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as the economy recovers. 14 a third is that large - scale asset purchases ( lsaps ) can complement conventional policy actions by making financial conditions more favorable for growth even when short rates are constrained by the zlb. 15 armed with these insights, policymakers were prepared and able to act quickly and decisively when the financial crisis hit. a great deal was learned about the zlb and unconventional policy tools along the way. 16 indeed, another conference organized by the boston fed was held in october 2010 to assess lessons learned, and the proceedings of that conference were published in a special issue of the jmcb in february 2012. for me, the most interesting aspect of that conference was that participants took the zlb as a defining feature of the landscape : what was once viewed as primarily theoretical had become grounded in practice and experience. the zlb in 2019 this brings me to today. the federal reserve has embarked on a review of its monetary policy strategic framework. as was the case 20 years ago, the question is how to best achieve our monetary policy goals in the context of low inflation and the zlb. indeed, the policy questions we are grappling with today are exactly the ones laid out in woodstock. the one fresh wrinkle is that with estimates of the neutral real interest rate much lower than those that prevailed 20 years ago, the zlb is likely to be an even more powerful force than was imagined in 1999. 17 in approaching this question today, we should take lessons from the conference held in woodstock 20 years ago : bring together leading researchers and policymakers, draw out the best and most creative thinking, and take a long - run view of how we can navigate the environment before us. i am happy to say that this process is already in train, with the fed β s framework review incorporating perspectives from a wide range of stakeholders, culminating in an academic conference next week in chicago. conclusion in closing, i want to add a personal thanks to ken west for all he has done to promote outstanding research that is both innovative and relevant to the real - world problems that central banks face. and my best wishes for the jmcb, which i hope may continue its illustrious record for the next 50 years. as a researcher and policymaker, the one thing i am certain about is that fostering an open and active dialogue between researchers and policymakers is the best way for us to succeed in our work. thank you. 1 for references to the early literature, see james cl | daleep singh : implementing the fed β s facilities - moving at maximum speed with maximum care remarks ( via audio webinar ) by mr daleep singh, executive vice president and head of the markets group of the federal reserve bank of new york, before the money marketeers of new york university, 17 april 2020. * * * as prepared for delivery good morning everyone. thanks for being here, and let me begin by offering best wishes for everyone β s health under these difficult circumstances. i should also make clear at the outset that the views i express are my own and do not necessarily reflect those of the federal reserve bank of new york or the federal reserve system. in my remarks today i β d like to review the context in which the federal reserve launched an unprecedented set of policy actions, and i will then describe our approach to standing up emergency facilities at maximum speed with maximum care as we execute our mission. context in mid - march as you will no doubt recall, financial markets in mid - march were seized by the uncertainty caused by virus outbreak, both in terms of the speed and scale of impact on the economic outlook, and for society as a whole. extreme uncertainty triggered unprecedented market volatility across asset classes, escalating into a system - wide deleveraging event that appeared to overwhelm the capacity of financial intermediaries to absorb and transfer risk in an orderly manner. liquidity dried up across markets, including in u. s. treasuries, the benchmark upon which virtually every other asset is priced or hedged, the foundation for the dollar β s primacy as a reserve currency, and the source of funding for our federal government. as uncertainty rose and liquidity deteriorated, demand for cash and safe assets rose and demand for assets with any form of credit or liquidity risk plummeted. for a few weeks in march, even treasury yields began to rise, especially in longer maturities, and so did the cost for almost all forms of household and corporate borrowing. access to financing beyond overnight tenors became severely impaired, causing acute dislocation across short - term funding markets and triggering outflows across prime money market funds. in the race to safety, dollars became increasingly scarce, intensifying the stress across global markets. emerging market economies experienced an unprecedented outflow of capital from non - residents. sovereign yields surged in the most indebted european countries. the ominous reality was that a synchronized global selloff had taken on a life of | 0.5 |
the celebrations. thank you. | we have already begun this process in order to implement the regulation of new technologies rationally, protecting the markets from risks. at the beginning of this speech i mentioned the strategic objectives of the bank of russia. these are our key priorities. you may have noticed that the tasks we set ourselves four years ago and those for the year 2016, which i have been speaking about today, as well as challenges of the future, are all, of course, related to each other. we consider it to be very important to respect the principles of continuity, consistency and predictability. we will no doubt be responding with flexibility to any given situation. the situation is volatile, there is a lot of uncertainty in the world. we will have to react in accordance with the challenges presented to us. but the consistency of our policy, i think, is very important. the preservation of trust is vital to development, as well as to financial markets. this is a key category β trust in the financial market and trust in monetary policy have been the most influential factors in terms of economic growth. we view our policy as part of an overall economic policy aimed at creating conditions for sustainable long - term economic growth in our country. thank you very much! 3 / 3 bis central bankers'speeches | 0 |
3 % decline 2 / 7 bis central bankers'speeches in total assets over the period and the extensive restructuring efforts that have taken place in many banks. third, regarding the legacy of npls we first need to acknowledge that significant progress has been made. on average, npl stocks are being reduced fairly quickly, particularly in countries with the highest levels of npls. still, the burden remains heavy for a number of banks. reduction plans for these banks look ambitious for the coming years, but it is how they are implemented that will make the difference. at the same time, the ongoing policy initiatives designed to address this issue and prevent a similar build - up in the future are essential. if these structural challenges are only resolved slowly, the outlook for the euro area banking sector will hinge on cyclical developments and their impact on banks β operational environment. it is thus interesting to look at the broader financial stability challenges for banks over the next couple of years. despite some positive recent trends, the risk environment has become more challenging for the euro area financial system in many ways. on the positive side, the growing economy and the ever more resilient banking sector are supporting financial stability. this is partly why the financial system has recently proved resilient to volatility, and why contagion across countries and markets has remained limited. but these developments need to be put into the context of the continuing search for yield in the markets, rising trade protectionism, and political and policy uncertainty, which increase risks to financial stability. taking these factors together, the euro area financial sector is faced with risks, which can be classified in three categories. first, the factors that are related to the past, in other words, the legacy of the crisis, include a still - significant private and public debt overhang. and as i just said, the banking sector is still dealing with the challenges posed by the quality of its legacy assets. second, the current expansion of the us is now significantly longer than historical norms and the second longest in us modern history. looking ahead, a down - turn in the us macro - financial cycle could trigger a correction in markets in particular for riskier asset classes. furthermore, tensions have grown in emerging market economies on the back of a stronger us dollar and increased trade frictions. these developments may undermine global growth prospects and ultimately lead to abrupt increases in risk premia. so far, however, we continue to observe high risk - taking by market participants searching for yield in the low | lucas papademos : european central bank β s annual report 2007 introductory statement by mr lucas papademos, vice - president of the european central bank, to the committee on economic and monetary affairs of the european parliament, strasbourg, 21 april 2008. * * * madam chair, honourable members of the committee on economic and monetary affairs, it is a great pleasure and privilege to present to you today the ecb β s annual report 2007. this presentation is a key pillar of the ecb β s accountability relationship with the european parliament. in my introductory statement, i will first review economic and monetary developments in 2007, summarise our current assessment of the macroeconomic outlook, and explain our monetary policy decisions and operations. i will then briefly address fiscal policies and structural reforms. finally, i will focus on financial market conditions and prospects and will conclude by discussing envisaged policy measures aimed at restoring confidence and strengthening the resilience of the financial system. before doing so, i would like to highlight an important event : the third enlargement of the euro area with the adoption of the euro by cyprus and malta on 1 january 2008. thanks to the meticulous preparations of all parties concerned, the changeover to the euro was very smooth and efficient in both countries. the single currency was received with great enthusiasm by the cypriot and maltese people and we warmly welcome them to the euro area. economic and monetary developments 2007 was a very good year for the euro area in terms of economic activity. real gdp grew by 2. 7 %, mainly driven by domestic demand. euro area exports also benefited from strong, albeit moderating, global growth. however, in the second half of 2007, the outlook for economic activity was clouded by unusually high uncertainty, stemming from the difficulty of ascertaining the potential impact on the real economy of the financial turmoil that erupted in august 2007. the balance of risks to the growth outlook tilted to the downside. with regard to inflation, the year 2007 was characterised by a number of challenges. in the euro area, average annual hicp inflation last year was 2. 1 %, that is, slightly above the ecb β s definition of price stability. however, in the last quarter of the year, annual inflation rates rose sharply, reaching a peak of 3. 1 %, driven largely by substantial increases in oil and food prices. notwithstanding these price shocks, wage growth remained moderate and medium to longer - term inflation expectations firmly anchored at levels consistent with price stability | 0.5 |
strong support from abroad, both in terms of visiting lecturers and money. in some cases, these two aspects were interconnected, and completely new programs were gradually built up. among all, let me name center for economic research and graduate education, us business school prague and cmc graduate school of business. i can offer another illustration of how far we have gone. i have been with the czech national bank for six years. but as an academician i was in contact with the central bank already at the beginning of 1990s. at that time, the staff was struggling with very basic issues : a new statistics and data on the newly born market economy, ways how the economy should be analysed and what kind of theory or model should be applied etc. the czech national bank was receiving a lot of help from the foreign central banks and international institutions. today, we are at the level of state - of - art and we do not receive but provide foreign technical assistance. we assist directly to a number of countries as well as our experts are invited to imf missions around the world. and yet our staff is based primarily on people educated in the czech republic. i consider it as a good signal that we have reached significant achievements in economic education and that the problem of missing generation will soon cease to exist. i can only hope that we will continue with this process of catching up and that cmc will keep contributing to it. what can i wish to you personally? let me recall my recent visit to the bank of israel on the occasion of its 50th anniversary. we were having lunch with the finance minister benjamin netanyahu and we discussed necessary fiscal reforms. mr. netanyahu said that for pushing reforms through, one needs three things : the vision, the will and the political power. i can only add that combining these ingredients - the vision, the will and the power of knowledge - form the leader, regardless whether we talk about politics, managements, or science. having in mind education and network you have gained 1 / 2 during the emba course you have the best assumptions to succeed. i wish you all the very best in your further professional carriers. 2 / 2 | management of their reserve assets and the conditions associated with their issuance. fatf ( 2012 ), β international standards on combating money laundering and the financing of terrorism & proliferation β, available at : https : / / www. fatf - gafi. org / media / fatf / documents / recommendations / pdfs / fatf % 20recommendations % 202012. pdf. fatf ( 2021 ), β updated guidance for a risk - based approach virtual assets and virtual asset service providers β. https : / / ec. europa. eu / info / publications / 210720 - anti - money - laundering - countering - financing - terrorism _ en. in this respect, matters such as restricting said activities to supervised deposit institutions, 34 constraining reference assets to higher quality ones and imposing transparency measures on the latter35 are emerging issues that could ultimately become global trends. at the national level, in spain there are no specific regulations on crypto - assets. the spanish national securities market commission ( cnmv ) has issued a circular on advertising of crypto - assets intended for financial investment36. the circular aims to ensure that the advertising content is accurate, easily understandable and not misleading, and that it clearly includes mention of the associated risks, including the possible loss of the entire investment. as such, this regulation establishes the tools and procedures for effective supervision of crypto - asset advertising, but it does not regulate either crypto - assets, their issuance or crypto - asset - related services and, since october 2021, the banco de espana37 has held a special register of providers, although its scope is currently restricted to only a subset of players. 38 unlike other registers, this one has a limited purpose, catering only for anti - money laundering and counter terrorist financing needs. in other words, an entity β s inclusion in the register does not imply that it has been granted prudential authorisation, i. e. it does not guarantee that the agent is solvent or has the technical capabilities necessary to correctly pursue its activity. nor does the register impose specific transparency requirements vis - a - vis the agent β s clients. in sum, initiatives such as the register of certain crypto - asset service providers are a step forward. but they should not be interpreted as authorisation comparable to that granted to banks, nor do they mean that the banco de espana performs any supervision of their activities. these examples are a sample of the initiatives which are under way | 0 |
so as to plan any extra sales operations that would be needed, with the intention of creating minimum disruption to the market consistent with meeting the mpc β s desired exit path. a portfolio of Β£200bn of gilt purchases has a market value which constantly varies as market prices change. currently there is a large β mark - to - market β positive accounting position, given the increase in gilt prices since the programme ended. but for the public sector as a whole such fluctuations wash out : the ( gilt ) assets held by the bank are the liabilities of the government and fluctuations in the value of one exactly offset the other in terms of the public sector β s notional balance sheet. nevertheless, once all the assets have been sold, the asset purchase facility may end up with a cash deficit and i want to make a few points about that possible outcome. in conducting the buying operations, it was in part an intended policy objective that we would push up gilt prices and hence lower long - term interest rates. when we sell the gilts back to the market, we will be tightening policy by pushing up on interest rates and hence necessarily making gilts cheaper. the net effect will depend on the path of interest rates relative to those expected at the time of each buying operation but, given the policy objective, the result of the sales programme could easily be a cash deficit. but i want to emphasise that such an outcome would not mean that the public finances have been made worse off. the ongoing dynamic effects of the programme will have been to make it cheaper for the government to issue its debt in the interim. more importantly, over the lifetime of the programme, it would have delivered great benefits to the public purse by stimulating the economy and avoiding deflation : the increase in taxes received as a result of higher nominal gdp should be an order of magnitude larger than any financial deficit on the purchases themselves. to genuinely assess the impact on the taxpayer, one would have to take these and other factors into account. the counterfactual story will never be known precisely but the speech available at http : / / www. bankofengland. co. uk / publications / speeches / 2010 / speech437. pdf. the dmo β s objectives include : β to conduct its market operations, liaising as necessary with regulatory and other bodies, with a view to maintaining orderly and efficient markets and promoting a liquid market for gilts. β see page 31, β debt and reserves management report, | could be described as idle inventory stock, but these are defined as notes in circulation. but i should be clear that i don β t have enough evidence to prove to you that the stock : output ratio for banknotes has gone up, which would run counter to the story in almost all other industries. i want to move on now to trends in cash usage ( i am using β cash β here to mean banknotes and coin ). chart 8 shows survey evidence for the use of cash in retail transactions in the uk over the last 25 years. in terms of the share of the total volume of transactions, cash has fallen from over 80 % in the mid 1980s to 60 % currently. in value terms, cash accounted for around 9 % of all retail transactions in the early 1990s, whereas it is around 4 % currently. cash is generally used for small - value transactions. the latest evidence suggests that the average value of a cash transaction is around Β£9, with 93 % of payments under Β£5 being made in cash. one in five adults in the uk report that they use only cash for day - to - day transactions, with this group heavily focused on teenagers / young adults and the elderly. the survey evidence also indicates that more credit - constrained individuals prefer to use cash, as a budgeting tool based, i think, on the principle that with cash you can only spend what you have. the paradox of banknotes this quick survey of trends in banknote demand and use leaves us with what i regard as the paradox of banknotes. the total value of bank of england banknotes in circulation continues to rise, but their use in transactions is falling gradually. to recap, i have put forward some arguments that seek to explain this paradox. from a macroeconomic perspective, sustained low inflation has increased confidence in the real value of the currency, while more recently demand for banknotes has risen during this recession, and particularly for high denomination notes, reflecting loss of confidence in banks, and very low interest rates. atms have changed banknote issuance. and, banknote use is more concentrated among the young, the elderly, and those on low incomes. i would add one other thought on the demand for banknotes, which is more to do with human psychology. i suspect most people, however much they use cards, feel a degree of comfort from knowing that they also have cash in their wallet or purse, even if it is as a back - up. what does this analysis tell us about future | 0.5 |
mobile money @ 10 - stakeholder workshop dr. maxwell opoku - afari first deputy governor bank of ghana thursday, july 11, 2019 kempinski gold coast hotel, accra honourable minister of finance distinguished guests ladies and gentlemen good morning 1. thank you for the invitation and it is a pleasure to join you today at this workshop which also celebrates ten years of mtn mobile money. the chosen theme β a decade of driving financial inclusion and socioeconomic development β the impact of momo β is broadly aligned with the bank of ghana β s strategy to widen the scope of mobile money transactions and in so doing promote financial inclusion in the economy. over the past ten years, mtn has been a pacesetter in the mobile money space with the introduction of innovative financial products and services to their clients. i am sure this workshop will among others provide an opportunity for mtn to share insights on its successes within the mobile money space. 2. ladies and gentlemen, the bank of ghana has undertaken several reforms to deepen financial intermediation and promote financial inclusiveness for broad - based economic growth. more recently, the bank has taken advantage of the rapid technological advances and widespread use of mobile money to accelerate the country β s migration to electronic payments so as to expand the scope of financial services to all and sundry. consequently, the bank worked towards achieving a more diversified financial system which meets the needs of various consumers and businesses. 3. the start of these developments dates back to 2007 when the payment infrastructure was established, that is, the ghana interbank payment and settlement systems. this was further enhanced with supportive structures such as the real time gross settlement system ( rtgs ), the electronic central securities depository ( csd ), the automated clearing house ( ach ) system and codeline cheque truncation system. 4. considering the rapid growth in mobile money usage within the financial system, the branchless banking guidelines was issued in 2008, and replaced with the guidelines for electronic money issuers in 2015 after a significant policy intervention. this provided the supportive regulatory environment for mobile money services kick started partnerships between banks and non3 bank entities including telecommunication companies to set up subsidiaries to offer mobile money services and deliver innovative financial products and services. 5. the objective was to leverage on the prevailing high mobile phone penetration to deliver affordable financial services to the growing financially excluded segment of the population. these regulatory interventions incentivised telecommunication companies to partner banks in the provision of innovative products, culminating in increased up | the two consecutive years. however, assessment of current economic conditions in the first half of 2013 indicates some growth moderation amid rising inflation. 5. economic conditions broadly remained challenging during the first half of 2013. the developments reflected a slower pace of real sector economic activity during q1 evidenced by a contraction in the real ciea and weak business and consumer sentiments in the quarter. however, economic activity and consumer confidence rebounded in q2 while business confidence continued to be weak. 6. headline inflation has consistently trended upwards in the year on account of significant increases in domestic petroleum products and seasonal food cycle which affects prices. inflation has risen to 11. 8 pct in july 2013 ( new cpi basket ), from 8. 8 pct in december 2012. in addition, inflation expectations by both businesses and consumers remained heightened. 7. on the external front, prices of ghana β s key commodities softened which resulted in lower export earnings. this, coupled with moderated import growth, resulted in some bis central bankers β speeches improvement in the trade deficit to us $ 1. 2 billion in the first half, compared with a deficit of us $ 1. 3 billion same period last year. 8. while modest gains have been made in broadly stabilizing the foreign exchange market, major vulnerabilities emanating from continuing imbalance in the supply and demand conditions on the market are currently exerting some pressure on the local currency. on a year to date basis, the ghana cedi has cumulatively depreciated by 3. 4 pct against the us dollar, compared to 17. 2 pct depreciation a year earlier. going forward, the bank of ghana stands ready to implement both short term and medium to long term measures to ensure stability in the foreign exchange market. 9. mr. chairman, as we all know, developments in the banking sector showed that banks remained profitable, liquid and well - capitalised, thanks largely to the high interest rate environment that has persisted for some time now. in contrast to low investment yields of 2 pct in global financial markets, banks in ghana on average had roe of over 20 percent and roas of over 5 percent. the capital adequacy ratio ( car ) was about 18 pct, above the prudential limit of 10 pct. asset penetration, measured as the ratio of total assets to gdp, was 40. 5 pct indicating continued deepening of the financial sector in the economy. 10. these notwithstanding | 0.5 |
rebalancing of the budget in the medium term. it is essential to look further ahead : the long - term sustainability of the public finances is fundamental to ensure the effectiveness of policies in the short term as well. monetary policies the central banks have made a prompt and coordinated response to the crisis. official interest rates have been lowered rapidly ; in many countries they are near zero. worrying about getting too close to the lower limit for nominal interest rates cannot be a reason for inaction. the experience of the united states in the 1930s and of japan in the 1990s suggests that in the initial stages of the crisis it is necessary to counter the tendency of real interest rates to increase. rapid disinflation must not be allowed to turn into deflation. the ecb has reduced its reference rate by 225 basis points since last october. in the euro area the real short - term rate is now below 1 per cent ; if official rates had not been cut, it would have risen considerably because of the fall in inflation. the governing council is keeping a close watch on the real cost of money. the main central banks have injected liquidity in unprecedented quantities. they have extended the range of their own instruments for action. in some cases, they have intervened directly by buying corporate debt, reactivating the circulation of credit where it had been blocked, helping to finance the private sector. they can act to influence long - term interest rates. to date, the judgement on the effectiveness of these measures is favourable. 1 when macroeconomic conditions return to normal, the liquidity pumped into the economy should be rapidly drained. the adoption of a strategy to return to normality is premature until see ben s. bernanke β s testimony to the committee on financial services, us house of representatives, washington, d. c., 10 february 2009. output and employment have stopped falling : but, as with fiscal policy, it is important to provide for it from today to ensure the effectiveness of the monetary expansion, firmly anchoring long - term inflation expectations and countering any speculative bubbles in the prices of financial and real assets. policies for financial system stability and the revival of credit reactivating financial intermediation remains essential to get over the recession and return to lasting growth. the surrogate role played by central banks can only be temporary. interventions in the united states and europe last autumn ( guarantees on deposits and bank securities ) affected the liability side of bank balance sheets. they prevented the collapse of the system, reviving some | sectors hardest hit by the pandemic and by the higher energy costs. in a similar vein, forborne loans, 1 most of which are classified as stage 2 or non - performing, were down by 7. 7 % to june 2022, with their share of total lending shrinking to 4. 5 %, again below pre - pandemic levels. second, the profitability of the spanish banking industry continued to improve in the first half of the year, adjusting for the extraordinary profit recorded largely as a result of the mergers that took place in 2021. specifically, the sector β s roe stood at 10 % in h1, up by forborne loans are also typically associated with possible repayment difficulties for borrowers ; indeed, more than half are classified as non - performing. 2 percentage points ( pp ) on june 2019. this was higher than our estimated cost of capital for the period ( 7 %, similar to the level estimated prior to the pandemic ). this improved profitability owed to a better performance in banks β recurring business, with growth of more than 10 % in net interest income and in fees and commissions. it is worth noting here that banks are beginning to pass through the increase in money market interest rates to new loans, albeit, for the time being, far more slowly than in the past. evidently, for variable - rate loans the impact is automatic, but it will likewise take some time. for their part, banks β wholesale funding costs are reflecting the tightening of financial market conditions, while risk premia are also rising. as yet, however, deposit interest rates have not increased, and to june there has been no significant shift of funds towards term deposits. further, listed banks as a whole recorded a year - on - year increase in impairment losses to june, as a result of specific contributions from business abroad, but at most banks these impairment losses declined. in any event, impairment provisions remained slightly higher than those recorded before the onset of the pandemic. third, as regards solvency, the overall common equity tier 1 ( cet1 ) ratio of spanish banks stood at 12. 9 % in june 2022, down 50 basis points ( bp ) on a year earlier, but 70 bp above the pre - pandemic level ( 12. 2 % ). the recent reduction owed to the increase in risk - weighted assets, since the numerator of the ratio barely changed. this solvency level implies higher voluntary capital buffers than key regulatory | 0 |
and should concretely increase the efficiency of our supervisors. but i would like to focus for a moment on the contribution that we can make, as a central bank and supervisory authority, to the development of the regulatory framework. in this area, i think it is important to recall a few principles that underpin our vision as a supervisor and central banker with regard to the changes in the regulatory framework of the financial system. first of all, i would like to stress that no regulatory framework is set in stone. we must keep an open mind, and have the necessary understanding and lucidity to adapt frameworks to technological evolutions - or even revolutions -, as well as to their challenges and associated risks. secondly, this adaptation must, in my view, preserve and consolidate two fundamentals of financial sector regulation : the financial stability objective and the principle of monetary sovereignty. in this respect, i would like to commend the ambitiousness of the european commission β s recent digital finance package and its priorities, in particular those to fight against the fragmentation of the digital single market for financial services and to address the new challenges and risks associated with the digital transformation. with regard to these risks, i think it would be appropriate for the commission to address the complex but currently unavoidable issue of the oversight framework to be applied to critical it service providers, including cloud service providers, and the equally important matter of the supervision of issuers and distributors of stablecoins, whether they be single or multi - currency coins. i will not go into detail on the commission β s proposed legislation, which still requires careful examination on our part and which will, of course, have to be improved by the negotiations that are about to get underway. i simply want to say here that the regulations β proposals aimed at critical it service providers and stablecoins include promising provisions : for the former, a dedicated framework that does not exempt financial intermediaries from their responsibilities and their obligation to use european service providers, and for the latter, a strict supervision that involves and associates national and european authorities. i would also like to stress here that the two points for attention i have just mentioned do not, in my view, overshadow any of the following : the many other initiatives announced in the action plan, the work to facilitate remote access and promote an interoperable digital identity, the provisions on cybersecurity, or the forthcoming discussions on artificial intelligence or data sharing in financial services - open finance after open banking. | close coordination of economic policy with common rules β 3. but let me specify her / his concrete tasks. i see four of them. first, the minister would be in charge of preparing the euro area - wide collective strategy to fulfill its sustainable growth mandate and collectively agreeing the division of tasks through the setting of individual performance targets for member states. nobody seriously disputes that a collective strategy involving more structural reforms in some countries including france, and more public investment in others including germany would make for a better policy mix for sustainable growth and employment in europe. second, the finance minister would be responsible for supervising the implementation of the collective strategy, using adequate instruments to provide symmetric incentives. negative incentives would include the existing sanction mechanisms, and could be broadened in contractual procedures, already put forward in the 2013 franco - german contribution on emu, or in chancellor merkel β s 4 β binding reform contracts β proposal. a positive incentive could be for instance the access to a euro area β convergence fund β, through which member states could benefit from common funding. third, the finance minister would be responsible for implementing centralized crisis management. a finance minister for the euro area would naturally be in charge of overseeing european stability mechanism operations. last, while moving towards further integration, the minister could be given the authority for managing a euro area convergence fund, progressively evolving towards a euro budget. further integration and democratic accountability should move forward in parallel. these institutional changes obviously require a new treaty. marcel fratzscher, lessons for europe from german monetary union, diw economic bulletin 27. 2015 angela merkel β s first parliamentary speech of the third term, december 18 2013. bis central bankers β speeches a legitimate institution with genuine admin. capacity legitimacy : appointment process and international role capacity : treasury administration and advisory councils accountability : stronger democratic control over euro area affairs first, we need a legitimacy - enhancing appointment process. the finance minister could thus be appointed for a five - year period by the european council acting by qualified majority on a proposal from the president of the eu commission. the new appointment would be subject to the formal approval of the european parliament, and the finance minister would be member of the commission, as well as chair of the eurogroup. second, the euro area finance minister would need to be backed by a genuine treasury administration. such a civil service would also benefit from the public advice of two independent bodies, the european fiscal board and the competitiveness council. last, if we succeed in implementing further integration, we | 0.5 |
it easier for the eu and the uk to cooperate in addressing the challenge of tackling unequal regional economic opportunities. however, https : / / www. pbl. nl / publicaties / korte - termijn - gevolgen - van - de - brexit investigating and implementing effective ways to tackle regional inequality, remains a shared interest to all of us. let me conclude by stressing that while the uk will now leave the eu, other alliances between the continent and the uk will remain in place. central banks and supervisors on both side of the channel will continue to coordinate our efforts in the imf, the fsb, the bis and other standard - setting bodies. eu - uk cooperation within the network for greening the financial system demonstrates that our combined impact is greater than the sum of our individual contributions. and new alliances between the eu and the uk will no doubt emerge in the future. specific alliances may change over time, but the most important challenges facing the eu and the uk will continue to bind us. indeed, ultimately, we will always be only 33. 3 kilometers apart. i wish you all an inspiring day and thank you for your attention. | areas across the country that had recently experienced a bank branch closure. we found that small businesses, older people, and people with limited access to transportation are most https : / / www. stlouisfed. org / publications / bridges / fall - 2018 / parents - wealth - helps - explain - racial - disparitiesin - student - loan - debt. see federal reserve bank of richmond and federal reserve bank of atlanta ( 2017 ), small business credit survey : report on rural employer firms ( richmond, va. : frb richmond ), https : / / www. richmondfed. org / / media / richmondfedorg / community _ development / resource _ centers / small _ business / pdf / credit _ survey / sbcs _ report _ rural _ employer _ firms _ 2016. pdf. see randal k. quarles ( 2018 ), β trends in urban and rural community banks, β speech delivered at β community banking in the 21st century, β sixth annual community banking research and policy conference, st. louis, mo., october 4, https : / / www. federalreserve. gov / newsevents / speech / quarles20181004a. htm. according to 2017 federal deposit insurance corporation summary of deposits data ( available at https : / / www5. fdic. gov / sod ), nonmetro persistent poverty counties had, on average, 0. 36 bank branches per 1, 000 people, compared with 0. 53 for other nonmetro counties. - 9affected. 18 we also learned that the loss of the branch often meant more than the loss of access to financial services ; it also meant the loss of financial advice, local civic leadership, and an institution that brought needed customers to nearby businesses. regulation and supervision need to be carefully tailored to suit the size and business model of different types of institutions. at the fed, we have renewed our efforts to avoid unnecessary regulatory burden on community banks, which provide essential credit in their local communities. another means to address the issue of branch closures is the community reinvestment act, or cra, which encourages banks to help meet the credit needs of the communities they are chartered to serve. the cra has been an important tool for strengthening local communities. the trend toward fewer branches and increased use of technology to deliver financial services presents a particular challenge to our current approach to cra evaluations. specifically, the current regulations use a bank β s | 0 |
especially the most needy, and writing a more exciting chapter in that history book. β i look forward to the deliberations and the outcomes over the next two days as we reimagine the future of the african banking sector. thank you! | ##rencies, most notably bitcoins and more recently stablecoins. however, they have turned to be less of payment instruments and more of wealth management tools. further, they have largely remained out of the realm of regulation, but are being closely watched by regulators. closer home, a medley of financial services have emerged on digital platforms, most notably digital lending. a lot of these digital players, not being deposit takers have operated below the radar of regulators. this has caused grave social strife through exhorbitant interest rates, aggressive debt collection and overindebtedness. regulators must therefore review their perimeters without stifling innovation. this is a discussion we are currently having in kenya, with a bill under consideration by parliament to empower cbk to regulate fintechs offering digital lending services. as i draw to a close, the african banking sector has done relatively well in the pandemic but we must not be complacent. the pandemic remains far from over while the global terrain is rapidly shifting. we came into the pandemic with a well - developed digital ecosystem, leveraging mobile phone technology particularly in kenya, ghana, rwanda, tanzania and uganda, among others. these digital rails have enabled the financial sector keep the lights on as they delivered much needed services. will these advantages be enough to move the african banking sector to the next frontier? the simple answer is no, and african banks must reset their paths. they must keep their customers at the heart of everything they do while building ecosystems that meet customer needs at every stage of their lifecycle. most importantly, they must build new ships that will steer them in the deeper ocean that they must play in. there is work to be done. i close with a personal message that i sent ceos of commercial banks on january 2, 2021 : β congratulations, 2021 is finally here! with 2020 now consigned for the history books we should also acknowledge our many accomplishments during a very unusual year. thank you for your contributions, even those that appeared small or trivial. looking ahead, however, more than ever before the spirit of the legendary trailblazers is needed β courage and hope for the future. we will rise to the challenges along the way with the responsibility of a leader, treading boldly where others have not trodden. unsurprisingly, the period ahead will provide us many opportunities to recommit to a shared future, ultimately improving the lives of those around us | 1 |
of the use of agents by the two companies at its meeting in april 2006. as a result of that discussion, the two companies were asked to provide the reserve bank board with their policies on agents. mr thompson, at that time chairman of the boards of both npa and securency, responded to this request in july 2006, and provided the policies and associated documents for both companies. this correspondence noted that the companies had recently reviewed and strengthened their bis central bankers β speeches policies. while each company had its own policies and procedures, both articulated the following key elements : β’ the respective boards reaffirmed the companies β policies against any direct or indirect involvement in corrupt, unethical or otherwise questionable practices, and asked management to ensure that all agents formally acknowledge and commit to this policy. the agency agreements provided for termination when this commitment was breached ; β’ a process was established to inform the respective boards about the appointment of agents, the applicable commission rates and payments made ; and β’ a process of annual review of these policies was established. the npa board sought updates on implementation of its revised policies at the february 2007 npa board meeting. on hearing management β s responses, the npa board requested that faster progress be made and that an information paper on the state of play with agents be prepared for the may 2007 meeting. the rba, through the assistant governor ( corporate services ) and director of npa, mr campbell, also sought or received updates on the implementation of the policies from the npa manager of corporate service. in november 2006 and march 2007. no probity concerns were raised in response to these requests for updates. the may 2007 npa board paper, the audit at npa and the memo from the npa manager during the course of implementing the revised agent policies at npa, in about mid april 2007, the npa manager raised concerns with mr campbell ( assistant governor ( corporate services ) of the reserve bank, and director of npa ) about comments that had apparently been made by two of npa β s agents and about the conduct of certain npa management. mr campbell encouraged the npa manager to seek answers to the queries he raised and to include his concerns in the may 2007 npa board paper on agents which had been requested by the npa board. the paper, authored by the npa manager ( as company secretary ) and the ceo, was presented at the 16 may 2007 npa board meeting. it noted that two of three agents had yet to | review of securency β s agent policies and procedures by kpmg. at the request of the afp, securency did not immediately retain kpmg, so as not to hinder the afp β s initial access to documents. in early june 2009, the reserve bank board was provided with an update on securency β s referral to the afp for investigation. the reserve bank board was informed that the afp β s investigation was in an assessment phase, during which the afp would determine whether a further investigation was necessary. the afp informed securency around the end of june 2009 that the afp would proceed with a full - scale investigation and that it did not object to securency engaging kpmg. securency offered full cooperation to the afp, as did npa when the afp inquiry was subsequently widened to include possible wrongdoing at npa. in july 2009, with the afp β s agreement, the board of securency approached kpmg and asked them to conduct an independent investigation of securency β s policies and procedures regarding agents. the reserve bank board was subsequently informed at its july 2009 meeting that securency had engaged kpmg to conduct an independent review of securency β s agent policies and procedures. in october 2009, kpmg informed dr rankin that kpmg had discovered documents indicating that a former employee of securency had raised concerns over the use of overseas agents in early 2007. a progress report was provided by kpmg to the securency board in november 2009 which confirmed that their forensic work had discovered material which indicated concerns about possible corrupt payments had been raised by a securency employee with securency senior management in early 2007. these concerns had never been made known to the securency board or the audit department when it conducted either bis central bankers β speeches the 2007 or 2008 audits. at the time the ceo and cfo of securency were stood down and the use of agents suspended pending further inquiry. the preliminary findings reported by kpmg also indicated that there had been failures to fully implement the procedures specified in securency β s agent policies and procedures. kpmg β s final report was released publicly by securency in march 2010. it contained a number of recommendations, which have been implemented. the charges charges were laid against a number of individuals who were former employees of npa and securency from july 2011. the companies were also charged. further charges were laid against securency in august 2011, | 1 |
of the spav law is accomplished. as the financial environment becomes increasingly global and liberalized, bsp saw the need to align the local banking practices with internationally accepted standards. we are upgrading the banking system β s capitalization and risk management standards to be fully compliant with basel ii by 2007l we are also institutionalizing corporate governance and financial transparency. by yearend, the banking industry will adopt the new international accounting standards ( ias / ifrs ). the monetary board very recently approved the implementing guidelines. we are likewise improving the current regulatory framework through close coordination with other local and foreign financial regulators. i am happy to report that the financial sector forum, our partnership with local financial regulators ( sec, ic and pdic ), is now fully operational with major projects currently underway. these projects include conglomerate mapping, information sharing, joint examination arrangements, rules harmonization and financial literacy. the domestic capital market remains shallow and underdeveloped. in response, the bsp has issued various circulars diversifying the financial products available in the capital market. traded papers like unsecured subordinated debts ( as tier 2 supplementary capital ), long - term negotiable certificates of deposits or ltncds, documented repos, and securitization structures create market - oriented opportunities for banks and other players and deepen the capital market. the bsp has also been fully supportive of the establishment of the fixed - income exchange ( fie ) as an infrastructure for the secondary trading of fixed income and other debt securities. this envisages the trading, clearing, settlement and delivery of securities in a transparent and efficient manner. recently, the bsp issued the implementing rules of circular no. 392 to fully operationalize the rules on proper delivery of securities including the role of third party custodians. we are just awaiting the last missing step that is the interconnection of all key debt market participants to ross2 ] to create a truly seamless infrastructure for fixed income. combined resources of which account for almost 90 percent of the total resources of the banking system. registry of scriptless securities of the bureau of treasury. we have also started revitalizing the trust business to widen investor base with the gradual phase out of common trust fund ( ctf ) for a better product called unit investment trust fund ( uitf ). uitfs enhance the credibility of pooled funds to investors as the value of investments is mark - to - market, paving the way for long - | ##ble salary, depreciation of fixed assets and others that i just mentioned, such as r & d expenditure, advertisement expenditure, risk provisioning and loss write - off etc. if those items could be reflected accurately in the tax base, the profits will also be accurate too. third, there is the problem of enterprises β undertaking social functions. we have a very clear direction of relieving enterprises of their social functions. but things are not that simple. in fact, enterprises are still responsible, to varying degrees, for some social functions and working to preserve stability. it is feasible to transfer the function of providing employment, pensioning, and health cares from enterprises if we could have clearly defined responsibilities. otherwise, β responsibility vacuum β is really troublesome if no social entities take over those social functions. this is potentially possible since reform of social institutions needs much time to complete. fourth, it is related to many public companies. their legacy companies coexist with them and their relations need to be tackled. some enterprises underwent cosmetic restructuring to get listed in the stock market simply to raise funds, thus it is unnecessary to keep the legacy company. in most cases, there are differences within an enterprise group. some are growing while others are on the decline ; some are well managed and work really hard while others owe it to themselves for the bad performance. at the time of going to the capital market and structural design, consideration should be given to an effective incentive mechanism, moral hazards and striking a balance between the rich and poor. to solve these problems, enterprises have a part to play ; at the same time, it has something to do with the state β s obligations and historical reasons. my personal preference is quite clear. i don β t think we should underestimate those supporting measures. only with concerted efforts to promote enterprise reform and take supporting measures can we smoothly solve the problem of returns on state investment. 4. who should be paid dividends? there is no doubt to whom the state - owned enterprises and state holding companies should pay dividends. clear definition of property rights can be found in the company law, differing from the traditional definition of absolute and relative ownership in the contract - based responsibility system. compared with some advanced countries and emerging market economies, where the share of stateowned enterprises in the gdp is 2 percent or 5 percent only, ours is much larger. accordingly, it is necessary to have multi - leveled operational management. should each level have capital operation rights? we can | 0 |
moreover, the short - run implications for inflation and employment of a sustained pickup in productivity growth were ambiguous. staff analysis at the time supported brainard β s conclusion that the appropriate response to heightened uncertainty about the economy β s true william c. brainard ( 1967 ), " uncertainty and the effectiveness of policy, " american economic review, vol. 57 ( may ), pp. 411 - 25. productive potential would be to reduce the importance of the estimated output gap in setting policy. 8 whatever the persuasiveness of this analysis, the fomc did respond in a restrained manner to unusually robust real economic activity - as i believe was appropriate in light of the low and stable inflation that followed. of course, gradualism and model averaging may not be appropriate in all circumstances. for example, it may be necessary for monetary policy to respond to what might be called " tail events, " along the lines suggested by recent work on " robust control. " to simplify greatly, this approach often amounts to choosing policy settings to minimize the maximum possible loss across different models of the economy, in contrast to the standard bayesian approach, which ( loosely speaking ) seeks to minimize the average loss across models. much of the research on robust control has been a bit technical and esoteric. but the notion that policymakers may at times base policy settings on especially pernicious risks has an important ring of truth. for example, in 2003 the fomc noted that a continued fall in inflation would be unwelcome largely because such an eventuality might potentially lead to persistently weak real activity with interest rates stuck at zero. partly in response, the fomc reduced the federal funds rate to an unusually low level and kept it there for an extended period, in a manner that perhaps would not have occurred in the absence of concerns about the " worst case " effects of deflation. this type of risk management - in which the central bank takes out some insurance against a bad but improbable event - has been an aspect of policymaking for some time and does seem to respond to extreme risks in a way reminiscent of the literature on robust control. 9 policymakers also seem to have absorbed another lesson from the recent literature, namely, the desirability of reducing the public β s uncertainty about how the central bank will respond to changes in economic conditions. to this end, central banks now strive to conduct policy in a predictable ( albeit flexible ) manner that is consistent with their stated objectives | their remarkable support in collaborating with sbp for organizing this event. fao has long played a strong role for the development of agriculture sector in pakistan through introduction of innovation and technical assistance and this event is a mark of their continued commitment to the cause of developing an exceedingly vibrant agriculture sector in pakistan. i am also grateful to ukaid for their continued and long - term support to advance financial inclusion in pakistan. let me also express our gratitude to asia - pacific rural and agricultural credit association ( apraca ) for the importance and attention that you always give to pakistan and sbp in the regional initiatives. ladies & gentlemen, 13. i wish you all a pleasant participation in the conference and hope that this experience will invigorate the spirit of transformation that challenges the conventional beliefs and fosters innovative thinking to find lasting solutions to the problems of agriculture - financing. thank you our chief guest senator muhammad ishaq dar, finance minister, and the guest of honour federal minister mr. sikandar malik bosan, and all the participants and speakers! bis central bankers β speeches | 0 |
rightly require, the information disclosed to the public is not deceitful or manipulative, an information overflow might generate confusion and ultimately hamper customers β decision making. indeed, financial education programmes developed as a mere delivery of information may fail to reach the expected goal. the limited available evidence seems to suggest that education strategies are most effective if those trained are actively involved and experience effective gains and losses from simulated decisions. it is worth emphasising again that the success of financial education programmes largely depends on people β s awareness of their level of financial literacy and of the enormous impact this will have on their medium - to - long term well - being. people who are aware that their level of financial literacy is low may be more receptive to educational programmes and proactively strive to acquire the information and knowledge they need. financial educators should use mass media and effective communication strategies to develop such awareness. knowledge of the costs associated with short - sighted financial decisions is also very important. consumers are used to shopping around for relatively sophisticated goods or for important investments ( such as in real estate ). in fact, the cost of not doing so is evident to them. customers need to be encouraged to shop around even for banking and financial products and services. 4. the bank of italy β s financial education initiatives in italy, financial education has only recently entered the limelight. as one of the first institutions to point out the importance of this issue to the country, the bank of italy has, on several occasions, stressed the need for investors to acquire appropriate and up - to - date financial education as one of the key components of comprehensive action to foster economic and business growth. since then several initiatives have been launched. in the last two editions of the bank β s shiw ( for 2006 and 2008 ) specific questions were included to measure the financial literacy of the italian population ( ability to read a bank statement, calculate variations in purchasing power, measure bond yields, calculate accrued interest, understand the relations between the various securities and distinguish between types of mortgage loan ). as mentioned before, the findings were in line with those of other advanced countries and confirm the need for financial education programmes : about 50 per cent of italian households do not possess the basic knowledge required to make informed decisions on the most common financial transactions. since 2007, the bank of italy β s website contains a section dedicated to financial education. it attempts to provide easily understandable information on the main banking products as well as clear explanations of banking, economic | are limited. at the end of 2004 household debt was equal to 28 per cent of gdp in italy, compared with a euro - area average of 55 per cent and about 90 per cent in the united states and the united kingdom. partly as a consequence of subdued investment, the financial conditions of firms have remained good on the whole. in 2004 firms β operating profits were higher in relation to value added than during the cyclical downturn of the early 1990s. however, the data for the sample of around 40, 000 non - financial corporations surveyed by the company accounts data service show a fall in profits in the period 2000 - 03, notably in the textile, clothing and transport equipment sectors. firms β interest expense has diminished thanks to the reduction in interest rates, due in part to the lengthening of the average maturity of corporate debt. leverage is seven percentage points below the level of the 1990s ; the average maturity of italian firms β bank debt is gradually approaching that prevailing in the other european countries. there continues to be rapid growth in financing to categories of firms that in the past encountered greater obstacles in gaining access to credit during cyclical downturns ; credit to firms resident in the south of italy increased by 8. 5 per cent, two points more than the national average. in the period 1996 - 2004 the value of mergers and acquisitions between banks in italy accounted for 27 per cent of the euro - area total, compared with the italian banking system β s roughly 14 per cent share of euro - area bank assets. the far - reaching transformation of the banking system since the middle of the 1990s has had positive effects on operations. since 2001 loan quality has remained unchanged despite the weakness of the economy. at about 1 per cent the ratio of new bad debts to outstanding loans is very low by comparison with the past. households and firms have benefited from part of the banking system β s efficiency gains through more favourable rates on deposits and loans. in 2004 banks β profits amounted to β¬11 billion, or 10. 7 per cent of capital and reserves, compared with 6. 7 per cent in 2003. contributing to the improvement in the results for the year were the decline in value adjustments to loans and a significant increase in net non - recurring income. operating costs diminished by 0. 5 per cent with respect to 2003. the ratio between costs and revenues was in line with the european average. the growth in self - financing and capital increases have strengthened the banking system β s capital base. at the end of 2004 italian banks | 0.5 |
a currency board with a fixed rate against the us dollar. i have recently written and spoken at some length on the rationale behind this choice and do not intend to repeat all of that today. but let me just reiterate one of my principal contentions β namely that monetary policy, which includes exchange rate policy, cannot determine an economy's competitiveness outside the relatively short term. competitiveness is determined by the intrinsic efficiency of the economy, which is in turn the result of investment, productivity, structural evolution, and so on ; these may in turn be amenable to influence by government policy in various fields, but the role of monetary policy is to provide a stable monetary environment within which those longer - term forces can operate most propitiously, and not itself to attempt short - term fine - tuning. there is one further aspect of this debate which i should like to address, since it seems to be the focus of increasing attention. it is the issue of what should or should not be done with the hong kong dollar, were the renminbi to move more flexibly against the us dollar, and, more particularly, whether we should consider pegging the hong kong dollar to the renminbi. adjustment of competitiveness prices in hong kong are observed to be flexible in both directions in response to market forces. one of these forces is the influence of competing prices from the mainland ; our research indicates that there is a gradual process of convergence at work ( which includes rises in prices across the border as well as falls in hong kong ), although this may be weaker than some observers claim and certainly does not mean that prices will or should eventually equalise completely. moreover, prices of tradables in hong kong are found to be particularly adept at adjusting to movements in the effective exchange rate. in other words, if our prices become misaligned against foreign prices because of some movement in exchange rates ( such as by the us dollar moving against other major currencies and pulling the hong kong dollar with it ), hong kong prices are quick to adjust in order to restore competitive equilibrium. at the same time, it appears that prices in the mainland are, by international standards, also quite flexible. two conclusions can be drawn from these observations. one is that prices between hong kong and the mainland are well able to adjust relative to one another without any assistance from the exchange rate. the other is that, if the exchange rate were to move around and create disequilibria between prices | has also been accompanied by reports of abusive, unethical - - and in some cases illegal - - lending practices. given these concerns, and after considering public comments, the federal reserve determined that information on loan prices was critical to gaining insight into the functioning of the higher - cost mortgage market. the board's amendments to its hmda regulation require the collection and reporting of pricing data, among other things, and are consistent with the need to keep hmda data relevant to the fair lending issues presented by today's marketplace. before we go further into recent events, it may be instructive to take a look back at hmda and see how the current rules have evolved. when hmda was originally enacted in the mid - 1970s, the only information required to be reported was the location ( by census tract ) of the loans. many of you will remember that this addressed the so - called redlining issue. the data simply helped the public and regulators track where an institution was lending and more important, where it was not. it wasn't until the late 1980s that the reporting requirements were expanded to include data on race, sex, and income level for each loan. the current concern about the release of the new pricing data is reminiscent of the concern about the first release, fifteen years ago, of data on race and sex. those data, and the studies surrounding their release, raised serious questions about whether the mortgage market was serving people of all races fairly. in 1989, the concern was whether minority borrowers were denied mortgage loans more frequently than white borrowers and, if so, whether the disparity reflected discrimination. today, as i stated earlier, the issue is no longer limited to whether minority borrowers have access to credit but, rather, whether the price of that credit reflects the lender's risk or whether it is tied in any way to discrimination. today's mortgage market offers a broad spectrum of loan products, ranging from prime loans for borrowers with indisputably solid credit histories, on one end, to what have come to be known as 1 / 4 predatory loans, on the other. in between are a variety of higher - cost loans for borrowers who have impaired credit ratings, high debt - to - income ratios, high loan - to - value ratios, or some other risk characteristic for which lenders may legitimately charge a higher rate as protection against default. but it is the abusive end of the spectrum that has drawn so much attention and | 0 |
so that countries have the right incentives to address their problems. this calls for substantial improvements in the quality of fiscal institutions and policy frameworks in europe. all in all, a lesson to take from the current sovereign debt crisis is that there is an undeniable tension between, on the one hand, the need for financial integration to ensure a smooth functioning of monetary union, and, on the other hand, micro - prudential and fiscal bis central bankers β speeches competencies that have remained at the local level. and this tension has the potential to exacerbate the risk of future financial crises and hinder effective crisis management. we need bold steps towards a fiscal union. we need to go beyond and create a financial union. in one word, the crisis has clearly shown us that we need β more europe β. the new eu supervisory framework is actually based on two pillars : first, the esrb for macro - prudential supervision and, for micro - prudential supervision, a second pillar comprising three different european supervisory authorities ( esas ) β one for banking, one for insurance and one for the securities markets. this framework provides a more consolidated and rational institutional design for linking the micro - prudential supervision of individual institutions with the supervision of linkages between institutions and within the broader system. however, as the esas were only established at the beginning of 2011, they are too young for us to judge their effectiveness. under the current framework, all supervisors in the member states continue to be responsible for assuming their individual supervisory functions, but they have to report on their practices to the relevant authority. the esas β regulations provide for a review of the new institutional arrangements by the european commission in early 2014. should the esas be deemed not to have adequate tools and powers, there may be a case for greater integration of the supervisory framework β including tools for crisis management and resolution. there may indeed also be some support for a single eu financial supervisor. the main argument for such an institutional consolidation is that given the growing financial β inter - connectedness β of europe, a centralised supervisory body would promote a more efficient level playing field in supervisory practices. moreover, it might enhance both the efficacy of supervision and the crisis management capabilities over credit institutions with a strong cross - border presence. although there are obvious benefits of such a centralised institutional structure, there are also obvious concerns about the issue of national sovereignty. let me wrap up and conclude. by providing the basis for payments and | , to better diversify and manage economic risk. the securitisation of assets made it possible for financial institutions to sell loans within complex and opaque financial products and to take them off their balance sheets. these financial techniques weakened incentives for the prudent screening and monitoring of credit risk and led to banks loosening their lending standards. eventually, when the global financial system was thrown into crisis, many policy - makers were shocked to discover that they did not have the macroprudential tools to deal with part of the financial system spiralling out of control. up until then, the common view in policy circles had been that the whole financial system would be stable as long as its single parts were sound. the financial crisis painfully demonstrated how supervisory arrangements have not been sufficiently focused on ensuring the stability of the financial system as a whole. therefore, to be able to monitor, assess and mitigate systemic risk, policy - makers have been working on creating new tools for a new policy area, namely giving a macro - prudential orientation to financial regulation and supervision. the european systemic risk board ( esrb ) was established as the main body for macroprudential oversight and surveillance of eu financial markets. bis central bankers β speeches as you probably know, the european central bank ( ecb ) has close links with the esrb. these include, first, a personal link : the president of the ecb also serves as the chairperson of the esrb. second, the ecb provides logistical and administrative support by hosting the esrb secretariat. and lastly, the ecb provides analytical and statistical support, collecting and processing information that feed into the esrb β s discussions. despite this, however, the esrb remains a body that is quite distinct and separate from the ecb. the esrb does not change in any way the functioning of the ecb β s statutory role and its unambiguous primary mandate for delivering price stability. the new institutional set - up, and the ecb β s role in it, rests on solid institutional and legal foundations. the ecb has participated closely and constructively in the legislative process leading to the establishment of the esrb. it has thus focused on establishing in europe the most effective and robust macro - prudential supervision set - up possible to prevent and mitigate systemic risk. the question remains, however, as to whether, within this new macro - prudential framework, there might not be some tension between inter - connectedness born out of | 1 |
country, such as serbia, should have so many β professors β and β experts β on monetary policy who are a disgrace to their own profession and the very subject matter that they have been teaching their students for decades. as with the banking sector reform, i never expected to get much support, but neither did i expect to get so little of it. fortunately, we enjoy tremendous support from our citizens and that is most important to us. let me now turn to the banking sector and speak of how i see its further development. though the largest and the most spectacular part of the banking sector restructuring has already been completed, its fine tuning is a challenge that should on no account be underestimated, and there are quite a few details to tackle not only in 2007, but until the end of the decade. 1. ownership structure as an indispensable, albeit insufficient, prerequisite for banking sector reform, transformation of the ownership structure paved the way for a modern and stable banking sector. nearly 80 % of the serbian banking sector has, so to say, already joined the european union, as it is in majority ownership of strategic investors from the eu member countries. some challenges still remain, such as : β’ the republic of serbia has to define its further strategy clearly in terms of both majority and minority interest in banks ; β’ the national bank of serbia has set a deadline until 30 june this year to all qualified holders of more than 5 % interest, as specified by the recently adopted banking law ( 15 % before ), for submission of necessary documents for the purpose of assessing their financial standing, reputation and investment strategy. β’ the frequency and method of capital increases, as well as the capital adequacy ratio of some banks confirm that some bank owners are interested only in fast price gains from their stock of shares and hope to re - sell them and make a quick buck. it remains yet to be seen whether such banks will be able to find strategic partners or fight increasingly stronger competition. at this stage of the banking sector development, strategic investors show interest in both purchasing existing banks and setting up new institutions based on greenfield licenses. surely, this will not only boost the level of competitiveness of the serbian banking sector, which is one of the key nbs goals, but also ensure a wider range and better quality of banking services and products for serbian citizens. the national bank does not expect a significant drop in the number of banks in the forthcoming period as there are equal chances of local banks being acquired | rates on new dinar loans ( weighted average values, p. a., in % ) government securities and eurobonds ( p. a., in % ) dinar securities, 5y dinar securities, 7y dinar securities, 10y eurobonds, usd, 5y eurobonds, usd, 7y eurobonds, usd, 10y eurobonds, eur, 10y household loans * corporate loans * key policy rate source : ministry of finance. source : nbs. * excluding revolving loans, current account overdrafts and credit card debt. strong credit growth at favourable conditions gives significant support to economic growth. favourable financial conditions in the domestic market are also evidenced by the lending interest rates, which in the dinar market fully mirrored the nbs β s monetary policy easing. as for the euroindexed loans, favourable terms of financing were supported by the lower interest rates in the european money market and, to a greater extent, also by the decline in serbia β s risk premium. what i want to emphasize particularly is that serbia β s risk premium is now among the lowest in the region and that its sharp fall was largely driven by domestic factors. in the past months, the risk premium dropped several times, to even below 50 basis points, while on 12 november it touched its lowest value of 34 basis points. i would further like to point out that serbia is only a step away from investment grade, characteristic of economies offering high security of investment, which not only confirms the economic progress and the results achieved, but also contributes to further improvement of financing and investment conditions in serbia. a decrease in interest rates, coupled with economic growth and positive trends in the labour market, gives rise to lending. the structure of lending is favourable in terms of support to sustainable economic growth, as evidenced by a significant rise in corporate investment loans and a rebound in household housing loans, with a mild deceleration in the growth of loans intended for consumption. while lending has recorded two - digit y - o - y growth rates, loans have a stable share in gdp, posing no risk to either price or financial stability. the reduction in the share of npls in total loans to 4. 7 % has created room for further credit growth and at the same time reinforced financial stability. chart 11 lending activity and gdp ( y - o - y rates, in % ) chart 12 npl share in total loans, gross principle ( in rsd bn ) ( | 0.5 |
##s. in fact, as also illustrated on the slide, inflation excluding unprocessed food and tobacco remained in line with the outlook presented in the october inflation report ( figure 3 ). bis central bankers β speeches food prices became the main determinant of the course of consumer prices in the last quarter of 2010 as well. food prices that posted record highs in the third quarter due to the hikes in unprocessed food prices, declined in the last quarter as opposed to the previous years ( figure 4 ). moreover, the favorable developments in inflation in this quarter did not remain limited to food prices ; quarterly inflation across all goods and services items stayed below the average of previous years ( figure 5 ). meanwhile, energy prices, which followed a horizontal course in the second and third quarters of the year, increased in the last quarter parallel to the developments in international oil prices and exchange rates. the core inflation indicators decelerated in the fourth quarter of 2010 compared to the third quarter ( figure 6 ). although hikes were seen in these indicators, which edged up again in bis central bankers β speeches november and december, the main trend of inflation remained in line with medium - term targets ( figure 7 ). against this background, medium - term inflation expectations declined significantly ( figure 8 ). while near - term inflation expectations declined in a higher ratio compared to the previous quarter, the longer the maturities, the less was the decline in expectations. 12 and 24 - month ahead inflation expectations remained above the figures implied by the targets for 2011 and 2012 year - ends, however, the difference went down slightly in the last quarter ( figure 9 ). bis central bankers β speeches 2. monetary policy response after commenting briefly on inflation developments, i would now like to cover the policies pursued by the central bank during the last quarter. the second round of quantitative easing initiated in the last quarter of 2010 by some advanced economies and the attendant ramp up of capital inflows to emerging markets has required significant modifications to the cbrt β s strategy. macroprudential measures were needed because short - term capital inflows have strengthened the divergence between domestic and foreign demand causing the current account deficit to widen rapidly. since core inflation trends were in line with medium - term inflation targets, the monetary policy was able to focus on financial stability. the new monetary policy strategy envisions the use of multiple instruments to manage both internal and external balances. in this context, policy rates, liquidity management facilities | stefan gerlach : banking and fiscal union introductory remarks by mr stefan gerlach, deputy governor of the central bank of ireland, at a panel session at the eui conference on β the state of play in the euro area β fixing the emu for the long term β, florence, 21 january 2013. * * * i am grateful to rebecca stuart for her help in preparing these remarks. while plenty of work has been undertaken since last summer on establishing a european banking union, progress has been uneven and it has stalled in some areas. of course, it is difficult to build consensus in a situation where bank resolutions may become necessary, and deposit insurance schemes could be called on, in the near future. this is a matter that ideally should have been discussed and settled when emu was formed, much in the same way as a car must be insured before it can be driven. unfortunately, that route was not taken. much of the interest in banking union arises because it is a necessary, but not sufficient, condition for the esm to recapitalise banks. indeed, the establishment of the single supervisory mechanism ( ssm ) with the ecb is frequently seen as having been adopted precisely because this is the fastest road, legally and institutionally, to banking union. it is of course essential and urgent to enable the esm to support banking systems in order to overcome some of the tensions in the euro area, and there is intense public debate about how best to structure the ssm. in my introductory remarks today, however, i would like to take a step back from that debate and instead reflect more broadly on why a banking union is important for any monetary union to function well and why it is natural to locate the ssm with, or at least β close to β, the central bank in such a union. banking supervision why might it be beneficial to have a ssm in a monetary union? to my mind, one important reason is that a greater remove between supervisors and the banks they regulate can help improve the capacity for challenge and ensure a broader, more detached, perspective on the issues. in particular, it would ensure the independence of the supervisory and regulatory decision - making process from national political pressure, and avoid regulatory capture. for example, a distant supervisor may take action to address risks arising from a bubble in good times that a national supervisor would come under pressure to overlook. it also seems unlikely that a banking supervisor from, say, italy or ireland, sitting in frankfurt, | 0 |
##e ) has established a regional statistical data collection system covering as many as 25 indicators including business conditions, price variation, labour and employment. these are different from the qualitative surveys. information so collected is analysed and transformed into scores which forms an important input in the deliberations of the monetary policy committee ( mpc ) of the boe. india is a country with significant regional variations. hence regional inputs are valuable for policy making. with its reorganised structure and envisaged wider presence of regional offices in major centres, the department may put a similar system of gathering relevant statistics and market intelligence, particularly in the area of prices and agricultural conditions to aid policy formulation at the national level. sixth, as a part of the on - going work with dcm on forecasting of demand for currency and coins, it is necessary to conduct focused regional surveys relating to ( i ) availability / shortages of coins / currency notes, ( ii ) regional practice and usage of currency notes, and ( iii ) estimation of counterfeit currency notes in the system. in addition, the regional offices of the department could be directly involved in conducting surveys on financial inclusion, particularly assessment of financial inclusion outcomes in the villages following the outreach programme of the bank. seventh, the department has noticeable presence in a number of central office departments, like department of external investment and operations ( deio ), monetary policy department ( mpd ), internal debt management department ( idmd ), department of information technology ( dit ), department of payment and settlement systems ( dpss ), department of banking supervision ( dbs ) and financial stability unit ( fsu ). it is desirable that our officers bis central bankers β speeches in these departments provide analytical inputs for policy and operational issues and come out with research papers. these papers could be presented in conferences and published eventually in the rbi working paper series. this will make research more valuable in furthering our organisational objectives. eighth, focused and determined approach to research across various units, including the regional offices, should be pursued so that research agenda being adopted by the department is accomplished in a timely manner. for data management and dissemination, technology must be harnessed to its fullest extent. there is also a need to strengthen the modelling and forecasting capabilities towards developing a full fledged forecasting suite including dsge models. finally, i congratulate the department for its many achievements. however, there are challenges ahead, to some of which i have drawn your | considerable decline in output and employment. monetary policy was therefore tightened by an interest rate increase last summer. at the one - year horizon, the strong krone would push down inflation to below 2Β½ per cent, but the effects of strong wage growth would subsequently dominate. last year, norges bank β s executive board struck a balance between the consideration of stable inflation developments in the short term and the consideration of stability in output and employment. it was expected that inflation would be low in 2003. however, price developments are uncertain even 6 months to 1 year ahead. there was thus a possibility that inflation could fall even lower than projected, and be more than 1 percentage point below target. nevertheless, the deviation from the forecast is unusually large. this is an indication that the economy was exposed to sizeable unexpected disturbances. the exchange rate appreciated more than projected. after the publication of inflation report 3 / 02 in october last year, the krone appreciated further. this was related to unexpectedly weak developments in the global economy resulting in lower interest rates abroad and a wider interest rate differential between norway and other countries. negative events such as the accounting scandals in large us companies, fears of terror and war in iraq and the spread of sars contributed to weak growth and low inflation in other countries. developments in the international equity markets and the risk of higher oil prices also contributed to strengthening the krone. in addition, the norwegian business sector has clearly felt the effects of the high norwegian cost level and the strong krone in 2002. growth in private consumption came to a temporary halt last winter as a result of high electricity prices and general uncertainty. this probably affected profit margins in retail trade, particularly for durable consumer goods. public entities have also had to make adjustments following last year β s wage settlement. sluggish global and domestic growth has in turn had an impact on the norwegian labour market. inflation in 2003 has been pushed down by the fall in prices for imported consumer goods in particular. the low rise in imported price inflation is a consequence of the appreciation of the krone throughout 2002 and low inflation abroad. the rise in prices for domestically produced goods and services has also gradually slowed. this is particularly the case for prices for domestically produced goods influenced by world market prices. the fall in prices for imported consumer goods is not solely attributable to exchange rate developments. clothing prices have exhibited a falling trend over the past few years. in october 2003, clothing prices were 13. 7 per cent lower than in the same month | 0 |
stable. 4. capital markets union β the day after tomorrow? the european banking union is definitely a major step forward in designing a better framework for the european monetary union. however, europe should broaden its view beyond the banking sector. consequently, the eu - commission has proposed to establish a european capital markets union. following monetary union and the banking union, this will be the third major step of financial integration in europe. in essence, the european capital markets union has two objectives. the first objective is to increase the share of capital markets in the funding mix of the real economy. the second objective is to integrate capital markets more closely across borders. some people relate the first objective to the question of whether a capital markets - based financial system is superior to a bank - based financial system. well, to sum up the empirical evidence : it depends. it depends on a number of factors and country - specific characteristics, which makes it hard to provide a general answer. nevertheless, the recent crisis shed light on these issues from another angle. a system in which the real economy relies on a single source of funding will most certainly run into trouble when that source dries up β regardless of whether it is bank funding or capital market funding. therefore, it is not a question of β either / or β. the objective of the european capital markets union is not to abandon bank - based funding but to supplement it with capital markets - based funding. and in europe above all places there is ample room to do so. the european stock market is only 60 % the size of the us stock market when measured in relation to gdp. likewise, the european market for venture capital is 20 % the size of the us market, and for securitisations the percentage is even lower. in the end, it comes down to the uncontested argument of diversification. increasing the share of capital markets will improve and broaden access to funding particularly for small and medium - sized enterprises which form the backbone of many european economies. at the same time, it will improve the matching of investors to financial risk, thereby increasing the efficiency of the financial system. as a result, the financial system will be able to better support sustainable economic growth. the second objective of the european capital markets union is to improve the integration of capital markets in the entire european union. one of the main arguments is that integrated capital markets can improve private risk sharing. the technical question is : to what degree does a shock to the economy affect consumption? empirical | glenn stevens : recent economic and financial developments in australia opening statement by mr glenn stevens, governor of the reserve bank of australia, to the senate economics references committee, sydney, 28 september 2009. * * * thank you mr chairman. i have just a few opening remarks. economic conditions in australia were generally quite subdued in the second half of 2008 and the first part of 2009. output was sluggish, hours worked in the economy declined, unemployment rose and inflation started to abate. by the standards of past recessions, however, this was a mild downturn. although the evidence is as yet incomplete, this episode has been much less serious than those in the mid 1970s, the early 1980s and the early 1990s. it also has been very mild indeed in comparison with recent outcomes in many other countries, where deep recessions have been experienced. for the g7 group of advanced countries, for example, a cumulative contraction in real gdp of nearly 5 per cent was experienced over the four quarters to june this year. the australian economy recorded a small net expansion in gdp over the same interval. so i think it is reasonable to conclude, against the benchmarks of historical and international experience, that australia has done quite well on this occasion. why was that so? the key factors have been articulated before, but it may help to frame our discussion here today if i recount them. first, our financial system was in better shape to begin with, being relatively free of the serious problems the americans, british and europeans have encountered. lenders have some problem loans, as always occurs during a downturn, but these are manageable. the banking system has continued to earn a positive return on its capital, unlike those in some key countries. the system has been affected by the spillovers from the global crisis, through tighter borrowing conditions in international markets, higher spreads and so on. but these too have been manageable and various policy responses have helped the system to cope. the reserve bank was prepared to expand its balance sheet to assist in maintaining liquidity and the government guarantees were important in shoring up confidence and maintaining access to wholesale funding. second, some key trading partners for australia have proven to be relatively resilient through this episode. the chinese economy did slow sharply in the latter part of 2008, but quickly resumed very strong growth. china will easily achieve her 8 per cent growth target this year, led by domestic demand. many of our other asian trading partners have also returned to growth recently. ongoing | 0 |
for digital transactions? how do prices behave when the marginal cost of producing more is very small, even close to zero? addressing all these questions is no easy task. overall, digitalisation complicates our understanding of the transmission process from extra output to inflation. this has implications not only for the way we model the economy β and here i am thinking about possible adjustments to the new - keynesian phillips curve β but also for the role we devote to monetary policy. should monetary policy set different objectives if prices are highly flexible and the costs of inefficient price dispersion are much smaller than presumed? too early to tell, of course, but definitely worth an in - depth investigation. meanwhile, i welcome advances made in measuring macroeconomic aggregates in the digital economy, in particular consumer prices. across the atlantic, the billion prices project and adobe analytics data are promising examples of that. they provide tentative evidence that us inflation could be overestimated, although this result seems to depend on the dataset used. at the euro area level, national statistical offices β initiatives on integration of online and scanner prices into hicp measures, as well as the eurosystem's choice of investing heavily in research on pricesetting using micro data will certainly help too. while digitalisation challenges our thinking about macro - economic accounting, it can also provide a whole new set of granular and at the same time multidimensional data. in that sense, big data can become our ally. i will briefly come back to this point at the end. third challenge : the changing role of the financial sector a third challenge to traditional thinking relates to the changing nature and role of financial intermediation, well documented in a research area that literally exploded during the last decade. we have not only witnessed greater fragmentation within the banking sector which has forced us to take unprecedented non - conventional measures to preserve a smooth transmission of monetary policy. we are also observing a slow - moving tendency towards a larger role for nonbanks in the financing of the economy. with the capital markets union, a project i fully endorse, the role of players outside the traditional banking sector will hopefully get bigger. this justifies particular vigilance on the part of the ecb to be ready to monitor developments in this area. we should also make sure we are able to monitor developments in so - called private virtual tokens that aim to play a role as money β even though i tend to think that these developments | to enable the financial system to absorb the failure of individual firms as others grow and prosper ; and ( d ) we are strengthening international cooperation arrangements necessary to be able to effectively regulate in a digital environment that may have little regard for national borders or jurisdictional reach. disruptive innovation and the global unbundling of traditional financial services models in banking, insurance, and funds management can also have implications for financial stability. international consolidation in the financial services market to maximise the scalability benefits of new technologies may create larger firms that are more difficult to resolve. greater specialisation may also foster the growth of mono - line firms that are more exposed to sectoral shocks. it is also important to assess the implications of new types of settlement systems and digital currencies for the role of central banks in the domestic and international monetary systems, including the pros and cons of digital base monies supplied by central banks. 10 conclusions in summary, the dual forces of globalisation and innovation are high on the research and policy agendas for financial regulators and central bankers. an immediate challenge relates to the postbrexit reconfiguration of the european financial sector. in managing the transition to the new post - brexit regime, it is essential for policymakers to take a global perspective in view of the importance of non - european investors and financial intermediaries to the functioning of the european financial system. equally, financial innovators will be looking for clarity about the new regulatory and trading arrangements between the uk and the eu, since uncertainty about institutional frameworks is an obvious inhibitor of investment plans. let me conclude by thanking the organisers of the european financial forum. the agenda and lineup of speakers for the rest of today looks fascinating. 1 philip r. lane ( 2011 ), β innovation and financial globalisation, β in lessons from east asia and the global financial crisis : annual world bank conference on development economics global ( justin yifu lin and boris pleskovic, editors ), 309 - 332. 2 philip r. lane and gian maria milesi - ferretti ( 2016 ), β international financial integrationin the aftermath of the global financial crisis β, presentation, imf annual research conference. 3 philip r. lane ( 2014 ), β cross - border financial linkages : identifying and measuring vulnerabilities, β cepr policy insight no. 77. 4 daniel carvalho and michael fidora ( 2015 ), β capital inflows and euro area long | 0 |
euro in march 2003 to chf 1. 55 today, thus depreciating by about 6 %. the franc β s fall is even greater in real terms owing to the higher inflation rate which prevailed - and still prevails - in the euro zone. also in real terms, the swiss franc is worth less in euros than when the single currency was launched five years ago. this development shows that, as the new european currency has gained in stature, the markets have taken a different view of the safe - haven role traditionally played by the franc. it is probably also to the euro β s existence that we owe the swiss franc β s reduced volatility and its rather controlled weakening, whereas the dollar experienced difficulties. this is a reaction to which we were not accustomed ; moreover, it is good news for our economy. while it may be justified by the united states β huge external deficit, the slide of the greenback has nevertheless exerted an asymmetrical impact : it has hit european exporters hard, but has not affected asian currencies that have been kept artificially low by massive intervention. the swiss franc's fall against the single currency has sheltered us somewhat from these upheavals. guarded optimism for 2004 our economic forecasts for the current year are marked by cautious optimism. the recovery that began in the third quarter of 2003 is set to continue. the production gap, which measures the difference between actual production and its potential level, is expected first to stabilise and then to gradually narrow. however, this will take time. as usual, the first signs of an economic recovery appeared in the industries geared to exports. next, capital goods investment began to pick up, driven by the high rate of depreciation in new technologies ; there is therefore significant pent - up demand. to a large extent, these investments feed on imports, so that the immediate impact on our economy is limited. moreover, as investment is also gaining steam among our neighbours, our own capital goods industry, with its strong export bias, has improved. while consumer spending has held up well in the past two years, it is expected to gain momentum as the economic environment brightens. consumption will thus continue to support growth, though it will probably cede pride of place to more cyclical components such as capital expenditure and exports. it will benefit, in particular, from the gradual improvement that will be seen on the labour market. at this stage of the economic | to justify our actions. lastly, the new act grants us greater freedom in the choice of instruments to manage our monetary reserves. as you know, the national bank has considerable monetary reserves. these reserves, which are a national asset, are essential for pursuing an independent monetary policy by reinforcing confidence in our currency. they are thus instrumental in ensuring its stability. it is crucial, however, that these reserves be managed effectively and with due regard to liquidity and security requirements. over the next few weeks, we will define to what extent we wish to take advantage of the investment possibilities offered by the new act. we will present our plans on this matter at our press conference on june 17. conclusion the swiss economy has enjoyed a high degree of monetary stability for some years now, and this advantageous situation should last for a number of years to come. while the international environment in which we operate has improved, it remains unstable. we cannot rule out fresh setbacks. however, we can count on the significant adaptability of our companies and look to the future with confidence. nevertheless, our high standard of living in international terms should not lull us into complacency. in recent decades, we have seen our position among the leaders of the most highly developed countries eroded. corrective measures are necessary. let β s be clear : the main threat to our prosperity does not come from abroad, where the β made in switzerland β label is still a success when it is associated with quality. the threat comes from within switzerland. take, for instance, our excessive predilection for regulations - often an invisible barrier to the free play of competitive forces - and our hesitation to fully accept an international environment that is more competitive and innovative than it was 20 years ago. the guiding principle for our structural reforms should be : more competition and fewer regulations. we have to have the courage to take this path in order to durably enhance our economic growth. this is essential to the balanced development of our economy and to the confidence that each of us feels in the future. it is with this wish that i conclude my remarks. thank you for your attention and for the interest you show in the national bank and its activities. | 1 |
instruments, the german supervisor bafin is the appropriate body. tight coordination between macro - and microprudential policies as well as between the participating institutions needs to be ensured. this should also extend to the ministry of finance as it has the ultimate responsibility for financial policy and is the representative of the taxpayer. macroprudential authorities need to ensure transparency and clear communication of decisions and decision - making processes. transparency and communication in terms of policy strategy, risk assessment and the use of instruments are indispensable in order to make macroprudential policies comprehensible to financial market participants and the general public. systemic risk does not respect national borders. therefore, it is in our best interests to coordinate our actions in order to mitigate systemic risk internationally. the establishment of the european systemic risk board β esrb in short β is the european answer to this international challenge. the task of the esrb is to assess systemic risk, to issue recommendations β and, should the situation worsen β to issue warnings across europe. recently, the scope of the esrb has even broadened : it will assume a coordinating role for macroprudential policies and guard against protectionism in the regulatory framework. in its work, the esrb should draw on the substantial expertise and analytical capabilities of its members to fulfill its mandate. it is my strong belief that national authorities possess the greatest expertise in the analysis of macroprudential risks. according to the principle of subsidiarity, and because the costs of a crisis are borne on a national level, eu member states need the appropriate authority for macroprudential interventions and the calibration of instruments. now, the eu member states must get their macroprudential policies to work. today β s challenges call for a macroprudential policy which is alert and capable. conclusion let me conclude with a very brief outlook. at the current stage, good macroprudential regulation is more about basics such as defining properly the objective, compiling the efficient toolkit and setting up the competent institutions. one day, this part of the job will be done. then, we will enter a new stage in which good macroprudential policy is more related to conduct and to daily routine. from then on, the foreseeable challenges will more or less correspond to the five famous principles of better bis central bankers β speeches regulation, that is : being proportionate, accountable, consistent, transparent and targeted. i am confident that, in the near | will continue. 6. outlook the pfandbrief is undoubtedly a winner of the financial crisis. the voluntary transparency initiative of the association of german pfandbrief banks has also contributed to this. this initiative could be a model for other asset classes β for example abs β to increase transparency and to regain investors β confidence. though issuers have to cope with higher competition for the favour of investors, from the perspective of the bundesbank the pfandbrief is well positioned for the future. thank you very much. bis central bankers β speeches | 0.5 |
philip r lane : disinflation and monetary policy in the euro area dinner speech by mr philip r lane, member of the executive board of the european central bank, at the money marketeers of new york university, new york city, 21 september 2023. * * * introduction in my remarks this evening, i will assess the economic and inflation outlook in the euro area and explain last week's monetary policy decision taken by the governing council of the ecb. before i turn to the most recent developments, let me start by recalling how we got to where we are today. 1 the 2021 - 2022 inflation surge in europe was driven predominantly by an extraordinary combination of shocks. the pandemic generated a staggered sequence of sectoral supply - demand mismatches. especially in 2021, the global rotation of spending from services towards goods - at a time when supply remained hampered by pandemic - related lockdowns - resulted in severe supply chain bottlenecks and fostered exceptional pricing power for producers of in - demand products. in europe, after alternating waves of lockdowns and temporary reopenings, the economy fully reopened in the spring of 2022 at a time when the supply capacity in contact - intensive service sectors ( especially the tourism and hospitability sectors ) had not yet recovered from the prolonged shutdown phase. in parallel, the unjustified invasion of ukraine by russia triggered an extraordinary surge in energy prices ( and attendant terms of trade losses ) that peaked in august 2022. the scale and breadth of these shocks generated extraordinary shifts in sectoral relative prices. in principle, fluctuations in sectoral relative prices can be accommodated with no change in the overall inflation rate. however, in the presence of downward price rigidities and downward wage stickiness, this would have required an enormous tightening of monetary policy and depression of output. together with the inevitable time lags in monetary policy transmission, this is the fundamental reason why central banks focus on medium - term inflation rather than seeking to deliver the inflation target continuously. in the euro area, inflation peaked at 10. 6 per cent in october 2022. the peak inflation rate would have been even higher in the absence of the significant fiscal subsidies rolled out by euro area governments in the final months of 2022. during 2023 many of these factors have reversed : energy prices have come down sharply from their peaks ; supply conditions in global manufacturing and global trade have normalised ; and demand - supply mismatches in contact - intensive sectors | area countries. a number of countries have lowered marginal tax rates in order to make their tax systems more employment - friendly. many countries have targeted tax cuts at the lower end of the labour market in particular. these measures have contributed to a higher demand for low - skilled workers. nevertheless, marginal tax rates still remain high in some countries. some progress has also been made with the introduction of part - time or more flexible working contracts and practices. in addition to government policies, there are signs of a gradual change in labour market behaviour related to the wage formation process. discipline seems to have improved in that field over the past decade. such a change, resulting from lower inflation expectations, is important. furthermore, there seems to be a growing awareness that, in a single currency environment, the price increases and loss of competitiveness generated by excessive wage settlements cannot be compensated by an exchange rate depreciation and may directly result in a loss of jobs. looking ahead, it is crucial that social partners continue to adhere to moderate wage developments, since this is one of the prerequisites in fostering employment and maintaining a favourable outlook for price stability in the medium term. in this respect, there is some cause for concern with regard to ongoing wage negotiations. the wage formation process also seems to have undergone changes. in a majority of euro area countries, there are signs of a gradual trend towards more decentralised bargaining and more flexibility at lower bargaining levels. this seems to happen, mostly informally, through clauses that allow firms to deviate from the sectoral or central wage agreements according to the financial situation of the firm or sector. this is encouraging. the outcomes of wage bargaining should allow not only for appropriate wage developments in the overall economy, but also for adequate wage differentiation across sectors, regions and firms. this will make it easier to account for local conditions, such as unemployment, productivity or profitability differentials across sectors, regions and firms. in short, labour market reforms have, in general, been going in the right direction in recent years and the benefits of these positive developments are clear. however, progress has been rather uneven across countries and areas. in many areas important reforms have not yet got off the ground. for instance, few changes have been made regarding employment protection policies in euro area countries, which remain amongst the strictest in the industrial countries. furthermore, in almost all euro area countries, reforms targeting unemployment benefit systems have only made slow progress. at the same time, significant mismatches between | 0.5 |
a 30 - year mortgage, even though the borrower will be able to enjoy a low interest rate in the first two years, the repayment burden could become much heavier as a result of interest rate hikes in the years that follow. this could have serious consequences for the well - being of those families in the coming years. therefore, i hope that the public will be cautious and should not underestimate the risks that rising interest rate could have on repayment ability, asset prices and the overall economy in hong kong. bis central bankers β speeches | norman t l chan : recent economic and financial developments in hong kong remarks by mr norman t l chan, chief executive of the hong kong monetary authority, hong kong, 22 february 2013. * * * the property market in hong kong moderated briefly after the introduction of the fifth round of prudential measures on property mortgages by the hkma in september 2012 and the new tax measures by the government in october 2012. however, activities in the property market picked up again recently, with significant increases in transaction volume and prices of residential properties as well as commercial and industrial properties. the risk of overheating in the property market has, once again, risen sharply. moreover, the recent increase in intensity of the quantitative easing by central banks in europe, the us and japan has made it more difficult and uncertain for them to β exit β these measures in the future. it will be particularly so when inflationary pressures emerge again in the advanced economies, and the pace and extent of interest rate hike could be greater than originally expected. in fact, in the last quarter of 2012, the hkma already started requesting local banks to assume a of 300 bps increase in interest rate above the baseline scenario for its mortgage portfolio when conducting stress testing. in order to further enhance banks β risk management in property mortgage lending and to strengthen borrowers β resilience to withstand future interest rate hikes, the hkma has just issued a set of guidelines to banks, requiring them to adopt an increase of 300 bps instead of 200 bps of interest rate when stress - testing the repayment ability of mortgage applicants. this measure is applicable to all types of mortgages, including residential as well as commercial and industrial property mortgages. the risk of overheating in the commercial and industrial property market also continues to rise. our experience shows that the quality of commercial and industrial property mortgages will deteriorate more significantly than that of residential property mortgages during market downturns. in view of these circumstances, our guidelines have also required banks to lower the maximum ltv ratio of mortgage loans for commercial and industrial properties, whether or not for self - use, by 10 percentage points from the existing applicable levels. for example, for mortgage applicants with income mainly derived from hong kong, the maximum ltv ratio will be lowered from 50 % to 40 %. if the applicant β s income is mainly derived from outside hong kong, the maximum ltv ratio will be lowered from the current 40 % to 30 %. the | 1 |
kganyago : cross - border payments shall be quicker, cheaper, more transparent and more accessible to all. yet this momentum could fade rapidly due to the lack of political impetus. the latest g20 offers a renewed opportunity to regain impetus on this topic, through the identification of concrete priorities β such as payment systems interoperability β and projects β such as the bis innovation hub nexus platform, connecting domestic instant ( or β fast β ) payment systems around the world. to prevent further financial fragmentation, let us start by reducing payments fragmentation for our fellow citizens * * * in these times of navigation and travel in stormy international and financial conditions, let me conclude with this famous quote from jack kerouac β s even more famous novel, on the road : β our battered suitcases were piled on the sidewalk again ; we had longer ways to go. but no matter, the road is life β. it is in our very essence as public authorities to carry on, no matter what, for the sake of global public good. rest assured that we central banks will do our part. thank you for your attention. f. villeroy de galhau, how monetary policy will defeat inflation : channels and locks, speech, 17 february 2023. for an overview on minilateralism see for instance e. moret ( 2016 ), brief _ 17 _ minilateralism. pdf ( europa. eu ) iii see for instance p. lamy ( 2020 ) ( polylateralism as the way forward, a conversation with pascal lamy - groupe d'etudes geopolitiques ( geopolitique. eu ) ) and answering the crisis of multilateralism with polylateralism groupe d'etudes geopolitiques ( geopolitique. eu ) iv imf, geoeconomic fragmentation and the future of multilateralism, staff discussion notes, 15 january 2023. v f. villeroy de galhau, ethics of currency : a possible guide for central bankers?, speech, 14 september 2022. vi boileau, art of poetry, 1674. i ii | inflation, the ecb raised its policy rates at an unprecedented pace ( + 350 bp since july 2022 ) to reach a restrictive stance. page 3 sur 7 but from now on, we are entering a new, more open phase of monetary policy ; we are shifting from automatic pilot to navigation by instruments. what does that mean in practice? our decisions on interest rates will be taken meeting by meeting. this navigation by instruments will especially rely on three cockpit dials : β’ the outlook for headline inflation, based on our macroeconomic projections. β’ the dynamics of underlying inflation. in my view, a turnaround in the trajectory of underlying inflation β be it actual or expected with sufficient certainty β, should be a trigger for stabilising our rates. i page 4 sur 7 β’ the strength of the transmission of our policy measures, or in other words the extent to which the β plumbing β of monetary policy is effective, and fast : from what is still in the pipe, to the ultimate and concrete impact on economic activity and prices. it takes some time β usually about one or two years β for monetary decisions to take full effect. there has been some debate recently in the united states on whether this lag is shorter or longer under the current conditions : but let us acknowledge we don β t know enough on this issue, and need to dig further. let me accordingly sum up where we are in our ecb monetary policy : we may possibly still have a little way to go on rate hikes at our next meetings, though i think it premature to decide now what we will do in may, but we have already completed most of our rate - hiking journey and the strongest economic effect ahead of us will be the pass - through of what is already in the pipe. in other words, the deferred effect of our past rate hikes will be more significant than the one of our future decisions. and it will be key to then stay the course for as long as necessary. to put it differently, the sprint is over giving way to a more long distance run. and, for interest rates as with ballistics, β longer β is becoming more significant than β higher. β b. separation of price stability and financial stability the two recent crises that engulfed svb and credit suisse have shaken investor confidence and sparked increased volatility on financial markets β including speculative behaviour. however, we at the ecb are confident in the resilience of the european banking system, as signalled by the | 1 |
situation. for some unlisted cooperative banks, conversion into joint stock companies will be part of a broader transformation of governance also comprising stock exchange listing. these interventions will greatly enhance access to capital markets and help overcome the problems with the current process of share price determination, which the law reserves to the shareholders β meeting. stock exchange listing will also ensure the liquidity of the investments of shareholders who wish to dispose of their holdings. the banca popolare di vicenza is one of the cooperative banks that have embarked on this process as part of the measures required by the supervisory authorities. as the explanatory note published on our website yesterday describes in more detail, in 2014 evidence emerged that this bank had committed irregularities in share buybacks. in agreement with the new european supervisory bodies, which were about to start operating, we scheduled a targeted inspection for immediately after the european comprehensive assessment. this intervention, conducted by bank of italy inspectors as part of the single supervisory mechanism, revealed other practices not in compliance with the rules. as soon as the initial findings of the investigations begun last february started to emerge, the bank of italy and the ecb concurred fully on urging the banca popolare di vicenza to adopt immediate corrective measures. the top executives and almost all of the senior management were replaced ; a capital strengthening plan was drawn up, the success of which is ensured by the presence of an underwriting consortium ; and a radical reform of corporate governance is planned for the cooperative β s conversion into a joint stock company and its simultaneous stock exchange listing. a reform of the mutual banking sector is also needed now. self - financing, the main source of funds for increasing these banks β capital, has essentially dried up as a result of the recession. in the absence of any decisions, the necessary increase in provisions to cover bis central bankers β speeches non - performing loans would lead to a further reduction in the capacity for self - financing ; a significant part of the mutual banking system would incur negative evaluations by the supervisory authorities and might not be able to meet the need for a larger capital endowment. this could give rise to situations that would be difficult to manage within the new crisis resolution framework, also considering the constraints of the regulations on state aid. mutual banking systems in other euro - area countries have long since instituted highly integrated organizational structures capable of realizing economies of scale, unitary risk control mechanisms, and safety nets for the liquidity and solvency of the participating banks. some of these | issue warnings where risks are deemed to be significant ; and issue recommendations for remedial action where appropriate. β thank you very much for your attention, i am now at your disposal for questions. | 0 |
also included the topics of diversity and inclusion in their research agendas, and the webinar features several good examples of those. also, all the participants would benefit from getting a view from the academia on the implications for the economics of the lack of diversity. gender, of course, is one important aspect of diversity, but this webinar also brings together studies from authors affiliated to institutions all over the world. this geographical diversity would enrich the discussion and expand the menu of possible action points. the conclusions we may reach over the course of these two days will certainly boost the actions to be carried out by our institutions which should be expected to lead by example not only within the financial sector but also, as a public administration, fulfilling our duty to serve public interest. banco de espana has already committed different internal actions. among others we have created a group of d & i ambassadors, representing all the business areas together with hr - of which i am proud to be the sponsor -. this group has the purpose of enhancing diversity and inclusion consciousness and helping to step up specific measures across the organization. we have also worked on a data dashboard for the top management to track gender progress through kpis on an annual basis, we have launched leadership and mentoring programs to strengthen strategic skills and encourage female to apply for management positions, we guarantee gender equitable panels in managerial recruitment processes, we are deploying training in unconscious bias, we have an internal d & i manifesto and we are working closely on a regular basis with our colleagues of the escb and ssm on a specific network to advance diversity and inclusion in our institutions. these actions are already proving we are on the right path, but events, such as this, sharing different views, challenges, approaches, and possible ways of improving, allow us to discover new pathways to become more efficient in the fulfilling of our goal : gender equality in central banks. thank you very much and enjoy the sessions! | 18. 05. 2022 welcoming remarks pathways to gender equality in central banks margarita delgado deputy governor dear ladies and gentlemen, i feel very honored to participate in the opening of this conference co - organized with the international economic association, banco de la republica and banco de espana. the development of initiatives, such as this one that gives visibility to issues related to gender diversity, are key to finding solutions to the waste of talent that involves not taking this diversity into account, consequently putting economic growth at risk and depriving economies of opportunities to develop. ensuring diversity and, in particular, gender balance, must be a priority in our organizations and, with this commitment, we work at the banco de espana, where we have made significant progress in recent years. by the end of 2021, 51 % of our total staff were females, and it is noteworthy that, in one decade ( since 2012 ), that proportion has increased in nearly 10 percentage points. more than 4 years ago, in april 2018, banco de espana joined bank al maghrib, the central bank of morocco, to organize the first international meeting between international central banks with the aim of studying and fostering female leadership in central banks. in 2019 we expanded the geographical scope of this initiative to the " montevideo group " made up of the central banks of colombia ( banco de la republica ), mexico, argentina, chile, paraguay and uruguay. with all these central banks of latin america and some others which joined morocco, from the african continent, we organized what was going to be the 3rd meeting of central banks to promote female leadership β fostering women's leadership in central banking β. unfortunately, in march 2020 the pandemic broke out and this event had to be cancelled at the very last moment. the work initiated by so many central banks and the questions addressed are not the result of a fad or political ideologies. the matter of female leadership and gender diversity is an economic concern of global importance, which, according to the world economic forum, after the pandemic, has suffered a setback with respect to the progress that was previously made : β gender equality is still almost a century away from being achieved with the current rate of change. β for this reason, studies and research such as those which are going to be presented here today and tomorrow assessing the challenges and evaluating the policies that lead us to the path towards gender equality, are of the utmost importance in order to accelerate the necessary change. several central banks have | 1 |
β s house museum, for hosting today β s event. elizabeth, over to you. bis central bankers β speeches | policy β broadly defined β tended to countenance investor expectations. at year - end 2007, the outstanding public debt of fannie mae and freddie mac totaled about $ 5. 0 trillion, roughly comparable with the publicly held treasury debt of $ 5. 1 trillion, and spreads to treasuries on their senior debt amounted to about 30 to 50 basis points, even though the institutions were thinly capitalized relative to their asset composition and risk characteristics. in the fall of 2008, however, gse senior debt spreads widened significantly to more than 500 basis points. market participants grew increasingly skeptical of the gses'financial and operational wherewithal and were uncertain of the depth of government support. when markets decided to test policymakers, as markets are especially wont to do during panics, the treasury was forced to intercede, effectively taking control of the entities. congress authorized successive administrations to take forceful actions, including appropriations of up to $ 200 billion to - date, to assure investors and counterparties that the institutions would remain solvent. these efforts, while necessary and well intended, have not completely resolved the uncertainty around the gses to market participants. indeed, even after extraordinary actions most recently by the federal reserve to improve liquidity and market functioning in the agency debt markets, confidence in the gses is less than markets were long accustomed to before this period began. when presumptively risk - free, highly liquid assets backed by the highest - grade sovereign are subject to large swings in value, the risk - return profile of virtually all other assets becomes highly uncertain. the resulting portfolio reallocation boosts demand for treasury securities, and reduces demand for assets that are genuinely riskier, placing upward pressure on risk premiums across a wide range of markets. in addition, financial firms that had assumed that their holdings of gse debt were as good as cash were forced to reassess the adequacy of their liquidity positions, adding to balance sheet pressures and leading to even greater safehaven demands for treasury securities. across a broad range of financial institutions and financial markets, an unhealthy mix of recession dynamics and panic conditions appear at work. but, in my view, it is predominantly the latter β the uncertainty with respect to financial intermediation and the corresponding breach of articles of faith β that have exacerbated the downturn. conclusion let me offer several concluding observations that may help frame a new foundation for growth and ensure that discarded articles of faith are repaired, | 0 |
01 / 12 / 2020 shaping the future β challenges in the european payments market | deutsche bundesbank shaping the future β challenges in the european payments market speech at the virtual conference β future of payments in europe β 27. 11. 2020 | virtual event | jens weidmann 1 introduction 2 opportunities and risks of retail cbdcs 2. 1 potential beneο¬ts 2. 2 curbing the risks 3 other innovative payment solutions 3. 1 instant payments 3. 2 cross - border payments 3. 3 token - based solutions 4 concluding remarks 1 introduction ladies and gentlemen, it is my pleasure to welcome you all to our virtual conference on the β future of payments in europe β. more and more, the topic has moved towards the top of the agenda of policymakers, central bankers and private market participants alike. and seeing all the esteemed speakers and participants, i am sure this conference will make a valuable contribution to this debate. so what does the future hold in store for us? along with utopian or dystopian visions, science ο¬ction sometimes offers fascinating glimpses of what everyday life in the future might look like. one of the https : / / www. bundesbank. de / en / press / speeches / shaping - the - future - challenges - in - the - european - payments - market - 851850 1 / 9 01 / 12 / 2020 gshaping g pthe future β challengesyin they european payments marketg | deutsche bundesbank most popular american books in the 19th century was edward bellamy β s β looking backward β. [ 1 ] in this story, the protagonist falls asleep one night in 1887 and miraculously wakes up in the year 2000. he ο¬nds himself in a β workers β paradise β where people can retire at the age of 45 and the government controls the means of production. this utopia is technologically advanced and [UNK], featuring electronic entertainment, large shopping centres with a fast delivery system, and β credit cards β. yes, you heard right : money no longer exists in bellamy β s vision of the year 2000. instead, those cards grant people a just share of the goods produced in this ( socialist ) economy. ironically, bellamy may well have been the ο¬rst to use the term β credit card β. jumping back to reality, we have long grown accustomed to paying with β plastic β or cards. physical money still exists, but cashless forms of payment are readily available and on the rise. now, many observers see us | code, computers and networks. but when non - specialists actually ask for digital solutions, they frequently fail because they oversimplify the job of it specialists. for example, they fail to accurately specify the goal and the desired properties of an application. partly because they don β t speak the right language and regard the actual solutions as a black box ; partly because they simply don β t bother. unfortunately, incoherent concepts at the outset frequently lead to dirty fixes and workarounds, both of which turn out to be costly and inconvenient in the long run. and, frustratingly for itexperts, it makes them look incompetent in the end. also, co - workers are often not sufficiently aware of the various other challenges which it departments face in their day - to - day work. just think of the need to make a software application stable, secure and efficient, to make it adaptable to changes of purpose or to changes in the β outside world ", and to make it useable for the β dumbest assumable user ". these are regular trade - offs. they require strategic decisions. but in this regard, top management needs to understand the trade - offs first. this leads to another, overarching issue : scarce resources. top management is often reluctant to allocate sufficient resources to an it project. this is quite a common finding in our supervisory inspections. that puts long - lasting solutions out of reach. while this may often be due to β short termism β ( as it projects often pay out only in the mid - or long term ), it can also be caused by underestimating their value. 2 / 6 bis central bankers'speeches let me now turn to a second bias of top management, namely underrating it and cyber risks. nowadays, a large majority of households and enterprises will have experienced cyberattacks for themselves. but even though awareness of potential threats has risen in previous years, it is still the case that, far too often, incidents are interpreted as a stroke of fate, as mere bad luck. to be fair, having reliable defence mechanisms is indeed challenging for many applications and larger it systems because threats constantly evolve. and so does technology, opening up new loopholes all the time β just take the weaknesses in computer processors which came to light just recently. still, the likelihood of a successful cyberattack can be significantly reduced by measures that are well - known β at least in it | 0.5 |
data science in central banking welcome address by piero cipollone deputy governor of the bank of italy banca d'italia and the irving fischer committee ( bis ) rome 19 october 2021 ladies and gentlemen, i am delighted to open this virtual conference on data science in central banking, jointly organized by banca d β italia and the irving fischer committee of the bank for international settlements. i would like to welcome all the participants joining us today from some sixty countries. 1. introduction for the last two years, we have lived through a dramatic period as the covid - 19 pandemic has swept the globe. never before as in these dark days has data science in the form of big data and machine learning ( ml ) algorithms proved so helpful in the war against coronavirus. the lack of biological knowledge on this virus has spurred the data science community to step up and contribute to the fight against covid - 19. scientists from many different disciplines and public organizations have acknowledged the importance of data analytics by open sourcing the virus genome and other datasets in the hope of a swift data - driven solution. in this four - day conference we will endeavour to share among institutions and academia the newest and most interesting applications of data science and machine learning to sharpen our analytical capacity to cope with new and rapidly evolving economic equilibria. 2. the role of data science in central banking activities data science is an interdisciplinary field that combines computer science, statistics and business domain knowledge aimed at generating insights from noisy and often unstructured data. it integrates mathematics with scientific methods and computing platforms. still a young field, it has quickly developed over the last few years. its main driver is the astounding volume of data stored by private companies and public authorities, which can now be treated more easily with new algorithms to extract the information hidden among them. nonetheless, at the bank of italy, data science is not completely new. we do have a sound history of basing our decisions on data. in 2016, we established a multidisciplinary team to address the potential benefits and hidden risks of embracing the technological challenges of artificial intelligence ( ai ) and machine learning ( ml ) fuelled by the advances in big data, which continue to evolve at an incredible speed. a gargantuan amount of digital activity is occurring every day. in fact, data are constantly generated by our internet activities. this explosion stems from the aggregate actions of about 4. 7 billion active internet users worldwide 1. these | numbers are projected to rise even further in the coming years. according to seedscientific 2, at the dawn of 2020 the total amount of data in the world was around 44 zettabytes, tantamount to [UNK] bytes, which is the number of cells we could count in more than 1, 400 human beings. this astonishing amount of data can give us a better understanding of the state of the economy at both the micro and the macro level, provided that we able to extract the signal from the noise. as of january 2021. see https : / / seedscientific. com / how - much - data - is - created - every - day / banca d β italia has constantly striven to be at the cutting edge in developing software and hardware platforms, enabling big data analytics 3 for statistical and economic applications. the rise of data science started at the beginning of 2010 when high - quality models for image recognition were created, computational power achieved sufficient growth, and people in many scientific areas realized the full potential of such an approach. data science glues together machine learning and data processing. the former is a collection of tools, which allows us to learn from the given data and to extract patterns and interactions between series and values. the latter describes the possible set of actions in relation to the data itself : collection, manipulation, preparation, and visualization. it is important to flag a few differences between data science and the classical econometrics we study at university. unlike econometrics, which concentrates on solving non - linearity bias problems in a typical linear framework, data science is about improving our ability to work with non - linear relationships in the system. another difference is that econometrics concentrates on methods such as robustness, while machine learning algorithms became popular for their outstanding predictive performance 4. 3. data science at the bank of italy banca d β italia is organizing, along with the federal reserve board, the sveriges riksbank, the university of pennsylvania and the imperial college, a series of webinars on β applied machine learning, economics, and data science β ( amleds ) 5. the aim of these webinars is to foster the integration of data science tools into economics and policy - related issues and to promote closer cooperation on issues related to data science, big data and machine learning techniques applied to policy questions. such cooperation has intensified during the pandemic, leading to many important initiatives such | 1 |
juyeol lee : prospects and challenges for sustained growth in asia welcoming remarks by mr juyeol lee, governor of the bank of korea, at the 2017 mosf - bokimf - piif international conference β prospects and challenges for sustained growth in asia β, seoul, september 7, 2017 * * * ladies and gentlemen, honored guests! i am delighted to bid you all a sincere welcome to this conference, hosted jointly by the ministry of strategy and finance, the imf, the peterson institute for international economics and the bank of korea. let me first express my special gratitude to managing director christine lagarde, who is here to represent the imf directly despite her tight schedule. i wish to thank as well president adam posen of the peterson institute for international economics, and director changyong rhee of the asia and pacific department of the imf, who have worked so hard to arrange the joint hosting of this conference starting from the initial planning stage. appreciation also goes to all of our moderators, presenters and discussants, including first vice minister hyoung - kwon go, who delivered the welcome address just before, and imf economic counsellor maurice obstfeld, who will deliver the dinner speech tonight. as we are all well aware, the asian economy has sustained a rapid rate of growth over the past 50 to 60 years, and in doing so served as a locomotive driving growth in the world economy overall. we can look at this as a result of success in the export - led growth strategy, centering around the manufacturing industry and based on surplus labor as well as late - comers β advantages. during this time, the economic growth pattern in asia has been that when the economies in the countries leading growth have entered their mature stages, the later - developing countries have moved into their places and asia as a whole has sustained its high growth. japan came first, to be followed in turn by the so - called four dragons, and then china. now it is india and the asean countries that are emerging as new runners. in light of this, we expect going forward that the asian economy will sustain its role as the engine of world economic growth for some time, while showing dynamism centering around later - developing countries. but there are also not a few claims that this growth strategy has reached its limits. as asian economies have gradually entered their mature stages, it has become difficult for them to sustain extensive growth strategies based on increasing their production factor inputs. | ##ing operations over the life of the respective tltro. for banks whose eligible net lending exceeds a benchmark, the rate applied in tltro iii operations will be lower, and can be as low as the average interest rate on the deposit facility prevailing over the life of the operation. the maturity of the operations will be extended from two to three years. fifth, in order to support the bank - based transmission of monetary policy the governing council decided to introduce a two - tier system for reserve remuneration in which part of banks β holdings of excess liquidity will be exempt from the negative deposit facility rate. separate press releases with further details of the measures taken by the governing council will be published this afternoon at 15 : 30 cet. the governing council reiterated the need for a highly accommodative stance of monetary policy for a prolonged period of time and continues to stand ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner, in line with its commitment to symmetry. 1 / 3 bis central bankers'speeches today β s decisions were taken in response to the continued shortfall of inflation with respect to our aim. in fact, incoming information since the last governing council meeting indicates a more protracted weakness of the euro area economy, the persistence of prominent downside risks and muted inflationary pressures. this is reflected in the new staff projections, which show a further downgrade of the inflation outlook. at the same time, robust employment growth and increasing wages continue to underpin the resilience of the euro area economy. with today β s comprehensive package of monetary policy decisions, we are providing substantial monetary stimulus to ensure that financial conditions remain very favourable and support the euro area expansion, the ongoing build - up of domestic price pressures and, thus, the sustained convergence of inflation to our medium - term inflation aim. let me now explain our assessment in greater detail, starting with the economic analysis. euro area real gdp increased by 0. 2 %, quarter on quarter, in the second quarter of 2019, following a rise of 0. 4 % in the previous quarter. incoming economic data and survey information continue to point to moderate but positive growth in the third quarter of this year. this slowdown in growth mainly reflects the prevailing weakness of international trade in an environment of prolonged global uncertainties, which are particularly affecting the euro area manufacturing sector. at the same time, the services and construction sectors show ongoing resilience and the euro | 0 |
a bubble is inflating, so resistance would probably be particularly strong when measures are needed the most. the political and psychological pressure on those pulling on the regulation lever could thus be substantial. important with a good allocation of responsibility i thereby come to an issue that is just as important as how regulations should be designed ; namely, who should pull on the regulation lever and when. lessons can be learned from monetary policy when it comes to responsibility and mandate. if an authority has a sufficient degree of independence it can more easily withstand external pressure. and if it also has clear and specific objectives, it has greater opportunity to do a good job, while at the same time it is easier for society to evaluate it. the allocation of responsibility and mandate are of course important also because there are both an interest rate lever and a regulation lever to pull, and that these can in some cases have similar effects. it is not difficult to imagine situations where regulations and the interest rate counteract one another. for instance, one might have a situation where the prospects for inflation and the economy as a whole look bleak, but where there are nevertheless signs that a credit - driven bubble is inflating. there may then be reason to use macroprudential measures to counteract the bubble. but these will reduce lending and thus further weaken the economy. such counteracting effects need not be a problem, if one single authority is controlling both levers, or if they are controlled by different authorities that are essentially trying to achieve the same aims and make similar assessments. for instance, they may both agree that the economy is weak, but that there may be reason to take action to counteract a bubble. then it is a question of coordinating and trying to find a suitable dosage, or mix, of interest rate and regulations. it is clear that the problems can be aggravated if the levers are controlled by different authorities that do not have the same aims and make completely different assessments of the situation. it is thus important to try to coordinate monetary policy and macroprudential policy. of course, there has always been a need to coordinate monetary policy and the work to promote financial stability. but following the crisis and the emergence of a macroprudential approach, this need has become even more evident. important issues to resolve in the coming years are how responsibility should be allocated between different authorities to facilitate this coordination, and what forms the cooperation should take. it is of central importance that the mandate is clear and the tools are | . speech by fritz zurbrugg, β challenges posed by the growth in the snb β s foreign exchange reserves β, snb money market event, geneva, 8 november 2012. bis central bankers β speeches their unconventional measures for stabilising the economy in the crisis if they had not acquired a high level of credibility in the preceding years. long - term interest rates can only be influenced by a central bank if market participants are convinced that price stability will prevail in the long term. for monetary policy, it remains essential that price stability be ensured, even β and most particularly β in difficult situations like the one we are experiencing at the moment. after the beginning of the financial and economic crisis, the question of what central banks could contribute to financial stability became more important. in the previous years, the view had become established that monetary policy served financial stability best by focusing on price stability. this was linked to the widespread opinion that monetary policy should not β lean β against a growing bubble on the equity or real estate markets. it should wait until the bubble had burst before intervening and cleaning up. the β lean or clean β question was reassessed as a result of the financial crisis. it became evident that financial stability was not necessarily guaranteed, even where monetary policy β as measured by the criterion of price stability β was very successful. moreover, the damage caused when a bubble bursts can be so enormous that it is not easily remedied using monetary policy instruments. to simplify things somewhat, we can distinguish two ways in which central banks can attempt to make a more substantial contribution to financial stability. the first is to steer monetary policy decisions more strongly in the direction of financial stability. the argument against this is the danger of overburdening monetary policy. one lesson from the years of the great inflation was that the overall result is not improved when monetary policy tries to achieve too many goals simultaneously. the credibility and success of monetary policy will inevitably suffer as a result. for this reason, the second option has much in its favour. this is to supplement the central banks β instruments in such a way that β alongside the maintenance of price stability β central banks can also make a greater contribution to financial stability than they have done in the past. the specific tools being referred to here are the macroprudential instruments that have attracted increasing interest in recent years, and that have been introduced in many countries. such instruments can be used in a supplementary manner, as required. in the case of switzerland | 0 |
and a development bank. conclusion with the current challenges in our economic environment both globally and domestically, the reserve bank has been proactive in its roles to support our economic recovery. we have eased our monetary policy stance and more recently we have been conducting moral suasion with the commercial banks in an effort to stimulate investment and credit especially to the priority sectors and support growth in domestic demand. we have and will continue to relax exchange controls in order to support overseas current payments which are conducive for business growth. this will also instil confidence to the investors and encourage investment as well. the reserve bank has rationalised and introduced the import substitution and export finance facility which all exporters and businesses may access to boost exports and reduce imports. energy renewable projects also qualify for this facility. $ 40 million is available under this scheme and the current usage is $ 20 million. the rbf lends funds to commercial banks, credit institutions and fdb at 2 percent and these lending institutions are allowed to charge interest rates up to a maximum of 6 percent. the current government β s concerted effort is vital and timely and we also support the call made by this panel for more variants on fiscal and incomes policies given the limitations faced by the monetary authorities. nevertheless, a more positive outlook remains ahead with the reforms taking place and as the current mix of monetary and fiscal policies are aligned. from the presentations that we have heard so far, investment is the key. we need to address all the obstacles to investment and address them accordingly. we need to ensure that the environment is conducive as well. it is also important that fiji attracts the right type of investors. we have heard a lot of issues and questions so far. what we need is solutions β practicable and relevant solutions that can be implemented. finally, i would like to add that this type of dialogue is healthy and provides an excellent platform for exchange of ideas so that we can all work together and move forward for a better fiji. thank you. bis central bankers β speeches | ben s bernanke : brief overview of the 4th conference of the international research forum on monetary policy ( welcoming remarks ) welcoming remarks by mr ben s bernanke, chairman of the board of governors of the us federal reserve system, at the fourth conference of the international research forum on monetary policy, washington dc, 1 december 2006. * * * vice president papademos, ladies and gentlemen, i would like to welcome you to the fourth conference of the international research forum for monetary policy. the forum is one outgrowth of the increased interaction between central banks and academic institutions that, in my opinion, benefits both groups. it is a true joint effort involving the european central bank, the federal reserve board, the bmw institute for german and european studies at georgetown university, and the centre for financial studies at goethe university in frankfurt. you have a very full agenda for the next two days. the topics represent a good mix of theoretical work as well as empirical work based on both calibration and econometric estimation. you are beginning with two papers that emphasize the importance of inflation expectations. other papers examine such topics as the application of search theory, the functioning of mortgage markets, the theoretical analysis of optimal monetary policy, and empirical research on price - setting. there is a lot of intellectual food on the table. bon appetit! | 0 |
targets β namely a negative phillips curve coefficient and a viable transmission mechanism β a sustained period of disinflation, if this is possible at all, can only emerge if monetary policy facilitates it. however, present day central banks have little scope to show forbearance when price stability is at risk. tolerating inflation destabilisation is not an option for them. modern central banks have two strong antidotes at their disposal to avoid this. first, their robust monetary policy frameworks prescribe the delivery of price stability within a policy - relevant horizon. i stress this qualification as it is a key element. to be sure, the time horizon for central banks to normalise inflation cannot be preset, by statute, unconditionally. indeed, in a vast part of the world where central banks are assigned numerical objectives for price stability the stabilisation horizon is not defined in rigid calendar - time form, but is left rather flexible for central banks to determine according to the nature of shocks that cause inflation to deviate from target. at the same time, a central bank which allows itself too much discretion over the time horizon when inflation should return to its target would de facto be claiming authority over redefining its monetary policy objective. this would be manifestly inappropriate, probably illegitimate. central banks know that if they lack a verifiable commitment to control inflation over a horizon for which the public retains some visibility, this can result in inflation expectations becoming β unanchored β. to go back to a point i made earlier, it is in this spirit that a central bank may choose to react vigorously to supply - side shocks so that it can restore the public β s faith in the effectiveness of monetary policy. second, and as a corollary, present day central banks do not indulge in the self - absolving notion that monetary policy has reached its limits and that further actions would be fruitless. historically this sort of pessimism about the potency of monetary policy has led to policy paralysis. to make matters worse, this idea was often combined in central banking circles with the conviction that those authorities with control over income, structural and fiscal policies should be principally responsible for reviving the economy and countering deflation risks. in both the 1930s and 1970s as well as in the early 2000s in japan, these counterproductive beliefs led to policy inaction which ultimately resulted in enormous harm being inflicted on their economies. today β s central banks have learned the | ##bed of innovation. ultimately, the greatest asset that barclays has is its staff. most of them are unsung heroes in the backrooms, cleaning crews, far - flung branches, etc. all dedicate themselves with professionalism, integrity, and a spirit of service. this is what all our institutions, including those in our banking sector, need to see and adopt. i applaud barclays for its excellent staff and anchoring its business on a set of strong values, without which it would have been impossible to sustain growth and stability over a century. before i finish, i would be remiss if i did not mention that the central bank of kenya ( cbk ) will this year mark its 50th anniversary. at this juncture, the central bank is at a point of reflection on its past successes and challenges in delivering on its key mandates including promoting the stability, access, efficiency and integrity of the banking sector. cbk will continue to take steps to further strengthen prudential regulation and supervision, with a view to supporting the continued safety, soundness and growth of the banking sector. this is in line with kenya β s aspirations under vision 2030 of promoting a sound, safe and inclusive financial system to progress towards a regional financial services hub. as i close, i see barclays standing with two roads diverging in front of it, and the last verse of robert frost β s poem β the road not taken β comes to mind : i shall be telling this with a sigh somewhere ages and ages hence : two roads diverged in a wood, and i β i took the one less traveled by, and that has made all the difference. i wish once again to congratulate barclays on this milestone and look forward to many more successful years ahead. i wish you fruitful centennial celebrations. thank you! bis central bankers β speeches | 0 |
richard w fisher : β not to be used externally, but also harmful if swallowed β β projecting the future of the economy and lessons learned from texas and mexico remarks by mr richard w fisher, president and chief executive officer of the federal reserve bank of dallas, before the dallas regional chamber of commerce, dallas, texas, 5 march 2012.. * * * the views expressed by the author do not necessarily reflect official positions of the federal reserve system. i have been asked to speak about the economy. i am going to take a different approach than is typical for a federal reserve speech. i β ll eschew making the prototypical forecast, except to note that from my perch at the federal reserve bank of dallas, i presently see that : a. ) on balance, the data indicate improving growth and prospects for job creation in 2012. however, the outlook is hardly β robust β and remains constrained by the fiscal and regulatory misfeasance of congress and the executive branch and is subject to a now well - known, and likely well - discounted, list of possible exogenous shocks β the so - called β tail risks β β posed by possible developments of different sorts in the middle east, europe, china and elsewhere. and b. ) while price stability is being challenged by the recent run - up in gasoline prices β which has yet to be reflected in the personal consumption expenditure and consumer price indexes but may well make for worrisome headlines when february data are released β the underlying trend has been converging toward the 2 percent long - term goal formally adopted by the federal open market committee ( fomc ) at its last meeting. 1 as to the outlook envisioned by the entire fomc, you might wish to consult the forecasts of all 17 members, which include those of yours truly, that were made public after the january meeting β though i think a puckish footnote appended to the internal document laying out a component of the december 1966 fomc forecast might still apply : β not to be used externally, but also harmful if swallowed. β 2 speaking of harmful if swallowed, i might add that i am personally perplexed by the continued preoccupation, bordering upon fetish, that wall street exhibits regarding the potential for further monetary accommodation β the so - called qe3, or third round of quantitative easing. the federal reserve has over $ 1. 6 trillion of u. s. treasury securities and almost $ 848 billion in mortgage - | stated in its preamble. but of this i am certain : it has made the lives of community and regional banks vastly more complicated. like almost anything that comes out of the u. s. congress, it has primarily been a boon to lawyers and consultants and compliance officers, adding to expenses but doing little to help you grow your businesses. we at the dallas fed are acutely conscious of this. we think of dodd - frank as akin to what dr. seuss once wrote about medicine : bis central bankers β speeches interest margins for community and regional banks have been shrinking for some 20 years. to be sure, the low interest rates the fed has engineered to bring the economy out of the death spiral threatened by the financial panic of 2007 β 09 exacerbated pressures on margins as we awaited the strengthening economy we are now beginning to experience. but adding the pills and the bills of extra layers of compliance and legal expenses generated by dodd - frank has compounded the difficulty of passing on profitable franchises to your banking heirs. this is why, systemwide, the fed has been sensitive to the situation of banks under $ 50 billion, and especially sensitive to the situation of banks with less than $ 10 billion in footings. to be sure, we are as committed as ever to safety and soundness and the application of the law ; we always have been and always will be. but at the dallas fed, we believe we can apply the requisite discipline required to safeguard our banking system in a way that is beneficial to regional and community banks. we and our fellow federal reserve banks have worked hard to instill a constructive and interactive relationship, rather than a hostile, purely formulaic one, with the banks we supervise. you might have noted that janet yellen β s speech of may 1 to the independent community bankers was titled β tailored supervision of community banks. β the federal reserve banks take this charge seriously. this is no idle claim. just looking at the eleventh district, we are increasingly being petitioned by banks for membership in the federal reserve system. the number of state member banks in the dallas fed district increased by 8 percent in 2012, by 19 percent in 2013, and we have already increased membership an annualized 26 percent in the first three months of 2014. so i would just say this to those of you who are madder than ( bleep! ) about what congress and the regulators have wrought : the federal reserve knows what community and regional banks do for their communities. we appreciate that | 0.5 |
rate, weight is also given to stabilising developments in output and employment. for monetary policy to contribute to stabilising developments in output and employment, there must be confidence that the inflation target will be reached. inflation will not be at target at all times, but if there is confidence in monetary policy, expected inflation will be close to the inflation target over time, which in itself contributes to stabilising inflation. norges bank β s communication of monetary policy aims to stabilise inflation expectations by giving the reasons for and explaining interest rate setting. by publishing its interest rate forecasts and monetary policy strategy, norges bank has made it easier for others to understand and evaluate monetary policy. it is my objective to continue and enhance the bank β s analysis and communication. since march of this year our monetary policy reports have included a summary of the executive board β s discussion of monetary policy prior to the reports. chart : surplus liquidity in the banking system to be effective, the key policy rate must have an impact on market rates. norges bank supplies liquidity to banks to bring short - term money market rates down closer to the key policy rate. surplus liquidity in the banking system is kept as sight deposits at norges bank. the redistribution of interbank liquidity does not function adequately. in 2010 norges bank had to maintain high liquidity in the banking system to keep short - term money market rates close to the key policy rate. to dampen demand for central bank liquidity and promote increased activity in the money market, norges bank β s executive board approved changes in the system for managing liquidity in the banking system in december 2010. under the new regulation, only a certain amount of banks β deposits β a quota β will bear interest at the key policy rate. deposits in excess of this quota will bear a lower interest rate. this will give banks a stronger financial incentive to redistribute liquidity among themselves, making the norwegian money market function more effectively. the new system is expected to take effect from 3 october of this year. 3. from financial crisis to debt crisis chart : general government gross debt the experience of recent years has shown the costs of financial instability in many countries. global economic growth has recovered, but the effects of the financial crisis are still visible and will be so for some time ahead. financial crises tend to be followed by debt crises. fiscal policy was used actively in most countries to dampen the effects of the financial crisis. the mistakes | understanding of climate risk, seeking to address those risks through upskilling, identifying useable tools and frameworks, raising awareness, and taking leadership applies to all participants in the financial system β including regulators β and we are supportive of many of the recommendations. i am particularly drawn to the new industry narrative recommendation, which proposes to articulate a coherent story on what role the industry is playing in support of wider climate goals. in my view, the establishment of the climate forum and the publication of this report is a substantial first step in building that narrative. but there is no doubt that we are very much in the early days of this journey. and while we can expect the regulations and industry best practices for meeting those regulations to evolve β there is a need to further embed climate risk and sustainable finance within our organisations and that can only happen through building capacity. as i have said before while the path toward a net - zero economy is a difficult one, it is nevertheless one that we must all walk together. my thanks again to the working group for making a substantive contribution in that journey with this report and i look forward to the rest of the event this morning. 2 / 2 bis - central bankers'speeches | 0 |
economy β may not regain momentum soon. therefore, i am carefully monitoring these developments. b. domestic demand economic recovery this time has been led by the nonmanufacturing sector so far, mainly driven by private consumption. in order to have continued firm domestic demand, it is important to maintain a situation in which improvement in the employment and income situation supports consumption. another important factor in considering the future of domestic demand is the increase in firms β business fixed investment. turning to indexes related to consumption, private consumption remains resilient, but there is a sign of slowing in its growth momentum. the household activity - related diffusion indexes ( dis ) for current and future economic conditions in the economy watchers survey, which seem to reflect consumer confidence, dropped for the fifth consecutive month since april 2013. this development is consistent with that of real consumption expenditure in the family income and expenditure survey. the sign of slowing in consumption is also reflected to the latest gdp statistics. the real gdp growth rate in the july β september quarter of 2013 registered 0. 5 percent on a quarter - on - quarter basis. on an annualized quarter - on - quarter basis, it slowed to 1. 9 percent from around 4. 0 percent in the first half of the year. private consumption also slowed compared to the first half of the year, to 0. 1 percent on a quarteron - quarter basis. business fixed investment on the whole grew for the third consecutive quarter, reflecting an improvement in corporate profits, to 0. 2 percent on a quarter - on - quarter basis, but the recovery in the manufacturing sector still shows a lackluster performance. meanwhile, exports β which largely affect investment by manufacturing firms β lack resilience and decreased for the first time in three quarters, to minus 0. 6 percent on a quarter - onquarter basis. i think the key to the future of domestic demand lies particularly in the extent to which business fixed investment will grow under these circumstances, but that a full - fledged recovery of such investment will take time. c. outlook for prices as for the outlook for prices, i formulated a proposal to make the following changes in the october 2013 outlook report, although it was defeated by a majority vote during the bis central bankers β speeches monetary policy meeting ( mpm ). first, with regard to the outlook for prices toward the latter half of the projection period, i proposed to change the current expression that the year - onyear rate of change in the cpi β is | the year - on - year rate of change in the cpi. this can be understood as a typical example of an inflation targeting policy ( chart 3 ). enhancing policy credibility and predictability an inflation targeting policy has a number of advantages. to begin with, as the policy contains a specific numerical target for the future inflation rate, it can be judged objectively whether the target has been met. through enhanced transparency, a central bank β s obligation to be accountable with regard to policy judgment and the status of achieving the target will become crucial. this will create a situation in which credibility in monetary policy is likely to be enhanced. as it becomes easier to forecast price levels, various economic entities can conduct their activity on the basis of such forecasts. the predictability of future prices will be further reinforced as credibility in monetary policy becomes enhanced. preventing hyperinflation regarding the bank β s policy, some raise concern that, when the time comes for the bank to change the course of monetary policy, it might be difficult to do so due to pressure from bis central bankers β speeches financial markets or the government, and this eventually leads to inducing hyperinflation. the adoption of inflation targeting is effective in terms of alleviating such concern. the reason for this is that an inflation targeting policy is a device to hold a specific numerical target for the future inflation rate and make a commitment to achieving a situation that generates neither inflation above the target rate nor deflation. though an inflation targeting policy is often discussed in japan as a measure to overcome deflation, it was originally adopted in the 1980s in countries that suffered high inflation, such as new zealand. i would like you to understand that, in case the economy should overheat and the inflation rate should rise well above the 2 percent price stability target, the bank will take appropriate measures in line with the framework of an inflation targeting policy. this has already been made as a firm commitment. i should stress that, in line with the mission stipulated in the bank of japan act, the bank will conduct monetary policy based on its judgment and responsibility while facilitating communication with the government. ii. quantitative and qualitative monetary easing now, i will talk about the content and transmission mechanism of the qqe, which was introduced as a policy to overcome deflation. a. two pillars of the qqe the bank set the price stability target of 2 percent in terms of the year - on - year rate of change in the cpi. it has been pursuing bold | 0.5 |
a full range of financing options to entrepreneurs is a key element in the mobilization of the region β s rich reservoir of savings to finance regional investments. another contribution that can be made by exchanges is enhanced transparency. in some cases, investors are said to be discouraged from investing in the emerging asian market, partly because transparency is so low. with their transparent trading systems, which i have just mentioned, exchanges may help overcome this problem. finally, exchanges could be linked across borders. such linkages would create additional efficiency. in the context of emerging asia, it is important to strengthen the intra - regional as well as extra - regional linkages between exchanges. listing of overseas assets, cross - listing of products and trading links between exchanges can all be designed to enhance intra - regional capital flows. i hope the distinguished leaders of established exchanges assembled here today would assist their emerging asian colleagues to achieve these goals. concluding remarks central banks operate in the markets to achieve its policy goals. as a result, the effectiveness of monetary policy depends on the sound development of financial markets. in this context, central banks have more than a passing interest in enhancing market infrastructure. exchanges are important building blocks of this infrastructure. i should stress that in a globalizing world supported by information technology, the certainty of transactions is a crucial factor for sound development of the financial system. central banks provide certainty through the finality of payments effected through their accounts. exchanges provide certainty through its settlement arrangements. in light of these common roles, i believe that we can cooperate in many ways to enhance the efficiency and soundness of the financial system. i look forward to working together with you in this regard. thank you for your kind attention, and good evening. | international financial system and the global economy? large imbalances are worrisome, because imbalances cannot grow forever. in fact, the imbalances we saw in the middle of the 1980s led to a rather painful correction of the dollar. as one accumulates more dollars, he or she would begin to worry about the danger of putting all his or her eggs in one basket. alternatives are there. it can be the euro, the yen or any other currency or a physical asset. if sentiment shifts suddenly in such an environment, there would be a rush to convert dollars into alternative assets. with the large accumulation of deficits to start with, the resulting flows could be quite large. they might be of a magnitude that could impair the smooth functioning of the international financial system. though unlikely, that is still a risk we must not ignore. in order to reduce such risks, we must think about how to adjust the imbalances to more comfortable and manageable levels. policy makers cannot adopt benign neglect in this context. i believe many things are best left to the market and the government should keep out of its way. we cannot, however, always say that the market would take care of itself. if left to the market, there is a risk, however remote, of a sudden shift in sentiment over the dollar. policy makers must reassure the market that they are not letting imbalances get out of hand. we need to have a good mix of policies. to begin with, we need to ensure flexibility in the financial system and the economy. in many cases, unleashing market forces is a key to efficient adjustment, and flexibility is essential to the financial system and the economy to withstand shocks arising from adjustments. beyond this, there are basically two routes to reach a level of imbalances that would be more comfortable and manageable in the long run : realigning exchange rates and rethinking policies that influence absorption in economies. adjusting imbalances entirely through exchange rate realignments is neither practical nor desirable. meanwhile, policy choices can influence absorption. if dissavings by the government are resulting in current account deficits, consolidation of fiscal expenditure would be necessary. governments of deficit - running economies might also review any policies that are discouraging private savings or adopt policies that encourage private savings. surplus - running economies can adopt policies to encourage domestic absorption. for example, enhancing confidence in social security systems would persuade households to avoid excessive savings. it is responsibility | 1 |
shaktikanta das : south asia's current macroeconomic challenges and policy priorities keynote address by mr shaktikanta das, governor of the reserve bank of india, at the high - level conference co - organised by the international monetary fund ( imf ) asia and pacific department ( apd ) and the imf south asia regional training and technical assistance centre ( sarttac ), new delhi, 6 january 2023. * * * i am delighted to have been invited by the imf to join this distinguished gathering here today to discuss pathways to resilient, sustainable and inclusive growth in south asia. i am happy to note that the conference proceedings will be anchored by the research findings and policy recommendations of the book titled " south asia's path to resilient growth ". in the current international setting, global trade and growth outlook appear uninspiring, and policies have to be conducted amid a whirlwind of uncertainty. at such critical times, conferences of this nature can help us better understand the evolving scenarios and policy trade - offs. in my address today, i shall briefly cover some of my thoughts on south asia's current macroeconomic challenges and policy priorities. 2. looking back into history, the south asian region has been a key hub of ideas, commerce, art and culture, etc. the indus valley civilisation was among the three earliest civilisations on earth and was the most extensive. in the so called middle ages, trade and commerce flourished in a variety of commodities such as spices, precious metals and other minerals, handicrafts and food items. overall, the south asian region has had an outsized influence on the progress of civilisation and trade in the world. currently, the region accounts for about 25 per cent of world population. with a median age of 27 years, it is one of the youngest regions in the world. the average growth rate of the region has accelerated from 3 per cent in the 1970s to about 7 per cent in the latest decade ( pre - pandemic ). consequently, per - capita income levels have risen alongside notable progress on key development parameters. as per the imf estimates, south asia contributes nearly 15 per cent to global growth, led by india and bangladesh. the region also receives one - fifth of total remittance flows in the world. 3. the south asian region has grown, responding to formidable global challenges in the past. following the food crisis of the 1960s, the region successfully | south asian region. i have identified six such policy priorities. taming inflation 6. multiple external shocks in the form of covid related global supply chain disruptions, food and energy crisis following the war in ukraine, and financial market volatility arising from the aggressive monetary policy tightening have exerted sustained price pressures in the south asian economies, as in other parts of the world. during the first three quarters of 2022, food price inflation in south asia averaged more than 20 per cent. the region's heavy dependence on imported fossil fuels has made it vulnerable to imported fuel inflation. for successful disinflation, credible monetary policy actions accompanied by targeted supply side interventions, fiscal, trade policy and administrative measures have become the key instruments. while the recent softening of commodity prices and supply chain bottlenecks should help in lowering inflation going ahead, risks to growth and investment outlook may rise if inflation persists at high level. prioritising price stability, may therefore be the optimal policy choice in the current context for the region. the approach to disinflation, however, needs to be mindful of the rising risks to the growth outlook in an environment of deteriorating prospects for global growth and trade activity. containing external debt vulnerabilities 7. the surge in external debt in recent years and associated vulnerabilities have undermined macroeconomic stability in several countries of the south asian region. external debt, which was already elevated in low - and middle - income countries ( that include all south asian economies ) in the pre - pandemic period, surged to us $ 9. 3 trillion in 2021 from us $ 8. 2 trillion in 2019, an increase of us $ 1. 1 trillion. 2 / 5 bis - central bankers'speeches 8. the debt service suspension initiative ( dssi ) was set up by the g20 in may 2020. up to december 2021, an estimated us $ 12. 9 billion of debt service was deferred. according to the world bank, 60 per cent of the 73 dssi - eligible countries are at high risk of debt distress or are already experiencing it. it is estimated that total external debt service payments on public and publicly guaranteed debt by poorest countries may rise by 35 per cent to over us $ 62 billion in 2022 and to remain high up to 2024 due to rising global interest rates and the compounding of interest on dssi debt service deferrals. 9. even though the participation of private creditors was encouraged | 1 |
see the inflation risk as serious and imminent, they are taking expansionary monetary and fiscal action. in the bank β s view, for trinidad and tobago, with inflation already at 14. 8 per cent, inflation reduction should be priority number one. in the overview, we make the point that a quick return to single - digit inflation is critical for reversing inflation expectations and bringing inflation down to 6 - 7 per cent in the medium term. one cannot have sustained growth and improve the quality of life of the population until inflation is brought under control. the downward trend in global food prices will help to reduce food price inflation ; expected increases in domestic agricultural production and increased food imports from guyana should also help to bring down food prices. the government has indicated that it will respond to projected reduction in energy tax collections by trimming expenditures. the central bank is committed to tightening the monetary stance as required. dealing with wage demands could present a challenge. high inflation and in particular, high food price inflation have seriously eroded the real incomes of workers and understandably this is going to be reflected in their wage demands. how we deal with this will determine whether we achieve a reduction in inflation or whether we face the risk of a wage / price spiral. we continue to believe that the best way of resolving this is through dialogue ( a social compact ) between the major stakeholders finally, the mpr touches on a worst - case scenario ( hopefully, highly unlikely ) in which oil prices fall below us $ 40 per barrel with corresponding declines in gas prices. we argue that our economy is in a better position now to withstand such a worst case scenario ( given our level of reserves, low external debt, the hsf etc. ). obviously addressing such a worst case scenario would call for major adjustment in both the public and private sectors. thank you ladies and gentlemen. | ewart s williams : trinidad and tobago β state of the economy and short - term prospects remarks by mr ewart s williams, governor of the central bank of trinidad and tobago, at the monetary policy report media conference, port - of - spain, 17 november 2008. * * * good morning, ladies and gentlemen and thank you for joining us. before i discuss today β s monetary policy report, which reflects the central bank β s latest thinking on the economy, i would like to say a few words about the global financial crisis. the honest truth is that it is difficult to make an informed assessment about the state of the crisis since each day brings more depressing news. there would seem to be sufficient evidence to suggest that the risk of a total melt - down of the world β s financial system has receded somewhat, though all the accompanying ills are still with us. while solvency concerns have eased in the light of official commitments to use public funds to recapitalize financial institutions, lingering uncertainty has impeded the proper functioning of money and capital markets. thus, we are seeing unprecedented volatility in the world β s major equity markets ; liquidity preference, risk aversion, and bank spreads remain at elevated levels. perhaps the big legacy of the financial crisis may be a global recession. the us is now in recession ; the uk has been in recession for a few months now ; and on friday, the euro zone conceded that recession had arrived. ( one last word on the international economy ) contagion has finally reached developing and emerging market economies, all of which will experience slowdowns. even so, the entire increase in global growth in 2009 is expected to come from these economies. the industrialized economies as a group are projected to decline by as much as 1 per cent. emerging and developing economies are projected to grow by around 5 per cent ( most of it from china and india ). it is not surprising therefore that the historic talks held in washington dc over the weekend ( some called it bretton woods ii ), were not among the g7 or g8 ( as is the custom ) but among a broader group called the g20 countries. many observers see this as a clear recognition that the world could not get out of its present predicament without, china, india, saudi arabia, brazil, and a host of others β¦ they are providing the growth and they have reserves to pull even the developed countries out of the present dilemma. we will have | 1 |
to invest and think more intensively about what the future world of payments should look like. and due to the pivotal nature of payments, the public sector is actively involved too, seeking both to enhance and strengthen the existing infrastructure but also assessing whether there is a more fundamental approach to complement it. new forms of digital money could contribute to faster, cheaper, and more efficient payments and have financial inclusion as a prominent design consideration. as innovation develops further in this space, it will be important that regulation follows suit. our governor andrew bailey noted in his recent speech, that it is crucial the regulatory framework adapts to innovation in a way that fulfil the bank β s core mission to promote the good of the people of the uk. we cannot allow innovation to have β free pass to ignore public interest β. 3 earlier this month the bank published a discussion paper on digital money including the possibility of central bank digital currencies ( cbdc ). 4 a cbdc would, if introduced β and that is an important if being considered by a number of recently announced groups5 β be a new form of central bank digital money issued by the bank of england for use by households and businesses. importantly it would co - exist alongside cash, commercial bank deposits, and core payments infrastructure such as rtgs. rtgs at the heart of uk payments a decision on whether to introduce cbdc will be made in due course. but a significant programme to enhance the existing infrastructure is already well on the way to delivery and is set to start to make a real difference 12 months from now : the renewal of the rtgs service itself. rtgs sits at the heart of uk payments. it is the infrastructure where the key uk payment systems ultimately settle β chaps and a myriad of retail systems including bacs, faster payments, cheques and cards. the rtgs service settles an average of Β£700bn each working day ( which is equivalent to more than the uk β s gdp every three days ). this settlement occurs in central bank money, the ultimate risk - free asset. in addition to its settlement functionality, rtgs also plays an important role in the implementation of monetary policy. and the smooth operation of rtgs makes a vital contribution to the bank β s overarching mission of maintaining monetary and financial stability. in april this year we celebrated the 25th anniversary of our current rtgs service. the service has been enhanced along the way with a number of technical and policy upgrades. we were the first major central | on another call, this time with the treasury and its debt management office ( dmo ), to discuss the β ways & means ( w & m ) account β β in modern language, the government β s overdraft facility at the bank of england, funded by reserves creation. w & m sits at the very bottom of the hierarchy of tools used to meet the government β s borrowing needs. the primary tool is gilt issuance β for many years used by the dmo to β fully fund β those needs over the medium term ( usually a fiscal year ). because government cash flows are not perfectly predictable, β rough tuning β is achieved through the issuance of marketable treasury bills. and β fine - tuning β is done through the money markets. the w & m exists purely as a back - up to those fine - tuning operations. given these multiple alternative tools, w & m had seen no material usage in over a decade ( chart 13 ). but clearly the period of dysfunction in gilt and money markets in march and early april raised the possibility that it might be needed if all of the other alternatives were temporarily rendered ineffective. working together, the uk authorities β challenge was to remind financial markets that its sole purpose was as a temporary, short term cash management tool to smooth cashflows, and not in any way intended as a more lasting replacement for gilt issuance as the government β s primary financing source : something that could all speeches are available online at www. bankofengland. co. uk / news / speeches complicate the execution of monetary policy. those principles were embodied in a public announcement released on 9 april. in the event, the rapid normalisation of market conditions allowed the government to announce, and so far meet, sharply higher near - term gilt issuance plans ( chart 14 ) without any need for recourse to the ways & means account. the account remains available for use, if unexpected future cash needs cannot be met by any other market - based means, e. g. because of a renewed period of dysfunction. but in such circumstances, the usage would be short term ; and, as soon as possible before the end of the year, the dmo would scale up its market operations to repay the w & m balance. chart 13 : usage of the ways & means account Β£ bn chart 14 : dmo funding plans compared 2016 - 2019 average 2020 ( dmo announced ) Β£ bn source : bank of england. available here | 0.5 |
insurance fund financed by all the banks. the us treasury provided recapitalisation support and guarantees through its troubled asset relief program ( tarp ). the federal reserve undertook a thorough stress - test, determining banks β additional capital needs. bis central bankers β speeches to understand the situation we are in in europe, it is useful to make a thought - experiment, and imagine that no such federal institutions exist in the us. imagine that the state of california would have had to come up with the tarp money for wells fargo instead of the us treasury. imagine that the state of new york would have had to provide the guarantees to citigroup. think about how the markets, how would the rating agencies have treated these states? and how they would have treated these banks? the lesson for the euro area is clear : federal institutions can prevent local crises from becoming systemic. in europe, we do not yet have these federal institutions that can act as shock absorbers. so far, responsibility for dealing with bank problems lies exclusively with the individual eu countries. the result is that β to quote an ft editorial β β national taxpayers subsidise banks implicitly in good times, explicitly in bad times, and suicidally in a sovereign debt crisis β. indeed, the crisis in ireland has shown that problems in domestic banks can overwhelm the fiscal capacity of national sovereigns. the causality can also be the other way around, as the case of greece has shown, where fiscal problems have dragged down the banking system. these countries got caught in a vicious fiscal - financial feedback loop, which in the end also drags down the economy, breaks up the internal market, and impairs our monetary policy conduct. removing this vicious feedback loop is what banking union is all about. creating a banking union will be good for the euro, good for the internal market, and good for the recovery. it will be good for the euro, because it will help to repair our monetary policy transmission mechanism. in other words, it will ensure that the ecb β s low interest rates will be effectively passed on to those countries that probably need them most. it will be good for the internal market, because it will be of help to reverse the significant financial fragmentation that we have seen so far. and it will be good for the recovery, as banks will be put on a stronger footing, confidence will be improved, and ultimately credit will start to flow again to enterprises on affordable terms. but what are the necessary elements | also on the basis of low interest rates all along the money market yield curve, providing attractive financing conditions, the economy is expanding and we see a positive growth outlook. i will also outline which policies β in my view β are needed for the recovery to be sustainable with the prospect of long term growth. first, structural reform policies to strengthen overall growth prospects. second, a financial market sector reform ( which is well on track ), third, fiscal consolidation ( which is also well on track ) and fourth, the continuous concentration of monetary policy to be directed at medium term price stability as this is the necessary and crucial contribution of monetary policy to fostering sustainable economic growth, job creation and financial stability. price stability and financial stability are indispensable elements shaping the outlook for global growth. a third element is sound public finances. but before addressing these issues, let me give you some ideas on what the ecb has done during the crisis. the ecb β s actions during the crisis recent years have been most challenging across the globe. what started as tensions in the money market in august 2007 quickly spread around the globe, leading to severe repercussions across economies and markets. after the failure of lehman brothers in september 2008, we saw a sharp fall in global activity. in the fourth quarter of 2008 and the first quarter of 2009, global trade volumes fell by 18 percent. this development was also felt here in china, where year - on - year gdp growth decelerated to 6. 2 % in the first quarter of 2009 from 9. 1 % in the third quarter of 2008 and trade values decreased by 33 % from september 2008 to march 2009. in the euro area, real gdp fell by altogether almost 4. 5 percent and unemployment rose by 1. 4 percentage points in just six months. at the same time, extra - euro area export volumes of goods decreased by 18. 0 % and import volumes by 12. 8 %. the ecb acted quickly and decisively in response to the crisis. we reduced our key interest rates to unprecedented low levels. the interest rate at the main refinancing operations was lowered by 325 basis points to 1. 0 % between october 2008 and may 2009, i. e. within a period of only seven months. and, we have left it unchanged since then. in addition, we introduced a series of non - standard measures to support credit provision by banks to the euro area economy. our non - standard measures were designed to sustain financing conditions | 0.5 |
had not developed effective contingency plans. they did not anticipate the broad consequences of widespread deleveraging, forced asset sales that exacerbated the illiquidity in markets, or the broad loss of confidence that followed. it's now obvious that this inability to anticipate and prepare for extremely bad outcomes posed a significant risk to financial system stability. more robust risk - management practices, grounded in a longer - term, through - the - cycle perspective and appropriately designed stress tests, could have helped to prevent the buildup of leverage that became unsustainable. it has also become clear that riskmanagement models must take into account the collective impact of individual choices. for, without an understanding of this impact, there is a risk that core markets can close, liquidity can dry up, and the type of crisis we are currently enduring could be repeated. the regulator and the central bank can possibly help in this area. by running coordinated macroeconomic stress - test scenarios, they can observe the details of risk - management systems at individual institutions and may identify possible feedbacks that are missing in these systems. they could then disseminate the results of these exercises in a suitably aggregated form among risk managers at individual institutions, to help them internalize these externalities. the crisis has exposed some weaknesses and inconsistencies in the application of fair value accounting methods. first, the reliance on market valuations has the potential to amplify the boom and bust cycle in credit and asset prices, by creating a feedback loop between asset values and lending. second, the application of fair value methods in illiquid or inactive markets may distort information if the models or observable prices used for valuation are inadequate or inappropriate β a problem that is heightened during periods of market stress, when correlations break down. for example, as the liquidity of many markets became impaired in this crisis, there was considerable uncertainty about how to value certain assets and how to compare financial statements. the financial stability forum ( fsf ) β which includes senior representatives of national financial authorities from selected countries including canada, along with international financial institutions and standard setters β has called for improved guidance from standard setters in the use of fair value accounting at times when measurement is challenging, and for improved disclosure by financial institutions. accounting standard setters have since clarified their position and have proposed increased disclosure standards for the valuation of financial instruments. this is a good first step, considering how essential | turalay kenc : the turkish economic outlook and monetary policy β challenges and policy response remarks by mr turalay kenc, deputy governor of the central bank of the republic of turkey, at the eu ambassadors meeting, ankara, 28 january 2016. * * * i would like to start by thanking his excellency ambassador cornelis van rij for the opportunity to share with such distinguished audience some views about the turkish economy, the challenges stemming from a very volatile external environment, and the policy approach that has been implemented to cope with these challenges. the turkish economy has shown a relatively robust performance in the face of major external and internal shocks. gdp growth is estimated at around 4 percent in 2015 with an expected gradual strengthening of economic activity in 2016 and in 2017. the rise in gdp growth rate observed in 2015 is mostly attributed to strong private consumption. private investment recorded a moderate recovery. the challenging external conditions especially geopolitical events in the region have adversely affected exports. however, the economic recovery in most eu member states enabled turkey to largely compensate its loss in other exports markets as turkey increased exports to the eu countries by more than 10 percent in euro terms in 2015. this outcome also highlights turkish exporters β resiliency in adopting to adverse economic conditions. of course, probably the most significant development of the last year or so has been the sharp decline in oil prices. turkey, being an energy importing country benefited from lower oil prices in many dimensions. the current account deficit fell from $ 52 billion in june 2014 to below $ 35 billion in november 2015 in 12 month rolling terms. this sharp improvement in the current account balances is also greatly helped by prudent macro - economic polices including monetary, macro - prudential and fiscal policies. tight monetary policy, well - targeted macroprudential measures and strong fiscal balances have all contributed to lower levels of domestic demand by stabilizing loan growth and reducing risk taking behavior. going forward, the current levels in oil prices and depressed producer prices in most part of the world due to weak economic activity are expected to lead to further improvements in external balances. therefore, it is highly likely that turkey will record a current account deficit of below 4 percent of its gross domestic product in 2016, representing a major achievement in satisfying the norm of the european union β s macroeconomic imbalances procedure. unlike these positive developments in the economy, inflation increased and its outlook worsened in 2015 reflecting the pass - through from the tl | 0 |
market, this will have positive spillovers in lifting the quality of jobs in the industry more generally and reversing the brain drain of insurance talent. secondly, insurers need to stay ahead of the curve in leveraging new technologies to be more accessible, more efficient and more agile. many forces will be driving insurers to be more innovative. the removal of tariffs and changes introduced under the life framework will drive the growth of new products and delivery channels. as social media and other forms of communication change the way insurance is accessed, traditional business models will be at risk of being β uberised β. even where face - to - face contact remains important, for example in the purchase of long term life insurance, the effectiveness and cost efficiency of agents will be transformed by enhancements in productivity arising from better data analytics. the bank will continue to pursue the innovation agenda. technology advancement is here to stay. revolution in business brought about by technological advancements will change the way we live and do business. as a catalyst for such innovations, i am pleased to announce that following a public consultation process, the bank has today issued details of the financial technology regulatory sandbox. effective immediately, financial institutions and fintech companies will now be able to pilot innovations in a controlled, live - test environment with appropriate flexibilities accorded. this will include flexibilities under existing regulatory requirements that apply to outsourcing arrangements and access to customer information, subject to compensating safeguards. the experience from the sandbox will provide input into formulating more proportionate regulations that will spur the orderly growth of new innovations in the financial industry, including insurance. we see significant potential for positive disruptions to transform the business of insurance and takaful in malaysia β from the way insurance is consumed, to opportunities for addressing leakages to drive insurance costs lower. indeed, the greatest gains from technological innovations may well be reaped in the more mundane aspects of running a business efficiently. today, money is still being left on the table from inefficiencies and leakages in the insurance system. from inefficient manual bis central bankers β speeches processes to the slow take - up of electronic payments, there are large gaps in the supply chain that unduly increase the cost of insurance and limit efforts to combat insurance fraud. the insurance industry needs to accelerate its pace in terms of its technological adoption or else events will dictate the shape of the industry β s future. | aznan bin abdul aziz : banking and esg revolution β going beyond aspirations closing remarks by mr aznan bin abdul aziz, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the aicb - abm 2nd malaysian banking conference, kuala lumpur, 27 june 2023. * * * y bhg tan sri azman hashim, chairman of the asian institute of chartered bankers ; y bhg dato khairussaleh ramli, chairman of the association of banks malaysia, vice chairman of aicb and group president and ceo of maybank group ; esteemed guests, ladies and gentlemen assalamualaikum and salam sejahtera it's past 5 pm. and i have the unenviable job of keeping you from leaving after a highly productive and packed day. it is simply incomplete to adjourn without the regulator relaying its thoughts and expectations. i understand that the day started with a focus on where we, as a country, are in the climate journey. we know that 2050 is the year β the earliest point by which malaysia aspires to reach net zero ghg emissions. many significant policies are now either in place or are due to be finalised soon to get us to 2050. these include key frameworks and roadmaps for malaysia to transition such as the long - term low emissions development strategy ( lt - leds ), nationally determined contributions roadmap ( ndc roadmap ) and national energy transition roadmap ( netr ). these policies will enable yourselves and your clients to better align your transition plans. for the international community, these policies provide a clear signal on the country's seriousness about 2050, despite contributing only 0. 7 % of global ghg emissions. along the transition journey, there are risks to manage, and opportunities to be seized. technology is key. so is finance. your actions and responses are critical. the partnership between you and your clients is critical. your clients would need the " how " in terms of new forms of financial instruments β transition finance, adaptation finance and blended finance to name a few. for the smes, this goes beyond financing. for instance, they need the " how " in terms of where and how to begin greening their operations, tools to help them understand, measure and track their own emissions profiles. i am delighted and encouraged to see the malaysian ecosystem and accompanying tools continue to mature. the progress thus far is | 0.5 |
willem f duisenberg : international charlemagne prize of aachen for 2002 acceptance speech by dr willem f duisenberg, president of the european central bank, aachen, 9 may 2002. * * * ladies and gentlemen, for the first time, the charlemagne prize association has decided to honour not an individual or a group of persons, but an object. you have chosen to pay tribute to " the euro β our money ". for more than a decade now, monetary union has been a focus of public attention and a major issue of public debate. the depth of feeling generated by the euro, whether enthusiasm or hostility, has been far greater than what we are used to in this typically unglamorous field of economic management that is monetary policy. in fact, a lot of the attention gained by the euro was and is directed not so much at the currency itself, but more at the underlying political vision, of which it has become the symbol. by accepting today the charlemagne prize on behalf of the euro, i would like to pass on the credit for it to those who forged that vision of europe and turned it into reality. among them were helmut kohl and francois mitterand, who jointly won this prize in 1988. the vision of a united europe was born, let us not forget, from a desire for peace and prosperity in a continent which was so often divided by internecine conflict, and which embroiled the rest of the world in two wars within two generations. it would be inaccurate to say that the vision of a united europe was born solely out of the horrors of the first and second world wars. it existed long beforehand. but significantly, it was from these two conflicts that the founding fathers of the current process of european integration found the strength to succeed where earlier visionaries had failed. in the 1920s, an austrian diplomat, count coudenhove - kalergi, emerged as the founder of the european movement. he remarked that " even more than a common history, it is a common destiny that makes the union of the people of europe a necessity ". incidentally, and unsurprisingly, he went on to become the first person to receive the charlemagne prize. and as aristide briand, the french statesman, later pointed out, it is the mutual vulnerability of the people of europe β if only because of the geography of our continent β which creates the conditions for solidarity, and the pressing need for mutual confidence. this, in essence, was the | . this applies to the constitutional value of money as well as to its economic value. it was wise, therefore, that the drafters of the treaty chose to make the monetary constitution of europe not only solid, but the most solid in the world, in the sense that it is possibly the most difficult to alter. towards a third contract we know that such a bold step as the single currency was conceived as part of a wider process of uniting europe not only economically but also politically. today, a new path is being explored : the convention on the future of europe has been established. its task is to make proposals on furthering the construction of a united europe as well as on streamlining and democratising the structure of the union. if it succeeds in this task, the convention will help to complement the existing economic constitution with effective and transparent political structures and processes. in the same way that the economic constitution, because it is based on sound principles, is capable of meeting the challenges of the future, so will europe as a whole be better equipped to meet its citizens'expectations. so will europe as a whole be better able to meet the challenges it faces, be they from within or from without, and to assume the international responsibilities commensurate with its size and its importance. we may ask what we can expect from the convention in our main field of interest and responsibility, safeguarding the value of our currency. when quoting nicolas oresme, i already implicitly gave my view. i consider the existing economic constitution, as set down in the present treaties, to be, on the whole, satisfactory, based on sound principles and capable of meeting the challenges of the future. in particular, this applies to the fundamental features of monetary union and the escb, the elements of the monetary contract i just referred to. conclusion since the monetary chapter of the constitution, at least, has been completed, let me also bring my remarks to a conclusion : for more than ten years, the euro β as a goal β has crystallised hopes and fears, and has attracted praise and criticism, not only in relation to the prospect of a single currency but also in relation to the entire process of european integration. the introduction of the euro was a momentous event for europe, made possible because of the two contracts i have been talking about. the first, money itself, is the contract that creates ties between the people of the euro area β and also forges links with all other users of the euro, | 1 |
, the decrease in inflation rate and a reduction in interest rates. the imf and world bank boards on 30th and 31st august 2006, respectively, approved that malawi had reached the hipc completion point after making satisfactory progress in implementing its poverty reduction strategy paper ( prsp ) for at least one year, and maintained satisfactory macroeconomic policies as evidenced by its performance under the prgf. furthermore, malawi also met all the completion point targets in the area of economic governance and public expenditure management, safety nets, and microfinance. apart from receiving hipc debt relief, malawi also qualified for the multilateral debt relief initiative ( mdri ) which cancelled all pre - 2004 debt to the world bank and african development bank, and pre2003 debt to the imf. in october 2006, paris club creditors also agreed to cancel almost 100 % of malawi β s debt owed to them. these developments, distinguished ladies and gentlemen, reduced malawi β s external debt from 142 % of gdp at the end of 2005 to 23 % of gdp at the end of 2006. other external debt indicators also improved significantly. distinguished ladies and gentlemen, let me now turn to the monetary policy stance that was pursued in 2006. monetary developments in 2006 were generally expansionary. the increase in money supply mainly arose from net foreign reserves on account of receipts for balance of payments support. the increase in money stock was also partly a reflection of an expansion in credit to the private sector. it should be noted that since march 2006, credit to the private sector has been increasing steadily, implying that the february 2006 reduction in the liquidity reserve requirement ( lrr ) was bearing fruit. this is in line with the economic program which allows for more credit to the private sector to boost economic growth. the bank rate was adjusted downwards from 25. 0 percent to 20. 0 percent on 13th november 2006. as a result, commercial banks followed suit by adjusting both their savings and deposit rates. the reduction in interest rates should, therefore, give an opportunity to the private sector to participate in borrowing capital, thereby generating economic growth. it is also pleasing to note that the rate of inflation has been declining since february 2006. by december 2006, the annual rate of inflation declined to 13. 6 % from 17. 1 % realised in 2005. this was mainly due to : β’ slowdown in food inflation as a result of a good crop. β’ relative stability of the malawi kwacha against other major currencies. β’ lagged effects of a decline | 75913 crore as at end march 1998 to βΉ 16, 10, 729 crore at end september 2015. share of nbfc assets as a percentage of scheduled commercial banks β assets has increased from 7 % in 1998 to 14. 8 % in march 2015. there are 202 nbfcs - nd - si ( assets size βΉ 500 crore and above ) with a total asset size of βΉ14126 billion. the number of deposit taking nbfcs, including residuary non - banking finance companies ( rnbcs ), decreased from 1, 420 in 1997 β 98 to 209 in september 2015. share of nbfc deposits as a percentage of scheduled commercial banks β deposits has come down from 3. 34 % in march 1997 to 0. 30 % in march 2015. 20. sources and uses of funds of nbfc sector β position as on september 30, 2015 21. loans and advances extended by nbfcs - nd - si posted strong double - digit growth of 15. 5 % during 2014 β 15, in contrast to the slowdown in commercial bank β s non - food credit during the same period ( chart 4. 6 ). strong growth in credit extended by the infrastructure finance companies, microfinance companies and loan companies contributed to sturdy growth in the loan portfolio of nbfcs - nd - si. among the sectors, infrastructure, medium and largescale industries, and the transport sectors contributed to strong growth in credit off - take of the nbfcs - nd - si. during 2014 β 15, nbfcs - nd - si raised funds mainly through debentures and commercial papers. borrowings from banks, which earlier constituted to be the main source of funding, has been progressively reduced. a notable feature is the rising exposure of mutual funds to the financial instruments floated mainly by the nbfc - infrastructure finance companies ( ifcs ), loan companies ( lcs ) and nbfc - micro finance institution ( nbfc - mfis ). 22. in recent years, asset quality of nbfc sector has gone through the vicissitudes of overall deterioration spreading across the financial system as the economy slowed. gross npas as per cent of credit deployed rose to 4. 1 per cent by end - march 2015. bis central bankers β speeches prospects 23. in my opinion, the prospects for the sector in the medium term are not going to be uniform. different segments of the sector are poised | 0 |
itself. there have been several conjectures about the apparent softness of inflation in canada and many other advanced economies. some have argued that globalization is restraining inflation. this could be due to increased imports from lower - cost countries, for example, or the effect of canadian companies participating in global supply chains. others point to the impact of digitalization on the economy. they suggest that digital technologies could lower barriers to entry in some sectors and lead to more competition. the rise of ecommerce may be changing price - setting behaviour. and digital technologies could promote innovation and higher productivity, which could create disinflationary pressure. the second issue is the degree of excess capacity in the economy. we note several signs that point to slack remaining in the labour market. for example, the participation rate of young workers is still below trend, and average hours worked are less than we would expect. with the economy now operating close to capacity, we expect to see investment by companies, together 1 / 2 bis central bankers'speeches with job creation by new and existing firms, and rising productivity. this should serve to raise the economy β s potential output, increasing the amount of non - inflationary growth that is possible. however, this process is highly uncertain and not at all mechanical, so we have built it into our projection in a conservative way. the third issue is the continued softness in wage growth. while employment growth has been strong in canada, wages have not kept pace. the slack in the labour market is certainly responsible, in part, for this effect, and there will be a lag between the time this slack is used up and when we see stronger wage growth. however, other factors, including globalization, may also be affecting wage dynamics. finally, the fourth issue is the elevated level of household debt and how that might affect the sensitivity of the economy to higher interest rates. bank staff have recalibrated our main economic model used for projections to capture key information about housing and debt. this work tells us that the economy is likely to respond to higher interest rates more than it did in the past. however, we will watch incoming economic data closely for evidence to support this idea. we will also look to see how the household sector is responding to the new rules about mortgage underwriting. we also outline several other risks in the mpr. taken together, these give us a balanced outlook for inflation. we have not incorporated into our projection the risk of a significant shift toward more - protectionist trade policies | job with this. certainly the bank of france was successful in the early 1990s in building credibility as an inflation - fighting central bank. at that time, the bank of canada and the government of canada had come to a shared appreciation of the damage that inflation can do. so they made an important decision in early 1991. they announced a joint agreement to adopt explicit inflation - control targets. the agreement has been very successful in giving canada low, stable, and predictable inflation. it has been renewed three times β most recently for five years until the end of 2006. today, both the bank of canada and the european central bank are working to strengthen the economies in their jurisdictions. we both want to promote stable growth and rising living standards. and, importantly, we agree that promoting low and stable inflation is the best means to those ends. there are similarities between our inflation - control systems. for example, we both focus on inflation, and we both aim for price stability over the medium term. but there are also some differences that i want to highlight for you today. the bank of canada aims for price stability through its inflation target of 2 per cent. on the other hand, the european central bank has an inflation ceiling of 2 per cent, as measured by the harmonized index of consumer prices. this may look like a subtle difference, but it is important. for the bank of canada, 2 per cent is the midpoint of our 1 to 3 per cent inflation - control target range. it is a target, not a ceiling. our focus on that midpoint makes it clear that we run monetary policy in a symmetrical way. that is to say, we pay equal attention to any significant movement away from 2 per cent β whether above or below. when demand is strong, it can push the economy against the limits of its capacity to produce. this will tend to raise future inflation above its target midpoint. in these circumstances, the bank will raise interest rates to cool off the economy, and return inflation to the target. but this process also works in the other direction. when demand is weak, as we saw in 2001, this means that future inflationary pressures are likely to ease. so the bank will lower interest rates to stimulate the economy, absorb economic slack, and return inflation to the target. by working in a symmetrical way in response to surprises in demand, our inflation - targeting system helps to smooth the peaks and valleys of the business cycle. this promotes sound, and generally less variable, economic growth | 0.5 |
. this increase in labour costs coincided with a period of slower growth in labour productivity. since 2005, estimated labour productivity growth has averaged less than Β½ per cent per year, compared with average growth of 2 per cent over the 1990s. the reasons for this slowdown are not fully understood, although it may partly be a result of the high commodity prices that have allowed lower quality and / or more costly mines to be developed. in any case, productivity growth will need to pick up again if our living standards are to improve at the rate we have become accustomed to over the past two decades. this is a major challenge facing both the private and public sectors. looking back to the recent cycle in inflation, it is clear that developments in unit labour costs had a significant role, both in contributing to the increase in inflation and then to its decline. but they provide only a partial explanation, and alone cannot explain why inflation picked up so sharply in 2007 after having been stable over the preceding few years. one possible explanation for this pattern is that there is some threshold in capacity utilisation which when crossed causes inflation to increase very quickly. an alternative explanation is that the short - run dynamics of underlying inflation were influenced by other factors during this period. it is difficult to formally test these two explanations, but other factors do appear to have played a significant role. of these, developments in housing costs were perhaps the most important. housing cost inflation currently, housing - related costs β including rents, utilities and the cost of building new dwellings β account for around 20 per cent of the cpi, the largest share of any single group. broadly speaking, the housing component of the cpi shows the same general pattern as that in underlying inflation, although the recent moderation is less pronounced ( graph 6 ). bis central bankers β speeches graph 6 a couple of factors are important in explaining this general pattern. the first is that the large run - up in australian house prices that was driven by the adjustment to low inflation ended in late 2003. when the housing boom came to an end, building cost inflation came down and growth in rents was subdued for a few years. these outcomes helped hold down overall inflation rates during this period. but by 2007, the cycle had again turned, with building costs rising more quickly and growth in rents accelerating. this faster growth in rents reflected the changing balance of demand and supply in the rental market, with strong population growth coinciding with relatively slow expansion of supply. the second factor has been utilities prices. during | the middle years of the 2000s utilities prices were increasing at an average rate of 4 per cent, which was slightly lower than that in the previous few years. then from 2007, utilities price inflation accelerated sharply. the proximate cause was the regulatory decisions allowing double - digit price increases, partly to help fund infrastructure investment, particularly for the distribution of electricity. but a deeper cause was the low levels of investment in previous years, which meant that the capacity of the system to distribute electricity had not kept pace with the growth in demand, particularly during hot weather. 4 while these developments in rents and utilities do help explain the particular dynamics of inflation over the recent cycle, they also demonstrate that when the economy is operating up against supply constraints, all sorts of prices β and not just the price of labour β start rising more quickly. international factors the third issue that i would like to touch on is the role of international factors. looking at headline inflation rates across countries over recent years, there is a deal of similarity in the movements ( graph 7 ). many countries in both asia and the north atlantic experienced increases in headline inflation rates in 2007 and 2008 and many experienced for further details, see plumb m and k davis ( 2010 ), β developments in utilities prices β, rba bulletin, december, pp 9 β 18. bis central bankers β speeches declines in late 2008 and in 2009. this co - movement partly reflects the large changes in global commodity prices over recent years. when global oil prices went up, they boosted the cpi in almost all countries, and when they went down during the financial crisis, they led to cpi inflation falling almost everywhere. movements in food prices had a similar global effect. graph 7 in terms of underlying inflation, we also see some co - movement across countries over recent years, although somewhat less than in headline inflation ( graph 8 ). when underlying inflation in australia was rising, so too were equivalent measures of underlying inflation in the united states, as were exclusion - based measures of core inflation in most asian countries. 5 similarly, measures of underlying inflation fell almost everywhere in the aftermath of the financial crisis, although there has been more dispersion recently. these common movements reflect the correlation in the business cycle across countries, as well as the flow - on effects of the large changes in global commodity prices to the prices of a wide range of final goods and services. trimmed mean measures of underlying inflation are not available for most countries in asia. bis central bankers β speeches graph 8 movements in | 1 |
energy. i am happy that the excellent list of speakers allows us to touch upon all these key challenges today. ladies and gentlemen, before giving the floor to mr. david kotok from the global interdependence center, the co - organizer of today's event, i would like to speak briefly about our cooperation with the global interdependence center. the gic is a philadelphia - based nonprofit think tank with the mission to " encourage the expansion of global dialogue and free trade in order to improve cooperation and understanding among nation states, with the goal of reducing international conflicts and improving worldwide living standards. " this is indeed a noble goal in today's changing world full of new challenges and, unfortunately too often also conflict. eesti pank is honored to have been included in the gic list of cooperating institutions for a number of years already. our people have participated in gic events both as speakers and members of the gic delegation. we have first - hand experience in how dedicated the gic is in fostering the cause of free markets, cooperation and liberty. ladies and gentlemen, thank you once again for coming here today. i am now most pleased to invite david to say a few words of welcome on the behalf of the gic. | a function of the shocks hitting the economy. as well, the band or confidence interval around the target is held constant, even though it may sometimes be beneficial to worry less about inflation volatility in a period of highly volatile, but transient, shocks. finally, the time horizon for returning inflation to target is usually held constant. as a consequence, it can be too short to factor in fully the longer - run disruptions associated with, for example, building asset imbalances. the current parameters are not arbitrary. in canada, the 2 - per - cent target for the total consumer price index reflects the measurement bias inherent in the cpi, the risks associated with the zero lower bound and concerns about downward nominal wage rigidities. the 1 - percentage - point range around the target reflects the unconditional variance of the inflation process. 2 the 18 - to 24 - month time horizon reflects the lagged response to monetary policy action. 3 this inflexibility has significant value. it provides clarity of objectives and holds central bankers accountable. when policy lacks credibility, it can be beneficial to have simple inflexible elements in the framework because they demonstrate the policy - makers'commitment to that policy. if the inflation target is achieved, it enhances the credibility of the central bank and creates a virtuous circle whereby increased policy credibility further anchors inflation expectations, which then contribute to a more stable macroeconomic environment, which, in turn, enhances policy credibility. we should be careful neither to underweight the value of resulting simple heuristics nor to minimize the risks of complicating them. it can also be argued that the range should be conditional on the nature of the shock to inflation. note that in canada, unlike some countries, the cpi fully captures the direct effect on inflation of changes in house prices in the " owned accommodation " component of the cpi, which includes mortgage interest cost, replacement cost, property taxes, house insurance, maintenance and repairs, and " other owned accommodation expenses. " this component represents 16. 5 per cent of the cpi basket. when then to be flexible? once credibility is achieved and the operation of the framework better understood, could credibility be retained if the parameters were adjusted to reflect the characteristics of the shocks hitting the economy at any particular time? flexible inflation targeting works well with temporary or one - off shocks. whether it can adapt to address unique but longer - lived shocks ( such as an asset boom or secular changes wrought by globalization ) is the | 0 |
to project capital buffers that the banks would need under the two scenarios. as you know, unlike other countries that conducted stress exercises, we took the highly unusual step of publicly reporting the findings of the scap, including the capital needs and loss estimates for each of the 19 banks. 2 this departure from the standard practice of keeping examination information confidential was based on the belief that greater transparency of the process and findings would help restore confidence in u. s. banks at a time of great uncertainty. supervisors released the methodology and assumptions underlying the stress test first and then, two weeks later, the results for individual institutions. the results showed that under the more adverse scenario, 10 of the 19 scap banks would need to raise a total of $ 75 billion in capital in order to have the capital buffers that were targeted under the scap β tier 1 capital in excess of 6 percent of risk - weighted assets and tier 1 common capital in excess of 4 percent of risk - weighted assets at the end of the two - year horizon. the merits of publicly releasing firm - specific scap results were much debated within the federal reserve. in particular, some feared that weaker banks might be significantly harmed by the disclosures. in the end, though, market participants vindicated our decision. they appeared to be reassured for three reasons. first, the results were deemed credible by most market participants, owing in part to the release of details about our assumptions and methods, as well as the variation in assessment of the banks. second, the results were released at a time when uncertainty about bank conditions was very high, and some market participants feared the worst. that is, perceptions of tail risk were very high, and the scap results helped reassure market participants that under a severe but plausible scenario, the capital needs of the largest u. s. banks were manageable. third, the treasury stood ready to board of governors of the federal reserve system ( 2009 ), β federal reserve, occ, and fdic release results of the supervisory capital assessment program, β press release, may 7. make capital available to any scap bank with capital needs through the cap if they were unable to raise private capital. in retrospect, it is clear that the public release of the scap results played an important role in stabilizing the financial system, as has our supervisory follow - up on improving capital levels. by november 2009, the 10 banks that required additional capital had increased their tier 1 common equity by more than | $ 77 billion, primarily by issuing new common equity, converting existing preferred equity to common equity, and selling businesses or portfolios of assets. none of the scap banks received cap funds. 3 many observers initially criticized the stress tests as overly optimistic. on the one hand, they noted that gdp growth was weaker and unemployment higher in 2009 than projected in the more adverse scenario. on the other hand, house prices did not fall as much as assumed under the more adverse scenario. as of the end of 2009, actual losses at the 19 banks were less than one - half of the two - year loss estimates under the more adverse scap scenario, and actual revenues were more than one - half of the two - year revenue estimates. nevertheless, there is wide variation across the firms, and it is too soon to tell whether firms will perform better over the full two years than the scap estimates. the lessons of the scap as i suggested at the outset of my remarks, i doubt that anything as ambitious as the scap would have been tried β at least as soon as it was β but for the exigencies of the financial crisis. yet the approach we took in the scap was informed by discussions that had been taking place among supervisors and academics for some time. not surprisingly, against the backdrop of the crisis, the scap experience elaborated and confirmed principles that had been advocated internally by some supervisors, but that had not been broadly incorporated into the practice of regulatory agencies. first, whether conducted by banks or supervisors, stress tests must consider severe but plausible scenarios, including low probability events with potentially highly adverse effects. in the period leading up to the crisis β characterized by strong profits, excess liquidity, and low credit losses β too many banks and regulators were skeptical of the possibility of a rapid and severe deterioration such as ultimately occurred in the u. s. housing, mortgage, and shortterm funding markets. if the crisis taught us anything, it is that we must test to the tail, not to the mode. a related point is that a stress test will be most useful if applied to the full range of credit and trading exposures. second, good management - information systems are critical to the ability of firms to manage their risks. assessing risk exposures across an entire organization is essential to understanding the potential effect of correlated risk exposures that may reside in distinct business lines as well as different legal entities and regulatory jurisdictions. yet during the scap, many of the banks were unable to | 1 |
to account for its performance. i shall touch on this last aspect again in a moment. secondly, the inflation - targeting framework gives the responsibility for achieving the target to the central bank, and specifically to the reserve bank's monetary policy committee, acting independently and under a clear mandate to deliver the target. it also gives the mpc the means to achieve the target, through its decision on setting the reserve bank's repo rate at each of its meetings. the framework thus ensures that there is a clear allocation of responsibility ; and it ensures that interest rate decisions are taken by a competent authority dedicated to the task and acting independently. thirdly and fourthly, the inflation - targeting framework is one that delivers a high degree of transparency and accountability. transparency and accountability is achieved through the full statement the mpc issues immediately after each meeting, through the range of publications the reserve bank issues setting out its view of developments, and through the public appearances the governor and his colleagues make in explaining the reserve bank's policy activities. i think this is a very important and beneficial part of the process for several reasons - partly because it is right that in a democratic system public agencies should be required to be open and accountable in explaining their activities ; partly because that process hopefully helps to maintain public confidence in the performance of the agency and public support for the objective of low inflation ; partly because that in turn should encourage business and individuals to conduct their affairs on the basis that low inflation will be maintained ; and partly because openness and accountability helps promote a better public debate on the issues. these are all elements that i believe help to strengthen the effectiveness of the inflationtargeting process. this framework has, of course, been tested in the past 18 months by the inflationary shocks the economy has faced from the fall in the value of the rand in the latter half of 2001 and the accompanying upwards pressure on food prices and fuel costs. the steps taken last year to raise interest rates were necessary to prevent these shocks generating a self - reinforcing process of rising inflation. as indicated in the statement issued after last week's meeting of the mpc, there are now signs that the inflationary pressures are beginning to abate and that the outlook for inflation is improving, though there is little room for complacency given the considerable risks we still face. but to return to my initial impressions, what is particularly encouraging, i believe, is that the coherent and responsible policy framework provided by inflation - targeting has demonstrated | payment service of its own. another us - based payment service β paypal β is very widespread in e - commerce. recent figures indicate that roughly 40 % of sales by the top 1, 000 online retailers in germany, excluding amazon, are paid for using paypal. china offers a very vivid example of how far bigtech services can penetrate people β s dayto - day lives : wechat and alipay ( which belongs to the alibaba group ) can be used not only as a payment method, but also to directly order food, buy cinema tickets or call taxis β all services united on a single platform β¦ without a doubt, this is all very convenient for consumers and retailers, since everything can be taken care of β under one roof β, so to speak. this development, however, is not without its problems from the point of view of the consumer, as well as from the perspective of regulators and established banks. if bigtech firms expand into an increasing number of business areas, there is a risk that monopolies arise. moreover, if the data generated are analysed and consumers are offered matching products and services, they will lose sight of the alternatives. in the markets of the internet economy, usually β the winner takes it all β. from the consumer β s perspective, we should remind ourselves of the business logic of many bigtech firms : many of the services they offer β such as payments β might be provided purely as a way of obtaining data, the key raw material for their business model. consequently, many services are only seemingly free for consumers, since they are paying for them with their personal data. for banks, meanwhile, there is the danger of losing the battle for the customer in payments. the risk is that the bigtech players place themselves at the customer interface, leaving the banks merely as interchangeable settlement actors in the background. for now, the bigtech firms still rely on cooperative ventures with banks for the settlement of payments in europe. a payment made using apple pay or google pay is mostly settled via the credit card stored in the account, which is issued by a bank. however, apple, for one, has already started issuing its own credit cards ( currently still in cooperation with goldman sachs ). a next step could now be creating closed payment systems that no longer need any established payment instruments to carry out payments. and indeed, facebook is of course already planning its own payment system which is independent of any bank : libra β i will come | 0 |
jurgen stark : taking stock β where do we stand in the crisis? speech by mr jurgen stark, member of the executive board of the european central bank, at the bmw ( bayerische motoren werke ) stiftung herbert quandt, washington dc, 15 april 2010. * * * ladies and gentlemen, introduction : macroeconomic developments and outlook in autumn 2008, the world economy entered the worst financial crisis and the deepest recession since the great depression. both monetary and fiscal policies responded vigorously to this exceptional situation and contributed to the emergence of a recovery in the course of 2009. hence, after falling last year, global activity is expected to grow by around 4 % this year, while global trade is expected to grow by almost 6 % ( imf january weo update ). strong growth in emerging market economies in asia is a major driving force behind these figures, while growth in many advanced economies is forecast to be weak. questions can be raised as to whether such an uneven pattern of the recovery will prove sustainable. in the euro area, recent information indicates that the recovery has continued to expand in the first few months of this year. looking forward, euro area growth is expected to remain moderate, owing to ongoing balance sheet adjustments in the private sector, weak prospects for the labour market and low capacity utilisation. available growth forecasts for 2010 put it at, on average, around 1 %. the crisis is also expected to have lasting effects on our economy, as both the level and the growth rate of potential output are most likely reduced for a longer time. turning to price developments in the euro area, according to eurostat β s flash estimate, annual inflation increased to 1. 5 % in march, from 0. 9 % in february. this was higher than expected. while this does not change our assessment, it is important to understand whether the surge in inflation in march is temporary or more lasting in nature. this is difficult to assess without a breakdown of developments in the overall hicp, which will only become available tomorrow ( 16 april ). however, it seems reasonable to consider energy and food prices as the main drivers behind the higher than expected inflation outcome in march. looking ahead, we expect inflation in the euro area to remain moderate over the policyrelevant horizon. the outcome of our monetary analysis confirms the assessment of low inflationary pressures over the medium term, with money and credit growth remaining weak. at the same time, we need to monitor price developments in the more dynamic regions | up inflation to levels not seen since the introduction of the euro. in response, we started a gradual reduction in our asset portfolio and we increased our policy rates by a total of 450 basis points. our strong reaction was key to prevent a deanchoring of expectations and to curb inflation. in terms of economic activity, the slowdown has so far been contained and gradual. however, the incoming data indicate that the future remains uncertain, and the prospects tilted to the downside. the inflationary shock that we were confronted with following the energy crisis has been particularly challenging : it occurred in an already difficult environment, with the world economy recovering from the pandemic and global supply chains still disrupted. furthermore, supply side shocks are particularly difficult to manage using monetary policy instruments. in this context, sustainable and investment - oriented fiscal policies aimed at promoting the energy transition, strengthening the resilience of supply chains and increasing euro area productivity are supportive of our price stability goal. structural reforms and investments to enhance the euro area's supply capacity can help reduce price pressures in the medium term. in this regard, we very much welcome the agreement on the eu's economic governance framework reached a few weeks ago. it is a powerful signal to markets as it reduces uncertainty about fiscal rules in the eu. the reformed framework will help strike a balance between sustainable public finances and sufficient debt reduction on the one hand and room for reforms and investment on the other, while supporting 3 / 4 bis - central bankers'speeches countercyclicality of fiscal policies. achieving this balance turned out to be less straightforward than we might have hoped. it is now crucial that the new fiscal framework is implemented properly and without delay. thank you for your attention. 4 / 4 bis - central bankers'speeches | 0.5 |
amando m tetangco, jr : layon β money as vision of a nation speech by mr amando m tetangco, jr, governor of the central bank of the philippines ( bangko sentral ng pilipinas ), at the opening of the layon exhibit at the bsp money museum, manila, 3 july 2007. * * * monetary board members, officers and directors of the philippine numismatic and antiquarian society, mr. and mrs. angel cacnio, mrs. fely asuncion and other members of the asuncion family, fellow central bankers, ladies and gentlemen, good morning. the 14th anniversary of bsp finds us celebrating on several fronts β we have new facilities, an exciting exhibit at our main building lobby, and the grant of support for various social projects. another cause for celebration is the β coming home, β so to speak, of the designs for philippine currency that were proposed in the 1940s to the 1950s. these never reached philippine shores, had never been in private hands, and were seen by the public only for the first time when these were included in the catalogue of the american auction house h. r. harmer. interestingly enough, it was dr. benito legarda, the central bank official who started the money museum, who called our attention to the auction. i therefore ask all of you to join me in acknowledging dr. legarda by giving him a round of applause. while dr. legarda cannot join us today, we are assured he is celebrating this moment with us as well. dr. legarda retired from the central bank more than two decades ago, but the central bank remains close to his heart. as they say, once a central banker, always a central banker. the monetary board was quick to realize the significance of these pieces in the history of the bsp and indeed, of our country, and readily approved our participation in the auction. i therefore ask all of you to join me in thanking the members of the monetary board here with us today by giving them a round of applause. canadian numismatist douglas andrews describes the pieces as β stunning in their use of proposed color schemes, vignettes, and different designs, many of which look contemporary even by present standards. β he considers the bound volume containing an assortment of 3, 500 different trial and proof notes from the late nineteen - forties and early fifties as the largest single offering of color proof notes | ever. other currency designs in this exhibition are those made by italian company istituto poligrafico dello stato as well as by filipino artists angel cacnio and rafael asuncion. they prove that the artistic talent of the filipino is indeed world class, as their works join the foreign works in this exhibition. mr. cacnio allowed us to reproduce his designs for the exhibition, and we thank him, especially as he joins us today with his wife mrs. amelia cacnio. on the other hand, mr asuncion has passed on, but we thank his wife mrs. fely asuncion and her family for lending his works and for joining us today. the exhibition conceptualized by museologist ino manalo proposes that currency design embodies the vision and aspirations of a nation and its leaders. we can see in the proposed designs for instance the focus on power generation, the importance of agriculture, and excitement over the development of mindanao. layon, the exhibition title, refers in our native language to objectives, goals and visions. but i understand that it can also mean the deep part of the river, referring to the role of money as currency, as a current that flows through our economy and our lives. through this exhibit, let us explore the convergence of art and the economy that is established by currency design ; the relationship between currency design and the vision of national economic development. thank you all and good morning. | 1 |
with remaining fiscal imbalances have committed themselves to implement consolidation plans in order to reach budgetary positions close to balance or in surplus in the medium term. as part of this process, governments should put emphasis on growth - oriented consolidation policies that strengthen the productive forces of the economy. such policies are likely to be most effective when integrated into a comprehensive reform strategy based on structural retrenchment in spending. the fiscal policy framework, as laid down in the treaty and the stability and growth pact, provides a sound basis for limiting the risk of fiscal imbalances occurring. at the same time, it preserves an appropriate medium - term orientation for fiscal policy, based on realistic assumptions regarding economic developments. the governing council supports the steps taken by the commission to preserve the functioning of the framework, including the implementation of excessive deficit procedures and the issuing of early warnings, where required. turning to structural reforms, it is essential that governments intensify their efforts to expand the euro area's potential for non - inflationary growth and to reduce its high level of unemployment. the need for further progress in this field is particularly evident in a phase when the euro area economy has to adapt to a sequence of adverse shocks. indeed, such reforms, which should aim to reduce rigidities in labour and goods markets, could significantly enhance the degree of resilience of economic activity to such shocks, both in the euro area as a whole and in its regions. renewed momentum in the process of structural reform will be important to foster confidence among consumers and investors in long - term growth and employment opportunities in the euro area. this, in turn, should also have a positive effect on spending and investment decisions in the short and medium term. we are now at your disposal for questions. | and we have an exceptionally high number of vacant jobs, there is scope to cool the labour market without causing the kind of large surge in unemployment that we have typically experienced in recessions. as we use higher interest rates to cool inflation, we β ll be watching very closely for signs that the economy and the labour market are responding. one way to explore the needed adjustment in our labour market is through the lens of what economists call the beveridge curve. this curve depicts the typically inverse relationship between job vacancies and unemployment ( chart 3 ). chart 3 : cooling labour demand is associated with some increase in unemployment quarterly, seasonally adjusted, dotted line denotes evolution over time vacancy rate ( % of labour force ) 2022q3 unemployment rate ( % ) fitted curve ( 2011 β 19 sample ) observed values note : job vacancies for 2022q3 are based on the average of july and august from the job vacancy and wage survey. the curve is based on data from 2011 β 19. sources : indeed, canadian federation of independent business, statistics canada and bank of canada last observation : 2022q3 calculations as job vacancies decline, unemployment usually goes up. but by how much? that depends on where the labour market is along the curve. generally speaking, when job vacancies are high, as they are now, a decline in vacancies does not lead to as big an increase in unemployment as it does when job vacancies are low to begin with. staff analysis of canada β s beveridge curve suggests that the unemployment rate will rise somewhat if the job vacancy rate returns to more normal levels. 6 but it would not be high unemployment by historical standards. 6 the beveridge curve shifted out at the onset of the pandemic, suggesting a higher unemployment rate for any given level of job vacancies. however, chart 3 shows that this shift so what does that mean for canadian workers? well, it β s clear that the adjustment is not painless. lower vacancies mean it could take longer to find a job, and some businesses will find that with less demand for their products, they don β t have enough work for all their workers. but relieving the pressure in the labour market will contribute to restoring price stability. we β ll be watching a broad set of indicators to gauge the health of the labour market and how it is adjusting to tighter monetary policy. as we watch to see how the economy is responding to higher | 0 |
just the beginning of such consultations with the malawi law society and other stakeholders in the financial sector, as we try to strengthen the financial sector, for the good of our nation. ladies and gentlemen finally, i would like to thank management of sunbird ku chawe inn for providing excellent facilities for this seminar. once again, the reserve bank of malawi warmly welcomes all distinguished participants to this seminar. i wish you very fruitful deliberations. mr. president, ladies and gentlemen thank you for your attention and may god bless you all. bis central bankers β speeches | perks m ligoya : safeguarding malawi β s foreign exchange reserves speech by dr perks m ligoya, governor of the reserve bank of malawi, at the official launch of the exchange control manual, blantyre, 29 december 2009. * * * president, bankers β association of malawi chief executives of commercial banks distinguished guests ladies and gentlemen compliments of the season. it gives me great pleasure to officially launch the exchange control manual. on behalf of reserve bank of malawi and indeed on my own behalf, i welcome you all to this memorable event. distinguished guests, ladies and gentlemen, the objectives of the official launch of the exchange control manual are three - fold : a ) to present the exchange control manual to its ultimate users - authorized dealer banks and the business community. b ) to assure exporters and importers that the reserve bank of malawi is fully committed to economic liberalization that it embarked upon some fifteen ( 15 ) years ago. c ) to garner support and cooperation of banks and the business community in ensuring prudent use of foreign exchange reserves. in order to achieve these objectives, let me start by mentioning that the main challenge ( and particularly so in recent times ) for malawi as an emerging economy is the generation of sufficient foreign exchange reserves to meet the economy β s growing import demand. malawi β s foreign exchange reserves are volatile due to the economy β s over - reliance on primary commodity exports and in particular a few agriculture exports. this reliance will continue to undermine the country β s foreign reserves position unless significant progress is made in growth and diversification of exports. while export diversification on its own may not be a panacea for an improvement in foreign exchange reserves, the principle that export diversification can contribute to reducing instability of export earnings is widely accepted. thus, government in its quest to mitigate malawi β s external vulnerability and, more generally, the country β s overall economic performance and welfare, continues to take initiatives to promote export diversification. the generation of adequate foreign exchange reserves is key to malawi β s growth prospects. apart from supporting the malawi kwacha exchange rate, reserves are also essential in supporting economic growth through imports of industrial raw materials, agricultural inputs, medicines and other basic necessities. government, in this regard, continues to undertake initiatives to boost and preserve the country β s foreign exchange reserves. one such initiative is the computerization of export proceeds tracking system. we are all aware that in november 2008, the bank rolled out the | 0.5 |
half of this year were growing at around their long - run average rates. after a prolonged period during which consumer price inflation was below its 2 % target, inflation has been above target for nine out of the past thirteen months. so what are the challenges facing the monetary policy committee as it tries to bring inflation back to the 2 % target? since their peak in early august, oil prices have fallen by around a quarter. in due course, that will ease the pressure on petrol prices and fuel bills, including gas and electricity. the direct impact was seen in the producer price data published yesterday, and will be seen in cpi inflation over the coming months β making it less likely that i will have to write an explanatory letter to the chancellor than was the case two months ago β although the anticipated fall in inflation for september may not persist for long. over the past year, profit margins, especially in manufacturing, have been squeezed and outside the oil sector the share of profits in gdp has fallen. the recent fall in oil prices will ease the pressure on firms β input costs allowing them to restore profit margins without an increase in output prices. nevertheless, according to surveys, businesses are more likely to raise prices than during the nice decade. and in their own survey, the bank β s agents found that half of those ( largely manufacturing ) firms which had experienced some erosion of margins were now intending to raise prices. not so bad : not of the same order but also desirable. speech at the eden project, cornwall, october 2004. a change in oil prices does not in itself tell us where overall inflation is headed in the medium term. for that, we need to look at the balance between money spending and potential supply. the growth of total money spending in the economy has picked up in recent quarters β nominal domestic demand rose by 6 % in the year to q2. and the growth rate of broad money and credit in the economy is now higher than at any point since 1990. there is, however, great uncertainty about potential supply. the possibility of continuing migration from the new member countries of the european union and elsewhere is likely to increase the potential labour force available to uk employers. and it appears that more people of pensionable age are choosing to continue to work. the difficult judgment facing the monetary policy committee is to what extent that increase in labour supply, and hence potential output, will allow a faster expansion of total money demand without upward pressure on inflation. given the uncertainties about the supply potential of | of operational and cyber risk. recovery and resolution regimes for ccps need to take more account of threats to ccps from this direction. whether this should mean more loss absorbing capital at ccps, access to member resources in the event of non - default losses or some combination of the two is a matter of ongoing discussion. but given the role ccps play in the financial system, we need to think more about how we would resolve a ccp that had suffered a major operational failure, without entry into insolvency. similar issues arise in the context of the resolution of systemically important banks. having published guidance on resolution strategies for ccps in 2017, the financial stability board β s fmi cross border crisis management group is now focused on two issues that remained outstanding ; namely the adequacy of financial resources for resolution and the treatment of equity in resolution. bank resolution the lehman brothers episode with which i started today exposed brutally that insolvency is not an option for large cross - border banks that perform critical economic functions. one of the main objectives of the post crisis reforms has been to put in place bank resolution regimes that enable the authorities to stabilize a failing bank by bailing in its debt holders to restore solvency and regulatory capital. the aim, as i have said, is to enable the bank β s critical economic functions to continue, without taxpayer support, while it is being resolved. a great deal has been achieved. all speeches are available online at www. bankofengland. co. uk / speeches we now have agreed international standards covering the design of resolution regimes, the amount of β bail - inable β resources banks must hold, and agreement with industry participants to β stay β termination rights by counterparties in derivative and repo transactions if resolution is in train. alongside this we also have international guidance on how to ensure continuity of access to fmis as well as on the mechanics of executing a bail - in. the uk now has in place a comprehensive and effective bank resolution regime that implements the eu β s bank recovery and resolution directive ( brrd ) and the international standards. the bank of england has been established as the uk β s resolution authority with a wide range of powers to β bail in β shareholders and creditors of failed banks. the biggest uk banks have begun to issue bail - inable debt at scale and are well on their way to meeting the target for loss absorbing resources in resolution. key policies and guidance to firms have been issued, notably on operational | 0.5 |
well given the demographics of the second half of the twentieth century. but as i have argued previously, the system is ill - suited to address the unprecedented shift of population from the workforce to retirement that will start in 2008. much attention has been focused on the forecasted exhaustion of the social security trust fund in 2042. but solving that problem will do little in itself to meet the imperative to boost our national saving. raising national saving is an essential step if we are to build a capital stock that by, say, 2030 will be sufficiently large to produce goods and services adequate to meet the needs of retirees without unduly curbing the standard of living of our working - age population. unfortunately, the current social security system has not proven a reliable vehicle for such saving. indeed, although the trust funds have been running annual surpluses since the mid - 1980s, one can credibly argue that they have served primarily to facilitate larger deficits in the rest of the budget and therefore have added little or nothing to national saving. in my view, a retirement system with a significant personal accounts component would provide a more credible means of ensuring that the program actually adds to overall saving and, in turn, boosts the nation's capital stock. the reason is that money allocated to the personal accounts would no longer be available to fund other government activities and - barring an offsetting reduction in private saving outside the new accounts - would, in effect, be reserved for future consumption needs. the challenge of medicare is far more problematic than that associated with social security. a major reason is the large variance of possible outcomes mentioned earlier coupled with the inadequacy of the current medical information base. some important efforts are under way to use the capabilities of information technology to improve the health - care system. if supported and promoted, these efforts could provide key insights into clinical best practices and substantially reduce administrative costs. and, with time, we should also gain valuable knowledge about the best approaches to restraining the growth of overall health - care spending. crafting a budget strategy that meets the nation's longer - run needs will become ever more difficult the more we delay. the one certainty is that the resolution of the nation's unprecedented demographic challenge will require hard choices and that the future performance of the economy will depend on those choices. no changes will be easy, as they all will involve setting priorities and, in the main, lowering claims on resources. it falls to the congress to determine how best to address | inflation targets widened following fluctuations, inflation and inflation expectations were to a great extent brought under control, owing to the measures taken. in the period covering 2007 and onwards, the main factors impeding the disinflation process were sharp increases in oil and other commodity prices in the international markets along with adjustments in administered / directed prices. the significant weight of food prices within the consumer price index ( cpi ) in turkey β as is the case in many developing countries β increased the volatility of inflation. in 2007 and onwards, rapidly increasing food and energy prices in the international markets caused inflation to display an upward trend on a global scale. as a matter of fact, by november 2008, inflation rates in all developing countries β apart from brazil β implementing inflation - targeting regimes exceeded inflation targets by a significant margin ( chart 2 ). this observation confirms the fact that the relatively high inflation figures of 2007 and 2008 in our country should be assessed mostly as a reflection of global factors. chart 2. inflation targets and realizations in the developing countries n o vem b er 2008 inflation t arget b and iceland * south africa * the philippines * guatemala turkey chile colombia romania * brazil peru mexico israel * slovak rep. korea * czech rep. hungary poland * * as of october 2008 source : central banks, ifs, turkstat, and cbt. as inflation remained significantly above targets for a protracted period, it entailed the central bank to pursue an efficient communication strategy. in this context since 2007, when supply shocks became more apparent, the central bank has highlighted core inflation indicators excluding energy and food prices and has frequently referred to them. it was emphasized in this period that, despite the upward trend of inflation, there was no pressure on core inflation indicators and that prices, which were not directly affected by supply shocks, did not display high increases. under the assumption that the hike in energy and food prices is temporary, and thus inflation shall resume its downward trend, the aim was to direct the focus of economic agents to the medium - term in order to avoid undesired fluctuations in economic activity. at first, this approach was successful in containing inflation expectations. however, the fact that shocks were more persistent than expected caused the rise in food and energy prices to influence prices in general and an increase was observed in core inflation indicators. in early 2008, when turbulence in the global markets that started in summer 2007 was combined with domestic political uncertainties, significant depreciation was observed in the turkish lira | 0 |
##bfcs, where the underlying assets were loans against gold jewellery, and purchase / assignment of gold loan portfolio from nbfcs were not eligible for classification under agriculture. such pool of loan assets against gold jewellery is generally extended by these nbfcs without proper credit appraisal and without verification of end use of funds. some of our special scrutinies have confirmed this aspect. in the revised guidelines, such investments and outright purchases do not qualify for psl status. other highlights 30. a few other highlights of the revised guidelines are : ( i ) loans to individuals for educational purposes, including for vocational courses upto rs. 10 lakh in india and rs. 20 lakh abroad : the limits are not changed. however, the vocational courses were added recently under this. ( ii ) loans to individuals for setting up off - grid solar and other off - grid renewable energy solutions for households : this was not allowed in the pre - revised guidelines. bis central bankers β speeches management information system ( mis ) 31. let me now turn to an area which is absolutely critical. there are several gaps in data on priority sector coverage and the existing data is not fully reliable. in the light of this, it was decided against prescribing fresh targets under priority sector. we, however, emphasize that there is an urgent need for data cleansing so that we are able to generate fast, reliable and consistent mis on the coverage of priority sector lending across all sections of the economy. this would prove to be a valuable input for refining our policy framework and strategies in this area. a separate circular would be issued on this subject. 32. one of the objectives of the revised guidelines is to ensure greater transparency in priority sector lending. i would urge banks to work towards this goal by having the courage and conviction to highlight any shortfall in achieving the targets instead of including ineligible loans under priority sector category. the generation of reliable mis would be crucial to attaining this transparency. conclusion 33. the priority that senior management of banks accord to priority sector would determine the success of our efforts in this area. without this commitment, it would not be possible to accomplish this task. let me assure you that the top management at the reserve bank is fully committed to this goal, as is evident from the amount of time we spend on this subject at our meetings and outreach visits and the number of enabling policy initiatives that we have taken in this regard. financial inclusion and priority sector credit are closely interconnected subjects as financial inclusion is | is also relevant that the prices that australian households pay for utilities are little changed and have not gone up sharply like the prices of utilities in europe. rent inflation has also been lower in australia than elsewhere. looking ahead, we expect a further lift in underlying inflation. there is also likely to be a shift in the drivers of inflation. our central forecast is that underlying inflation will increase to 3ΒΌ per cent in the coming quarters, before easing to around 2ΒΎ per cent. this increase in the short term primarily reflects the ongoing effects of supply - side disruptions, most recently due to omicron, at a time of strong demand. as these supply - side pressures are resolved, some of the current upward pressure on prices is expected to abate. an offset to this, though, is expected to be stronger growth in labour costs due to the tighter labour market. wages growth has picked up recently, but only to the low rate prevailing before the pandemic. the vast bulk of australians are still experiencing wages increase of no more than 2 point something per cent, although there are areas where the increases are much larger than this and non - wage benefits are also increasing. a further pick - up in overall wages growth is expected, although this is likely to be a gradual process given the institutional features of our labour market β including multi - year enterprise agreements, an annual review of award wages and publicsector wages policies. we are also expecting broader measures of labour costs to pick up faster than the wage price index. there is, however, more than the usual degree of uncertainty around the outlook for inflation and wages. it is still unclear as to whether, and at what pace, the demand for goods will normalise as infection rates decline. the speed at which the supply side of the economy can respond to changes in the demand side is also uncertain. and we have no contemporary experience to assess how wage outcomes will evolve at a national unemployment rate below 4 per cent. a broader uncertainty is the extent to which other central banks will have to increase interest rates to return inflation to lower rates. central banks and financial markets expect that a decline in inflation to target can be achieved without real policy interest rates returning to positive territory. it is entirely possible, though, that countries with higher inflation rates will need a bigger adjustment in interest rates than currently anticipated. if so, this could result in an abrupt adjustment in financial conditions. 2 / 4 bis central bankers'speeches monetary policy i would now like to turn to australian | 0 |
no claim that these patterns are driven by trade. chart 6 : trend in income distribution across north american countries income share held by highest 10 % over income share held by lowest 10 %, annual, 1991 ( 1992 for mexico ), 2000, 2010 1991 ( for mexico 1992 ) canada united states mexico last observation : 2010 sources : world bank, haver analytics and bank of canada calculations shifts in income distribution could have implications for the standard open - economy models that policy - makers rely on. since they may have less access to credit, lowincome groups are more likely to be credit constrained and therefore less likely to be influenced by intertemporal substitution than high - income groups. meanwhile, highincome groups tend to make their spending plans independently of the level of interest rates. an increase in income dispersion, then, could increase the share of the population that is less influenced by interest rate fluctuations, perhaps pointing to a lower interest elasticity of consumption in aggregate. there is limited empirical evidence of this conjecture to date. however, it is important to acknowledge that the level of empirical confidence in estimates of the interest elasticity of aggregate demand is not high to start with. there is evidence that lowincome households have a higher marginal propensity to consume out of their disposable incomes than high - income households ( blundell, browning and meghir 1994 ; guvenen 2006 ; parker et al. 2013 ). while weakly supportive of the conjecture of a lower sensitivity to interest rate movements in partial equilibrium, this evidence also suggests that once the income effects from interest rate movements are factored in, low - income households won β t necessarily adjust their spending by less than their high - income counterparts. indeed, kaplan and violante ( 2014 ) offer a model in which increased income dispersion may actually increase interest sensitivity of consumption indirectly through a higher average income elasticity. in principle, the interest elasticity of aggregate demand represents an amalgam of a spectrum of actors, not a representative agent. the importance of this issue depends on how significant the underlying heterogeneity might be. a more promising line of inquiry might be to model income distribution explicitly, and to simulate the effects of an increase in income dispersion due to globalization in the model. a rough attempt to do so is explored in the next section. monetary policy implications of rising integration in this section we use the bank of canada β s macroeconomic policy model, totem ( | stephen s poloz : opening statement before the standing senate committee on banking, trade and commerce opening statement by mr stephen s poloz, governor of the bank of canada, to the standing senate committee on banking, trade and commerce, ottawa, ontario, 25 april 2018. * * * good afternoon, mr. chairman and committee members. senior deputy governor wilkins and i are pleased to be back before you today to discuss the bank β s monetary policy report ( mpr ), which we published last week. when we were last here at the beginning of november, we saw signs that the canadian economy was moderating after an exceptionally strong first half of the year. that moderation turned out to be greater and to last a bit longer than we expected. still, it is important to recognize that inflation is on target and the economy is operating close to potential. that statement alone underscores the considerable progress seen in the economy over the past year. the slower - than - expected growth in the first quarter reflected two main issues. first, housing markets reacted to announcements of new mortgage guidelines and other policy measures by pulling forward some transactions into the fourth quarter of last year. that led to a slowdown in the first quarter that should naturally reverse. second, we saw weaker - than - expected exports during the quarter. this weakness was caused in large part by various transportation bottlenecks. some of this export weakness should also reverse as the year goes on. so, after a lacklustre start to 2018, we project a strong rebound in the second quarter. all told, we expect that the economy will grow by 2 per cent this year, and at a rate slightly above its potential over the next three years, supported by both monetary and fiscal policies. the composition of growth should shift over the period, with a decline in the contribution from household spending and a larger contribution from business investment and exports. inflation should remain somewhat above the 2 per cent target this year, boosted by temporary factors. these factors include higher gasoline prices and increases to the minimum wage in some provinces. their impact should naturally unwind over time, returning inflation to 2 per cent in 2019. of course, this outlook is subject to several important risks, and a number of key uncertainties continue to cloud the future, as was the case in november. in terms of risks to the outlook, the most important remains the prospect of a large shift toward protectionist trade polices around the globe. i should be clear that our forecast already includes | 0.5 |
to work for the economic benefit of all canadians. it's therefore crucial that we keep our focus on the national inflation rate. we can't concentrate on just one region, because at any given time, it's very likely that different regions will be experiencing quite different economic conditions. and since we at the bank of canada have only one policy lever β our ability to control the overnight interest rate β we can focus on only one policy goal : the national inflation rate. but, we do take note of the difficulties that various sectors of the economy are experiencing, and we are well aware of the diverse issues facing different regions. to better understand concerns across the country, we have staff in regional offices β including our office in calgary β who actively seek input from businesses. one message that we have been hearing is that business widely recognizes the importance of flexibility and the need to be able to rapidly adjust to changing circumstances. that realization has certainly helped alberta to better adjust to economic upheaval and change more quickly today than it did during the 1970s and'80s. since those days, we've all learned that it does no good to try to shelter the economy from adjustments driven by global changes such as large swings in energy prices. the need for flexibility so, let me talk a bit more about flexibility. i'm going to address this from two perspectives. first, i'll give the macroeconomic view, and then i'll look at the microeconomic issues. canadian governments, both federal and provincial, are in a strong fiscal position. at the federal level, overall government debt has been reduced. alberta has successfully eliminated its debt, and other provincial governments have worked hard to balance their books. this success has given governments more flexibility to deal with cyclical shocks. more importantly, lower debt - to - gdp ratios have meant that over time, the share of government revenues that must go to servicing debt has been reduced. that frees up revenues to help governments deal with looming demographic issues without the necessity of raising taxes. at the same time, federal and provincial governments have made strides in preparing for these demographic changes, with reforms designed to ensure the long - term viability of the canada pension plan. so, from a fiscal point of view, canada is in a position that is envied by almost every other country in the world. and, as i said earlier, we at the bank of canada have kept the rate of inflation low, stable, and predictable. this has allowed business | , the experience of many countries so far suggests that this approach brings with it important economic benefits. by smoothing the peaks and valleys of the economic cycle as a whole, inflation targeting helps the economy to achieve maximum sustainable growth over the medium term. but if a central bank wants to have the monetary policy independence needed to pursue low and stable domestic inflation, then it has to be prepared to allow the external value of its currency to fluctuate. that independence, which is typically lost under a fixed exchange rate regime, has been a tremendous asset for canada. further, given the somewhat sticky nature of both wages and prices, a floating exchange rate can serve as an important economic stabilizer, helping to facilitate the adjustment to shocks and the resolution of global imbalances. it is true that under a floating exchange rate regime, currencies can experience short - term volatility. this volatility can certainly be unnerving. however, in my view, central bankers ought to be extremely cautious about trying to smooth these fluctuations. it is extraordinarily difficult to judge whether sharp currency movements simply represent market β noise β or more fundamental forces. so, there is great potential for policy error when central bankers try to smooth currency volatility. besides, businesses can take advantage of highly efficient hedging tools available in financial markets to help them deal with short - term currency movements. let me now turn to fiscal policy. a country should have a medium - term fiscal plan that is appropriate to its particular situation. citizens and investors need to know that their government will not let debt levels get out of hand. when public debt is controlled, people can have confidence that their governments will not inflate the debt away, impose an overly onerous tax burden in the future, or simply repudiate the debt. in attempting to keep levels of public debt under control, governments should be wary of using β discretionary β fiscal policy to stabilize the economy. let me be clear that i am talking here about discretionary action and not the use of automatic stabilizers, such as unemployment insurance payments. for one thing, it is very difficult to get the timing of discretionary action correct. for another, as we know from bitter experience around the world, tightening fiscal policy is politically much more difficult than easing it. and so the use of discretionary fiscal policy as an economic stabilizer increases the chances of a country getting into an unsustainable debt situation. further, the economic evidence suggests that | 0.5 |
not borrowing much on the domestic market, because it has accumulated enough funds on their accounts with the bis central bankers β speeches national bank. also, the funds it borrowed from abroad in the beginning of the year are still disposable on their account, because of which there was no need for additional debiting on the domestic market. however, some of the economists fear that exactly the foreign debiting is unfavorable, saying that it was made for unprofitable, unproductive purposes. how do you see this situation, is there a risk? well, macedonia has a lack of domestic savings, and as a country, we will need foreign savings for a long time, and that is the situation with most of the developing countries, if i may say. it means, the foreign savings is necessary, and part of it will pour through the foreign direct investments, while part through debiting. of course, speaking from the viewpoint of the monetary policy, we would like to see the state to borrow also from abroad, not only on the domestic market, because it gives additional security and stabilization to the macedonian economy. the level of debt is still moderate and causes no other unfavorable implications. so, whether like it or not, we must borrow, better abroad, in order to, if not else, cover also the current expenditures? well, the state budget is structured in such a manner that it has a deficit, meaning a need of funding, but whether that funding is used for current or capital needs, it is hard to say, because it is one account of the government from which all those needs are covered. if a problem regarding the repayment emerges, hypothetically, does it mean that the monetary policy can feel the consequences as well? the fiscal and the monetary policy are, of course, interleaving and the monetary policy is always adjusted in order to maintain the balance in the macedonian economy. if we come to a situation when this balance is disturbed, the monetary policy will adequately react in order to restore the balance. the foreign reserves for a month " melted " by approximately euro 80 million. has these reserves been spent for maintaining the stability of the denar, or for other purposes? no, the foreign reserves reduced in the first half of the year. the decrease amounted about euro 150 million. the largest part was due to the changes in the gold prices and the us dollar β euro exchange rates. you know that that the gold was | , information and data that the nbrm uses, and which we feel obliged to supply you with through our communication. among other things, guided by our firm commitment to social responsibility, for several years now we have hosted this workshop, which becomes a tradition. this year β s workshop has a different format, which is the result of our attempt to follow your interest, as well as your recommendations expressed during the successful cooperation so far. it will be focused on two very important, but so far insufficiently covered topics β the lending survey and the profitability of the banking sector. i am sure that in the period ahead, we will raise the level of transparency, by promoting the way, the form and the channels of communication, and we will always make sure that we are socially responsible institution whose communication with the media representatives will be at the highest professional level and will be an example for others. i believe that we will succeed in this by mutual correctness, respect and professionalism. i wish you a pleasant, successful and fruitful workshop. 3 / 3 bis central bankers'speeches | 0.5 |
susan schmidt bies : the federal reserve system and the economy remarks by ms susan schmidt bies, member of the board of governors of the us federal reserve system, at the american association of individual investors washington chapter meeting, arlington, virginia, 23 october 2004. * * * good morning. i β m certainly pleased to be here with you. the programs of the american association of individual investors play an important role in advancing the financial education of its members. folks like you - individual investors - are important participants in our economic system. as financial services firms and their products continue to evolve, people are continually challenged to improve their ability to evaluate alternative consumer and investor services. the great strength of our financial markets is that they efficiently weigh and sort the judgments of literally millions of investors, large and small, as economic conditions evolve, channeling investment dollars, at least ideally, to where they can best be used. programs such as this morning β s event doubtless help keep your members informed about where they may seek the highest risk - adjusted returns on their investments. i know that because you have a federal reserve policymaker here, you will want to hear how my own views of where our economy stands compare with yours. i β ll get to that. but first, let me offer the customary caution that the views i β ll express are my own and don β t necessarily reflect those of other policymakers or staff members of the federal reserve. and second, i want to spend some time offering you a broader perspective on the federal reserve β s purposes and functions, of which monetary policy is just one part, albeit a very important part, of the larger whole. at the board, we sometimes nickname this topic β fed 101. β in fact, the fed has a wonderful website with just that name. you can find it at www. federalreserveeducation. org. 1 the federal reserve system is generically described as the central bank of the united states. it represents our nation β s third, and i trust final, attempt to establish a central bank. you may well recall learning in school that, in the late eighteenth and early nineteenth centuries, the congress chartered the first bank of the united states and the second bank of the united states, but neither institution lasted more than twenty years. the banks β very existence was controversial and went to the heart of the great national debate, which continues to this day, over which responsibilities and powers should be handled at the federal level and which should be | risk that may arise in financial markets β’ supervising and regulating banking organizations to ensure the safety and soundness of the nation β s banking and financial system and to protect consumers from harm in their use of credit and banking services β’ playing a major role in operating and overseeing the nation β s payment system, including providing certain financial services to financial institutions, the u. s. government, and foreign official institutions β’ conducting monetary policy in pursuit of stable prices and maximum sustainable employment we have an all - too - recent example of the fed as a source of financial stability in its response to the financial aftermath of the terrorist attacks of september 11, 2001, which occurred just before i joined the board in december 2001. as a commercial bank executive, i was impressed with the speed at which the fed responded when the normal settlement and information systems in check and securities markets were interrupted. the fed worked immediately through discount window lending, open market operations, and other means to provide the financial and banking systems with sufficient liquidity. it worked with public - and private - sector participants to keep markets open or, if circumstances forced markets to close, to return them quickly to normal operations. as the operator and overseer of key payment systems, it had to ensure that its own systems, as well as those of the private sector, were operational. and on the monday after september 11, it lowered the target federal funds rate to help cushion the economic fallout of the blow to consumers β and businesses β confidence. because the fed worked so effectively, bankers throughout the country could serve their consumer and business customers and thereby help to minimize the economic effect of the terrorist attacks. the fed β s role as the supervisor of banking organizations - both as the federal supervisor of the roughly one thousand state - chartered banks that have joined the federal reserve system and as the umbrella overseer of financial and bank holding companies - gives the fed β s staff and policymakers the kind of hands - on experience and knowledge that is essential for a central bank during a financial crisis. the fed β s examiners and supervisors seek to ensure not only the safety and soundness of the banking system but also the strength of banking organizations, systems for complying with antimoney - laundering, consumer - protection, and other laws. in fact, the congress charged the federal reserve board with writing the rules that implement consumer protection laws such as the truth in savings act and the truth in lending act, though each of the various federal banking agencies enforces the regulations for the institutions within its | 1 |
for four bis central bankers β speeches euro area countries indicates continued progress in restoring sound public finances. however, euro area countries should not unravel progress made with fiscal consolidation. a full and consistent implementation of the euro area β s macroeconomic surveillance framework, together with the necessary policy actions by euro area countries, will help to raise potential growth, increase the euro area β s resilience to shocks and facilitate job creation. we are now at your disposal for questions. bis central bankers β speeches | has been revised upwards. the risks surrounding the economic outlook for the euro area continue to be on the downside. geopolitical risks, as well as developments in emerging market economies and global financial markets, may have the potential to affect economic conditions negatively. other downside risks include weaker than expected domestic demand and insufficient implementation of structural reforms in euro area countries, as well as weaker export growth. according to eurostat β s flash estimate, euro area annual hicp inflation was 0. 5 % in may 2014, after 0. 7 % in april. this outcome was lower than expected. on the basis of the information available to us at today β s meeting, annual hicp inflation is expected to remain at bis central bankers β speeches low levels over the coming months, before increasing only gradually during 2015 and 2016, thereby underpinning the case for today β s decisions. meanwhile, inflation expectations for the euro area over the medium to long term continue to be firmly anchored in line with our aim of maintaining inflation rates below, but close to, 2 %. looking ahead, the governing council is strongly determined to safeguard this anchoring. our assessment has been supported by the june 2014 eurosystem staff macroeconomic projections for the euro area. they foresee annual hicp inflation at 0. 7 % in 2014, 1. 1 % in 2015 and 1. 4 % in 2016. in the last quarter of 2016, annual hicp inflation is projected to be 1. 5 %. in comparison with the march 2014 ecb staff macroeconomic projections, the projections for inflation for 2014, 2015 and 2016 have been revised downwards. it should be stressed that the projections are conditional on a number of technical assumptions, including exchange rates and oil prices, and that the uncertainty surrounding each projection increases with the length of the projection horizon. the governing council sees both upside and downside risks to the outlook for price developments as limited and broadly balanced over the medium term. in this context, we will closely monitor the possible repercussions of geopolitical risks and exchange rate developments. turning to the monetary analysis, data for april 2014 continue to point to subdued underlying growth in broad money ( m3 ). annual growth in m3 moderated further to 0. 8 % in april, from 1. 0 % in march. the growth of the narrow monetary aggregate m1 moderated to 5. 2 % in april, after 5. 6 % in march. in the recent past, the increase in the mfi net external | 1 |
international oil prices as well as in domestic food prices. these external shocks were responsible for a surge in the twelve - month rate of increase in the cpix from a low of 5, 8 per cent in september 2001 to a peak of 11, 3 per cent in october 2002. subsequently, the appreciation of the rand from the beginning of 2002 again had to be carefully taken into consideration in the formulation of monetary policy. the fluctuations in the exchange rate of the rand clearly illustrated the need for structural adjustments in the foreign exchange market in south africa. the reserve bank accordingly concentrated on eliminating its negative net open foreign reserve position and its oversold forward book. with the success achieved with these objectives, the focus of the bank has now shifted to a gradual strengthening of the official foreign exchange reserves. since the end of 2002 the official foreign exchange reserves of the country have increased from us $ 7, 6 billion to us $ 13, 0 billion at the end of october 2004. the higher foreign exchange holdings should help to stabilise the external value of the rand. 4. implications for monetary policy taking these changes in the world and more specifically in south africa into consideration, we now come to the crucial question on how will monetary policy be affected or what will happen to monetary policy in the next ten years. more in particular i want to concentrate on three questions in this regard, namely : will monetary policy still be effective? what should the primary objective of monetary policy be? what monetary policy framework should be applied? 4. 1 the effectiveness of monetary policy as in the rest of the world, e - money has not really taken off in south africa. although several potential products have been evaluated by the reserve bank, no roll - out on a significant basis has yet occurred. the failure of e - money to meet expectations can possibly be ascribed to the fact that cash remains a trusted and very convenient payment mechanism, debit and credit cards are widely used and e - money products generally do not allow for person - to - person payments. however, it is conceivable that this could change in the future and that e - money could to an increasing extent become a substitute for banknotes and coin. as benjamin m. friedman ( 1999 ) has pointed out it is possible, albeit at present highly unlikely, that e - money could be used as a means of payment as well as settlement and therefore erode the role of currency and reduce banknotes and coin in circulation. friedman also stated that the size of base money | - time gross interbank settlement. new developments in commercial banking include automated teller machines, credit and debit cards, telephone and inter - net banking, intelligent cards and card reading devices. in the 1990s a further advance in technology made it possible to store monetary value on a silicon chip embedded in a plastic card or in a personal computer. this was the first step in the development of electronic money or e - money. initially it was believed that this development would lead to a quick and dramatic change in the way that payments are made. such a change would have required large investments in infrastructure and the general acceptance of this new payments method by the public. it is thus not surprising that it did not take off in the way predicted by some analysts. however, initial setbacks to new innovations are a common experience and it is quite possible that the public could eventually be more willing to accept this new innovation. 3. effects on south africa β s financial structure these changes in the rest of the world did not affect south africa β s financial sector to any great extent during the 1980s, i. e. in a period in which the country became increasingly isolated from the rest of the world as a result of trade boycotts, embargoes and financial sanctions. the subsequent transition to a new political dispensation and the normalisation of the country β s international relations completely changed this situation. these circumstances forced the south african financial sector to move from a relatively isolated position to a world that had changed in many ways from the time when our financial institutions were still actively involved internationally. to cope with the challenges faced in this new environment it was important to improve the functioning of the domestic financial markets and to reintegrate them in the world economy in an orderly way. great efforts were accordingly made to bring the rules and regulations applying to financial institutions in line with international norms and standards. the re - entry of south africa in an integrated financial community also made it important to reconsider the strict exchange control rules applicable at that time. the country β s limited foreign exchange reserves prevented the immediate removal of all exchange control measures, which caused the authorities to opt for a policy of a gradual relaxation of capital account transactions. from 1994 south african financial institutions started operating on an increasing scale in major international financial centres and opened branches or subsidiaries in other african countries. at the same time foreign financial institutions were encouraged to conduct business in south africa by the creation of a level playing field between local and foreign service providers. in addition, | 1 |
##zation could push long - term rates to zero, there is no guarantee that will provide enough stimulus, given the prevailing deflation. the real bond rate could still be too high. this proxy role for money could, in principle, cover other channels besides long - term government and private interest rates and asset prices β such as liquidity and credit effects β that might be activated by increases in the money supply. in this case, even additional conventional operations β open market operations in treasury bills β might stimulate aggregate demand, even if they could not further lower the short - term nominal interest rate. however, that affect does not seem very plausible. for example, would the increased liquidity of holding money versus short - term bills stimulate aggregate demand? if economic agents wanted the additional liquidity they could have acquired it with no holding cost by selling zero - interest - rate bills and acquiring cash. why, when the central bank initiates this change, would it affect spending, if no interest rates or asset prices were affected? bernanke and gertler have emphasized a credit channel as part of the transmission mechanism. but this channel β though amplifying the effect of monetary policy β seems itself to require a change in interest rates. for example, a decline in interest rates would, according to bernanke and gertler, reduce existing committed cash flows of borrowers and therefore make the borrower more creditworthy. this, in turn, could result in lenders offering additional credit. however, if interest rates do not decline this channel is not activated. finally, the proxy role for money could include the effect of monetization on expectations. this channel depends on the ability of policymakers to alter expectations about the course and effects of future policy. that is, the policy effect does not derive from a higher money supply today but from a perceived commitment to a higher money stock in the future. expectation effects could alter current long - term real interest rates in two ways. first, convincing the public that monetary policy will remain stimulative longer will lower expected future nominal short - term interest rates and therefore longer - term nominal interest rates. second, convincing the public that monetary policy will achieve a higher inflation rate in the future, at least on average, could lower bernanke and gertler ( 1995 ). clouse et al. ( 2000 ). i am assuming a standard expectations theory of the term structure of interest rates and constant risk premiums. long - term interest rates are, | not set an explicit numerical inflation target. it might be more appropriate for the congress, presumably with input from the fed, to set such a target given that the congress is responsible for setting the broad objectives for monetary policy. at any rate, the upside or downside of publicly reporting a reference value is that the fomc would have to be more explicit about its objectives. to calibrate my reference value, i provide the staff with my personal inflation target. for the chain gdp price measure, the appropriate choice in the equation of exchange, my inflation target is 1 - 1 / 2 percent. i allow 1 / 2 percent for measurement error and add an additional 1 percentage point as a " cushion, " in light of the potential deterioration of cyclical performance in economies operating at very low inflation rates. this would be consistent with a 1 - 1 / 2 percent target for the personal consumption expenditure measure of consumer prices and about a 2 percent target for the consumer price index, based on recent experience with the differentials among these alternative measures of inflation. finally, we consider whether adjusting the m2 reference value for a systematic trend in v2 velocity is appropriate. before the velocity shifts of the early 1990s, there seemed to be a long - standing, small, but positive, trend in v2. the pattern is no longer clear. of course, the velocity shift in the early 1990s was, at least at the beginning, unexpected and unexplainable. for the reference value to be informative, adjustments for shifts of velocity would be necessary, and the ability to detect such shifts in " real time " is a potential problem. at this point, we assume that trend growth in v2 is zero. bringing all the steps together, my resulting reference value for m2 growth is 5 percent to 5 - 1 / 2 percent, the sum of my inflation target and my estimate for trend growth. given the uncertainty about some of the inputs to the calculation, we might end up with a narrow range, as opposed to a point. the next issue is how to effectively make use of the reference value. the purpose of the reference value, in my view, is not to read short - run deviations from it as signals of the need for adjustments in policy. the short - term variability in velocity makes the extraction of such a signal too difficult. instead, the purpose of the reference value is to provide a check that might help avoid significant and persistent errors that undermine the fed's medium - term inflation | 1 |
14 trillion of sovereign paper had negative yields. for the past decade, the yield structure in the us has been lower than at any time previously. let me put in context the current excitement about the 10 - year yield in the us reaching 3 per cent. in the three decades prior to 2007, the low point for the yield was 3. 11 per cent. all this goes to say that we have been living in a period of unusually low nominal bond yields. how long will this period last? one way to think about this question is to ask whether what we are seeing is the realisation of a tail event in the historical distribution of interest rates. 1 while this tail event has now lasted quite a long time, if you thought it was a tail event, then you would expect yields to revert back to their historical mean at some point. you also wouldn β t change your assessment of the distribution of future realisation of interest rates. on the other hand, it might be the case that the yield structure has shifted to a permanently lower level because of ( say ) secular stagnation resulting in structurally lower growth rates for the major economies for the foreseeable future. if this were the case, you would change your assessment of future interest rate outcomes. i don β t know the answer to this question, but it has material implications for asset pricing. 2 / 14 bis central bankers'speeches as i said earlier, the prices of many assets could be broadly validated if you believe the low rate structure is here to stay. 2 this is because the lower rate structure means that the rate with which you discount expected future returns on your asset is lower and hence the asset price is higher for any given flow of future earnings. the current constellation of asset prices seems to be based on the view that the global economy can grow strongly, with associated earnings growth, but that strong growth will not lead to any material increase in inflationary pressure. 3 you might want to question how long such a benign conjuncture could last. current asset pricing suggests that the ( average ) expectation of market participants is that it will last for quite a while yet. it is also worth pointing out that it is possible that a move higher in interest rates occurs alongside higher expected ( nominal ) dividends because of even higher real growth. if this were to occur it would not necessarily imply that asset prices have to adjust. it would depend upon the relative movements in earnings expectations and interest rates ; that is, the numerator | have been factors behind the low structure of interest rates which are difficult to understand completely and raise questions about its durability. i have discussed some of them here today. in particular, i find it puzzling that there is little compensation for duration in the rate structure. while there are explanations for why interest rates may remain low for a considerable period of time, there is minimal compensation for the uncertainty as to whether or not this will actually occur. at the same time, equity prices embody a view of the future that robust growth can continue without generating a material increase in inflation. again, there is little priced in for the risk that this may not turn out to be true. the ongoing improvement in the global economy, together with the fiscal stimulus in the us has caused some investors to question these views. if interest rates continue to rise without a similar rise in expectations about future earnings growth, one would expect to see a repricing of other assets, particularly equity markets. such a repricing does not necessarily mean a major derailing of the global recovery, indeed it is a consequence of the recovery, but it may have a dampening effect. at the same time, we need to be alert for the effect the rise in the interest rate structure has on financial market functioning. the recent spike in volatility is one example of this. in my view, that was a small example of what could happen following a larger and more sustained shift upwards in the rate structure. the recent episode was primarily confined to the retail market. the large institutional positions that are predicated on a continuation of the low volatility regime remain in place. that said, i have expected that volatility would move higher structurally in the past and this has turned out to be wrong. but i think there is a higher probability of being proven correct this time. 1 see kozlowski j, l veldkamp, v venkateswaran ( 2018 ), β the tail that keeps the riskless rate low β, available at, nber working paper no. 24362. 2 one may also want to think about the relatively low level of spreads in a number of fixed income markets, as my colleague christopher kent talked about earlier this week. in some markets ( but not all ), these spreads are close to pre - financial crisis levels. see kent c ( 2018 ), β australian fixed income securities in a low rate world β, address to the debt capital markets summit, sydney | 1 |
by the cbrt. accordingly, we estimate that the contribution of these developments to inflation would have reached 6 percentage points, had the cbrt not taken any policy measures. in this scenario, consumer inflation reaches double digits at 10. 1 percent, owing mainly to the excessive depreciation of the turkish lira, also coupled with the effect of the deterioration in inflation expectations ( table 2 ). therefore, given the backward looking pricing - behavior in the services sector, inflation would hover at elevated levels for an extended period of time. this would lead to a deterioration in inflation expectations, and risk the hard - earned recent bis central bankers β speeches achievements on the path to price stability. in such a case, bringing inflation back to reasonable levels would be more costly. in order to prevent such adverse developments, the cbrt intervened actively in the foreign exchange market ; and in line with its primary objective of price stability, responded boldly by increasing overnight lending rates significantly. besides, we have explicitly stated that the cbrt, in line with the strategy announced today, will not allow exchange rates to deviate from economic fundamentals, nor will it allow a deterioration in price stability and financial stability. i would like to reiterate that various measures will continue to be taken in the forthcoming period, in order to ensure price stability. 3. risks and monetary policy distinguished members of the press, in the last part of my speech, i would like to mention risks regarding the inflation outlook and how the monetary policy will be shaped should these risks materialize. the fact that inflation will hover above the target in the short term poses risk to inflation expectations and price setting behavior. accordingly, as of october, the cbrt has adopted a policy stance aimed at eliminating these risks. these risks will be closely monitored and the necessary measures will be taken to avoid deterioration in the medium - term inflation outlook. medium term projections assume that the global outlook will remain weak for a long period, but the situation will not worsen further. nevertheless, uncertainties regarding the global economy continue to be of significant concern. especially, mounting problems regarding the sovereign debt of euro area economies continue to pose downside risks on the global economy. concerns regarding the debt sustainability of euro area economies have further increased since the publication of the july inflation report, exacerbated by the concerns of a possible contagion to the region β s banking sector. in this context, the cbrt will continue to monitor global economic developments closely and will take | the state - owned banks β structural problems, is putting substantial constraints on the monetary policy actions, making financial markets more fragile. in view of this important issue, the state - owned banks have started to lessen their overnight borrowing from other banks and non - banking institutions in the short - term by obtaining liquidity from the central bank through repurchase or outright selling transactions against government papers given by the treasury to cover their duty losses. a similar process is running for the banks taken over by the saving deposits insurance fund. the central bank and the treasury are absorbing the excess liquidity from the market through reverse repurchase transactions and through selling government papers. dear shareholders, distinguished guests and valuable press members ; in view of the current economic conditions, the economic literature also indicates that, pursuing a tight monetary policy to stabilize exchange rate right after the emergence of crises has certain setbacks. although a post - crisis policy implementation can reduce the fluctuations in the exchange rates, the resulting higher interest rates will negatively affect both the domestic debt stock and the real sector. furthermore, i believe that once the setbacks are eliminated right after the crisis and once the amendments are made in the central bank act, we will be able to use short - term interest rates actively as a monetary policy instrument in the medium - term. a more efficient monetary policy implementation will be ensured through easing the fiscal burden on the financial markets and through reinforcing the banking sector, which will lay the ground for inflation targeting. in the near future, we will continue to do the technical works for inflation targeting. these works will include, choosing an appropriate price index ; determining a transmission mechanism that would show how monetary policy instruments might influence the prices and how the pressures might come up on the prices ; determining a targeting band and its period. in short, the central bank will shift from a post - crisis policy aimed at short - term financial stability toward price stability, once the necessary conditions have emerged. let me point out that, developments in november 2000 and in february 2001 highlighted once again the importance of achieving the structural and financial reforms, which is one of the keystones for the medium - and long - term stability of the economy. at this point, i would like to underline that the existence of a healthy financial system can be considered as a public good with substantial positive externalities. once the system is relieved from the burden of the state - owned banks, both the borrowing costs will decline and the central bank will get an upper hand in its | 0.5 |
simple but powerful idea β that the well - off cannot go on doing obscenely well even as the rest keeps moving backwards. the message from this collective rage is that growth itself can be destabilizing if it is not inclusive. bis central bankers β speeches on that sobering thought, ladies and gentlemen, please join me in welcoming mr. tharman shanmugaratnam to deliver the 13th l. k. jha memorial lecture on the challenge of inclusive growth. bis central bankers β speeches | achieving inclusive growth : the challenge of a new era β, a topic he is very well qualified to address because of the combination of perspective he brings to it β asian values and ethos combined with wide ranging international study and experience. inclusive growth is of course a topic of undoubtedly great interest to us in india β but also of interest, i believe, to every country in the world β rich and poor alike. the quest for inclusive growth draws from a powerful lesson of development experience β that growth has no meaning, or indeed even no legitimacy, if those at the bottom of the pyramid get left behind. but consensus, if any, breaks down right at that point. beyond the basic premise that inclusive growth is desirable, virtually every issue and nuance β starting from what constitutes inclusive growth to how it is to be achieved and sustained β is up for a contentious, and oftentimes acrimonious, debate. this debate, like several others in development economics, is one that has frowned on moderation. at one extreme is the β trickle down β theory which holds that the benefits of growth would automatically trickle down to the bottom ; that the trickle down is a process that must be left to its natural pace and path, and forcing it down will be counterproductive. at the other extreme is the activist view that rubbishes trickle down and holds that redistributive policies must be part of the development paradigm, even if it means compromising on the quality and pace of growth. as we all realize, inclusive growth is a deeply emotive issue that has transcended economics to enter into political discourse and electoral platforms. in the era of globalization, the debate on inclusive growth has quite naturally acquired international dimensions too. is a world order in which some countries prosper while others get left behind sustainable? if not, what are the obligations and responsibilities of rich countries, and of poor countries? and in a world dominated by nation states, how do we build a constituency for the global economy? the concerns about inclusive growth are not unique to emerging and developing economies. they are resonating in the rich world as well. last year, we saw a massive demonstration of popular discontent around the world. the β occupy wall street β movement in new york β s zuccotti park was the most prominent, but by no means the only one. despite its amorphous nature, and its refusal to articulate a set of demands, the protest campaigns across the world were shaped by a | 1 |
##ance : la declaration du 9 mai 1950, jean monnet foundation for europe, european research centre, 2000, pp. 251 β 253. bis central bankers β speeches | . and pisani - ferry, j., β the governance of the european union β s international relations : how many voices? β, in bis central bankers β speeches in the economic sphere, what should our shared goals be? the β five presidents β report β 17 seeks to answer this question from the perspective of our monetary union. but the question is also relevant for the internal market, and thus for the european union as a whole. the five presidents β report stresses that we need to reinforce the stability of our economies by developing solidarity mechanisms, in particular within the monetary union, while ensuring that governments and economic actors behave responsibly. this is what has been done within the framework of the banking union, and it β s what we must aim to do within the framework of the capital markets union. 18 likewise, greater risk sharing in the fiscal sphere presupposes sufficient economic convergence among participating countries. solidarity cannot turn into a system of permanent transfers, which is not part of the founding β contract β of monetary union. to put it another way, this is about establishing a new european social contract, which can be designed only under john rawls β β veil of ignorance β. 19 such greater risk sharing also presupposes responsible fiscal policies, which are in the interests of both individual countries and their neighbours. i want to make this clear : we cannot advocate a europe of solidarity while believing that the economic policies of each euro area country are the business of that country β s parliament alone. the crisis has fully exposed that contradiction. second, efficiency gains could be achieved if we were to progressively pool certain resources within the framework of the single market β with such action being justified by economies of scale and scope, network effects and externalities. this was the logic behind the establishment of the european coal and steel community in 1951, and today it informs the juncker plan, as well as efforts to develop an energy union and a single digital market. the joint implementation of a political project and an economic strategy also assumes that our political union will be strengthened. to remedy the β executive deficit β 20 β in other words, to reduce the difficulties involved in taking decisions that i mentioned earlier β we should favour sharing decisions that affect the future of the euro area within common institutions with a european mandate and democratic oversight at european level. how would the governing council of the ecb have dealt with the crisis if it was just a club of 19 national governors making decisions by consensus? following the lead of jean | 1 |
22 ). if there is progress with a shift in the deflationary mindset of holding money to a growth - percentage of firms in deficit is that among firms with capital of less than 100 million yen in the sampling survey on firms for fiscal 2021 conducted by the national tax agency. oriented mindset of using money effectively, this will lead households to reallocate some of their savings into investment in financial assets focusing on the long term, on regular contributions, and on risk diversification. this will boost households'earning power through the acquisition of dividend income from many listed firms that they have invested in, and at the same time promote future asset formation through the growth of firms that they have invested in. simply keeping cash and deposits drives households far away from the benefits of growth in japan's economy, which has been achieved through the business activities of many firms. developments in the tokyo stock price index ( topix ) and dividend yields from 2001 onward show that asset values have risen in tandem with the growth of listed firms even after significant shocks such as the gfc, and dividend yields have remained at around 2 percent since that crisis ( chart 23 ). the economy continues to grow through activities of a large number of firms. during the showa era, from 1926 through 1989, japan's economy realized growth driven by exports, and industrial clusters were formed, bringing about a society in which almost all japanese people considered themselves to be middle - class based on income earned from the firms where they work, a concept widely shared during the 1970s when japan's population exceeded 100 million. as a result of firms'earning power weakening accompanied by the yen's appreciation following the 1985 plaza accord, as well as a population decline, and also of sluggish wages, it is now necessary for households to change the structure for boosting their earning power. it is important that households invest in equity and investment trusts as a means of linking to multiple listed firms, transforming the structure for strengthening their earning power to one that promotes not only sustainable and stable increases in wages and financial income accompanying nominal gdp growth but also asset formation. thank you. economic activity, prices, and monetary policy in japan speech at a meeting with local leaders in gifu august 31, 2023 nakamura toyoaki member of the policy board bank of japan chart 1 imf projections in the world economic outlook update ( july 2023 ) y / y % chg. imf projections - 2 - 4 japan united states - | deflation. however, with setbacks such as the global financial crisis see international monetary fund ( imf ), " regional economic outlook for asia and pacific, " october 2022. ( gfc ) and the covid - 19 pandemic, the deflationary mindset has not yet been dispelled. considering that the principle of monetary policy is to achieve price stability, thereby contributing to the sound development of the national economy, it is important for a virtuous cycle to take shape in which wages increase on the back of stable price rises, economic activities such as investment and consumption become aggressive, and interest rates rise accordingly. for this to happen, the country's economic and wage structures need to change so that wages increase alongside economic growth, as is the case in the united states and europe. monetary policies in these economies aim to curb demand and subdue high inflation, in the context of their present economic and wage structures. in the case of japan, however, the structures of sluggish economic activity and wages need to be changed, and the price stability target seems to serve as a barometer for gauging the progress of this change. the year - on - year rate of increase in the cpi for all items less fresh food has exceeded 2 percent for 16 consecutive months, and labor shortages have also exerted greater pressure on firms to raise wages. nevertheless, developments in the gdp deflator - - which measures the change in prices of value - added generated in the domestic economy - - show that, unlike in the united states and europe, a substantial increase in unit labor costs has not been observed in japan ( chart 6 ). thus, the current inflation in the country seems to be due mainly to the effects of the pass - through to consumer prices of cost increases led by the surge in import prices with a lag, and inflation accompanied by wage increases has not yet been achieved. the second reason i believe the bank needs to continue with monetary easing concerns boosting the earning power of firms, including small and medium - sized ones, which allows for wage growth that can keep up with inflation. the june 2023 tankan ( short - term economic survey of enterprises in japan ) shows that the diffusion index ( di ) for output prices has been positive for nine consecutive quarters, and that the gap with the input prices di has been narrowing since its peak in the january - march quarter of 2022. 4 this points to firms'ongoing efforts to pass on higher | 1 |
daily basis that the advancing digitalisation of the financial system, too, requires intensive international exchange. in our role as central bankers, we closely observe, analyse and share our views about the 1 / 2 bis central bankers'speeches opportunities and risks created by new providers of digital financial services. because one thing is clear β digitalisation does not recognise national borders. in many places, the new developments will require us to come up with, at the very least, european responses. and i am not only talking about the challenges of cross - border supervision and regulation of the activities of new fin - techs or so called big - techs. i am convinced that we need to develop paneuropean payment solutions. we have to think in european dimensions in order to withstand global competition. europe β s citizens need an alternative to existing platforms such as facebook, alibaba or google, if only in order to protect their personal information. i therefore welcome the european commission β s commitment to press ahead with its efforts to develop european solutions in the coming legislative period. for we in the eu have a shared objective : to make available to all citizens a safe, rapid and reliable financial infrastructure. 3 conclusion ladies and gentlemen, i am well aware that european dialogue is not always harmonious. there is often heated debate and controversy about finding the right path. and yet europe shares many interests, objectives and values. it is my wish for the future that we will succeed in giving these shared european traits greater prominence. in the political arena and in our society at large. this evening, the emphasis is on our mutual interest in contemporary art β also often a topic of heated debate! without the dialogue between the art curators of euro area central banks and the interest in the interplay between our art collections, this successful project could never have got off the ground. i would therefore like to take this opportunity to thank the curators and all the staff members of the national bank of belgium and the deutsche bundesbank involved in this project. you have done an amazing job! the success of this exhibition shows that central banks can contribute to public dialogue in various ways. the bundesbank will definitely continue to display its art collection in exhibitions and guided tours. we are officially closing this exhibition today. however, we are not ending the dialogue! we will be continuing it. and i cordially invite you to take part in it, now and in future. thank you for your attention. 2 / 2 bis central bankers | andreas dombret : total impact β how regulation and crisis management will change the world β s financial landscape speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the frankfurt finance summit, frankfurt, 19 march 2013. * 1. * * introduction ladies and gentlemen i am delighted to conclude this year β s frankfurt finance summit. for the third year in a row, this event has provided an excellent platform for an exchange of views between high - level experts from politics, academia, as well as the financial and the official sectors to discuss financial market issues of major current importance. today β s conference has been asking about the total impact that regulation and crisis management will have on the financial landscape. the keynote speakers and panellists have given wide - ranging and, in some cases, diverging answers to that question. i am pleased to conclude this year β s summit by offering my views on some particular aspects of the issues discussed today. 2. future of the european monetary union let me start with the topic of the first panel this morning : the future of european monetary union. the crisis has highlighted shortcomings in the union β s institutional framework. let me remind you of three serious flaws. first, the deficit rules of the stability and growth pact were not only circumvented by some member states, but deliberately bent. second, member states β borrowing was not effectively curbed because financial markets failed to exert a disciplining effect on public budgets. third, contagion effects transmitted via member states β financial systems were largely underestimated. the introduction of the single currency led to a greater integration of european financial markets. the highly integrated market increased the probability of contagion effects occurring via member states β financial systems. hence, it amplified the existing close link between risks stemming from a country β s public finances and the state of its banking system. these flaws were a major factor in the emergence of the sovereign debt crisis and that fact makes a good case for strengthening the institutional framework of the monetary union. i welcome the measures that have been initiated. the reform of the stability and growth pact and the agreement on the fiscal compact are major steps towards sounder budgetary policies. with the agreement on a european banking union, we have made further progress in one important specific area. a banking union can help to strengthen financial stability by loosening the nexus between banks and sovereigns. a european banking supervisor would benefit from the ability to make cross | 0.5 |
cannot be preserved by the goodwill of one side alone. one cannot overlook the difficulties of the current situation, be blind to growing geopolitical differences or ignore the prospect of an increasingly polarised world. much in this is highly political, therefore beyond the scope of this conversation. concerning economic and financial institutions, one should be both realistic and hopeful. the goal, to quote raghuram rajan, should be to create ( or rather, maintain )'safe spaces in which countries, albeit with different values and systems, can interact regardless of their respective domestic policies or international tensions '. looking ahead, this needs genuine engagement on all sides. 3 / 3 bis - central bankers'speeches | third, the integration of impact evaluations into wb projects and programs, which requires building capacity in client countries and allows for optimizing design and delivery. strengthened international cooperation is essential to assisting those in need and enhancing preparedness for future crises in order to prevent their most dramatic impacts. our constituency firmly supports multilateral institutions and international coordination efforts. as with its 2021 g20 presidency, italy enters the 2024 g7 presidency firmly committed to those efforts. 3 / 3 bis - central bankers'speeches | 0.5 |
scale than ever before. the malware wannacry hit 200, 000 computers in 150 countries. attacks on multinational transport companies based in europe stranded cargo at ports in india. the losses from these events are large. cyber theft cost the global economy more than $ 450 billion in 2016. lloyd β s of london estimates that a global - scale cyber - attack could rack up losses of $ 53 billion, similar to a catastrophic natural disaster such as u. s. superstorm sandy in 2012. unsurprisingly, risk awareness is now growing across the entire spectrum of businesses. the 2017 allianz risk barometer, which covers mainly large corporates, as well as a 2016 zurich study on smes revealed that cyber risk is topmost on businesses β minds. the same study showed that, in asia pacific, there are now twice as many smes that worry about cybercrime, fire, technological vulnerabilities, health and safety of customers or employees, and corruption compared to four years ago. yet, in terms of preparedness for dealing with risk events, there is a marked disparity between 1 / 4 bis central bankers'speeches large corporates, and mid - sized and smaller companies. predictably, larger companies are the ones that tend to have a structured risk mechanism in place, as well as the resources and expertise to deploy risk management tools. larger companies also tend to have better access to specialist insurance products and the resources to establish a captive. indeed, 90 % of fortune 1000 companies have a captive insurance company. smaller and mid - sized companies are a different story. most do not consider captives as a feasible risk management option. however, this is changing with innovations in captive models, such as group and rental captives and protected cell companies. it is not only possible for smaller companies to engage captives. a more compelling business case is emerging for the use of captives as small and mid - sized businesses evolve. some of the most significant small business trends in the 21st century include disaggregated business networks, shorter cycles of proprietary knowledge, and rising entrepreneurship powered by a younger digital generation. take for example, high - growth tech startups. as disruptors, their business models and risk profiles, are often unique. much of their competitive edge is derived from concepts and technologies that are new to the market. ride - sharing platforms such as uber and grab are built on seamless apps that work exactly the same whether in london, new york or kuala lumpur. from | to traditional insurance and reinsurance markets. more significantly, it recognizes the importance of applying a supervisory regime that has due regard to the specific nature, scale and complexity of various forms of captives. a primary objective of regulation for captives is promoting financial stability. in this respect, regulators will continue to be concerned with risks that may be created as a result of arbitrage and distortions to the broader insurance market. captives have an important contribution to offer. however, understanding risks relating to captives at a much deeper level, will be important to deliver regulatory outcomes that are proportionate and economically efficient. captive risks will differ from traditional insurance, and they also vary significantly between different types of captives, depending on ownership and structure, scope of business and nature of risks insured. managing these risks cannot simply be addressed at an institutional level. macroprudential 3 / 4 bis central bankers'speeches measures might have relevance in certain circumstances. for example, a pure captive insurer that merely underwrites the risks of its parent may pose low financial and consumer risks, but if the parent is an economically significant entity, with critical financial linkages, a different regulatory response and approach might be warranted. to a large extent, our ability to design suitable regulatory frameworks for captives remains constrained by the paucity of data on captives. this needs to be addressed as a matter of priority. broader measures need to be taken, both at a national and global level, to collect better data on captives to understand their nature, evolution and impact on macro - financial developments. increased efforts by governments to tackle profit shifting and tax base erosion ( beps ) have been another factor behind recent regulatory developments. significant changes have taken place affecting offshore financial centers in the past decade, shaped by heightened expectations for enhanced transparency and exchange of information between tax authorities. these winds of change are likely to pick up speed for captives. and they will change the way captives have operated in the past. very likely it would pave the way for the transformation of offshore financial centers. captives could metaphorsise from perceived brass plates models into legitimate commercial vehicles that serve a real economic purpose. perception management is pivotal for the future existence of captives. captives must be seen as supporting and contributing to the broader economic transformation and growth. these three developments ; the emergence of more diverse captive models serving a broader spectrum of companies, technological advancements and more considered regulations, are likely to foster a greater convergence between the intended economic outcomes of captives, and the required and appropriate | 1 |
was also considered to be well in line with the ambitions in other countries in europe. since 1993 the way the riksbank works has been developed quite a bit. this applies to our internal procedures, the intellectual policy framework and our external communication. since this has been my primary task during the last five years, i could go on speaking about it for ages but i shall confine myself to a set of issues related to the role of the inflation forecasts and policy rules. in my opinion, the focus on the combination of a specific, symmetric target and published forecasts set by the policymakers has been important for monetary policy β s credibility. by consistently presenting our forecasts and acting accordingly, we have created greater freedom of action than would otherwise have been feasible. it has been a short - cut to credibility. my favourite example is the autumn of 1998. at that time, in the midst of a fairly lively discussion of interest rate policy, similar to that in the rest of europe, we managed to cut our rate in several rapid steps without being accused of political bias. we could make our point by referring to a very concrete picture of our view on inflation. it is sometimes said that you need a firm foundation before venturing to publish forecasts. i don β t subscribe to that. admittedly the riksbank began by just compiling inflation indicators. it was not until 1996 that we published really comprehensive accounts of economic tendencies and inflation, followed in 1997 by the first projections of inflation. however, i personally believe that an understanding of how the riksbank acts could have been achieved sooner if we had started earlier with fuller accounts of inflation and stuck to them in policy. in this context the recent brasilian experience is interesting. in time the policy framework was augmented with what could be called a rule of action or a policy rule. we made it clear that if inflation is expected to exceed the 2 % target in the coming one to two years, then we will normally raise the interest rate and vice versa. this formulation reflects our judgement that policy β s effects mainly occur after a time lag of twelve to twenty - four months. the rule of action has made policy even clearer. in principle, by relating new information to our most recent forecast, market players are in a good position to form a picture of policy β s direction and we can see that when we compare their forecasts of the repo rate with our own. however, one should be aware that there is a risk that | financial imbalances must have been allowed to build up during the preceding period. in other words, monetary policy makers must have seen no reason or been unable to prevent these imbalances from building up. thus, an important question is whether a monetary policy for price stability will indirectly prevent excessive debt accumulation in the economy? in other words, how likely is it that large imbalances will have time to build up before the central bank judges that its inflation target is threatened and therefore raises interest rates? can large imbalances materialise without inflationary pressure building up? a related question is whether the choice of monetary policy strategy has a bearing on the risk of financial imbalances and financial crises? for example, will a monetary policy based on a simple policy rule lead to a lower or higher risk of financial imbalances building up compared to a more discretionary policy? will an inflation targeting regime lead to a larger or smaller risk of imbalances building up compared to a monetary targeting regime? these highly relevant questions are being asked by a number of central banks in emerging markets that have recently been forced to abandon a fixed exchange rate policy that was no longer sustainable. the papers to be presented at this conference will hopefully throw some light on a number of the questions i have raised here this morning. i look forward to learning what our distinguished guests have to say on these matters. | 0.5 |
euro area, concentrating firmly on euro area countries experiencing sustained losses of competitiveness and large current account deficits as these countries face the greatest sustainability challenges. it should be determined by transparent and effective trigger mechanisms and specify clearly the sanctions in case of breach. and we need full transparency. the assessments of macroeconomic imbalances and recommendations for corrective action should be given broad publicity at all stages of the surveillance process. β¦ with a special focus on financial surveillance. and finally, the financial crisis has taught us that economic growth can be severely impacted by financial market disruptions. for this reason, european leaders agreed on a new financial supervisory architecture for the eu aiming to prevent financial disruptions of the kind that we have been experiencing in the future. this new financial supervisory architecture, which will become operational as of 1 january 2011, includes the three new european supervisory authorities ( esas ) for banking, insurance and securities markets to enhance microprudential supervision and the european systemic risk board ( esrb ) as the new macroprudential supervisory body in the eu. the ecb will provide the secretariat to the esrb. the assignment to the ecb of specific tasks concerning the functioning of the esrb is welcome, but does not constitute a change in the mandate or an additional objective for monetary policy. rather, these tasks should contribute to financial stability, while being fully in line with the ecb β s primary objective of maintaining price stability. there are clear lines of institutional separation between the ecb and the esrb. in particular, both institutions are independent and have separate, clearly defined mandates, namely the maintenance of price stability in the case of the ecb and the mitigation of systemic risk in that of the esrb. see the ecb proposals on β reforming economic governance in the euro area β, which president trichet submitted to the van rompuy task force on behalf of the governing council on 15 june 2010. | are improving. conditions in the euro area money markets are improving. the volumes in the interbank money market ( eonia ) have virtually doubled since summer, and are now back to the levels prevailing before august 2007. the overall reduction in central bank liquidity has brought the interbank ( eonia ) rate closer to the policy rate, which is an important step towards going back to our pre - crisis framework. euro area activity recovered in the second quarter of 2010 β¦ economic activity in the euro area is recovering. according to eurostat β s flash estimate, gdp grew by 0. 4 %, quarter on quarter, in the third quarter of 2010, after increasing by 1. 0 % in the second quarter. while no breakdown is available for the third quarter of 2010, all components contributed positively to quarterly gdp growth in the second quarter. in particular, domestic demand contributed quite strongly for the first time since the crisis, namely by 0. 5 percentage point. β¦ and surveys point to ongoing growth into the fourth quarter. looking beyond the third quarter, survey indicators, such as the purchasing managers β index ( pmi ) and european commission business surveys for the manufacturing and the services sectors, point to ongoing growth in october. consumer confidence increased in october and stood above its long - term average, pointing to a gradual recovery in euro area consumption. good prospects for households β income from the stabilisation in the labour markets β¦ the sentiment in the survey data finds its support in a number of encouraging developments, both in the household and in the non - financial corporations sector. on the household side, labour markets are stabilising, with employment levels remaining stable in the first and the second quarters of 2010, while hours worked increased by 0. 2 %, quarter on quarter, in both these quarters. the effect of the crisis on hours worked was far stronger than that on the number of persons employed. therefore, the upturn has also been stronger in terms of the hours worked. moreover, the unemployment rate has stabilised in the last few months and stood at 10. 0 % in the third quarter of 2010. overall, the stabilisation in the labour markets is creating good prospects for household income and, thereby, also for private consumption. indeed, the breakdown of households β income shows that the share of compensation of employees has increased recently, while the contribution of net social benefits has declined. β¦ and upward trend in production and new orders. as to non - financial corporations, we can observe an increasing improvement | 1 |
fossil fuels. this transformation will reduce dependency on fossil fuels. it will mitigate the financial risk of rising energy prices. i am optimistic that european companies will use their innovative strength to adjust their business models. today's topic is " changing or pretending β between ambition and reality ". it is difficult for the real economy and the financial sector to show proof of real change. one tool that can help corporates to show this proof is corporate transition plans. corporates set out transition plans to explain their transformation strategy. they publish their strategy for the next 5, 10 or 15 years. not just in prose but with facts and clear figures, so that investors will see whether a corporate is about to change or just pretending. 2 well begun is half done β benefits of transition plans ladies and gentlemen, many companies have pledged to achieve net - zero emissions by 2050. but as the motto of this conference suggests, ambition and reality do not necessarily match up. i know this from personal experience, so allow me to stray for a moment. new year is approaching fast, so i want to share my new year's resolution with you. i want to brush up on my french skills. i know that without a rigorous action plan my resolution might be shelved before i even pick up the first french book. but there's a huge difference between new year's resolutions and net - zero pledges. not sticking to a new year's resolution is not the end of the world. missing climate targets has far greater consequences. good forward planning is essential. to turn ambition into reality, companies need a concrete, medium to longer - term action plan. in other words, they need a transition plan that outlines clear milestones and intermediate targets. transition plans are the chance to break the tragedy of the horizon by aligning long - term commitments with concrete action today. a clear roadmap will make it easier for companies to manage risks that will come with the transition. and it will help them to seize the opportunities presented by the transition. because rethinking business models can open up the potential for more efficient processes, new products, and new markets. transition plans also provide valuable signals to stakeholders when it comes to securing financing. banks and other financial stakeholders are increasingly scrutinising their corporate clients'transition strategies. they want to see more than just lofty targets and pledges, and demand concrete steps. this is especially relevant for companies that are not green yet or those that might never | collaboration among all stakeholders. βͺ prospects in the medium to long - term are very positive. need to continue with the reform process can hardly be overemphasised. state of the local economy ( cont. ) status of debt service βͺ in quarter 1 of 2024 debt service was only to multilateral and plurilateral institutions. βͺ in the second quarter, there was a sharp upward jump following the conclusion of restructuring of the commercial ( eurobond holders ) as broader debt service resumed ( see chart below ). liquidity risk secondly, the industry β s concerns on liquidity risk is noted. however, it is important to fully appreciate the context that informed boz actions. βͺ the environment has for sometime now been characterized by strong underlying inflationary pressures, stemming not only from the debilitating drought shock of 2023 / 24 agricultural season, but also the persistent exchange depreciation. βͺ managing such pressures points to the need to implement relatively tight monetary policy to contain the inflationary pressures. βͺ we are the first to admit that the policy rate, on its own, is not sufficient to manage exchange rate pressures. the bank has had to complement the policy rate changes with upward adjustments in the statutory reserve ratio. in this regard, in early february 2024 we raised the srr to 26 % from 17 % on 5 february 2024. βͺ at the same same time it was deemed necessary that the government transfers its unutilised deposits from commercial banks to the boz. thus, on 29 january 2024, commercial banks were instructed to transfer such deposits to boz. βͺ the increased statutory reserve ratio resulted in a net withdrawal of k8. 1 billion of excess liquidity. with respect to government deposit transfers, between endjanuary 2024 and july 2024 k3. 4 billion had been transferred to boz β far much less than the projected k12 billion. liquidity risk ( cont. ) βͺ the less - than - satisfactory performance of the government deposit transfers meant that the impact was not fully achieved. with this development another way of achieving the intended objective had to be found. the bank turned to making overnight lending facility ( olf ) as the main source of commercial banks β liquidity as opposed to use of regular open market operations ( omo ). βͺ upon observing relative stability in the foreign exchange market conditions since june 2024, the bank started to provide commercial banks liquidity relief through the much cheaper omo facility compared with the olf | 0 |
mechanism is exacerbated when funds are allowed to run on a mismatch between redemption rules and the liquidity of their portfolios ; not surprisingly, open - end funds behaved more procyclically than other investors did during the march turmoil. moreover, while funds provide greater diversification for end - investors, they typically display little diversity in their own strategies within each investment class. state - of - the - art strategies are likely to be similar across many funds ; besides, as managers are compensated relative to benchmarks, they tend to replicate the investment strategies adopted by peers. the resulting herd behaviour will further amplify shocks and cause contagion. herding is, however, very much inherent in etfs and passive funds, which have been shown to increase the sensitivity of peripheral markets to global shocks. 1 finally, algorithmic and high - frequency trading, widely used by asset managers, tends to increase market efficiency during normal times, but may break down during high volatility episodes, increasing the procyclicality of prices and liquidity. 2 the bank of italy had long been advocating for international financial standard setters to tackle some of these vulnerabilities. this was largely ignored until the covid crisis made them obvious to all, when investment funds played a crucial role in market disruption and, specifically, in capital flow reversals. 3 nbfi reform is now very much on the fsb β s agenda. the italian presidency of the g20 has made it one of its key priorities in the finance track. while some issues are still controversial, progress has been palpable in some key areas, and i am confident that a more comprehensive approach is gradually developing. this was my first main point. my second point concerns the policy responses during the pandemic, which proved effective in dealing with large and volatile capital flows. as is well known, the actions taken by ae authorities after the outbreak of the pandemic, including the introduction of swap agreements by major central banks, contributed to improving global financial conditions ; as investors β risk appetite returned, emes β capital inflows recovered and tensions on foreign exchange ( fx ) markets eased. the point to which i would like to draw your attention is that a number of eme policy makers also played a crucial role during that episode, as shown for instance in a joint paper by the bank of england and the bank of italy. 4 to mitigate the impact of the covid - 19 shock on | zeti akhtar aziz : growth and development of the world economy welcoming remarks by dr zeti akhtar aziz, governor of the central bank of malaysia ( bank negara malaysia ), at the official opening of the world bank group knowledge and research hub in malaysia, sasana kijang, kuala lumpur, 28 march 2016. * * * it is my great honour to welcome the distinguished senior leadership of the world bank group, dr axel van trotsenburg, vice president of development finance ; and dr kaushik basu, chief economist and senior vice president, to the master lecture on'shared prosperity'by dr kaushik basu. the lecture is held in conjunction with the official opening of the world bank group knowledge and research hub in sasana kijang later this afternoon. as we meet today, the global economy is confronted with an immensely challenging environment. a slower than anticipated growth in several major economies, the sharp decline in commodity and energy prices, the significant shifts in global liquidity, and the heightened geopolitical tensions are having far reaching and widespread implications. going forward, the challenge for both the advanced and emerging economies is to lift growth trajectories and search for sustainable growth factors that can rebuild economic fundamentals, address structural vulnerabilities and forge new sources of growth. key is the " sustainability " and strengthening of the growth and development of the world economy. an important aspect in this process is that economic growth and development, no matter how stellar, will begin to fade when inequality sets in and when income disparities widen. experience has also shown that financial crisis and economic recession entrenches the cycle of poverty. during a financial crisis, the poor lose their income by several times more compared with the average household. we saw this happen during the recent global financial crisis, and we also saw how many that were displaced suffered " hysteresis " thus deeply affecting their income prospects. we also risk facing a severe setback in our fight against poverty. in the more recent years, the international community has accorded greater attention to addressing this agenda and to achieving more balanced and inclusive growth. malaysia, while achieving growth and progress since the 1960s has always given attention for it to be a shared prosperity. given the role of the financial system in facilitating this, bank negara malaysia has always given priority to the financial inclusion agenda to not only bring the underserved segments of society into the financial mainstream but to promote a more effective participation | 0 |
. against this background, the latest macroeconomic projections of the banco de espana, published on 24 september, foresee a moderation in the spanish economy β s growth rate over the next two years, in response to the loss of momentum of domestic demand, which has already begun to be observed, in the latest period, and which has affected both private consumption and private investment. as i have mentioned already, this behaviour appears to have been fundamentally influenced by the deterioration in the external environment, as well as by the uncertainty regarding the future outlook. in any event, under the baseline scenario, which assumes that export markets will gradually recover ( following their recent weakness ) and that budgetary policy will acquire a neutral stance over the projection horizon, the accommodative stance of monetary policy and the improvement in the financial position of firms and households over the last few years, should allow the economy to continue to grow at slightly above its potential rate ( which according to our estimates is somewhat less than 1. 5 % ). however, as in the euro area, this baseline scenario for economic activity is subject to significant downside risks. in fact, the projected recovery in world trade and activity could be hampered by factors such as the possible adoption of further protectionist measures, the worsening of geopolitical tensions and the high level of indebtedness of certain agents in particular regions of the world. a source of further uncertainty, which has still to be clarified and has been highly unpredictable, is the process of the united kingdom β s departure from the european union and the subsequent negotiation of the future uk / eu trading relationship. lastly, we cannot rule out that the uncertainty surrounding the future course of some domestic economic policies ( such as budgetary policy and the structural reform agenda ), arising from the difficulty in recent years of forming solid parliamentary majorities, or the recent events in catalonia, may also, if they persist, have an adverse effect on the spending decisions of private agents. transformations and vulnerabilities of the spanish economy in this context, the spanish economy, despite the improvements made during the recovery, continues to suffer from significant vulnerabilities. progress in correcting these is urgently required, in order to enhance the economy β s resilience to possible adverse shocks. in fact, some positive elements stand out from the evolution of the spanish economy in recent years, such as, for example, the ability to continue to run external surpluses during the upswing, something that was not normal | for this new generation of banknotes has been an intricate process, involving many role players. on this note, on behalf of the board, staff of the bank of namibia and indeed my own behalf, i would like to thank the president and the cabinet for the endorsement of the new generation of the namibia dollar banknotes. furthermore, we would like to express our gratitude to the minister of finance for her guidance and support during this process. special thanks also go to my predecessor, mr tom alweendo, who started this project, just before he left. i am grateful to my colleagues at bank of namibia who worked hard on this project to ensure that we have well secured banknotes which compare with the best in the world, notes that we are proud of. director of ceremonies your excellency our notes do not only contain state of the art security features, but they also honour namibian heroes. kaptain hendrik witbooi will forever remain one of our martyrs, a hero who fought fearlessly against the occupation of our mother land. the battles he fought, for example in the naukluft mountains on 27 august 1894 and subsequent battles in the auab valley, were not ordinary, but acts of bravery. kaptain hendrik witbooi died on 29 october 1905 near koes after he was wounded in the battle near fahlgras. your excellency, according to history, these were his last words β it is enough now, the children shall have peace β. ladies and gentlemen, my fellow namibians, let β s treasure the peace we are currently enjoying for this was bought with blood. your excellency, sir, we are celebrating and praising our heroes and their heroic deeds. inspired by our forefathers, dr. sam nujoma, with his compatriots, carried the struggle forward. this too, director of ceremonies, was a long and bitter struggle. they sacrificed their youth years and many rivers of blood were crossed. their efforts paid off, on 21 march 1990, namibia became a republic. dr. nujoma became our founding president and father of our newly born nation, a unique position in the history of our country which no else will ever occupy. in his inaugural address on that day, the founding president also paid homage to all fallen heroes and heroines, who sacrificed their lives for the total emancipation of the namibian people. he said : β in accepting the sacred responsibility which the namibian people have placed | 0 |
to bear the bulk of the losses if a government could not service its debt. i have always supported this arrangement because it ensures that the ecb does not introduce a fiscal union through the backdoor. that means that if the italians failed to repay their debt they would in the first instance harm themselves. the italian central bank would then bear the heaviest losses. i can β t comment on hypothetical scenarios. the euro area heads of state or government want to launch a reform of monetary union 1 / 4 bis central bankers'speeches in june. as you said yourself, the economy is growing, the crisis is over. why the need for yet more reforms? indeed, the euro area expansion is strong and broad based. but as christine lagarde, the head of the international monetary fund, often says [ quoting jf kennedy ] : the time to repair the roof is when the sun is shining. europe has been made more stable over the past few years, but we are not there yet and now is the right time to complete the job. have you honestly ever met a politician that fixed the roof when the sun was shining? most only start repairing it when it β s raining. that is understandable, but if you β re right, it means that when the next crisis occurs european leaders will once again have to improvise a wobbly solution during a hectic late - night meeting in brussels. i don β t think that β s how citizens expect europe to be governed. but isn β t that precisely how europe has always been governed? it was at the height of the debt crisis, because the situation at the time was unprecedented. the problem with late - night meetings is that, while we can get things done and indeed succeeded in doing so then, this type of improvised decision - making sows the seeds of mistrust β between governments, between citizens and politicians. it is not a tenable situation. europe needs stable rules and institutions. in this connection, the ecb has called for a european deposit insurance scheme. so german banks would have to pay towards reimbursing savers in italy and spain if banks in those countries failed. how would that make europe more resilient to crises? let me put this discussion in perspective. we need three lines of defence for our monetary union. the first is to have well - functioning private markets, which are not yet fully in place. the single market needs to be completed, particularly in the services sector. capital markets are | also still too domestic. the second line of defence is to have sound fiscal policies in the member states. most countries have now reduced their deficit, but that is mainly thanks to favourable cyclical conditions. fiscal improvement should be made structural, otherwise governments won β t have fiscal space when the next recession hits. euro area - wide protection mechanisms such as the european stability mechanism, the single resolution fund for banks, or a new deposit insurance scheme are only the third line of defence. all existing currency unions have such or similar mechanisms to safeguard the stability of their currency. what exactly does deposit insurance protect us against? for one, it can enhance confidence in the banking system by preventing savers from emptying their bank accounts in a crisis situation. history has taught us that such bank runs are highly dangerous. that all sounds fine, but germany has a different perspective : a common deposit insurance scheme means that germans would also be affected if, say, a bank in italy failed. to return to the metaphor : if it rains, the roof would be in a worse state after the repair than before. why should we agree to that? with a proper european deposit insurance scheme, germans would have fewer problems rather than more. a deposit insurance scheme should be seen as an insurance against economic risks, just as you take out liability insurance to protect yourself against the risk of an accident. if risks are properly priced, it β s not a system of transfers between countries and still less from the β north β to the β south β, as is too often argued. of course, banks would need to further reduce risks before the deposit insurance scheme is introduced. much has been done recently in that respect. 2 / 4 bis central bankers'speeches and if the reforms can β t be managed by june? at the moment, all parties seem to be busy drawing their red lines. it would send a more positive signal to think about what they can achieve together. let me give you two reasons why this is urgent. first, who knows what the next crisis will look like? if our monetary union is not made stronger now, then the ecb will have to come to the rescue again the next time there is a crisis, and this may then lead us to test the limits of our mandate. who knows what the next crisis will look like? that β s not what germans expect of a central bank, and rightly so. second, the world is in disarray, and many expect europe to show the way. failing | 1 |
brought central banks, regulators, and finance ministries together to identify the problems, suggest avenues for addressing those problems, and push for timely solutions. what remains to be done? the process of addressing the problems is still at an early stage. now that the crisis seems to be abating, we can better identify the causes of the crisis and work on finding the best solutions. deficiencies must be fixed on a global basis to forestall gaps and regulatory arbitrage that could undermine the effectiveness of regulation. and countries need to have confidence that others are implementing tighter standards in a consistent way. but at the same time, regulations must be passed and implemented nationally. on one level, this type of action is simply what is required under existing legal structures. on another level, it reflects the reality that taxpayers in individual countries end up bearing much of the cost when home - country institutions need to be stabilized. i'll highlight four of the many areas that require international coordination. first, we need to identify the global risks that can affect local banks. one obvious issue is cross - border exposures, especially when banks in many countries have similar exposures. on a global level, international groups like the financial stability board have an important role to play in looking for these kinds of vulnerabilities. for individual banks that operate across borders, supervisory colleges bring the key supervisors together and can improve the flow of information. these groups can also help raise supervisors'awareness of the risks that occur when the business plans of local banks evolve and shift to take on more global exposures. of course, we shouldn't expect too much from these exercises. in identifying risks, false positives will be common, and some mispricing of assets is inevitable as people attempt to evaluate the implications of broad economic trends and innovations. but looking in a focused way across markets and institutions may help to identify areas where greater supervisory attention could result in a more resilient system. a second area that is likely to involve international collaboration is the development of a more macroprudential approach to supervision and regulation. one aspect of such an approach is higher standards for systemically important institutions ; another is supervisory and regulatory measures to offset procyclical tendencies of the financial sector. formulating higher standards for systemically important, globally active institutions will require international coordination to avoid uneven playing fields. and, offsetting procyclical tendencies presents a difficult question : should authorities aim at damping such tendencies at a global level or at the | find productive uses for the deposit inflows and perhaps face changes in regulatory capital requirements. in addition, liquidity in some markets might be affected ; for example, the incentive for reserve managers to trade federal funds diminishes as the overnight rate falls, probably thinning brokering in that market. in thinking about the costs associated with a low overnight rate, one should bear in mind the message of milton friedman β s classic essay on the optimal quantity of money ( friedman, 1969 ). friedman argued that an overnight interest rate of zero is optimal, because a zero opportunity cost of liquidity eliminates the socially wasteful use of resources to economize on money balances. from this perspective, the costs of low short - term interest rates can be seen largely as adjustment costs, arising from the unwinding of schemes designed to make holding transactions balances less burdensome. these costs are real but are also largely transitory and have limited sectoral impact. moreover, to the extent that the affected institutions have economic functions other than helping clients economize on money balances ( for example, if some money market mutual funds have a comparative advantage in lending to commercial paper issuers ), there is scope for repricing that will allow these services to continue to be offered. thus there seems to be little reason for central banks to avoid bringing the policy rate close to zero if the economic situation warranted. a quite different argument for engaging in alternative monetary policies before lowering the overnight rate all the way to zero is that the public might interpret a zero instrument rate as evidence that the central bank has β run out of ammunition. β that is, low rates risk fostering the misimpression that monetary policy is ineffective. as we have stressed, that would indeed be a misimpression, as the central bank has means of providing monetary stimulus other than the conventional measure of lowering the overnight nominal interest rate. however, it is also true that the considerable uncertainty that surrounds the use of these alternative measures does make the calibration of policy actions more difficult. moreover, given the important role for expectations in making many of these policies work, the communications challenges would be considerable. given these risks, policymakers are well advised to act preemptively and aggressively to avoid facing the complications raised by the zero lower bound. | 0.5 |
unit of account in some transactions. i. full dollarization during the 1990s many economies were struggling to control or stabilize inflation. many of them had used a pegged exchange rate to bring inflation down from triple digit levels. it was then that the power of the impossible trinity β of the combination of a pegged exchange rate, free capital movements, and a monetary policy dedicated to domestic goals β became clear, and that a series of financial crises erupted. further, as the financial crises of that decade unfolded, it also became evident that the impossible trinity should be amended to say that the combination of a pegged exchange rate, free capital movements, and macroeconomic policy β not just monetary policy β dedicated to domestic goals was not possible. the resultant trilemma pointed in three possible directions : one was to attempt to control international capital flows, a solution that for good reasons was rejected by most countries 1 ; the second was to move to a more flexible exchange rate β though not necessarily one that was totally free - floating ; and the third was to strengthen the exchange rate peg, either by adopting a currency board, or by getting rid of the exchange rate entirely, that is by adopting a foreign currency, or full dollarization. the major benefit of the third solution as seen at the time β and as emphasized particularly by my then - colleague michael deppler of the imf β was that a country that adopted that solution would among these reasons is that capital controls tend to : cut the development of the financial sector of the country off from the global economy ; cut the economy off from the benefits of international trade in assets ; and are frequently ineffective and a source of corruption. however, countries with capital controls, a weak macroeconomic framework, and a vulnerable financial system, need to strengthen the macroeconomic system and the financial system before or as they liberalize. rapidly see the benefits of the enhanced credibility of monetary policy in lower interest rates. when one considers for instance the case of turkey, where high real interest rates in the late 1990s and in the run - up to the crisis created a massive fiscal problem 2, the benefits of the lower interest rates were obvious. those benefits had been seen in the case of bulgaria when it adopted a currency board solution, a step just short of full dollarization, and they were seen also in the full dollarization cases of el salvador and ecuador in the early years of this decade. they were seen too in the cases of the countries joining, or slated to join, the | there may be some leeway between foreign and domestic interest rates, giving monetary policy some leverage. although i have not so far distinguished between dollarization and exchange - rate linking of assets and liabilities, there is a potentially important difference. so long as assets and liabilities are exchange - rate linked, and payable only in the domestic currency, the central bank still technically has the capacity to serve as lender of last resort in the domestic currency, even without holding massive reserves. but this the literature uses the concept of a minimum variance portfolio for the economy, which includes a significant share of foreign - currency or foreign - currency denominated assets. does mean that the impact on the exchange rate of a significant financial crisis is likely to be very large in an economy with extensive dollarization. empirical work shows that monetary policy in heavily dollarized economies tends to aim to smooth the exchange rate. this is not surprising given that economic agents in such an economy are very vulnerable to exchange rate changes, and that monetary - policy makers will typically also be concerned about the stability of the financial system. in that regard, it is often suggested, and correctly, that reserve requirements against foreign currency liabilities should be larger than those against domestic currency liabilities, and that especial care needs to be taken in evaluating the risks associated with foreign currency assets. however, it is also the case that the more difficult it becomes to hold foreign - currency assets in the domestic banking system, the more those assets are likely to be held outside the banking system, quite possibly abroad β in other words, actions to limit the extent of dollarization may well contribute to capital flight. why not simply fix the exchange rate? we have already discussed that issue, under the heading of full dollarization. it can be done, for small economies, and for ones β such as the candidates for entry into emu β that know how they will ultimately exit the fixed exchange rate arrangement. but it is also a dangerous course of action for those countries that might one day find themselves having to change the exchange rate. there is some evidence that the provision of price - indexed financial assets helps reduce the extent of dollarization. that makes considerable sense, since the underlying issue for asset - holders is increasing the safety of their portfolios. generally countries that suffer from high inflation, which empirically means also unstable inflation, provide a range of assets, including both price - and foreignexchange indexed assets. but extensive price level indexation, like dollar | 1 |
the unemployment rate still high and capacity utilization low, resource slack is likely putting downward pressure on prices. in addition, market measures of longer - run inflation expectations are at the low end of the range they have been running since last november. bis central bankers β speeches putting these factors together, my outlook is for overall inflation over the medium term to fall back towards core and remain below the 2 % level i see as consistent with the price stability leg of the fed β s dual mandate. monetary policy and the dual mandate in my view, central banks should focus on medium - term inflation. over shorter periods, measured inflation rates are affected by all sorts of short - term influences, such as fluctuations in food and energy prices that are beyond the control of monetary policy. furthermore, there are significant lags before policy actions influence inflation. so reacting too strongly to short - run influences simply adds noise to the policy - making process. so, by this appropriate standard i think inflation likely will be below our goal of 2 %. and of course, unemployment is much above its natural rate. thus, at the moment, there is little conflict between our two goals. both suggest at least some additional monetary policy accommodation would be helpful. however, given how truly badly we are doing in meeting our employment mandate, i argue that the fed should seriously consider actions that would add very significant amounts of policy accommodation. such further policy accommodation does increase the risk that inflation could rise temporarily above our long - term goal of 2 %. but i do not think that a temporary period of inflation above 2 % is something to regard with horror. i do not see our 2 % goal as a cap on inflation. rather, it is a goal for the average rate of inflation over some period of time. to average 2 %, inflation could be above 2 % in some periods and below 2 % in others. if a 2 % goal was meant to be a cap on inflation, then policy would result in inflation averaging below 2 % over time. i do not think this would be a good implementation of a 2 % goal. 1 with this in mind, i want to discuss the nature of policy - making under a dual mandate when we are far from our goals. what β s a central banker to do? ( warning : math ahead ) normally, the deviations of the real economy and inflation from our objectives are small enough that any conflicts are minor. and the well - known taylor rule captures normal policy adjustments well, appropriately weighting output gaps | ##s, eurosystem central banks committed last february to implement sustainable and responsible investment strategies and to report the first results by end of 2022. banque de france β s policy has been exemplary since 2018 regarding the management of its own funds, whose alignment on a 2Β° c objective is already effective. we won β t stop there though : we started to exit from non - conventional oil and gas earlier this year, we announced that we are exiting totally from coal by end 2024. we now commit to work toward aligning our own portfolios with a 1. 5Β°c objective. one additional word about the international context of these developments. here again, we saw a major improvement this last year with the new american involvement : climate - related issues are now firmly on the agenda of the g20, the g7, the fsb and all other standard setting bodies. the ngfs, created in paris in december 2017, is a unique knowledge hub. it now has 95 members, including the us fed since last december and this number will still grow in coming weeks. the banque de france provides its global secretariat with 15 staff, and we created last april our climate change centre chaired by nathalie aufauvre. we are indeed making good progress across the board. but each year that passes without sufficient emission reductions makes the issue more severe, and the solutions more radical. to grapple with this dynamic situation, it is imperative that we are able to better understand and forecast the macroeconomic impacts of climate developments. 2. an imperative for the year to come : forge models that gauge the interaction between climate and the economy one aspect of the ecb β s action plan launched on the back of the strategy review may have received too little attention : macroeconomic modelling and scenario analyses. the challenge is huge as we face a triple source of uncertainty : first, how climate change will materialise, second, what the transition could look like and, third, how both will translate to the macroeconomy. the ngfs has produced detailed macro financial scenarios and the corresponding data that provide the most comprehensive framework to date for financial risk assessment. to make such scenarios possible, the central banking community β with a strong involvement of bank of england and banque de france among others - has collaborated with first tier research institutes in climate science and economic modelling. this is a huge step forward. our objective is now to propose a common set of plausible and differentiated futures, built with the best available science and | 0 |
mr thiessen reviews the canadian economy and monetary policy in unsettled times speech by the governor of the bank of canada, mr gordon thiessen, to the greater victoria chamber of commerce in victoria, british columbia on 7 / 12 / 98. when the asian crisis erupted in the summer of 1997, few observers anticipated that international financial markets would still be under its influence more than a year later. most expected that the crisis would be contained and resolved relatively quickly. but then who could have foreseen a year ago that the japanese situation would deteriorate as much as it has ; or that russia would declare a debt moratorium, jolting markets everywhere, and increasing financial pressure on parts of latin america? all these unexpected developments have slowed world economic activity. canada β s very open economy has not been immune to these forces. the sharp decline over the past year in the demand for, and the prices of, the key primary commodities we produce has taken its toll. british columbia has been particularly hard hit because it produces and exports a larger share of such goods than other canadian provinces. these developments have been reflected in the value of our currency, which has declined substantially against the u. s. dollar. all this seems to have provided fertile ground for some pessimistic scenarios. indeed, some commentaries have raised the spectre of global recession and deflation, implying a consequent downturn for canada. are such concerns justified, or are they an overreaction to events? i believe that the pessimistic commentary has been overdone. given the global uncertainty and financial market volatility of the past year, canada has been coping relatively well. it is normal for people to feel queasy and to fear the worst when caught in the kind of stormy seas we have encountered in the past year. but the important thing to remember is that these days canada is better positioned to ride out the storm. and we will feel much better if we can keep our eyes on the horizon β for there are signs that the sky is clearing. what i would like to do this morning is to put the recent changes in the global economic and financial environment in perspective. next, i will look at the implications for the world economy and for canada in particular. i will finish with a discussion of the bank of canada β s response to the international turbulence. global financial problems in perspective i will spare you the detailed chronology of the past year β s events. you are probably already too | is still the main uncertainty at this point. but the recent legislation to rehabilitate its banking sector, which is at the core of japan β s problems, and other measures proposed to stimulate the economy are grounds for cautious optimism. if these are implemented in a sensible, systematic fashion, the world economic outlook will brighten considerably. another factor that added to the pessimism through the early autumn was the concern about a β credit crunch β in the united states that could spread elsewhere, including here in canada. however, the recent interest rate reductions by the u. s. federal reserve have eliminated the worst scenarios envisaged at the time. some of the rise in interest rates on β less - than - prime β debt, which occurred during the autumn because of concerns in global markets about risk and liquidity, has reversed. and the availability of credit is slowly improving. this is not to say that we are completely out of trouble yet ; or that there is no longer considerable uncertainty out there. but, for the reasons i have discussed, i certainly do not believe that the scenarios of worldwide recession and deflation are very likely as we look ahead. as for canada, it is true that we have been hit hard by the more than 15 % decline in commodity prices over the past year. it is also true that those lower prices, together with the slowing world economy, are affecting our export industries β a fact that this audience probably knows only too well. it is also evident that the nervousness and volatility in financial markets have made some canadian consumers and businesses less confident, affecting domestic spending plans. as a result, the canadian economy has expanded much more moderately this year than in 1997, when it grew by more than 4 % ( fourth quarter over fourth quarter ). as we look ahead to 1999, the considerable degree of global uncertainty that is still lingering makes all economic forecasts more tentative than usual. because financial stability is so important for household and business confidence, the expansion of our economy will be influenced by how quickly global financial markets stabilize. still, with accommodative monetary conditions and recent solid employment gains, spending by canadian households and businesses, while slowing, should continue to contribute to an expanding economy. and, based on the bank β s current assessment of the world economic outlook and canada β s improved competitiveness, our exports should continue to grow. the monetary policy response to the international turbulence let me now turn to monetary policy. you will not be surprised to hear that | 1 |
β when putting forward our proposed paths for policy rates. we can achieve this either by a greater emphasis on the uncertainty of interest rate forecasts, or by basing them beyond some horizon on some formula that incorporates the market yield curve. the reason given for this recommendation is that there is no real information in interest rate forecasts that extend further than a couple of quarters ahead. we at the riksbank are well aware of how uncertain interest rate forecasts are in the longer run and we have therefore endeavoured to draw attention to this uncertainty. we have done so, for instance, by publishing uncertainty bands around the interest rate paths and by repeatedly emphasising the fact that the repo rate path is a forecast and not a promise. of course we can make further efforts to point out the uncertainty of these forecasts if necessary, but we believe that the market and the general public have already understood that the forecasts are uncertain in the longer run and should therefore be taken with a pinch of salt. one indication of this, which professors goodhart and rochet also point out, is that β the market seems to have retained a, healthy, scepticism whether the official projections would be realised β during the period we have been publishing a repo rate path. this applies in particular to the period following the global financial crisis, when there was extreme uncertainty surrounding all of the forecasts. however, the fact that interest rate forecasts in the longer run are uncertain does not mean that we should not make such forecasts. and when we make our own interest rate forecasts we should also publish them. by publishing these forecasts we can explain more clearly to the general public and the market how we view future developments and how we reason when making our monetary policy decisions. i find it difficult to see how this could be harmful. to instead base long - term forecasts on market expectations of the policy rate is a method we have already tried and decided to abandon. if we use market expectations of the policy rate as a starting point, it may be difficult to determine how the interest rate is connected to other developments in the macro economy. our own forecast for the interest rate has the advantage that it is produced together with the forecasts for gdp, inflation, employment and so on. moreover, market expectations can vary substantially over time, which can lead to the information content in the macro forecasts as a whole declining. the evaluators also consider that the riksbank β s schedule for the | funds. in many countries, there are no such funds. this hidden wealth is an aspect to consider when discussing the distributional effects of expansionary monetary policy. references hasselberg, y. and ohlsson, h. ( 2016 ), β collective wealth formation : conflict and compromise in sweden, 1950 - 2000 β, in hudson, p. and tribe, k., ed., the contradictions of capital in the twenty - first century : the piketty opportunity, agenda publishing, pp. 109 - 130. nilsson, c., soderberg, j. and vredin, a. ( 2014 ), β the significance of collective pension saving for the swedish financial system β, economic commentaries 2014 ( 3 ), sveriges riksbank. oecd ( 2019 ), pensions at a glance 2019 : oecd and g20 indicators, oecd publishing, paris, https : / / doi. org / 10. 1787 / b6d3dcfc - en. oecd ( 2020 ), pension markets in focus 2020, http : / / www. oecd. org / finance / pensionmarketsinfocus. htm. ohlsson, h., roine, j and waldenstrom, d. ( 2020 ), β inherited wealth over the path of development : sweden, 1810 β 2016 β, journal of the european economic association 18 ( 3 ), pp. 1123 - 1157. waldenstrom, daniel ( 2016 ), β the national wealth of sweden, 1810 β 2014 β, scandinavian economic history review 64 ( 1 ), pp. 36 β 54. waldenstrom, d ( 2017 ) β wealth - income ratios in a small, developing economy : sweden, 1810 - 2010 β, journal of economic history 77 ( 1 ), pp. 285 - 313. 6 | 0.5 |
of below - normal credit growth. a primary objective is to increase the resilience of banks to unexpected reversals in credit dynamics ; in addition, depending on circumstances, it is possible that the credit cycle might also be dampened by such counter - cyclical measures. while new lending is picking up, our assessment is that the credit cycle remains subdued, which is reflected in the current zero value for the counter - cyclical capital buffer. still, since the counter - cyclical capital buffer is reviewed on a quarterly basis, this policy tool provides a highfrequency ( compared to the typical duration of financial cycles ) mechanism to respond to cyclical shifts in credit conditions. a small but increasing number of eu countries have raised the counter - cyclical capital buffer in recent times. of course, the bedrock of our macroprudential policy framework is formed by the borrowerbased measures we have introduced in relation to mortgage loans. we view our mortgage measures that put ceilings on loan - to - income ( lti ) and loan - to - value ( ltv ) ratios as essential in limiting systemic financial risk emanating from the mortgage market, while acting to protect consumers from the risks associated with overborrowing. such borrower - based measures are intended to improve the resilience of the financial system and the overall economy by improving the sustainability of mortgage loans, leading to a lower probability of default and smaller losses in the event of defaults. moreover, such measures are reinforced by the higher capital requirements facing banks, which improves their capacity to absorb loan losses. an important property of the mortgage measures is that the lti rule acts as an automatic stabiliser in relation to house price dynamics : house prices cannot persistently rise faster than the income levels among the pool of potential purchasers. in addition, the differential ltv ratios for first - time and second - and - subsequent buyers recognises the asymmetric impact of house price increases on these different groups : whereas a rise in house prices requires extra savings to meet the deposit requirement for a first - time buyer, an incumbent house owner experiences a decline in the ltv ratio on her existing property which expands her borrowing capacity in further 2 / 5 bis central bankers'speeches housing market transactions. in similar vein, the additional ltv requirement for buy - to - let ( btl ) investors limits the feedback loop between house price rises and the conversion of increases in home equity values into borrowing capacity in the btl category. | missteps which inevitably accompanied the initial design of the programme of assistance, it worked out to bis central bankers β speeches deliver, as i have said on a previous occasion, what it said on the tin : restoring market confidence and stabilising not only the public finances but also the economy. the rest is up to us, the irish policy makers and the irish people, to complete the recovery of the economy β which has been on a persistent growth path both in terms of output and employment for the past three years β and to rebuild the economic aspects of irish society in a way which fully resonates with our shared vision and goals. it is often observed these days that key among the characteristics needed to prosper in what seems to be a rapidly changing and increasingly unpredictable global economic environment are resilience and the adaptability to take advantage of new opportunities and trends. i believe that irish resilience has been fully demonstrated in the way in which the economy has been recovering from the disaster that struck in 2008. ireland β s adaptability and openness to the opportunities that emerge in the world have been well demonstrated in the rapid and firmly founded growth of the mid - to late - 1990s β the true β celtic tiger β period. that is why i believe there are solid reasons for optimism about the future, building on the platform of restored financial stability which the eu - imf programme helped us rebuild. bis central bankers β speeches | 0.5 |
run, demographics of the elderly are a given. thus, reviewing the current social welfare framework in order to make it viable on a sustainable basis, taking into consideration the longer - term changes in demographics, is an enormous challenge. iv. conclusion when one looks back into history, the β global shifts β examined by professor eichengreen are happening continuously. i believe japan β s catching - up with the advanced economies through its post - war miracle and its ensuing transition to slow growth, as well as the current high growth of china and india, can be understood as examples of the β global shifts β ( slide 12 ). high growth cannot last forever. in concluding, i would like to emphasize that what is important here is to introduce a smooth transition from high growth to stable growth. even emerging economies which are currently enjoying high growth will likely face, in the future, the same challenges that japan is currently struggling with. for this, preventing bubbles, reviewing business models and preparing for changes in demographics are especially important. 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 bis central bankers β speeches bis central bankers β speeches | is on pace to more than double. 3 owners - equivalent rent is similarly on pace to nearly double this year. 4 sometime early next year, though, i expect to see the upward pressure on inflation from these forces to ease as future increases in new or renewed leases moderate and the full effects of monetary policy tightening make their way to housing services prices. beyond housing, i expect goods price inflation to continue to moderate as monetary policy now and going forward slows the pace of increase in aggregate demand, supply problems ease, and supply and demand come into better balance. there is some evidence that goods supply production and delivery problems tied to the pandemic are improving, with supplier delivery times and reports of items in short supply continuing to drop. in terms of service price inflation, we saw a step - down in airfares and other travel - related services last month, but i am uncertain about how these services, as well as food services, and nonmarket services prices will evolve going forward. nominal wages have been growing quickly, and i β ll be watching closely to see how wage growth evolves and feeds into inflation. the atlanta fed β s wage growth tracker hit another record in july for its 24 years of data, a 12 - month rate of 6. 7 percent wage growth. i don β t expect wage increases to ease up much unless and until there is a significant softening in the labor market. one way to anticipate future wage growth is through quit rates. most people who quit their jobs are moving to others that pay significantly better, so i take quits as one signal about where wages are headed in the near see christopher j. waller ( 2022 ), β the red hot housing market : the role of policy and implications for housing affordability, β speech delivered at the β recent fiscal and monetary policy : implications for u. s. and israeli real estate markets β conference, march 24, https : / / www. federalreserve. gov / newsevents / speech / waller20220324a. htm. tenants β rent, which rose 3. 3 percent in 2021 and has already increased another 4. 3 percent through the first seven months of 2022, is on pace to more than double this year. similarly, owner β s equivalent rent rose by 3. 8 percent in 2021 and has risen another 3. 8 percent in the first seven months of this year. - 7term. quits are near their highest level over the | 0 |
team spirit. it has not always been easy to draw the appropriate line between preserving the diversity of national traditions, cultures and institutional arrangements, which illustrate the richness of europe, and being european in the definition of the policy missions and pursuing the public interest. tommaso was a central banker by profession, but he was also an advocate of a united europe by deep personal conviction. european unification as a project which is economic in content and historically strategic. on the one hand, the creation of a single market was a process. a process that could ultimately lead to the contradiction which tommaso referred to as the β inconsistent quartet β β that free trade, free mobility of capital, a system of fixed exchange rates and autonomous national monetary policies were incompatible. one of the four would come under pressure and would have be surrendered in order to avoid inconsistency. the single currency was the way to square the circle in merging all the independent national monetary policies. one single money for one single market. tommaso saw the creation of the single currency as an ultimate integrative step, in the clearly defined policy field of monetary policy and was very aware of the responsibility given to the ecb to make this a success and a stepping stone for completing and achieving economic integration. the euro contained a strong commitment to move towards more economic integration. one of the lessons of the present crisis is precisely the necessity to not only very strictly apply the governance of the fiscal policy that was enshrined in the maastricht treaty and in the stability and growth pact, but to reinforce very significantly this governance and to enlarge it to the surveillance of competitive indicators and macropolicies. this is why i called, on behalf of the governing council of the ecb, for a quantum leap towards strengthening the institutional foundations of emu and deepening economic union. the framework for economic governance needs to take into account that the euro area must operate, de facto, as a quasi - fiscal federation, in which the college of participating governments has the responsibility of exerting a very strong surveillance on national economic and fiscal policies. tommaso has always been very profoundly convinced that it was necessary to reinforce considerably the e letter in emu in order for economic union ( eu ) to be fully commensurate to monetary union ( mu ). and the time to move is now. we need, in particular, a stronger role of eu institutions, quasi - automaticity of the surveillance process, quasi - | jean - claude trichet : interview with le figaro, frankfurter allgemeine zeitung, irish times and jornal de negocios interview with mr jean - claude trichet, president of the european central bank, by jean pierre robin ( le figaro ), benedikt fehr ( frankfurter allgemeine zeitung ), paul tansey ( irish times ) and rui jorge ( jornal de negocios ), conducted on 11 july 2008 and published on 18 july 2008. * * * 1. could you outline how you see the euro economy evolving over the short run and the implications for euro interest rates? i always said β on behalf of the governing council with all our colleagues, vitor constancio, john hurley, christian noyer and axel weber β that in order to have clear indications on what the euro area economy has been doing in the last months, we should take together the first and second quarter of 2008. whilst the first quarter was very dynamic, due to particular circumstances including the weather and its impact on construction in germany for instance, the second quarter is likely to be weak. our base line scenario is that we will have a trough in the profile of growth in the euro area in the second and third quarters of this year and, following this, a progressive return to ongoing moderate growth. i have also said clearly that the risks for growth were on the downside. amongst these risks are the influence of the ongoing very significant financial market correction, the possible further increases in, oil and commodity prices and the possible unwinding of global financial imbalances. as regards interest rates, i have nothing to add or to withdraw from what i said before on behalf of the governing council β that we trust that our decision to raise our key interest rate from 4. 0 % to 4. 25 % will contribute to achieving price stability in the medium term in line with our definition. i also mentioned that we had no further indication for our future interest rates, that we are never pre - committed and that we will do in the future what is appropriate to deliver price stability in the medium - term and to be credible in doing so, since this is essential to anchoring inflation expectations. 2. central banks, including the ecb, have been responsible for a lot of monetary growth in the recent past. to what extent are central banks to blame for the present inflation, in the euro area and elsewhere? 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demonstrate and model risk - aware behaviours, and employees at all levels who are equipped with the knowledge and tools 3 / 5 bis - central bankers'speeches to identify, assess and manage risks effectively in a fast - changing and significantly more complex operating environment. creating greater agility to meet changing business and employee needs finally, future talent strategies will need to create greater agility for institutions and individuals to respond to changing needs by embracing new norms of talent mobility and encouraging diversity in the workforce. the pandemic has shaped a significantly more fluid and mobile workforce. in response to this, many organisations are pivoting their talent strategies from'acquiring'talent, to'accessing'talent. in other words, firms are looking to alternative ways to access ready talent apart from hiring. the ability to tap into external and more diverse talent pools to meet specific skill gaps is becoming a more important part of talent strategies of firms including financial institutions. this also reflects the rise of a segment of the workforce associated with the gig economy and professional experts that are not affiliated to any single organisation. such fluid arrangements are also being leveraged to build internal capacity building and support transition. a survey conducted by capgemini reported that more than 60 % of businesses fill new jobs powered by ai and automation with fluid workers first, then gradually seek to transfer knowledge from these specialists to other full - time employees in the organisation. these strategies will have important implications for how we build the future workforce from without rather than within. such strategies can create greater flexibility for organisations to respond to changing business needs, but they also call for a fundamental re - thinking of pre - existing organisational and cultural norms. as we move forward, deepening employee engagements will become more important to enable firms to better anticipate shifting trends and inform approaches to building a future - fit workforce. it is not uncommon today to find up to four different generations coexisting in many workplaces, each with different perspectives on leadership, learning and workplace culture. recognising these differences within talent strategies will be important to successfully cultivate a future - ready workforce. closing message : in closing, i am reminded of the words of mr. colin powell, former u. s. secretary of state who said : " one of the greatest talents of all, is the talent to recognise and develop talent in others ". this lies at the heart of building a workforce fit for the future. we all have a part to play β as employers, professional development bodies | several issues pertaining to the breakdown of the internal audit function, which led to the manipulation of the rates. despite the group internal audit functions carrying out their routine audits in this area, deficiencies in the banks β systems, controls and policies were not adequately highlighted. the lessons learnt from the above cases and others clearly reinforce the key roles played by both the internal audit function and the audit committee. my view is that the strength and effectiveness of the internal audit function will influence the risk and compliance culture in an organisation. the function has to continually be refreshed such that it remains robust and effective. bis central bankers β speeches clearly, the job is now more difficult and challenging than ever, given the increased expectations by stakeholders and heightened scrutiny when things go wrong, as well as increasing obligations under the statute that place additional fiduciary responsibilities on audit committee members. i would like to share my thoughts on four matters where efforts are necessary to raise the bar on audit standards and audit quality. firstly, the audit coverage and scope should not be confined to compliance or risk - based parameters. the audit scope should be holistic, encompassing new risk areas and tail risk events that originate from the evolving operating environment and financial landscape. the process of ascertaining the audit scope must be robust, such that audits focus on higher risk areas as the company grows and evolves in its products and processes. internal auditors should be constantly challenged to think beyond the scope of the audit framework and focus on the broader picture. the so - called ability to β connect the dots β about the implications of the audit findings across the organisation is an important starting point to identify new and emerging risks. secondly, internal audit should move beyond compliance to strategic auditing and to provide value - added recommendations for the betterment of the organisation. my view is that before an organisation seeks to venture into new or higher risk areas of growth, it is imperative for the board and senior management to seek assurance from the internal audit function so that the risk and control frameworks are rigorous in identifying gaps in the system. the audit committee should identify opportunities where the internal audit function is able to add value, through consultation and advice on business process improvements. the input from the internal audit function would also be helpful to craft initiatives to embed good behavioural norms, ethical and responsible culture within the organisation. thirdly, the internal audit function must be supported by a strong quality assurance process. this requires internal auditors to be equipped with the re | 0.5 |
financial stability post brexit : risks from global debt speech given by sir jon cunliffe, deputy governor for financial stability, member of the monetary policy committee, member of the financial policy committee and member of the prudential regulation committee cfo agenda, london tuesday 7 may 2019 all speeches are available online at www. bankofengland. co. uk / speeches thank you for inviting me in january to speak today at your conference on β financial stability post brexit β. i suspect that when this subject was chosen and the invitation sent, it was assumed that brexit itself would have happened by the time of the conference. as it is, not only has brexit not occurred, but the path to it and its eventual outcome are perhaps less clear now than a few months ago. so it is perhaps worth spending a little time today on the financial stability risks that might arise from brexit. i will then go on to examine the financial stability risk environment more generally. before going further, a health warning is necessary. it cannot be repeated too often that the bank β s approach to its financial stability objective is, in one key respect, very different to its approach to its monetary stability objective. for the latter, the monetary policy committee makes the best forecast we can of the path of the economy and the path of inflation β the central case. we set out clearly and graphically the risks around those forecast, but it is the central case β what we think most likely to happen β that informs our policy decisions. for financial stability, the focus of the financial policy committee ( fpc ) is not on the central case β on what is most likely to happen ; rather it is on the risks β on what could happen even if it is not the most likely scenario. it is the risks, what could happen, that inform our policy decisions. brexit that is why our financial stability focus has been on the risks from a disorderly brexit. the bank has been working since the referendum to reduce the risks to financial stability and the risk of disruption to financial services, in the event, that the uk leaves the eu without a deal and without any transition period. this has been a pretty large task. alongside the treasury and the fca we have made sure that we will have a working legal and regulatory framework for the financial sector at the point that eu law no longer applies in the uk. over 10, 000 pages of financial sector related eu legislation has | booms gone bust : monetary policy, leverage cycles and financial crises, 1870 - 2008 β, american economic review, 102 ( 2 ) : 1029 - 61, and kaminsky and reinhart ( 1999 ), β the twin crises : the causes of banking and balance of payments problems β, american economic review, 89 : 473 - 500. all speeches are available online at www. bankofengland. co. uk / speeches between 2000 and the crisis in 2008, total global debt as a proportion of global gdp grew by over 60 percentage points, a growth rate of nearly 30 %. between 2008 and 2018 it has grown by around 25 percentage points, a growth rate over the last 10 years of just under 10 %. however, the bulk of the post crisis growth occurred in the first 5 years after the crisis as governments stepped in to offset private sector deleveraging and support the economy. since then, global debt has stabilized, growing by only 1 % in total, relative to global gdp, over the past 5 years. the aggregate growth rate is not therefore signaling an impending correction. the level, however, may well represent a significant vulnerability given that high levels of debt are associated with deeper and more persistent recessions. assessing the sustainability of this debt is more difficult. whether debt is sustainable depends on the difference between the interest rate and the growth rate of the income stream that will be used to repay the debt. the future is not known β in assessing today whether a given level of debt is sustainable, we must rely on our best forecast of future interest rates and growth. the level of debt that is sustainable in an economy is not a constant. it can change over time and indeed has changed enormously over the last 150 years. the ratio of credit to gdp in the late victorian british economy was under 20 % ( not including the financial sector ). in the mid - twentieth century it was around 60 % and by the early 1990s over 100 %. it is influenced by many factors including, very importantly, the long run real rate of interest. there is strong evidence that the long run, or trend real rate has come down materially over the past 40 years as a result of slow moving, secular changes in the supply of savings and the demand for investment. the mpc published analysis last august suggesting that the trend real rate in the uk has fallen by more than 2pp since 1990. slower population growth, increased life expectancy and slower productivity growth have all contributed to this fall | 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 | this challenge. banknotes remain the most important contact point for central banks with the public and therefore they play a key role in the reputation and public perception of the central bank. the quality of banknotes in circulation also poses a reputational risk for the central bank and in fact for the country. poor quality banknotes cannot be used by the people to pay for example their parking tickets where the pay - station will not accept poor quality banknotes. furthermore, poor quality banknotes, would lead to jamming of automatic teller machines but also increases the risk of counterfeiting. these are but three examples of why it is important that the quality of banknotes in circulation should be efficiently and effectively monitored and controlled by the central bank, irrespective of the degree to which off - sorting may have been privatised within a particular country. the type of substrate to be used remains a very topical subject within the industry. central banks from both large and small economies have challenged the long accepted wisdom over security and the longevity of banknotes. the longer a banknote lasts, the more value the bis central bankers β speeches central bank will obtain from that particular note order. given the size of orders, even a small improvement in percentage terms can mean a substantial improvement in profitability. during the conference we will be debating this at length. among our speakers, we have the bank of canada, they recently changed their notes from paper to polymer and will share their experiences with us. the demand for cash is increasing and so is the cost of transporting and processing the cash. central banks increasingly recognise the need to revisit nationwide arrangements for distribution and consider the role of the private sector ; however, outsourcing brings with it its own risks. whether sorting is carried out in - house or outsourced, central banks are under increasing pressure to improve efficiency. during the course of the conference some of the presenters will focus on the different cash management systems employed by central banks. another challenge, facing the industry, is the forecasting of the demand banknotes. it seems that there is no simple method to do this calculation. in south africa, as in many other countries, the demand for currency is showing an increasing trend. in 2012, the demand for currency increased by 11 per cent with approximately r110 billion ( us $ 10. 6 billion ) worth of notes in circulation as at the end of the year. central banks, therefore, are faced with challenges to either reduce the volume of cash produced | 1 |
return the price level to what was expected by people who signed long - term contracts, such as debt contracts, before the deflation began. however, such a strategy is inappropriate for the united states in current circumstances. inflation expectations appear reasonably well - anchored, and both inflation expectations and actual inflation remain within a range consistent with price stability. in this context, raising the inflation objective would likely entail much greater costs than benefits. inflation would be higher and probably more volatile under such a policy, undermining confidence and the ability of firms and households to make longer - term plans, while squandering the fed β s hardwon inflation credibility. inflation expectations would also likely become significantly less stable, and risk premiums in asset markets β including inflation risk premiums β would rise. the combination of increased uncertainty for households and businesses, higher risk premiums in financial markets, and the potential for destabilizing movements in commodity and currency markets would likely overwhelm any benefits arising from this strategy. each of the tools that the fomc has available to provide further policy accommodation β including longer - term securities asset purchases, changes in communication, and reducing the ioer rate β has benefits and drawbacks, which must be appropriately balanced. under what conditions would the fomc make further use of these or related policy tools? at this juncture, the committee has not agreed on specific criteria or triggers for further action, but i can make two general observations. first, the fomc will strongly resist deviations from price stability in the downward direction. falling into deflation is not a significant risk for the united states at this time, but that is true in part because the public understands that the federal reserve will be vigilant and proactive in addressing significant further disinflation. it is worthwhile to note that, if deflation risks were to increase, the benefit - cost tradeoffs of some of our policy tools could become significantly more favorable. second, regardless of the risks of deflation, the fomc will do all that it can to ensure continuation of the economic recovery. consistent with our mandate, the federal reserve is committed to promoting growth in employment and reducing resource slack more generally. because a further significant weakening in the economic outlook would likely be associated with further disinflation, in the current environment there is little or no potential conflict between the goals of supporting growth and employment and of maintaining price stability. conclusion this morning i have reviewed the outlook, the | federal reserve β s response, and its policy options for the future should the recovery falter or inflation decline further. in sum, the pace of recovery in output and employment has slowed somewhat in recent months, in part because of slower - than - expected growth in consumer spending, as well as continued weakness in residential and non - residential construction. despite this recent slowing, however, it is reasonable to expect some pickup in growth in 2011 and in subsequent years. broad financial conditions, including monetary policy, are supportive of growth, and banks appear to have become somewhat more willing to lend. importantly, households may have made more progress than we had earlier thought in repairing their balance sheets, allowing them more flexibility to increase their spending as conditions improve. and as the expansion strengthens, firms should become more willing to hire. inflation should remain subdued for some time, with low risks of either a significant increase or decrease from current levels. although what i have just described is, i believe, the most plausible outcome, macroeconomic projections are inherently uncertain, and the economy remains vulnerable to unexpected developments. the federal reserve is already supporting the economic recovery by maintaining an extraordinarily accommodative monetary policy, using multiple tools. should further action prove necessary, policy options are available to provide additional stimulus. any deployment of these options requires a careful comparison of benefit and cost. however, the committee will certainly use its tools as needed to maintain price stability β avoiding excessive inflation or further disinflation β and to promote the continuation of the economic recovery. as i said at the beginning, we have come a long way, but there is still some way to travel. together with other economic policymakers and the private sector, the federal reserve remains committed to playing its part to help the u. s. economy return to sustained, noninflationary growth. | 1 |
the fox and the hedgehog : preparing in a world of high risk and high uncertainty speech given by charlotte gerken, executive director, insurance supervision insuranceerm risk and capital emea virtual conference 3 december 2020 i would like to thank alan sheppard, zachary morris - dyer, gareth truran, anthony brown, robin swain, manuel sales, olga filipenko and sarah o β sullivan for their assistance preparing these remarks. all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice good morning. thank you to insurance erm for inviting me to speak at your conference. when i told a colleague i had been asked to give a talk on responses to risk, he told me : β the fox knows many things ; the hedgehog knows one important thing. β i was curious to learn more : this idea came from a fragment of text by an ancient greek poet archilochus of paros ; it inspired isaiah berlin β s 1953 essay on tolstoy β s view of history ; and has been used in jim collins β s book from good to great. what it boils down to is a way of thinking, one that guides how you prepare for and respond to risk : the fox looking at every eventuality ; the hedgehog β s one big idea being to curl into a ball and wait for the peril to pass. i β m left with the image of the fox hopping about and getting ever more frustrated as it schemes how to get at the hedgehog. today i will take a look at some of the tactical steps we have taken around the financial markets and macro - economic impact of covid - 19 on insurers. and go on to more strategic responses to this and other structural changes, focussing on developments in stress testing and scenario analysis. there have been times this year when it β s been hard to resist the temptation to react to unfolding events with the hedgehog β s one big idea. unfortunately, there have been few places where curling up in a ball would not have left you in the path of a massive juggernaut. deploying our fox brain we have learned many things and responded tactically to the varying ways the financial markets, macro - economic, and business operational impacts from covid - 19 are affecting us. for example, ( 1 ) in the early phases of the pandemic in the uk, the prudential regulation authority ( pra | : the cpmi received multiple responses to its october 2021 call for ideas on expanding payment - versus - payment for fx transactions. these responses have helped inform a consultative report that will be published in the summer. building block 10 : the reserve bank of australia is working towards expanding access to domestic payment systems for non - bank payment service providers ( psps ). [ 10 ] and the central bank of india has reviewed access criteria in 2021 and expanded access to certain categories of non - bank payment system operators. building block 12 : the us fed has extended fedwire operating hours in 2021, it is now operational for 22 hours per day, 5 days per week. [ 12 ] the european central bank is planning to extend operating hours as part of the go - live of the consolidation project in november 2022. building block 13 : in may 2022 sveriges riksbank and tips have established a connection with the goal to use tips services to settle non - euro currencies in central bank money. building block 14 : the european central bank is migrating to iso in real - time gross settlement ( rtgs ) payments in november 2022, [ 14 ] with the bank of japan having already migrated to iso and completing version upgrade in 2025. to support further progress, in may 2022, the cpmi published reports on expanding access and extending operating hours. [ 15 ] these relate to two foundational building blocks that can enable the progress of many other building blocks of the roadmap. today i want to discuss why these two reports are critical and how central banks, industry and public authorities can play a key part in advancing the roadmap. how improving direct access can enhance cross - border payments the building block 10 report assesses the benefits and risks of expanding access to domestic payment systems in particular rtgs systems. expanded access could enable non - bank psps, financial market infrastructures ( fmis ) and foreign banks to gain direct access to the payment systems they rely on to provide payment services to end - users, without relying on an intermediary ( who maybe also be a competitor ). according to a cpmi survey, approximately 30 % of the payment systems allow non - bank psps and fmis direct access [ 16 ] and 28 % reported have made significant changes to their direct access policies since 2010. and despite the fact that the 61 % of payment systems that are considering to expand access within the next 5 years, only 7 % have concrete plans to do so. expanding | 0.5 |
remarks by carolyn rogers senior deputy governor manitoba chambers of commerce march 9, 2023 winnipeg, manitoba economic progress report : thinking globally, acting locally introduction good afternoon, and thank you to the manitoba chambers of commerce and the associates of the asper school of business for supporting this event and giving me the opportunity to speak with you today. and thanks to all of you for choosing to spend your lunch hour with me. it β s a particular pleasure for me to be in winnipeg. i still consider this city β and this province β to be home. i was born here, grew up here, attended university here and started my career here. and i still have a lot of family, friends and former colleagues in manitoba, so this feels a bit like a homecoming for me. yesterday was international women β s day, and i had the opportunity to meet with an inspiring group of women leaders from across this province. today i am looking forward to hearing from you. the bank regularly surveys canadian consumers and businesses as part of our work. but having the chance to hear from you directly about how your communities and businesses are navigating economic decisions day - to - day is very important to us. we know the decisions we make have a real impact on people. and i do plan to spend some time discussing the bank β s decision yesterday to hold interest rates steady and letting you in on our thinking as we made that decision. but let β s start by setting the scene. i β ll begin with inflation because that β s what we target. we can all agree that it β s still too high. it has started to come down, but, at 5. 9 %, we still have a way to go to get back to our 2 % target. our monetary policy is working to do just that. increases in our policy interest rate are starting to slow demand, giving supply time to catch up and taking some of the pressure off prices. i would like to thank subrata sarker and fares bounajm for their help in preparing this speech. not for publication before march 9, 2023 1 : 40 p. m. eastern time - 2we know that adjusting to higher interest rates has been hard for many canadians. our policy rate is at levels not seen for 15 years. we also know that many canadians are asking how making their mortgage more expensive while they β re dealing with higher grocery bills will eventually lower inflation and make their lives easier. we β re also often asked how raising interest rates will | investors will be acting in an investor centric way. a strong investor culture, based on establishing trust and confidence with investors could be what sets a firm apart in an increasingly digital investment environment. a prevailing theme is also the impact of different fee arrangements for retail investors as compared with the more favourable terms offered to institutional investors. of course, there can be underpinning reasons for this, such as economies of scale and so on. notwithstanding this, a firm which has strong investor centric culture, will be challenging themselves on such fee arrangements to assess whether they are justifiable and appropriate. building an effective culture for retail investors understanding and addressing these challenges will require action across the board by firms, industry representatives, policy makers and regulators. without action to address these issues, we risk increasing disengagement from retail investors with traditional capital markets. we know that the trust of investors is hard earned, and easily lost. as we seek to encourage greater retail participation in capital markets it will be important that all of us play our role in supporting that trust. before i conclude, i would like to spend a few minutes discussing the challenge of how to navigate the changing and evolving environment in a way that maintains and builds trust to the extent that new retail investors may be attracted to engage and invest. as you might expect, for regulators and public policy makers, this is primarily about better investor outcomes, ensuring their interests are upheld, and client assets are protected. high quality regulation plays a vital role in supporting well - functioning markets. it ensures that investors are protected and that risks to financial stability are identified and mitigated. our interventions are intended to : promote and safeguard the integrity of the funds sector and maintain confidence in the financial system more generally ; and identify and mitigate systemic risks which may arise. high quality regulation plays a vital role in supporting well - functioning capital markets. there is a direct link between effective regulation and ultimately better investor outcomes. regulatory intervention should : support innovation and product development to meet the changing needs of investors and the broader evolution of the global financial sector ; and 4 / 6 bis - central bankers'speeches be appropriately calibrated in order to achieve the right outcomes without being unduly onerous on market participants. ultimately, any inefficiencies that may be created will be borne either by the end investors or users of the financial service. at the start of my remarks today, i noted the similarity of purpose that both the international investment funds association and iosco have in | 0 |
our gratitude to the minister of finance and the national treasury for their support and cooperation. let me highlight some of the salient events in the extensive process leading up to this significant event. the design and development of the banknotes, even though these are only upgraded banknotes, has been a complex and intricate task. our team has spent a number of years on this endeavour. we had to obtain the services of international companies in the determination of the changes, both for the design and security features on the banknotes, as well as the supply of banknote paper, inks and security threads. the changes to the banknotes have been widely consulted on with the key stakeholders. consultations have taken place with the department of arts and culture on the coat of arms, with the pan south african language board ( pansalb ) on the language changes, with the national council for the blind on the changes with regards to the features for the blind or partially sighted and with various international and local service providers and the banking industry on the utilisation of the security features in processing and vending machines that have become part of our daily lives. today is a momentous day as the bank unveils the upgraded banknotes to the public. simultaneously, today we launch the communication campaign to inform and educate the public on the changes to the design and security features of south africa β s banknotes. the objective of the communication campaign is not only to inform and educate the public on the security features, but also to get the public to habitually examine their banknotes to ensure that they have good money. i trust that our key partners in the private and public sectors will play a significant role in ensuring that their constituencies know about the new features and encourage them to check the features on their banknotes. we trust that the media will also play its rightful role in informing and educating the public and in so doing protecting the public and ensuring that we give no quarter to criminals should they attempt to counterfeit our currency. all five denominations of the upgraded banknotes will go into circulation on 1 february 2005. the new banknotes will be issued gradually over time. we must therefore highlight that the upgraded banknotes and the current banknotes will circulate simultaneously. it is important to note that the sa reserve bank has not β demonetised β any of its currency. this means we can all confidently continue to use all south african money, even if it is part of a previous series. we encourage all south africans to | much more risk that it could reasonably manage β and the rest, is history. while the global financial crisis has inspired much conversation about ethics and culture, these issues are by no means new. throughout the 2000s, an estimated 45 million payment protection insurance ( ppi ) policies worth around Β£44 billion were widely mis - sold to customers in the uk. many people did not even know that they were buying a ppi policy. in one example, a ppi policy bundled with a mortgage β cost the customer more than Β£20, 000 over the term of the loan, even though the maximum amount claimable was only Β£31, 000! the fsa reported that this abuse stemmed from β a culture in banks and other firms that focussed on profit over customer outcomes β. closer to our region, we saw in 2001 the unexpected failure of the australian hih insurance group, which experienced estimated losses totalling aud 5. 3 billion. this was attributed in part to a culture where the board was β unduly deferential β to management, and staff simply did not question leadership decisions. in fact, instances of failures in professionalism and integrity do not seem to have waned since the global financial crisis. according to the boston consulting group, banks have paid fines amounting to usd 321 billion to regulators around globe since the crisis through the end of 2016. instances of misconduct range widely β from the well - known rigging of libor and euribor rates, to the more recently uncovered case of wells fargo, where over 2 million fake accounts were 1 / 5 bis central bankers'speeches opened under a senior management who fostered β an atmosphere that prompted low quality sales and improper and unethical behaviour β. our financial industry is not invulnerable to the ethical challenge. in the 1980s and 90s, we had cases of malaysian banks that suffered significant losses arising from imprudent lending under ethically questionable decisions by top management. in the past two years, more than rm 100 million in fines were meted out for breaches under the purview of bank negara malaysia and the securities commission malaysia. a study led by the university of malaya and the aicb in 2014 revealed that 43 % of employees within the malaysian conventional banking sector β had observed or had first - hand knowledge of wrongdoing in the workplace β. i believe that the survey findings which the fspb will present later today will reveal that not enough has improved since then. it is crucial | 0 |
p. finaldi russo, g. guazzarotti and v. nigro, β first - time corporate bond issuers in italy β, banca d β italia, questioni di economia e finanza, 269, 2015 ; n. branzoli and g. guazzarotti, β il mercato dei private placement per il finanziamento delle imprese β, banca d β italia, questioni di economia e finanza ( occasional papers ), 262, 2015. developing relations with investors whose needs are very different from those of a traditional bank. all this is already within the reach of many mediumsized and large firms. this needs to extend to other companies too. institutional investors on the supply side, the first requirement of a thriving economy is to have a large number of active institutional investors : insurance companies, pension funds and other asset management entities involved in managing savings, which facilitate the flow of resources to innovative firms with high growth potential. in italy, the share of managed assets in households β total financial assets remains below the average for euro - area and english - speaking countries, despite strong growth in recent years ( in 2016 the total volume managed by institutional investors exceeded β¬1. 4 trillion and reached 85 per cent as a proportion of gdp ). more importantly, only a small share of these resources currently flow into the productive system. institutional investors hold just over one tenth of corporate bonds. in france, where the capital market is more developed, the share is over 40 per cent. 8 and that is in a context where total bond issues are at much lower levels than in italy. investors are certainly deterred by the limited development of pension funds and of intermediaries specializing in the placement and underwriting of corporate debt instruments, such as private debt funds, but there are also more wide - ranging reasons. let β s look at the insurance sector. insurers β investments to cover technical reserves focus on italian government securities, with little appetite for corporate bonds, much less equity. so far, insurance companies have m. accornero, p. finaldi russo, g. guazzarotti and v. nigro, β the italian corporate bond market : missing investors or missing issuers? β, banca d β italia, forthcoming. shown limited interest in the legislative and regulatory changes made to encourage investment in productive firms. prudential regulation on own funds obviously influences this approach. as we know, | calculated as the ratio between debt and debt plus net capital ). this reduction has affected firms of all sizes. in large firms ( those with more than 250 employees or with assets or turnover above β¬50 million ) this was mostly due to an increase in net capital, thanks to the positive effects of the recovery, which has favoured both higher market value for capital and the reinvestment of profits in firms. the allowance for corporate equity ( ace ), a measure enacted in 2012 which finally gave risk capital and debt the same tax treatment, also played a part. 2 however, the weakening of this measure as of this year will greatly limit its effects going forward. leverage has decreased in the other size classes too, though mainly due to the decline in bank loans : many small firms, already greatly in debt, have left the market or found it difficult to renew their credit lines. see i. visco, address by the governor of the bank of italy, italian banking association, annual meeting, rome, 12 july 2017. on the effects of the ace, see n. branzoli and a. caiumi, β tax incentives and financial stability β, banca d β italia, questioni di economia e finanza ( occasional papers ), forthcoming. recourse to the stock market has increased, especially in recent years. between 2014 and 2016 over 60 firms were quoted on the stock exchange, mainly on the alternative investment market ( aim ), a market segment with lower entry costs. in the same period, investments by private equity and venture capital firms in risk capital returned to pre - crisis levels of around β¬5 billion a year. despite the positive contribution from various public schemes, such as the italian investment fund and the business register for innovative start - ups, the share of investment in start - ups or in high - growth firms is still modest by international standards : in 2016 it stood at 15 per cent, against 23 per cent in germany and almost 40 per cent in france and spain. during the crisis, not only did the relative weight of debt and risk capital change, but so did the composition of firms β sources of debt, with a growth in bonds to the detriment of bank lending. since 2011 the share of bonds in overall financial debt has risen by 5 percentage points to 12 per cent ; that of loans granted by italian banks has fallen in equal measure to 61 per cent. during the most acute phases of the credit restriction triggered by the global financial crisis and then by | 1 |
governors of the federal reserve system, federal open market committee reaffirms its " " statement on longer - run goals and monetary policy strategy, january 25, 2022. 2ruchi avtar, rajashri chakrabarti, and maxim pinkovskiy, " was the 2021 - 22 rise in inflation equitable? " federal reserve bank of new york liberty street economics, june 20, 2022. 3 federal reserve bank of new york, global supply chain pressure index. 4 board of governors of the federal reserve system, federal reserve issues fomc statement, september 21, 2022. 5 board of governors of the federal reserve system, federal reserve board and federal open market committee release economic projections from the september 2021 fomc meeting, september 21, 2022. 6 board of governors of the federal reserve system, plans for reducing the size of the federal reserve's balance sheet, may 4, 2022. 7 board of governors of the federal reserve system, federal reserve issues fomc statement of longer - run goals and policy strategy, january 25, 2012. 8 federal reserve bank of new york, survey of consumer expectations. 4 / 5 bis - central bankers'speeches 5 / 5 bis - central bankers'speeches | of solution to this is to create a more diversified and contestable financing mix, such that if banks finance becomes too expensive or scarce, non - bank finance can efficiently substitute for it. this is what the ongoing agenda to deepen and integrate capital markets in europe aims to achieve β the so - called capital markets union. non - banks such a private equity investors or institutional investors can also play an important role in filling financing gaps, especially for the latter in long - dated lending such as infrastructure that matches their liability profile. but we also know that for certain types of lending that are the preserve of banks, in particular sme financing, asymmetric information problems and high costs of monitoring means banks cannot easily be replaced by non - banks. and perhaps even more importantly, such lending cannot quickly be replaced by other banks, as exit from the market tends to destroy the relationship networks β or β soft information β β that is crucial for small business lending. 3 in this way, exit can in fact create a form of hysteresis in the banking sector. what this shows is that, as policymakers, we cannot be agnostic as to how banks adapt to the current environment. we need to stay alert to the fact that actions by banks that are rational at the microeconomic level can create negative externalities at the macroeconomic level β analogous to the β fire sales β problem during financial crises. 4 and where those externalities risk becoming sufficiently large, there is a justification for policy actions. in my view there are two main areas today where this applies : first, ensuring that banks retain the incentives to lend in markets where to all intents and purposes they are irreplaceable, namely for smes ; and second, ensuring that they have capacity to do so. ensuring that banks β retain incentives to lend ensuring that banks retain the incentives to provide an elastic supply of credit to smes involves a variety of issues, but the priority in the current environment is addressing the factors that could drive unwanted adjustment in the sector : in particular, the cyclical, legacy and regulatory factors i described above. cyclical factors matter for banks β incentives because the longer weak demand conditions persist, the greater the risk that banks will shrink their balance sheets more than is necessary. thus, a stronger recovery with stronger credit demand is a key part of repairing the bank lending channel. achieving this means economic policies must do their utmost to bring the economy back to potential as quickly as possible, by strengthening both supply capacity and | 0 |
my view, however, the " dutch " model has evident advantages, especially given the high degree of concentration of our banking system. in our country, banking supervision, monetary policy and payments are literally accommodated under one roof. i consider this essential, because of the common ground between the three areas and the synergy benefits for the information supply. the benefits brought by the combination of the said task areas are manifest not only in good times, but also in bad times. in the event of a crisis, adequate and rapid action based on the latest information is imperative. the way in which the key tasks are organised at the nederlandsche bank enhances the quality of the decision - making process. this was once more made clear by the tragic event in the united states. a final word central banks play a pivotal role in bringing about financial stability. there can be no stability without confidence. confidence in the value and authenticity of money ; confidence, also, in the solvency and integrity of the financial institutions to which we entrust our money ; confidence in the adequate operation of the financial infrastructure ; and, confidence in the independence and expertise of the monetary and supervisory authorities. confidence is not gained overnight, but takes time to grow because, to be trusted, the guardian of stability requires a track record. the bank of russia is a young central bank. it was founded in 1990 and, just like the ecb, is still in the middle of building up such as track record. i am convinced that the mutual contacts and exchange of ideas during this forum will contribute to this process. | responsibility of the national authorities, the introduction of emu has hardly had consequences for this task. however, the financial world and, consequently, supervision are really in a state of flux. think, for example, of the ongoing process of concentration and internationalisation. also the dividing lines between the various kinds of institution are fading as financial conglomerates are formed. the products and services offered by these conglomerates are growing increasingly complex. in view of the attendant risks and uncertainties, today β s consumers must be better and more extensively informed than they used to be in the past. the developments i just sketched call for a new supervisory approach in the netherlands. recently, the three supervisory authorities, the securities board of the netherlands, the pensions and insurance supervisory authority of the netherlands and the nederlandsche bank, submitted a proposal to the minister of finance regarding an adjustment of the current supervisory practice to the changed circumstances. to be precise, they proposed that supervision should be split up into behavioural supervision and prudential supervision. in the situation as envisaged, the securities board of the netherlands was to deal with behavioural supervision, including customer protection, while prudential supervision would be the domain of the nederlandsche bank and the pensions and insurance supervisory authority of the netherlands. in addition, the nederlandsche bank would continue to be responsible for the supervision of the system, meaning that it would continue to promote the stability of the financial system. why national supervisors? the question regularly arises whether we should not be working towards a single european prudential supervisor. one important argument in favour of national supervision is that national supervisors maintain close relations with individual institutions and financial markets in their countries. they are better placed to interpret information and identify and deal with problems swiftly and effectively than a single supranational supervisor would be. this helps the decision - making process. of course, the ongoing internationalisation of the financial sector does have implications for supervision. that is why supervisors are continuously consulting on an international level about harmonisation of the rules and a level playing field. besides, the nederlandsche bank has exchanged so - termed memoranda of understanding with supervisors in a number of countries. synergy benefits the three key tasks of the nederlandsche bank, which i just discussed, do not stand alone, but interact. in each of the areas of activities, the nederlandsche bank has a key role. i β m aware that this isn β t the case in all countries. in | 1 |
differences of opinion about the appropriate definition of price stability or how quickly to return to the target inflation rate when unanticipated events cause a deviation from the target. more importantly, with a common currency, individual countries can no longer benefit from having their national currency operate as a buffer in the event of an economic shock. take the case of a sharp rise in world energy prices. in this instance, an energy - producing country would experience rising incomes, expansionary demand pressures, and perhaps increased capital inflows. countries that are heavy users of energy would experience the opposite effects. exchange rate movements can help smooth the economic adjustment to such a shock, through a rise in the currency of the energy - producing country and a decline in the currency of the energyimporting country. where exchange rate movements are not an option, as within the current euro area, greater price and wage flexibility or greater worker and capital mobility between national economies will be needed in response to the shock. otherwise, the adjustment will be more painful and costly, involving greater fluctuations in national output and employment. europe is still characterized by significant wage and price rigidities and by low worker mobility, which could make the adjustment to shocks more difficult. evidently, the hope is that participation in the currency union will act as a catalyst for action to reduce or eliminate these rigidities. the economic case for a common currency in europe rests mainly on a judgment that buffering differential shocks in the partner countries will be a less important consideration than the benefits from lower transactions costs and from the greater economic certainty because of reduced currency risk. this presumes that the economic structures of these countries are sufficiently alike that any shocks will be felt by all of them at roughly the same time and to a similar degree. a good number of the euro countries probably fall into this category. those that do not may find themselves having to adopt measures to increase price and wage flexibility, as well as encourage worker and capital mobility, to take the place of adjustments in the exchange rate. what are the implications and relevance of the european currency model for canada? canada β s trade links with europe are relatively modest. only 4 % of our exports go to euroland countries and about 7 % of our imports come from there. so the direct economic effects on canada from any developments in europe related to the move to a common currency are likely to be rather limited, at least in the short run. of course, should the new monetary union lead to changes in world trade and finance | tiff macklem : opening statement before the standing senate committee on banking, commerce and the economy opening statement by mr tiff macklem, governor of the bank of canada, before the standing senate committee on banking, commerce and the economy, ottawa, ontario, 1 may 2024. * * * good afternoon. i'm pleased to be here with senior deputy governor carolyn rogers to discuss our recent policy announcement and the bank of canada's monetary policy report. in april, we maintained our policy interest rate at 5 % and published a revised outlook for the canadian economy. we had three key messages. first, monetary policy is working. total consumer price index ( cpi ) and core inflation have eased further in recent months, and we expect inflation to continue to move closer to the 2 % target this year. second, growth in the economy looks to be picking up. we expect gdp growth to be solid this year and to strengthen further in 2025. third, as we consider how much longer to hold the policy rate at the current level, we're looking for evidence that the recent further easing in underlying inflation will be sustained. before taking your questions, let me take a moment to discuss recent economic data and the outlook for growth and inflation. in canada, growth stalled in the second half of last year and the economy moved into excess supply. the labour market also cooled from very overheated levels. with employment growing more slowly than the working - age population, the unemployment rate has risen gradually over the last year to 6. 1 % in march. there are also some signs that wage pressures are beginning to ease. economic growth is forecast to strengthen in 2024. strong population growth is increasing consumer demand as well as the supply of workers, and spending by households is forecast to recover through the year. spending by governments also contributes to growth, and us strength supports canadian exports. overall, we forecast gdp growth in canada of 1. 5 % this year and about 2 % in 2025 and 2026. the strengthening economy will gradually absorb excess supply through 2025 and into 2026. cpi inflation was 2. 9 % in march, and price increases are now slowing across most major categories. however, shelter cost inflation is still very high and remains the biggest contribution to overall inflation. 1 / 2 bis - central bankers'speeches looking ahead, we expect core inflation to continue to ease gradually. the more timely three - month rates of core inflation are well below the 12 - month rates, suggesting | 0.5 |
an african vision for sustainable finance dr. patrick njoroge ( 822 words ) on september 22, 2019, on the eve of the united nations ( un ) climate action summit, the un launched the principles for responsible banking, with 130 banks collectively holding usd 47 trillion in assets or one third of the global banking sector signed up. in these principles, the banks commit to strategically align their business with the goals of the paris agreement on climate change and the sustainable development goals ( sdgs ) and massively scale up their contribution to the achievement of both. it is gratifying to note the strong presence of african banks, including kcb bank, in the list of founding signatories to implement the principles. sustainable finance has gained traction particularly after the global financial crisis in 20072008. the crisis was in part fuelled by the short termism of the global financial sector. the short - term drive for profits trumped more long term societal good. sustainable finance takes a long term view and integrates environmental, social and governance criteria in business and investment decisions for the benefit of customers and society at large. green finance is a critical component of sustainable finance and refers to raising capital and financial investments into companies, services, products and projects that accelerate the development of an environment friendly and climate - resilient economy. sdg 8 captures the essence of sustainability as it seeks β to promote sustained, inclusive and sustainable growth, full and productive employment and decent work for all. β in particular, sdg 8 emphasizes the strengthening of the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all. globally, about usd 5 - 7 trillion per year is required to implement the sdgs with developing countries facing an annual investment gap of usd 2. 5 trillion in areas such as infrastructure, water and sanitation and agriculture. the bridging of this funding gap will require global partnerships, deepening of financial and capital markets and leveraging on innovation. africa has not been left behind in the sustainable finance agenda, but much more remains to be done. africa contributes least to global pollution but is impacted the most. for instance, it is estimated that africa is responsible for only 4 percent of global greenhouse gas emissions, yet 65 percent of the population of the continent is considered to be directly impacted by climate change. african countries akin to other developing countries globally also face a significant funding gap in meeting the sdgs. the need for sustainable finance is therefore critical and immediate for african countries | sabine lautenschlager : taming the fire statement by ms sabine lautenschlager, member of the executive board of the european central bank and vice - chair of the supervisory board of the single supervisory mechanism, at the credit risk 2017 forum, vienna, 23 march 2017. * * * theodore roosevelt is supposed to have said : β risk is like fire : if controlled it will help us ; if uncontrolled it will rise up and destroy us β. i think that describes quite well the modern financial world and its risks. managing financial risks is a bit like controlling a fire. it β s the job of chief risk officers, the cros, to constantly remind decision - makers about the β fire safety rules β. the recent financial crisis showed how important that job is. it β s a job that requires cros to be steadfast and to speak unpleasant truths from time to time β just like banking supervisors have to do. it β s regulation that helps us to do our job. regulation seeks to control risks as well. following the devastating β fire β of the financial crisis, we have overhauled the rules for banks. we have mended them, strengthened them, and expanded them. that was the correct and necessary thing to do. but now it is time to finish the job. more than eight years after the crisis, banks need regulatory certainty. but the job needs be finished at the global level. the financial system is global and so should be the rules that govern it. you cannot enjoy fresh air on your patch of land while there is a fire raging on your neighbour β s β sooner or later the wind will blow smoke and sparks over the fence. against that backdrop, i welcome the fact that, last weekend, the g20 have confirmed their support for the work to finalise basel iii. but there are still some voices who question the general extent of the regulation. to be crystal clear : it would be wrong to soften the rules. this would just prepare the ground for the next crisis. i cannot deny, though, that rules put a burden on those who have to comply β the banks, that is. in that regard, it is often claimed that the burden on banks translates into a burden on the economy. it β s said that banks could no longer pursue their traditional business because the capital requirements are too strict. it β s also said that new business models would not make economic sense because of the regulatory cost. all that would hurt | 0 |
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