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malta fails to offer the right combination of productivity, skills, innovative ability and cost to justify their investment. there are other early warning signals. the economy β s 0. 2 % average real growth rate over the past two years is the lowest of all the acceding countries. it is also low compared to that of the existing eu member states. the experience of those two years may well have been exceptional, but it nevertheless serves to remind us that the economy needs to grow consistently much faster if malta is to catch up with average eu per capita income levels within a reasonable period of time. i strongly believe that the factors making for high costs and weak growth rates should be addressed as a priority. as i have observed on other occasions, strategies to improve competitiveness in a globalising world can be devised. other countries have shown the way. what is needed is the political will and the effective collaboration of all the parties concerned. population ageing perhaps there exists no clearer example to illustrate the kind of challenge the country faces than the issue of population ageing. the impact of a rapidly ageing population in the context of a generous welfare system is inevitably a dramatic rise in spending on pensions and health care. expenditure on welfare, including on health, is already absorbing close to one - fifth of the economy β s annual income, or about lm300 million, and almost two - fifths of government revenue. retirement pensions alone account for more than one - fourth of this, and are the cost item which is likely to register the strongest growth in the years ahead. over the next twenty - five years it is expected that the number of workers supporting one pensioner will drop from the present 4 to just over 2, partly reflecting the fact that the proportion of pensionable age persons in the population will rise from 16. 7 % today to over 28 %. an ageing society will also further aggravate existing national saving and investment trends. the impact on private consumption and savings patterns is a result of the β life cycle hypothesis β, which holds that a rise in the proportion of the elderly in the population tends to be accompanied by a decline in national savings. indeed, the effect of population ageing on public finances is nothing but a reflection of a wider economic problem involving a reduced productive capacity. reforms to pre - empt this impact must, therefore, be implemented without delay. here again, malta need not re - invent the wheel. the world bank model involving funded pension schemes is being applied successfully | the theme of β repairing the social and economic fabric β. in recognition of the scale of the employment crisis and its impact on both social cohesion and longer term growth, several other global institutions and economists are focusing their attention on employment, seeking ways to tackle unemployment and underemployment. these discussions on employment occur in a global context where unemployment has increased sharply since the onset of the financial crisis. of great concern is the fact that the number of young people who are unemployed, and the length of time that people remain unemployed, are rising. south africa has had an unemployment crisis for the better part of three decades. a few years ago south africa was an outlier with an unemployment rate of around 25 percent. today there are several countries in the periphery of europe with unemployment rates at least as high as ours β not that this is any reason for complacency or comfort. the international labour organisation estimates that there are about 200 million unemployed people in the world today. this figure excludes the millions more who are either underemployed or are discouraged from seeking employment. the ilo estimates that the number of unemployed people in advanced economies is likely to remain above the precrisis level up to at least 2017, a full decade after the crisis first began. in south africa, total employment is still about 400 000 below the peak reached in in 2008. bis central bankers β speeches the unemployment crisis represents a massive waste of lives and resources. it has profound social implications and its effects will be with us for decades to come. economists refer to the term hysteresis, which in this context describes the loss of skills and productivity when a person has been out of the workforce for a long period of time, thereby lowering future potential growth. reducing unemployment on a sustainable basis is arguably the single most important economic objective at the present moment. in part, creating jobs is about raising the level of economic growth. however, it is also about addressing the structural factors that limit employment growth. my address today will try to give you a sense of how central banks think about employment and how they factor employment issues into their reaction function. i will also explore broader structural and cyclical factors relating to employment. before concluding, i will briefly make some observations about the future of work and the likely impact of technological change. the policies of central banks are not often associated directly with employment creation. however, monetary and financial sector policies have a role to play in at least two respects. firstly, the | 0 |
result, pricing is disrupted and liquidity drastically decreased, which in turn implies falling asset values and further losses in the financial industry. the fact that the problems to a large extent have been driven by financial markets breaking down, rather than by individual institutions credit risk exposures, explains the unprecedented international impact of the crisis. globally interconnected markets have resulted in a situation in which financial institutions everywhere have been hit, even if not exposed to the institutions or assets at the core of the crisis. my home country sweden is a good example of this. what we have witnessed in recent months, since the default of lehman brothers, is the acute phase of a global financial crisis. to respond, authorities have taken action to prevent a systemic break down of the financial system. both the us and the eu have delivered financial support plans committing governments and central banks to providing the necessary support to the financial industry. these plans are now being implemented and we cannot yet be certain of their success. however, in my view, the support plans contain the necessary measures to solve the most critical issue right now, namely to restore market confidence by providing guarantees to creditors that their money will be repaid. therefore, the prospects for restoring financial stability and enhancing the availability of credit for firms and households should be good. that the support plans also provide measures for government capital injections and takeovers is obviously good, but for the purpose of getting markets to function properly ownership issues really are of secondary importance. after all, what creditors are looking for is to get their money back. to them it should not really matter from where or from whom that money comes. even if it is too early to tell, we can see that the financial support plans have contributed to a certain degree of recovery in the markets. interbank rates are falling, credit spreads are narrowing and liquidity is returning in some markets. however, most of the content of the support plans is directed at handling the most pressing problems in the financial system. in the longer term other measures will be needed, and this is what i will discuss now. what are the future challenges? let me first say that we need to realise that times of financial turbulence are unavoidable and something that we have to learn to live with. what is important is that we learn from previous experiences and use this knowledge to lower the probability of future crises occurring, and when they actually do happen, to mitigate their costs. we also need to realise that despite the many similarities between various crises they are | will probably last for quite some time to come, which means that the policy rates of central banks will on average be on a lower level. this may, in turn, limit the scope of central banks to tackle economic downturns by cutting policy rates. say, for example, that the repo rate will on average be around 2. 5 per cent, that is, at the lower bound in the riksbank β s assessment of the long - term level. that does not provide much leeway down to zero. as we have shown, it is possible to lower the rate some way below zero but it is clear that there may be less scope for rate cuts than previously. discussions are ongoing among central banks as to what the significance of low interest rates will be for monetary policy and how the scope for monetary policy to act in economic slowdowns can be increased. one conclusion is that complementary monetary policy measures of the type used by many central banks in recent years, such as the purchasing of various assets, may become more common in the future. other feasible measures in the monetary policy toolbox are loans directly to companies via banks, and foreign exchange interventions. 11 the new environment also affects other policy areas another possibility is other policy areas being used more actively to stimulate the economy in times of recession. in the international debate, it has, for example, been said that the limitations imposed on monetary policy by the low interestrate environment mean that fiscal policy may need to contribute to stabilisation policy to a greater extent than before. 13 i think, to start with, that it is important to point out that monetary policy has not be exhausted as a result of the policy rate being lowered as far as is practically possible. as i just mentioned, there are several tools in the monetary policy toolbox that can be used if need be, in order to stimulate the economy. that said, there are obviously feasible tools in other policy areas as well. and it is reasonable to evaluate the costs and benefits of using all these different tools so that economic policy is as efficient and effective as possible for the economy as a whole. but how the various tools are used is a matter for those responsible for the different policy areas and as regards fiscal policy, it is of course the riksdag and the government that determine how and on what grounds it is to be conducted. price stability still the basis for monetary policy in conclusion β the decade we are emerging from was characterised by crises and a deep, long - | 0.5 |
this year, it is difficult to assess its effectiveness comprehensively. however, it could be instructive to review ex ante the robustness of the analytical toolbox assigned to the esrb, and consider ex post whether such a toolbox would have enhanced policymakers understanding of systemic risk prior to the crisis. before doing so, i should make clear that the purpose of the esrb is not to predict crises. the academic literature on early warning signal models, developed over the years, suggests that, for a number of reasons, the scope for error in predicting crises is substantial. either the eruption of a crisis is missed or a period is wrongly identified by the start of a crisis. for this reason, the esrb β s analytical toolbox is based on early warning models and indicators designed to identify emerging vulnerabilities or imbalances that could lead to financial instability. these models aim to perform three functions in particular. first, to identify the variables which are associated with financial instability. to this end, an index of aggregate macro - financial imbalances, or of institution - specific vulnerabilities, is tested against variables such as credit growth, property price changes, private sector leverage and current account deficits, to discover which variables predict that index. measures of bank leverage, balance sheet growth and maturity mismatches may also be used in order to gauge the extent to which the financial sector is driving developments. second, to assess the relative importance of different risks for financial stability. this is done using β adverse scenarios β that are designed and macro stress - tested to establish the potential severity of different types of risk and the overall resilience of the financial system to severe shocks. such models, including top - down stress test of individual institutions, allow risks to be assessed more broadly and at a higher frequency than is possible with bottom - up exercises run by financial institutions, thus enhancing the β real time β information on systemic risk available to policymakers. third, to assess the financial channels through which risk can be propagated, thereby factoring - in potential second - round effects. the use of contagion and spillover models allows, for example, the assessment of the impact on the financial system of the failure of a particular financial institution or of turbulence in a particular sovereign debt market. bis central bankers β speeches we could consider how this framework would have functioned if applied retrospectively. for example, the monitoring of the credit - to - gdp ratio as an early warning | labor income shares β, imf world economic outlook, april. 8 see for example brynjolfson, e., rock, d., syverson, c., ( 2018 ), β artificial intelligence and the modern productivity paradox : a clash of expectations and statistics β, chapter 1 in the economics of artificial intelligence : an agenda, nber, gordon, r. j. ( 2018 ), β declining american economic growth despite ongoing innovation β, explorations in economic history, vol. 69, pp. 1 - 12, mokyr, j. ( 2018 ), β the past and the future of innovation : some lessons from economic history β, explorations in economic history, vol. 69, pp. 13 β 26. 9 the direction of the bias for the aggregate index is less certain. in broda, c. and weinstein, d. ( 2010 ), β product creation and destruction : evidence and price implications β, american economic review, vol. 100 ( 3 ), pp. 691 β 723, the authors find that failing to take into account product creation across the index creates an upward bias to traditional β fixed good β indices. 10 gorodnichenko, y. and talavera, o. ( 2017 ), β price setting in online markets : basic facts, international comparisons and cross - border integration β, american economic review, vol. 107 ( 1 ), pp. 249 β 282, january. 11 cavallo, a. ( 2018 ), β more amazon effects : online competition and pricing behaviour β, nber working paper no 25138, presented at the jackson hole symposium 2018. 12 nevertheless, early evidence suggests that online prices are as unresponsive to macroeconomic shocks as offline prices β see gorodnichenko, y., sheremirov, v. and talavera, o. ( 2018 ), β the responses of internet retail prices to aggregate shocks : a high - frequency approach, β economics letters, vol. 164 ( c ), pp. 124 β 127. 13 in cavallo, a. ( 2017 ), β are online and offline prices similar? evidence from large multi - channel retailers β, american economic review, vol. 107 ( 1 ), pp. 283 β 303, the author finds price levels are identical around 72 % of the time. 14 gorodnichenko, y. ( 2018 ), discussion of cavallo, a. | 0.5 |
, as well as our rules and procedures as regulators. 2. consequences for the central bank in its three roles as operator, overseer and catalyst the eurosystem fulfils its statutory task of promoting the smooth operation of payment and settlement systems in three distinct roles : as operator, overseer and catalyst. these three roles are not going to change. what does change is what we need to do in each role. as an operator, the eurosystem is committed to assessing the opportunities presented by new technologies to enhance the different services it provides to the financial services community. the current exercise of consolidating the two infrastructures operated by us is an excellent starting point for this. with this exercise, we aim to bring benefits to target2 end users by offering them the state - of - the - art features available in t2s. we are convinced that bis central bankers β speeches increasing the efficiency of our market infrastructure will ultimately support the efficiency of the financial services community. as an overseer, the eurosystem needs to arrive at a common understanding of which developments could potentially affect the overseen entities. the digitalisation of the financial industry means that the security requirements for the overseen instruments and infrastructures need to be adapted and enhanced accordingly. furthermore, the emergence of new service providers requires reflection on issues such as how to ensure a level playing field for newcomers and long - established players, as well as an appropriate level of protection for the users. service providers from outside europe offering global solutions present a further challenge that has to be tackled. last but not least, the effects of digitalisation and new technologies also need to be studied in the context of cyber resilience, in both our operator and overseer functions. the objective continues to be to have resilient infrastructures and smoothly functioning payment systems which guarantee the proper transmission of monetary policy. as a catalyst, the overarching goal is still to fulfil our tasks as laid down in the treaty and to support the creation of truly single european market for payments and securities. we strongly believe that the single market brings improvements in efficiency and contributes to economic growth. hence, our main focus here is to ensure that technological innovation does not lead to disruption or re - fragmentation in the market. 3. the eurosystem β s vision for evolving its financial market infrastructure services to address the need for europe β s financial market infrastructure to continuously evolve and keep pace with market developments and technological progress, the eurosystem has developed three key action | yves mersch : shaping the future of europe β s financial market infrastructure opening remarks by mr yves mersch, member of the executive board of the european central bank, at the information session on the consultative report on rtgs services, frankfurt am main, 22 march 2016. * * * introduction in my opening remarks i want to address three issues. first, i will set out the main drivers of change that have been shaping europe β s financial market infrastructure in general and the rtgs system in particular. second, i will address the consequences of these drivers for change that the eurosystem will have to tackle in its roles as operator, overseer and catalyst. and third, i will present the eurosystem β s concept for evolving its market infrastructure beyond 2020. 1. key drivers of change in europe β s financial market infrastructure change in europe β s financial market infrastructure landscape has been driven by two big objectives : integration and increasing efficiency. with the advent of the euro as a common currency, integration was at the heart of the eurosystem β s strategy for building its rtgs system and the correspondent central banking model ( ccbm ) in the 1990s. the elimination of differences between national and cross - border retail payments in euro was a key ambition behind the creation of the single euro payments area ( sepa ). last but not least, t2s, the single pan - european platform for securities settlement in central bank money, has consolidated the most fundamental part of the securities value chain : settlement. we are now seeing market consolidation in trading and clearing as well. in parallel to the efforts to move towards an integrated market infrastructure, the eurosystem has taken steps to increase the efficiency of its market infrastructure. this has been facilitated by technological progress and innovation. at the same time, we have to take into account that digitalisation and the social diffusion of real - time information and communication has fundamentally changed end user expectations. access to and use of financial services anytime, anywhere, via multiple devices / access channels is taken for granted now. this not only has consequences for the service layer, but also for the underlying clearing and settlement layers. a further impact on certain functionalities within the market infrastructure may be expected from distributed ledger technologies ( dlts ). we are committed to analysing whether these technologies could lead to lower costs and a more resilient market infrastructure. but we also have to consider how they may affect financial intermediation in general, the role of banks and other market participants | 1 |
john mcdermott : the role of forecasting in monetary policy speech by dr john mcdermott, assistant governor and head of economics of the reserve bank of new zealand, to finsia ( financial services institute of australasia ), wellington, 15 march 2013. * 1. * * introduction as is well known, the reserve bank act requires the bank to seek to maintain price stability, an objective similar in spirit to that of most modern advanced - country central banks. the governor is legally responsible for monetary policy decisions and they are made independently from the government. last week he explained in a speech how we make and communicate these and other important reserve bank decisions. 1 because the economy is never at rest, and monetary policy actions take time to affect inflation, forecasting economic conditions is an essential part of making these decisions. the forward - looking nature of monetary policy is reflected in the policy targets agreement ( pta ) between the governor of the bank and the minister of finance, which specifies the price stability target as β future cpi inflation outcomes between one percent and three percent on average over the medium term, with a focus on keeping future average inflation near the two percent target midpoint β. there are difficulties and uncertainties involved in assessing the current state of the economy and its likely future path. modern central banks therefore put a huge amount of energy into forecasting. events such as the global financial crisis and the canterbury earthquakes showed how we must be prepared to pivot, at times very quickly. reflecting this complex policymaking environment, the bank β s governing committee is advised by a team of about 40 economists and financial market analysts, including two external monetary policy advisers drawn from the private sector. this speech explains how forecasting fits into the monetary policy process. i β ll address the limitations and trade - offs involved in forecasting and how we manage these in monetary policy decision - making, and illustrate by discussing important issues in the current forecast. 2. the forecasting process and economic framework forecasting links the bank β s policy rate decisions and strategy to the requirements set out in the pta. the forecasting process follows a quarterly cycle with two ocr reviews, one of which is accompanied by the monetary policy statement for the quarter. through the quarter, we examine the incoming data, update forecast tracks and scenarios, and discuss policy risks. inputs to the process are many and various. we draw on official data, surveys and other information covering output, sales, employment, consumption, investment, exports, imports, | influenced by the positive impacts from various policies taken by the government and bank indonesia. inflation of foods and inflation of administered prices are expected to be stabilized, supported by expectation of improvement in the supply and distribution of food, assuming there will be no more policy of price increases that is of strategic nature. core inflation is expected to remain controlled due to the preservation of supply availability, stable rupiah exchange rate, and manageable inflation expectation. 75. for the prospect of banking in 2014, potentially fragile economy and interest rates increases need to be anticipated. in this sense, we forecast that credit growth from banking in 2014 will be within the range of 15 β 17 %, supported by growth in deposits along the same pace. in our assessment, that pace of credit growth is consistent with our efforts in balancing the economy. therefore, i expect the active involvement of the banking sector to adjust the target of credit growth in each respective bank business plan for 2014 to be more consistent with our effort in managing the economy towards a healthier direction. respected ladies and gentlemen, < medium - term prospects > 76. in the medium - term perspectives of 2015 β 2018, global economy is expected to grow at an average rate of 3, 9 %, driven by expected improvement of economic activities within the united states. prices of non - oil and gas commodities are expected to increase, albeit limited. nevertheless, prospect of global oil price needs to be carefully monitored because it can potentially increase due to ongoing global economic recovery. bis central bankers β speeches 77. indonesian economic growth is expected to reach 6, 5 % in 2018, if all transformation policies in the economy proceed according to expectation [ figure 11 ]. i take the view that those policies can improve the structural balance between demand and supply, while also easing the problem of current account balance structure. along the same line, economic growth could be stuck at 6 % if the transformation process does not proceed according to expectation. figure 11 medium - term economic prospect distinguished ladies and gentlemen < vision, mission and strategic values of bi > 78. in order to achieve those important targets, bank indonesia is transforming itself. we have launched our vision until 2024, which is to become a central bank that is to be a credible institution and the best central bank in the region. 79. we strive to be the best in the implementation of policy mix, macroprudential development, management of capital flow, initiative policies for the creation of regional financial safety net, financial inclusion and smes, and the | 0 |
gent sejko : the importance of media in analysing albania β s monetary policy address by mr gent sejko, governor of the bank of albania, at the end - of - year meeting with the media, tirana, 20 december 2018. * * * dear ladies and gentlemen, welcome to our end - of - year meeting with the media. i would like to thank you for your readiness, objectivity, and seriousness in covering the activities of the bank of albania and informing the public about them, throughout 2018. thanks to you, our analyses and decision - making have been communicated in a thorough manner, mindfully tailored and styled in accordance with the age and profession of the targeted audience. i must note that, in addition to broad geographic coverage, your comments and analyses on the economic and financial developments in albania have been very professional. at the bank of albania, my colleagues and i maintain that the current media reality is an important part of our activity. our decision - making could not be considered complete without your contribution. communication is a vital and delicate process for a central bank. i must emphasize that, without your help and objectivity, realisation of bank of albania β s decision - making regarding monetary policy and financial stability would have been an impossible mission. figuratively, i would point out that you are the ones that enable the translation of our analyses and conclusions into an adequate and easy - to - understand message for the general public. you have informed the public on our actions and interventions related to monetary policy, as well as on our decisions related to financial stability, market efficiency, banking regulations and other more specific aspects. this leads us to the conclusion that the level of reporting has improved significantly, which, in turn, urges us to be more demanding of ourselves in all the arguments and analyses underpinning our decision - making. i would like to thank you for your constructive role in reporting news items related to developments in the economy, finances, money, the banking system, inflation, financial stability, as well as to the risks towards which our economy is exposed. i would also like to assure you that the bank of albania will continue to be an open and very loyal institution vis - a - vis the media. the bank of albania will be continuously open to communication with regard to the entire spectrum of economic, financial, contemporary, professional and unbiased news. dear ladies and gentlemen, it has become a tradition now for us to organise, during the end - of | ardian fullani : overview of economic developments and key issues in albania speech by mr ardian fullani, governor of the bank of albania, on the monetary policy decision by the supervisory council of the bank of albania, tirana, 20 december 2012. * * * today, on 20 december 2012, the bank of albania β s supervisory council reviewed and approved the monthly monetary policy report. based on the latest monetary and economic developments in albania, and following the discussions on their future outlook, the bank of albania β s supervisory council decided to keep the key interest rate unchanged, at 4. 00 %. the supervisory council deems that the current monetary conditions are adequate to meet bank of albania β s inflation target in the medium term. moreover, these conditions ensure the right monetary stimulus to support the domestic demand. let me now proceed with an overview of the economic developments and key issues discussed at today β s meeting. * * * annual inflation in november stood at 2. 5 %. the major part of inflation continues to be determined by the performance of food prices. contribution of other goods was steady from the previous month. inflation fluctuation owed mainly to the supply - side factors, of external and internal origin. nonetheless, the intensity of supply shocks was low and lasted for a short period of time. the supervisory council finds that developments in the real economy and financial markets produced low inflationary pressures. the albanian economy continues to remain below its potential. this development is reflected in the low increase of wages and production costs. prices in the global markets and the exchange rate were relatively stable ; hence, they did not exercise pressures for upward prices at home. likewise, expected inflation remains anchored around bank of albania β s 3 % target. finally, monetary developments are characterised by low demand for liquid monetary assets. the monetary policy pursued by the bank of albania has contributed to stimulating the aggregate demand, administrating the liquidity in the system, and keeping inflationary expectations in check. this situation of inflationary pressures is expected to remain steady in the medium run. available figures on the economic activity over the second half of the year are partial. indirect data analysis, however, confirm earlier estimates for positive growth during this period, at levels similar to the second quarter of the year. economic growth was mainly driven by foreign demand, while domestic demand was weak. consumer spending is assessed to have been up during the third quarter, reflecting also better activity of the services sector. private consumption, however, remains weak, due | 0.5 |
nils bernstein : recent economic and financial developments in denmark speech by mr nils bernstein, governor of the national bank of denmark, at the annual meeting of the association of danish mortgage banks, copenhagen, 23 april 2009. * * * thank you for the invitation to speak here today. at last year's meeting, i began by saying that economic predictions should always be taken with a grain of salt. the same applies this year. today's cyclical picture is a great deal gloomier than i β or others, for that matter β predicted a year ago. expectations of global growth are being adjusted downwards all the time. at the moment, growth estimates come and go. the latest international forecasts expect output in the industrialised countries to drop by 4 per cent this year. major exporting countries like germany and japan are hit especially hard ; a decrease in output by more than 5 per cent is foreseen. in that case, the setback will be of a magnitude not seen for a long time. the current outlook is gloomy. but for some time the most pessimistic predictions have tended to stick most. the global political willingness to address the crisis is one encouraging aspect. there is no universal agreement, but so far the world has managed to keep tendencies to profit at the expense of others at bay. let us hope that it continues. the euro plays a major role here. i am not blind to the fact that the currencies of some of denmark's important export markets have depreciated against the euro and thus the krone. this makes life hard for danish exporters, but we will just have to accept it. and it is a reminder of how important it is to keep costs down. the g20 summit in london early this month agreed to expand the lending capacity of international financial institutions, including the imf. in addition, the g20 countries agreed on higher trade credits and a general increase in the foreign - exchange reserves of central banks. all this amounts to astronomical figures. denmark will have to pay its share of the financing of these commitments. a global economic downturn of the magnitude we are witnessing at the moment must necessarily have serious implications for a small open economy like denmark. exports have declined by almost one fifth over the last six months. and the downward trend continues. last year, output fell by more than 1 per cent in denmark, while it rose in most other eu member states. this year, we expect output to decline even more | will ultimately contribute to future prosperity. but experience has taught us that it is a development which needs to be monitored very closely and presupposes a high degree of discipline in economic policy. it requires a great deal from decision - makers in the political system and the supervisory authorities, as well as from those of us who work in central banks. developments in the financial field are creating large opportunities. but it is also important to bear in mind that major, far - reaching changes normally entail risks. in view of these risks, every agent in the financial system needs to act wisely and discerningly. only in this way can the full benefits be drawn from the opportunities that financial developments are providing. | 0 |
us, and what they cannot. in addition, we plan to publish an article in the federal reserve bulletin discussing and interpreting the data. the article will be published at the same time that the federal financial institutions examination council ( ffiec ) publishes summary tables of the hmda data, in late summer or early fall. an institution that might soon - as early as today - have to disclose its own price data, should already have analyzed its data and be prepared to respond to comments from others interpreting its data. first, an institution should take the steps necessary to reach a high degree of confidence that its data are accurate. after that, an institution may want to determine how its data will appear to the public in the disclosure tables the ffiec will release by the early fall ; the precise formats of those tables were published in december. a lender may also want to determine if the hmda data reflect price disparities that are not adequately explained by other information in the hmda data set - such as income, loan size, and lien status - and, if so, to analyze those disparities in light of price variables known to the lender. the analysis could include a review of pricing discretion provided to loan officers. it also could include, where applicable, a review of the pricing patterns of mortgage brokers through which the lender has originated loans. should a lender discover risks in its hmda data, it goes without saying that the lender should manage those risks. as with other risks, those related to the hmda disclosures should be managed with an eye to the entire enterprise, including the bank and the non - depository affiliates. compliance with the bank secrecy act since the usa patriot act of 2001 significantly amended the bank secrecy act, compliance in this area has been a major concern for the banking industry. in large part, bankers β concerns center on the increased burden of complying with the additional requirements, the apparent lack of consistency in oversight and supervision, and law enforcement issues. the federal reserve recognizes that banking organizations have devoted significant resources to helping the government identify and prosecute those who are involved with the funding of terrorist activities, money laundering, and other crimes. but some recent events are affecting bankers β perceptions about their role in this critical area, and have raised serious questions about what bank regulators and other government authorities - most notably law enforcement agencies - expect of bankers. today, i want to provide some background information and describe what the federal reserve is doing, in coordination | with long - term rates falling sharply relative to short - term rates. 17 but in contrast to what we have seen with lsaps thus far, it was also associated with a to be clear, this argument relies on there being multiple distinct monetary assets. that is, the case needs to be that, for some investors, long - term treasury securities provide a type of service that is not provided as effectively by short - term bills or reserves. if all safe assets provide the same kind of monetary services, then an lsap that swaps reserves for long - term bonds has no effect on the net supply of monetary assets. see also woodford ( 2012 ) and krishnamurthy and vissing - jΓΈrgensen ( 2012 ). friedman ( 1969 ) famously argued that a socially efficient outcome involves setting the opportunity cost to investors of holding money equal to the marginal cost to the government of creating additional money. krishnamurthy and vissing - jΓΈrgensen β s ( 2012 ) analysis is based on market quotes from july 20, 2012. one obtains similar estimates if their methodology is updated to the present. however, it is important to emphasize that spreads of the sort they study can be subject to a variety of other idiosyncratic influences, so care must be taken not to over - interpret any one of them. see greenwood and vayanos ( 2010 ) for an analysis of the clinton buyback program and its effect on the treasury yield curve. bis central bankers β speeches pronounced increase in treasury - specific scarcity. one way this scarcity manifested in the data available at the time was in a widening of the treasury - swap spread, which rose rapidly after the announcement of the buybacks, and hovered in a range of 120 to 130 basis points in the spring and summer of 2000. 18 the lesson to be drawn is that we should continue to develop and monitor a variety of metrics of this scarcity phenomenon because they may provide an early warning if lsap costs begin to rise relative to benefits. for the sake of concreteness, i have couched the discussion in terms of a hypothetical all - treasury lsap. in light of our recent initiation of an mbs purchase program, it is natural to ask what the salient differences are between buying treasury securities and buying mbs. in my view there are two, both of which suggest that mbs purchases may offer a better cost - benefit profile than treasury purchases in the current environment. first, on the | 0.5 |
euro - area enterprises with a bbb rating for bonds with a maturity of 7 - 10 years have to pay an average interest rate of only around 4ΒΎ %. this represents a premium of merely ΒΎ percentage point over comparable government bonds. on average, this figure has been twice as high since 1999. at the present, corporate bonds are obviously also benefiting from a search for higher yields. furthermore, euro - area bank interest rates are very low. credit standards have not tightened further. 3. economic conditions in germany since early 2004, the economic situation in germany has improved significantly. for a long time, germany β s growth lagged behind that of the other euro - area countries. this gap has now narrowed considerably. germany is no longer trailing behind the rest of the euro area. in the second quarter of 2004, gdp increased by 0. 5 %. in the first half of this year the annualised growth rate was 1ΒΎ %. as potential growth in germany is only about 1Β½ % this means that there was an increase in capacity utilisation for the first time since many years ago. however, the recovery in germany is not broadly based. domestic demand has not yet taken off. growth has been driven mainly by exports. in the first half of this year, exports grew by 6. 2 %, while imports grew by 3. 7 %. from january to august 2004, exports were up by as much as 10. 9 %. this shows that the price competitiveness of the german economy is still very high, which enables german firms β to benefit from strong growth in their export markets. it is striking that the appreciation of the euro has had a far less dampening effect on exports than many had expected. it seems that the increase in foreign demand for german products in the wake of the buoyant global economy has more than offset the effects of the exchange rate. exports to the usa, for instance, which declined last year, have improved again. exports to countries outside the eu in particular have increased strongly. from january to july our exports to russia and china both grew by 22. 7 % on the year. despite all these positive figures we must not lose sight of our export dependency. the german economy remains vulnerable to a slowdown in global economic activity. this is the german economy β s achilles β heel. overall, domestic demand contributed little to growth in the first half of the year. the level of business investment was again disappointing. there was no increase in the second | hermann remsperger : the bundesbank β s view of the economic outlook and economic policy challenges speech by professor hermann remsperger, member of the executive board of the deutsche bundesbank, at swedbank β s economic outlook conference, stockholm, 25 october 2004. * * * i was very glad to accept your invitation to attend swedbank β s economic outlook conference. to a german central banker comparing the economic developments in germany and sweden since the 1990s is interesting for a number of reasons. this also holds true for the question of how we in germany should tackle the current economic policy challenges. just an example : last wednesday i read an article in the financial times with the heading β can sweden give germany fertile ideas to revive an ailing economy? β. in the past, sweden was admired by many for its virtually β perfect β social welfare system. today, sweden is perceived as an example of successful reforms because it anticipated the need for economic restructuring at an early stage - namely in the early 1990s when the country suffered from a banking crisis and exchange rate problems. sweden reacted by making its labour markets more flexible and adapting its social welfare systems to the new environment. in germany, by contrast, structural reforms had a much lower priority on the agenda in the 1990s. unfortunately, german reunification was not seized as an opportunity to explore new approaches in economic policy. the preparations for european integration also tied up a lot of resources at the time. in the meantime, however, a lot has been done to reform the labour market and the social security system. i will talk more about that in just a moment. but first i would like to make a few comments on the current economic situation and the monetary policy of the ecb. 1. developments in the global economy in the first half of this year, the world economy grew faster than many experts had been predicting in the spring. this is reflected in upward forecast revisions. the imf β s september forecast is an example. it suggests that the increase in global output in 2004 could turn out to be 0. 3 percentage points higher and reach 5. 0 % on average. a rate of 4. 3 % is expected for 2005, which would be still pretty dynamic. since in many countries actual gdp growth is above the potential rate, a slight slowing of global economic momentum must not be viewed as completely negative. at the same time we have to take into account that the oil price has undergone further increases since september. in my view, | 1 |
account ; but they can also use an official currency as their unit of account. on the one hand there are private issuers, who claim that the value of their tokens is stable against official currencies ; in our illustration we assign this type of token money to the β stable coins β category. however, state institutions such as central banks can also issue digital token money β the snb, for example, could issue a swiss franc token. ladies and gentlemen, as you see, digital token money can take a number of forms. it is important that we understand the characteristics and implications of these various tokens, as they could influence the snb β s mandate. i will now set out our thoughts on this topic. privately issued digital token money let me start by outlining our view of cryptocurrencies, before moving on to discuss stable coins and state - issued digital tokens. we believe that cryptocurrencies and cryptocurrencybased tokens are of only limited use as payment instruments, stores of value and units of account because they are subject to major fluctuations. crypto tokens are more like speculative investment instruments than β good β money in terms of their characteristics. users typically describe money as β good β if it has a stable value over time, is broadly accepted, and enables efficient payments. given these parameters, it seems unlikely that crypto tokens will be widely used as money in switzerland. the picture may be different for stable coins, however. these are designed in such a way that they can potentially assume the characteristics of good money β for instance if they are pegged to stable, official currencies. in the simplest case, such an anchor would consist of a single currency. let β s take an example : an issuer of stable coins in swiss francs would typically pledge that his tokens are equal in value to swiss franc cash. when it comes to classifying these kinds of stable coins, two important factors need to be taken into page 3 / 7 consideration. the first concerns the strength of such a pledge. does the issuer explicitly commit to instantly and unconditionally converting the stable coins into swiss franc cash at nominal value? or is the pledge merely a statement of the issuer β s intention to keep the exchange value of his tokens stable against the swiss franc? the second key point concerns the credibility of the pledge. in the case of a swiss franc stable coin, the more | upswing. in the new forecast, inflation will rise more markedly at the end of the forecasting horizon due to an even more expansionary monetary policy since june. expansionary monetary policy to be continued at our last media conference, i pointed out that the national bank must be prepared to react quickly to changes in the economic situation. when the delay in economic recovery became discernible in summer, we acted immediately by again lowering interest rates. since then, nothing of basic significance has changed in our assessment of the situation. we shall adhere to our expansionary monetary policy in the foreseeable future. we will thus contribute to the economic rebound and continue to keep swiss franc investments unattractive. the low interest rate level and the relatively strong growth of monetary aggregates currently do not represent a threat to price stability. once a sustained economic recovery becomes discernible, we shall have to review our monetary policy and adjust it to the new circumstances. there is still no sign, however, that the time for this is approaching. on the contrary, the risks still point downward. should the recovery in the us and in europe be delayed or should the swiss franc appreciate markedly, the expected upswing in switzerland would be threatened. in such a case, the national bank is ready to react by appropriate means. under present conditions, however, our monetary policy is sufficiently expansionary. currently, the risk of deflation is being widely discussed. as can be seen from our forecast, this risk is likely to be negligible in switzerland in the medium term. certainly, in the short term it is always possible for special effects, e. g. a marked reduction in the oil price, to lead to negative inflation rates in individual quarters. nevertheless, we consider a continuously falling price level in conjunction with a strong decline in the demand for goods and in production improbable in the present circumstances. our expansionary monetary policy and the flexibility of the swiss economy would prevent such a development. in the present situation, however, other efforts are needed besides an expansionary monetary policy in order to maintain or to enhance the attractiveness of switzerland as an industrial and business centre. the efforts aimed at a further liberalisation of the domestic economy may not be abandoned. sectors suffering from structural problems must improve their competitiveness by means of consistent adjustments. our experience with the monetary policy concept let me briefly describe the experience gained with our monetary policy concept. we introduced this concept exactly three years ago. you are acquainted with | 0.5 |
burkhard balz : deepening trust, reinforcing cooperation speech by mr burkhard balz, member of the executive board of the deutsche bundesbank, to mark the inauguration of the bundesbank β s new representative in rome, virtual event, 10 november 2021. * * * 1 introduction ladies and gentlemen, italy, and especially rome, have always been destinations that many germans have longed to visit. one of these germans was without doubt the famous writer johann wolfgang von goethe. from 1786 to 1788, he fulfilled a lifelong dream by travelling through italy. the report on his travels, which he titled β italian journey β, became a best seller and remains to this day the embodiment of many germans β yearning for italy. by the way, the β italian journey β can also be found in my personal library. several days ago marked the anniversary of a milestone event on this journey : 235 years ago, in late october 1786, goethe had been on his travels for almost two months when he laid eyes on rome for the first time. overwhelmed, he wrote in his diary β now, at last, i have arrived in the first city of the world! β nowadays, it is far quicker and easier to travel to rome. nevertheless, every time i visit i am delighted to be in this exceptional cosmopolitan city. our reason for being gathered together today is not to celebrate the anniversary of goethe β s italian journey. the occasion is just as gratifying, though : the inauguration of dr. elisabetta fiorentino as the bundesbank β s representative at the german embassy in rome. 2 cooperation in the eurosystem ladies and gentlemen, much has happened since goethe β s travels to italy. but what has not changed is the special relationship between germany and italy, the deep bond between the two countries. without this bond, european integration and our single currency, the euro, would not have become possible. the bundesbank also has a variety of connections with italy. we have especially close ties with our colleagues at the banca d β italia. we work together harmoniously in many areas and in many working groups of the eurosystem. one example that goes beyond the usual level of cooperation concerns payment systems. the bundesbank and the banca d β italia, alongside the banque de france, manage target2, europe β s most important payment system. together with the banco de espana, the three central banks also operate the target2 securities ( t | ##2s ) settlement platform. in doing so, they are providing efficient and secure payment systems and ensuring that payments throughout europe can be made smoothly. one thing is for sure : the joint operation of complex systems such as these can only succeed if all parties trust one another and pull together at all times. and that β s exactly what we β re doing! in addition, we β re working on making payment systems fit for the future. just last week, for example, experts from the bundesbank and the banca d β italia came together to exchange ideas on the possibilities for settling securities in central bank money using innovative market solutions based on distributed ledger technology ( dlt ). 1 ladies and gentlemen, payment systems are just one example of the especially close cooperation between germany 1 / 3 bis central bankers'speeches and italy within the eurosystem. for this reason, i am delighted that we are now sending a representative to the german embassy in rome to strengthen our ties even further. this is because europe and the eurosystem are undoubtedly facing significant challenges. first of all, we need to tackle the coronavirus pandemic and its fallout. how can we ensure a successful economic recovery? how do we roll back the emergency measures? and what structural changes will the pandemic bring about over the medium and long term? furthermore, we must continue to develop european economic and monetary union. how do we deal with the sharp rise in public debt in the euro area? how can we reconcile the single monetary policy with different national fiscal and economic policies? will we be able to strengthen the capital markets union and complete the banking union? and, finally, we must grapple with the pressing issues surrounding the megatrends of demographic change, decarbonisation and digitalisation. above all, digitalisation is making waves in the financial sector and presenting challenges to central banks like the bundesbank and the banca d β italia. what will the digital financial system of tomorrow be like? who will play what roles within that system? and how will we make payments in the future? with cash? book money? digital money? or with central bank digital currency? as different as all of these questions are, they do have one thing in common : they all require a joint european response. in this regard, it is absolutely clear that the need for international exchange, consensus and collaboration will continue to grow. for this reason, we at the bundesbank believe that it is vital to redouble | 1 |
destined for sectors, such as metals, renewable energy, automotive equipment and financial services. africa is also seen as an attractive fdi destination by those multinational investor groups that are keen to benefit from the intra - africa trade opportunities that currently exist. in addition, other investors that already have operations in africa are looking to expand their footprint on the continent, to ensure that they are well positioned to benefit from the favourable growth prospects that prevail in many countries. investors from developing economies, particularly those from china, have significantly increased their ventures into the continent. in the post crisis period, china accounted for more than half of the greenfield fdi to africa. it is also worth noting that intra - continent fdi has been growing at a healthy pace. in fact, the share of african countries in total fdi in the continent more than doubled between 2003 and 2012 ; whereas in 2003 some 8 per cent of fdi into african countries came from other african countries and 92 per cent from other continents, by 2012 the intra - african share had risen to 18 per cent. as expected, multinationals from south africa have seized the opportunity to expand their production networks across the continent. the number of projects in africa originating from south africa has increased by over 500 per cent in the past decade. between 2010 and 2013, south african multinationals made fdi investments into 18 african countries. in 2012, south africa invested in more new fdi projects in africa than any other country in the world. according to ernst & young β s 2013 attractiveness survey, south african fdi into africa has created almost 46 000 jobs in africa since 2003. the financial crisis has shown that the conventional view of a positive relationship between finance and growth cannot be taken for granted. in fact, the shallowness of africa β s banking system has helped to insulate many african countries from the adverse effects of the financial crisis. however, financial innovation and development over the past decade has helped to significantly increase the share of the population with access to basic formal financial services and technology in many african countries. we know that capital markets can be a significant driver of economic growth. while many countries in africa have capital markets that are small and illiquid, some steady progress has been made towards developing financial markets in africa. increasingly african countries are accessing international capital markets, and their ability and success in doing so has contributed towards the funding of massive infrastructure projects, which i will touch on later. the ability to issue in international markets has been made possible by | the labour market each year. secondly, over the longer term there is need to move up the value chain in production in both the manufacturing and service sectors. this would require significant investment in education both at the school and higher education levels. programmes directed at entrepreneurship development and other training initiatives that could provide the technical skills required to support infrastructure development are key to the attainment of sustainable growth on the continent. where do central banks fit into the sustainable growth picture? while most of the structural reform imperatives fall outside the mandate of central banks, i believe that central banks, by keeping inflation in check and creating an environment of financial stability, can make a meaningful contribution. economic prosperity is built on stable foundations provided by central banks taking their mandate seriously. thinking of the dozens of countries on the african continent that had high double - digit rates of inflation 20 years ago and contrasting that with the current situation, much progress has been made. in general, while inflation rates have increased marginally over the last couple of years they remain entrenched at single - digit levels in many countries. the rise in food and fuel prices coupled with the impact of currency depreciations have been important sources of inflationary pressures in many countries. the current uncertainties in the global financial bis central bankers β speeches environment and their associated impact on currencies may continue to pose a major threat to inflation outcomes in many countries. recently the issue of currency movements and its impact on competitiveness has received much attention in the general press as well as in policy and academic circles. while it may be difficult to determine the equilibrium exchange rate, it is well recognised that a significantly misaligned exchange rate or excessively volatile exchange rate leads to a misallocation of resources which eventually thwarts sustainable growth. in some countries like south africa for example, a special effort has been made to build up the level of foreign exchange reserves β to some us $ 50 billion at present, from us $ 8 billion a decade ago β since adequate reserves contribute to investor confidence and moderation in exchange rate volatility. in some other countries the nature of the foreign exchange market and risk appetite of the authorities does, at times, allow for central bank intervention in an attempt to moderate episodes of abnormal depreciation or appreciation. the shorter - term challenge to macroeconomic policymakers on the continent is to strike a balance between controlling inflation and supporting economic growth. as pointed out earlier, growth is driven from the supply side over the long - term. the | 1 |
accessing this market and as such, entry as well as exit is unrestricted and ( b ) contracts are cash settled. in other words, it may be used for hedging, but it is also a perfect instrument for speculation for it makes trading in exchange rate just like trading in any other financial asset. the question that arises is : how can the two markets β the otc with the regulatory restrictions and the etd without β coexist? more importantly, will the restrictive measures in the otc market to control rupee volatility not be rendered completely ineffective if market participants are free to migrate to the etd segment? with this perspective, at the height of rupee volatility, we, and, at our request sebi, were constrained to take several measures in respect of the etd segment including putting a ceiling on individual positions / open interest, restricting arbitrage between the two markets through banks and increasing the margin requirements. here i would like to add that with return of stability in the exchange rate, we have already unwound some of the restrictive measures in the otc / etd market and, in fact, gone further for hedging in the otc markets ( e. g. permitting hedging up to us $ 250, 000 without any documentation requirements ). similarly some more relaxations in the etd segment, including permitting participation of foreign investors are under consideration. 23. the emergence and growth of ndf market as well as its possible impact on the domestic market poses two important questions. should attempts not be made to bring the offshore market in rupee onshore and thereby add depth to our markets and also possibly, bis central bankers β speeches income and employment? secondly, since ndf market is often seen to be affecting the domestic markets, implying thereby the possibility of arbitrage, should domestic banks be allowed to participate in this market? let me add here that in some countries, the central banks are reported to have intervened in the ndf market of their respective currencies to curb the volatility at its root. 24. if the answer to both questions is positive, it requires some fundamental rethinking on the regulatory framework for foreign exchange derivatives. already, as mentioned above, we are committed to allowing foreign investors access to the etd segment with minimal restrictions. but will this access be inviting enough to the investors if the futures prices are not tightly linked with the spot prices? but this is possible only | , we have adequate institutions at the global level to fulfill these tasks, so currently i do not see the need to create new authorities for that purpose. thank you for your attention! bis central bankers β speeches | 0 |
β s little local difficulty with herr waigel. and it is too early to assess the consequences for the project of the results of the french election. but it is clear that new elements of uncertainty have entered the scene, making it harder than ever to forecast the outcome next year. looking at the markets β own assessment, our interpretation of movements in the forward fx markets since the autumn is that the markets have become more persuaded that the euro will begin, but that it will be a broader, and possibly weaker euro. until last summer the assumption appeared to be that only seven or eight countries would make up the hard core. in the last few months the expected future correlation of the deutsche mark / dollar and lira / dollar rates has strengthened, suggesting a stronger market expectation of those currencies being part of the first wave. very recently, a few doubts seem to have emerged about the project itself, though it would seem that, according to the market, the most likely outcome remains that a euro of some sort would start on time. i recognise that this is a difficult background against which businesses need to plan. our own advice, which we have maintained for some time now, is that it is prudent to plan on the basis that the euro will begin on 1 january 1999, as set out in the treaty. as far as the position of the uk is concerned, the option remains open, the policy remains what the french call β le wait and see β. but the new chancellor, like the old, has acknowledged that there are considerable difficulties to overcome if the uk is to be a first wave member. this is not a tidy position to be in, perhaps, but against the uncertain background, it nonetheless has a certain practical appeal. but taking my prudent assumption - that emu will go ahead - what can we say about the impact on the london market in general, and on the futures and options business in particular? i note with interest that your own assessment is that the best option for the futures and options business in london would be for emu to go ahead and for the uk to participate in the first wave. it is a moot point as to whether the impact on the profits and bonuses of derivatives traders will be the number one criterion in the minds of labour mps when they come to reach a view on emu, but i will certainly draw it to their attention if you would like me to do so. by contrast, you are slightly, though not exaggeratedly pe | you sit in your hotel rooms poring over it. ) frankfurt has recently started making inroads into liffe β s share of bund futures business - but the level of activity on liffe nonetheless continues to increase. our assessment is that, in these markets, there is a considerable and long - term advantage inherent in being the first mover. that helped liffe to achieve a very broad and international membership, with only 27 per cent of members being uk - based. it has meant that london has an established skill base and good support functions in law and accountancy. also a good telecommunications system - though fewer of those old telephone boxes, which may be a problem for me at super - sib. london also has a strong clearing function and we should not forget the advantage of the english language, which is increasingly the lingua franca of the european union, and i believe that even some americans can now speak a kind of pidgin version which allows them to be understood. but emu will create change. this raises three interesting questions. what will be traded in an emu environment? how much will be traded? and where will the new instruments be traded? let me take these points in turn. what will be traded when the euro makes its debut? looking first at on - exchange markets, it seems likely that, in emu, there will be room for only one three - month euro short - term interest rate futures contract, although the greater depth of the new euro market may allow other products at the short end of the yield curve, such as a one - month euro contract, to co - exist with the three - month benchmark product. in the bond markets, one - and perhaps the most likely outcome - is that a particular government β s bonds will become the benchmark for the new euro bond market. we may all speculate idly on which that country might be. these issues would then anchor the euro yield curve and futures contracts would follow naturally. the greater depth of the new euro bond market may well mean that it can support a greater range of futures contracts further along its yield curve, as is the case now in the us. five and two - year contracts, which do already exist in the bund market, may develop further. the exchanges themselves recognise this point and are seeking to fill in the yield curve in their various markets before the start of emu. other national bond markets will be keen to run alongside the main market and futures contracts | 1 |
for european and north american companies. these firms must therefore take up many challenges in order to safeguard their competitive edge, both on their domestic markets and their foreign outlets. at the same time, the emerging countries are large in size and exhibit strong economic growth, too. therefore, they also offer many opportunities for firms that are able to seize them. all these developments linked to the increasing globalisation of the economy obviously raise a good many questions. these include the determinants of trade flows, strategies enabling companies to gain a foothold in external markets, or the employment consequences of importing goods from low - cost countries. these issues have been extensively discussed in both the theoretical and empirical economic literature. since the mid - nineties, a growing segment of this literature has been paying particular attention to the microeconomic determinants of international trade and foreign investment. researchers have made intensive use of firm - level databases specific to different countries that have gradually become available for them. this microeconomic approach has brought an important contribution to our understanding of the causes and consequences of the globalisation, mainly because firm - level data make it possible to point up things that do not show up in aggregate statistics. if only one example had to be given, it would of course be the fact that trade is concentrated among a few firms, which are in a better position than the others to bear the high costs associated with entering foreign markets. indeed, within each industry, firms of different sizes, with different performances, and with different behaviour in terms of innovation and international involvement, operate alongside each other. it is important to take this heterogeneity into consideration to understand the dynamics of foreign trade. this heterogeneity also has very important implications for economic policy, in the sense that it helps to identify two levers that are likely to be activated as a means of boosting firms β international involvement. the first consists of encouraging their expansion β and especially that of smes β so as to give them the best preparation to go international, including policies designed to foster their research and development efforts. the second lever concerns measures aimed at cutting the costs of entering foreign markets, for instance by helping firms to find potential new customers there or by removing administrative and regulatory barriers. another undeniable advantage of the microeconomic approach is that it helps bring out the scale of reallocation of production factors from the weakest - performing firms towards those whose business is more flourishing. among other things, this enables economists to gain a | for release on delivery 12 : 50 p. m. edt september 27, 2021 navigating delta headwinds on the path to a full recovery remarks by lael brainard member board of governors of the federal reserve system at β shocks, shifts, and the emerging economic landscape β 2021 annual meeting of the national association for business economics arlington, virginia september 27, 2021 it is a great honor to join the community of nabe fellows, and i want to express my appreciation to the board of directors of nabe. 1 given the unprecedented nature of the pandemic shock, it should be no surprise that the recovery is not proceeding in a straight line. the economy continues to make welcome progress, but the delta variant has been more disruptive than initially expected. the headwinds from delta are a reminder that the virus continues to pose downside risks to the outlook. delta highlights the importance of being attentive to economic outcomes and not getting too attached to an outlook that may get buffeted by evolving virus conditions. indeed, delta disrupted both demand and supply. many forecasters have downgraded consumer spending in the second half of the year, as delta has limited the acceleration in services spending that had been anticipated to help offset the drag on activity from fiscal support shifting from being a tailwind to a headwind. although the retail sales print for august was stronger than expected, the level of spending in august was not much changed from june. high - frequency data indicate that consumption of discretionary services, such as restaurants and travel, stalled or may have even moved lower in some categories since july. this development doesn β t appear to be sensitive to regional variations in vaccinations, perhaps reflecting the high transmissibility of delta. for example, the consumption of food services has declined recently even in states with relatively high vaccination rates and low case counts. 2 i am grateful to kurt lewis of the federal reserve board for his assistance in preparing this text. these views are my own and do not necessarily reflect those of the federal reserve board or the federal open market committee. reflecting these trends, consumer confidence declined in the michigan and conference board surveys in august. for more information on the university of michigan survey of consumers, see https : / / data. sca. isr. umich. edu / survey - info. php. for more information on the conference board consumer confidence survey, see https : / / conference - board. org / data / consumerconfide | 0 |
eva srejber : frameworks and stabilisation policy in a monetary union speech by ms eva srejber, first deputy governor of the sveriges riksbank, at the bank of uganda, kampala, 17 august 2006. * * * let me begin by thanking you for the invitation to come here and speak today on the occasion of bank of uganda β s 40th anniversary. on several occasions the members of the executive board of the swedish central bank, including myself, have had reason to address the interesting topic of monetary unions. besides being a stimulating theoretical exercise, it has been of great practical importance with the creation of the euro. also, from a swedish point of view, because of the national referendum in 2003 when a majority of swedish voters said no to adopting the euro. another reason, from an international point of view, is the trend in exchange rate policies towards corner solutions, of which membership in a monetary union is one. although the east african community ( eac ) β with member states uganda, kenya and tanzania β aims at eventually forming a political federation, and not only a monetary union, i am convinced that the experiences from other monetary unions, for instance the cfa zone, will prove valuable to you in your efforts. however, since my comparative advantage concerns the swedish and european experience i will discuss monetary unions from that perspective and i hope that this might be of some value. hopefully, it can also shed some light on how the bank of uganda β s role will transform over the coming decades. optimum currency areas β an illusive concept when discussing whether or not to join or form a monetary union, concerns are usually expressed that the countries in the union at some point will have different needs in terms of stabilisation policy. consequently, this then casts doubts on the appropriateness of a common, supranational monetary policy. if one country experiences rapid growth while the neighbouring country is in a pronounced downturn, how should monetary policy respond? on the other hand, this type of problem does exist within countries as well, as different regions β business cycles usually are not perfectly synchronised. given these two observations, should we strive to create larger or smaller economic entities? in his famous article published almost half a century ago, nobel laureate robert mundell concludes that β [ t ] he optimum currency area is not the world β ( mundell, 1961 ). trying to establish what area would be optimal, it is from a practical | that β they do not have enough technical resources to deliver their ifrs 9 project β and almost 25 per cent of the respondents did not think that β there will be sufficient skills available in the market to cover shortfalls. β the worst case scenario is that the bank ends up, after 1 january 2018, with the subsidiaries and branches of international banks successfully implementing ifrs9 while the domestic and smaller banks are unable to do so. thank you for your attention. 3 / 3 bis central bankers'speeches | 0 |
mr gramlich assesses the state of the electronic money transformation in the united states and abroad remarks by mr edward m gramlich, member of the board of governors of the us federal reserve system, before the electronic payment symposium, university of michigan, ann arbor on 17 september 1999. * * * although the united states economy seems to be leading the world in the adoption of new computer and internet - based technology, the picture is not uniform. the united states is not at the forefront in the adoption of electronic money systems, one area that would seem most eligible for the information revolution. adherence to traditional payment systems, check and cash, is very strong. the united states is the only developed country in the world where check use is still increasing, with the number of checks written growing at a rate nearly as fast as the overall economy. use of cash is extensive as well. americans still use cash for about three - quarters of all transactions. the total us supply of coin and currency now comes to $ 550 billion, about one - third of which is actually circulating in this country ( the remainder is held abroad ). but even after subtracting estimated foreign balances, the supply of outstanding coin and currency comes to $ 670 per capita which strikes most people as incredibly large. for many years, observers have looked forward to the advent of electronic money, a system that uses either a computer chip or another electronic device to record payments and debits automatically. there are obvious efficiency advantages in terms of ease of handling and record - keeping for consumers, merchants, the banking system and the federal reserve. use of electronic money systems appears to be growing in at least a few foreign countries. but in this country, growth of electronic money systems is sluggish β well behind earlier predictions, well behind the growth of credit and debit card use and way behind the growth of other types of electronic commerce. even fervent advocates of electronic money will admit disappointment at its rate of adoption. in this talk i will try to assess the state of the electronic money transformation, here and abroad. i mention some promises, some stumbling blocks and some technological and regulatory issues that will have to be dealt with as electronic money use proceeds. historical antecedents the idea of using technology to improve the efficiency of the payment system is very old. world commerce has seen an evolution from barter to valuable metals, to paper money and to checks. in the united states, as early as 1853, more than a half - century before | recoveries. consumer spending is also being restrained by the excess supply of housing, which has put downward pressure on home equity values and household wealth. a substantial portion of homeowners now have negative home equity and are effectively unable to refinance at historically low mortgage rates. many more have seen a drastic decline in the value of their homes, which would typically serve as collateral for home equity lines of credit or second mortgages. the slow progress in repairing and restructuring households β balance sheets may also be lowering the normal responsiveness of consumer spending to a decline in market interest rates. in particular, lenders continue to maintain relatively tight terms and standards on credit cards and, to a lesser extent, other consumer loans. consequently, many households may be unable to take advantage of the lower borrowing rates that are available to those who have a high net worth and pristine credit records. many small businesses also appear to be facing unusual obstacles in obtaining credit. if times were more typical, we would expect a smooth transmission in which lower interest rates would fuel credit expansion that would be used to finance expanding payrolls, capital investment, inventories, and other short - term operating expenses. nonetheless, the latest federal reserve senior loan officer opinion survey on bank lending practices, which was taken in july, indicated that although domestic banks continued to ease standards on their commercial and industrial loans, the net fraction reporting easing on such loans to smaller firms ( those with annual sales of less than $ 50 billion ) remained low and was well below that bis central bankers β speeches of loans to large and middle - sized firms. 7 in its august survey, the national federation of independent businesses reported a noticeable increase in the proportion of small businesses reporting that credit has become more difficult to obtain. 8 these businesses not only expect credit to become tighter in coming months but β like other businesses β have turned sharply more pessimistic about the broader economic outlook. finally, and perhaps most comprehensively, it is worth observing that the financial crisis has undermined the wealth of many americans. low - and moderate - income families entered the recession with little financial buffer against the adverse effects of wage cuts, job loss, and drops in home values. according to the 2007 survey of consumer finances ( scf ), home equity accounted for about half of the total net worth for low - and moderate - income families, which made them extremely vulnerable to the eventual housing market collapse. 9 families at the lower end of the income distribution saw a substantial drop in their net worth | 0.5 |
weakened by the headwinds that may arise in the aftermath of balance sheet recessions. likewise, inherent non - linearities could kick in when interest rates are persistently low and may dampen their impact on spending. the law - and - order case for banning cash also wilts under scrutiny. by acting as a store of value and a means of payment, cash fulfills an important social function for many honest citizens. would anyone suggest forbidding cell phones because criminals use them? harming the lawabiding majority in order to punish a misbehaving minority is a step too far. last but not least, cash is the only central bank liability available to the public. digital claims against central banks already exist β commercial banks and some other types of institutions hold them in the form of deposits. but private citizens have no access to them. although electronic payments provided by the financial industry are used by private customers, these methods are based on commercial bank money. from the perspective of the citizen, a liability vis - a - vis the central bank is more valuable than one vis - a - vis a commercial bank, not least because of the different credit risks. bank deposits and other commercial bank liabilities are highly protected, but they are not absolutely risk - free. a central bank, however, can never become illiquid and can always honour its liabilities. cash therefore maintains a tangible link between the general public and the central bank, a tie which is important for maintaining trust between the two. but cash could be digitalised, too, given recent technological advances such as the distributed ledger technology, or dlt, a variant of which is used for bitcoin. central banks could stop issuing cash and shift to just providing an electronic claim on the central bank. in principle, the introduction of central bank - issued digital currency or digital base money ( dbm ), as i have called it, would be much easier and potentially less expensive than ten years ago. 2 / 3 bis central bankers'speeches but the challenges go beyond the technological sphere. would dbm involve each individual having an account at the central bank, or instead a decentralised system where each individual has an electronic wallet and the central bank is unaware of transactions that take place? either solution could be implemented using distributed ledger technologies, but the set - up would be quite different in each scenario. a further important question is whether dbm would be remunerated ( as excess central bank reserves held by commercial banks currently are | benoit cΕure : interview in il sole 24 ore interview with mr benoit cΕure, member of the executive board of the european central bank, in il sole 24 ore, conducted by mr alessandro merli on 25 april and published on 27 april 2016. * * * last friday in amsterdam the economic and financial affairs council ( ecofin ) discussed a dutch presidency proposal to change the rules on sovereign debt holdings in banks β portfolios. that was opposed by a majority of countries. what happens now? there were clearly different views among ministers and they agreed that the issue needs to be investigated further. it β s a long technical process. several participants, including the ecb, made the point that we should seek to achieve global consistency. we should have as level a playing field as possible in banking regulation. to be honest, i was never totally convinced by the argument that there cannot be a european discussion on sovereign risk : the bank / sovereign nexus exists everywhere, but in the euro area it β s unique in its intensity and there is an acceptance that it has been a major contributor to the euro area crisis. but any european answer has to be set against a global background. we need to wait and see how the discussion develops in the basel committee. that was very much the tone in amsterdam. the germans, and a few others, make the point that there cannot be a european deposit insurance scheme ( edis ), which the ecb says is an essential part of the banking union, without a solution to banks β sovereign exposure. so, if edis is put on hold, does that mean there will be a long delay before a common deposit insurance is introduced? the exclusive link between the two is a political construction. there are at least three dimensions to the issue of sovereign risk. one has to do with the risk in banks : that is clearly tied to edis. progress in risk sharing has to be combined with progress in risk reduction. it makes sense in economic terms and it makes sense in political terms. but if we want to examine all the consequences of putting risk weights on sovereign bonds or setting a limit on exposure, they are not just about risk in banks. they also have an impact on how governments fund themselves. in europe, unlike the us, most government bonds are purchased by banks. so any change in sovereign exposure for banks would also have consequences for government funding. this second dimension ties in with the discussion on fiscal union. there is also a third question : the need | 0.5 |
would need to be carefully considered. with monetary policy continuing to be set to achieve the inflation target, our institutions should not be lulled into a false sense of security by current low rates. similarly, households will need to be prudent in their borrowing, recognising that over the life of a mortgage, interest rates will often be much higher. thank you. bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches | about each one in a bit more detail. trade liberalization the first principle is trade liberalization, and our economic relationship with the united states has reflected that goal. as you and i discussed last year, the canadian and u. s. economies made difficult adjustments to freer trade in the early 1990s. the canada - u. s. free trade agreement and the north american free trade agreement exposed many canadian companies to stiffer competition. but freer trade also opened up new markets. and canadian companies have risen to the challenge. some of the sectors that we used to protect the most β such as furniture, clothing, and wine β have established a strong presence in international markets. on the whole, canadian industry has flourished with the competitive pressures generated by these agreements. and so has the trading relationship between canada and the united states. as you can see from chart 1, freer trade has clearly meant increased volumes of exports and imports. and now that we have made the adjustment, the more open trading environment is clearly helping to raise living standards for canadians. that should strengthen our resolve to see freer trade extended both within and beyond north america. we need to continue to work towards reduced trade barriers, both within nafta and at the doha round of multilateral talks. it won't be easy, but the long - term economic benefits will make our efforts worthwhile. structural reform the second principle focuses on improving the structure of national economies, to facilitate adjustment to changing economic conditions and to ensure the longer - term viability of social - and income - security arrangements. a number of initiatives have been undertaken in canada, but i'm going to focus on only three. i am sure that you're familiar with them, and many of you have participated in the debate surrounding these reforms. first, employment insurance ( ei ) benefits were restructured to strengthen the incentive to work. with these changes, and with improved economic performance, ei payments as a share of gdp have declined significantly over the past decade, from more than 2 1 / 2 per cent to just over 1 per cent, as shown in chart 2. second, the canada and quebec pension plans were revamped, to put them on a sustainable footing. the reforms meant some restructuring of benefits and a sharp increase in contributions β moves that were necessary, if unpopular. the results are shown in chart 3. the assets of the cpp are now managed by the independent canada pension plan investment board, the mandate of which | 0.5 |
varying extents of macroeconomic imbalances amid the exceptionally low interest rate environment in recent years. 5. to consider what may lie ahead for emes, it is perhaps useful to look back at past episodes of us monetary tightening. on the positive effects, fed rate hikes were mostly associated with a pick - up in us growth momentum which could benefit emes β exports, although we have observed that the strength of this support has weakened considerably after the global financial crisis. but, on the other hand, a tightening of us monetary policy and the resulting us dollar strength could expose the macroeconomic vulnerabilities of emes and potentially trigger financial instability. experience of the mexican peso crisis in 1994, the asian financial crisis in 1997, the brazilian currency crisis in 1999 and the argentine economic crisis in the early 2000s clearly indicates emes that had accumulated significant macro - financial imbalances could be vulnerable during a strong us dollar cycle. 6. in fact, broadly speaking, most instances of financial turbulence in emes could be considered to be some form of balance of payments crisis, which were usually preceded by heavy capital inflows to emes that led to the build - up of macroeconomic imbalances, such as asset price inflation, strong credit growth and current account balance deterioration. these problems were particularly serious in the past when some emes violated the β impossible bis central bankers β speeches trinity β by pursuing at the same time, a de facto dollar peg, free movement of capital and an independent monetary policy. these conditions tend to encourage an accumulation of significant short - term external debts in the emes. eventually, a combination of us rate hikes and strengthening us dollar generated momentum for capital outflows from the emes, exposing their fault lines and macroeconomic vulnerabilities as domestic liquidity conditions tightened. those with weak fundamentals and significant external imbalances could face speculative attacks, sharp currency depreciation, a surge in value of their us dollar denominated debts leading to a financial crisis. 7. would history necessarily repeat itself? some have rightly pointed out that the economic fundamentals of asian emes are now much more robust than two decades ago, with improved current account balances and better coverage of short - term external debts by sizable foreign reserves. and currency and maturity mismatch in foreign liabilities are no longer a serious issue. moreover, the more flexible exchange rate regimes adopted by many asian economies should give regional currencies more flexibility to | important issues. 11. thank you. bis central bankers β speeches | 1 |
medium term fiscal positions close to balance or in surplus and ensure that they do not breach at any time the ceiling on the fiscal deficit of 3 % of gdp. it is the governing council's view that these rules are indispensable for economic and monetary union and are also in the interest of the member states. the stability and growth pact has been successful in promoting sound public finances in the euro area. as a result, 8 of the 12 euro area countries have reached budget positions which are " close to balance or in surplus ", a development which has helped to support the maintenance of price stability and growth in employment and real gdp. these 8 countries are now in a position to let the automatic stabilisers work in full, as envisaged by the pact. the other 4 countries still have to make progress to achieve the medium - term requirements of the pact. these countries now need a credible consolidation policy that will be supportive to the outlook for economic growth, as direct short - term effects on demand should be counteracted by a higher credibility for the conduct of fiscal policy, boosting confidence and thus private spending. in this regard, the full implementation of the stability and growth pact is particularly important at the current juncture. in this same vein, the euro area should implement the reforms needed to reduce the structural rigidities in its labour and goods markets. this would not only increase trend potential growth over the medium term, but also make the euro area economy more resilient to economic shocks. under the current circumstances, rapid and decisive action would be a very important contribution to support confidence in the euro area. thank you. | a strong correlation between their cost of funding and their bidding behaviour. banks without outstanding debt securities bid on average even more aggressively. overall, our internal analysis shows that the most aggressive bidders were characterised by larger amounts of debt maturing in the next three years and a shorter average maturity of the outstanding debt. the results of the bank lending survey further reinforce this interpretation. this evidence supports the governing council β s view that banks were facing significant funding problems and that, by removing impediments to their ability to finance the real economy, the three - year ltros helped to avoid a dangerous credit crunch in the euro area. the large injection of liquidity via the three - year ltros had an immediate impact on many market segments. by reducing concerns over the liquidity situation faced by banks and by cutting banking sector systemic risk ( which is reflected, for instance, in a sharp decline in eu bank cds premia ), the ltros contributed to reopening funding markets. in money markets, the euribor - ois spreads have reversed their widening trend from last year, by narrowing substantially, thereby suggesting that the operations have successfully lowered risk premia. more generally, the whole euro money market curve has flattened. in the secured segment, repo rates in selected euro area government bonds, which had been progressively increasing since august 2011 compared with those based on collateral from aaa countries, declined and continued to remain low, indicating that the funding of italian and spanish government bond positions in the repo market has become much cheaper. although turnover in the repo market has remained relatively subdued, there are signs of a moderate pick - up in the volume in spanish and italian markets from their levels at the end of 2011. the widespread perception of lower liquidity risk and improved capital adequacy thanks to the european banking authority capital exercise also brought a welcome reduction in us dollar funding costs via the fx swap market. us prime money market funds increased their exposure to euro area banks in january 2012 for the first time since april 2011, with an additional increase of 21 % between the end of january and mid - march, and exceeding 12 % of total assets under management. euro area banks β issuance of medium and long - term debt picked up in the first two months of 2012 compared with the subdued levels in the second half of 2011. in this period, euro area banks issued about β¬50 billion in senior unsecured debt, which is about as much as was issued in the entire second half of | 0.5 |
increasing awareness that the rules of the game are changing. take fintech as an example. this β fourth industrial revolution β has transformed and is transforming the way people think and do things. technological advances are changing our needs and wants. disruptions to the economic and financial landscape brought by innovation and technology are the new normal. these disruptions may aggravate inequalities among nations, putting inclusive growth in peril. will we be able to cope and compete? with the earlier discussions, i believe we are convinced that we will. in the philippines, we nurture a regulatory environment that will foster innovation while ensuring risks are effectively managed. we continuously monitor fintech developments. we espouse proportionate regulation, multi - stakeholder collaboration and consumer protection. we do this because we believe that the democratization of technology enables efficiencies. 1 / 2 bis central bankers'speeches this phenomenon of fintech, while new and exciting, shares commonalities with the silk road. both are powerfully transformative. but like the silk road, fintech β s positive impact can only be sustained if its further development and use are done in an inclusive manner. technology is our now and our future. to harness its benefits, we must collaborate and leverage on each other β s strengths. only then will we be able to enjoy sustained economic growth over the long term. i would like to end with this thought. this meeting is one of those opportunities to do just that. the philippines is honored to have hosted this event and i am privileged to be able to close it. we thank everyone for your commitment that has made this event a success. i look forward to more collaboration and the pursuit of deeper and more meaningful relationships as we move from ancient to modern networks and as we move forward, thriving as co - participants in the journey of digital transformation. thank you and mabuhay! 2 / 2 bis central bankers'speeches | increase in loans reflects the modest recovery in banks β overall lending attitudes along with improved economic prospects owing to the gradual lifting of lockdown measures. outstanding loans for production activities was mainly driven by the expansion in loans for real estate ( 7. 2 percent ), information and communication ( 26. 6 percent ), financial and insurance ( 6. 0 percent ), and manufacturing ( 4. 4 percent ). we see loan activity continuing to improve in the coming months as public health restrictions are gradually eased and domestic demand gains further traction. looking ahead, the central bank will remain patient in keeping policy support available to the 1 / 2 bis central bankers'speeches economy β particularly given the continued downside risks to economic activity associated with the pandemic. the inflation outlook over the policy horizon remains manageable. average inflation is seen to slightly exceed the upper end of the target band of 2 - 4 percent this year but is projected to settle close to the midpoint of the target range in 2022 and 2023. inflation expectations remain firmly anchored to the baseline projection path. but we are ready to adjust policy settings as needed to ensure the fulfillment of its price and financial stability mandates. we aim a smooth normalization of our time - bound pandemic measures. monetary policy settings will be outcome - based rather than anchored on a particular date. consistent with such approach, we will remain guided primarily by the outturns in economic data, such as inflation, real sector activity, and liquidity and credit conditions. i will end here. 2 / 2 bis central bankers'speeches | 0.5 |
we worry as much about inflation falling below the target as we do about it rising above the target. through most of the last decade, we have succeeded in keeping inflation close to the target. and so, canadians'expectations for inflation have become anchored around 2 per cent. all this has helped to smooth out the ups and downs in the economy and to create the best possible environment for longer - term economic growth. this framework may sound simple in theory. but it is quite complex in practice. our monetary policy decisions are based on economic projections, which can always be thrown off by unforeseen events. because monetary policy actions take time to have their full impact on the economy, we must aim these actions at where we see the economy sitting 18 to 24 months into the future. in doing so, we are always looking at what is called the output gap - the difference between the actual level of production in the economy and the level of potential output. if the economy is operating above its potential capacity and inflation appears likely to be above target in the future, then we would tighten monetary policy. this would cool demand and bring inflation back down to the target. on the other hand, if the economy is operating below its potential capacity and inflation appears likely to be below target in the future, we would ease monetary policy in order to stimulate demand, close the output gap, and bring inflation back to its target. this means that we are always looking at demand and supply in the economy and trying to bring them into balance. so, in carrying out our policy, a large part of the analysis we do is concerned with the many factors that can influence demand and supply. the most important factor is, of course, the strength of domestic demand. but canada is a trading nation, and so the strength of world demand is also important to us. in particular, the united states is a major customer for canadian goods, so we closely monitor the health of the u. s. economy. economic activity is also affected by movements in exchange rates. as you well know, there has recently been a significant adjustment in the value of the u. s. dollar against major currencies, including the canadian dollar. as always, we need to understand the causes of this movement, as well as its effect on the canadian economy. furthermore, movements in exchange rates have a direct effect on the prices of traded goods and services and, therefore, on inflation. however, our research has shown that, in economies such as canada | effects of monetary easing - - that is, although low interest rates are conducive to improving corporate profits, it seems that businesses are simply using those earnings to repay their debts, and therefore, the desired effects of stimulating economic activity, such as increasing investment, have not been achieved. some even say that the low interest rates are only delaying the structural adjustment of the japanese economy. if we take a look at the actual figures of corporate profits and business fixed investment, cash flow of firms - - hat is, retained earnings plus depreciation - - increased by approximately Β₯7 trillion in the two years since fiscal 1995, when the official discount rate was lowered to 0. 5 percent. business fixed investment also increased by approximately Β₯7 trillion, commensurate with the growth in corporate profits. during this two - year period, the low interest rates have helped to improve the profitability of investment and to support corporate profits. therefore, the bank believes that low interest rates have had the effect of generating an appropriate increase in business fixed investment. it should be noted, however, that in past phases of economic recovery, firms borrowed from financial institutions to expand their business fixed investment in addition to using their cash flow. this time, however, few firms have increased bank lending or issued bonds for this purpose. rather, in quite a few cases, firms have used the increase in profits to repay their debt. thus, there has been no significant acceleration of business fixed investment when compared to past recovery phases. one factor behind this seems to be the various structural adjustment pressures that the japanese economy faces today, notably persistent balance - sheet adjustment pressures. as you are aware, many firms borrowed actively from financial institutions during the economic β bubble β period to engage in large - scale real - estate investment or securities investment. following the bursting of the economic β bubble β, prices of real estate and stocks plunged. the borrowings, however, remained. thus, on corporate balance sheets, there was a significant depreciation of assets at market value while liabilities remained unchanged. this resulted in a decrease in the net worth of firms - - that is, assets less liabilities - - and this in turn has limited the business risks that these firms can take on. firms in this situation can rarely conduct active investment in plant and equipment that leads to the expansion of their business activity. this situation is often referred to as the β balance - sheet problem β. when we look at the relationship between balance sheets and business fixed investment | 0 |
borders. over the last decade, working with supervisors around the world, we have built a common understanding of the crisis, its causes, and its consequences. now, as the full set of post - crisis reforms comes into effect, we should renew our focus on assessing their implementation and their overall impact. the sponsored by the federal reserve bank of boston, july 9, 2019 ), https : / / www. federalreserve. gov / newsevents / speech / quarles20190709a. htm. randal k. quarles, β the next stage in the libor transition β ( speech at the alternative reference rates committee roundtable, cohosted by the alternative reference rates committee and the new york university stern school of business and its salomon center for the study of financial institutions, new york, june 3, 2019 ), https : / / www. federalreserve. gov / newsevents / speech / quarles20190603a. htm. randal k. quarles, β law and macroeconomics : the global evolution of macroprudential regulation β ( speech at the β law and macroeconomics β conference at georgetown university law center, washington, d. c., september 27, 2019 ), https : / / www. federalreserve. gov / newsevents / speech / quarles20190927a. htm. - 7financial system is truly global, and the structures and incentives that govern it are critical to its stability and resilience. 17 the regulatory community has started significant work to examine those structures and incentives as a whole, from their effect on β too - big - to - fail β subsidies to their impact on market fragmentation. 18 we are participating actively in that work, as a way to ensure the global financial system supports, rather than inhibits, american growth. i appreciate the chance to discuss this work with you, and i look forward to answering your questions. thank you. randal k. quarles, β government of union : achieving certainty in cross - border finance β ( speech at the financial stability board workshop on pre - positioning, ring - fencing, and market fragmentation, philadelphia, september 26, 2019 ), https : / / www. federalreserve. gov / newsevents / speech / quarles20190926a. htm. randal k | . quarles, β the financial stability board at 10 years β looking back and looking ahead β ( speech at the european banking federation β s european banking summit, brussels, belgium, october 3, 2019 ), https : / / www. federalreserve. gov / newsevents / speech / quarles20191003a. htm ; see also, financial stability board, β fsb launches evaluation of too - big - to - fail reforms and invites feedback from stakeholders, β news release, may 23, 2019, https : / / www. fsb. org / 2019 / 05 / fsb - launches - evaluation - of - too - big - to - fail - reforms - and - invitesfeedback - from - stakeholders / ; and financial stability board, β fsb publishes report on market fragmentation, β news release, june 4, 2019, https : / / www. fsb. org / 2019 / 06 / fsb - publishes - report - on - market - fragmentation /. | 1 |
trends to strengthen our own codes and commitments to the customers. consumers β lack of financial literacy β financial literacy includes knowledge of financial concepts and sound practices such as budgeting, but also the contractual rights and recourse procedures open to consumers. internationally, financial education, awareness and financial literacy are being accorded the highest priority in the scheme of financial consumer protection. where are we placed in this regard? the efforts like setting up of flccs are only a small measure considering the gigantic task we have at hand. whether or not mentioned in the bcsbi β s codes, can we bankers not make a commitment to put financial education and awareness on a mission mode and promise to deliver on our commitments? conclusion as we go forward, a major challenge is how to strike a balance between the twin objectives of increasing financial access / banking penetration vis - a - vis improving the quality of customer service and customer protection. while in the long run it will converge, in the short run, the dilemma and the tradeoff underlying the debate between financial access and financial consumer protection may be very real to the governments and policy makers. after all, developed countries have both high levels of access to formal financial sector, and relatively elaborate financial consumer protection measures after four decades of evolution. the financial consumer protection regimes in countries like india are still evolving. bcsbi needs to persuade banks to achieve convergence in an effective manner by adopting a voluntary and self - regulatory approach. it will be a great service to the society if bcsbi, banks and all of us collectively are able to achieve this. thank you, ladies and gentlemen. bis central bankers β speeches | 10002 : 2004 standard for reviewing the effectiveness and efficiency of the complaints handling process. adherence to this particular standard focuses on conferring the following benefits viz., management system customer satisfaction, management focus, brand improvement, credibility, customer confidence improved efficiency better relationship continual improvement transparent system auditable system synchronisation the standards has eight clauses, the first three are scope, normative reference and terms and definitions. the other five are : guiding principles complaints handling framework planning and design operations of the complaints handling process maintenance and improvement it is gathered from the bureau of indian standards that only two banks in the country ( private sector banks ) have so far adopted this standard. i urge the governing council of bcsbi to examine if adoption of an iso standard for grievance redressal could be considered for inclusion in the code of bank β s commitment to customers. the banks may on their own explore the possibility of adopting the iso standards. the office of fair trading, united kingdom has carried out several case studies to evaluate consumer credit intervention strategies. the case studies highlight the fact that vulnerable groups are particularly exposed to the risks of being misled by advertising. such action is treated as β non - compliance β with statutory provisions. we also need to look at some such robust provisions in our codes / statutes. the global financial crisis of 2008 had demonstrated that credit markets are fragile and not only because of the risk of political meddling ; borrowers also have tended to exhibit systematic vulnerabilities which compromise their financial decision β making capability. for many governments round the globe, the question is no longer β to protect or not to protect the financial sector consumer? β it is β when and how β. the global practices / regulatory measures for borrowers protection fall into three conventional categories ; disclosures, product based and provider based regulation. the current global trend is towards making disclosure regulation more stringent and robust. in particular, these regulations focus on prescribing the manner in which the interest rate and other charges must be calculated and disclosed. it may be the annual percentage rate ( apr ) as is favoured in the usa, which may also be easy to understand, or it may be the bis central bankers β speeches total cost of credit ( tcc ), the concept that is widely used in south africa. the product based regulation focuses on common elements such as right to cancel, prohibited behaviour and right of grievances redressal. we need to pick up the good aspects of these emerging global | 1 |
the entirety of their operations by january 2016. β’ banks which are designated as domestic systemically important banks ( d - sibs ) in singapore will be subject to additional supervisory measures over both their domestic and offshore businesses. 1 β’ in addition, where a foreign bank branch has significant retail presence in singapore, it will also be required to locally incorporate its retail operations. the subsidiary will be subject to the same suite of regulation as the local banks, and the same supervisory regime aimed at minimising risks to local depositors. 23. together, the enhanced global and domestic regulatory standards mean that the dbuacu divide is no longer useful. if we continue with the divide, it would merely impose undue administrative burden on banks, without materially enhancing prudential soundness or systemic stability. 24. hence, mas will be removing the dbu - acu divide in its banking regulations. the details will be released in an mas consultation paper by august. there is no rush. we will implement the changes in close consultation with the banking community, and phase them in over time. 25. this is a significant rationalisation in our banking regulation landscape. but i have to emphasise that one thing remains unchanged, and that is singapore β s commitment to promoting the growth of the asian dollar market, and the international business of banks based in singapore. establishment of financial centre advisory panel ( fcap ) 26. indeed, a strong partnership between the mas and industry leaders and practitioners has been key to the development of singapore β s financial sector, and how we got to where we are today. it will be even more important in the coming years, with changes accelerating in the financial world. 27. mas will therefore strengthen its dialogue with the financial industry. we will set up a financial centre advisory panel ( fcap ) comprising senior leaders from the banking, for example, as a d - sib, the foreign bank will be required to conduct recovery and resolution planning to reduce the potential for failure and promote their resolvability for an orderly winding - down. bis central bankers β speeches insurance and asset management industries. the panel will provide guidance in two broad areas : β’ first, overall financial sector developmental strategies. industry leaders and experts will provide advice on opportunities across the various financial activities, and propose initiatives to ensure continued vibrance in singapore β s financial centre. this includes building synergies across different activities β for example, spurring the development of the capital markets by building on the asset management sector | shopping ". increased size and market share may give a bank more credibility in the eyes of larger customers, thus providing the opportunity for bigger and more value - added transactions. size can also open the door into overseas markets. a case in point is that a bank needs to have assets of at least us $ 20 billion to be eligible to establish a branch in mainland china, which is at present beyond the reach of most local banks in hong kong. future profits may also benefit from cost reductions arising from economies of scale aβ¬ β that is, the ability to spread fixed costs, including particularly those which are technology - related, over a larger scale of operations. cost economies can also be achieved by eliminating duplications in branch networks, functions and staff. there may also be a reduction in risk, and therefore saving in costs, due to geographic or product diversification and the ability of larger institutions to invest in more sophisticated risk management systems. to the extent that risk reduction boosts a bank's credit rating, or increased size attracts the attention of investors, its cost of capital may be reduced, thus providing another means to increase shareholder value. of course, merger is not the only way to maximise value. nor, must it be said, is m & a always pursued for this reason. management may have its own motives for chasing size - personal ambition or herd " consolidation in the financial sector " : group of ten, january 2001, available at www. bis. org. instinct may also be part of the story. this may help to explain one of the paradoxes of the consolidation boom. lots of companies are doing it, but the success of m & a in achieving its stated objectives of cost and revenue synergies is not clear - cut. does m & a work? the g10 report to which i referred concluded, for example, that there was only weak evidence of cost reduction arising from increased size, except perhaps in the case of smaller banks. while there was stronger evidence for improvement on the revenue side, the gains were probably not as large as those anticipated by the practitioners. not surprisingly therefore, there was not much to show that, on average, m & a generated significant shareholder value. rather, what tended to happen was that there was a transfer of wealth from the shareholders of the acquirer to those of the target. other studies, and some well - publicised mergers that have failed to deliver the promised benefits, support this somewhat sceptical view. it is however | 0 |
##ity and evolution of payments payments sit at the heart of the financial system, and whilst the methods and nature of transactions have progressed considerably since the days of barley bartering, their importance has not faltered. within the uk, payments are a crucial part of everyday life and the past decade especially has seen a transformation in how people pay for goods and services. we have moved from a time where cash was king ; in 2010 56 % of payments were made using cash, this fell to 45 % in 2015 and further declined to 17 % in 2020. 1 it is predicted that by 2028 just 9 % of all payments will be made by cash. 2 transitioning through an era that has seen the continued decline in popularity of cheques and a rapid increase in card usage, we are now in a world where many of us today will have paid for a summer iced - coffee or groceries using our smartphones or even watches. this evolution in payments in the uk and globally is delivering transactional capability that is more reliable and quicker than ever before. but customers want more and there is a continuous drive for further improvements in speed, cost, transparency, safety and resilience. in shakespeare β s a midsummer night β s dream, some characters are transported to a new world and new, not always desirable, experiences. but this was merely temporary, and an illusion 1 / 6 bis central bankers'speeches rather than reality. here a payments transformation is under way that could render the next decade almost unrecognisable from the transactional landscape of the past : but is a real and lasting change, bringing benefits to many. it is an environment where future generations will benefit from a new world of possibilities : one in which fast, frictionless and future proofed payments β just work β invisibly behind the scenes to unlock individual and commercial potential. where innovation will flourish, changing customer demand will be supported and exceeded, and ultimately life - dreams enabled. it is up to each of us to help build the foundations that will allow this to take place. this transformation involves many new actors, alongside the traditional banks. there are growing numbers of challenger banks as well as innovative payments services, payment service providers ( psps ), and increased interest from the world of fintech. indeed, payment businesses currently make up 17 % of the uk β s c2500 fintech companies. global household β bigtech β names such as facebook and amazon are also breaking into this market. these competitive pressures are pushing existing market participants | bis - central bankers'speeches 5 https : / / www. ecb. europa. eu / paym / intro / news / html / ecb. mipnews230425. en. html 4 / 4 bis - central bankers'speeches | 0 |
reviews, six reviews have now been completed and published. building a new system of international peer review is a major accomplishment. but heavier lifting lies ahead. as new, higher standards come into force, ensuring equivalent implementation will become increasingly important. three critical areas stand out : basel iii, resolution regimes and central clearing for otc derivatives. we will need rigorous and effective assessment of implementation across all jurisdictions to ensure that they are living up to their commitments. the goal is to create a race to the top in national adherence to international standards. agreement on these three elements β higher standards, new tools and strengthened enforcement mechanisms β will substantially enhance financial stability at the core of the system. agreement in these areas has been hard. but the truly tough work of consistent, rigorous and relentless implementation is just beginning. now that we have largely agreed on the reforms to reduce the likelihood of failure at the core of the system, the reform agenda is turning appropriately to two further priorities : expanding the perimeter of oversight and regulation, and reducing contagion and harmful international spillovers. expanding the perimeter of supervision and regulation the existing prudential regulatory framework was designed around banks whose credit - intermediation activities are closely regulated and supervised, as well as backstopped with deposit insurance and central bank liquidity. by contrast, the shadow banking sector is less regulated and does not have access to public liquidity support. however, like the bis central bankers β speeches credit - intermediation activities of banks, shadow banking also involves liquidity and maturity transformation, and often with some degree of leverage. the label β shadow banking β is unfortunate. it is not shadowy. market - based financing, as it is more appropriately called, provides competition for the banking sector and is an important source of innovation and diversification. and it is also big. in the united states, market - based financing was roughly twice as large as traditional bank intermediation at the peak of the credit boom and is still about 25 per cent larger today. in several other advanced economies, including canada, the sector is at least as large as the banking sector. the crisis highlighted the systemic vulnerabilities market - based financing can pose. the opaque and excessively levered securitization of u. s. mortgages, combined with undue reliance on short - term wholesale funding, greatly intensified the consequences of the u. s. housing collapse. with the capital and liquidity standards applied to banks set to increase, we can expect to see further | to celebrate a decade in which legal challenges have mostly been successfully overcome, but also to openly discuss the many steps that still await the future generations of colleagues working for and within the eu banking supervision. 5 / 5 bis - central bankers'speeches | 0 |
ernst welteke : trends in international banking address by mr ernst welteke, president of the deutsche bundesbank, at the international arab banking summit held in frankfurt, 19 june 2001. * * * ladies and gentlemen, i would like to welcome you to the international arab banking summit 2001 in frankfurt, the city of the euro. frankfurt is home not only to the bundesbank and the european central bank but also to as many as 340 banks, including more than 130 foreign banks. it is the leading financial centre in germany and the euro area. the heart of the eurosystem is the right place to discuss trends in international banking, such as electronic banking, as well as questions regarding a deepening of the euro - arab partnership. i the success of the common currency in the european monetary union has rung in a new phase of debate about monetary unions. this holds for all continents, for north and south america, for asia as well as the arab countries. the decision to adopt further steps leading towards a common monetary union by the gulf cooperation council at the end of last year attracted a lot of attention. clearly, the process of integrating different economies is an arduous one, involving not only the surrendering of a national monetary policy but also a process of integrating the real economy. in europe this process took almost half a century, from the first pro - european declaration to the full integration of monetary policy in the european monetary union. harmonising tariffs and creating a single european market with free movement of goods, services, capital and labour created the basis for a common monetary policy. in addition the convergence process caused macroeconomic policy and data to converge to such an extent that the abolition of national monetary policy would no longer cause major distortions. the arab countries face similar problems in terms of tariffs and trade barriers. clearly, the basis for a common monetary policy is a single market for the real economy, the financial system and labour markets. even within the gulf cooperation council ( gcc ) there is still a long way to go. there are, however, some encouraging characteristics in the gcc for integration. the similarity of the economies is a striking feature. all depend to a large extent on energy exports. the price of crude oil is by far the single most important factor determining the business cycle. in addition to the similar sectoral structure of the economies the common language represents an integrating element. the same holds true for the common culture, religion and the similar geography. to reach the | ##isation and deregulation as well as new developments in technology are also playing a major role. the markets have become more liquid, larger, deeper and more complex. it is true that on the way towards a single european capital market more work has to be done. institutional, technical and legal barriers are hampering the process of integration. the fact that there is no single sovereign issuer, but rather 12 different government issuers, undoubtedly contributes to the certain degree of fragmentation that still exists. in this context, the benchmark position of the german bund is something of which we can be particularly proud. the great diversity of issuers will, for the time being, remain a characteristic feature of the european capital market. the same is true for the large number of stock exchanges and exchange - like trading systems as well as the different clearing and securities settlement systems. this does not, however, rule out the possibility that the individual capital markets will become progressively closer to each other in terms of their economic organisation. this is something the institutional investors themselves are already taking care of. there are many signs that a more market - oriented financing structure is evolving in the euro area. enterprises are increasingly meeting their financing needs directly through the capital markets, that is : by means of negotiable paper. the dynamism of this disintermediation process may be gauged by the development of the equity market : the degree of market capitalisation has increased significantly. this is a reflection not only of higher equity prices but also of the steadily rising total number of enterprises listed on the stock exchange. a major contribution to this development has been made by the neuer markt ( new market ) of the frankfurt stock exchange. this is where young, innovative enterprises obtain access to risk capital. in terms of the neuer markt, germany has the top position among european growth markets β even if some investors may have overlooked the fact that this is a market for risk capital. in addition, the market for corporate bonds is on the advance. alongside the introduction of the euro itself, a major driving force has been the continuing restructuring of the corporate landscape. however, changes are not restricted to the financial markets themselves. the entire financial sector, including the whole range of financial intermediaries and financial institutions, is affected by them. as a result of the loss of the β home - field advantage β represented by the deutsche mark, at the start of monetary union the german credit institutions entered into competition with all the | 1 |
rate regime. with respect to domestic demand, measures such as tax reduction, increase of household income, speed - up of rural infrastructure building, and expansion of financial service to individuals were adopted. and we have also quickened the pace of reform of pension system, health service system, education system and the cultivation the residential mortgage business in order to lower savings rate. all these measures indicate that china is seeking to rely less on export and more on domestic demand to achieve growth. this will contribute to a more balanced development in china and the world at large. the sustained and rapid development of china β s economy has played an important role in the balanced development of global economy. global consumers have benefited a lot from good and cheap goods from china. companies especially the multinational ones get great profits from their investment or trade with china. some western economists have pointed out that it is the good and cheap chinese exports that made 10 years of low - inflation and continuous economic growth possible. according to the estimates of the european central bank, without the positive factor of cheap chinese exports, the price index of the euro zone would have risen 2 percentage points on average from 1996 to 2005. at the same time, china β s economic development pattern characterized by high input, high energy consumption and low domestic demand has brought about domestic imbalances. in terms of industrial structure, some capital intensive sectors such as the manufacturing sector have witnessed rapid development and become engines of china β s economic development. but agriculture and modern services have lagged behind. with respect to regional development, while the coastal areas in east china has put in place a virtuous economic development mechanism, vast middle and western areas have developed relatively slowly. as for the driving force of economic development, despite high investment and export growth rate as well as excessive energy consumption, growth of china β s per capita national income has been slow, and domestic consumption remains slack. some rural areas even haven β t got out of poverty. so china β s economic development mode must be transformed to support balanced development between eastern, middle and western area as well as urban and rural areas through boosting domestic demand and a new type of industrialization. second, harmonious financial development is an important part of the balanced economic development. financial industry is the core of modern economy. linking commodity market with factors of production markets and bridging production, distribution, and consumption, finance plays an essential role in resource allocation. with the deepening of china β s economic reform, financial industry became more and | to further open up its financial industry. china will honor its wto commitments to open the financial industry on schedule and some commitments have already been materialized ahead of schedule. but international practice also tells us over - hasty financial opening - up incompatible with the economic and financial development will exacerbate the vulnerability of financial system and thus leads to financial crisis. this will negatively affect the world economy. faced with many issues such as the industrial sector imbalance and the weak financing channels, china β s financial opening - up will be a long and arduous process. at the same time, financial opening - up also needs a relatively relaxed international environment. we will make efforts towards this end. we also need the understanding and support from the international society. third, shanghai β s growth as the international financial center will play an important role in building a harmonious financial system to build shanghai into an international financial center is a national strategy established in 1992. this strategy has two aims : one is to promote economic and financial development of the yangtze river delta and even the whole country ; the other is to develop shanghai into a window for china β s openingup, foreign capital utilization and international financing. thanks to fourteen years β development, shanghai has become the most financially advanced city in china. shanghai β s international financial center build - up has taken up new responsibilities in the new era characterized by the shift of development mode and the harmonious economic development. a financial center basically undertakes the function of financial intermediary and is the core part of resource allocation. home to lending, securities, foreign exchange, and insurance transaction, and sensitive to market changes, a financial center can mobilize and distribute huge funds quickly, effectively allocate financial and economic resources. an international financial center, also a center of economic and financial information, reflects regional and global economic changes, and realizes the price discovery function. the world β s major international financial centers have always had the above features. to build shanghai into an international financial center contributes to the cultivation of a nationwide financial system, the improvement of financial organization system, the growth of financial markets, the cooperation between regional financial institutions and the further opening up of the financial industry. shanghai β s growth as a financial center will serve the whole country, and promote the stability and development of the entire global economy. we hope that the experts participating in the financial culture week can come up with suggestions and proposals on transforming shanghai into an international financial center. and we also hope this financial culture | 1 |
until recently, this did not manifest itself in the form of labor shortages, since labor demand has been sluggish, so that the problem was not sufficiently addressed. fortunately, during the current economic recovery, labor force participation rates, in particular those of women and the elderly, have been rising ( chart 8 ). it is critical to ensure that this phenomenon is not a cyclical one, but becomes permanent by creating a work environment favorable to women and the elderly in order to mitigate labor force shortages over time. utilization of foreign workers also deserves consideration. another way to mitigate future labor shortages is to prompt investment in labor - saving technology and research and development for such investment. all of these issues are incorporated in the government β s growth strategy. if, despite the delays, the strategy is implemented in a steady fashion, japan β s economy will regain its vitality and achieve sustained growth. i have talked about japan β s labor market, focusing on the effects of balance sheet adjustments, deflation, and demographic changes. while some of these problems are unique to japan, the issues i discussed may nevertheless be of relevance for the challenges faced by other countries today or in the future. i hope that japan β s experience can provide a helpful reference in this regard. thank you for your attention. bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches | likely to experience a full - fledged increase in the number of full - time workers. a more troublesome problem is that wage - setting practices have changed during the prolonged period of deflation. because of low labor mobility due to relatively widespread lifetime employment, wages of regular employees in japan tend to reflect labor market conditions only insufficiently, at least in the short term. therefore, some kind of mechanism, a β visible hand, β is necessary for wages to rise. prior to the period of deflation, the so - called bis central bankers β speeches spring offensive of the practice of simultaneous wage negotiations between management and labor at major firms in spring served as such a mechanism for negotiating wage increases. however, as deflation continued, this mechanism stopped working effectively. that is, firms needed to cut wages in order to reduce costs against the background of falling prices, while it was rational for workers to accept a decline in wages in exchange for job guarantees. as a result, in the past decade or so, the practice of raising base wages through the spring offensive had more or less disappeared. this spring, however, has seen increases in base wages and / or bonuses not only among large firms but also among small and medium enterprises, partly reflecting calls by the government. for wages to increase at an appropriate pace in the future, it is necessary to have some kind of coordination mechanism to bring about wage increases. in such a mechanism, the bank of japan β s price stability target can serve as a benchmark for firms in their wage setting. that is, once the bank has succeeded in firmly anchoring inflation expectations at 2 percent, this could provide the basis on which wage negotiations between management and labor are conducted. firms and households can then base their economic decisions firmly on the expectation that prices will rise at a rate of around 2 percent. thus, creating an appropriate wage - setting mechanism plays an important part in anchoring inflation expectations at 2 percent. concluding remarks i have so far talked about the effects of balance sheet adjustments and deflation on the labor market, but there is one topic i have yet to touch on. this is an issue that concerns the supply of labor, namely, demographic changes. reflecting the aging of japan β s population, the labor force participation rate has been on a downtrend, and serious labor shortages are likely to emerge in the future. the downtrend in the labor force participation rate is due to japan β s demographic composition and therefore does not come as a surprise. however, | 1 |
and for the engineers and planners, really began, the work of optimising and reviewing the design, while at the same time moving stepby - step ever - deeper into detail with each new phase and passing month. i would like to thank the architect, professor wolf prix, his staff of coop himmelb ( l ) au and all planners and engineers for never giving up, for always fighting passionately for their design and for always finding a way to improve on the different aspects of the building. my thanks also go to drees & sommer, the external project managers, who supported our project team within the ecb in the coordination of all the major and minor details that need to be taken care of and resolved. a crucial situation occurred when the initial tender strategy failed and a new one, more fitting to the changing markets, had to be developed and implemented. as of today, with the start of the actual construction works, the main responsibility for the construction site has passed into the hands of our construction management company, gassmann + grossmann. throughout the last few years, all the parties involved have worked closely together with unfailing energy, determination and conviction to finally make this event possible today. the grossmarkthalle in itself has been yet another challenge : together with the historic preservation authorities of both the city of frankfurt and the state of hesse, our project team and the architect and planners, the structural engineers and restoration experts worked hard on every millimetre of the market hall to gain an insight into its current state, to discuss all details and aspects of its desperately needed restoration and how to convert such a building into an integral part of our institution β s premises. i remember one visit by my colleagues and myself to the site when thomas rinderspacher, the ecb β s project manager, showed me the new windows that had been developed to improve the insulation of the facade, while preserving the appearance of the old window frames. i am proud of all the work carried out. my fellow - members of the governing council and i were and are being informed regularly about the development and the progress of the project. we are aware of our being a demanding task - master, asking for a perfect building, as well as for sound and transparent processes on the way towards attaining it. we are simply aiming for the best possible building for providing a healthy and safe environment for our staff and visitors, while at the same time ensuring an efficient and effective functioning of the institution. | luck and a smooth construction phase. the laying of the foundation stone marks the start of the main construction works for the new headquarters of the european central bank. let me reiterate the different steps so far and take the opportunity to point out some of our main partners in this process so far. the project was initiated by the governing council under the presidency of my honoured colleague wim duisenberg in 1998 β and it is very sad that he cannot be here today. back then, when the ecb had barely been founded, none of us could really imagine just how much time and effort such a project would call for. the decision in favour of the chosen site was taken on the basis of a variety of criteria, such as the size of the site and its location on the banks of river main, as well as the fact that the ostend is a lively and well - functioning district close to the centre of the city of frankfurt. the size of the site β and of the building to come β has been chosen in view to possible extensions of the eurosystem and the european union, the former today encompassing 16 countries and around 330 million citizens, so as to be able to fit all ecb staff in the new premises on the site. i can remember the presentation of all the designs of the international ( urban planning and architectural ) design competition, the great variety of ideas from all over the world of how a european institution and a modern central bank should look like. and how the grossmarkthalle, a remarkable monument, would be integrated and become part of this institution. when deciding on the site in 2001, we aimed at preserving a building that was remarkable in its own time. i would like to thank anp, the consultants who prepared and organised the international architectural competition that generated so many ideas. the international jury, which was chaired by the ecb β s vice - president, lucas papademos, was the first body to face the challenge for awarding the prices to the most suitable designs. i would also like to thank the jury for their work and express my appreciation of their endeavours to find the right design for the task and the site at hand. deciding on the building that is required to serve the purposes of a modern central bank is a difficult task. i remember how my colleagues in the governing council and i became deeply involved in details when deciding on the final design at the end of the revision phase. it was only then that the real work for the architect, | 1 |
andriy pyshnyy : introductory speech - workshop on monetary policy in emerging markets introductory speech by mr andriy pyshnyy, governor of the national bank of ukraine, at the nbu - eabcn workshop on monetary policy in emerging markets, kyiv, 15 december 2023. * * * dear colleagues, welcome to our traditional workshop on monetary policy in emerging markets. for the third time, we gather to discuss the main challenges for central banks and outline ways to overcome them in emerging markets. first and foremost, i would like to express my gratitude to the euro area business cycle network ( eabcn ) for their support in organizing this event. for the second consecutive year, we are organizing this workshop together, and i sincerely appreciate our productive collaboration. this year, we have placed a special emphasis on understanding the causes and consequences of the new wave of inflation worldwide. the one that shook the world during the post - pandemic recovery and gained particular momentum after the onset of the war in ukraine. almost every country in the world has felt the new wave of inflation, with emerging markets being the most affected. this is confirmed by the economic outlook presented by the imf in october. according to the imf, in 2022, inflation in developed countries averaged 7. 2 %, while in emerging markets, it was 10. 1 %. in some emerging markets, inflation exceeded 20 %. among these countries is ukraine, where we observed a substantial inflationary surge driven by the escalation of the war. the causes of inflationary processes, and even more importantly, the nature of risks for its escalation, can vary significantly across different countries. it seems that inflation has attacked the world from all sides, and in each country, it is targeting the'vulnerable'points in defense : from both demand and supply sides through uncertainty and turbulence in global energy and food markets through structural fragmentation in labor markets and changes in production and supply chains through potential debt crises and financial destabilization ultimately, through the security risks and active military conflicts. 1 / 4 bis - central bankers'speeches all of these factors have presented distinctive challenges for central banks, particularly given the constraints of our toolkit. in particular, these challenges stem from structural liquidity surpluses, escalating debt burden, dependence on the policies of developed nations, and the dynamics of international capital markets. economic theory and practical experience have demonstrated successful strategies in addressing inflation. nevertheless, today we | 2005 ending with the card system ( namswitch ) in 2008. the namswitch system was implemented in a phased approach because of the nature of payments, facilities, and systems that are involved. the automated teller machine ( atm ) solution went live on 21 april 2008 and the point - of - sale ( pos ) was recently rolled out on 16 november 2008, thus bringing the reform project on the clearing side, to an end. ladies and gentlemen this is an achievement worth mentioning as namibia now has its own independent payment infrastructures, with the bank of namibia having adequate regulatory oversight over these systems. i am aware that to a normal eye, it is difficult to notice the changes that have taken place because this change was managed seamlessly. however with a careful eye significant benefits brought about by the reform are visible. for example it use to take about up two weeks to clear a cheque, now this only takes at most fives days and in most cases is less than that. ladies and gentlemen, on behalf of the bank of namibia and indeed on my own behalf, let me thank and commend the banking industry for a job well done. the industry has shown commitment in ensuring that all the systems were implemented. despite the slippages that we experienced along this journey, we have proven that in unison we can achieve greater things. it shows that with the spirit of teamwork we can achieve all what we intend to achieve. i believe that this is the path we will continue to follow in the future. ladies and gentlemen, we should all understand that reform projects are done with due regard to national interests. i do not believe that our intention to bring about reform initiatives will negatively affect the operation of the industry and nps. the bank of namibia understands that such initiatives are expensive and sometimes costs involved run into millions of namibia dollars. our position is that benefits far outweigh the costs incurred in the process. we all need a situation where if there are disruptions in the south african payment environment, for example, namibia catches no cold. building our own systems will also enable us manage inherent payment system risks and exposures sufficiently well. in conclusion, ladies and gentlemen, although milestones have been achieved in terms of implementing required clearing and settlement systems, certain issues remain to be addressed. i am aware that there are some card transactions that are still cleared and settled in south africa. i am pleased to learn that there are measures in place to ensure that such transactions are cleared and settled | 0 |
lanka β s financial system is resilient and it is capable of absorbing shocks from within or outside. we should be happy to note that like the sri lankan economy, the financial system has also displayed its resilience under trying circumstances in the recent past. we hope it will continue to be so in the future. from a regulatory point of view, we will continue to support markets and financial intermediaries to maintain the required robustness of the financial system. thank y ou. | ##kits, aligning them with the new generation of business models and technological solutions brought about by fintech. in recent years, similar formats for regulator engagement with the industry have sprung up widely β from canada to australia. arguably, these developments mark a shift in authorities β thinking β facilitating innovation instead of aiming to restrict it. in this regard, the idea of developing a central bank digital currency has recently been gaining traction. the task of issuing a central bank digital currency is indeed complex and requires extensive long - term efforts. yet it also offers substantial gains. these include increased transparency, more efficient payment and settlement systems and enhanced instruments for financial risk monitoring. with more flexibility come new responsibilities nevertheless β and here i have to put the strongest emphasis β with more flexibility come new responsibilities. while becoming more open to innovations, we β i mean both industry and regulators β cannot turn a blind eye on the associated risks. first of all β cyber risks, which, under intensifying digitalisation processes, attract elevated regulator attention. financial institutions increasingly base their operations on novel technological solutions, such as cloud computing. this certainly brings efficiency gains. but also makes financial firms more vulnerable to hacking and malware, placing vast amounts of data and critical ict infrastructure in a potential danger zone. today this challenge is particularly relevant in europe due to the ongoing regulatory shift towards β open banking β. it is therefore no surprise that international standard setters, such as the bank for international settlements, have recently become more active in this domain. as a result, today financial institutions and regulators are offered guidance β including the recent steps taken by the european central bank β that they can implement to enhance the level of cyber resilience. to strengthen these efforts, the international monetary fund has lately been putting more emphasis 2 / 4 bis central bankers'speeches on cyber risks within its surveillance and policy advice frameworks. nevertheless, digitalisation - induced risks for the financial system stem beyond cyber threats. financial innovations also tend to create additional room for β shadow banking β to expand. it takes time to identify and fully understand these new and often obscure financial services, sometimes revealing regulatory and supervisory loopholes. through interlinkages with other financial institutions, this may eventually lead to a build - up of hidden systemic risk. in other words, in absence of adequate regulation, β shadow banking β operations risk putting the whole financial system under threat. in the last several years, we have witnessed an increase in scrutiny towards β shadow banking β activities on a global scale | 0 |
may be implemented sooner than implied by the baseline scenario. however, given that higher oil prices will also worsen the current account balance, a possible policy response will consider macro financial risks as well. therefore, the exact content of the adopted policy mix may vary depending on the outlook for external demand, capital flows and the credit growth. esteemed guests, we will continue to monitor fiscal policy developments closely while formulating our monetary policy strategy. our inflation forecasts assume that the ratio of fiscal expenditures to gdp will evolve as projected in the mtp. a revision in the monetary policy stance may be considered should the fiscal stance deviate significantly from this framework, and consequently has an adverse effect on the medium - term inflation outlook. increasing government saving, thus sustaining fiscal discipline, under current circumstances is essential to control the current account deficit driven by the divergence between domestic and external demand. therefore saving the extra tax revenues driven by the stronger - than - expected economic activity would not only reduce financial stability risks, but also enhance the effectiveness of the new policy mix. bis central bankers β speeches monetary policy in the period ahead will continue to focus on building price stability on a permanent basis. to this end, the impact of the macroprudential measures taken by cbrt and other institutions on the inflation outlook will also be assessed carefully. fulfilling the commitment to maintain fiscal discipline and strengthening the structural reform agenda in the medium term would contribute to the improvement of turkey β s sovereign risk, and thus, enhance macroeconomic stability and the price stability. maintaining fiscal discipline will also provide more room for monetary policy maneuver and support the social welfare by keeping interest rates permanently at low levels. i would like conclude my remarks by reiterating that implementation of the structural reforms envisaged by the mtp and the european union accession process remains to be of the utmost importance. thank you for your attention. bis central bankers β speeches | second quarter. however, the extent and the timing of the impact may vary depending on developments beyond the control of monetary policy. i would like to underline that as the central bank, we will closely monitor the lagged effects of our policy measures on price stability and financial stability, and will take additional measures if deemed necessary. in assessing risk factors and related monetary policy measures under current circumstances, we adopt a framework where both price stability and financial stability are taken into account. therefore, risk factors are not only assessed with respect to their impact on the level but also on the composition of the aggregate demand. this is because the level of aggregate demand is related to price stability, while its composition relates directly to financial stability. therefore, we evaluate risk factors regarding the global economy against this backdrop. although downside risks regarding the global economy have decreased compared to the previous reporting period, they still remain significant. problems in credit, real estate and labor markets in many advanced economies are yet to be completely solved. moreover, uncertainties regarding debt sustainability and the impact of a possible fiscal consolidation persist. meanwhile, rapid increases in oil prices may restrain global recovery. all these factors continue to feed downside risks regarding the pace of global growth. the possibility of prolonged period of slow global growth not only poses downside risks regarding external demand, but also keeps prospects for strong capital flows to turkey vigorous. should such a scenario materialize, a policy mix of low policy rate, high reserve requirement ratios and a wide interest rate corridor may be implemented for a long period. moreover, an outcome whereby problems in advanced economies intensify, leading to contraction in domestic economic activity, may require an easing in all policy instruments. in other words, we may consider joint cuts in policy rates and reserve requirement ratios. although downside risks to global economy remain notable, upside risks are also becoming more significant. major uncertainties exist regarding the lagged impacts of the exceptionally loose monetary policies implemented by advanced economies on global economic activity and inflation. if the global economy faces a faster - than - expected recovery in the upcoming period, inflationary pressures may arise sooner than envisaged in the advanced economies. materialization of such a scenario would mean a tightening by using policy rates as well as reserve requirements against higher global policy rates and demand - pull inflationary pressure. as i have previously emphasized, the outlook for oil and other commodity prices remains uncertain. should the increases in commodity prices persist and impose risks on achieving medium - term inflation targets, additional tightening | 1 |
has led to a rebound of economic activity, particularly in the third quarter, compared to the first half of the year, when there was no diamond production. in addition to the beneficial effect of the on - going recovery of the world economy, government spending and the easing of monetary policy contributed to a strong expansion of the non - mining sector, which enabled the overall economy to grow by 1. 3 percent in the third quarter of this year. this suggests that the underlying trend in economic activity remains positive, partly because the government was able to implement a fiscal stimulus by drawing on the savings that were accumulated when revenues were buoyant. as a result of the world economic upturn, diamond production has resumed in response to a steady revival of overseas demand for rough diamonds ; and it is expected that this trend will continue in the second half of the year. the resumption of diamond exports has also led to surpluses in the current account of the balance of payments in recent months, so much so that the foreign exchange reserves are now increasing after months of consistent decline. as intimated earlier, the bank of botswana lent support to the domestic economic recovery by easing monetary policy. to this end, the bank rate was reduced from 15. 5 percent in december 2008 to the current level of 11 percent. it is important to emphasise that the bank remains vigilant in monitoring inflation trends, to ensure that the medium term inflation objective of 3 β 6 percent is adhered to, despite some transient spikes in prices, which pushed inflation to 7 percent in september. after all it is the bank β s policy to stabilise inflation at a low and sustainable level in order to promote long - term economic growth and diversification. needless to add, the world economy remains fragile. for a strong rebound in economic activity to be sustained, there is need to learn from the current crisis and to take corrective measures, if we are to avoid a recurrence of the recent economic and financial turmoil. at a global level, there is discussion of the need to create a new economic order. towards this end, the g20 is no longer an obscure talking shop for finance ministers and central bank governors of advanced economies. although there is practically no developing country participation, we should take comfort from the fact that it has now been transformed into a serious forum for world leaders to take collective global decisions. it is also expected to assume the responsibility for policy coordination, a role that has, until now, been played by | or t & au r an t s m un an d ba rs w at er ns tru ct io n & co el ec tri cit y tr ad e, re st - 100. 0 m m in an in g uf ac tu rin g - 50. 0 ag r icu ltu re 0. 0 source : commercial banks. 3. 21 for households, annual credit growth accelerated from 4. 5 percent in 2022 to 5 percent in 2023. the higher credit growth was mainly attributable to a higher rate of increase in property and motor vehicles loans. conversely, annual growth fell with respect to personal unsecured and credit card - based loans. thus, the share of mortgages in total household credit increased from 26. 8 percent in december 2022 to 27. 6 percent in december 2023, while that for motor vehicles increased from 4 percent to 4. 3 percent in the same period. meanwhile, the share of credit card exposures in total household credit was unchanged at 1. 5 percent in the same period. overall, it is assessed that modest increase in lending to households reflects the impact of the 2022 policy tightening on credit demand as borrowing became more costly, as well as restricted supply of loan facilities by banks to guard against possible defaults, therefore, a balanced response to market conditions. 3. 22 in general, credit growth continues to be supportive of economic activity although the amount of credit relative to the size of the economy remains comparatively low by global standards. commercial bank credit to gdp ratio increased slightly ( table 3. 2 ) in 2023 reflecting faster credit growth relative to output growth but remains monetary policy statement february 2024 comparatively low relative to financial inclusion and development needs, as well as global trends ( appendix, table a2 ). in this context, there continues to be scope for prudent credit extension to enhance support for economic activity. the assessment of vulnerabilities and risks to financial stability, as measured by the credit - to - gdp gap ( chart 3. 10 ), also shows that the modest rate of credit growth is commensurate with the rate of increase in gdp ; hence signifying that the current level of credit relative to economic activity is sustainable and poses limited risk. table 3. 2 : commercial bank credit - to - gdp ratio percent of gdp total commercial bank credit business parastatals agriculture mining manufacturing construction trade transport and communications finance and business services real estate households retail credit3 mortgage 38. | 0.5 |
mr thiessen converses on the conduct of monetary policy in canada under a floating exchange rate system speech by mr gordon thiessen, governor of the bank of canada, to the canadian society of new york, new york, on 9 march 2000. * * * the conduct of monetary policy when you live next door to a large neighbour both in canada and elsewhere, much ink has been spilled over the past year on the pros and cons of different exchange rate regimes and the implications for monetary policy. interest in the subject was piqued by the difficulties experienced in 1997 - 98 by a number of emerging - market economies in asia - difficulties that had a lot to do with unsustainable exchange rate arrangements. as well, the formation of a large single currency area in europe, just over a year ago, focused attention on monetary unions. canada β s floating exchange rate system has itself been the subject of debate, particularly while our economy was adjusting to the effects of falling world commodity prices. there have been a number of changes in exchange rate regimes recently. several asian countries have abandoned their fixed exchange rate arrangements for more flexible systems. last year, brazil also moved to a floating exchange rate. conversely, argentina was seriously debating giving up its currency board arrangement and adopting the us dollar. and of course this past january, ecuador embarked on the road to β dollarization β in an effort to restore political and economic stability there. in a world of increasingly open markets for goods and services, burgeoning international trade, and massive global capital flows, what can we say about the appropriate exchange rate arrangements and the scope for independent monetary policies in individual countries? i believe that canada is well placed to offer some useful insights, living next to a much bigger neighbour, with whom we have forged very close economic and financial links over the years. and so today, i would like to talk about the conduct of monetary policy in canada under a floating exchange rate system. i will end with a brief summary of the state of the canadian economy. economic and financial links between canada and the united states no two other countries share as much as the united states and canada - and i do not just mean hockey, baseball, or the longest undefended border in the world! let us look at some basic economic facts. the value of goods and services that cross the canada - us border every year amounts to about us $ 370 billion - 40 % of our gross domestic product. canada accounts for nearly one - fifth of | uncertainty about the production potential of our economy at this time of structural change, the bank is now monitoring a wide range of indicators for early - warning signs of pressure on capacity and prices. up to now, our inflation performance has been somewhat better than we had expected. while the increase in the total cpi over the past 12 months to january was 2. 3 %, our core rate of inflation ( excluding food, energy, and the effect of changes in indirect taxes ), at 1. 3 %, remains in the bottom half of the 1 to 3 % target range. this good inflation performance bodes well for the continued expansion of the canadian economy. but what remains to be seen is whether this expansion will bring with it strong productivity gains for canada similar to those witnessed in the united states. one thing is clear. the job of the bank of canada must be to keep inflation in canada low and stable. without that, we will be risking both the economic expansion and the potential productivity gains. | 1 |
network for greening the financial system ( ngfs ), we will be collaborating with central bankers and financial regulators from around the world in monitoring associated risks and developing suitable policy frameworks. however, it is clear that an extension of the university sector β s programme of work on climate change to include academic analyses of its macroeconomic impact and its implications for the financial system would provide a valuable external and independent expert perspective on these issues. in particular, given the global efforts in this area, it would be especially valuable to see academic studies that are customised to the specific challenges facing the irish economy and the irish financial system. beyond topics such as digitalisation and climate change, it is important that central banks and financial regulators also incorporate the latest thinking in academic research. for instance, the fields of behavioural economics and behavioural finance have become mainstream over the last decade. these fields study how people actually make choices, taking insights from both psychology and economics. for instance, the evidence shows that people are sensitive to the way that information is presented β the so called β framing effect β β and that decisions can reflect emotions and biases, such as overconfidence or loss aversion. these fields are beginning to shape financial regulation, since the research shows that people often make predictable, persistent and costly errors when choosing and using financial products. the models developed by researchers allow us to understand why these errors arise and what we can do to ameliorate them. in relation to policy impact, the 2009 credit card accountability responsibility and disclosure ( card ) act in the united states was informed by behavioural evidence that showed that consumers misunderstand the true cost of credit. in the united kingdom, the financial conduct authority banned the sale of add - on insurance products through automatic tick boxes on the basis of behavioural evidence that consumers cannot compare products in this setting ( iscenko et al 2014 ). since behavioural economics and finance can help to create more targeted and effective policy solutions, the central bank of ireland is committed to using insights from these disciplines to strengthen consumer protection and promote healthy household finances. in terms of my wish list for university research, let me highlight several more areas. first, the demographic transition will have a profound impact on the national and international economies, together with an array of associated implications for society, families and individuals. in terms of the financial system, an ageing population changes saving and investment behaviour, while also requiring the implementation of a sustainable approach to pensions provision. while universities | on an assessment of the risks facing borrowers, the financial position of the banking sector as well as recent stress - testing of the system, is that the banking system is well placed to withstand the impact of any major adverse developments in the short to medium term. this central expectation does not preclude the possibility of adverse developments, which should they materialise, would have serious financial consequences for banks. stress - testing exercises a round of stress testing was launched earlier this year by the bank with the 11 domestic retail credit institutions, whereby each institution was required to assess its vulnerability to hypothetical shock scenarios. these include a major fall in foreign direct investment, a negative world trade shock, exchange - rate appreciation of differing magnitudes, interest - rate increases, and house price falls. at the same time, there was a separate overall assessment by the central bank of the banks β vulnerability to various risks. the results of both stress - testing exercises, notwithstanding some important caveats, suggest that the banking sector β s shock absorption capacity is strong. house prices and private sector indebtedness i would like to comment a little more on two vulnerabilities of the financial system. residential house prices following the publication of last year β s report a reacceleration emerged in annual house price increases. in more recent months, however, there have been tentative signs of a re - emergence, from both housing indicators and anecdotal evidence, of some easing of price pressures. if these signs were to be confirmed and to continue into 2007, the vulnerability posed by house prices would be reduced somewhat. accordingly, the recent indications that the momentum in the rate of increase in house prices may be easing is a welcome development which we would like to see continue. while a soft landing in the residential property market still seems to be the most likely outcome, the run - up in residential property prices until recently has been unwelcome for two reasons. first, it is not obvious that this was driven by fundamental factors. house prices would have enjoyed some support from continuing strong demographics and higher income growth, but increasing interest rates and continuing high levels of housing supply were acting to counteract this. there is an interesting new research study contained in this report which explores the role of interest rates and disposable income in determining house prices. while, as with all such estimations the results are not necessarily definitive, the study suggests that these variables largely accounted for increases in house prices over the sample period 1980 to 2005. | 0.5 |
already started as we speak. deterioration in risk perceptions has increased the risk premia of developing countries, including turkey. so far, the rise in turkey β s risk premium was in line with that of other developing countries, although more recently the current political uncertainty has started to put turkish financial markets under considerable strain. i believe turkey β s risk premium would be even higher in the absence of improvements in macroeconomic conditions and institutional reforms implemented in recent years. dear guests, one can label the last two decades as the era of globalization, deregulation, and privatization. it is not a coincidence that this period has overlapped with the rise of attention paid to good governance. one may just look at the number of occurrences of the word β governance β in academic search database ( econ - lit ) over time. it occurred just five times from 1970 to 1979, 100 times in the 80s, 4000 times in 1990s, and more than 10000 times since 2000. globalization of economic activity and greater reliance on private sector in economic decisions has created an environment in which the pursuit of efficiency has acquired utmost importance. globalization has increased the likelihood of international financial crisis in countries where the governments do not function properly. economic crisis in south eastern asia in late 1990s showed that even countries with considerable success in economic development may easily collapse into turmoil if they do not follow good governance practices. quite paradoxically, as the control of governments over the economy decreases, the quality of governance becomes more critical and decisive. with greater mobility of capital, countries have become more vulnerable to negative assessment of investors. today, financial markets are facing the most acute crisis they have experienced since the emergence of globalization. it is not surprising that good governance is once again at the center of public debate at this juncture. the seeds of current problems may be traced to past governance practices of governments, monetary authorities, financial institutions, and corporate sector. but before that, let me first introduce some conceptual issues. this may help us understand how we ended up here. it is not easy to give a short and comprehensive definition for economic governance. for the sake of our discussions, let me define it simply as the nature and practice of economic management, regulation and development. economic governance is in fact part of a larger picture that combines political governance, corporate governance and legal governance, which continuously interact with each other. the term β economic governance β is explained as β the study of arrangements, and organizations that arise and evolve to govern economic activity. β these institutions underpin | fiscal side. the prudent fiscal policy that has been implemented since 2002 has made significant contributions to the disinflation process and the economic growth. the ambitious primary surplus targets are at the center of the improvement in fiscal policy. however, i should also underline the progress in institutional and legal framework, such as the introduction of the public fiscal management and control law, the public procurement law and the multi - year budgeting framework. three year inflation targets that are compatible with the three - year budgeting practice are also one of the good examples of coordination between fiscal and monetary policies. another pillar of better economic governance is financial stability. a stable and healthy financial system is the key to sustainable growth through allocating savings to the real sector in a country. law defines financial stability as the auxiliary objective of the central bank of turkey. establishment of the banking regulation and supervision agency, successful implementation of the banking sector restructuring program and the new banking law that brought the legal framework with best international practices were the milestones of legal and institutional reform in the financial sector. no need to say that the improved macroeconomic framework through successful monetary and fiscal policy implementations also contributed much to financial stability. last but not least, i should say that there is also an effective cooperation among the central bank of turkey, the banking regulation and supervision agency, the undersecretariat of treasury, the capital markets board and other public authorities and also with private sector representatives. the fourth and the final set of actions that has been undertaken towards better economic governance is structural reforms. turkey has achieved significant progress in this front, but today, i would like to put a special emphasis on the role of regulatory and supervisory institutions without getting into details. establishment and effective implementations of institutions such as the banking regulation and supervision agency, the turkish competition authority, the energy market regulatory authority, the telecommunications authority and many others have contributed to the development of a competitive, resilient and efficient economy in turkey. it is not surprising that manufacturing, retail, energy and financial sectors have attracted the interest from foreign investors in recent years, as witnessed by over 40 billion usd foreign direct investment in the last two years. the good corporate governance practices have also contributed to the overall economic governance in the country. as a result of the steps taken in the four categories that i have just mentioned, turkey has shown an impressive economic performance after 2001. the consumer price inflation declined to the single - digit territory. the gdp has continuously grown in the last 24 quarters. | 1 |
thereafter, in large part reflecting rapidly escalating health expenditures and the aging of the population. this dynamic is clearly unsustainable. at best, rapidly rising levels of debt will lead to reduced rates of capital formation, slower economic growth, and increased foreign indebtedness. at worst, they will provoke a fiscal crisis that could have severe consequences for the economy. to avoid such outcomes, fiscal policy must be placed on a sustainable path that eventually results in a stable or declining ratio of federal debt to gdp. even as fiscal policymakers address the urgent issue of fiscal sustainability, a second objective should be to avoid unnecessarily impeding the current economic recovery. indeed, a severe tightening of fiscal policy at the beginning of next year that is built into current law β the so - called fiscal cliff β would, if allowed to occur, pose a significant threat to the recovery. moreover, uncertainty about the resolution of these fiscal issues could itself undermine business and household confidence. fortunately, avoiding the fiscal cliff and achieving long - term fiscal sustainability are fully compatible and mutually reinforcing objectives. preventing a sudden and severe contraction in fiscal policy will support the transition back to full employment, which should aid long - term fiscal sustainability. at the same time, a credible fiscal plan to put the federal budget on a longer - run sustainable path could help keep longer - term interest rates low and improve household and business confidence, thereby supporting improved economic performance today. a third objective for fiscal policy is to promote a stronger economy in the medium and long term through the careful design of tax policies and spending programs. to the fullest extent possible, federal tax and spending policies should increase incentives to work and save, encourage investments in workforce skills, stimulate private capital formation, promote research and development, and provide necessary public infrastructure. although we cannot this projection is the alternative fiscal scenario in the congressional budget office ( 2012 ), updated budget projections : fiscal years 2012 to 2022 ( washington : cbo, march ). bis central bankers β speeches expect our economy to grow its way out of federal budget imbalances without significant adjustment in fiscal policies, a more productive economy will ease the tradeoffs faced by fiscal policymakers. thank you. i would be glad to take your questions. bis central bankers β speeches | or restricted. unless those policies are changed, a greater proportion of the cash flow of producing countries will be needed for oil reinvestment if capacity is to keep up with projected world demand. concerns about potential shortfalls in investment certainly have contributed to current record - high long - term futures prices. to be sure, world oil supplies and productive capacity continue to expand. major advances in recovery rates from existing reservoirs have enhanced proved reserves despite ever - fewer new discoveries of major oil fields. but investment to convert reserves to productive capacity has fallen short of the levels required to match unexpected recent gains in demand, especially gains in china. besides feared shortfalls in crude oil capacity, the status of world refining capacity has become worrisome as well. of special concern is the need to add adequate coking and desulphurization capacity to convert the average gravity and sulphur content of the world's crude oil to the lighter and sweeter needs of product markets, which are increasingly dominated by transportation fuels that must meet ever - more stringent environmental requirements. * * * u. s. natural gas prices have historically displayed greater volatility than prices of crude oil, doubtless reflecting, in part, the less - advanced development of price - damping global trade in natural gas. over the past few years, notwithstanding markedly higher drilling activity, the u. s. natural gas industry has been unable to noticeably expand production, or to increase imports from canada. significant pressure on prices ensued. north america's limited capacity to import liquefied natural gas ( lng ) has effectively restricted our access to the world's abundant gas supplies. because international trade in natural gas has been insufficient to equalize prices across markets, u. s. natural gas prices since late 2002 have been notably higher, on average, than prices abroad, thereby putting significant segments of the north american gas - using industry in a weakened competitive position. indeed, ammonia and fertilizer plants in the united states have been particularly hard hit as the costs of domestic feedstocks have risen relative to those abroad. the difficulties associated with inadequate domestic supplies will eventually be resolved as consumers and producers react to the signals provided by market prices. indeed, the process is already under way. as a result of substantial cost reductions for liquefaction and transportation of lng, significant global trade in natural gas is developing. this activity has accelerated sharply over the past few years as profitable arbitrage has emerged in natural gas prices across international | 0.5 |
caleb m fundanga : financial sector development in zambia remarks by dr caleb m fundanga, governor of the bank of zambia, at the farewell cocktail hosted in honour of the barclays bank zamia limited managing director, lusaka, 4 february 2010. * * * the chairman β barclays bank zambia plc, mr j j sikazwe the chairman β bankers association of zambia, mr saviour chibiya chief executive officers of commercial banks outgoing barclays southern africa regional managing director, mr zafar masud acting barclays bank plc, managing director, mr bret packard management and staff of barclays bank zambia plc colleagues from bank of zambia distinguished guests ladies and gentlemen ladies and gentlemen i am privileged to officiate at this farewell cocktail as we say goodbye to mr. zafar masud who has been the managing director of barclays bank zambia since january 2008. in the past few years, barclays bank zambia plc has contributed to making banking more accessible through its outreach programme which saw an increase in its atm and branch network to over 150 atms and 55 distribution points comprising branches and agencies nationwide. clearly the grass - root population in zambia has continued to benefit from this initiative. as is the case with a number of other banks, barclays bank zambia plc has continued to innovate and positively contribute to financial sector development in zambia. notable innovations that came under mr. masud β s time include the commissioning of the bank β s branch queue management system at its mutaba and kafue house branches and northend atm lobby, as well as the launch of premier banking. barclays bank zambia plc may have not pioneered all of these innovations, but they have provided reasonable competition to their colleagues which we at bank of zambia believe will be of benefit to the zambian financial sector in the medium to long - term. it is my expectation that barclays bank zambia plc will continued to contest the market in a meaningful and beneficial way. let me also acknowledge the contribution made by barclays bank zambia plc under mr. masud through the bank β s partnering with the corporate world to cosponsor the first ever euromoney investors β conference in zambia. in addition, it is worth mentioning that baz, under the chairmanship of barclays bank zambia plc and mr. masud, helped initiate the beautification of cairo road by adopting the maintenance of its wonderful gardens. the positive change to our immediate surroundings particularly around the bank square is there for all to see. | the number of hours worked is usually one quarter in sweden, while the time lag between gdp and employment is usually twice as long, that is, six months. a well - known relationship between economic activity and activity in the labour market was formulated by arthur okun in the early 1960s. 1 this describes a negative relationship between gdp growth and changes in unemployment, which has become known as β okun β s law β. he found, for instance, that the us economy needed to grow by at least 3 per cent to avoid an increase in unemployment. okun β s law can thus be interpreted as a short - term relationship that expresses the link between changes in economic activity and changes in activity in the labour market. as the relationship between growth and employment is dependent on factors such as labour market policy, productivity, social norms and demography, the relationship varies between different countries and different periods in time. okun, a. m. ( 1962 ), β potential gnp : its measurement and significance β, american statistical association, proceedings of the business and economics statistics section, pp. 98 β 104. a recently - published economic commentary on the riksbank β s website 2 estimates this relationship using swedish data. 3 the study shows that there is a relatively strong link between gdp growth and unemployment, a link that has also varied over time. the connection has increased over time and between 2004 and 2008 it was relatively high, which indicates that unemployment was more sensitive to changes in gdp during this time. however the relationship has weakened over the past year, when gdp fell heavily without unemployment rising as much as one would have expected, given the historical relationship. according to the study, a gdp growth of more than 2. 8 per cent is now needed for unemployment to decline, which can be compared with the historical average of 2. 3 per cent. at present a higher level of economic growth is thus required to change the level of unemployment compared to the average historical relationship since 1980. the time lag between gdp and unemployment also appears to have increased during the 2000s. thus, it now takes longer before the full impact of a change in growth has an effect on unemployment in sweden. what is different this time? part of the explanation for unemployment not having risen as much as one might have expected given the historical relationship could be that not all of the economy has suffered. the main fall in employment has been in the manufacturing industry, while the services sector, which is more labour intensive, has fared better | 0 |
supported by the imf, and it has also been supported by the ecb within our own mandate, in numbers, in size β¦ in this period you were in paris. do you have any observations as someone working in the french system about what was going on in ireland at this time? it β s clear that the irish government β in the weeks after lehman brothers failed β guaranteed the liabilities or the entire irish banking system. what i can say is that there was a certainly a lot of proximity between the views of the french government and the views of the ecb at that time, on several accounts. first, that the decision, that the blanket guarantee on deposits was not the right decision to take. this was also the ecb β s view because it created issues elsewhere in the euro zone. and second, that there was high financial stability risk, that there were contagion risks which justified a very careful look at these burden - sharing issues, so i think that the view was not different in paris. and certainly that ireland had to be supported, which the french government did also by supporting the programme and by being instrumental in the creation of the efsf... what would have been the preferable route for the irish government to take at that time? it β s so difficult to take these kinds of decisions. i certainly would not claim to pass a moral judgement here. you have to take decisions based on the information you have. there were many negative consequences, and i take it that these consequences were not foreseen when the decision was taken... that remains the view? from a european perspective, many of the interactions and cross border consequences and effects were not properly understood initially and that β s one reason why, in a sense, the euro zone authorities collectively let the crisis develop and deepen. these kinds of interactions and spillovers were only gradually understood. it was only late down the road for instance that the esm was created, finally, with adequate size. so it has taken quite some time for europe to understand what was going on and that this was a regional crisis. it was not only a set of local issues, but one with the potential to disrupt the system as a whole. that β s a collective responsibility, not only an irish one. on deflation / greece β¦... the starting point is not deflation, but inflation being low, far away from our definition of price stability which is below but close to 2 % in | important currency, the euro, has appeared on the stage. this has had important consequences, but has not meant a shift to a genuine duopoly in the supply of international currencies. while the euro has become a credible alternative to the dollar, this has had little impact on the dollar β s centrality in the ims. in particular, the exorbitant privilege remains largely the dollar β s attribute. to be sure, it is undeniable that the very low yield spreads associated, until approximately 2008, with the debt of certain european countries were mainly a by - product of the β privilege β of being part of the euro area. and it is also true that this was one of the factors that contributed to underestimating the crucial importance of fiscal discipline and competitiveness in the monetary union. but it is equally accurate that the idiosyncratic negative shocks stemming from such euro area countries in the past two years have led to a major re - pricing of their sovereign risk. this is opposite of what has happened on the occasion of similar negative shocks originating from the united states. the current stability of the exchange rate of the euro is more attributable to the overall good fundamentals of the whole euro area than to any exorbitant privilege. but the third and most significant change, from a triffin perspective, is the following : there is no longer a fundamental global liquidity3 shortage that is intrinsic to the very functioning of borio and zhu ( 2008 ) insightfully define liquidity is β the ease with which perceptions of value can be turned into purchasing power β. bis central bankers β speeches the system. the accumulation of global external imbalances in today β s world should not be seen as a necessary precondition for the provision of global liquidity and the expansion of world trade. let me explain. today, the united states and the euro area are not obliged to run rising current account deficits to meet the demand for dollars or euros. 4 this is for two main, interlinked reasons. first, well - functioning, more liquid and deeply integrated global financial markets enable reserve - issuing countries to provide the rest of the world with safe and liquid financial liabilities while investing a corresponding amount in a wide range of financial assets abroad. the euro has indeed become an important international currency since its inception and the euro area has been running a balanced current account. in a world where there is no longer a one - to - one link between current | 0.5 |
of march, it became clear that a very significant monetary and fiscal response would be required. by virtue of my role as governor of the rba, i have been able to see first - hand how this support has been put in place. what struck me from the outset was the very strong sense of common mission from our political leaders, our regulators, our banks and the rba itself. that common mission was to support the australian economy through this difficult period. the level of cooperation and coordination was extraordinary and there was a real β team australia β mindset. in my view, this reflects positively on both australia β s political system and our institutions. from the outset, there was a strong sense that we needed to build a bridge to the other side, when the virus is contained. as things have turned out, that bridge has had to be longer and stronger than we might have hoped would be necessary. even so, it has been the right strategy. at some point the virus will be contained and those foundations that have made australia such a prosperous country will still be there. we will be better placed to build on those foundations if we have limited the damage to the fabric of our economy and our society while we are battling the pandemic. in terms of the rba β s own response, that began with a cut in the cash rate at our regular meeting on 3 march. the reserve bank board then held an extraordinary meeting just two weeks later, where it decided on a comprehensive package that included : a further reduction in the cash rate to 25 basis points the introduction of a target on three - year australian government bonds of 25 basis points a term funding facility for the banking system under which funds can be provided for three years at 25 basis points the continued use of our open market operations to make sure that the financial system has a high level of liquidity the modification of the interest rate corridor system, with the rate paid on exchange settlement balances set at 10 basis points, rather than zero. this package is designed to keep funding costs low across the economy and support the provision of credit, especially to small and medium - sized businesses. to support these businesses, the term funding facility provides banks with an additional five dollars of low - cost funding for every extra dollar of credit extended to them. many other central banks have announced similar packages, although the bank of japan is the 2 / 5 bis central bankers'speeches only other central bank with a yield target ; in their case, it is a target for | erdem basci : latest economic outlook and macroeconomic developments in turkey panel speech by mr erdem basci, governor of the central bank of the republic of turkey, at the conference on β policy responses to commodity price movements β, istanbul, 7 april 2012. * * * distinguished guests, the global economic developments observed during the last decade are influential on the commodity prices. some of these developments were real factors directly affecting the supply and demand of these commodities. on the demand side, significant growth in demand for energy, food and raw materials of developing countries, led by china and india, became an important factor in commodity markets in recent years. likewise, the discrepancy between the paces of recovery of developed and developing countries in the aftermath of the global crisis and the global monetary expansion are observed to have reflections on the demand for commodities. the increasing income in developing countries enjoying robust growth broadly decreases the price sensitivity of commodity demand. as a result of production capacity shortfalls of exporting countries in the short run and these countries β reluctance to increase their production capacity, prices sometimes display excessive increases in the event of a setback in supply. on the other hand, the robust economic growth potential of developing countries implies that the demand for raw materials will continue to be strong also in the medium term. the key solution for imports - dependent countries due to having little natural resources lies in increasing the productivity in agriculture and energy sectors. increases in productivity especially in the agricultural sector are of vital importance and thus call for prompt action for the developing countries that are witnessing a shift in employment from agriculture to nonagriculture sectors. in a similar sense, measures for achieving more effective use of energy by companies and households, and for increasing the use alternative energy sources, especially renewable energy, should be the another issue among the priorities on the part of both advanced and developing countries, dependent on imported energy inputs. esteemed participants, a comprehensive literature has been guiding central bankers as to the type of monetary policy responses to be given to commodity price changes. the central banks following to the widely accepted advice put forth by this literature endeavor to contain the second - round effects of the commodity price increases, rather than the first - round effects. it is inevitable for commodity price increases to be reflected directly on prices, because of the high weight of goods linked to energy and other commodities in consumer price indices. that is why the first - round effects cause fluctuations in inflation. nevertheless, temporary movements in commodity prices, unless they | 0 |
a sufficient buffer away from zero were articulated during our strategy review in 2003. it compensates for possible measurement bias, helps countries rebalance their economies within a monetary union and creates a buffer against deflation, as well as leading to higher nominal interest rates over the medium term. that helps ensure that monetary policy is not forced too often towards the effective lower bound β the level of interest rates at which further cuts do not have the desired positive impact β when faced with shocks that push inflation too low. since 2003, the ecb has used a double - key formulation to set our objective, defining price stability as a year - on - year increase in inflation of β below 2 % β, while aiming for inflation of β below, but close to, 2 % β. https : / / www. ecb. europa. eu / press / key / date / 2020 / html / ecb. sp200930 ~ 169abb1202. en. html 1 / 7 30 / 09 / 2020 the monetary policy strategy review : some preliminary considerations this formulation was appropriate at a time when the ecb was seeking to establish credibility and too - high inflation was its main worry. as our research shows, it was a key factor in successfully capping inflation expectations. but in the current environment of lower inflation, the concerns we face are different and this needs to be reflected in our inflation aim. ensuring that there is sufficient space above zero to re - empower conventional monetary policy becomes more important. and, to underpin inflation expectations, we need to ensure that our aim is perceived to be symmetric by the public. so we should have an inflation aim that the public can easily understand. the second issue is the horizon over which price stability should be achieved, which is captured by the ecb β s β medium term β orientation. this forward - looking orientation reflects traditional and wellestablished principles of prudent monetary policy, which is consistent with the notion that monetary policy works with a lag and can influence inflation over the medium term rather than the near term. but within the ecb β s framework, the medium - term orientation has also been a way for the governing council to take into account what is happening in the real economy, including employment. we have a hierarchical mandate with price stability at the top. but the medium term, which is a flexible concept, allows us to avoid unnecessarily constricting jobs and growth in the event of a supply shock which temporarily pushes up | in 2013. this is a reflection of the positive outcomes of policy initiatives by the government and the central bank as well as the initiatives of the financial sector players and their innovations. there is scope for further deepening of the financial sector, and especially the banking industry, and as a result, this will lead to further financial inclusion. even with the industry β s assets looking impressive at the levels i highlighted earlier, they still remain below 50 percent of our gdp. economies that have achieved higher levels of development, accompanied by high levels of financial inclusion have a higher banking assets to gdp ratio, with some well over 100 percent. with the level of innovation and dynamism in our banking space, there is no reason why we cannot aspire to be like those economies and grow our assets with strong banks and a strong policy drive to financial inclusion for financial development. i see research being at the centre of such growth. as a researcher myself, i know that collaboration will remain core. i commend the kba for seeking collaboration with other institutions, among them the central bank, in its research efforts. i see that collaboration in this research conference manifested in the diversity of paper authorship. i look forward to seeing the conference papers reviewed and put in the public domain so that the intended purpose of promoting an idea - based engagement is realized as well as development based on a certainty policy path. with those remarks, i declare this conference officially open, and wish all the participants fruitful engagements over the next two days. thank you for your kind attention. bis central bankers β speeches | 0 |
the credit volumes that they find privately optimal, and allocate it to the projects that are most profitable to them. neither the credit volume nor the credit allocation is necessarily socially optimal : this is one basic reason why financial markets are and should be regulated. the next question is : how strictly should they be regulated? when does regulation severely impair the positive effect from financial markets to economic growth? let me again make some observations from my home country : norway had a severe banking crisis around 1990. three of the four largest banks failed and the direct capital injections required were alone more than 3Β½ per cent of gdp. just to put this figure into perspective, the 106 billion euros the european banks need for recapitalisation now is less than 1 per cent of gdp in the euro area. ever since the norwegian banking crisis in the early 1990s, our banking industry has been regulated more strictly than banks in comparable countries. for instance, bank capital definitions have been tighter and the financial supervisor has been more actively restricting banking activities. another example is that packaging loans into complex financial instruments was in practice not permitted until 2007 when new regulations provided for the issuance of covered bonds. the complex instruments central in the creation of the subprime crisis were never introduced, and norwegian banks did not invest in them. our gdp growth rates have still been high during the years up to 2008, also outside the petroleum sector. and the downturn we experienced in 2009 was modest in relation to comparable countries. at the early stage of the banking crisis in the1990s, the norwegian central bank provided a large liquidity loan to a savings bank. it soon became clear that the loan would not be paid bis central bankers β speeches back. a liquidity problem turned into a problem of solvency. this was not the first time! we were again reminded how responsibilities should be shared between the fiscal authorities and the central bank. it is the responsibility of the parliament and the government to spend taxpayers β money. it is not up to an independent central bank to spend their money! we still remembered this principle in late 2008 and early 2009 when the funding of norwegian banks also dried up. then we made sure that the ministry of finance became the banks β counterparty in the bond swap i mentioned earlier. we thus avoided the discussion we have seen elsewhere about the central bank intruding into the arena of the fiscal authorities. the financial crisis also hit some very small norwegian municipalities β far up north close to the coldness of the | barents sea and others deep into the fjords warmed by the gulf stream β that had in fact invested in instruments exposed to the us subprime market. they were told that they could earn a risk - free excess return of 50 basis points. the instruments were in most cases sold to them by their very small local savings banks, which had taken them on from large us investment banks. the savings banks did not understand the risks either! ignorance combined with greed β a dangerous combination. in 2008 and 2009 the municipalities suffered very large losses ; from risks they had not understood. welfare schemes had to be cut, schools closed and the pupils had to learn to swim in the cold fjords because the swimming pools were closed. the main argument used in favour of new and complex instruments is that they facilitate risk sharing across economic agents. but risks that are not understood can hardly be shared in any optimal way. it is also important to keep in mind that risk sharing can also be promoted through simpler and more conventional instruments. bis central bankers β speeches our oil fund β managed by norges bank and with more than 500 billion dollars under management β set up a special instrument committee after the recent financial crisis. the committee must sanction every financial instrument before it can be used for investments. as a result, the number of instruments available to the fund β s managers has been significantly reduced, in particular fixed - income and derivatives instruments, since the committee was established. one factor behind the financial crisis was a very important market distortion described by hyman minsky : the interaction between asset prices and credit volumes may create a spiral where both asset prices and credit rise to unsustainable levels. the use of financial innovations to create more credit with the result that it fuels such a spiral is clearly not a socially desirable use. adair turner of the british fsa1 has pointed out that credit and asset bubbles also represent a massive misallocation of capital in the real economy. speech by adair tuner on 29 september 2011, credit creation and social optimality. bis central bankers β speeches one key answer to the spiral described by minsky has been to introduce macroprudential regulation. instruments such as the countercyclical capital buffer are meant to provide a cushion when the credit cycle turns down. there is also a commonly held view that we need instruments to dampen credit growth during an expansion. we should probably look broadly at how the minsky style spirals could be contained. discretionary policy can be a | 1 |
other ecosystem participants must have robust disaster recovery and business continuity plans in place and test them periodically. further, it infrastructure and channels have to be protected from the emerging cyber threats to ensure operational resilience. i would therefore like to reiterate that the boards and it strategy committees of the banks need to step up their oversight in this matter. outsourcing risks aβ¬ β managing third party dependencies while we acknowledge the numerous advantages that outsourcing can offer to a bank, such as cost savings and increased efficiencies, it is crucial for banks to maintain vigilance regarding the accompanying risks. these risks include the potential loss of control over critical operations, the risk of data security breaches, heightened dependency on third - party providers, and the possibility of reputation damage stemming from the misconduct of service providers. as the rbi has time and again reiterated, outsourcing does not absolve a bank of any of its obligations and they continue to remain ultimately responsible for the activities of their service providers including recovery agents. banks must ensure that their service providers employ the same high standard of care in performing the services as would be employed by the banks. banks should not engage in any outsourcing that may result in their internal control, business conduct or reputation being compromised or weakened. 3 / 5 bis - central bankers'speeches climate risk it also needs to be appreciated that we are living in an era when climate change and its consequent risks cannot be ignored. due to its geographic, environmental and economic characteristics india is particularly vulnerable to climate change. variability in monsoon patterns coupled with temperature change impact crop production and affect our food security. apart from agriculture, even in other sectors the economic impact of climate change in india could be substantial. climate - related financial risks pose both micro and macro - prudential concerns. climate change risk is ascending the hierarchy of threats to financial stability across advanced and emerging economies alike and consequently, the need for an appropriate framework to identify, assess and manage climate - related risk has become imperative. customer protection lastly, and perhaps most importantly, i would like to discuss the aspect of customer protection which is integral to building a resilient brand india in many ways. financial services institutions exist because of their customers. they entrust regulated entities with their hard - earned money, their dreams, and their aspirations. therefore, customer protection and timely grievance redressal, forms the foundation of trust and reliability, contributing to the overall resilience and reputation of | presently enjoying may not be sustained in the future when the interest rate cycle reverses, whenever that happens in future. external benchmark linked loans will be repriced much faster than deposits contracted during the peak of the interest rate cycle resulting in pressure on nims and eventually profitability. therefore, apart from interest rate risk in the trading book, banks must be mindful of the interest rate risk in the banking book as well. on the liabilities side, banks must endeavour to proactively manage the pricing and duration of their deposits while trying to diversify the sources and optimising the product mix of deposits. excessive reliance on bulk deposits should be avoided as these are more sensitive to interest rate movements and perpetuate concentration risk while also eroding earnings. business models 2 / 5 bis - central bankers'speeches as recent global events have demonstrated, sometimes, even business models once perceived as safe can fail. therefore, banks need to remain alert to the risks inherent in their business models and mitigate them in a timely manner. in good times like this, financial institutions must review their growth plans while putting in place adequate risk management systems to handle the emerging risks. it is imperative for boards of banks and nbfcs to fix suitable sectoral and sub sectoral exposure limits and monitor them closely to avoid any sectoral concentration, adverse selection or dilution of underwriting standards. the growing collaboration between banks, nbfcs, and fintechs is driving innovation in products, services, and business models. an important consideration is the cautious adoption of model - based lending through analytics. banks and nbfcs should exercise caution in relying solely on preset algorithms, ensuring that these models are robust, regularly tested, and recalibrated as needed to maintain robust underwriting standards. operational resilience in view of the ever - increasing adoption and usage of digital channels by members of public, it has become imperative for banks and payment system participants to ensure uninterrupted availability of various online and mobile banking channels at all times. recently, there have been a few incidents of unscheduled downtimes inconveniencing several customers. it is also observed that many banks have not been spending fully, the budget earmarked for procurement of it systems and it security systems. banks have to proactively commit adequate resources for augmenting their it infrastructure, commensurate with their business plans and also monitor them for their continued availability and stability. banks and | 1 |
and labour threaten to gain the upper hand and jeopardise price stability is a gradual process. that makes it difficult to tell exactly when the imbalances constitute a genuine problem. observers and those who decide economic policy have to assemble the pieces of this puzzle. in an economy that is approaching a strained situation in resource utilisation, signs that imbalances are beginning to build up will appear with increasing intensity and frequency. as more and more pieces of the puzzle fall into place, they ultimately provide a basis for action. the whole of this process is complicated by the time lag before monetary measures elicit effects. our premise is that the full effect of an interest rate adjustment materialises after one to two years. so measures taken today would not have their full effect until some time during 2002. monetary policy therefore involves balancing the risks of acting too soon against those of acting too late. acting prematurely is liable to lead to unemployment being higher than it need be. if the riksbank acts too late, on the other hand, price and wage increases may already have got under way. in that case, the economy may ultimately land in a recession, perhaps with even higher unemployment. fortunately, it is not a question of either / or. a monetary policy adjustment can be decided gradually, with stepwise changes in the repo rate. consequently it is always possible to compare forecasts with outcomes, assess the policy stance continuously and make the adjustments that are considered to be necessary. if monetary policy is successful, a foundation is laid, not only for low, stable inflation in line with the target and the riksbank β s statutory objective, but also for a stable long - term growth of output and employment. seen from this angle, low inflation, besides being our objective, is accordingly a means of trying to achieve a stable economic development in general. that is something which should be underscored. inflation prospects in an analysis of the situation in the run up to the next inflation report, due to be published on 7 december, the following can be noted : β’ the price trend to date is approximately in line with the forecast that was presented in the october report. β’ as expected, there have been signals that international economic activity is tending to become somewhat slacker. the pattern is clearest in the united states but even some slowing of growth in europe seems likely in the coming years. β’ in sweden, too, there are indications that activity has become somewhat calmer. both households and firms | urban backstrom : the swedish economy speech by mr urban backstrom, governor of sveriges riksbank and chairman of the board of directors and president of the bank for international settlements, to the swedish shareholders association, in stockholm on 28 november 2000. * * * first a word of thanks for the invitation to talk to you this evening. my topic is the swedish economy and monetary policy. provided nothing unexpected occurs, in my opinion it will soon be time to raise the repo rate. it is, however, difficult to tell just when this will happen. the board is made up of six members, each with their own opinion of what is the most appropriate monetary stance and a say in the final decision. but this evening i would like to elaborate on why i personally believe it will soon be time to raise the repo rate. in order to put the present monetary policy situation in perspective, we need to look back some years into the past. during 1996, when confidence had been established in economic policy β s overall commitment to price stability and the consolidation of the public finances had begun, the riksbank was in a position to initiate a comparatively marked reduction of the repo rate. this had been preceded by a period with a tight monetary stance, when the repo rate had reached a high of almost 9 %. when the 2 % inflation target was introduced, few observers believed at first that trend inflation would ultimately land up around 2 %. we would do well to remember, however, that people β s perceptions of the future are often shaped not so much by words as by actions. so, after a series of purposeful decisions by the government, the riksdag ( sweden β s parliament ) and the riksbank, economic policy β s general commitment to macroeconomic stability began to inspire confidence. economic policy β s credibility gave the riksbank greater freedom to act the growing confidence accordingly meant in turn that, without jeopardising the objective of price stability, the riksbank was able to lower the repo rate relatively markedly, from almost 9 % to just over 4 %. interest rates for longer maturities also fell. this led, as we have all seen in recent years, not just to higher gdp growth but also to a more uniform development of demand in different sectors. when the cyclical upswing began towards the end of 1993, most of the growth came from the export sector. however, lower levels of interest rates benefited swedish households and firms by | 1 |
##ened society of tomorrow ; equipped with ideas and also the ability to convert them into a better reality for all. i congratulate all the new graduates of the academy, and wish you all a very bright future ahead. * * * * * * * page 6 of 6 | context and circumstances that culminated in the path - breaking economic reforms of 1991 are by now standard fare. the programme of β opening up β launched under the leadership of the then finance minister, and the present prime minister, dr. manmohan singh β who, incidentally, was also governor of the reserve bank of india β catapulted india into a major emerging economy. today, india is the fourth largest economy in the world in purchasing power parity ( ppp ) terms and the second - fastest in terms of growth. it is a tribute to the resilience of the indian economy that even in the midst of the deep recession that the world is going through today, india remains a growing economy. our growth, no doubt, has moderated but this moderation is modest compared to the convulsions almost everywhere else in the world. most importantly, over the years, the mandate of the rbi has expanded encompassing both its regulatory and developmental responsibilities. today, we are a large and complex organisation compared to most other central banks in the world. the various departments that have made up the bank through these years have reflected the diverse financial and economic functions associated with the process of economic development and the growth of the financial sector. when we started in 1935, there were just three departments, namely the banking department, the issue department and the agricultural credit department. today, we have 26 departments in the central office, have 26 regional and field offices across the country, four subsidiaries ( brb note mudran press ltd., dicgc, nabard and nhb, ) and a staff of over 20, 000 employees. the preamble to the reserve bank of india act lays down the purpose of establishing rbi as β to regulate issue of bank notes, to keep the reserves with a view to securing monetary stability in india and generally to operate the currency and credit system of the country to its advantage β. as you will note, this is a broad and flexible mandate. today, we perform several important functions. we are the monetary authority, and regulator and supervisor for banks and non - banking financial companies. we are the issuer of currency and the debt manager for the central and state governments. besides, we manage the country β s foreign exchange reserves, manage the capital account of the balance of payments, and design and operate payment systems. we also operate a grievance redressal scheme for bank customers through the banking ombudsmen and formulate policies for treating customers | 0.5 |
) and a spatial dimension ( across participating countries ). and they see oecd, 2013. β crisis squeezes income and puts pressure on inequality and poverty β, new results from the oecd income distribution database, 15 may 2013. it includes the comment : β in spain and italy, while the income of the top 10 % remained broadly stable, the average income of the poorest 10 % in 2010 was much lower than in 2007 β. see t. padoa - schioppa : β efficiency, stability, and equity : strategy for the evolution of the economic system of the european community β, oxford university press, 1987. there are two main reasons why central banks should be shielded from distributive politics. the first one is legitimacy : the degree of fairness in society should be decided by society itself through the mechanisms of representative democracy. although it is generally not the case, distributive policies can, however, be delegated to unelected bureaucrats if they can be instructed to be fair behind the veil of ignorance. the second reason is efficiency. central banks'limited number of instruments should be directed at a limited number of objectives, with a clear priority. for an assessment of why distributive policies are usually not delegated to bureaucrats, see a. alesina and g. tabellini, 2007. β bureaucrats or politicians? part i : a single policy task β, american economic review, march, p. 169 β 179. bis central bankers β speeches have significantly impaired the potency of our standard monetary policy actions. the crisis measures of the ecb have accordingly acted on the horizontal, vertical and spatial transmission impairments of monetary policy. most importantly, our measures have prevented catastrophic outcomes for the euro area economy. and these outcomes would have had the biggest impact on the weakest in society. does all this β as the conference title asks β imply a changing role for central banks in macroeconomic stabilisation? the answer is no. monetary policy should aim at preserving price stability, the primary mandate given to us by the eu treaty. with regard to the objective, there are no differences between monetary policy in normal and crisis times. only the intensity and the choice of instruments might require an adjustment. affecting intra - temporal and spatial allocations should remain the responsibility of governments and other authorities. rather than being redistributive, central banks in a fragmented world should aim at repairing monetary policy transmission, | lehman brothers which threatened to produce very adverse economic outcomes with strong reductions in output, deflationary spirals and high unemployment, we made a series of policy rate cuts. these limited the consequences the downturn could have had on the income of households and firms across the euro area. our more recent rate cuts have narrowed the interest rate corridor between the deposit rate and our main policy rate to 50 basis points. these rate cuts have further eased the financing conditions of borrowers in the euro area and they have contributed to a decline in the crosscountry heterogeneity in funding costs. banks from stressed countries which participate most in eurosystem liquidity - providing operations will benefit from the lower interest rate charged for these operations. this will, over time, translate into reduced financing costs and improved access to credit for households and firms in stressed countries. second, apart from standard monetary policy, the ecb has also resorted to a number of nonstandard measures. by re - directing credit to those segments where financial intermediation ceased to function, the non - standard measures supported those areas most in need and thereby countered the increasing heterogeneity. the announcement of outright monetary transactions ( omts ) in particular has played a crucial role : it has improved the transmission of monetary policy by removing the β tail risk β arising from redenomination concerns in certain euro area countries. see m. brunnermeier, and y. sannikov, 2012. β redistributive monetary policy β, paper prepared for the 2012 jackson hole symposium, princeton university. see b. coeure, 2012. β central banking, insurance and incentives β, speech at the ecb conference on β debt, growth and macroeconomic policies β frankfurt, 6 december. bis central bankers β speeches overall, while our non - standard measures were designed for the euro area as a whole, their use has varied among counterparties and across countries. in this regard, our non - standard measures restored the distributional neutrality of our monetary policy by mitigating distortions in certain stressed asset classes or sectors. their impact has prevented very adverse economic outcomes for certain sectors and countries, and because of the effect this would have had on the rest of the euro area, it has thereby also supported medium - term price stability in the euro area as a whole. today we are clearly seeing signs of improvement in financial conditions. spreads in sovereign and corporate debt markets have fallen substantially. deposits placed by the euro | 1 |
to keep inflation under control and further its continuous reduction, at minimum costs on the economic activity and financial stability of albania. also, our rigorous micro and macro - prudential measures strengthened the stability of the banking system, while the continuous alignment of our regulations with the european union standards led to a considerable regulatory convergence, by reducing financial risk premia in albania. last, the ongoing advancement regarding the infrastructure and regulatory basis of payment systems has driven up financial inclusion and has helped efficiency and formalisation of private sector edging up. next, i will delineate in more concrete terms the main aspects of our work over the past year, by evidencing the undertaken measures and the achieved outcomes. monetary policy and price stability 2 / 6 bis - central bankers'speeches the monetary policy of the bank of albania has continued to be oriented towards the fulfilment of our legal objective : achieving and maintaining price stability. in this context, i would like to highlight that still high and above - target inflation rates dictated the continuation of a normalising monetary policy over 2023. nevertheless, we have tried to implement a more flexible monetary policy, aiming not to undermine the positive development trends of albania and by taking care to harmonize it with the financial developments and the fiscal policy stance. in this context, allow me to focus on two important conclusions : first, the normalisation pace of monetary policy slowed down over the course of 2023. in this year, we have increased the policy rate only twice, with a cumulative effect of 0. 5 percentage point. this slowdown reflected the exchange rate strengthening and the consolidation stance of fiscal policy. in more concrete terms, rapid lek appreciation helped in mitigating imported inflationary pressures, while fiscal consolidation helped in curbing domestic inflationary pressures. in particular, lek strengthening has been and continues to be one of the most prominent economic developments of this period by providing an entirely positive impact on the economy. it contributed to keep inflation under control, by enhancing the purchasing power of albanian households, as well as enabling a more gradual normalisation of our monetary policy stance, by keeping financing costs to businesses low. consequently, albania has one of the highest economic growth rates, the lowest inflation rate and the slowest increase in financing costs, across regional countries. second, the increase in policy rate engendered an overall hike in interest rates in the country, though the overall financing conditions in albania still remain simulating. in response to them coupled with the positive approach | kevin stiroh : a microprudential perspective on the financial risks of climate change remarks by mr kevin stiroh, executive vice president of the financial institution supervision group of the federal reserve bank of new york, at the 2020 climate risk symposium, global association of risk professionals ( delivered via videoconference ), 10 november 2020. * * * introduction good morning and thank you for the opportunity to participate in garp β s2020 climate risk symposium. as shown by the strong turnout today, attention on climate - related financial risks is clearly growing within finance, both for the private sector and the public sector. today, i β ll speak about these risks from a microprudential perspective β that is, the impact on specific financial institutions, particularly banks, and how firms are managing those risks. i β ll also provide a short update on some of the work under way through the basel committee β s task force on climate - related financial risks β the tfcr. before proceeding, i β ll emphasize that i am speaking only for myself and not necessarily the federal reserve system or the federal reserve bank of new york. risk management perspective from a supervisory perspective, a primary focus is to ensure that banks operate in a safe and sound manner and manage risks so they are resilient to a range of shocks. as you know, the core of effective risk management includes identifying, measuring, and managing traditional banking risks like credit risk, market risk, operational risk, or liquidity risks. these risks can materialize from a range of shocks β a recession, a geopolitical event, or a bad actor. and climate change. the purpose of bank supervision is to ensure that supervised firms are resilient to all of these risks. 1 banks are becoming increasingly attuned to the heightened financial risks from a changing climate. these risks can manifest in a number of ways : the impairment of collateral due to severe weather events ; mark - to - market losses from the devaluation of companies with stranded assets ; stress to contractual cash flows as regional shocks are realized ; or the reduced provision of financial services as business strategies adapt. all of these are salient concerns for financial firms and their supervisors. financial firms are now incorporating these risks into existing risks management frameworks. many firms view climate change as a cross - cutting risk driver that spans familiar risk categories, broadly affecting risk management approaches. moreover, some firms are considering governance issues, the use of scenarios analysis, disclosure options, and thinking about the | 0 |
radovan jelasic : social responsibility in serbia and the un β global compact β initiative speech by mr radovan jelasic, governor of the national bank of serbia, at the launch of the united nations global compact initiative ( ungc ) in serbia, belgrade, 6 december 2007. * * * ladies and gentlemen, when did you last visit a hospital that cares for children with mental health disorders? where did you throw the glass bottle after you drank your juice yesterday? is the building you live in accessible to physically handicapped people? have you ever been to the area where roma people live under the gazela bridge? and, at risk of sounding sarcastic, have you convinced yourself again today that all problems in this country should be dealt with by the government and that you have the right to criticize that same government to your heart β s desire? do you think that you as an ordinary citizen have some kind of responsibility for all those events taking place outside your micro cosmos? when was the last time you walked down knez mihajlova street looking up to read the names of legacy donors and asked yourself how we compare to them? have you shaken hands, opened the door, smiled or simply been nice to anybody today? what will our country look like in five or ten years time depends only on us and nobody else. if anyone should make our country more beautiful, it should be us, you and me, and we do not and can not have any excuse not to do something. you and i are those who not only have the opportunity but an obligation as well. we have the good will, and as company managers, some money on our hands too. so β let serbia rise β as dositej said, but not against somebody or something, but for a more beautiful, smiling and, above all else, happier serbia. if you are an enterprise that feels the need to do something more than just pay taxes regularly, which is of course necessary but not enough, then you are in the right place today! we have gathered here today to meet and to get to know one another, to unite people and companies who care, who know how and are willing to do more to better not only their own lives, but also the lives of all the people in our country. as a start, a big step forward will have been made if we who have gathered here today were to unite as people of good will who feel the need to do something more, something better, and | something nobler for our country. and our country will not, can not and should not be changed by either the imf, the world bank or the european union, but by us β you and me, and mr. vice - president and the ministers β today in their official capacity, and tomorrow as ordinary citizens. the aim of today β s launch and cooperation of the un and the nbs is getting the information through to companies operating in serbia about the global compact initiative, the largest global voluntary association dedicated to promoting socially responsible operations. the main reason for our participation in this project is not to support the launching of this initiative, but to learn something new and do something concrete together with the people who care about the future of our country and our planet. cooperation of the public sector, non - government organizations, and companies is not only possible but also indispensable, and i am convinced that much more can be done to the benefit of all the participants. our research has shown that in serbia today there is awareness of socially responsible operations, but more on conceptual level than in terms of concrete projects. what is lacking is the ignition spark, and i sincerely hope that today β s meeting will provide just that! there is a proverbial saying in our country that β anything that can be bought for money is cheap. β so, in that spirit, it is not only the privatization receipts that matter in the context of foreign direct investments, but also the companies β attitude to social responsibility issues which contributes to changing our country for the better. there are many companies in serbia that have not yet had any experience with projects promoting socially responsible behavior, but what matters is their good will to join in. many companies and institutions, including the nbs, are already engaged in many activities that can be defined as socially responsible : waste recycling on the site, free of charge training of the nbs ex - employees, financial support to handicapped children, etc. however, as members of the global compact we shall have the opportunity to share our experiences, to formulate our common platform and to become a part of a bigger family. and finally, let me be explicit : this is a voluntary gathering of people and companies β you have the opportunity but no obligation to join this initiative. you have no obligation but you have an opportunity to give, and give only as much as you think you ought to. you are not pressured in any way ; there is no obligation on your part other than strictly moral, which | 1 |
chances that monetary policy will be constrained by the lower bound on interest rates. but recovering from a shock like the global financial crisis can be a long drawn - out process β just as it was in the 1930s β as consumers and businesses repair their balance sheets and rebuild their confidence in the future. ultimately, i see this as a cyclical issue, not a secular one, although the cycle is proving to be longer than usual. more to the point, i take issue with the word β stagnation. β the world β s policy - makers put in place measures to mitigate the damage of the crisis and prevent the worst. we have strengthened our financial architecture to protect against future crises, and the system is still adjusting. growth has been slow, but it hasn β t been non - existent. many of those policies remain in place, sustaining growth and avoiding stagnation until such time as keynes β s animal spirits, which have been crushed over the past seven years, revive. bis central bankers β speeches no matter where you stand on the issue, it β s clear that the expansion in the developed world is slower now than it was in previous decades, and it will probably remain that way. this is because population growth is slowing as the positive impact of the post - war baby boom is mostly behind us now. however, economic progress can still come through productivityenhancing technologies, which historically have defied prediction. and there is a plethora of structural policies that can raise trend economic growth β such as trade liberalization or labour market reform β which are being actively discussed by the g20. in the bank β s last monetary policy report ( mpr ) in october, we forecast that the canadian economy would return to positive growth in the second half of this year, and that annual growth would continue to increase in 2016 and 2017. that would see the economy use up its excess capacity, and return inflation sustainably to the 2 per cent target, around mid - 2017. so far, that forecast seems to be playing out, as we said in our interest rate announcement last week. beneath the surface, however, our economy faces a complex and lengthy adjustment to lower resource prices β an adjustment that will unfold over the next several years. while the resource economy works through this adjustment, the non - resource economy should continue to gather momentum, driven by improved export performance. this will be followed by rising investment, growth in the population of companies and a steadier trend in new job | sector might cause important and risky business activities to be shifted into less regulated areas such as shadow banking entities. competitive distortions could also arise from a failure to establish a genuine single rule book and from the discretion that national authorities maintain regarding, for example, the implementation of macroprudential tools. notable national differences in supervision might therefore remain in place ; in other words, the playing field would then not be completely level. on the other hand, it may be argued that there should be scope for some degree of differentiation below the euro area level. after all, different cultures and languages will continue to exist within the euro area. in the same vein, the question remains if the new supervisory system is apt to address national problems properly. for instance, there will still be national or local financial cycles, as has been the case for business cycles to this day. as small banks will remain within the remit of national supervisory authorities, there will in any case be the need for a two - tier supervisory regime. banking union will not only affect relationships among the various players within the euro area, but also relationships with players outside the euro area. the fact that banking union currently only covers the euro area may give rise to competitive concerns. to be sure, all eu countries can be expected to benefit indirectly from banking union via a more stable financial system in the participating countries. but let me stress here that it would be in the interest of all if as many countries as possible decided to join. banks domiciled in countries that opt to join will enjoy the reputational gains from being subject to the same supervisory standards as their euro area peers, which might for instance dampen risk premiums on their debt. obviously, this might encourage a number of central, eastern and southeastern european countries which are not ( yet ) part of the euro area to join banking union. to conclude, centralizing banking policy at the european level undoubtedly constitutes a milestone in deepening and completing the euro area β s economic and institutional integration. at the same time, banking union is of course no panacea, and in itself does not bis central bankers β speeches solve the problems surrounding banks. furthermore, the problems of the banking sector were by no means the only reason behind weak growth, rising government debt or fragmentation in the euro area. banking union can therefore only be one β albeit an important β element in the overall set of measures which are instrumental in putting the future development of the euro area on a more sound economic and institutional footing. | 0 |
gabriel makhlouf : opening remarks to the international operational risk working group opening remarks by mr gabriel makhlouf, governor of the central bank of ireland, to the international operational risk working group, virtual conference hosted by the central bank of ireland, 18 may 2021. * * * welcome to dublin and the central bank of ireland. over the past decade, we have been witnessing significant changes to the risks our respective institutions confront. in many cases our mandates have expanded since the global financial crisis, complicated by the need to effectively process and analyse big data, often now at higher frequency intervals, and compounded by the phased migration from legacy to new technologies. the cyber and information security risks are evolving, and hybrid threats can arise as these overlay with physical security and data protection risks. in his book, against the gods, the remarkable story of risk, peter bernstein notes that β the essence of risk management lies in maximizing the areas where we have some control over the outcome while minimising the areas where we have absolutely no control over the outcome and linkage between effect and cause is hidden from us. β traditionally our respective institutions have predominantly focused on financial risk, but rebalancing over the past decade to strengthen nonfinancial risk management. however, over time, the lines between financial and non - financial risk have started β and will continue β to blur. this is apparent when one considers recent targeted cyber - attacks on critical infrastructure ( very timely in ireland this week ), the opportunities and risks presented by financial innovation driven by technological change, not least potential developments on central bank digital currency, and our learning from the recent response to the pandemic. and of course our shared risk and the necessity for collective action to address climate change as well as our collective efforts in support of sustainable finance. we believe in the importance of an independent central bank that is transparent, accountable and connected across all public policy domains, in ireland, in europe and across the world. we embrace diversity and inclusion as they strengthen us, as individuals and as an organisation. it is important that we foster a cultural foundation that supports implicit risk management, to avoid groupthink, while also implementing proportionate risk management frameworks, embedded to provide a systematic approach to explicit risk management that creates organisational value. effective operational risk management is a core enabler to the achievement of our vision to be trusted by the public, respected by our peers, and a fulfilling workplace for our people. it is a | prerequisite to stakeholders trusting us and it forms part of living our values. it aligns with our aim that β our culture, resources and capabilities support the effective and efficient delivery of our mandate whilst maintaining the highest standards of governance and risk management. β at a global level, it is clear that the risk environment is continuously evolving, exacerbated by the pace of change, and the broader and very significant risks society itself must confront, not least climate related. for these reasons, it is important that our institutions continue to enhance their approach to risk management, and recognise that the lines between financial and non - financial risk will continue to blur over the longer term. naturally, tone from the top is critically important, and senior leadership must not only embrace their first line risk management responsibilities, leveraging the frameworks, policies and supporting toolset of the second line, but also continually foster a culture of risk awareness, seeking when possible to design risk out of our institutions. 1 / 2 bis central bankers'speeches it is a pleasure to open this virtual meeting of the international operational risk working group. in doing so i welcome a very diverse representation of participants from across the world. this network has continually strengthened and grown since its foundation in 2006. it facilitates an opportunity for all of our respective institutions to share learnings. the iorw g can help guide our institutions, by looking to raise the bar on the standards of operational risk management and facilitating peer dialogue on emerging risk issues. we should benchmark ourselves against each other, relevant industry standards, and maintain a broad perspective on how the risk landscape is evolving, to ensure we remain capable of mitigating controllable risk. it is our pleasure to host this virtual conference and i encourage you all to participate and contribute over the next three days. welcome to dublin. β β β β β β β β β β β β β β β β β β β β β references bernstein, p. l. ( 1996 ). against the gods, the remarkable story of risk. john wiley & sons inc. 2 / 2 bis central bankers'speeches | 1 |
manuel sanchez : forces and threats to mexico β s economic recovery remarks by mr manuel sanchez, deputy governor of the bank of mexico, at the united states β mexico chamber of commerce, new york, ny, 28 september 2012. * * * it is a great honor to be back at the northeast regional chapter of the united states β mexico chamber of commerce. thank you for inviting me to share some thoughts with you on the recent evolution and outlook of the mexican economy. since i was here over a year ago, the pace of economic recovery in mexico has strengthened, even surprising on the upside, slightly exceeding mainstream forecasts. however, some risks that i exposed then still remain today, notably those related to the world economy, while others associated with domestic concerns have surfaced. in this brief overview of mexican economic conditions, i will focus on both old and new issues, including those regarding inflation and monetary policy in mexico. as always, my remarks are entirely my own responsibility and do not necessarily reflect the views of the bank of mexico or its governing board. current economic rebound since the middle of 2009, mexico has been experiencing a process of continuous economic recovery. three characteristics of the upswing are worth mentioning. first, the rebound has proceeded at rates that have been roughly twice as high as those observed during the first decade of the century, before the global crisis. 1 obviously, high growth is partly explained by adjustment from the deep recession that the country suffered three years ago in the aftermath of the global financial crisis. however, even after taking the correction into account, recent expansion is noteworthy. specifically, on average during the first half of this year, gdp increased 4. 3 percent in annual terms, which has contributed to bringing the economy back to the level of its long - term trend, as reflected by conventional estimations that the output gap has closed. this progress contrasts with economic underperformance relative to historical standards in many developed nations and, in particular, the united states, mexico β s main trading and investment partner. second, the current upturn has been balanced, in the sense that it has included all key components of aggregate demand, notably, domestic fixed investment and consumption. capital formation has shown substantial rates of growth, surpassing those of consumption, as typically occurs over business cycles. nevertheless, and despite recent signs of deceleration, during the last two years consumer spending has been increasing at a fairly stable annual rate, close to 4 percent. in a structural sense, the reactivation of economic activity | markets represented only 9 % of the total financing of listed companies. obstacles hindering mexico's equity market development are extensive, but i will refer to some of the most relevant. one of the main problems of the low and limited access by the retail sector, which represent more than 90 % of the enterprise sector in mexico, is investors'notion that going public is costly. they consider that the cost will not be compensated for the risk of losing control of the company and the risks that may come with increased transparency and disclosure. therefore, investment funds are highly concentrated in fixed income and liquid assets. on the issuers'side, weak corporate governance still prevails in addition to slow public placement processes. companies instead prefer to seek alternative sources of financing other than those offered by the stock market, such as private equity funds instead of a public offering which are more attractive in terms of regulation and corporate governance. but on the other hand, mexico is the latin american leader in the financial technology start - up ecosystem, with 238 companies, followed by brazil ( 219 ), colombia ( 124 ), and chile ( 75 ). it holds second place in hosting unicorns, which surpass one billion dollars in value without being listed on the stock market, both in number and valuation, only after brazil. this data emphasizes the tremendous potential of the mexican market. there is also a growing notion of listing advantages over reputational enhancement and increased access to capital. mexican financial authorities have given increasing importance to the development of the equity market. the concession of a new stock exchange biva, and the approval of significant reforms that aim to strengthen companies'ecosystem in the country speak for this. more actions toward strengthening the market have been implemented, among others : one : enabling access to the market for retail investors by reducing transaction costs and simplifying access to digital platforms, increasing the opening of savings accounts, and improving financial education. two : creating a bidirectional market to attract new investors by means of hedge fund schemes or similar investment vehicles, development of securities lending, and increasing coverage of market and information assessment. three : diversification of investors'profiles via institutional investment in specialized mutual funds, optimization of capital cost according to the financial instruments, and alignment of brokerage models toward market needs. four : raising private capital and entrepreneurship by authorizing specialized stock exchanges with specific regulation, like regulatory sandboxes. five : removing access barriers for new and existing issuers by simplifying capital listing for smes. | 0.5 |
literature has progressed with more elaborate models mainly by going numerical. in what follows, we seek insights by examining alternative scenarios in known macroeconomic episodes constructed using totem. 3. 1 counterfactual 1 : purvis β s 1985 warning is heeded immediately as discussed above, doug expressed considerable concern in 1985 about the medium - term debt implications of fiscal policies in place at the time. although budget deficits began a slow decline around that time, these efforts really became aggressive after the emergence of international financial market pressures in 1994 β 95. as noted earlier, the headwind of declining oil prices posed a significant challenge for fiscal policy during the 1980s. accordingly, in our first counterfactual, we ask what the implications for the economy might have been had doug β s warning been heeded immediately, with the federal deficit brought into balance over the five years from 1985 to 1990, about five years earlier than when it actually occurred. the historical and counterfactual budget deficits are shown in chart 7, along with a number of other simulation results. in this totem simulation, monetary policy is modelled using a reaction function estimated on historical data that aims to keep inflation and therefore aggregate demand ( or real gdp ) close to their actual historical paths. since neither fiscal nor monetary policy is modelled as truly optimal, we are abstracting from the possibility that different policies might have offered a different, potentially superior, set of macroeconomic bis central bankers β speeches outcomes. we are also abstracting from a key monetary policy issue at the time, namely, the lack of a well - defined policy target, as inflation targets were not formally introduced until 1991. totem is built on a credible inflation target and a mixture of rules of thumb and rational expectations. despite these caveats, the simulation is instructive. the shock we analyze is a series of cuts to government spending beginning in 1985 that brings the federal budget into balance by 1990 and holds it there. notice that, given the importance of debt servicing to federal spending at the time, this would have meant a significant surplus of 4 to 5 per cent of gdp measured in primary terms ( i. e., net of interest payments ). obviously, since we are basing our counterfactuals on actual history, starting points will matter to the simulations. according to our model, under this assumption of aggressive fiscal consolidation, the federal debt would have peaked at about 50 per cent of gdp in 1986 β 89, instead of around 67 per cent | area fiscal stance is expected to continue to provide some support to economic activity. in view of the weak economic outlook, the governing council welcomes the eurogroup β s call in december for differentiated fiscal responses and its readiness to coordinate. governments with fiscal space should be ready to act in an effective and timely manner. in countries where public debt is high, governments need to pursue prudent policies and meet structural balance targets, which will create the conditions for automatic stabilisers to operate freely. all countries should intensify their efforts to achieve a more growth - friendly composition of public finances. likewise, the transparent and consistent implementation of the european union β s fiscal and economic governance framework over time and across countries remains essential to bolster the resilience of the euro area economy. improving the functioning of economic and monetary union remains a priority. the governing council welcomes the ongoing work and urges further specific and decisive steps to complete the banking union and the capital markets union. we are now ready to take your questions. 3 / 3 bis central bankers'speeches | 0 |
developments. since covid - 19 has been pushing down aggregate demand considerably through these three channels, corporate profits seem to have declined significantly recently. weakness in the employment situation has also become evident, as seen in ( 1 ) the fact that the di for employment conditions turned to a net " excessive " for manufacturing, accommodations, and eating and drinking services in the june tankan ; ( 2 ) a decline in the active job openings - toapplicants ratio ; and ( 3 ) a rise in the unemployment rate ( chart 4 ). next, i will elaborate on price developments in japan. the year - on - year rate of change in the consumer price index ( cpi ) for all items less fresh food ( the core cpi ) has decelerated recently, mainly due to the effects of the decline in energy prices, and has been at around 0 percent. on the other hand, the rate of change in the cpi for all items less fresh food and energy has been in the range of 0. 0 - 0. 5 percent recently, albeit with fluctuations ( chart 5 ). on the price front, covid - 19 has affected not only energy but also such items as the following : ( 1 ) travel - related services such as charges for hotels and for overseas package tours ; ( 2 ) water charges, which declined due to reductions and exemptions by local governments for those who have difficulty paying them ; and ( 3 ) tutorial fees, which declined reflecting the introduction of online classes. meanwhile, moves to reduce prices to stimulate demand seen during the deflationary period in the past are not widely observed at this point. in financial markets, tension has abated compared with the period from late february through march 2020, when the markets were extremely unstable. in the foreign exchange market, the yen can be considered to have been substantially stable against the u. s. dollar : it temporarily showed large fluctuations but has become increasingly range bound despite the reduction of the federal reserve's policy rate by as much as 2. 25 percentage points in total since july 2019. in addition, the annual range of fluctuation for the dollar / yen exchange rate throughout 2019 was as narrow as around 8 yen, the smallest figure recorded since the adoption of the floating exchange rate system in 1973. i would like to point out the following as background to these developments. first, there was no significant difference in the volume of exports and imports for 2019 in japan, with exports amounting to 76. 9 trillion yen and imports | intermediation and payments, help create value and thus enhance welfare. when we focus on this fact, we can finally understand why we are uncomfortable with some past developments in the financial industry. problems seem to have arisen when a product or service is insufficiently anchored in intermediation or facilitation of payments. innovation is useless or even harmful, if financial institutions lose sight of the needs of their clients, or more broadly the society. technology - driven innovations are more likely to be beneficial, because, when the innovator is deliberating on the application of technology, the client cannot usually be ignored. on the other hand, in the case of modality - driven innovations, one can easily lose sight of the client when cutting and dicing existing businesses. for example, securitization now has a bad name because of its perceived role in the financial crisis. nevertheless, securitization is conceptually beneficial, because it aims to bridge the gap between the risk preferences of lenders and the actual risk profile of borrowers. the only condition is probably that the investment bank arranging the transaction must find takers for all the tranches. in this regard, some resecuritized products, which inflicted enormous pain during the recent financial crisis, are suspect because they include unsold tranches of original securitization vehicles, tranches that investment banks could not sell to willing buyers or found too unattractive for their own books. considering that financial institutions enhance welfare through intermediation, relevance of any developments to intermediation should be a good starting point. this perspective is particularly important for modality - driven innovations. iv. dealing with undesirable outcomes unfortunately, the world of finance is complex. as a result, one or two simple tests cannot separate all the wheat from the chaff. in this regard, one of the most difficult issues involves the claim that certain instruments or practices provide a public good, namely the better functioning of markets through enhanced liquidity or more efficient price discovery. for example, in the case of high - frequency trading ( hft ), one can argue that the increase in the speed and execution serves no socially useful purpose, because most of the hft transactions are netted out and, therefore, very little intermediation actually takes place. 2 on the other hand, one could argue equally persuasively that trial and error carried out by hft facilitate price discovery, performing a useful function for market | 0.5 |
##ai branly in paris in partnership with the french government. in paris, visitors were amazed at the sophistication and artistry of our precolonial gold ornaments. indeed, we at the bsp believe that our cultural properties promote better understanding and appreciation of our evolution as a nation. among filipinos, this serves as a powerful catalyst for instilling a strong sense of national identity and love of country, attributes that foster social stability and economic growth. thus, the bsp ensures that outstanding examples of filipino genius in its gold, art, and numismatic collections are shared with the people through exhibits, books, cds, social media, and provincial lectures. in the philippines, it is the bangko sentral ng pilipinas and the ayala foundation that had the vision to acquire and preserve these priceless golden legacy from our ancestors. bis central bankers β speeches thus, while some precolonial gold pieces found by people unaware of their historical value have been irretrievably lost to melting, we can take comfort from the fact that we have two museums in metro manila where our people can visit golden treasures from our past β at the met museum at the bsp head office along roxas boulevard and the ayala museum where we are gathered today. so please help protect, preserve and promote our cultural heritage. and take the time to visit our museums with your family and friends. starting september this year to january next year, the people in new york and its visitors will have the same opportunity to experience the golden history of our country. please invite your family and friends to visit and to spread the word about this rare exhibit. once again, i thank the asia society and the ayala museum for inviting us to be part of this exhibit on β philippine gold : treasures of forgotten kingdoms. β thank you for your kind attention. maraming salamat at mabuhay po tayong lahat! bis central bankers β speeches | amando m tetangco, jr : philippine history wrought in gold speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the press launch of the asia society gold exhibit, new york city, 7 august 2015. * * * the bangko sentral ng pilipinas is pleased to be part of this pioneering exhibit of philippine pre - colonial gold in new york with the asia society and the ayala museum. for the first time, we will showcase in the united states the exquisite centuries - old gold ornaments crafted by our ancestors, some pieces of which are over 1, 000 years old. if we look at our history books, we find that one thousand years ago, the colonization of the americas by europeans had not even started. ladies and gentlemen. our pre - colonial collection provides insights into a glorious past we filipinos can be truly proud of : β’ first, that we had a distinct culture and art tradition that resulted from a fusion of indigenous and diverse foreign influences ; β’ second, that our ancestors had both the artistry and the technical ingenuity to craft these magnificent and complex gold pieces that remain much - admired by contemporary artisans ; and β’ third, that we had a flourishing economy with active domestic and international trade conducted through barter and gold payment. among the bsp gold pieces to be exhibited in new york is a β piloncito β, a gold nugget believed to be part of an early form of coinage system, whose value was determined by its weight. in addition, two β kandits β or royal gold belts will be on exhibit, one of which weighs more than one kilo. looking at these gold objects, we can conclude that before westerners came to our shores, we already had a thriving cosmopolitan trading center doing active trading with neighbouring kingdoms and islands. today, the philippines is on the international radar screen as one of the exciting emerging economies on the basis of its remarkable positive economic performance and growth potential. this is therefore the most opportune time for the world to know more about our country and our people through our history wrought in gold. thus, the exhibit presents an excellent opportunity to showcase our remarkable heritage in that part of the world. for your information, part of the bsp β s gold collection has been shown in europe twice : the first was in the 1990s and the second in 2013 at the musee du qu | 1 |
jobs that are below their qualifications. countries that lose labour, are deprived of an active labour force, and pressures can aggravate differences in salaries. in the receiving countries, in contrast, employees often reject newcomers as competitors that are willing to work for considerably lower pay. long - term advantages may nevertheless greatly benefit all parties. economic growth in the receiving country accelerates and over time, the salary levels of old employees in the competed sectors also increase. an important factor in the present migration movement is also that the emigrants are more likely to return home than earlier. recent evaluations show that nowadays most emigrants will eventually return home, bringing with them improved skills and accumulated wealth, with which they facilitate economic development in their home region. it is evident that a broad migration in both directions will significantly contribute to improvements in productivity and economic activity within the eu. it will improve the level of education, the transfer of know - how from country to country and networking. these matters must be taken seriously and must be emphasised, even when faced with the problems associated with migration. for the sake of balance it is, of course, important to aim at relatively modest net migration flows. it is evident, for example, that population ageing will affect all eu countries ; it is unlikely that any of them will be able to handle the challenge primarily by attracting young population from other eu countries. migration is β and of course has to be β primarily market - driven. to the extent that changes in the production structure seem unavoidable, they should not be retarded through economic policy ; rather, support should be provided in the event of problems caused by these changes. problems in the transition period must also be acknowledged, but the advantages generated as a result of the changes should be emphasised. member states and the european commission have already provided wide support to the free movement of labour by removing obstacles that limit migration and introducing active measures that facilitate migration. support should be channelled to workers rather than work places. re - education as well as occupational and geographical support and security in connection with migration are key measures that governments should take in order to facilitate the reallocation of labour force. the ecb and other central banks within the eu can enhance the regional and professional allocation of labour force by improving the integration and efficiency of financing markets and payment systems throughout the area. this development work must naturally be shared by governments. to conclude, there still remains much to be done to improve the situation. | ] as a result, many large and complex financial institutions appear to have benefited from cheap funding, thanks to such too - big - to - fail expectations. 9 cheap funding which is insensitive to balance sheet risks may easily spur risk - taking, especially when banking competition gets tougher. sheer ignorance by bank managements of the true risks may also have played a role. 10 [ slide 9 β market discipline vs. structure of banks β a β chicken - and - egg β problem to be solved ] the too - big - to - fail assumption weakened market discipline, as did the opacity of large, complex financial institutions. as a result the banking sector has not been renewed or restructured in a way that might have happened in a world with efficient market discipline. inefficient business models have not been outdated in the same way as they have been done in the corporate sector, where the conglomeration trend of the 1980s reversed already some time ago. the market indications of a diversification discount appear to be too weak. 11 the challenge at hand is thus to implement regulatory reforms and policies which help steer the financial sector and banks towards a size and structure, which in a better way support economic growth while maintaining financial stability. no one really knows what the right size this refers to the era which is known as the great moderation. see e. g. borio ( 2003 ), β towards a macroprudential framework for financial supervision and regulation? β, cesifo studies, 49 ( 2 ) and the june 2013 imf - report β key aspects of macroprudential policy β on work to be done in the field. davies & tracey ( 2014 ), β too big to be efficient? the impact of implicit funding subsidies on scale economies in banking β, journal of money, credit and banking ( forthcoming ). rajan, r. ( 2013 ), a step in the dark : unconventional monetary policy after the crisis. andrew crockett memorial lecture, bis, 23 june 2013. laeven and levine ( 2007 ), β is there a diversification discount in financial conglomerates? β, journal of financial economics 85 ( 2 ). bis central bankers β speeches of the financial sector or banks is. but at least what we can do is to remove any perverse incentives which could lead to an excessive growth of the sector and its risks. eliminating the too - big - to - fail assumption by making resolution of systemically important financial institutions a | 0.5 |
to have important negative effects on aggregate demand and, in turn, on the medium - term inflation outlook. while both monetary and fiscal policy may, in principle, counter the inflationary effects of energy costs, only the latter is able to directly influence these costs, also offsetting the loss in disposable income β at least in part and to the extent that it does not jeopardise debt sustainability β and limiting their impact on the economy. that said, the main response to what is essentially a tax cannot come from monetary policy, especially in the absence of a wage - price loop and with inflation expectations re - anchoring to the central bank β s objective. however, these issues emphasise the importance of swiftly designing a strategy, particularly at the european level, that, while in the short run helps to curb the unjustified spike in energy prices, on a more structural basis takes into consideration the issue of energy source diversification, energy storage and the identification of common resources for managing energy crises. it is a challenge that, today, goes hand in hand with the one posed by climate change and its resolution is essential also for avoiding uncontrolled and dangerous increases in the relative prices of fossil fuels. * * * the russian invasion of ukraine implies some very important changes in the economic outlook of the euro area and in the assessment of risks. further increases of energy prices will not only affect the short - term inflation outlook, but will also determine significant headwinds to domestic demand, while the announced sanctions and the sharp deterioration of russia β s economic conditions will weaken external demand and cause potential risks to financial stability. household and business confidence may be strongly shaken. this would result in a worsening of the prospects for gdp growth and, in turn, greater downside pressures to inflation in the medium - term, which could follow the large price increases observed so far and, perhaps, still to come over the rest of the year. the ecb staff has made some new baseline projections available β which were discussed by the governing council last week β built on the assumptions that disruptions to energy supplies and impacts on confidence are only temporary, while global supply chains are not significantly affected. overall, gdp growth is projected to 3. 7 per cent in 2022 and 2. 8 per cent in 2023, a downward revision of, respectively, 0. 5 and 0. 1 percentage points compared to december 2021. on the other hand, inflation is set to average 5. 1 per cent | 2019q1 2019q3 2020q1 2020q3 2021q1 2019q1 2021q3 2019q3 source : us bureau of economic analysis and estimates based on eurostat data. note : dashed lines show pre - pandemic trends. 2020q1 2020q3 2021q1 2021q3 figure 3 contributions to consumer price index inflation ( monthly data ; percentage changes and percentage points ; year - on - year growth ) united states euro area source : us bureau of labor statistics and eurostat. figure 4 gas prices ( daily data ) 01jan2020 01jul2020 01jan2021 european gas ( ttf ; in euros ) 01jul2021 01jan2022 us gas ( henry hub ; in dollars ) source : refinitiv. figure 5 wages ( monthly data ; percentage changes ; year - on - year growth ) euro area negotiated wages us average hourly earnings source : us bureau of labor statistics and ecb. figure 6 longer - term inflation expectations ( per cent of respondents ) united states euro area median median 1. 5 2. 5 1. 5 2. 5 source : survey of professional forecasters, federal reserve bank of philadelphia, february 2022 ; survey of professional forecasters, ecb, february 2022 ; euro area data exclude one outlier. designed by the printing and publishing division of the bank of italy | 1 |
ravi menon : money at a crossroads - public or private digital money? summary of panel remarks ( virtual ) by mr ravi menon, managing director of the monetary authority of singapore, at the imf seminar on money at a crossroads, 18 april 2022. * * * summary of remarks by ravi menon a crypto asset or token is about digitally representing anything we regard as having value, putting encryption around it on a distributed ledger, where the ownership of the asset can be ascertained and verified, and it can be transferred securely. in singapore and in mas, we are excited about the potential to build a crypto or tokenised economy. cryptocurrencies, about which there is so much excitement, is just one sliver of the crypto ecosystem or economy comprising a variety of tokenised assets. cryptocurrencies are crypto assets which perform a payments function and try to mimic money. private cryptocurrency is unlikely to perform the functions of money because its value is unstable and it is not backed by the central bank or the government. stablecoins are pegged to a fiat currency and therefore derives stability, but it is not clear that all stablecoins, which purport to have a backing, are indeed backed adequately. without such backing, it is hard to imagine how they will fulfil the function of money. stablecoins will become a more prominent feature as long as their backing is strong. they could potentially challenge the currencies of some smaller emerging market economies. if they are used widely, they could lead to currency substitution and the potential loss of money sovereignty in these countries. with respect to central bank digital currencies ( cbdcs ), mas makes a careful distinction between wholesale cbdcs and retail cbdcs. both are digital currencies issued by the central bank. for wholesale cbdcs, mas sees a variety of potential use cases. they can be used in the interbank system on a decentralised ledger to facilitate cross - border payments and transactions. mas has conducted successful experiments with the industry and other central banks on wholesale cbdcs. this is an interesting development to watch. most of the impactful use cases are going to be in wholesale cbdcs for, for example, cross - border payments, and cross - border trade finance. for retail cbdcs, mas is keeping an open mind. we want to make sure we have the technology, governance, and policy structures to | market conduct measures focus on upholding principles of fairness and transparency, for instance, through requirements on disclosure to investors and a fair - dealing sales process. the second leg of the tripartite approach is to put the primary responsibility for sound risk management and oversight of each institution on the board and senior management, which must set the right tone and culture. the third leg is to promote greater awareness among investors of their financial needs, encourage financial planning and promote deeper understanding of the risks and returns of different products, through educational programmes such as moneysense. 4 the fourth pointer from the current crisis is the importance of preventing regulatory arbitrage, and ensuring a level playing field. with regards to islamic finance, in particular, mas seeks to ensure a level playing field between the conventional and islamic financial players. where the economic substance and risks are similar, the same regulatory treatment is accorded, regardless of whether the product is a β conventional β or β islamic β product. for example, singapore - based banks treat murabaha - based 5 asset financing as a credit risk exposure to the customer for the purpose of maintaining regulatory capital. as islamic finance grows, our regulatory framework must continue to evolve to maintain regulatory consistency in managing the underlying substance of the risks. international collaboration the fifth and very crucial point that emerges from the current crisis is the importance of international collaboration. as islamic finance grows, cross border transactions will multiply. we must therefore take an international perspective in preventing and resolving problems right at the outset. allow me to suggest three areas where regulators can work closely. the first area is that legal, regulatory and supervisory frameworks that are developed should be based on internationally recognised principles and standards. the work done by international standard - setting bodies such as the ifsb, idb, aaoifi and iifm 6 is instructive in this regard. for example, β the ten year framework and strategies β co - issued by the ifsb and idb is a thoughtful blueprint. aaoifi has also produced standards in areas such as accounting, auditing, ethics, shariah compliance and governance. today, the applications of shariah precepts differ somewhat in certain areas. it will eventually be desirable to have some standardisation to enhance consistency and to remove one source of regulatory risk. however, our goal should be to achieve a gradual harmonisation of standards and approaches to regulation, rather than immediate convergence. even in conventional finance, regulatory approaches and standards differ across different jurisdictions. | 0.5 |
jacqueline loh : re - thinking investment strategies for growth keynote address by ms jacqueline loh, deputy managing director of the monetary authority of singapore, at the asia investment management summit, 25 november 2013. * * * distinguished guests, ladies and gentlemen, a very good morning to all of you. 1. the global economic recovery remains uneven and fragile, five years after lehman β s collapse. while there have been some encouraging signs over the past year, with stronger jobs growth and the housing recovery in the us and the euro area economies stepping out of the recession zone, there continues to be heavy reliance on extraordinarily loose monetary policy and low interest rates for life support. 2. lean economic growth since the onset of the global financial crisis, beset by bouts of heightened volatility, present a challenging environment for investment managers. for the insurance industry, higher payouts following natural disasters pose additional difficulties. five of the ten costliest natural disasters, in terms of money rather than lives, occured in the past five years. 1 3. as a result of economic, financial and environmental systems coming under stress at the same time, insurance companies are now operating in extremely trying conditions. specifically, insurers β profitability is under pressure simultaneously from all 3 sources : a. firstly premium income, which is correlated to weak economic growth and excess capacity ; b. secondly investment income, amidst a low yield environment and higher market volatility ; and c. and thirdly, claims and expenses, given increasing claims for natural catastrophes. 4. in light of this unprecedented mix of challenges, the insurance industry is responding as follows : a. firstly, focusing more on improving underwriting profitability. against a backdrop of low yields, insurers can no longer rely on investment income to compensate for poor underwriting results. insurers now recognize the need to strengthen their underwriting capabilities, in order to improve underwriting profitability. following the spate of natural catastrophes in asia - pacific in 2011 for instance, many insurers have imposed more stringent underwriting and risk controls such as event limits and policy exclusions. steps have also been taken to close data and risk modelling gaps, which will enable more accurate measurement and in turn, better management of risk exposures. b. second, optimizing investment and product portfolios. for in - force businesses for which policy terms cannot be changed, insurers are primarily seeking to optimize their investment and hed | inclusion space, especially in the rural areas, and boosted economic growth. 28 there are other examples. robo - advisory services can allow investors greater access to customised, low - cost financial advice. other initiatives like open banking can provide potential benefits to a broad range of consumers by allowing for the easy portability of data and payment instructions. the use of distributed ledger technology, or blockchain, may replace traditional central party systems or intermediaries by creating alternative trusted platforms. such blockchain - based immutable transaction and account records may help to facilitate cross - border transactions, by cutting costs and settlement time without compromising on security and certainty. 29 there is no contradiction between regulation for safety and prudence vis - a - vis regulations that are open to, or supportive of, good financial innovations. these may be new business models or use of a technology that promote competition, improve customer experiences or simply a more efficient or pleasant delivery of services. so far from adopting a luddite instinct, many financial regulators have in fact set up dedicated teams to both support and to monitor new fintech developments. but as with any innovation in any era, fintechs can also bring about new risks. in this regard, international organisations such as the international monetary fund, fsb, iosco and the basel committee have all produced several useful public reports on the potential risks. 31 as examples of new risk typologies, there may be increased vulnerabilities to anti - money laundering and efforts to counter the financing of terrorism, given the anonymity of digital currencies. cyber - security is another area as fintechs vary in size and risk management capabilities. there can also be an increase in macro - financial risks from contagion, procyclicality, or excess volatility given the increased speed of financial transactions, and new networks of relationships. open banking and the ease of moving funds can also lead to potentially destabilising movements of money, posing liquidity risks. 32 i welcome more research and studies to guide such developments. it is probably too early to determine whether and how fintechs or bigtechs may change the behaviour of incumbent financial institutions. it is also not unreasonable to expect that traditional business lines between financial services, general commerce or telecoms will increasingly be blurred β and activities may concentrate in the biggest institutions with superior competitive advantages including in the areas of talent, customer base, and customer data. the faangs and bats | 0.5 |
close to capacity. the timing and pace of further increases in the bank β s target overnight rate will depend on the strength of domestic demand, the evolution of inflation expectations, and the pace of economic expansion in the united states and overseas. | relatively even more efficient. so what can canada do to improve the efficiency of its markets? one area that has received a lot of attention, not just in canada but in many other countries, is securities regulation. the key issue is to reduce what economists call β information asymmetries β by as much as is practical. what that means is that our regulatory framework should aim - in general - at having market prices reflect all relevant information, and that all parties to a transaction should have fair access to that information. we can enhance efficiency by reducing information asymmetries up to the point where the cost of additional compliance would outweigh the benefits. following events such as enron, parmalat, and livent, it became clear that investors were not always receiving sufficient and accurate information. corporate scandals prompted many an investor to say : β there oughta be a law! β - a law to make publicly traded companies disclose all information. but in the rush to write laws and regulations, too much attention has been paid to detailed rules that govern how companies disclose information, rather than focusing on what they disclose. we have seen a large increase in the costs of providing information - particularly in the united states - without commensurate progress towards improving the relevance of the information being disclosed. the concept of relevant disclosure is particularly important for a country like canada, where public companies range in size from the very small to the large and multinational. the precise nature of what constitutes relevant information differs depending on the size and complexity of the firm. corporate disclosure regulations should recognize this. for large, complex firms, more complex rules are required in order for investors to receive appropriate information. but for smaller firms, less - complex disclosure regulations - and lower costs of compliance - may result in the best cost - benefit balance. the canadian securities administrators recognized this point in putting forward new proposals for guidelines for corporate governance that are based on a firm β s size. there is another consideration, and that is the need for some companies to have access to global capital markets. firms that want to list on international exchanges will have to follow the disclosure rules that apply in those markets. and large canadian firms that want to raise capital abroad need regulations here that are recognized as meeting international standards. but smaller, less - complex firms - which make up the vast majority of publicly listed companies in canada - may not want to raise capital abroad. so it may not make sense for canadian regulators to force these smaller firms to comply with the kinds of | 0.5 |
gent sejko : convergence process challenges facing south - east europe and albania speech by mr gent sejko, governor of the bank of albania, at the 7th ecb conference on central, eastern and south - eastern europen ( cesee ) countries on " institutional quality and sustainable economic convergence ", frankfurt am main, 5 october 2017. * * * accompanying slides honourable participants, it is a pleasure for me to participate in this conference, and discuss about the role of our institutions in the eu economic convergence process, such a relevant topic nowadays. i believe sharing our knowledge and experience in this area is extremely beneficial to all of us. my thoughts will be organized along three main dimensions. to begin with, i will highlight some of the challenges that the see convergence process is facing, from bank of albania β point of view. next, i will briefly describe how albania is positioned across these dimensions. lastly, i will try to emphasise how the convergence process itself can be enhanced to anchor our policymaking. 1. see convergence process challenges the long - term political future and economic prosperity of the see region is firmly linked to eu convergence and integration processes. while individual countries have differences, a common specific they all share is the economic and political benefits from the process. the convergence process is difficult and full of challenges, most importantly, the risk of falling into a β middle income trap β, a feature that is especially relevant given the slowdown in the speed of convergence that the region experienced in the aftermath of the crisis. the main reasons that can entrap an economy in a middle - income level are a low level of innovation, poor quality of institutions and unfavourable demographics. from a certain point of view, the ability of any country to move up the development ladder depends on the upgrade of its internal economic system, from an efficiency - driven into an innovation - driven economy. obviously, upgrading the whole economic systems and adopting best practices is easier said than done. diminishing marginal returns on labour and capital, as well as a reduced scope for total factor productivity growth, coming mainly from imported technologies, decelerate growth and increase the risks of getting stuck in a β middle income trap β. therefore, progression to the next development stage requires improvement of the human capital stock, facilitation and innovation in production processes, advancement of domestically generated technology and expansion of high value added exports. in a nutshell, the see countries need to transform themselves into innovation - driven economies | 3 to 2016, to 10 in 2022 ). however, in order to achieve these objectives, a concrete and detailed action plan is needed. this action plan would require the support of all the stakeholders in the payments market, as well as interventions in many aspects, such as : 1. improvement of the applicable legal and regulatory framework ; 2. development and improvement of financial services infrastructures ; 3. expansion of the number and use of accounts and payment services ; 4. expansion of access points for these services ; 5. increase of education, awareness and financial inclusion ; 6. increase of the volumes of transactions processed by payment systems. while the strategy was only recently approved, in june, concrete steps have been taken in this 1 / 3 bis central bankers'speeches regard, for example, the drafting of the bill β on payment services in the republic of albania ", which transposes the revised directive of the european union β on payment services β ( psd2 ). the adoption and implementation of this bill is considered to have a direct impact for fostering competition and innovation in the field of retail payments, thus promoting efficiency and reduction of the costs for using them. moreover, the bill is expected to enhance transparency in the services provided by the market and to create a consolidated framework on consumer protection, a very important component for our market. last but not least, the bill also aims to expand the presence of bank services across the territory of the country ( including rural areas ). beyond legal improvements, important steps have been noted in the framework of financial education. i would like to highlight the initiative undertaken in cooperation with the world bank, and funded by the seco, for the implementation of project greenback 2. 0 in berat. this project consists in enhancing financial inclusion and financial education for emigrants and their families, who receive these funds, as well as in establishing effective channels in terms of costs for the delivery of these funds. in addition, to expand the market knowledge regarding remittances, in june, the bank of albania published β remittances : a support for development ". this publication is entirely dedicated to remittances and adopts a comprehensive approach to various aspects in the domestic market. some of these aspects are the macro - level analysis of remittances and their impact on development in general and on the receiving families ; the analysis of the infrastructure of the remittances market in albania, and the need for intervention, as well as providing adequate | 0.5 |
political mood has changed. therefore, we might see gradual tightening of the scrutiny on capital flows from swf countries, at one stage, especially funds that are destined for direct investment in certain companies. faced with all this nonsense, swfs will certainly come to the conclusion that it is time to change strategy. this could make swfs avoid direct investment in certain companies, or even avoid direct investment in all companies, and become more of passive investment vehicles in the west. as, swfs have large sums to invest, this might make them direct part of their investments to existing or newly created companies in the region. this situation, if it happens soon, will lead to creating a new regional developmental cycle. third : linking regional payment systems linking regional payment systems and using local currencies for settlement of transactions should be a long - term objective for countries in the menasa area, as this will improve speed, efficiency and will achieve transaction cost reduction, for the benefit of cross - border trade, investment flows and tourism business. achieving this would be a big challenge, because the good old routes, which we all are used to, will have to be abandoned. also, trust in each other β s national currency in addition to trust in the efficiency of national payment systems across regions is another challenge. however, these challenges can be overcome over a period of time, maybe depositing of the settlement amount with the counterpart payment system provider in the recipient country would create the required trust. to build trust in national payment systems, it will also be necessary for the national regulatory authority to take a leadership role. payment systems on the national level should be unified into one system, and operate with strict rules for action against mistakes or events of fraud through members. to achieve some form of common payment system among menasa area countries, it will be necessary to : 1. identify countries that are ready to be linked, through national payment systems that satisfy certain pre - set standards. 2. setting - up of a steering committee, consisting of technical staff representing the national payment systems, who would agree to work on a certain strategy aimed at achieving a common payment system, that would use local currencies for settlement, at a future stage. forth : investment in infrastructural projects encouraging regional capital flows aimed at investment in infrastructural projects in the menasa area countries should be encouraged through capital markets. this could be achieved through allowing corporations that are in marine transportation, air transportation, rail road companies | sultan bin nasser al - suwaidi : strengthening financial sector supervision and current regulatory priorities welcoming remarks by h e sultan bin nasser al - suwaidi, governor of the central bank of the united arab emirates, at the 9th high - level meeting for the middle east & north africa region on β strengthening financial sector supervision and current regulatory priorities β, organized by the basel committee on banking supervision ( bcbs ), the financial stability institute ( fsi ) and the arab monetary fund ( amf ), abu dhabi, 18 november 2013. * * * good morning excellencies - the honorable, josef tosovsky, chairman of the bis financial stability institute, - h. e. dr. jassim al mannai, general manager & chairman of the arab monetary fund, - distinguished guests, - ladies & gentlemen, it gives me great pleasure to welcome you to the uae, especially those who traveled a long way to be here with us at the outset of this important high level meeting, and i would mention in particular the honorable stefan ingves, governor, sveriges riksbank and the honorable eric rosengren, president & ceo federal reserve bank of boston, and the distinguished speakers. first of all, i take this opportunity to thank the organizers for their careful selection of the meeting title : β strengthening financial sector supervision and current regulatory priorities β, also for the choice of the excellent topics of discussion. i believe this meeting will definitely help regulators in the mena region develop appropriate methodologies, regulations and macro - prudential oversight regimes that would help us all achieve our objectives, in a more efficient and improved manner. regulatory development is currently a key focus for central bank of the uae. very briefly, i would like to mention our two recent regulations, namely : 1 ) regulations regarding mortgage loans, and 2 ) regulations re monitoring large exposure limits i would not go into details of these two regulations, as their details are available on the central bank website ( or will be available very soon ). however, what concerns us at central bank of the uae, is that with strengthening regulations and related supervision, extension of credit through the banking system will be impacted. and since we are operating in one of the developing economies in the region, we believe that we have to support economic and social development. for this reason we have to focus on certain initiatives that could mitigate the impact that would come through strengthening regulations and related supervision, such as : 1 ) financial inclusion : in this respect, and | 0.5 |
on a number of factors, including the size of the merging banks, whether the acquirer is focused on small business lending, and the response of other local banks to the merger. 6 studies have also shown that the post - merger bank tends to be healthier than the target institution was before the merger, which could to lead to an increase in the availability of credit in the community. 7 the bottom line is that some studies find small business lending goes up after mergers, and others find it goes down. given the wide range of results, this is another topic where policymakers and the public would benefit from further research and analysis. one very clear trend in the united states is a decline in the number of bank headquarters. acquisitions have resulted in the conversion of many bank headquarters into new branches of the acquiring institution. unfortunately, some evidence suggests that these conversions may adversely affect the local communities that are no longer home to a headquarters. the impacts extend well beyond the availability of credit. bank executives and staff who serve on the local chamber of commerce or on the boards of local hospitals or nonprofits may move to the new headquarters location, creating a leadership void in their old hometown. unfortunately, community involvement like this is difficult to measure. we turned to community reinvestment act ( cra ) performance evaluations in the hope that for example, see berger and others ( 1998 ), peek and rosengren ( 1998 ), and avery and samolyk ( 2004 ). see jagtiani, kotliar, and maingi ( 2016 ). - 10 they would offer some insights into local involvement by banks. because certain institutions are subject to community development tests, their performance evaluations include information on the bank β s qualifying loans, investments ( including donations ) and services, grants, and certain community service activities. 8 comparing performance evaluations from cra exam reports before and after an acquisition can provide some limited, case - specific evidence on the potential consequences of the loss of a bank headquarters. several examples from the past decade show that local donations and community service activity decline in communities that lost a bank headquarters following a merger. pre - merger cra evaluations detailed donations to organizations targeting initiatives such as child care, job training, homeless shelters, and scholarship programs for low - and moderate - income ( lmi ) individuals. other notable activities included in - kind donations of real estate to habitat for humanity and monetary contributions to food pantries, meals on wheels, and big brothers big sisters of america | for release on delivery 9 : 20 a. m. edt ( 1 : 20 p. m. local time ) may 24, 2024 some thoughts on r * : why did it fall and will it rise? remarks by christopher waller member board of governors of the federal reserve system at the reykjavik economic conference reykjavik, iceland may 24, 2024 thank you for the invitation to be here and speak to you today. 1 i want to step away from shorter - term questions about the economic outlook and monetary policy to delve into a subject of longer - term significance β r *. while there are many concepts of r *, i interpret it to be the real policy interest rate that is neither stimulating nor restricting economic activity with inflation anchored at the central bank β s inflation target. in the short term, policymakers must judge whether a given policy setting is restrictive or otherwise, and while this judgment is made with some idea of r *, a number of factors can influence the economy in the near term so that the current setting of policy usually differs from the value of r *. at the same time, policymakers continually update their view of the appropriate value of r *. recently, for example, discussions have focused on whether or not r * has risen, which has important implications for the conduct of monetary policy. for the purposes of this discussion, i am going to be talking about the long - run, real value of r *, when inflation and employment have reached the federal open market committee β s ( fomc ) goals. because of that, an estimate of r * points toward where monetary policy is headed over the longer run. this is important for policymakers deciding the best way to get there and also for investors and other members of the public who make decisions in the near term based on their expectations of future economic conditions. much has been written on this topic, and different methods have been developed to estimate r *. my goal today is not to debate which statistical estimate of r * is best but rather describe what i believe are the economic factors behind the secular behavior of r *. the views expressed here are my own and are not necessarily those of my colleagues on the federal open market committee. - 2in particular, i want to address two questions. first, what drove the decline in r * over the past 40 years? second, what are the factors that may cause it to rise? i am certain some of you will disagree with my answers to these two questions, but that | 0 |
rupees, seeks it as surplus, 3 august, 2018. dalal, sucheta. ( 2000 ) a. d. shroff - titan of finance and free enterprise, penguin books india. eichengreen, barry ( 2018 ) investors have the power to tame erdogan and trump : politicians should think carefully before seeking to influence central banks, financial times, august 19, 2018. friedman, milton ( 1970 ) the counter - revolution in monetary theory, first wincott memorial lecture, transatlantic arts. fukuyama, francis ( 2011 ) the origins of political order : from pre - human times to the french revolution, farrar, straus and giroux. khatkhate, deena ( 2005 ) reserve bank of india : a study in the separation and attrition of powers, in public institutions in india : performance and design, edited by devesh kapur and pratap bhanu mehta, oxford university press. kydland, finn e. and edward c. prescott ( 1977 ) rules rather than discretion : the inconsistency of optimal plans, journal of political economy, 85 ( 3 ), 473 - 492. mohan, rakesh ( 2018 ) preserving the independence of the rbi ( october 3, 2018 ) ; responsibility fulfilled ( october 4, 2018 ) ; protect the rbi β s balance - sheet ( october 5, 2018 ), business standard. moser - boehm, paul. ( 2006 ) the relationship between the central bank and the government, bank for international settlements. patel, urjit r. ( 2018 ) banking regulatory powers should be ownership neutral, inaugural lecture β center for law & economics ; center for banking & financial laws, gujarat national law university. rangarajan, c. ( 1993 ) autonomy of central banks, tenth m. g. kutty memorial lecture at calcutta, september 17, 1993. reddy, y. v. ( 2001 ) autonomy of the central bank : changing contours in india, speech delivered at indian institute of management, indore. reddy, y. v. ( 2007 ) evolving role of the reserve bank of india : recent developments, speech delivered on the foundation day of the institute of development studies, jaipur, june 30, 2007. sargent, thomas j. ( 1982 ) the ends of four big inflations, in robert e. hall, ed., inflation : causes and effects, university of chicago press. silber, william ( 2012 | er ) at a weaker level ( devaluation of 25 % ), recalibrate capital controls and hike the key policy rate from 10 % to 25 %. 1 / 4 bis - central bankers'speeches our life became easier as international aid grew and the imf approved new programs with ukraine : first, program monitoring with board involvement, in end - 2022, and then full - fledged program ( eff ) in march 2023. this support allowed us to fully focus on ensuring macroeconomic stability β and i will now walk you through the outcomes we were able to achieve. in fact, today we are considering path to normalization of our policies β something difficult to imagine a year ago, in the summer of 2022. let's start with fx market as since february 2022 exchange rate has been our main nominal anchor. meanwhile, in summer of 2022, we saw that the initial peg supported by tight fx restrictions diverted from the fundamentals : reserves approached the dangerous level multicurrency practice was entrenched and led to additional demand via permitted channels. thus, we repegged the exchange rate by 25 % while further tightening the capital controls. this gave us space on the fx market but spread widened again after a while. as fx mismatches shrank ( partially due to the grain deal ), international support accelerated and the reserves position improved, we refocused the goals of our fx regulation towards minimizing the spread between exchange rate on cash and interbank segments of fx market. so, we expanded the options for population to satisfy its demand for fx while in addition strengthened our financial monitoring and made additional effort to improve the attractiveness of assets in national currency. as a result, er expectations stabilized and the spread between exchange rates has almost disappeared. in our policy mix, the key policy rate became a secondary policy tool. the hike from 10 % to 25 % in june a year ago was done primarily to stabilize the fx market and ensure attractiveness of assets in national currency. as in many other, even advanced, economies, we have faced weak transmission amid vast banking sector liquidity. in our case, the excessive banking reserves were the outcome of central bank purchases of bonds and fx from the government. in order to strengthen the transmission, we employed both conventional and unorthodox tools : reserve requirements were revived as monetary instrument. the ratios were increased in several steps by 10 β 20 pp depending on currency and term helping to freeze some part of liquidity | 0 |
. even when there is a surplus of funds in the money market as a whole, money market rates could rise slightly due to a decrease in the supply of short - term funds by the bank. if money market rates were sufficiently positive and there were no concern about financial system stability, the bank would be free to use any assets for its operations, because a surplus or shortage of funds would ultimately be adjusted in the market. however, this is not currently the case in japan. the outright purchase of long - term jgbs is a means to smoothly increase the outstanding balance of current account deposits, and has played a significant role in securing financial market stability. at the same time, such a purchase has engendered some unexpected side effects, such as fewer opportunities for the bank to conduct money market operations, which has in some cases led to a slight rise in money market rates. let me briefly touch upon the relationship between long - term interest rates and the outright purchase of long - term jgbs. market participants often point out that the decline in long - term interest rates up until mid - june was partly due to the bank β s outright purchase of long - term jgbs. the outright purchase of long - term jgbs of 1. 2 trillion yen per month could facilitate the adjustment of dealers β position in the market. and it appears easy to understand that when long - term interest rates fall for some reason, the existence of such a purchase would make dealers more bullish than otherwise. but, based on the observation that the yield on ten - year jgbs has been fluctuating between 0. 4 percent and 1. 4 percent for the past month or so, the relationship between long - term interest rates and the outright purchase of long - term jgbs may not be as simple as it appears. v. relationship between the bank and its counterparties in market operations a. findings in the area of supply and demand for funds the number of counterparties in the bank β s market operations is close to 150 at present. when financial institutions become eligible as a counterparty in the bank β s market operations, they are requested to bid actively against the bank β s offers for market operations, process transactions accurately and swiftly, and provide the bank with market information and analyses useful in conducting monetary policy. in addition, the bank recently began considering the amount of successful bids in the previous year as a criterion for the selection of counterparties for market operations in the following year. these | cases, ensuring financial market stability becomes most important. then, the question is how to assess subtle changes in financial markets in light of maintaining their stability. in the money market, a tightening of the market will not necessarily be translated into a change in overnight interest rates, as these rates have been at around zero. for example, even when concern about financial system stability intensified in autumn 2002, the unsecured overnight call rate stayed at 0. 001 percent. however, the repo rate on forward transactions, the yield on tbs with longer maturity, and the offer rate of the bank β s funds - supplying operations all increased. thus, when conducting market operations under such circumstances, it becomes important to judge how and to what extent the target balance for current account deposits should be achieved and various interest rates should be stabilized to ensure financial market stability. moreover, the criteria for such judgment differ depending on the economic and financial conditions. therefore, it has become very challenging to judge whether financial market stability is being maintained. b. how to evaluate the functioning of financial markets the second challenge is to maintain the functioning of financial markets. the word β call β in the money market derives from the phrase β money at call, β referring to the money available on demand. the amount outstanding of the call market decreased substantially after financial institutions felt that it would not be a problem to hold reserves far in excess of required reserves. since the call market is the market in which participants lend and borrow short - term funds, the shrinking of the market implies a possibility that financial institutions may not be able to appropriately perform their banking activity. therefore, the bank inevitably has a serious concern about maintaining the functioning of the market. lenders in the money market are reluctant to lend when market rates fall to virtually zero. some regional banks have closed down their tokyo branches. it has also been pointed out that, with liquidity in the call market declining as a result of less market participation, the market may not function effectively in funds procurement in times of emergency. let me elaborate by illustrating these points with examples. the amount outstanding of the call market stood at 26. 5 trillion yen at the end of february 2001 just before the introduction of quantitative easing. this amount fell by roughly 10 trillion yen in two years to 16. 5 trillion yen at the end of february 2003. in addition to the introduction of quantitative easing, two factors among others are considered to have contributed to this reduction : one is the progress in consolidation among large financial institutions, and the | 1 |
mr duisenberg presents a few observations about the challenges facing the european union in the years ahead speech given by dr willem f duisenberg, president of the european central bank, at the edmond israel foundation in luxembourg on 11 november 1999. * * * dear mr israel, dear mr waigel, ladies and gentlemen, it is a great honour to be here today to receive the prestigious β vision of europe β award. it is with great pleasure that i accept this honour. i perceive this award as encouragement for the continued work of the european central bank ( ecb ) towards making our new common currency a success and delivering its benefits to business, consumers and to european citizens in general. as a central banker, my business is the conduct of monetary policy which is an inherently forward - looking task. given the long time - lags with which monetary policy decisions impact on price levels, the very essence of our work is to estimate today what risks there will be to price stability tomorrow - and to act accordingly. while it appears that the governing council of the ecb has so far shown sound judgement and a steady hand in the conduct of its forward - looking policy, as central bankers we do not pretend to be able to see into the future. what we can do is to assess future trends and their potential impact on price stability on the basis of a thorough examination of past and current developments, using a comprehensive range of analytical and empirical tools. it is with this acute awareness of the limitations of our ability to discern future developments, not only in the monetary and economic spheres, but also in the political realm, that i shall present to you some observations about the challenges facing the european union in the years ahead. using the β central banker β s toolkit β, i shall attempt to make a modest contribution to the endeavour which gave its name to this award - to shape a β vision of europe β. the european union today - integration in β small steps β and β great leaps β the european union at the end of this century represents an unprecedented, imaginative and successful model for the management of international relations. not only have the original objectives of european integration so far been achieved, namely to ensure peace and prosperity in what has historically been a conflict - ridden part of the world, but also the european community - and later the european union - has managed to adjust to the manifold challenges of its more than 40 - year history. such is its attractiveness that there are now many non - member countries keen to join | of germany, undoubtedly contributed to focusing the minds of european leaders on the maastricht project. in retrospect, it appears that the complementarity of these two methods - continuous incremental change and exceptional bold steps - has been a recurring element in the integration process so far. by using these insights from the history of european integration and by observing the behavioural and institutional patterns established over the past decades, one can endeavour to identify the challenges ahead and assess the eu β s capacity to deal with them. allow me to turn now to these very challenges faced by the europe of the future. from a central banker β s perspective, three main challenges can be identified, and i shall address them in turn. i should like to begin with the challenge closest to the heart of the president of the ecb, namely that of making economic and monetary union a success. thereafter i shall turn to the challenge of extending the β european project β within europe, and finally touch upon europe β s role in the wider world. 1. making economic and monetary union a success economic and monetary union as set out in the maastricht treaty transfers the competence for the conduct of a single monetary policy into the hands of a new supranational institution, the eurosystem, with the ecb at its centre. at the same time, economic policies have essentially remained the competence of the member states. with this particular distribution of responsibilities, all involved - central bankers, governments, businesses, and trade unions - indeed face a very special challenge. the eurosystem, for its part, contributes to the success of emu by pursuing its treaty mandate, which is to maintain price stability in the euro area over the medium term. while we can look back on the first 10 months of the operation of our monetary policy with considerable satisfaction, we cannot afford to sit back in idle contentment. the ecb is a novel and unique institution, and in the performance of its tasks it is still navigating uncharted waters. the ecb must formulate a single monetary policy for an economic area made up of 11 distinct national economic policy jurisdictions. our monetary policy decisions must thus always be oriented towards the conditions of this currency zone as a whole, since monetary policy by its nature is one and indivisible. precisely this is our treaty mandate. the ecb must develop into a truly european institution and we are making good progress in that direction. emu has already proved to be a | 1 |
as a user of such products. bis central bankers β speeches it is our sincere hope that you will gain in knowledge and establish contacts and relationships that will continue into the future ; but most of all our hope is that you will enjoy having an enjoyable time. thank you bis central bankers β speeches | , which prompted the us fed to begin to consider slowing the pace of extraordinary monetary policy accommodation it has been providing. this does not mean an imminent tightening of policy by raising short term interest rates, but rather beginning to cut back on the pace of asset purchases, currently at us $ 85 billion per month. the reaction to the announcement by the fed in may that tapering would begin relatively soon took many analysts and market participants by surprise, and underlined just how nervous markets are, and how elevated the uncertainty is. what was meant to be an orderly adjustment threatened to become precisely the opposite, despite the assurances by the fed that tapering would be done in a responsible manner. long - term bond yields and mortgage rates in the us increased by about 100 basis points. the spillover effect on emerging markets was intense, with bond yields generally increasing by more than in the us, as bond flows reversed sharply β since may about us $ 20 billion has flowed out of emerging bond markets, with r17 billion net sales by non - residents in the domestic bond market between 22 may and the end of august ; and emerging market currencies, including the rand, depreciated markedly across the board. although there was a general expectation that tapering of quantitative easing would begin in september, there was a great deal of uncertainty around the pace and timing, and the period between the may and the september fomc meeting was highly volatile. in the event, the fed refrained from tapering in september, out of concern about the slow pace of recovery in the us labour market ; the unresolved fiscal issues in the us which could lead to further fiscal contraction when the debt ceiling is reached, possibly in mid - october ; and the negative impact of tight financial conditions and higher long term interest rates on the nascent housing market recovery in the us. the reaction of the markets to this surprise was dramatic, with strong recoveries in bond and equity markets, while the dollar weakened across the board. however, it is inevitable that the fed will have to begin tapering at some stage, and markets are likely to react or over - react to any data coming out of the us that is likely to have a bearing on us monetary policy decisions. we have been given a taste of what is to come, and we are in for a difficult and bis central bankers β speeches volatile period ahead. this is unchartered territory, and whatever the us does is going to have spillover effects onto the | 0.5 |
jorgovanka tabakovic : overview of recent monetary and macroeconomic trends in serbia introductory speech by dr jorgovanka tabakovic, governor of the national bank of serbia, at the presentation of the inflation report - august 2016, belgrade, 17 august 2016. * * * ladies and gentlemen, dear colleagues, welcome to the presentation of the august inflation report. as always, we will give you an overview of monetary and macroeconomic trends for the period since the previous report and set out our expectations for 2016 and 2017. however, before we move on to this, i would like to share with you a few thoughts about a much longer period, because recently it was four years since my appointment as the governor of the national bank of serbia. together with us you were witnesses to the numerous challenges we faced, particularly from the international environment. despite the challenges, the national bank of serbia has achieved admirable results β inflation is low and stable today as it has been for three years straight, which was not the case earlier. our good results are not only due to global circumstances and low inflation abroad, because inflation in the international environment was around 2 % rather long, while at the same time it was much higher and more volatile in serbia. it was the reduction in serbia β s internal and external imbalances and the maintaining of relative stability of the exchange rate that were instrumental to bringing inflation in serbia to a level comparable to that of other countries. at the same time, deflation was averted. expectations of market participants that inflation will remain low for the next two years represent another indicator of confidence in the national bank of serbia and the measures it implements. chart 2 one - year ahead inflation expectations * and target chart 1 consumer prices and target tolerance band ( y - o - y rates, in % ) tolerance band ( y - o - y rates, in % ) 5. 5 4. 0 2. 5 1. 2 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 sources : sors and nbs calculation. corporate sector financial sector ( ninamedia ) financial sector ( bloomberg ) target tolerance band targeted inflation consumer prices ( cpi ) targeted inflation target tolerance band 2, 8 2, 0 2, 0 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 10 1 4 7 sources : | randall s kroszner : improving the infrastructure for non - agency mortgage - backed securities speech by mr randall s kroszner, member of the board of governors of the us federal reserve system, at the federal reserve system conference on housing and mortgage markets, washington dc, 4 december 2008. the original speech, which contains a link to the documents mentioned, can be found on the us federal reserve system β s website. * * * i very much appreciate the opportunity to participate in this conference and to hear your insights firsthand about such a range of important topics. as you know, housing markets are weak. sales of new homes and of existing homes are well below their respective peaks around the middle of this decade. house prices have fallen sharply β the national price index published by the federal housing finance agency is down almost 8 percent from its high in the spring of 2007, and the case - shiller national index is down more than 20 percent from its peak about 2 - 1 / 2 years ago. residential construction has remained weak, with single - family housing starts having declined to less than a third the number seen early in 2006. even with the drop in homebuilding, the inventory of unsold new homes represents more than 10 months'supply at the recent pace of sales. taken together, these data suggest continuing near - term challenges for stabilization of the housing market. with the plunge in home sales and house prices as well as very tight lending conditions, mortgage borrowing by households has fallen sharply over the past two years or so. indeed, the latest information suggests that, on net, home mortgage debt may not have increased at all since the spring. moreover, most of the new mortgages that were originated in the past several months were funded with mortgage - backed securities ( mbs ) guaranteed by the government housing agencies β fannie mae, freddie mac, and ginnie mae. that is, origination of mortgages not eligible for a government guarantee has fallen dramatically as issuance of private - label mbs has virtually come to a halt this year. the rapid deterioration in credit quality of mortgages in subprime and so - called alt - a mbs pools β and the subsequent severe rating downgrades of the securities they backed β has significantly eroded the value of and investor confidence in private - label mbs. in my remarks today, i would like to suggest some fundamental changes in the structure of private - label mbs that might help a recovery, over time, in investor | 0 |
bank of japan β s november report of recent economic and financial developments1 bank of japan, communication, 20 november 2000. * * * the bank β s view2 japan β s economy is recovering gradually, with corporate profits and business fixed investment continuing to increase. with regard to exogenous demand, public investment is decreasing gradually since the implementation of the supplementary budget for fiscal 1999 has peaked out. net exports ( real exports minus real imports ) continue to follow a moderate upward trend due to steady developments in overseas economies. as regards domestic private demand, business fixed investment is on an increasing trend. the recovery in private consumption continues to be weak as a whole through lack of notable improvements in employment and income conditions, although there are somewhat positive signs in some indicators. housing investment is mostly unchanged. reflecting such developments in final demand, industrial production is increasing. corporate profits and sentiment continue to improve, and the number of firms that take positive action, such as increasing the amount of fixed investment, is increasing, especially in high - growth sectors. income conditions of households still remain severe but regular and overtime payments as well as new job offers continue to increase in line with the recovery in corporate activities, and compensation of employees has stopped decreasing. as for the outlook, public investment is expected to continue decreasing for the time being. while the u. s. economy is decelerating gradually, the expansion in overseas economies is projected to continue, albeit at a slower pace. in these circumstances, the increase in exports is likely to slow down, as inventories of some raw materials and electronics parts are somewhat excessive at present in asian economies. meanwhile, imports are projected to continue increasing, particularly for those of consumer goods, and capital goods and parts. therefore, net exports will level off for a while. in the corporate sector, firms still strongly feel that they have excess equipment and that they should reduce their debts to restore financial soundness. however, it is very likely that fixed investment in highgrowth sectors, including those related with information technology services, will increase as corporate profits continue to recover. moreover, an improvement in corporate profits will increase household income and this in turn is expected to boost private consumption. however, the pace of recovery in household income will be modest for the time being, since firms β perceptions of excess employment still persist, and thus significant changes have not been observed in their efforts to reduce personnel expenses. the increase in industrial production is expected to slow down somewhat for a while mainly because of the slower rise in | masaaki shirakawa : the turmoil in global financial markets and economic and financial developments in japan speech by mr masaaki shirakawa, governor of the bank of japan, at the kisaragi - kai meeting, tokyo, 5 november 2008. * * * introduction i am very privileged to have the opportunity to speak before such a large audience. as you all know, global financial markets are currently experiencing a type of turmoil not seen since the 1930s. strains in the markets have mounted significantly, especially since the bankruptcy filing of lehman brothers in september. it is difficult for a central bank to choose the right words to express this situation, but the blunt phrase " financial crisis " was used in the joint statement by major central banks released in october. the degree of strains in financial markets, although they have recently improved somewhat, has increased to a level that has obliged us to use such a strong phrase. the turmoil in financial markets that began in the summer of 2007 as well as its impact on economic activity were, at first, limited to the u. s. and european economies, but have since gradually spread to japan as well as to emerging economies. this global turmoil has now become the largest problem facing the world economy, although the degree of impact varies by country. in my speech today, i would like to first discuss developments in global financial markets and overseas economies, given that current developments in japan's economy are being overwhelmingly influenced by them. after that, i will discuss the outlook for japan's economic activity and prices, and then the bank of japan's conduct of monetary policy, including the reduction in the policy interest rate decided at the monetary policy meeting held on october 31. and lastly, i would like to touch on how a financial crisis should be dealt with and how, from a longer - term perspective, similar crises can be prevented in the future, based on our experience with the one that occurred in japan. i. developments in global financial markets and overseas economies i will begin by discussing developments in global financial markets and overseas economies. looking back, until recently the world economy enjoyed a sustained period of benign economic conditions. the statement released after the meeting of the group of seven ( g - 7 ) finance ministers and central bank governors in april 2007, for example, indicated, " although risks remain, the global economy is having its strongest sustained expansion in more than 30 years and is becoming more balanced. " all of you here are familiar with developments in the world economy since then | 0.5 |
norman t l chan : monetary policy β s effect on wealth distribution and a way forward for policymakers welcoming remarks by mr norman t l chan, chief executive of the hong kong monetary authority, at the hong kong monetary authority and federal reserve bank of new york joint conference, hong kong, 23 may 2019. * * * 1. good morning, president bullard, director hirtle, ladies and gentlemen. welcome to this conference jointly organized by the federal reserve bank of new york and the hong kong monetary authority. i would especially like to thank our overseas guests who have travelled a long way to be with us today. 2. over the past 40 years, the global economy has undergone impressive growth and transformation. from 1980 to 2018, ppp - adjusted real per capita gdp in advanced economies and emerging market economies have increased by 94 % and 205 % respectively1, driven by globalisation, open markets, technological advancements, and the general trend of falling inflation. 3. but the news is not all good. while the world economy has done well on the whole, economic inequality has widened noticeably at the same time. just take a look at the gini coefficient, which is a commonly cited measure of income inequality. in hong kong, the gini coefficient has risen steadily from 0. 476 in 1991 to 0. 539 in 2016, whereas in the us, it has increased from 0. 449 in 1991 to 0. 519 in 2015. 2 economic inequality causes social divisions, with the rise in populism especially in the us and europe being one of the unwelcome symptoms, and it also affects development and growth in the longer run. indeed, problems with income and wealth disparity have become so acute that it has recently triggered a debate on the β crisis of capitalism β. imf managing director christine lagarde, when presenting her global policy agenda at the imf spring meetings last month, also pointed out that the rewards of economic growth have not been shared, and called for a β new multilateralism β which will, among other things, foster inclusion. 4. with so much at stake, policymakers simply cannot brush aside the issue of the widening gap between the β haves β and the β have - nots β. over the past two years, i have been talking about, on different occasions, how globalisation, technological innovation and monetary policy may have affected distribution of income and wealth. today i wish to offer some further thoughts about | . ladies and gentlemen, as we continue to fortify the global financial system and economy against downside risks, a crucial question is how monetary policy, in conjunction with fiscal policy, may cause significant distributional effects on different segments of the society. it may be worthwhile to rethink how the monetary and fiscal policies can be modified to take better care of the less privileged or those who have been left behind. 8. the theme of our conference is monetary policy and heterogeneity, and i am glad that so many accomplished economists and researchers have assembled in hong kong to deliberate on issues relating to the distributional consequences of monetary policy. i hope that the discussions will be fruitful in helping us better understand these important issues. thank you. 1 source : imf world economic outlook database, april 2019. 2 a gini coefficient of 0 means everyone has the same income, and 1 means all disposable income of an economy is concentrated on one person. the gini coefficients quoted are based on household income before taxes and transfer payments. sources : census and statistics department ( hong kong ) and the congressional budget office ( us ). 3 domanski, d., scatigna, m., & zabai, a. ( 2016 ). wealth inequality and monetary policy. bis quarterly review ( march ). 2 / 2 bis central bankers'speeches | 1 |
remain flexible, constantly iterating financial education approaches to adapt to what works best in the given context. this is where fresh ideas are welcomed, like those being featured and celebrated today. on this, i would specifically acknowledge and congratulate the three winners of the best paper awards today. i understand that the winners and other shortlisted papers will be given the opportunity to publish their research in a renowned academic journal or an edited publication. i trust that their exemplary work will inspire many others to contribute to this area of research. in closing, i am hopeful that all of us here today can be increasingly effective in our shared aim to promote financial literacy in malaysia. today's event is a step in that direction. let us take this opportunity to learn from one another and reimagine new paths forward β helping malaysians regain financial resilience and improve their financial well - being. thank you. 3 / 3 bis - central bankers'speeches | unbiased interventions in the fx market in either direction, which contributed not only to lower core inflation, but also to preserving confidence in the business and investment environment. a stable exchange rate is the key ingredient to monetary and financial stability in serbia and plays an important role in creating a favourable environment for citizens and businesses. the national bank of serbia remains committed to maintaining high fx reserves as the foundations of the country's resilience to external shocks and to safeguarding the stability of the dinar as the pillar of macroeconomic stability. our activities have ensured the reliability of all six payment systems that we operate, as well as the safety and efficiency of execution of payment transactions in those systems. 1 / 3 bis - central bankers'speeches at this moment, apart from the standard account to account transfer, instant payments are also used for the payment of bills by scanning the nbs ips qr code, payment in physical and internet points of sale and transfer of funds via a mobile phone number. we provided to households and corporates an extremely simple model of paying their monthly bills by scanning the nbs ips qr code via mobile banking applications on the bills issued by providers of utility and other services. we enabled the execution of instant payments on points of sale via different methods ( ips show, ips scan ), thus giving a chance to merchants to offer at their points of sale a new, modern instrument allowing funds disposal within seconds, at lower fees, and to independently prepare solutions tailored to their needs. we gave the opportunity to citizens to simply execute instant payments via mobile banking applications, just by entering the mobile phone number of a registered payee or selecting it from their phonebook, without bothering to remember templates or write down or enter the payee's account number. in other words, rather than just dealing with money in its basic form, a traditional task of institutions such as ours, we are stepping up and modernising the financial future of our country, so that each and every citizen has the opportunity to participate in the digital economy with ease and certainty. i recall the day when first ideas about instant payments were no more than an outline on paper, a dream of faster and safer payment in every situation. that outline has long become the reality of the republic of serbia and a part of our everyday habits. the possibilities of cashless payments that we will consider at this conference reflect our wish and determination to continue to exceed the average speed of positive change in the world, because we | 0 |
tony latter : hong kong's currency board today - the unexpected challenge of deflation speech by mr tony latter, deputy chief executive of the hong kong monetary authority, at the conference on " alternative exchange rate regimes in the globalised world ", organised by eesti pank to mark ten years of the currency board in estonia, tallinn, 11 june 2002. * * * the conquest of inflation those of us here today who once studied economics almost certainly did so in a period of at least mild, if not quite rapid inflation. and those of us who are central bankers have for the majority of our working lives been struggling to cope with inflation. so it's hardly surprising that back in 1983, when the hong kong authorities pegged the hong kong dollar to the united states dollar, we didn't seriously contemplate any deflationary scenario. the us inflation rate in the early 1980s was averaging some 4 % pa and, not possessing any special forecasting capability in this field, we must have reckoned that it would remain near that figure. in addition, the textbooks would have told us that structural and developmental factors would tend to make hong kong's inflation rate somewhat faster than that of the us - as indeed it was for the ensuing fourteen years. neither a significantly lower rate of us inflation nor a situation where hong kong's rate was significantly below the us rate would have been considered at all likely. yet hong kong now finds itself with a consumer price level that is 12 % below the peak of four years ago, and with a gdp deflator some 15 % below its peak and 22 % lower relative to that of the us than it was four years ago. what is the explanation, and can one live with this? there is general consensus, supported by both recent imf analysis and research conducted within the hkma, that hong kong's deflation is predominantly cyclical. i shall return to hong kong in a minute, but let me first dwell for a moment on the global slowdown in inflation. over the past four years the rate of consumer price inflation has averaged 2. 5 % in the usa, only 1. 7 % in euroland, minus 0. 3 % in japan, and minus 0. 3 % in mainland china. in six other economies of east and south - east asia taken together, the inflation rate fell to 2. 7 % on average in these four years as against 4. 4 % in the preceding four. this widespread slowdown in | jean - pierre roth : the position of the swiss franc exchange rate in the swiss national bank monetary policy strategy summary of a speech by mr jean - pierre roth, chairman of the governing board of the swiss national bank and chairman of the board of directors of the bank for international settlements, at the university of st. gallen, st. gallen, 19 december 2007. the complete speech can be found in german on the swiss national bank β s website ( www. snb. ch ). * * * the exchange rate is an important factor in determining the domestic price level in switzerland. nevertheless, it is not a monetary policy goal for the swiss national bank and is only relevant insofar as it has an impact on future inflation. our concerns about our currency's weakness should not be read as a hidden form of exchange rate policy but rather as genuine concern about future price stability. a sustained tendency to weakness on the part of the swiss franc could trigger inflationary effects that β sooner or later β would have to be countered with monetary policy instruments taking the form of interest rate measures. in the medium - term, this could lead to a reduction in the interest spread between the swiss franc and the euro. | 0 |
area. in fact, one challenge from innovation is that old tensions about competition might emerge in new ways. the board will need to remain just as vigilant in these areas in the years to come. bis central bankers β speeches | ##eding, estimates of the size of the output gap have to be made with caution. strong growth may be leading to higher potential output, as crisis - induced hysteresis may be reversed in conditions of stronger demand. and the effects of past structural reforms, especially in the labour market, may now be showing up in potential output. for example, three - quarters of employment growth over the recovery has come from older workers and more than half from women. this is in part because past labour market reforms have encouraged both groups to enter the workforce in response to higher growth. 7 if substantially more workers can be drawn into the labour force, it would be possible for the labour market to strengthen further without generating wage pressures. in this environment, policymakers have to be more cautious than in the past about the assumptions that underpin our forecasts β and simple policy rules based around estimates of the output gap are no longer a useful guide for our actions. the severity of the crisis means that we cannot rely exclusively on traditional historical relationships to determine how quickly real developments will be passed through into nominal ones. the key issues we need to examine are wage dynamics, their pass - through to prices, and the possible risks to the inflation outlook. wage growth has been trending upwards for the euro area as a whole, rising by 0. 5 percentage points from the trough in mid - 2016. 8 but consistent with the weakening of the relationship between slack and inflation, the adjustment of wages during the recovery has so far been atypically slow. that said, our analysis suggests that, as the cycle advances, the standard wage phillips curve should hold better for the euro area on average. the unexplained residuals in the model β which in the past were sizeable β are diminishing, suggesting the link between unemployment and wages should improve. moreover, the anchors for wage formation are gradually becoming more aligned with our inflation objective. backward - looking factors appear to be becoming less important, and the forwardlooking anchor, inflation expectations, is strengthening. phillips curve decompositions find that past low inflation dragged down wage growth from its long - term average by around 0. 2 percentage points each year between 2014 and 2017. but these same analyses suggest that, as headline inflation recovers to more normal levels, the impact of past low inflation on wages could be waning. in terms of the pass through from wages to prices, the signals remain mixed. as wages have picked up, labour productivity has also recovered | 0 |
total assets and risk - rated off - balance sheet items, while loan portfolio quality is at satisfactory levels. year 2008 coincides with increased prudential policies of the bank of albania in terms of adopting a more conservatory approach. the passing of the new banking law, the 2007 developments once credit bubble exploded in the usa and high lending rates over 3 - 4 last years were assessed with prudence by the bank of albania. therefore, in early 2008 the bank of albania organised the first open forum with the banking system, submitting through an open communication, a new packet of prudential regulations for being discussed there, aiming at consolidating the financial stability of the country. the bank of albania β s supervisory council gave way to the approval of the whole proposed packet, thus creating an effective vaccine, which has produced appropriate antibodies or has provided the immunity i mentioned earlier in my speech. which are these modifications that have increased our resistance so much? β’ in compliance with the new law, there were approved new criteria for calculating, supervising and reporting large exposures of banks to parent banks and connected subjects, aiming at managing the risk deriving from concentrated exposure to them. β’ in order to achieve a more effective management, a new regulation was drafted, strengthening the internal audit in banks and branches of foreign banks. it regards the internal audit as a part of the general governance of banks. it ensures the platform for creating an efficient internal audit system, as the main factor in management and administration of banks and branches of foreign banks. β’ a special importance was given to transparency of banking and financial products and services. this is another aspect where we intervened during 2008. the new requirements standardise the way and form of supplying customers with information about banking products and services. special emphasis was laid on obligatory publication of effective interest rates for deposits and loans. through this information bank customers may get acquainted with calculation of loan effective interest rate, elements of credit and deposit contract, marketing of products and services, maintaining of customer data and confidentiality, dealing with customer complaints and establishment of specific structures relating to such complaints. β’ part of the new package was also the standardization of obligatory information the banks and branches of foreign banks should disclose about the main business of banks, their organisation and management, financial performance and position, risk management and accounting policies. β’ taking into consideration the international situation and aiming at a better diversification of risk deriving from the concentration of bank investments in international financial markets, the bank of albania β s supervisory council | the balance of payments with a positive result for 2008. foreign reserves of the bank of albania increased by about euro 192 million or by 0. 9 percentage points of gdp. in macroeconomic terms, the high deficit on trade account signals high levels of consumption and investments in the economy, financed from foreign savings in the form of capital inflows. in a longer - term analysis, albania β s current account deficit is a normal phenomenon in the context of the country β s development level. especially positive is the fact that the major share of the country β s imports is represented by imports of machinery and equipments and that of intermediate consumer goods. however, current account deficit widening is an element that should be constantly monitored, since its financing sources are not always steady and necessary corrections for the current deficit compliance with the available funds for its financing are frequently difficult. macroeconomic policies should be prudent to ensure longterm sustainability of the balance of payments, as one of the principal aspects of the macroeconomic stability and long - term growth of the country. fiscal policy and indicators fiscal policy is one of the main instruments for stimulating and controlling the economic activity. due to its weight, the public sector is a significant generator of the economic activity and a determinant of the financial conditions of the economy, of interest rates, of the exchange rate, and its liquidity. during 2008 fiscal policy was more expansionary, thus being reflected in enlargement of the budget deficit and of the public debt. during 2008 budget deficit to gdp reached 5. 7 percent, being expanded by about 2. 2 percentage points in a per annum basis. public debt level amounted to 55. 6 per cent of gdp, from 52. 2 per cent in the previous year. budget revenues and expenditures increased respectively by 15. 3 and 22. 6 percent during 2008, accounting for 27. 3 and 32. 9 percent of gdp. improvement of public debt management in terms of extending maturity time - length and diversifying the financing sources is a positive highlight, which has helped to refinance the debt and control its cost impact on debt indicators. however, the bank of albania deems that the fiscal policy should not distract attention from maintaining long - term stability of fiscal indicators and minimizing their impact on financial markets. fall of budget deficit during 2009 and the commitment for drop of public debt in the long run should be constant priorities of the fiscal bodies. in line with that, the bank of albania deems that more endeavours | 0.5 |
long term. the bank of albania sticks to the opinion that the public finance consolidation should anchor to an effective and transparent fiscal rule. this rule would increase the short - term flexibility of public finances and reduce the fiscal adjustment cost. second, the overall economic and financial stability is a prerequisite for a rapid economic growth. the monetary policy has been and will remain oriented toward meeting our inflation target. in line with the cyclical situation, this policy has provided its stimulus through the key interest rate cut and ongoing liquidity injection into the banking system. we have also revised the banking system regulatory basis from the viewpoint of easing it, in order to stimulate lending by the banking system. i avail myself of the opportunity to reiterate that the banking system remains profitable, liquid and well - capitalised. safeguarding the stability of this system will always be on our focus. bis central bankers β speeches third, reducing uncertainties and risk premiums in the economy is an important priority. as i have already stated, these uncertainties stem, to a great extent, from the foreign market, but a part of them stems from the albanian economy. without intending to make a list, i will mention just a few : β’ reducing informality should be a primary objective. besides outflows in public finances, informality brings hidden costs in terms of diminishing competition, inefficiency in terms of lack of balance sheet transparency, and artificially increased financing costs to businesses. β’ fostering the financial system infrastructure protection is another aspect deserving attention. the bank of albania signed and has already made effective a cooperation agreement with the people β s bank of china, which also provides for the possibility to obtain liquidity in case of need. an important step in this regard is the agreement between the deposit insurance agency and the european bank for reconstruction and development to increase the deposit insurance coverage. we deem that there is room for other agreements with international financial institutions specialised in providing funds and assistance. establishing collective public protection releases the financial system and businesses from setting up individual protection. besides, it may be transformed into a necessary source of funds for the albanian economy. β’ improving the business climate further and observing the contract enforcement. the business climate is a rather complex issue, but i would highlight two issues here. first, the payment of deferred budget liabilities as a priority. in spite of the financial cost, it is an important step for easing the debt burden in the economy and signalling the political willingness to guarantee | ##increasing importance in the assets structure of the banking system, constituting a considerable source of the demand for monetary assets. the credit / deposit ratio increases on a continuous basis, an indication that positively introduces the function of the intermediation role of the banking system in supporting the economic development. the balance credit rise marked during the eleven - month period of the year the value of lek 15. 3 billion, reflecting a rise of 30 percent relative to the yearend of 2003. the easing monetary policy of the bank of albania has helped smooth the appreciation pressure of the lek exchange rate. the differences between interest rates in foreign currency and those in domestic currency incurred a decline during 2004. however, the rising foreign currency inflows on one hand, and the reduction of imports volume on the other one, have created a temporary difference between the foreign currency supply and demand during the summer period. this misbalance has exerted a significant pressure on the appreciation of the lek exchange rate, fostering the foreign market volatility. the exchange rate volatility through this temporary rise of foreign currency supply has imposed the necessity of the bank of albania intermediation to the foreign market during the summer period, towards purchasing the foreign currency. though trade deficit increased, the current deficit in the third quarter has been lower than in the previous quarters, thanks to increased and positive balances of income, services, and particularly current transfers. the current transfers balance is estimated at usd 295 million, being higher than the 1 / 2 one of the first two quarters, and nearly 44 percent higher than the one of the third quarter of the previous year. overall, the balance of payments performance during 2004 was positive. the gross foreign reserve level, at the end of this period, was estimated at usd 1 billion and 244 million, adequate to cover 5. 1 months of imports of goods and services. based on the aforementioned developments, we may conclude that year 2004 contributed generally in further consolidating the country's macroeconomic equilibrium. although full data for the yearend of 2004 are not yet available, there is a crystallization of the idea that the primary targets projected in the medium - term plan on the country's development have been met satisfactorily. according to the latest estimations, the albanian economy grew by 6 percent under the conditions of a low inflation rate, far closer to the bottom level of the targeted band. the structural reforms, through their problematic concerns, have progressed during | 0.5 |
a positive step and are expected to reduce public debt as a ratio of gdp by 20 percentage points by 2060. at the same time they also reduce the annual gross financing needs of the general government by around 5 percentage points of gdp. however, to ensure the sustainability of the debt going forward, additional medium - term measures are also necessary. when the debt - to - gdp ratio is above 100 %, measures that reduce interest payments on debt can improve the ratio quicker than a rise in the primary balance. for example, with a debt - to - gdp ratio of 180 %, a 1 percentage point reduction in the 13 / 23 bis central bankers'speeches average interest rate on debt will reduce the ratio of debt to gdp by 1. 8 percentage points. by contrast, a rise in the primary surplus as a percentage of gdp by 1 percentage point lowers the debt - to - gdp ratio by only 1 percentage point ( assuming that the fiscal multiplier is 0 which, as we well know, it is not ). a similar effect to lowering the interest rate can be achieved through a rise in nominal growth. for debt to be sustainable, it is important to look at the gross financing needs of the general government. the eurogroup agreement of the 24th may last year set the goal for gross financing needs of the government to be below 15 per cent of gdp in the medium term and below 20 per cent over the long term. with a primary surplus goal of 2 per cent, gross financing needs are higher than they would be if the primary surplus were held at 3. 5 per cent. 14 / 23 bis central bankers'speeches however, mild debt relief could reduce them and keep them within the limits set by the eurogroup. the interest burden is low until 2021 but increases substantially thereafter because of payments of deferred interest on the efsf loans and interest on new debt issued in financial markets. an exercise done at the bank looks at the impact of smoothing interest payments for efsf loans. looking at the right - hand - side diagram on the slide, the exercise entails that interest payments are smoothed, as in option 1, instead of remaining as they are now ( the baseline scenario ). what does such an exercise imply for the path of debt and gross financing needs? the baseline high surplus scenario assumes primary surpluses of 3. 5 per cent of gdp until 2027 and a gradual decline to 2 per cent by 2037. the baseline low surplus assumes only three years of primary surplus | ##iberations. some people interpreted this to mean that we believed downside risks had strengthened. what we intended to communicate, however, was that, with the 2 % target in sight, we gave increased consideration to the risk that inflation could fall below the target. as you can see, differences in interpretation can be very subtle, which makes choosing the right words all the more important. i'd like to think that all the years of explaining complex concepts to my students has given me a lot of practice in this regard. even though i've been in this role for only a short time, i've been able to appreciate how the bank's approach to communication is constantly evolving. in the past, press conferences were held only when the rate announcement was accompanied by a monetary policy report. starting this year, all eight rate announcements now feature a press conference. this gives the bank the opportunity to share its assessment of the economic outlook with the public and explain the reasoning that led to the rate decision. following the decision, governing council members host information sessions and regularly give interviews with the media. since january 2023, a summary of deliberations is published online two weeks after every decision. this document is a record of governing council's assessment of the economic environment and the upside and downside risks to inflation. it also highlights where opinions converged and the topics that generated the most debate among members. the summary of deliberations for the september decision was published yesterday, in fact. lastly, the bank is always looking for new ways to communicate and for new channels to reach the widest audience possible. in fact, the bank has accounts on youtube, x, instagram, facebook and linkedin. be sure to follow us. 6 / 7 bis - central bankers'speeches conclusion it's time for me to wrap up. i've now participated in 12 rate decisions. since arriving at the bank, i've always felt my experiences and external point of view have been useful to my work and valued by the other members of governing council and the organization as a whole. i genuinely feel i'm contributing to the mission of a rigorous and conscientious institution that is mindful that its credibility is directly linked to the effectiveness of its actions. credibility must be earned. the bank's is founded on the trust that canadians place in us and our actions. even when those actions are difficult and have direct impacts, canadians understand that we are always guided by our resolve to | 0 |
vertical integration between the two countries, slower u. s. industrial activity, reflecting the downsizing of the oil sector amid low prices, has capped the expansion of mexican manufacturing. as a result, manufacturing exports have lost steam, with declining rates of annual growth falling into negative territory in recent quarters. this deceleration has taken place in spite of significant real peso depreciation, which has occurred along with that of other emerging - market currencies. this fact highlights the bis central bankers β speeches dominant negative effect stemming from a decline in external demand, notably from the united states, mexico β s main trading partner, but also from other nations as well. 1 in short, the main engine of recent mexican economic expansion has been domestic spending, largely by the private sector, including both consumption and investment. yet it is worth noting that, although representing a smaller weight in total aggregate demand, government consumption was expanding, thereby supporting spending as well. in the 2016 first quarter, however, this trend changed. additionally, public investment, an even smaller contributor to aggregate demand, continues to contract. as with the global economy and most world regions, mexico β s economic outlook has been subject to downward revisions, with a modest recovery projected for this and the following year. even in this lackluster scenario, mexico distinguishes itself, with expected expansion higher than the average pace foreseen for latin america. 2 this does not mean we should be satisfied with only middling growth. as an emerging economy, mexico should eventually enjoy much higher rates of economic expansion, breaking out of its previous long - term, not excessively encouraging, record. to be sure, in the short term, real challenges prevail. specifically, mexico β s scenario of modest improvement faces risks, among which the downside forces seem more numerous. let me mention three. in the first place, u. s. imports and industrial output may slow further, potentially not only inhibiting the country β s manufacturing production, but also generating spillover effects on the services sector and private investment. second, producer and consumer sentiment could deteriorate due to less favorable international financial events. finally, a larger - thananticipated fall in mexican oil extraction could occur. on the upside, however, recent structural reforms could start to yield greater - than - expected benefits. 3 financial markets international financial markets have been affected by uncertainty on the implications of the extraordinary lax monetary stances undertaken in advanced nations and the normalization process in the | , which commits countries to enshrining important fiscal rules in binding national legislation. the fiscal compact is an important step towards a fiscal union in the euro area. its timely ratification is now key. a real innovation is the macroeconomic imbalances procedure. it will help to detect and correct economic imbalances, for instance in house price developments. this should avoid situations like in ireland, where a bursting housing bubble, together with bank guarantees provided by the state, led to an abrupt fiscal deterioration. more legislative acts are under way to further increase the surveillance of national economic policies. once the β two - pack β has been adopted, it will be possible for draft national budgets to be examined in brussels. and revisions will be demanded if the budgets are not in line with the euro area β s fiscal rules. bis central bankers β speeches if implemented successfully, these measures will help countries to internalise an important point : any member of a currency union has to treat its economic policies as a matter of common concern. the euro area is already much closer to a political union than many of us realise. there is one broad area, however, where a good strategy is still missing. this is the area of financial markets. let me mention just one concern which needs to be addressed : the negative feedback loops between banks and national governments. the recapitalisation of a troubled bank by its government may lead to a deterioration of the government β s fiscal position. the deteriorating fiscal position in turn further weakens banks β balance sheets, through their holdings of sovereign bonds. this feedback loop has to be stopped. we have to move closer to a financial markets β union. a european bank resolution authority and a european deposit insurance scheme are two elements that could be used to address the nexus between sovereigns and banks. i see further issues that need to be addressed in the area of financial markets, for example the potential conflict of interest for national supervisors whose task should be to ensure financial stability and a smooth functioning of european financial markets, but who are β at the end of the day β accountable to a national parliament and the tax payers of one single country. this, from my point of view, is an argument in favour of the single european rulebook without loop - holes and a supervisory authority at the european level for systemically relevant financial institutions with a cross - border business model. concluding remarks let me conclude. the crisis in europe is still ongoing, but we have come a long way in addressing the most important | 0 |
differences include most notably so - called national discretions and options. on one hand, the new framework provides for a gradual transition to the new capital requirements, in line with the basel iii accord. the regulation gives countries some discretion in setting the pace of convergence towards the new requirements, which may give rise to temporary differences in the treatment of some specific aspects. for instance, a country may decide to bring forward the application of the new capital conservation buffer, initially envisaged for 2016, or the deduction of certain capital components. moreover, the regulation provides for a series of national options that might give rise to permanent differences in the treatment of specific aspects. it is logical that the ssm should work to achieve a degree of harmonisation, seeking to restrict national options of a permanent nature. it is perhaps less logical to take steps in the case of temporary discretionary arrangements, which by their very nature must disappear within a few years. different accounting practices, especially as regards provisioning, also significantly affect the uniformity of capital figures and should be a supervisory concern. it is thus reasonable to expect the ssm to contribute to convergence in the interpretation of international accounting standards. and it is essential that the ssm should strive equally to revise the calculation of riskweighted assets. that will call for a detailed review of the risk models used by banks and the adoption of corrective measures should unjustifiable deviations be detected. macroprudential policy macroprudential policy, insofar as it seeks to identify systemic risks, prevent them and increase the industry β s resilience, has an important role to play. the very nature of these risks is global in dimension, meaning that coordination between the various authorities with responsibilities in this field is needed. at the same time, it should be borne in mind that while the risks may be considered common to the euro area as a whole, their impact and intensity vary from country to country. this heterogeneity not only depends on the characteristics of each country, but also on the particular juncture of the financial cycle. for example, at present certain euro area countries evidence risks associated with excessive real estate market prices, while in others this risk is not discernible. macroprudential policy thus requires a coordinated approach by the various institutions, and at the same time attention must be paid to considerations of a national nature. in a monetary bis central bankers β speeches union like the euro area, the heterogeneity | legislative reforms ; ( b ) the requirement that institutions have resolution plans in place ; ( c ) assessment of the effective resolution ability of the authorities of the respective crisis management groups ; and ( d ) the need for institutions to have the loss - absorbing capacity or funds to ensure that, in a situation of resolution, it can be carried out β from within β, i. e. without need for capital injections by the relevant authorities and without destabilising the financial system as a whole. allow me to take a moment to talk about loss - absorbing capacity in resolution, or total lossabsorbing capacity ( tlac ). on 10 november the fsb published a proposal on the tlac requirement to be met by systemically important banks, the final design of which is scheduled for the end of 2015. the consultative process of the tlac proposal will be conducted in parallel with an impact study which will include ( i ) an analysis of the tlac needs for each institution which may have to be resolved ; ( ii ) a survey to assess the depth of the market in each jurisdiction bis central bankers β speeches involved ; ( iii ) an analysis of the historical losses incurred by global systemic banks at the height of the crisis ; and ( iv ) an assessment of the economic impact of the proposal, both at institution level and as to how it will affect the supply of credit. the difference from the basel requirements lies in the instruments eligible for meeting the new requirement. thus, in addition to all the equity instruments envisaged under basel, the proposal permits, and in fact requires, the inclusion of debt instruments, generally subordinated debt instruments. experience shows that capital may disappear in a crisis, and quickly so. the authorities must, therefore, have debt and equity instruments which ( through debt reduction and / or conversion into equity instruments ) allow them to resolve and recapitalise institutions from within, without need for bail - out by the public authorities. will this be the end of the reforms? i think not, at least as far as other financial sectors are concerned. the considerably higher prudential requirements on banks naturally cause some credit intermediation to shift to other financial sectors, in a phenomenon commonly known as β shadow banking β. the fsb has set in train two courses of action to prevent an excessive concentration of banking risk off the balance sheets of banks : first, it monitors their size, activities and risk characteristics ; and second, it is working on the introduction | 1 |
this challenge through multipronged strategy ; it is conducting various mass awareness programs and focused group discussions all over the country and supporting the industry and other related stakeholders for such initiatives. however, this is one area in which islamic banks have also to play a far more proactive role. ladies & gentlemen! as i mentioned earlier, standardization in islamic finance is essential for addressing various issues facing the islamic finance in addition to promote disclosure, transparency and integration into global financial system. i think the rapid growth of islamic banking and page 4 of 6 finance requires further strengthening of its financial infrastructure. this will augment the ongoing efforts to bring the infrastructure of islamic financial industry up to the international standards. the alignment of islamic finance industry with the global best practices would not only help supervisors in their tasks but will also foster the integration of islamic financial institutions into the international financial community. i would like to highlight here the commendable role aaoifi has played in development and promotion of shariah, accounting and governance standards to facilitate the growth of islamic financial services industry. aaoifi has also been instrumental in enhancing awareness of islamic banking and finance globally through knowledge sharing and organizing capacity building programs, workshops, conferences, and seminars. considering the constant changing dynamics in financial sphere, aaoifi also reviews and updates its standards to keep them relevant. aaoifi β s enhanced coordination with relevant stakeholders and increased collaborative efforts help islamic financial services industry to grow on sound footings. the aaoifi role in capacity building through offering shariah based certifications in the area of auditing, accounting and advisory services is laudable. such certifications provide the much needed qualified resources for effective implementation of the shariah standards. sbp has long standing association with aaoifi. as a member of the aaoifi β s board of trustee, state bank contributes in the overall oversight and supervision of its operations. our officials participate as both speakers and participants in different knowledge sharing and capacity building initiatives. so far sbp has adopted 6 of the aaoifi β s standards while another 8 to 10 standards are in the final stages of implementation. besides, sbp has advised the banks to refer the aaoifi β s standards for guidance in different areas of islamic finance. given the commitment and concerted efforts of all stakeholders, i am optimistic that islamic banking and finance is likely to maintain its positive growth trajectory. the growth of islamic finance on its distinct strengths would bring more stability to the financial system, improve equitable | niklaus blattner : current economic situation and monetary policy summary of a speech by mr niklaus blattner, vice - chairman of the governing board of the swiss national bank, at the 1st basel economic talks of the national bank, basel, 5 may 2006. the complete speech can be found in german on the swiss national bank β s website ( www. snb. ch ). * * * switzerland β s economy clearly picked up pace last year. exports were the main engine for growth, while construction and consumer expenditure also buoyed up economic activity. companies were nevertheless reluctant to invest or hire new staff. the recovery was thus still patchy, and inflation risks were accordingly low. since the beginning of the year, there has been a stream of positive news from switzerland and abroad. the us and asia are still enjoying a high level of economic momentum, and in europe, too, the recovery is becoming more firmly entrenched. benefiting from the favourable international environment, the upswing in switzerland has gained a broader footing. the investment environment in particular seems much more attractive now than last year. this applies especially to northwestern switzerland. many companies in this region have stated that they now want to implement investment plans that have been put on hold for a long time. the swiss national bank expects switzerland β s gdp to expand by just over 2 % this year. the economic upturn does not jeopardise price stability, at least not in the short term. in the long term, however, the current low level of interest rates is not compatible with price stability. if the economy performs as expected, the national bank will further pursue the gradual adjustment of its monetary policy that has already been initiated. | 0 |
to msmes seeking financing during the covid - 19 pandemic period, primarily for short - term working capital needs and medium - term productive business investments. these programmes have been fully disbursed, and the central bank is currently collaborating with the government of barbados to negotiate a third round of funding from the idb for usd 50 million, which will have an expanded focus of : 1 / 2 bis - central bankers'speeches 1. enhancing export readiness and diversification, innovative investment, food security, and climate adaptation ; 2. increasing the financial inclusion of women - led / owned business and persons with disabilities ; and 3. leveraging technical assistance to support capacity building and training of msmes. since the launch of the ecgf a decade ago, i can confidently state the operation of the ecgf has achieved its general objective of enhancing msme's access to muchneeded loan funding. in fact, during this period, the central bank has approved 326 guarantees totalling over usd 65 million for loans from eight participating financial institutions. furthermore, during the second loan programme to provide financing support during the covid - 19 pandemic, there was an increased demand for guarantees on loans to the renewable energy sector, which represented one - third of the total guaranteed amount. i am hearted that this sector is also posed to receive additional support in the third round of idb funding support. it is evident that idb continues to be a valuable development partner that is instrumental to barbados achieving its sustainable development goals. we will endeavour to maintain our strong collaboration into the future, and to provide the required support for our small business sector. we are heartened by the participation of the msmes and their financial institutions, including the enterprise growth fund limited, which has a mandate of providing financing to small businesses working capital purposes across the various economic sectors, including the renewable energy sector. i look forward to hearing first - hand the financial institutions'and businesses'experiences with the ecgf and to a lively dialogue on the important topic of access to financing for msmes. once again, welcome to everyone. 2 / 2 bis - central bankers'speeches | kamau thugge : acceptance speech - african bankers awards 2024 acceptance speech by dr kamau thugge, governor of the central bank of kenya, at the african bankers awards 2024, nairobi, 28 may 2024. * * * as prepared for delivery excellencies distinguished guests ladies and gentlemen good evening. i am very pleased to join you on this auspicious occasion of the african banker awards, 2024. i greatly appreciate the invitation to this important event, and i am humbled and honoured to be awarded the african central bank governor of the year award. the award reflects the efforts of the board, monetary policy committee, the management, and staff of the central bank of kenya ( cbk ), to whom i am grateful. tonight's recognition affirms kenya's sound macroeconomic policies, for which i thank his excellency the president, dr. william samoei ruto, for providing overall leadership. i also greatly appreciate the institutions we have walked the journey with including the national treasury, the president's council of economic advisors, my banking sector colleagues, and our development partners. when i was appointed cbk governor in june 2023, the kenyan economy was reeling from shocks such as a surge in global energy and food prices, and climate factors that were exerting upward pressure on food prices. currencies in emerging and developing economies were on a free fall, due to the monetary policy tightening in advanced economies. capping all this, was our dysfunctional interbank foreign exchange market, with low liquidity and significant foreign payments backlog, which led to low investor confidence, especially for foreign investors. as a result of these shocks, our overall inflation rose sharply to peak at 9. 6 percent in october 2022, and remained elevated at around 8. 0 percent through may 2023. the shilling also depreciated rapidly, exerting upward pressure on domestic prices, and contributing to a significant increase in the kenya shilling value of foreign currency denominated debt and debt service. my priority, therefore, was to address the inflationary pressures and the rapid depreciation of the kenya shilling. i convened my first monetary policy committee ( mpc ) meeting on june 26, 2023, one week after my appointment as cbk governor, and the committee agreed to raise the central bank rate ( cbr ) by 100 basis pointsthe highest single rate increase since july 2015. this was followed by another sharp rate increase | 0 |
or capital. the fact that the euro area is not considered as a single jurisdiction may result in applying higher capital buffers to euro area g - sibs. while the institutional underpinnings of the banking union do not yet meet the requirements of a genuine single financial market, the creation of the ssm has been a leap forward in the establishment of a coherent regulatory framework. one of the first priorities of the supervisory board has been to promote integration through harmonized implementation of options and national discretions ( onds ), thereby evening the level playing field in the euro area. regarding liquidity requirements, the single supervisory board can grant waivers at national as well as cross - border level on a case - by - case basis. in the current institutional context, where the free flow of liquidity within the same banking group but across border could be impeded, a prudent supervisory approach has led the ecb β s supervisory board to still maintain a floor on the liquidity requirements of significant subsidiaries. overall, the banking landscape still resembles too much a collection of banking systems highly exposed to their domestic economies, with limited cross - border private risk - sharing. at the same time, one should recognise that the banking union is both an objective and a process of fundamental structural changes in the euro area β s financial architecture. the next steps are 1 / 2 bis central bankers'speeches clearly set out in the ecofin roadmap to complete the banking union. it is now urgent to agree on an ambitious timetable for its implementation. 2 / 2 bis central bankers'speeches | bimal jalan : seminar on international financial architecture remarks by dr bimal jalan, governor of the reserve bank of india, at the symposium of central bank governors, hosted by the bank of england, london, 5 july 2002. * * * today β s topic is a very large one and the time available to us is relatively short. to make the maximum use of the time available to me, i will make four broad points rather than deal with any specific issues relating to the international financial architecture. these, we can deal with later in the seminar during the question / answer period. the first point that i want to make is that we need to recognize that the period of the 90s, despite many gains, has seen many more financial crises than the earlier decades. the most distinguishing characteristic of this period is a marked increase in volatility in exchange rates and capital flows. the swings in these areas have not only been large, but also unpredictable and unanticipated. thus, we have seen a large number of currency crises, for example, in mexico, russia, east - asia, brazil and currently argentina, turkey, and emergence of currency pressures in brazil and paraguay again. exchange rates of industrial countries, notably dollar, euro and yen have also shown both short - term volatility and large medium - term movements. capital flows, particularly to emerging markets, have similarly been volatile, with a boom phase being followed by an abrupt and equally large reversal. another feature of the abrupt movement in exchange rate is that while crisis initially occurs in one or two countries, their adverse effects can be felt across the world. in the light of the recent events following the argentina crisis, it is also not clear whether the contagion effect from one country β s problems to others has actually been contained, as was assumed only a month ago. as i said, there have been real gains also in terms of benefits from higher capital flows and more flexible exchange rates. however, it is also a fact that the international financial environment has become substantially more uncertain, unpredictable and unstable in the 90s than in the previous half - century. the second broad point that i want to make is that the present international financial architecture, which was designed at bretton woods after world war ii, was for a different era altogether - one of fixed exchange rates, preponderance of β official β and stable capital flows, and temporary current account deficits which could be met with temporary access to imf credit. the bretton | 0 |
financial system in japan has regained stability mainly because financial institutions have mostly resolved their nonperforming - loan problems, and as a result financial institutions'precautionary demand for liquidity has declined substantially. the year - on - year rate of change in the cpi has become slightly positive recently, and therefore the policy commitment has to a significant extent lost its influence on the formation of longer - term interest rates. thus, the stimulative effects of the quantitative easing policy on economic activity and prices are coinciding with the effects of short - term interest rates being at practically zero percent. the effects of monetary easing are being amplified by low interest rates maintained during the improvement in economic and price conditions. given this situation, the bank will thoroughly examine economic activity and prices, and decide a change of the policy framework appropriately according to the commitment based on the cpi. conclusion japan's economy continues to recover steadily. the current economic expansion has lasted four years, since january 2002, based on the cabinet office's reference dates of business cycles. this already makes it the third - longest expansion phase in the post - world war ii period. as for the outlook, the economy is likely to experience a relatively long period of growth, albeit at a moderate pace, and the bank will continue its close monitoring of developments. the bank will also continue to examine the state of the economy in each region thoroughly through such means as research conducted by its branches. the bank conducts monetary policy to realize sustainable growth of the economy through the pursuit of price stability. the bank is determined to firmly support japan's economy from the financial side to achieve sustainable growth with price stability by maintaining an accommodative financial environment, based on careful examination of developments in economic activity and prices. | direct effects of the consumption tax hike, the year - on - year rate of increase in the core cpi, which excludes volatile food, is likely to be around 1ΒΌ percent for some time. thereafter, it is expected to reach the price stability target of 2 percent from the latter half of fiscal 2014 to fiscal 2015, as the economy continues to grow at a pace above its potential growth rate. based on such an outlook, the policy board has judged it appropriate to steadily pursue the qqe under its current guidelines of asset purchases. ii. price stability target and qqe a. price stability target as a flexible framework next, i will explain what we mean by the price stability target, introduced in january 2013 ( chart 3 ). bis central bankers β speeches under the qqe, the bank aims to achieve this target at the earliest possible time, with a time horizon of about two years. the policy framework of the price stability target is flexible, just like that adopted by major central banks overseas. specifically, monetary policy requires long and variable time lags before its effects permeate the economy, and thereafter prices. to achieve a sustainable growth path in the context of price stability, monetary policy needs to be flexible. in other words, we examine the current conditions and the outlook for economic activity and prices. we also analyze various risk factors including the accumulation of financial imbalances. we take account of all these developments when we decide on monetary policy. that is what i mean by being flexible. flexibility in monetary policy has been widely shared with other countries. particularly in the aftermath of the global financial crisis, major overseas economies have become increasingly attentive to the flexibility of monetary policymaking. from that viewpoint, the price stability target is by no means a rigid and superficial framework which calls for the inflation rate to reach 2 percent with surgical precision. it is a flexible and practical framework that accommodates the needs arising from economic developments. put differently, what the price stability target aims to achieve is not a situation in which only prices will rise. rather, it aims to achieve an environment in which the improvement of the overall economy results in higher wages and then higher prices. in my view, in such an environment, some degree of latitude to the price stability target β both on the upside and downside β is naturally required. furthermore, it is necessary to make an analysis from broader perspectives when assessing the extent to which the bank has come close to achieving the target. that includes examining the | 0.5 |
ranks of poor. in asia, poverty incidence fell from 27 % in 1990 to 20 % by 2006 accompanied by improvements in attainment of mdgs. pace of poverty reduction has been steeper in east asia relative to south asia 4 with former lifting the estimate of poor women is based on undp human development report 1995 which stated, " poverty has a woman's face β of 1. 3 billion people in poverty 70 % are women. " this ratio of poor women is most widely quoted even presently. global call for action β stand up & speak out : 70 % poor are women β 2007. ibid. the world bank, global monitoring report, 2007. around 630 million people from extreme poverty in under a quarter of a century. this has lowered the region β s share in the total poverty from 58 % in 1981 to just 9 % in 2004. in south asia poverty fell from 52 % in 1981 to 32 % in 2004, but absolute numbers of poor remain large. several factors have contributed to improvements in these indicators ranging from higher economic growth and liberalization to concrete affirmative and targeted anti - poverty programs. nexus between inclusiveness, growth and gender equity 7. there is now a broad consensus emerging in development literature that women being a large proportion of population and labor force, if appropriately nurtured, through development and finance inclusive policies would have more distinct impact on economic growth and reduce poverty. 8. recent evidence of few key reports including the world bank β s global monitoring report, 2007 and access for all, 2007 and the world economic forum, gender report, 2007 brings out with greater clarity and distinctly the nexus between inclusiveness, growth and poverty reduction. β’ first, evidence confirms that there is a positive correlation between country β s gender gap ranking and their per capita income as well as competitiveness ranking. consequently, it is found that countries with low per capita incomes and ranking inadvertently have high gender gaps. β’ second, impact of growth on poverty on women β s uplift varies depending on the level of incomes of countries as well as the quality of economic growth and its transmission mechanism which in turn, among others, influences income distribution. the global monitoring report, 2007 found that in 19 low income countries, 1 percent of gdp growth was associated with a 1. 3 percent fall in the rate of extreme poverty and a 0. 9 percent fall in the $ 2 - a - day poverty rate. however, for middle - income countries the impact of gdp per capita growth on poverty is less and | radovan jelasic : development of the municipal bond market in serbia speech by mr radovan jelasic, governor of the national bank of serbia, at naled β national alliance for local economic development, belgrade, 13 may 2009. * * * it gives me great pleasure to welcome you all on behalf of the national bank of serbia. we in the national bank have long been advocating the development of bond markets by not only the government and local government bodies, but by other issuers as well. it is the crisis period that shows best that bankcentric systems β elsewhere and in europe, but more poignantly in serbia where banks account for over 90 % of the financial sector β face significant challenges, such as : a ) how to refinance loans due for repayment, b ) how to obtain fresh capital in the market, and c ) how to preserve public trust in the banking system. of course, one should also think in terms of catering for the needs of our clients since a bank is not an end in itself but represents a transmission mechanism between those who save and those who need the money. inefficacy of the banking sector necessarily affects the overall economy, and bank debtors are no exception. allow me to illustrate this idea by the following example : even if the european central bank cuts its policy rate ( which, at the moment, measures 1. 0 % only ), that does not necessarily mean that banks will automatically have access to cheaper funding especially if the risk premium for banks is increased. bank clients would in such a situation have two options : a ) to take more expensive loans from banks, or b ) to bypass banks altogether and borrow directly in the capital market by issuing own securities. as the nbs is also entrusted with the supervision of insurance companies and voluntary pension funds, urgent development of the securities market, including securities issued by local government bodies, is of our utmost interest. such development is also in the interest of commercial banks since securities operations are a typical segment of investment banking operations β issuing securities without undertaking credit risk. for that particular reason, the nbs is of the opinion that amid numerous projects and proposals relating to the development of the capital market, it is high time a concrete project was finally undertaken. some of the major prerequisites for the successful implementation of such a project are as follows : 1. local government bodies should have their own sources of income instead of relying on the β transfer of funds β which can be | 0 |
the achievement of a common economic goal. in the scheme of things, trade liberalization 4 / 7 bis central bankers'speeches meant, inter alia, elimination of quota on imports, removal of import licenses, gradual reduction of tariffs and customs duties etc. on the fiscal side, the pre - eminent measures were a planned reduction of the then high corporate tax and income tax. a prudent wage policy was deemed a key element in the overall policy package to beef up the competiveness of the mauritian economy. on the central banking side, a few policies aimed at complementing measures for strengthening competiveness and financial sector reforms were set as an agenda for immediate execution. the export sectors were the first policy target. the bank β s exchange rate policy was immediately geared towards one prime objective : achieve and maintain the competitiveness of the export sectors. following the introduction of the new currency peg, the bank of mauritius monitored the exchange rate of the rupee on a daily basis. corrective steps were taken as and when they were deemed necessary. in this exercise, constant attempts were made to keep the exchange rate of the rupee ( i mean real effective exchange rate of the rupee ) stable. the exchange rate of the rupee, deftly managed, in an imperfect financial market eventually enabled exporters to better predict costs and prices of their products. the previous two currency pegs had not permitted the re - alignment of the exchange rate of the rupee on a regular basis. the new peg did. investment in the economy shot up. the manufacturing sector, in particular the export sectors, underwent an unprecedented expansion. the economy fired in all its cylinders. entrepreneurs mushroomed. like boats in the rising tide of economic prosperity, new enterprises floated profitably. exports shot up. the economy attained a state of full employment conditions. the foreign exchange reserves of the bank of mauritius rose to levels never attained before. economic prosperity reached the lowest strata of the population. government revenue collections improved substantially despite cuts in corporate and personal income tax rates and reduction in tariffs and customs duties. it β s certainly not my intention to claim that the unprecedented economic prosperity of the second half of the 1980s is attributable solely to the bank of mauritius. far from it. i am sure, you will agree with me that entrepreneurship and industrial success do not occur from a void. they thrive in the soil of political structure and a culture comprising many essential elements. those combined elements give rise to synergy | 1980s, was quite likely to be followed by a process of trade liberalization at the level of individual countries, regional level as well as the global level. having taken the view that, at some stage, trade liberalization might eventually affect the balance sheets of banks thereby undermining their soundness, the bank of mauritius far - sightedly intensified its regulatory and supervisory activities in a bid to stave off as far as possible its adverse impact ; 3. there exists a solid body of research strongly suggesting that improvements in financial arrangements precede and contribute to economic performance. developing countries with relatively deep and efficient financial markets in the 1960s and the 1970s grew faster than those with relatively shallow markets. the bank of mauritius has thus been committed to initiate credible regulatory and supervisory measures with a view to strengthening the banking industry ; and 4. the efficacy of monetary policy implementation in a liberalized financial system depends greatly on the strength and efficiency of the players in the financial marketplace. we have a bank - centered financial system. in other words, banks are at the epicentre of our financial system. evidently, the players in our market are banks and bankers. banks are the medium through which the monetary policy impulses of the bank of mauritius are transmitted to the rest of the economy. the weaker the medium for transmission of monetary policy impulses the lesser is its efficacy in achieving the desired objectives. the medium, that is banks, had to be strengthened and hence the repeated emphasis on the need for a sound and solid banking industry. these have been the inter - related objectives envisioned in the approach adopted by the bank of mauritius in the last seven years with regard to the banking sector. despite a number of hurdles and unforeseen happenings, the bank of mauritius relentlessly pursued its objectives, for it is in the best interests of the economy to have a banking industry sufficiently strong to meet emerging challenges. all through the road traveled so far, the bank of mauritius has not been short of criticisms from commentators. in january 1992, the financial times carried a headline β man bites watchdog β. the man was robert maxwell. in the list of watchdogs, pension fund trustees, external auditors and accountants, institutional shareholders, the bank of england and a number of other regulators were identified as potential scapegoats. in private conversations and in the media everyone had his favourite scapegoat. some carefully avoided including themselves in the list of potential candidates for the scapegoats, as is the case in | 0 |
consumers navigate and compare financial products more efficiently, we are looking into the establishment of an online product aggregator to provide financial consumers with the ability to gather reliable information on a wide range of insurance products and make comparisons on simple products on a single website. a number of issues will need to be addressed to support such an initiative and ensure that meaningful comparisons can be achieved. over the coming months we will be meeting with stakeholders to obtain further views on our aggregator proposals and examine options to move this initiative forward. i have spoken at length this morning about our plans for the industry. in the years ahead, this industry will have an important strategic role in the ongoing transformation agenda that is being pursued for the insurance and takaful sectors. the bank is committed to providing a well - balanced regulatory environment that adequately protects consumers, while encouraging advisers to realise their full potential. we will continue to set a high bar on professional integrity and quality of advice, and we welcome your ideas and input on how we can continue to encourage firms to grow within the industry and bring financial advisory services to a wider spectrum of the public. the association of financial advisers has a very important role in this process and has been a focal point for the bank β s engagements with the industry. i look forward to your continued cooperation in achieving our shared goal of developing a financial advisory industry in malaysia that truly serves to improve the well - being of financial consumers in this more challenging environment, and one that we can all be proud of. thank you very much for your attention. bis central bankers β speeches | marzunisham omar : launch of the national scam awareness campaign speech by mr marzunisham omar, deputy governor of the central bank of malaysia ( bank negara malaysia ), at the launch of the national scam awareness campaign, kuala lumpur, 30 october 2022. * * * assalamualaikum and good morning. on behalf of bank negara malaysia, i would like to thank the association of banks in malaysia, the association of islamic banking and financial institutions malaysia, and the association of development financial institutions of malaysia for organising the national scam awareness campaign. the presence of dato'mohd kamarudin bin md din, director of the commercial crime investigation department, pdrm, encik kamal baharin bin omar, deputy director - general of the national anti - financial crime centre ( nfcc ), and encik harme mohamed, head of network security division, malaysian communications and multimedia commission ( mcmc ) this morning reflects our commitment and collaborative efforts to raise awareness on financial literacy and fight financial scams. this morning, there is also the financial literacy month ( flm ) exhibition, which marks the end of this year's financial literacy month. this year's flm, themed " financial wellbeing : go digital confidently ", is all about educating and raising awareness on digital financial literacy and safe usage of digital financial services. the past month has seen many seminars, workshops and other activities being conducted all around the country. the fen mobile coach also travelled to 61 locations across the country, reaching out to over 20, 000 people in urban and rural communities. in this regard, i would like to express my gratitude to the financial education network and everyone involved in the flm for their relentless efforts in elevating financial literacy. the reality is that as our lives become increasingly digital, criminals are also finding new and innovative ways to commit digital crimes, such as financial scams. indeed, the issue of financial scams has become a global issue, not just unique to malaysia. criminals are using increasingly sophisticated methods to scam victims. this is a concerning trend which keeps many of us up at night. for bank negara malaysia, our priority is to ensure that banking and payment channels remain safe and secure. given that the tactics used by criminals will continue to evolve, we will, where necessary, issue new security advisories and additional security measures for banks to take from time to time. these include the five measures announced on 26 | 0.5 |
. in particular, the time - bound actions undertaken by the bsp intend to : maintain domestic liquidity, incentivize lending, especially to important sectors of the economy such as msmes, grant financial relief to their customers, and ensure continued access by households and enterprises to financial services. the numbers show that the bsp β s short - term measures have started to gain some traction. 2 / 5 bis central bankers'speeches following the bsp β s infusion of p1. 9 trillion in liquidity into the system, total bank deposits grew by 10. 6 percent year - on - year, as of end - august 2020. banks β funding costs have declined. in turn, this has translated to lower lending rates across almost all types of loans. total loan portfolio of banks expanded by 4. 4 percent, yoy, as of august 2020. similarly, consumer loans grew by 14. 1 percent, yoy, as of end - june 2020. the bsp β s measures to incentivize lending to msmes and critically impacted large enterprises have resulted in the grant of new loans or in the renewal or restructuring of loan to msme borrowers. this is reflected in data on banks β utilization of msme loans as compliance with the bsp β s reserve requirements. as of the reserve week ending october 1, 2020, an average of p120. 9 billion in msme loans was used as compliance with the bsp β s reserve requirements, a substantial increase from the p8. 7 billion in msme loans reported in april 2020. data also show that restructured loans of banks grew by 158. 7 percent as of end - august 2020 year - on - year. this growth is significantly higher than the average growth rate of restructured loans of 36. 0 percent for the past five years. meanwhile, the volume and value of electronic payments surged in the past months. from august 2019 to august 2020 : instapay transactions posted a growth rate of 820 percent in volume, from 3. 2 million to 29. 5 million transactions, and 499 percent in value, from p24 billion to p141 billion. meanwhile, pesonet transactions more than doubled with the volume rising from 1. 1 million to about 2. 7 million, and the value climbing from p118 billion to p253 billion, or by 114 percent over the same period. apart from the philippines β solid macroeconomic fundamentals, the country β s other | strengths remain intact. on the bsp β s part, three areas are key to our path to progress : good governance, digital transformation, and msmes first, enterprises should be held accountable to a higher standard of good governance and should adhere to sustainability principles. the bsp β s initiatives in this space include alignment of our policies and work practices towards environmentally responsible and sustainable approaches. bsp has issued guidelines that will encourage financial institutions to incorporate sustainability in their risk governance frameworks. future policy will cover incentives which will encourage the financial sector to invest in activities that will promote climate - resilient, green, and sustainable growth. second, there is a need to support digital transformation within the economy and the acceleration of digitalization in the financial industry. the results of the bsp β s 2019 financial inclusion survey revealed that there is a wide gap in smartphone ownership and internet access depending on locality, geography, and income. 3 / 5 bis central bankers'speeches this basic constraint needs to be addressed so that our objectives can be achieved. in this regard, the bsp has expressed its strong support for programs that will hasten the establishment of reliable internet infrastructure across the country. these include the passage of the open access in data transmission act and the issuance of amendments to the executive order to liberalize access to satellite technology for internet services, which will allow the operation and use of international satellite communications in the country. third, given the vital role played by the msme sector in reinforcing the country β s growth prospects, the bsp is working on the establishment of market - enabling infrastructure that will sustain recovery of the msme sector. these include : the establishment of a credit risk database which will enable msmes to readily access low - cost and collateral - free lending. towards this end, the bsp is working with the japanese government on the development of this credit risk database for msmes. this is a comprehensive statistical reference tool for riskbased lending. this will lessen the dependence of banks on collateral, hence increase msme access to financing. the bsp also strongly supports the passage of the guide bill which proposes measures to strengthen capacity of government financial institutions to provide financing to msmes and other strategically important companies. let me now share some thoughts as to how the tmap can contribute to our national efforts, especially in the crucial areas to our growth. the country entered the crisis with a strong fiscal base which enabled the philippines to bridge the massive funding needed to finance the government | 1 |
demand elsewhere in the world, we cannot expect the us to continue to be the engine of growth to the extent that it has been over the past decade ; the likelihood is, rather, that its balance of payments deficit, which is currently around 5 per cent of gdp, will have to be corrected. which means that europe will have to generate its own growth to a much greater extent than in the past. this should be possible with such a large, relatively closed, economy, but it will entail a significant degree of structural reform. i know that sounds like a rather jaded mantra coming form a central banker, but there is no getting away from it. structural reforms inevitably involves short - term pain in pursuit of longer - term benefits. such reforms are essential if the euro area is to raise its potential to generate non - inflationary growth and to reduce its high level of unemployment. monetary policy implementation turning my attention to the area of monetary policy implementation, i would like, first of all, to refer briefly to the target system and the correspondent central banking model β the so - called ccbm. target has played a significant role both in monetary policy implementation and in the integration of the money markets in the euro area. the system has also helped to significantly reduce systemic risks associated with large value payments. daily transactions are over β¬1Β½ trillion involving around 250, 000 payments. the corresponding figures for ireland are about β¬19 billion and 2, 300. the governing council recently decided on the strategic direction of target over the medium - term. this will involve the development of target2, which will comprise a multiple platform system, including one shared platform to be used by central banks on a voluntary basis. the ccbm is also an important component of the eurosystem β s operational framework. the ccbm is used for the transfer of cross border collateral in respect of borrowings by escb counterparties. at end - 2002, just over β¬200 billion was held under the ccbm. at a level of about β¬15 billion, ireland β s share was disproportionately large, reflecting our importance as an international financial services centre. in terms of how markets have functioned, i would like to start off by reminding you of just how much has been achieved. the market in dublin was fully prepared for emu in that the bank had adapted its monetary policy instruments and procedures to the ecb model well in advance of emu. we β re four years into emu now and we have | and shift risk, so that, for example, the banks are seen to be well - capitalized and sufficiently de - risked in terms of their loan portfolios. it also requires market participants to be convinced that this action has been effective and sufficient. so far, not least because of the rest of the fiscal burden remaining such a challenging problem, investors are not yet fully convinced. important steps in the process are still under way but nearing completion, namely ( i ) the purchases by nama of the big property - backed loans and ( ii ) the achievement β despite the very sizable loan losses crystallized by these purchases β of much higher capital ratios. these capital ratios are calibrated to ensure that core tier 1 capital remains above 8 per cent through to 2012 ( 7 per cent equity ) for the main irish - controlled banks, taking into account the inevitability that the non - nama book will incur additional losses not yet brought to book during that time. ( the new capital injected would keep the banks above 4 per cent core tier 1 even in a severe stress scenario contemplated by the central bank and involving much higher loan losses across the loan book than are currently expected by the banks. ) the higher capital ratios have been achieved partly through the sale of sizable non - core assets at prices above book as well as by the acquisition of equity stakes by the national pension reserve fund and ( in the case of bank of ireland ) by the private sector. scale of losses dealt with by the capital injections i β m not sure that it is widely recognized just how big the actual and prospective loan - losses taken account of in the recapitalization of retail banks in ireland has been. in fact, if we include the losses of the 6 main foreign owned banks active in the domestic market, of which the largest have been ulster ( an rbs subsidiary ) and bosi ( a subsidiary of lloyds ) as well as all six of the banks that were guaranteed at the end of september 2008, and if we include all loan losses that have been provided for in the accounts of the banks since 2007, as well and this is the steady state cost, which would be true even if there were no interest free period. as the central bank β s base case of the prospective losses through to 2012 ( against the expectation of which the current capital requirements have been set ), the total loan losses come to no less than β¬85 billion, or about 55 per cent of this year β s gdp. | 0.5 |
and held an event at gillette stadium. more than 2, 100 borrowers seeking help attended. twenty servicers and twenty non - profit counseling agencies took part, with staff at the event and on dedicated phone lines. although we do not yet know the outcomes for these homeowners, we are monitoring the results and other federal reserve banks are considering holding similar events. in conclusion, the federal reserve has taken a range of actions to stabilize financial markets and to help borrowers and communities. taken together, these measures should help rebuild confidence in the financial system, increase the liquidity of financial markets, and improve the ability of financial institutions to raise capital from private sources. efforts to stem avoidable foreclosure and help borrowers through h4h and more aggressive modifications, as well as to develop effective strategies for dealing with foreclosed - upon properties, i believe, will also help homeowners and communities. these steps are important to help stabilize our financial institutions and the housing market, and will facilitate a return to more - normal functioning and extension of credit. | elizabeth a duke : foreclosure prevention efforts and market stability testimony of ms elizabeth a duke, member of the board of governors of the us federal reserve system, before the committee on banking, housing, and urban affairs, us senate, washington dc, 23 october 2008. * * * chairman dodd, senator shelby, and other members of the committee, i appreciate this opportunity to discuss recent actions taken to stabilize financial markets and foreclosure prevention efforts. financial markets have been strained for more than a year, as house prices declined, economic activity slowed, and investors pulled back from risk - taking. these strains intensified in recent weeks. lending to banks and other financial institutions beyond a few days virtually shut down. withdrawals from money market mutual funds and prospects that net asset values would fall further severely disrupted commercial paper and other short - term funding markets. longer - term credit also became much more costly as credit spreads for bonds jumped and interest rates rose. the problems in credit markets and increasing concerns about the state of the economy caused equity prices to swing sharply and decline notably. policymakers here and in other countries have taken a series of extraordinary actions in recent weeks to restore market functioning and improve investor confidence, with the aim ultimately to increase the availability of credit and the value of savings. the federal reserve has continued to address ongoing problems in interbank funding markets by expanding its existing lending facilities, and recently increased the quantity of term funds it auctions to banks and accommodated greater demand for funds from banks and primary dealers. we also increased our currency swap lines with foreign central banks. to alleviate pressures on money market mutual funds and commercial paper issuers, we implemented several important temporary facilities, including one to provide financing to banks to purchase highquality asset - backed commercial paper from money funds, and another to provide a backstop to commercial paper markets by purchasing highly rated commercial paper directly from businesses at a term of three months. on tuesday of this week, we announced another program in which we will provide senior secured financing to conduits that purchase certain highly rated commercial paper and certificates of deposit from money market mutual funds. the financial rescue package recently enacted by congress, the emergency economic stabilization act ( eesa ), provides critically important new tools to address financial market problems. eesa authorized the troubled asset relief program ( tarp ), which allows the treasury to buy troubled assets, to provide guarantees, and to inject capital to strengthen the balance sheets of financial institutions. as provided in the act, the | 1 |
banks so that they can better assess the potential systemic impact of a liquidity shock. the ecb supports the idea of organising common liquidity stress tests, for which participating banks would use their own stress tests based on a joint scenario. furthermore, the contingency funding plans of large banks should be shared not only with banking supervisors but also with central banks, as also recommended by the fsf. having said that, i would like to stress that financial institutions are ultimately responsible for ensuring that all relevant risks, including liquidity risk, are properly integrated into their overall risk management. in this vein, the full and timely implementation of the principles and best practice recommendations developed by both the public authorities and the industry, as well as a regular assessment of this implementation process, are of utmost importance. the second issue that i would like mention is that of procyclicality, and in particular the extent to which the current regulatory framework could encourage the procyclical behaviour of financial institutions. this is a complex issue as procyclicality depends on many factors. although the way in which financial institutions manage their risk is regarded by many as the main determinant of procyclicality, other elements such as capital requirements, accounting standards or banks β compensation schemes can act as contributing factors. in terms of policy action in this field, in the short term, regulators are determined to avoid measures aimed at tightening capital requirements, as these could impinge on the financial standing of banks and negatively impact the supply of credit and, in turn, the whole economy. at the same time, the contributing factors to procyclicality must be looked at from a longer - term perspective. finally, i would like to address the importance of cross - border cooperation between central banks, supervisors and regulators in the current context. indeed, the significant impact of the crisis in the us sub - prime market on other parts of the world highlights the importance of improving cooperation between national authorities, both for preventing and for resolving shocks. on the crisis prevention side, it has now been agreed that there is a need to reinforce multilateral surveillance at the global level. to this end, the fsf and the imf will intensify their cooperation with a view to enhancing the assessment of financial stability risks on a global scale as well as to coordinating possible policy responses. this endeavour should be mirrored at the national and the regional level by heightening the level of cooperation and exchange of information between central banks and supervisory authorities | in the united states are further reinforcing this very impressive implementation of the plan that has been approved by the international community. this is no time for complacency. central banks will remain solid anchors of stability and confidence. public authorities must be alert, decisive and effective at a global level : this is not a problem of the industrialised countries alone ; this is a global issue that has to be addressed with the full participation of the emerging countries. at the same time, private financial institutions and market participants must behave wisely, prudently and with a solid sense of responsibility. it is time to keep our composure. i thank you for your attention. | 1 |
the ideas i have discussed today. first, rich countries don β t make rich people. if your development strategy is to return the wealth of the country to the people, you don β t have a development strategy. real, lasting wealth is about knowhow, not natural resources. second, if you hear someone urging stimulus and going for growth, ask how they plan on dealing with the macroeconomic constraints. what β s the plan for inflation? how are they going to meet the import bill to avoid a balance of payments crisis? if they don β t have a serious answer, they aren β t serious. if they do have a serious answer, expect it to include policies like inflation targeting, a floating exchange rate and measures for keeping the fiscus solvent. these things cannot be ignored. south africa β s stimulus and recovery package does take these into account. third, acute challenges of inequality, poverty and unemployment are not reasons to gamble on macroeconomic stability. south africa β s social challenges mean we need to be extra careful about managing the system carefully so it doesn β t blow up β not that we need to run the system as hot as we can get it and hope for the best. finally, don β t ignore populists completely. they are very good at tapping into social frustrations β in a way, they are uncannily good instruments for detecting where society is hurting most. they aren β t very good at economics, so their ideas routinely end in disaster, but that doesn β t mean they are altogether foolish. rather, they are a reminder to better informed, more responsible people that things have to change. we cannot just say the populist path will end in disaster. it will. but we still have to point out another path. you cannot just be against populism β you need to be for something too. we need to talk about how we are going to get back to real and sustainable growth in south africa. thank you. | . the argument is that more spending will make people better off. more demand encourages more supply, meaning more jobs and more investment. it β s supposed to be a virtuous circle. so the government starts spending money β as much as possible. it borrows from people β s pension funds. it borrows from the central bank and demands it buys its debt β which means printing money. it spends the foreign exchange reserves. and at first sight, it works. as scholars of populism have noted, the immediate consequence of these policies tends to be an economic boom. people who warn that populism is a disaster will look foolish. there is more growth and big wage increases and more jobs. but it doesn β t last. time and time again, the boom turns to bust. inflation shoots up and growth collapses. some populists realise their strategy has failed and change course. others put their countries through even greater pain. during the 1950s, the argentine president juan peron effectively aborted his populist programme when inflation neared 50 %. 2 in peru, alan garcia abandoned his stimulus programme in 1988, with inflation well over 1000 %. 3 in venezuela, inflation is expected to reach one million percent this year, 4 and people are fleeing the country to find food, but the policy direction still hasn β t changed. what is it about the populist recipe that goes wrong? the literature focuses on two kinds of constraints : inflation and the balance of payments. now these are things populists probably don β t see coming. they don β t understand the causes of inflation very well. and they may not even know what the balance of payments is. but these are powerful forces, and ignoring them doesn β t mean they will leave you alone. the inflation problem is fairly simple. if a government wants to stimulate demand, it will want low interest rates, and it will demand that the central bank print money to buy its bonds. this extra money does a couple of things. it raises demand, and with the economy running hot, firms and workers put up their prices. it causes the exchange rate to depreciate. and because people see the government is printing money, they start to put a lot of time and effort into figuring out where inflation is going, and raising their prices to keep ahead of it. this process then gets worse over time. in the first year, you get a fair amount of growth and a bit more inflation. in the second year | 1 |
, is a vital driver of improvement on the supply side of the economy. at the micro - economic level, that means that particular sectors and individual businesses will continually rise and fall ; and that is why established producers everywhere often see new competition, perhaps especially international competition, as an unwelcome threat. but at the macro - economic level what we have to remember is that every dollar earned is a dollar available to be spent or reinvested back into the economy, whoever earns it. so, at the macroeconomic level, competition β the driver of economic progress β is a positive sum game ; it increases the potentially sustainable growth rate nationally, regionally, and internationally. how far each country individually is able to take advantage of this increased potential depends upon how flexibly it can adapt to changes in comparative productive advantage β which in turn depends upon the supply β side characteristics of our separate economies. but there is no doubt that we all stand to benefit. that is why i have always believed fundamentally in the principle of free trade and open capital markets which enhance competition. it is why i have always welcomed the rapid growth we have seen in the emerging market economies β and why incidentally i look forward to china β s accession to the wto. we cannot then sensibly aim to obstruct structural changes. but nor can we realistically hope to avoid all shorter - term fluctuations, associated with the business cycle for example or as a result simply of random shocks. what we are looking for is a stable macro - economic framework for the economy as a whole, which will help to moderate rather than aggravate shorter - term fluctuations, and one within which change can occur in response to longer - term real economic factors, undistorted by unnecessary, erratic, movements particularly in nominal values. in a totally closed, national, economy i suspect that the most effective way of achieving this would be to aim to stabilise the rate of consumer price inflation β at some very low level representing effective price stability. we might, certainly, as an intermediate step aim to stabilise the rate of growth of the money supply, if we were confident that the demand for money was sufficiently stable and predictable, but the reason for targeting the growth of the money supply would ultimately be to stabilise the rate of inflation, so the distinction is operational rather than substantive. but it is important to understand that effective price stability would not be intended simply as an end in itself. in order to maintain price | seed varieties, drove the consolidation of prairie farms to take advantage of the greater ability to cultivate and harvest crops on a larger scale. saskatchewan β s farm production and exports expanded massively, even while its population steadily declined. that freed up workers to move into job opportunities opening up elsewhere in the economy, while increasing the productivity and incomes of those who remained ( charts 4a and b ). this is a story that has a personal connection for me : half of my great - grandparents were farmers in the prairies, but none of their descendants is still farming. 4 / 10 bis central bankers'speeches i β ve been talking about how innovation drives trade, but the reverse is also true : trade openness drives innovation, too. this happens for two reasons. first, access to foreign markets exposes firms to new technologies and provides incentives for them to invest in producing more efficiently. 11 and second, competition from trade encourages firms to innovate and invent new products to maintain market share. trade is also an important channel for knowledge to spill over across borders : an operation in one country can become competitive by combining its home advantages with the best techniques developed elsewhere. 12 while trade and innovation have always been interconnected, the nature of these interconnections is changing rapidly with recent advances in digital technology, touching virtually all sectors of the economy. we are only beginning to appreciate how new fields, such as artificial intelligence, cloud computing, additive manufacturing and big data, may play out in new trade patterns. even calculating their economic impact is challenging. returns from patented intellectual property ( ip ), such as software, are an increasing part of value added in electronic products, and these are hard to measure. that β s also true of trade in ip services, which is becoming increasingly important. google chrome and dropbox β distributed worldwide across the internet β are good examples. since they do not physically cross the border, there is no customs paper trail, and they are difficult to track. they are also provided free to many users, so it β s hard to place a value on them. this whole process of expanding two - way trade and technological advancement is playing out in myriad industries. it is one of the most important drivers of canada β s growth potential, which, in turn, underpins rising living standards for canadians. while these are basically positive developments, they do pose important challenges for society and for policy - makers. both trade expansion and innovation are by their nature disruptive for firms and individuals | 0 |
##udent liquidity management. concentration risk whether it be in advances or in funding sources is something that we should be mindful of. large exposures to a single counterparty or a group of counterparties turning bad can have detrimental consequences. therefore, the frenzy of some of the ucbs to acquire large corporate exposures which are beyond their bite size, is to be strictly avoided and there is a need to closely monitor the existing ones. it is essential to ensure that there are well documented board approved policies for important aspects such as identification of target segments and business sectors, acceptable concentration levels, product specific guidelines such as borrower loan eligibility criteria, etc. risk managers should try to see that these policies are in 2 / 4 bis - central bankers'speeches alignment with the risk that the bank can bear i. e. its risk tolerance. for instance, a lossmaking bank with high npas should not be giving high risk loans and instead be focussing on recovery efforts. the other aspect i would like to highlight is the meticulous monitoring of risk limits. frequent breaches in risk limits, coupled with their non - ratification or their routine ratification, poses substantial dangers to the stability and integrity of financial institutions that extend beyond the immediate financial implications. if breaches become normalized or overlooked, employees may perceive risk limits as mere guidelines rather than non - negotiable boundaries, thereby compromising the institution's overall risk awareness. therefore, it is imperative to address breaches systematically, conduct thorough investigations, hold staff accountable, and implement corrective measures to fortify the risk management practices. compliance next in line is the role of compliance. compliance should adopt a forward - looking approach to anticipate and prevent non - compliant activities. rather than reacting to issues after they arise, compliance should strive to identify and address potential compliance risks before they escalate. the compliance function should adopt a'regulation - plus'approach, going beyond mere adherence to the letter of regulatory requirements and instead ensure that the spirit and intent of the regulation is also addressed. internal audit once appropriate policies and strong internal controls are in place, it is for internal audit to independently verify compliance with the same. very often we come across deficiencies in the scoping, coverage, and periodicity as well as issues in independence of the internal audit function. proper scoping should ensure that risks are comprehensively covered. further, high - risk areas may necessitate more frequent audits, while lower - risk areas may | remind all of us that it will take more than just a solid program. credibility can only be built if we can develop a credible program and at the same time be consistently and strictly adhere to it. bank indonesia has been working closely with the government in developing our own economic program to replace the program currently stated in the imf letter of intent. with the support from all of us, we are confident that we can and we will be able to obediently and consistently implement the program. for monetary policy, we are in the process of preparing the new framework of monetary policy, i. e., inflation targeting framework. this framework provides clarity in our objective and consistency in our monetary policy to pursue price stability, thereby gradually improve credibility. in banking sector, to maintain financial system stability and improve governance in banking sector, bank indonesia is currently in the process of preparing indonesia β s banking architecture ( api ) that can be used as a comprehensive and forward - looking platform for banking policy. the indonesian banking architecture vision is to create a sound, strong and efficient banking system to preserve financial system stability and stimulate national economic development. the new architecture consists of six pillars, as follow : β’ a sound domestic banking structure with the capacity to meet public needs and to stimulate sustainable national economic development. β’ a strong banking industry that is highly competitive and has a solid core capable of absorbing shocks. β’ good corporate governance as means to strengthen banks β internal condition β’ effective banking supervision and regulations, consistent with the international standards. β’ a complete infrastructure in supporting sound banking industry, including preparation for more sophisticated technology in line with a more sophisticated financial transaction. β’ consumer protection and empowerment. ladies and gentlemen, before closing my remarks, let me figure out the outlook of our economy. looking forward to 2004, we will continue to strengthen our macroeconomic fundamentals to be the basis for stronger growth in 2004 onward. while monetary policy will remain prudent, as both the inflation rate and the risk premium decline, fiscal policy will stay focused on achieving sustainability. this will require further steps to increase revenue collection and improve access to financing. but as the recovery continues we can begin to look forward to strategic investments to improve the welfare of the people and support the development of the economy. good macroeconomic management, however, is not enough to sustain high rates of economic growth. high growth requires structural reforms to make the economy more efficient. such reform programs that the government is undertaking include the strengthening of legal infrastructure, improving governance and increasing transparency in | 0 |
% believe in the wisdom of institutional processes or in enlightened economic debates for sufficiently steering national cycles. they must be complemented with common rules and anchors to ensure fiscal discipline. in other words, in the famous rules / discretion debate, we need indeed more discretion β¦ but not too much ; and we need less mechanical or obscure rules, but we still need rules. the setup should indeed ensure binding thresholds for the minimal annual adjustment of public finances. let me add that the more we progress effectively on national fiscal discipline, the easier we could envisage a common fiscal capacity β which we badly need. mario draghi eloquently advocated it recently, v and i wish it will be part of his new mission on competitiveness in europe. * * * to conclude, let me borrow a fundamental principle from physics, stated by isaac newton : β when two forces unite, their efficiency double β. well, it is time to combine the two forces of our monetary and fiscal policy, towards a greater efficiency of our euro area economy and to the benefit of our citizens. thank you for your attention. i press release : governors and heads of supervision endorse initiatives in response to the banking turmoil and reaffirm priority to implement basel iii. ii eurogroup statement on the euro area fiscal stance for 2024, press release, 13 july 2023. iii c. bouthevillain, s. debu, towards a much - needed reform of eu fiscal rules : the european commission β s proposals, banque de france bulletin no. 246 : article 2, 21 june 2023. iv x. debrun, l. jonung, under threat : rules - based fiscal policy and how to preserve it, european journal of political economy. v the economist, mario draghi on the path to fiscal union in the euro zone, 6 september 2023. | mr. greenspan remarks on income inequality remarks by chairman of the board of governors of the us federal reserve system, mr. alan greenspan, at a symposium sponsored by the federal reserve bank of kansas city in jackson hole, wyoming on 28 / 8 / 98. income inequality : issues and policy options i am pleased once again to open this annual symposium. at the outset, i wish to thank tom hoenig and his staff for assembling a highly capable group of experts to inform us and to stimulate discussion on an important issue in the world economy. the study of income inequality - its causes, its consequences, and its potential policy implications - has a long history in economics, although it has not always had a high profile among researchers and policymakers. to borrow a phrase from professor atkinson, income distribution in recent years has been β brought in from the cold. β in part, that awareness has resulted from the experience of many industrialized economies with widening earnings inequality in the 1980s and 1990s. it has been heightened by interest in the consequences of economic change in developing, newly industrialized, and transition economies. the experience of industrialized countries, including the united states, with growing income inequality has spawned a great deal of research on the functioning of labor markets, on the sources of shifts in the demand for various types of skills, on the supply responses of workers, and on the efficacy of government efforts to intervene in the operation of labor markets. a number of those who have contributed importantly to this work will be participating in this conference. one story that has emerged from that body of research is now familiar : rising demand for those workers who have the skills to effectively harness new technologies has been outpacing supply, and, thus, the compensation of those workers has been increasing more rapidly than for the lesser skilled segment of the workforce. that this supply - demand gap has been an important source of widening earnings inequality is now widely accepted within the economics profession. however, the considerable diversity of experiences across countries as well as the finding that earnings inequality has also increased within groups of workers with similar measured skills and experience suggest that we may need to look deeper than skill - biased technological change if we are to fully understand widening wage dispersion. in particular, how have private and public institutions influenced inequality over the past two decades? what roles have been played by growing international trade and the evolving ways in which production is organized? again, the participants in this symposium are well - equipped to speak to these issues, | 0 |
the fluctuation bands of the exchange rate mechanism. only the tight link between the dutch guilder and the deutsche mark, sealed with an exchange of letters between the deutsche bundesbank and de nederlandsche bank, survived this storm. apparently, the credibility of dutch monetary policy was restored again. in parallel to these developments, a vision even more daring than the close link between the dutch and german currencies was gaining the attention and support of european leaders : the introduction of a single currency in europe. one of its fathers, the former prime minister of luxembourg pierre werner, only very recently passed away. it is unfortunate that his proposal to achieve monetary union by the end of the 1970s did not succeed, and i take this opportunity to pay him the tribute he deserves. but this failure probably did not harm europe, because at the time the single market was far from completion. indeed, the political aspirations behind a single currency in europe were running too far ahead of the economic realities. by contrast, failing to introduce a single currency following the maastricht treaty would have been considerably more damaging. the path towards a single currency was a tortuous one. the whole plan, laid down in the werner report, was put aside amid the global currency turmoil in the early 1970s and the subsequent economic recession. but the vision of establishing a single currency in europe gained new momentum after the ratification of the single european act in 1987, which laid the foundations for the european single market. the idea, rightly so in my view, was that it would not be possible to reap all the benefits from an internal market if it were still subject to exchange rate fluctuations. moreover, the free movement of capital, fixed exchange rates and sovereign national monetary policies were generally regarded as mutually incompatible. ( a view first expressed by my colleague on the executive board of the ecb, tommaso padoa - schioppa ). the initiatives taken at that time, however, would not have been possible without the political will and courage to create a single currency in europe. indeed, this process, which eventually led to the introduction of the euro banknotes and coins on 1 january of this year, required considerable resolve on the part of the german government. in the run - up to the introduction of the euro, germany proved to be a staunch supporter of a single currency enshrined in a stability - oriented culture. the internal value of the single currency would have to be at least as stable as that | vitor constancio : securities settlement in 2020 β t2s and beyond speech by mr vitor constancio, vice - president of the european central bank, at the ecb β s conference on β securities settlement in 2020 β t2s and beyond β, frankfurt am main, 4 october 2011. * * * i am very pleased for the opportunity to be with you here today. as you might know, the president β s visit to the european parliament for the last monetary dialogue of his tenure was rescheduled at the last minute, so it was not possible for him to participate tonight. he sends his apologies and wishes you a very interesting and fruitful conference. in my remarks this afternoon, i would like to focus on the importance of strengthening the single market, the various initiatives currently being pursued for this purpose, and how t2s fits into the wider picture. the single market, and the single financial market in particular, has been one of the great success stories of the eu. since the project began with jacques delors β s white paper in 1985 and almost 20 years since the 1992 programme was completed, it has delivered enormous economic, financial and social benefits to the citizens of europe. the euro has played a major role in delivering the benefits of a single market. it has ensured price stability, removed exchange rate uncertainty and reduced transaction costs. all this is conducive to an integrated market. in times of urgency, we may sometimes take for granted the benefits that the single market has already brought. freedom of goods, freedom of services, freedom of capital, and freedom of people. indeed, in recent years we have been observing sometimes less focus on the need for further progress in the single market and even protectionist tendencies, which were also exacerbated by concerns raised by the financial crisis. however, the financial crisis should instead serve as a powerful reminder that only a fully fledged integrated single market can provide the resilience that we need to withstand future shocks. the single market act, launched in april by the european commission is therefore very much welcomed to provide impetus to the reinforcement of the project. this is also what is wished by citizens, since the very recent eurobarometer survey of 26 september shows that there are still important gaps between expectations and the reality of the single market : information gaps affecting citizens and authorities, gaps in the implementation of european policy, and gaps in the european legislative framework. against this background, i would like to highlight the progress made | 0.5 |
august indicated a rise in the unemployment rate. along with other factors, this triggered growing concerns over a slowdown in the u. s. economy, leading to a rapid weakening of the u. s. dollar and a decline in stock prices worldwide. i do not believe there have been significant changes in economic fundamentals in japan since the july mpm, as seen in corporate profits being at historically high levels, 6 / 7 bis - central bankers'speeches as i mentioned earlier. however, i think it is necessary to look back at market developments in the wake of july's policy change when considering further adjustments to the degree of monetary accommodation. in the course of this consideration, the bank should, as it has done to date, base its decisions on a careful assessment of how changes in financial markets are affecting the outlook for economic activity and prices - for example, how changes in market functioning and firms'fund - raising behavior are affecting the likelihood of realizing the outlook and the speed at which it is realized. thank you. 7 / 7 bis - central bankers'speeches | jean - pierre roth : once a student, always a student summary of a speech by mr jean - pierre roth, chairman of the governing board of the swiss national bank, at the university of bern, switzerland, 9 february 2006. the complete speech can be found in german on the swiss national bankaβ¬β’s website ( www. snb. ch ). * * * like all decisions relating to the future, monetary policy decisions involve numerous uncertainties. economic researchers are divided as regards both the effects of monetary policy and the form that this policy should take. there are a number of competing models in economic theory, and their policy recommendations often vary. relationships that have been stable in the past may change at any time, due to the fact that the structural equations used in economic models are not based on the laws of nature. the swiss national bank's monetary policy concept takes account of these uncertainties. our inflation forecast is a key element in this concept and combines the results obtained by a variety of different models. research is extremely important in our changing world. we can only be sure of identifying new developments as early as possible and basing our monetary policy decisions on a solid foundation if we engage in constant research. | 0 |
. more generally, in these demanding times, moderation is of the essence in terms of both profit margins and wages. these measures should be accompanied by structural reforms that increase competition in product markets, particularly in services β including the liberalisation of closed professions β and, where appropriate, the privatisation of services currently provided by the public sector. at the same time, the governing council stresses that it is absolutely imperative that euro area national authorities rapidly adopt and implement the measures announced and recommended in the euro summit statement of 26 october 2011. we are now at your disposal for questions. bis central bankers β speeches | growth in the euro area, which slowed in the second quarter of 2011 to 0. 2 % quarter on quarter, is expected to be very moderate in the second half of this year. there are signs that previously identified downside risks have been materialising, as reflected in unfavourable evidence from survey data. looking forward, a number of factors seem to be dampening the underlying growth momentum in the euro area, including a moderation in the pace of global demand and unfavourable effects on overall financing conditions and on confidence resulting from ongoing tensions in a number of euro area sovereign debt markets. at the same time, we continue to expect euro area economic activity to benefit from continued positive economic growth in the emerging market economies, as well as from the low short - term interest rates and the various measures taken to support the functioning of the financial sector. in the governing council β s assessment, the downside risks to the economic outlook for the euro area are confirmed in an environment of particularly high uncertainty. downside risks notably relate to a further intensification of the tensions in some segments of the financial markets in the euro area and at the global level, as well as to the potential for these pressures to further spill over into the euro area real economy. they also relate to the impact bis central bankers β speeches of the still high energy prices, protectionist pressures and the possibility of a disorderly correction of global imbalances. with regard to price developments, euro area annual hicp inflation was 3. 0 % in october according to eurostat β s flash estimate, unchanged from september. inflation rates have been at elevated levels since the end of last year, mainly driven by higher energy and other commodity prices. looking ahead, they are likely to stay above 2 % for some months to come, before falling below 2 % in the course of 2012. inflation rates are expected to remain in line with price stability over the policy - relevant horizon. this pattern reflects the expectation that, in an environment of weaker euro area and global growth, price, cost and wage pressures in the euro area should also moderate. the governing council continues to view the risks to the medium - term outlook for price developments as broadly balanced, taking also into account today β s decision. on the upside, the main risks relate to the possibility of increases in indirect taxes and administered prices, owing to the need for fiscal consolidation in the coming years. in the current environment, however, inflationary pressure should abate. the main | 1 |
##tes from the bank of mauritius act and the national payment systems act. the bank is mandated to oversee as well as own payment schemes. the perception of collusion or conflict of interest does not arise as the bank will have separate teams for operations and oversight. the bank has always adopted an enabling approach with regard to new technology in order not to stifle innovation. maucas is a testimony of the bank β s commitment towards maintaining an innovative, yet secure, payment system ecosystem. the launch of maucas is not the end in itself. it is the start of a fantastic journey. the bank will go around improving the system and adding new features. the bank intends to establish bilateral ties with switch operators from other countries with a view to bringing down the cost of transactions for trade in goods and services, including for tourism purposes, with these countries. the creation of a payment card for the islands in the region is another project that will contribute to higher trade among these countries. the bank has other projects in the pipeline for the benefit of financial institutions and the public at large. on the regional front, mauritius is already a member and host of the comesa regional payment and settlement system ( repss ). maucas may serve as a regional switch to the participating countries. it can be used for cross border retail payments through mobiles and cards, with settlement being carried out on repss. honourable prime minister, in your 2016 / 17 budget speech, you mentioned that the bank of mauritius will come up with a national payment switch as well as introduce a national payment bill. both have materialised under your guidance and support. testing but interesting times lie ahead as digital transformation brings about fundamental changes in working modes and business models of the financial sector as well as changing 3 / 4 bis central bankers'speeches customer preferences. such openings can be but beneficial to our society and economy. we must not only take advantage of the opportunities but also be alert to manage any accompanying risks. now that the bank is launching maucas, i invite banks and non - bank operators to make extensive use of this platform. the opportunities to develop new payment services are immense. both payment service providers as well as consumers stand to gain from this modern system. operators in fintech can also leverage this platform to launch new products and services. this journey would not have been as fruitful without the support of our partners, banks and other economic stakeholders. i thank all chief executives of banks for their assistance and cooperation to deliver on | t fix all the economy β s problems. but monetary accommodation is indispensible. the economy would be in much worse shape if the fed weren β t acting so energetically. looking ahead, we may need to do more if the recovery falters or if inflation stays well below 2 percent. if the economy does need more stimulus, restarting our program of purchasing mortgage - backed securities would probably be the best course of action. the policy actions the fed takes will depend on how economic conditions develop. if circumstances change, our policies will adapt. no matter the circumstances, i assure you that we at the fed are doing everything we can to achieve the goals of maximum employment and stable prices. thank you very much. references board of governors of the federal reserve system. 2011. β minutes of the federal open market committee β, june 21 β 22. board of governors of the federal reserve system. 2012. β press release β, january 25. federal reserve bank of new york. 2010. β quarterly report on household debt and credit β, august. feroli, michael e., ethan s. harris, amir sufi, and kenneth d. west. 2012. β housing, monetary policy, and the recovery β. presentation to the 2012 u. s. monetary policy forum, new york, february 24. jorda, oscar, moritz schularick, and alan m. taylor. 2011. β when credit bites back : leverage, business cycles, and crises β. nber working paper 17621. mian, atif, kamalesh rao, and amir sufi. 2011. β household balance sheets, consumption, and the economic slump β. presentation at american economics association meetings, atlanta, ga, january 8, 2012. reinhart, carmen m., and kenneth s. rogoff. 2009. this time is different : eight centuries of financial folly. princeton, nj : princeton university press. for more information, see board of governors ( 2012 ). bis central bankers β speeches williams, john c. 2012. β the federal reserve β s mandate and best practice monetary policy β. presentation to the marian miner cook athenaeum, claremont mckenna college, february 13. bis central bankers β speeches | 0 |
##demic. to sum up, a cross - check of the outcome of the economic analysis with the signals coming from the monetary analysis confirmed that an ample degree of monetary accommodation is necessary to support economic activity and the robust convergence of inflation to levels that are below, but close to, 2 per cent over the medium term. regarding fiscal policies, an ambitious and coordinated fiscal stance remains crucial, as premature withdrawal of fiscal support would risk delaying the recovery and amplifying the longer - term scarring effects. national fiscal policies should thus continue to provide critical and timely support to the firms and households most exposed to the ongoing pandemic and the associated containment measures. at the same time, fiscal measures taken in response to the pandemic emergency should, as much as possible, remain temporary and targeted in nature to address vulnerabilities effectively and to support a swift recovery of the euro area economy. the three safety nets endorsed by the european council for workers, businesses and governments provide important funding support. the governing council reiterates the key role of the next generation eu package and the urgency of it becoming operational without delay. it calls on member states to ensure a timely ratification of the own resources decision, to finalise their recovery and resilience plans promptly and to deploy the funds for productive public spending, accompanied by productivityenhancing structural policies. this would allow the next generation eu programme to contribute to a faster, stronger and more uniform recovery and would increase economic resilience and the growth potential of member states β economies, thereby supporting the effectiveness of monetary policy in the euro area. such structural policies are particularly 3 / 4 bis central bankers'speeches important in improving economic structures and institutions and in accelerating the green and digital transitions. we are now ready to take your questions. 4 / 4 bis central bankers'speeches | . underlying price pressures are expected to increase somewhat this year, owing to short - term supply constraints and the recovery in domestic demand, although they remain subdued overall, in part reflecting low wage pressures, in the 2 / 4 bis central bankers'speeches context of economic slack, and the appreciation of the euro exchange rate. once the impact of the pandemic fades, the unwinding of the high level of slack, supported by accommodative fiscal and monetary policies, will contribute to a gradual increase in inflation over the medium term. survey - based measures and market - based indicators of longer - term inflation expectations remain at subdued levels, although market - based indicators have continued their gradual increase. turning to the monetary analysis, the annual growth rate of broad money ( m3 ) stood at 12. 3 per cent in february 2021, after 12. 5 per cent in january. strong money growth continued to be supported by the ongoing asset purchases by the eurosystem, as the largest source of money creation. the narrow monetary aggregate m1 has remained the main contributor to broad money growth, consistent with a still heightened preference for liquidity in the money - holding sector and a low opportunity cost of holding the most liquid forms of money. overall, lending to the private sector remained broadly unchanged. the monthly lending flow to non - financial corporations showed a modest pick - up in february compared with the previous month. this was also reflected in a slightly higher annual growth rate of 7. 1 per cent, after 6. 9 per cent in january. monthly lending flows to households continued to be solid with the annual growth rate of loans to households remaining unchanged at 3. 0 per cent in february. the latest euro area bank lending survey for the first quarter of 2021 reports a moderate tightening of credit standards for loans to firms, following more significant tightening in the previous two quarters. heightened risk perceptions among banks were again the main contributor to the tightening, although their impact was less pronounced than in previous survey rounds. surveyed banks also reported a renewed fall in demand for loans to firms, mainly driven by a continued decline in demand for financing for fixed investment. with regard to lending to households, the survey indicated lower demand for loans for house purchase, while the credit standards for these loans eased slightly, supported by competition among lenders. overall, our policy measures, together with the measures adopted by national governments and other european institutions, remain essential to support bank lending conditions and access to financing, in particular for those most affected by the pan | 1 |
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