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decade of its existence, see lorenzo bini smaghi, β the euro area β s exchange rate policy and the experience with international monetary coordination during the crisis β. speech delivered on 6 april 2009 in brussels. dependence on imported goods to satisfy domestic consumer demand, the peg was also seen as a prerequisite to safeguard domestic purchasing power. 3 throughout its existence, therefore, the bank β s monetary policy orientation was always focused on a fixed exchange rate as the nominal policy anchor. when the bank was founded in 1968, malta formed part of the sterling area, reflecting its past as a british colony and its strong ties with the united kingdom. when the bretton woods system collapsed in 1972, the maltese monetary authorities decided to break the exclusive link with the pound sterling and to peg the lira to a trade - weighted basket of currencies. during the 1980s the composition of the basket was revised on several occasions until, in 1989, the number of component currencies was reduced to three, the ecu - which had replaced several european currencies - the pound sterling and the us dollar. in 2002, the weight of the euro was raised to 70 %, while those of the dollar and the pound were set at 20 % and 10 %, respectively. following malta β s accession to the european union, in may 2004, the authorities resolved to move swiftly to adopt the euro. a year later, the maltese lira entered exchange rate mechanism mark ii ( erm ii ) with a unilateral commitment by the maltese authorities to maintain its value unchanged at the central parity rate. this central parity rate then became the conversion rate between the maltese lira and the euro when malta adopted the single currency at the beginning of 2008. in effect, malta has moved from a currency union with the pound sterling to membership of the euro area, with a period characterised by a basically fixed exchange rate in between. maintaining an exchange rate peg over such a long time span is hard, though changes to the composition of the currency basket allowed some flexibility. throughout this period, the lira was only devalued once, in 1992, in the wake of the turbulence seen in europe, which saw the pound sterling ejected from the exchange rate mechanism ( erm ) and the devaluation of the italian lira among others. otherwise, the bank β s determination to maintain the peg never wavered. we never blinked. the ability to maintain the peg may have been partly due to restrictions | the maastricht criteria. these include convergence of inflation and interest rates, sustainable fiscal positions and exchange rate stability. the exchange rate criterion requires participation in erm ii for a minimum period of two years prior to the adoption of the euro. this is an arrangement whereby the european central bank ( ecb ) and participating national central banks would not allow any currency to fluctuate beyond a given margin from its central euro rate. this margin at present can be as wide as 15 %, but significantly narrower margins are being contemplated, with an often - cited reference value of 2. 25 %. thus, participation in erm ii does not necessarily imply increased currency volatility. indeed the rationale of this mechanism is to test the stability of a currency. as you know, the maltese lira is pegged to a weighted average of three currencies, whose individual exchange rates against the lira can vary. in this regard, it is noteworthy that the fluctuations in the maltese lira / euro rate over the past few years on average have not exceeded 3. 5 %. as for the inflation and interest rate criteria, malta is well within the reference values. the fiscal deficit, on the other hand, represents a significant hurdle as it is currently about double the 3 % of gdp limit. related to the deficit is the size of the public debt, which exceeds the 60 % threshold. the main determining factor in the timing of the adoption of the euro, therefore, is the speed with which fiscal consolidation can be achieved, bearing in mind that the euro area will not technically be in a position to accept newcomers before 2007. if the government embarks on the relatively fast track of fiscal consolidation implied by malta β s pre - accession economic programme, we would need to enter erm ii in 2005. should this track be chosen, however, it would be vital that the planned pace of consolidation be maintained. in this way the benefits of an early adoption of the euro would be reaped, and the lira β s stay in erm ii would be smooth, with no noticeable shocks in the transition from the current basket system to the single currency. if, on the other hand, there are slippages in the rate of fiscal consolidation, the stay in erm ii would have to be prolonged and the adoption of the euro postponed. this would attract negative attention from the international financial markets, resulting in a reduced credibility of our economic policy and in pressures on the exchange rate and the interest | 0.5 |
overcome, contributed to an inflow of capital looking to the european periphery, further mitigating fragmentation of financial markets in the eurozone. both components of the banking union, the ssm and the srm help reduce the negative feed - back loop between banks and sovereigns but do not completely eliminate it. bis central bankers β speeches let me start with the first building block : the ssm. one important objective of the ssm regulation is to improve the quality of supervision and to ensure homogenous supervisory standards across the euro area. the ssm, upon its operational start in november, will root its supervisory work on the best supervisory practices. the general principles, processes, and methodology for supervision will be described in the ssm supervisory manual of which a comprehensive public version is being prepared. the ssm will lead to a convergence of rules and standards and a harmonised supervisory culture. for example, by imposing common principles about methods and models β parameters that improve the reliability of banks β internal models it will address the problems created by differences in the way that banks calculate risk - weighted assets. importantly, the ssm will ensure that the same risks are given similar weights, knowing of course that the same types of risk can have different manifestations in different markets, in accordance with the local economic situation. there will also be a harmonised treatment of non - performing exposures and provisioning rules, which at present varies between jurisdictions and is not directly comparable for investors. more generally, the substantial compliance costs, from having to observe different sets of rules and different sets of reporting requirements, as well as having to interact with several different authorities, will be reduced. direct supervision of significant banking groups will be undertaken by joint supervisory teams that will comprise supervisors from both the ecb / ssm and national competent authorities, thus enabling a fully integrated approach to the supervision of cross - border banks. compared with supervision at national level, this integrated approach will enable the ssm to detect excessive risk - taking and the cross - border externalities associated with it, and to be therefore proactive if local financial developments develop into threats to broader financial stability. i expect all these changes in the supervisory framework to contribute to reducing fragmentation by creating a level playing field for financial institutions and spreading best practices across borders, thus removing the barriers that existed in the past. essential for de - linking banks from sovereigns is the trust that the financial system at large will develop in relation to the banks both directly and indirectly supervised by the ss | ##m. this can help normalise interbank markets and overcome financial fragmentation. that said, high standard banking supervision is not centred on preventing bank failures at any cost. in fact, to effectively perform its tasks, a supervisor must also be able to let failing banks exit the market. this is the reason why the ssm has also been given the competencies to withdraw from credit institutions, the authorisation to operate. however, given the role of banks in the financial system and in order to safeguard financial stability, the supervisor has to feel confident that the resolution of banks is conducted in an orderly fashion. this brings me to the second pillar of the banking union. the establishment of the srm is the second crucial step towards addressing financial fragmentation and breaking the sovereign - bank nexus. the main point here is that the orderly resolution of banks, even big ones, may contribute to avoid costly rescues by sovereigns that may endanger their own finances. the srm puts in place a single authority responsible for the resolution of banks in the euro area and participating member states. this will enable swift and unbiased resolution decisions, which will address notably cross - border resolution cases in an effective manner. in this respect, the srm should be viewed as a necessary β and logical β complement to the ssm. it would indeed be ill - advised to elevate the responsibility for supervision to the european level, while keeping resolution at the national level. this would create a mismatch of responsibilities, undermine the credibility of the ssm as supervisor, and delay the resolution of banks, a task that has to be done swiftly. an important element of the srm is the single resolution fund, which will be financed via levies on the banking sector and gradually mutualised. starting with national compartments, it will become one truly single european fund in the course of eight years. by mutualising the bis central bankers β speeches cost of bank resolution, this approach will loosen the link between domestic banks and their sovereigns and further level the playing field. a shortcoming of the srm is the absence of a clear common financing arrangement that would provide additional temporary resources when needed. however, the ssm and srm are not enough to completely sever the ties between sovereigns and their domestic banks. the ssm and harmonised supervision may not be enough to build sufficient trust among banks and, on the other hand, the srm may face legal limitations to autonomously manage orderly resolutions of significant banks, using its | 1 |
policy. by this we usually meant a more general state of affairs where inflation is low and stable, the banking sector is healthy and not a source of excessive money supply growth, the currency is reasonably strong and external imbalances are not building up. however, the world's macroeconomists longed for a simpler notion of a target that could be expressed in an exact, numerical, way, preferably with a single number. out of this was born price stability defined as low single - digit inflation, usually derived from the consumer price index ( cpi inflation ). 1 / 5 bis - central bankers'speeches in an inspirational group of economists here at the faculty, we paid limited attention to the fresh trends in american academia and central banks at the time, and mainly discussed various historical views of money and monetary policy. after all, we weren't experiencing any great moderation around us at that time. in particular, the second half of the 1990s was quite wild in the macroeconomic and financial sense in the czech republic and many other small open economies. the great moderation phenomenon manifested itself here later as a " temporary calm before the storm " between 2003 and 2007. then the global financial crisis ( gfc ) came and put a definitive end to the idea of a great moderation. the global financial crisis was no great surprise to me and my colleagues at the cnb. this is evidenced by the fact that in 2004 we were one of the first central banks in the western world to set up a team for analysing risks to financial stability. the pitfalls of mainstream macroeconomics just after the gfc, a heated debate erupted about the merits of mainstream macroeconomics. by that we mean the nkm presented in dsge models. i will thus refer to it as nk - dsge throughout my lecture, although today this term covers a wider range of approaches than it did 10 or 15 years ago. state - of - the - art nk - dsge approaches introduced rigour and strong microeconomic foundations into macroeconomic thinking. they became an important tool for simulating the effects of monetary policy and other macroeconomic shocks. but nothing is for free. the positive features of this framework came at the cost of what is described as a high degree of model stylisation. put simply, these models, especially at their beginnings, were very narrow in terms of the specification of the economy and its behaviour, and omitted a number of important linkages and processes. despite much | tend to forget them and start to regard highly stylised models as a correct and complete presentation of the economy. what is not included in the model ceases to matter to them. i am thinking here in particular of the banking sector, capital markets and real estate, which in most countries is a key investment asset. fiscal policy has also been marginalised. neglecting important factors increases the likelihood of systematic economic policy mistakes. how can this be avoided? seemingly simply β it is important to recognise that putting all your eggs in one basket is not appropriate when considering macroeconomic dynamics and the effects of monetary policy. we should not forget that there are many different stories playing out in the economy at any given time. some are fast - moving and some slow ; some are strong at a given moment but later fizzle out ; some prevail over time, even if no one would have put a brass farthing on them at first. i would liken it to a symphonic orchestra in which different instruments play very different music at different times in terms of number of notes and volume. but in an economy, no sheet music is handed out β it's a socio - political system that creates its own endogenous dynamics, that is, it rewrites the score itself, and in quite different ways each time. for a while, modern macroeconomics tried to get around this more or less intractable situation by picking just one out of a wide set of stories, often treating it as if it were immutable in time and space. and when reality deviated from that story for an extended period, it opportunistically explained it away as bad luck in the form of a series of unpredictable adverse shocks. a persistent challenge for inflation - targeting central banks is the phenomenon of inflation itself. we recognise that the cpi or some similar inflation measure, which lies at the heart of this monetary policy framework, may not be an ideal representation of what is meant by inflation in traditional monetary theory. personally, i still adhere to the monetarist definition that inflation means a steady and continuous rise in the price level, that is, a situation where different price categories and nominal variables generally show a similar trend. cpi inflation does not quite fit this definition, and it is not always desirable to regard its short - term fluctuations as genuine inflation or deflation. this is partly because cpi inflation tends to change quite frequently as a result of shocks of a non - macroeconomic and non - monetary nature. | 1 |
. bis central bankers β speeches concluding remarks economic activity in the euro area is on the path to recovery, but the pace is slow and differs from country to country. in italy, as in other euro - area economies, conditions remain difficult, despite some signs of stabilization. the timing and strength of the recovery will depend not only on continuous and effective reform but also on the availability of sufficient financial support for businesses. decisive progress towards the completion of the european union could halt the downward spiral caused by the strains on sovereign borrowers and on financial intermediaries, encouraging a return to more favourable credit conditions. the banking union is the first important step towards a budgetary, and ultimately a political, union through a process that should not be taken as purely sequential : on the one hand, the pooling of national resources is necessary to complete the banking union but, on the other, strong signals of political union would counter the perception of reversibility risk for the single currency. it is a delicate passage, to be undertaken with rigour and responsibility, avoiding errors which could rekindle tensions on the financial markets. the italian banking system is moving along this path, beset by structural problems and weakened by the long recession. but the system can count, partly thanks to the work of the bank of italy, on strengthened capital and prudent evaluations of the quality of its assets. there is no immediate, simple solution that will allow the banks to fully resume their role of supporting economic activity. they must continue to work towards restoring profitability and strengthening capital, as well as adapting their corporate strategies to the changed technological and market conditions. today, the banks are also being called upon to rapidly change pace. bis central bankers β speeches | annual convention of the asociacion de mercados financieros recent developments and open questions in the european banking industry speech by governor of the bank of italy ignazio visco madrid, 6 november 2017 ladies and gentlemen, it is an honour and a privilege to address this assembly. i would like to express my gratitude to governor linde and president prados del amo for the kind invitation to be here today. i will take this opportunity to share with you some reflections on the state of the european banking industry, of which spanish banks are a fundamental part. i will start with some considerations on the evolving structure of the sector ; i will then move on to the issue of profitability ; and i will conclude with my take on the main open questions we need to address over the coming months. the long journey : evolving structure of the european banking industry since the financial crisis since the global financial crisis, the european banking industry has undergone a considerable structural transformation, along three closely intertwined dimensions. the first one concerns the profound changes in both regulation and institutional set - ups. capital requirements have been raised, leverage has been limited, and stringent liquidity requirements have been established. the institutional set - up has also been completely modified. in a very short time frame, the banking union has been launched, with the introduction of the single supervisory and single resolution mechanisms ( ssm, srm ). a new framework for managing banking crises has been adopted. although the third pillar of the banking union β the european deposit insurance scheme β is still lacking and in other dimensions advancement is slow, the overall progress has been remarkable. it would perhaps have been unimaginable only a few years ago and testifies to the strong determination to continue along the path to european integration. the second dimension of structural change relates to the contracting size of the european banking sector, which not only reflects the tightening of regulation but also other factors, such as the need for banks to clean up their balance sheets, the impact of technology, as well as the increased role of non - bank financing. in the aftermath of the crisis, the total assets of the euro area banking sector declined significantly both in absolute terms, by 15 per cent between 2008 and 2016, and relative to gdp ; leverage has been reduced across the board, and especially in countries where it was higher. the downsizing of the european banking sector is also the result of important changes in its industrial organisation, which represent the third dimension of structural transformation. | 0 |
the opportunity, for instance, to discuss how micro data can be used to evaluate the effects of regulatory changes. the second session addresses the questions of how and what micro data collected by public authorities can be made available to the public via data hubs. and the third session looks at how data can be used to understand financial interconnectedness, for example by linking a buyer and a seller of a security or by identifying who is lending money to whom. but this conference is not only about financial stability : the fourth session examines the statistical challenges associated with the measurement of the macroeconomic effects resulting from changes in the price of natural resources. the recent decline in the oil price and its consequences for inflation and financial markets may serve as an example for the importance of this topic. last but not least, the fifth session is concerned with the measurement of the material conditions of households. by including this session in the conference, the programme committee has proven to have the right instinct concerning topical issues : this october, the royal swedish academy of science decided to award the nobel prize in economics to angus deaton. angus deaton was awarded the prize not least for his extensive research into consumption and poverty in developing countries. bis central bankers β speeches 3. responding to new demands : the bundesbank β s research data and service center ladies and gentleman, the demand for new and better statistics is not only reflected in the programme for this conference. it has also already left its mark on the organisation of the bundesbank. the bundesbank is not only a user but also a large producer of high quality statistics. aggregate data that are relevant for macroeconomic analysis are regularly published in our monthly report and our time series database. but we also collect a large amount of micro - level data. these sometimes highly sensitive data range from banks β monthly balance sheet statistics to micro data on foreign direct investment. to meet data protection rules, we can only make these data available to the public under certain restrictions. to facilitate access to these data, last year we established our research data and service center. it is located in the 20th floor of the trianon tower here in frankfurt and provides workspaces for 12 guest researchers. a staff of 12 persons advises these guest researchers on data selection and data access. the center does not lift restrictions on data access in place to meet data protection rules, but it makes it easier for non - commercial researchers to use the data to the largest possible extent. 4. the panel on household finances as an | jens weidmann : welcome remarks at the 3rd imf statistical forum welcome remarks by dr jens weidmann, president of the deutsche bundesbank and chairman of the board of directors of the bank for international settlements, at the 3rd imf statistical forum, frankfurt am main, 19 november 2015. * 1. * * introduction dear mr. zhu, dear otmar issing, ladies and gentlemen, good morning and welcome to the 3rd imf statistical forum. it is probably safe to say that the bundesbank has seldom had the opportunity to welcome such a large body of international statistics experts. the objective over these two days is to bring together data producers, policy makers, academics and other users to discuss how to further improve the provision of statistics for micro and macroeconomic analyses. for central banks this is of vital importance. monetary policy ultimately depends on the availability of good statistics. the monetary and economic analyses that precede any deliberation on the appropriate monetary policy stance are built on a large amount of data on monetary aggregates, financial market data, inflation expectations or labour market indicators. i am therefore particularly glad that the bundesbank is hosting the first imf statistical forum to be held outside washington. and, when i tell you that the bundesbank is attaching great importance to statistics, i am not merely paying lip service to you. the importance the bundesbank attaches to statistics and statistical methods is shown, for instance, by the fact that carl friedrich gauss, one of the most influential statisticians of all time, was portrayed on the 10 deutsche mark banknote for a long time. building on the work of carl friedrich gauss, statistical methods have been perfected and the process of data collection has been refined again and again. often, the great progress made in the field of statistics has been driven by new demands. if you will, the supply of data and new methods has always responded to changes in demand. governments, for example, have always had a demand for statistics on the wealth of their citizens, as this helped them to collect taxes. in the 17th century, this led sir william petty, an englishman, to count chimneys in order to draw inferences about the wealth of an economy. his works can be seen as the foundation of modern social and economic statistics. but to find examples of how the supply of statistics has responded to demand one does not have to go back as far as the 17th century. in the 1930s, the great depression provided | 1 |
financing conditions associated with a phenomenon of deleveraging. it is here that we have to closely watch developments. if such behaviour became widespread across the banking system, it would undermine the raison d β etre of the system as a whole. but there are more positive some elements as far as the financing of the corporate sector is concerned. one of them is given by the corporate bond market, where issue volumes have remained significant. in january, euro non - financial corporate issuance even reached a record high. hence, this channel is open, and it is functioning. of course, not all firms are benefiting equally from it, the pricing has become tougher and high volumes are likely to be partially compensating for more difficult bank financing. but in an environment where we need to search for factors of reassurance, the considerable issuance volumes in the corporate bond market are noteworthy. overall, however, there is no doubt that the situation in the financial sector and real economy remains very difficult. how are central banks, governments and other authorities responding to these challenges? and what more should they consider doing? the acute market conditions of last september prompted central banks to take a number of exceptional measures. these measures have been instrumental in organising a first line of defence against β systemic liquidity risk β. they include increasing the size and frequency of liquidity operations, extending the list of eligible collateral, significantly expanding our balance sheets and implementing unprecedented interest rate cuts. compared with the period before the start of the turbulence, the eurosystem β s balance sheet has grown by about β¬600 billion, an increase of 68 %, representing just above 6 % of the euro area gdp. this shows that our β intermediation role β has grown very significantly. we are now providing β and this is quite exceptional β unlimited refinancing to the banks of the euro area for maturities ranging from one week to six months in exchange for eligible collateral. this is a very important contribution to liquidity in the financial sector of the euro area. governments for their part have organised a second line of defence against what i have called β systemic solvency risk β. key measures have included recapitalisations, guarantees and asset support schemes. the eurosystem has issued recommendations on the appropriate framework for both government guarantees and recapitalisation measures. the aim is to support the banking sector in a way that avoids creating distortions in the single market. moreover, measures should be consistent with our | are not captured through traditional measures. in particular, i would highlight the following : β’ first, a rapid growth of trading book assets relative to traditional banking book assets and a fundamental shift in the types of risks retained in the trading book, in particular those arising from structured credit products. this is a natural consequence of the improvement in financial technology we are seeing, which enables more and more assets to be priced and traded. β’ second, the growth of the trading book is, in turn, producing a rapid growth in counterparty credit exposures relative to traditional credit exposures. as with market risk exposures, these counterparty exposures are becoming increasingly complex and difficult to measure. β’ third, the valuation of increasingly complex products presents yet another challenge. many of these products have not been tested under periods of stressed liquidity, which could have a significant impact on valuations. β’ fourth, the use of traditional approaches by many firms to assess their vulnerability to funding liquidity risk. these approaches may not take into account the growing reliance on active markets to manage the firm β s liquidity in an environment that is increasingly capital - markets driven. both the basel committee and the industry are currently exploring issues relating to the management and supervision of funding liquidity. β’ finally, the degree of risk transfer that is actually achieved through credit risk mitigation and securitisation techniques requires greater scrutiny. in particular, how well do these risk transfers hold up under stress? to what extent will risk be put back to firms if counterparties were to default, if investors were to demand compensation for losses, or if investor risk appetites were to shift abruptly? practical areas of focus for risk managers and supervisors trying to predict how all these risks will play out in practice can be demanding since we have little historical experience to guide us. growth in credit markets, synthetic securitisations, new market players and new risk management techniques have largely taken place over the past five years, that is, after the last credit downturn. i expect we will only experience a true period of stress when we have the combined impact of a credit downturn, a major shift in risk appetites and a withdrawal of market liquidity. firms have been challenged to develop more comprehensive stress tests that cut across risk types and business lines in a true downturn environment. stress tests that are produced on a regular basis are most evolved in the market risk area. regular credit risk stress tests tend to be conducted primarily at the level of business lines. more | 0 |
eurofi β santiago de compostela, 15 september 2023 monetary and fiscal policy - mix addressing the disease of inflation speech by francois villeroy de galhau, governor of the banque de france press contact : mark deen ( mark. deen @ banque - france. fr ), deborah guedj ( deborah. guedj @ banquefrance. fr ) page 1 sur 4 ladies and gentlemen, it is a great pleasure to be here for this final day of the traditional september eurofi meeting, and i extend my warmest thanks to didier cahen and david wright for organising this event, this time in the holy city of santiago de compostela. let me start with good news about a favourite eurofi topic : banking regulation and basel 3. i say it as bis chair and former chair of ghos : we had in monday an important ghos meeting in basel, and we unanimously welcomed the decisive progress made this year in the implementation of basel 3. by 2025, all jurisdictions β including europe and β yes β the us β should have implemented it in a broad compliance with the standards. i know each banking industry, on both sides of the atlantic, tends to consider that the other side has undue advantages. it β s simply not right, and our motto is now straightforward : let us now close this page, and implement the european compromise, no less and no more. no less as some banks would perhaps still dream of, and no more as some theoreticians of regulation would perhaps imagine. and we should now turn to the priority learned from the banking turmoil : β strengthening supervisory effectiveness β i rather than focusing on further regulation. let me now turn to my theme which is the policy mix to fight our main economic disease : inflation. well, santiago has not yet produced a miracle for inflation, but there is indeed some encouraging news : headline inflation has passed its peak since the beginning of 2023, and it seems that core inflation is following suit. indeed, the latter started to recede, to stand at 5. 3 % in august ( down from 5. 5 % in july and 5. 7 % in march ) in the euro area. obviously, these inflation rates remain too high : we must and we will bring inflation back towards our 2 % target by 2025. i reiterate this morning this clear commitment which is fully consistent with our latest ecb forecasts. monetary policy is the first line of defence, | reaching structural changes have taken place in credit and capital markets, with hedge funds playing a major role in the process. it's fair to say, for instance, that credit derivatives would not have expanded at the same pace and with so high innovation without strong hedge funds involvement. what do those evolutions mean for the future? financial innovation is good and healthy for our economies. changes that have occurred in the last years strongly contribute to market efficiency and overall increase the resilience of our financial system. by allowing wider spreading of risk through credit derivatives, in particular, hedge funds bring an important contribution to market efficiency and liquidity. at the same time, the implications of those changes for financial market dynamics might be more complex and far reaching than before. new instruments have been developed in a very benign environment. liquidity in many market segments has not been tested in period of stress. how these instruments would behave in periods of stress is a major question for market participants and authorities alike. in such an uncertain environment, securing the full benefits of the structural shifts in the financial system does put a premium on risk management. everybody would agree, i think, that the first mitigant against the risks associated with hedge funds is robust internal risk management systems, both in hedge funds themselves and at their prime brokers. these are the basis for an efficient market discipline and a condition for financial stability. strong and rigorous implementation of sound principles for risk management seem essential. you have noticed the reference, in yesterday's g7 communique, to the paulson's task force ( presidents working group ). beyond that, there may be some additional questions to consider which, for the sake of argument and in order to launch the debate, i will put on the table rather in a provocative mode, but are dealt with in more detail and balance in my own ( and some other ) contributions to the review. first question : what are the conditions to ensure an appropriate level of investor protection, and in particular, what are the consequences of the increased " retailization " of hedge funds? a second question is the future of the hedge fund industry. it is the nature of technological progress to spread in a way that the profits it creates to be competed away. replicating hedge funds strategies β at lower costs β seems to be expanding. m. hsieh will tell you more about it during the panel discussion. a third and important issue relates to the evolving relationship between banks and hedge funds. this relation is complex | 0.5 |
. estonia has shown a remarkable capacity to take difficult political decisions when they are needed. this, i believe, was widely recognized and respected, and helped pave the way for estonia to join the monetary union. it also bodes well for estonia β s future in emu. boom and bust my third observation regards another factor that also bodes well for estonia as part of the euro area : the recent boom and bust episode in this country. estonia went through a very classical cycle of low interest rates, easy credit, and unrealistic expectations, which eventually built into a substantial overheating of the economy, and finally a spectacular bust in 2008 β 2009. some countries experienced this as part of the monetary union, while estonia experienced it all by herself. i am optimistic that the experience will prove to be a vaccination against future financial excesses. the finnish depression in the early 1990s resulted in suffering and economic hardship for many, but it also re - established a more cautious economic attitude that resulted in stronger balance sheets, and ultimately a stronger economy. finland received a vaccination against financial excesses that has lasted well over a decade. i am optimistic that estonia will benefit from a similar vaccination, and will emerge from the recession as a stronger economy. only the beginning my fourth observation is that this is only the beginning. a lot is going on inside the euro area and the eurosystem. economic policy coordination is being given much greater traction than before. in particular, the crisis has shown that a group of countries with a common currency and highly interconnected banking sectors have a great deal of interest in each others β public finances. how each country chooses to allocate its public expenditure remains mostly its own business. but how a country finances its public expenditure must be a matter of common interest to a much greater degree than we were willing to acknowledge in the past. enhanced economic governance, including the european semester, creates a framework for ensuring that budgetary policies take into account the common european interest. i trust estonia will be a like - minded partner for all of us who will ensure that this framework will work as intended. i am also looking forward to working with the governor of eesti pank on the european systemic risk board that will be established as of the beginning of next year. we have high expectations for this new body. the financial crisis showed that there is a considerable gap between microprudential supervision and monetary policy. we need stronger policy instruments to tackle fluctuations in | marja nykanen : banking in the digital age opening remarks by ms marja nykanen, member of the board of the bank of finland, at the banking in the digital age conference, helsinki, 14 june 2018. * * * ladies and gentlemen, dear fellow bankers and digital enthusiasts, money makes the world go round, as they say. it facilitates trade, enables transactions, and lubricates the economy. but what does money look like? is it metal coins, paper banknotes, account entries on bank ledgers, or something completely different? the truth is, it is all of the above, and it keeps evolving. money is created by the banking sector as a whole, that is, by the central bank and the commercial banks together, and it takes many forms. in a world that is turning increasingly digital, so does money and banking. today β s event is about looking into the future and about understanding the change. we will hear five excellent presentations from true leaders in this transformation, as well as a panel discussion which includes the top three banks operating in finland. we will also have a live illustrator drawing pictures of the presentations. you can see the illustrations taking shape on the screen above. so don β t be surprised if there is something strange happening on that screen! digital technology is transforming the financial industry both from the bottom up and from the top down. on the one hand, improved infrastructures and back office technology will help to make financial companies more cost efficient. at the same time, however, financial services are becoming more mobile, more 24 / 7, and more fit - for - purpose. from the perspective of an individual consumer, the financial industry β s digital transformation will be most evident in the nature of payments. credit transfers between bank accounts will soon happen without delay. although the use of cash has decreased in recent years and cards have become the most popular form of retail payment, banknotes and coins are in no danger of disappearing soon. change is not always perceived as beneficial. the financial industry is already feeling the impact of automation which is making many jobs obsolete. there are many who have been diligently working in the banking industry for decades, but who are now on individual level facing uncertainty and the need for acquiring new skills. a more digital bank relying more on automation is also more vulnerable to cyber - attacks and systems malfunctions. information security has traditionally concentrated on the role of the organisation, focusing on measures such as antivirus protection | 0.5 |
##b have gained us time ; they have preserved the functioning of monetary policy. bis central bankers β speeches but we have now reached a point where european integration, in order to survive, needs a bold leap of political imagination. it is in this sense that i have referred to the need for a β growth compact β alongside the well - known β fiscal compact β. a growth compact rests on three pillars and the most important one, from a structural viewpoint, is political : the economic and financial crisis has challenged the myopic belief that monetary union could remain just that, and not evolve into something closer, more binding, into an arrangement whereby national sovereignty on economic policy is replaced by the community ruling. if the governments of the member states of the euro define jointly and irrevocably their vision of what the political and economic construct that supports the single currency will be and what the conditions to reach that goal together should be. this is the most effective answer to the question everyone is asking : β where will the euro be in ten years β time? β. the second pillar is that of structural reforms, especially, but not only, in the product and labour markets. the completion of the single market and the strengthening of competition are crucial for growth and employment. labour market reforms that combine flexibility and mobility with a sense of fairness and social inclusion are essential. growth and fairness are closely connected : without growth, and the events of recent months also reflect this, the temptation to β circle our wagons β gains strength, and solidarity weakens. without fairness, the economy breaks up into multiple interest groups, no common good emerges as a result of social and economic interaction, and there are negative effects on the capacity to grow. recent italian history has no shortage of examples. these reforms have long been indispensable in a global economy very different to the one which witnessed the creation of the institutions still operating today. in the political structure that will emerge from the crisis it is likely and desirable that for these reforms a system of european rules will be introduced similar to that for the fiscal compact, a discipline leading over time to the european harmonisation of objectives and tools. the third pillar is the revival of public investment : the use of public resources to push forward investment in infrastructure and human capital, research and innovation at national and european levels. ( the proposed strengthening of the eib and the reprogramming of union structural funds in favour of less - developed areas go in this direction ). thus, a growth | wholesale market funding. the fragmentation of the interbank market and sharply rising yields in some countries impaired the transmission of monetary policy and threatened the unity of monetary policy throughout the euro area. credit to the private sector contracted and the euro area entered a further recession, with unemployment peaking in early 2013 at just over 12 %. the output gap β the difference between current levels of economic activity and its long - run potential β reached a position well into negative territory. 1 / 5 bis central bankers'speeches additional factors weighing on inflation beyond the downward pressure on inflation from domestic sources, a number of other factors also weighed on inflation. in particular, energy and other commodity prices fell sharply from the middle of 2014. headline hicp inflation turned negative in december 2014. our mandate is to maintain price stability over the medium term, so short - term movements in volatile components of the index do not necessarily require a monetary policy response. indeed, the full transmission of monetary policy to inflation takes more than a year, but the initial impact of energy price changes no longer has an effect on the annual inflation rate after a year. so there is a real risk that any monetary policy action might only take effect when the main impact on headline inflation has already passed. as such, monetary policy could exacerbate volatility in inflation. conversely, there is a risk that movements in headline inflation caused by a succession of energy price shocks could become entrenched in wage bargaining and inflation expectations. inflation expectations drifting away from our objective interferes with monetary policy β s ability to meet that objective. as a result, monetary policy typically reacts to energy price movements by β looking through β their first - round, direct impact, but remaining vigilant regarding any secondround effects on expectations. this is certainly a description that fits the actions of the ecb at the time. while the domestic recession and falling energy prices are the major underlying reasons for the low rates of inflation recorded since 2014, there are a number of additional contributory factors, including the flow - through of generally weak global demand and certain industry - specific factors. i won β t detail them today, except to mention that the european system of central banks has carried out a significant body of research on the subject, which was published last week. 1 decline in equilibrium interest rates economists use a concept called, variously, the equilibrium real rate or the natural rate. it represents the interest rate at which there is neither upward nor downward pressure on economic activity and hence on inflation. broadly | 0.5 |
andriy pyshnyy : national bank of ukraine press briefing - monetary policy decisions speech by mr andriy pyshnyy, governor of the national bank of ukraine, at a press briefing on monetary policy decisions, kyiv, 25 january 2024. * * * dear colleagues, the board of the national bank of ukraine has decided to keep its key policy rate at 15 % per annum. this decision comes along with the need to maintain exchange rate sustainability, keep inflation moderate in 2024, and bring it to the target range of 5 % Β± 1 pp over the monetary policy horizon. despite russia continuing its aggression against ukraine, the inflationary pressure eased significantly last year, including due to the nbu's consistent monetary policy inflation slowed to 5. 1 % yoy in november and stood at this level in december. good harvests and lower global energy prices were major factors behind the decrease in the pressure on prices. the moratorium on tariff increases for certain utilities played an important role. at the same time, a decline in core inflation to 4. 9 % as of the year end also points to a sizeable contribution made by the nbu's consistent monetary policy, in particular measures to ensure exchange rate sustainability and attractiveness of hryvnia assets. these measures helped improve exchange - rate and inflation expectations. despite the expected acceleration of inflation in 2024, it will remain moderate and will return to the target range in 2025 inflation will be within the target range in the coming months. from the middle of the year, it will accelerate somewhat as effects of last year's bumper crops wane. additional pressure on prices will come from the further recovery in consumer demand, as well as the pass - through of business costs to consumer prices, in particular due to persistently high security risks and wage increases. however, inflation will remain moderate, in part due to the nbu's measures to maintain exchange rate sustainability and the attractiveness of hryvnia assets. inflation is expected to reach 8. 6 % as of the end of the year. in 2025, it will return to its target range, slowing to 5. 8 % as of the end of the year. in 2026, inflation will meet the target of 5 %. this will be primarily driven by a decline in security risks, which is assumed by the forecast. it will ensure an overall improvement in expectations, and will allow restoring the logistics and production processes. the price pressure | , for the time being, the main scenario for the euro area remains that economic growth is expected to return to rates close to potential in the course of 2003. in fact, this expectation is consistent with all forecasts published by international organisations. private forecasters, on the whole, also seem to share the same view. moreover, financial markets have shown signs of stabilisation in recent weeks following a period of considerable turbulence. the expectation of an improvement in economic activity in the euro area is contingent on a recovery of growth in private consumption, supported by a reduction in actual and perceived inflation rates. this expectation is also based on a projected gradual recovery of the world economy and export growth which, together with the low level of interest rates, should help to strengthen investment. nevertheless, the uncertainty surrounding this scenario remains high. it is therefore very difficult, at this juncture, to predict the timing and strength of the economic upswing, both in the euro area and globally. turning to recent price developments, in september annual hicp inflation was 2. 1 %. for october, eurostat's flash estimate indicates an annual hicp inflation rate of 2. 2 %. this increase is again likely to reflect developments in energy prices, although no detailed information is available at present. looking at price developments for the remainder of 2002 and the early part of next year, despite the recent decline in oil prices, some upward impact may occur reflecting base effects and country - specific developments - such as increases in indirect taxes or specific developments in services prices. although difficult to anticipate, particularly due to the volatility of oil prices, a further increase in the annual rates of inflation around the turn of the year and a delay in the return to inflation rates below 2 % cannot be ruled out. however, this further increase should only be temporary. beyond the very short term, we consider that both the euro exchange rate, which has strengthened since early this year, and the overall economic environment are still contributing towards reducing inflationary pressure. moreover, there should also be a further unwinding of the indirect effects of previous increases in oil prices and other factors that have added to the stickiness of the annual rate of hicp inflation excluding unprocessed food and energy prices. however, for inflation rates to fall below 2 % in the course of 2003 and to remain in line with price stability thereafter, as indicated by recent forecasts, it is crucial that oil prices do not increase sharply again and that the upward | 0 |
commercial banks ( other than rrbs ) are free to open branches / mobile branches / administrative offices / central processing centres ( cpcs ) / service branches in rural, semi - urban and urban centres in north - eastern states and sikkim without permission from reserve bank of india. while preparing their annual branch expansion plan ( abep ), banks are required to allocate at least 25 per cent of the total number of branches proposed to be opened during a year to unbanked rural ( tier 5 and tier 6 ) centres. an unbanked rural centre would mean a rural ( tier 5 and tier 6 ) centre that does not have a brick and mortar structure of any scheduled commercial bank for customer based banking transactions. the committee on customer services in banks ( damodaran committee ) constituted by the reserve bank, has made several recommendations for improving banking services in the north eastern region. ( recommendations are given in the annex for your use ). an important one among them is to explore using the back up of alternate sources of energy for atms to ensure their continuous and uninterrupted availability in the north east region. 7. despite strict guidelines, a section of fake microfinance companies have started their operation in the north east. hundreds of people are the victims of these microfinance companies. as the situation is very alarming are you going to set up any committee to monitor the operation of these microfinance companies? no such instance of any fake microfinance company cheating the public of the north east has come to our notice. however, we are aware that many investors in this region have been victims of pyramid schemes operated by some non - banking financial companies ( nbfcs ) / multi level marketing companies ( mlm ) and unincorporated bodies ( uibs ). we are sensitising the police and are creating awareness among the public about the nefarious activities of these companies. having said that, i must add that it is important for the public to be discrete in investing their savings. the public should verify whether the company is registered with the reserve bank or any other regulatory body. the public must also be aware that high returns are often associated with high risk and they should particularly look askance at promise of excessively high returns. bis central bankers β speeches | and market stress more severe than the global financial crisis. the 2017 stress test subjected the banks to simultaneous uk and global recessions, a deep market shock and stressed estimates of conduct redress fines. the test included a sharp adjustment in corporate credit markets and commercial property markets. sterling investment grade corporate bond yields were assumed to snap up almost 800bps as long - term gilt yields rose by over 500bps and credit spreads blew out. commercial property prices were assumed to fall by 40 %. these are typically syndicated loans to large companies which have either high levels of indebtedness, a non - investment grade credit rating, or are owned by a private equity sponsor. for more information, see pages 30 - 31 of the november financial stability report. as a percentage of institutional leveraged loan issuance. all speeches are available online at www. bankofengland. co. uk / speeches more than 5 % of uk and global business loans would have been impaired over the first two years of the test period. with banks having substantially reduced their exposures in the past decade, largely by reducing their lending to commercial property companies, the resulting losses amounted β only β to Β£50bn. and following the shrinking of banks β trading books in the past decade, their losses on trading assets totalled β only β Β£30bn. the losses resulting from this, and other parts of the stress scenario, would have wiped out the entire banking system in 2007. however, major uk banks have tripled their capital strength. even after a stress like this, they have more than twice the capital they had going in to the crisis. they can now absorb losses like this and continue to supply credit to the real economy. 5. are bond markets resilient or might they amplify adjustments? this is the final channel through which stretched markets could affect the wider economy. it would magnify any effect on corporate and bank balance sheets. and it could affect the cost of finance directly, as market interest rates are driven up and credit availability tightened. we have a duty to spot new market developments that could drive this and to simulate, rather than wait for the empirical proof, because by that point it can be too late. and as your mission statement acknowledges, we must move beyond the causes of market fragility in the last crisis. the resilience of markets is not guaranteed by the safety of the banking system and other core intermediaries. to do that, we β re going to | 0 |
compulsory military service is also often quoted as a common area in which people from different backgrounds met on an equal footing, and often formed closer bonds. accordingly, the norwegian armed forces have not only helped to protect the country, but also developed norway β s social capital, at least that of half the population ( see also langeland, n. r. : β mΓΈtet med krigens and β [ meeting the spirit of warfare ], morgenbladet, 1 november 2013 ). hermann, richard ( 1992 ) : med skjebnen i handen [ with destiny in their hands ], cappelen, oslo. not everyone agrees on this view of the glorious revolution. see, for example, sussman, n. and y. yafeh ( 2004 ) : β constitutions and commitments : evidence on the relation between institutions and the cost of capital β, cepr discussion paper 4404. smith, adam ( 1776 ) : an inquiry into the nature and causes of the wealth of nations, book i : division of labour. sinclair, david ( 2001 ), the pound. a biography. the story of the currency that ruled the world, london : arrow books 2001 pp. 141 β 2. bis central bankers β speeches his high turnover of wives. to coin collectors, on the other hand, he is associated with thegreat debasement, whereby the silver content of one coin after another was diluted. 17 neither the turnover among his wives nor the debasement of the coinage was conducive to building confidence. the king could solve a short - term financing problem by issuing debased coins and more notes. however, with ever more coins and notes chasing the same goods, the long - term consequence was rising prices. economists refer to this as an inflation tax. 18 what happens when the powers that be unleash inflation? β’ first, confidence in money as a store of value disappears. an extreme example is the 1923 hyperinflation in germany, when absolutely everything, including perishable food products, provided better security than money. 19 β’ second, money disappears as an accounting unit. goods became the new standard. during the napoleonic wars, inflation was also very high in norway, and the local history of the islands of karlsΓΈy and helgΓΈy shows that accounts were kept in silver or goods such as cod liver oil, pollock and flour rather than speciedalers. β’ finally, money ceases | : β institutions are the rules of the game of a society and in consequence provide the framework of incentives that shape economic, political, and social organization. institutions are composed of formal rules ( laws, constitutions, rules ), informal constraints ( conventions, codes of conduct, norms of behaviour ), and the effectiveness of their enforcement. enforcement is carried out by third parties ( law enforcement, social ostracism ), by second parties ( retaliation ), or by the first party ( self - imposed codes of conduct ). institutions affect economic performance by determining, together with technology employed, the transaction and transformation ( production ) costs that make up the total costs of production. β see north, douglass ( 1997 ) in drobak, j. n. ( ed. ) : prologue of frontiers of the new institutional economics, p. 6. economists use a basic and powerful theoretical construct to demonstrate that, at the most fundamental level, production takes place through the use of labour, capital and raw materials as well as through technological progress. lying behind it β and often having a profound effect on it β is how firms and the society in which the firms operate are organised. and organisation is about institutions in the broad sense β everything from society β s moral norms to how production is organised in each firm. hernando de soto in the mystery of capital ( 2000 ) argues that a lack of proper land registration in poor countries makes it impossible for the poor to obtain credit. as a result, a large proportion of the population is in effect barred from establishing a business. the arab sociologist and diplomat ibn khaldun analysed the relationship between institutions and economic progress. he published his major work the muqaddimah in 1377. the book was published in norwegian this year on the initiative of nils holme, the former director of the norwegian defence research establishment ( ffi ). in 1759, in his work theory of moral sentiments, adam smith wrote that institutions are the framework bis central bankers β speeches however, in and of themselves, institutions are insufficient to ensure progress β the key is whether they are strong or weak. 5 this is also the starting point for daron acemoglu and james robinson β s book why nations fail. 6 they introduced the concepts inclusive and extractive institutions. 7 β’ inclusive institutions do not forget why they exist : they remember that their purpose is to serve the people, as the term β public servant β aptly illustrates. a well functioning constitutional state makes | 1 |
##s, eurosystem central banks committed last february to implement sustainable and responsible investment strategies and to report the first results by end of 2022. banque de france β s policy has been exemplary since 2018 regarding the management of its own funds, whose alignment on a 2Β° c objective is already effective. we won β t stop there though : we started to exit from non - conventional oil and gas earlier this year, we announced that we are exiting totally from coal by end 2024. we now commit to work toward aligning our own portfolios with a 1. 5Β°c objective. one additional word about the international context of these developments. here again, we saw a major improvement this last year with the new american involvement : climate - related issues are now firmly on the agenda of the g20, the g7, the fsb and all other standard setting bodies. the ngfs, created in paris in december 2017, is a unique knowledge hub. it now has 95 members, including the us fed since last december and this number will still grow in coming weeks. the banque de france provides its global secretariat with 15 staff, and we created last april our climate change centre chaired by nathalie aufauvre. we are indeed making good progress across the board. but each year that passes without sufficient emission reductions makes the issue more severe, and the solutions more radical. to grapple with this dynamic situation, it is imperative that we are able to better understand and forecast the macroeconomic impacts of climate developments. 2. an imperative for the year to come : forge models that gauge the interaction between climate and the economy one aspect of the ecb β s action plan launched on the back of the strategy review may have received too little attention : macroeconomic modelling and scenario analyses. the challenge is huge as we face a triple source of uncertainty : first, how climate change will materialise, second, what the transition could look like and, third, how both will translate to the macroeconomy. the ngfs has produced detailed macro financial scenarios and the corresponding data that provide the most comprehensive framework to date for financial risk assessment. to make such scenarios possible, the central banking community β with a strong involvement of bank of england and banque de france among others - has collaborated with first tier research institutes in climate science and economic modelling. this is a huge step forward. our objective is now to propose a common set of plausible and differentiated futures, built with the best available science and | such global pricing, a carbon border adjustment mechanism ( cbam ), as recently put forth by the eu in order to prevent carbon leakage is appropriate. we all know how politically sensitive these issues are, domestically as well as internationally. but the political scene on climate has already been changing dramatically and it will continue to change - hopefully for the better. * * looking back at how far we have come in developing green finance over the last six years, one may wonder : β is it useful? β β certainly yes ; β is it enough? β β certainly not. let me remind everyone of one simple β and dreadful number : according to the ipcc, we have less than six years of greenhouse gases budget left if we want to have 83 % chance to stay below 1. 5Β°c. let β s not fool ourselves : we have been making very significant progress to make sure that the financial system is fit to the challenge of the transition. but there is still much work to do on our side, starting with mandatory and harmonised disclosures, and a close monitoring of transition paths. still more fundamentally, what we are doing only makes sense if this is part of a wider collective endeavour. finance, and still more central banks, cannot be the only green game in town. a few days ahead of glasgow, it is the right time to listen to the pink floyd again and the dark side of the moon : β and then one day you find ten years have got behind you ; no one told you when to run, you missed the starting gun β 4. it is not too late yet, but let us hear the starting guns. i thank you for your attention. 1 1 autorite de controle prudentiel et de resolution ( 2021 ), the main results of the 2020 climate pilot exercise 3 / 4 bis central bankers'speeches 2 2 f. villeroy de galhau, Β« the role of central banks in the greening of the economy Β», speech, february 11 2021. 3 3 corporate sector purchase programme 4 4 pink floyd, time, the dark side of the moon 4 / 4 bis central bankers'speeches | 1 |
22 january 2018 address to the club siglo xxi luis m. linde governor introduction let me begin by thanking the chairman of the club siglo xxi, and my good friend, chencho arias, and the management of the club for their kind invitation to me to join you today. over the years this club has seen debate on all β or practically all β matters, and naturally on economics too, which will be our subject today. my address will focus on the european and spanish economic situation. situation of the european economy with a decade now having elapsed since the international financial crisis began, we can say that the euro area is finally in a phase of sound and vigorous economic expansion. gdp growth is expected to have posted a growth rate of around 2. 5 % in 2017, a figure not seen since the early years of the monetary union. the favourable economic situation extends, moreover, to all corners of the area, including the economy that has undergone the greatest difficulties, namely greece. it is expected that in the coming months greece may successfully conclude its third financial assistance programme. further evidence of the soundness of the recovery is the dynamism of business investment following years in which the expansion of household demand, acting as the sole engine of growth, appeared to be decoupled from the need for firms to increase their capital. reflecting the strength of the expansion has been a notable reduction in unemployment rates, which are generally standing at pre - crisis levels. however, substantial cross - country differences persist in this area, with unemployment levels ranging from below 4 % in germany to 20 % in greece. the favourable financing conditions associated with the extraordinary monetary policy measures implemented by the eurosystem have no doubt been one of the essential determinants behind the economic recovery transforming into a vigorous expansion. to illustrate this, the estimates made by the banco de espana suggest that the monetary policy measures contribute to accounting for practically half the euro area economy β s observed nominal growth since mid - 2014. adding to this is the greater buoyancy of world trade, which recouped growth rates not observed in the five previous years. this result reflects the favourable cyclical juncture at which many advanced and emerging economies now stand, but also a true recovery in the sensitivity of trade to global growth, despite the protectionist threats that have emerged and that may put a brake on this fundamental engine for economies as open as the european ones are. the strength of exports has contributed notably to sustaining the greater bu | ##rtered territory for everybody. the main challenge is to understand these activities, technologies, players and instruments before it is too late and they originate disruptive episodes. largely, this can only be achieved through strengthened see β the cost of cybercrime β, ninth annual cost of cybercrime study, accenture, 2019. and strategic collaboration not only across regulators but also with financial market participants. - esg principles : climate - related risks besides the new risks stemming from the irruption of new technologies, at a time when esg principles are gaining momentum i would also like to highlight risks to financial stability from climate change and governance failures. climate change and the transition towards a more sustainable economy is currently a most topical issue. this is so for obvious reasons. it is a challenge that affects virtually all economic and social agents, and it has the potential to lead to a major transformational change not just for the economy but for society at large. of course, the financial sector is not immune to these developments. in particular, climate change may affect financial stability through two types of risks. following a classification that has already become standard, we can distinguish between physical and transition risks. the former have to do with the direct consequences of climate change on the value of financial and real assets, due for instance to natural disasters, floods, drought and migration flows. the latter refer rather to the impact on financial and real assets of the regulatory, fiscal and technological changes that could take place in the transition towards a more sustainable economy. it is fair to say that, at this stage, both regulators and financial sector participants have relatively little knowledge about their exposure to these risks. however, the large number of public and private sector initiatives in place is likely to accelerate this learning process in the near term. for instance, as a member of the network for greening the financial system ( ngfs ), which comprises more than 50 central banks around the world, the banco de espana is actively contributing to raising awareness in the industry about climate - related risks, increasing data availability and developing the necessary analytical tools for a rigorous assessment of the impact that these risks could have, not only on the spanish financial sector as a whole, but also on the solvency of individual entities. insofar as these risks are properly accounted for, not only the financial sector will be in a better position to cope with the consequences of climate change but, through the proper pricing of these risks, it will help to efficiently channel the resources needed to | 0.5 |
benjamin e diokno : launching of the citi micro entrepreneurship awards 2020 message by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the launching of the citi micro entrepreneurship awards 2020, manila, 1 december 2020. * * * citi philippines ceo, mr. aftab ahmed ; members of the cma national selection committee ( nsc ) ; partners from the microfinance council of the philippines, inc. ( mcpi ) headed by mr. eduardo c. jimenez ; colleagues in the bsp ; fellow microfinance advocates ; and friends from the media : good afternoon. welcome to the virtual launch of the 18th citi microentrepreneurship awards ( cma ). this year is a landmark for the cma program, for being launched amid the covid - 19 pandemic and showcasing the determination of filipino microentrepreneurs to succeed at this trying time. a critical sector of our country, msmes account for 99. 5 % of business enterprises, 62. 4 % of total employment, and 35. 7 % of gross value added ( gva ). the pandemic disrupted msmes in unprecedented ways. more than ever, it is vital to sustain our microentrepreneurs, who provide essential products and services in the β last mile. β predominant in low - income areas and serving as engines driving local economies, microentrepreneurs also nurture swathes of the filipino population depending on them for postpandemic recovery and rebuilding. hence, the bsp is pulling out all the stops to support microentrepreneurs and smes. to stimulate lending to the sector, the bsp has included new loans granted to msmes as part of industry compliance with reserve requirements ; reduced the credit risk weight of current loans granted to msmes ; and assigned zero percent risk weights for loans covered by government guarantee programs. to broaden usage of digital payment streams, the bsp encouraged financial service providers ( fsps ) to waive fees for pesonet and instapay transactions. likewise, the benefits of digitization initiatives supporting our digital payments transformation roadmap ( dptr ) are expected to redound to msmes as they adopt and utilize digital financial services ( dfs ). the bsp is also implementing several projects to facilitate credit flows to the msme sector. our | agri value chain financing ( avcf ) pilot project aims to improve industry capacity and interest for this innovative financing approach to benefit not just smallholder farmers, but also agri - based msmes. we are also building a credit risk database ( crd ), which uses a variety of data to build statistical scoring models to sharpen credit assessment of banks and promote risk - based sme lending. the bsp continues to support the cooperative development authority ( cda ) in capacity development for credit surety fund cooperatives providing credit enhancement for bank loans of cooperatives and their member - msmes. 1 / 2 bis central bankers'speeches forthcoming initiatives include developing a standard loan application form ( slaf ) for small business loans to address sector preference for simplified and streamlined loan application requirements. we have an upcoming study to inform strategic interventions towards developing a supply chain finance ( scf ) market in the country. we are supporting an msme demand - side survey to better understand the sector β s needs and challenges. these initiatives, like the cma, are conducted in partnership with various stakeholders. the cma, our two - decade long partnership with citi foundation, and mcpi, fits well with the bsp β s advocacy to raise awareness on the opportunities and impact of microentrepreneurship on inclusive development. through cma 2020, we highlight the creativity and internal fortitude of our microentrepreneurs to serve as a great inspiration. congratulations to the covid - 19 category winners for demonstrating innovation and selflessness. we also extend our gratitude to our partners and the nsc in making cma 2020 possible. let us remain steadfast in collectively shaping a brighter, rosier future for our microentrepreneurs. thank you and good afternoon. 2 / 2 bis central bankers'speeches | 1 |
climate finance day 2018 β paris, 28 november 2018 the role of finance : anticipating climate risks, financing transition opportunities closing session : speech by francois villeroy de galhau governor of the banque de france press contact : mark deen ( mark. deen @ banque - france. fr ). page 1 sur 6 ladies and gentlemen, it is a great pleasure to be here to conclude this fourth edition of climate finance day. this event gives a concrete picture of what i like to call the β powerful coalition of the willing β. each and every one of us β public authorities ; academics, ngo β s and think tanks ; corporates and financial institutions β have a part to play in this coalition. it is a shared challenge that no one can tackle alone, and you have worked during these last three days to bring tangible solutions to quickly and effectively finance the transition. paris, chere madame la maire, has been a driving force committed to translating momentum into concrete action. let me mention three key milestones : the cop 21 back in 2015, the β one planet summit β in december 2017, and this fourth edition of climate finance day. to better address concretely the financial risks stemming from climate change, the banque de france initiated a network for greening the financial system ( ngfs ) at the one planet summit, with eight founding members. i in less than one year, we have been joined by 13 other members ii and five observers iii from the five continents. they work together with great energy and enthusiasm. in my remarks today, i will ( i ) take stock of the ngfs β achievements and then outline the decisive steps that are still ahead of us in order to ( ii ) anticipate climate risks and ( iii ) seize opportunities. * * i. the ngfs β first achievements as highlighted by the winner of the 2018 nobel prize in economics, william nordhaus, although β there is substantial uncertainty about the path of climate change and its impacts [ β¦ ] this does not reduce the urgency of taking strong climate - change policies today. iv β tackling climate change to β prevent the airplane from crashing β is first and foremost the responsibility of appropriate public policies in energy β as page 2 sur 6 announced yesterday for france β, transportation, housing or β yes β taxation and carbon pricing. finance cannot substitute them, but finance can help ; and as central bankers and supervisors, we are determined to help. i would even say that this challenge is our β new frontier | can probably imagine, benjamin franklin β s philosophy has crossed the atlantic and still guides decision - makers today, including at the european central bank. in that regard, i would like to touch on a few ideas drawn from his autobiography. i need not remind you of his great fondness for quotations, especially in poor richard β s almanack. in his autobiography, benjamin franklin defined a number of virtues that he believed to be cardinal. they included temperance, silence, order, resolution, frugality, industry, sincerity, justice, etc. i find his interpretation of these terms interesting. for instance, for benjamin franklin, the term β temperance β should be understood as follows : β temperance first, as it tends to procure that coolness and clearness of head, which is so necessary where constant vigilance was to be kept up β¦ β. this, to my mind, is one of the virtues that central bankers must impose on themselves. my eurosystem colleagues and i have made it one of the guiding principles of our actions. benjamin franklin continues his description of these virtues in the following terms β frugality and industry freeing me from my remaining debt, and producing affluence and independence, would make more easy the practice of sincerity and justice,..., β. he emphasises the importance of being freed from one β s debts and recovering one β s independence. we know from his political activity that he attaches a great deal of importance to the independence of the nation, but here we are talking about that of individuals and therefore of the institutions for which they are responsible. as we will see later, this is the type of independence that lies at the heart of the eurosystem. furthermore, sincerity can be associated with transparency, another key principle of the eurosystem. as in most human activities, the conduct of monetary policy involves some risk - taking and may, justifiably or not, be subject to debate and criticism, as we will see later on. i would like to conclude this brief tribute to benjamin franklin by quoting one of his phrases that makes an encouraging link between success and risk : β there are many ways not to succeed, but the most certain is not to take risks β. let me turn now to my main topic which is to provide you with an overview of the single monetary policy of the eurosystem that consists of the european central bank and the 12 national central banks of euro area member states and of its main | 0.5 |
spending as a share of the economy will remain approximately unchanged in the years ahead. this will entail lower growth in public demand than in recent years. at the same time, monetary policy continues to be expansionary. according to norges bank β s march 2017 forecast, the key policy rate will remain close to today β s level in the years ahead, followed by a gradual rise from 2019. chart : key policy rate and inflation ahead in 2016, the pace of consumer price inflation was at its highest for many years, driven to a great extent by the considerable depreciation of the krone up to the beginning of last year. inflation has slowed since last summer and our projections in the march monetary policy report indicate that inflation will slow further in the years ahead. at the same time, inflation expectations seem to be firmly anchored. the upturn in the real economy appears to have taken hold and unemployment has declined. with a key policy rate close to today β s level, there are prospects that inflation will pick up again further ahead. the ministry of finance is currently assessing the need to modernise the regulation on monetary policy. after more than fifteen years, this is a natural step. based on our experience over this period, it is norges bank β s assessment that the monetary policy framework has worked well. inflation has been predominantly low and stable since inflation targeting was introduced in 2001. average annual consumer price inflation has been close to, albeit somewhat below, 2. 5 percent. at the same time, employment has consistently been more stable since 2001 than in previous periods, in spite of the fact that the norwegian economy has been exposed to substantial shocks. chart : inflation the inflation target has anchored inflation expectations. at the same time, there has been sufficient room for flexibility and the exercise of judgement to enable monetary policy to dampen the impact on output and employment when the economy has been exposed to shocks. our experience has shown us the crucial importance of flexibility in inflation targeting to enable us to make the appropriate trade - offs in response to these shocks. the time horizon for achieving the target must be sufficiently long, and the balance of risks, including risks related to 3 / 4 bis central bankers'speeches financial stability, must be taken into account. we have also experienced the important role the exchange rate has played as shock absorber, particularly during the financial crisis and in periods of falling oil prices. at the same time, the interest rate level abroad places limitations on the room for manoeuvre in monetary | like traditional commercial banks β an important locus of maturity transformation, which in turn led to both an expansion and alteration of traditional money markets. ultimately, there was a vast increase in the creation of so - called cash equivalent instruments, which were supposedly safe, short - term, and liquid. when, in 2007, questions arose about the quality of some of the assets on which this intermediation system was based β notably, those tied to poorly underwritten subprime mortgages β a classic adverse feedback loop ensued. investors formerly willing to lend against almost any asset on a short - term, secured basis were suddenly unwilling to lend against a wide range of assets. liquidity - strained institutions found themselves forced to sell positions, which placed additional downward pressure on asset prices, thereby accelerating margin calls on leveraged actors and amplifying mark - to - market losses for all holders of the assets. the margin calls and booked losses would start another round in the adverse feedback loop. in short, the financial industry in the years preceding the crisis had been transformed into one that was highly susceptible to runs on the short - term, uninsured cash equivalents that funded longer - term extensions of credit. 2 designing and implementing a policy response in light of the vulnerabilities of short - term wholesale funding markets that were revealed in the 2007 β 09 crisis is an integral part of post - crisis reform. the key question is how to balance the important role these markets have come to play in funding economic activity with the need to contain the destabilizing risks of runs in these same markets. to get a better sense of the terms of this balancing effort, let me examine the implications, first, of relying completely on liquidity requirements to manage liquidity problems, and then of relying entirely on lolr liquidity from a central bank. the shortcomings associated with either of these one - dimensional approaches demonstrate why liquidity regulation and lolr should be viewed as complements and not substitutes. 3 note that financial entities that do not use debt financing can nevertheless experience liquidity pressures that are structurally similar to bank runs. for example, in the context of various pooled investment vehicles, investors may have an incentive to redeem their shares early because the costs of the redemptions are effectively borne by remaining investors. the resulting β first - mover advantage β contributed to runs on money market mutual funds in the fall of 2008 and could, at least in theory, lead to runs on other open - end fund vehicles | 0 |
##ilience in meeting loan repayments, the increase in indebtedness over the past 15 years does mean that households are now significantly more sensitive to changes in interest rates. the bis central bankers β speeches proportion of household income devoted to debt servicing is relatively high, even though housing interest rates are only a little above average ( graph 4 ). it is therefore not surprising that households have become more cautious. household saving increased markedly in the wake of the global financial crisis, and it has remained high in the face of the continuing problems in european financial markets and rising global inflationary pressures ( graph 5 ). graph 4 household interest payments * per cent of household disposable income graph 5 household saving ratio * per cent of household disposable income bis central bankers β speeches in the current environment, it is unlikely that households will have much enthusiasm for increasing indebtedness. the most likely scenario is that household borrowing will continue to grow at a relatively subdued rate for some time yet. from the reserve bank β s perspective, this would be a welcome development. it would allow the period of consolidation in household balance sheets to continue and would avoid households adding to pressures in the economy at a time when its productive capacity is already being stretched by the resources boom. while most of the growth in credit in the lead - up to the global financial crisis was driven by households, a substantial increase in business credit also occurred in the years immediately before the crisis. this expansion in lending was mainly to large businesses and, while some of it was used to fund real investment, a substantial amount was for financial activity. as often happens during a credit boom, a disproportionate amount of the lending that took place over that period came from second - tier lenders. business credit provided by foreign banks, for example, rose by about 80 per cent between 2006 and 2008, while business credit provided by regional banks rose by 60 per cent ( graph 6 ). a lot of this was directed to commercial property. graph 6 business credit by source january 2006 = 100 since the global financial crisis, the inevitable correction has occurred. business credit has fallen and those lenders that expanded the most have since contracted the most. similarly, sectors such as commercial property that increased gearing the most have since experienced the sharpest increase in problem loans and the sharpest contraction in credit. through all this, credit to the small business sector has been much more stable ; it increased by less through the boom and has continued to | philip lowe : opening statement to the house of representatives standing committee on economics opening statement by mr philip lowe, governor of the reserve bank of australia, to the house of representatives standing committee on economics, sydney, 11 february 2022. * * * chair members of the committee good morning. my colleagues and i look forward to the day where we can return to in - person hearings. we hope that will be for the next hearing. i would like to focus my introductory remarks today on three issues : the economic recovery ; the outlook for inflation ; and the rba β s monetary policy decisions. the economic recovery at the time of the previous hearing in august, we were in the early days of the delta lockdowns and were expecting a strong bounce - back when the restrictions were eased. this bounce - back did eventuate and the economy had strong momentum late last year. then omicron hit, which has been a significant setback for many people and businesses. yet, once again, the economy has proven to be resilient. despite the disruption caused by omicron in january, we still expect positive growth in gdp in the march quarter, with spending and hours worked already recovering. reflecting this resilience, the outlook for the australian economy has improved since we last met. we estimate that gdp increased by around 5 per cent over 2021 and are expecting gdp growth of around 4ΒΌ per cent over 2022 and 2 per cent over 2023. this outlook is being underpinned by a number of factors. these include household balance sheets that are in generally good shape, with households having accumulated more than $ 200 billion in additional savings over the past two years. an upswing in business investment is also under way and there is a large pipeline of residential building to be completed over the next year or so. macroeconomic policy settings are supportive of growth, with governments planning significant infrastructure spending and monetary policy remaining very accommodative. the resilience of the economy is evident in the australian labour market, where the outlook has continued to improve. a year ago, our central forecast was that the unemployment rate would be close to 6 per cent at the end of 2021. the outcome was much better than this : 4. 2 per cent. there has also been a welcome decline in underemployment as many people have been able to obtain additional hours. labour force participation has increased and the share of the working age population with a job has never been higher than it is now | 0.5 |
inflation to levels that are below, but close to, 2 % over the medium term. regarding fiscal policies, an ambitious and coordinated fiscal stance remains critical, in view of the sharp contraction in the euro area economy. measures taken in response to the pandemic emergency should as much as possible be targeted and temporary in nature. the three safety nets endorsed by the european council for workers, businesses and sovereigns, amounting to a package worth β¬540 billion, provide important funding support in this context. at the same time, the governing council urges further strong and timely efforts to prepare and support the recovery. we therefore strongly welcome the european commission β s next generation eu proposal, which is dedicated to supporting the regions and sectors hardest hit by the pandemic, to strengthening the single market and to building a lasting and prosperous recovery. it is important for the european leaders to quickly agree on an ambitious package. in order to reach its full potential, the european union β s recovery and resilience facility will need to be firmly rooted in sound structural policies conceived and implemented at the national level. well - designed structural policies could contribute to a faster, stronger and more uniform recovery from the crisis, thereby supporting the effectiveness of monetary policy in the euro area. targeted structural policies are particularly important to rejuvenate our economies, with a focus on accelerating investment in priority areas such as the green and digital transitions. we are now ready to take your questions. 3 / 3 bis central bankers'speeches | country in the world to use this new security feature. on the 50 and 20 dollar notes, we have retained the β multi image hologram β or the round silver foil, but instead of having both of them of the same shape we have different shapes β the 50 dollars have the shape of a turtle and the 20 dollars the shape of a fan. on counterfeits, i wish to clarify that in relation to the total value of currency in circulation, the combined value of counterfeits is extremely negligible at. 0009 percent. we obviously cannot completely eradicate counterfeits. however, we are well aware of the importance of safeguarding at all times public confidence in our currency. the bank will therefore continue to work with the fiji police force to renew media awareness on the security features of our currency notes. for the first time, fiji β s banknotes will vary in length to help the visually impaired. the 100 dollar note will be the length of our existing banknotes. the length of the lower denomination will progressively reduce by 5 millimetres. this means that the two dollars will be the shortest note being 25 millimetres less than the 100 dollar note. the notes will all have the same width as the current notes. i am confident that we will be proud of our new banknotes. in the next two weeks, we will be starting a public awareness campaign to inform the public of the new notes. the new banknotes will go into circulation from 10 april. the new and the β existing β notes will circulate side by side until the existing notes go out of circulation. both designs are of course legal tender. with the introduction of the 100 dollar banknote, we have the same highest denomination with developed countries like the united states, australia and new zealand. the united states has stated that it is not raising its highest banknote above 100 dollars. i believe that it would be a very, very long time before fiji will think again about raising its highest bank note. once again, i express our sincere thanks to his excellency, the president for agreeing to be our chief guest. we are indeed honoured that you have graced the occasion with your presence today. i now have the pleasure of inviting his excellency to address us. | 0 |
wholesale and retail trade sector, have been the main reasons for the gap, followed by finance and business services ( excluding real estate ). in the wholesale and retail trade sector, for instance, hourly labour productivity grew on average by 1. 4 % in the euro area, while it grew on average by 4. 6 % on the other side of the atlantic. what lies behind these labour productivity developments? specific policies aimed at increasing employment, particularly in the unskilled segment of the labour market, have certainly contributed to the slowdown in labour productivity growth, especially in services, which are usually more labour - intensive. however, developments in labour supply are only part of the story. to a large extent, the slowdown in labour productivity growth can be attributed to a marked slowdown in total factor productivity ( tfp ) growth, which is generally taken as a measure of technological progress and improvements in the organisation and overall efficiency of production. between 1980 and 1995, tfp for the whole economy grew on average by 1. 5 %, before declining to 0. 8 % between 1995 and 2007. 5 and private sector services significantly contributed to this decline. indeed, tfp growth in these services slowed down from 0. 6 % between 1980 and 1995 to - 0. 1 % between 1995 and 2005. 6 several authors, such as oliner and sichel ( 2002 ), have already highlighted the major role of innovation and information and communications technology ( ict ) in the revival of labour productivity growth in the us. 7 moreover, it has been argued that the effect of ict dissemination, as measured by ict investment, has been particularly important in explaining the differences in labour productivity growth developments in some market ict - using services sectors between the euro area and the us. since the early 1980s, investment in ict in the united states has been double that of the euro area. 8 basu and others ( 2003 ) find, for instance, that industries with faster growth in ict capital in the 1980s and early 1990s had faster tfp growth rates in the late 1990s. 9 it seems that the ict investments in some private sector services in the us have sparked further innovations in managerial processes, procedures and organisational structures, and facilitated complementary innovations. the full benefits of the productivity acceleration however can only be reaped if there are no obstacles to organisational change. 10 in this regard, the structural characteristics of the euro area economies β as reflected by labour market rigidities and the lack of competition in product markets β did not | prices and bolstering growth across the globe. now the cycle is again turning. the ongoing deleveraging of the european banking system is reducing global liquidity, with cross - border credit being pulled from many emerging markets and some u. s. - dollar asset classes. market - making activity is becoming thinner, and private financing is slowing across the world. the volatility of global liquidity in recent years underscores the value of the structural and cyclical policies that can dampen these cycles and channel the flows to their most productive uses. this speech draws heavily on the forthcoming report, β global liquidity β concept, measurement and policy implications, β prepared by a group of the committee on the global financial system chaired by jean - pierre landau of the bank of france. bis central bankers β speeches defining global liquidity global liquidity is an amorphous concept. the usual suspect for any event or dynamic too complicated to explain, global liquidity is the keyser soze of international finance. it has no agreed definition and, as a consequence, there has been no coherent policy approach to tame its more violent tendencies. at its core, liquidity represents the ease with which financial institutions, households and businesses can obtain financing. 2 global liquidity cannot be understood by simply summing domestic measures of financial conditions. the international components of liquidity ( such as cross - border lending ) will affect market and macroeconomic outcomes in recipient countries, and can have a disproportionately large role in fluctuations in financial stability. to capture all the dimensions of global liquidity requires a combination of price and quantity measures. price indicators, such as the general level of interest rates or credit spreads, provide information about the conditions under which liquidity is provided, while quantity measures, such as credit aggregates, show the degree to which such conditions translate into the build - up of risks. official liquidity overall levels of global liquidity are the product of the levels of official and private liquidity and the complex interactions between the two. official liquidity is funding that is unconditionally available to settle claims through monetary authorities. it can only be created by central banks. core official liquidity is base money, or the sum of currency in circulation and funds held by financial institutions at the central bank. official liquidity has traditionally been small relative to economic activity. before the financial crisis, it was about 5 per cent of gdp in the united kingdom and the united states. in recent years, | 0 |
risks from a commercial firm to its bank : i ) first, by limiting related - party transactions between the bank and its commercial firm owner and requiring that their relations are conducted at market prices, ii ) second, by aligning the incentives of banks β board members and managers. for example by requiring that the majority of banks β board members remain independent from the controlling firm or other affiliates of the conglomerate. and iii ) third, through the analyses and risk assessments of the financial positions of the entire group. in order to gain a meaningful idea of the risks of a large conglomerate, some financial authorities have suggested that supervision must cover the relevant risk positions of the letter to congressman james a. leach, january 20, 2006. board of governors of the federal reserve system. entire group. this constitutes a formidable challenge. legal amendments would have to be made to compile basic management information on financial condition and risk exposures of the group as a whole. it is also important to send a clear message that the bank will be able to stand alone if the commercial owner gets into trouble, and thus banks β depositors and creditors do not need to run for the exit. other conflicts of interest likely to surface when commercial firms become bank owners are the anticompetitive practices that commercial firms may conduct once they have a bank. for instance, commercial firms may require their suppliers to have their financial services arranged by their banks. banks belonging to a commercial firm may also engage in tied selling practices by, for example, extending consumer credit only for purchases made in the commercial retailer. finally, we should be very careful with the protection of personal data to prevent the non - authorized transfer of personal information ( bank secrecy ). final remarks embracing globalization brings both benefits and challenges. the evolution of the financial industry in mexico constitutes a good example. openness to foreign direct investment in the financial system was essential to recapitalize the banking sector and increase efficiency. it also brought other benefits, such as new technologies and products, and advanced risk management techniques. however, it is important that the authorities continue to foster competition through transparency and disclosure, as well as new entrants to the system without increasing the risks to it. | jwala rambarran : implications of the proposed regulatory regime for credit unions feature address by mr jwala rambarran, governor of the central bank of trinidad and tobago, at the 42nd annual general meeting of aero services credit union, port of spain, 29 march 2014. * * * ladies and gentlemen, it is my honour to be asked by the board of directors of aero services credit union co - operative society limited to address its 42nd annual general meeting. i believe this invitation comes at an opportune time for the central bank to once again reach out directly to the credit union movement, as we move even closer towards regulation of the credit union sector. it is also my pleasure to speak directly to you, the membership of aero services credit union. i have known some of your board directors for close to a decade and i am aware that aero services credit union has been responding to the challenges of a harsher socioeconomic climate. i note that, in light of an aging demographic, you have had to expand your membership bond outside the aviation industry. equally impressive is that you have managed to grow your resource base to over tt $ 200 million while managing delinquency in a historically low interest rate environment and more competitive financial services sector. apart from building wealth for your members, aero services credit union continues to demonstrate the fundamental values sacred to the credit union movement, a clear indication that you are living up to your motto β the credit union where every dream counts β. you are an example of how credit unions when managed properly can meet their members β expectations, maintain their trust and confidence, and fulfill your commitment to those who trust you with their hard earned money. for this reason, i want to underscore that the central bank recognizes the important contribution that credit unions are making to our society, especially in fostering greater financial inclusion by reaching out to the ordinary working men and women who are underserved by traditional financial institutions. today, about one - third of the population can boast of membership in credit unions. credit unions have collectively amassed an asset base of over tt $ 9. 5 billion or 3 percent of the assets of the total financial system assets in trinidad and tobago. your relevance, however, is much richer than your asset base. credit unions have helped their members to develop a healthy savings habit, educated them on financial matters and financed small business start - ups, all while experiencing considerable turbulence and consolidation. you have propelled the ideals of financial inclusion as well. these ideals are | 0 |
founded. the second main focus of the allsopp review is the stark imbalance between the coverage, timeliness and quality of statistics on the services sector relative to those on manufacturing. suppose you were interested in studying the economic behaviour of the uk textiles industry - which accounts for around one - third of one percent of uk output. the good news is there β s plenty of coverage in the national accounts, although you have some decisions to make. are you interested in clothing, or carpets and rugs? and if clothing, are you interested in knitted and crocheted garments β¦ or work wear β¦ or outerwear? β¦ or indeed underwear? each of these has its own data set : the array of sub - categories is truly impressive. however, suppose instead that you were interested in the retail sector, and wanted to know, for example, how much the large supermarket chains have contributed to gdp in recent years, or what inroads they have made into the non - food market. no dice. although the retail sector nowadays accounts for over 5 % of uk output - so it is nearly 20 times the size of the textiles industry - more detailed data are not produced for the uk national accounts. the need for better service sector statistics goes well beyond any interest we might have in detail for its own sake. in the uk, early estimates of gdp rely heavily on measuring output. since the service sector accounts for more than 70 % of uk output, the quality of early gdp estimates is inextricably linked to the quality of service sector statistics. over the past ten years, revisions to services output have accounted for more than half of the average revision to gdp growth ; and around four - fifths of the variance of gdp revisions can be attributed to revisions to service sector growth. indeed, research by bank staff has indicated that the private - sector business surveys may give a better guide to the ons β s estimate of service sector output growth two years or more after the event than do the ons β s own early estimates. ( in contrast, the ons β s early estimates of manufacturing output growth clearly outperform the business surveys as a guide to later estimates. ) the ons is well aware of this imbalance. in fact, it has been at the forefront of developing and improving measures of service sector output : within the oecd only the uk and korea produce a monthly index of services production, the counterpart to the well - established monthly index of production for the industrial sector | would be under increased strain during 2012 β 13 due to higher level of npas. the gross npas of the banking system has increased from 2. 36 percent in march 2011 to 3. 25 percent in june 2012. restructured standard accounts as a percent of gross advances have doubled from 2. 7 percent in 2009 to 5. 4 percent as at june 2012 with substantial increase in restructuring in certain sectors. data indicates that restructuring is largely resorted to in case of industrial sector accounts, particularly, large industries, as against smaller borrowal accounts such as agriculture, micro and small enterprises. the persistently high level of npas and increase in restructured accounts continues to pose a significant constraint on banks β abilities to reduce lending rates, thereby, in a sense, penalizing the honest borrowers. corporates need to innovate and embrace technology to improve their productivity and efficiency so that their costs can come down, they remain bis central bankers β speeches competitive and continue to service their obligation as borrowers. banks on their part must look to arrest the deterioration in asset quality by adopting better risk management practices like better credit appraisal, closer monitoring of borrowal accounts, greater information sharing among banks and by carrying out elaborate viability studies before restructuring. while npas / restructuring of assets cannot be wished away, they need to be effectively curtailed so as to ensure that the lendable resources of banks are maximized. on its part, rbi has mandated banks to put in place an effective mechanism for information sharing by december 2012 and to sanction ad hoc loans / renewal of loans to new or existing borrowers only after obtaining / sharing the information. lack of enabling environment according to the doing business rankings 2013, india ranks way down at 132 out of 185 countries in the global index of countries in β ease of doing business β ; 41 places below china, 51 places below sri lanka and 116 places below taiwan. explosive growth can only be achieved if there is an enabling economic environment. this requires governmental policies for quicker clearances, which encourage business and long term investment. recently, some steps have also been announced to stabilize the government finances and contain fiscal deficits within manageable levels. government has also taken steps to encourage public investment as well as public private partnerships in infrastructure and to tap into available technology and capital from around the world. i firmly believe that for achieving explosive growth, it is imperative that macroeconomic environment stabilizes, inflation and inflation expectations come down to comfortable levels and the twin deficits are | 0 |
of non - standard steps, but we took them cautiously and always with a view to ensuring a better transmission of monetary policy. everybody knows as well that we are fiercely independent. the governing council has proved its independence through all its decisions and also through its firm and explicit messages to governments on all occasions. bis central bankers β speeches 15. president trichet, you will leave at the end of october after eight years as the head of the ecb. mario draghi, the governor of the banca d β italia, will replace you. how has the bank that you will pass on to him changed in recent years? do you have any tips to give him? mario draghi has been a wise and strong member of the governing council for many years. he knows the institution extremely well and, of course, was a party to all the decisions we have taken. what matters is the permanence of the institution. i am certain that mario draghi will ensure the institution β s continuity and credibility over the long term. bis central bankers β speeches | not our system. the discussions in the council and the executive board help us to meticulously evaluate the advantages and disadvantages of a decision, especially when it is about something as important as large - scale bond purchases. bis central bankers β speeches mario draghi has already made it clear that a bond programme does not have to be agreed unanimously. but would it really be acceptable if such a fundamental step was agreed with a narrow majority? it would be possible and permissible, but not advisable. the more council members that agree, the surer i am that we have weighed all the pros and cons of a bond purchase programme properly and have minimised the risks. the verdict of the european court of justice on the earlier bond programme, the omt programme, is still outstanding ; this week the advocate general will make his recommendations. do you not fear legal constraints for bond purchases on a larger scale, as are currently being considered? we still don β t know how the court will decide. but the final opinion of the advocate general will give us a certain indication this week. in the end, it might be confirmed that bond purchases in the secondary market are legal. but economically, they have an effect similar, in many respects, to a prohibited direct monetary financing of governments by means of the printing press. if that is supposed to be unproblematic, do you then find the whole prohibition redundant? this prohibition might be less important if we had a fiscal union with a common fiscal policy. but as long as that is not the case, the ecb must be prevented from being dominated by the ministers of finance. that is why we need this treaty article, to protect the independence of the central bank. will it necessarily come to this fiscal union sooner or later? of course, a fiscal union would make life easier for us as a central bank. but a fiscal union must have democratic legitimacy and be subject to adequate parliamentary control. it doesn β t exactly appear to be likely at the moment. could the euro survive as a β currency without a state β in the long run? the euro can certainly survive. but the system would always be fragile. we would have to get used to there can always be crises in one country with contagion in others. if we want to make progress, we need a common economic policy that also covers the field of structural reform. bis central bankers β speeches | 0.5 |
implemented in the identification of the time in which normalisation will mean a return of money to its traditional means of payments function. at that time, when inside money will resume its traditional role in liquidity provision, when the multiplier will start increasing, the central bank will have to be quick in re - absorbing the excess outside currency created in the crisis times. money will have to be put back along the trajectory indicated by the quantity theoretic relation. conclusion let me conclude with a few words on how these considerations affect the ongoing debate on putting emu on a sounder footing. bis central bankers β speeches an effective monetary policy is one which can resist inflationary pressures and stabilise inflation at low and stable levels. for this, an independent central bank is an absolutely necessary condition. but it is not sufficient. the fiscal counterpart needs to be disciplined and the overall macroeconomic framework needs to foster stability. in such a system, the central bank can concentrate on the determination of the interest rate charged on its liquidity provision to the banks with a view to maintaining inflation at low and stable levels. the fiscal authority for its part has to ensure that its fiscal policy stance remains consistent with debt sustainability, at whatever real interest rate may be determined by the central bank. then households and firms can focus on their undertakings without having to worry about sudden shifts in economic policy that change the calculus underlying their decisions. judging against these ideals, we must acknowledge that the track record of emu has been mixed. despite the challenges that several countries in emu are currently facing, it is important to emphasise that the ecb has delivered on its price stability mandate, with cpi inflation averaging around 2 % per annum. moreover, the ecb has contributed to averting acute downside risk to inflation during the crisis, which would also have impacted adversely on economic stability. to this end, the governing council forcefully reduced the main policy rates and adopted several non - standard measures that preserve the transmission of monetary policy signals to the economy. its full operational independence and the clear orientation of its price stability mandate have been crucial cornerstones in guiding these interventions. at the same time, our experiences since the start of emu underscore the importance of other policy domains for economic stability. in a benign economic environment before the crisis, the institutional framework of emu has not prevented the accumulation of fiscal imbalances, losses in economic competitiveness and the build - up of excessive risks in the financial sector. when the | needs public regulation and β in its pure form at least β cannot be manufactured by unfettered private issuers. it is easy to understand why. any unregulated private issuer would have the incentive to increase note issuance well beyond the socially - optimal level. this is due to a failure of private issuers to account for the negative externalities that increased production of currency, and the concomitant erosion in its value, would have on those using it. in fact, unfettered private issuers would produce currency up to the point where the value of the exchange services provided by the last unit of currency produced is equal to the marginal cost of producing it. but if issuing unconvertible notes is costless β or nearly costless β then an agent with the right to issue notes would do so in infinite quantities, because only when the money stock becomes infinite is the exchange service value of the last unit in terms of goods indeed driven to zero. of course, one can think of incentives for banks to preserve their franchise, thus partly counteracting their temptation to drive the last unit of their own currency to zero and reap the entire exchange value that private traders assign to that unit. for example, the bank could commit to buy back its notes whenever their value relative to a certain basket of goods declines. but time inconsistency problems apparently make these arrangements prohibitively costly to run, because there is β to my knowledge β no evidence in history of a fiat currency regime, where all money is inside money and no money is contractually redeemable, at least the us dollar had been inconvertible to individuals since 1933. in 1971 president nixon made it inconvertible to foreign central banks as well. bis central bankers β speeches ex ante, into some real asset available in the bank β s inventory. 8 a currency that offers zero exchange services at the margin is a currency without real value, a currency that supports an infinite price level : in effect, a failed currency. third, public regulation has to be designed in such a way that any market failure resulting from unfettered private issuance is not simply replaced by government failure : this essentially requires that the right to issue currency be placed outside the remit of fiscal authorities and instead be entrusted to an independent public agency, such as a central bank. this central bank β s task should then find a technology that forces money to be maintained in a certain proportion to real income and to the | 1 |
basel rules in its own jurisdiction. the second qualification is that basel standards are intended for, and tailored to, large, complex, and internationally active financial institutions. as a result, the rules themselves have become large and extremely complex, and basel iii is certainly no exception here. appropriate as they are for global players, the rules tend to overburden small institutions. to demonstrate, let me refer to the german banking landscape, because it is a case in point. in germany there are roughly 1, 700 credit institutions, several of which are β big players β and many are small institutions. some have a balance sheet worth no more than a few hundred million euros. some institutions have only a handful of employees. these small institutions are of course having a hard time with rules that are aimed at large and complex banks. the main problem is the compliance workload β that is, the work involved in meeting the requirements and demonstrating that they β ve been met. this is to say that the rules could act as an additional handicap for small banks that are already under pressure from many sides. take the rapid digitalisation of banking, for example, or the lowinterest - rate environment in europe. one reaction that we are seeing in the european banking sector is continued consolidation. as supervisors, it cannot be in our interest to overburden smaller institutions with rules that were designed for their larger peers. this would effectively give an advantage to larger financial institutions and intensify the pressure to consolidate. the argument becomes even stronger as some requirements developed for large international banks have proved ineffective for small credit institutions, simply because these enterprises are less complex, are not active in comparable business fields and are thus exposed to fewer risks. during the crisis years, small institutions proved to be more robust β not least due to their simple 2 / 4 bis central bankers'speeches and less risky business models. this is why jurisdictions are free to apply a different set of rules to smaller banks which operate solely within their national market and pose no threat to international financial stability. most countries β including brazil β already have less restrictive rules in place for smaller banks in order to ease the operational burden on them. and i am a strong proponent of extending this proportionality further. in europe, we are currently busy fine - tuning our regulatory framework by providing some additional relief for small, low - risk institutions. importantly, capital and liquidity requirements will remain untouched. but we are aiming to reduce disclosure requirements, simplify reporting, and exempt some institutions | of these dynamics may well feed into the risk landscape. there are numerous consequences that are worth pondering from a stability perspective β think, for instance, of the threat of a rapid disruption of business models, or systemic operational risks. now i am well aware that the whole digitalisation trend has produced a host of buzzwords and metaphysical theories, some of which might never materialise. no major disruption has occurred to date. if you look at the german banking sector, there are segments such as internet payments where new market entrants have taken incumbent banks by surprise. but these developments have had limited effects outside of those segments. also, while new market entrants initially took 3 / 4 bis central bankers'speeches an aggressive approach towards incumbents, different forms of cooperation are usual today β we observe a blend of competition and cooperation as well as a widening of services. an abundance of new business ideas have turned up, from white label banking to digital ecosystem strategies. so, as a preliminary summary of digitalisation, i can say that, as of today, digital revolution fantasies have waned. what is more, if we look at regulation, earlier narratives about the end of banks have ceased. not long ago, the so - called fintechs were presented as opponents to classical banks. today, some fintechs have even acquired a banking licence, meaning that they have to fulfil exactly the same requirements as other, age - old institutions. but have we seen all that digitalisation has to offer? not at all, if you ask me. at the present point in time, the transformation is only gaining momentum. from other sectors of the economy, we have learned time and again how digitalisation has transformed business. in the music industry, where selling individual pieces of music on demand online seemed like the end of the narrative of cut - throat competition, music streaming services suddenly appeared and quickly gained market shares. in banking, business changes and changes in customer habits are likely to reinforce each other. we simply cannot predict where this will lead us. but regarding regulation, i guess it β s fair to say that we have already learned a valuable lesson. if we want to find good regulation for a digital financial world, we cannot build it on superficial distinctions : we have to look closely at each and every case. be it crypto currencies, robo advice or payment services β whether it constitutes a risky financial business or merely an additional service may depend on details. when advancing regulation, | 1 |
their industry is. either way, we see jobs being added in a range of industries. employment in health care and social assistance has been increasing for a while ; the rollout of the ndis is an important driver of this, but not the only one. more recently, we have also seen employment increase in a number of business services industries. construction employment had also been strong for a while, reaching the highest share of total employment in more than a century of records. https : / / www. rba. gov. au / speeches / 2019 / sp - ag - 2019 - 03 - 26. html 2 / 17 3 / 26 / 2019 what's up ( and down ) with households? | speeches | rba graph 2 one can be reasonably confident in the steer the labour market data are giving us, because it is coming from multiple, independently collected data sets. the employment and unemployment data come from the abs's survey of households. but a survey of businesses, also from the abs, tells us that the number of job vacancies has been a very high share of the total jobs available. separate private - sector surveys of businesses tell us that many firms plan to hire more workers. many of our own liaison contacts also tell us that they are hiring. and as the labour market gradually tightens, we are beginning to see the effects in wages growth. this has been low for some time, but is gradually trending up now, especially in the private sector ( graph 3 ). part of this shift is that fewer workers are subject to wage freezes than was the case a year or so ago. minimum and award wage rises have also increased. along with other countries, it's taking longer and a lower unemployment rate to start seeing faster wages growth than historical experience might have suggested. indeed, we still think australia is a little way off the levels of the unemployment rate that would induce materially faster wages growth. but as the experience of other countries has also shown, if the labour market tightens enough, wages growth does eventually pick up. https : / / www. rba. gov. au / speeches / 2019 / sp - ag - 2019 - 03 - 26. html 3 / 17 3 / 26 / 2019 what's up ( and down ) with households? | speeches | rba graph 3 household consumption spending is slowing in contrast to the positive picture implied by the labour market, growth in household income has been slow, and growth in consumption has weakened | , barrages, link canals constructed during the last five decades has enabled the country to double the area under cultivation to 22 million hectares. tubewell irrigation provides almost one third of additional water to supplement canal irrigation. β’ the road and highway network in pakistan spans 250, 000 km - more than five times the length inherited in 1947. modern motorways and super highways and four lane national highways link the entire country along with secondary and tertiary roads. β’ natural gas was discovered in the country in the 1950s and has been augmented over time. as of now, almost 26 billion cubic meters of natural gas is generated, transmitted and distributed for industrial, commercial and domestic consumption. β’ private consumption standards have kept pace with the rise in income. there are 30 road vehicles for 1000 persons in 2001 relative to only one vehicle for the same number of population in 1947. phone connections per 1, 000 persons have risen to 28. 6 from 0. 4. tv sets which were nonexistent adorn 26. 3 out of every 1, 000 houses. these achievements in income, consumption, agriculture and industrial production are extremely impressive and have lifted millions of people out of poverty levels. but these do pale into insignificance when looked against the missed opportunities. the largest setback to the country has been the neglect of human development. had adult literacy rate been close to 100 instead of close to 50 today, it is my estimate that the per capita income would have reached at least $ 1000 instead of $ 500. pakistan β s manufactured exports in the 1960s were higher than those of malaysia, thailand, philippines and indonesia. had investment in educating the population and upgrading the training, skills and health of the labour force been up to the level of east asian countries and a policy of openness to world market would have been maintained without any break, pakistan β s exports would have been at least $ 100 billion instead of paltry $ 12 billion. had the population growth rate been reduced from 3 percent to 2 percent, the problems of congestion and shortages in the level of infrastructure and social services would have been avoided, the poor would have obtained better access to education and health and the incidence of poverty would have been much lower than what it is today. but as if this neglect of human development was not enough, the country slacked in the 1990s and began to slip in growth, exports, revenues, and development spending and got entrapped into deep morass of external and domestic indebtedness. as a result the | 0 |
, core inflation has remained rather sticky. this is the case with labourintensive services in advanced economies, against a background of still - tight labour markets. nonetheless, services inflation is now falling in most countries. favourable base effects in energy, food and the unwinding of supply chain bottlenecks have also tempered price increases in other consumer price index ( cpi ) components. furthermore, longer - term inflation expectations, at least in major advanced economies, have remained reasonably well anchored, a testimony to central banks retaining their credibility. as a result, the monetary policy tightening episode appears largely complete. while central banks maintain vigilance against persistently high inflation, they demonstrate rising evidence of the transmission of earlier rate hikes to financial conditions and credit demand. consequently, financial markets now see no probability of an additional hike in the united states ( us ) or eurozone. in the emerging economies, some of those central banks which had acted early and proactively to deal with inflation now have the flexibility to consider rate cuts. another encouraging development is that disinflation is occurring alongside the surprising resilience of the global economy. the imf β s october world economic outlook estimates that global growth will only slow to 3. 0 % this year, from 3. 5 % in 2022. in addition, bloomberg consensus of economists now also expects world growth see β inflation : a look under the hood β, bank of international settlements, annual economic report 2022. of 2. 8 % in 2023, up from only 2. 1 % projected at the beginning of the year. in advanced economies, most private sector balance sheets were solid at the time when monetary policy was tightened. cash buffers supported private spending, while in the us, corporate borrowers had β locked in β low - cost medium - term financing when interest rates were at historic lows. this delayed the impact of higher rates on demand. cross - border capital flows, while weak by historical standards over the past few quarters, have nonetheless displayed equal resilience in 2022 β 23, considering the size of the repricing in advanced economies β bond markets, usually a β bellwether β for global investor risk appetite. over the past 12 months, portfolio flows to emerging markets over the past 12 months are only a 0. 3 standard deviation below their average of the past 10 years. 2 this is good news, considering that the 10 - year us treasury yields have risen by about 300 basis points since the beginning | foreign exchange losses. many countries in the ssa region tend to suffer from β twin deficits β ( fiscal and external ) which raise the cost of debt servicing and refinancing at a time when global investors are more risk - averse, and more sensitive to deteriorating fiscal dynamics. according to the imf, over half of the ssa countries are either at a high risk of debt distress or already in debt distress. 10 no country in the region has been issuing eurobonds since april 2022, suggesting that the refinancing of external debt could be particularly challenging in the next few years. finally, economic performance in the ssa region remains uneven, and generally falls short of the performance seen two decades ago β a period when investment in the region increased steadily. south africa is one of the laggards in the region β the sarb only expects growth to accelerate to 1. 0 % in 2024 amid continued constraints from insufficient electricity production and inefficient transport networks. other cma countries also look set to fall short of the regional average. more generally, the imf notes a tendency for resource - intensive economies to underperform, highlighting the lingering problem of the ssa β s insufficient downstream integration into value chains. see international monetary fund, β geoeconomic fragmentation : sub - saharan africa caught between the fault lines β, regional economic outlook : sub - saharan africa analytical note, april 2023. international monetary fund, regional economic outlook : sub - saharan africa, october 2023. how policy can best respond in response to these global challenges and regional vulnerabilities i have described, policymakers in our region, including us central bankers, still have work to do. here is a list of the issues we should consider : β’ policy response is not for central banks alone β’ structural reforms are unavoidable β’ controlling inflation is not negotiable β’ close supervision of banks and non - banks is a must β’ and a credibility fiscal path is not only a necessary for fiscal sustainability but to bolster confidence, ensure financial stability to give some breathing room to monetary authorities high and volatile inflation discourages external capital inflows. it also discourages domestic fixed investment, erodes the purchasing power of the more vulnerable in society, and generally leads to a sup - optimal allocation of resources. this makes it essential for central banks to ensure that inflation returns swiftly to target, even when the causes of deviation are due to external factors, domestic supply shocks | 1 |
while the impact on tourism and coastal systems will significantly affect household income and the economy as a whole. of particular importance are water reserves, on which both agriculture and water supply depend. the work so far undertaken by ccisc has highlighted the importance of a concrete adaptation policy as a necessary damage control measure. for this reason, under a memorandum of understanding signed with the ministry of environment and energy and the academy of athens, we have drafted the national climate change adaptation strategy ( nccas ) and we are currently elaborating on its implementation. this strategy sets out the general objectives, guiding principles and implementation tools for an effective and growth - oriented adaptation strategy, in line with european directives and international experience. moreover, it is the first step in a continuous and flexible process for planning and implementing the necessary adaptation measures at national, regional and local levels and aspires to leverage the capabilities of greece β s public authorities, economy and society at large, in an aim to address the impacts of climate change in coming years. more recently, last june, the bank of greece released a book entitled β the economics of climate change β, which provides a comprehensive, state - of - the - art review of the economics of climate change and a literature review in the emerging area of environmental macroeconomics and focuses on the design of economic policy aimed at controlling the climate externality. with this publication, the bank of greece aims, among other things, to lay the foundations for addressing the role of monetary policy under conditions of global warming and exploring the link between 3 / 4 bis central bankers'speeches monetary policy and climate change, a topic that remains high on our research agenda. it acknowledges, of course, that monetary policy is not the primary tool for tackling climate change but rather plays a supplementary role alongside fiscal, environmental and structural policies. scientific research and current developments confirm the need for a dynamic strategy and an action plan to address sustainability challenges. i am sure that the presentations during this first day of the conference, and even more so tomorrow, will shed light on crucial aspects of the path towards achieving the sustainable development goals by 2030 and beyond. i would like to congratulate the organisers for taking this initiative and wish them the best of success in this conference. 1 see www. overshootday. org / newsroom / press - release - july - 2018 - english 2 according to the united nations conference on trade and development ( unctad ), the achievement of sustainable development goals will | non - deliverable forward exchange rate, which tracked each other very closely until the end of 1998, when they began to diverge. the decoupling suggests that the market has drawn the obvious conclusion from the fact that, since the linked exchange rate was introduced in 1983, the renminbi has depreciated by more than 70 %, while, during the same period, the hong kong dollar has remained rock solid. and this was confirmed by the calmness with which the market took the raising of the possibility of greater flexibility for the renminbi exchange rate by premier zhu. our own study further suggests that, contrary to popular intuition, a devaluation of the renminbi might actually provide a stimulus to the hong kong economy : this is because the positive impact on demand arising from the complementarities between the two economies would outweigh the negative impact of any loss of competitiveness in those relatively few activities where the two economies remain in competition with each other. such complementarities are in part reflected in hong kong β s role as a major entrepot for mainland exports. for any renminbi devaluation, while hong kong β s own direct trade balance with the mainland will deteriorate, our re - exports of mainland origin should rise. indeed, with the surge in mainland re - exports activities since the early 1980s, the margins earned on such re - exports are now larger than all other components of hong kong β s trade with the mainland combined. conclusion i have suggested in this address that china β s accession to the wto will bring benefits to hong kong on a number of fronts. wto entry will see a vast and rapid increase in china β s external trade. not all of this additional trade will go through hong kong, but nor will it all avoid hong kong. more important still, the stimulus to liberalisation, globalisation and better corporate governance will expand and deepen hong kong β s well - established role as a fund of professional expertise, a centre of international experience and a source and channel of investment. hong kong β s banking sector, with its strong reputation and long involvement in mainland business, stands to benefit greatly from the liberalisation in this area, providing that it can position itself to make the best out of the opportunities. in the monetary sphere, the various predictions about the future development of the renminbi in the light of wto membership - which include the possibility of greater exchange rate flexibility - would most likely have positive implications | 0 |
or even retreated. in particular, the world bank doing business report for 2015 ranked greece 60th among 189 countries ( a fall by two places ) while according to the imd world competitiveness yearbook 2016, greece fell by six places and is ranked 56th among 61 countries. more recently, the world economic forum β s global competitiveness report 2016 β 2017 ranked greece 86th among 138 nations, which corresponds to a fall by 5 places. but it should be noted that greece has achieved high rates of responsiveness to oecd recommendations consistently since 2011 ( oecd, going for growth 2013 & going for growth 2015 ). 5 / 9 bis central bankers'speeches b. monetary and banking developments on the other hand, hicp harmonised inflation was marginally negative in september ( - 0. 1 % ), having remained negative for the previous fourteen consecutive quarters, despite some marginally positive monthly spikes ( in july and august ) as a result of vat increases in a wide range of products and services ( figure 7 ). the convergence of hicp between greece and the euro area is mostly attributed to the higher indirect taxes imposed on the greek economy. 6 / 9 bis central bankers'speeches furthermore, according to greek banks β latest financial results for the first half of 2016, their capital adequacy was preserved at 18 %, comfortably above the eu average. at the end of june 2016, non - performing exposures ( npes ) remained relatively flat around 45. 1 %, about eight times the european average which is around 5. 7 %, while in absolute terms the total amount of npes reached β¬108 billion, an 9 % increase compared with the end of 2014. by sector, the highest ratios of non - performing exposures were recorded in the sectors of 7 / 9 bis central bankers'speeches agriculture ( 59 % ), commercial properties ( 55 % ) and tourism ( 54 % ). among the four main loan segments, the respective ratios for consumer, large business, smes and mortgage loans reached 55. 3 %, 29. 1 %, 59. 9 % and 44. 7 %, respectively ( figure 8 ). loans in delay of more than 90 days accounted for 30 % of npls, while this evidence is an early warning signal for credit risk developments in the banking system. despite the size of the problem, the capital base of the banking system β as mentioned above β remains strong, while in terms of provision coverage greek banks are well placed compared to | a 4th memorandum per se, not perhaps with any involvement of the imf, it will be a first for the esm, but we have every confidence as europeans in klaus regling and his excellent team that they will do a brilliant job. closing remarks in closing, i would like to stress that greece belongs to the core of europe. its future is within the eurozone, within the group of solidary countries, to the people of whom we, the greeks are grateful for their financial support. despite all these years of uncertainty and austerity, this is the overwhelming wish of the majority of the greek people still today, within the core of europe. this is our legacy as a nation that goes back to our history and our tradition and, more recently, expressed by a visionary greek politician, a great european statesman, who stood above political parties, konstantinos karamanlis, who showed the greek people the way forward, the european way. i would now like to invite the committee chairman and head of this mission or the vice president of the european parliament to say a few words and then have a productive discussion with all of you on the greek programme and beyond. thank you very much. appendix : the risks and prospects for the greek economy - june 2017 4 / 4 bis central bankers'speeches | 0.5 |
to be good plumbers and electricians rather than unemployable low - skilled engineers. in fact, teaching our citizens can be a stepping stone to teaching the world. india can be at the forefront of providing mass technology - enabled education with our professors providing appropriate human inputs to achieve the best mix of automation and customisation for learning. 3 ) we need better business regulation. this does not always mean less regulation but it means regulation that is appropriate to the objective and, that is enforced. entrepreneurs tell me about boiler inspectors showing up at software outfits, asking for the location of the boiler. the lack of change may be sheer inertia, but it may be more sinister rent - seeking. all too often, we have too much regulation on the books and too little regulation in practice, with the worst of the regulated finding unscrupulous ways around the regulation while the honest are stymied. even opening a business legitimately requires an enormous number of clearances and paperwork. in the same way as we have saral form for filing income tax, could we have a saral one page disclosure for opening a small business, with a single authority giving all necessary permissions? bis central bankers β speeches 4 ) and finally, we need a better financial system, which will finance the needed infrastructure and the expansion of every producer ranging from the kirana shop owner to the industrialist. but finance is not only about credit. equally important is for households to be able to save safely with positive real returns, insure themselves against health emergencies or old age costs, and borrow at low cost to finance consumption. they should be able to make remittances cheaply and pay at low cost. importantly, the financial system should not require constant subsidies to bail it out. in the rest of this talk, i want to focus on what we, at the reserve bank, are doing to improve the financial system. we plan to build the reserve bank β s developmental measures over the next few quarters on five pillars. these are : 1. clarifying and strengthening the monetary policy framework. 2. strengthening banking structure through new entry, branch expansion, encouraging new varieties of banks, and moving foreign banks into better regulated organizational forms. 3. broadening and deepening financial markets and increasing their liquidity and resilience so that they can help allocate and absorb the risks entailed in financing india β s growth. 4. expanding access to finance for small and medium enterprises, the uno | for important elements of prudential regulations set by the reserve bank. the capital and leverage ratios, liquidity position, the computation of impairment and provisions, etc. rely on the accurate and transparent financial statements prepared by regulated entities. the financial statements can only be accurate when the accounting standards are correctly interpreted and consistently applied. the auditors are guardians who are expected to ensure the sanctity of this process. they are also 1 / 5 bis - central bankers'speeches the bridge between the management and stakeholders. they ensure that management's judgement is sound and that the entity adheres to spirit of the accounting standards. the interest of the regulator is not limited to fair and transparent representation of affairs in the entities regulated by it. banks and financial institutions are also users of financial statements and to a large extent their well - being in linked to the entities which they lend to or invest in. therefore, we are equally concerned with sound audit practices that result in high quality corporate reporting. we also monitor developments in the area of national and international accounting and auditing standard setting closely. with these objectives in mind, we continue to work closely with the institute of chartered accountants in india ( icai ) on accounting issues in the banking sector. in october 2001, the rbi had set up a working group under the chairmanship of shri n d gupta, the then president of the icai, to identify gaps in compliance with accounting standards. based on the recommendations of the group, guidelines were issued to banks in march 2003 to ensure compliance with accounting standards. we had also worked closely with the industry and icai on the road map to moving towards adoption of ind as and had set up a working group to deal with ind as implementation issues in banks. role of auditors in a principle - based regulatory environment the reserve bank, for some time now, has been supplementing rule - based regulations with principle - based regulations to give res a degree of flexibility in their business decision making. this process has evolved with indian financial sector achieving greater maturity. the principle - based regulations also embed an aspect of accounting that would reflect a move away from the prescriptive, rule based criteria to record transactions. let me cite two recent examples. the first guideline pertains to classification and valuation of the investment portfolio in banks. the revised norms, effective from april 1, 2024, largely align the guidelines on classification, valuation and operations of investment portfolio of banks with the global financial reporting framework. these norms require banks to | 0.5 |
it is optimal, in the interest of financial stability, to entrust the function of regulation of banks and non - banks also to central banks. the argument is that only the monetary authority, as the lender of last resort, can provide emergency liquidity support. also, being the regulator, the monetary authority gets a better sense of the market conditions and can therefore manage liquidity more efficiently. but this model raises fresh questions. in particular, can the central bank have exclusive responsibility for financial stability? conversely, can the government completely delegate this responsibility to the central bank under a principal - agent model? consider, for example, a situation where the banking system is under threat of instability. decisions have to be made on which banks to bail out and how much support to extend. in all this, fiscal support may need to be extended. would a government, especially if it is democratically elected and accountable to a legislature, not want to have a say in this regard? this calls for the following question to be resolved. how should the responsibility for financial stability be shared between the government and the central bank? what should be the protocol for decision making? who should prevail, and under what circumstances, in the event of a deadlock? third challenge : growth and financial stability β managing the trade - offs in order to safeguard financial stability, we have traditionally used a variety of prudential measures such as specifying exposure norms and pre emptive tightening of risk weights and provisioning requirements. but these measures are not always costless. for instance, tightening of risk weights arguably tempers the flow of credit to certain sectors, but excessive, premature or unnecessary tightening could blunt growth. similarly, exposure norms offer protection against concentration risks ; however, such limits could restrict the availability of credit for important growth sectors. this is a live issue in our country in the context of the immense needs of infrastructure financing. thus, as in the case of price stability, central banks face the challenge of managing the trade off between financial stability and growth. it needs to be recognized that after a crisis, with the benefit of hindsight, all conservative policies appear safe. but excessive conservatism in order to be prepared to ride out a potential crisis could thwart growth and financial innovation. the question is what price are we willing to pay, in other words, what potential benefits are we willing to give up, in order to prevent a black swan event? experience shows that managing this challenge, that is to determine | made valuable recommendations. these relate to : need for thrust on research and development activities with a clear focus on the areas of research that should be taken up in the next 3 to 5 years time ; revamping education and training activities with the aim to develop technically competent and in - house expertise in banks to efficiently supervise and manage technology - intensive resources like data centres, data recovery centres, corporate network, etc. ; becoming a member of global technology standard setting bodies active in the area of banking ; and developing a cadre of faculty focussing on technology requirements of the banking industry. 29. we are working on implementing these recommendations. 30. as i noted earlier, indian banks have come a long way in using technology to improve the reach and efficiency of banking. what they have done is laudable because they have adapted the best international technology practices to the indian situation. i want to compliment them for what they have achieved and for their efforts towards addressing the challenges on the way forward. task for idrbt 31. we are gathered here today to recognize outstanding performance in the use of technology in banking. hearty congratulations to the winners today. i hope these awards will encourage further innovations and competition towards improving efficiency. i also wonder if we can benchmark banks β performance in the use and adoption of technology against some international standards, especially in the area of financial inclusion. i would urge idrbt to work on this. 32. finally, i want to compliment shri sambamurthy and his dedicated team of faculty and staff at idrbt for their important contributions to the financial sector. my thanks also to the members of the governing council of the institute whose expertise and guidance has been the backbone of idrbt β s performance and achievements. | 0.5 |
has continued to be an indicator for money markets. based on the information currently available, the level of the liquidity in the market in 2007 ( i ) the increase in base money, ( ii ) coupon and principal redemption by the treasury to the central bank, ( iii ) treasury β s foreign exchange debt payments financed by its domestic currency borrowing will have a lowering effect, while ( i ) the central bank β s net foreign exchange purchases, ( ii ) interest payments to be made by the central bank for reserve requirements and for excess liquidity absorbing transactions, ( iii ) the decline in treasury cash accounts with the central bank will have an increasing effect on liquidity. based on the assumption that the foreign exchange payments of the treasury would exceed the foreign exchange inflow, and by taking the central bank fx buying auction program into consideration, the excess liquidity in the market is expected to continue within reasonable limits in 2007, even though temporary liquidity shortages may occur. however, as in previous years, it is not possible to make a precise forecast regarding the net foreign exchange payments of the treasury, the amount of the central bank β s foreign currency purchases and the balance of treasury cash accounts with the central bank. depending on the variations of these variables, the market liquidity may change significantly. as long as the excess liquidity in the market remains at reasonable levels, as foreseen in the main scenario, the central bank will continue to withdraw the excess liquidity in the market, on an overnight basis, via new turkish lira deposit operations in the interbank money market within the cbrt and repo transactions in the repo and reverse repo market of istanbul stock exchange. accordingly, overnight interest rates will continue to realize at the level of the borrowing rate of the central bank. thus, the overnight borrowing rate of the central bank will continue to be the benchmark interest rate with respect to monetary policy. in case of a permanent liquidity shortage in the market, the benchmark short - term interest rate will be the average interest rate of the repo auction, not the daily borrowing interest rate of the central bank. therefore, in case of liquidity shortage, the interest rate taken as a benchmark by the market would have become higher merely due to the decline in liquidity. in order to avoid any negative impacts, the central bank could revise its interest rates β provided that the inflation outlook is stable β so as to encounter the pressure created by the liquidity shortage. however, | that frequent changes in targets are likely to have adverse effects on inflation expectations and pricing behaviors, which could damage the credibility of the future commitments. for this reason, it is important in the upcoming period that targets should be left intact as long as inflation is expected to converge to targets within a reasonable period of time. transmission mechanism and control horizon central banks in both developed and developing countries experience serious uncertainties regarding the lagged effects of monetary policy on inflation. considering the fact that the relationship between macroeconomic variables changed remarkably along with the structural transformation in the economy after the 2001 crisis, it is assessed that the mentioned uncertainty in turkey is at least as high as those in other countries. however, in light of the recent normalization experience, it is possible to produce forecasts about the period required for monetary policy to influence inflation. the latest observations indicate that the period needed for monetary policy measures to affect domestic demand varies between 3 to 9 months, while the change in demand influences inflation in a period between 3 months and 1 year. this leads us to the conclusion that the impacts of monetary policy on inflation spread over a period of one and a half years on average. in this context, taking into account the lagged impacts of monetary policy, the central bank defined the policy horizon as approximately one and a half years in the main policy statement published last year. although it is forecasted that the impact of monetary policy on inflation will show itself in a more lagged manner and that the control horizon may be extended as the normalization process of the economy continues, the control horizon is maintained as one and a half years at this stage. there is no doubt that this period may be extended or shortened depending on the extent of shocks and the period needed for their influence to reflect on prices. the impacts of various shocks on inflation may differ according to time and period. as a consequence, the period required for inflation to converge to the target again will be announced after the occurrence of shocks and the determination of their sources, if there is a significant deviation from the target. forecast horizon the forecasts presented in the inflation reports published throughout 2006, covered a period of one and a half years. from 2007 onwards, forecasts will refer to a two - years period. this change aims to help economic agents to predict the future better. furthermore, forming a comparable forecast period with the results of the expectations survey will provide us with the opportunity to analyze and assess inflation forecasts more easily. 1 inflation forecasts and interest rate path while | 1 |
required to counter inflation β when inflationary pressures actually emerge β would be more forceful. see a. blinder and r. reis, β understanding the greenspan standard β, paper presented at the federal reserve bank of kansas city symposium β the greenspan era : lessons for the future β, jackson hole, wyoming, august 25 - 27 2005. wealth of cumulative evidence accruing β from month to month β from the economic and the monetary side. in both cases, the medium - term orientation of its monitoring activity has been preserved. two examples : as regards our economic analysis, when looking at the underlying trend of growth of the european economy, we judged in the second half of last year that we were experiencing a recovery with the trend progressively approaching potential. we judged that the short - term volatility observed in important indicators, including the quarterly growth figure for the fourth quarter of 2005, did not call into question the medium - term growth prospects and therefore the associated gradual increase of risks to price stability. another example can be extracted from our monetary analysis : consistent indications that broad money growth was increasingly due to its most liquid components has contributed in recent months to a gradual tilt of the balance of risks perceived to be signalled by our monetary analysis. it was not the behaviour of aggregate m3 per se which altered the outlook for price stability. it was the realisation that the structural force at work behind persistently abundant liquidity was becoming increasingly connected with final spending and pricing decisions. as i said at the start, the complexity of the analysis required to predict our moves has not materially impeded market participants in responding meaningfully to incoming data. the understanding of our strategy and the information coming from the real economy, as well as from the sphere of monetary aggregates, have shaped market expectations beyond the very near term. i attribute this satisfactory result to our policy framework, which features a primary, sharply - defined objective and a systematic reaction to events whenever the objective is perceived to be at risk. concluding remarks i am sometimes asked the following question : β you are in the process of increasing rates. is your judgement that your rates today are significantly lower than they should be? what then is the level of the β neutral rate β that you would judge it appropriate to reach ( as rapidly as possible )? β my response to such questions would be the following. first, we are not in a position that we would judge β abnormal β, in the sense that we would have to increase as rapidly as possible | office activities, in the process of reserve management. no transaction can take place without the back office. it provides a vital service to the front office by ensuring that all funds flow in a timely and correct manner and all the necessary documentation is completed. inaccurate or untimely trade capture can have implications for the p & l and risk management process. if the central bank does not capture the correct transaction, then position and reported credit exposure might be incorrect. having in mind the importance of the back office service to the reserve management process, one of the goals of the workshop will be to provide best practices in the area of settlements, then different services provided by the bis central bankers β speeches custodians, and the importance of appropriate it tools to perform secured and efficient settlements. all the aspects cover over this week will enable to improve and make more efficient and controlled environment for the conduct of the reserve management transactions. in this regard, although back office activities should be separated from front and middle office activities, it does not mean that operations should be considered as separate from the business. on the contrary, the closer operations management is the pulse of the business, and the better communication channels between all the areas in reserve management function, the more responsive operations to changes in the business. ultimately, the overall reserve management process will be better controlled. to conclude, i wish all of you a fruitful and efficient participation in the workshop, with hopes that you will have incentive to take out the maximum from all the issues to be discussed with the distinguished lecturers from the world bank, as well as between each other during the exercises. have a nice week during this workshop, in skopje. thank you. bis central bankers β speeches | 0 |
for diversity initiatives and goals over the next two years. there is more to do to reach our medium - term target, but we are encouraged by the momentum that we β ve established, we believe we have the right plan in place, and are heartened to see that our approach chimes with the conclusions in today β s report. finally, we are conscious that sustained effort across the financial service sector will be selfreinforcing ; we will all benefit from each other β s progress. so without further ado, i will pass over to the economic secretary to the treasury so that she may tell you more about the report and the broader initiative it supports. bis central bankers β speeches | global coordination is also vital for interest rate benchmark reform. since interest rate benchmark reform presumes the discontinuation of libor and takes the approach of selecting alternative benchmarks for each currency, specific deliberations will be left to each jurisdiction. as a result, the status of alternative benchmarks might differ from currency to currency, depending on the situation of the financial markets in each jurisdiction. nevertheless, in order to ensure smooth cross - border transactions, it is necessary to coordinate the use of interest rate benchmarks on a global scale to a certain extent. ensuring global coordination among interest rate benchmarks used for cross - currency swap transactions is important. these three things indicate the basic viewpoints of the interest rate benchmark reform. the following points are considered to be important : endeavoring to form a consensus on the selection of interest rate benchmarks as a common infrastructure by taking various needs of parties into account ; involving many relevant parties in the reform given that interest rate benchmarks tend to become deeply rooted in the financial system ; and furthermore, ensuring that the interest rate benchmark reform of each jurisdiction is in line with global trends. iv. japan β² s initiatives for a smooth transition from libor now, i would like to discuss how japan should proceed with interest rate benchmark reform over the next two years until the end of 2021, when the discontinuation of libor is expected. i will focus on initiatives by individual companies, initiatives by the entire market, and the role of the public sector. initiatives by individual companies the users of interest rate benchmarks such as financial institutions, institutional investors, and non - financial corporates are required to change their libor - based operations and organizational structures to a framework based on alternative benchmarks ( figure 6 ). in this regard, it is important first of all to accurately understand how those parties use libor, because this might be different depending on the industry type and the business model of individual companies. it is also necessary to not only simply examine the exposure of liborbased transactions but also how libor is used in various areas, including accounting and risk management. while the workload associated with the detailed research might be heavy in some cases, it is essential to conduct a thorough examination given the widespread use of libor as a market practice. in addition, it will be required to establish a governance framework, including specific section focusing on the transition to alternative benchmarks, and secure internal resources, including staff and budgets, while | 0 |
concerns and the associated smoother functioning of the interbank market throughout most of the crisis. as graph 1 shows, this spread has fallen back in australia to be not far above its pre - crisis levels : pre - crisis the 90 - day spread averaged around 10 basis points, now it is around 20 basis points. it is not surprising this spread has narrowed so far. by and large, one would expect that in more stable times, counterparty concerns would be reasonably absent over shorter horizons and so not much of a risk premium should be present in the pricing. but when counterparty concerns are rising, they tend to be rapidly incorporated into this spread. for more detail on bank funding, see the reserve bank of australia submission to the senate economics references committee inquiry into competition within the australian banking sector, 30 november 2010. graph 1 at longer terms, the effect of this repricing of risk is much more stark and, while pricing has eased back from its peaks, it still remains well above its pre - crisis levels ( graph 2 ). the overall cost to a major australian bank of issuing a three - year bond has risen to around 120 basis points over the government bond yield compared with around 50 basis points precrisis. graph 2 shows that similar, but larger, developments have occurred in other banking sectors. graph 2 in addition to this effect on the pricing of wholesale funding, the re - assessment of risk has had a marked impact on the structure of banks β funding ( graph 3 ). banks, their regulators and markets have re - assessed the riskiness of different sources of funding, particularly liquidity risk and the related concept of rollover risk. this change in perspective is embodied in the new basel standards for the banking system. graph 3 one notable change is the rise in the share of deposits from less than 40 per cent in 2007 to over 45 per cent currently. the deputy governor ric battellino talked about this at this conference last year. 2 the desire to increase the share of deposits reflects the assumption that deposits represent a more stable source of funding. in order to boost their share of deposit funding, banks in australia have competed aggressively in terms of price. an indication of the degree of competition for deposits is the extent to which there has been an increase in the cost of deposit funding relative to the cash rate since mid 2008 : the average cost of the major banks β new deposits is now only slightly below the cash rate, whereas prior to the onset of the financial crisis, deposit rates | clearly in manufacturing where the mass - production of standard items will become dominated by the big asian countries, and we must find other avenues which are opened up by the possession of more specialised skills. this is more complicated than it sounds. some people think that china is only going to dominate low - tech things such as textiles, clothing and footwear, basic utensils, consumer electronics, etc. but they could dominate a lot more than that ; they could dominate anything that can be produced on a large scale, even if it is technologically sophisticated, such as cars and semiconductors. what we will need to be good at will be in producing things that are specialised rather than mass - produced, skill - intensive and which, in many cases, may be difficult to identify other than by trial and error. they will include both manufactured goods and specialised services for export, but will also involve using the best applied science available to increase productivity in our traditional resourcebased industries and in those parts of the economy not involved in international trade such as construction or domestic transport. there are no short cuts here. the thing we know is that profitable opportunities will only be found if we have a culture of inquiry and innovation. this in turn can only happen if we have a vigorous educational and scientific environment where excellence is valued and rewarded. an illustration of this is if we think back to the discussions in 2000 at the height of the technology boom. there was a widely - held view at that time that the countries that would get ahead were those that manufactured it and telecommunications equipment, and that if you did not do so you would fall behind. there was even the suggestion floated in this country that we should entice intel to open a chip factory here. in fact, all the research that has now come to light shows that it is the application of the new technologies which leads to the big increases in productivity, not the manufacture. in fact, manufacturing often takes place in a huge foreign - owned factory, using orthodox mass production techniques, with very little spin - off to the rest of the economy. my third theme is demographic. all around the developed world, populations are aging and the growth of working - age populations is slowing or, in some cases, falling. more retired people are being supported by fewer working people. we should be looking ahead and encouraging higher labour force participation by older workers. the intergenerational report produced by the government will be a very useful document on which to base thinking on policy options. | 0.5 |
narayana kocherlakota : on the objectives of monetary policy speech by mr narayana kocherlakota, president of the federal reserve bank of minneapolis, to the economic club of marquette county, marquette, michigan, 22 september 2014. * * * thanks to david fettig, terry fitzgerald and sam schulhofer - wohl for their assistance with these remarks. introduction thank you for that generous introduction, and thank you for the invitation to join you here today. this is my second trip to marquette since becoming president of the federal reserve bank of minneapolis five years ago, and i β m glad to be back. i β m planning to spend most of my time today talking about the objectives of monetary policy. as you will hear, the fomc has made great progress in formulating, and communicating, the objectives of monetary policy to the public. i will discuss some of that progress and then move on to some ideas about how the committee can make further improvements along these lines. i look forward to your questions, as well β i always learn a lot from q & a sessions. before i start, though, i must remind you that the views i express today are my own and not necessarily those of my federal reserve colleagues. federal reserve system basics let me begin with some basics about the federal reserve system. i like to tell people that the fed is a uniquely american institution. what do i mean by that? well, relative to its counterparts around the world, the u. s. central bank is highly decentralized. the federal reserve bank of minneapolis is one of 12 regional reserve banks that, along with the board of governors in washington, d. c., make up the federal reserve system. our bank represents the ninth of the 12 federal reserve districts and includes montana, the dakotas, minnesota, northwestern wisconsin and the upper peninsula of michigan. eight times per year, the federal open market committee β the fomc β meets to make monetary policy. all 12 presidents of the regional federal reserve banks β including me β and the governors of the federal reserve board contribute to these deliberations. however, the committee itself consists only of the governors, the president of the federal reserve bank of new york and a rotating group of four other presidents. i β m one of those four presidents this year. in this way, the structure of the fomc mirrors the federalist structure of our government, because representatives from different regions of the country β the various presidents β | have input into fomc deliberations. this basic federalist structure has a long history. in fact, this year is the centennial of the opening of the 12 reserve banks and the start of the work undertaken by the federal reserve system. it β s been a fascinating hundred years, with many twists and turns along the way. i β m sure that many of you have questions about that journey. the answers to all of your questions β and probably more β are on a website that the fed has created at federalreservehistory. org. i encourage you to visit this site to learn more about the people, places and events that have shaped federal reserve history. i won β t say too much more about fed history β perhaps to the relief of some of you! β but i do want to draw your attention to one of the things that i think has changed the most over the federal reserve β s history : our communication with the public. a hundred years ago, congress created a system that was designed specifically so that the residents of main street would have a voice in monetary policy. technology has changed a lot since 1914 β i β m told that they didn β t even have smartphones back then β and so the ways that we gather bis central bankers β speeches information from main street have changed. but this fact - finding is still an important part of the making of monetary policy. indeed, tomorrow, i will meet with upper peninsula business leaders to gather exactly this kind of information. communication is a two - way street, however. during the past century, the federal reserve β s communications to the public about its monetary policy actions have also evolved greatly. the pace of change was especially rapid in the eight years under chairman bernanke β s leadership. so, as the federal reserve system plans for its second century, i would say that the importance of two - way communication is a key lesson from the system β s first century. in order for the fed to continue to be effective, it needs to communicate its policy decisions transparently to the public. conversely, it also needs the public β s input on how those policies are affecting them. events like the one today, and my meeting with business leaders tomorrow, are a key part of fostering that two - way communication. with that background in mind, let me turn back to the fomc and the making of monetary policy. i mentioned that the fomc meets eight times per year. at those meetings, we decide | 1 |
rather on a series of potential outcomes and the possible effects of alternative policies, including judgments of the consequences of taking a policy action that might, in the end, have turned out to be less than optimal. i viewed our small increase in the federal funds rate on march 25 as taken not so much as a consequence of a change in the most probable forecast of moderate growth and low inflation for later this year and next, but rather to address the probability that being wrong had materially increased. in the same sense that it would be folly not to endure the small immediate discomfort of a vaccination against the possibility of getting a serious disease, it would have been folly not to take this small prudent step last march to reduce the probabilities that destabilizing inflation would re - emerge. the risk to the economy from inaction came to outweigh the risk from action. to be sure, 1997 is not 1994 when the fed was forced to tighten monetary conditions very substantially to avoid accommodating rising inflation. current financial conditions are much less accommodative than they were in 1994. yet we must be wary. while there is scant evidence of any imminent resurgence of inflation at the moment, there also appears to be little slack in our capacity to produce. should the expected slowing in the growth of demand fail to materialize, we would need to address any emerging pressures in product and credit markets. to understand the problems of capacity restraint, i should like to spend a few moments on what we have learned over the years about economic growth and the conditions necessary to foster it. first it is useful to distinguish between two quite different types of economic growth. one is true, sustainable growth, the other is not. true growth reflects the capacity of the economic system to produce goods and services and is based on the growth in productivity and in the labor force. that growth contrasts with the second type, what i would call transitory growth. an economy producing near capacity can expand faster for a short time through excess credit creation. but this is not growth in any meaningful sense of promoting lasting increases in standards of living for our nation. indeed, it will detract from achieving our long - term goals. temporary fluctuations in output owing to say, inventory adjustments, but not financed through excess credit, will quickly adjust on their own and need not concern us as much, provided policy is appropriately positioned to foster sustainable growth. when excessive credit fostered by the central bank finances excess demand, | mr. greenspan reviews current monetary policy in the united states remarks by the chairman of the us federal reserve system, mr. alan greenspan, at the 1997 haskins partners dinner of the stern school of business, new york university, new york on 8 / 5 / 97. i am pleased to accept this year β s charles waldo haskins award and have the opportunity to address this distinguished audience on current monetary policy. a central bank β s raising interest rates is rarely popular. but the federal reserve β s action on march 25, to tighten the stance of monetary policy, seems to have attracted more than the usual share of attention and criticism. i believe the critics of our action deserve a response. so tonight, i would like to take a few minutes to put this action in the broad context of the fed β s mandate to promote the stable financial environment that will encourage economic growth. the federal open market committee raised rates as a form of insurance. it was a small prudent step in the face of the increasing possibility that excessive credit creation, spurred by an overly accommodative monetary policy, might undermine the sustained economic expansion. that expansion has been fostered by the maintenance of low inflation. but the persisting - - indeed increasing - - strength of nominal demand for goods and services suggested to us that monetary policy might not be positioned appropriately to avoid a buildup of inflationary pressures and imbalances that would be incompatible with extending the current expansion into 1998, and hopefully beyond. even if it should appear in retrospect that we could have skirted the dangers of credit excesses without a modest tightening, the effect on the expansion would be small, temporary, and like most insurance, its purchase to protect against possible adverse outcomes would still be eminently sensible. for the federal reserve to remain inactive against a possible buildup of insidious inflationary pressures would be to sanction a threat to the job security and standards of living of too many americans. as i pointed out in testimony before the congress in march, the type of economy that we are now experiencing, with strong growth and tight labor markets, has the special advantage of drawing hundreds of thousands of people onto employment payrolls, where they can acquire permanent work skills. under less favorable conditions they would have remained out of the labor force, or among the long - term unemployed. moreover, the current more - than - six - year expansion has enabled us to accelerate the modernization of our productive facilities. it has long been | 1 |
##es from 39. 5 to 42. 3 per cent, both measures to take effect by october 2012 ; completion of the 15th general review of quotas by january 2014 ; and a reduction of advanced european countries β representation at the executive board and the elimination of appointed executive directors, to be implemented in late 2012. this agreement was considered by imf management as β β¦ the most fundamental governance overhaul in the fund β s history, and the biggest ever shift in influence in favor of emerging market and developing countries to recognize their growing role in the global economy β. 5 and yet, the proposed increase in quota shares of emes is still well below the figure that would be consistent with their near 60 per cent stake in the world economy. furthermore, the reform, approved by the imf β s board of governors in december 2010, is still to be implemented, since the required endorsement by u. s. congress on the most important measures has not thus far been possible. as a result, the envisaged more prominent role for emes in fund governance has not materialized and, notwithstanding the huge expansion of world economic and financial transactions over the last years, the fund has not seen a general quota increase since 1999. in addition, work on the 15th quota review has been delayed, and is unlikely to be completed by the deadline set under the fundΒ΄s articles of agreement ( december 15, 2015 ). thus, contrary to the quota β based nature of the fund, its financing has relied disproportionally on borrowed resources. it is also important to note that the 2010 imf reform disregarded a modification of the criteria for the designation of the fund β s managing director, a position that traditionally has been reserved for european nationals. the implications of this overall situation for the efficiency, credibility and legitimacy of the fund are evident. growing frustration of a number of emes with the current framework for global economic governance, has coincided with a proliferation of alternative schemes for international cooperation under the form of bilateral arrangements, regional financial agreements and new multilateral financial institutions. it is difficult not to establish at least some degree of causality between both trends. the emergence of new sources of international finance, be it at the bilateral, regional or multilateral level, is a welcome development. global needs of financing for crisis prevention and resolution, and development, are huge and not covered by existing arrangements. however, it is also important to take into consideration that to the extent that those new alternative sources of financing respond to dissatisfaction | with current global governance, they may end up implying a wider dispersion of global decision making or, to put it differently, the advent of a parallel governance framework. should this be the case, the challenges for creating adequate channels for coordination and communication, and more generally for proper cooperation among the different institutions involved, would become much greater. will the recent economic difficulties in emes affect in any significant way the current situation? this is very unlikely. notwithstanding the complexities of the problems they face, as a result of a combination of factors emes will most probably continue to show higher rates of growth than aes. in fact, according to the latest imf projections, the share of world gdp β imf executive board approves major overhaul of quotas and governance β, press release no. 10 / 418, november 5, 2010. bis central bankers β speeches accounted for by emes will adhere to an upward trend in coming years, with the oecd reaching similar conclusions for a much longer forecast horizon. 6 it is therefore evident that as the center of gravity of the world economy continues to move towards emes, a corresponding adjustment of global economic governance will inevitably take place. as a result, we are basically left with two alternatives. one, to promote and embrace an orderly, guided change towards a better, more inclusive and representative global governance framework, and the other, to keep stalling the much β needed reform process, with the risk that even higher levels of dissatisfaction of emes result in the emergence of additional alternative financing schemes, and a more complex framework for global economic governance. allow me to make a last reflection. the predominance of national considerations over the global interest has for long been an obstacle for effective global economic governance. as some have noted, global governance in essence depends on the ability of sovereigns to find consensual solutions to common challenges and on their willingness to stick to their agreements. 7 this problem is present even in cases where a political commitment with the common interest appears to be stronger, as illustrated by the difficulties that have emerged on the road to create the institutional infrastructure required for the adequate functioning of the european monetary union. in my view, the reluctance of individual nations to subject decisions to global rather than local needs, is closely linked to an inadequate understanding by the authorities, and the public in general, of the implications of interdependence among countries for national prosperity in a globalized world. clearly, we also need a much | 1 |
it does not mean all investors have to be treated in exactly the same way in the process of making investments. in other words, the hkma agrees that private banking and retail banking clients can and should be treated differently in the investment process. this being the case, we need to have a clear and practical definition of β private banking customer β. after consulting the industry and the sfc, the hkma is minded to agree that a β private banking customer β can be defined as a customer with either ( a ) at least us $ 1 million of assets under the management ( aum ) with the bank concerned or ( b ) total investable assets of at least us $ 3 million. this is an expanded definition to cater for the operational needs of private banks. once we have defined who qualifies as a β private banking customer β, the next step is to consider specific measures that would help make private banking more β user friendly β without compromising the need to accord appropriate protection to private banking customers. first of all, let β s talk about suitability assessment. the hkma agrees that private banks need not mechanically match their client β s overall risk tolerance level to product risk level. this is because in private banking, customers often look to their private bankers for investment advice on a continuous basis having regard to the customers β entire portfolios or balance sheets. this is quite different from the retail end of the market in which one - off sales transactions are common. we therefore consider that suitability assessment for private banking customers can be conducted on a holistic or portfolio basis, taking into account all the relevant circumstances of the customers. for example, as long as the portfolio allocation and the overall risk level agreed with the client is adhered to, a low or medium risk tolerance client buying high risk products that only constitute a minor proportion of his portfolio is not necessarily a β mismatch β. the same principle applies to some other aspects like investment tenor and concentration risk of aum with any individual private bank because the entire portfolio of the customer will be taken into account. also, we agree that the documentation of rationale for recommendations need not be on a per transaction basis. it can be done on a portfolio level at the outset, subject to some conditions being met. these conditions include the preparation of an investment mandate stipulating the types, risks and allocation of investments after taking into account all relevant circumstances of the client. the investment mandate should be explained to and agreed by the client, and | , and in the meantime the government can make its efforts for fiscal consolidation. e. overcoming deflation and the bank β s response the next topic concerns what policy response the bank might take when we see the overcoming of deflation start to have an effect on long - term interest rates. after the success of the qqe, people β s medium - to long - term inflation expectations will be anchored at around 2 percent, and the bank might possibly start moving toward an exit. market participants will notice signs of change in economic activity and monetary policy. under those circumstances, nominal long - term rates might start to adjust, well before the actual changes in policy. from a purely macroeconomic perspective, a change in nominal rates can be considered as the result of a change in people β s inflation expectations. such a change may not be detrimental as long as real rates remain more or less the same. more optimistically, a higher tax revenue after the overcoming of deflation can be expected, and that will improve the fiscal situation. from a pessimistic viewpoint, an abrupt change in nominal rates might make the fiscal situation severer and possibly have an effect on the financial system. somewhat ironically, the success in overcoming deflation might produce unfavorable spillover effects, given the significant size of the government β s debts. in an extreme case where there is a grave negative impact on financial stability, a central bank might have to choose either financial stability or price stability, no matter how strongly it is committed to price stability. once a central bank can no longer pursue price stability in fear of fiscal sustainability, it might fall into a situation, known as β unpleasant monetarist arithmetic β. 2 see sargent and wallace ( 1981 ) for details regarding β unpleasant monetarist arithmetic β. bis central bankers β speeches in my view, we must avoid such a pessimistic scenario from unfolding. to that end, the bank has been stress - testing the robustness of japan β s financial system, taking into account possible changes in the interest rate environment. furthermore, it has urged financial institutions to reinforce their risk management and take measures to enhance profitability. in terms of its relationship with the government, the bank pursues monetary policy to achieve the 2 percent price stability target. that includes the process through which it will eventually exit from the current easing policy. we simply cannot accept a situation in which a monetary policy decision is affected by the consideration of fiscal policy. there is no question about it | 0 |
mr backstrom elucidates the economic situation in sweden and describes the consequences it may have for future monetary policy speech given by mr urban backstrom, governor of the sveriges riksbank at foreningssparbanken, ulricehamn on 1 september 1999. * * * first a word of thanks for the invitation to visit ulricehamn and talk about something that is close to the heart of a riksbank governor, namely sweden β s economic situation. i shall be describing the situation as i see it and saying something about the consequences it may have for future monetary policy. unexpectedly strong trend the new statistics in recent months show that economic activity is stronger than most forecasters had foreseen as recently as in the spring. the growth of both domestic and external demand has been higher than expected. relative to the first half of 1998, the gdp growth rate for the first six months of this year is an estimated 3. 7 %. most observers are in the process of revising their forecasts upwards, if they have not already done so. in the inflation report last june the riksbank judged that growth this year would reach 2. 5 %, followed by 3 % next year as well as in 2001. when the executive board discussed monetary policy on 12 august, however, our assessment was that this year β s growth rate would be 3. 5 %. we also saw grounds for an upward revision of growth in the next two years, though the prospects for that period are more uncertain. it is not just total output that has exceeded expectations. the same applies to employment. in the first half of 1999 there were approximately 100, 000 new jobs compared with the same period last year. much of the increase occurred in the private sector. this has been accompanied by decreased unemployment, if one disregards the temporary seasonal upturn during the summer. however, the reduction of unemployment is less marked than the increase in employment because many people are returning to the labour market now that jobs are becoming available. meanwhile, price increases have been moderate. the underlying rate of inflation ( undix, which measures inflation excluding interest expenditure, indirect taxes and subsidies ) fluctuated during the spring between 12 - month figures of 1. 0 and 1. 5 %. other indexes also point to low inflation, despite an increase in some commodity prices, oil in particular. altogether, then, the swedish economy is developing very well. we are now entering the seventh year of favourable economic growth β | far can unemployment be reduced without firms encountering recruitment problems more generally? even with the high unemployment at present, it is, for example, already difficult to recruit computer consultants and some other occupational categories. the situation in certain segments of the stockholm labour market is also tighter than in other parts of sweden. but so far, the bottleneck problems seem to be fairly restricted. as yet there are no indications of more widespread shortages. it is a positive sign that the matching of job seekers and job vacancies is still running comparatively smoothly, as it is that although the shortages of skilled workers in manufacturing have grown, the level remains relatively low. to date this year, moreover, the wage drift statistics show increases that are lower than expected. good credibility promotes price stability experience from the 1990s and earlier periods demonstrates that the relationships which are discernible in economic models have to be constantly questioned and reviewed. above all, they can never be adopted uncritically when forecasting the future. so much happens in different economies, not least as regards economic policies, that earlier truths have to be reassessed continuously. inflation has been subdued in recent years for a number of reasons. imported inflation has been low because of subdued commodity prices in connection with the asian crisis. productivity growth in sweden has been better than before. another major factor is the increased confidence in monetary policy and economic policy in general. all the survey data, as well as the underlying trend in market prices, show that no one expects inflation in the somewhat longer run to be anything but 2 %. the inflation target accordingly seems to constitute a clear anchor for price formation. in the 1970s and 1980s, inflation prospects did not depend on the level of domestic economic activity alone. relatively abrupt shifts in more long - term inflation expectations also played a part. today, there are no abrupt shifts of that kind. economic players simply count, with good reason, on the riksbank acting if signs of rising inflation were to appear. in such a world, overall price formation centres above all on the level of economic activity. the improved credibility is thus a further factor that may have contributed to a level of inflation that is lower despite relatively strong growth. at the same time, the riksbank has the major responsibility of keeping a close eye on the more long - term inflation expectations in order to maintain the credibility that has been built up in recent years. demand assessments difficult a question that naturally has to be included in the assessments is whether the stronger growth of demand | 1 |
fedwire, and chips - - have already substituted electronic transfers for paper checks for many transactions. the recent federal reserve study of retail payments found that americans β use of credit cards, debit cards, and other electronic payments have been gaining relative to their use of checks. for example, from 1979 to 2000, while the number of checks written per year increased by 53 percent ( or a 2Β½ percent compound annual growth rate ), electronic payments increased by 500 percent ( or an 8 percent compound annual growth rate ). as a result, electronic payments accounted for roughly 40 percent of all retail payments other than cash in the united states in 2000 up from 15 percent in 1979. credit card transactions today account for about half the electronic retail payments, and debit cards account for a little more than a quarter, and the remainder is primarily ach payments. these trends are expected to continue. as part of this movement to electronic payments, the federal government encourages recipients to receive benefit payments electronically, and an increasing number of taxpayers are filing electronically. the debt collection improvement act of 1996 required that most federal payments, except for tax refunds, were to be made electronically by 1999. while the β requirement β has been eliminated, in fiscal year 2001, 32. 6 percent of federal tax payments were made electronically, and approximately 76 percent of all other treasury disbursements were made electronically, representing more than 900 million payments. today, the federal reserve operates an extensive check clearing system and an electronic automated clearinghouse ( ach ) system, alongside and in competition with private check and electronic clearinghouses. daily the reserve banks receive more than 50 million checks, which they sort on high - speed machines and route to paying banks in the local area and throughout the country. the fed β s check - processing operations also electronically capture payment data on all the checks and create digital images of many of the checks. ach payment instructions flow from one bank computer to another via federal reserve computers. the value of these check and ach payments are settled between banks on the fed β s books. questions have been raised over the years about the rationale for a direct role for the federal reserve in the retail payment system. in 1996 and 1997, a federal reserve study group, under the direction of alice rivlin, who was then vice chair, considered the future role of the fed in retail payments. after extensive discussions with banking industry representatives, the group concluded that the federal reserve should continue to provide check - clearing and ach | range of goods expands, barter becomes increasingly inconvenient and costly. several considerations have affected the evolution of commodity money itself - - from cattle and grain toward shells and then bronze and ultimately to silver and gold. commodities are useful as a means of payment and store of value if they were are less bulky in relation to their value, more durable, more homogeneous, and more easily verified as to their worth than other commodities. these considerations favored the use of the precious metals, for example, over cattle and grain, encouraged the use of gold and silver rather than bronze and copper, and further affected the way that silver and gold were used as money over time. early commodity money, for example, was weighed, not counted, including the early uses of silver and gold. the introduction of coins that were stamped with their weight and purity allowed money to be counted and again reduced the costs associated with making transactions. silver became the dominant money throughout medieval times into the modern era. relative to silver, copper was too heavy and gold was too light when cast into coins of a size and weight convenient for transactions. the next important evolution was the introduction of β representative β paper money. warehouses accepted deposits of silver and gold and issued paper receipts. these paper receipts in turn began to circulate as money, used as a means of payment and held as a store of value. the paper was fully backed by the precious metals in the warehouse. once again, efficiency was enhanced by the convenience of carrying paper money as opposed to the bulkier silver or gold coins. owners of the warehouses soon learned that the holders of the paper receipts would not simultaneously redeem the gold deposited with them. the warehouses could therefore lend the gold - in turn, often converted into paper notes - - holding a reserve of gold that allowed them to meet the normal demands for redemption. this is the beginning of fractional reserve banking. seventeenth - century english goldsmiths are usually credited with this transition to modern banking, though the first paper money was introduced in china in the seventh century, a thousand years before the practice became widespread in europe. paper notes and early banking were introduced in europe in medieval times and further advanced by the great banking families of the renaissance. the spread of paper notes and fractional reserve banking opened up the potential for credit expansion to support economic development but also introduced the possibility of runs and liquidity crises as well as the risk of insolvency through the credit risk associated with the lending. in the nineteenth century, | 1 |
tiff macklem : opening statement before the house of commons standing committee on finance opening statement by mr tiff macklem, governor of the bank of canada, before the house of commons standing committee on finance, ottawa, ontario, 23 november 2022. * * * good evening. i'm pleased to be here with senior deputy governor carolyn rogers to discuss our recent policy announcement and the bank of canada's monetary policy report ( mpr ). in october, we raised the policy interest rate by 50 basis points to 3. 75 %. this is the sixth consecutive increase since march. we also expect our policy rate will need to rise further. how much further will depend on how monetary policy is working to slow demand, how supply challenges are resolving and how inflation and inflation expectations are responding to this tightening cycle. our decision reflected several considerations. first, inflation in canada remains high and broad - based, reflecting large increases in both goods and services prices. inflation has come down in recent months, but we have yet to see a generalized decline in price pressures. second, and related, the economy is still in excess demand - it's overheated. job vacancies have declined from their peak but remain high, and businesses continue to report widespread labour shortages. third, higher interest rates are beginning to weigh on growth. this is increasingly evident in interest - rate - sensitive parts of the economy, like housing and spending on big - ticket items. but the effects of higher rates will take time to spread through the economy. fourth, there are no easy outs to restoring price stability. we need the economy to slow down to rebalance demand and supply and relieve price pressures. we expect growth will stall in the next few quarters - in other words, growth will be close to zero. but once we get through this slowdown, growth will pick up, our economy will grow solidly, and the benefits of low and predictable inflation will be restored. to put this in numbers, growth in gross domestic product ( gdp ) is projected to decline from about 3aΒΌ % this year to just under 1 % next year and then rise to 2 % in 2024. and inflation is expected to hover around 7 % in the final quarter of this year, fall to around 3 % by the end of next year and return to the 2 % target by the end of 2024. finally, we are trying to balance the risks of under - and over - tightening. if we don't do | enough, canadians will continue to endure the hardship of high inflation. and they will come to expect persistently high inflation, which will require much higher interest rates and, potentially, a severe recession to control inflation. nobody wants that. 1 / 2 bis - central bankers'speeches if we do too much, we could slow the economy more than needed. and we know that has harmful consequences for people's ability to service their debts, for their jobs and for their businesses. this tightening phase will draw to a close. we are getting closer, but we are not there yet. i also want to update you on the bank of canada's balance sheet, which is declining as we continue quantitative tightening. the balance sheet peaked in march 2021 at $ 575 billion, and as of last week, it was at about $ 415 billion, a decline of about 28 %. the decline primarily reflects the maturity of our repo operations and the reduction in our holdings of government of canada bonds following decisions to end quantitative easing in october 2021 and begin quantitative tightening in april. after a period of above - average income, our net interest income is now turning negative. following a period of losses, the bank of canada will return to positive net earnings. the size and duration of the losses will ultimately depend on a number of factors, including the path of interest rates and the evolution of both the economy and the balance sheet. the losses do not affect our ability to conduct monetary policy. i would also stress that our policy decisions are driven by our price and financial stability mandates. we do not make policy to maximize our income. the bank of canada's job is to ensure inflation is low, stable and predictable. we are still far from that goal. we view the risks around our forecast for inflation to be reasonably balanced. but with inflation so far above our target, we are particularly concerned about the upside risks. we are mindful that adjusting to higher interest rates is difficult for many canadians. many households have significant debt loads, and higher interest rates add to their burden. we don't want this transition to be more difficult than it has to be. but higher interest rates in the short term will bring inflation down in the long term. canadians are looking for ways to protect themselves from rising prices, and we are working to protect them from entrenched inflation. it will take time to get back to solid growth with low inflation. but we will get there. by working through this difficult phase, we will | 1 |
because of the highly specialized nature of investing in equities, most sovereign funds outsource part of the management of their resources to specialized external managers. these external managers are given specific mandates, with specific targets or benchmarks and their fees are tied to returns in excess of the benchmark. i should note that since the hsf act has been approved, much has been achieved : β’ as you may know, the hsf board has been appointed. β’ the board has approved the strategic asset allocation. β’ the central bank is in the process of selecting the external managers, a process that we expect to complete in the next few months. β’ the first audited annual report of the hsf has been prepared and has been submitted to parliament ; the central bank has also prepared quarterly reports that are sent to the hsf board. β’ pending the appointment of the external managers, the hsf board has approved a transitional investment plan that β s currently being implemented by the central bank. β’ for the record, the current fund balance is us $ 1. 996 million. from 2002 to the present, the fund has increased by us $ 1, 500 million, roughly us $ 250 million a year. this represents about 12 per cent of average annual energy tax collections. ( i note, that this is the figure even though the government has always deposited more than required by the formula. ) β’ at the current rate of deposit, and assuming no withdrawals and a real rate of return of 4 per cent, the total fund balance would rise to a mere us $ 11. 3 billion in the next fifteen ( 15 ) years. β’ one can argue that a more robust accumulation will be necessary to fulfill the fund β s original objective over the long term. " back of the envelope " calculations suggest that it will take an average annual deposit of about us $ 800 million, ( or about 20 per cent of projected annual energy tax collections ) to reach a balance of around us $ 25 billion by 2023 ( i. e. after 15 years ). of course the increase in savings has as its counterpart, expenditure curtailment. is there a role for the population in the administration of the hsf? the answer is without doubt yes. without doubt, public understanding of the importance of the hsf and public buy - in to the programme are critical to the success of the hsf. and the hsf board intends to adopt an active communications strategy. for example, the public should be convinced of the | hsf act approved by parliament in march of last year, is therefore a most important piece of legislation. in line with international best practices, the legislation provides for clear deposit and withdrawal rules ; a governance structure that seeks to incorporate checks and balances and provisions to ensure the highest level of transparency and accountability in the management of the country β s money. broadly speaking : β’ the deposit rule requires that a minimum of 60 per cent of the excess between actual and budgeted energy revenues must be credited to the fund, while ; β’ the withdrawal rule allows the government to tap into the fund to cover 60 per cent of any revenue shortfalls. there is a cap on the amount of the fund that could be used for stabilization. there are some other significant provisions in the law or in the principles underlying the fund. thus, for example : β’ hsf deposits are to be invested abroad, with a medium to long term focus ; β’ in principle, the fund should be invested in assets not directly related to oil and gas ( so as to avoid contagion ) ; β’ the fund cannot be used to directly finance capital expenditure or as collateral for government borrowing ; β’ the act comes up for review every five years ; and β’ as i said before, the fund should be characterized by the highest level of transparency of objectives and results, and clear accountability and professionalism in its management. the legislation clearly outlines the roles for the major players β minister of finance, the board of the hsf, the central bank, and the parliament, which represents the people, as the ultimate authority. the minister of finance is responsible for approving the deposits and withdrawal from the fund ( according to the formula ). the hsf board decides on the investment objectives of the fund and approves the strategic asset allocation β which in effect is the definition of the overall risk - return profile of the portfolio. in the final analysis, the board is answerable for the overall performance of the fund but it delegates this function to the central bank, which is given responsibility for the day to day management of the fund. to fulfill its function, the bank will make extensive use of external fund managers which it will help to select and oversee. the bank is also available to give technical advice to the board as required. the parliament, as representative of the people has the ultimate oversight role of the fund, exercised through review of the annual reports and the audited financial statements. the norwegian petroleum fund is recognized as the benchmark for transparency and disclosure of | 1 |
conclusion, i wish to thank you for finding time from your busy schedules to attend this workshop. i urge you to ask as many questions as you could possibly can, in order to get the best out of it, as well as make the workshop more lively and interactive. with these few remarks, it is now my honour and privilege to declare the workshop officially open. i thank you! | michael gondwe : enhancing access to financial services in zambia speech by dr michael gondwe, governor of the bank of zambia, at the launch of the mpongwe branch of the national savings and credit bank zambia limited ( natsave ), mpongwe, 28 june 2013. * * * the copperbelt province minister, hon mwenya musenge, mp the mpongwe area member of parliament and deputy minister of foreign affairs, hon gabriel namulambe, mp ; the copperbelt province permanent secretary, mr stanford msichili ; the permanent secretary, ministry of agriculture, dr shamulenge ; the permanent secretary ministry of agriculture, mr siazongo siakalenge ; your royal highnesses the chiefs present ; the mpongwe district commissioner ; the natsave chairman of the board, dr chiselebwe ngandwe ; the natsave managing director, mr cephas chabu ; distinguished natsave customers ; management and staff of natsave ; colleagues from bank of zambia ; members of the press ; distinguished guests ; ladies and gentlemen. it is my honour and privilege to officiate at this very important launch of the national savings and credit bank ( natsave ), mpongwe branch. let me begin by thanking the board of directors and management of natsave for inviting me to this momentous occasion, which marks the official opening of the mpongwe branch which is the first ever bank branch in this economically vibrant district. i commend the board and management of natsave for the effort in opening this branch which will go a long way in supporting the bank of zambia β s strategic objective of increasing financial inclusion. distinguished ladies and gentlemen, the role of financial services in economic development cannot be over - emphasized. it is generally accepted that financial services play an important role in improving income - generating opportunities and overall living conditions among households. furthermore, better access to finance not only increases economic growth, but also helps to fight poverty and reduces income inequality between the rich and the poor in society. it is for this reason that the role that financial services play in an economy is sometimes compared to the significant role that blood plays in the human body. it should be stressed that no economy can function efficiently, if at all, without financial products and services. the opening of this branch by natsave is therefore expected to spur economic growth and contribute to the ease of access to financial services which has for long time been a | 0.5 |
and the scientific committee for having put together such a rich and interesting programme. once again, i express my gratitude to the presenters, moderators and all the other participants in this event for their presence here today. i wish you all two days of very fruitful interactions and discussions. 2 / 2 bis - central bankers'speeches | zeti akhtar aziz : statistical science for a better tomorrow keynote address by dr zeti akhtar aziz, governor of the central bank of malaysia ( bank negara malaysia ), at the international statistical institute regional statistics conference 2014 β statistical science for a better tomorrow β, kuala lumpur, 18 november 2014. * * * introduction it gives me great pleasure to welcome you to this inaugural international statistical institute regional statistics conference. this conference takes place at a time of major transformative change in our region and in the world. the contribution of statistics in this new and rapidly changing environment has become of even greater importance. in this increasingly complex world, the availability of high quality statistics is vital in facilitating decision making for both the private and public sectors. the world is also seeing greater demands for higher levels of transparency. this has become key for building trust and confidence regardless of the line and nature of business. the statistics community has responded to these changes. immense progress has been achieved in developing the methodology for generating consistent economic and financial statistical systems. in a world that has also become more globalised, such progress has brought great benefits to businesses and policymakers in terms of the availability, comparability, and broad consistency of economic data across countries. for any economic and financial community, detailed and comprehensive data are highly important to understand the implications of the developments taking place. this has prompted greater international collaboration across the world to contribute towards a greater understanding of the implications of this trend. underpinning this is also the high level of professionalism and integrity of statisticians at national and international agencies. it is in this recent two decades, that the global economic and financial environment has become more interconnected, more complex and more competitive. it has resulted in greater economic and financial integration and more intricate interconnectivities. at the same time, the world has also become more unstable and less predictable with frequent shocks and crises. this new and more challenging environment has significant implications for business and for public policy. economic agents need to have an appreciation of the multi - faceted shifts in their environment in order to form the appropriate assessments and make informed decisions. for policy makers, it highlights the importance of having reliable, relevant and high - quality statistics to support and pave the way for sound policy decision making. for statisticians, the challenge is to continuously improve the statistical science towards facilitating the foundation to build a better future. my remarks today will be from the perspective of a central banker. timely and | 0 |
by the covid pandemic in 2020. this statement sets out our expectations on the second and third of these pillars. supervisory cooperation to support responsible openness to international wholesale banking, be it as branches or subsidiaries, and to meet our objectives on safety and soundness and financial stability, we need confidence that : a. the home state supervisory regime delivers outcomes which are sufficiently equivalent to the uk regime ; b. there is effective supervisory cooperation ; and c. there is assurance over the home state resolution framework. https : / / www. bankofengland. co. uk / speech / 2020 / sam - woods - city - banquet https : / / www. bankofengland. co. uk / financial - stability - report / 2020 / december - 2020 all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice the first and last points concern in large part the legislative framework, rules and powers of intervention that home states and authorities have. the better the outcomes they deliver, so the more reliance we can place on risks arising from overseas operations being manageable. the second point is about how those powers are applied, the practices, and openness of overseas authorities that wield them. it is on this point that i want to focus as a supervisor. cooperation with home state supervisors for both branches and subsidiaries, the pra places reliance on cooperating closely with the home state supervisor, for branches this is particularly the case for prudential requirements, because a branch is not a separate legal entity. but for both there needs to be effective regulatory and supervisory cooperation if openness is to be β responsible β. we have a long history of working very effectively with a range of supervisory authorities, including the us, eu, switzerland, japan, and many others. the recent market stability issues resulting from the covid health crisis has provided an opportunity to ensure there is a good flow of information between authorities and coordinate our approaches where appropriate. as a recent example, in december, the pra, european central bank ( ecb ) and federal reserve board all published short statements on our respective websites5 highlighting that, recognising the global and interconnected nature of banks, we are committed to working closely to ensure that supervisory approaches on operational resilience are well coordinated. given the uk β s exit from the eu, i would like to specifically mention the open and supportive relationship we have with colleagues at the | responsible openness : the pra β s approach to supervising banks speech given by david bailey, executive director for international banks supervision, prudential regulation authority bank of england hosted webinar 11 january 2021 i am grateful to andy murfin, tom crossland, orfhlaith sheehy, caleb barnes, shakir anverally, marina barnard, ross howie and tanveer hussain for their assistance in writing this speech. all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice introduction welcome. i am delighted that so many of you could join us today. i started my role as executive director for international banks supervision in late 2019. i took on the role, in part, because of the wide variety of firms i would be supervising, the diversity of cultures i would be interacting with, and the promise of travel to exotic locations. the role has delivered in many respects β although given the events of the last year, the travel has been somewhat disappointing. while my travel guides are left unread, my videoconferencing systems guide has many worn pages. one clear lesson i have taken away from talking to such a variety of institutions remotely, is the value of simple and clear communications. so today i will be giving you the headlines from our supervisory statement published today that sets out the pra β s approach to supervising international banks. it sets out publicly, for the first time, our approach to subsidiaries and combines that with the approach set out in our existing supervisory statement on branches ( ss1 / 18 ) 1. let me emphasise that the key message i want to give you today is one of stability and consistency in our overall approach. we have all faced a lot of change and uncertainty, especially over the last year β but i want to assure you that our supervisory approach remains both stable over time and consistent across the firms we supervise. it remains both robust and proportionate. why now? we are publishing this now, for three main reasons : 1. first, to set out our approach to host supervision in a holistic way. we published our approach to branches in 2018 but this publication goes further and covers the full range of authorisation options available to international banks. by making clear our expectations we will provide transparency for all parties. existing firms, new and transitioning firms, and home regulators. 2. second, there remains strong interest from international banks seeking a banking licence | 1 |
sabine lautenschlager : how can prudential regulation foster growth? speech by ms sabine lautenschlager, member of the executive board of the european central bank and vice - chair of the supervisory board of the single supervisory mechanism, at the frankfurt finance summit, frankfurt am main, 16 march 2015. * * * supervisors can contribute to sustainable economic growth by ensuring that supervised entities are resilient to plausible shocks, properly managed, adequately capitalised and subject to an efficient risk management and the right incentives. the european single supervisory mechanism takes a medium to long - term perspective on this, resisting those who argue for short - term relief. the ssm ensures that banks can deliver in their tasks in all phases of the economic cycle and thus are able to provide the economy with the financial services that corporations, smaller firms and citizens need. * * * it is my pleasure to open this dinner with a question that may seem quite straightforward, but whose answer is far from intuitive, especially from the perspective of a supervisor : β how can prudential regulation foster growth? β i must admit that when i first saw the topic of this short speech i was tempted to turn this into a brainstorming session. i am sure that many of you have innovative ideas on how to foster growth by means of prudential regulation and supervisory action. some might suggest restraint on the side of regulators and supervisors as a way of fostering growth β and they may be right regarding some of the many topics that were regulated over the last seven years. but if you now expect me to provide comfort with a regulatory break or even promise supervisory leniency, i am afraid you are in for a disappointment. the financial crisis has shown that there is little more damaging for sustainable growth than a malfunctioning banking sector. that is why β after a long period of deregulation β governments around the world decided to strengthen regulation and supervision. the ultimate objective of these reforms has been the same since the 1930s : regulators and supervisors have to ensure that the banking sector is resilient and provides the economy and society at large with its key services, even under severe stress. as a supervisor, our most valuable contribution to economic growth is to do our job β by implementing regulation consistently, by closely monitoring supervised institutions in a forward - looking, risk - based and proportionate way and by taking timely and determined action when needed. the ssm has the responsibility and privilege to go a step further. by harmonising | the first place. banks have to improve their risk culture regardless of the β too big to fail β problem. at the spring meeting of the financial stability board, recommendations for action were agreed on and subsequently announced. according to the financial stability board, the foundational elements of a sound risk culture are effective risk governance, an effective risk appetite framework and, in particular, the alignment of compensation with prudent risk taking. four practices may help in assessing the soundness of a risk culture. β’ first, the tone from the top : the board and senior management are the starting point for setting the financial institution β s core values and the expectations for its risk culture, and their behaviour must reflect the values being espoused. β’ second, accountability : employees must understand the institution β s core values and its approach to risk. and they have to be aware that they are responsible for their actions and risk taking. β’ third, effective communication and challenge : a sound risk culture promotes an environment of open communication and effective challenge, within which decisionmaking processes encourage a range of views. β’ last but not least, incentives : performance and talent management encourage and reinforce maintenance of the financial institution β s desired risk management behaviour. this includes changing the banks β in - house incentive schemes. one example here would be to cap bonus payments and link them to the long - term development of institutions β profits. we must succeed in embedding awareness of sustainable business practices more firmly in the risk culture of banks. 3. profitability of course, a new risk culture has its price, which will unquestionably also have a short - term impact on the banks β profitability. what β s more, the current low - interest - rate environment also remains a major challenge for the profitability of banks. german savings banks and credit cooperatives in particular rely on net interest income as the most important earnings bis central bankers β speeches component. consequently, they expect a further decline in profitability in the current interest rate environment. in addition, competitive pressure is high due to the sheer number of institutions in the marketplace, and this will no doubt increase as the integration of the banking market across europe deepens. last but not least, the implementation of the new banking rules will come at a cost β to raise fresh capital, say, or to draw up recovery plans and build up a restructuring fund. against this backdrop, it is essential that german credit institutions recognise their weaknesses and counteract them at an early stage. this could | 0 |
closing address delivered by mr. millison narh first deputy governor, bank of ghana at 2017 continental seminar of the association of african central banks ( aacb ) at movenick ambassador hotel on may 05, 2017 the executive secretary, aacb, colleague central bankers, distinguished guests, ladies and gentlemen, introduction 1. i am delighted to be part of the 2017 continental seminar. i am reliably informed that the deliberations were very fruitful. 2. effective communication has now emerged as one of the most crucial and latest addition to the menu of monetary and financial stability policy tools at the disposal of central banks in our modern era. within the framework of inflation targeting and market based, prudential regulation of financial institutions, the need to have an effective, wellcoordinated and targeted communication strategy cannot be ignored by any central bank that wants to succeed in delivering the twin mandate of price and financial stability. 3. as was mentioned, the importance of having a carefully planned communication strategy is well captured in the statement by a deputy governor of the federal reserve bank of new zealand, that β central bank β s pronouncements have economic and social impact. β 4. to this end my colleague, the second deputy governor of bank of ghana, challenged you to find answers to three important questions at this seminar : a. how should central banks manage communication in times of financial crisis? b. how does effective communication enhance central bank credibility and effectiveness of monetary policy and for maintaining stability in the financial sector? and c. what lessons should we learn from cross - country experiences in central bank communications strategies? 5. i hope the various expert presentations and the plenary sessions have helped you enhance your knowledge and understanding of these and other pertinent issues bordering on communication in the central bank. 6. some of the key points gathered at this seminar include but not limited to the following : a. that effective central bank communication requires a consciously designed strategy in line core mandates, the adoption of the most suited medium, and with specific target audience in mind ; b. there is also the need to have specific strategies for monetary policy and financial stability. but the effectiveness of adopted strategies should be assessed regularly through surveys and feedback in order to adjust to the changing circumstances ; c. finally, the issue of consistency in message, proper coordination and adequate funding of communication activities must not be underestimated. 7. colleague governors and i would surely be expecting to receive the communique from this seminar to help us consider | to meet this requirement and we may end the year ba es o f gh a na nk t. 1 9 5 7 with many more banks meeting the minimum capital requirement than was originally anticipated. this will help ensure a banking industry that is well capitalized and well - positioned to support the much needed economic transformation ghana needs. 5. we have been working with the fiscal authorities and other stakeholders to create the enabling environment to support growth and i am happy to report that we are beginning to see good results. at the last monetary policy committee meeting, we observed that economic activity continued to strengthen with robust export growth, higher industrial electricity consumption and higher tourist arrivals. overall, the country remains on a steady growth path with the first quarter 2018 gdp outturn estimated at 6. 8 percent, compared with 6. 7 percent in the same period of 2017. also, the bank β s updated composite index of economic activity ( ciea ) showed a strong pickup in the year to july. ghana recorded a trade surplus of $ 1. 4 billion at the end of august. headline inflation broadly declined and has ranged between 9. 6 and 9. 9 percent over the past five months, despite the marginal upticks occasioned by adjustments in administered prices. 6. the cedi β s strong performance against the major international currencies in the first quarter of 2018 weakened in the subsequent quarters ba es o f gh a na nk t. 1 9 5 7 as the currency came under pressure, mainly from emerging and frontier market contagion effects. factors such as the us fed rate increases due to continued monetary policy normalization, strengthening of the us dollar, rise in us yield rates, and the escalating trade tensions have all taken a toll on emerging market and frontier economy assets. 7. the combination of these factors have resulted in a tight financing conditions, reverse capital flows and exchange rate pressures in most emerging market and frontier economies, including ghana. however, different countries have responded differently depending on the strength of their underlying macroeconomic fundamentals. the impact on the exchange rate in ghana has been somewhat moderated compared to other ems and frontier economies β a testament to the gains in macroeconomic stability achieved over the past 18 months. while currencies in other ems are still under stress, ghana β s currency has recently regained some stability and the local currency is gradually becoming more stable. indeed ghana has recently received an upgrade by standard and poor β s to her sovereign credit rating on the back of improved monetary | 0.5 |
paul tucker : financial crisis and g20 financial regulatory reform β an overview remarks by mr paul tucker, deputy governor of the bank of england, at the financial stability board ( fsb ) and korean g20 presidential committee conference, seoul, 3 september 2010. * * * being a western financial official, one comes to asia with some humility in truth. this has been a financial crisis born and bred in the western world, but inflicted throughout the world. that makes it all the more important that korea and the other countries in asia and elsewhere in the emerging market world are involved in the reform efforts. the reforms are not simply going to be cooked up in the west where the problems were bred. in korea, you have to play a really important leadership role, especially in steering us through the next couple of months. much of the work towards the leaders summit is being handled in the financial stability board. and here is a very brief overview of what is going on in the fsb contribution to the g20 effort, under the following headings : 1 ) surveillance ; 2 ) bank capital and liquidity ; 3 ) too big to fail ; 4 ) capital markets ; 5 ) incentives ; and finally the regulatory perimeter. 1. surveillance of the system very obviously this was a crisis that was not spotted β in the most important sense of being prevented β ahead of time. people did issue warnings about developing leverage in the system and accumulating macroeconomic imbalances. but no one acted to make the financial system more resilient to those vulnerabilities. this was not just an intellectual failure, as is widely discussed and recognized now. it was also partly a failure of machinery. the fsb has been encouraging new machinery to survey and head off risks. the fsb itself has created a vulnerabilities group. it is probably the least prominent part of the financial stability board β s effort to date, but it could have enduring significance over the years and decades. it is paralleled in various regions. europe is setting up a systemic risk board, which will be supported by the ecb but involve all of the eu. the usa is setting up a systemic oversight council ; and in the uk, the government is establishing a macroprudential financial policy committee in the bank of england. maybe something is needed in asia, too. martin [ wolf ] talked about complacency ; for the machinery i have described to make any difference, people will have to stick to it year | by construction β to be in a liquidity trap. as is well known, the optimal policy within this class of models is for the central bank to commit to low interest rates for an extended period and to a temporary overshoot of the inflation target. exchange rate depreciations ( svensson 2001 ) and interest rate commitments ( krugman 1998, woodford 2003 ) are examples of policy recommendations stemming from this result. the crucial insight emphasised by these models is that expectations matter, and provide a mechanism through which policy makers can seek to influence activity at the zero bound. this is an important channel of monetary transmission and one i will return to. but the argument that monetary policy can work only through expectations management is not a robust result. it rests on very particular assumptions. in this class of models, financial markets are assumed to be complete and frictionless and the representative agent is able to arbitrage across all financial markets. as such, all non - aggregate risk in the economy can be hedged perfectly and asset prices depend only on state - contingent payoffs. under these assumptions, demand curves for financial assets are perfectly elastic. but in the real world it seems plausible that demand curves for assets, in addition to money, are downward sloping to some degree, in which case changes in their relative supplies can affect their relative prices. it is this which gives quantitative easing its traction. half a century ago tobin ( 1958 ), in pioneering work on portfolio allocation, recognised that a range of assets, in addition to money, are likely to be imperfect substitutes. but tobin did not articulate fully the frictions that could generate such imperfect substitutability. more recently, there has been rapid development in micro models of the source of financial frictions which can motivate imperfect substitutability. recent examples include brunnermeier and pedersen ( 2009 ) and vayanos and weill ( 2008 ). 1 these models help to explain when and why investors may face un - diversifiable risks when holding specific types of securities, such that they become imperfect substitutes for otherwise similar assets. in brunnermeier and pedersen ( 2009 ), for example, marketmakers face uncertainty over the in addition see duffie, garleanu and pedersen, ( 2007 ). timing of customers β trades. they are unable to hedge perfectly this liquidity risk because of borrowing constraints, so that less liquid securities are imperfect substitutes for more liquid ones. this liquidity risk leads | 0.5 |
climate catastrophe. as we forge the path towards a climate conscious future, and for the whole system to change at the needed pace and scale, policy makers need to step up as well. for emerging economies such as malaysia, there is a careful policy balance between transitioning to a low - carbon economy while addressing needs of society and businesses. this is meant to minimise unintended consequences of channelling financing towards non - green and non - sustainable practices and to minimise transition risk. as the central bank, bank negara malaysia is cognisant of this in crafting our strategies to respond to climate risk. our commitment stems from the direct relevance that climate change has to our mandates in preserving monetary stability and financial stability. approximately 11. 7 % of malaysian financial institutions assets are potentially exposed to climate change. our aim is to ensure that financial institutions are adequately measuring, mitigating and building buffers against climate risk. our target is for climate risk to be featured more visibly in the risk management practices of financial institutions by 2022. of equal importance is our resolve to build their capacity to become effective agents of change in facilitating transition towards a low - carbon economy. a common language to categorise economic activities to help facilitate financial flows towards activities that would support the transition to a lower carbon economy, is therefore paramount. for this purpose, the bank issued the climate change and principles - based taxonomy discussion paper in december 2019. the taxonomy is now undergoing further refinements, and a pilot implementation for selected financial institutions will commence this month. collaboration on to my final c, β collaboration β. in his quest to clean up versova beach, afroz shaz would not have been as successful had he acted alone. he had help from organisations and volunteers from over 12 countries. the versova beach clean - up was one of the largest citizen initiatives the world has even seen. in the same vein, the bank values contribution and collaboration with various stakeholders. this includes the financial industry in planning an orderly transition towards a more climate - resilient economy. the joint committee on climate change ( or β jc3 β ) was set up in september 2019 as a platform for financial regulators and financial institutions in malaysia 2 / 3 bis central bankers'speeches to work together to deepen our understanding on climate risks and develop tools to effectively respond to those risks. the jc3 is chaired by the bank and securities commission malaysia, with bursa malaysia and 19 financial institutions as members. now i am | change have already increased five - fold in the past 30 years. the third is the rising income inequality that can threaten the fabric of our society. consider this. the top 1 % of the population has captured twice the global income growth of the bottom 50 % since 1980. worse still, inequality has persisted despite large transfers of public to private wealth in many countries. the fourth is the rising populism and protectionist policies. this can be seen in inward looking policies and anti - establishment views that have become more entrenched in parts of the world. slow growth, lack of economic mobility and erosion of trust in public and private institutions are among the factors that are likely to have contributed to this. like undercurrents before a storm, these trends have far reaching implications for political, economic and social systems. last but not least, the fifth shift is the advancement of technology. this has and will continue to 1 / 5 bis central bankers'speeches dramatically alter the way we behave, interact and transact. much has been said about the benefits, but an increasing reliance on technology presents risks that we cannot ignore. this includes issues of data privacy, discrimination or biases and also displacement of certain segments within society. in the digital age, higher order risks of cyber - attacks and operational disruptions are magnified in ways that we have yet to fully comprehend. calling for a financial system that is relevant, safe and socially responsible these five megatrends and finance are deeply intertwined. while undoubtedly finance has helped to power the economic rise of asean, its role in contributing to an increase in climate risk and inequality cannot be denied. therefore, as we consider the future of finance, we need to contemplate not only how these megatrends may impact finance, but how finance itself can respond to and shape these trends in more positive ways moving forward. in my mind, this calls for a financial system that is relevant, safe and socially responsible. finance must be relevant to the needs of the economy. this means that it must offer suitable, cost - effective and quality financial products and services for all segments of society. it must also respond to the changing demographics and structure of the economy. for example, as we move towards becoming a digital economy, the financial sector must accord adequate support to innovative smes, such as those involved in e - commerce. equally important, we must remember that this imperative is not only for banks, but extends to the other parts of the financial sector. non - | 0.5 |
##i case illustrates, there is a further argument against over - dependence, namely that it's a two - way street. the dependencies go many ways, and thus the incentives to co - ordinate and co - operate are much larger. in this world, fragmentation would be positively dangerous. underpinning the extensive co - operation and co - ordination are international regulatory standards. they provide a core of assurance to support open financial systems. to be honest, some areas are ahead of others. the basel committee has made most progress, though it is essential that we see a consistent implementation of the so - called basel 3. 1 package. we have more to do in the various parts of the non - bank world, and the financial stability board is very much on the case. but this does not mean that in all jurisdictions the rules must be exactly the same. we are most interested in the outcomes. there will be differences to fit local markets, and again when that is done in a transparent and well understood way, it is sensible and fine. all of that fits within a framework of public policy where the basic objective of financial stability is common, and there should be effective frameworks established through international regulatory standards underpinned by trust and co - operation. to conclude, we must be alert to the pressure for fragmentation, both in the global economy and financial system. the costs that go with such fragmentation are real and undesirable. the better approach is strong articulation of a common public policy objective in terms of financial stability, accompanied by effective co - ordination and cooperation. these are not impossible ideals β we have real evidence of the system working. thank you. i am grateful to sarah breeden, lee foulger, karen jude, rhys phillips, danny walker and michael yoganayagam for helpful comments and assistance in helping me to prepare these remarks. 1 sasha mills speech at the isda derivatives and trading forum, 7 november 2023. 4 / 4 bis - central bankers'speeches | financial stability threat, which at the bank of england we dealt with via a market intervention. it has, of course, caused us to look at the regulatory standards in this area, and recommend substantially greater resilience, which is now in place. the point i want to draw out today is that responsibility for oversight of these funds rested both in the uk where they operated and in some eu countries, including ireland, where they are typically domiciled. i want to thank the central bank of ireland for the excellent assistance they have provided in tackling these issues. our strong working relationship has paid off. the work we are doing is no doubt important. three current priorities for both of us illustrate this well. first, we are both putting in place stronger resilience standards for ldi funds. second, we agree on, and both emphasise, the pressing need for action to implement the financial stability board's recommendations for enhancing the resilience of money market funds. and third, we are both committed to the review and, i believe, upgrade of the standards for managing risks in open - ended funds, where sharon donnery is coleading the global work. i take three very important lessons from all of this. first, strong co - operation and coordination is a much better approach than fragmentation. there is no reason to be restrictive when a much better alternative exists. second, i sometimes hear an argument made that the fallacy of this first conclusion is that no - one can credibly commit with certainty to this standard of co - operation at all times in the future. i reject this proposition. let's go back to the global public good of financial stability for a moment. the stakes are simply too high to throw away financial stability, and the global institutional structures now create the necessary commitment. 3 / 4 bis - central bankers'speeches the third argument is part of the co - operation and commitment point, but sufficiently important to draw out separately. i am going to be direct here β i usually am. it is said that there is an over - dependence on the uk as an international financial centre. by the way, dublin is a thriving international centre too, and that's good to see. the overdependence argument leads, wrongly in my view, to a belief that the dependency needs to be reduced. as i have already said, the responsibilities that go with a global public good argument point firmly against the logic of this point. but, as the ld | 1 |
a deposit insurance system and other mechanisms to protect investors, depositors and the insured will quickly dissolve and reduce the risks as they arise. finally, the central bank needs to look at the systemic risks in the entire system. when systemic risks do arise, prompt and proper action shall be taken in terms of monetary policy and liquidity based on domestic and international experience, in order to alleviate the damage on the financial industry and the national economy. in conclusion, when we steadily promote the pilot cross - sector operation in the financial industry, the legislature, central bank and supervisory agencies are faced with new challenges. in the direction set by the 5th plenum of the 16th cpc central committee, we will strive to do a good job in every area to make effective progress and accumulate more experience. thank you. | , in late 80s and early 90s, the financial industry was not segmented in china. the disorder financial industry witnessed in early 90s was caused by many reasons, including the lack of legislation, supervision, expertise, internal control and accounting standards. the financial eco - environment then would inevitably give rise to problems. in the first part of 90s, commercial banks were requested to terminate their international business company and credit card company, because many of the disorders were thought to have originated in non - banking companies created by commercial banks. in retrospect, many banks still feel that a separate credit card company to run the business was a meaningful exploration. later on, problems occurred in the stock market and capital market, leading to the perception that it was a dangerous thing for fund to flow from banks into the stock market. at the same time, in consideration of what happened in the great depression, the banking and securities sectors were further segmented. in 1999?? one reason that the four big commercial banks established four asset management companies was that provisions on the management of asset management companies could provide them with some flexibility in disposing of npls, flexibilities that were beyond the reach of commercial banks. for example, asset management companies could do debt equity swap, but commercial banks were not allowed. other methods of asset disposal by asset management companies were also not allowed in the case of commercial banks. the purpose of establishing asset management companies was to dispose of npls in a flexible manner. of course, large - scale transfer of npls out of commercial banks might not be possible in the future ; rather, commercial banks will resolve the problem assets on their own. therefore, if commercial banks are still constrained by the rules of segmented operation in investment, share - holding and asset disposal, their ability to dispose of npls will be limited. in addition, asset management companies also hope to further enhance their capability by establishing their own securities companies to put the assets under their management on the capital market. there should be new considerations and arrangements. we are in favour of reviewing and interpreting history in our endeavor while moving forward. this will help us find a correct way of thinking and create a necessary environment for experimenting cross - sector operation in the financial sector as put forward by the 5th plenum of the 16th cpc national congress. iii. the experiment with cross - sector operation must proceed steadily, because such operation needs a large pool of high quality talents and risk control capability. we all know the importance of talents | 1 |
domestic flexibility to adjust wages and prices to correct lack of competitiveness. we therefore could not maintain the parity for long. it also led to distortion in risk perception that led to excessive foreign exchange risk mismatch, over investment in the non - traded sector and damaging speculation, especially in real estate. when we had to change to the flexible exchange regime, the exchange rate depreciated to a low point of less than 50 % of its pre - crisis value before backing up to above 60. the exchange losses that occurred was, among other things, one of the major factors causing the level of non - performing loans to go up to the peak of 45 %. this was almost one out of every two dollars lent out. what stress test can really prepare us for such an event? the second is to have the right infrastructure for the domestic financial markets. this topic includes many things like ( a ) having the proper market rules, ( b ) having the legal framework that facilitates the enforcement of creditors β rights, ( c ) having the laws and procedures to deal with bankruptcy, ( d ) having proper accounting and auditing standards as well as a reliable system of credit information on individual borrowers. i can still recall that during the 1997 crisis, the inter bank market in thailand ceased up for fear of counter party failure. but the problem also extended to the system of commercial trade credit between ordinary companies, the sellers and buyers of goods. today, five years after the event, the system of trade credit still has not regained its full recovery. this problem can be mitigated with the function of credit bureau that reports regularly on payment behavior of commercial firms. third is to ensure that there exists proper supervision of financial institutions. the country has to ensure that the agency entrusted with this task has sufficient power to act. i can still remember that in thailand long ago, when government successions often did not come from elections but through military actions, it was very common for commercial banks to have army generals sitting on their boards. banking supervision under such an environment was a challenge. but the biggest challenge is what to do when banks suffer such losses that they are unable to continue. this happened when thailand went into the crisis in 1997. we closed down two - thirds of our finance companies. as for the commercial banks, we had 15 local banks then. six banks had to be taken over by the authority. the private shareholders were forced to take full losses, and new capital provided by the authority. management | tarisa watanagase : changes in thailand β s economic dynamism after the 1997 crisis speech by dr tarisa watanagase, governor of the bank of thailand, at the international symposium β ten years after the asian currency crisis : future challenges for the asian economies and financial markets β, hosted by the center for monetary cooperation in asia ( cemcoa ), bank of japan, tokyo, 22 january 2007. * * * at the outset, i would like to thank governor fukui and the center for monetary cooperation in asia, bank of japan, for inviting me to speak at this special international symposium and for the excellent arrangements made. it gives me both a great honor and pleasure to meet with many people who are genuinely interested in our asean economies. in this first session, i have been asked to speak on changes in thailand β s economic dynamism after the 1997 crisis as well as the bank of thailand β s view on where the thai economy is heading. due to the time constraint, i will limit my talk to only three key points. the first is that the thai economy is now back on a firm growth path and has become more resilient. for nearly five years after the 1997 crisis, the thai economy went through a period of substantial adjustment. the tough adjustment was unavoidable because the crisis had inflicted a deep wound on the economy. during 1997 - 1998, we underwent a severe economic contraction, thousands of companies went bust, hundred thousands of people became unemployed, and the amount of nonperforming loans in the financial system skyrocketed. the economy staged a rebound in 1999 and 2000. but the recovery was cut short by the global economic downturn in 2001, when growth that year registered merely 2. 2 %. things then started to turn in 2002. despite the continued global slump, the thai economy expanded 5. 3 % that year and has since been on a firm growth path. the resiliency of the economy is evidenced by the fact that during the past two years thailand has weathered several economic storms β the tsunami, avian flu, political uncertainty, and the recent oil shock β with only a moderate slowdown in gdp growth. the key driver behind the current economic expansion has been a combination of domestic demand and exports. the latter, in particular, has always been our main engine of growth. one reason for this is that our export structure has become more diversified, both in terms of product and destination. for example, | 0.5 |
international accounting, auditing and disclosure standards and practices for global banking organizations. for example, our chief accountant was the basel committee's lead representative at meetings of the former international accounting standards - setter and is a member of the iasb's standards advisory council, which advises the iasb and its trustees on the iasb's agenda, proposals, and standards. the basel committee has also issued numerous policy papers, surveys, and other releases that address bank transparency, enhanced practices for loan - loss reserves and credit risk disclosure, sound bank internal and external audit programs, and sound risk - disclosure practices. moreover, the basel committee's approach to its new capital accord, with its market - discipline component in pillar 3, signals that sound accounting and disclosure will continue to be important aspects of our supervisory approach for many years to come. many u. s. banking organizations have assumed that international accounting standards are essentially irrelevant to their financial reporting activities. however, the sarbanes - oxley act includes a directive that u. s. accounting standards should seek convergence internationally. in view of this, the fasb and the iasb announced in october 2002 a major agreement to intensify their projects that seek international convergence and harmonization of accounting standards. the sec and the federal reserve strongly support efforts to harmonize international accounting standards in ways that achieve high - quality standards for global firms, including banking organizations. i believe that u. s. banking organizations and their auditors should focus more attention on the initiatives of the iasb in view of these developments and the requirements of the new legislation. in conclusion in conclusion, steps to restore public confidence in the u. s. capital markets have begun, yet the need for a cultural change in the accounting profession, in addition to more regulation, is evident. we have seen all too well that the actions of a few can easily bring down a firm built primarily of good practitioners. although i've been critical of the profession, in many cases the public doesn't look beyond the reputation of our firms, and in some cases individuals, when they evaluate the integrity of the profession. it is, therefore, up to auditors to embrace the professional standards and ethics that have made their attestation function so effective and accepted in the past. a cultural change in the profession today is a prerequisite for an effective principles - based system of standards that can serve to guide us through accounting for new and innovative financial transactions. along with enhanced disclosures based | than the median. this is because i project that it will take some time before households β income grows steadily, thereby improving their tolerance of price rises as well as firms β price - setting ability, and medium - to long - term inflation expectations will gradually converge to around 2 percent. in the baseline scenario, the bank postponed the timing of reaching around 2 percent inflation by one to two quarters : this was reflected in changing the expression β in or around fiscal 2015 β to β around the first half of fiscal 2016. β this postponement is consistent with my own repeated claims in the past. however, i submitted a proposal at the monetary policy meeting against the expression β around the first half of fiscal 2016 β being used for the baseline scenario and replacing it instead with the expression β in or around fiscal 2016. β i bis central bankers β speeches considered my suggested expression to be more appropriate for two reasons. first, given that the bank assesses that risks to prices are skewed to the downside, a wider time span to reach around 2 percent seemed appropriate. second, the bank reduced the time span significantly β from one year or more to around six months. this is more likely to reduce the flexibility of monetary policy. here, i would like to make it clear that since the introduction of qqe, i have made all efforts toward achieving the target of around 2 percent at the earliest possible time, without imposing an excessive burden on households and firms. my aforementioned proposal is not in any way contrary to those efforts. it is natural for a central bank to revise its forecasts and delay ( or advance ) the timing to achieve the price stability target in the face of constantly changing domestic and external conditions. it is important that the bank endeavors to realize an economy with around 2 percent inflation by taking into account the sustainability perspective, while revising forecasts with updated information and indicating the timing of achieving the target as a reference. this framework embodies the essence of the β flexible inflation targeting β practically adopted by the bank and other major central banks, which i have been emphasizing since the introduction of qqe. moreover, i would like to add that my aforementioned forecasts for prices do not rule out the possibility of achieving the target of around 2 percent over the projection period. thus, my suggested expression was broadly in line with my own forecasts. c. upside and downside risks to economic activity and prices with regard to upside and downside risks to the bank β s baseline scenario | 0 |
the recent fall in oil prices, which should be helpful in containing inflationary pressure and supporting the real disposable income of households, thereby sustaining consumption in many countries. with regard to economic growth in the euro area, it would be premature to offer a firm assessment of the macroeconomic impact of the tragic events in the united states and current activities to combat global terrorism. at present, there are no major imbalances in the euro area which would require a longer - term adjustment process. on account of policies aimed at price stability, fiscal consolidation, wage moderation and structural reform, the euro area fundamentals remain very positive. financing conditions are favourable and inflation is declining. the mere existence of the euro has sheltered the countries of the euro area from adverse intra - european exchange rate tensions, which had typically plagued many countries when external shocks occurred in the past. taken together, all these elements should provide a much better base than in the past for a recovery in the course of next year once the initial shock has been absorbed. however, notwithstanding all these positive aspects, we will continue to monitor downside risks to the current situation. against this background, we are confident that inflation in the euro area will continue to decline to a level consistent with price stability. receding external price pressures, combined with the expected continuation of wage moderation, underpin this expectation. for the time being, we thus see a confirmation of our earlier assessment, which led us to reduce the key ecb interest rates by 50 basis points on 17 september. in fact, the recent events strengthened tendencies towards lower rates of inflation that were already prevailing before. given their nature and their expected economic consequences, the terrorist attacks clearly warranted a prompt, flexible and appropriate response by the governing council, in the context of the medium - term - oriented monetary policy strategy of the ecb. regarding fiscal policies, there have been very encouraging signs of firm fiscal consolidation in a significant number of euro area member states over past years, whereas, in a few other countries, progress towards balanced fiscal positions has been slower. it is natural for an economic slowdown to have adverse effects on member countries'budget positions, and there is no need for immediate countervailing actions. however, a short - lived slowdown should not drastically change the scope for reaching the targets set in the countries'stability programmes. for countries with a budget position still not close to balance or in surplus it is important to adhere to their medium - term consolidation plans. turning | mario draghi : ecb press conference β introductory statement introductory statement by mr mario draghi, president of the european central bank, naples, 2 october 2014. * * * ladies and gentlemen, the vice - president and i are very pleased to welcome you to our press conference. i would like to thank governor visco for his kind hospitality and express our special gratitude to his staff for the excellent organisation of today β s meeting of the governing council. we will now report on the outcome of our meeting. based on our regular economic and monetary analyses, and in line with our forward guidance, we decided to keep the key ecb interest rates unchanged. following up on the decisions of 4 september 2014, we also decided on the key operational details of both the asset - backed securities purchase programme and the new covered bond purchase programme. this will allow us to start purchasing covered bonds and asset - backed securities ( abss ) in the fourth quarter of 2014, starting with covered bonds in the second half of october. the programmes will last for at least two years. together with the series of targeted longer - term refinancing operations to be conducted until june 2016, these purchases will have a sizeable impact on our balance sheet. the new measures will support specific market segments that play a key role in the financing of the economy. they will thereby further enhance the functioning of the monetary policy transmission mechanism, facilitate credit provision to the broad economy and generate positive spillovers to other markets. taking into account the overall subdued outlook for inflation, the weakening in the euro area β s growth momentum over the recent past and the continued subdued monetary and credit dynamics, our asset purchases should ease the monetary policy stance more broadly. they should also strengthen our forward guidance on the key ecb interest rates and reinforce the fact that there are significant and increasing differences in the monetary policy cycle between major advanced economies. together with the monetary accommodation already in place, the determined implementation of the new measures will underpin the firm anchoring of medium to long - term inflation expectations, in line with our aim of maintaining inflation rates below, but close to, 2 %. as all our measures work their way through to the economy they will contribute to a return of inflation rates to levels closer to our aim. should it become necessary to further address risks of too prolonged a period of low inflation, the governing council is unanimous in its commitment to using additional unconventional instruments within its mandate. a separate press release will provide further information on the modalities of | 0.5 |
innovation seemed limitless and regulators were left behind in the process. by the first half of 2007, financial market activity had expanded at a tremendous pace. however, dependence on capital markets and on sustained market liquidity also increased, as banks and other intermediaries placed greater reliance on their ability to β originate and distribute β loans and other financial products. they also depended on the market to manage their risk positions dynamically. the coincidence of greater levels of deregulation and integration of capital markets implied that if a major problem arose it was more likely to spread quickly across borders. this environment encouraged an increase in risk - taking as many players β hunted for yield. interestingly, the composition of investors also changed. measuring risk where credit can be sliced and diced the widespread use of structured credits effectively lowered the compensation for bearing credit risk and market risk to historically low levels. it is during this time that a market for bearing risk through complex structures of credit derivatives flourished. there were a few warning signals particularly about hedge funds, but not many warnings about securitisation. regulators were caught napping and the rating agencies did not spot the weaknesses. there are two aspects to this problem, one is the absence of oversight bodies which were monitoring and more importantly, which had authority to forestall this problem and the other was the absence of rules or processes which would help to prevent its occurrence. there was also clearly a need for internal corporate ground rules at the operational level. however, securitization is here to stay as it is a critical factor in achieving financial flexibility in a world of global flows. however, it is important that credit originators bear greater responsibility for the credit worthiness of the credits they originate. because of the difficulty of tracking risks in securitised loans which have been leveraged several times, loan originators need to be required to take more responsibility and to suffer some penalty for failure of the loans they originate. a solution to this problem will require greater study by derivative experts, but it is important that is addressed. concentration and risk management developing guidelines for risk management and requiring compliance to them are a core remedy for this situation and adequate internal risk management measures and processes at the level of the firm are very important. portfolio concentration seems also to be an important area which calls for attention. sectoral concentration and instrument concentration are both risk areas for which guidelines need to be developed. regulatory slips in addition to national oversight level, something went wrong also with global regulatory and oversight systems. | effective, sustainable, and grounded in evidence. the power of evidence - based policymaking lies in its ability to improve the economic welfare of all. by analysing data on unemployment, poverty, and general 1 / 2 bis - central bankers'speeches economic trends, we can prescribe policies that promote inclusive growth and drive real change. as former un secretary - general kofi annan once said, " knowledge is power. information is liberating. education is the premise of progress, in every society, in every family. " our research is the foundation of this progress. 2. addressing structural challenges the caribbean's low productivity and competitiveness are exacerbated by high debt and limited fiscal space. research plays a pivotal role in identifying these structural barriers and proposing targeted solutions. for instance, we know from global case studies that economic growth, job creation, and poverty reduction are interlinked. the success stories of countries like vietnam and indonesia demonstrate that by focusing on employment strategies, nations can experience significant poverty alleviation. our research must emphasise the importance of human capital development to drive productivity and innovation. 3. enhancing economic resilience : we are all aware of how vulnerable the caribbean is to external shocks. however, by diversifying our economies and strengthening our institutional frameworks, we can build resilience. understanding the effects of phenomena like bank de - risking or global supply chain disruptions is essential to crafting policies that ensure stability and continued growth. yet, we are not without challenges. limited data access, under - resourced institutions, and the ever - present brain drain hinder the growth of our region. but these challenges only strengthen our resolve. as nelson mandela wisely said, " it always seems impossible until it's done. " let us view these obstacles not as insurmountable barriers but as opportunities to create innovative solutions through the research we undertake. in closing, caribbean economic research is not just vital - it is the antidote to our challenges. through our research, we can solve our own unique problems and unlock sustainable growth, reduce inequality, and improve the quality of life for all our citizens. investing in research is not merely for academic exercise ; it is a key component to unlocking a brighter future for all of us. together, through our collective efforts, we will chart a path to resilient, innovative, and thriving economies that strengthen our macroeconomic management to withstand the era of many crises. it is with the greatest pleasure | 0.5 |
taxpayer is being asked to cough up. you can β t have liked that. we have taken some enormous steps forward with the european resolution authority and our banking supervision. but we haven β t yet reached our goal. for instance, european banking supervision is still lacking some tried and tested tools to be able to act more quickly and effectively. take the moratorium tool, for example : if a bank gets into trouble, all cash outflows can initially be stopped. that tool exists in germany but not in spain. but banking supervision is in any case in a state of flux because there are constant innovations. just think of the fintechs. yes, there are always new developments in the banking business β but there β s no need to react to every innovation with a new tool. after all, you don β t buy a new screwdriver every time you buy a new shelf, regardless of whether you bought it from a swedish furniture store or from an exclusive manufacturer. are credit institutions earning enough money? banks are complaining about low interest rates and the resulting lower interest margin. the low interest rate environment is certainly a challenge in the long run. but the earnings performance of quite a few banks was already critical when interest rates were high. that β s because, among other things, we have a very large number of banks in germany, around 1, 600. there are, in fact, too many of them. they maintain a large and very costly network of branches. and because competition is fierce, the banks β margins are low. loans are cheap, some of them too cheap, and some banking services are being provided free of charge. that eats away at earnings. so we need more mergers. consolidation is necessary. some banks have already been moving in that direction, such as in the cooperative sector. there are now fewer than 1, 000 cooperative banks ; 15 years ago there 2 / 3 bis central bankers'speeches were several hundred more. but banks must continue to squeeze costs and open up new sources of revenue. so prices are set to rise for customers? not all banking services can remain as favourable as they are now. we see aggressive rates in some areas. while the supervisor doesn β t determine prices, generally speaking good services should command fair prices. such services can β t be free forever. do you understand why german savers are complaining about low interest rates? yes, i understand why, but every saver is an employee or a business person, and sometimes also a borrower | to each of these parameters. in the case of china, for example, while the appropriate size of the renmimbi β s appreciation will depend on considerations of macroeconomic balance in the context of the ongoing demand rebalancing, the degree of exchange rate flexibility could be used as part of the authorities β strategy for addressing the need to manage the effects of capital inflows while preserving domestic macroeconomic and financial stability. for countries facing large capital inflows, greater exchange rate flexibility may represent the most effective line of defence, reducing the need to accumulate official reserves. the main challenge posed by capital inflows for fixed - exchange - rate countries is to prevent them from feeding excessive growth in domestic credit, asset market booms and inflationary pressures, given the difficulty of fully sterilizing the domestic effects of reserve accumulation in a context of limited development of the internal financial market. while a crawling peg does not provide greater monetary autonomy than a fixed exchange rate ( it may even require maintaining lower interest rates than those in the anchor currency ), exchange rate flexibility β even within the limits of a fluctuation band β introduces a perception of two - way exchange risk, which should help discourage one - sided speculative bets on a renminbi appreciation. this buffering effect will be greater if the fluctuation band is sufficiently wide. such a regime would allow greater leeway for an autonomous monetary policy : a rise in domestic interest rates would normally be associated with a more appreciated exchange rate within the fluctuation band, and thus with greater scope for future depreciation ; it would not, therefore, trigger capital inflows if the band is credible. a possible second line of defence in the face of excessive capital inflows, particularly when these are a structural phenomenon, could be greater liberalization of capital outflows. this should be part of a broader process of fostering domestic financial development, both in order to ensure an efficient allocation of the country β s huge pool of savings and to support china β s increasingly globalized and sophisticated companies. related to this broad project is also the objective of enhancing the role of the renminbi as an international currency. in this context, the introduction of some degree of exchange rate flexibility ( possibly increasing over time ) can be seen also as a way of gradually allowing domestic investors and firms to familiarize with the management of exchange risk. here the interaction with financial market development is important : as domestic firms and banks become exposed to currency risk | 0 |
credit with respect to output with an upward shift since the end of the 1990s. faster credit growth is also a reflection of the wider dispersal across the economy. viewed in a holistic perspective, it is difficult to arrive at a clear judgment as to what rate of credit growth is too high in relation to potential growth. in the presence of the kind of structural changes that i have described above, even when the macro availability of resources is adequate to fund the increase in demand arising from both consumption and investment, there could be micro imbalances that lead to observation of excess demand and overheating. it is in this context that monetary management has to also look at imbalances that could be transitional. the challenge before us at the present time is to manage the transition to a higher growth path, in the presence of some structural rigidities, in such a way that actual inflation and inflation expectations are contained and do not become mutually reinforcing. our assessment is that while expansion of capacity is underway, the realisation, particularly in sectors like infrastructure could be constrained over the next two years. indeed, the difficulties with improving the supply response are more complex and challenging than aggregate demand management. supply management will need to encompass wide areas including labour markets, land laws and the content of regulation in each sector. as long as supply responses are less than elastic, they could show up as excess demand, causing inflationary pressures and raising inflation expectations. to reiterate, managing structural change while keeping inflation low without dampening the growth momentum is the quintessential challenge to monetary policy in the period ahead. illustratively, given the growth in consumption demand, rising incomes and high growth in sectors such as information technology ( it ), it is not surprising that there is a huge actual demand for housing, retail activity and office space from the burgeoning services sector. it is also not surprising that there would be associated problems on the supply side including availability of land, zoning and other land regulations, and social concerns about the conversion of land from agricultural purposes to other uses. therefore, monetary policy has to be creative in addressing these problems in a non - disruptive manner. it is in this context that prudential and other measures such as provisioning and risk weights on bank loans to specific sectors are being used so as to enhance the sensitivity to risks emanating from these sectors rather than standard monetary policy responses that address aggregate demand. the task before monetary policy is thus rendered complex, requiring that | 2005 ) : some apparent puzzles for contemporary monetary policy, speech delivered at the conference on china β s and india β s changing economic structures : domestic and regional implications at beijing during october 27 - 28. mohan, rakesh ( 2006 ) : new economic geography and monetary policy in a flattening world, observation as an overview panelist at a symposium sponsored by the federal reserve bank of kansas city at jackson hole, wyoming, august 24 - 26. mohanty, m. s., gert schnabel and pablo garcia - luna ( 2006 ) : banks and aggregate credit : what is new?, bis papers no. 28, august. rbi ( 2006 ) : handbook of statistics on the indian economy 2005 - 06, reserve bank of india rbi ( 2007a ) : macroeconomic and monetary developments : third quarter review, 2006 - 07, reserve bank of india. rbi ( 2007b ) : third quarter review of annual statement on monetary policy for the year, 2006 - 07, reserve bank of india. | 1 |
which fosters environmentally responsible and sustainable policies and work practices within the bsp. we have started instilling environmentally sound habits among ourselves by prohibiting singleuse plastics in our premises. we also issued the sustainable finance framework which forms the first phase of our enabling regulations on sustainability. for all these great initiatives to flourish, we need your support. you have been our partners in statistical undertakings, information requirements, advocacy programs, and various initiatives for many years. you never left us even during the most trying times. now, we enjoin you to help us prepare for the new economy by promoting digitalization, financial inclusion, and sustainability. together, we can b - s - p β build a stronger philippines. today, we celebrate ; and tomorrow, we will do great things again. on behalf of the bsp, let me extend our gratitude to all our outstanding partners who have been our anchors and pillars throughout this journey. congratulations at mabuhay tayong lahat! 2 / 2 bis central bankers'speeches | amando m tetangco, jr : vigilance amid stability and growth speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( the central bank of the philippines ), at the annual reception for the banking community, manila, 18 january 2013. * * * distinguished guests from the banking community, the government, philippine business, the diplomatic corps, multilateral institutions, ngos, the media, special guests, good evening and a happy new year. the bangko sentral ng pilipinas and its monetary board welcome all of you to this traditional annual reception for the banking community. this annual ritual provides us the opportunity to come together to review the past and to share our roadmap moving forward. but first, allow me to call on my co - hosts tonight, the other members of the monetary board : finance secretary cesar purisima, mbm alfredo antonio, ignacio bunye, peter favila, felipe medalla, and armando suratos. as you may have noticed, the high - rise bsp building behind us greets everyone β masaganang bagong taon. β in english, this means wishes for β a prosperous new year. β our collective wish, here at the bsp, is for balanced, sustainable and inclusive growth that brings prosperity to filipinos. we at the bsp believe that if we unite and work together, this is not impossible. ladies and gentlemen. while global headwinds continued to challenge economies around the world home - grown sources of resilience enabled the philippine economy to grow with a 6. 5 % increase in gdp in the first nine months in 2012. this surpassed growth projections and earned for the country the distinction of posting one of the fastest growth rates in asia. this strong economic growth was achieved with inflation remaining low and stable. at 3. 2 % in 2012, inflation was well within the target range set by the national government. this tells us that our monetary policy settings remain supportive of non - inflationary growth. at the same time, the philippines continued to have a strong external position with, based on the latest figures, a balance of payments surplus of $ 9. 2 billion for full - year 2012 and gross international reserves at $ 83. 8 billion as of year - end. this continues to enhance confidence in our ability to meet potential shocks. another source of resilience for our economy is our strong and responsive banking sector. as of november | 0.5 |
the united states and the authorities'measures to push forward with deleveraging. as for europe, production has declined since the second half of last year, mainly in germany, partly reflecting the tightening of gas emission regulations on automobiles within the european union ( eu ), and weaker exports to china also have been exerting downward pressure on the european economy. looking at japan's economy, exports - - mainly those of capital goods related to business fixed investment to china as well as the nies and the asean economies - - have been relatively weak since the turn of the year, affected by the slowdown in overseas economies ( chart 2 ). in addition, weakness in exports and related production is leading manufacturing firms to have cautious sentiment. on this point, since the kansai region, in particular, has a strong economic relationship with the asian economies, such as china, you may feel such developments. that said, domestic demand has remained firm. thus far, the effects of the slowdown in overseas economies do not seem to be exerting on domestic demand ( chart 3 ). business fixed investment has continued on an increasing trend, with corporate profits staying at high levels on the whole. according to the financial statements statistics of corporations by industry, quarterly ( fssc ), the ratio of current profits to sales for all industries and enterprises has remained at a historically high level. in this situation, business fixed investment on a gdp basis has maintained its uptrend, being positive for the april - june quarter on a quarter - on - quarter basis. turning to the household sector, private consumption has increased moderately, albeit with fluctuations. this is mainly attributable to the continued improvement in the employment and income situation ( chart 4 ). the active job openings - to - applicants ratio has been at a high level that exceeds the peak marked during the bubble period, and the unemployment rate has been in the range of 2. 0 - 2. 5 percent, remaining at around a low level that was observed during the bubble period. while labor market conditions have remained tight, employee income has been increasing. japan's economy thus has been on a moderate expanding trend, with a virtuous cycle from income to spending continuing to operate in both the corporate and household sectors, although exports have shown some weakness. with regard to the outlook, japan's economy is likely to continue on a moderate expanding trend, despite being affected by the slowdown in overseas economies for the time being. the keys to | much as 189 %. of course, we still have a long way to go to achieve a fully market - determined exchange rate, like for example switzerland, but we are on the right track and we are getting there fast! we need a ) a still deeper forex market, b ) buyers and sellers who engage in forward trade and have abandoned the " euro costs what it costs " principle, c ) exchange dealers who trade exclusively with banks. moreover, after the first two weeks this year when, as we had expected, demand for foreign currency went up substantially, the nbs intervened in the interbank foreign exchange market session on one day only. do we need another proof that the exchange rate is freely formed? last year's inflation of 6. 5 % in serbia matches the level achieved by its neighbours. to illustrate, by applying the foreign exchange regime of the currency board, bulgaria recorded 6. 5 % also, bosnia 6. 0 %, while hungary reached 6. 5 % and romania 4. 9 %. building on this, and primarily on the low inflation recorded in the final quarter of 2006, in 2007 the national bank of serbia will target the lower band of the 4 - 8 % core inflation corridor, set already in august 2006. let us now note the role of the monetary policy. last year was a key year for serbia, as it was finally recognized that monetary policy represents a significant and powerful tool whose importance cannot be overstated! this is a very important point to make, especially in serbia, where i can in all honesty say this is the first time a modern and proper monetary policy has been pursued! i find it quite normal and understandable that a person may come up to me in the streets of cacak, novi sad or belgrade and ask me why the national bank of serbia has only one objective and why this objective is β to achieve and maintain price stability β and not β to achieve growth and development, higher employment rates, exports, etc, β or why it is that the nbs needs to sterilize excess money and how it finances this sterilization. but when such questions are raised by β economists β and β experts β β well, that is a cause for much concern! i get the feeling that these people are trying to ignore a very valuable experience from the 1970s and 1980s. many experts seem to have slept through the past 20 years β but the economic science has been developing regardless! experiences from that time were well summarized at a conference | 0 |
nor shamsiah mohd yunus : keynote address - jc3 flagship conference keynote address by ms nor shamsiah mohd yunus, governor of the central bank of malaysia ( bank negara malaysia ), at the joint committee on climate change ( jc3 ) flagship conference, kuala lumpur, 23 june 2021. * * * it is my pleasure to speak at the jc3 β s flagship event today. this conference is an important platform for us to share knowledge, best practices and solutions in tackling the threat of climate change. since the last time we held this event in 2019, the world has been gripped by a health crisis of staggering proportions. it is unlike anything we have experienced in recent memory β with great economic and social costs. despite unprecedented and massive policy responses to the crisis, the crisis has led to some setbacks to past progress towards sustainable development goals. and the global community is still confronting the harsh consequences of under - investments in health, education, infrastructure and the environment, at the expense of more sustainable and inclusive growth. if anything, the pandemic has been a sobering wake up call to the importance of sustainable development and the urgent need to pay more attention to planetary health. even as governments and policymakers have been laser - focused in combatting the covid - 19 pandemic, climate - related events have continued to intensify. these events include displacement and disruptions due to storms, flooding and droughts. for example, between november 2020 and january 2021, a few states in malaysia experienced severe flooding. this led to the displacement of more than 25, 000 people, loss of lives and significant economic damage. last year, 53 weather disasters across the world racked up more than usd1 billion in economic losses 1. in fact, it is estimated that altogether, economic losses from natural disasters were more than a quarter of a trillion us dollars in 2020 2. these events are prompting a renewed determination around the world to achieve a new balance of economic, social and environmental progress. indeed, the pandemic presents a once - in - ageneration opportunity to place sustainable development firmly at the core of recovery plans. to date, governments of more than 120 countries have committed to β net zero β by mid - century or earlier. among the countries are some of malaysia β s major trading partners such as the eu, south korea, japan and china. similarly, more and more companies are also adopting net zero targets. it is noteworthy that in 2020 | spillovers of the financial crisis on economic growth, on unemployment and on public finances, the citizens in our countries will not forgive us, if we fail to draw the right lessons from the crisis. in my view, there are three main lessons to be learnt : β’ first, the need to build a more resilient financial sector, β’ second, the need for fully coordinated measures to that end at the global level, and β’ third, the need for all systemic economies to embark on sound macroeconomic policies over the medium and long term. the epicentre of the crisis was located in the financial sector. therefore the global financial system has to be made more resilient. current efforts are under way, and the focus must now be on implementation. this concerns both financial regulation as well as oversight. in the eu, financial sector supervision is on the way to be strengthened in a two - pronged approach. a european system of financial supervisors will be established to permit better coordination among national authorities that oversee financial regulation. and a european systemic risk board will be responsible for macro - prudential supervision. this new body will provide early warnings and issue recommendations to help prevent any renewed build - up of excessive risk in the financial system as a whole. these measures are not the end of the road on regulatory and supervisory reform, but, once implemented, a significant step forward. although they are aimed at the financial sector, they will serve the economy as a whole, not least manufacturers. the manufacturing industry has a stake in a stable and resilient financial system. the crisis has revealed the very high level of interconnectedness of the global financial system. this constitutes a compelling case for very close international cooperation and solutions at the global level. there is an overwhelming need to implement global reforms in a coordinated fashion and along the same concepts, in order to preserve a global level playing field that would be solid and resilient. finally, the crisis has again stressed the need for all policy - makers to contribute to financial, macroeconomic and price stability over the medium and long term. in the area of monetary policy, a sound legal and institutional framework for central banks promotes medium - term and stability orientation. the primary mandate of the ecb is to maintain price stability. to fulfil this mandate, the ecb and national central banks are institutions whose independence is firmly enshrined in law. this framework has been crucial to anchoring inflation expectations. it has also facilitated our task of maintaining price | 0 |
and their different projects should be offset by different risk premiums charged. this requires the commercial banks to charge interest to offset and cover the risk premiums, which is also for the purpose of absorbing losses from defaults which have low probability of occurring and account for only a small portion of the total loans. the nature of banking business is to take deposits, issue loans and make profits out of interest spreads. not all loans issued can be recovered. there is always a percentage of loans that result in losses and need to be absorbed by higher interest rate income. thus, it is crucial for banks to be able to decide on the prices charged to different clients so that they can prevent large amount of npls from forming or be able to dispose of them. if a one - size - fit - all interest rate is charged to different types of enterprises, the loss of some risky loans would not be covered. if accumulated, even losses on a small scale could evolve into large amount of npls. in sum, the progress of interest rate reform will have a bearing on the source and disposal of npls. market - based interest rate should not only be reflected in pricing of loan products and other assets, but also be extended to pricing of all kinds of services and deposits. in absence of good customers, the commercial banks could adjust their business strategy in two directions : one is to reduce activities on the asset side and expand business on intermediate service, which surely involves pricing of services ; the other is to cut business on both the liability side and the asset side. active management of the liabilities, either expansion or reduction, would surely require commercial banks to exercise discretion in pricing products on the liability side of the balance sheet, including deposits. in this regard, deposit interest rates shall remain flexible too. 3. commercial banks shall be allowed to make full provisioning and write off losses. the related tax polices shall be revised accordingly. bank loans are always subject to a certain degree of economic risks, and at some stage of business operation, the financial risks faced by banks are rather high. the commercial banks have to rely on operational income and profits to offset losses. we can see that in mature economies, banks are required to put aside all kinds of reserves, including risk reserves and others to guard against different types of risks. in the case of china, for a long time, commercial banks were not allowed to make full provisioning. one reason was that the reforms of commercial banks had not been completed. the other | by 1. 2 percent in the same period year - on - year, the august cpi registered a 0. 5 percent increase from the previous month. money growth accelerated in the first eight months, with m2 and m1 up 28. 5 percent and 27. 7 percent respectively, resulting in a credit growth of 34. 1 percent. the renminbi exchange rate remained stable. the domestic demand has become the dominant source of growth. the package of macroeconomic measures in response to the global financial crisis β suited to the chinese circumstances β has proven to be timely, forceful, and effective, and has helped reverse the sharp decline in growth. the projected growth target for this year is within reach. efforts are also being made to contain fiscal and financial risks. the government intends to limit the fiscal deficit and public debt to around 3 percent and 20 percent of gdp, respectively. the banking system has improved its asset quality and resilience to shocks. the nonperforming loan ratio of the banking sector declined by 0. 64 percentage points in the first six month to 1. 8 percent at end - june. and their capital adequacy stood at 11. 1 percent. the chinese government is faced with an uncertain global environment. in the first eight months, exports dropped by 22. 2 percent while imports, by 22. 7 percent. the task for structural adjustment remains formidable. while the effect of the supportive policies is expected to phase out, the measures aimed at addressing longer - term issues will take time to yield results. the government is committed to maintain stable and consistent macroeconomic policies while accelerating structural adjustment. promotion of domestic demand, particularly consumption, will remain a top priority. in this regard, the government is committed to maintain a reasonable investment growth, improve investment structure, and enhance efficiency by eliminating inefficient capacity and encouraging merger and restructuring. it will continue to restructure and revitalize key industries, encourage innovation, and improve the people β s livelihood. it will monitor closely the developments in the domestic as well as the global economy and stand ready to take contingent actions, as necessary. china will also remain vigilant against various potential risks, including the risk of inflation, and sustain strong economic growth. against the economic rebound in mainland china and easing of the downside risks in the global economy, the hong kong sar economy in the second quarter recorded a 3. 3 percent rebound over the previous quarter, and the decline in exports moderated. total employment stabilized and the | 0.5 |
result of brexit could add to demand, although brexit could also have a negative effect, in particular on retail commercial real estate if consumer sentiment is adversely affected. existing commercial real estate exposures leave irish retail banks vulnerable to any change in market conditions. house price growth has been rising steadily since late 2016, while survey data show further price increases being expected over the medium term. high rental growth is also being observed. a scarcity of housing in certain locations is contributing to price and rent developments in the residential property market. there has been a substantial decline in vacancy rates in recent years, particularly in high population growth areas. the number of residential properties listed for sale or for rent is also low. there is some uncertainty surrounding official housing completion data at present but the number of new units being built and likely to be constructed over the medium term is below demand. the central bank introduced macroprudential mortgage - lending requirements in february 2015. the outcome of a review of these requirements was announced in november 2016 and found that the regulatory framework is appropriate and effective in meeting the objectives of the measures, which are to strengthen households β and banks β resilience to shocks and to curb price - credit spirals in the housing market. we have committed to review the measures on an annual basis. the general government deficit ratio continues to improve and the medium - term deficit target is projected to be achieved in 2018. the public debt burden, at around β¬42, 000 per person resident in the state, however, remains high by historical and cross - country comparison, leaving the sovereign vulnerable to real economy and financial market shocks. looking at the financial sector, irish retail banks β profits, while remaining positive, fell in 2016 as a substantial reduction in the write - back of impairment provisions occurred. operating income increased last year, with the domestic market accounting for almost 80 per cent of revenue. brexit could adversely affect those irish retail banks with a significant presence in the uk. new lending to the uk fell by over 18 per cent in the twelve months to 2017q1, with a drop in uk mortgage lending and exchange rate movements contributing. irish retail banks β aggregate loan book has become more concentrated in recent years in residential mortgages and in lending to irish counterparties. developing a sustainable model to address declines in their main income sources and the eventual normalisation of interest rates represents a challenge for irish retail banks. 2 / 3 bis central bankers'speeches the aggregate value of total assets held by | be associated with self - control problems. 3 in addition, households can be overly attached to the status quo and suffer inertia bias, taking default options in financial contracts, failing to switch product or provider even when there are clear benefits to switching. 4 retail investors also tend to follow naive investment strategies rather than identifying superior options. 5 consumers can also exhibit loss aversion bias, meaning that they care more about potential losses than making equivalent gains. 6 the design of financial products and services can serve to ease or exacerbate these biases. in this context, behavioural economics shows that framing matters β put simply, firms can present the same information in different ways and this can lead to different choices by consumers. a key insight from the recent experience with financial crisis and from the growing literature on 1 / 9 bis central bankers'speeches behavioural economics, is that consumers do not always act in their own best interest. in addition, market forces do not always act to reduce consumer mistakes. firms face their own incentives when designing and framing products, and these incentives may not align with the best interests of the consumer. for example, analysis by the office of fair trading in the uk shows that firms can frame prices in a way that plays on consumer biases. 7 empirical research also suggests that firms can choose to market the salient features of products that appeal to consumer biases, while shrouding the less favourable aspects that could alter a consumer β s choice to purchase that product. 8 the interactions between misaligned incentives and behavioural biases can adversely affect consumer welfare, and there are many examples of analytical work that highlight such costs. 9 in summary, there is abundant empirical and theoretical research to show that consumers do not always act in their own best interest in making financial decisions and that biases can be exacerbated by the design of financial products. in this context, financial regulation to protect consumers can play a critical role and i would now like to talk to you about the institutional arrangements for the protection of consumers across the globe, and the vision for consumer protection at the central bank of ireland. consumer protection : institutional setup around the world, institutional arrangements in place to protect consumers vary from stand - alone consumer protection agencies to bodies with dual regulation and consumer protection mandates and bodies like the central bank of ireland with financial stability, prudential regulation and consumer protection mandates. 10 measures applied to protect consumers range from working to ensure financial stability, through prudential and macro | 0.5 |
peter praet : communicating the complexity of unconventional monetary policy in emu speech by mr peter praet, member of the executive board of the european central bank, at the 2017 ecb central bank communications conference " communications challenges for policy effectiveness, accountability and reputation ", frankfurt am main, 15 november 2017. * * * central bank communication has been fundamentally affected by the fallout from the global financial and economic crisis. 1 throughout that period, central banks succeeded in preventing a de - anchoring of inflation expectations. to do so, they adopted a broad range of unconventional measures, the functioning of which is very difficult to explain to the public. this applies, for example, to the notion of negative nominal interest rates, which is hard to communicate because it challenges the conventional wisdom that thrift and patience are virtues that deserve pecuniary remuneration. against this backdrop, i would like to discuss three communication challenges that are particularly relevant to the euro area and the ecb β s monetary policy. the first challenge is to bear in mind the multi - country nature of our monetary union, which requires communication to be tuned to the specific context of different national audiences so as to ensure broad participation in the public debate on euro area monetary policy. the second challenge for monetary policy communication is to take into account the increasing complexity of monetary policy by ensuring consistency over time and clarifying the state contingency of the policy stance. to ensure consistency over time, it is essential for the central bank to adopt a clear organising framework, centred on the ultimate objective, for the ecb consisting of price stability, and adhering to a state - contingent reaction function that determines how the monetary policy stance adjusts to changing economic conditions. as the economic environment that monetary policy faces may indeed be subject to massive swings, state contingency may entail pronounced differences in the monetary policy stance over time. this, in turn, requires careful explanation β in particular in circumstances that call for unconventional measures and, hence, leave markets and the general public without empirical precedent to help them anticipate and rationalise the central bank β s actions. the third challenge is for the communication framework to provide clarity on the use of specific tools in a multi - instrument context, when the central bank reaction function acquires an additional dimension. in normal times, the central bank reaction function mainly specifies the contingencies for loosening, tightening or maintaining a given policy stance. in unconventional times, it also needs to spell out which tool would | twenty years, it seems to me that an unfortunately well - founded criticism could be that we have constantly under - assessed the rapidity of the stream of history : the rapidity of the deterioration of the situation in the ussr, the rapidity of the collapse itself, the rapidity of the enlargement process, the depth, the strength and the intensity of the β desire of europe β which is spreading in the countries in transition. second word : stability. economic and financial stability, in a period of excessive volatility and of wide boom - bust episode, financial and real stability appear to be a very precious asset. over the last twenty years, we have constructed a new world : technology has permitted instantaneous communication and incredibly powerful real - time computation. globalization has created new cultural, conceptual, commercial and financial links between all economies including previously centrally planned systems ; together technology and globalization are progressively driving us to a unified planet of universal rules and regulations, code of conduct and practices, market procedures and market instruments, accounting standards, etc. in this new world, phenomena which had traditionally a local or even a national impact may be amplified and become dangerous at the global level : amplification of financial cycles, herd behaviour, global contagion. analysing the opportunities and the risks, and understanding the functioning of our system with a view to making it as stable as possible is a very exiting, ambitious and urgent task. and, last but not least, union. i can not avoid mentioning the question of completing monetary union with the entry of the united kingdom. i would like to stress the following points in this regard : let us never forget that the uk is unanimously warmly welcomed in the euro area. it depends only on the decision of the british people and of the british authorities to join in. you know that the germans and the french on the continent, as well as all other nations on the continent are very warmly hoping for a positive decision by the uk. i thank you for your attention. | 0 |
the sadc rtgs system, formerly known as siress, was developed as a catalyst to support the regional financial integration agenda towards the realisation of sadc β s aim of facilitating trade and investment in the region. prior to the implementation of the 1 international standards organization page 3 of 10 sadc rtgs system, regional cross - border transactions were settled via correspondent banking arrangements, which are prone to counterparty risk, lags in the settlement of these transactions on a t + 1 or t + 2 basis, and short cut - off times. the system was implemented through a public - private partnership between central banks and the commercial banking industry. the role that other partners played in the project β partners like the finmark trust, the european union, the world bank, the bill and melinda gates foundation, and the international monetary fund ( imf ) β is also appreciated and valued. the system currently settles transactions for 82 participating banks drawn from 14 countries across the sadc region. since july 2013, it has settled over 1. 2 million cross - border transactions and a cumulative peak value of r5 trillion, which was reached in october 2018. a project is currently underway to replace the sadc rtgs platform with a solution based on modern technology, which will provide, among other things, multi - currency capabilities, flexible settlement windows per currency, and re - engineered business processes to support the possible future business needs that could utilise distributed ledger technology ( dlt ). vision 2025 it is imperative that we continue to build on our legacy in our quest to enhance the safety, efficiency and accessibility of the nps in a manner that promotes competition and minimises risk to the payments ecosystem. as outlined in vision 2025, we will pursue this objective by leveraging technological developments to extend the availability of digital payment services to all sectors of society while meeting domestic, regional and international requirements for the benefit of all members of south african society. the nps affects the lives of all south africans. essentially, it exists to serve the economy and, through it, the people of south africa. it is a crucial enabling factor for page 4 of 10 economic activity among consumers and businesses. payment systems can, for example, enable seamless links to public transportation. a recent study by visa titled the cashless cities : realising the benefits of digital payments 2 reveals that, should johannesburg reach a state where 100 % of transactions are digital, the city would gain just under us $ 500 million in net benefits cumulative | ##ly for consumers, business and government per year. the study further suggests four main long - term benefits over the next 15 years : an increase in employment, an increase in the gross domestic product ( gdp ), and marginal increases in wages and productivity. the emergence of fintech, the fourth industrial revolution and the continuing shift from the industrial to the digital economy all hold significant benefits and could materially contribute towards lifting the growth potential of our economy. i would like to demonstrate this by referring to examples of other countries that have not only embraced technology, but that are reaping the fruits from their foresight. the potential of fintech according to financial sector deepening africa, a development finance organisation, fintech is expected to contribute at least us $ 40 - 150 billion 3 to sub - saharan africa β s economic output by 2022. in a similar vein, accenture β s pivoting with ai report 4 states that embracing artificial intelligence, in - process automation and augmenting human capabilities could potentially double the size of south africa β s economy in a few decades. however, the most compelling evidence for the potential of fintech comes from some small countries in europe and many from the east. the digital revolution has increased the growth potential in these countries. 2 compiled by evidence - based economics research firm roubini thoughtlab based on 2016 data and published in 2018 3 https : / / techcentral. co. za / fintech - seen - adding - 150 - billion - to - africas - gdp / 83628 / 4 https : / / www. accenture. com / za - en / _ acnmedia / pdf - 85 / accenture - pivoting - with - ai - pov - brochure. pdf # zoom = 50 page 5 of 10 estonia a country leading the charge in embracing fintech and setting the pace towards the digital economy is estonia. it is a small country, with minimal natural resources. in 2018, there are only three things you cannot do online : get married, get divorced, and buy real estate. everything else largely happens digitally. estonia has introduced e - identity, digital signatures, e - residency and i - voting. the estonian entrepreneurship growth strategy 2020 outlines the strategy for the estonian economy for the next seven years, focusing on three main challenges in order to increase the wealth of estonia : increasing productivity, stimulating entrepreneurship, and encouraging innovation. allow me to quote some resounding statistics marking the success of some of | 1 |
john hurley : schools β information pack on price stability speech by mr john hurley, governor of the central bank and financial services authority of ireland, at the launch of the schools β information pack on price stability, dublin, 24 january 2006. * * * a aire agus a dhaoine uaisle. dia dhibh go leir agus cead mile failte romhaibh go dti an banc ceannais. minister, president of the business studies teachers association and guests, you are all very welcome to the central bank. i am delighted that you could be with us today as we launch this new schools β information pack, price stability : why is it important to you. i am particularly happy to also welcome the students and their teachers today from marian college, st. mary β s cbs, st. vincent β s secondary school, scoil caitriona and st. mary β s college. they have come from various parts of the country to be with us today. i hope you β re not missing too many important classes as a result! developed by the european central bank and the 12 national central banks of the euro area, including, of course, our own central bank, this is a unique initiative. for the first time, the central banks of the euro area have produced a single cross - border education pack. it is being distributed to 50, 000 secondary schools, not only in ireland, but throughout the 12 countries that share the euro as their currency. i would like to say at the outset that i am delighted that the central bank has an opportunity to be involved in this way with the education of irish students on issues which are relevant in all our lives. while setting monetary policy and ensuring price stability may not seem on the surface to be one the most interesting of topics for young adults, i can assure you that it has a significant impact on the lives of each and every one of the 300 million people of the euro area. this information pack, i hope, helps to make it a little more interesting than you might expect and maybe even a little bit enjoyable, if that is possible! now, i β m sure that many young students will probably think, β well, price stability is not actually that important to me β¦ β but in fact, stable prices and low inflation are a guarantee that your pocket money or savings from your summer or weekend jobs can buy you the things you want throughout the year. stable prices also help promote economic growth and | stefan gerlach : banking and fiscal union introductory remarks by mr stefan gerlach, deputy governor of the central bank of ireland, at a panel session at the eui conference on β the state of play in the euro area β fixing the emu for the long term β, florence, 21 january 2013. * * * i am grateful to rebecca stuart for her help in preparing these remarks. while plenty of work has been undertaken since last summer on establishing a european banking union, progress has been uneven and it has stalled in some areas. of course, it is difficult to build consensus in a situation where bank resolutions may become necessary, and deposit insurance schemes could be called on, in the near future. this is a matter that ideally should have been discussed and settled when emu was formed, much in the same way as a car must be insured before it can be driven. unfortunately, that route was not taken. much of the interest in banking union arises because it is a necessary, but not sufficient, condition for the esm to recapitalise banks. indeed, the establishment of the single supervisory mechanism ( ssm ) with the ecb is frequently seen as having been adopted precisely because this is the fastest road, legally and institutionally, to banking union. it is of course essential and urgent to enable the esm to support banking systems in order to overcome some of the tensions in the euro area, and there is intense public debate about how best to structure the ssm. in my introductory remarks today, however, i would like to take a step back from that debate and instead reflect more broadly on why a banking union is important for any monetary union to function well and why it is natural to locate the ssm with, or at least β close to β, the central bank in such a union. banking supervision why might it be beneficial to have a ssm in a monetary union? to my mind, one important reason is that a greater remove between supervisors and the banks they regulate can help improve the capacity for challenge and ensure a broader, more detached, perspective on the issues. in particular, it would ensure the independence of the supervisory and regulatory decision - making process from national political pressure, and avoid regulatory capture. for example, a distant supervisor may take action to address risks arising from a bubble in good times that a national supervisor would come under pressure to overlook. it also seems unlikely that a banking supervisor from, say, italy or ireland, sitting in frankfurt, | 0.5 |
basel framework ; and Β· information on exposure concentration, exposures to connected parties, asset quality and profitability. the key information summary must be displayed prominently in, and be available on demand from, every bank branch. the general disclosure statement contains wider - ranging and much more detailed information on the bank and its banking group, including : Β· comprehensive financial statements ; Β· credit rating information ; Β· detailed information on capital adequacy, asset quality and various risk exposures ; and Β· information on the bank's exposure to market risk. one of the most important features of this disclosure framework is the role it accords bank directors. each director is required to sign and make certain attestations in the disclosure statements, including : Β· whether the bank is complying with the prudential requirements imposed on it by the reserve bank ; Β· whether the bank has systems in place to adequately monitor and control its banking risks and whether those systems are being properly applied ; Β· whether the bank's exposure to connected parties is contrary to the interests of the bank ; and Β· whether the disclosure statement contains all the required disclosures and is not false or misleading. directors face potentially severe criminal penalties and civil liability where a disclosure statement is held to be false or misleading. complementing the disclosure requirements, banks incorporated in new zealand are required to have a minimum of two independent directors ( who must also be independent of any parent company ) and a non - executive chairman. these requirements are intended to increase the board's capacity to scrutinise the performance of the management team. in addition, independent directors provide some assurance that the bank's dealings with its parent or other related parties are not in conflict with the interests of the bank in new zealand. the disclosure requirements have increased the accountability of bank directors and, indirectly, the accountability of various levels of management within the banks. as a result of the disclosure arrangements, we have seen directors taking greater care than might otherwise have been the case to ensure that they are adequately discharging their obligations. in so doing, directors have strong incentives to ensure that there are appropriate accountability mechanisms within the management hierarchy. | agency is not a substitute for sound corporate governance practices. ultimately, banking system risks are most likely to be reduced to acceptable levels by fostering sound risk management practices within individual banks. instilling sound corporate governance practices within banks is a crucial element of achieving this. as the commonwealth secretariat's report notes, there are a number of ways in which corporate governance in the financial sector can be strengthened. these include : Β· having a well designed and enforced company law ; Β· having codes of principles developed by professional or industry associations, setting out desired attributes of corporate governance, and associated educational and consciousness - raising initiatives ; Β· maintaining high quality disclosure requirements for banks and other companies, based on robust accounting and auditing standards ; Β· adopting measures to strengthen market disciplines in the banking sector, including by promoting a contestable and competitive banking system and seeking to ensure that bank creditors are not fully insulated from loss in a bank failure ; Β· effective banking supervision arrangements, with particular emphasis on policies that encourage sound governance and risk management practices ; and Β· leadership by example, including the adoption of sound governance, accountability and transparency practices by central banks and regulatory agencies. new zealand's approach to financial stability against this background, let me briefly summarise the new zealand approach to promoting financial stability. this has three main strands : Β· promoting self discipline by banks in the management of their risks ; Β· fostering effective market discipline on the banking system ; and Β· supervising banks for the purpose of promoting financial stability, but seeking to avoid supervisory practices that might erode market discipline and weaken the incentives for bank directors to take ultimate responsibility for the management of risks. let me elaborate on each of these in turn. banks'self discipline in managing risks banking supervision in new zealand places considerable emphasis on encouraging banks'self discipline in managing risks, primarily by reinforcing the role of bank directors in taking ultimate responsibility for the stewardship of their banks. since the mid 1990s, when a new public disclosure framework was introduced for banks, a key mechanism for encouraging banks to manage risks prudently has been the need for banks to issue public disclosure statements each quarter. the disclosure statements are in two forms : a brief key information summary, which is aimed at the ordinary depositor ; and a more comprehensive general disclosure statement, which is aimed principally at the professional analyst. the key information summary contains a short summary of information on the bank, including : Β· the bank's credit rating ; Β· the bank's capital ratio, measured using the | 1 |
the loss of information due to removal of controls. in fact, many analysts hold the view that the financial crisis that hit the asian economies about ten years ago was partly occasioned by inadequate data on the activities of the banking system. in highly deregulated regimes, sometimes, conducting a survey is the only option available for obtaining the data necessary for policy making. however, we do recognise that a survey has to be properly designed to serve the objectives. firstly, quality of data derived from surveys depends on the methodology and standards used for these surveys. an international conference of this type is useful for sharing of country experiences on these issues and, hopefully, you will benefit by learning from varied experiences in making judgments on the complex issues involved. secondly, in a country like india with significant diversity, the matching of survey β design with target population is important. the diversity encompasses several languages, different customs and culture, and variation in levels of literacy and understanding. no doubt, respondents vary across objectives of surveys. thirdly, even a perfectly prepared questionnaire is of no use if large number of people fail to complete it. thus, the main goal of any survey implementation plan should be to obtain a high response rate. as far as our experience with survey responses is concerned, we do not encounter problems with the regulated entities like banks from whom the response is generally more than 90 per cent in most of the surveys conducted whereas the response rate drops significantly when the survey is conducted amongst non - regulated entities. however, the response of households to the inflation expectations survey is almost 100 per cent. even after increasing the sample size considerably, we continue to get good response, though it is difficult to ascertain the reliability of responses from different categories of households, in view of the varying degrees of awareness. in any case, the erroneous responses in this sector are likely to be higher than in the case of banks and other financial institutions, where the percentage of erroneous responses is normally remaining in single digit. fourthly, survey data are subject to well - known types of bias. for example, since respondents know that they are being studied, and have at least some idea why, they may change their answers, either consciously or unconsciously, to show themselves in a better light or to conform to the expectations of those who are studying them. this is fairly common in inflation expectation survey. fifthly, from the perspective of policy - making, the primary purpose of conducting a survey is to produce data that will help | a couple of weeks ago ( 12th june 2007 ) in his opening address at the workshop on the compilation of banking statistics in kenya. first, there are varied users of the banking data such as government, central bank, market participants, researchers, etc. the data and analysis, therefore, have to be user friendly. second, he stated that the dynamic nature of our economies necessitates our becoming dynamic in our approach to data compilation. for my part, i would like to add, by way of concluding remarks, that in data or surveys, there should be consistency with global standards but the scheme has to be tailored to meet the domestic interests and needs. no doubt, we have to learn from each others β experience but need to adapt to the country - specific context. let me conclude by wishing you all the best, and a safe journey with pleasant memories of a productive stay in pune. thank you. | 1 |
factors behind such weak developments. one is that the mindset and behavior based on the assumption that wages and prices will not increase easily have been deeply entrenched among firms and households, due mainly to the experience of prolonged low growth and deflation. the other is that the room to raise productivity and the technological progress have allowed firms to absorb a rise in labor costs by increasing labor - saving investment and streamlining their business process, and thereby constrain price rises. on the other hand, although the pace of improvement in prices has remained slow, some changes have been seen amid the improvement in the economic and employment conditions. for example, moves to raise sales prices are starting to be observed at a wide range of firms, mainly in the services sector. according to the tankan, the number of enterprises answering that the output prices have risen has been exceeding the number of those answering that such prices have fallen. also, with the aging of the population, labor market conditions are likely to tighten further and the pace of increase in hourly scheduled cash earnings of part - time employees is expected to accelerate. in addition to such moves, if full - time employees'wages increase with an improvement in productivity, this will lead to an increase in households'tolerance of price rises. while price developments are affected by various factors, i consider that the factor that determines the underlying trend in prices is the aggregate supply - demand balance. as the output gap remains positive, various factors behind the weak developments in prices will likely be resolved gradually. if that happens, firms'wage - and price - setting stance and households'tolerance of price rises will improve, and the pace of increase in inflation expectations will accelerate gradually. iii. conduct of monetary policy let me now turn to the bank's monetary policy. the bank has set the price stability target at 2 percent in terms of the year - on - year rate of change in the cpi and has been conducting monetary policy to achieve this target at the earliest possible time. to this end, the bank has been pursuing powerful monetary easing, considering developments in economic activity and prices, as well as financial conditions, under the framework of quantitative and qualitative monetary easing ( qqe ) with yield curve control introduced in september 2016. the bank, under this framework, has been conducting yield curve control, in which it controls short - and long - term interest rates. specifically, at present, according to the guideline for market operations, the bank sets the short - term policy interest | working long hours are common ; in my view, there is still considerable room to enhance work efficiency through such initiatives. the second is women's participation in the economy. in japan, the labor force participation rate of women in the working - age population has reached 70 percent, which is considered a high level on a global standard. i expect that this trend will encourage firms to assign more women to value - added work and promote them to managerial positions from now on. the third is employment of seniors. although their employment has been progressing, there remains considerable room for improvement, as there are gaps between what they can accomplish through their ability and will, and what they actually are assigned to do. the fourth is employment of foreigners. although their employment has been increasing gradually, it is still vital to further develop systems to accept them. lastly, the fifth example is labor - saving efforts through utilization of information technology including the use of robots. japan is a leading country in robotics, and i believe that we should expand its application from manufacturing operations to other kinds of work, including administrative work. as these initiatives toward structural reforms and a growth strategy bring about benefits including improvement in business efficiency, they may exert downward pressure on wage increases in the short term, but in the longer term, they will raise the productivity of the economy as a whole, thereby strengthening its growth potential. i believe that improving productivity would stimulate price rises through increases in wages and private consumption. nevertheless, even now there are firms that maintain their cautious wage - and price - setting stance, as they are concerned, for example, about a shrinking of the domestic market size and the issue of succession for businesses ; they also lack confidence in growth in private consumption. let me note that raising productivity and growth potential is a time - consuming task. therefore, while the bank's conduct of monetary policy stimulates aggregate demand and suitably tight supply - demand conditions are being maintained, a virtuous cycle in which active demand encourages progress in various initiatives should remain intact for a long period of time. i believe that, with a view to achieving its price stability target and realizing sustainable economic growth in a coordinated manner, the bank should continue with its monetary easing policy and firmly support the various initiatives taken by a wide range of entities. | 1 |
, after the formation of the albanian state. during ww2, the albanian currency underwent radical changes. on its obverse and reverse we no longer see king zog. instead, victor emanuel iii is featured and the most significant change is that the albanian franc was officially pegged to the fate of the italian lira. we will have the opportunity to hear, during the day, other interesting and important examples in the monetary and economic history of albania. dear ladies and gentlemen, this conference does not seek to analyse wars and the various factors triggering them ; instead, it aims to show how the radical changes introduced by wars or conflicts on political systems and alliances, or the divisions between states have affected monetary developments. the history shows that conflict or war periods are particularly related to radical changes in monetary systems and policies. over the centuries, we find various examples of such developments, materialised in changes in the monetary system or introduction of temporary fiscal policies, additional quantity of money 1 / 2 bis central bankers'speeches issued before the start and during a war, massive circulation of a monetary type in areas far away from their place of origin, higher number of hoards found in a conflict zone or massive usage of the currency of allied countries. numerous phenomena testify to the constant presence of a relationship throughout epochs, between military conflicts on the one hand and the role of money in wartime on the other. to better reflect the relationship between conflicts or war and money, we have decided for the conference proceedings to follow a chronological order of presentations, starting from antiquity, to middle ages and the modern history of the xx century. our guests are distinguished professors, scholars, historians, and representatives from central bank museums who responded to our invitation to research and lecture on this topic. the views and conclusions expressed in the presentations are of the authors and not necessarily of the respective institutions or the bank of albania. wishing success to the conference, i hope that all the participants will benefit from the interesting presentations that will be shared with the audience today. i have now the pleasure to invite our keynote speaker, prof. olivier picard, former director of the french archaeological school in athens, professor at the sorbonne university, member of the β academie des inscriptions et belles β lettre β ( institute of france ), who will hold a presentation on β minting of coins in illyria in wartime β. thank you! 2 / 2 bis central bankers'speeches | elisabeta gjoni : role of money in wartime opening remarks by ms elisabeta gjoni, first deputy governor of the bank of albania, at the second conference of the museum of the bank of albania, tirana, 20 september 2018. * * * dear guests, participants, researchers, academics, numismatists, collectors, students, welcome to the bank of albania! it is a special pleasure for me to open the proceedings of the second conference of the museum of the bank of albania on β role of money in wartime β. the rich collection of coins and banknotes and other items exhibited in our museum becomes more meaningful when supported by the historic background of the period of the country of issue. the organisation of this conference, an annual one, contributes to the both the historic and educational role of the museum. this conference is also an excellent opportunity to share experiences with representatives of the main institutions of culture in albania and museums of central banks and other prominent foreign institutions in this field. i am happy to see in this room both old and new collaborators, whom we wish to be β permanent consultants β of the bank of albania. we aim to create and cultivate a solid and productive relationship with the best experts in numismatics, museology, cultural heritage and research. dear participants, today β s presentations will address the mutual, complicated and multi - dimensional relation between money and war. wars have had an impact on the economy and development of human kind from the birth of civilisations to modern times. meanwhile, in the words of the socrates, the greek philosopher, β all wars are fought for money β. we heard some good examples that illustrate this relation in last year β s conference. we heard from prof. picard about king monunius, who is known thanks to the respective coin. he had it minted for the sole purpose of raising a strong army, convinced that his might rested with the army. from prof. egro, we learned that mahmut pashe bushatlliu and ali pashe tepelena tried to introduce their coins and banknotes, independently from the ottoman empire, not for financial purposes but as a token of rebellion or an attempt to break away from the empire. later on, in ww1, we see the banknotes of the republic of korca, which are a rare phenomenon not only in terms of numismatics, but also a materialisation of the early issues as a result of the war | 1 |
, it is the force of an argument, rather than who makes it, that commands respect. i can assure you that we have a very comprehensive monetary policy preparation process in place in the central bank, which ensures that we play a full part in the formulation of euro area monetary policy. we also play a full part in the monetary policy implementation process. at the operational level, central bank staff carry out the eurosystem's money market management operations with dublin based banks. the banking system in ireland actually takes a disproportionately high share of funding in ecb operations. this reflects the importance of dublin as a financial centre, as testified by the still growing number of financial institutions choosing ireland as a location for their operations. thus, in terms of our interaction with the market, it may be surprising but it is nonetheless true that membership of monetary union has actually brought the central bank in contact with a wider range of domestic counterparties than was the case before 1999. the eurosystem is also responsible for the smooth operation of payment systems. the main instrument for carrying out this task is the provision of payment and securities settlement facilities. to this end, the eurosystem has created target for large - value payments in euro. at present, target is a'system of systems'made up of interlinked national payment systems, and again here the central bank plays a full part. in excess of one million transactions, amounting to almost eur5 trillion, were processed through the irish system in 2004. this represented 1. 5 per cent by volume of the total transactions processed by the target system last year. while i have focussed on the central bank's responsibilities in relation to eurosystem monetary policy, i would like to emphasise that this is only one part of what we do. additional responsibilities, among other things, include contributing to the maintenance of financial stability and providing banknotes and coin ; our full set of responsibilities are set out in the three year strategic plan which we published in 2004. this gives you a flavour of some of our activities and i feel i should now stop and hand over to tom o'connell and his team who will tell you a lot more about the role of the central bank as a member of the eurosystem, with a particular focus on monetary policy. once again i would like to thank you for taking the time to come here this morning. | john hurley : the central bank and the eurosystem introductory remarks by mr john hurley, governor of the central bank and financial services authority of ireland, at the seminar for irish media, dublin, 6 december 2005. * * * introduction i would like to begin by thanking you all for making time to come here this morning. this promises to be a busy news week and i am sure there are many other demands on your time, so i am very grateful that so many of you have turned up this morning. the aim of the session is to give an overview on the role of the central bank as a member of the eurosystem. the main focus is on monetary policy, looking at the strategy, the experience to date and communication. the session will also include the launch of some new euro area statistics. experience and achievements for almost seven years now the euro area has had a single currency and a single monetary policy conducted by the governing council of the ecb. the introduction of the single currency has been an historical landmark. in twelve countries, the euro has replaced the national currency and rapidly become part of everyday life. for the business community, intra - euro area exchange rate volatility and the uncertainty it caused for trade and investment have been eliminated. in the financial area, the role of the euro in global markets and the growth in the use of the new currency outside the euro area have also been impressive. the euro has very quickly become an important part of the global financial system and the evidence of the past seven years is that its role can continue to grow. within the euro area, the key challenge has been to formulate and implement the single monetary policy. as you are well aware, it has not all been plain sailing. since coming into being, the single monetary policy has been conducted in a very testing environment, characterised by a series of shocks. at various times, especially in the early years, there were periods of exceptional economic, financial and geopolitical uncertainty. the first 18 months witnessed a very strong increase in oil prices, the peak of the dotcom boom and a significant fall in the value of the euro. the subsequent correction following the collapse of the dotcom boom, allied to heightened geopolitical tensions, then triggered the most critical and sustained period of economic and financial uncertainty witnessed in decades. this persisted until early 2003, and while uncertainty has unwound considerably since, the sharp rise in oil prices has led to uncertainty returning periodically in the interim. on top of | 1 |
capital adequacy ratios or a reserve requirement. nor can an increase in the repo rate be ruled out if financial stability is threatened. however, these are more far - reaching measures and would only be used if the build - up of risk was assessed to constitute an acute problem. the assessment of the situation made by the riksbank and other authorities will always be marred by a large measure of uncertainty, as it is extremely difficult to evaluate how serious the build - up of risk actually is. if drastic measures are to be taken, the assessment must be based on a strong foundation. the development we can see today is, as i mentioned earlier, far from requiring any intervention. the riksbank β s assessment is that if the macroeconomic situation should worsen, it will lead to problems for individual households in meeting their payment obligations, but will hardly comprise a serious risk for banks in general and therefore not threaten financial stability either. in this context it is important to mention that the household sector normally accounts for a small percentage of loan losses, even during the banking crises. there is thus no reason in the current situation for the riksbank to resort to special measures to intervene against the build - up of debt currently occurring in the household sector. when discussing the banks β loan losses, i have alluded to the risk that households and companies will not be able to pay their loans. loan losses can also arise when the banks cannot meet the obligations among themselves. these risks are usually called counterparty and settlement risks. this type of risk arises in the banks β trading and taking positions in the financial markets. as the major swedish banks have extensive commitments to one another and also to foreign banks, problems in one bank can rapidly spread to the others and cause problems throughout the entire financial system. such a problem need not be due to a bank being insolvent ; it may be based on, for example, a failing computer system or similar. the riksbank has on several occasions pointed out that these individual exposures are a growing problem from the point of view of stability. to overcome this problem, the riksbank has begun a review of the regulations, together with the swedish financial supervisory authority. conclusion in the current situation there are great expectations that the future will bring economic growth and good times. β the new economy β with a low inflation rate and high levels of employment and growth has gradually crossed the atlantic to reach us. in such times of strong confidence in the future, consumption | for resource utilisation and inflation. however, we still anticipated that inflation would be in line with the target two years ahead. the conclusion drawn by the riksbank in august with regard to future inflation still largely stands, in my opinion. however, there may be reason for some upward revision to the inflation forecast made in may, and perhaps even to the one made in august. one factor which could indicate a higher inflation rate, at least in the short term, is the high oil prices. resource utilisation may also be slightly higher than anticipated in the coming years. one reason is the strong figures for swedish growth that we have seen over the summer. another is that fiscal policy will probably become more expansionary now. inflation can nevertheless be expected to be in line with the riksbank's target two years from now. this is also the picture painted in a speech by riksbank governor lars heikensten in london today. conclusion let me summarise what i have said this evening. despite stock market fluctuations and a periodically weak economic climate, both household indebtedness and house prices have increased substantially, on a national level, in recent years. there have been similar developments in many countries, and households β debts and interest payments as a percentage of disposable income are not remarkably high in sweden. although the debt ratio is approaching the high level prior to the financial crisis at the beginning of the 1990s, the low interest rates have meant at the same time that households'interest expenditure as a percentage of income has largely been halved since then. our calculations also indicate that households with debts on average have a relatively good safety margin for interest rate rises and reductions in income. we therefore do not at present envisage any major problems for the household sector as a whole, even if interest rates rise significantly. however, this does not mean that problems will not arise for individual households in the case of higher interest rates. it is important that borrowers include rising interest rate expenditure in their calculations and carefully consider what level of indebtedness they can manage when interest rates sooner or later begin to rise. for this reason, we have emphasised in connection with our monetary policy decisions over the past six months that interest rates are at present low in a historical perspective and will need to be raised in the long run. with regard to house prices, the calculations we have made so far do not indicate that prices for housing in the country as a whole are substantially un | 0.5 |
s structural weaknesses. also, korea overcame the global financial crisis thanks largely to bold initiatives by the government and the central bank, such as the expansion of fiscal spending and swift policy rate cuts. so far, the remarkable development of the korean economy has been attributable mainly to increases in external trade, and in this sense the korea - us fta, which came into effect recently, is expected to provide economic benefits to both nations. the effects of an fta vary depending upon the counterparts β economic conditions and their trade structures. but for korea, a number of ftas have served to spur on the growth of trade. ( the korea - eu fta took effect in july 2011 ) even though our overall exports to the eu have declined owing to the sovereign debt crisis, since the conclusion of the korea - eu fta, the exports of those items that benefit from the fta have maintained high rates of growth. [UNK] increases in exports with eu h1. 2011 h2 degree of tariff reduction total exports 16. 7 β 7. 9 automobiles [ 10. 4 ] 51. 3 87. 5 gradual elimination of 10 % over 3 ~ 5 years petroleum products [ 5. 3 ] 92. 8 26. 0 immediate elimination of 3 ~ 7 % notes : yoy %, [ ] represent the share of items in exports with the eu in 2011 the korea - us fta is believed to help maintain korea β s export momentum with the us through tariff reductions. in addition, the fta is likely to boost brand recognition of korean products that rank much lower in terms of technology and quality. from a medium - and long term perspective, the fta is expected to heighten the competitiveness of relatively weak service industries in korea including the financial, legal, accounting and consulting sectors. bis central bankers β speeches competitiveness factors of export1 ) korea - us fta β s effects ( %, 100mil. usd ) average tariff increases in rates exports to the in the us us1 ) total exports automobiles electronics textile machinery chemicals 2. 5 2. 2 13. 0 1. 7 3. 2 12. 9 7. 2 1. 6 1. 1 0. 6 0. 5 note : 1 ) annual average for 15 years after the fta takes effect note : 1 ) survey of us buyers source : kita source : kiep for the us, the fta with korea, the largest after nafta, is likely to help the us economy, which is | crisis and prevent another, the highest priority is placed on leading world economic growth. in this respect, global financial markets are supposed to leave the icu ( intensive care unit ), and time is ripe to initiate a new strategy for further growth by attaining a global equilibrium. asian emerging market economies ( emes ) have shown rapid growth, boosted by an export - oriented growth strategy, cheap high - quality labor, and the introduction of capital and technology from advanced countries, and so on. unlike advanced economies ( aes ), asian emes, in particular, have been growing steadily since the global financial crisis. gdp growth ( % ) source : imf korea china india us euro 0. 3 9. 2 6. 8 β 3. 5 β 4. 3 6. 3 10. 4 9. 9 3. 0 1. 9 3. 6 9. 2 7. 4 1. 8 1. 6 source : imf, bok the asian economy has been leading global economic growth since the 1980s and its importance is expected to grow even further. although having been temporarily sluggish due to the currency crisis in late 1990s, the gdp, trade volume and foreign reserves of the economy in this region have all been on a steady rise. bis central bankers β speeches share of asia in the world economy 12. 5 in 1960 β 19. 8 in 1980 β ( %, based on nominal gdp ) 27. 4 in 2011 trade volume china ( 2 ) japan ( 4 ) korea ( world rank, 2010 ) hong kong ( 10 ) singapore official foreign reserves china ( 1 ) japan ( 2 ) taiwan ( world rank, 2011 ) korea ( 7 ) india especially, the rate of contribution of asian emes to world gdp rose from 14 % in 1970s to 23 % in 1980s, 34 % in 1990s and 50 % during the period for 2000 ~ 2011. the imf forecasts the rate to remain at around 50 % for the coming five years. however, regarding macro - financial linkages, the international community has so far stressed securing financial stability, focusing more on the effect of finance on the macro - economy than on that of the macro - economy on finance. as a result, the injection of global financial resources concentrated poured mainly into greece and other heavily indebted countries in the euro area, and a relatively smaller proportion of these resources was allocated for growth promotion and job creation. in this respect, a true normalization of the current sovereign debt crises in the euro area can take place | 1 |
gent sejko : albania's economic and financial developments in 2022 address by mr gent sejko, governor of the bank of albania, presenting the annual report 2022 to the parliamentary committee on economy and finance, tirana, 31 may 2023. * * * honourable chair, honourable members of the committee, i am pleased to be back before the ef committee to present the annual report of the bank of albania for 2022. i consider the presentation of this report, as well as the today's hearing, fundamental for the bank of albania's accountability relationship with the parliament. dear ladies and gentlemen, meeting our mission and legal duties, realising the commitments in view of the mediumterm development strategy, and complying with the recommendations left by the parliament of albania for 2022, have been important objectives guiding the activity of the bank of albania throughout 2022. the albanian economy has faced a wave of complex and unprecedented shocks in recent years. these shocks have tested the sustainability of the economic and financial balances of albania, triggering serious challenges to albanian businesses and households, in turn requiring fast and coordinated reaction from public authorities. though it is still early to provide a final analysis of consequences from the war in ukraine, i am pleased to see that the albanian economy has displayed a high resilience against these shocks. this resilience has been shown, first, in the maintenance of a positive economic growth rate, and second, but no less important, in the preservation of overall economic and financial stability in the country. in particular, the rapid surge in prices over the last year, has been brought under control and inflation has been declining in recent months, through easing the pressures on household'budgets and reducing uncertainties for enterprises. at the same time, the banking sector appears sound, indicators on the stability of both public and external debt have been improving, the financial environment is calm, and enterprises and households'balance sheets remain solid. these achievements are not a result of chance. they reflect, among other things, adequate and coordinated monetary, financial and fiscal policies and the results of continuous structural reforms which we have undertaken in the financial sector. the proportional and timely reaction of these policies has minimised the immediate consequences of shocks and has safeguarded the production capacity of albania. in parallel, continuous structural reforms have strengthened the flexibility and resilience of the albanian economy, by helping both the monetary and financial stability of albania. 1 / 8 bis - central bankers'speeches | mr. matsushita discusses recent monetary and economic conditions in japan and comments on the bank of japan β s monetary policy management speech by the governor of the bank of japan, mr. yasuo matsushita, to the research institute of japan in tokyo on 5 / 11 / 97. i. introduction it is a great honor to be invited by the research institute of japan to address this distinguished audience. it has been one year since i last attended this gathering in november 1996. looking back at the economic developments in japan over the past year, economic growth temporarily accelerated from the latter half of 1996 through the spring of 1997, helped to some extent by increased demand ahead of the rise in the consumption tax rate in fiscal 1997. since april this year, however, economic growth has been decelerating partly reflecting the lingering effects of the rise in the consumption tax rate. during this period, business sentiment seems to have become more cautious. today, i would like to give views of the bank of japan on the present condition of and on the outlook for the japanese economy. i will also discuss the bank β s thinking behind its monetary policy management. i would then like to use the remaining time to discuss the bank β s views on some of the comments and questions the bank has been receiving recently concerning the prolonged easy money policy, by which the official discount rate has been maintained at 0. 5 percent for more than two years. through my explanation, i hope to gain your better understanding on the bank β s aims in its monetary policy management. ii. recent monetary and economic conditions and the bank β s monetary policy management a. the present condition of and the outlook for the domestic economy let me first discuss the domestic economic condition. japan β s economic growth has been decelerating since april 1997 partly reflecting the impact of the rise in the consumption tax rate that took place that month. in addition to the continuing decrease in public investment since autumn 1996, household spending such as personal consumption and housing investment has also dropped significantly since april 1997. as regards personal consumption, outlays on services such as those provided by the travel industry have been increasing moderately. however, outlays on goods have remained sluggish, as indicated by the sales of automobiles and household electric appliances as well as department store and chain store sales, although there are signs of a slight recovery. in addition, housing investment in terms of housing starts has declined more recently to 1. 3 million from the 1. 6 million per annum level | 0 |
ardian fullani : recent economic and monetary developments in albania speech by mr ardian fullani, governor of the bank of albania, at the joint press conference with the albanian minister of finance and the imf mission chief for albania, tirana, 22 june 2011. * * * dear media representatives, in the last two weeks, a team of the international monetary fund ( imf ) led by mr gerwin bell, mission chief, visited albania. during this visit, we had intensive discussions on the current economic developments, the economy β s expected performance and appropriate orientation of macroeconomic policies. this visit in the framework of article 4 consultation focused also on structural issues of the albanian economy, highlighting the steps to be made for ensuring sustainable long - term growth. brief overview of key issues discussed first, the 2010 and early 2011 economic and financial developments showed that, overall, the albanian economy overcame the global crisis effects with success and has the prerequisites to generate economic growth in the period ahead. foreign demand was the main contributor to the 2010 economic growth, while the current year is expected to be characterised by a resurgence of domestic demand and slower growth rates of albanian exports. overall, the macroeconomic situation is balanced, characterised by low and controlled inflation ; safe, liquid and well - capitalised financial system ; improving financial markets ; and improved current account position. these developments reflect, inter alia, the relevant policies, which have proven effective in buffering large shocks from the global crisis. i take this opportunity to point out that the bank of albania β s efforts to keep inflation in check and anchor inflationary expectations, as well as its regulatory and supervisory measures to guarantee financial system stability managed to reduce shock - buffering costs and prevented undesirable consequences. second, as regards the economy β s expected performance in the medium and long run, the conclusion reached after the two - week long consultations was that the albanian economy is expected to remain in positive territory of economic growth. however, growth rates will clearly depend on the resurgence of the domestic demand, which is suffering from insecurity related to national and international developments. consumption and investments continue to suffer from added prudence by economic agents, while financial conditions and banking system capacity to credit the economy are improved. furthermore, higher inflation rates, noted during the first months of 2011, are expected to drop in the upcoming period. this reveals the foreign origin of shocks that have led to increased prices and reflects internal economic and financial conditions as well as our | monetary policy. the joint examination of the albanian economy found that the fiscal and external sectors are the two main ones that would require our attention and our work in the future. the bank of albania has long held that public finances β long - term stability is a precondition for sustainable economic growth. the daily world press illustrates channels through which indicators such as budget deficit and public debt affect financial markets and in turn the real economy. convinced that the albanian economy would benefit in the medium and long run from lower public debt, we have encouraged and supported all measures taken in this regard. we deem that this philosophy should lay at the foundation of the expected 2011 midyear budget review, as well as other medium and long - term public finances projects. the external sector is another structural weakness of the albanian economy. partially also in response to this concern, the bank of albania has underlined constantly the need for deepened structural reforms to support a new economic growth and development model for bis central bankers β speeches albania. this model should inevitably materialise through increased efficiency and competitiveness of our products and services in domestic and international markets. on the other hand, it requires a more rational attitude of the private sector towards the current economic context as well as a more careful financial - risks management. what is more, the albanian economy needs to become more attractive to foreign investors by continuously improving the business climate, the legal framework and its implementation, as well as by providing educated and cost - attractive labour force. thirdly, seen in the above - mentioned setting, our policies should remain prudent to guarantee the country β s macroeconomic equilibriums. as the crisis showed, prevention is better than cure. in this regard, political and structural measures that contribute to stability have a positive impact in the long term horizon. * * * during the consultations, i found that we share with the imf and the ministry of finance the same views on the need to maintain and further strengthen macroeconomic stability. moreover, there is a modern consensus on division of duties between the two central institutions of macroeconomic administration ( central bank and ministry of finance ) as well as a concrete commitment to continue this co - ordination in the future. in conclusion, i would like to reiterate that the bank of albania remains fully committed to observe the inflation target of 3 %, and continue to orientate its monetary policy exclusively to this function. bis central bankers β speeches | 1 |
easier to put into practice when you are working with someone like mike gill, who wants to get things done and is at heart an internationalist. and, so it should be no surprise that during the period mike was here at the cftc, things did get done, and they continue to get done building on his legacy. there is another feature of clearing that is distinctive. as i said earlier, by its very nature it concentrates the risks associated with the trades being cleared. that's how and why ccps are such crucial nodes in the financial system. but it also means that if a ccp doesn't manage its risk well, the concentration magnifies the impact of the problem. moreover, ccps tend to be highly interconnected because the instruments they clear are likewise interconnected β think about the different ways to trade interest rate risk. a small number of ccps provide most of the capacity in over the counter derivatives clearing. and, a small number of clearing members provide the majority of clearing services to clients at all of these big ccps. these firms are also providing key services to the ccps, such as settlement, custody and liquidity backstops. we can take a few points from this. clearing is quite complicated and technical as an activity. i'm going to stick my neck out and suggest that here in washington, conversations in bars are not of the sort : " tell me how does margining in a clearing house work ". its notoriously a dry subject, but important, hugely so. but therein lies a risk β even at international meetings there can seem to be other things to talk about, happily so, and that can lead to problems of neglect. except, onto the scene came mike gill and chris giancarlo. the enthusiasts had arrived. suddenly, it seemed a pleasure to talk about clearing. the fun kids talked about clearing. the serious point is that supervising big ccps requires deep cooperation between authorities across multiple jurisdictions. it requires cooperation not fragmentation. we knew how to do that, but it always seemed harder to put in practice than it should have done. we don't like economic fragmentation in the world, rightly so, but somehow arguments are made that its ok to do so for clearing. no it isn't as a matter of fact, because such a view defies the logic of how financial markets work. supervising and regulatory cooperation is a key part of the right approach. i want to finish by looking forwards | / news / speeches conclusion macroprudential may no longer be the buzz phrase it was a decade ago. but its objective of promoting a financial system that can serve households and businesses in bad times as well as good remains as important as ever. the avoidable damage caused by the economic tremors of 2008 is a salutary reminder of the costs a fragile financial system can impose on an economy. in the uk at least, macroprudential policy has become an operational reality. now, with the help of research and the latest techniques, we β re looking to the future. that work will help us stay disciplined and agile in keeping up with changes in the economy. it β s guiding us to what needs to be monitored closely in the non - bank system and where new standards of resilience might be needed to keep up as the financial system changes shape. keep up we must. it β s no use waiting for the tremors. when the economic ground shakes, whenever that may be, we will all want the financial system to be resilient. all speeches are available online at www. bankofengland. co. uk / news / speeches | 0.5 |
new opportunities for growth. crop agriculture, the dairy industry, fishing industry and livestock are three key areas, which can make a significant contribution to growth. women β s participation in each of these activities is estimated to be high and there are clear opportunities for women, seeking banking and financial services. it is time to prepare a comprehensive plan and that should have new entry points to accommodate women β s financial requirements. some of the new entry points include the following : β’ information technology application and usage : the phenomenal growth in the telecommunication industry, particularly in the mobile telephone sector, could serve as the main platform to enhance the delivery of credit to women and girls. sri lanka is fast moving towards a technology savvy population. however, many women and girls still do not use computers and newer payment modes available through mobile phones and cards. in india and bangladesh, many disadvantaged and vulnerable groups, women and children in particular, have benefited immensely from information technology, which has enabled such groups to have better understanding of prices in the market and business processes. the government β s information, communication and technology ( ict ) program should ensure that more and more women are included so that women can use the ict entry point to enhance financial inclusion. β’ introduce products / supply chain focused credit facilities and payment instruments : introduction of appropriate credit facilities as well as payment systems and instruments in commodity markets and production chains / supply chains seems to be new entry points to improve access to finance and financial inclusion. women in agriculture can be driven towards a debt trap when prices collapse at the time of harvesting. although it is common to both men and women in agriculture, losing regular incomes would be a bigger blow to women than men. there can be inland bills, goods receipt vouchers and other instruments that are discountable during such periods. this is a responsibility for banks and financial institutions. let me sum up the substance in a few sentences. more than anything, there is an urgency on the part of cenwor or marga or any other institution to conduct research, surveys and statistical analyses to assess the status of enhancement of access to credit and financial inclusion among women in sri lanka. it is hard to come to conclusions without adequate and reliable statistics or even to initiate policy action to fill in gaps that exist in this area. it is equally important for the relevant ministry or ministries and other public and private organizations to coordinate and prepare a strategic plan to spearhead the campaign of financial inclusion for women and suggest policy and operational measures as they dee | ranee jayamaha : access to finance and financial inclusion for women speech by dr ranee jayamaha, deputy governor of the central bank of sri lanka, at the centre for women's research ( cenwor ), colombo, 4 april 2008. * * * let me start by giving a general definition for access to finance and financial inclusion before assessing the status of women in these two areas, and then discuss the areas of focus in enhancing financial inclusion for women. what is access to finance? in simple terms, this means to provide an environment in which people, in general, have accesses to the formal financial system, through the use of different financial products at affordable prices. the access could be to any formal financial institution, market, and payment system or to a financial instrument, including savings, loans, remittances and insurance services. what is financial inclusion? this means the process of facilitating those sectors and segments of the population that are outside, to become a part of the formal financial system and enrolling individuals or groups into the formal financial sector. key entry points for financial inclusion these could be through : ( a ) direct loans or banking facilities to the targeted vulnerable communities or groups ; ( b ) facilitation of economic activity in a particular geographical area of operations or location ; ( c ) development of local or national infrastructure to enable a particular type of business activity, which could then be practiced or performed by a group or groups which can include women ; and ( d ) providing an enabling environment and / or enhancements for such economic activity to take place. the enabling environment includes laws, regulations, taxation, skills development, duty waivers, subsidies, etc. in this context, tax concessions and duty waivers given to make enterprises be β financially inclusive β are often forgotten. in fact, due to lack of awareness, enhancement of access to finance or financial inclusion that has already taken place in various sectors, and the enabling environment that has been created, are taken for granted with no value attached to them. women β s contribution to economic development let me now deal with the importance of women β s contribution to the economic development in sri lanka and assess whether financial inclusion of, and access to finance by women are on par with the contribution they make. women in sri lanka have been engaged in economic activities over centuries of history primarily through employment. due to low productivity and inadequate incomes in the agricultural sector, women in small farm families have moved from unpaid family labour to other occupations | 1 |
the other reason is that not all banks participate in the eurosystem liquidity - providing operations, but prefer to cover their needs for reserves primarily in the interbank market. for example, in normal times, of the 1, 700 banks that were eligible for eurosystem monetary policy operations, less than 500 used to participate in liquidity allotments. in a eurosystem environment, the short - term inter - temporal calculus finds another anchor : the need for banks to fulfil their reserve requirements over a monthly maintenance period. in normal times, this is accomplished smoothly throughout the monthly period, again via an inter - temporal substitution of liquidity balances by each individual bank. bis central bankers β speeches of the short - term rates become the driving factor in the pricing of long - dated securities, and monetary policy acquires a potent handle on the economy. in august 2007, a sudden re - pricing in the us sub - prime mortgage market changed this world. the close and predictable relationship between the expected path of policy rates and market rates broke down because the liquidity premia widened and became volatile. the elevation of market premia was especially pronounced in the spread between the three - month euribor and the expected three - month path of the overnight rate ( see slide 3 ). banks recognised a substantial counterparty risk in lending to each other, given that interbank lending was generally unsecured. but, even if collateral was taken, the ability to liquidate it at a reasonable price was severely impaired in an environment of widespread fear and uncertainty. bank positions in the interbank market can be highly persistent. large diversified banks tend to be borrowers and smaller, regional banks lenders. when the financial turmoil erupted, persistent borrowers endured a sharp and sustained jump in their funding costs and many of them had no access to markets at all. when lehman brothers finally filed for bankruptcy in mid - september 2008, widespread financial panic broke out. the paralysis of transactions spread beyond the money markets, where it had been more or less confined for a year. outside the money market, dealers play a critical role guaranteeing market liquidity. but in order to be able to take positions on both sides of the market, they need to finance their securities positions via collateralised funding. for that, they need their own capital, which they can use to pay for the margins required by those who lend them securities. when confidence evaporates, margins increase and dealers β capital is eroded, so | the basis for monetary policy transmission ; but, at the same time, the central bank cannot fulfil its mandate to maintain price stability if the fiscal authority does not fully honour its obligation to pay back its liabilities under all circumstances. to remove the influence of market expectations about future policy rates, it is useful to focus on the term structure in terms of spreads between sovereign bond yields of a given euro area country and benchmark yields β which can be represented by the ois curve or the term structure of german bunds. bis central bankers β speeches how to make these apparently conflicting instances compatible? and how to overcome the deadlock? the ecb policy response : outright monetary transactions guidance to answer these questions can be derived from the maastricht treaty and the conceptual apparatus developed in the context of the economic literature on monetary vs. fiscal dominance. these insights have made clear that, from an institutional design perspective, central bank independence and a clear focus on price stability 6 are necessary but not sufficient to ensure that the central bank can provide a regime of low and stable inflation under all circumstances β in the economic jargon, ensuring β monetary dominance β. maintaining price stability also requires appropriate fiscal policy. to borrow from leeper β s terminology, 7 this means that an β active β monetary policy β namely a monetary policy that actively engages in the setting of its policy interest rate instrument independently and in the exclusive pursuit of its objective of price stability β must be accompanied by β passive β fiscal policy. a passive fiscal policy means that the fiscal authority must be ready and willing to adjust its policy stance ( revenues and primary spending ) in such a way as to stabilise its debt at any level of the interest rate that the central bank may choose. or, to put it another way, borrowing from woodford β s terminology, 8 fiscal policy needs to be β ricardian β. 9 although the treaty shows an awareness of the need for consistency between monetary and fiscal policy, in the sense described above, to ensure lasting stability, it did not foresee that fiscal policy could go off track to an extent that requires dedicated institutions and policies able to provide financial assistance, against conditionality, in order to restore sustainability and preserve financial stability in the euro area. the creation of the efsf / esm in charge of providing support to euro area member states in difficulties and enforcing appropriate conditionality has filled this gap. it provides the euro area with a means to restore β ricardianess β, thereby | 1 |
good morning! back 4 / 4 bis central bankers'speeches | markets go through peaks and troughs. and like this marble hall β renovated, rehabilitated, now strong, beautiful and iconic... it is our taking action, our adoption of decisive policies and our welcoming of reforms through the years β that has helped strengthen our economies. our actions, our reforms, our regulations and our staunch commitment as policymakers, monetary authorities, central banks, regulators, public servants, have made them resilient. the ayuntamiento gives us a glimpse of the past. it also reminds us to continue to fortify our pillars and to build on the economic, financial and institutional reforms we initiated. it is when we gather together periodically and openly share our ideas, insights and experiences that we add to the strength and resilience we have. this is what today was about. our discussions will continue tomorrow. tonight, this dinner is about celebrating that collaboration. it is about fellowship. as your hosts, we are also proud to share our culture with you β to showcase our talents and also our cuisine which we arranged for you to enjoy tonight. 1 / 2 bis central bankers'speeches thank you very much and have a good evening. bon apetit. 2 / 2 bis central bankers'speeches | 0.5 |
of fixed - income securities, which are predominantly used for market making, declined sharply after the lehman brothers failure, from about $ 1. 3 trillion to about $ 800 billion, and have since fallen further to about $ 700 billion. the recent decline might be due in part to regulations, such as the volcker rule and the supplementary leverage ratio, aimed at making the financial system safer and sounder, as well as to changes firms may have made on their own, perhaps in reaction to the experience of the financial crisis. regardless of the causes of the change, market participants have expressed a concern that the decline in inventories reflects in part a reduced willingness or capacity of the primary dealers to make markets - - which may in turn lead to lower liquidity. however, whether markets are in fact less liquid depends on both the degree to which the decrease in primary dealers β inventories affects their willingness to provide liquidity and the extent to which nonbank firms such as hedge funds and insurance companies fill any lost marketmaking capacity. 4 2. decline in trade size and turnover market participants also often cite the decline in average trade size and turnover - - the volume of trades relative to the total amount of bonds outstanding - - as bessembinder, jacobsen, maxwell, and venkataraman ( 2016 ) find that bank dealers are less willing to provide liquidity now than in the recent past, while nonbank dealers are more willing. duffie ( 2012 ) argues that the negative effect the volcker rule may have on market liquidity in the short run may disappear in the long run as nonbanks step in to provide liquidity. duffie ( 2012 ) also mentions that the migration of liquidity provision from banks to nonbanks, which are not regulated, may have potentially important adverse consequences for financial stability. - 3evidence of reduced liquidity. figure 2 shows that average trade size in the corporate bond market has indeed declined since 2006 but has been relatively stable in the past four years. nevertheless, this decrease may reflect a number of factors, including changes in technology or the types and preferences of institutions engaged in trades, so it may not indicate a reduction in market liquidity. certainly, the length of this trend, roughly a decade, seems on its face more consistent with a secular trend such as technological change. turnover in the corporate bond market has declined as well, though this evidence is also not a definitive sign of reduced market liquidity. the decline in turnover is not | implementation frameworks and to assess a number of issues related to the consideration of alternative frameworks. i hope the work and ideas presented and discussed over the next two days will spur subsequent research on these issues and promote further collaboration among all of you. as i have often stressed before, in addition to its responsibilities for monetary policy and financial regulation and supervision, the federal reserve takes very seriously its role as a research institution. i want to thank our research conference committee for putting together this high - caliber research conference, which has gathered distinguished speakers and guests from around the world and, i am sure, will add to our understanding of the implementation and transmission of monetary policy. welcome to the federal reserve board. i hope you all have enjoyable and productive discussions over the next two days. bis central bankers β speeches | 0.5 |
of the economy include low competition, poor contract enforcement, and burdensome regulation resulting in widespread informality. 4 current momentum for structural reform in mexico is a welcome development as the reforms include some measures that may tackle inhibitors of productivity in key sectors of the economy. the transformation agenda encompasses several areas, including labor, education, financial intermediation, telecommunications, and energy. the legislative changes incorporate deregulation in the labor market, the protection of creditors β rights, and the exposure of sectors to competition where the entry of private participants is either completely banned, such as in most areas of the energy sector, or restricted to different degrees, such as in telecommunications. as regulation improves and obstacles to competition diminish, higher efficiency may emerge in related areas, with eventual benefits for the consumer in terms of higher quality and lower prices for goods and services. it is worth noting, however, that as with any other structural change, the intended benefits depend crucially on the quality of the rules and their adequate implementation, so that participants view the new framework as clear and reliable. in particular, secondary legislation is pending for the energy, telecommunications, and financial system reforms, and these norms need to facilitate participation and competition. we should also recognize that, although a revival of private investment may occur in sectors such as energy in the not - too - distant future, productivity effects and eventual consumer benefits will likely become evident only over the course of several years. the economic outlook in the year beginning in the 2012 third quarter, the mexican economy underwent a process of deceleration. the main factors behind slowing gdp growth were weaker export demand from all regions, including the united states, and a contraction in domestic investment, largely driven by deterioration in construction. shrinking construction, in turn, reflected reduced public expenditures associated with the change in administration, and lower private housing investment linked to major developers β financial problems. since the middle of 2013, there have been signs of an economic upturn. gdp grew in the third quarter and continued to expand in the fourth, though at a much slower pace. a source of improvement has been more dynamic exports as the u. s. economic recovery has gained steam, and lately the normalization of public expenditures. consumption apparently continued to grow in the fourth quarter, as suggested by the performance of service production and retail sales. the labor market provides other encouraging indicators. formal employment has maintained a positive trend and the unemployment rate has fallen to its lowest level since 2009, even though it remains above pre - | existence and benefits of services and facilities, and when these are accessible in a convenient and cost - effective manner, they are more likely to use such services. increasingly, β virtual β presence and access enabled by digital channels has become a viable platform for access to services and needs to be harnessed accordingly. overall, presence and accessibility enhance prospects for mobilisation of financial resources, and effective demand for housing finance and other beneficial loan products ; ultimately leading to increase in social welfare, as well as the broadening and growth of economic activity. i should, therefore, acknowledge that, currently, botswana building society has offices and branches in francistown, gaborone, kasane, lobatse, maun, selibe phikwe, serowe ; and now palapye, in addition to twelve automated teller machines ( atms ) countrywide. more significantly, bbs has and continues to invest in various corporate social responsibility projects worth millions of pula. among these projects are a school library in letswai primary school in zutshwa ; computer labs at marapong and mowana primary schools in the central and north east districts, respectively, as well as building new ablution facilities and upgrading old ones at molapowabojang primary school. these investments in educational facilities will go a long way in contributing towards good education for our children and this is to be applauded. on that note, let me conclude by indicating that it is my expectation that patronage and use of financial services will increase because of this new branch. thus, with relevant business strategies by botswana building society, as well as facilitative policy environment, this branch will foster and sustain financial inclusion and, in turn, the attendant benefits of productive saving and use of finance, access to payments services, and broadly, enhanced economic activity. i implore you all, palapye residents, the surrounding areas and beyond, to use bbs and other financial institutions in your area, to save ; to access and use credit wisely, for the benefit of your families and sustainable development of the country. it is now my honour and privilege to declare the bbs limited palapye branch officially open. i thank you for your kind attention. | 0 |
to allow greek banks to continue financing the economy. currently, the central bank liquidity extended to greek banks amounts to around eur 118 billion, more than double the amount at end 2014. the current liquidity support represents around 66 % of greece β s gdp, the highest level as a share of gdp of any euro area country. last week, the governing council decided not to object to a further increase in the ela ceiling, by eur 2. 3 billion to eur to 83 billion. liquidity will continue to be extended as long as greek banks are solvent and have sufficient collateral. however, in a situation where the greek government does not have market access, this liquidity can not be used to circumvent the prohibition of monetary financing, as laid out in art. 123 of the treaty on the functioning of the european union. this, together with supervisory considerations, explains why there is a ceiling on the greek t - bills held by the greek banking sector. for the governing council to reconsider the t - bills ceiling, there should be a credible perspective for a successful conclusion of the current review and subsequent implementation which would imply the disbursement of programme funds by euro area member states. this would also significantly improve the outlook for future market access by the greek government. bis central bankers β speeches it should be absolutely clear that the decision on whether to conclude the review of the current programme and disburse further financial support to greece lies entirely with the eurogroup, so ultimately with euro area member states. hence this is a political decision that will have to be taken by elected policymakers, not by central bankers. in the meantime, we will continue to provide our advice on the adjustment programmes. it is within this context, that we need a strong and comprehensive agreement with greece, and we need this very soon. by strong and comprehensive i mean an agreement that produces growth, that has social fairness, but that is also fiscally sustainable, ensures competitiveness, and addresses the remaining sources of financial instability. i can assure you that the ecb is doing all it can to facilitate a successful outcome. such a strong and credible agreement with greece is needed, not only in the interest of greece, but also of the euro area as a whole. while all actors will now need to go the extra mile, the ball lies squarely in the camp of the greek government to take the necessary steps. conclusion the situation in greece reminds us again that the economic and monetary union | terms for borrowers replace old ones, financial accommodation reaches a growing number of consumers and investors. this incremental process has not yet run its course. it is still on - going. this being said, in the process of price adjustment, the term structure of the money market interest rates has come under intense upward pressure. the expected policy rate path implied by money market quotes has shifted up and steepened noticeably as a consequence. the very short end of the curve β because of expanding surpluses of liquidity β has remained well - anchored around levels that are broadly in line with our forward guidance over those horizons. we are closely monitoring conditions to detect signs of an unwarranted tightening of our stance, to which we would need to react. risks and side - effects of app engaging in a large - scale asset purchase programme is not without risks and side effects. let me focus here on the financial risks of our own balance sheet, on financial stability implications for the euro area, and on effects on income distribution. we monitor very closely the risks for the eurosystem β s balance sheet associated with our asset purchase programmes and we manage those risks to keep them at levels that do not threaten our capacity to fulfil our policy mandate to maintain price stability. in particular, we manage credit risk by exclusively purchasing assets of sufficient credit quality, by defining an asset allocation and a limit framework that ensures some degree of diversification, and by applying severe due diligence and monitoring processes. with regard to pspp, we also decided that the purchases of government bonds conducted by the eurosystem ncbs will not be risk - shared within the eurosystem. this does not hamper the effectiveness of the purchase programme and the singleness of our monetary policy. the governing council has full control over all the design features of the programme. the specific risk - sharing agreement takes into account the unique institutional structure of the euro area, in which a common currency and a single monetary policy coexist alongside 19 national fiscal policies. as regards possible financial stability risks, we assess these risks as rather contained for now. looking in particular at housing markets in the euro area, we don β t see any signs of general overvaluation. important indicators for increasing financial imbalances are real estate prices and credit growth, but so far we have witnessed low growth rates of both. for instance, the annual growth rate of prices for houses and apartments in the euro area bis central bankers β speeches increased on average by | 1 |
. the countries which participate in the international capital market tend to have higher per capita growth rates than other countries. the globalisation of production and trade calls for new solutions for payments and financing. it is also a great advantage to have a financial system that is capable of channelling savings to those parts of the world that need them most for investment. however, participation in the international capital market presupposes that a country has an adequate banking system with accounting regulations and other institutions, such as thorough supervision that ensures sound banking practices. this has evidently not been the case in a number of the countries that are now affected by the crisis. nor should we forget that the banking system in sweden was not fully prepared at the time when our credit market was deregulated. if loans from the international capital market are channelled to a country where the banking system and other financial institutions are not ready to function in this community, the result may thus be loan losses. but, as you know, it takes two to tango. it may well be asked why banks in the industrialised countries have arranged loans to countries that evidently were not yet sufficiently sound borrowers. capital has been flowing to emerging markets in a broad stream in recent years. it has been channelled directly through the banks as well as indirectly, for instance via hedge funds. a good many such funds have obtained large loans from banks in the industrialised countries and, in pursuit of favourable yields, invested the money in emerging markets. this indirect lending can be likened to the swedish banks β earlier lending to finance companies. this brings us to the nature of banking in a more profound sense. traditional banking involves accepting deposits from the non - bank public and lending these funds to various borrowers. moreover, the equity capital on which banking is based is small, which implies high leverage and low solvency. if all the banks β capital had consisted instead of equity, incurred losses could have been handled more or less painlessly. with a large proportion of borrowed capital, however, there are liable to be chain reactions that successively spread through the banking system. it is precisely this that necessitates comprehensive, efficient supervision and a functional set of regulations in order to avoid unnecessary losses. that is also why central banks around the world have been assigned the function of safeguarding the financial system β s general stability. what can be done? the current problems in the global financial system need solutions for both the short and the longer run. in the short run it is a | world economic impact of the problems in the emerging markets can be divided into effects on real economic activity and influences via financial markets. the latter are transmitted both by falling prices for shares and possibly other assets and by a higher degree of prudence on the part of firms, households and banks. let me begin with the real economic effects. in the emerging economies that are currently affected, the problems have led to sharply falling demand and output. imports from the rest of the world are therefore declining, too. at the same time, currency depreciation has improved the competitiveness of exports. thus, a weakening of western exports to the emerging markets is being accompanied by a gradual increase in western imports from these countries. for overall growth in the oecd area, however, the aggregate real economic effects are probably not all that large. so what about the effects transmitted by financial markets in the west? a falling stock exchange reduces the value of households β share portfolios, which may influence the propensity to consume. it also increases the cost of capital procurement, which may likewise affect demand via a weaker propensity to invest. the recent global fall in share prices - more or less wiping out the increase in the past two years or so - should be seen in the light of the strong upward trend that share prices have followed in the 1990s. in sweden the omx index is still around 300 per cent above the low in the autumn of 1992. in the united states the dow jones index is about 200 per cent higher than at the beginning of 1991. this provides a perspective for the impact of falling share prices on international growth. it should also be borne in mind that the us economy is more sensitive than europe to a falling stock exchange. when it comes to confidence, it is more difficult both to quantify and to arrive at more definite conclusions about consequences of the crisis. we do not know to what extent the present course of events is affecting how households and firms appraise both their own and their country β s economy. a good many people and businesses will no doubt become more cautious about buying a car or making investments for the future, for example. here we have a potentially larger effect that must be monitored very carefully. some guidance is to be had from various countries β survey data. a number of the results point to a fall in consumer confidence. neither can one draw any precise conclusions about the magnitude of the effect that may come from increased prudence in banking around the world. the global unrest | 1 |
not deteriorated significantly. for the time being, bank profitability has only somewhat declined due to interest rate cuts, lower fees and higher provisions to weather such an adverse situation. however, it remains uncertain how the pandemic may affect credit portfolios in the most vulnerable sectors. 8 it is therefore particularly important to monitor the portfolio quality indicators for the various latin american banking systems, which in 2020 accounted for more than 50 % of profits at spain β s two largest banking groups, and which during the previous european sovereign debt crisis played a countercyclical role for the spanish banking system. the worsening of the pandemic in latin america since late 2020 points to heightened uncertainty in the short run. the next six months will be a race between new strains of the virus emerging and the vaccination campaigns, which in latin america are progressing but gradually. among the factors supporting the region β s continued recovery in activity is external demand, which may also benefit from new stimulus programmes passed in the united states and better price performances for certain commodities. the imf forecasts gdp growth for the region of 4. 1 % in 2021, albeit again with notable differences across the economies. 9 in the medium term, the crisis poses a series of significant risks and challenges, some global in scope and others more specific to latin america. mainly credit support programmes, moratoria on payments by the most vulnerable borrowers and government guarantees. for a more detailed analysis, see banco de espana ( 2020 ), β recent developments in the most important latin american banking systems for spanish banks β, box 2, β report on the latin american economy. second half of 2020 β, analytical articles, economic bulletin, 4 / 2020. for a stress test analysis of the 61 largest banks in latin america, see annex 4 of the imf β s regional economic outlook ( 2020 ), pandemic persistence clouds the recovery. see a. werner, a. ivanova and t. komatsuzaki ( 2021 ), latin america and caribbean β s winding road to recovery, imf blog. first, in addition to the human cost in lives, the effects on poverty and income distribution have been very severe. 10 indeed, during 2019, bouts of political tensions and social unrest in several countries, partly related to this situation, fuelled economic uncertainty ; this in a region where numerous elections are due to take place in the coming quarters. a second challenge is that posed by shrinking fiscal space following the increase in government debt in the | - de - pandemia - ideas - para - eldebate _ julio - 2020. pdf. | 1 |
which funding currency the rates refer to. since the number of transactions in swedish kronor between panel banks has decreased, the stibor framework states that the banks'submissions can be based on judgements of their borrowing costs in foreign currency. the riksbank considers this unfortunate and that a reference rate in swedish kronor should be anchored in transactions in swedish kronor only. the definition of swestr is similar to those in euro, british pounds and danish kronor. like the ecb, the bank of england and nationalbanken in denmark, the riksbank has chosen to use deposit transactions with overnight maturity, and with a counterparty group that is wider than just the panel banks. the main reason is that this part of the money market tends to exhibit good and relatively stable transaction volumes, even in difficult times. the transition to swestr should begin now β it is a process that will take several years and some adjustments are required as swestr is now available, there is an alternative to stibor. we therefore call on market participants to step up their efforts for a transition to swestr. 5 however, in order for us to reach a point where transaction - based reference rates dominate in the market in sweden and internationally, certain adjustments are required in the financial markets. this process needs to run over several years. the greatest need for adjustment probably concerns maturities. the traditional interbank rates are available at several different maturities, for example three and six months. however, swestr and its international equivalents are only calculated at the shortest maturity, overnight. the reason for this, as i said, is that in sweden and abroad, it is at this maturity that a sufficient number of transactions are carried out. for the rate to be credible and representative, there needs to be a steady flow of enough transactions on which to base the calculation. the interbank rates can be developed at longer maturities even with a very limited transaction base, precisely because there is scope for the banks'own judgements β but this is also what makes them lacking in objectivity and easier to manipulate. alternatives to longer - term interbank rates being developed in order to address this problem, central banks in several countries are now working to ensure that the new reference rates can also replace interbank rates in contracts with longer maturities. in principle, it is possible to create forward - looking rates based on traded derivative instruments with the new rates as a base. however | speech date : 30 september 2021 speaker : martin floden venue : kommuninvest ( digitally ) sveriges riksbank se - 103 37 stockholm ( brunkebergstorg 11 ) tel + 46 8 787 00 00 fax + 46 8 21 05 31 registratorn @ riksbank. se www. riksbank. se swestr β a fully transaction - based reference rate * i would like to begin by thanking kommuninvest for the opportunity to participate in its finance forum. as usual, the finance forum offers a highly appreciated meeting place where representatives of both authorities and the private sector can have open and fruitful discussions on current financial market issues. thank you to kommuninvest for that! as mentioned in maria viimne β s presentation, i am going to talk today about the riksbank's new reference rate swestr. i will explain why the riksbank considers that financial market participants in sweden should now begin the transition from stibor, the traditional reference rate in swedish kronor, to the riksbank's transaction - based reference rate swestr. i will also describe how the riksbank intends to be active in and support this process. however, in order to provide some context, i will first briefly explain the importance of reference rates in the financial market. i will also provide some background to the interbank rates, such as stibor and libor, which have been dominant in the markets to date, and describe the problems with these reference rates. reference rates fulfil a useful function in society reference rates can be perceived as a rather technical issue and they are rarely at the centre of the daily economic debate. however, reference rates are used worldwide in a variety of contracts and concerning very large contract values. they therefore fulfil a central function in our financial markets. * i would like to thank ola medelberg for help in writing this speech, and ingrid wallin johansson, anders ryden, johannes forss sandahl and marianne sterner for valuable comments. 1 a reference rate works as a benchmark in the pricing of financial contracts. the main intention of such a benchmark is that pricing shall follow market developments, and that none of the contracting parties shall be able to manipulate it. i think that reference rates can be seen as a common tool that exists to facilitate for everyone who participates in or is affected by the | 1 |
11 stress. for example, growth in core loans on banks β books has decelerated since late 2022, as banks tightened lending standards and demand slowed amid lagged effects from monetary policy tightening. the deceleration in core loan balances was especially pronounced in early 2023 even before the silicon valley bank collapse and has continued afterwards. and we did see discrete effects in deposit outflows in mid - march, but those flows have stabilized. moreover, banks have been able to replace core deposit outflows with large time deposits, federal home loan bank advances and other sources of funding. these actions are leading to a slowdown in credit growth, but one that is in line with monetary policy tightening. so, what does this mean for monetary policy? with the banking sector sound and resilient, fighting inflation remains my top priority, and i believe we will get there. what will get us there is setting the stance of policy at a level that will continue to help bring supply and demand in the economy into better balance. while i expect inflation to eventually settle near our 2 percent target because of our policy actions, we have to make sure what we saw in yesterday β s inflation report feeds through broadly across goods and services and that we do not revert back to what has been persistently high core inflation. the robust strength of the labor market and the solid overall performance of the u. s. economy gives us room to tighten policy further. as things stand now, my outlook for the stance of monetary policy that will get inflation near the fomc β s 2 percent target is roughly consistent with the fomc β s economic projections in june. i see two more 25 - basis - point hikes in the target range over the four remaining meetings this year as necessary to keep inflation moving toward our target. furthermore, i believe we will need to keep policy restrictive for some time in - 12 order to have inflation settle down around our 2 % target. since the june meeting, with another month of data to evaluate lending conditions, i am more confident that the banking turmoil is not going to result in a significant problem for the economy, and i see no reason why the first of those two hikes should not occur at our meeting later this month. from there, i will need to see how the data come in. if inflation does not continue to show progress and there are no suggestions of a significant slowdown in economic activity, then a second 25 - basis - point hike should come | appear to be a lot of evidence that a substantial credit crunch was in the works, i felt that waiting another six weeks was prudent risk management. in the end, i believed that risk management concerns slightly outweighed hiking based on the incoming data. i also felt more comfortable with this decision given that the median of the summary of economic projections ( sep ) signaled two additional rate hikes by the end of this year. early in march, prior to the march fomc meeting, i had planned to raise my terminal rate 50 basis points given the hot data that had come in at that point. but then came the turmoil in the banking sector. my thought was that credit conditions were going to tighten a lot as a result of the banking turmoil. i believed this tightening would effectively replace some of the tightening that otherwise would have been needed through monetary policy. the net result was that in the march sep, i left my projection of the terminal policy rate unchanged from december. but by june, there was little evidence that credit conditions were tightening more than would be expected as a result of monetary policy that had already tightened significantly. this led me to believe policy needed to be tighter relative to what i thought in march. so, i marked up my projected path for the federal funds rate at the end of 2023 by 50 basis points. so why did i walk you through this evolution of my thinking of the appropriate setting of policy? first, it highlights how the appropriate setting for monetary policy shifts over time. second, it shows that managing uncertainty and risks is a big part of my - 3job. third, i hope it allows you to better consider how policymakers will adjust the setting of policy in response to incoming data going forward. monetary policy lags a second issue for the fomc is how long it takes for changes in monetary policy to affect economic activity and inflation. as reported in the minutes of various fomc meetings, the committee often discusses these lags. there is a wide range of views among researchers and policymakers as to how long it takes for the full effect of monetary policy to register in the economy. what i would like to discuss is expectations for how long it will take for last year β s sizable monetary policy tightening to show up in the economic data. while there is no consensus on an exact length of time, traditional rules of thumb say that the maximum effect of an unexpected policy change, what economists call a β shock, β on the real economy is | 1 |
##s perhaps via bcp ssc, β core guide 3 : getting to great ; lead reviewer insights from the performance improvement framework β, april 2013. bis central bankers β speeches exercises, security penetration testing, and external review etc. risk management committees have a place in maintaining the focus. 6. engagement and conversations are vital. risks need to be talked about. this builds awareness and action. developing a culture in which risks and risk - taking can be discussed, managed and accepted is a key leadership challenge. while we are not wedded to explicit, whole of organisation, risk appetite statements, the conversations about risk tolerance for particular risks are crucial. it is important to send clear messages to an organisation about whether, why and which risks should be reduced or relaxed a little. some are below the waterline and must be averted. others may be above it and permit greater risk taking. strong, consistent senior leadership is vital. often staff or lay observers contend that risk management will tie an organisation up with process and overhead, slowing it and its innovative capacity down. this need not be the case. motor racing and sail boat racing enthusiasts recognise the finely balanced science and art of incurring increased risk to increase speed, and then set about optimising the tradeoff. recall sir peter blake β s famous dictum that the black magic campaign was about doing everything to make β the boat go faster β, without making it unstable. organisations need to incur risk in order to prosper. we are not there to tie down all the hatches and keep the sails furled. our goal is not risk avoidance but risk awareness, risk management and, indeed, calculated risk - taking. bis central bankers β speeches | these criteria into their decisions and actions. and banks are certainly no exception to this trend. banks have, for some time, had corporate social responsibility areas. but their involvement needs to go further. as we supervisors have been insisting, banks also need to incorporate these elements into their risk analysis and management. in this respect, both the european single supervisory mechanism ( ssm ) and the banco de espana have recently published supervisory expectations relating to the inclusion of environmental risk in banks β management. we are also working on the inclusion of these risks in the stress test methodology for the spanish financial sector. in sum, banks and supervisors alike are moving along this path, which poses all sorts of challenges. for instance, it is in no way straightforward to envisage these risks as part of the commonly used valuation and measurement methodologies. moreover, there are cultural factors hampering their inclusion, which calls for involvement from the uppermost levels of organisations. and, above all, one of the main challenges is the lack of information, which enormously hinders further progress. allow me briefly to refer to these valuation - based aspects and the absence of data. traditionally in finances there is a tendency to value investments exclusively from the standpoint of economic return. the classic focus of study in finances would be cash flows ; once capitalised or discounted, these enable us to compare different investment options. from a theoretical standpoint, responsible investment reminds us that we should not value and compare different investments looking solely at an excel chart. rather, we should perhaps look at variables that are not directly monetisable in the expected return on each investment. measuring this β non - monetisable β return is clearly not straightforward. the approach being followed focuses on the measurement of β impact β. for example, environmental sustainability has for some time used measurements that take β footprints β, be they carbon, hydric, environmental, etc. in corporate and labour market circles it is becoming commonplace to consider what the value or social impact of a specific activity is, and to attempt to evaluate the economic and labour consequences of regulatory changes. one good example of regulatory impact is the ecological transition bill that is currently pending parliamentary approval. the aim, as you know, is to switch our economy towards an environmentally more sustainable model. this aim is very broadly shared in our society, but its achievement will have large - scale implications for our productive model that may also entail undesirable social consequences. the banco de espana is working with the | 0 |
leading this effort. learning more about the importance of ecosystems and sharing all this knowledge with decision - makers and policymakers is necessary. exposure to biodiversity loss must be assessed, and actors should understand the systemic impact of biodiversity loss on the real economy. we all must promote a sustainable investment strategy and make it clear that it is a winwin strategy in which the benefits exceed current and future costs, considering the counterfactual of not acting in a timely and decisive manner. according to the world wildlife fund ( wwf ), the bill for ignoring natural capital will be 10 trillion globally by 2050. 4 / 5 bis - central bankers'speeches a sustainable investment strategy can only be achieved with the participation of the private sector through long - term initiatives that identify and internalize environmental, social, and governance standards as a priority in their business models and that are aware of the need for restoration and conservation of our ecosystems. it is precisely initiatives such as the biodiversity finance reference guide presented today that contribute to a better understanding and dissemination of sustainable finance. it will offer a means to identify investment opportunities and helps to build a common language to achieve a more standardized framework that allows a better and timely transition to a greener and more sustainable economy. undoubtedly, this tool will be handy for financial institutions and investors in identifying sustainable practices and for the corporate sector in incorporating green processes into their business models. to resume, on the public sector side, financial authorities should provide the economy and the financial sector with solid and holistic regulatory bases and align the incentives to achieve the goal of greening the financial system through financing projects and activities that consider and disclose its impact on the environment. what do you think should be the role of the sector you belong to? thank you again for the invitation, and congratulations on the ifc's biodiversity finance reference guide presentation, which i am sure will be of great use for this purpose. presentation of ifc's biodiversity finance reference guide and panel discussion. 5 / 5 bis - central bankers'speeches | flows away from nature - negative outcomes and toward nature - positive outcomes. " the tnfd recommendations are to be published in september of this year. it will likely become a significant force to move corporates, investors, and lenders to account for nature - related risks and opportunities. according to the task force, " corporates are failing to consider how their supply chains, operations and enterprise values depend on, and impact, nature. in turn, lenders and investors are not assessing nature - related risks and opportunities across their loan books and investment portfolios. " 3 / 5 bis - central bankers'speeches in short, the risks stemming from biodiversity loss and natural capital are not yet adequately integrated into financial and non - financial firms. while the challenge of developing standardized and comparable data on nature seems to be significantly more complex than for climate, for which there is a single metric, namely global emissions of co2 equivalent, with nature, there is no single variable driving renewable natural capital loss. however, outstanding progress has already been made since the creation of the tnfd in 2021. i am sure that i am not alone in being very optimistic about the positive impact the upcoming recommendations will have on firms and the financial sector. role of financial authorities and central banks looking beyond the tnfd recommendations, financial authorities and central banks must continue to engage with the international sustainability standards board ( issb ). the issb aims to move " from the currently fragmented esg disclosure landscape, that lacks connectivity and has conflicting concepts, to a truly global common language of sustainability - related financial disclosures, by clearly articulating the relationship between sustainability matters and financial value creation. " for its part, the network for greening the financial system ( ngfs ), a network of which banco de mexico is a founding member and a permanent member of the steering committee, has been leading in the development of climate scenarios and, most recently, biodiversity scenarios. numerous financial authorities and financial institutions are considering the ngfs scenarios and models. in mexico, at the committee of sustainable finance ( cfs ), we decided in the first half of 2022 to use four scenarios from the ngfs. the committee also approved a fifth asymmetric non - ngfs climate scenario. these analyses will allow authorities and financial and non - financial companies to know the challenges and opportunities associated with different transition paths. the ngfs recently started some work on biodiversity / nature scenario analysis. banco de mexico and banque de france are co - | 1 |
no - one disputes it. table 1 shows that the real growth rate for the world economy was more than twice as high in the 1950 - 1973 period than in the previous 80 years. in australia there was also a major improvement, although less than a doubling. inflation, which had been negligible on average until the second world war, rose to about 4 per cent in the 1950 - 1973 period, with the average being pushed up by the korean war period and the early 1970s. at other times it was a good deal lower, and even with these periods included, it was moderate enough to permit economic expansion for most of the period. unemployment remained low throughout the period, although there was some cyclical movement at times. overall, macro - economic performance was considerably better in this period than in any time before or since, which has prompted economic historians such as maddison ( 1991 ) to refer to this period as the β golden age β. table 1 : indicators of world ( a ) and australian ( b ) macro - economic performance ( average annual increase ) 1870 - 1950 1950 - 1973 1973 - 1980 gdp cpi 2. 3 ( 2. 9 ) 4. 9 ( 4. 7 ) 2. 6 ( 3. 1 ) 0. 1 ( c ) ( 1. 3 ) 4. 1 ( 4. 6 ) 7. 3 ( 9. 7 ) ( a ) sixteen largest oecd countries ; ( b ) australian figures in brackets ; ( c ) peacetime years. source : maddison ( 1991 ). there were a number of factors behind this impressive economic performance, but time and space limit me to mentioning only the main ones. the four most important, i believe, are as follows : ( i ) there was a big gap to be made up following the depression and the second world war. the 1950s and 1960s was a period of post - war reconstruction or β catch - up β for most countries. the largest growth pick - up occurred in the countries most devastated by the war, such as germany, italy, japan and austria, and the least pronounced ( although still significant ) were in the united states, canada, switzerland, sweden and australia. ( ii ) although populations and governments were eager for economic growth, there was widespread restraint in economic behaviour. the privations endured during the depression and the war meant that as incomes rose, a high proportion was saved. inflationary expectations too had been conditioned by decades of nearly zero inflation, which showed up in | ##s in mortgage offset accounts and redraw facilities amount to 16 per cent of outstanding housing debt. this is equivalent to around 2Β½ years of required mortgage payments at current interest rates. it is important to recognise though that this figure masks a lot of variation across households. we estimate that around a quarter of households with a mortgage have either no buffer or a very small one. loan arrears remain low, although they have risen over recent years. also, we estimate that for almost 4 per cent of borrowers their current loan balance exceeds the value of their property. over half of these borrowers are in western australia where there has been a large and persistent decline in housing prices. so this is an area that bears watching. on a completely different matter, i would like to draw your attention to the fact that we will be releasing the new $ 20 note next week, on 9 october. this note is printed here in melbourne, at our printing works in craigieburn. i have brought along a few notes tonight hot off the presses for you to have a look at. i sometimes get asked why the reserve bank is replacing the existing series of banknotes, especially when more of us are moving to electronic payments. people also wonder with contactless payments now so ubiquitous, do we still need banknotes? given these questions, it might surprise you then to know that the demand for banknotes in australia is still strong. the stock of banknotes on issue, relative to the size of the economy, is close to the highest it has been in 50 years. it is possible that low interest rates are part of the story here. all up, there are 14 $ 100 notes on issue for every australian, 30 $ 50s, and 7 $ 20s. that makes for around $ 3000 worth of banknotes on issue for every australian. i, for one, don β t have anywhere near that amount. at the rba, we have recently undertaken some work to understand the whereabouts of all these banknotes. it is hard to know exactly, but we estimate that around a quarter are used to make legitimate day - to - day transactions within australia. 1 it also appears that between half and threequarters are held as a store of value in safes, under beds and at the back of cupboards, both here in australia and elsewhere around the world. we estimate that a further 4 to 8 per cent are used in the shadow economy, either to hide transactions from the tax office or | 0.5 |
of regional gdp. international monetary fund, β where are we headed? perspectives on potential output β, world economic outlook, washington dc : international monetary fund, april 2015. j e tyson, sub - saharan africa international sovereign bonds : investor and issuer perspectives, overseas development institute, january 2015, available at http : / / www. odi. org / sites / odi. org. uk / files / odi - assets / publications - opinion - files / 9435. pdf. bis central bankers β speeches furthermore, development in african capital markets has not been limited to sovereign bonds. global flows into the region β s equity markets, while still very small compared to other regions, nonetheless grew in importance relative to the size of the recipient economies. the flow of capital into africa is critical to its ongoing development. access to capital has been greatly enhanced and a more competitively priced supply is currently offered, moving away from a reliance on official - sector financing. however, to ensure that benefits to borrowers are maximised, it is important that financing be transparent and that risk be fairly priced. furthermore, where lending is overly risk - averse, the development of corporate bond, equity or even venture capital markets can facilitate the expansion of a private, mediumsized business sector. finally, over time, as financial markets grow across the continent, one can equally expect to see increased cross - border portfolio and direct investment flows within sub - saharan africa, helping to facilitate regional economic and financial integration. these gains in hand, we need to be mindful of the risks associated with external portfolio financing. a tightening of financial conditions in the developed world can easily prompt international fund managers to reduce their exposure to frontier markets. what is then a small portfolio adjustment for a large us - or europe - based fund, however, can result in significant price action on a small and relatively illiquid sovereign debt market. rising foreigncurrency external liabilities equally expose a sovereign β s balance sheet to currency depreciation, limiting the benefits i described earlier of foreign - exchange adjustment as a β shock absorber β. in that respect, an increased focus on developing local - currency bond markets and on equity financing may present a solution to the risk of excessive foreign - currency leveraging. in south africa, the existence of a large and liquid domestic government bond market, with long - maturity instruments, has limited the rise in foreign currency - denominated debt, even as our country has experienced large current - account deficits. | in generating financial resources for institutions, fundraising is not their raison d β etre. we can also think of β fun β raising, i. e. entertaining and exciting ways of building alumni relationships. various projects, too numerous to mention, can be undertaken. also, benefits of staying connected to one β s alma mater, other alumni and peers are immeasurable. networking is developed through strong alumni associations. this includes circulating information on internship, employment and other opportunities available in the various areas of enterprise alumni are engaged in. to my mind the benefits seem to outweigh the costs. your effort as we gather here tonight dovetails with one of the government β s key programmes. as you may be aware, the government has set itself the goals of halving poverty and unemployment by 2014. to meet these challenges, the government seeks an annual average growth rate of 4, 5 per cent or higher between 2005 and 2009, and an average growth rate of at least 6 per cent between 2010 and 2014. there are strong indications that the south african economy has reached a higher growth path. the growth rate averaged 3 per cent per annum between 1994 and 2003 as compared to 1 per cent during the decade preceding the country β s advent to democracy. however, growth rates in 2004 and 2005 have averaged 4, 5 per cent and 4, 9 per cent respectively. while growth is expected to decelerate somewhat this year, it is still expected to exceed 4 per cent. there is thus little doubt that the sustained application of prudent macroeconomic policies is bearing fruits. monetary policy has played its part by contributing to a low inflationary environment - inflation has been within the target range of 3 - 6 per cent for cpix for the past 34 months - which in turn has been supportive of economic growth. the maintenance of price stability, however, is not without its challenges. the globalisation of the south african economy is well documented. there is no escaping the impact of global influences on the sa economy. the recent volatility in our financial markets following the increased risk aversion of global investors towards emerging countries is an example in this regard. in addition, the recent successive monthly increases in the price of petrol as a result of the sustained increase in international oil prices bear further testimony to the sensitivity of the south african economy to global developments. as is the case internationally, the high oil price, if sustained, poses a significant threat to inflation and economic growth in south africa. there are domestically generated | 0.5 |
the finnish economy continued to grow in the first months of 2022. the turnover of all key sectors has exceeded the pre - pandemic level and employment has continued to rise, and growth in investment was robust. the main constraints of the finnish economy were shortages of materials and labour. russia β s invasion of ukraine has cast a new veil of gloom over the outlook for our economy. there is considerable uncertainty over the economic impact of the russia - ukraine war. the extent and duration of the war are unknown, and neither do we know what economic policy measures will be taken to alleviate the coming economic effects. [ slide 7 ] finnish views on joining nato have changed moreover, i would stress that uncertainty may sometimes be the worst state of all. examples are many but to think about the times around the brexit referendum, the penultimate us presidential elections or the italian referendum. premiums declined remarkably after the electoral events, even if the outcomes were not the ones initially desired by the markets. in finland, the geopolitical situation currently is the biggest source for uncertainty. we don β t have a vote on geopolitics, but our domestic debate on the possible nato membership is similar enough. hopefully, this piece of uncertainty is resolved sooner rather than later, at least the polls are clear. to end my introductory remarks in a positive tone, i would like to note that the solid financial position of the finnish corporate sector and the solid underlying conditions for the finnish economy in early 2022 provide a silver lining to the otherwise foggy landscape. dear colleagues, after these words, i β d like to give the floor to vice president thomas ostros from the eib. following his words, the results of the eib investment survey for finland will be presented, followed by a talk by professor otto toivanen from aalto university and a high level panel, focusing on investment dynamics and investment gaps in finland. with this, i hope you will seize the opportunity to enjoy the presentations and the panel discussion of the distinguished speakers and actively participate in today β s discussions. thomas, please, the floor is yours. thank you senior adviser juuso vanhala for the background work for this speech! links in the text kokkinen, arto & obstbaum, meri & maki - franti, petri ( 2021 ) : bank of finland β s long - run forecast framework with human capital, bof economics review, 10 / 2021. ( external link ) lindblad, | the fact that whereas ongoing investment projects will be carried on despite changes in prevailing uncertainty, the uncertainty will heavily affect decisions on new investments. in contrast, supply factors have eroded growth in business fixed investment more or less throughout the period under review. from the early 2000s until 2015, supply factors either had a slowing impact on investment growth or did not have a significant impact on its rate of growth. it is noteworthy that during the years of rapid growth in the first half of the 2000s, investment was fueled by robust demand, which masked the structural problems in their supply. in 2015 β 2017, supply - side factors both strengthened investment growth and dampened the rise in prices for investment, and at the same time, partly offset the weakness stemming from global uncertainty. the stronger investment growth in these years was mainly due to the temporary improvement in total factor productivity. coming to the more recent years, the recovering of the economy before the pandemic was accompanied with encouraging signs of investment. the gathering of momentum did not last, however, as it started dampening already in late 2019. the real blow came in 2020 with the arrival of the pandemic. this induced huge uncertainty into the economy, many companies experienced a sharp contraction in turnover, forcing them to adjust their cost structures accordingly and lower risk appetite. [ slide 5 ] the financial position of non - financial corporations remains strong in spite of the covid - 19 and the disruption caused to many firms, the non - financial corporations sector as a whole improved its profitability and financial position in 2020 and 2021. ( see bank of finland bulletin, 2021. ) while the value added created by the corporate sector decreased, compensation of employees declined and firms received public financial support. ultimately the corporate sector β s profit share managed to increase. 2 / 4 bis central bankers'speeches [ slide 6 ] changes in revenue and expenditure of non - financial corporations from 2019 to at the same time, the investment rate declined less than had been feared. better profitability and a stronger financial position were facilitating investment growth for the coming years, once the pandemic would recede and the fading of uncertainty would improve the outlook for production. in early 2022, before russia β s invasion of ukraine, finland β s economy had largely recovered from the pandemic. gdp had already surpassed its pre - pandemic level during the first half of 2021, and the economy continued to grow strongly in the latter part of the year. indicator data and our short - term models suggest that | 1 |
efforts to maintain the confidence. governments make their efforts to maintain the mediumto long - term fiscal balances. central banks maintain the stability in prices and the financial systems through the conduct of monetary policy, through actions as the lender of last resort, through financial supervision, and others. private banks maintain their capital base, manage various risks, and provide credit intermediation and payment services. my point here today is the interdependency of confidence. confidence in each issuer is supported not only by the issuer β s own efforts but also by the fact that confidence in other issuers is maintained and that members in society understand the importance of confidence in each other. now, i will elaborate on the interdependency of confidence. determination by the government to underpin confidence in private financial institutions first, confidence in bank deposits of private banks, or in debts of financial institutions, is significantly affected by confidence in governments as well. the global financial crisis after the failure of lehman brothers demonstrated that. after the failure, financial institutions lost confidence in each other β s creditworthiness, and the interbank money markets almost stopped working. under the circumstances, central banks acted as the lender of last resort and aggressively provided funds in order to deal with the liquidity shortage of financial institutions. although the provision of liquidity by central banks was extremely important during the crisis after the failure of lehman brothers, it alone was not enough to restore the stability of the financial system. that was because the adverse feedback loop between the financial system and the real economy eroded capital positions of financial institutions and thereby confidence in their solvency significantly. as the central issue shifted from the liquidity shortage problem to the capital shortage problem, governments were required to inject public capital and to guarantee senior debts of the financial institutions in order to bis central bankers β speeches restore confidence in private financial institutions. the amount of public capital injected by the governments of the united states, united kingdom, germany and france during the recent global financial crisis reached an equivalent of 84 trillion yen. 1 the experience above suggests that the stability of money and the financial system also depends on confidence in governments. support by the public to underpin confidence in a government second, having talked about the importance of confidence in a government, i would like to emphasize that confidence in a government is, in the end, underpinned by support by the public. after the global financial crisis, fiscal conditions in many countries deteriorated seriously as a result of decreases in fiscal | has slowed somewhat compared to that in summer 1996, reflecting the shift of assets to those outside m2 + cds. recently, m2 + cds average outstanding grew at around 3 per cent on the whole. regarding money market rates, the overnight call rate ( uncollateralized ) has moved at a level slightly below the official discount rate. the 3 - month cd rate has stayed at around 0. 55 per cent. meanwhile, the long - term government bond yield declined to a record low of below 2. 1 per cent in early april 1997. however, it recently rose to around 2. 5 per cent as market uncertainties about the economic outlook and about japanese financial institutions have gradually subsided in line with developments in the stock market. with respect to bank lending rates, the short - term prime lending rate has remained at a record low level of 1. 625 per cent since september 1995. the long - term prime lending rate had been moving at the record low of 2. 5 per cent since december 1996. reflecting movements in long - term interest rates, however, it was raised by 0. 6 percentage points to 3. 1 per cent in may 1997. on the stock exchange, the nikkei 225 stock average has been rising since the second half of april 1997, reflecting the fact that market uncertainties about the economic outlook and about japanese financial institutions have gradually subsided, and the strong u. s. stock prices. in early may, it recovered to above Β₯20, 000 for the first time in four and a half months, and has recently continued to move at around Β₯20, 000. in the foreign exchange market, the yen depreciated between april and early may to around Β₯126 - 127 to the u. s. dollar. however, the yen β s depreciation was later reversed rapidly, as concerns about the appreciation of the u. s. dollar strengthened, and as the differential in interest rates between japan and the united states narrowed somewhat. the yen has recently moved at around Β₯116 - 117 to the u. s. dollar. meanwhile, the yen has appreciated against the deutsche mark and recently has moved at around Β₯68. | 0.5 |
that could assume a greater role of the government and the central bank. we do not assume that this will be the case because the efficiently working self - regulation model might bring better solutions than a model enforced through regulations. regardless of the target model for sepa implementation, the national bank of poland declares its readiness to support the process. important activities on the part of the nbp, as regards sepa - related works, include the strengthening of the infrastructure for cross - border euro settlements and the participation in target2 system, as well as the support of the implementation of sepa standards in the polish payment system. in order to achieve these goals, it is necessary to follow the works undertaken by the banking community in relation to sepa on the eu and national level. it is also important to foster cooperation on the government level to prepare and implement possible new regulations for the banking sector. the payment system council can further play an important role in this respect. sepa is a crucial challenge for the polish banking sector and for many clients of that sector. this is why it is critical to hold wide - scale consultations not only to develop a vision of sepa pl that would be coherent with the european vision of sepa, but also to take into consideration specific niche needs of polish entities. many questions, including the following, should be answered when developing the vision of sepa pl : - what is the target model of the european payment infrastructure and how to make sure that economies of scale are used on the single payment market in order to lower the costs of services for consumers, the appropriate competition is simultaneously provided and specific niche needs of each country are met ; - what is the best pace for implementing changes, considering the lack of straightforward declarations of the government regarding the date of poland β s accession to the euro area ; the experience gained so far suggests that the maintenance of the national payment infrastructure is beneficial for poland. for instance, the launch of euro - elixir and sorbnet - euro significantly reduced fees for cross - border payments in correspondent banking. so far, the decrease in prices has benefited mainly banks while their clients have felt the positive effects to a lesser extent. the national bank of poland hopes that clients of banks will soon more strongly experience positive price developments brought by the modern, safe and effective infrastructure of euro payments. such a development would indicate undoubtedly that the national bank of poland should strengthen its activities to counter the marginalisation of the polish settlement and payment infrastructure because the existence of a | krzysztof rybinski : single euro payments area from the point of view of the national bank of poland address by mr krzysztof rybinski, deputy president of the national bank of poland, at the conference of the polish bank association, single euro payments area, sepa organisational structure in poland β sepa pl, klub bankowca ( bankers β club ), warsaw, 10 october 2006. * * * ladies and gentlemen, not all of you may know that the first bank that fulfilled many functions of a modern central bank was established in 1609. it was the bank of amsterdam. this bank issued its own money, managed its supply through open market operations and operated an rtgs system for large volume payments, although the meaning of the term β system β was slightly different four hundred years ago as compared to its current meaning 1. four hundred years ago, the rtgs system of the bank of amsterdam completed payments equal to the netherlands β gdp within three weeks. today, many countries need less than a week for the same task. bankers who managed floren β s agio in the seventeenth century could have never dreamt that four hundred years later we all would not only use a single european currency, but also implement standards of the single euro payments area, or sepa. sepa is to be real. it is part of a vision of united europe where payment services are part of the single market. you can rest assured that payment systems of european countries will cease to be national payment systems sooner or later. as intended by the european union decision - makers, in a few years cross - border euro payments will be as unified and cheap as is the case for cashless money settlements in national payment systems now. from the point of view of the central bank, sepa should be beneficial first of all to the citizens of europe, but it is also to contribute to the development of the payment services market. as politicians refine their visions of united europe, tax - payers ask questions about the price. in the long term, the balance of benefits and costs of united europe is undoubtedly favourable. the same pertains to the idea of sepa. however, it is worth remembering that the final shape of the european payment system should be determined, to the largest possible extent, by the market that will choose the best solution for banks β clients. the assumptions made in order to streamline and increase the efficiency of cashless turnover in euro are well | 1 |
ardian fullani : achievements and challenges of the albanian banking system speech by mr ardian fullani, governor of the bank of albania, at the open forum with the albanian banking system β s players, tirana, 29 september 2008. * * * dear heads of commercial banks operating in albania, dear participants, it has almost been 6 months since the first open forum was held, at the core of which were the achievements and challenges of the albanian banking system. today β s forum is a follow - up of the debate which commenced 6 months ago with the good will and goal to further bolster the banking system β s stability in albania. i consider the first forum a successful one, given that it generated a number of important decisions that have been made recently. in addition, i have the strong conviction that the discussions to be held this afternoon will be productive and will serve to the prudent examination of the banking system β s activity, in particular in the context of the recent developments in the global financial markets. to begin with, i would like to provide a general overview of the banking sector β s financial situation and the extent of impact from the developments in the international financial markets. during the first half of 2008, the banking sector maintained its stable growth pace. the albanian banking system is lucrative, well - capitalized and liquid. the good financial result continues to be driven by the rapid growth of high return on investment activities. as of end june 2008, credit portfolio of the banking system accounted for nearly 43 % of total assets, increasing by 3. 6 percentage points relative to end - year 2007. consumer deposits remain the main funding source for the activity, accounting for 80 % of total assets. business funding through the credit lines from the parent banks increased to 9 % of total assets in the first half of 2008. as of end june 2008, return on average assets was estimated at 1. 3 % while return on average equity equalled to 16. 6 %. capitalization indicator of the financial sector, and in particular of the banking one, increased slightly. capital adequacy rate of the banking sector showed a slight increase to 17. 3 % as of end the first half of 2008. liquidity indicator continues to remain at higher levels compared to the other regional countries. liquid assets of the banking sector share 47 % of total assets, dropping by about 5. 7 percentage points relative to end - year 2007. the spread of the u. s. economy crisis to the international financial markets | into the consolidation stage, our banking systems still remain fragile, and as such, they require greater commitment and care. regardless statistical developments, the scale of financial intermediation is relatively low, whereas time after time the shadow of shocks on the economic equilibra shows up itself in different countries. future changes will not be simple at all, but all of us together, by exchanging experiences and necessities for change, will build a safer environment, which i hope will make future challenges somewhat easier. granting independence to central banks represents one of the most relevant steps in the financial system reform in the countries of our region, as an important precondition for maintaining inflation under control and becoming an escb member. however, our endeavours for the consolidation of the institutional and real independence should be coordinated carefully by taking into consideration the specific features of our economies in transition, and not as a mere implementation of what may seem to be a successful model for the escb countries. in this framework, i consider today β s meeting as very important, since the bulgarian economy and the bulgarian national bank have been going through substantial reforms in the context of eu accession. i believe that the challenges that we have faced and those that we will face in the future are more or less the same with those experienced by the bulgarian authorities, including the bulgarian national bank. as a consequence, i think that the bilateral cooperation between our banks carries a high potential, and in the name of my institution, i avail myself of this opportunity to offer maximal guarantees with regard to the fruitful development of these relations. 1 / 2 passing into a multilateral framework, i will return once more to the idea that focuses on the institutionalisation of the inter - regional cooperation between central banks. if we look to the meetings organised with some of the regional banking authorities, the initiative on regional cooperation has been welcomed, but i also believe that time has come to carry out concrete measures towards this cooperation. judging from my personal experience, not as governor but as a banker, i hold the opinion that it would be appropriate to establish a club of regional central banks. the regular meetings of this club would certainly enable the exchange of experiences and the further strengthening of our cooperation. 2 / 2 | 0.5 |
g7 2019 conference β banque de france, 10 may 2019 cybersecurity : coordinating efforts to protect the financial sector in the global economy conclusion by francois villeroy de galhau governor, banque de france press contact : mark deen ( mark. deen @ banque - france. fr ). page 1 sur 6 ladies and gentlemen, first, i would like to thank the moderators and the panelists for their very rich comments and the very useful ideas. we are all convinced that cybersecurity of the financial sector will remain on our agenda for a long time. the challenge is no longer about gaining awareness anymore, but to find ways to intensify and rationalise our action. based on the discussions today, let me start with one pre - requisite β coordination - and then propose concrete steps and tangible actions to improve our coordination in three areas : i. regulation and supervision ; ii. information ; iii. preparation. a. global threats, coordinated action panel 1 questioned the importance of cyber threats for the financial sector. there is a consensus that the level of cyber threats has never been so high, but at the same time, we must acknowledge that the capacity to anticipate attacks needs to be reinforced. following an attack, we need to address the potential contagion issues to the entire financial system or the entire economy. this is why coordination is a pre - requisite, not an easy one but a necessary one. while remaining realistic, there will not be a β world organization for cybersecurity β for obvious reasons, including trust. hence, coordination should be cross - jurisdictional. contagion can be global as our countries'financial systems are interconnected. this follows president macron's call for an " internet of trust " at the unesco forum in november 2018, which includes helping low - income countries to keep pace with developed countries. the imf and the world bank are encouraged to further develop their assistance program. in addition, coordination should be cross - sectors. the financial sector is not the only one concerned with cyber - attacks. other critical sectors are also at risk, some of which are essential to the functioning of the financial sector. this reinforces the importance of a cross - sectoral approach. national security agencies use this approach, and financial sector authorities page 2 sur 6 could also do the same at their level, taking into consideration the forthcoming g7 ceg fundamental elements. finally coordination should be cross - authorities, | christian noyer : no one should, nor can, manipulate their currency β interview in le figaro interview with mr christian noyer, governor of the bank of france and chairman of the board of directors of the bank for international settlements, in le figaro, paris, conducted by ms isabelle chaperon, ms bertille bayart and mr jean - pierre robin on 9 november 2010 and published on 11 november 2010. * * * interview β on the eve of the g20 in seoul, the governor of the banque de france advocates an β orderly and calm β discussion on the international monetary system. le figaro β last week, the us federal reserve pumped usd 600 billion into the economy. this decision has been harshly criticised. how do you view it? christian noyer β we raised this issue last weekend at the bank for international settlements in basel. fed officials explained this action in the light of their mandate, their goal of reviving the us economy and the risk of deflation. they assured us that they had no deliberate intention to devalue the dollar. and i have no reason not to believe them. le figaro β the fed seems much more accommodating than the ecb... are the economic situations so different? christian noyer β saying that the fed is very accommodating and the ecb very stringent does not reflect reality. in europe, our monetary policy is still marked by the non - standard measures tailored to the structure of our economy. in this respect, we do not think there is any risk of deflation in the euro area, or inflation for that matter. furthermore, the united states may be substantially below its long - term growth potential, whereas the euro area is relatively close. le figaro β nonetheless, the dollar is sliding and we seem to be moving away from the close cooperation seen between central banks during the crisis... christian noyer β first, everything does not come down to the dollar. for example, there are emerging countries that, by not being sufficiently flexible in their exchange rate policy, have monetary policies that are inappropriate and create risks to inflation and growth. moreover, while each central bank is pursuing a policy appropriate to its country β s situation, nobody wants to move away from the goal of consistency. we are all committed to ensure a framework for balanced growth, and that commitment remains just as strong. as reiterated at the last meeting of g20 finance ministers and central bank governors, no one should or | 0.5 |
central bank of barbados tom adams financial centre, spry street, bridgetown p. o. box 1016 telephone : ( 246 ) 436 - 6870 : fax. ( 246 ) 436 - 7836 e - mail address : info @ centralbank. org. bb website : www. centralbank. org. bb remarks by cleviston haynes, governor, central bank of barbados at the opening of the new branch of consolidated finance one welches, st. thomas thursday, january 31, 2019 i am delighted to celebrate with you, the launch of this new corporate branch in the growing welches business district. firstly, i would like to extend congratulations to the head of the branch, mr. darrell wilson, an experienced financial services professional, and his staff, as they set out on this exciting journey, anxiously looking forward to seizing the available opportunities and overcoming the inevitable challenges that lie ahead. i have no doubt that the depth of experience and understanding of the barbadian financial landscape that you bring will augur well for the success of this new branch, as you seek to expand consolidated finance β s foothold in the corporate and commercial lending market. consolidated finance is now a household name with a long history in barbados, having been established as a wholly - owned subsidiary of the mcenearney alston ( barbados ) group. the company has built an excellent reputation, expanding its range of financial products and services ranging from vehicle leasing arrangements to offering fixed deposits, real estate financing, merchant banking and foreign exchange trading. as regulator, the bank has been able to monitor your growth and we are satisfied with your commitment to enhance your systems for risk management to ensure compliance with regulatory standards. we welcome your decision to expand your footprint in the domestic financial market at this time. it demonstrates confidence in your ability to manage an expanded portfolio. equally important, it shows confidence in the future prospects for the barbados economy and embodies your commitment to helping the barbados economy to recover and strengthen over the medium term. 1 | page as i reported only yesterday, the economic indicators for the barbadian economy are displaying encouraging signs. but the prospects for durable growth over the medium term require a strong recovery in investment, both foreign and domestic. i believe that the domestic financial sector has an important role to play in this area, as it seeks to allocate over time, the substantial resources it has mobilized from our citizens. in recent years, credit demand has been weak and the banking sector has been marked | their processes, to save time and to shorten output schedules. it enables a more effective alignment with the rapidly changing demands of the customers since new enterprises with different skills increase functional flexibility. most businesses benefit by establishing a more solid presence in new markets, either directly of through a local partner, particularly since some traditional customers are still wary of conducting extensive business over the internet because of the uncertainty of legal environment governing such transactions. concerns about enforcement of contacts, liability, intellectual property, privacy, security and other matters have caused international business and consumers to be cautious. hence, it is useful to have a local presence. nevertheless, subsidiaries of foreign companies may require financial statements under us, canadian or uk gaap, thereby expanding the work of local firms and increasing their exposure. international business jurisdictions like ours, therefore, tend to benefit from a vast international exposure even though they are locally based, because their clients are multi jurisdictional. evaluating entry options research shows that over 80 % of companies seeking to expand plan to grow by adding new customers and entering new markets. however, entering new markets often involves learning, adopting and implementing new business practices and policies. fortunately for us in the caribbean, regional markets have, for the most past, similar accounting and regulatory systems, so that expansion regionally should not be problematic. successful companies who instinctively recognize the importance of new customers and new markets, are the firms which tend to succeed since they are proficient at establishing both effective marketing and new business development processes, including benchmarking and competitive analysis aimed at achieving sustained growth. in the increasingly market - oriented, global economy, challenges bring changes. even banks and others in the financial industry are revising their strategies, focusing on revenue generation after years of focussing on costcutting measures. global trends point therefore to increasing revenue growth, but the success of many firms located in the region, will be also determined by how well they respond to the forces that are changing the face of their respective industries, including the changing requirements relating to standards, and the need for additional transparency with respect to both the customer and the investing public, and how well they adjust to these global trends. the csme can assist in helping firms in accessing external markets through using the region as a stepping stone, though this intermediate step is not always essential to going global. with the help of some of the initiatives of government as well as initiatives from private firms themselves, successful regional expansion is possible. each firm will need to be able to formulate its own | 0.5 |
tharman shanmugaratnam : singapore β s dynamically changing landscape speech by mr tharman shanmugaratnam, chairman of the monetary authority of singapore, at the opening of one raffles place tower two, singapore, 18 september 2012. * * * wee ee cheong, chairman, oub centre limited, mr henry kok, general manager, oub centre limited, distinguished guests, good evening. it is my pleasure to be invited to officiate the opening of a new twin skyscraper in raffles place β one raffles place tower two. it is part of the continuing rejuvenation of the cityscape at raffles place, which continues to be at the heart of businesses and commerce in singapore. raffles place β a continuing history of new blended in old raffles place has indeed been a continuous story of the new inserted in the old, as it emerged from being a humble docking location for small boats and ships in the early 1800s, to become a thriving centre of regional commerce and now a global business and financial centre. on 8th august 1988, oub centre, now called one raffles place tower one, was opened by mr lee kuan yew, who was then prime minister. he had noted the building β s quality design and distinctive workmanship. it was also an icon for singapore at the time, as the building went on to be recognised as the tallest building in the world outside of the united states. designed by kenzo tange, one raffles tower one still remains amongst the tallest three skyscrapers in singapore. this evening, one raffles place continues this evolution with the addition of a second tower. how interesting too, that the new tower is designed by mr paul noritaka tange, son of the architect for the original tower one. i am told that one raffles place tower two has two distinctive features which differentiate it from its predecessor. first, one raffles place tower two is a certified bca green mark platinum development. some of the building β s environmentally - friendly features include solar cells and tools to harvest rainwater. with these sustainable features, the new tower will achieve an overall energy savings of 32 % each year. i applaud oub centre on this effort. second, one raffles place tower two will not only provide an additional 360, 000 square feet of grade a premium office space but has floor plates which are column - free. they grant offices the flexibility to apportion their office | , significantly influencing them to chart their future strategies. also, given the important role played in financing by private sources, there is a need for regulators to put in place right climate information architecture to create a conducive environment to attract private capital for climate finance. therefore, the role of disclosure frameworks which are consistent with internationally accepted norms is crucial. the point i wish to make is that it is possible to converge the objectives of growth and climate - protection in an optimal way. once we are able to put in place enabling 4 / 6 bis - central bankers'speeches frameworks, economy would be able to create a pipeline of the viable projects as well as evolve a set of new financial instruments like adaptation finance3, blended finance4 as an innovative climate financing tools. given these building blocks the possible policy direction points to strengthening regulatory and supervisory frameworks could include ( i ) disclosure requirements ( ii ) risk management ( iii ) robust network of third - party verification of green credentials and impact assessment of projects to address green washing concerns and ( v ) periodical stress testing as part of risk mitigation measures. as a country, india too has made significant advancements in addressing climate change and fostering sustainable development. we have submitted our nationally determined contributions ( ndcs ) to the unfccc in 2015, with updates presented at cop 26 in 2021. india also has committed to ambitious targets through its comprehensive strategy known as " panchamrit, " aiming to increase non - fossil - fuel energy capacity to 500 gw by 2030, derive 50 % of energy from renewable sources, and reduce gdp carbon intensity by 45 % by 2030, aiming for net zero emissions by 2070. launching of long - term low emission development strategies ( lt - leds ) at cop27, co - founding the international solar alliance, launching of the national hydrogen mission, introduction of mission life ( lifestyle for the environment ) are some of the other steps taken by the government of india. rbi too has taken proactive steps like including financing renewable energy projects under priority sector loans, introducing green deposits, and drafting a disclosure framework for climate - related financial risks. in near future, we plan to release guidance notes on scenario analysis, stress testing, and effective management of climate - related financial risks based on bcbs principles. rbi's aspirational goals for rbi @ 1005 includes establishing a robust regulatory and supervisory framework to effectively manage challenges arising from climate change, enhance the resilience of payment systems | 0 |
##terity policy. that β s because, all told, the euro - area countries have saved a handsome β¬1, 000 billion or so in interest, based on the 2007 interest rate level. and yet the large member states of france, italy and spain were precisely the ones which spent every last bit of what they saved in interest payments, instead of using it to pay off their debts. bearing this in mind, it is undoubtedly a welcome sign that the new french president has committed to comply with the fiscal rules and announced his intention to roll out additional economic reforms with a view to boosting french growth. a strong french economy will ultimately be a boon for the euro area as a whole. given the subdued price pressures, it is still appropriate, in principle, for monetary policy to be in accommodative mode. but in light of the ongoing economic recovery and a consensus inflation rate forecast of just under 2 % for 2019, it is certainly legitimate to ask when the ecb governing council should set its sights on normalising monetary policy. equally, there are good grounds to have a diversity of views about the right degree of monetary accommodation β all the more so, given that the highly accommodative monetary policy stance is mainly being achieved through the deployment of non - standard instruments. as you are no doubt aware, i take a critical view of the large - scale purchases of government bonds in particular. in a currency union, purchase operations of that kind blur the especially important boundaries between monetary and fiscal policy. eurosystem central banks have now become the euro - area countries β biggest creditors. at the end of the day, this can lead to political pressure being exerted on the eurosystem to maintain the very accommodative monetary policy for longer than appropriate from a price stability standpoint. after all, in the context of asset purchases, changes in monetary policy impact more directly on governments β funding costs than 2 / 6 bis central bankers'speeches interest rate moves. and that β s naturally also problematical in view of the disciplining effect of the capital markets on government finances. hence my view that government bond purchases are an instrument of last resort - one which should mainly be used to fend off deflation. but i β ve said in the past that the fears of deflation are overblown, and since then they have become even less of an issue. what is more, looking at the monetary policy stance, there is no disputing that the | that duties distort the structure of production, thus reducing global trade overall. but a single large country might hope to gain an advantage if the trading partner lowers its export prices and thus ultimately bears the customs duty. it then pays for the trading partner, however, to reduce its losses by raising duties and preventing the shift in trade prices. this means that everyone is worse off in the end. in actual fact, analyses suggest that there are only losers in the trade conο¬ict between the united states and china. they indicate that chinese suppliers are not prepared to make major price concessions, which is why us ο¬rms and consumers had to the bear the main burden of the duties. [ 6 ] nor was the reduction in bilateral trade ο¬ows offset to a signiο¬cant extent by more trade with other partners. a bundesbank study looked in vain for who had the β last laugh β in this conο¬ict, for example. [ 7 ] instead, the dispute led worldwide to greater uncertainty, and dampened the propensity to invest and trade. and even leaving aside such uncertainty effects, bundesbank analyses highlight the potential harm : if the duties remain in place, the size of the us and chinese economies would shrink by up to Β½ % ; the size of the global economy would shrink by ΒΌ % overall. https : / / www. bundesbank. de / en / press / speeches / the - potential - long - term - effects - of - the - coronavirus - crisis - on - the - economy - and - on - monetary - policy - 855 β¦ 4 / 14 12 / 21 / 2020 the potential long - term effects of the coronavirus crisis on the economy and on monetary policy | deutsche bundesbank this shows how important it is to keep markets open or make them more open. on the other hand, in globalisation, too, there are not just winners. it is true that, taken as a whole, world trade and the international division of labour boost the prosperity of national economies. but not everyone beneο¬ts alike. that is because there is a shift in relative prices and wages, jobs can be lost while new employment opportunities arise elsewhere. it is therefore, for one thing, important to alleviate social hardships with an appropriate transfer system. for another, education is key so that as many people as possible are able to beneο¬t from the opportunities afforded by open markets as well as new technologies. 2 | 0.5 |
presentation of the 2020 annual report of the autorite de controle prudentiel et de resolution ( acpr ) press conference, friday 28 may 2021 speech by francois villeroy de galhau, governor of the banque de france chairman of the acpr ladies and gentlemen, it gives me great pleasure to be with you again for the presentation of the 2020 annual report of the autorite de controle prudentiel et de resolution ( acpr β prudential supervision and resolution authority ), in the company of the new vice - chairman, jean - paul faugere, dominique laboureix, secretary general of the acpr, and alain menemenis, president of the sanctions committee. i would first like to pay tribute to the staff at the acpr β more than 1, 050 men and women whose professionalism is exemplary and recognised β who have worked especially hard, both on - site and remotely, to monitor closely the effects of the economic crisis on financial stability. exactly a year ago, when we were just at the start of the covid crisis, i pointed out to you, in this exact same setting, how vigilant we were being and how confident i was, both in the competence of our supervisor and in the resilience of the financial system. looking back, we haven β t done too badly at all : at this stage, the financial risks are, on the whole, under control, thanks to resilient financial institutions with solid fundamentals ( i ). this reassuring picture should not, however, mask the short - term challenges of the emergence from the crisis, and the more structural challenges that our financial institutions will face over the coming decade ( ii ). i. financial institutions have proved more resilient than expected during the covid crisis just a short word, to start with, on the situation for insurers, which jean - paul faugere will go into in greater depth. despite a fall in profits, france β s insurance sector is holding up well and remains the leading market in europe in terms of balance sheet size : insurers have managed to keep their solvency ratios on the whole solid, at around 243 %, which is one of the highest levels in europe. but we need to be careful not to become complacent : the solvency of insurers is still a major focus of attention. consequently, as one of its control priorities, the acpr will carry out reinforced supervision in | up a central bank that was capable, because it was trusted by the french people, of offering an β elastic β money supply, to use the economic jargon, that is, of adjusting the money supply to suit the needs of the economy. in this way, the foundations for an active lender - of - last - resort policy were laid very early, providing a means to combat financial crises and thus support the economy. in this timeline of measures to preserve monetary stability since 1800, 1848 marks a turning point because, with the opening of branches in bordeaux and eight other french cities, the banque de france became the central bank for the entire country, for three reasons : first, it unified local payment systems by creating a single nationwide multilateral settlement system through its branch network. banknotes then circulated over all the french territory with the same value, and the ability to transfer money between branches slashed and standardised the cost of wire transfers for economic agents. second, it could perform in each financial centre a single supervision of what was essentially local banking businesses, greatly lessening the financial instability that had plagued france off - and - on between the fall of the empire and the revolution of 1848. 7 harnessing its in - depth knowledge of business and banking communities, which was shared between each branch and the head office, the bank was able to implement prompt corrective actions or step in to ensure the recovery or resolution of struggling financial institutions. faure, edgar, 1977, la banqueroute de law, 17 juillet 1720, paris, gallimard β trente journees qui ont fait la france β for a complete description of the law system, and courtois, 1875, previously cited, on attempts to set up a central bank before the banque de france. 6 sargent, thomas and francois r. velde, 1995, macroeconomic features of the french revolution, journal of political economy, vol. 103, pp. 474 - 518 7 see bignon, vincent and marc flandreau, 2018, the other way : a narrative history of the bank of france. in sveriges riksbank and the history of central banking, edited by r. edvinsson, t. jacobson and d. waldenstrom, cambridge : cambridge university press, pp. 206 - 241. third, 1848 heralded the beginning of a single monetary policy for the entire country, with the same policy rate applied in all cities. in this way, | 0.5 |
in its stages of implementation, how the institution assesses and manages risk, and relevant information for third parties to ascertain the effectiveness of the bank's risk 2 / 4 management. pillar 3 market discipline, therefore, will complement supervisory efforts to maintain adequate capital. so where do we go from here? the u. s. agencies learned some valuable information from the follow - up work pertaining to qis4 results this summer. right now we are still evaluating the results from this follow - up work, discussing the options to respond to those findings, and determining how the implementation process will proceed in the united states. obviously, we understand that the industry and others are interested in details about the next steps in the united states, and we hope to provide a public communication sometime in october. additionally, the agencies are moving forward on an advanced notice of proposed rulemaking for revisions to basel i rules, the details of which should be publicly available very soon. we expect that the timeframe to adopt revisions to current rules will overlap with the basel ii proposals, so that the industry can review them side - by - side. progress on home - host issues with such a large group of international bankers in attendance, i would be remiss in not offering a few thoughts on home - host issues relating to basel ii implementation. understandably, internationally active banks are keenly interested in cooperative arrangements among supervisors for evaluating capital adequacy under basel ii. several years ago, the accord implementation group ( aig ) was formed as a subcommittee of the basel committee for supervisors to discuss the tactical issues associated with cross - border supervision. most recently, and in cooperation with the representatives of the core principles liaison group ( non - group of ten supervisors ), a joint working group was established to consider enhancing guidelines for information sharing among home and host supervisors. this working group is looking to clarify the roles and responsibilities of home and host supervisors as well as supervisory expectations of banks with regard to communications between their head office and their foreign offices. the working group is also hoping to address communications between home and host supervisors about enterprise - wide risk models and their use in assessing capital adequacy in host jurisdictions, as well as mechanisms for supervisors to work together for consistency and to avoid duplication. obviously, whatever guidance is issued would be supplemented further as implementation plans and qualification processes become more fully developed. i do think it is also helpful to remember that a number of the home - host issues pertaining to basel ii are actually | . turkey, following the second approach, has been using mainly macroprudential measures along with a relatively low and yet quite flexible interest rate policy in face of volatile short term capital flows. 2 the central bank and the other government agencies responsible for financial stability, developed new tools and introduced new policies to avoid excessive deviations of the credit growth rates and the exchange rates from economic fundamentals. examples of macroprudential policies used in turkey are loan to value restrictions, high risk weights and provisioning requirements on credit with negative externalities, maturity based reserve requirements and leverage based reserve requirements. these policies already helped to start a rebalancing process for domestic and external demand during the rapid post lehman recovery and the more recent european sovereign debt crisis. 3 distinguished guests, the financial stability, when lost, has deep and long - term impacts on both employment and growth. 4 the cost of preventing a financial crisis is much lower than the cost of living it. the recent developments have reminded us this economic dictum once again. the primary objective of the central bank of the republic of turkey is to achieve and maintain price stability. besides price stability, contributing to financial stability within its scope of operations has been also listed among the primary duties of the bank in the central bank law. to that end, cbrt has used a combination of macroprudential tools and automatic stabilizers. we view both price stability and financial stability as two indispensable components of balanced growth. borio, c. ( 2011 ). central banking post - crisis : what compass for uncharted waters? bis working papers, no. 353. akcelik, y., bascΔ±, e., ermisoglu, e. and oduncu, a. ( 2013 ). the turkish approach to capital flow volatility. cbrt working papers, no : 13 / 06. for sustainable debt levels, see : cecchetti, s., mohanty, m. s. and zampolli, f. ( 2011 ). the real effects of debt. bis working papers, no. 352. reinhart, carmen m., and kenneth s. rogoff. ( 2009 ). this time is different : eight centuries of financial folly. princeton, nj : princeton press. ; taylor, a. ( 2012 ). the great leveraging, nber working papers, no. 18290. bis central bankers β speeches distinguished guests, comprehending the | 0 |
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