last year. despite this, companies boosted production and exports of crude oil as earlier investments were completed and as they found greater efficiencies. and, since oil is priced in us dollars, the decline of the canadian dollar also helped cushion the impact of the shock. the increased output and weaker currency helped to offset almost half of the $ 60 billion decline in revenue from oil shipments, boosting exports by about $ 25 billion. 2 / 5 bis central bankers'speeches that said, canada ’ s other exports took longer to recover than we anticipated. exporting companies had taken a significant hit both during and after the global financial crisis. many disappeared, to be	off sharply, since banks needed to repair their balance sheets and comply with more - stringent regulatory capital requirements. so how does canada fit in? we have traditionally been a capital importer. our current account balance — the difference between how much we invest and how much we save — has typically been in deficit to the tune of 2 – 3 per cent of gdp. we have depended on external financing to fund this gap. in the early 2000s, strong foreign demand and high commodity prices raised our national incomes, and we ran current account surpluses for a number of years. during those years we exported capital to the rest of the world ( chart 4 ). since the global financial crisis, foreign demand has been on a weaker track and commodity prices are lower. our current account is again in deficit and, once more, we are relying on capital imports from the rest of the world. benefits and challenges of financial globalization as i ’ ve already mentioned, opening up an economy to capital flows brings both benefits and challenges. benefits the benefits of financial globalization are similar to those of free trade. open borders create opportunities for transactions that benefit both parties because of their differences in endowments or preferences. for example, a country where a large share of the population is of working age can benefit from being able to channel its savings to other countries — a net capital outflow. as the country ’ s population ages further and more of its citizens retire and start to draw on their savings, foreign assets are liquidated, generating a capital inflow from the rest of the world. cross - border investments, which give rise to gross capital flows, enable investors to diversify risk. canada ’ s pension funds have, for example, used international opportunities to effectively provide more - secure retirement income for canadians. fdi brings other benefits, since it bundles financing and know - how. this helps residents of the investing country use these capabilities where they can be most see committee on international economic policy and reform, banks and cross - border capital flows : policy challenges and regulatory responses, september 2012. - 6productive and creates opportunities in the recipient country. over the years, canada has benefited from sizable flows of fdi in both directions. chart 3 : banking flows are the most volatile capital flows per cent of group gdp, four - quarter moving average % - 10 fdi direct inflows portfolio inflows derivative inflows gross inflows other inflows source : imf world economic outlook. imf balance of payments	0.5
klibor which has no direct correlation with the changes in the rental rate. actively promote the role of the market players the islamic financial services industry is expected to benefit from the recent increase in the number of players following the launching of islamic subsidiaries, the issuance of foreign islamic banking licences and the measures to issue additional takaful licences. the entrance of these players will contribute to an active participation in both the primary and secondary markets for islamic financial instruments. ladies and gentlemen, i hope this seminar will crystallize positive ideas to pave the way and contribute towards the development of a more vibrant and dynamic islamic financial system. i wish to take this opportunity to thank the speakers for accepting our invitation to share their invaluable knowledge and experiences in this seminar. the participation by researchers and practitioners in the islamic financial system is also important. on this note, i wish you all a successful seminar.	the euro crisis. in fact, there are already signs that asian exports, thailand ’ s included, are slowing. amid a slowing global economy, this drag on growth is unavoidable in the short - term. to grow out of the crisis and survive the shocks from outside, thailand must look within and unleash domestic engines of growth. long - term investment in productive infrastructure is one key engine of growth. another is domestic structural change spurred by two drivers of change in the region. the first driver of change is growth in china and the attendant rise of the chinese middle class and demand for a broader range of imported goods and services. chinese exports will also grow in sophistication. the second driver of change is trade liberalization in the region – such as free trade agreements with china and india as well as the asean economic community, or bis central bankers ’ speeches aec. aec, in particular, goes beyond free trade and also has the potential to foster not only goods and services integration but also cross - border labor and investment flows. because of the sheer size of these markets – china, india and aec – the regional pattern of production will change considerably to cater to new demands while leveraging on new comparative advantages and supply chain synergies. uncompetitive firms have to either upgrade themselves, or close down and free up labor resources to more competitive firms. this reallocation process implies that the country makes better use of labor resources and achieves higher productivity. ongoing financial sector reform will also build financial sector resiliency. thailand ’ s financial sector master plan, now in its second phase, continues, and focuses on liberalization through increased competition, raising efficiency, and strengthening the financial infrastructure. our research shows that the gains from structural change can be considerable although adjustment costs, in terms of the reallocation of labor and capital, will also be significant. now we arrive at the third and final question. given the euro crisis and thailand ’ s prospects for growth, what should monetary policy do? the dilemma here is how to bridge short - term stabilization with long - term goals of structural change. the challenge for policy is to maintain an overall framework where the trend of increasing economic integration can continue while containing crises. given our baseline scenario of a prolonged recovery without a liquidity seizure we lean towards long - term goals – for example, maintaining capital flow liberalization, financial sector liberalization and market - led exchange rates – but with a readiness for monetary stimulus should	0
ravi menon : a vibrant carbon market for a low carbon future opening remarks by mr ravi menon, managing director of the monetary authority of singapore, at the climate impact x announcement event, singapore, 20 may 2021. * * * minister for national development mr desmond lee, ladies and gentleman, good afternoon. let me start with the big picture. to limit global warming to 1. 5°c, global annual greenhouse gas emissions need to be halved by 2030 and reduced to net - zero by 2050. yet, the trajectory of carbon emissions is still on a steady uptrend. just on energy needs alone, demand in asia is projected to double in 2030. economic development will drive demand for fossil fuels, which is still the cheapest way to generate electricity in many parts of asia. the switch to cleaner energy sources cannot be made in one leap. coal accounts for about half of asia ’ s total energy supply today. we need to shift the energy mix progressively, first to relatively less emissions - intensive fuels like natural gas, and then to renewables. this shift will require fundamental infrastructure changes : refurbishing power plants to generate cleaner fuels ; and upgrading the power grids to manage different energy sources and to minimise the intermittency of renewables. to make this progressive shift to a low - carbon future, asia will need a lot more transition financing than is available today. to spur more green finance for transition, we need to have two things in place : a price on carbon, and a market for trading carbon credits. carbon prices and carbon markets climate change is the result of probably the biggest market failure in history. for the longest time, the world did not put a price on the carbon emissions that have steadily degraded our environment and now pose serious climate risks. a meaningful price on carbon is critical to create the right incentives to reduce emissions. the challenge is to arrive at the right price, one that does not unduly impede economic development and yet is sufficient to drive decarbonisation efforts that will enable the world to meet its climate targets. carbon pricing is gaining momentum. globally, there are 61 carbon pricing initiatives in place, half of them carbon taxes and the other half emissions trading systems. 1 / 5 bis central bankers'speeches singapore introduced in 2019 a carbon tax of $ 5 per tonne of greenhouse gas emissions, to establish the principle of a price on emissions. the original intention was to gradually raise the tax from 2023 onwards to between	for domestic inflationary pressure, the mpc has raised bank rate twice ; it now stands at 0. 75 %. the fpc, meanwhile, judging that the domestic risk environment had returned to a standard level, has also raised the counter cyclical capital buffer twice to 1 %. looking ahead, if we get a smooth brexit with a transition deal, as assumed in the mpc ’ s latest inflation report forecast ( table a ), i expect growth to pick up, leading to excess demand and building domestic inflationary pressure, so that further monetary tightening is appropriate to maintain monetary stability. relative to the best collective judgement expressed in the mpc ’ s central forecast i am, as i have set out in my talk today, a little more pessimistic on gdp growth than my colleagues on the mpc. but as i have discussed, that is true both on the supply side, where i can see more downside risks to productivity, and on the demand side, where i am less optimistic that investment will recover as much as it does in the central forecast. those two risks broadly offset each other in terms of the balance of demand and supply, meaning that my best guess for inflation, and the outlook for policy, is in line with the central view. but as i have argued today, the outlook for policy depends on more than just our central expectation for the path for the economy – we need to consider the risks as well. my third lesson from the crisis was that policy needs to be prepared for the unexpected. that is true both for the mpc, who need to take the balance of risks to their central forecast into account when setting monetary policy, and for the fpc, who set financial policy based on their assessment of the risks to financial stability. the fpc track a very large number of risks ; i will focus on just two – first, market volatility, and, second, brexit. 6 jon cunliffe ’ s speech “ financial stability post brexit : risks from global debt ”, available online at https : / / www. bankofengland. co. uk / / media / boe / files / speech / 2019 / financial - stability - post - brexit - risks - from - global - debt - speech - by - jon - cunliffe. pdf, goes into more detail on several key risks including brexit and global risks. all speeches are available online at www. bankof	0
in service to society new zealand ’ s revised monetary policy framework and the imperative for institutional change a speech delivered at wharewaka function centre, wellington, new zealand on 29 march 2019 by adrian orr, governor written with omar aziz, economic advisor 2 the terrace, po box 2498, wellington 6140, new zealand telephone 64 4 472 2029 online at www. rbnz. govt. nz introduction tena koutou katoa. thank you for joining us today to discuss new zealand ’ s new monetary policy framework. the recent amendment to the reserve bank ’ s legislation sets up a monetary policy committee that is responsible for a new dual mandate of keeping consumer price inflation low and stable, and supporting maximum sustainable employment. the committee ’ s deliberation process will ensure that all decisions benefit from a diverse range of views, and offer greater transparency and accountability to monetary policy decisionmaking. before i outline the features of the new framework and its underlying principles, i would like to paint the backdrop to this institutional change. the business of central banking is evolving as circumstances change. some of the change is favourable, some is confronting. on the favourable side, we have low and stable inflation, low unemployment, and broad financial stability. this advantageous position must never be taken for granted. i thank all of the wise people – past and present – who have worked hard on creating the current environment. on the challenging side, in addition to maintaining the status quo, we have new and significant long - term economic challenges among which central banks operate. for example, in the financial system alone, we must deal with global economic inter - dependence, dominant financial institutions, significant debt burdens, technological change that challenges employment and financial inclusion norms, climate change, and much more. the list is long and the challenges have intergenerational implications. i spoke about many of these issues in a recent speech about the dangers of short - term thinking. 1 the refreshed reserve bank act and monetary policy practices, and the ongoing reviews of our legislation, position us to adapt to these changes. the aim is to ensure that the reserve bank can continue to achieve its fundamental purpose, which is “ to promote the prosperity and well - being of new zealanders, and contribute to a sustainable and productive economy ”. 2 institutions, legitimacy & identity let ’ s take a step back and talk about the backdrop to recent and pending changes to the reserve bank ’ s frameworks. the key role of a public institution is	/ refit - - review - of - flexible - inflation - targeting / and https : / / www. regjeringen. no / en / aktuelt / report - of - the - law - commission - on - the - act - relating - to - norgesbank - and - the - monetary - system / id2558679 / page 5 of 11 “ strategies, tools and communication practices ” that service its dual mandate. 12 and, the bank of canada is well into a regular five - yearly review of its “ inflation control agreement ”. 13 14 beyond this, calls to build further resilience in the financial system – especially in its interface with the wider economy – is an emerging theme on the international agenda. 15 the first review of the reserve bank of new zealand act 1989 to be completed was that of monetary policy. now enacted in law, new zealand ’ s new monetary policy framework is being formally introduced on 1 april 2019. i will now elaborate on the specifics of the revised monetary policy framework with reference to its history, locating it in the wider context of other external policy reviews and consultation processes that the bank is involved in. reserve bank act 1989 : objectives & accountability the reserve bank act of 1989 was introduced at a time when there was great uncertainty about economic conditions in new zealand. in the 1970s and 80s, our country, like many others, had adopted a variety of strategies to deal with high and volatile inflation ; none were successful. the 1989 act gave the reserve bank operational independence to achieve the objective of price stability. a single decision maker model was introduced making the governor responsible and singularly accountable for the substance of monetary policy. the policy targets agreement ( pta ) between the minister of finance and the governor set explicit goals for monetary policy to pursue. 16 an agreement between a single decision maker and the government provided sufficient flexibility to make the appropriate revisions to the inflation target as we adjusted from high to low inflation. over time, there have been several revisions to the inflation target, settling in recent times on a band of 1 – 3 percent with a focus on the 2 percent midpoint. 17 12 federal reserve to review strategies, tools, and communication practices it uses to pursue its mandate of maximum employment and price stability, press release, 15 november 2018, ( https : / / www. federalreserve. gov / newsevents / pressreleases / monetary20181115a. htm ) wilkins, c., a.	1
state one of the particular strengths of new york state is its diversity — and this is especially true from an economic perspective. in western and central new york there are top - tier universities, manufacturing businesses, a thriving professional services industry, as well as popular tourist destinations. since the 2008 financial crisis, the declining population trend in upstate new york of earlier decades had largely stabilized. in recent years, new businesses had sprung up and unemployment had fallen to historic lows. 1 / 3 bis central bankers'speeches all of this was against the backdrop of a strong national economy. at the start of the year, most forecasts anticipated continued moderate growth throughout 2020 and into 2021. according to the data for april, the unemployment rate now stands at a staggering 14. 7 percent — a figure i hoped that i would never see in my lifetime, and one that is sure to get worse before it gets better. if i think back to the economic picture of february, nobody could foresee this would be our reality within a few short months. it ’ s likely that the latest numbers do not reveal the full extent of the financial devastation faced by millions of american families. the data don ’ t capture those who had to leave their jobs, either for their own health or to take care of loved ones. many more people have had their hours reduced or have been forced to take a pay cut. it ’ s going to be some time before we have a detailed understanding of the full economic effects of the public health measures necessary to combat the coronavirus. what we do know is that the pandemic has put a large question mark over the positive trends experienced in our state, as well as the nation as a whole. as social distancing measures are relaxed, we will get a better understanding of how different industries are affected. we know that travel, hospitality, and retail have all been hard hit. what we don ’ t know is what the shape or timescale of the recovery will be. it ’ s going to be some time before we have a clearer view of the effects on other industries, including autos, higher education, manufacturing, and professional services. our response despite this extraordinary uncertainty, at the federal reserve we worked quickly to put measures in place to support the economy and set the foundation for a strong recovery. during the first half of march, the federal open market committee ( fomc ) brought the target range for the federal funds rate to near zero. 1 the fomc has indicated	christian noyer : re - examining central bank orthodoxy for un - orthodox times speech by mr christian noyer, governor of the bank of france and chairman of the board of directors of the bank for international settlements, at the conference of the global interdependence center / bank of france, paris, 26 march 2012. * * * the unconventional policies implemented during the crisis have transformed the face of central banking. but will these changes prove permanent and will “ the unconventional become the new normal? ” there is not yet definitive answer to this question. we may not, as easily as we would like, be able to revert exactly to the status quo ante. however, i strongly believe we must make sure that the gains from the pre - crisis period, in terms of monetary and price stability, are not compromised in the process. prior to the crisis, a description of central banks would have centred on four characteristics : they were focused with price stability being their primary or key objective, and no responsibility was sought or given for financial stability ; they were of limited size with very small balance sheets and interest rates as their only policy instrument ; they were independent, a condition recognised as necessary to anchor inflation expectations, and embodied in very strong institutional frameworks ; and they were successful : the “ great moderation ”, a period of exceptional low volatility in output and inflation, was widely seen as a product of efficient and wise monetary policies. there was a happy feeling that, at last, a perennial monetary regime had been found, well - tailored to the characteristics of a modern market economy. financial markets were efficient and the zero lower bound and liquidity trap appeared to be no more than historical curiosities. with hindsight, of course, we can see now that this “ ideal ” economy may never have existed. the great moderation was as much a product of “ good luck ” ( brought by disinflationary effects of globalisation ) than good policy. monetary stability is a necessary but not a sufficient condition of financial stability, because capital markets are not always and necessarily efficient. and downward financial spirals may quickly bring our economies to the point where interest rates can no longer be used as effective tools. therefore, as the crisis unfolded, central banks responded by taking unprecedented measures and, in the process, underwent three major changes a diversification of their interventions. in order to both : unclog financial markets ( both private and public ). this involved exceptional liquidity provision to	0
philip r lane : q & a with reuters q & a with mr philip r lane, member of the executive board of the european central bank, conducted by mr daniel burns, at reuters newsmaker, new york city, 27 september 2019. * * * the following is a transcript of an on stage question and answer. let me welcome philip lane, member of the executive board of the ecb. that ’ s a role he went to earlier this year having served as the governor of the central bank of ireland since 2015. he has been an adviser to other international economic organisations, such as the imf, oecd, world bank and asian development bank. he has a phd in economics from harvard and earned his bafrom trinity college dublin where, until recently, he was the whately professor of political economy. i ’ m also told he is a liverpool fan, so he is riding high early in this premier league season and we ’ ll see if that confidence extends to team ecb. mr lane if you ’ d like to start. one reason i suppose that i wanted to talk here this morning was to further explain the context for our recent monetary policy decision. so if you look back over the last few years, if you look at the period from 2014 to 2018, essentially, the decision in 2014 by the ecb to tackle the risks of a slow - growing economy and the deflation risk in the euro area meant that during those years, from 2014 to 2018, what we saw was a fairly significant recovery. we had a big decline in unemployment in europe, a very strong record of job creation and a significant stabilisation of inflation. so compared with the period in 2014, when deflation risk was on the horizon, there was a significant recovery in the inflation process through that period. and so to more recent monetary policy history, at the end of 2018 the decision was made that enough progress had been made in bringing inflation back towards the target that we would end the net asset purchases. now in september 2019, part of the package that we announced a couple of weeks ago was : we did a small policy rate cut – the deposit facility rate went from – 40 basis points to – 50 basis points, we provided reinforced forward guidance and we restarted the net asset purchase programme ( app ), running at €20 billion a month. so you may ask : why was that necessary? well, when we made the decision last december to end net purchases under our app, the 2021	most helpful in building an economy in which people are poised to get ahead. conversely, it would also be beneficial to understand whether any policies may hold people back or discourage upward mobility. there is some debate on how the level of economic mobility in the united states may have changed in recent decades and whether it is easier or more difficult for people to get ahead today than it was in previous generations. shortly, you will hear from a panel of distinguished experts with a range of views on this topic. looking at the very recent past, we should also be asking whether and how this may have changed coming out of the great recession. later, my federal reserve board colleague, governor brainard, will speak on a topic of significant interest to me and i expect to many others – how young adults are faring in the economy and what the short - and long - term implications may have been for entering the job market at a time of significantly constrained opportunities. this is another example of how exogenous factors – those over which individuals have little or no control – may play an important role in determining how easily someone is able to improve his or her circumstances. communities also affect economic mobility, and here, too, more research is needed to understand how and to what extent these effects occur. economists do not fully understand how locational differences affect economic mobility or the complex relationship between economic mobility and geographic mobility. there are community characteristics – for instance, the composition and level of local employment, schools, transportation, physical infrastructure, and community facilities – that may affect the economic mobility of the residents of that community. and there is also a community development analogue to economic mobility : further research may help us better understand why some communities succeed or fail in generating jobs, developing successful small businesses, attracting infrastructure investment, and so on. how do some places advance economically and create circumstances in which residents, in turn, are more likely to thrive? finally, there are important research questions to be answered about the relationship between economic mobility and the economy as a whole. it seems obvious that greater economic opportunity and mobility promotes a healthier economy. entrepreneurship, innovation, and hard work – surely key contributors to individual mobility – are central to a strong economy as well. but research could help us better understand how much mobility at the individual level matters for overall growth in productivity and economic output. to what extent is income mobility influenced by domestic or global economic forces, and to what extent can we promote mobility through domestic policy choices? bis central bankers ’ speeches these	0
heartened by your show of support. as the economist adam smith once said, and i quote : “ civilized society stands at all times in need of the cooperation and assistance of great multitudes. ” bis central bankers ’ speeches it is our hope therefore that the same spirit of cooperation and collaboration will characterize our pursuit of continuing reforms in 2013 and the years ahead. and now, let us offer a toast to all of us coming together for an even stronger, more responsive, more inclusive, and more successful philippine banking system that will underpin a strong and vibrant philippine economy that will bring prosperity and a better quality of life to our country and our people. cheers! bis central bankers ’ speeches	##ism. pragmatism 1 / 4 bis - central bankers'speeches in light of our limited knowledge about the economy and the influence of monetary policy, decision - makers are well advised to be pragmatic. they should choose policies that exhibit a certain degree of robustness to different circumstances. rather than seeking measures that are optimal in the context of specific situations, decision - makers are better off adopting less ambitious policies that produce reasonably good results in a sufficiently large variety of scenarios. in analysing such scenarios, we work with models that incorporate a relatively small set of key relationships. these relationships provide useful approximations of the economy's dynamics and the transmission of monetary policy. however, not everything can be captured in mathematical equations or measured with the available data. furthermore, our assumptions about the behaviour of market participants are drawn from the past, which is often only roughly comparable to a given situation in the present. policymakers must therefore also look beyond models and form broader – less formal – hypotheses about how the economy and the monetary transmission mechanism function. model simulations and forecasting must have a prominent place in our decision - making process – not least given the lag in monetary policy's impact on the economy. however, risk assessments and cost - benefit analyses should also involve judgements based on less precisely measurable evidence that cannot be directly incorporated into models. the snb takes such a pragmatic approach to decision - making. our policies do not follow a strict rule designed to be optimal with respect to a single model of the economy. our main inflation forecast is based on a suite of models, as well as judgmental adjustments drawing on a variety of outside information not captured in the models. such outside information includes monetary indicators and discussions with company managers. furthermore, our monetary policy decisions are not based exclusively on our inflation forecast. our forecast is always complemented by a careful risk assessment and comprehensive cost - benefit analysis by the governing board. the snb's pragmatic approach to decision - making allows us to respond quickly and flexibly to different kinds of shocks. however, it is important to note that pragmatism is not synonymous with unbounded discretion and a lack of discipline in policy - making. this brings me to the second principle : consistency. consistency while decision - making should be pragmatic, it should be consistent over time. policy decisions must be based on a firm commitment to the objective of price stability. they cannot be based on a period	0
incoming ” banks, from our point of view. they are making progress in preparing for the post - brexit world, although details and decisions are often still missing. that said, there are still some banks, mostly smaller ones, which seem to be delaying their final decision on relocating. second, there are those banks which access the uk market from the eu – the “ outgoing ” banks, from our perspective. most of these banks have also made plans, which is good. still, some of these plans remain a bit too high - level, in our view. so, more work needs to be done, even if the circumstances might be challenging. my message to all affected banks is this : don ’ t procrastinate. no one will wait for you. when brexit happens you will either be prepared, or not. i advise you to be prepared. and there are a lot of things that need to be considered. settlement finality, for instance, might be affected by brexit, because the protection of the eu settlement finality directive regarding the unwinding of transfer orders will no longer apply across the channel. another issue is the continuity of contracts, that is, the ability of market participants to continue servicing existing contracts, in particular derivatives contracts, without appropriate permissions in place. banks should therefore include this topic in their contingency plans. and finally, banks should assess what brexit means for their recovery plans. after all, it could 3 / 6 bis central bankers'speeches raise barriers and make certain recovery options less feasible. but brexit is not just something the banks have to think about. it also raises a lot of questions for us supervisors. and right from the start, we have worked hard to answer all these questions and map out our approach to brexit. we have to think about cross - border banking groups, for instance. in the wake of brexit, new banks will be set up in the euro area. and they will most certainly be part of banking groups which are headquartered outside the eu, in a third country. this raises the question of how autonomous the new euro area entities will be. will they become well - established banks? or will they end up as shell companies, which are overly reliant on other group entities from outside the eu? and to be very clear : that ’ s not what we want to see. we expect banks to manage some of their risks locally. they need local staff	, and they need local infrastructure. in respect of market risk, banks must be able, in the medium to long term, to trade locally on a permanent basis, and they must have local risk committees. likewise, they will need to trade and hedge risks not just with other group entities but with diversified counterparties. against that backdrop, we are currently working on a booking model assessment framework, which will set out what we expect from banks. naturally, our expectations will follow the principle of proportionality. in other words, large banks that are highly interconnected and conduct complex capital market operations will have to meet higher expectations. but it ’ s not just booking models that play a role here. i already mentioned the need for local staff. it seems, however, that some incoming banks have something in mind which is referred to as “ dual - hatting ”. it means that staff members carry out functions in more than one entity of the group. here, we have some concerns, in particular if dual - hatting includes important functions, extending to that of the ceo. wearing two hats might cause conflicts of interest and limit the time that can be spent on each. this is even more of an issue when the relevant staff members are physically located outside the euro area. in our view, certain key roles should not be part of such dual - hatting arrangements. in other words, euro area entities must be sufficiently independent from group entities that are located outside the eu. we will not accept shell companies ; that ’ s for sure. we do not see them as banks. and we won ’ t accept more inventive set - ups either. in order to avoid having to move staff and assets to the continent, some banks seem to be considering the idea of establishing a subsidiary in the euro area, which would then set up a branch in the united kingdom. this branch would use the subsidiary ’ s eu passport to enter the european market from the uk. we have serious misgivings about this. first, the primary reason for establishing a branch should be to serve the market of the country where the branch is based. then, there are legal issues. can a third - country branch use its parent company ’ s eu passport to access the european market from that third country? that cannot be in the spirit of european law. and the subsidiary might just serve as a shell company. as i said, we do view these kinds of design critically. internal models – setting capital buffers ladies and gentlemen,	1
øystein olsen : the norwegian economy – macroeconomic developments and monetary policy speech by mr øystein olsen, governor of norges bank ( central bank of norway ), at the finance norway's capital markets day 2018, oslo, 6 april 2018. * * * accompanying slides first of all, i would like to thank finance norway for the opportunity to speak to you today about macroeconomic developments and monetary policy in norway. as you may be aware, a new regulation on monetary policy came into force earlier this spring. i will return to the regulation and its implications for the conduct of monetary policy and the interest rate outlook. but first, let me start abroad. chart : economic growth following the financial crisis the advanced economies have emerged from a challenging period. ten years ago the world economy was hit by a shock and thrown into the deepest recession since the 1930s. the economic downturn that followed the financial crisis stands apart from earlier recessions. it was both deeper and longer. potent measures were deployed to address the crisis, but it has still taken time to get the world economy back on its feet. monetary policy had to play a substantial role in the wake of the crisis. without powerful economic policy measures, there was a risk of a self - reinforcing recession. chart : global real interest rates central banks were led into unknown territory and implemented unconventional measures. already low long - term real interest rates were brought down even further. ten years of historically low interest rates and large - scale asset purchases give cause for reflection. an important question is what responsibilities should rest with a central bank. a related theme is what is meant by the objective of low and stable inflation. chart : inflation in norway the primary objective of monetary policy is to maintain monetary stability, as part of the central bank ’ s responsibility for the monetary system. inflation that is either too high or too low has undesired consequences, such as arbitrary wealth redistribution, underinvestment and resource misallocations. the result is lower activity and lower welfare. since 1990, an increasing number of countries have chosen to link monetary stability to a numerical inflation target. since the financial crisis, all of these countries have maintained their inflation targeting regimes. this reflects the overall positive experience with this framework. it did not get in the way of a powerful response to the financial crisis. in norway too, inflation targeting has functioned well. inflation has remained low and stable since it came down in the early 1990s, and the inflation target has anchored inflation	2. 5 percent. an expected real appreciation could then occur partly in the form of wider price and cost differentials between norway and its trading partners. the period of rising oil revenue spending now appears largely to be over. thus, it is difficult to find compelling arguments for setting an inflation target in norway today that differs from that of our trading partners. the new regulation is consistent with how monetary policy has been conducted in practice in recent years. the regulation states that : “ inflation targeting shall be forward - looking and flexible so that it can contribute to high and stable output and employment and to counteract the build - up of financial imbalances. ” as long as there is confidence that inflation will remain low and stable, monetary policy can contribute to stabilising the economy. when the economy is exposed to shocks, the central bank can respond rapidly by adjusting the key policy rate, as we did in 2008 and when oil prices fell in 2014. a flexible inflation targeting regime can reduce the risk of unemployment becoming entrenched at a high level following economic contractions. nevertheless, monetary policy cannot assume primary responsibility for high output and employment. the level of output and employment over time depends on overall economic policy, including the tax and social security system, the wage formation process and the functioning of the labour market. monetary policy is only one component of such an overall framework. 2 / 4 bis central bankers'speeches the importance of financial markets and financial stability was underestimated before the crisis – also by central banks. the financial crisis revealed how harmful financial imbalances can be. monetary policy can in given situations take account of the risk of a build - up of financial imbalances. but monetary policy cannot take primary responsibility for heading off a gathering storm. regulation and supervision of financial institutions are the primary means of addressing shocks to the financial system. the build - up of financial imbalances has in recent years been given little weight in monetary policy among the major central banks. their focus has been on counteracting a deeper and more prolonged downturn and on preventing deflation. in countries that were less affected by the financial crisis, more attention has been devoted to financial stability considerations. in high - tech, global financial markets, capital moves rapidly between different currencies. a wide interest rate differential could have a substantial impact on the exchange rate, with repercussions on inflation, output and employment. this is why low interest rates in large economies that were severely hit by the financial crisis quickly	1
indeed, the three recent rate hikes by the fomc were so well anticipated that financial markets hardly responded when those actions were announced. second, in the long run, communicating the central bank ’ s objectives and policy strategies can help to anchor the public ’ s long - term expectations - most importantly, its expectations of inflation. public confidence that inflation will remain low in the long run has numerous benefits. notably, if people feel sure that inflation will remain well controlled, they will be more restrained in their wage - setting and pricing behavior, which ( in something of a virtuous circle ) makes it easier for the federal reserve to confirm their expectations by keeping inflation low. at the same time, by reducing the risk that inflation will come loose from its moorings, well - anchored inflation expectations may afford the central bank more short - term flexibility to respond to economic disturbances that affect output and employment. the third way in which clear and open communication enhances the effectiveness of monetary policy the channel that will be the focus of my remarks today - is by helping to align financial - market participants ’ expectations about the future course of monetary policy more closely with the policy committee ’ s own plans and projections. as i will discuss, to the extent that central bank talk provides useful guidance to markets about the likely future path of short - term interest rates, policymakers will exert greater influence over the longer - term interest rates that most matter for spending decisions. at the same time, expanding the information available to financial - market participants improves the efficiency and accuracy of asset pricing. both of these factors enhance the effectiveness and precision of monetary policy. in the remainder of my remarks i will elaborate on the usefulness of central bank communication as a means of informing the policy expectations of financial - market participants and the public more generally. in doing so, i will discuss some new empirical evidence on the effects of central bank communication policies in both the united states and japan, drawn from a recent paper i prepared with two federal reserve colleagues. before proceeding, however, i should say that the views i express today are not necessarily those of my colleagues on the federal open market committee or in the federal reserve system more generally. communication and the effectiveness of monetary policy although people often speak of the federal reserve as controlling interest rates, in fact the fed directly affects only one very short - term and ( in the scheme of things ) relatively unimportant interest rate, the federal funds rate. as you may know, the federal funds rate is	term policy tightening, presumably on the expectation that the sharp pickup in growth in the third quarter of 2003 would induce the fomc to raise rates. however, this market reaction placed insufficient weight, i believe, on the fact that the expansion that began in mid - 2003 was characterized by exceptional gains in labor productivity, which implied in turn that the rapid growth in output did not materially increase the pressure on resources. with inflation low and with continuing slack in resource utilization, the rapid tightening projected by the markets did not appear justified, the surge in output growth notwithstanding. the language of the statement in august 2003 and subsequent meetings persuaded the markets that an autumn tightening was not in the cards, and market expectations adjusted accordingly. crucially, this change in expectations resulted in lower interest rates at all maturities, a development that helped support the expansion in the latter part of last year. when the policy tightening cycle finally began earlier this year, the fomc indicated that, with underlying inflation still relatively low, it would proceed “ at a pace that is likely to be measured. ” as i discussed in a speech in may, the gradualist approach implied by this statement is often appropriate during a period of economic and financial uncertainty ( bernanke, 2004 ). at the same time that it provided information on its outlook and its expected policy path, however, the committee properly insisted that its policies would be conditional on the arriving economic data. in particular, the committee noted that it would respond as necessary to maintain price stability. before 1994 the public did receive relatively immediate notice of monetary policy action if a change in the fomc ’ s target for the federal funds rate was accompanied by a change in the discount rate, which was always announced in a press release. to be absolutely clear, in pointing out the benefits of clear communication i am not asserting that central bank talk represents an independent tool of policy. indeed, if the central bank ’ s statements are not informative about the likely future course of the short - term interest rate, they will soon lose their ability to influence market expectations. rather, the value of more - open communication is that it clarifies the central bank ’ s views and intentions, thereby increasing the likelihood that financial - market participants ’ rate expectations will be similar to those of the policymakers themselves - or, if views differ, ensuring at least that the difference can not be attributed to the policymakers ’ failure to communicate their outlook, objectives, and strategy to the public and the markets	1
arrangements for the recovery or potential resolution of central counterparties in a crisis situation can be put in place. we should not wait for a potential emergency to remind us of the urgency of this problem. it would be too late to address it then, as the cross - border upheaval in the banking sector in the context of the 2008 – 09 financial crises amply demonstrated. and the consequences in the case of central counterparties would be even more devastating than what we have seen in the banking sector. cross - border application inconsistencies finally, let me briefly mention another area of concern : the cross - border application of different rules. i leave entirely aside the question of whether or not we are finished with the bis central bankers ’ speeches standard setting. there are areas where additional work would be beneficial : think of collateral transformation and settlement cycles, and of the success of target2 - securities in fostering harmonisation around t + 2 settlement in europe. but this would require another conference and i will focus here on the application of existing rules. it is clear to all of us that due to the global nature of the otc derivatives markets, international coordination is absolutely indispensable to avoid inconsistencies, gaps or overlaps, or conflicting rules. at a more general level, the lack of a level playing field in the enforcement of the new financial standards has a potential to fragment the global financial system and to lead to a suboptimal allocation of capital of liquidity and to overconsumption of scarce resources, such as the safe assets used as collateral by financial market participants. otc derivatives are a case in point. i therefore strongly welcome the recent agreement reached between the european commission and the us commodity futures trading commission ( cftc ) on a common path forward regarding a number of measures on how to approach cross - border issues. in this context, the notion of substituted compliance is a useful tool, as it will help to reduce the risk of duplication and potential frictions of rules. clearly, convergence at a very granular level may not be achieved. it may not even be desirable, as specific differences may reflect the specific institutional and regulatory frameworks in the jurisdictions concerned. nevertheless, it needs to be ensured that the outcome in all material aspects is similar. a key objective of the g20 mandate for otc derivatives reform was to ensure effective systemic risk reduction in these markets. it is unlikely that we will achieve this objective by converging on the lowest common	there is no doubt of the scale of the challenge that the crisis has posed for all advanced economies, including the us and japan, there is also no doubt that we have taken significant measures in responding to that challenge. but much more needs to be done. i. financial and economic reform prompted by the crisis let me begin with financial regulation. the crisis calls for a comprehensive agenda of reform of virtually every aspect of the global financial system. we must control the forces that led the system to become absorbed with itself and ensure instead that it serves the real economy. and we must be assured that the financial system provides a sustainable contribution to economic growth. at this point, we have achieved a blueprint of more stringent bank regulations, which includes more loss - absorbing capital, better risk coverage and limitations on undue leverage. countercyclical capital buffers are intended to lower pro - cyclicality. the oversight of financial institutions, financial markets and market infrastructure are being strengthened, and the organisational structure of financial supervision is being overhauled. but much remains to be done. the most important aspect is implementation of these reforms. moreover, the issue of systemically important financial institutions still requires decisions, and oversight of financial markets must be strengthened. we cannot afford the consequences of limited transparency and excessive influence of dominant players and oligopolistic market structures. bis central bankers ’ speeches the new european system of financial supervision is an important step forward. the three new european authorities – for banking, for insurance and occupational pensions, and for securities and markets – are strengthening our focus on interlinkages and spillovers within the eu ’ s financial system. and the european systemic risk board is developing the tools it needs to issue warnings and make recommendations for action on potential future sources of systemic risk. inattention to financial risk was the prime cause of the crisis. inattention to macroeconomic risk – and the many ways in which such risk interacts with fragile fiscal structures – prepared the ground for the budgetary troubles that some euro area countries are facing today. this brings me to reform of economic governance. the eu is about to introduce surveillance focused on imbalances and divergences in competitiveness across the euro area. this is long overdue. since 2005 within the eurogroup and – shortly thereafter – publicly, the ecb has warned that such divergences create considerable risks and must be corrected. if fully implemented, macroeconomic surveillance will make a strong contribution to the smooth functioning of emu. it	0.5
and risk - based capital is that they work. if and as they work, we may well observe what the critics note. but, that short - run effect has to be evaluated against the long run, and a judgment reached about the terms of the tradeoff. for in the long run, both market discipline and risk - based capital charges affect ex ante risk - appetites because lenders can calculate the likely impact of their actions. the resultant change in behavior should reduce the amplitude of cycles, and any resultant pro - cyclicality has to be evaluated against that backdrop. or, more generally, short runs have to be evaluated against the backdrop of long runs, regardless of mr keynes ’ s unfortunate observations about the latter.	overvalued exchange rate. with ltcm, there was similar excessive leverage and reliance on short - term financing arrangements. going forward, international organizations and national authorities will have to invest more resources in monitoring markets for signs of stress. while there is not a single indicator of banking or balance - of - payment crises, the tracking of financial market prices in many markets and financial flows across borders should help to identify trouble spots. where appropriate, national authorities should consider broadening the information they collect. complementary to these efforts, national authorities can take steps to facilitate transparency within markets. the key to avoiding excessive leverage is the market discipline that should be provided by market participants ’ creditors and counterparties. but market discipline works well only if counterparties share sufficient information to allow reliable assessments of their risk profiles. supervisors need to ensure that, before establishing credit relationships, regulated entities have a clear picture of a counterparty ’ s risk profile and have ensured that information relevant to that relationship will be available on a sufficiently timely and ongoing basis. public disclosure also has an important role to play, and authorities should make sure that appropriate requirements are in place. to be sure, public disclosure is unlikely to be sufficiently timely or detailed to meet the needs of creditors. still, it is essential to protect retail depositors and investors, and it provides a standardized framework from which customized bilateral disclosures can be drawn and elaborated. lastly, industrial countries have the responsibility to assist in the training of supervisors in emerging market economies, an area in which, i am pleased to say, we in the federal reserve system have been active for a while. we cannot afford not to take this responsibility, and in this regard, virtue is more than its own reward. we benefit in such technical assistance by strengthening our contacts with supervisors abroad, which is important when examining internationally active institutions based here at home, and by reducing the potential for adverse shocks from abroad. issues for further consideration as i noted, one of the contributing factors to asian financial distress was the ill - considered buildup of short - term foreign currency borrowing by banks in these nations from banks in industrial countries. some have attributed such behavior to the effects of an inappropriately low capital charge in the basel accord for short - term interbank credit extensions. they argue that the experience requires an increase in capital charges in order to effectively control the quantity of interbank loans. i do believe that we, in fact, should question the treatment of interbank credit by the accord. credit risk, in my	1
. c. stein ( 2004 ), “ cyclical implication of the basel ii capital standards, ” economic perspectives, 1q / 2004, federal reserve bank of chicago. rajan, r. g. ( 2009 ), “ cycle - proof regulation, ” the economist, april 8, 2009. " contingent " regulations have the following properties. during the up - phase period, they should mitigate overconfidence to prevent the accumulation of systemic risks once systemic risk actually emerges, however, they should impose few restrictions to avoid reinforcing economic deterioration. in preparation for a severe erosion of confidence, they may be furnished with some policy incentives to restore confidence. to sum up, it is desirable that regulations be contingent on risk - taking attitudes of market participants, and thus strict during booms and loose during busts. " cost - effective " regulation is a concept which is important in the evaluation of regulations. this standard dictates that when one or more regulations could achieve the same results, the least expensive approach should be chosen. for example, if it is desirable to induce financial institutions to raise capital, it is better to do so during boom times when funding is readily available as opposed to slump times when the economy has begun to turn sour and the funding cost is higher. this standard is also important when considering how to use public funding. when making the decision between injecting capital and purchasing nonperforming credits, one must consider costs involved as well as benefits of policy effects. currently, the basel committee on banking supervision and many other fora, interest groups and ad hoc groups are floating many different proposals about how best to regulate finance. taking the " 3 cs " in mind, i would like to take up several regulatory reform proposals that have come out of the international debate and examine their significance. in doing so, it is perhaps easiest to divide regulations into two categories : " ex ante measures " to be taken to prevent the crisis and " ex post measures " to influence how the crisis plays out when it happens. these could also be termed " policies for normal times " and " policies for emergency times. " ex ante measures the basel committee on banking supervision is taking the lead in a discussion on ways to alleviate the procyclicality of capital adequacy requirements. as i explained, current capital adequacy requirements are considered to have procyclicality properties. in response, the discussions focus on the idea of introducing variable " buffer capital	drying up quickly in the interbank market. the event has come to be known as the " paribas shock. " many european banks were among those facing liquidity difficulties. confronted with this situation, the european central bank ( ecb ) promptly announced that it was prepared to supply massive amounts of liquidity into the short - term money market. 5 in point of fact, mmfs played a role in deepening the crisis during the " lehman shock " of september 2008 as well, as will be discussed below. the reserve primary fund, a major independent mmf, held large amounts of cp issued by lehman brothers. the fund incurred large losses because of the bankruptcy, plunging it into some argue that there may be an excessive maturity mismatch on financial institutions ’ balance sheets as a background factor that triggered the liquidity crisis. certainly, a close observation of the facts in the current financial crisis exposes not only the maturity mismatch but also the " liquidity uncertainty " that is the fundamental risk inherent in all financial instruments. it is a truism that liquidity is largely unrecognized while it exists and only understood once it disappears. for example, the design of abcps assumes that they can be sold on the market at any time if necessary, but when crisis actually occurred, these instruments could not immediately be sold. had institutional fund - raising been a little more long - term, there would have been a time cushion that might have enabled them to deal with the crisis in liquidity. although it may not be possible to take every possibility into account in the selection of assets, a constant awareness of the uncertainty of liquidity and continuous assessment of the maturity gaps between assets and liabilities are key factors in improving the soundness of financial institutions. one often - heard opinion is that credit default swaps ( cds ) and other financial derivatives amplified the instability of the financial markets in the current financial crisis. opinions will differ on the merits of cdss themselves, but no one would deny that the dysfunction of the over - the - counter ( otc ) market, where these instruments were primarily traded, undermined confidence in financial markets as a whole. on september 15, 2008, lehman brothers declared bankruptcy. right around the same time, the market began to talk about american international group, inc. ( aig ) being on the rocks as well, and its share price plummeted. aig sold large volumes of cds protection, in which it was believed that there	1

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Dataset card

The dataset econo-pairs-v2 is the second version of "econo-pairs". This dataset is built on top of the "samchain/bis_central_bank_speeches"[https://huggingface.co/datasets/samchain/bis_central_bank_speeches] dataset. It is made of pairs of sequences of 512 tokens. The pairs are built following this approach:

If both sequences are coming from the same speech, the label is 1.0
If the sequences are coming from two different speeches but from the same central bank, the label is 0.5
If the sequences are coming from two different speeches and two different central banks, the label is 0.0

Why a new version ?

This dataset presents two improvements vs the prior:

More data cleaning, especially we made our best effort to prevent having non-sense speeches or wrongly utf decoded characters
A better nuance of similarity and dissimilarity as we introduce a middle ground with the 0.5 labels

Downloads last month: 11

Size of downloaded dataset files:

153 MB

Size of the auto-converted Parquet files:

153 MB

Number of rows:

56,305

Models trained or fine-tuned on samchain/econo-pairs-v2

samchain/econo-sentence-v2

Collection including samchain/econo-pairs-v2

NLP for Economics 1.1

Collection

Collection with models and datasets for NLP practitioners interested in economics or economists interested in NLP ! • 3 items • Updated 3 days ago