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question of β access. β direct intervention to build financially inclusive system is critical as one recognizes fully ( i ) financial markets failures and imperfections such as information asymmetries, lack of sensitivity to gender and redistributive dimensions of resources and wealth and high transaction costs etc. ; ( ii ) high price and non - price barriers such as lack of credit history and collateral and connection ; and ( iii ) other constraints such as lack of literacy and entrepreneurial skills, etc. 4. over the years, there has been substantive development in the architecture and thinking on financial inclusion. while there is no β one - size fits all β financial inclusion strategy or approach but it is important to recognize few core or necessary and sufficient conditions that are needed to maximize the benefits derived from such strategy. 5. at the outset, it is critical to understand the size and dimension of financial exclusion. despite complexities of estimation, a recent study 3 concluded that average level of financial an alternative definition of poverty ( $ 2 a day ) gives an estimate of 2 billion poor in asia. however, for monitoring progress of mdgs, world bank uses the $ 1 / day definition as it reflects extreme poverty. the world bank, global monitoring report, 2007. beck, thorsten, asli demirgc - kunt, and maria soledad martinez peria ( 2007 ) " reaching out : access to and use of banking services across countries. " journal of financial economics 85 ( 1 ). exclusion, as measured by the percentage of the adult population with access to an account with a financial intermediary, in poor developing countries is as high as the level of financial inclusion in advanced industrialized countries where it is rare not to have at least some access to basic financial services in remote parts. in developing countries, level of financial exclusion is steepest in sub - saharan africa ( a reflection of extreme poverty and difficult economic condition ). situation in asia, present a mixed picture. south asia ( average access rate being 31 percent ) lags behind in expanding financial access relative to south east asia ( average access rate being 47 percent ). advanced transition economies of central europe have progressed well in rebuilding access. there has been relatively little progress made in central and south america despite a relatively robust economic base, particularly among larger countries. 6. to design strategy and policies, there is further need to understand what the reasons for exclusion are? is it voluntary or pure denial of services and what the barriers of access to finance are | only about one fifth of countries will achieve the target increase ; among low income countries ( lics ), only about one - tenth will make it. in overall terms, east asia will meet the goals as it has countries such as china and thailand, which have already made it. at the other end cambodia and png are seriously off track. in general, middle income countries ( mics ) are much better positioned to achieve the mdgs than the low income countries ( lics ). the mics will still have 280 million people living on less than $ 1 / day and 870 million people living less than $ 2 / day. there are 59 top and high priority countries identified by undp where failed progress and terribly low starting levels undermine many of the goals. now i turn to the question : what needs to be done in the next ten years i. e. until 2015 by different partners in this business. the achievement of the development goals will require rising above current trends and accelerating the pace of development and doing so swiftly. there is a need to scale up the action and there are three ways to do so. 1 ) accelerating and deepening reforms to achieve stronger growth, 2 ) empowering and investing in poor people - stepping up action to improve the delivery of services affecting hd, 3 ) matching stronger developing countries efforts to spur growth and improve service delivery to poor people with stronger support from developed countries. what is required by each of the partners in this compact is briefly outlined in the following paragraphs. developing countries : developing country policies have improved most notably in asia but also in many countries in sub - saharan africa. but public sector governance remains the weakest area of the reform agenda in most countries. institutional dimensions of reform are critical both for good macroeconomic management as well as delivery of services. a ) economic and financial policies the developing countries should continue to pursue ; β’ prudent fiscal management and sound public financial management for reducing vulnerability to crises. β’ outward - oriented strategies by reducing tariff and non - tariff barriers and trade liberalization. β’ deregulation and strengthening institutions - especially property rights, rule of law. β’ implement stronger and deeper financial sector reforms to channel savings to productive uses and broaden access to finance. b ) human development β’ allocate more resources and ensure more effective use of these resources for accelerating hd. they can increase the impact of existing spending by proper targeting of subsidies. β’ put in place well targeted social safety nets that protect poor and vulnerable. β’ em | 0.5 |
anita angelovska - bezoska : macedonia β s current macroeconomic landscape and main challenges ahead speech by ms anita angelovska - bezoska, vice - governor of the national bank of the republic of macedonia, at the economic and financial dialogue on the economic reforms programs on western balkan and turkey, brussels, 12 may 2015. * * * dear ministers, dear representatives of the european commission, european central bank and eurostat, at the beginning, let me express our gratitude to the european central bank, european commission and eurostat for their assessment of our economic reforms program for the period 2015 β 2017. let me mention that we appreciate very much this dialogue with the eu institutions and the overall feedback on our policies that we have received during the process and we believe that it is highly beneficial regarding our preparedness for joining the eu. at this point, i would like to address several important issues related to the current macroeconomic landscape of the macedonian economy, as well as the main challenges ahead. the growth momentum was kept in 2014, with the real gdp growth accelerating to 3. 8 % p. a. as the external environment is not sufficiently β growth - conducive β, the strong performance of the domestic economy is explained by country - specific factors. firstly, it is a reflection of the positive fundamental shifts, with growing foreign investments, mainly in the tradable sector. they are helping the economy to gradually increase its resilience, by significantly increasing the diversification of the production and the export structure of the economy, but also by yielding positive second - round effects, improving the labor market conditions, increasing the know - how, integrating domestic suppliers in the production process. secondly, the economy has been impacted favorably by the fiscal stimulus in the infrastructure, an area continuously being pinpointed as a weak spot, when it comes to the structural competitiveness. hence, albeit the fiscal impulse does have positive short run effects on growth β bridging over the current β anemic external environment β, it also affects the long - term potential of the economy. the solid economic recovery is significantly improving the labor market conditions, increasing the labor demand, reducing the unemployment, positively impacting the participation rate, but also boosting the productivity growth of the economy. as being largely export and investment - led, the solid growth does not create pressures on the external position of the economy, nor on the inflation. on the contrary, the external sector is in a relatively good shape, with | . investment cycle is expected to be further strengthened by the continuation of the productive fiscal investments. as the external demand is envisaged to recover further, additional stimuli is expected through this channel. the above mentioned growth factors are expected to strengthen further the labor market and the disposable income of the households, hence boosting the private consumption as well. the growth expectations provide room for additional rise of the deposit potential in the banking system, which accompanied with the rise in the credit demand and the willingness of the banks to lend, should enable credit growth at a rate of 9 β 10 % in the period to come. the inflation is expected to be influenced mainly by the global prices of primary commodities and the consumers prices of our main trading partners. an average inflation of 0. 5 % is expected for 2015, with the current forecast indicating its reversal to 2 % in 2016, reflecting the rise in the demand and in the import prices. the structural improvements in the export sector are expected to continue in 2015, which along with the overall external recovery and the much lower oil prices, are envisaged to bring about a moderate current bis central bankers β speeches account deficit of bellow 1. 6 % of gdp. in the following year, widening to 3 % is expected, reflecting the fall in private transfers and import pressures from the new investment. the external financing needs, within the current scenario, are expected to be covered by further inflows of foreign direct investments and by the public borrowing for infrastructure purposes. the current forecast points to a rather stable external debt to gdp ratio. no major pressures are foreseen in the following two years on foreign reserves, and they are to be maintained at the adequate level. risks surrounding this baseline macroeconomic scenario should not be neglected. for us, as a small an open economy, they mostly come from the external environment and our main trading and financial partners. although with the latest monetary easing of the ecb the downside risks to the euro zone growth are less pronounced, and in general the global growth risks are more balanced, they are still present and if being materialized, could impact the economy. additional source of risks are the sharp and sudden swings in the primary commodities prices, which for country like ours, can change the envisaged economic profile to a large extent. a new, additional source of risks is the current domestic political context, which can harm the economy, if not being tackled swiftly. of course, the risks are challenging and are to be closely | 1 |
is moderating price, cost and wage pressures. it is in this context that the ecb decided to reduce its key interest rates by 25 basis points in early november 2011. dysfunctional government bond markets in several euro area countries hamper the single monetary policy because the way this policy is transmitted to the real economy depends also on the conditions of the bond markets in the various countries. an impaired transmission mechanism for monetary policy has a damaging impact on the availability and price of credit to firms and households. this is the very important monetary policy reason for the ecb β s non - standard measures. but of course, such interventions can only be limited. governments must β individually and collectively β restore their credibility vis - a - vis financial markets. tensions in sovereign bond markets have been accompanied by stress in the banking sector given the financial interlinkages between governments and banks. the ecb has taken bis central bankers β speeches several measures in 2010 and 2011 to ensure that banks continue to have access to funding sources. this has enabled them to continue lending to firms and households. most importantly, the ecb has extended its policy of fully allotting liquidity demanded by banks at fixed rates against collateral. the maximum maturity of these liquidity - providing operations was first extended to six months and later to 12 and 13 months. a new covered bond purchase programme has recently been initiated, with a size of 40 billion euros. in addition, liquidity in us dollars has been offered to banks for three - month periods. yesterday, in a globally coordinated action with the federal reserve, the bank of japan, the bank of england, the bank of canada and the swiss national bank, we have agreed to lower the price on us dollar provision in other constituencies including the euro area. we have furthermore agreed, as a contingency measure, to establish temporary bilateral liquidity swap arrangements so that liquidity can be provided in each jurisdiction in any of the currencies, should market conditions so warrant. as the ecb β s governing council meets on thursday next week, we are now in the pre - decision period, and nothing that i say should in any way be interpreted in terms of future monetary policy decisions. but as far as the current situation is concerned, there is not much more to say beyond what i have said in recent statements. we are aware of the continuing difficulties for banks due to the stress on sovereign bonds, the tightness of funding markets and scarcity of eligible collateral in some financial segments. we are | also aware of the problems of maturity mismatches on balance sheets, the challenges of raising levels of capital and the cyclical risks related to the downturn. challenges for europe β s economic and monetary union let me now turn to the overall functioning of europe β s economic and monetary union. looking back at 2010 and 2011, notable progress has been achieved in reinforcing economic governance β though i recognise that this may not be evident in times of crisis. the european parliament has contributed decisively to that progress, and the ecb commends that work. the β six pack β, the european semester, the euro plus pact : all these initiatives have set the stage for closer coordination and more intensive scrutiny of economic policies in the eu, particularly in the euro area. yet we are at a difficult stage at present. we have set up these new mechanisms, but their positive effects on the credibility of government fiscal policies are not yet visible. and the government changes that have taken place in some of the more exposed countries have not yet had much of an effect on the continuing fragility of financial markets. fundamental questions are being raised and they call for an answer. at the heart of these questions are not only the credibility of governments β policies and the actual delivery of the promised reforms, but also the overall design of our common fiscal governance. i am confident the new surveillance framework will restore confidence over time. i am also quite sure that countries overall are on the right track. but a credible signal is needed to give ultimate assurance over the short term. what i believe our economic and monetary union needs is a new fiscal compact β a fundamental restatement of the fiscal rules together with the mutual fiscal commitments that euro area governments have made. just as we effectively have a compact that describes the essence of monetary policy β an independent central bank with a single objective of maintaining price stability β so a fiscal compact would enshrine the essence of fiscal rules and the government commitments taken so far, and ensure that the latter become fully credible, individually and collectively. bis central bankers β speeches we might be asked whether a new fiscal compact would be enough to stabilise markets and how a credible longer - term vision can be helpful in the short term. our answer is that it is definitely the most important element to start restoring credibility. other elements might follow, but the sequencing matters. and it is first and foremost important to get a commonly shared fiscal compact right. confidence works backwards : if there is an anchor in the | 1 |
10 ). the unemployment rate remains above its pre - crisis decade average. the duration of unemployment also remains above its pre - recession average and the number of people working part - time who would prefer to work full - time has come down only slowly. and the behaviour of wages is not pointing to generalized excess demand for labour. wage growth has been modest ( chart 11 ). the labour market is an important component of the bank β s assessment of the amount of excess supply in the economy. we continue to monitor the full range of labour market indicators, together with other relevant information, very closely as we seek to achieve the 2 per cent inflation target. to the extent that the economic expansion continues and the excess supply in the economy is gradually absorbed, some modest withdrawal of the present considerable monetary policy bis central bankers β speeches stimulus may become appropriate, consistent with achieving the 2 per cent inflation target over the medium term. the timing and degree of any such withdrawal will be weighed carefully against domestic and global economic developments. the future labour market in the five years since the start of the financial crisis, the most significant labour market challenge has been creating enough good jobs for workers. over the next five years, the most important challenge is more likely to be finding enough good workers for jobs. even with some slack remaining in labour markets, firms are reporting β with increased frequency β difficulty in attracting suitable labour. our own business outlook survey indicates that labour shortages have gradually moved up across the country. and in the latest survey of small and medium - sized businesses by the canadian federation of independent business, β shortage of skilled labour β has moved ahead of β insufficient customer demand β as the top business constraint facing their members. 4 looking ahead, canada β s demographic trends will compound the scarcity of labour. 5 we are getting older, living longer and having fewer children. that means more workers retiring and fewer people to replace them. this will put upward pressure on wages and lead to adjustments to the composition and the nature of the labour force. for firms, attracting talent while retaining relevant expertise and institutional knowledge will be more challenging. confronting this challenge requires working on three margins : expanding the labour force ; utilizing it more efficiently ; and increasing labour productivity. let me address each of these in turn. expanding the labour force several segments of the labour force have potential for greater labour market participation. let me highlight three. first, older individuals may be enticed to stay longer in the workforce. indeed, this is already happening. the labour | canada β s april 2012 monetary policy report. bis central bankers β speeches in addition, growth is expected to continue in the period ahead β at 2. 4 per cent in 2012 and 2013, easing to 2. 2 per cent in 2014. these growth rates may seem relatively modest, but over the 2012 to 2013 period, they are somewhat above the rate at which the potential of the economy is expanding, estimated at 2 per cent in 2012 and 2. 1 per cent in 2013. as a result, we expect the canadian economy to return to full capacity by early next year ( chart 6 ). bis central bankers β speeches most of the growth in the period ahead is expected to come from private domestic demand. in particular, that growth relies on continued spending by canadian households on consumption and housing. it also reflects a continued strong rise in investment spending as canadian firms seek to expand, replace, and modernize their capacity. on the other hand, we are still seeing weak growth in canada β s net exports. that in turn reflects factors i mentioned earlier : notably the protracted recovery of demand in the united states, canada β s major trading partner, and canada β s weak competitiveness. the bank forecasts that canada β s exports will regain their pre - recession peak only at the end of 2013. in contrast, the level of imports has already regained its pre - recession peak. this divergence has contributed to a decline in canada β s current account balance, which has dropped from a pre - recession surplus to a deficit of approximately 2 per cent of gdp β a trend that is projected to persist ( chart 7 ). oil prices are one important factor underlying the economic outlook for canada β and here is a story in which transport has been playing an important role. canada as a whole usually benefits when oil prices rise. as a net oil exporter, canada gains from higher incomes in the industry, higher production and investment and the resulting spillovers to other parts of the economy. those benefits typically outweigh the effects of more expensive gasoline on the cost of living and the effects on production costs. in recent months, this balance of costs and benefits has shifted because of an unprecedented spread between the price of oil that canada imports and the price of oil that canada exports β a spread that peaked at about $ 50 a barrel earlier this year ( chart 8 ). there are many reasons for this, some of which are temporary. growing global demand β especially from emerging - market economies β together with supply disruptions | 0.5 |
financial conditions has tilted the balance of risks to euro area growth to the downside. the governing council has made it clear that it is determined to ensure that inflation expectations remain firmly anchored. looking ahead, the governing council has signalled that there is a need to gather additional information and assess new data, including the new projections due in early december, before drawing further conclusions for monetary policy. concluding remarks i want to conclude by briefly outlining the evolving economic environment in this country. ireland's economic fundamentals β as evidenced by a good budgetary position, strong employment growth and an adaptable economy β continue to be sound. the irish economy has performed solidly this year in circumstances where a rebalancing of economic activity is underway. the contribution of the domestic housing sector to economic growth is declining, though the overall construction sector remains strong. in these circumstances, judging by the overall level of growth, employment, output and exports, the economy has performed well in comparison with others in 2007. we expect the economy to grow next year by some 3 per cent. or so, and this in a situation where the rebalancing of economic activity will continue. such a performance would undoubtedly be a good performance particularly given the background of heightened uncertainty and serious market turbulence. finally, with regard to the broader international picture, the outlook is not without risk. it is heavily dependent on how market developments and financial conditions evolve, and how banks, households and firms respond. the performance to date of the core financial system in the euro area, and here at home, has been encouraging. the euro area operational framework has worked well and, as i have stated, continues to respond flexibly to the evolving situation. however, uncertainty remains high and it is likely to be some time yet before a broad measure of confidence returns to markets. | issues, we build business intelligence through the analysis of, for example, data on sales, complaints about products and services, advertising spends, new business and product development, issues arising from queries and social media, horizon scanning and feedback from supervisors, enforcement and authorisation officers. this helps us to detect and understand where potential consumer detriment can arise and helps supervisors compile conduct risk reports on which our actions to mitigate risk will be based. we use themed inspections to focus on a specific issue, topic or product rather than on a specific institution. we identify the themes to pursue in a number of ways, including consumer queries, complaints, issues arising from previous inspections, market intelligence and annual sectoral risk assessments, as well as advice from the consumer advisory group on our consumer protection strategy and policy initiatives. 16 themed inspections are conducted by survey or by a combination of survey and on - site inspections. following a themed inspection, we issue firm - specific letters, an industry - wide letter and a press release and publish our findings on the central bank website. where we identify a specific compliance issue in an individual firm, we address this directly with the firm. a credible threat of enforcement underscores our powers to protect consumers of financial services. we take robust enforcement action aimed at promoting principled and ethical behaviour by and within regulated entities. transparent and strong action where entities or individuals fall short of required standards helps to deter poor practices, achieve compliance and encourage the behaviour we expect. we take action where firms or individuals have breached provisions in prescribed legislation, a code, or a condition, requirement or obligation imposed by the central bank. in 2013, legislation provided the bank with formal redress powers to direct regulated financial services firms to make appropriate redress to customers where they have suffered or will suffer a loss as a result of widespread or regular relevant defaults by a regulated financial services provider. where consumers suffered detriment prior to 2013, we have used our influence to obtain redress for consumers on a range of issues including payment protection insurance and credit card protection insurance, as well as part of the tracker mortgage examination. 4 / 9 bis central bankers'speeches current priorities we set out what we see as the key risks now facing consumers in our consumer protection outlook report, which was published last week. 17 these range from the absence of a consumer - focused culture in financial services firms, through the ongoing problems of high levels of indebtedness and mortgage arrears, to the implications for consumers | 0.5 |
national bank of serbia introductory speech inflation report β february 2022 dr jorgovanka tabakovic, governor belgrade, 18 february 2022 ladies and gentlemen, esteemed members of the press, dear colleagues, welcome to the presentation of the february inflation report. we will give you an overview of recent economic trends, our new macroeconomic projections, as well as monetary policy decisions made in the period since the previous report. since our last meeting in november, the global economy has been marked by geopolitical tensions, deepening energy crisis and further growth in cost - push pressures on a global scale. in addition, we are faced with persisting problems in global supply chains and the spread of the omicron variant, to which the leading world economies reacted differently. all of this has led to additional mismatches between demand and supply and to new inflationary pressures globally. energy and food prices recorded a sharp rise worldwide. unlike in the previous crises, besides oil prices, the prices of gas and electricity also recorded robust growth in international commodity exchanges. global strengthening of cost - push pressures and the spread of the omicron variant in our key foreign trade partners led not only to the upward revision of inflation projections, but also to a slowdown in economic activity and a downward revision of gdp growth projections. despite unfavourable circumstances in the international environment, the nbs kept its november projection of real gdp growth for this and the following years. in 2022, as well as in the medium run, gdp growth is expected at 4. 0 β 5. 0 % range, with the central projection in all years measuring 4. 5 %. overall risks to the projection are judged to be symmetric and, as so far, those from the international environment being tilted to the downside and those from the domestic environment to the upside, including primarily government investment and better results in attracting fdi inflows. besides, it will be easier to achieve the 2022 projection as we are building on excellent trends from the last quarter of the previous year, in which, despite the slowdown in the euro area, serbia recorded real gdp growth of 6. 9 % y - o - y or 1. 6 % s - a relative to q3 2021. this was largely a result of the record level of government investments, but also fdis, whose inflow in 2021 reached eur 3. 9 bn and thus surpassed the record high from pre - pandemic 2019. over the past few weeks | jorgovanka tabakovic : digitalisation, system upgrade - delivering the digital dividend opening speech by dr jorgovanka tabakovic, governor of the national bank of serbia, at the presentation of the european bank for reconstruction and development β s ( ebrd ) transition report 2021 β 2022, belgrade, 11 march 2022. * * * ladies and gentlemen, esteemed colleagues, welcome to the national bank of serbia! we are the hosts today, but this event is organised by our partners from the european bank for reconstruction and development ( ebrd ). therefore, i β d like to welcome mr colangeli, whom i have met at the kopaonik business forum, as well as mr sanfey and mr plekhanov, who are the face of the ebrd before us today. the fact that the ebrd has compiled and published its transition report for 28 years tells us that this report has passed the test of time and has the seal of approval of its audience. each year, the focus of the report is on an area that contributes to faster and sustainable economic transition. in the latest report, this area is digitalisation. i will focus on the fourth chapter of the report β fintech and banks in transition, which pertains to the digitalisation of financial systems and the effects which the implementation of new technologies has on the financial system as we know it. it is old news that over the past several years there have been substantial global changes in the financial services sector. banks, which are traditional participants in this market, are increasingly joined by new institutions from the technological sector, offering innovative products. we are talking about fintech, as well as international tech giants, notably in the social media sphere β the so - called big tech. how do banks react to their emergence? they have a choice to either treat the new market participants as competition, or at least as an incentive that would encourage them to speed up their own work on innovations and development of advanced services. the second choice is to welcome these companies as partners, and to make full use of the effects of such synergy on the development of society. in the modern age, which requires fast adjustment to client needs, everyone is creating niche markets where they can have a competitive edge. and as long as society as a whole is benefiting from changes that do not threaten stability, and yet save time and money, they will be one of the factors of development | 0.5 |
turn, uses private - sector data on construction starts to build the sampling frame for its construction survey. the data sources for industrial production and capacity utilization can be found at board of governors of the federal reserve system ( 2024 ), β industrial production and capacity utilization - g. 17, β webpage, https : / / www. federalreserve. gov / releases / g17 / about. htm. the data sources for consumer credit can be found at board of governors of the federal reserve system ( 2022 ), β consumer credit - g. 19, β webpage, https : / / www. federalreserve. gov / releases / g19 / about. htm. - 11 staff and relies on new business applications for employer identification numbers, or eins. 12 during the early months of the pandemic, weekly data from the bfs provided a timely indicator of the initial decline in economic activity, and then later the figures likewise documented the rebound. 13 another measurement invention was created during the early months of the pandemic : the census bureau β s high - frequency β pulse β surveys β one each for households and businesses. those surveys leveraged existing census bureau resources to provide quick - turnaround information about the rapidly evolving health and economic situations. 14 the household pulse survey was rapidly developed shortly after the pandemic struck the u. s., with participation from a broad set of government agencies. 15 the survey provides a range of economic information about americans, including the pandemic - induced jump in remote work. the survey has adapted over time as the health and economic situations have evolved, incorporating questions about vaccination, access to infant formula during a product shortage, inflation, and other issues. the small business pulse survey provided timely information about employment, revenue, financial conditions, and expectations for future growth, survival, and needs in the highly see kimberly bayard, emin dinlersoz, timothy dunne, john haltiwanger, javier miranda, and john stevens ( 2018 ), β early - stage business formation : an analysis of applications for employer identification numbers, β nber working paper series 24364 ( cambridge, mass. : national bureau of economic research, march ), https : / / www. nber. org / papers / w24364. see the box β small businesses during the covid - 19 crisis β in board of governors of the federal reserve system ( 2020 ), monetary policy report ( washington : | ##b forum on central banking, may 2014. 3 coibion, o., gorodnichenko, y. and wieland, j. β the optimal inflation rate in new keynesian models : should central banks raise their inflation targets in light of the zero lower bound? β, the review of economic studies, volume 79, issue 4, 1 october 2012, pp. 1371 β 1406. 8 / 9 bis central bankers'speeches 4 see, for example, borio, c. and zhu, h. ( 2008 ), β capital regulation, risk - taking and monetary policy : a missing link in the transmission mechanism? β, bis working papers, no 268, bis, and adrian, t. and shin, h. - s. ( 2010 ), β liquidity and leverage β, journal of financial intermediation, vol. 19, pp. 418 β 437. 5 see, for example, bekaert, g., hoerova, m. and lo duca, m. ( 2013 ), β risk, uncertainty and monetary policy β, journal of monetary economics, vol. 60, issue 7, pp. 771 β 788, and heider, f., saidi, f. and schepens, g. ( 2017 ), β life below zero : bank lending under negative policy rates β, mimeo, available on ssrn. 6 see maddaloni, a. and peydro, j. - l. ( 2011 ), β bank risk - taking, securitization, supervision, and low interest rates : evidence from the euro area and u. s. lending standards β, review of financial studies, vol. 24, issue 6, pp. 2121 β 65 and jimenez, g., ongena, s., peydro, j. - l. and saurina, j. ( 2014 ), β hazardous times for monetary policy : what do twenty - three million bank loans say about the effects of monetary policy on credit risktaking? β, econometrica, vol. 82, issue 2, pp. 463 β 505. 7 igan, d. and kang, h. ( 2011 ), β do loan - to - value and debt - to - income limits work? evidence from korea β, imf working paper, imf. 8 acemoglu, d., johnson, s. and robinson, | 0 |
line with fundamentals today, may not be tomorrow. because they cannot rule out the chance that some asset prices might correct more than anticipated, policymakers must consider how the economy might withstand such a correction. corrections in interest rates and asset values may have the most potential for disruption when they impair the financial health of borrowers and lenders and thereby cause them to pull back even further than might be warranted by the change in rates or prices. in that regard, we have some reason to be optimistic that the players are well positioned to absorb these adjustments. we have already discussed the reasons for confidence that household borrowers will be able to meet their obligations. lenders, too, appear well positioned to weather any such adjustments. commercial banks remain highly profitable and well capitalized, and other financial intermediaries show few signs of widespread problems. i am encouraged by the way our financial system came through the very difficult circumstances of the last few years, including the plunge in equity values, the recession, the subsequent period of slow growth, and the spike in credit problems. to be sure, pockets of difficulty emerged, and lenders became more cautious, but, for the most part, credit continued to flow, and problems remained isolated, not systemic. our increasingly sophisticated financial market was able to effectively distribute risk so that lenders were sufficiently diversified to survive some quite stressful developments. in addition, financial markets have important automatic - stabilizer properties. if investors sense that asset - price adjustments are undermining the expansion, interest rates will fall back because investors will anticipate a lower trajectory for the federal funds rate. for its part, the federal reserve will adapt its monetary policy to unexpected developments in an effort to keep the economy on track toward high employment and stable prices. implications for the current policy setting that brings me to what i see as the implications of this analysis for the federal reserve β s current monetary policy of keeping the federal funds rate low and being patient in removing policy accommodation. i hope that the discussion has cast some doubt on the argument that this policy is generating substantial imbalances in the economy. i am not disputing the argument that current policy has contributed to higher asset prices, more household indebtedness, and strong activity in interest - sensitive sectors such as housing. but i am questioning the apparently firm conclusion of some that these developments represent distortions or imbalances that are likely to correct in an abrupt and harmful manner. at the very minimum, one cannot reach | similar circumstances will be trying to squeeze through the same door at the same time, in which case prices could adjust sharply. the second consideration is that regulators of financial institutions should strive to ensure that these institutions have risk - management systems in place that help to assess and control vulnerability to potential adjustments in interest rates and asset prices. in doing so, supervisors reinforce market discipline. banking supervisors at the federal reserve, for example, in the course of the ongoing examination process, have been paying close attention to the sorts of vulnerabilities we have reviewed and have been discussing these risks with the commercial banks they oversee. conclusion interest rates are at unsustainable levels, and monetary policy will need to tighten eventually if the economy is to be kept on a path to high employment and price stability. my remarks today were not focused on the medium - term macroeconomic outlook and its implications for policy. instead, i addressed a different and difficult set of issues for policymakers - whether policy adjustment should be made that might make the medium - term outlook less favorable but might at the same time lower the odds on longer - term economic instability stemming from possible imbalances in financial markets. this issue has been the subject of considerable research and discussion in recent years, and i have not had time to touch on all its aspects. in recent months some central banks have cited similar types of financial imbalances when they tightened policy. but the economies in which these central banks operate have been running at higher levels of resource utilization and have experienced faster increases in some asset prices than has the united states. my conclusion is that for the united states at this time, the balance of costs and benefits does not favor policy action to address possible imbalances. in the process, i hope that i have given you a sense of the difficult judgments facing a policymaker in an uncertain world and that you have also gotten a taste of the intellectual interest and excitement of working through such issues. this exercise is very similar to many others you would find in the public sector, and so i also hope you keep these challenges and rewards in mind when considering your career path. | 1 |
leong sing chiong : remarks - official opening ceremony of the fm global centre remarks by mr leong sing chiong, deputy managing director ( markets & development ) of the monetary authority of singapore, at the official opening ceremony of the fm global centre, singapore, 8 november 2022. * * * thank you, mr malcolm roberts, distinguished guests, ladies and gentlemen, good morning. it is a pleasure to join you at the official opening of the fm global centre. 2 the launch of the fm global centre is yet another significant milestone in fm global's long and rich journey with singapore. since 37 years ago, the singapore office has grown significantly, and became the asia pacific headquarters for fm global in 2019. today, it provides commercial property, risk advisory and engineering solutions to over 400 clients, across 36 markets in singapore and the region. the global centre is the second biggest centre, outside of the us. 3 the choice of singapore to house the fm global centre is very timely, and is reflective of two key factors. first, strong growth prospects. asia's property insurance industry is projected to grow from s $ 122 billion in premiums in 2020, to almost s $ 200 billion in 2025. 1 this is due to continued commercial expansion and infrastructure development as part of the region's growth. second, it also reflects asia's growing need for natural catastrophe and climate risk financing solutions, given the region's significant exposure to climate risk. by 2050, it is estimated that climate change losses could cost asia more than a quarter ( 25. 6 % ) of 2019 gdp. 2 4 insurers are important partners in helping governments and businesses manage physical and transition risks. the fm global centre's testing and research on how properties can be impacted by fire, floods and natural hazards at varying levels of intensity, can provide valuable data insights. these data insights can support the development of ex - ante climate risk insurance solutions for businesses in the region. it goes to the heart of insurance solutions aβ¬ β which should increasingly focus on ex - ante risk reduction and loss prevention, beyond just ex - post risk financing. the centre will also provide hands - on loss prevention education to businesses and individuals, through interactive simulation labs and learning areas. 1 / 3 bis - central bankers'speeches 5 the insurance industry can also play an important role in empowering the development of the green economy in asia. singapore, for instance, as part of our energy decarbonisation | growth engines of the economy in the last three years β manufacturing and financial services β have stalled in recent quarters. manufacturing is in recession and financial services has stopped growing in sequential terms since the middle of last year. the economy has been supported, however, by the domestic facing industries, including those benefiting from increased travel - related and tourism activity. growth will remain weak in the near term. manufacturing and financial services are expected to remain in the doldrums amid the weaker external outlook. growth in the domestic facing sectors is likely to taper, as consumer demand slows in the face of higher interest rates and more moderate wage increases. singapore's gdp growth for 2023 is expected to slow to a below - trend pace within mti's current forecast range. consequently, the output gap is estimated to turn mildly negative, to around - 0. 5 %, from the positive 0. 6 % recorded last year. inflation in singapore has clearly peaked and has discernibly moderated. in assessing inflation trends, it is instructive to focus on month - on - month momentum and price trends going forward rather than year - ago averages. core inflation on a month - on - month seasonally adjusted annualised basis has come down sharply, to 3. 6 % in may 2023 from a peak of 9. 1 % in june 2022. the disinflation has been broad - based across most components in the core cpi basket. notably, imported inflation has turned negative, reflecting the decline in global energy and food prices and the effects of a stronger singapore dollar. even excluding oil, whose prices have fallen most sharply, imported inflation was minus 1. 2 % in may this year. the fall in inflation momentum is gradually translating to lower year - on - year inflation. core inflation on a year - on - year basis moderated to 4. 8 % in apr - may from 5. 4 % in q1. headline inflation slowed to 5. 4 % from 6. 1 % over the same period. singapore should see further reductions in inflation by the end of the year. one, imported inflation should remain negative over the rest of the year. the decline in global energy and food prices should weigh on the costs of intermediate and final consumer goods. the strengthening singapore dollar will further dampen imported inflation. 2 / 16 bis - central bankers'speeches two, the domestic labour market is showing early signs of cooling off. a recovery in the non - resident workforce is helping to | 0.5 |
and productivity. in this regard, time and effort saved from less handling of cash and cheques can be directed to more productive tasks such as to increase sales, even by usage of whatsapp. second, increasing your digital accessibility to prospective clients. for a long as i am aware, the agency force has always dominated the insurance distribution 2 / 4 bis central bankers'speeches channel. in 2017, there was a total of over 56, 000 agents constituting a market share of approximately 63 %. irrespective of whether in general or life insurance, the agency force has traditionally been the physical point of contact and engagements with clients. but, with the internet and improved access amongst a growing number of the malaysian population, online insurance solutions will not only become more viable, but also easier to adopt. in this, the agency force cannot afford to stagnate. other industries with heavily digitalised services, like the air travel, hospitality and retail sectors, have elevated the digital literacy of the malaysian population and improved their appetite for efficient delivery and transparent pricing of services. in this sector, there remains significant untapped demand for general insurance products as a whole. the low penetration rate of 1. 4 % for general insurance, which is measured in terms of premiums as a share of the nation β s gross domestic product, is actually symptomatic of this. thus, agents who move quickly to improve their digital outreach will have a first mover β s advantage and are likely to gain a growing group of digitally literate malaysians. thirdly, conducting robust suitability assessment for customers. one thing worth emphasising repeatedly is this ; financial services offered must be suitable to the needs of the customers. while the bank β s guidelines on product transparency and disclosure attempts this by stipulating the β rules of the game β, we look to insurers and the agency force to β play β according to these rules and seek out ways to achieve the outcome of ensuring consumers obtain financial services that are suitable to their needs. agents should develop their individual capacity to analyse customer requirements to identify their needs and develop risk profiles to match them with suitable products or combinations of products. for example in the case of motor insurance policies, agents should create awareness on optional add - on covers that are available and underwriting factors that will affect motor insurance premiums. appropriate profiling of a customer can be crucial in helping agents identify customised product recommendations efficiently. finally, perhaps i should bring your attention to | 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 | 0.5 |
inflation targeting. there can be little doubt that both real and financial global integration have brought enormous economic benefits. still, it has been increasingly questioned of late. we partly understand why. we know that there are significant gains from real integration but that there are winners and losers. the losers can be compensated in principle, but in practice this does not always happen. inequality has increased within many countries and economic integration is blamed, although research shows that technological change plays a significantly bigger role. at least in part, the case of financial integration is different. finance is an integral part of economic progress, and there are significant benefits from global financial integration. but more is not always better when it comes to finance, as we learned the hard way during the latest financial crisis. furthermore, large and volatile capital flows can undermine the financial stability of countries. it is not clear who the winners are in that case nor what the compensation mechanism would be. spillover effects from monetary policy of global rate setting countries to small, open and financially integrated economies ( sofies ) increase as global financial integration intensifies. in particular, if the global rate setter experiences an economic slack at a time when a sofie is booming, the sofie might find it difficult to pursue warranted macroeconomic policies without risks to financial stability and / or significant detrimental effects on export sectors. this could be the case if there are perceived limitations to the use of fiscal policy ; for instance, if there is already a sizable headline surplus. in this situation, macroprudential and even capital flow management measures could help. in iceland β s case and some others, this raises the issue of compatibility with existing international and regional treaty obligations regarding free movement of capital. the jury is still out on these issues. it is one thing to try to make global financial integration safer and to mitigate unwanted spillover effects β which might involve some retrenchment, as it did in this country and many others after the crisis β but it is another matter entirely to bring about a large - scale reversal of the global financial integration of recent decades. most likely, such a reversal would seriously undermine real economic integration and the benefits associated with it. we are going to discuss these issues and others that pertain to the current state and future prospects of global economic integration. after jaime β s keynote speech, we will have two sessions with substantive presentations and discussions on different aspects of the topic. this afternoon, we aim to take stock of recent trends in global and regional economic and | services would be enhanced, thereby reducing the cost of capital. simulations using the stylised dynamic stochastic general equilibrium model in chapter 7 indicate that domestic real interest rates would decline, the domestic capital stock would grow, and gdp per capita would rise permanently if a small country such as iceland were to join a larger currency area ( see also chapters 2 and 21 for a discussion of other countries β experience ). β’ upon joining the euro area, consumers would have access to a large market in which they could use their home currency. this would facilitate price comparison and boost competition. it would also be easier for domestic firms to gain a foothold in larger markets and benefit more from economics of scale in their operations and production. bis central bankers β speeches β’ with euro area membership, the risk associated with cross - border banking operations would be reduced, as banking would take place in the home currency to a larger degree and the ecb would be responsible for providing liquidity. as a result, it would be possible to ease the restrictions on cross - border banking that would otherwise be necessitated by foreign exchange risk and maturity mismatches in the banks β foreign - denominated assets and liabilities. β’ eu and euro area member countries are subject to requirements concerning public finances and other aspects of economic policy, which aim to improve policy discipline. in addition, member countries participate in a variety of consultative fora on economic policy and financial stability, which should also promote improved policy in these areas. another benefit of euro area membership is access to rescue funds and a common safety net intended to address shocks in individual countries and reduce contagion among them. but euro area membership also entails risks for iceland. it would no longer be possible to apply independent monetary policy and a flexible exchange rate in response to shocks and to expedite adjustments to changes in national income. under certain circumstances, this has been quite useful for the icelandic economy. on the whole, however, domestic monetary policy has not proven particularly effective in achieving set goals, and more often than not a flexible exchange rate has proven a source of shocks rather than a shock absorber. consequently, relinquishing domestic monetary policy may not prove to be a great sacrifice unless monetary policy can be improved and excess exchange rate volatility can be mitigated. this possibility is explored later in this chapter. another risk is the crisis currently facing the euro area and the design failures that are a partial cause of it. because of this, it would be risky | 0.5 |
entrepreneurs who are financially excluded. access to improved financial services, through the provision of better ways of accumulating savings and access to credit to augment accumulated savings, avails funds for investment in income generating projects that help the public to lay foundation for better standards of living for themselves and their families. madam managing director, as your bank introduces these products on the market, please ensure that the pricing aspect is also critically looked at. many a time a good product is introduced on the market yet it is out of reach of ordinary citizens due to the costs associated with the products. consumers of these products expect an affordable service if indeed these are new and innovative products. banks need to show more commitment to the growth and development of the country by encouraging more zambians to open bank accounts through provision of easily accessible and affordable products and services. as i end my remarks, i want to remind all players in the financial sector that some of the challenges we face in our country today can indeed be mitigated by all stakeholders playing their respective roles. in particular, we have seen food prices increasing dramatically in the past few months. this is despite zambia possess vast arable land, relatively good weather and plenty of fresh water. further, zambia is predominantly an agricultural country, but lending to agriculture has been limited. the challenge therefore is to devise financial products that meet the requirements of the sector while at the same time devise means of protecting the financial institutions from the risks associated with lending to the agricultural sector. a vibrant agriculture sector will no doubt lead to a vibrant economy less dependent on the mining sector. i hope that standard chartered bank will lead the way in establishing affordable products and services for our small scale farmers throughout our country. i encourage you madam managing director in your capacity as the deputy chairperson of the bankers association of zambia to expand your horizon and collectively join hands with all stakeholders in addressing this problem. i thank you for your attention. | caleb m fundanga : access to improved financial services in zambia remarks by dr caleb m fundanga, governor of the bank of zambia, at the standard chartered bank m - banking media launch, lusaka, 17 march 2009. * * * the standard chartered bank plc β managing director, ms mizinga melu management and staff β standard chartered bank zambia plc members of the press ; distinguished guests ; ladies and gentlemen i am honoured and thankful for the invitation to officiate at this important launch of the m - banking product. distinguished ladies and gentlemen ; allow me to begin by commending standard chartered bank for the important role it continues to play in the financial sector in zambia. since 1906, when standard chartered bank was established in zambia, the bank has grown to be one of the biggest players in the market. as at 31 january 2009 the bank accounted for about 15 % of the banking sector β s total assets, while its deposit base accounted for 18 % of total sector deposits. more importantly, the bank β s loan portfolio accounted for 13 % of the total loans in the sector. madam managing director, i congratulate you for the bank β s commitment to providing products and services that best suit the needs of customers. this, in my view, should be emulated by other banks to ensure that more people have access to banking and financial services that are tailor made to meet the needs of customers. under your leadership the bank has continued to bring to the banking sector an array of products and services that provide convenient alternative channels that lead to customer satisfaction and improved service delivery. the introduction of new products and services such as mobile banking, internet banking and e - statements provide customers with greater flexibility in their banking requirements, enabling them to transact at their own convenience, knowing that their finances are completely secure. this will no doubt enhance customer confidence in the banking system in zambia. ladies and gentlemen, i am reliably informed that the m - banking product we are launching today, will allow the bank to reach out to many more customers. this will increase the number of people with access to the financial system. at bank of zambia, we believe strongly that wider access to financial services through positive action by the banking community is vital. we also believe that the driving force will be banks and other financial institutions searching for new, profitable market opportunities. furthermore, a key element in the strategy of poverty alleviation is the provision of financial services to the majority of our people especially the small and micro | 1 |
that afi espouses. the government in the current fiscal year 2009 / 10 proposed to introduce branchless banking. this will enable banks to provide their services through agents with wide distribution networks and therefore legalizing agent banking and reducing costs of financial services. there has been a significant reduction of the proportion of our population that remains unbanked from 38 % in 2006 to 33 % in 2009 according to the national financial access surveys conducted by the cbk and financial sector deepening ( fsd ) kenya. this reduction in the unbanked is greatly attributed to the contribution of mobile phones as a channel for money transfer. the recent financial access survey also indicates that the proportion of our population accessing banking services increased from 19 % to 23 % between 2006 and 2009. however, 33 % of the population still has no access to any form of financial service and 27 % access financial services from the informal financial sector. despite the progress we have made towards expanding financial access, the majority of kenyans still lack access to formal financial services. we are therefore keen to draw on the wealth of experiences that are brought to the table by participants in this forum. we will, over the next three days, share experiences on smart financial inclusion policies that have worked elsewhere. we will thereafter adopt these policies to suit our respective countries as we work together to push forward the global financial access frontiers. mr. prime minister, this forum also comes at a time when the global economy is suffering a slow down, with economic activities weakened considerably. although there are signs of improvement, we are yet to see full recovery. globally, policy actions taken to mitigate the crisis have been geared towards maintaining effective and well functioning financial systems and to reinforce their resilience in order to guard their integrity. we have acted accordingly to ensure that our financial system remains sound, secure, stable, accessible and trusted. we are in constant vigilance that this remains the case and any action necessary to achieve this will be undertaken. with these few remarks, it is now my pleasant duty and honour to welcome the deputy prime minister and minister for finance to make a few remarks and to welcome you to address this forum. honourable deputy prime minister and minster for finance, you have the floor. | therefore within our reach to break these barriers and bring all persons with disabilities to the formal financial system. allow me now to focus on the reasons why it is paramount for the banking sector to deal with these constraints and pave way for persons with disabilities to access financial services. first, it is our responsibility to ensure that we continually put people β s needs at the core of banking business. this is one of the commitments that financial institutions made through the adoption of the kenya banking sector charter ( kbsc ) issued in 2019. customer centricity, which is the first pillar of the charter, not by accident, but by design, should be at the heart of product development. over the last few years, financial institutions are increasingly tailoring their products and services to the needs of their customers. this was especially the case during this period that we have been dealing with the coronavirus pandemic. however, much more needs to be done particularly in segmenting the markets deeper to understand the needs of persons with disabilities. i am glad, this is already happening with the development of the deaf elimu banking app. second, we are on the road towards ensuring shared prosperity for all by 2030, engrained in the sustainable development goals ( sdgs ). this will only be achieved through building sustainable and inclusive communities that foster inclusion and equitable opportunities for all. it is 1 / 2 bis central bankers'speeches now widely appreciated that businesses can only be as successful as the societies they operate in and draw their existence from. environmental, social and governance ( esg ) considerations are now paramount in any organization β s strategy and operations. in this regard, ensuring that persons living with disabilities have the same opportunities to access financial services is an obligation that we have to step up to. third, the kenyan banking sector is known for its leading role in an array of areas ranging from innovation to supporting broader societal good including in education, health and the environment. this has spilled over to the east african region and beyond where kenyan banks are expanding their footprint. in the same breadth, the banking sector should also lead in enhancing inclusion of persons with disabilities. let me take this opportunity to implore upon the other players in kenya as well as in the region to follow this path. this will move us a step closer towards achieving shared prosperity for all. the central bank of kenya ( cbk ), is also walking the talk. we are involved in various initiatives in support of persons with disabilities. more specifically, cbk | 0.5 |
1 ). most of this expansion was cross - border, and a significant part of it was actually off - border, having very little to do with iceland, as both financing and investment took place abroad. around two - thirds of the balance sheet of the three cross - border banks was denominated in foreign currency. as is typical for banks, the fx part of the balance sheet had a significant maturity mismatch. however, there was no safety - net of the type that we have at the national level to back it up. this turned out to be the fatal flaw in the whole setup. why were these big risks allowed to build up? i do not think we yet have the research and the consensus to provide a reasonably undisputed list of the main causal factors in this process ; however, i think four factors will rank highly on that list. the first of them is iceland β s membership in the european economic area ( eea ) beginning in 1994, which made it possible for the banks to operate more or less freely throughout the area on the basis of home licencing but with national supervision, safety net, and crisis management and resolution. the other three causes are the privatisation of the icelandic banking system in the early 2000s in a manner that placed the major banks in the hands of risk - loving investment bankers, the global conditions of ample and cheap credit that prevailed in the years prior to the international financial crisis, and the tendency in iceland both to adopt international and eu regulations without critical analysis of iceland - specific risks and to base supervision to a significant degree on mechanical checks of adherence to those regulations. in the panic that gripped global financial markets after the collapse of lehman brothers, these banks were faced with a wholesale run on their foreign currency liabilities and were therefore heading towards a default on those liabilities in the absence of lolr assistance in foreign currency. however, given the size of the banks, it was impossible for the icelandic authorities to provide such assistance on their own. there was actually a plan to nationalise one of the banks in late september 2008. fortunately it failed, as nationalising the bank would have turned a private bank β s foreign currency refinancing problem into a sovereign problem, with the serious risk that the sovereign might have defaulted on such foreign currency payments, thus initiating a full - scale sovereign debt crisis. figure 2 gives a sense of the potential scale involved in the case of the three banks, by comparing the foreign currency liabilities of the | banks and the central bank β s fx liquidity at the time. figure 2 bis central bankers β speeches based on published financial accounts and the analysis of the supervisor, the icelandic authorities assumed that the banks were solvent. on that premise, the authorities tried to build defences against potential foreign currency liquidity problems at the banks by negotiating swap lines and tapping foreign capital markets, in both cases with limited success. now, however, we know that there were hidden vulnerabilities in the banks β capital positions. however, given the lack of international cooperation, the icelandic authorities were forced to consider radical solutions. although they were not necessarily articulated fully at the time, these solutions entailed several goals : preserving a functioning domestic payment system, ring - fencing the sovereign in the case of bank failures, limiting the socialisation of private sector losses, and creating the conditions for rebuilding a domestic banking system. in essence, the adopted solution saved the domestic operations of the banking system and let the international part to go into a resolution process. the new banks were created by carving the domestic assets and liabilities out of the old failing banks. the idea was then that the government would recapitalise the banks and place compensation bonds in the estates of the failed banks. however, valuing the assets and liabilities proved a complicated process in the middle of an economic and financial crisis, and a solution emerged where the estates of the failed banks became majority owners of two of the banks and kept a small equity stake in the third, which was otherwise recapitalised by the government. the new banking system amounted to 1. 7 times gdp. in order to stop an incipient run on domestic deposits, all deposits in iceland were declared safe and all deposits in icelandic - headquartered banks were given priority over other unsecured claims, including the deposits of the icelandic banks in branches abroad. as a result of these measures, the domestic payment system functioned more or less seamlessly throughout, and there was uninterrupted access to deposits in iceland. the run on the domestic banks stopped, but at its peak, demand for cash tripled and the central bank almost ran out of banknotes. international payment flows were seriously affected, however, not least because of the freezing order imposed by the british authorities on icelandic banks, but also because of a general distrust among foreign counterparties. why did the government give a verbal blanket guarantee for domestic deposits only and not for deposits in the banks β foreign branches? after all, | 1 |
burhanuddin abdullah : globalization, financial stability and regional cooperation keynote address by mr burhanuddin abdullah, governor of bank indonesia, at the 33rd asean banking council meeting, bali, 10 october 2003. * * * mr. secretary general, mr. chairman, distinguished officers and members of the asean banking council, honored guests, ladies and gentlemen, good morning and assalamu β alaikum wr. wb it is indeed a great pleasure for me to welcome all of you to this beautiful island of bali and to open this meeting today. it is also a most gratifying experience to speak before a large gathering of distinguished representatives of bankers association from the 10 asean nations. your presence here is an opportunity to further enhance cooperation among bankers to promote regional growth in a new global environment. as we all may aware, globalization is a reality and no country in the world is immune to its impact. it has opened up tremendous opportunities, but it has also posed a wide range of challenges and risks. we must therefore strive to maximize the benefits of globalization while endeavouring to minimize the costs. our experiences in the past crisis has shown that even the most dynamic economies are vulnerable. in spite of the judicious macroeconomic policies that we adopted and the structural adjustments that we carried out, the development gains that we earned over decades could crumble in the span of a few weeks. the severe crisis proved that our banking system had some structural weaknesses. those weaknesses had led most of the asean countries banking system into deep trouble, reflecting in the mounting amount of non performing loan, serious liquidity problems, huge amount of losses and eventually caused many banks to became insolvent. in the face of these realities, the asean banking industry has rightly responded to restore the solvency and the stability of the banking system, through banking restructuring program, and improvement of banking supervisory and regulatory capability. ladies and gentlemen, this crisis may be abating, but greater challenges still lie ahead. the challenges that we are going to faced, first is the heightened competition among banks that requires bankers to make the basic strategic decision. as financial modernization going forward, bankers will be forced to decide what kind of institution they want to be. bankers need to figure out where they want to be in terms of a whole spectrum of activities whether they want to be a local bank, regional, or global bank. the second is a challenge of effective risk mitigation and risk intermediation. we have to ask how do we keep | roger w ferguson, jr : the proposed check clearing for the 21st century act speech by mr roger w ferguson, jr, vice - chairman of the board of governors of the us federal reserve system, before the subcommittee on financial institutions and consumer credit of the committee on financial services, u. s. house of representatives, 25 september 2002. * * * i would like to thank the subcommittee for inviting me to discuss h. r. 5414, the proposed check clearing for the 21st century act. this bill, which is similar to a proposal the board sent to congress late last year, removes existing legal barriers to the use of new technology in check processing and holds the promise of a more efficient check collection system. the board commends representatives ferguson and ford for introducing this bill. technological advances in check processing check processing is far more efficient than it once was. less than fifty years ago, clerks hand sorted millions of checks each day. in the 1960s, the banking industry began to use mechanical high - speed check processing equipment to read and sort checks, which had been redesigned for automated processing. today, banks, thrifts, and credit unions, which i will collectively refer to as banks, process the more than 40 billion checks that consumers, businesses, and the government write each year. legal impediments, however, have prevented the banking industry from fully using these new electronic technologies, such as digital imaging, to improve check processing efficiency and provide improved services to customers. this is because existing law requires that the original paper checks be presented for payment unless the banks involved agree otherwise. we can see how this requirement constrains technological adoption by following a check through the collection process. after a bank's customer deposits a check with his or her bank, the bank typically transports the check from the branch or atm where it was deposited to a central operations center. the check is then usually sent to one or more intermediaries - - such as a federal reserve bank or a correspondent bank - - or a clearinghouse for collection before it is ultimately delivered to the bank on which it is drawn for payment. during each step of this process, the check must be physically shipped to its destination by air or ground transportation. of course, banks can agree to accept checks electronically, but the large number of banks in the united states makes it infeasible for any one bank to obtain such agreements from all other banks or even a large proportion of them. therefore, legal changes are needed to facilitate | 0 |
will not return some of the current problem countries to pre - crisis growth rates. so there will inevitably be calls for more stimulus. but we should keep in mind that the last ten years were not representative : it was a boom period, built on credit, creating ever larger imbalances. that party is now over. we need to learn the lessons from it. and the lesson from the bursting of a debt bubble cannot be to load up on more debt. these countries need reforms that undo previous excesses and re - build their economies on a more sustainable basis. this is the direction in which europe is currently heading. and there is really no alternative. there is one area, however, where i fear we are not learning the right lessons in europe. several european countries face a vicious circle where weak domestic banks cause fiscal difficulties for governments, which in turn undermines public debt sustainability and further damages banks β balance sheets. in the u. s., such a feedback loop does not exist, because federal institutions act as shock absorbers. they prevent local crises from becoming systemic : for example, banks can be recapitalised through the u. s. treasury and resolved through the federal deposit insurance corporation. in europe we need to look to the u. s. for inspiration in this area. this is why i have called for a european bank resolution authority. is the ecb β s response to the crisis swamping the world with liquidity? let me turn now in more detail to the recent actions by the ecb β in particular, the question whether the 3 - year long term refinancing operations ( ltros ) have swamped the world with liquidity. behind this question is the implication that increasing central bank liquidity always leads to distortions, be it inflation or currency volatility. but this misunderstands what central bank liquidity is. ecb liquidity is a very specific form of money. it can be used only to make payments between banks with accounts at the ecb and to meet reserve requirements. there is no automatic mechanism which converts this liquidity into loans or asset purchases. banks take such decisions based on factors like their financial strength, their risk aversion and the demand for credit by non - financial corporations and private households. so we should not make simplistic assertions about one factor leading to another. we should ask : what are we seeing in the data? looking at credit growth in the euro area, we see few signs | use of our credit operations, ensuring that our monetary policy tools remain effective even in times of severe financial market stress and against the backdrop of looming rating downgrades. of course, as the economic situation is evolving rapidly, we are constantly monitoring the situation. we remain more determined than ever to ensure supportive financial conditions across all sectors and countries to allow this unprecedented shock to be absorbed. we continue to stand ready to make further adjustments to our monetary policy measures should we see that the scale of the stimulus is falling short of what is needed. the impact of the coronavirus emergency on the european financial sector the pandemic hit the financial sector with an economic shock of unprecedented speed, scale and global scope. unlike in 2008, the current crisis did not start in the financial system. but the spread of the virus triggered a market reaction that at times rivalled the 2008 financial crisis in terms of the magnitude of price falls and volatility. the tightening of market conditions was abrupt, broad - based and, at times, disorderly. markets calmed following the announcement of forceful responses by monetary authorities around the globe. in particular, the ecb β s announcement of private and public asset purchases has helped to restore market functioning in many asset classes. in this challenging environment, banks β resilient balance sheets shielded them from the initial 2 / 4 bis central bankers'speeches cash - flow shock. recent efforts to build a stronger banking union allowed the banks to enter this crisis with healthier starting capital and liquidity positions than they had in 2008. at the end of 2019, the cet1 ratios of significant banks in the euro area stood at around 15 percent. the creation of a solid institutional set - up enabled us to take swift action to ensure that the euro area financial system continues to play its role in mobilising savings and directing funds into the real economy. in addition to the monetary policy measures i already mentioned, the ecb also took a number of supervisory measures. i will not elaborate on them now because the chair of the ecb β s supervisory board discussed them before this committee two days ago. these measures will release some of the buffers that were built up during the good times and help banks to continue providing financial support to households and businesses hit by the economic fallout of the pandemic. moreover, they will bring clear benefits in terms of maintaining a level playing field within the european banking sector. these microprudential measures were complemented by a range of macroprudential actions | 0.5 |
this multidimensional environment. ebrd needsto be ready to share, when and if its help is required. together with the other institutions of european union, the european commission, the eib group, as well as the national development agencies of the member states, we all have a duty to help / assist the less fortunate. however, as expansion is a β hot topic β today in the ebrd, should it be considered by the shareholders in the future, it needs to be calibrated with a strong and decisive intervention in the current countries of operations, to remove as much as possible the transition gaps. this approach should be a consensual approach of the shareholders, a transparent one, where everybody, sponsors and countries of operations agree on the principles and objectives. ladies and gentlemen, 1 / 2 bis central bankers'speeches allow me to conclude by saying that the national bank of romania strongly supports the partnership with the european bank for reconstruction and development. we appreciate the assistance provided and its benefits and positive impact. we will remain your reliable partner, as always. i invite mr. eugen teodorovici, minister of finance and governor to the ebrd to give his keynote speech on β romanian government program and future presidency of the european union council β. i wish you fruitful and successful discussions. thank you. 2 / 2 bis central bankers'speeches | mugur isarescu : opening speech - annual ebrd eu - 11 meeting opening speech by mr mugur isarescu, governor of the national bank of romania, at the annual ebrd eu - 11 meeting, bucharest, 13 april 2018. * * * vice president heilbronn, minister teodorovici, your excellences, ladies and gentlemen, you are most welcome here, at the national bank of romania. together with the board of the bank we are privileged to greet you here, today, for the annual european bank for reconstruction and development eu - 11 meeting. let me begin by saying that the national bank of romania has always had a consistent and reliable cooperation with the european bank for reconstruction and development. several high ranking officials from the ebrd have visited the national bank of romania, jacques de larosiere being one of them, in order to discuss topics of mutual interest and, of course, the ebrd activity in romania ( especially ebrd β s contribution to the reform of the banking sector in romania ). i would like to recall that the national bank of romania has hosted, over the years, more than a few official presentations of the ebrd transition report, including the 2014 edition, β innovation in transition β. on a more personal note, i confess i am among those who signed the agreement establishing the bank in 1991, as the representative of romania to that historical moment. i will take this opportunity to acknowledge the role that the european bank for reconstruction and development had in mitigating the global financial crisis. ebrd β s involvement in two very important initiatives, namely the local currency and local capital market initiative and the vienna initiative, has been essential for romania and the region. i am closely following the evolution of the ebrd. i believe that it finds itself at a cross - road, as the world has been changing rapidly due to the remarkable achievements of the past century : the it revolution, artificial intelligence, the technological progress and so on. ebrd, as other financial institutions, ought to adapt itself to this new environment and try to respond wisely and appropriately. in this respect, i think that ebrd has to continue its work in the countries for which the bank was initially created, as transition gaps still exist. we all need to share our experience with the new countries of operations, adjusting our knowledge to new challenging environments. we need to remain open minded and ready to tackle further challenges in | 1 |
general, i think those dual objectives β promoting financial stability and avoiding the creation of moral hazard β are best reconciled by central banks'focusing on the macroeconomic objectives of price stability and maximum employment. asset prices will eventually find levels consistent with the economy producing at its potential, consumer prices remaining stable, and interest rates reflecting productivity and thrift. such a strategy would not forestall the correction of asset prices that are out of line with fundamentals or prevent investors from sustaining significant losses. losses were evident early in this decade in the case of many high - tech stocks, and they are in store for houses purchased at unsustainable prices and for mortgages made on the assumption that house prices would rise indefinitely. these are my views and are not necessarily those of my colleagues on the federal open market committee. to be sure, lowering interest rates to keep the economy on an even keel when adverse financial market developments occur will reduce the penalty incurred by some people who exercised poor judgment. but these people are still bearing the costs of their decisions and we should not hold the economy hostage to teach a small segment of the population a lesson. the design of policies to achieve medium - term macroeconomic stability can affect the incentives for future risk - taking. to minimize moral hazard, central banks should operate as much as possible through general instruments not aimed at individual institutions. open market operations fit this description, but so, too, can the discount window when it is structured to make credit available only to clearly solvent institutions in support of market functioning. the federal reserve's reduction of the discount rate penalty by 50 basis points in august followed this model. it was intended not to help particular institutions but rather to open up a source of liquidity to the financial system to complement open market operations, which deal with a more limited set of counterparties and collateral. the effects of financial markets on the real economy related developments in housing and mortgage markets are a root cause of the financial market turbulence. expectations of ever - rising house prices along with increasingly lax lending standards, especially on subprime mortgages, created an unsustainable dynamic, which is now reversing. in that reversal, loss and fear of loss on mortgage credit have impaired the availability of new mortgage loans, which in turn has reduced the demand for housing and put downward pressures on house prices, which have further damped desires to lend. we are following this trajectory closely, but key questions for central banks, including the federal reserve, are, what is happening | narrow band because we cannot, by law, pay interest on reserves for another four years. at the same time, the term interbank funding markets have remained unsettled. this is evident in the much wider spread between term funding rates β like libor β and the expected path of the federal funds rate. this is not solely a dollar - funding phenomenon β it is being experienced in euro and sterling markets to different degrees. many loans are priced off of these term funding rates, and the wider spreads are one development we have factored into our easing actions. moreover, the behavior of these rates is symptomatic of caution among key marketmakers about taking and funding positions, and this is probably impeding the reestablishment of broader market trading liquidity. conditions in term markets have deteriorated some in recent weeks. the deterioration partly reflects portfolio adjustments for the publication of year - end balance sheets. our announcement on monday of term open market operations was designed to alleviate some of the concerns about year - end pressures. the underlying causes of the persistence of relatively wide - term funding spreads are not yet clear. several factors probably have been contributing. one may be potential counterparty risk while the ultimate size and location of credit losses on subprime mortgages and other lending are yet to be determined. another probably is balance sheet risk or capital risk β that is, caution about retaining greater control over the size of balance sheets and capital ratios given uncertainty about the ultimate demands for bank credit to meet liquidity backstop and other obligations. favoring overnight or very short - term loans to other depositories and limiting term loans give banks the flexibility to reduce one type of asset if others grow or to reduce the entire size of the balance sheet to maintain capital leverage ratios if losses unexpectedly subtract from capital. finally, banks may be worried about access to liquidity in turbulent markets. such a concern would lead to increased demands and reduced supplies of term funding, which would put upward pressure on rates. this last concern is one that central banks should be able to address. the federal reserve attempted to deal with it when, as i already noted, we reduced the penalty for discount window borrowing 50 basis points in august and made term loans available. the success of such a program lies not in loans extended but rather in the extent to which the existence of this facility helps reassure market participants. in that regard, i think we had some success, at least for a time. but the usefulness of the discount window as | 1 |
that appears to be extremely far removed from citizens. you β re criticised for being essentially responsible for a form of β democratic hold - up β, an expression used by journalist jean quatremer : you β re taking away budgetary sovereignty ; the euro area is described as being under german sovereignty ; you β ve invested absolutely huge sums in saving banks and the financial system, but it β s european people who have paid the price, with taxes, strict policies, the list is endless. what would you say in defence of your institution, mr cΕure? i β ve read jean quatremer β s book, β il faut achever l β euro β. now, when he speaks of the β democratic hold - up β he β s not talking about the ecb, but about european institutions and the way the euro functions in general. and it β s true, i agree with him : there β s a democratic deficit in the way the euro area functions. look at the discussion with greece. extremely painful measures have been discussed for the greek economy, for the greek people, and this discussion was between the greek minister and the other 18 finance ministers β it never went to the european parliament. so there is a problem. but it β s not the ecb. 3 / 8 bis central bankers'speeches ok, but the ecb formulates monetary policy that does not depend on governments or citizens, but considerably influences the economic policies and day - to - day lives of european citizens... that β s true, but what allows the ecb to be independent is its very narrow, very clear, very simple and very precise mandate, which is to bring the inflation rate back towards 2 %. this is how we are judged. and we are accountable to the european parliament. we go everywhere β i visit high schools, go to conferences, i discuss with people. we are on twitter, we β re in dialogue with european citizens... and with france inter! and with france inter, which is important as it allows me to explain all of these things. yes, we are bureaucrats in frankfurt, but this independence is possible... and technocrats!... and technocrats... this independence is possible because we have a very narrow mandate which can be monitored. the rest of the system is political, and requires democratic accountability. you β re a left - winger, mr cΕure, but despite that you won β t get | benefit from the impact of the ecb β s monetary policy measures and the low opportunity cost of holding the most liquid deposits. the narrow monetary aggregate m1 remained the main contributor to broad money growth. the recovery in the growth of loans to the private sector observed since the beginning of 2014 is proceeding. the annual growth rate of loans to non - financial corporations rose to 4. 1 % in june 2018, after 3. 7 % in the previous month, while the annual growth rate of loans to households remained unchanged at 2. 9 %. the euro area bank lending survey for the second quarter of 2018 indicates that loan growth continues to be supported by easing credit standards and increasing demand across all loan categories. the pass - through of the monetary policy measures put in place since june 2014 continues to significantly support borrowing conditions for firms and households, access to financing β in particular for small and medium - sized enterprises β and credit flows across the euro area. to sum up, a cross - check of the outcome of the economic analysis with the signals coming from the monetary analysis confirmed that an ample degree of monetary accommodation is still necessary for the continued sustained convergence of inflation to levels that are below, but close to, 2 % over the medium term. in order to reap the full benefits from our monetary policy measures, other policy areas must contribute more decisively to raising the longer - term growth potential and reducing vulnerabilities. the implementation of structural reforms in euro area countries needs to be substantially stepped up to increase resilience, reduce structural unemployment and boost euro area productivity and growth potential. regarding fiscal policies, the ongoing broad - based expansion calls for rebuilding fiscal buffers. this is particularly important in countries where government debt remains high. all countries would benefit from intensifying efforts towards achieving a more growth - friendly composition of public finances. a full, transparent and consistent implementation of the stability and growth pact and of the macroeconomic imbalance procedure over time and across countries remains essential to increase the resilience of the euro area economy. improving the functioning of economic and monetary union remains a priority. the governing council urges specific and decisive steps to complete the banking union and the capital markets union. we are now at your disposal for questions. 2 / 2 bis central bankers'speeches | 0.5 |
world's capital markets, february 2005, and mapping the global capital market 2006, second annual report, january 2006. nelson, edward, 2003. the future of monetary aggregates in monetary policy analysis. journal of monetary economics 50, pp. 1029 - 1059. nelson, edward, 2006. ireland and switzerland : the jagged edges of the great inflation. federal reserve bank of st. louis working paper series 2006 - 016a, may revision. reynard, samuel, 2006. money and the great disinflation. swiss national bank working paper series, 2006 - 7. white, william r., 2006. is price stability enough? bank for international settlements working papers n. 205. | the financial system conducive to sustainable and equitable economic growth. effective insolvency regimes, by saving struggling firms when possible, or by reallocating assets of failing firms more productively, contribute to the smooth functioning of the financial system. they help minimize market disruptions. banks and investors are also more willing to lend when they know they can recover at least some of their investment when businesses bis central bankers β speeches fail. entrepreneurs, particularly those involved in small and medium scale enterprises, will be more willing to enter the market when they do not have to put their entire personal resources at risk. effective insolvency regimes enable transacting parties to take calculated risks in their investment decisions. i am sure you will agree with me when i say that such an empowerment to take calculated risks is what fuels innovation. in turn, innovation is that which is at the heart of economic growth. the current philippine growth trajectory is on an uptrend. to sustain this, we need more investments, especially from real money funds from abroad that are accompanied by new technology for innovation. while it helps that the country is now rated two notches into investment grade territory, we should be mindful this alone won β t bring in investors. good growth prospects and higher credit ratings are undoubtedly important contributors to improving the investment environment. but they may not be enough to entice the full range of investors to come in, build businesses and create jobs for filipinos. we should always recognize that investment decisions are highly influenced by investors β confidence in our domestic legal system, the quality of our laws governing private and property sectors and how effective our laws are upheld and enforced. investors look for consistency and predictability in their commercial affairs. they would want to maximize and preserve the value of their assets or ensure that their claims are upheld, prioritized or equally treated if they become creditors of insolvent debtors. it is their confidence in our legal system that will encourage them to make use of court processes should rehabilitation and insolvency issues confront them. the fria provides us with a menu of remedies for distressed debtors and new approaches to rehabilitation and insolvency. and because it expressly adopts the uncitral model law on cross - border insolvency and accordingly, fria gives foreign creditors in liquidations and rehabilitation proceedings direct access to philippine courts. thus, opportunities for cooperation between domestic and foreign courts and domestic and foreign insolvency administrators | 0 |
to adhere to some critical factors. reasons for optimism first, our exercise needs to be more comprehensive than a standard stress test. in order for the comprehensive assessment to enjoy credibility, we must prove that we had deep insight into specific business areas, portfolios and individual credits as well as into processes and working guidelines. we must check whether accounting standards and workflows have been adhered to and ascertain whether the files of credit institutions faithfully reflect the contents of their systems. the comprehensive assessment is more comprehensive than any previous exercise β in terms of its scope and of the number of banks covered. we will examine in detail no less than 760 banking book portfolios. to reach our objective β to improve market confidence in euro area banks β it was essential to select more than 50 % of banks β portfolio exposure. the exercise would not have been seen as credible if a smaller set of portfolios had been selected. we will review some 135, 000 credit files. a total number of more than 6, 000 supervisors and auditors are currently conducting the review on the ground. for this review, we have and will collect vast amounts of data. i am aware that fulfilling our data requests puts quite a burden on banks, particularly the smaller institutions. we know that some of those face tighter constraints on the number of staff they can dedicate to specific tasks relating to the asset quality review ( aqr ) and that they may generally be less used to regular supervisory exercises such as the stress tests conducted by the european banking authority ( eba ). we did get some complaints which we take seriously. but even if we pare down our data requests to the essentials, we will still request tremendous amounts of data. bis central bankers β speeches by the way, let β s not trick ourselves β if there were no complaints at all, i would wonder whether we were doing a good job! and we need the data to do this job correctly. we need to stretch banks β and our own resources to the limit, not only to drill down to the detail, but also to allow for comparability. second, the two parts of this assessment complement each other : the aqr will give us a point - in - time picture of the state of banks β balance sheets. the aqr will ensure that the following stress test will be based on clean data, thus avoiding the weakness of the previous stress tests, in which the calculations were based on exposures valued only by the bank concerned. | me explain. the post - crisis economic recovery, while being subdued nearly everywhere, was faster in central and eastern european countries than in the western balkan economies. exporters from central and eastern europe were in a better position to take advantage of the recovery in global demand, due in part to their tighter integration in euro - area affiliated cross - border bis central bankers β speeches production chains. looking ahead, the dismantling of trade barriers between the western balkans and the eu should allow exporters in this region to also realise in full the advantages of vertical specialisation in international trade. this is one of the reasons why closer integration in europe will continue to be beneficial. another reason is that implementing the new eu governance framework will be key to prevent future macroeconomic imbalances in the member states. the so - called macroeconomic imbalance procedure explicitly monitors the emergence of internal and external macroeconomic imbalances. moreover, the existing stability and growth pact was strengthened, introducing earlier sanctions and more automatic enforcement procedures. it now needs to be implemented vigorously. not least, in the context of the on - going process of building the banking union the ecb has been granted supervisory powers. as you know, this will start in november next year, and will cover not only euro area banks, but also the banks of any non - euro area member state wishing to join the single supervisory mechanism through so - called enhanced cooperation. as part of the new powers, the ecb will monitor the financial soundness of banks and, in case of need, impose additional capital, liquidity and other prudential requirements. the completion of a comprehensive banking union with all necessary elements will be a milestone in the construction of the new european governance. it will also be of significance for countries in the entire region as in many of them the banking sector is dominated by euro area headquartered banks. 2. my second key policy lesson is that the process of economic and institutional convergence needs to be sustainable over the longer run. the fundamental logic of the eu treaty β with the convergence framework embedded in it β remains the right one. existing members, as well as candidate, and potential candidate countries have to make sure that they pursue sound policies. they should first and foremost focus on establishing sound fiscal and sustainable macroeconomic developments, and complement this with the necessary structural and institutional reforms including a strong framework for central bank independence. to support the process of institutional convergence, the ecb, together with national central banks of the eurosystem, has implemented | 0.5 |
as the share of non - bank financial intermediation increases this fragility may expose the financial system to a risk of systemic disruption in case the run event results in contagion. hence we cannot afford complacency and we need to monitor financial innovation. this is one of the key lessons to be drawn from the previous crisis. financial innovation now takes new forms, and part of it is true technological progress. in evaluating the usefulness of digitalization in the provision of finance we need to consider the benefits against the potential risks. benefits include having a more diverse set of finance providers, more efficient use of algorithms and data bases with which credit decisions are made, and the improved access to finance for entities that would not have had the access otherwise. the potential risks stem from the possible flaws in these new lending algorithms and lack of experience with how they fare through the credit cycle. this is particularly relevant at this time as the new innovations are developed amid low interest rates. but we should not be naive either : part of financial innovation may still be motivated by evasion of regulation and taxes. new types of links between banks and shadow banks may form. to stay on top of things, we will need in - depth analysis, building of risk scenarios and counterfactuals, and out - of - box thinking. non - bank financial intermediation also has the potential to move quickly between jurisdictions, and the new low - cost business models make this fairly easy. hence, there is a need for international cooperation when it comes to regulation and macroprudential actions towards these entities. [ slide 13 ] let me also consider the question whether regulatory reforms have been excessive in the sense that they would be increasingly driving activity to the unregulated segments of the financial system. looking back, bank regulation before the global financial crisis was rather light, too light, at least in terms of banks β true loss absorbance capacity. yet, certain forms of shadow banking grew rapidly, motivated precisely by opportunities to increase banks β leverage to even 4 / 5 bis central bankers'speeches higher levels. hence, there is a certain irony in the current concerns that increased regulations, like higher capital requirements, are pushing activity to the shadow banking sector. the lesson of the past fifteen years is that there always seems to be this tendency, no matter how high or low the starting level of regulation is. against this backdrop, i would put in perspective the current concerns of excessive regulation. 4. conclusions i would | the 1970s better than other countries. this was attributed to the consistent anti - inflationary economic policy of the bundesbank. this was of great relevance to the monetary policy of other countries, in general, and to the future structure of european monetary union, in particular. hence, in the aftermath of the 1970s inflation, maintenance of confidence in the value of money, in other words stabilisation of inflation expectations at a low level, surfaced as the key function of monetary policy. this is commonly referred to as the β anchoring β of inflation expectations. it was appreciated that this is the very objective that defines the role of the central bank in the division of economic policy responsibilities. in the 1980s and 1990s, more and more countries modelled their monetary policy institutions and practices upon this approach. the new central bank doctrine has perhaps best been recapitulated by stanley fischer in his famous paper β modern central banking β, delivered in london in 1994 at the tercentenary symposium of the bank of england. the then professor at mit later served as first deputy managing director of the imf and governor of the bank of israel. fischer outlines the following principles of modern central banking. central banks must have a clearly defined mandate, which is to maintain price stability, and they must make a public commitment to honouring this objective. central banks must enjoy operational independence in the deployment of monetary policy instruments, such as interest rates, to achieve their objective. independence also requires that central banks must not be obliged to finance the government fiscal deficit. as a counter - balance to central bank independence, fischer underscored the accountability of central banks, ie their responsibility to achieve their objective. while these principles were gaining ground in monetary policy, the advanced economies entered a highly favourable period of economic development, now referred to as the great moderation. this period of low inflation and stable economic growth persisted for more than ten years, until the emergence of the financial crisis. bis central bankers β speeches the seemingly favourable developments, nevertheless, masked mounting risks, such as global economic imbalances, as well as the huge expansion of banks β balance sheets and risks, which was partly facilitated by the weaknesses in the regulatory framework for banks. the emergence of the international financial crisis in 2007 and its escalation in 2008 revealed the fragility of the world economy and the credit system as never before. it may come as a surprise that, despite its gravity, the economic crisis of recent years has not undermined the foundations of monetary policy. | 0.5 |
the ongoing supply challenges and demand shifts, have led to inflation rates we have not seen in four decades. the priority for monetary policy is clear. the federal reserve is strongly committed to bringing inflation back down to our 2 percent longer - run goal. price stability is absolutely essential for the economy to achieve its potential and sustain maximum employment over the medium term. i want to be clear : this is not an easy task. we must be resolute, and we cannot fall short. this morning i'm going to talk about the uncertainty that high inflation poses to the economic outlook. i'll also share more about the labor market, both here in puerto rico and in the country more broadly. then, i'll describe how the federal reserve's monetary policy actions are aimed at bringing down high inflation and restoring balance to the economy. before i continue, i should give the standard fed disclaimer that the views i express today are mine alone, and do not necessarily reflect those of the federal open market committee ( fomc ) or others in the federal reserve system. dual mandate i know many of you here are studying economics, so you may be familiar with the fed's dual mandate, or the two goals congress has set for us : to promote both maximum employment and price stability. to better understand what affects our mandate, we look at data β lots of it. we study everything from food and gas prices to retail sales and inventories, from labor costs and employment figures to semiconductor inventories and shipping expenses, and from the demand for goods and services to readings on public health. slowing growth so, i'll start with the data that we are seeing as it relates to one half of our dual mandate : maximum employment. although there are some signs that job growth has slowed in recent months, the labor market remains incredibly tight. during the first six months of this year, the economy added 2 - 3 / 4 million jobs, as businesses added staff to keep up with demand. the unemployment rate has been steady in the past few months near its historical low and was 3. 6 percent in june. there are now far more job openings than people looking for work, and employers are still struggling to fill roles. the economy experienced a rapid recovery from the pandemic last year, but i expect growth to slow considerably this year as the waning effects of fiscal stimulus, less favorable financial conditions, and slower growth abroad all weigh on our economy. by continuing to use our site, | on the challenge of gathering loss data in a historically low loan loss environment. we will also discuss the challenges you share around keeping abreast of consumer compliance requirements. during today β s luncheon, our head of consumer compliance will share remarks on recent enhancements to the examination process. i β d like to close with a few words about a specific topic that is core to the community bank 2 / 3 bis central bankers'speeches business model, namely attracting new customers and growing deposits. i believe success in the area will be increasingly linked to a willingness to invest in technology and new processes. customers today seem to prefer online banking, and millennials favor alternative banking options. this suggests both an opportunity and a strategic imperative. there may be no better time than now to reimagine transformation through investments in innovation, improved multichannel delivery, more fintech partnerships, and expansion of digital payments. technologies to enable transformation are more powerful, readily accessible, easily implementable, and economical than ever before. of course, these new activities bring risk management and legal issues and challenges to consider β vendor management, data privacy, consumer protection and cybersecurity to name just a few. to conclude, and again to echo the β on the horizon β theme of the conference, i believe we all need to be mindful of this new financial landscape as community banks strive to retain control of the customer experience. this is critical to the relationship - based business model of many community banks and reflects the unique local knowledge of the market and customer needs. as the industry evolves, this poses some challenges but also opportunities. this is new territory for us all and i expect it will be part of the ongoing supervisory dialogue in the years ahead. thank you for your attention and for joining us today at the new york. i will be available during today β s lunch session to discuss further, and i hope you enjoy today β s conference. 1 i thank jacqueline fenton for assistance drafting these remarks. 2 kevin j. stiroh, introductory remarks at the new york feds first fintech research conference, march 22, 2019. 3 / 3 bis central bankers'speeches | 0.5 |
news conference embargo 20 june 2024, 10. 00 am introductory remarks by the governing board thomas jordan, martin schlegel and antoine martin chairman of the governing board / vice chairman of the governing board / member of the governing board swiss national bank zurich, 20 june 2024 Β© swiss national bank page 1 / 6 zurich, 20 june 2024 thomas jordan, martin schlegel and antoine martin news conference ladies and gentlemen as chairman of the governing board, it is my pleasure to welcome you to the news conference of the swiss national bank. i would also like to welcome all those who are joining us today online. after our introductory remarks, we will take questions from journalists as usual. questions can also be asked by telephone. monetary policy decision i will begin with our monetary policy decision. we have decided to lower the snb policy rate by 0. 25 percentage points to 1. 25 %. the change applies from tomorrow, 21 june 2024. banks β sight deposits held at the snb will be remunerated at the snb policy rate up to a certain threshold, and at 0. 75 % above this threshold. we are also willing to be active in the foreign exchange market as necessary. the underlying inflationary pressure has decreased again compared to the previous quarter. with today β s lowering of the snb policy rate, we are able to maintain appropriate monetary conditions. we will continue to monitor the development of inflation closely, and will adjust our monetary policy if necessary to ensure inflation remains within the range consistent with price stability over the medium term. inflation forecast allow me to address the development of inflation in more detail. inflation has risen slightly since the last monetary policy assessment, as we expected at the time, and stood at 1. 4 % in may. higher inflation in rents, tourism services and oil products has contributed in particular to this increase. overall, inflation in switzerland is currently being driven above all by higher prices for domestic services. taking into account today β s policy rate cut, our new conditional inflation forecast is similar to that of march. over the longer term, it is slightly below the previous forecast. this reflects somewhat lower second - round effects. over the entire forecast horizon, the conditional inflation forecast is within the range of price stability ( cf. chart ). the forecast puts average annual inflation at 1. 3 % for 2024, 1. 1 % for 2025 and 1. 0 % for 2026 ( cf. table ). it is based on | interest rate policy. you, the private sector, analyse this information and act upon it. unlike the situation in the past, when international businesses were led to believe that the future path of exchange rates was predictable, today we have a more realistic situation in which the business community knows that shocks can occur, and that what is predictable is the way in which the central bank will react to them. in addition to a more stable international monetary order, this new paradigm has brought us many other advantages : lower inflation, lower real interest rates and lower international spreads are additional achievements. after decades of high inflation and even recurrent episodes of hyperinflation in various emerging markets, the last ten years have been marked by low stable inflation in most caramazza, f. and j. aziz ( 1998 ), fixed or flexible? getting the exchange rate right in the 1990s ', imf, economic issues 13, april. eichengreen, b. and raul razo - garcia ( 2006 ), the evolution of exchange rate regimes, economic policy, july, pp. 309442, table 1. countries of the world. price stability has benefited all. consumers benefit, of course, because their income is no longer eroded by price growth. but producers have also gained because price stability helps them to plan ahead. lower inflation and confidence in central bank policies have, in turn, reduced uncertainty about future price developments. the lower inflation risk premium is allowing even industrial economies to grow at lower real interest rates than in the past. and, finally, an unambiguously beneficial consequence of the new international monetary order is that it allows for more efficient distribution of capital. at the same time as the current polarisation of exchange rate regimes has come into being, financial globalisation has intensified. capital controls are being lifted in a growing number of developing countries. in the 1970s, net flows of private capital to the world's poor countries amounted to a little over 1 % of host - country gdp. 3 by the end of the 1990s, this percentage figure had grown by a factor of three. today, there is a broader acceptance of the benefits to be derived from financial liberalisation. indeed, the gains expected from a free market for international capital are substantial. global finance allows for a better allocation of world resources, enhancing the prospects for growth of all nations. for richer countries of the world, there are new investment opportunities to finance the expanding needs of their aging populations. younger and poorer nations obtain access | 0.5 |
mohammed laksaci : financial system developments in algeria β resilience and risks in the face of the international financial crisis and its spillover effects speech by dr mohammed laksaci, governor of the bank of algeria, at a meeting with the algerian bankers association, algiers, 22 january 2009. * * * algeria β s strong macroeconomic performance over the past nine years and the gradual strengthening of the banking sector β s stability have contributed to establishing a relative resilience to external shocks. key achievements include : β’ sound management of international reserves ( no investments in risky assets ), paying due attention to the strategic objective of safeguarding asset portfolios against any loss of capital ; β’ significantly reducing external debt, in 2005 and 2006, after strictly limiting external borrowing since early 2000. by end 2008, total medium and long term debt stood at only $ 4 billion ( less than 3 % of gdp ). furthermore, banks β external liabilities represent less than 1 % of their total liabilities, and banks are required to deposit their end - of - day foreign exchange balances at the central bank which manages the country β s overall exchange position ; β’ saving part of the fiscal revenue windfalls, with an annual budget saving averaging 23 % of gdp during the period 2005 - 2008. by end 2008, savings in the stabilization fund ( frr ), totaled da 4113 billion ( equivalent to $ 57, 8 billion ) ; β’ domestically financing the economy β s large investments, in the context of excess saving rates over investment rates ; β’ developing the bond segment of the financial market, with access limited to domestic investors ; β’ advancing the restructuring of the banking sector following failure and bankruptcy of small private banks which resulted in withdrawing their licences over 2003 - 2006 while compensating depositors through the deposits guarantee fund. the strengthened macroeconomic stability, as evidenced by subdued inflation ( 4. 4 % in 2008 despite the surge in world commodity prices ) and a real exchange rate of the dinar near its equilibrium level, as well as important foreign exchange reserves ( $ 143 billion, by end 2008 ) and low external debt, have constituted sound safeguards against the inherent shocks of the current international financial crisis. in addition, indirect monetary policy instruments ( deposit auctions, marginal deposit facility, β¦ ) have been successfully used to limit the impact of structural excess liquidity on inflation. although the direct contagion impact of the international financial crisis on the algerian banking system is limited, in view of its small | exposure to international financial markets, increased attention is directed to further strengthening and preserving its soundness. in this regard, the required minimum capital for banks and financial institutions have recently been substantially increased to strengthen their resilience and increase their lending capacity. despite the structural nature of the excess liquidity since 2002, growth of credit to the economy has been relatively moderate ( 14 % in 2008 ). for a better contribution to the diversification of the economy, banks are expected to enhance their efforts in financing the development of smes while further improving credit and operational risk management. the role of banks in investment financing is crucial given the limited development of the financial markets. the 2009 government budget provides for appropriations to strengthen public banks β capital base. government financial support to the public banks ( bailing out of public banks β portfolios and strengthening of their capital assets ) averaged 2. 6 % of gdp for the period 1991 - 2002 and 1. 7 % for the period 2005 - 2006. the bank of algeria will continue to pay due attention to potential risks arising from the deepening international financial and economic crisis, particularly risks to the banking sector. in this respect, particular attention will be attached to the flexible use of available monetary policy instruments and to maintaining a flexible exchange rate policy to reflect the economy β s fundamentals. at the same time, banking supervision will continue to be strengthened, in accordance with the ongoing initiatives of the basel committee. following the modernization and consolidation of banks β reporting system and the recent increase in required minimum capital, sustained efforts are being devoted to strengthen the operational and regulatory frameworks of the banking sector over the first half of 2009 ( conformity of bank assets, liquidity and credit risks management, β¦ ), in accordance with international standards. in this regard, a stress testing system, introduced in 2007, already contributes to better assessing banks β risk management and evaluating adequacy of capital assets to potential risks. in view of the large number of foreign banks presently operating in algeria, continued efforts are being made to develop bilateral cooperation on their supervision. in conclusion, prudent management of resources and continued strengthening of the financial and banking system stability allow algeria to consider its medium term economic objectives with a relative confidence. however, the deepening of the international financial crisis and its drastic spillover effects on the world economy is already affecting the country through a number of channels, notably : β’ a reduction in its savings capacity. the sharp decline in oil prices is drastically reducing hydrocarbon export receipts and | 1 |
i think, necessary for improving our understanding of how to preserve financial stability in the current context. the second issue is the potential spillover effects of monetary normalisation on emerging markets. the β taper tantrum β of 2013 exposed the vulnerability of emerging markets to tightening global financial conditions. this time, most analysts expect the effects to be more benign, given the increased resilience of some key emerging economies and the favourable ( for them ) commodity prices, but we do not really know to what extent this might remain a cause of financial vulnerability. there are very good papers in this workshop on global fund flows and emerging markets, on the currency structure of corporate debt, on exchange rates, and on the effects of foreign monetary policy on inflation in emerging countries. it might be interesting to see these issues through the lens of monetary policy normalisation as well. the final issue i would like to mention is the transmission of monetary policy through the lending channel. a tightening of credit standards by banks might amplify the impulse from monetary policy normalisation. one interesting way to look at this issue is to consider the heterogeneity of banks in terms of ( say ) market power, screening processes, balance β sheet strength, and possibly other factors. a further aspect that has become increasingly relevant is the role of macroprudential policy. conceptually, macro β pru tools have strong complementarities with monetary policy, but we still know too little of the way they work in practice, given the relative novelty of their systematic use. there are excellent papers in the programme, both theoretical and empirical, on the transmission of monetary policy in an environment with heterogeneous banks and on the link between monetary and macroprudential policies. what lessons can we learn about the effects of monetary policy normalisation on the lending channel, and on the interactions between the monetary stance and what we might call the β prudential stance β? these are just a few of the many interesting topics that the workshop will address. others include the impact of multinationals on inflation co β movements around the world, the role of a safe asset for international financial stability, and the functioning of central banks β swap lines at the beginning of the pandemic. it is a rich menu ; we shall learn a lot. i would like to thank the organisers for their efforts ; the presenters and discussants, and the keynote speaker, for their contributions ; all of you for being here to take part in this debate. | welcome address luigi federico signorini, senior deputy governor of the bank of italy annual meeting of the cepr - imf programme, 09 - 10 june 2022 it is my pleasure to open the annual meeting of the international macroeconomics and finance group of the cepr. it is a double pleasure, in that this is the second time this week that i have had the opportunity to welcome people attending an international meeting in person. it is a nice sign that we may finally be going back to some normality after unpleasantly exceptional times. i am also particularly happy because of the very distinguished group of researchers that are gathering today here at the bank. there are elements of normalisation in the financial and especially monetary arena as well. obviously, nothing can be the same as before the pandemic, but one hopes that the world β s economies will gradually be able to find a β new normal β after the shock. we still face hard challenges, and the ongoing war in ukraine, on europe β s very doorstep, certainly adds to the political and economic uncertainty. i would like to take the opportunity of addressing this floor in order to raise some issues that in my opinion deserve particular attention at the current juncture. some of them are related to topics that will be discussed during your workshop. the first issue concerns financial stability, and has to do especially with non - monetary financial institutions. the size of the nbfi sector has increased significantly over the last few decades, and together with other developments, such as increased concentration and ( possibly ) decreased diversity, this may pose novel challenges to policymakers and supervisors. we had been drawing attention to the implied potential risks for years, and in a way we felt vindicated, in the spring of 2020, by an episode of market turmoil that was only contained thanks to massive central bank intervention. international fora, such as the g20 ( particularly during our presidency, in 2021 ) and the fsb, have been debating the issue ; certain steps have been taken ; but my feeling is that progress has been too slow so far. this point seems especially relevant in the current environment, where markets are again facing increased volatility and wider credit spreads in a context of high leverage β though to a much lesser extent than two years ago, for what we can see. research on the effects of monetary policy normalisation on the risk - taking channel for investment funds, pension funds, and insurance companies and on the risk of liquidity stress in markets is, | 1 |
high and rigid reserve requirements, and replaced it by daily, weekly and monthly auctions of monetary loans and deposits of commercial banks with the central bank. in the last two years we are gradually replacing these monetary auctions with treasury bills which will be our main instrument for conducting monetary policy vis - a - vis the market as a whole. judging from the results, the outcome is rather satisfactory : β’ israel enjoys price stability. β’ the foreign currency market functions smoothly, with relatively narrow spreads and low volatility. at the background, the central bank watches the market but does not intervene and the shekel, the domestic currency, is fully convertible. β’ the foreign currency position of the israeli economy is positive : the current account is roughly balanced ; fdi and portfolio investment started to go up again in the wake of the rebound in world financial markets ; and foreign exchange reserves held by the central bank are ample. to sum it up : the decision to regard the exchange rate as a policy instrument or let it be a marketdetermined variable is an integral part of the general strategy of macro - economic policy. in our case we let it be determined by the interbank market and used the short - term interest in its stead. a final word on the financial relations among mediterranean countries. while the potential for intraregional trade does not seem to be large at this stage, there seems to be some scope for furthering financial ties, especially under the auspices of the european central bank : β’ one example can be joint missions and consultations to review the stage of development of various financial markets. β’ another example, based on the trend toward a flexible exchange rate regime, is a framework for collaboration among central banks to promote the stability of the financial system and open information channels among supervision authorities. β’ a third example deals with the sequencing of liberalizing the capital account in connection with changing the exchange rate regime. the initiative of bank of italy and the european central bank should, therefore, be seen as a successful beginning. this is the most suitable forum to discuss and strengthen financial ties between the eurosystem and mediterranean central banks. | interest rates across key industrial countries in recent years supports this hypothesis. however, this co - movement in long - term interest rates might also be the outcome of global shocks which affect different countries in much the same way and, therefore, prompting similar national monetary policy responses. in this case, the co - movement in national longterm interest rates does not necessarily imply that central banks no longer exert an influence on their domestic long - term rates. 2. 3 credit channel the credit channel consists of several sub - channels with the bank lending channel and the balance sheet channel probably being the ones that have been most analyzed. whereas the bank lending channel concentrates on the supply of bank loans, the balance sheet channel looks at the effects of monetary policy on the overall supply of funds via borrowers β net worth. as concerns the bank lending channel, a number of studies document that financial innovation β such as securitisation or credit derivatives β have led to banks becoming more flexible in reacting to monetary policy. more specifically, they may have become able to better isolate their loan costumers from restrictive monetary policy impulses. 2 consequently, financial developments may have made the bank lending channel less important. however, to the extent that credit protection through credit derivatives is associated with an increase in bank credit supply the importance of the bank lending channel has not necessarily changed. for example, the possibility of transferring credit risk may not result in reducing risk from a see boivin, giannoni, mojon, β how has the euro changed the monetary transmission? β, nber working paper no w14190. see for example altunbas, gambacorta and marques - ibanez ( 2007 ), β securitisation and the bank lending channel β, ecb working paper no. 838. see for example hirtle ( 2007 ), β credit derivatives and bank credit supply β, federal reserve bank of new york staff report no 276. specific activity ( such as lending ) may increase that activity. in such a case, monetary policy would still operate through a bank lending channel as capital requirements would still be effective. according to the balance sheet channel, possible interest rate changes influence the creditworthiness of borrowers via the evaluation of their assets. creditworthiness, in turn, influences the premium that borrowers have to pay for external financing, and, thus, economic activity. while the analysis of the balance sheet channel was originally applied to non - financial institutions, the deep | 0 |
our firepower be well aimed. indices of policy uncertainty are about 1ΒΌ times their pre - crisis averages in the us and japan, and as high as three times in china. in the uk, progress since the financial crisis has been more than totally unwound this year with the measure having risen to five times its precrisis average by the start of the official referendum campaign ( chart 3 ). a closely watched measure of economic uncertainty β the vix β spiked when the global financial crisis hit. measures that combine this with other sources of economic uncertainty, such as dispersion among forecasters β growth projections, households β unemployment expectations, and currency volatility, show clear variation over time, and rise at times of economic stress. see haddow, a, hare, c, hooley, j and shakir, t ( 2013 ) β macroeconomic uncertainty : what is it, how can we measure it and why does it matter? β, bank of england quarterly bulletin, q2. one way some of this has been measured is again to count occurrences in media articles of references to economics, uncertainty, and policy terms like β deficit β, β regulation β or terms relating to monetary policy. see : baker, s, bloom, n and davis, s ( 2015 ), β measuring economic policy uncertainty β, nber working paper no. 21633, october. bis central bankers β speeches while clearly these three uncertainty measures are related, distinct movements are visible. the heady days of the great moderation were restrained by geopolitical uncertainty. during the financial and euro crises, by contrast, economic uncertainty dominated. and from 2012 onwards, with the abatement of the acute phase of the euro - area crisis, economic uncertainty began to fall back, only to be replaced by renewed geopolitical tensions and now sharply higher policy uncertainty ( chart 4 ). chart 3 uk economic policy uncertainty has increased since the global financial crisis, rising sharply higher in early 2016 source : bank calculations and baker et al, ( 2015 ), ibid. chart 4 three eras of uncertainty : geopolitical from 9 / 11 to 2008 ; economic uncertainty from 2008 to 2012 ; and policy uncertainty today source : bank calculations and authors cited in charts 1 β 3 above. economic policy and geopolitical uncertainty indices are de - meaned and shown relative to their respective standard deviations. chart shows two - year centred moving average for each measure. bis central bankers β speeches 2. | 10 - year government bond yield. - 2 source : imf, bloomberg, thomson reuters datastream and bank calculations. the equity - bond yield spread is the difference between the reciprocal of the ftse allshare price - earnings ratio and the uk 10 - year government bond yield. the growth contribution is calibrated from the imf 5 - year - ahead world growth and inflation forecasts. the erp contribution is calibrated using the var model described in chin and polk ( 2015 ), β a forecast evaluation of expected equity return measures β, bank of england working paper, no. 520. the serial disappointment in earnings growth is mirrored in global growth since the crisis ( chart 9 ). in advanced economies, uncertainty appears to be holding back spending, particularly by corporates. globally, investment remains weak ( charts 10 and 11 ). in the uk, relatively strong business investment growth in the past few years has only restored it to a level still shy of its pre - crisis share of gdp ( chart 12 ), and it is tracking below past cycles ( chart 13 ). a fall in expected growth rates will tend to push down on expected future earnings, lowering equity prices and increasing the equity yield. at the same time, a fall in growth expectations will tend to be reflected in a lower expected path of risk - free rates, pushing down on bond yields. so a decline in growth expectations will tend to widen the spread between equity and bond yields. since equity prices depend on earnings expectations at all future horizons, the equity yield ( and hence the equity - bond yield spread ) will be particularly sensitive to expectations about growth rates at long horizons bis central bankers β speeches chart 9 consistent downward revisions to gdp growth forecasts actual gdp growth per cent 8. 0 dotted lines = emerging economies solid lines = advanced economies 6. 0 4. 0 2. 0 0. 0 source : imf world economic outlook. each line shows how forecasts for a particular calendar year have evolved over time. the diamond shows the eventual outturn. chart 10 chart 11 whole economy real investment substantially weaker than pre - crisis forecasts advanced economy investment has fallen relative to gdp, remains lower than past episodes residual non - residential total equipment residential per cent pp fall in investment share of gdp 1. 0 - 10 0. 5 - 20 0. 0 - 0. 5 - 30 - 1. 0 - 40 - 1. 5 - 50 - 2. 0 - 2. 5 - 3. 0 sweden switzerland germany uk | 1 |
provides an excellent opportunity to take stock, reflect on our experiences and listen to a wide range of external voices. 1 for a more detailed discussion, see : lane, p. r. ( 2020 ), β the monetary policy toolbox : evidence from the euro area β, speech at the us monetary policy forum, new york, 21 february ; and lane, p. r. ( 2019 ), β determinants of the real interest rate β, remarks at the national treasury management agency, dublin, 28 november. 2 / 2 bis central bankers'speeches | the successful, widespread adoption of artificial intelligence, innovations in automation and enhanced infrastructure investment ). however, for now the downward pressure on the equilibrium real rate is a significant environmental constraint on the options available to central banks. the low equilibrium real rate has been compounded by weak nominal developments over the last decade. the global financial crisis ( plus the sovereign debt crisis in the case of the euro area ) resulted in a considerable amount of slack in labour markets and capacity utilisation. in the euro area, the post - crisis focus on fiscal consolidation meant that the fiscal stance was not supportive of domestic demand until quite recently. given these forces, the ecb has adopted an accommodative monetary stance, which has been characterised since 2014 by a combination of : ( a ) a negative policy rate ; ( b ) an asset purchase programme ; ( c ) targeted longer - term refinancing operations ( tltros ) ; and ( d ) forward guidance on the path of policy instruments. this policy stance has been successful in warding off deflation risk and, more recently, in supporting a resurgence in wage inflation ( through the accumulated reduction in labour market slack ). however, ongoing monetary accommodation is still required in order to ensure the robust convergence of price inflation to our aim. 1 / 2 bis central bankers'speeches this sustained period of below - target inflation reflects both the extent of post - crisis slack in the economy and the inherent gradualism of inflation adjustment in this environment. in particular, while above - target inflation can be countered by sharp monetary tightening, lower bound limits on policy space mean that policy easing measures must take the form of less - sharp adjustments that are maintained over an extended horizon. a corollary fundamental principle in the design of monetary policy in this environment is that β in order to avoid a long - term de - anchoring of inflation expectations β easing measures must be sufficiently pre - emptive to guard against a further downward drift in inflation dynamics. furthermore, under conditions in which policy rates are likely to rise only gradually over time, fiscal measures have an especially powerful macroeconomic impact, both by providing stabilisation in the event of adverse shocks and by supporting the return of inflation to our aim. in conclusion, i have briefly described some of the forces shaping the ecb β s current monetary stance. however, there are still many open questions that are raised by the combination of low interest rates and low inflation. accordingly, this year β s review of our monetary policy strategy | 1 |
andreas dombret : the euro, the banks, and the crisis β reshaping the world of finance speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the american academy, berlin, 10 march 2014. * * * introduction ladies and gentlemen thank you for inviting me to speak at the american academy in berlin. as you may know, i was born in the united states and still carry a us passport in addition to my german one. and this is why i very much appreciate the work of the academy in fostering dialogue between the united states and germany, and why i wholeheartedly support gary smith and his team. in general, a dialogue based on trust and mutual understanding is essential in order to master challenges and solve problems. however, trust and mutual understanding do not always come naturally. what i am thinking of is the world of finance. over the past years, people around the world have lost trust in the financial system in general and in banks in particular. this lack of trust is not only reflected by rather sobering polling results ; it is also reflected by what people on the street are saying. just the other day i heard a short remark that was intended as a joke but, to my ears, certainly did not sound like one. it went like this : β an honest criminal becomes a bank robber. a dishonest criminal becomes a bank manager. β although i do not subscribe to the message, this remark does capture the general mood rather well. and this sentiment should not come as a surprise to us. we have lived through a succession of crises for almost seven years now. banks and the financial system have, unfortunately, been at the heart of each of these crises. against this backdrop, everyone agrees that we have to reshape the world of finance. regarding the banks, change has to come from within and from without. a change in culture is what must come from within, and from without must come a reform of regulation. but we also have to look beyond the banks. the first thing that comes to mind is the link between banks and the state. the crisis in the euro area has emphasised how closely the fates of banks and states are intertwined. to break this link, further reforms are important and they are necessary. finally, we have to acknowledge that the financial system comprises more than just banks. there are other players that can become a source of risks to financial stability, to the economy, | speech central bank of the republic of turkey prof. sahap kavcΔ±oglu, governor cbrt 89th ordinary meeting of the general assembly 30 march 2021, ankara esteemed shareholders, distinguished guests on the occasion of this meeting, i would like to express my pleasure to be here with you today as the governor of the central bank. i believe that we will duly fulfill our responsibility with all my colleagues at the central bank in the period ahead, and i wish that the new period will be beneficial to our country, our nation and our bank. today, we are holding this meeting under safety measures due to the coronavirus pandemic going on for the past year, which has deeply affected both our daily lives and world economies. i salute all the stakeholders and audience attending our general assembly meeting either in this hall or in front of their screens. the pandemic that has been going on for over a year has caused, among other things, economic challenges and uncertainties all over the world. as you know, the measures that have been put in place to curb the spread of the pandemic since the first quarter of 2020 have adversely affected growth performance of economies all over the world. for this reason, countries have tried to mitigate the potential impact of the pandemic on their economies through expansionary monetary and fiscal policies. at this point we see an improvement in the global growth outlook and an increase in international commodity prices on the back of positive developments in the vaccination process, in addition to expansionary policies. however, despite the ongoing vaccination efforts, the ongoing uncertainties regarding the vaccination process and the course of the pandemic keep the risks to the global economy alive. distinguished guests, at my first general assembly meeting, let me briefly share with you some important issues regarding the monetary policy. under the duties and powers set forth by law and in line with its main objective of achieving a permanent fall in inflation, the central bank of the republic of turkey will continue to use the monetary policy tools effectively. we are strictly committed to the medium - term inflation target of 5 %, defined as price stability and set jointly with the government. we are going to use the monetary policy tools appropriately to achieve this target. i would like to underline that we are determined to bring inflation down to 5 % in 2023 and keep it there permanently, consistent with the medium - term framework we set out in the january inflation report. i am aware that the | 0 |
from intermediate regimes. in 1990, nearly 70 % of all countries were pursuing some variant of intermediate er regimes, a share that dropped to 41 % by the end of the 1990s, and further to 30 % in 2004 ( figure 2 ) 1. exits from intermediate regimes were more frequently towards floats rather than to hard pegs. the share of floaters increased from 15 % in 1990 to 45 % in 2004 while, on the other extreme, the share of hard pegs rose from 15 % to 26 % during the same time span. the latter increase in hard pegs reflects, to some extent, the establishment of the european monetary union in 1999. the share of countries with crawling pegs β a very popular regime among higher - inflation economies β dropped from 14 % in a new imf database of de facto er regimes adopted by imf member countries allows to classify countries into three broad er regimes : hard pegs ( formal dollarization, currency union, and currency boards ), intermediate regimes ( conventional fixed pegs, crawling pegs, crawling bands, and tightly managed floats ), and floating er regimes ( managed float with no predetermined er path and independently floating rates ). 1990 to 6 % in 2001. in contrast, countries with a crawling band or a tightly managed float rose from 10 % at the beginning of the 1990s to 31 % by the year 2001. crawling bands offer β at least in the short - term β more flexibility in coping with volatile capital flows and avoiding extreme er misalignments, than rigid er regimes. tightly managed floats, on the other hand, keep the anchoring role of the exchange rate without committing to any explicit target parity. the transition of er regimes has come with a shift of mp regimes based on an er or monetarygrowth anchor to an it framework, particularly in emerging economies. the number of countries under it rose from 8 in 1999 to 21 in 2004 ( tables 1 - 2 ), and many more are considering to adopt it in the near future. this transition in mp regime has been more pronounced in latin america. while in 1994 twelve countries in the region had in place an er anchor, and four others had a monetary growth anchor, by 2004 only three countries remained with an er anchor. the transition of policy frameworks during 1994 - 2004 led to a significant rise in the number of latin american countries with a floating regime ( from three to twelve countries ) and an inflation targeting framework ( from one to five countries ). 2. chile | , not only about economics but about every walk of life, it is that people cannot be fooled forever, so the only way to act is realistically. we are enduring a world recession, and nobody disagrees about the current hardships the world economy faces, so the discussion has shifted to when we will see the first signs of recovery. the scenario of global economic and financial catastrophe has dissipated, and confidence seems to be recovering. one piece of evidence that the β free fall β of the world economy may have stopped is the evolution of growth projections for the year ( figure 14 ). after the sharp deterioration post - september 2008, the downward revision to the growth expected for this year has moderated in magnitude significantly in most of the economic zones. in japan, which has suffered one of the most intense revisions in the past few months, the latest forecast revised upwards the expected growth for 2009. gdp growth for 2010, which had posted small but systematic falls since september, is showing stability in the latest forecasts. combined with this, perceptions regarding investors β appetite for risk seem to be picking up. sovereign premiums have declined, capital flows to emerging economies are returning, interest rates on treasury bonds are increasing in many economies and the various expectations indicators are signaling some degree of recovered confidence. extreme pessimism is withdrawing, but we cannot expect an accelerated recovery. the confidence crisis is one piece β an important one β of the explanation of the synchrony and strength of the shock that occurred at the end of last year. however, the distortions that motivated this confidence crisis will have persistent effects, even after the confidence is fully recovered. the loss of confidence explains the sharp and sudden downfall of the global economy, as well as its propagation to the other countries. however, the origin of the crisis is not this loss of confidence, but rather can be traced back to years of financial excesses that will take time to resolve. 6 the big and, in the light of what we know today, unreasonable private overborrowing in many developed countries will have to be corrected, leading to significant de - leveraging mostly of households. they will raise their saving rates which will hold back growth in consumption and demand. the countries that grew fast based on credit booms will have to adjust. we cannot expect the world economy to go back to pre - crisis growth rates. these are normal stages of the business cycle, but the magnitude of the imbalances that formed in those countries now experiencing financial crises indicate | 0.5 |
kevin stiroh : climate change and risk management in bank supervision remarks by mr kevin stiroh, executive vice president of the financial institution supervision group of the federal reserve bank of new york, at the conference on β risks, opportunities, and investment in the era of climate change β, harvard business school, boston, massachusetts, 4 march 2020. * * * as prepared for delivery introduction good afternoon and thank you for the opportunity to participate in this conference on β risks, opportunities, and investments in the era of climate change, β a topic of critical importance for all of us. climate change is already affecting economic and financial outcomes, and projections point to increasingly severe and unpredictable change. 1 in recent years, we β ve seen a growing focus of central banks on the financial risks related to climate change. some may argue that this shift was slow in coming, but the change is striking nevertheless. beginning with bank of england governor mark carney β s speech in 20152, climate change has emerged as a key issue globally. within the federal reserve, governor brainard detailed how climate change impacts the fed β s core objectives around monetary policy, financial stability, financial regulation and supervision, community and consumer affairs, and payments and describes efforts to build capacity to assess these risks. 3 today, i β m going to take a more narrow perspective and talk about climate change from the perspective of risk management. i β ll discuss how the development of new risks associated with climate change is beginning to change the practice of risk management at financial institutions in terms of governance, risk identification and management, scenario analysis and transparency. i β ll also say a few words on why i believe it is appropriate, even critical, for supervisors to focus on this particular risk. before proceeding, i will emphasize that i am speaking for myself and my views do not necessarily reflect those of the federal reserve bank of new york or the federal reserve system. climate change and risk management the discussion of climate change and risk management has introduced a new lexicon for risk discussions. physical risk is the potential for losses as climate - related changes disrupt business operations, destroy capital and interrupt economic activity. transition risk is the potential for loss resulting from a shift toward a lower - carbon economy as policy, consumer sentiment and technological innovations impact the value of certain assets and liabilities. these effects will be felt across business sectors and asset classes, on strategies and operations, and through the balance sheets and income statements of financial firms. at a practical level, risk managers at financial institutions | regulatory capital requirements appropriately reflect their risk. while critically important, capital alone does not define an institution β s strength. it is vitally important for firms to continue to invest in strong internal controls and to make sure that advances in the operational infrastructure keep pace with rapid growth, particularly in complex transactions. strong operational controls can help ensure smooth market functioning in times of stress, and when they are weak they can exacerbate adverse market dynamics. an important element of a sound operational control environment is timely and accurate information for senior managers, especially when it is most critical for them to have a clear picture of the firm β s exposure. as such, strong operational controls can help reduce some dimensions of uncertainty and therefore help markets function better in conditions of stress. the challenge of ensuring that operational controls keep up with front office advances in the complexity and volume of transactions is particularly evident today in the area of credit derivatives. the rapid growth in the trading of credit default swaps and structured credit products has resulted in considerable back - office backlogs ( unsigned confirmations and master agreements, delays in trade capture into risk management systems, delayed notification of assignments of positions ) that create significant operational risk for market participants. these types of operational problems have arisen more broadly in the otc derivatives market over time and they have gotten worse with the rapid growth in activity by hedge funds. efforts underway to automate matching and confirmation of credit default swap transactions should help address these concerns. but we need to see a stronger collective commitment by the principal dealers in these markets to reduce the outstanding backlog of confirms, shorten confirm times and move larger share of transactions in the more standardized instruments to automated platforms. and we β ll act to reinforce that commitment. these considerations are particularly important for the systemically significant financial institutions that stand at the core of the u. s. financial system. these institutions need to have exceptionally high standards in terms of internal controls, capital and risk management and governance. the greater complexity of their risk profile puts more exacting demands on the risk management architecture and requires a higher margin of capital than would be necessary for a business profile with less volatility and more predictability in returns. and the central role these firms occupy in our financial system and the consequences to other firms and to the stability of the financial system should one of them face significant financial or operational difficulties requires that they hold a higher margin of capital above economic capital than would be appropriate for smaller institutions with a similar risk profile. these arguments are compelling | 0.5 |
put nominal rigidities and market imperfections centre stage. however, since these debates more or less concentrated on the shortcomings of the original synthesis, it did not really fundamentally leave the old paradigm. the basic macroeconomic framework of inflation determination has its analogue in the prominence of monetary policy rules. in that context it is argued that monetary policy can roughly be tracked by so called β simple feedback policies β such as the β taylor rule β. some central banks appear to follow those rules. 7 some macroeconomists even claim that solely relying on those β simple feedback policies β might be sufficient if not superior. the latter statement draws on the fact that such simple rules entail lower information requirements than complex rules. however, the plausible tracking of observed monetary policy by a monetary policy reaction function does not imply that the monetary policy strategy is reducible to a simple rule. for instance, even if a mervyn king emphasized that argument vividly. see king, mervyn ( 2004 ), what fates impose : facing up to uncercainty, the eight british academy annual lecture, december 1, 2004. eigene ubersetzung von : β gefahr entsteht, wenn der mensch sich seiner position sicher fuhlt. β kohn, donald l. ( 2005 ), modelling inflation : a policymaker β s perspective, speech to the international research forum on monetary policy conferences in frankfurt am main, may 20, 2005. see bernanke, ben s. ( 2004 ), the logic of monetary policy, speech before the national economists club, washington, d. c., december 2, 2004. central bank has no output goal, it is likely to react to variations in the output gap as a possible determinant of future inflation. moreover, β simple feedback policies β are not necessarily only backward - looking. they can also incorporate forward - looking elements. 8 indeed, they must to some extent be forward - looking. hence, forward - looking approaches or forecast - based policies are and should be relevant to central banks. in this context let me stress two aspects which have been discussed at this conference : our limited knowledge about the expectation formation process and the problem of limited information and limited credibility in financial markets. i should like to discuss expectation formation first. the traditional assumption of rational expectation formation aims at bringing intellectual discipline into our thinking rather than being intended to be an adequate description of the real world. we know that simpl | ). number of business insolvencies down 6. 6 % in 2017 year on year, press release 91, march 2018. wiesbaden. financial stability board β fsb ( 2011 ). key attributes of effective resolution regimes for financial institutions, october 2011. basel. financial stability board ( 2017 ). framework for post - implementation evaluation of the effects of the g20 financial regulatory reforms. basel. foster, l., cheryl grim, john c. haltiwanger, and zoltan wolf ( 2018 ). innovation, productivity dispersion, and productivity growth, nber working paper 24420, national bureau of economic research ( nber ). cambridge, ma. international monetary fund β imf ( 2017 ), world economic outlook database, october 2017. washington dc. international monetary fund β imf ( 2018 ), world economic outlook update, january 2018. washington dc. pellegrino, giovanni ( 2017 ). uncertainty and the real effects of monetary policy shocks in the euro area, melbourne institute working paper no 15 / 17, june 2017. melbourne. rajan, raghuram g., and luigi zingales ( 2003 ). the great reversals : the politics of financial development in the twentieth century. journal of financial economics 69 ( 1 ) : 5 β 50. rajan, raghuram g., and rodney ramcharan ( 2016 ). constituencies and legislation : the fight over the mcfadden act of 1927. management science 62 ( 7 ) : 1843 β 1859. 1 for example, empirical results for the us show that monetary policy shocks affect output and investment more strongly in times of low financial market volatility than during spells of heightened volatility ( eickmeier, metiu, and prieto 2016 ). similar results were found for the euro area ( pellegrino 2017 ). 2 these numbers are based on data from the federal statistical office of germany available at www. destatis. de / en / factsfigures / indicators / longtermseries / insolvencies / lrins01. html. 3 these numbers are based on data from the bundesbank β s mfi interest rate statistics and calculated as a share of domestic banks'credit volume with a respective fixed interest rate of the total volume ( measured by the 5 / 6 bis central bankers'speeches volume of new business ). the time series is part of the system of indicators for the german residential | 0.5 |
: entry of nordic banks of course this high degree of integration has been achieved over time. in the baltic countries, today's level of economic and financial development was a distant dream as recently as 10 years ago. the fall in gdp bottomed out in mid - 1990s. the following years have brought rapid output growth. in estonia, for example, the level of real gdp has more than doubled. ( a side remark : output growth in the nordic countries has also been robust in the past 10 to 15 years. swedish gdp, for example, has doubled. such pace of development is likely to have contributed to the growth in the baltic countries. ) coming back to the baltics, 1997 and 1998 were the years of the asian and russian crises. in the baltic states, these crises led to the collapse of the stock markets, bankruptcies of many companies, including banks, and a surge in interest rates and unemployment. thus it was a good time to make cheap acquisitions in many industries, including baltic banks. that said, strategic entry of nordic banks was at the time of critical importance to restore market confidence. seb and swedbank acquired minority shares in two largest estonian banks, and started to increase their control. in the year 2000, sampo bank followed. indeed, the presence of foreign banks in emerging markets has generally been found to increase stability, efficiency, and governance. combined with improved regulation, strong nordic banks have brought a qualitative change in the baltic financial sector. as a result, we can proudly say that the estonian financial system stands out in the eu for integration, e - banking, and credit conditions, to name a few. nordic investment in estonian banking sector has proven profitable : roe has been around 20 percent. furthermore, local know - how helped the nordic parent banks to enter the latvian and lithuanian as well as the russian markets. effects of eu accession the eu accession has led to even better market access for local producers and has given estonia as well as the other new member states a kind of " seal of quality " as an investment destination. already the prospect of the eu accession enhanced these countries'credibility in the eyes of investors. but since the accession, the inflow of funds has been especially strong, as economic situation in the euro area was combined with higher global liquidity. furthermore, the geography of investors has broadened. the prospect of adopting the euro in a relatively near future has lowered interest margins in several of the new member states including estonia and has given | as a long - term conservative investor. eesti pank has reacted to changes in the operating environment and has spread its risks by adding further asset classes to the investment portfolio and investing money in the sovereign bond markets of more countries than before. β’ eesti pank β s return on its investment was several times higher in 2014 than the target set at the start of the year, and reached 22. 8 million euros. falling interest rates throughout the year made investments in bonds profitable and the increasing share portfolio of eesti pank meant that we earned significant income from investments in shares. as well as earning income, eesti pank is careful to keep control over its spending and to use its money efficiently. for this reason we have put the maardu manor site up for sale, as we do not need it in carrying out the main functions of a central bank. we would have done this earlier, but first it was necessary to complete the process of registering the manor house and the land it stands on. it is worth noting under cost efficiencies that eesti pank has added technical support for the fiscal council to its list of responsibilities together with the macroprudential supervision and increased requirements for compiling financial statistics. despite this, the number of people employed at the bank is roughly the same as a year ago, and eesti pank remains the smallest central bank by staff size in the european union. eesti pank β s operating expenses fell last year to 17 million euros from the 17. 4 million of a year before. although the central bank β s duty is to keep inflation low and not to chase every possible source of higher revenues, it is good to be able to note that we ended last year comfortably in profit. bis central bankers β speeches conclusion in conclusion i would like to emphasise again that it is important for stable development in estonia and for improved public well - being that we remain ready to adapt to a changing economic climate, to react rationally to changes, and yet to maintain the conservative stance on monetary issues that has served us well so far. thank you for your attention. bis central bankers β speeches | 0.5 |
reichlin, β trends and cycles in the euro area : how much heterogeneity and should we worry about it? β, ecb working paper no 595, 2006. heinz, f. f., and m. ward - warmedinger, β cross - border labour mobility within an enlarged eu β, ecb occasional paper no 52, october 2006. kalemli - ozcan, s., b. sorensen and o. yosha, β asymmetric shocks and risk sharing in a monetary union : updated evidence and policy implications for europe β, hary huizinga and lars yonung ( eds. ), who will own europe? the internationalization of asset ownership in the eu today and in the future, cambridge university press, 2005. mckinnon, r., β optimum currency areas revisited β, stanford university, mimeo, 2001. mongelli, f. p., β european economic and monetary integration and the optimum currency area theory β, european economy, economic papers no 302, february 2008. mundell, r., β uncommon arguments for common currencies β, h. g. johnson and a. k. swoboda ( eds. ), the economics of common currencies, allen and unwin, 1973, pp. 114132. obstfeld, m., and g. peri, β regional non - adjustment and fiscal policy β, economic policy, vol. 26, 1998 pp. 205 - 260. rose, a., β currency unions and trade : the effect is large β, economic policy, vol. 33, 2001, pp. 449 - 461. trichet, j. - c., β further integrating euro area economies : some reflections β, speech at the β 57. jahresversammlung des ifo instituts fur wirtschaftsforschung an der universitat munchen β, munich, 29 june 2006. http : / / www. ecb. europa. eu / press / key / date / 2006 / html / sp060629. en. html. trichet, j. - c., β how to elevate the potential growth rate of europe β, ludwig erhard lecture, berlin, 16 october 2006. http : / / www. ecb. europa. eu / press / key / date / 2006 / html / sp061016. | gdp per capita and price levels are always likely to have stronger output growth and higher inflation. diversity may also extend to correcting past excesses in terms of overall cost and price competitiveness, particularly in the markets for tradable goods and services. in such situations, national governments and social partners need to take action to address excessive wage developments and to strengthen productivity growth, so that unit labour costs in those economies increase less rapidly than the euro area average. to sum up, this sound economic management can foster economic stability and growth, as well as reduce the impact of adverse shocks, or facilitate the adjustment thereafter. the attentive monitoring of economic and financial developments, and of changes in competitiveness in particular, understandably, for the ecb, further european financial integration is essential given its relevance to the conduct of the single monetary policy. considerable progress has already been made across various market segments. financial integration is generally more advanced in those market segments that are closer to the single monetary policy. while the euro area banking markets for wholesale and capital market - related activities have shown clear signs of increasing integration since the introduction of the euro, the retail banking segment has remained more fragmented, leaving european firms and consumers unable to take full advantage of emu and the single market. while many member states expect to increase their spending in this area, the eu will fall short of its overall target of 3 % of gdp by 2010. increasing investment in research and development is not, of course, an objective in itself. if we want to see an impact on growth, it is also the return on that r & d that matters. must be an integral part of this economic management. the public β s understanding and acceptance of these elements is also crucial. that is why we always strive to explain what actions we are undertaking, and why. * * * ladies and gentlemen, let me now conclude. the past ten momentous years have been rich in achievements. the introduction of the euro has been recognised as a remarkable success. since 1999, the single currency has fully inherited the degree of credibility and confidence that was the privilege of the most credible national currencies prior to the euro. inflation expectations are well anchored, and medium and long - term interest rates in the euro area are at the same low level as the levels observed for the most credible of these former national currencies. we also see a remarkable degree of resilience in a complex international environment. these achievements are a solid foundation for our future. but | 1 |
anselmo l s teng : risk and compensation management opening remarks by mr anselmo l s teng, chairman of the monetary authority of macao, at the macau management association ( mma ) 2008 annual management conference, macao, 14 june 2008. * * * council chairman lau distinguished guests dear delegates ladies and gentlemen, good morning! 1. i am honoured to be invited by the macau management association to make an opening remark in this conference, the theme of which, β navigating complex changes through corporate strategies β, is most timely and relevant, especially when organizations, big and small, are facing a lot of threats and challenges, both internal and external, under a globalised environment nowadays. as you are aware, the business definition for corporate strategy is the direction an organization takes with the objective of achieving business success in the long term. i β ll use the sub - prime fallout as an example to illustrate two important aspects within corporate strategies, i. e. risk related aspects and human resources related aspects. 2. the turbulence of the international financial markets caused by the subprime fallout will probably linger for another 1 - 2 years. the rescue actions adopted by central banks of the developed economies have prevented a major financial calamity from happening but the impact on global economy and financial markets will remain for quite a while. there is no exact figure for overall subprime losses. the estimates made by financial experts and international institutions range from usd400 billion to usd1 trillion. the losses will be borne by financial institutions and individual investors. the investors who have suffered losses will inevitably cut back investment and perhaps consumption. the losses incurred by financial institutions of the developed economies however have inflicted more serious repercussions. the immediate effect is the overall shrinkage in liquidity in the international financial markets. the most devastating impact is the reduction in lending capacity of financial institutions as the write - off and provision of delinquent loans and / or investments directly eat into the shareholders β fund of a financial institution. 3. after the subprime crisis, financial experts around the world have started to find out the reasons why it happened and proposed ways to prevent similar mistake from happening again. there are a lot of findings but they all boil down to a big topic β β risk management β. in the past few years, financial and technological innovations have given rise to a number of subprime related products coming from financial institutions. these included subprime loans, collateralized debt obligations ( | it has been widely adopted in a number of fields and proven to be successful. the tool however is a double edged knife and the financial sector has vindicated such a conviction. 5. one of the causes of the subprime bubble is the pay structure adopted by financial institutions in launching subprime products. during the subprime cycle, most financial institutions pursued a compensation scheme which gave incentives to all personnel involved in the subprime products to chase after high income through risky trading, launching risky products that generally provided higher rates of return. bonus payments for successful and senior investment bankers, including those in the business holding subprime positions, were very substantial. essentially, bonuses were measured against gross revenue after personnel costs, with no formal account taken of the quality or sustainability of those earnings. we have to admit that greed is part of our human nature. in the face of profit, quality of product and hence the revenue derived therefrom could be compromised. the phenomenon was common among institutions and staff involved in the subprime trade, from top management, originators, agents to traders. 6. all enterprises, not confined to financial institutions, should learn from this lesson that, to maintain the sustainable growth of an entity, all compensation schemes should in future adequately reflect performance in the medium and long term as well. as a matter of fact, the compensation schemes for staff involved in the subprime bubble all had a common feature in that there were enormous rewards for deals but there was also a failure to impose penalty symmetrically when losses occurred. to put it in a nutshell, a viable compensation scheme should be well structured and be geared to the long term corporate target and strategy rather than short term profit. 7. i hope my opening remarks on risk management and compensation management will kick off a series of discussions on management of other facets of business. experts and seasoned practitioners from different trades are going to share with us their views, experience and insights to resonate with today β s theme β navigating complex challenges through corporate strategies β. i am sure the conclusions of this conference will enable the attendees to formulate the correct corporate strategies to navigate through uncharted waters of the contemporary global economy. finally, please accept my best wishes for a huge success of this visionary conference. thank you. | 1 |
are around their highest level for many years and the long - awaited pick - up in non - mining business investment is taking place. there has been a large pick - up in infrastructure spending in some states. the number of australians with jobs has also grown strongly over the past year. the unemployment rate is lower than it was a year ago, although there has been little change for the past six months. growth in consumer spending has been solid, although it is lower than it was before the financial crisis. here in south australia, we heard how the pulse has also quickened over the past year. this follows a number of years of difficult structural adjustment after the closure of the car industry. but over the past year, domestic final demand in south australia increased by 5 per cent, which is a very positive outcome. as we have seen nationally, there has been a pick - up in business conditions and investment in south australia. there are positive signs in a number of areas, including tourism, high - value food and beverage production and some parts of advanced engineering and manufacturing. helping the economy here in south australia and elsewhere in australia are the positive outcomes at the international level. investment has picked up around the world and international 1 / 4 bis central bankers'speeches trade is stronger than it has been for some time. as a group, the advanced economies are growing faster than trend and unemployment rates are low. and the chinese economy is still growing strongly, although at a lower rate than in the past. so, at the moment, the international backdrop is pretty positive. at our meeting today, we also discussed the latest inflation data, which showed that both cpi and underlying inflation were running marginally below 2 per cent. this was in line with our expectations and provides further confirmation that inflation has troughed, although it remains low. strong competition in retailing is holding down the prices of many goods : for example, over the past year, the price of food increased by just Β½ per cent, the price of clothing and footwear fell 3Β½ per cent and the price of household appliances fell 2Β½ per cent. importantly, these outcomes are helping to offset some of the cost of living pressures arising from higher electricity prices, which nationally are up 12 per cent over the past year. another factor influencing recent inflation outcomes is the subdued growth in wages. increases in wages of around 2 per cent have become the norm in australia, rather than the 3 β 4 per cent mark that was the norm a while back. this is | ric battellino : an update on household finances speech by mr ric battelino, deputy governor of the reserve bank of australia, at the 7th itsa bankruptcy congress, sydney, 30 october 2008. * * * the extraordinary developments in global financial markets over the past couple of months have, understandably, undermined households β confidence in their finances. this has occurred around the world. β’ households have seen incredible volatility in financial prices. daily movements in share prices of several percentage points have become the norm. β’ share prices have fallen sharply around the globe. in australia, the share market is down about 40 per cent in 2008, resulting in negative returns in most individuals β superannuation funds. β’ the difficulties in global interbank markets which had existed since august 2007 took a dramatic turn for the worse last month. the crisis, which had until then been largely confined to wholesale markets, spilled over into a severe loss of confidence among retail investors in financial institutions. governments around the world have been forced to offer wide - ranging guarantees on banks β liabilities. β’ and, to top it off, some commentators are predicting sharp falls in house prices here in australia. given the daily barrage of gloom and doom, it is easy for households to lose perspective, so i thought it would be useful to take an objective look at the state of household finances. in doing so, i will focus on three key areas : β’ household income ; β’ household balance sheets ; and β’ the housing market β in particular, is the australian housing market going to go the same way as the us market? household income the first thing to say about household income is that the past five years have been an extraordinarily favourable period. real disposable income of the household sector grew on average by 6. 1 per cent per year, resulting in a cumulative increase over the five years of more than 30 per cent. one has to go back more than thirty years to find a bigger increase over a five - year period. table 1 : real household disposable income average annual percentage change before interest after interest 1963 - 1968 4. 6 4. 5 1968 - 1973 5. 8 5. 6 1973 - 1978 3. 1 2. 7 1978 - 1983 2. 6 2. 2 1983 - 1988 1. 8 1988 - 1993 1. 7 2. 1 1993 - 1998 3. 1 1998 - 2003 3. 2 2. 9 2003 - 2008 6. 1 4. 8 deflated using the | 0.5 |
##sustainable fiscal deficits in debt - ridden countries and too little toward growth and job creation. i believe that redirecting of financial resources more toward growth β more specifically, toward countries with high productivity β could yield substantial stability benefits to all in the long run. this is why i see a greater role for asia going forward. asia weathered the global crisis well, and has thus far remained resilient to negative spillovers from the on - going fiscal crisis in europe. moreover, many expect asia to develop even more into the engine of global economic growth. but asia also faces many challenges. its source of growth is skewed to external demand, and there is limited scope for domestic demand to play a major role. intra - regional trade has been on the rise, true, but it remains only secondary to trade with other advanced regions. our regional financial markets are meanwhile underdeveloped, less satisfactorily integrated, and vulnerable to shocks of external origin. while asia accounts for over one - third of world gdp, its share in world finance is less than one quarter. bis central bankers β speeches that said, i find the theme of this conference to be highly topical. asian market integration and financial innovation should, i believe, be our path to prosperity and stability. in what follows, i would like to set out my views on this theme, with a particular emphasis on the role of the central bank. asian market integration : a way forward to financial deepening and stability let me begin by addressing the benefits and the risks of financial integration in asia. asian economies grew rapidly over the past several decades, by integrating themselves to the world economy through trade. during the catch - up process, asia was able to upgrade and boost the scale of its productive capacity and, through learning - by - doing, significantly reduce its productivity gap vis - a - vis its advanced trading partners. i believe that financial integration can and should bring the same benefits for asia as trade integration. in principle, financial integration facilitates domestic financial development, improves resource allocation within and across countries, and ultimately promotes growth. the diverse stages of development and demographics of asian countries offer fertile ground for such efficiency gains from financial integration. these benefits are relatively well understood. another important but less known benefit is a stronger market base for financial stability. financial integration tends to bring about greater market liquidity, improved risk allocation and enhanced competition, all of which contribute to financial stability by allowing market participants to better absorb and trade risks among | an interest rate policy geared to the needs of the swiss economy. membership would also spell the end of the interest rate advantage with respect to the euro area, which still stands at one and a half to two percentage points. this would entail the loss for the swiss economy of an important competitive advantage. if there are grounds for hoping that an enlarged eu will lead to greater stability and prosperity on the european continent, it is also conceivable that a larger market will open new opportunities for switzerland. once the bilateral agreements have been extended to cover the new member countries, our economic relations with the enlarged eu will be regulated by the same network of bilateral treaties, as is the case with the current eu. the swiss economy will thus enjoy easier access to a greatly expanded market totalling 450 million people. however, eu enlargement also represents a challenge for switzerland. a larger union needs to work out its joint position in lengthy internal consultation and decision - making procedures. it could thus become increasingly difficult for us to defend our own interests. enlargement is therefore very likely to influence our relationship with the eu. let me now move to one of the key features of our economy : our financial sector, which currently also faces some major challenges. 4. switzerland as a european financial centre since the beginning of the last century the swiss financial sector has been a mainstay of our economy. it accounts for just under 6 % of total employment, but currently generates over 10 % of the country β s gdp. relatively speaking, therefore, it is more than twice as big as the german or french financial sectors, for example. switzerland β s globally active big banks and insurance groups are also major international competitors in most market segments. the two big banks are among the world β s ten largest banks. in terms of value added by the financial sector, switzerland occupies fourth place behind new york, london and paris, but is ahead of frankfurt. switzerland plays a leading role in banking, above all, in asset management. almost four trillion francs worth of assets are managed in switzerland. this accounts for around one - third of the world β s portfolios of cross - border investments. over the last 10 years, our financial institutions have also greatly expanded their activities abroad on a global basis. in 2000 the value of their foreign investments amounted to some 54 billion swiss francs, which is equivalent to around 14 % of total swiss investments abroad. switzerland is also a magnet for foreign banks. nearly one in every two banks in switzerland | 0 |
still reflected significant uncertainty, with no primary dealer placing more than 50 percent probability on any particular target range. like the dealers, the market participants also report wide individual distributions of beliefs. likewise, when primary dealers were asked about the timing of the announced change in reinvestment policy, the average of their responses was a relatively flat distribution of possible dates, with almost equal probability on the announcement occurring in the fourth quarter of 2017, the first two quarters of 2018, or the second half of 2018 ( figure 5 ). again, the individual distributions were narrower but still showed a significant amount of uncertainty. highlighting the usefulness of also surveying market participants, expectations in the market survey are distinctly shifted toward an early announcement date relative to the expectations of the primary dealers. - 9the surveys reveal that while beliefs are dispersed across participants, importantly individual survey participants are also significantly uncertain - - in other words, any given participant does not appear to have firmly decided on the likely path of policy. the general point is that while we often measure and report differences in views across individuals, the uncertainty that individuals feel internally is also relevant. recent survey results that show that market participants assign a positive probability to a wide range of outcomes also suggest that the factors that exacerbated the taper tantrum - dispersed but firmly held beliefs - - may be less pronounced in current circumstances than they were at the time of the taper tantrum. the market reaction to the release of the minutes of the march 2017 fomc meeting supports this interpretation of the interaction of uncertainty and fed policy communications. the minutes reported that, β provided that the economy continued to perform about as expected, most participants anticipated that gradual increases in the federal funds rate would continue and judged that a change to the committee β s reinvestment policy would likely be appropriate later this year. β 14 as was shown in figure 5, in the march 2017 surveys, respondents placed the most weight, 71 percent for the primary dealers and 57 percent for the market participants, on an announced change in reinvestment policy not occurring until 2018 at the earliest. presumably, the april survey will reveal a shift in these distributions. it is noteworthy, however, that even though the statement in the minutes of the march fomc meeting regarding committee members β expectations for announcing changes in the reinvestment policy was not aligned with market expectations, there was see board of governors ( 2017 ), p. 3. - 10 only a muted market reaction. 15 perhaps in part, that | a memo to governor sherman j. maisel concluding that the federal open market committee was required to consider the goals of the employment act. see howard hackley ( 1971 ), β responsibilities of the board under the employment act of 1946, β memorandum, board of governors of the federal reserve system, february 11. - 3 ( fomc ) decisions. 6 but the same annual report made no reference to the employment act. for some people, there wasn β t any question of whether the employment act of 1946 should be a top priority. from its earliest days, the civil rights movement included full employment on a list of economic objectives deemed necessary to achieve the goals of freedom and political equality. several leaders of that movement carried forward that goal into the 1960s, including the rev. martin luther king and my cousin floyd mckissick, sr., but i would like to focus on an individual who probably did as much as anyone to establish maximum employment in 1977 as a goal assigned specifically to monetary policy. that person was coretta scott king. she had been a civil rights activist since attending the 1948 progressive national convention, where economic rights were discussed alongside other issues. after her husband β s assassination, mrs. king carried on his work for nonviolence, civil rights, and peace, but she was particularly focused on his economic justice agenda. four days after mlk β s death, in a speech at memphis city hall, she said that the right to employment had been on his mind : β every man deserves a right to a job or an income, β she said. β our great nation β¦ has the resources, but his question, β ( she means dr. king β s question ) β was : do we have the will? β 7 a month later, she led a long - planned march in washington known as the poor people β s campaign, to push for bringing troops home and creating jobs and economic see board of governors of the federal reserve system ( 1976 ) 62nd annual report 1975 ( washington : board of governors, june, p. 51, https : / / fraser. stlouisfed. org / files / docs / publications / arfr / 1970s / arfr _ 1975. pdf? utm _ source = direct _ download. see david p. stein ( 2016 ), β β this nation has never honestly dealt with the question of a peacetime economy β : coretta scott king and the struggle for a nonviolent economy in the 1970s, β | 0.5 |
##te that kepss simplifies payment processes as well as enabling cross border payment and transfer of value within the region in an easier, safer and more efficient way. ladies and gentlemen : in a new system and a new way of doing business, better is always resisted β we went through the same motion with the cheque truncation system. i challenge the central depository agents to impress upon their clients the immense benefits accruing from the use of the kepss for settlement of nse transactions. these benefits include : β’ enhanced efficiency in the settlement process and risk control mechanisms ; β’ enhanced safety through use of the swift infrastructure ; β’ increased accessibility through commercial banks ; β’ improved investor confidence leading to increased activities at the nse ; β’ an efficient audit trail. today β s launch therefore marks another milestone in revolutionising the payments ecosystem in kenya and in particular in the securities exchange market. the system successfully went live on 15th january with the settlement of transactions concluded at the nairobi securities exchange ( nse ) being executed through the central bank β s kepss system. therefore, as we celebrate with the cdsc, cma, nse and indeed the entire capital markets fraternity, we are also affirming the potential for more innovativeness and enhancement of safety and efficiency through collaborations and innovation in payment and settlement systems. in doing so, we shall play our role in enabling the attainment of the national economic goals envisaged under vision 2030. distinguished guests, ladies and gentlemen : let me conclude my remarks by emphasising the important role that an efficient settlements system plays in enhancing the deepening of capital markets. as kenya aspires to become a regional and international financial centre, the centrality of efficient payments and settlements system cannot be gainsaid. the model we are about to launch is one more step towards achieving that goal. thank you bis central bankers β speeches | njuguna ndung β u : investing differently in women speech by prof njuguna ndung β u, governor of the central bank of kenya, at the african women β s economic summit, nairobi, 18 β 20 march 2010. * * * the right hon. raila odinga, prime minister of the republic of kenya ; hon. uhuru kenyatta, deputy prime minister and minister for finance of the republic of kenya ; mrs. graca machel, founder, new faces, new voices network ; dr. donald kaberuka, president, african development bank ; distinguished guests ; ladies and gentlemen : first, rt. hon. prime minister, may i take this opportunity to thank you most sincerely for finding time from your busy schedule to grace this important forum whose theme is investing differently in women. your presence demonstrates the seriousness with which the government of kenya embraces the role of women and participation in the development process and more importantly their role in the financial sector. may i also heartily thank the new faces, new voices network ( nfnv ), the founder madame graca machel and the african development bank ( afdb ) represented by the president, dr. donald kaberuka for choosing to host the inaugural african women β s economic summit ( awes ) in nairobi. this is a great honour to us in kenya. i also warmly welcome all international delegates represented here including fellow central bankers from the region. the rt. hon. prime minister, the central bank of kenya is delighted to partner with afdb and nfvn in this summit especially when the central bank and indeed the government of kenya is in the process of promoting more inclusive financial policies. in the recent past, the government has introduced new institutions to support, shape and deepen the financial sector. examples include : licensing and supervision of deposit taking microfinance institutions ; savings and credit co - operatives ( saccos ) and the saccos regulatory authority ; amendment of the banking act to allow shariah - compliant banking products ; licensing of credit reference bureaus to facilitate credit information sharing ; agent banking for cost effective financial outreach. since we have seen commercial bank branch expansion by over 100 branches in three years, deposits have increased from ksh. 800 billion on to ksh. 1. 01 trillion and accounts from 2. 4m to 8. 4m in the same period. the rt. hon. prime minister, as we commence deliberations at this important summit, it is | 0.5 |
to its pre - pandemic growth path. the number of vacant jobs is at its peaks. high demand for labour resources is demonstrated by companies in construction and transport, a whole range of manufacturing enterprises, and in trade. these are the industries that started to bounce back earlier and were recovering faster and where demand exceeds prepandemic levels. a further expansion of output is possible through a restoration of the inflow of labour migrants, but β first of all β through an increase in labour productivity. this all means that after the rebound of the economy completes, it will develop more smoothly, at a more gradual pace, as compared to the recovery growth of output observed over the last 12 months. in a situation when companies experience a shortage of workers or components, monetary policy measures promoting demand will not increase output or consumption. for instance, if the demand for cars rises even more, this will not boost their output, when there are no parts, but will only increase the queues for them and speed up price growth. 1 / 3 bis central bankers'speeches as regards inflation, it is above the forecast rate, and inflation expectations remain high. in august, annual inflation was 6. 7 %. according to the steady indicators of inflation measuring the inflation rate without volatile components, inflationary pressure continued to considerably exceed our target in both august and early september. indeed, inflation is impacted by multiple factors that do not depend on our monetary policy. the most important of them are world commodity prices, the country β s fruit and vegetable harvest, and bottlenecks in global supply chains ( container shipments, microcircuit manufacture, etc. ). it has been stated recently that these factors should be completely ignored if monetary policy cannot influence them. this opinion leaves out one essential circumstance, namely, the fact that all these factors impact inflation expectations which, in turn, influence consumers β sentiment and behaviour. hence, they drive inflation across a wide range of products. higher inflation expectations boost demand and increase the extent of the pass - through of higher costs to consumers. as a result, companies have the opportunity to almost completely pass costs to prices and thereby maintain or even increase their profits, which in turn discourages them to take efforts in order to reduce costs and improve labour productivity. monetary policy should prevent the inflationary spiral from getting out of control. therefore, it should respond to transitory factors to the extent they transform into steady factors through higher inflation expectations. this is especially relevant when households β inflation expectations and | - side risks, logistics problems and bottlenecks in production chains remain a significant risk as these issues may persist longer than we estimate today. the abovementioned problem of a limited availability of labour resources is another risk, which is becoming increasingly important. moreover, this problem may become even more serious. this is equally relevant for both the russian labour market and the constraints experienced by other economies. a decline in global demand due to a slowdown in the world economy may become a disinflationary risk. this may happen, for instance, in the case of a large - scale new wave of the pandemic, accompanied by extensive lockdowns in the majority of countries. another scenario where inflationary pressure might also weaken faster in the russian economy is a quick easing of the restrictions on foreign travel for both outbound tourism and the inflow of labour migrants. there is a number of factors, the potential impact of which is uncertain today. in the first place, these are the volumes and quality of the grain and vegetable harvest this year both in russia and worldwide. moreover, it is still uncertain how steady global inflation is and how fast and extensively other central banks will respond to it. winding up, i would like to comment on our future actions. we hold open the prospect of further key rate rises at the upcoming meetings. we will assess whether it is reasonable to increase the key rate, as well as how long the key rate should be maintained at the level achieved taking into account economic developments, inflation trends, and largely the balance of risks to future inflation, including those associated with persistently elevated inflation expectations. in addition to the baseline scenario, we also consider various other scenarios of potential developments in the russian and global economies. the three scenarios describing the key possible circumstances in the external environment were released last week in the monetary policy guidelines for the next three years. monetary policy will be able to bring inflation back to the target regardless of whether the baseline or an alternative scenario materialises. thank you all for your attention. 3 / 3 bis central bankers'speeches | 1 |
hand, is still higher than normal. unemployment varied between 6 and 8 per cent around an average of 7 per cent during the ten years preceding the financial crisis. 16 if the current rate of fall in unemployment continues, it will reach a normal level in the autumn of 2011. although, the assessment in the monetary policy report is that this will not take place so quickly, we should remember that both the riksbank and others have underestimated the strengthening of the labour market in recent years ( see figure 20 ). monetary policy must also take into account how the development of the economy affects wage formation. monetary policy must resist the temptation to stimulate production and employment in the short term over and above the level that is compatible with a stable development of wages and inflation. a very rapid improvement of the labour market may lead to problems in the wage negotiations that will begin in the autumn. wage formation has worked well in the last 15 years and this has helped to keep inflation at a low and stable level. it would be unfortunate if wage negotiations had to be conducted in a situation where there is overheating on the labour market. in the current situation, the shortage of labour is probably a better measure of how strained the labour market is than unemployment. the shortage of labour in the business sector was back to an almost normal level in the fourth quarter of 2010. in several parts of the business sector, however, the shortage was greater than normal, for example in the manufacturing industry and the construction industry, and for several types of labour, for example technical white - collar workers in the industrial sector and computer consultants ( see figure 21 ). the fact that the shortage of labour is already so high even though unemployment is still higher than normal indicates that matching on the labour market has deteriorated. this is also indicated by the beverage curve, which shows the relation between unemployment and vacancies. this has shifted outwards, that is a certain level of vacancies is compatible with a higher rate of unemployment. in part, this may be a cyclical phenomenon, but the change is so large that it may also relate to a structural deterioration ( see figure 22 ). one difficulty at present is to assess whether the normal rate of unemployment has changed due to the financial crisis and economic policy. in connection with a severe downturn, the sustainable rate of unemployment ( nairu ) usually increases, at least initially. but the nairu will probably also be affected by the labour - market reforms implemented in recent years. some | andriy pyshnyy : national bank of ukraine press briefing - monetary policy decisions speech by mr andriy pyshnyy, governor of the national bank of ukraine, at a press briefing on monetary policy decisions, kyiv, 14 september 2023. * * * the board of the national bank of ukraine has today decided to cut the key policy rate to 20 %. the further pullback in inflation and the nbu's ability to ensure fx market sustainability are making it possible to continue the cycle of key policy rate cuts while maintaining the sufficient attractiveness of hryvnia savings. such a step will support the economic recovery without posing threats to macrofinancial stability. although headline inflation has been declining faster than expected, core inflation is close to the nbu's forecast in year - on - year terms, inflation slowed to 8. 6 % in august. price movements came out better than the nbu anticipated, primarily due to an increase in the supply of food products. however, the drop in core inflation ( down to 10 % in year - on - year terms ) was close to the forecast the nbu made in july. the nbu's measures to keep hryvnia assets attractive and the fx market sustainable played an important role in easing underlying price pressures. among other things, the nbu's actions helped further improve exchange - rate and inflation expectations. the overall downtrend in inflation is set to persist, but there is little to no potential for a rapid slowdown in price growth on the one hand, better harvests will continue to restrain price increases in the following months. the impact of the fixing of some utility tariffs will also remain. the nbu is committed to persevere in ensuring the sustainability of the fx market to keep exchange - rate and inflation expectations in check. on the other hand, business costs will remain under significant pressure to increase because of war - related losses as well as higher prices for electricity and fuel. although significant amounts of official financing have maintained ukraine's international reserves at a high level, further international support is vital amid significant budgetary needs official financing enables the nbu not only to make up for a significant shortage of foreign currency in the market, but also to maintain international reserves at a high level. in august, they exceeded usd 40 billion. 1 / 3 bis - central bankers'speeches budget revenues and investments are not sufficient to meet expenditures. international aid will therefore continue to be the primary | 0 |
1990s. bond - rating downgrades have subsided, and upgrades have picked up to levels normally associated with economic expansion. the narrowing of spreads also reflects the outlook of investors for sustained strength in sales and profit growth. the continuation of efforts to address the accounting and corporate governance scandals of the past few years also serves to increase investors β comfort with providing capital to firms with reasonable premiums for risk. these four factors all suggest that financial conditions are capable of supporting sustained, solid growth of the u. s. economy. the much - improved profitability can help finance expansion directly out of internal funds or indirectly by supporting firms β borrowing capacity. furthermore, firms will be able to draw on the liquid assets that they have accumulated over the past couple of years. of course, profit margins are likely to recede from their current high levels as labor and other costs pick up and productivity growth moderates. even so, given the successful efforts to pare costs, firms are set to benefit from new investment in plant and equipment. anti - tying restrictions on banks finally, i want to discuss the nature of anti - tying regulations for financial institutions, an issue that can be very confusing to nonbankers. as innovations create new financial instruments, services, and markets, and as banks expand the scope of the financial services they offer, the process of making business decisions for banks is similar to the process many of you apply in your own business. financial institutions are trying to build customer loyalty by offering a broader menu of financial services to corporate customers. the concern addressed by anti - tying restrictions is that banks may force customers to take unwanted products to obtain needed services. as a brief background, the special anti - tying statute that applies to banks generally prohibits a bank from conditioning the availability or price of one product on a requirement that the customer also obtain another product that is not a traditional bank product from the bank or an affiliate of the bank. for example, a bank may not inform a customer that the bank will provide the customer a loan only if the customer engages the bank β s securities affiliate for an underwriting or obtains some other product or service that is not a traditional bank product from the bank or an affiliate. the words β that is not a traditional bank product β are important. not all tying arrangements are illegal ties. the statute and the board β s regulations expressly permit a bank to condition the availability or price of a product or service on a requirement that the customer also obtain one or more traditional bank products from | enrollment rates have picked up noticeably among individuals aged 25 and over. presumably, many of these older students are striving to keep pace with the new demands evolving in the job market. indeed, an important aspect of the changing nature of jobs appears to be that an increasing number of workers are facing the likelihood that they will need retooling during their careers. the notion that formal degree programs at any level can be crafted to fully support the requirements of one β s lifework is being challenged. as a result, education is increasingly becoming a lifelong activity ; businesses are now looking for employees who are prepared to continue learning, and workers and managers in many kinds of pursuits have begun to recognize that maintaining their human capital will require persistent hard work and flexibility. 2 peter cappelli, β are skilling requirements rising? evidence from production and clerical jobs, β industrial and labor relations review ( april 1993 ), pp. 515 - 530 ; and β technology and skill requirements : implications for establishment wage structures, β new england economic review, special issue on earnings and inequality ( may / june, 1996 ), pp. 139 - 154. 3 david h. autor, lawrence f. katz, and alan b. krueger, β computing inequality : have computers changed the labor market, β national bureau of economic research working paper 5956 ( march 1997 ). economists have long argued that more than half of the market human capital produced in a worker β s lifetime is produced on the job4. several decades ago, much of that on - the - job training was acquired through work experience ; today we are seeing greater emphasis on the value of formal education and training programs for workers. developing human capital is perceived by many corporations as adding to shareholder value. if idea creation is increasingly the factor that engenders value - added, then training and education are crucial to the growth of company value - added and profitability. in the private sector, a number of major corporations have invested in their own internal training centers - - so - called corporate universities. some labor unions have done the same. more broadly, recent surveys by the bureau of labor statistics and by the department of education indicate that the provision of education on the job has risen markedly in recent years. in 1995, the bls report showed that 70 percent of workers in establishments with 50 or more employees received some formal training during the twelve months preceding the survey. most often this training was conducted in house by company personnel, but larger firms also | 0.5 |
broadly offset the negative impact of low rates on net interest margins. against the backdrop of continued loan growth, net interest income increased by about 4 % in the first three quarters of 2019, compared with the same period in the previous year. but margins slightly tightened in 2019 as a whole and are expected to remain under pressure. in addition, increasing provisioning needs and persistently high costs will continue to weigh on banks β return on equity. structural factors are at the heart of weak bank profitability, however. euro area banks face challenges linked to the sector β s overcapacity, with two important implications for profitability. first, banks are not fully benefiting from economies of scale and are relying on overlapping physical distribution networks, leading to persistent cost inefficiencies. indeed, euro area banks β cost - to - income ratio β at 66 % in the 12 months to september 2019 β is high when compared 1 / 4 bis central bankers'speeches with their global peers. second, many banks have low market shares and face high competitive pressures which, in turn, have an impact on their pricing behaviour. on the positive side, banks have greatly improved the quality of their balance sheets and their resilience over the past few years. there has been a steady improvement in their asset quality : the ratio of non - performing loans more than halved over four years, reaching 3. 4 % in the third quarter of 2019. banks now hold significantly more and higher - quality regulatory capital than before the crisis, largely reflecting the impact of the new regulatory framework. significant banks β aggregate common equity tier 1 ratio, a key measure of capital strength, stood at 14. 4 % in the third quarter of 2019, up from 12. 7 % in mid - 2015. regulatory liquidity ratios are also at solid levels, with an aggregate liquidity coverage ratio of 145 %. furthermore, banks also made progress in building loss - absorbency capacity by issuing more debt instruments that can be bailed in. some market analysts think this has been facilitated by reduced risk aversion among fixed income investors who, unlike equity investors, are less concerned about the overall bank profitability outlook. but although banks have improved their capital positions in recent years, they hold only a small fraction of their capital requirements in the form of the countercyclical capital buffer, which authorities can release in the event of systemic stress to help avoid costly economic deleveraging. this suggests that the current composition of capital requirements may need to | be rebalanced to give the countercyclical capital buffer a more prominent role, without affecting the overall level of capital requirements. resilience is a key reason why bank profitability matters for financial stability. bank profits serve as a first line of defence against losses and are the main source of bank capital growth. but how can euro area banks return to sustainable profitability? i see room for banks to further diversify income sources and improve cost inefficiency. this would include investing in digital technologies, even if this would initially push up their costs. the prudential treatment of software assets in the capital framework should be consistent with fostering digital investment, and an alignment on both sides of the atlantic would be welcome to ensure a level playing field. in the light of the overcapacity in the banking system, efficiency gains can also be reaped through both domestic and cross - border mergers and acquisitions ( m & a ). in practice, incipient m & a activity has mainly taken the form of domestic mergers as cross - border consolidation poses more challenges. policymakers should remove obstacles to cross - border m & a and to pursue the completion of the banking union. opportunities and challenges for euro area non - bank financial institutions turning to the non - bank financial sector, its rapid growth since the global financial crisis is impressive : total assets doubled from β¬24 to β¬48 trillion between september 2009 and september 2019. euro area non - banks have also increased their share of credit to the real economy, especially through sizeable investments in bonds issued by euro area non - financial corporations. euro area investment funds, insurers and pension funds jointly hold half of these bonds, whereas euro area banks hold less than 10 %. from a financial stability point of view, the greater role played by non - banks can be perceived as clearly positive as it helps diversify the sources of financing provided to the real economy. moreover, life insurers and pension funds typically provide one of the most stable sources of long - term financing. they are well - placed to invest in infrastructure which can help in reducing asset - liability duration mismatches, for example. but, similar to banks, non - banks also face several challenges in the current environment, with profitability being one of the major concerns, especially for life insurers and pension funds. as 2 / 4 bis central bankers'speeches bond yields have fallen, they are holding a growing share of low - yielding bonds, which decreases | 1 |
services agency ( fsa ) of customers'total return on investment trusts ( after fees and commissions ) suggest that, as of end - march 2019, 34 percent of customers of all investment trust distributors face negative total returns. 28 given that the average holding period of such funds is thought to be around three years and that stock prices in major countries have risen during that period, including in japan, where the nikkei 225 stock average has risen by around 25 percent, the return on most funds should be positive. this means that the negative returns must be due to high fees and commissions. as highlighted by the fsa, some of the distributors of investment trusts seem to be encouraging their customers to churn between funds in the short term to gain profits from transaction fees. 29 moreover, looking at the costs and returns of investment trust funds by type of distributor, i find that banks and securities firms engaged in face - to - face sales tend to sell trusts involving high costs and low returns. in contrast, independent investment trust firms and securities firms specializing in sales via the internet tend to sell trusts at a lower cost and that offer higher returns. 30 see, for example, the 2 - day series, minami takero and nakatani shogo, " chigin haran jinzai kokatsu no kiki, " nikkei, february 20 and 21, 2019. 28 for details, see financial services agency, " publication of the monitoring results pertaining to the implementation status of customer - oriented business conduct taken by financial institutions " ( the full text is available only in japanese ), november 2019, https : / / www. fsa. go. jp / en / newsletter / weekly2019 / 367. html. in fact, this situation where customers are making losses in their investment trusts has even made it into works of fiction, such as shairokku no kodomotachi ( p. 16 ) by jun ikeido, mentioned earlier. 29 toshihide endo, " to turn challenges into opportunities, " speech at the 34th annual general meeting and reception of the international bankers association of japan, financial services agency, november 2018. 30 see footnote 28 for the reference. some financial institutions in europe, where interest rates also are low, are in the process of significantly enhancing their business efficiency due to the prolonged sluggishness of profits. since drastic employment adjustments in europe seem to be difficult due to factors such as labor practices, some financial institutions are revising their organizational | graeme wheeler : the building blocks of the economic expansion speech by mr graeme wheeler, governor of the reserve bank of new zealand, to the canterbury employers β chamber of commerce, christchurch, 31 january 2014. * * * introduction small open advanced economies like new zealand tend to have economic cycles that are heavily influenced by developments in the global economy. we saw this when our growth rate slowed during the asian financial crisis in the late 1990s and the collapse of the dot - com bubble in the united states three years later, and, most recently, during the global financial crisis ( gfc ). over the past two years our economy has outperformed most of the advanced economies. our growth rate has averaged 2. 7 percent, or twice the average of the group of 35 advanced economies in the imf classification. most of our economic indicators are positive with the terms of trade at a 40 - year high, business confidence is the strongest since 1993, and consumer confidence is at a seven - year peak. this afternoon, i would like to offer some thoughts on the reasons for our stronger economic performance, and discuss the nature of the expansion and the challenges facing the reserve bank in helping to ensure that the expansion can be sustained. 2008 β 2011 : four difficult years although new zealand experienced a shallower recession than most of the advanced economies during the gfc, the economy has faced many difficult adjustments in recent years. these include : the liquidation of over 60 finance companies beginning in 2006 and 2007 ; the collapse of global trade in 2008 and 2009 ; droughts in 2008 and 2012 ; and the devastating canterbury earthquakes in 2010 and 2011. the earthquakes, in particular, had a profound human and economic impact that will continue to be felt for many years. on a global scale, the canterbury earthquakes are among the 10 costliest natural disasters in recent history. relative to the size of the economy, the earthquakes are the most severe natural disaster faced by an advanced economy in recent times ( table 1 ). 1 natural disasters in developing countries have in several cases been more deadly and had a larger cost relative to gdp than disasters in the advanced economies, even if insured losses have been low. for example, the 2010 earthquake in haiti is estimated to have a death toll of over 220, 000 and an economic cost of over 100 percent of haiti β s gdp. bis central bankers β speeches in canterbury, businesses closed, residents moved away, and foreign students and tourists stopped coming. businesses that exported or competed against imported goods and services also faced | 0 |
##bility in sectors whose business model may be profoundly affected by the pandemic. in contrast, the announced size of public guarantees and loans is larger in economies hit less hard by the pandemic. as liquidity support, these measures increase ο¬rm indebtedness. the higher the corporate debt levels were prior to the pandemic, the more pronounced the uptake of moratoria has been. in countries with lower corporate debt levels, in contrast, public loans and guarantees have been used to a greater extent. figure 5 a priori, these patterns ensure that already high debt levels do not increase further and possibly become unsustainable through additional borrowing. however, as long as moratoria are in place and debt servicing is suspended, assessing the underlying strength of the borrower is [UNK]. overall, the esrb report ο¬nds that corporate debt sustainability is reο¬ected in the design and use of ο¬scal measures. countries which are more exposed to vulnerable sectors offer direct grants, which support ο¬rm β s solvency, relatively more than public loans and guarantees, which provide liquidity. also, countries with high initial corporate debt levels tend, on average, to use moratoria to a relatively large extent. this limits the increase in corporate leverage. 3 monitoring and addressing the sustainability of corporate debt will be crucial policy responses to the pandemic have so far contained ο¬nancial stability risks and prevented a liquidity crisis which could have turned into a solvency crisis. fiscal measures, in particular, have supported corporate debt sustainability and have, indirectly, shielded banks from the effects of the pandemic. at the same time, public and private sector debt has increased. future debt sustainability thus hinges on the evolution of future economic activity and interest rates. looking ahead, addressing emerging solvency issues and dealing with corporate distress as well as rising non - performing loans will be important. the magnitude of potential solvency problems and the structural change that is needed remain highly uncertain, also due to the continued crisis - related support. elevated debt levels for households and ο¬rms might become unsustainable if the economic crisis lasts longer than expected. this could lead to an accumulation of losses in the ο¬nancial sector. maintaining and addressing the sustainability of corporate debt will be of utmost importance. this suggests a number of policy priorities : targeting : as the immediate economic pain from the crisis recedes, support measures should become more targeted to sectors and ο¬rms that still require them | more expensive and take longer than a transfer from brussels to antwerp. it was not without reason that the eu commission and the european central bank ( ecb ), independently of each other, have once again stressed the need for improvements. as far as i can see, there has already been distinct progress in the time it takes for a transfer between euro countries. but little has happened in terms of pricing. what are affected members of the public to think if - as in a recent case - they have to pay a fee of eur25 for a transfer of eur75 from germany to austria? however, i personally obtained some weeks ago the double amount of cash in austria by drawing on my domestic account - which, of course, also involved a non - cash transaction - and this β only β cost eur4 owing to the high degree of standardisation. the free negotiation of prices between the customer and the bank certainly represents one of the key areas of free competition, but if the result is out of proportion to the service provided, then - as past experience has shown - new operators or procedures tend to emerge - in europe possibly in the form of cross - border cash transports or the increasing use of credit cards - which is unlikely to be in the interest of either the banking industry or of consumers. there are important reasons for adjusting the prices of cross - border transfers very rapidly to those of the efficient domestic procedures. what is required in this connection is to work towards further improvements on the technical side. standardisation the major importance of standardisation in europe has therefore, in my view, been rightly highlighted in the report published by the ecb in september of this year. a europe - wide linking of the national payment systems has not yet been reached. so far, national standards are only compatible for the provision of cash through automatic teller machines using the ec - card, but not for credit transfers. owing to the differing standards, foreign payments are mostly still transferred in systems which are separate from domestic payment systems and are levied with special charges, in some cases without the consent of the originator. a complete conversion towards unseparated processing in each domestic payment system is not always possible and also quite expensive owing to the many possible combinations. a harmonisation in terms of cost, however, requires a very close europe - wide cooperation. here, the solution is to be found not so much in the development of new ( additional ) standards as in the general implementation and application of standards such as those | 0.5 |
policy framework addressing systemic risk enhanced international coordination. the global nature of the crisis required a global response and new international institutions to coordinate the regulation of the financial sector. at the global level we saw the creation of the financial stability board and the intensification of the work at the basel committee ( bcbs ). in the case of the european union, we have taken an important step towards financial integration, most notably with the activation of the banking union, currently comprising two elements : the single supervisory mechanism and the single resolution mechanism. there is a third necessary pillar, the european deposit insurance scheme, which is still under political negotiations. iii. four broad challenges for central banks ahead : 1. are we under a β new normal β macroeconomic environment for the macroeconomy and what does it mean for monetary policy? new normal? debate about whether or not we are facing a new structural reality of secular stagnation that defines a β new normal β for the macroeconomy, characterised by low growth, low inflation and low real and nominal interest rates. most estimates suggest that the natural interest rate ( i. e. the real interest rate consistent with inflation stability and output at its natural level ) is now at historically low, possibly negative, levels. some possible explanatory factors are of a transitory nature ( such as the still - ongoing deleveraging processes ), while others are more structural ( i. e. low productivity growth and demographic factors ). we have to deepen our analysis further in order to have a full grasp of this β new normal β reality. implications for monetary policy : new conventional? the question that arises is whether the β new normal β should lead to a β new conventional β for monetary policy. indeed, inflation and real interest rates are likely to persist at a low level in the future, and therefore nominal interest rates will also be lower and hence closer to their effective lower bound, limiting their effectiveness as a monetary policy instrument, which will possibly lead to balance sheet management as a permanent policy. there are still no conclusive debates about balance sheet management, including on its marginal effectiveness, the optimal size of the balance sheet and the repercussions it could involve in terms of financial stability. again, in this area, we need further analysis. 4 / 6 once the conditions for it are met, the exit strategy from the accommodative policies will require gradualism and predictability. as the recovery gathers speed, and as long as this | of independent monetary policy to offset macroeconomic shocks. together, these two lessons have taught us that it is prudent to use a wide set of available policy instruments to achieve low and stable inflation, prevent undue volatility in the exchange rate, and maintain broad financial stability. our policy toolkit has till now encompassed, in addition to the policy rate and bank reserve requirements, mechanisms to better understand the nature of the flows, international reserve accumulation and the associated liquidity management, financial and foreign exchange reforms, and bis central bankers β speeches macroprudential regulations. by employing this strategy, the bsp has thus far been able to keep inflation in check while containing the risks associated with strong capital inflows. a third lesson we have learned is that policy responses must be oriented towards preventing a build - up of system - wide risks that may be brewing underneath the growth momentum. we need to keep an eye on the broader objective of maintaining financial stability. the regulator can no longer simply look at transactional risks, but we need to also consider how these individual transactions impact on other financial transactions. our commitments to the basel 3 accord exemplify this belief as we have placed greater scrutiny on linkages between our financial institutions and the non - banking corporate sector. this now brings us full circle. for financial stability to translate fully to solid and durable economic growth, the bsp must continue to enable different stakeholders to participate confidently in the financial system. this is where our continuing reform initiatives toward greater consumer protection come in. the fourth lesson we can draw from recent experience is that consumer protection complements financial stability. these twin goals ultimately help address the expanding needs of the growing economy. i have given you the lay of the land, so to speak β¦ clearly, the coming months are likely to continue to prove to be challenging for the philippines β¦ as such, our strategy in addressing potential threats to the economy continues to revolve around using a broad - based policy tool kit that aims to bolster our domestic sources of resilience. ladies and gentlemen, i have noted that many of you ( the patient side of the summit ) have been listening intently β¦ but for the β other side β of the summit, you may anxiously ask, what do all these mean for the economic variables that matter to us? quickly, three guideposts : 1. on the policy rate β we continue to see the average inflation rate falling within the lower half of the target range. with this relatively favorable inflation outlook | 0 |
ardian fullani : achievements and challenges facing the albanian banking sector address by mr ardian fullani, governor of the bank of albania, at the year - end event with the albanian association of banks, tirana, 20 december 2012. * * * dear bank managers, at the end of this calendar and financial year, i take this opportunity to share with you some of the achievements and challenges facing the banking sector, confident that they will serve to guide our actions in the future. as expected, the year 2012 was a very challenging year for the financial and economic activity of the country and of various economic agents. very likely, this year β s economic growth will remain positive, but significantly lower than last year. this economic performance is dictated by the weakening of the fiscal and monetary stimuli, as well as the slowdown of private investment and consumption. the slowdown in the latter is, however, accompanied by a reduction of imports. on the other hand, foreign demand has supported higher growth of exports, especially of energy products. this has led to an improved trade balance during 2012, hence marking a decrease in the deficit - to - gdp ratio. the impact of the global economic crisis continues to be present and its prospects to overcome it in 2013 remains our hope, which is not supported by the expectations of international financial institutions and public authorities, especially with regard to the economic situation in the euro area. during 2012, the banking sector marked a positive financial result, overall. net interest income was stable but provisions on credit risk reduced the size of profit. generally, the banking sector maintained control over other costs of the activity. liquidity indicators, shortterm and structural ones, stand at satisfactory levels. all banks complied with the requirements set out in the regulatory framework regarding the size of liquid assets, both in the lek and in major foreign currencies. deposits continued to grow at good rates, although at lower levels than in the last year. due to the credit growth slowdown, the credit / deposit ratio appears at very suitable levels to support the liquidity needs of the sector. indicators of activity capitalization stood at good levels, due to capital increase by some banks and slowdown in risk - bearing assets growth. in the course of the year, the bank of albania applied tighter requirements for liquidity and capitalization of banks in accordance with the risk profile of their activities. in the interbank market, trading volumes and participation increased in the 2012. this performance is influenced by structural liquidity movements | are subject to leverage constraints. 12 large - scale asset purchases can ease these constraints and increase investors β risk - bearing capacity, leading to a portfolio rebalancing towards risky assets and to strengthened lending activity for banks. all in all, research has confirmed that central banks are not powerless at the effective lower bound. provided they are willing to explore non - standard policy avenues, they can continue pursuing their price stability mandates even in the most adverse circumstances. the evolution of policymaking the policy response by central banks and governments has evolved along the two main lines suggested by research. as short - term interest rates approached the effective lower bound, central banks on both sides of the atlantic undertook a number of unconventional measures aimed at influencing the whole constellation of rates that are important for the financial decisions taken by households and businesses. forward guidance helped guide market expectations of future short - term rates. qe involved direct intervention by central banks in markets through large scale asset purchases to influence the yield curve beyond the very short term. a large body of empirical research has substantiated the success of these policies in supporting the economy and inflation, both in the euro area and in the united states. 13 but central bank policy moves extended beyond just measures to counteract the impairment of the transmission mechanism caused by financial frictions. the ecb also acted in various ways to prevent self - fulfilling expectations from delivering socially undesirable outcomes by coordinating expectations onto β good β outcomes. one such policy initiative was our lender - of - last - resort intervention during the financial crisis. revisiting the bagehot principles set out a century and a half ago in the light of the ongoing crisis, 14 the ecb lent freely to solvent financial institutions against sound collateral, penalised by a haircut. we did so in multiple ways : our liquidity operations moved to a fixed rate full allotment basis with unprecedented maturity of four years, and we widened the eligible collateral accepted in our operations. 4 / 7 bis central bankers'speeches the second occasion came later in 2012 when we had to prevent a self - fulfilling bad outcome that threatened to occur as a result of the sovereign debt crisis. investors had begun pricing redenomination risk into sovereign debt and interbank markets, as they worried about the possible break - up of the euro area. however, as i said earlier, the pricing of such risk led to a breakdown of money markets, a fragmentation of banking systems along national lines and threatened the unity of monetary policy transmission | 0 |
as a whole held deposits in the banking system totalling $ 224. 4 million as at 31 december 2018, supporting the banks β ability to provide loans for consumption and investment purposes. honourable members, in addition to our core financial stability work, the development mandate of the bank calls for extended efforts on inclusive insurance initiatives. we wish to briefly provide an update on the work undertaken by the bank in this space, in 2018 : bundled insurance product : following the successful launch of the fiji care micro insurance bundled product in 2017 to 11, 606 cane farmers, the cover was extended in early 2018 to dairy farmers ( 258 ), copra farmers and rice farmers ( 63 ) with premiums as low as $ 52 per annum or $ 1 a week. the product was further extended to civil servants ( 37, 000 ) and social welfare recipients ( 71655 ) which brings the total number of bundled insurance holders to 120, 671. at the end of 2019, the number further increased to just over 135, 000. during the year, a total of 837 insurance claims valued at $ 1. 4 million was paid out. this increased significantly in 2019 with approximately 3, 800 claims paid out totalling $ 6. 5 million. the bundled product has significantly increased the take - up of insurance in fiji specifically from those who have never owned insurance, and has also assisted in the creation of awareness on the benefits of having insurance with our grassroots people. the reserve bank has a vested interest in such a trend for another reason, as the increased uptake allows fiji to remain on track to achieve its β percentage of adults with insurance product β national financial inclusion core indicator target of 25 percent, by 2020. agriculture insurance : the rbf sought to assist in the reactivation of the agriculture insurance national working committee, to engage with relevant stakeholders on exploring opportunities to introduce agriculture insurance in fiji and better adapt to climate change and disaster risks. we understand that the ministry of agriculture continues to lead the dialogue on this issue, and we stand ready to assist if required. consumer protection : with regard to consumer protection, the reserve bank received 48 insurance related complaints in 2018 comprising 0. 8 percent of the outstanding claims reported for the year. most of the complaints were in the area of customer services, and 39 of these complaints were settled during the year with one withdrawn. i can also report that the eight ( 8 ) pending complaints reported in 2018 have now all been settled. we continue to work together with the industry to ensure that | . we will continue to discuss with the industry on the design of insurance products and insurance arrangements that will specifically meet the growing needs of our people. the insurance act 1998, now more than 20 years old, is undergoing a review with the technical assistance of the imf, with the aim of modernising the legislation to incorporate recent industry developments and supervisory practices. these developments include exploring the fronting arrangements, the possibility of allowing captive insurance frameworks, and further clarity around the legal provisions for inclusive insurance. honourable members, we continue to see the effect of natural disasters locally and globally, evidenced by the vivid images of devastation caused by the current australian bushfires, the recent earthquake in puerto rico that is claimed to have changed the landscape of the country, and for us, the expectation that fiji may be in the path of a number of tropical cyclones in the remainder of the current cyclone season. the magnitude of economic and social losses caused by these natural disasters reiterates the importance of not only having adequate insurance coverage in place but also enhancing insurance affordability. there is indeed an ongoing need for the industry to not only promote insurance awareness to the general public, but to also develop and offer innovative insurance solutions that meet the needs and affordability of all fijians. the reserve bank is committed to continue work on the necessary initiatives to achieve such outcomes. honourable chair and members, thank you again for this opportunity to discuss the 2018 report with you, and we welcome any questions that you may have. reserve bank of fiji 16 january 2020 | 1 |
with these points in mind, the bank intends to establish an effective disclosure system that makes the bank sufficiently accountable to the public. the bank has, to date, endeavored to explain as clearly as possible the basic thinking behind its monetary policy management at regular press conferences, before the diet, in publications, in speeches, and at various other opportunities. disclosure of the transcripts and the summaries of discussions of the policy board are added to these measures under the new law, and this will equip the bank of japan with means that go beyond global standards to ensure the transparency of monetary policy. we at the bank intend to make effective use of these means to win even greater public understanding of and confidence in the bank β s policy management. 4. relationship between the central bank and the government lastly, i would like to discuss the relationship between the bank of japan and the government. the new law allows government representatives to attend policy board meetings on monetary control matters and to express their views when necessary. it also grants the government representatives the right to make policy proposals regarding monetary control matters, including requests to postpone the board β s vote on policies. some suggest that these provisions will constrain the independence of the central bank. we at the bank, however, do not take that view. first of all, the monetary policy of the bank of japan is designed to contribute to the sound development of the national economy in conjunction with the economic policy of the government. the bank therefore needs to ensure adequate communication with the government in managing monetary policy, although the policy must be decided by the bank on its own responsibility and judgment. what is important is that the relationship between the bank and the government in the determination of monetary policy be clear and transparent, and therefore under the new system, the government β s views and the discussions and votes on government proposals will be disclosed in the summaries of discussions. in addition, although the government representatives have the right to β request β a postponement of the board β s vote, they do not have the right to β instruct. β whether to postpone the vote on policies as requested will be determined by a vote by the policy board. this new system is designed carefully from the viewpoint of ensuring the autonomy of the central bank in monetary policy management while also ensuring adequate communication between the bank and the government. we at the bank intend to establish a clear, transparent, and constructive relationship with the government to serve the purpose of the - 12 - new system | on the real economy - - was an acute disease, so to speak, so it was clear what solutions should be prescribed. meanwhile, the problem that has emerged recently can be described as a chronic disease, given that dollar - denominated debts built up by emerging economies, including china, and commodity - exporting economies during the period of monetary easing in the united states are coming to the fore again as a debt overhang issue since the start of a liftoff by the federal reserve. it will probably take a long time before this problem can be cured. looking back at developments in the world economy during the recent period, the annualized growth rate of the u. s. economy, which is the driving force of the world economy, was a low 0. 8 percent in the january - march quarter because of the sluggishness in industrial production accompanying the appreciation in the u. s. dollar and the decline in commodity prices and because of unfavorable weather conditions in the winter. according to the nowcast by regional bis central bankers β speeches federal reserve banks and other forecasts, the growth rate appears likely to be somewhat higher in the april - june quarter. however, the u. s. employment statistics for april, the latest month for which the data is available, showed a slight slowdown in employment after a period of firm growth. with the economic recovery phase about to enter its eighth year, the economic cycle is presumed to be gradually reaching maturity. therefore, at the beginning of the year, there were even voices of concern over a possible economic downturn. although such fears have proved unfounded, there is the risk that productivity growth will be sluggish as business fixed investment continues to lack momentum amid the prolonged slowdown in emerging and commodity - exporting economies. under these circumstances, i am paying attention to the risk that a squeeze on firms β profit margins may affect employment, income, and consumption if wages increase too rapidly relative to the productivity growth because of tight labor market conditions. meanwhile, the chinese economy is generally regaining stability despite a slight slowdown mainly in exports and production, as the effects of the economic stimulus measures taken by the authorities are apparently starting to appear. the exchange rate of the chinese yuan, which became a source of the instability in the global financial markets since last year, has recently stayed stable and the stock market is also in a state of calm. the somewhat moderate decline in the yuan β s effective exchange rate following the recent pause in the rise | 0.5 |
##lated into a balanced and flourishing economic environment will they identify with society to the extent that they work actively towards its goals - which in turn is essential to the successful shaping of the appropriate economic framework. the resulting social equilibrium, i. e. political stability, creates the necessary confidence in a stable and sustainable development that is so essential to a financial centre. today, there is a tendency for people to retreat into the role of the pure economic subject. i see this as a worrying development, and indeed as posing a threat to both the economy and society. based on what i said earlier, the economy and society can only flourish in a balanced environment. but this balance can only be achieved if the citizens are aware of their dual responsibility and act accordingly. - 3we have talked about economic stability, political stability and the human factor. these are the elements which define the substance of a financial centre, and the necessary symbiosis between them hinges on the actions of the individual. but we should not forget the importance of other major aspects such as a clearly defined legal system and a properly functioning technical and organisational infrastructure. i would also like to address another aspect that is of particular importance to a central bank : the stability of the system. maintaining stability in the financial sphere should not be viewed in isolation, as it is closely interlinked with the human and economic factors discussed earlier. political and economic stability, the quality of the human contribution, a clearly defined legal order and an efficient infrastructure are the keys to the success of a financial centre. to this, we should add a reputation which is founded upon a sound attitude and a good track record, going beyond the criteria we have enumerated. stability of the financial system is a concern primarily for the market participants themselves. furthermore, it comes within the remit both of the bank supervisors and of the central bank, which is responsible for monetary policy. as you know, responsibilities and powers are kept separate in my country, the task of supervising the banks being assigned to an independent body, the federal banking commission. discussion about whether it would be preferable to unite the two institutions under one roof has been going on for a long time. both solutions clearly have their advantages and disadvantages, each of which may be weighted differently depending on the requirements of society. consequently, the debate must be pragmatic and not dogmatic. we believe that our approach has proved its worth and do not see any need for radical change. it is clear, though, | will help to influence african, caribbean and pacific governments in their advocacy for innovative sources of development finance to be a front - burner issue on the international economic agenda. ladies and gentlemen, it is no secret that small vulnerable economies in the caribbean have grappled with external shocks of varying magnitudes and duration over the past two decades. these shocks include a compression of aid flows, dismantling of preferential trade arrangements for sugar and bananas, interventions related to anti - money laundering and combating the financing of terrorism. more recently, the caribbean has been gradually recovering from the shock of the global financial crisis, which originated in the united states and spread to europe, the region β s two closest trading and investment partners. the untold story, however, is that the combined influence of these multiple shocks has led to a dramatic and fundamental shift in the composition of external financing flows to the caribbean. bis central bankers β speeches in my respectful view, the most significant change in the regional pattern of external resource flows stemmed from the sharp compression in official development assistance ( oda ). flows of oda to many caribbean countries began falling in the 1990s, as donors redirected their aid priorities to the newly emerging commonwealth of independent states and the least developed countries. this is certainly ironic because the eighth mdg recognizes that developing countries require more generous development aid to have the best chances of reducing poverty and accelerating development within the stipulated 15 year timeframe. faced with declining aid resources, many caribbean governments resorted to more expensive commercial borrowing to bridge their funding gaps. this, combined with the growing inability of regional governments to generate high enough primary fiscal surpluses for debt servicing, contributed to a large public debt overhang. gross public debt in the caribbean climbed rapidly from 65 percent of gdp in 1998 to a peak of almost 100 percent of gdp in 2002, before falling to a still elevated 80 percent of gdp in 2012. the accumulation of public debt was even faster in the eastern caribbean, moving from just over 60 percent of gdp in 1998 to a high of almost 120 percent of gdp in 2004, before falling to 95 percent of gdp in 2012. generally, a public debt ratio of over 90 percent of gdp is considered exceptionally high. by this measure, four countries in the caribbean are projected to hold exceptionally high public debt in 2013 : jamaica ( 140 percent ), st. kitts & nevis ( 139 percent ), grenada ( 109 percent ), and antigua & barbuda ( 93 percent ). another six | 0 |
. the reserve bank used multiple instruments such as the liquidity adjustment facility ( laf ), open market operations ( omo ), cash reserve ratio ( crr ) and securities under the market stabilization scheme ( mss ) to augment the liquidity in the system. in a span of seven months between october 2008 and april 2009, there was unprecedented policy activism. for example : ( i ) the repo rate was reduced by 425 basis points to 4. 75 per cent, ( ii ) the reverse repo rate was reduced by 275 basis points to 3. 25 per cent, ( iii ) the crr was reduced by a cumulative 400 basis points to 5. 0 per cent, and ( iv ) the actual / potential provision of primary liquidity was of the order of rs. 5. 6 trillion ( 10. 5 per cent of gdp ). these measures were effective in ensuring speedy restoration of orderly conditions in the financial markets over a short time span. these measures were supported by fiscal stimulus packages during 2008 β 09 in the form of tax cuts, investment in infrastructure and increased expenditure on government consumption. the expansionary fiscal stance continues during 2009 β 10 to support aggregate demand. while the magnitude of the crisis was global in nature, the policy responses were adapted to domestic growth outlook, inflation conditions and financial stability considerations. until the emergence of global crisis, the indian economy passed through a phase of high growth driven by domestic demand : growing domestic investment financed mostly by domestic savings and sustained consumption demand. this overall improvement in macroeconomic performance in india could mainly be attributed to the sequential financial sector reforms that resulted in an efficient system of financial intermediation, albeit bankbased ; the rule - based fiscal policy that reduced the public sector β s drag on private savings ; and forward looking monetary policy that balanced the short - term trade - off between growth and inflation. iv. lessons from the crisis the crisis has shown that irrespective of the degree of globalisation of a country and the soundness of domestic policies, it can be impacted by a crisis in any other economy due to the interlinkages in the global economy. with the benefit of hindsight, a number of important issues have emerged which allows us to draw lessons. i will highlight four key lessons. first, the policy objectives of central banks would have to be broader than price stability as conventionally defined. the lesson for central banks that emerged from the crisis is that financial stability can be jeopardised even if there | , including as g20 sherpa and now as alternate to the finance minister in the board of governors of the fund. speaking on the sidelines of the fund - bank spring meeting in april this year, i had alluded to labels such as β currency manipulation β and called for greater understanding all around, to the compulsions of emerging market economies ( emes ) in building up their own buffers. i would like to point out that the origin of the phrase β currency manipulation β itself is of recent vintage, dating to 2015, when the us treasury started publishing a semi - annual report on the subject. in this backdrop, it has acquired a predominantly bilateral connotation. currently, the semi - annual report judges countries as currency manipulators on the basis of three criteria : ( i ) a bilateral trade surplus with the us of at least us $ 20 billion ; ( ii ) a material current account surplus of at least 2 per cent of gdp ; and ( iii ) persistent one - sided net purchases in 6 out of 12 months adding to at least 2 per cent of an economy β s gdp over a 12 - month period. a country is put on the monitoring list even if two out of the three criteria are met. india was recently removed from that list after featuring in it from 2018. in the more recent period, the term has gained greater focus in the heat and dust of trade wars. 4. a question that crops up is why has labelling become a bilateral prerogative when a multilateral institutional architecture exists for the purpose? after all, article iv, section 3 ( a ) of the articles of agreement that established the fund, invests it with the oversight of the international monetary system. article iv, section 1 ( iii ) enjoins each member country to avoid manipulating exchange rates to gain unfair competitive advantage. article viii, section 3 obligates members and their 1 / 4 bis central bankers'speeches fiscal agents not to engage in discriminatory currency arrangements or multiple currency practices ( mcps ) unless they are approved by the fund or maintained under article xiv, section 2. 3. the application of the mcp concept has been reasonably considered, explained and applied by the fund with suitable changes carried out when needed. 5. after the collapse of the bretton woods system of fixed exchange rates and the eventual floating of currencies from 1973, the second amendment of the fund β s articles of agreement in 1978 made its mandate more explicit by fixing its | 0.5 |
than conventional estimates suggest, implying that incipient disinflationary pressures may be more intense. of the various elements that make up the expectations - augmented phillips curve, the degree of economic slack is the one currently providing the greatest impetus for further disinflation. by contrast, other elements of this conventional framework offer somewhat more reason to hope that inflation will instead stabilize at current levels or fall only slightly. in particular, as best we can tell, the public β s inflation expectations have not declined very much, particularly at longer horizons. for example, according to the university of michigan β s survey research center, the median respondent β s expectation of inflation over the next twelve months fell from 2. 5 percent in january 2003 to 2. 1 percent in june ; however, the median expectation for inflation for the next five to ten years was 2. 7 percent in both january and june. inflation compensation at the five - year horizon as measured by indexed government bonds has cycled up and down recently but has averaged about 1. 5 percent since early 2001. interpretation of all these measures of expected inflation is made more difficult by the fact that they are defined for total ( as opposed to core ) cpi inflation and hence presumably are affected by fluctuations in energy prices. nevertheless, the evidence thus far does not support the view that there has been a significant break in medium - term inflation expectations. supply shocks are another element of the modern phillips curve framework. in this category the most relevant current factor is probably the recent decline in the exchange value of the dollar. for a various reasons, including the limited pass - through of price increases by foreign producers and uncertainties about the future course of the dollar, the dollar β s fall is likely to have only a modest effect on the inflation rate ; but any effect it has should work against further disinflation. overall, the stabilizing effects of well - anchored inflation expectations and the slightly inflationary effect of the dollar depreciation are two reasons to expect whatever disinflation takes place to be reasonably gradual. some economists argued that the tendency of real wages to lag behind the unexpectedly strong productivity gains of the 1990s also reduced sustainable unemployment during that period ( ball and moffitt, 2001 ; see also braun, 1984 ). to the extent this argument was valid, presumably this factor is less relevant today, because productivity growth has moderated somewhat and has probably become more fully incorporated into the wage determination process. preliminary july figures show a drop in | decades - long war on inflation - - dubbed β public enemy number one β in some public opinion polls in the 1970s - - imagining that a β substantial fall in inflation β would be unwelcome seems just a bit strange. why does this risk, minor though it may be, concern the fed? let β s first be clear what we are talking about. some in the media apparently interpreted the may 6 statement as saying that the federal reserve anticipated imminent deflation in the united states and informed the public accordingly. in my view, such an interpretation substantially overstates the concerns that the fomc intended to communicate with its statement. first, we have no reason to think that a drastic change in the inflation rate is imminent. should further declines occur, a more gradual downward drift over a period of one to two years would be the more likely scenario. second, nowhere did the statement refer specifically to deflation ( that is, to a decline in the general price level ) ; rather, the reference was, again, to a β substantial fall in inflation. β in the present circumstances, a disinflation ( a decline in the rate of inflation ) and a deflation ( a falling price level ) are not necessarily the same thing. inflation could decline somewhat from present levels and still remain positive, although it is true that the lower the inflation rate goes, the greater is the risk of actual deflation at some future time. this distinction between inflation that is positive yet too low and deflation is worth exploring for a moment. although the federal reserve does not have an explicit numerical target range for measured inflation, fomc behavior and rhetoric have suggested to many observers that the committee does have an implicit preferred range for inflation. most relevant here, the bottom of that preferred range clearly seems to be a value greater than zero measured inflation, at least 1 percent per year or so. both the apparent tendency of measured inflation to overstate the true rate of price increase, as suggested by a range of studies, and the need to provide some buffer against accidental deflation serve as rationales for aiming for positive ( as opposed to zero ) measured inflation, both in the short run and in the long run. to the extent that one accepts the view that measured inflation should be kept some distance above zero, a very low positive measured rate of inflation ( say, 1 / 2 percent to 1 percent per year ) is undesirable and implies a need for highly accommodative monetary policy | 1 |
mugur isarescu : overcoming economic problems, the experiences of sweden and turkey β an inspiration for romania? opening speech by mr mugur isarescu, governor of the national bank of romania, at the conference β overcoming economic problems, the experiences of sweden and turkey β an inspiration for romania? β, bucharest, 23 september 2013. * * * ladies and gentlemen, your excellences, distinguished guests it is a pleasure for me to welcome you to the national bank of romania. i salute the presence of such a distinguished audience : their excellences, the ambassadors of sweden, turkey, brazil, cyprus, germany, the netherlands, members of the diplomatic corps, economists, bankers, businessmen, journalists. we are honored to host this international conference : β overcoming economic problems, the experiences of sweden and turkey : are these an inspiration for romania? β the title is, i believe, self - explanatory. in today β s globalized world, learning from other countries β experience is of utmost importance. and while it might be true that no one really learns but from his own mistakes, one can hope that some other mistakes may be avoided when learning from other people β s experiences. why sweden and turkey? before answering this question i wish to emphasize that the national bank of romania is open and willing to host other conferences with similar topics. and today β s conference might be considered the first of a series, involving clusters of countries with relevant interactions. with reference to the question above, i can tell you that there have been several reasons to begin with these three countries, but the main reason for which we compare today the present situation in sweden, turkey and romania is due to the diligent and assiduous activity of the ambassadors of these two countries in bucharest. then, i would like to salute their presence here today : his excellency mr. anders bengtcen, ambassador of the kingdom of sweden, and his excellency mr. omur solendil, ambassador of the republic of turkey and to particularly extend my gratitude to them and to all the persons involved in the materialization of this conference. i also thank mr. klas eklund, senior economist at the swedish bank seb and adjunct professor of economics at the lund university and mr. cagri memisoglu, deputy general manager at garanti bank romania. there are, of course, historical links between the three countries. i do take this opportunity to highlight a few of them. | of the risks that caused so much damage elsewhere in asia. the diversity and depth of australian markets, by ensuring that avenues of financing are always available, also add to the resilience of the economy. i would also give some credit to the financial sector for contributing to the reduction in inflation volatility we have seen over the past 15 years. part of this can be traced to the reduced pass - through to inflation of changes in the exchange rate, which, in turn, has been partly attributable to the increased use of exchange rate hedging by firms. conclusion so let me end by saying that it is clear that the growth of financial markets and the growth of the economy are closely intertwined. financial markets need a strong economy to thrive, and the economy needs strong, vibrant and well - regulated markets if it is to continue to expand. i think that it is fair to conclude that australia to date has been well served by its financial markets, and i would encourage you to continue to work to maintain these high standards. | 0 |
the initial problems primarily concerned the greek government debt market, contagion and spillover effects meant that the crisis quickly spread to the sovereign debt of other so - called β peripheral β countries and other market segments. in particular, financial markets turned their attention to the solvency of some β peripheral β economies that were perceived to have been hit particularly hard by the crisis because of long - standing structural and institutional weaknesses. the deterioration of public finances in some euro area member states has impacted negatively on investors β confidence in government bonds issued by these countries, and thus led to further turbulences in the financial markets. this is also reflected in the sharp increase in the yields on the government bonds issued by those countries. this additional distortion has given rise to further instability in the financial system, both directly and through its interplay with the weaknesses of the public sector. given the central role played by sovereign debt in financial markets, its dysfunctional behaviour threatened both financial stability and the transmission of monetary policy. in this context, the eurosystem launched its securities markets programme ( smp ), which entails the outright purchase of debt instruments to address the malfunctioning of securities markets and to ensure the proper transmission of monetary policy impulses to the wider economy and, ultimately, the general price level. in addition, in order to mitigate the impact of the sovereign debt crisis on the banking sector β s ability to refinance its activities, the ecb temporarily reversed the phasing - out of its nonstandard measures. it also took collateral - related measures to support access to central bank liquidity by banks located in the countries that were committed to implementing economic and financial adjustment programmes negotiated with the european commission, in liaison with the ecb, and the imf. there is no denying that the financial crisis has put the euro and the economy of the euro area to the test. during the crisis the euro area public authorities have proven their capacity bis central bankers β speeches and willingness to take the necessary emergency steps to maintain financial stability. however, the crisis has clearly shown the need to undertake a number of reforms in order to address some institutional and structural weaknesses in our economies. this is essential in order to map out the way forward for the european monetary union, which i will now briefly sketch. iii. the way forward the way forward for the euro area and the eu requires a number of initiatives in key areas in order to guarantee the public authorities β ability to continue delivering macroeconomic and financial stability. in | to reduce disclosure requirements, simplify reporting, and exempt some institutions from recovery and resolution planning, among other things. so what β s the global state of play in matters of banking regulation? one major step forward β the finalisation of basel iii β has already been taken. the next, equally important step lies immediately ahead of us β full implementation of these rules. during implementation, we should bear in mind that basel standards are minimum, not maximum standards. nevertheless, they are designed for the global players, and simpler rules are called for where small and regional institutions are concerned. importantly, this principle of proportionality must not be mistaken for a loophole allowing lax implementation or even deregulation. 3. regulation in europe : building the banking union now that you know my take on the global state of play, let β s move on to the european level. like in many other regions, our main focus in europe since the onset of the financial crisis has been on improving our regulatory framework and supervisory architecture to get rid of the gaps and loopholes uncovered by the financial crisis. we did this knowing that we can never make the system entirely crisis - proof, but that we have to do all we can. one major outcome of this process in europe was the establishment of the european banking union. november 2014 saw the launch of the common banking supervision arrangement β the single supervisory mechanism. at the beginning of 2016, it was joined by the second pillar responsible for the recovery and resolution of credit institutions β the single resolution mechanism. the banking union started with a great deal of momentum, and we can say without hubris that we have built up quite a lot from scratch within a very reasonable timeframe. 2 / 4 bis central bankers'speeches however, there are still some gaps in the banking union β s architecture. the banking union, and with it the euro area, requires further reform. europe β s heavy reliance on the banking sector stands out as one major reason why we need to make it more resilient still. the most prominent proposal put forward in this context is the erection of a third pillar for the banking union, namely some form of european deposit insurance scheme β or edis, for short. it is a hotly debated topic these days, and rightly so. strong deposit insurance is essential to reassure depositors and thus prevent runs and contagion. therefore, it certainly makes sense to think about ways to shore up this backstop in europe. that said, you will probably be aware | 0 |
. 2 billion ( as of may 2011 ) and annual growth of 9. 3 % ( 2010 ). in the near future, i strongly believe that sukuk will grow significantly as it can be developed to have various forms of contracts with attractive features offering competitive returns and liquidity. in addition, the existences of excess liquidity from surplus savings in asia and oil revenues countries across middle east become a potential demand for sukuk. this opportunity can be used by the government or private companies to issue sukuk as an alternative financing source. the current positive trend of issuing sukuk for financing government β s infrastructure projects provides a good signal of support from the government that should be maintained. ladies and gentlemen, through this summit, where the meeting of regulators, practitioners, academics, potential investors and industry experts are possible, it is hoped that the potential of the islamic banking and finance will be maximized to further improve the current swift development of the industry. in the future, it is expected that asia will grow to be the next islamic finance hub, in addition to middle east. bridging these two potential markets for developing islamic financial industry will also contribute to the increase of economic growth in respective regions. despite all those success stories and potential growth of islamic finance, we believe that the road ahead remains challenging. i would like to point out four main issues that can be further discussed in this summit. firstly, concerning the islamic financial products. in terms of product development, islamic financial institutions should develop innovative products that can bring up the uniqueness of sharia components. instead of emulating conventional products or adopting islamic dressing to existing products, industry should move towards creating pure or genuine sharia products that seek to bridge the financial sector with real sector. bis central bankers β speeches i believe the strength as well as the uniqueness of islamic transactions lies within the profitloss sharing mechanism, provision of underlying assets and commitment to promote real sector. however, in general, the record of profit - loss sharing ( pls ) transactions in islamic banking industries across countries are still relatively low. i strongly believe that increasing portion of profit - loss sharing transactions, such as mudharabah and musyarakah, will be beneficial for both the financial sector and the real side of the economy and will eliminate decoupling or detachment effect between two sectors, a situation that was behind the recent global financial crisis. another issue related to product development is about product codification. at the moment, as you all | products which truly confirms to sharia principles, complemented by appropriate legal framework, regulations and standards, insya allah, this creation of β genuine β islamic financial system would be able to reduce systemic risks and continue to become resilient to any financial shocks. as mentioned earlier that increasing portion of profit - loss sharing transaction will reduce the potential bubble in the economy and decoupling problem between financial sector and real sector. the fourth point is about β real rate of return β references. besides beneficial in creating and maintaining stability, we also believe that profit - loss sharing, the spirit of islamic finance, bis central bankers β speeches would give more fair return to all parties ( funds owner, financial institution, and borrower ). the return distributed to all parties should be a real result of business activities in the economy. however, at the moment, islamic financial institutions seemingly tend to refer their rate of return to conventional rate of return ( interest rates ). conceptually they should refer to the real rate of return in the economy. unfortunately, currently there is no valid reference available about the real rate of return. therefore, international islamic institutions and countries regulator need to collaborate to study about the real rate of return that will become a reference for islamic financial institutions in determining return, instead of referring to conventional interest rates. ladies and gentlemen, beside those four main issues, i would like also raise two additional challenges regarding liquidity and human resources. most of us aware that currently islamic financial markets have limited instruments and restricted access to short - term funding options in raising liquidity as compared to conventional markets. we should think of methods to enhance islamic liquidity market based on contracts consistent with sharia principles. a caveat for such initiative will be, to carefully identify and structure the instrument for the purpose of raising liquidity only and not for the tools for speculation. the emergence of global money market will reduce the reliant of islamic financial institutions in mirroring the techniques regularly use by conventional banks that are still within the grey area and debatable in terms of its sharia compliancy. hence, islamic finance can maintain its reputation as the sector linking financial intermediary and real sector and slowly close the door to a heavy use of leverage that once led to global financial crisis. related to human resources issues, we understand that the fast growth of islamic financial institutions so far isn β t followed by sufficient supply of human resources. in indonesia context, the tremendous acceleration of islamic finance industry has created human resources supply | 1 |
think about how we can further improve our efforts in combating money laundering. prosecuting money laundering is a key tool in combating money laundering and other crimes in fiji. let β s come back to the 4th annual money laundering conference next year with more positive stories to share and not have to revisit where we have been falling down! our anti - money laundering laws and the efforts by financial institutions, the police, fiu and other investigative agencies will be in vain if criminals are not being successfully prosecuted for money laundering. it will also be in vain if criminals are allowed to live off the profit of their illegal activities. so let us return to our workplaces with clear and definite goals of how we can apply the lessons learnt from today β s conference in our respective work areas. our collaborative efforts in investigating and prosecuting money laundering crimes will provide a strong message to criminals and their associates that β crime does not pay. β ladies and gentlemen, thank you for your patience and i now have the pleasure of formally closing the 2011 3rd national anti - money laundering conference. vinaka vakalevu bis central bankers β speeches | barry whiteside : promoting money managerial skills in fiji address by mr barry whiteside, governor of the reserve bank of fiji, at the β be money wi $ e β essay competition awards ceremony, suva, 20 march 2015. * * * distinguished guests colleagues ladies and gentlemen and most importantly our essay winners β sakshi prayatna ( lautoka andhra sangam college ), divneeta devi ( tavua college ) and upasna chand ( ahmadiyya muslim college ), who are present here today along with their proud school principals and parents. introductory comments a very warm welcome to you all. i am delighted to be present here with you all, to award and recognise the efforts of our winning students for this important initiative β the β be money wi $ e β ( bmw ) essay competition. i am also grateful for the support of the school principals, teachers and parents of these students. congratulations to our winners firstly, congratulations to our three winners who have travelled all the way from lautoka and tavua and from nearby nasinu with their teachers and parents. you have come out on top of 224 other students who are your peers and i know that this must be a proud moment for you. background this essay competition was launched last december, as one of the activities under the β be money wi $ e β ( bmw ) program, with the theme β be money wise β securing your future goals today β. the bmw program is part of the capital markets awareness platform, targeting school students. its objective is to promote the importance of acquiring good money management skills with a particular focus on understanding the concept of investing and investment products available in fiji. the program has been designed to teach our children β money smart β principles by using creative fun - filled activities which we envision that, in time, will lead to the development of a culture of financial prudence in our children, preparing them well for their adult working life. from the essays that were submitted, it was good to note that many students appreciate the importance of saving towards future goals. it was also great to note that students are now able to identify with the capital markets, ( an area still viewed as highly technical by many ). i am confident that activities like this competition will help create a culture of learning and information sharing amongst our students, teachers, parents and will help enlighten the nation as a whole on the products and services available in our very own capital markets. building on the success | 0.5 |
preliminary flash estimate. it is set to remain weak in the near term. surveys indicate that manufacturing 1 / 4 bis - central bankers'speeches continues to contract while services activity is expanding. consumer confidence is fragile, and households have not yet drawn sufficient encouragement from rising real incomes to significantly increase their spending. nevertheless, the conditions for a recovery remain in place. while the labour market has softened over recent months it continues to be robust, with the unemployment rate staying low, at 6. 3 per cent in december. a solid job market and higher incomes should strengthen consumer confidence and allow spending to rise. more affordable credit should also boost consumption and investment over time. provided trade tensions do not escalate, exports should support the recovery as global demand rises. fiscal and structural policies should make the economy more productive, competitive and resilient. we welcome the european commission's competitiveness compass, which provides a concrete roadmap for action. it is crucial to follow up, with further concrete and ambitious structural policies, on mario draghi's proposals for enhancing european competitiveness and on enrico letta's proposals for empowering the single market. governments should implement their commitments under the eu's economic governance framework fully and without delay. this will help bring down budget deficits and debt ratios on a sustained basis, while prioritising growth - enhancing reforms and investment. inflation annual inflation increased to 2. 4 per cent in december, up from 2. 2 per cent in november. as in the previous two months, the increase was expected and primarily reflected past sharp drops in energy prices falling out of the calculation. along with a month - on - month increase in december, this led energy prices slightly higher on an annual basis, after four consecutive declines. food price inflation edged down to 2. 6 per cent and goods inflation to 0. 5 per cent. services inflation edged up to 4. 0 per cent. most underlying inflation indicators have been developing in line with a sustained return of inflation to our medium - term target. domestic inflation, which closely tracks services inflation, has remained high, as wages and some services prices are still adjusting to the past inflation surge with a substantial delay. at the same time, recent signals point to continued moderation in wage pressures and to the buffering role of profits. we expect inflation to fluctuate around its current level in the near term. it should then settle sustainably at around the two per cent medium - term target. easing labour cost pressures and | full for the increase in private issuance activity seen in 1999, all the more so since the trend has continued at the beginning of 2000. second, the available data showed not only an increase in private issuance, but also a series of changes in the various characteristics of the newly issued debt securities. for example, the average size of new bond issues increased considerably in 1999, as the number of very large issues, of eur 1 billion or more, increased significantly. it should be recognised that this development partly reflected the increased preference of investors for deep and liquid instruments following the episode of financial turmoil in the autumn of 1998. however, another reason for this change, which was particularly notable in the euro area, was the fact that borrowers were able to take advantage of the newly created euro - denominated bond market. by virtue of its size and high degree of openness, the euro - denominated bond market is more able to absorb very large issues than the individual bond markets of the predecessor currencies of the euro. looking in more detail at the components of the increase in private euro - denominated bond issuance, it is noteworthy that issuance by non - residents, although small relative to the total, increased particularly rapidly in 1999. standing at around eur 630 billion at the end of 1999, the outstanding amount of euro - denominated debt securities issued by non - residents represented slightly less than one - tenth of the total outstanding amount of euro - denominated debt securities. however, this constituted an increase of more than 40 % compared with end - 1998. in 1999, the amount of new issues of euro - denominated debt securities by non - residents came very close to that of new dollar - denominated issues by non - residents. hence, in the course of 1999 the euro - denominated component of international bond markets played a far larger role than the predecessor currencies of the euro had hitherto. this development was in line with the predictions made by some commentators before the introduction of the euro. however, the speed of the increase in euro - denominated international bond issuance during 1999 was remarkable. in 1999 the main investors active in the euro - denominated segment of the international bond market were, as in previous years, investors located in the euro area. hence, as shown in a recent ecb working paper, although the euro became an important placement currency for international bonds virtually from the beginning, the use of | 0.5 |
& creating any sort of panic amongst the borrowers or the clients of the banks. several cases of delicate in nature were dealt with in close cooperation amongst sbp, nab & concerned banking company in a professional way. sbp has been forwarding complaints received from the banks / dfis to bureau for initiating investigation, under the provisions of nao, against those entities / persons which had cheated / deprived the public of their hard earned money through illegal brokerage and banking business. sbp, in collaboration with secp, has been advertising a message titled β public warning β in print media to keep the general public aware of the fake schemes / scams launched by the fraudulent companies / noncorporate entities / individuals. state bank of pakistan has also been playing its role in facilitating the banking sector in their efforts to recover from borrowers their long outstanding defaulted loan amounts by referring such cases of willful loan default to nab for inquiry, investigation and proceedings against them wherever required. about 100 such cases amounting to rs. 17. 5 billion approximately were processed & referred to nab under section 31 - d of national accountability ordinance, 1999. i appreciate the role of nab in speedy processing of these cases which helped not only in recovery of defaulted amount but also saved depositors money. the names of the corrupt persons convicted by nab under the provisions of nao, 1999 are also shared with the banking industry. the persons convicted under 25 ( b ) of nao, 1999 are debarred from obtaining any fresh loans from banking sector for a period of ten year from the date of conviction. such weeding out of corrupt elements, from the potential clientele of banking sector, has lead to more prudent lending decisions other than developing a critical data base for the sector. ladies and gentlemen, development of human resource in the banking industry on sustainable basis is a continuous process. taking lead in this front on an ongoing basis and conducting workshops, seminars, awareness programs, training sessions internally as well as for the benefit of the banking industry has become an integral part of our efforts to curb corrupt practices, money laundering and countering the financing of terrorism. the financial institutions are now less proned to be used as β the safe heavens β for the corrupt persons owing to the effective coordination mechanism developed amongst the financial institutions, sbp and nab. the introduction of compliance culture and establishment of a separate compliance department manned with skilled and professional officers has also helped in eradication of unlawful and | hence, the regulatory approach has remained gradual and in line with the evolution of the sector β¦ β β in the new microfinance strategic framework 2011 β 15, sbp has laid out a detailed strategy to promote sustainable growth of the sector. the strategy β s effectiveness and success hinges on growth dynamism fundamentally coming from microfinance operators themselves. the role of sbp is to develop the banking infrastructure, to encourage the use of successful global practices, and to provide the regulatory and supervisory mechanism that enable mfbs to develop viable business models β. 14. we shall soon have the pleasure of hearing our distinguished speaker, professor banerjee β s, thoughts on this subject. i am sure his lecture today will introduce us with something special on the topic, not only because of his extensive research on the subject but also because of candidness of his approach. perhaps, not many of us will have witnessed this openness and honesty of thoughts earlier β the kind that is evident from the last sentence of the concluding chapter of his most recent book titled β poor economics β. let me quote that very sentence for you : β at least we can stop pretending that there is some solution at hand and instead join hands with millions of well - intentioned people across the world β elected officials and bureaucrats, teachers and ngo workers, academics and entrepreneurs β in the quest for the many ideas, big and small, that will eventually take us to that world where no one has to live on 99 cents per day β. 15. now let β s turn to our guest speaker himself. ladies and gentlemen, we are honoured to have with us, dr. abhijit vinayak banerjee, the ford foundation international professor of economics at the massachusetts institute of technology, usa. his teaching and research have won him accolades the world over and he stands as a giant in his profession. just to introduce him to our guests here, dr. banerjee has attended the university of calcutta, jawaharlal nehru university and harvard university, successfully earning his ph. d from the latter. 16. during 1988 to 1992, he taught as an assistant professor of economics at princeton university. he moved to harvard university in 1992 as assistant professor of economics, before joining the m. i. t. in 1993 as pentti j. k. kouri career development associate professor of economics. he became associate professor of economics in 1994 and then professor of economics in 1996. he is the co - founder of | 0.5 |
could be a successful mode of credit delivery. hence, there is a need for promotion of self - help groups ( shgs ) with greater linkage with banks. in this regard, nabard has an important role to play, not only in promotion of shgs, but also in capacity bis central bankers β speeches building, along with sidbi and concerned state government agencies. another area where there is substantial scope for expansion is low - cost housing. expansion of housing loan remains poor as mortgages cannot be created in many parts of nes. however, banks can explore innovative structures for housing loans with a greater emphasis on group lending. seventh, in any plan for financial sector development, the physical presence of a bank branch is important. but the topography of the region, the dispersal of population, transport bottlenecks and law and order conditions in some areas inhibit branch expansion other than in certain commercial centres. hence, all the stake - holders β banks, state governments and the reserve bank β need to work in close co - ordination for increasing banking penetration and promoting financial inclusion in the region. conclusion to conclude, the north - eastern region has immense potential. the need, therefore, is to identify the opportunities and recognise the challenges to work towards a sustainable and inclusive growth of the region with greater penetration of the formal financial sector. bis central bankers β speeches | significantly more difficult ; how much of a physics lecture would you have to pay a taxi driver to drive you to bandra ; moreover would the taxi driver accept a physics lecture in payment ; perhaps you would have to lecture a student, and get the student to sing to the taxi driver β¦ you get the point, transacting becomes difficult as hyperinflation renders money worthless. hyperinflation also has redistributive effects, destroying the middle class β savings held in bonds and deposits. the horrors of hyperinflation in austria and germany in the 1920s still make scary reading. so clearly, no one wants hyperinflation. but what if inflation were only 15 percent per year? haven β t countries grown fast over a period of time despite high inflation? the answer is yes, but perhaps they could have grown faster with low inflation. 1 after all, the variability of inflation increases with its level, as does the dispersion of prices from their fundamental value in the economy. this makes price signals more confusing β is the price of my widget in fact, in a seminal paper, fischer ( 1993 ) presents cross - country evidence to show that growth is negatively associated with inflation, and the causality runs from inflation to growth. bis central bankers β speeches going up because of high demand or because of high generalized inflation? in the former case, i can sell more if i produce more, in the latter case i will be left with unsold inventory. production and investment therefore become more risky. moreover, high and variable inflation causes lenders to demand a higher fixed interest rate to compensate for the risk that inflation will move around ( the so - called inflation risk premium ), thus raising the cost of finance. the long term nominal ( and real ) interest rates savers require rises, thus making some long - duration projects prohibitively costly. these effects kick in only when inflation is noticeably high. so it is legitimate to ask, β at what threshold level of inflation does it start hurting growth? β unfortunately, this question is hard to answer β developing countries typically have higher inflation, and developing countries also have higher growth. so one might well find a positive correlation between inflation and growth, though this does not mean more inflation causes more growth. for this reason, the literature on estimating threshold effects beyond which inflation hurts growth is both vast as well as inconclusive. most studies find that double digit inflation is harmful for growth but are fuzzier about | 0.5 |
will be availed with the potential of positioning bis central bankers β speeches themselves ahead in the race of being asia β s premier banking player, and even position themselves as global force. to move markets into the next phase of growth, financial institutions must be willing to innovate and improve offerings in new growth segments. this has to be supported by good risk and capital management practices, or even develop entirely new skills to embrace new technology and business models. moreover, asia β s local banks with the aspiration to expand their regional or global footprint will need to develop talent to enhance their capacity and capabilities to compete beyond borders. this changing landscape should see the level of technical expertise, and skilled resources in the industry advance to new heights. the rapid pace with which change is occurring is not only demanding shorter time to competence, but also heightening demand for professionals with a broader range of skills including leadership and interpersonal skills as well as global business acumen. it is with this in mind that we advocate for professional development standards to be raised. it is clear that a transformation strategy endeavor for any nation, industry or organization, cannot be achieved without the right quality of human capital. this is particularly the case for banking as a knowledge dominated industry. capacity building programs to mould and generate the right skills, mindsets and values consistent with changing market dynamics will be the key success factors. it is therefore imperative for learning institutions around the region to continue to review and update their respective syllabus, contents and learning methodologies and ensure that education remain relevant and effective in meeting the talent needs in the region. on this note, i commend the commitment of the institute of bankers malaysia ( ibbm ) to transform from ; a provider of courses to a facilitator of professional education, from a consumer to a producer of intellectual capital, and from a national to a regional, or perhaps as a global service provider. we are now looking at a new landscape for our banking education infrastructure and plan to announce soon on the developments and delivery of a broad range of industry programmes that will embrace professional standards that are more applied and reflective of the times. it might include multi - disciplinary research that covers areas such as thought leadership, publications and flagship conferences. we aspire the transformation of ibbm into a forwardlooking, world - class provider in the development of professionals for the dynamic financial sector. the transformation of ibbm represents part of an overall capacity building and infrastructural development efforts to | - specific training to meet the industry requirements, and equip practitioners with the practical knowledge, skills and expertise that are important to their respective job functions. malaysia β s financial sector has continued to forge ahead. the contribution of the financial industry to the country β s gdp has increased from 9. 2 % in the year 2000 to 11. 7 % in 2009 and this figure is expected to grow further in time. likewise, the employment growth in the financial sector will continue to accelerate, with increasing demands for specialised skills and enhanced expertise in finance. in the fast changing and increasingly complex financial landscape, our workforce in the financial sector must not only rise above current challenges, but must be well equipped to excel in the significantly changed environment. in malaysia, we have prioritised talent development in the financial sector as a strategic priority and to approach this in a holistic manner, across the spectrum of the financial services industry. the goal is to develop a deep pool of financial sector talent with world class capabilities to drive responsible growth and development of the financial sector. as many of the initiatives supporting these strategies are multi - disciplinary and multi - layered, the approach is grounded in a shared commitment with the industry in a comprehensive, coordinated and collaborative manner. this is our best hope for rising confidently to the human capital challenge that lies before us. with the strong support of all the key stakeholders and practitioners in the industry, we can make a critical and lasting contribution towards creating a talented workforce for the industry. in this journey, the sharing of best practices and experiences will be extremely valuable. i therefore welcome and encourage your participation at this international symposium to discuss the important issues, challenges and the way forward in talent development for the financial services industry. on this note, i wish you a successful and productive session. bis central bankers β speeches | 0.5 |
emmanuel tumusiime - mutebile : fostering a strong financial sector in uganda speech by mr emmanuel tumusiime - mutebile, governor of the bank of uganda, at the official launch of finance trust bank ltd., kampala, 17 january 2014. * * * your excellency, the president of the republic of uganda honourable ministers honourable members of parliament the board of directors, finance trust bank the managing director and staff of finance trust bank distinguished guests ladies and gentlemen i am honoured to be here this evening for the launch of finance trust bank. i would like to begin by congratulating the shareholders, the board of directors, the management and staff of finance trust bank who have all worked tirelessly to bring about the conversion of the institution from a tier 3 microfinance deposit - taking institution to a commercial bank. this latest entry to the commercial banking industry in uganda has its origins in the uganda women β s finance trust that had been started in 1984 with the objective of providing financial services to low income people in uganda, especially women. it has thus been providing financial services to ugandans for 30 years. in particular, it has provided services to low and medium income segments of the population with a specific focus on women and the youth, offering a wide range of services like savings and loans, bill payments and money transfer services. the history of this institution demonstrates that it is committed to contributing to one of the nation β s strategic development priorities ; that of promoting inclusive growth. at the time of becoming a commercial bank in november last year, finance trust had a capital base of ugx 28 billion, it had ugx 43 billion in customer deposits, and ugx 59 billion in loans. the bank has a network of thirty one branches and six automated teller machines across the country. the transformation to a commercial bank will enable finance trust bank to widen its customer base. the bank β s capital base has increased and business volumes are expected to follow suit. however, the introduction of new products and the expansion of the bank β s portfolio require diligent board and senior management oversight to ensure that the risks which will attend this expansion are managed prudently. your excellency, the bank of uganda is committed to fostering a strong and vibrant financial sector which can contribute to the economic growth of the country while maintaining the safety of depositors β funds. the bou is also committed to maintaining macroeconomic stability which is the essential bedrock of a vibrant economy | total market capitalization of reits is close to s $ 12 billion, making singapore the second largest reit market in asia, after japan. singapore is now a preferred location for property owners to structure their reits. to further strengthen our regulatory framework for reits, so that this market segment can maintain its high reputation and grow in a sustained way, we have recently embarked on a consultation exercise to review the property fund guidelines governing reits. we expect to announce the results of our review soon, which will provide greater clarity on how we will be strengthening the reits regime to promote better governance of reits and further facilitate the growth of the industry. as market players, siba members understand commercial realities and market practices well. siba therefore plays a very important role in complementing mas to ensure that high standards and best practices are upheld in the market. i am therefore very glad that siba has taken this role seriously. in aug 2004, siba released the due diligence guidelines, which set out the basic principles on due diligence to be performed by issuer managers for initial public offerings. the guidelines raise the professional standards of issue managers, and help maintain investors'confidence in the quality of the issue. mas endorses these guidelines as a valuable guide to issue managers and underwriters on the level of due diligence expected of them as professional advisers and in meeting their obligations under the securities and futures act and sgx listing manual. mas appreciates that siba is now currently working to release a code of best practices on debt issuance. this code will serve as guidance on debt issuance. i believe this will enable issue managers to discharge their mandates better, and to address potential concerns of investors. such a code will be beneficial to issuers and issue managers, as well as to investors. developing deep expertise the second key factor in developing our market is expertise. investment banking is a knowledge - intensive, innovation - driven industry. a deep pool of highly trained and committed professionals is critical to enable the industry to thrive. the nurturing of these professionals should start from academic education, where knowledge and theories of investment banking could be imparted. this provides the foundation, to allow professionals to deepen knowledge and skills through on - the - job training and professional upgrading courses that focus on commercial issues and execution skills. with the experience and expertise among its members, siba is well - positioned to spearhead efforts to develop the pool of investment banking professionals in singapore | 0 |
basis that the stability of the financial system can be tomorrow β s objective, for the next person. but in order to achieve this, we need to be very clear on the benefits of financial stability. one of the questions i get asked most frequently is how we will ensure that the lessons of the crisis stick. we can only achieve this if the case for financial stability is well understood. there is a very clear parallel here with monetary policy. the success of monetary policy is founded on public acceptance of the benefits of sustained low inflation. that did not come easily, as the experiences of the 1970s taught. but once that public acceptance and interest started to become embedded, the task of monetary policy became easier β not easy, but easier. in this important sense, no such policy making apparatus can be independent of the will and interest of the public. and nor is the task of ensuring public acceptance ever finished. monetary policy has demonstrated that a firmly established and lasting institutional framework for policy making is a necessity. but exactly what is the public interest in financial stability? this can be a harder question to answer than for monetary policy, because financial stability cannot be so readily summarised in a statistical series. there is a temptation to generalise that you certainly know it when it isn β t there. i think there are at least four things that the public should want as part of the overall stability of the financial system. first, that they can have confidence in the safety and soundness of the institutions that hold their money and savings and write policies to protect them against risks. second, that those institutions have the capacity to undertake the stable and sound provision of financial services to the economy, including of course lending. third, that the system does not do business and exist on the basis of an implicit commitment that the state will have to use public money, the public β s money, to bail out firms that get into trouble. and fourth, that the public can place trust in firms and markets based on their reputations and the transparency of their dealings. regulation is important and it can help to foster that trust, but it cannot substitute for the trust that the public needs to have, in firms and markets. the state is not there to support the industry, and regulators are not there to substitute for trust in and the reputation of firms and markets. some important principles follow from the identification of the public interest in financial stability. first, a competitive financial system can only exist if it is rooted in stability : competition and stability | smes. these initiatives have yielded encouraging outcomes. yet, i believe, sri lanka still has a great deal of untapped potential in developing social enterprises. there is much scope to increase the use of financial services, technology and business support services in order to promote social enterprises. to achieve this, a more dynamic approach, which entails the combined effort of all stakeholders, including state and private entities following a cohesive policy framework, is required to match available resources with the needs of the sector. despite the numerous challenges, it is encouraging to observe the emergence of organizations, which are seeking to operate their commercial ventures to achieve the twin objectives of a social mission and profit generation. their prospects are being enhanced by the trend in consumer choice towards healthier, eco - friendly and " social goods ". " social buyers " who are keen to buy goods and services from social enterprises are emerging as a new force. in conclusion, a concerted effort is needed to establish policies and systems to support the growth of the emerging social enterprise sector in sri lanka. i hope today β s deliberations will deliver outcomes which will assist social entrepreneurs to lead social change by stimulating economic growth, innovation and the development of social capital. social enterprises have an important role to play in sri lanka meeting the sdgs. thank you. | 0 |
may emerge in the consultation. we want to shorten the period of uncertainty as much as possible. accordingly, after making any appropriate refinements ( for example, in relation to first time buyers, and to the potential future use of private mortgage insurance as floated in the consultation paper ), we will move quickly to confirm the parameters of the standing regime. almost all of the discussions that i have participated in at this committee over the past few years have naturally focused on the banks, but of course this is only one element of the central bank β s mandate and it is worth reminding that almost 9 out of 10 staff of the central bank are actually engaged in numerous tasks other than the prudential supervision of banks. ( there are, of course, other aspects of banking oversight that staff deals with, such as the consumer protection and conduct of business aspects of bank regulation ). indeed, the microprudential banking supervisory decision making now largely passes under the control of the eu single supervisory mechanism ( ssm ), which came into operation on november 4. the ssm does not, however, mean less work for us, but rather more work, inasmuch as the procedures of the ssm require a further expansion of our bank supervisory staff as well as a reorganisation of their function. indeed, after three years during which staffing levels have not risen, the central bank now needs to increase staff numbers again, not just because of ssm, but also because of the additional complexity of new international regulations covering non - bank financial services ( which form the heart of the ifsc ), new rules on bank resolution and other new mandates. ( much of the costs here are recovered from the industry ; indeed all regulatory costs could be so recovered, instead of having the effect of eating into the central bank β s surplus income to be transferred to the exchequer ; and the central bank has suggested this to successive governments. ) having already absorbed a sizable increase in staffing during 2010 β 11, we are currently engaged in an extensive review of our internal organisation to ensure the conditions for steady improvements in the effectiveness of our work, which relates to essential matters which, especially when they work well, are not obviously visible to the general public. the review is examining a range of issues including internal structures, career paths and internal processes. i expect significant beneficial changes to both organisational structures and practices within the central bank as a result of the review. our effectiveness will be enhanced by our carefully designed and efficient headquarters building at | in ireland to result in any substantial inroads on rates. what is the role of the central bank in the area of mortgage interest rates? from the prudential point of view, we could have a role in seeking to ensure that banks set rates on new business sufficiently high to cover the risks of future default. while the current spreads would not have been sufficient to compensate the banks for the risks they actually took in the boom, much of which still embedded in the existing stock of mortgages, i think it would be hard to argue that mortgage underwriting today was so bad as to require such a high margin on new business. inevitably, though, constrained by their inability to restore spreads on trackers, the banks have sought all means to restore their profitability including the widening of standard variable rate spreads, which typically apply to old as well as new business. as in most advanced economies, in ireland it has long been understood that tight administrative control over the rates charged by banks would be counterproductive in ensuring a sufficient flow of properly priced credit on a lasting basis. for one thing, such control would strongly discourage new entrants. therefore, while interest rate spreads are now high, since national credit policy is crafted with the welfare of the people as a whole being the β constant and predominant aim β, i see no sufficient basis for altering this view. bis central bankers β speeches there has been much discussion of the central bank β s consultation paper on macroprudential instruments, the limits being proposed on high loan - to - value and loan - to - income mortgages. the consultation period ends on december 8 and we hope to be able to announce a finalised set of regulations soon after that date, depending on the complexity of the responses received. it may be asked whether the central bank thinks that recent property market developments represent a bubble. that is not specifically the driver of these proposals. instead, what we want to achieve by these measures is to have in place a standing regime which ensures that a credit - driven bubble does not take hold, and that a new generation does not become over indebted. absent such a regime, sharp price rises in dublin β and they jumped by 42 per cent in just 18 months β in a thin market, not yet eliciting a sufficient supply response, could sow the seeds of trouble for the future. our approach seeks to draw on ongoing research being carried out at the central bank, on international experience, and of course on matters which | 1 |
by 2. 8 percentage points, a contribution rate of 56. 7 percent. new driving forces are growing fast, with strategic emerging industries gathering strength, and the development of digital economy, photovoltaic technology, and new energy vehicles leading the world. in the first three quarters, investment in high - tech industries increased by 11. 4 percent year on year, and the output of solar cells, charging piles, and new energy vehicles rose by 63. 2 percent, 34. 2 percent, and 26. 7 percent, 1 / 4 bis - central bankers'speeches respectively. the balance of payments has seen improved soundness. china's current account has maintained a reasonable surplus, and its cross - border trade, investment, and financing have become more active. china's economy is expected to grow by around 5 percent this year, continuously maintaining a leading position among the major economies and playing as an important engine and stabilizer for global economic growth. recently, the international monetary fund ( imf ) has revised up its forecast for china's economic growth to 5. 4 percent. ii. complex and severe international situation the world is facing many uncertainties and challenges, such as intensified geopolitical conflicts, widespread trade protectionism, as well as high inflation, high interest rates, and high debt. looking forward, the global economic recovery is sluggish. the geopolitical games, the cumulative effects of tightened global liquidity, the potential financial risks as well as the extreme weather events are important factors that may affect the growth of the global economy. according to the world economic outlook released by the imf in october, the global economic growth rate is expected to slow down from 3. 5 percent last year to 3 percent this year and 2. 9 percent next year. the tight monetary policies in the major developed economies have played a restraining role in controlling inflation, leading to an overall decline in inflation but impairing investment and consumption. the diverging situation of emerging economies and tightened global liquidity have increased uncertainties in the growth of highly indebted economies. financial risks are evolving. as inflationary pressures ease and the risk of economic recession rises among countries, major central banks will end rate hikes at the right time, which may blunt the marginal impact of tight monetary policies on currency exchange rates, stock markets, and cross - border capital flows in various countries. however, the cumulative effects will loom larger, and risks in some economies and sectors still deserve close attention. global | randal k quarles : progress on the transition to risk - free rates speech by mr randal k quarles, vice chairman for supervision of the board of governors of the federal reserve system, at the financial stability board roundtable on reforming major interest rate benchmarks, washington dc, 10 april 2019. * * * i am pleased that we have this opportunity to meet with many of the institutions active in helping to achieve a transition from libor to the risk - free rates identified by working groups in each of our jurisdictions. the financial stability board ( fsb ) has coordinated the international effort to reform interest rate benchmarks at the direction of the g - 20. this is an important effort across the globe, but nowhere is it of more importance than in the jurisdictions relying on libor. let β s review the reasons that we are here. by the time of the financial crisis, much of the global financial system had come to rely on libor. and yet libor was a very poorly structured rate ; contributing banks were asked to submit quotes without any requirement of evidence of transactions or other facts to back them up, which made them susceptible to manipulation. thanks to subsequent reforms, contributors now provide this type of evidence where possible, but libor is based on an underlying market with so few transactions that there is relatively little direct evidence they can provide. many submitting banks are uncomfortable with this situation, and some sought to stop their participation. as a result, the official sector has had to step in to support libor by securing a voluntary agreement with the remaining banks to continue submitting through 2021. at the same time, the official sector has convened national working groups to help develop alternative risk - free rates and navigate a very complicated transition. many people have used reference rates with little thought. the experience with libor should teach us that this has to change and that we cannot risk making this kind of mistake again. banks should conduct at least as much due diligence on the reference rates that they use as they conduct on the creditworthiness of their borrowers. the national working groups convened by many of the fsb member authorities have performed that type of diligence with the secured overnight funding rate, or sofr, and the risk - free rates identified in other jurisdictions. that effort has been a clear and positive example of public - private sector cooperation. these alternative risk - free rates have been created or substantially reformed to ensure that robust, transaction - based rates that accurately represent well | 0 |
., β labor market adjustment dynamics and labor mobility within the euro area β, dgtpe working paper, 2007 β 6. see arpaia, a. and mourre, g., β institutions and performance in european labour markets : taking a fresh look at evidence β, european economy β economic papers, no 391, directorate general economic and monetary affairs, european commission, 2009. bis central bankers β speeches 2000 and 68 % in 2006. the analogous numbers for italy were 108 % and 106 %, and for greece 103 % and 106 %. the stability and growth pact was devised in 1998 to make sure that national budgets were kept close to balance or in surplus, thus regaining their ability to deliver insurance against macroeconomic shocks. it did not work. while progress was at best slow when it came to labour flexibility and national fiscal policy, market - based risk - sharing mechanisms developed surprisingly quickly. integration of financial markets proceeded at a rapid pace, allowing firms and households in europe to reap the benefits of lower and more uniform financing costs. the ecb developed its own set of indicators, both price and quantity indicators, in order to monitor the progress of financial integration in the euro area. 5 in some market segments, integration was immediate and complete ; in others it was more gradual. euro area money markets achieved the fastest and most complete integration. the cross - country standard deviation of unsecured lending rates decreased essentially to zero immediately after the introduction of the euro. while somewhat more fragmented, equity markets showed significant signs of integration as well, especially after the application of the financial services action plan. for example, the share of equity issued by euro area residents and held by residents of other euro area countries more than doubled between 1997 and 2006, to 29 %. 6 perhaps the most striking sign of market - based risk - sharing in the first years of emu was the simple fact that the current account deficits and surpluses of euro area countries widened significantly. furthermore, the large current account deficits were financed internally, within the euro area. in the years between the launch of emu and the global financial crisis, greece saw its current account deficit rise from about 7 % to 15 % of gdp ; spain from about 3 % to 12 % ; ireland from zero to about 7 % ; and portugal from about 3 % to 5 % of gdp. these deficits were financed in the market, largely by investors from a single country : germany. germany, which entered emu with a | euro area countries did continue, though essentially independently of any policy measures and as a result of previously taken commitments, such as the single european act, and to some extent as an endogenous consequence of monetary union. trade flows within the euro area have increased and their nature has changed, with a lot more trade at the intensive margin and export price compression. 2 however, labour markets remained rigid in essentially all member countries. labour within individual euro area countries has traditionally been significantly less mobile than labour in this country. economic research shows that in the united states, in the year after a regional labour demand shock, labour mobility accounts for about one - half of the increase in regional employment resulting from that shock. in the european union, before the crisis, it would take three times as much time β three years β for labour mobility to account for a similar proportion of the rise in regional employment after a shock. instead, most of the reaction to shocks came through changes in participation rates. 3 almost everywhere, the adoption of the euro was followed by at best incremental reform steps. dual labour markets developed, with a significant fraction of employment growth due to temporary, and thus fragile, jobs. 4 perhaps most importantly, many countries had entered emu with high levels of public debt and did little or nothing to reduce it. for instance, france had a public debt - to - gdp ratio of 57 % in the year 2000 and 64 % in 2006. germany had a public debt - to - gdp ratio of 60 % in see bordo, m., β the euro needs a fiscal union : some lessons from history β, shadow open market committee, october 2010. see fontagne, l., mayer, t. and ottaviano g., β of markets, products and prices : the effects of the euro on european firms β, intereconomics : review of european economic policy, 44 ( 3 ), 2009, pp. 149 β 158. strikingly, this finding held within individual european countries. this empirical regularity could not therefore be explained by factors such as language or unwillingness to move to another country. see decressin, j. and fatas, a., β regional labour market dynamics in europe β, european economic review, 39 ( 9 ), 1995, pp. 1627 β 1655. the contribution of labour mobility to adjustment may have improved in the 1990s and now be closer to that observed in the united states. see l β angevin, c | 1 |
be higher, the interest rate needed to be raised. of course, this rule could not capture all of the aspects of the monetary policy considerations, but it provided a rough explanation of the monetary policy decisions. see, for instance, apel, m. et al ( 1999 ), β different ways of conducting inflation targeting β theory and practice β, sveriges riksbank economic review, 1999 : 4, 13 - 42, svensson, l. ( 1997 ), β inflation forecast targeting : implementing and monitoring inflation targets β, european economic review, 41, 1111 - 1146 and batini, n., and e. nelson, ( 2001 ), β optimal horizons for inflation targeting β, journal of economic dynamics & control, 25, 891 - 910. see the minutes of the executive board meeting on 16 january 2007. this rule was easy to understand and in that respect it was a good educational tool. however, there were also disadvantages. in normal cases it is not, for instance, particularly realistic that the policy rate would remain unchanged a couple of years ahead. the assumption made it difficult to assess our forecasts and to compare them with those of other forecasters. the latter usually base their assessments on the policy rate being changed. it was also difficult to apply the assumption in a consistent manner in the forecasting process. these problems would have become worse when we extended our forecast horizon. moreover, it gradually became clear that this rule could sometimes be an obstacle in our communication. it created an exaggerated focus on the current interest rate decision and on the inflation forecast exactly two years ahead. the gradual shift towards more flexible monetary policy led to a greater need to illustrate the fact that it is the entire expected sequence of events for inflation and the real economy a few years ahead that is important in monetary policy decisions, and not only the levels we foresee two years ahead. and the focus should not only be on current interest rates, but also on expectations of future interest rate changes. 5 we left most of these problems behind us when we changed over in october 2005 to making forecasts based on market expectations of the future development of the policy rate. compared with the assumption of an unchanged repo rate, market expectations normally provide a much more realistic forecast. but the assumption that the policy rate will develop in accordance with market expectations also entails some difficulties. examples of problems include how one should measure market expectations and the communication of the interest rate path. it feels natural to move | ##s. second, they have to restore confidence in, and stability to, the european financial system. third, they must deal with the remaining shortcomings in the institutional design of emu. let me elaborate on these factors in turn. first, the rebalancing of the euro area economies requires, first and foremost, that public sector expenditure is brought back to a sustainable path and that the debt overhang is reduced. this is, of course, particularly true for those euro area countries that are currently under an eu / imf programme or are experiencing disruptions in their sovereign debt markets. much remains to be done, but we should not forget the steps that have already been taken β although there is no room for complacency. based on a direct estimation of revenue and spending ( rather than on the cyclically adjusted primary balance ), the cumulative fiscal consolidation achieved thus far is in excess of 10 % of gdp in each of the three countries under eu / imf programmes. while some countries have, most regrettably, fallen behind the targets in their programme, the consolidation efforts are significant in absolute terms. one of the reasons why countries did not reach their headline deficit targets is to be found in the economic headwinds they are experiencing. negative economic growth, higher interest bis central bankers β speeches payments and higher social security spending have led to quasi - automatic increases in expenditure and obscure the fiscal consolidation efforts. this stresses the importance of the implementation of well - designed and ambitious fiscal adjustment programmes being accompanied by growth - enhancing structural reforms. there is no doubt that the long - term effects of fiscal consolidation on growth and employment are positive and significant. whereas fiscal consolidation may have a dampening effect on economic activity in the short run, the extent to which it does so depends on several factors, such as the composition of the fiscal adjustment. national authorities need to set ambitious and credible targets, and to stick to them. even small deviations from the targets can quickly jeopardise the progress made and undermine confidence. to address imbalances, countries also need to take structural measures and deal with market rigidities. suitable structural reforms can have a positive impact on growth and employment already in the relatively short term, and can thus also help to mitigate the negative effects of consolidation. structural adjustment nevertheless remains difficult, but not impossible. this is proved by the experience in the federal republic of germany over the past years. losses in competitiveness after the reunification boom in the early 1990s were | 0 |
general, i think those dual objectives β promoting financial stability and avoiding the creation of moral hazard β are best reconciled by central banks'focusing on the macroeconomic objectives of price stability and maximum employment. asset prices will eventually find levels consistent with the economy producing at its potential, consumer prices remaining stable, and interest rates reflecting productivity and thrift. such a strategy would not forestall the correction of asset prices that are out of line with fundamentals or prevent investors from sustaining significant losses. losses were evident early in this decade in the case of many high - tech stocks, and they are in store for houses purchased at unsustainable prices and for mortgages made on the assumption that house prices would rise indefinitely. these are my views and are not necessarily those of my colleagues on the federal open market committee. to be sure, lowering interest rates to keep the economy on an even keel when adverse financial market developments occur will reduce the penalty incurred by some people who exercised poor judgment. but these people are still bearing the costs of their decisions and we should not hold the economy hostage to teach a small segment of the population a lesson. the design of policies to achieve medium - term macroeconomic stability can affect the incentives for future risk - taking. to minimize moral hazard, central banks should operate as much as possible through general instruments not aimed at individual institutions. open market operations fit this description, but so, too, can the discount window when it is structured to make credit available only to clearly solvent institutions in support of market functioning. the federal reserve's reduction of the discount rate penalty by 50 basis points in august followed this model. it was intended not to help particular institutions but rather to open up a source of liquidity to the financial system to complement open market operations, which deal with a more limited set of counterparties and collateral. the effects of financial markets on the real economy related developments in housing and mortgage markets are a root cause of the financial market turbulence. expectations of ever - rising house prices along with increasingly lax lending standards, especially on subprime mortgages, created an unsustainable dynamic, which is now reversing. in that reversal, loss and fear of loss on mortgage credit have impaired the availability of new mortgage loans, which in turn has reduced the demand for housing and put downward pressures on house prices, which have further damped desires to lend. we are following this trajectory closely, but key questions for central banks, including the federal reserve, are, what is happening | of euro area gdp, roughly the same share as extra - euro area imports. this is substantially higher than in the united states, where exports represent about 10 % of gdp and imports 16 %, as well as in japan, where exports and imports of goods and services amount to 15 % and 13. 4 % of gdp, respectively. probably less well - known is, however, that the euro area is also more open than the united states and japan regarding the financial linkages. such linkages can be measured with different indicators. as i would like to highlight long - term trends, i will focus here mainly on stock data, given that flow data tend to be very volatile and usually reflect cyclical patterns in the short run. five main observations can be derived from cross - country comparisons of international investment positions. 6 first, comparative data highlight the financial openness of the euro area, thus contradicting any notion that this region is inward - looking when it comes to financial integration. the external assets and liabilities of the euro area account for a large share of gdp, around 124 % and 137 %, respectively. by comparison, in the united states, the corresponding numbers are substantially lower : 90 % for assets and 110 % for liabilities. in japan, foreign financial assets are likewise significantly lower than in the euro area ( 94 % of gdp in 2005 ), and the difference is even stronger for liabilities, which represent only 60 % of gdp, i. e. less than half of the corresponding figure for the euro area. second, it is interesting to observe that the advent of the euro seems to have significantly contributed to the process of opening up euro area financial markets. the euro area has indeed become progressively more open since 1999. on the assets side, stocks of euro area assets held abroad have increased from less than 87 % in 1999 to, as mentioned, over 124 % in 2005. on the liabilities side, the increase was also very substantial, from around 92 % to 137 %. the rise has actually been much less pronounced for the united states during the same period : us assets grew from 80 % of gdp in 1999 to 90 % today, and us liabilities increased from 91 % to 110 % of gdp. in other words, the euro area and the united states held roughly comparable assets and liabilities in 1999, but the euro area witnessed a more substantial increase since the start of economic and monetary union. third, the euro area appears to be a very important player in | 0 |
alone, it is easy to agree that market discipline would be more effective under more harmonious - if not completely harmonised - accounting rules. but the task is formidable : a reporter from the wall street journal questioned recently how accounting rules could be harmonised when, for example, europeans and americans do not even agree on which set of measures should be used in the kitchen. in our efforts to strengthen financial stability, central banks and supervisors have a legitimate interest in the quality of accounting standards and their effective implementation. we believe that in order to contribute to strengthening the banking system, accounting standards should support - or at least be consistent with - sound risk management and control practices in banks. in addition, they should facilitate market discipline by promoting transparent financial reporting of banks β financial position and performance, risk exposures and risk management activities. finally, accounting standards should facilitate the effective supervision of banks. this is why, as you know, the committee has attached great importance to taking an active role in the international debates on accounting and promoting the supervisory perspective on key accounting issues, and we very much support the work towards convergence in international accounting. we have worked closely with our colleagues in the international accounting standards board to avoid conflicts between pillar 3 and the broader accounting standards. in fact, the committee views pillar 3 as a further refinement of the accounting standards that apply to banks β specific exposures. because we recognise that we have much to do in this area, we will continue to monitor accounting and market developments in the light of pillar 3. our dialogue with accounting standards - setting bodies and the accounting profession will continue to grow in the years to come. conclusion : basel committee & the global research community i hope that this conference will help to identify the policy options that supervisors have in order to address emerging issues in risk management, financial reporting, and transparency so that we can work toward a more stable banking system. we can expect the financial services industry to quantify new aspects of risk while refining the existing measurement and management techniques. innovation and advances in the banking industry β s quantitative tools will open up many new areas for us to study that may enhance our ability to interpret financial information, to aggregate and report data, and to leverage the power of markets to motivate responsible business behaviour. on that note, on behalf of the basel committee, i would like to thank the research community in member agencies, in academic circles, and in the industry for your contributions to our work. many of basel ii β s advanced methods for | quantifying risk were first explored in research units within individual financial institutions, but also in central banks, supervisory agencies, and universities. our contacts with researchers, the work of the research task force, has helped us to gain access to some of the best research being done in risk management. equally important, it helped to translate the results of some of the most sophisticated technical advances into tangible tools for implementing public policy objectives. applied research cannot be conducted in a vacuum, and good research is rarely achieved alone. in that vein, i look forward to continuing a vigorous dialogue with researchers from many institutions as we explore ways to safeguard depositors β savings, to ensure prudent risk management in banks, and to secure more stable growth in the economy. i hope that you find tomorrow β s sessions to be equally stimulating and enjoyable, and i thank you for your attention this evening. | 1 |
it creates a sufficient fund of financial savings to boost credit and investments in the country. in a shorter - term horizon, it induces lack of demand and makes economic growth difficult. on the other hand, the albanian business learned that the domestic market has limited abilities to generate a sustainable economic growth. as a consequence, it is showing a rising interest to industry and agriculture, as sectors that have a better development perspective and a larger market. the above - mentioned situation has important implications for the country β s development pace and macroeconomic policies. first, it implies that the country β s economic growth potential is lower in the medium term. in other words, the transfer of financial and human resources across sectors, acquisition of technologies and modern business practices, as well as exploration of foreign market penetration, need time and determine the economic growth rate. moreover, this development is faced with an unfavourable external environment, relatively high cost of funds and lack of domestic demand. recovery of previous development paces takes time. second, the higher propensity to save and increased risk premia restrict the ability of monetary policy to generate additional demand in the economy by lowering the key interest rate. global economic developments are optimistic. the euro area and the european currency appear more consolidated due to the ecb β s contribution and nation - wide efforts for fiscal consolidation. however, the optimism is fragile. central banks of advanced economies have stated clearly that they will continue to apply the quantitative easing, as long as inflation remains below the target and unemployment remains high. actually, the so - far solutions have been in forms never experienced before. in fact, they pose new challenges with regard to implementation and potential risk spillover effects projected in the long run. under these circumstances, the bank of albania, considering the situation as rather complicated and after an intensive work, has succeeded in designing a full package of measures. they aim to boost credit and improve micro and macroeconomic balances of financing the economy, about which i will inform you in the following. package of credit recovery the idea about the package that we are introducing today occurred last year, where we discussed, jointly with you and representatives of the ministry of justice, about legal amendments needed to promote collateral execution. since that meeting, our experts have worked intensively for enriching it and bringing it to today β s form. the package consists in three pillars : legal pillar ; monetary policy pillar and prudential pillar. i will dwell on them in the following : 1 β legal pillar | system that the operational framework we provide will maintain the same stimulating nature. it aims at preventing banks from any tensions, even sporadic ones, with regard to market liquidity adequacy ( its quantity, price and maturity ). 3 β prudential pillar while both first pillars impact indirectly and over an extended period of time, the prudential pillar impacts directly and swiftly on credit recovery. it includes a number of measures that will release financial resources to banks and will encourage them to channel those resources toward lending. regulatory changes are at the core of these measures : β’ reduced requirements for liquid assets by banks ; β’ changed risk coefficients in the investment structure to boost lending. the reduction of the requirements for liquid assets by banks may be carried out without infringing the stability of the system, since their level is generally higher than that of international standards and of banks in the region. moreover, given that banks operating in the country have their origin mainly in europe, this reduction may take place under the conditions of declining risk premia in european financial markets. however, it will be bis central bankers β speeches monitored and implemented according to each bank β s risk profile. this means that though the reduction may be general, the level of liquid assets requested by currency and in total may be different in different banks. change in the risk coefficients of the investment structure will take place, so that banks β capital better supports the shifting of their resources toward lending. more specifically, we propose significant increase in risk coefficients that are used for calculating the banks β capital, for new flows of bank investments with non - residents. this increase in risk coefficients may take place also for part of bank investment stock with non - residents, taking into consideration : β’ regulatory requirements for liquid assets ; β’ adequate coverage of bank liabilities to non - residents ; and β’ the time needed so that this shift does not cause any operational overburden to banks. on the other hand, risk coefficients may decrease in banks for the amount of new credit added to the existing stock, for a certain period of time. in this way, the intended shifting of funds toward lending in the country may be conducted even by those banks that have a lower capital adequacy ratio. these measures are not administrative. the decision to conduct funds shifting to private sector credit in the country will be decided by the bank itself. as in any other case, the bank should balance all the factors affecting risk, costs and benefits from such a shift. the implementation of the above | 1 |
the importance of cross - firm coordination in tackling these systems issues in the new era. in addition, there will be learning on how best to perform contingency planning for these cross - firm, cross - border events. finally, the euro conversion experience may be seen as a leading indicator for the year 2000 weekend that will follow a year later. if things proceed well, many may interpret that as lessening the pressure, and efforts to prepare for year 2000 might appear to have a lower priority. if euro conversion is not as seamless as expected, the perceptions of year 2000 risk will likely increase, possibly leading to excessive concern and overreaction. it will be incumbent upon knowledgeable and balanced commentators to assess the situation coolly and point out appropriate similarities and differences between the two events. disclosure and transparency one way in which we can all ensure that balanced and rational discussion prevails is by adequate disclosure and transparency. the lack of adequate information on year 2000 preparations by firms and countries is a significant concern because, as we have seen recently, lack of information may feed negative perceptions in the marketplace. the interdependence of financial institutions, markets and payments systems, and the overall dependence by firms on the readiness of the public infrastructure, make it very important for firms and countries to share information on the status of plans and preparations. the year 2000 problem could potentially lead to a cross - border reassessment of counterparty and country risks similar to that occurring now. unless we continue to make steady progress in preparing for the century change and communicate clearly how we are doing, we may experience what i call the β year 2000 shadow β in the financial markets. financial market participants, and entire countries, may find that capital will become scarce, or at least dear, if they are not seen to be making sufficient progress toward resolving this problem. the uncertainty surrounding preparedness for year 2000 may make markets less liquid as institutions seek to insulate themselves from risk with counterparties who are thought to be unprepared. the financial cost of this is not clear, and i am not one of those forecasting recession as a result of a year 2000 slowing, but we know from recent events that a flight to liquidity can have severe repercussions in the real economy. in the united states, legislation has recently been passed by congress to protect firms that share information in good faith on the status of their year 2000 projects. in july, the us securities and exchange commission issued new guidance | important service by remaining attentive to the important task that we face in preparing for the century date change. interaction between year 2000 and the euro the current economic backdrop is not the only challenge facing those of us with a focus on the year 2000 challenge. most countries represented here today are also making a significant investment in preparing for the introduction of the euro. while the introduction of the euro is an event to be welcomed by market participants, it does raise several interesting challenges for year 2000 preparations. first, of course, is the contention for scarce it resources and the issue of whether there are β economies of scope β in these two projects or at least a benefit in β learning by doing. β the overlap between the two problems and two technical solutions is not as great as many would like. at the narrowest level, they involve different approaches to the technical solution. more generally, the testing approaches are different, with the euro relying on operational testing and year 2000 being more of a technical test. finally, year 2000 involves embedded systems while the euro will not affect systems with embedded chips in most cases. there may also be contention for another limited resource, which is top management attention. year 2000 was initially considered a technical problem, which many managers may have thought could be best handled by technicians. the euro conversion is obviously a business issue, which entails strategy and is more accessible to the well - informed senior manager. more importantly, the euro may be seen by some as having revenue potential that comes from offering new services ahead of competitors. year 2000 may offer some revenue opportunities, but it is probably most correctly perceived as a cost concern for many senior managers. both conversions must be managed as business issues because of the significant risks they both pose to operations. some commentators may have created another, false, relationship between these two technical challenges by suggesting that the year 2000 problem is a creation of some that want to distract attention and resources from the euro. i know of no responsible person who would create the need to spend the large sums necessary to prepare for the century date change or risk other disruptions for the purpose of diverting attention from a legitimate and beneficial effort of creating a common currency for a major economic region. in addition, computer professionals have known of this problem for years and are, i believe, universal in recognizing its importance. however, the story is more complex than these elements of resource contention ; there are some benefits from having these two major systems changes in close proximity. first, we can all learn about | 1 |
i j macfarlane : observations regarding stability in the australian economy talk by mr i j macfarlane, governor of the reserve bank of australia, to business council of australia annual dinner, melbourne, 8 july 2003. * * * i would like to start by thanking the business council of australia for inviting me to its annual dinner. this is the first such occasion i have attended, and i note that the price of my invitation is that i have to give the after - dinner speech. given the time of day, you will be pleased to hear that i will confine myself to a few simple observations, rather than delivering an economic treatise. some people may be expecting a commentary on the current outlook for monetary policy, but i am afraid they will be disappointed. last week we made a decision on monetary policy at our july board meeting, and it received a lot of press coverage. not everyone agreed with the decision, but i have to say that i was quite impressed with the quality of the discussion it generated. i think there is a very well informed and reasoned appreciation of the conflicting pressures and trade - offs we at the reserve bank face. given that, i am reluctant to add any more at this stage, because, no matter how carefully modulated my comments, i would run a great risk of destabilising a basically stable situation. instead, i would like to move into my talk by starting with the observation that the australian economy has now gained international recognition for its stability, whereas in previous decades it was noted more for its booms and busts. in the jargon of financial markets, investing in australia is now a β stability β or β safe haven β play whereas formerly it was known as a β cyclical β play. the latter term meant that the australian economy did better than the world economy when the world economy was doing well, and worse when it was doing badly. the change in the world β s perception of the australian economy from one of instability to one of stability has obvious advantages to us, but it does not eliminate the need for hard policy decisions - it simply changes the nature of those decisions. but before discussing that, i would like to illustrate some of the changes in the behaviour of economic variables that have given rise to the changed perception of the australian economy. the first clear sign that the australian economy was showing a new - found stability was the way in which it handled the asian crisis. although we had a higher share of our exports going to the crisisaffected | asset price boom has turned into a bust, the effect on the macroeconomic policy settings is profound. partly this is because the contracting economy affects the policy settings, and partly it is because policymakers are quick to adjust their levers in an attempt to head off the contraction. again, a comparison with the us makes the point. on fiscal policy, the australian budgetary position has varied little over recent years, with predominantly small surpluses being the order of the day. in contrast, the us budgetary position has moved from a surplus of 2 per cent of gdp in 2000 to an expected deficit of 4 per cent of gdp in 2003. the us has used a huge amount of its fiscal ammunition, while we have not even started to do so. terms of trade march 1982 = 100 index index source : abs national budget balance per cent of gdp % % us australia - 2 - 2 - 4 - 4 - 6 official short - term interest rates % % australia on monetary policy, the contrast between the two countries is equally pronounced. the us put us interest rates up slightly more than we did in 1999 / 2000, but the difference was minor. however, since the us recession hit in 2001, they have reduced their interest rates much more than us. from a peak in the second half of 2000, sources : federal reserve bank of new york ; rba they have come down by 5Β½ percentage points, while we have come down in net terms by 1Β½ percentage points. i do not want to give the impression that i think stability of interest rates is a goal in its own right - only that it reflects the greater stability of the australian economy. - 6 sources : commonwealth treasury ; thomson financial datastream again, the contrast in both of the above policy variables between the two countries is as great as the contrast in the other variables i showed earlier, with australia again representing stability and the us instability. equally importantly, stability was not pushed at the price of lower growth : to the contrary, the australian economy has grown faster than the us, not just over the past few years, but over the past decade. this, of course, has been the main point of my presentation this evening. the other point, i hope that has come out, is that the really large examples of instability in recent decades have emanated from a species of financial event - namely, an asset price boom and bust - rather than from the normal cyclical fluctuations we are all familiar with under the heading of the business cycle | 1 |
i am not ready to take that step. fortunately, the strength of the u. s. economy and resilience of the labor market mean the risk of waiting a little longer to ease policy is small and significantly lower than acting too soon and possibly squandering our progress on inflation. turning to the performance of the u. s. economy, the atlanta fed's gdpnow model, based on all current data, predicts first quarter growth in real gdp of 2. 1 percent at an annual rate. similarly, the consensus from the blue chip survey of private sector forecasters is 2 percent. this would be a significant slowdown from the average of around 4 percent in the second half of 2024 but still quite solid growth. 1 / 5 bis - central bankers'speeches consumer spending, the largest component of gdp, seems to be moderating this quarter. retail sales fell significantly in january and then retraced about half of that decline in february. smoothing out these swings, they clearly indicate a moderation in goods spending from the second half of last year. however, services spending, excluding energy, grew moderately in january, which offset to some extent the decline in goods spending. i will be watching on friday morning to see what the february data on personal income and spending show. on the business side, surveys of purchasing managers in february continued to report results we have been hearing for over a year. for manufacturers, the institute for supply management indicated a slight contraction in activity, with new orders and production moving down a bit. this contrasts with nonmanufacturing businesses that continued to see an expansion in activity, with measures of new orders and business activity on the higher end of their readings over the past year. now let me turn to the labor market. the data is sending a mixed message on how supply and demand are evolving. as i noted earlier, payroll data estimate that employers added 275, 000 jobs in february. this robust gain is not only above the 265, 000 average level of job creation since november, but also above the 251, 000 monthly average for all of 2023. recent gains have been broad based across most sectors, rather than concentrated in a few sectors, which may be a sign that demand is not moderating as much as is needed to support continued progress on inflation. conversely, the household survey estimated that the unemployment rate rose to 3. 9 percent in february. but that increase was driven mostly by an outsized rise in the number of 16 - | , conventions of business correspondents, to mention some of the important ones. 45. as a result of all these initiatives, the reserve bank is more conscious today than before that the policies it makes have a meaning if, and only if, they make a positive difference to the real world. for example, one of the core concerns of the reserve bank β s anti - inflationary stance is that inflation hurts, but hurts the poor much more than the better off. but the poor are not an organized, articulate lobby. as a public policy institution, the reserve bank has the responsibility to make that extra effort to listen to the silent β voice of the poor β. 46. outreach is not a discrete task ; it is a continuous process. as i said earlier, the policies of the reserve bank impact the everyday lives of people. the reserve bank will remain a useful and relevant institution only if it is able to understand the hopes and aspirations of ordinary people and factor them into its policy calculus. autonomy and accountability 47. the crisis over the last five years has reopened some fundamental questions about central banks β their mandates, the limits to their autonomy and the mechanisms through which they render accountability. these questions are playing out in india too. several committees have suggested that the mandate of the reserve bank should be narrowed on the argument that its currently broad mandate is diluting its focus on price stability β the core concern of monetary policy. the financial sector legislative reforms commission ( fslrc ) which submitted its report to the government in march this year has argued that the mandate of the reserve bank should be restricted to monetary policy and regulation of banks and the payment system. 48. in the context of the mandate of central banks, one needs to keep in mind that the global financial crisis was a powerful rebuke to central banks for neglecting financial stability in the pursuit of price stability. in the immediate aftermath of the crisis, which saw the us fed and other central banks provide liquidity in spades and use unconventional tools, a consensus had emerged that financial stability needed to be explicit in the objectives of monetary policy. then the euro zone debt crisis forced the ecb to bend and stretch its mandate to bail out sovereigns, in essence implying that a central bank committed to financial stability could not ignore sovereign debt sustainability. put differently, the fundamentalist view of a central bank with a single - minded objective ( price stability ), and a single instrument ( short - term interest rate ) is being reassessed across the | 0 |
gent sejko : launch of the ebrd transition report 2017 - 18 opening remarks by mr gent sejko, governor of the bank of albania, at the launching of the ebrd transition report 2017 - 18, tirana, 11 april 2018. * * * dear mr colangeli, dear mr sanfey, dear participants, it is a special pleasure for us to host again the presentation of the transition report 2017 β 18 by the european bank for reconstruction and development. the transition report 2017 β 18 addresses some very important issues for transition economies, such as convergence of firm dynamics and productivity, the importance of road infrastructure to economic growth, and the new opportunities from the green economy. it is a pleasure to note that the report presents a positive assessment of the developments in the region. after some years of anaemic growth, the economic activity in the region shows recovery and the prospects remain positive, notwithstanding the geopolitical concerns and the internal and external challenges we face. some regional countries grew faster than other countries around the world, of similar development level and market size. the capital inflows have been relatively considerable, driving to the narrowing of the interest rates spread in the region compared with those in large economies. more importantly, it seems that inflation is gradually returning to target levels and the accelerated economic growth in the western balkans is supported by bank lending and some major infrastructure projects. nevertheless, the report notes that productivity growth slowed down ; hence, the firm dynamics is identified as one of the main issues that should concern our region. the main reasons of these developments seem to derive from some factors : first, the low capacity of markets and firms to regenerate, decelerates the replacement of non - productive firms with new innovative ones, and hinders the efficient allocation of resources. second, small firms do not succeed in increasing their output or the number of employees. studies show that their productivity is rather lower compared with larger firms. smaller firms make up the majority of producing entities β around 80 % in ebrd region, and 95 % in albania. for this reason, more should be done for the integration of smaller firms into global production networks, finding human capital, access in the financial system or capital markets. the bank of albania deems that the development of the financial system is indispensable for the economic development of the country. in this regard, through our policies, we are trying to encourage a more efficient allocation of bank lending, in order for | be conducted after the 3 years target : mid - term review shall be conducted to assess impact of the interventions of the financial inclusion initiatives included in the framework and inform the national council on the appropriate directives to issue to the key stakeholders for implementation. your excellency, your majesty ; ladies and gentlemen : development of the framework has been a very fruitful process ; we have witnessed, from the members of the council and other national technical committees, great enthusiasm, commitment, energy and desire to increase the level of financial inclusion in tanzania. we therefore expect that the official launch of the framework shall build more impetus to fulfill our objective of improving the level of financial inclusion in tanzania. with this remarks, i now have the honor to welcome honorable, ms. saada mkuya, acting minister for finance to deliver her remarks and welcome his excellency, dr. mohamed gharib bilal, the vice president of the united republic of tanzania, to deliver his opening speech and thereafter welcome the guest of honor her majesty queen maxima of the netherlands to deliver the keynote address. honorable minister ; ms. saada mkuya, welcome. bis central bankers β speeches | 0 |
in monetary policy, others are tactical. and when you β re in a world where there are pretty big moves in ten - year rates, for example, trying to work out the appropriate response β it β s perfectly reasonable to have differences of view. and it β s perfectly reasonable for that to be heavily debated within the governing council. and then for that to be reflected in the public discussion, i think it β s fine. so it would not be accurate to say this is some kind of structural division. a lot of it was to do with β and i β m sure this is true also in the fomc β there β s an issue about under today β s conditions β not last month β s conditions, not next month β s conditions β what under today β s conditions is the best policy move. and here there was clearly a difference of views. but in the end the decision was taken and that β s the most important news story : to understand what this means, how this is going to permeate the financial system, how this is going to affect the real economy and affect the dynamics of inflation. we β re ready to open it to the audience q & a. i β m going to put one more question to you then we β ll do that. olivier blanchard was recently positing the idea that we β re potentially on the cusp of a paradox of thrift regime where, across the developed world with uber, 8 / 11 bis central bankers'speeches ultra - low rates, it β s an incentive for savers to in fact save more and stunt growth because they have such meagre returns on their investments. do you agree? so, let me say that when we ease monetary policy, or let β s say when there β s a cut in interest rates, one mechanism which olivier has referred to there is : how do people respond in terms of their savings behaviour to a lower interest rate. i think the bigger challenge is indirect : if the lower interest rates lead to more investment, more spending in the economy, then incomes go up. so let β s say you get a 5 percentage point increase in income. if you decide to save more of that, it β s still going to be partial, most of that increase in income goes through to consumption. i mean, the correlation is really high. when we look at what β s driving consumption, it β s is your income going up. the second question of β are you, at | per se. and then there β s other issues to do with intellectual property rights, other elements which can be handled in different ways. of course, the world evolves, it β s not the case that you go forever without any revision in either trade regimes or other multilateral understandings, so let β s see what happens. but i think the uncertainty in itself, if it continues to be prolonged, it β s a problem. you β re about to get a new boss. as she β s been on the circuit this week talking about clouds on the horizon, trade is obviously a big concern for her. how involved is she with you now and getting to be where she officially takes office? now is late september, so she has a month before taking over on 1 november. i mean, we made this big decision in the september meeting. there will be a monetary policy decision in late october, so one week before, ten days or more before she comes. so i think it β s a very exciting time, the renewal in an organisation. with these eight - year renewals, you know it β s obviously a challenge. it β s also a great opportunity. obviously, mario draghi has been an exceptional leader, but christine lagarde i think is going to be exceptional also. she has such amazing experience, both at the imf and as french finance minister, and of course through those roles she β s been very involved in the european debate for many years. and whether it β s in the running of monetary policy or the wider role of the ecb in the european system, i think she β s going to be a really good leader. there are some pretty deep divisions within the governing council as there are now across the fed, the bank of japan as well, how do you expect lagarde to attack that, do you think we β re going to see a more activist ecb under her? of course, it β s always interesting and dramatic to focus on differences of view. the most important assessment in the september meeting was β after we had a joint assessment in july that inflation was below target β that was confirmed in september, and there was a very high degree of consensus that a monetary easing was required. so i think it β s exaggerated to say there are deep divisions. what is true is that, on individual elements of what we do, there are differences of view. some of which are kind of structural about the role of sovereign bond purchases | 1 |
segment of the market, as well as the futures markets. 3 the intense and widespread selling pressures appear to have overwhelmed dealers β capacity or willingness to absorb and intermediate treasury securities. 4 in the end, the federal reserve took a number of steps to support smooth market functioning, which i will describe in a moment. fortunately, even with these strains in financial markets, banks were able to remain a source of strength to the financial system and the economy. banks entered this crisis with much stronger balance sheets than the last one β with more and higher - quality capital, more liquid assets, and less reliance on fragile funding. this is a testament to reforms implemented by the fed and other agencies in the aftermath of the gfc. not surprisingly, however, the magnitude of the economic and financial disruptions from the covid event posed some major challenges to banks. first, in march, many businesses β unable to satisfy their large cash demand through cp or 2 / 5 bis central bankers'speeches corporate bond issuance, for the reasons i described earlier β drew down on their existing credit lines with banks in order to raise cash. as a result, commercial and industrial ( c & i ) loans in the banking system increased by nearly $ 480 billion in march β by far the largest monthly increase ever. banks were able to fund these loans without notable problems through inflows of core deposits, other borrowing, and, to a lesser extent, by using their buffers of liquid assets. the inflow of deposits resulted from increased demand for safe haven assets, reflecting confidence in u. s. banks. while banks were a source of strain during the gfc, they were a source of strength during this crisis. after march, as the economy started to recover, many firms repaid these drawdowns and c & i lending by banks declined. if the drawdown of credit lines tested the resilience of banks to liquidity shocks, financial distress at borrowers has been testing the resilience of banks to losses. the covid event has made it harder for many borrowers β businesses as well as households β to repay their debt. encouraged by supervisors, banks have been working actively with their customers and have agreed to grant forbearance to millions of borrowers. at the same time, banks have recognized that the credit quality of many loans has deteriorated considerably, and they have made sizable provisions to prepare for expected loan losses. while banks have continued to lend, we have seen a notable tightening of bank lending | integrated response by irb banks. focusing irb efforts in a compliance unit that seeks to meet the letter but not the spirit of the irb standards will not be welcome. the details of what we will expect are, of course, still being developed. based on our discussions with banks thus far, areas of special attention may include the breadth and depth of internal audit and loan review and the consistency and timeliness of internal ratings. the overall supervisory review process is likely to be familiar : verification of internal processes and procedures, coupled with some degree of transaction testing. the overarching goal will be to assess the effectiveness of a bank β s processes and systems in achieving sound risk management and adherence to irb standards rather than to dictate the particular form that internal checks and balances must take. supervisors will also carefully review the manner in which loss characteristics are estimated and the estimates themselves β such as the probabilities of default, the losses given default, and the exposures at default β that are provided by irb banks. this is an area where supervisors have not tread very often and with many open issues. the issues include the suitability of internal and external data sources, the appropriate historical period to use in producing estimates, and the manner in which historical data and loss estimates should be linked to the bank β s current exposures. these and other issues will be challenging and will rightly occupy much of our attention over the coming months and years. in this context, the industry and supervisors must work together to develop and use reasonable standards for irb quantification. neither we nor banks can afford a β race to the bottom β in this critical area. the expertise of the rma will be particularly sought and appreciated. supervisors obviously have a lot of work to do. we are at the very beginning of efforts to train our staff to understand all of the issues raised by basel ii and to make sound judgments about banks β adherence to the standards. i hope you will be patient with our examiners as they come up to speed, just as we intend to be patient with you. and you should not interpret my earlier remarks as a signal that we intend to be very inflexible. we recognize that many systems, methods, and organizational forms can satisfy the spirit of the irb standard, and that what is appropriate for one bank may not be appropriate for another. we expect and welcome variety, in part because that is necessary to support further innovation. and innovation is absolutely necessary. | 0.5 |
banking sector is one of the key drivers in the financial sector. this is further motivated by the approach of the β asean way β, which is premised on the region β s belief and recognition of strength in diversity. important regional agreements such as the asean banking integration framework have encapsulated the principles of inclusiveness, attainment of mutual benefits and individual country readiness in supporting the regionalisation of asean banks. however, an important point that should not be forgotten is that the financial sector encompasses a wider scope than just banks. in fact, policymakers in asean have been successful in enlarging the borders of our financial markets by developing more diverse sources of funding for the economy. this is best reflected in the building of deeper and more liquid bond markets arising from the experience of the 1997 asian financial crisis. we are also seeing a shift in the financial landscape through the usage of technology, something that i will elaborate more on later. thus, the term bankers without borders, should perhaps, be expanded to be finance without borders. yet, despite the positive outcomes from these and the continued strong need for openness, the conviction for globalisation and international banking seems to be waning. for one, post the global financial crisis, we have seen the rationalisation of operations by many international banks. 1 / 3 bis central bankers'speeches we read regularly on the prospects of trade protectionism, how globalisation has created widening inequality and how globalisation is like a train running out of control. no doubt, a key driver of the 2007 / 2008 financial crisis was indeed financial liberalisation going too far. interestingly, some, including economists at the bank of england have also begin to consider the theory of β peak finance β β that global finance has peaked and financial de - globalisation has begun, while others at the bis have argued otherwise. international banking and finance β a new model for a new era while this debate will surely continue to unfold over the coming years, perhaps the more pertinent question is how we can evolve the model of international banking such that it becomes more desirable and beneficial for the needs of the future. it is worth considering a new model β one that is inherently more sustainable and inclusive. if i may postulate, the starting point is perhaps an honest appraisal that international banking ought to be much more than just a commercial decision. beyond considerations of revenue, margins and returns, international banking should fundamentally be more attuned to and invested in the developmental journey of the | quick money could be earned in the so - called new economy became the conventional wisdom. from the recent years β experience i can identify some important and interesting issues. although time does not allow me to expand on them, allow me nevertheless to mention some briefly. what can be done to make the stock market function better? what can be done to provide more support in the future for long - term saving by households? how could more education and knowledge be provided so that the inexperienced investor becomes experienced and well - educated instead. i β m sure that shareholders associations all over the world have an important role to play in this respect. further, it goes without saying that prompt, up - to - date, correct and relevant information is crucial. however, we must remember that more information is not the same as better information. quality is not the same as quantity. the inexperienced investor must be helped to interpret the information and pick out what matters most. an important role could be played by independent analysts, not to mention media. there have to be agents in society that can see through and criticise corporate managements that are unduly optimistic or provide information selectively. the argument for this is that international studies indicate that in the second half of the 1990s firms, banks and analysts had incentives to talk inexperienced people into investing in new enterprises on grounds that were not entirely sound. many new technology companies were not generating a profit and had to rely instead on paying for wages and equipment by issuing shares. for this to be feasible, stock market valuation needs to be high. in this sense there were incentives for managements to trim reports and statements about their firm β s future profits. at the same time, analysts and investment banks, with potential earnings from launching share issues, lacked incentives to take a critical look at these reports, so inexperienced investors did not get the assistance and support they needed. in order to reduce the risk of financial market imbalances, it is important that we have a well thought - out legislative, regulatory and supervisory infrastructure that functions properly and follows changes in the rest of the world. this is a never - ending task that requires the participation of all concerned. today, households face what are sometimes very difficult risk - management decisions that were not called for or even possible before. many people still lack the relevant knowledge for this and it may be asked whether people in general can be expected to have such knowledge in the future. everyone cannot be a specialist in risk management and financial theory. therefore, i think | 0 |
retaliation from all affected regions on an equivalent amount of u. s. exports. β scenario 4 : confidence shock β introduces a temporary global shock to confidence on top of scenario 3. it is assumed that advanced economies see risk premiums increase by 30 basis points - - about half the increase observed during the β taper tantrum β - - around two years after the additional tariffs, while emerging economies would face a shock that is twice as large. source : imf, β g20 surveillance note, july 21 - 22, 2018. β chart 3 real gdp growth and breakdown by component ann., q / q % chg. private consumption government spending imports real gdp private business fixed investment, etc. exports change in inventories, etc. - 5 - 10 - 15 cycy 17 17 source : cabinet office, β quarterly estimates of gdp for april - june 2018 ( first preliminary estimates ). β chart 4 outlook for economic activity and prices ( july 2018 outlook report ) medians of policy board members β forecasts, y / y % chg. fiscal 2018 forecasts made in april 2018 fiscal 2019 forecasts made in april 2018 fiscal 2020 forecasts made in april 2018 real gdp cpi ( all items less fresh food ) + 1. 5 + 1. 1 + 1. 6 + 1. 3 + 0. 8 + 1. 5 + 0. 8 + 1. 8 + 0. 8 + 1. 6 + 0. 8 + 1. 8 note : figures for the cpi ( all items less fresh food ) exclude the direct effects of the consumption tax hike scheduled to take place in october 2019. source : bank of japan, β outlook for economic activity and prices, β july 2018. chart 5 household consumption before and after consumption tax hikes consumption before and after tax hikes real private consumption by type apr. 1996 and apr. 2013 = 100 104. 9 durable goods 104. 6 120 103. 9 non - durable goods services 100. 5 122. 3 tax hike in fiscal 2014 ( from 5 % to 8 % ) tax hike in fiscal 1997 ( from 3 % to 5 % ) apr. 2013 = 100 106. 9 106. 3 103. 0 99. 4 95. 8 87. 7 96. 8 13 fy 1996 14 fy 2013 92. 8 note : the latest figures are as of june 2001 and june 2018. source : cabinet office, β synthetic consumption index. β 13 εΉ΄ [UNK] fy 2013 14 notes : 1. the latest figures are | without close cooperation among countries. this is indeed one of the key lessons from our policy responses to the global crisis. in today β s highly interconnected world, financial disruptions in one country or region would be no longer a problem of the country or region alone. by the same token, policy measures taken by a country can easily affect other countries. for example, extraordinary monetary easing by major central banks does appear to have helped their home countries contain the fallout from the crisis. but many emerging countries were forced to confront adverse financial spillovers from large and sharp swings in the global liquidity condition. in short, coordinated global efforts to rein in the excessive global liquidity and cross - border spillovers have fallen short of expectations. and we all know too well that international policy cooperation has always been difficult to achieve. but history is not destiny. nor does it mean that we should give up. a global solution is needed more than ever to overcome the current crisis, which is a global problem. and for the benefit of all, the global community should be more united than ever in tackling the enormous challenges that lie ahead of us. concluding remarks ladies and gentlemen, the world economy is still struggling to find its way out of the great recession. it is in need of stronger and wiser policy actions that can address the very complex economic and financial troubles we are facing now. but our understanding of what went wrong and what should be done is still incomplete. this is even more the case if we turn our attention to the future of the global financial system and to the monetary and macro - prudential policy framework. as i mentioned earlier, i believe that global policy cooperation should be a priority in our search for an exit from the current crisis. i also believe that effective collaboration between policymakers and academia is every bit as crucial as that between policymakers. we do not sit idle by during the crisis. nor should we sit idle by, being complacent with the conventional wisdom. we must bridge the gap between reality and our perception of it. it is our duty and indeed our very real privilege to engage in and work through the conundrums we encounter today. i look forward very much to a new thinking on monetary and macro - prudential policy. and i am confident that this conference will contribute to developing the new thinking that we all need. once again, i wish to extend my heartfelt appreciation to all participants, and my hope for your active discussion of new insights and views | 0 |
of caution are in order. one source of concern is that not only public debt ratios but also future expenditure commitments are already very high. this is because many public programmes, such as pension systems, will require more funds as the population ages. another concern is that tax revenues from traditional instruments such as income and consumption taxes may be lower, among other reasons because of the compositional effects associated with lower effective tax rates for older people. moreover, conventional fiscal stabilisers that rely on progressive income taxation and transfers may become less effective. since there are good reasons for not relying on discretionary fiscal measures for stabilisation purposes, there might be a need for alternative instruments such as the so - called β semi - automatic stabilisers β. these are fiscal instruments that involve tax reductions or increases in transfers and that automatically come into play as the economy goes into recession. finally, population ageing might also erode the effectiveness of fiscal multipliers since differences in the marginal propensity to consume over the life cycle make consumption by the old less responsive to fiscal transfers. as for macroprudential policies, they can also be used as an additional macroeconomic stabilisation mechanism. indeed, the introduction of macroprudential instruments to complement the stabilising capacity of monetary and fiscal policies is probably one of the most significant advances in the wake of the international financial crisis. for the countries belonging to a monetary union, the introduction of these tools is particularly important. this is because it is one of the few instruments available at the domestic level to ensure the stability of the domestic financial system. in particular, some instruments, such as the countercyclical capital buffer, can be used to build up capital buffers at financial institutions in good times that can be deployed when conditions worsen. the use of macroeconomic stabilisation mechanisms, such as the ccyb1, is particularly significant in a setting, such as the present one, in which monetary policy scope is more limited. a relevant issue in this regard is the extent to which these macropudential measures are complementary or substitutive with respect to monetary policy instruments. for instance, the activation / deactivation of a countercyclical capital buffer may weaken / increase the impact of expansionary monetary policy measures, as it may have a negative / positive impact on credit supply. countercyclical capital buffer implications for the financial system let me now briefly discuss the potential implications of ageing for the financial system. | dependencies on technology. all countries of the world, therefore, need to address the y2k problem and its potential effects on their domestic financial markets. in some cases, it is said that computer systems in particular countries are not much affected because their national calendars are not based on the conventional gregorian calendar used in the united states and many other countries. i do not derive much comfort from these statements because in most cases operating systems and the software applications running on them count internally with a conventional date system that may not be y2k - compliant. these systems typically also need to connect and interact with other systems that use conventional dates, so these interfaces must be tested for y2k - compliance. more broadly, mere assertions that computer applications are unaffected cannot be seen as a substitute for the rigorous see testimony of governor edward w. kelley, jr. before the committee on commerce, science, and transportation, u. s. senate. april 28, 1998. assessment, remediation, and testing efforts that should be undertaken by financial market participants worldwide. the increasing extent of cross - border, financial - market activity has been much remarked on in recent years. perhaps less well known is the fact that this activity is dependent on a large, geographically diverse, and highly computer - intensive global infrastructure for each of the key phases of this activity - - from trade execution through to payment and settlement. as an example, consider the daily financial market activities of a hypothetical us - based mutual fund holding stocks and bonds in a number of foreign jurisdictions. such a mutual fund would likely execute trades via relationships with a set of securities dealers, who themselves might make use of other securities brokers and dealers, including some outside the united states. the operational integrity of the major securities dealers in each national securities market is critical to the smooth functioning of those markets. in addition, securities trading in most countries is reliant on the proper functioning of the respective exchanges, brokerage networks, or electronic trading systems and the national telecommunications infrastructure on which these all depend. financial markets today are also highly dependent on the availability of real - time price and trade quotations provided by financial information services. for record - keeping, administration, and trade settlement purposes, our hypothetical mutual fund would also likely maintain a relationship with one or more global custodians ( banks or brokerage firms ), who themselves would typically maintain relationships with a network of sub - custodians located in various domestic markets around the world. actual settlement of | 0 |
and to deal with the underlying problems? tackling the urgent issues to tackle the urgent issues stemming from the crisis, it was first essential for the three countries that were experiencing major difficulties to be able to continue funding themselves : bis central bankers β speeches the eu and the ifm stepped in to assist them. they did this via bilateral loans in the beginning, and then in the framework of a structure that borrowed on the markets backed by a guarantee from the euro area member states : the european financial stability facility ( efsf ). this support was subject to strict conditionality to ensure that the sustainability of public finances was restored and the country in question regained its competitiveness. these countries therefore undertook to meet deficit reduction targets in order, ultimately, to be able to tap the markets directly for their funding needs. this support was always designed to be temporary and encourage sound fiscal policies. central banks also played a decisive role throughout the crisis. first, they cut their key interest rates sharply after the crisis of 2008 in order to guarantee price stability and boost lending and activity. furthermore, they provided financial institutions with liquidity to limit credit crunches. since 2008, the eurosystem, for example, has conducted fixed - rate tenders with full allotment against an extended range of eligible collateral. since 2010, it has run a programme to purchase government securities of countries in difficulty in order to support the market, ease pressure on interest rates and thus improve the efficiency of the transmission of its monetary policy to the real economy. in addition, cooperation between the world β s major central banks was stepped up, in particular for the provision of foreign currency liquidity. the rescue packages put in place for portugal and ireland are working well. ireland in particular has considerably reduced its deficit, and implemented very extensive economic structural reforms approved by a broad political and social consensus. it is ahead on the execution of the programme and has even already returned to a path of growth. in greece, unfortunately, the situation is less rosy. for several months, it has appeared that greece would not manage to meet its targets for reforms and deficit reduction. this has exacerbated market concerns. to resolve this situation, the heads of state or government of the euro area and the imf worked towards an agreement that was reached on 21 july 2011. this agreement allowed for major progress : β first, it agreed to support a new rescue programme for greece, better suited to its situation, with lower interest rates and extended maturities ; β second | and institutional changes in the educational, health and social security systems. the long expansion has been characterized by moderate inflation rates and consistently lower levels of unemployment. this is in sharp contrast to two decades ago when the growth in the economy was accompanied by double digit inflation. we have been able to manage our affairs to keep in check those domestic sources of inflation. as we go forward we need to ensure that wage settlements remain in line with productivity. one measure of productivity in the manufacturing sector for trinidad and tobago suggests that output per man hour worked grew by 3. 3 per cent for the first nine months of 2000 compared with 7. 1 per cent for the corresponding period of 1999. the strength of the country β s performance is also evident in the healthy state of the external accounts where the country recorded an overall balance of payments surplus in 2000 β the eighth such consecutive surplus. this has also led to a build up in the country β s gross foreign reserves which amounted to us $ 1, 890 million or around 5. 2 months of prospective imports. the state of play over the past seven years real gdp has grown on average at just under 4 per cent per annum and preliminary indications are that growth will continue apace during 2001. despite the slowdown in the fourth quarter of 2000, when real gdp rose marginally ( 0. 4 per cent ) the economy has rebounded in the first quarter of 2001 growing by around 1 per cent, considerably higher than the 0. 2 per cent recorded one year earlier. at that time the delay in settling the natural gas contract impacted negatively on economic activity in the energy based industries and these adverse developments continued well into the second quarter of 2000, when the natural gas contract was eventually signed. for example, the protracted negotiations led to a reduction in the volume of fertilisers exported to international customers, and also affected other sub - groups in the energy sector. for 2001 however the sector is expected to operate at or near capacity with minor stoppages. in the non energy based sectors of the economy, the 2000 performance is noteworthy in that for the first time in more than four years, every sector experienced positive growth : β agriculture rebounded from two difficult years as the output of raw sugar totalled 107 thousand tonnes. construction activity has slowed after spikes in 1997 and 1998 consequent on the installation of additional capacity in the energy based sectors, but some slowdown was expected as the major investments and public sector capital spending on infrastructure began to taper off. this | 0 |
##es, enforcement action by the central bank may follow. we have been active in taking enforcement cases against regulated firms. last year alone, fines totalling over β¬8. 4 million were imposed on firms. enforcement will remain an integral part of our strategy and this is in keeping with best international practice. the responsibility for ensuring regulatory compliance, of course, lies not only with the regulated entity, but also with those holding relevant functions within the firms. on the basis of the central bank reform act 2010, we have put in place a pre - approval process for persons who apply for relevant positions ( called pre - approval controlled functions or pcfs ) in regulated firms, to ensure that they meet the required standards of fitness and probity. this approach is very important since business decisions do not just happen, it is the people who run business who take them. if concerns arise that a person or persons in controlled functions in a regulated firm do not meet the required standards of fitness and probity, they may be investigated by the central bank and could ultimately be prohibited from carrying out a controlled function in their firm, or any other regulated firm. these powers equip us to ensure that the people in senior roles are capable, competent and act with integrity. the central bank will continue to focus on anti - money laundering compliance. in early 2016, the financial action task force will review our compliance and ireland has much to lose if its adherence with the highest standards of anti - money laundering procedures is left open to doubt or criticism. our current self - assessment is that we have a distance to travel in this area if we are to reach international standards or best practice. it is likely that the current imf review will concur with this view. it is therefore important that we continue to focus on this area and you can expect our supervisory focus on aml to remain high. consumer protection the third level upon which financial regulation operates is that of customer protection β one in which the central bank of ireland has been very active at a domestic, eu and international level, not least in 2013. our overarching aim here is β to get it right for consumers β and this mission is underpinned by our 5cs framework. this framework focuses on achieving outcomes for consumers under key headings : placing the consumer at the centre of the regulatory framework, promoting a consumer - focused culture ( as in our ongoing work on sales incentives across the sectors, the importance of which is borne out by the level of red | constantinos herodotou : technology - enabled financial services opportunities and challenges in the payments landscape speech by mr constantinos herodotou, governor of the central bank of cyprus, at the association of cyprus electronic money & payment institutions, nicosia, 28 september 2023. * * * ladies and gentlemen, it is a pleasure to speak to you today and i wish to thank the association of cyprus electronic money & payment institutions for the invitation. the co - existence of traditional banks and innovative fintech companies is transforming the financial sector landscape. this co - existence represents a dynamic interplay of collaboration and interdependence, fostering a complex, yet promising future for our financial ecosystem. the market in which traditional banks and fintechs operate, is also characterised by competition as fintechs gain market share in payment services. this also enables them to cross - sell other services, such as currency exchange, stocktrading, insurance and commodities. in this symbiotic relationship, banks and fintechs stand to benefit by capitalising on each other's strengths, in their efforts to deliver high - quality services to their customers. there are significant advantages in combining the network and regulatory expertise of traditional banks with the agile and innovative operating models of fintechs. however, innovation comes with challenges and risks. as such, the central bank of cyprus has a dual role to play : it encourages innovation and the opportunities that are created by digitalisation. in parallel, it is its duty to maintain a watchful eye on new and untested technologies in our local market, in order to ensure that no undesired risks are introduced, which may penetrate through the local financial sector due to the interdependence i just referred to. and this leads me to my next point, which is the innovation hub initiative that i recently introduced at the central bank of cyprus. through the establishment of the innovation hub, the central bank of cyprus embarks on an ongoing and constructive dialogue with innovative firms, fostering the implementation of novel ideas and the adoption of pioneering technologies. our aim is to simplify the process for innovative firms to understand and navigate their regulatory obligations within the financial system. the innovation hub aims to offer prompt responses and non - binding guidance to interested firms. the audience here today is an important representation of the local fintech community, and as such the central bank of cyprus extends an open invitation to all of you to engage with us through the innovation hub, in order to build | 0 |
virtual halt. international supply chains were disrupted and industrial firms grappled with production stoppages caused by shortages of materials. 1 / 3 bis central bankers'speeches services sectors with high frequencies of interpersonal contact β such as travel, hotels, restaurants, leisure and culture β were hit even harder. german gdp contracted by 4. 6 % in 2020, and even at the end of 2021 economic activity was still 1. 5 % below its pre - pandemic level. nonetheless, germany β s economy has got through the covid - 19 crisis with relatively few scratches. it was mainly decisive fiscal policy intervention that kept the economic slump in germany from being even worse. fiscal policy was one of the primary actors in coping with the economic consequences of the coronavirus pandemic by providing financial assistance to affected firms and workers. as high as the fiscal costs of these assistance measures have been, they prevented the economy from sliding into a downward spiral which could have driven the fiscal burdens much, much higher. but the euro area β s single monetary policy also made a key contribution to mitigating the economic fallout of the coronavirus pandemic. during the crisis, in addition to numerous monetary policy measures, the governing council of the ecb adopted its pandemic emergency purchase programme, or pepp, for private and public bonds with an overall envelope of just under β¬2 trillion. the eurosystem β s emergency monetary policy measures were appropriate and a bedrock in the crisis. in the meantime, the euro area β s economy has recovered significantly. this prompted the governing council of the ecb to announce that it would conclude net pepp purchases at the end of this month. however, for a long time it has no longer been just about exiting the pandemic - induced emergency monetary policy measures, as the economic recovery was also accompanied by a considerable increase in price pressures. consumer price inflation surged in the euro area, averaging 2. 6 % for 2021. for this year, according to its latest projection, the eurosystem is expecting the hicp to even go up to 5. 1 %, which would put inflation well above the ecb β s 2 % inflation target. this acceleration in price trends is attributable to global factors. globally, rising demand is encountering a level of supply that is still being limited by materials shortages and delivery bottlenecks. and, in particular, energy and food prices have risen sharply the world over. the rise in inflation has been | unsettling many people. we, the eurosystem, are taking these concerns very seriously. although our monetary policy is oriented to the medium term and would look through a short - term pick - up in inflation, the inflation risks, too, have risen distinctly and are clearly pointing upwards. the governing council of the european central bank therefore decided this month to scale back net asset purchases under the app, which was launched in 2014, more quickly than previously planned. 2 / 3 bis central bankers'speeches should the available data then support the expectation that the medium - term inflation outlook will not abate, net asset purchases will be discontinued in the third quarter. the governing council will then make policy rate moves some time thereafter. it will proceed gradually and keep a constant watch on current data β for the situation is currently highly uncertain. russia β s invasion of ukraine has put the world under additional extraordinary pressure. i hope that hostilities are halted as soon as possible and that a diplomatic solution is found so that the people in the region can once again live in peace and international trade can return to normal. for the pressing problems all over the world β chief among them the global climate crisis β can ultimately only be solved by all countries working together in peace. central banks, too, are maintaining intensive worldwide collaboration. we central bankers are facing similar challenges, be they finding the right monetary policy responses to developments in the real economy and financial sector or the introduction of a central bank digital currency β a topic that has been greatly occupying me. 3 bundesbank representatives in mumbai that, too, is why it is also so important to us at the bundesbank to have a permanent representative here in mumbai. for the past four years, you, mr kern, were our representative in india. i would like to thank you very much for this! you will now be taking on another high - responsibility position for directorate general communications at the bundesbank β s central office in frankfurt. as part of the scheduled transition, mr thomas notheis, an old acquaintance, will now be assuming his duties in mumbai. he was already the bundesbank β s first representative to mumbai from 2010 to 2014. some of you present today will probably still know him. you were most recently working at the bundesbank β s centre for international central bank dialogue ( cic ) in frankfurt and, in your position, were in a regular exchange with central banks all over the world. dear mr notheis, this will be | 1 |
complex structured products and the liquidity in this market under stressed conditions. let me point out three key weaknesses : β’ first, the ability of investors to assess the extent of concentrations among various types of collateral β including sub - prime β within the structured finance securities has clearly been shown to be less than adequate. indeed, conducting adequate due diligence regarding the nature of underlying investment exposures cannot be replaced by decision - making based almost exclusively on ratings. β’ second, market participants were not sufficiently alert to the possibility that liquidity could dry up in structured finance markets, even though secondary market liquidity in the various structured finance markets has been traditionally thin. as you know, there are several reasons for this, inter alia : the specificity of these instruments, which are often tailor - made ; the β buy - and - hold β strategies followed by a large number of investors ( including, pension funds, insurers, and banks ) ; and the limited comparability of mark - to - model valuations, stemming from the complexity of these instruments. β’ third, the asset backed commercial paper ( abcp ) structures had intrinsic liquidity risk because they invested the proceeds of short term liabilities into longer maturity structured finance assets. in some cases, certain types of abcp structures such as structured investment vehicles ( sivs ) faced increased pressure resulting from an inability to roll - over. this came both from investor anxiety concerning the underlying collateral and the inability to value adequately the collateral as they were forced to sell assets. there are indications that the liquidity strains associated to these structures are not yet over. three key weaknesses of credit markets whilst it is too early to make a definitive assessment, certain supervisory and regulatory issues can already be identified as warranting further attention or action. initiatives are already underway at the international and eu level to address these various issues, but for our exchange of views here today i would like to focus on three key issues : transparency, valuation of complex structured products, and liquidity risk management practices, including liquidity risk stress - testing. β’ first, transparency for markets, investors and regulators. adequate transparency is a necessary basis for an efficient functioning of financial markets. recent experience has shown how perceived opaqueness or uncertainty regarding the underlying exposures, in particular of financial institutions, has translated into a loss of confidence with a resulting disruption in the interbank market. there have been recently many calls for enhanced market transparency both from banks ( e. g. enhanced disclosure of banks β liquid | 40 billion above the benchmark amount. in the following weekly operation on 16 october, the allotment exceeded the benchmark amount by eur 18 billion, and in yesterday β s tender we allotted more than eur 14 billion above the benchmark amount. indeed, the difference between the allotted and the benchmark amount is envisaged to decline gradually in the course of the maintenance period, taking into account the prevailing market conditions. and the ecb still aims at balanced liquidity conditions at the end of the maintenance period. besides, the ecb intends to steer liquidity towards more balanced conditions also during the maintenance period, in a way which is consistent with the objective to keep very short term rates close to the minimum bid rate. we have also stated our commitment to keep this policy in place for as long as needed. before turning to the current situation in the market, let me stress a very important point. through the liquidity operations just discussed, the ecb has contributed to the orderly functioning of the money market, which is one of its key responsibilities. it is worth emphasising, however, that the ecb β s primary mandate calls for its monetary policy to deliver price stability. the two responsibilities are clearly distinct and should not be mixed. this is our concept. only when kept separate, the fulfilment of both duties can reinforce each other. current situation let me now turn to the main issues that characterise the nature and dimension of the current tensions in some segments of the financial markets. the so - called benchmark amount is the amount of liquidity that is needed for the banking sector to fulfill their reserve requirements in a smooth fashion over the course of a maintenance period. usually, the ecb supplies roughly this amount in its weekly refinancing operations. although the ecb interventions have had a stabilising effect on the euro money market rates at the shorter end of the term structure and, more generally, the money market has recovered some of the lost ground, market participants continue to report limited trading activity, particularly in unsecured inter - bank term markets. compared to the situation prior to the emerging of tensions, unsecured deposit rates beyond one month are in some cases ( notably, three months ) still significantly higher and turnover remains lower, despite some improvement during the past few weeks. this situation reflects two main factors. β’ first, some banks β daily funding needs, especially in usd, have significantly increased at various points in time in the recent past | 1 |
, and believing in the fairly widespread myths may lead people to avoid them altogether. that would be a mistake. it is true that the tremendous growth of the derivatives market and the reports of major losses associated with derivative products have created a lot of confusion about those complex instruments. derivatives have bis central bankers β speeches been considered as the villains in the collapse of the global financial system. in fact, companies and countries that bought derivatives in the form of mortgage - backed securities, credit default swaps and synthetic collateralized debt obligations as insurance, discovered, to their dismay, that the insurance cover was only as good as the counterparty at the other end of the contract. some were of the view that the problem was not so much with the exotic nature of some of the products, or their volume, as with the fact that the derivatives were traded over the counter, that is, outside a transparent and regulated exchange. that is how the value of otc derivatives reached ten times global gdp. others blamed the lax regulation of financial derivatives and perverse incentives. this is why there are proposals on the table on either side of the atlantic for the better regulation of all derivatives trading. essentially what derivatives do is to hedge risks by reducing future uncertainties and managing them more effectively. derivatives help to improve market efficiency because risks can be isolated and sold to those who are willing and able to accept them at least cost. but using derivatives requires a firm understanding of the tradeoff of risks and rewards, and the decision to use them should be driven by the participant β s strategic objectives. it is important that all users understand how their contracts are structured, the unique price and risk characteristics of those instruments, and how they will perform under stressful and volatile economic conditions. derivatives users should establish a framework for effectively managing and controlling derivative activities. the dark side of derivatives is that, if they are used improperly or without a plan, they can inflict serious losses. so without a clearly defined risk management strategy, the use of derivatives can be dangerous. when used wisely, they can increase shareholder value by providing a means to better control a firm β s risk exposures and cash flows. a firm should be clear about the risks it is comfortable with, and the risks it does not want. now that we have an exchange where currency futures can be traded, new opportunities are opened to investors. besides offering better price discovery and lower transaction costs, the futures market is a major financial hub which provides an outlet for intense competition among | its voice heard as an advocate for a culture of stability. i can reassure them that it will. we will contribute our expertise and our convictions to the discourse with confidence. however, making a case with confidence does not mean disparaging the validity of others. i am looking forward to fruitful discussions on the ecb governing council and to working with you, christine. as a long - standing member of the market operations committee, i always enjoyed working together with colleagues from the eurosystem and benefited from a variety of views and experiences. we are all striving to achieve our common goal of safeguarding price stability for the people of the euro area. likewise, i am looking forward to working together with the other members of the bundesbank executive board as well as with my colleagues throughout the entire bundesbank : in the branches, the regional offices and at central office. and i am already looking forward to getting reacquainted with old friends as well as getting to know new faces. together, we can achieve a great deal. 5 / 5 bis central bankers'speeches | 0 |
the surplus was 63 percent lower than the previous year. the long - term stability of the external position of our economy remains a weakness that requires constant consideration in terms of the formulation and implementation of economic policies. the slow growth rates of domestic demand were reflected in the low demand for money. in april, money supply posted an annual nominal growth of 7. 5 percent. the creation of money in economy continues to be primarily sustained by the growth of the banking system β s net foreign assets. in april, private sector credit posted an annual growth of 7 percent. banking loan data show a positive dynamics for the last two months, displaying higher monthly growth rates of loans and particularly of investment loans. however, the lending growth rates are still low owing to the economic agents β moderate demand for loans and the tight lending standards applied by the banking system as a result of its increased prudence. the growth of deposits improved the banking system β s balance sheet and its liquidity and capitalization indicators. this positive performance needs to be reflected in a more active role of the banking system in terms of lending. the improved liquidity indicators, the contained public sector borrowing in the domestic financial market, the lower risk premiums and the anchored inflation expectations have led to lower interest rates in the financial market. the latter appears more relaxed and the trading volumes have increased. the decrease of interest rates on deposits, loans and government securities persisted in the last two months ; hence providing appropriate conditions for boosting economic activity. the bank of albania considers that the same tendency should continue to be sustained by the contribution of all abovementioned factors. this year β s economic developments have yielded low inflation pressures. cpi annual inflation marked 3. 1 percent in may, close to the bank of albania β s target. annual inflation rate was downward for the third consecutive month, confirming our expectations and forecast for the transitory supply - side shock effects. on the other hand, domestic demand - side pressures have been downward ; this has been attested by the historical lows of core and non - traded inflation, 1. 2 and 1. 3 percent, respectively. the bank of albania has pursued a prudent monetary policy. in full observance of the inflation target, the bank of albania continued to be present in the market through the provision of the required liquidity to the banking system. in its meeting today, the supervisory council approved the change of its monetary policy operational objective, which as from today will be steering the short - term interest rates in | the medium term. the russian invasion of ukraine and the subsequent financial sanctions have clearly caused substantial volatility in financial markets. however, these factors have so far not caused severe strains in money markets or liquidity shortages in the euro area banking system. shortly before the russian invasion of ukraine, ecb banking supervision published the results of the 2021 cycle of the supervisory review and evaluation process ( srep ). the findings of that annual assessment indicate that significant institutions have maintained solid capital 4 / 6 bis central bankers'speeches positions, with most banks going beyond the levels dictated by capital requirements and guidance. of course, the 2021 srep cycle did not envisage the current war in ukraine nor the sanctions on russian counterparts that followed. yet, the srep results do reflect the general resilience of europe β s banking sector, which should help avoid disruptions in financing conditions as the economy and financial system are adjusting to the evolving circumstances. as regards russia, the ecb continues to monitor direct and indirect channels of impact on european banks, but none have been disruptive so far. outlook for monetary policy let me now turn to how this assessment of the euro area economy outlook translates into the outlook for monetary policy. it is a well - established practice in monetary policy that in times of uncertainty prudent policy calls for gradualism, as was also alluded to in a speech last week by ecb president christine lagarde. this holds particularly true when we approach potential turning points in the monetary policy cycle. in determining the appropriate degree of gradualism, the treaty gives us a compass β the principle of proportionality. a compass that points to price stability and β in line with our monetary policy strategy β has its needle moved by the evidence. against this backdrop, already in december we announced our intention to end the net asset purchases conducted under our pandemic emergency purchase programme ( pepp ), which in our recent meeting we confirmed we would do at the end of this month. moreover, in light of the revised inflation outlook, we have assessed that net asset purchases under our other purchase programme can be discontinued in the third quarter if the incoming data confirm that the medium - term inflation outlook will not weaken after net asset purchases. this strengthens our policy optionality by removing obstacles for potential policy rate normalisation beyond the horizon of our asset purchases. any adjustments to the key ecb interest rates will take place some time after the end of our net asset purchases and will be gradual and based on | 0 |
lawmakers and regulators. although risk management has become much more quantitative, considerable management judgement must be applied to the risk management process. frequent, small losses can generally be absorbed in the operating margin of the product or service. it is the low - probability, large losses that provide the greatest challenge. and, it is just such risks - - the ones that can severely damage, if not kill, an organization - - that too many enterprises do not formally take into consideration. when one looks at the extreme loss events for many types of operating risks, for example, executive frauds, it is easy to recognize that the normal bell - shaped probability distribution does not fit. rather, the extremely long - or fat - tailed distributions emphasize that risk management and internal control judgments must be applied. what is even more difficult, is that some exposures can better be classed as uncertainties than as risks. that is, patterns of losses, and risk drivers, are very hard to identify. terrorist attacks, technology breakthroughs, and other events that cannot be defined ahead of time often have significant implications for the loss exposures of corporations. indeed, recent events have demonstrated that the complexity and size of modern corporations create significant market risk exposures that give management and the board of directors little time to react after serious breaches in internal controls become known. reputation risk, especially in a trust business like banking, can lead to loss of liquidity, cancellation of major new contracts, and indictments, which bring the ultimate corporate loss - - failure of the firm. and as we have seen, the market's response can be harsh. risk management and disclosure the intended or unintended consequences of the opaqueness that comes with complexity raise serious issues for financial reporting and corporate governance. effective governance requires investors and creditors to hold firms accountable for their decisions. but they must first have the information necessary to understand the risks that the firm is bearing and those it has transferred to others. here again, enterprise risk management can provide a framework through which management and boards can convey appropriate information that will allow outsiders to understand the company's risk exposures and how the company limits and manages those risks. public disclosures by corporations need not follow a standard framework that is exactly the same for all. rather, we should insist that each entity disclose the information it believes its stakeholders need to evaluate its risk profile. each business line in a complex organization is unique, and - - to be most effective - - the specific disclosures of its risks | tightening of monetary policy, a crisis may ensue. in several countries the financial system has been on the verge of collapse during such a period of adjustment. this was the case in the us in the early 1980s and in the nordic countries around 1990. interest rates are the central banks β most β direct β tool for contributing to both monetary and financial stability. financial stability primarily contributes to price and exchange rate stability by facilitating the use of policy instruments for monetary stability purposes. unstable institutions and markets constrain the use of interest rates. tighter liquidity and higher interest rates may increase the uncertainty concerning the stability of the financial system. this suggests that situations may occur where there is a conflict between the two objectives. asset prices are an important link between monetary and financial stability. for example, a surge in property prices, with a risk of a subsequent fall, may threaten to undermine banks β collateral and increase loan losses. this can put financial stability at risk. a surge in asset prices without accompanying pressures on prices for goods and services raises a dilemma for central banks. there is no consensus on how to handle this dilemma. central banks have avoided targeting specific asset price levels. nevertheless, history provides some examples of when more emphasis might have been placed on asset price developments in the formulation of monetary policy. 1 structural changes in the financial sector have the strongest impact on monetary stability through the way it may alter the transmission mechanism of monetary policy. for example, if structural changes increase competition in the banking sector, banks may adjust their retail interest rates more rapidly in response to changes in central bank and money market rates. this means that monetary policy may influence savings and investment decisions more quickly. the four largest nordic countries have chosen different monetary policy regimes : β’ finland is part of the euro area ; β’ denmark is a member of erm ii ; β’ sveriges riksbank targets inflation ; β’ whereas norges bank focuses on long - term exchange rate stability. i want to emphasise that the objectives of monetary and financial stability can be achieved by different regimes, including the ones chosen by the nordic countries. denmark has for several years run a successful fixed exchange rate regime. denmark β s success must be seen in the light of a combination of factors. first, erm membership and denmark β s long - term commitment to a stable exchange rate have enhanced confidence in the current regime. second, fiscal policy has successfully supported the fixed exchange rate. for many other countries with less economic policy discipline, traditional fixed exchange rate regimes have | 0 |
small and medium scale enterprises ( smmes ), owner - occupied residential mortgages and project financing. needless to state, banking, by definition, is the business of trust and risktrading, of course in a prudent, safe and sound manner. in terms of potential impact, there is evidence, globally, that smmes are the lifeblood of any economy and are responsible for much of employment creation, innovation and economic growth, broadly. this is more so in our continent, africa. access to mortgage finance and house ownership adds to economic freedom and security and has great potential to unleash wealth - enhancing possibilities in several directions. the current estimated 15 percent share of mortgages in total commercial bank loans in botswana ( very low compared to peer upper middle - income economies ) need to improve markedly, which will go a long way towards helping the economy to realise its potential. the other area is an increasing need to complement government efforts in funding infrastructure development and this includes active engagement in fostering the development of the bond market or, more broadly, capital markets, where access bank plc has the experience of operating in other african markets and emerging economies. this, combined with medium - to long - term project financing, would help build the nation β s productive capacity and therefore attract investment and stimulate innovation and more vibrant and efficient production of goods and provision of services. channelling back credit in this direction should, therefore, generate more business for you, access bank plc, in botswana. honourable minister and distinguished ladies & gentlemen this plea for enhanced funding of productive domestic economic activity is against the background of ample domestically mobilised financial resources, especially by the pension fund industry. a substantial part of these resources is, for prudence and optimisation purposes, rightly invested abroad to preserve capital and generate return, given the domestic constraints. however, i suggest that the banking industry, the broader financial sector and local industry need to actively engage and innovate around finding local opportunities for productive domestic deployment of these resources. this would massively impact domestic economic activity, employment creation and enhanced inclusivity. in the area of digitalisation, an aspect of the so - called β new normal β, i also appreciate that access bank plc is active in deployment of digital channels that affords financial inclusion and promotes enhanced access to payments platforms, funds transfer and remittances, which, as well as being convenient, help promote economic activity and potential for increasing innovation, efficiency and business development. honourable minister and | to be licensed as a bank in botswana, hence the approval, in principle, of the acquisition of 78. 15 percent of abch shares in bancabc, in march 2021. promoting financial sector development and inclusion turning to the promotion of financial sector development and inclusion, the bank of botswana recognises, distinguished guests, that in the first instance, the licensing requirements and ongoing prudential supervision are meant to allow those that meet the criteria and operate prudently to pursue their business and profit / return interests and aspirations freely, albeit within a regulated environment that safeguards safety of deposits and integrity and stability of the broader financial system. however, at the same time, the activities and operations of banks play an important role in promoting and fostering economic development, financial discipline and innovation. in this regard, going back to economic history, a preeminent father of the economics profession, adam smith in his classic / seminal works, β an enquiry into the nature and causes of wealth of nations β, alluded to β the invisible hand β, a concept that describes unseen market forces of supply and demand, leading to the unintended greater social benefits and public good as a result of individuals acting in their selfinterest. hence, the need, as promoted by the bank of botswana, to accentuate the developmental role of banks in the interest of economic prospects and welfare improvements for society. therefore, where opportune and prudent, the bank will continue to implore banks, including access bank, into active participation and contribution to the national development and transformation agenda. distinguished guests, i have, therefore, in my engagement with the leadership of the incoming bank highlighted the pertinent and immediate developmental issues for botswana, where i observed a positive response by access bank, supported by a demonstrable track record in markets in which it currently operates. the overriding issue for botswana is financial inclusion generally, where it is expected that access bank plc will add to vibrancy of market competition and broader coverage in attracting customers, diversity of products and services, quality of service provision and related cost rationalisation, for the benefit of both its investors and customers. beyond this generalisation, there are specific areas of need where the bank of botswana has observed what i would call β cherry - picking β of easier to deal with customers and sectors and eschewing of some areas of greater need where the developmental impact can be larger and more pervasive. here i am referring to support for | 1 |
francois villeroy de galhau : france and germany facing european challenges in the crisis speech by mr francois villeroy de galhau, governor of the bank of france, at the bundesbank conference β banking and payments in the digital world β, berlin, 11 september 2020. * * * ladies and gentlemen, 1. to this day, the coexistence and complementarity of central bank and commercial bank money as settlement assets has structured the payment landscape and preserved the stability of the monetary system. yet this structure is increasingly being questioned. β’ our payment landscape is based on the coexistence and complementarities of central bank money and commercial bank money as settlement assets. their respective roles are clearly assigned : central bank money ensures the stability of the financial system while the multiplicity of issuers of commercial bank money preserves competition and innovation in the provision of financial services. their interplay and their interchangeability at par value ensures the safety and efficiency of the financial system. β’ however, the balance between these two forms of money cannot be fixed once for all, as it depends on changes in payment habits, the evolution of the financial ecosystem and the emergence of new technologies. β’ in the retail space, the digitalisation of the economy and the development of cheap, highly effective digital payment solutions displaying innovative features ( e. g. they are instantaneous and more user - friendly ) undergo ( i ) a decline of the use of cash in transactions, which puts into question the availability of central bank money for the public, and ( ii ) an increase of cashless payments which leads to a wider use of commercial bank money. this trend has apparently accelerated since the outbreak of the covid - 19 crisis. β’ besides, increased reliance on digital payment solutions also exposes how our european ecosystem has become critically dependent on non - european players ( e. g. international card schemes and big techs ), with little control over business continuity, technical and commercial decision - making, as well as data protection, usage and storage. β’ meanwhile, the development of crypto - assets and of so - called β stablecoins β aims to create a new category of settlement assets. stablecoins in particular may compete against both commercial and central bank money, even though they do not offer the same guarantees in terms of credit risk, liquidity, service continuity, and neutrality. β’ these trends at stake bring both benefits and risks, and we must consider them as a whole. we must acknowledge that | disappear? there are three possible reasons : the second pillar allows a cross check on the analysis of inflation. we could possibly introduce a focus on nominal aggregates, whereas the first pillar focuses by its nature on prices and volumes. finally, it would allow reference to some of the β secondary β objectives of the ecb, including financial stability. in our discussion to come, i believe we could study two types of aggregates : page 7 sur 10 financial aggregates, from the perspective of financial stability, and potentially looking more closely at the assets of financial institutions including non - banks ( such as their provision of credit in the broadest sense ) rather than at their liabilities only ( including money, as in the past ). other economic aggregates, starting with nominal gdp, which has the virtue of combining real growth and prices β two variables that statisticians sometimes have difficulties separating in our measures. but also employment and income distribution, which respond to the demands of the treaties as well as to the expectations of the public. allow me some remarks on the substance of these β secondary β objectives. to achieve financial stability, in an ideal world, we would have a box of macroprudential tools that could maintain financial stability whatever the monetary policy stance. however, in practice our set of macroprudential tools is comparatively limited. we need a monetary policy strategy that reflects this reality. we should go beyond the old debate of β separation principle β versus β leaning against the wind β. i advocate a median way, which we could call β coordinated β or β integrated β. viii we have now a range of unconventional monetary instruments and our objective should be to pick the right combination that delivers the necessary accommodative monetary stance while minimizing of adverse side - effects on financial stability. tltro β s and the tiering system we use today for refinancing the eurozone banks are two good examples in this respect. on climate change, the emphasis put by christine lagardeix herself is welcome and totally warranted. in my view, the fight against global warming is already an imperative for us under our price stability mandate : not only will the effects of climate change have significant repercussions on future inflation and growth, but they are already having an impact now. we could implement our climate decisions in no more than 3 to 5 years, which would make us pioneers among major central banks. page 8 sur 10 4. how to improve communication with the general public | 0.5 |
of npl secondary markets across the euro area, in other words, that npls is not only a greek problem, but it is also a concern to other south european countries, ` 2 including cyprus, italy, portugal, etc. my focus will then be the recent developments in tackling the greek non - performing loans problem including the two recent systemic proposals, one by us at the bank and one by the hfsf. 2. npls : the broader context across the european banking sector a. recent developments npl ratios continued to decline last year across the european union, confirming the overall trend of improvement over recent years. the latest figures show that the gross npl ratio for all eu banks further declined to 3. 4 % ( q3 2018 ), to the lowest level since 2014, indicating that the npl ratio is approaching pre - crisis levels again ( chart 2 ). the coverage ratio has also further improved and has risen to 46 % ( q3 2018 ), up 3 percentage points since 2014. chart 2. eu bank total non - performing loans source : eba, risk dashboard, data as of q3 2018. however, the situation continues to differ significantly between member states as 12 eu member states have npl ratios of below 3 %, while there are still some with considerably higher ratios β 9 member states have ratios above 5 % ( chart 3 ). in member states with relatively high npl ratios, there is encouraging and sustained progress in most cases ` 3 due to a combination of policy actions and the growth impact. for instance, in cyprus, npls have continued to fall since the end of 2015 with the npl ratio around 34 % and are expected to decline more sharply this year. in italy, where the npl ratio is currently around 9. 7 %, the securitisation scheme supported by state guarantees ( known as gacs ) was introduced in 2016 and extended for another six months in september 2018. several other market infrastructure initiatives are also helpful towards tackling npls. for example, in portugal that has an npl ratio of 12. 4 %, initiatives targeted at promoting smooth coordination among creditors ( to accelerate credit restructuring, npl sales, etc. ) are a welcome addition to the existing policy mix. chart 3. npl ratios in eu member states source : eba, risk dashboard, data as of q3 2018. in this context, last december, the european council presidency and the european parliament agreed on a new framework for banks | point has required considerable monetary policy support. the euro area is looking back on several years of exceptionally low interest rates and unconventional monetary policy measures. the ecb β s key interest rates have been at unprecedented low levels since 2009. they have been supported by a series of unconventional measures, introduced in the face of a protracted recession and persistently low inflation. while we are now at the point where we anticipate β subject to incoming data confirming our medium - term inflation outlook β that we will end net asset purchases at the end of the year, significant monetary stimulus will still be needed to ensure the continued sustained convergence of inflation to levels that are below, but close to, 2 % over the medium term. even after we end our net asset purchases, monetary stimulus will continue to be provided by the guidance we have given namely that we expect to keep interest rates at their present levels at least through the summer of 2019 and to maintain the stock of assets on our balance sheet by reinvesting maturing bonds purchased under the asset purchase programme for an extended period of time 1 / 3 bis central bankers'speeches after the end of our net asset purchases. but the overall favourable outlook and our still accommodative stance should not invite complacency. although on the whole the risks surrounding the euro area growth outlook can still be assessed as broadly balanced, risks relating to protectionism, vulnerabilities in emerging markets and financial market volatility remain / are prominent. we are seeing a growing willingness to question multilateralism, which has underpinned global growth since the end of the second world war. the protectionist trade measures implemented may have had very limited effects thus far, but the escalation of trade tensions is undermining confidence. financial stability allow me also to say a few words about euro area financial stability. the financial stability environment in the euro area overall remains favourable, but it has become somewhat more challenging in recent months. the results of the european stress test published last friday show that euro area banks are increasingly resilient to financial shocks. this also reflects the continuing economic expansion, which has strengthened private and public balance sheets alike. still, there are risks. these include liquidity risks in the non - bank financial sector that could be transmitted to the broader financial system. developments in this area should be closely monitored, and the regulatory and supervisory framework for non - banks needs to be strengthened. asset prices also require close monitoring. while there is currently no compelling evidence | 0 |
##s was sacrificed together with the program for sweeping tax reforms, although it is quite simple to do what is necessary without reference to any other reform. what needs to be done is to introduce one low rate of tax, say 5 percent on average, on all interest income above a certain threshold ; that threshold should be determined in such a way that on the one hand it is not worth the trouble of deducting the tax at source, and on the other it is justified on social grounds. the change should be planned in such a way that it is neutral with regard to the total revenue obtained, i. e., the drop in tax revenues on one side should be matched by increases on the other. it is important to ensure that the collection system is simple as far as the definition of the tax base is concerned, and to set a lower rate, say 4 percent, on nominal interest, and a slightly higher rate, say 6 percent, on real or foreign - currency interest. this change could be implemented without much preparation, and would be of great benefit to the economy. clearly it should not made effective retroactively. financing an increase in government expenditure by borrowing from the public financing an increase in government expenditure by borrowing from the public ( by the sale of government bonds ) causes damage in the following ways : β’ the first derives from the fact that the government already has a large debt of nis 430 billion, more than 90 percent of gdp, due to budget deficits in past years. this debt obliges the government to allocate part of its tax revenues each year to service the debt. in 2001 this interest payment will total some nis 30 billion, more than the total education budget, and several times larger than the government β s investments. the increase in the debt caused by budget deficits reduces the government β s ability to use its sources for current purposes, and creates pressure to further increase the debt to enable expenditure to rise nonetheless. β’ the second adverse outcome results from the effect of the government debt on the rate of interest. in israel, as in every economy, the rate of interest on government bonds is used as a benchmark for fixing interest in the private sector. mortgage interest rate is determined in this way, and interest on long - term loans, both those advanced directly by banks and those issued in the form of private bonds on the stock exchange is based on the interest the market requires from the government on bonds it issues. in other words, the greater the | scandinavia all the time, where labor productivity is very high. it is important that we deal with all the challenges in education, the bureaucracy, infrastructure and more, in order to deal with the problem of low productivity. the supervisor of banks headed a team that presented important conclusions regarding reinforcing banking competitiveness. each time i would meet a senior banker from abroad, i would try to convince him to start banking operations in israel. i didn β t succeed, and since 2008, i have stopped trying since the crisis led banks to stop expanding their operations overseas. however, at the team β s recommendation, there are many steps whose implementation can help reinforce competitiveness in the banking system. bis central bankers β speeches defense expenditures increase from year to year, although their share of gdp continues to decline and has now reached its level from the beginning of the 1960s. still, defense expenditures are the largest component in the state budget. it is clear to all of us that we live in unsafe and uncertain surroundings. it is the government β s duty to protect its citizens, and there is therefore no alternative to large budgets for the defense establishment. this also has positive ramifications, such as the defense establishment β s contribution to the development of the high - tech industry. we do not have the luxury to think that we are sweden and to plan our expenses without needing to allocate about 5 percent of gdp to defense. we must continue to provide ourselves with defense, but the allocation of more money to defense is not the only solution. we must also try to find other solutions, and try to achieve a peace agreement with our neighbors, including with the palestinians. the phrase, β there is no partner for peace β is a self - fulfilling phrase. you need two for an agreement, and if we don β t want to look for a partner, we will remain in the current situation. we must look for the partners for peace. until we reach agreements, it will cost us more since we will need to reinforce our readiness. however, in the long term, we will benefit from it, and it will have positive ramifications in various areas. we must, therefore, find a way to act more proactively in order to stop the conflict that has continued here for far too long. bis central bankers β speeches | 0.5 |
, assessing macroprudential measures in a consistent manner requires accounting for spillovers, including to the real economy, also taking account of their impact on various sectors as well as layers of interaction between those sectors. conclusion let me conclude. the ecb has been working hard on developing analytical tools for the effective implementation of macroprudential policy. the ecb β s new legal competences in macroprudential policy relate primarily to the power to top - up measures adopted by national authorities and the assessment of possible spillovers to other countries in connection with the reciprocity principle laid down in the legislation. in this vein, the ecb has been analysing the numerous macroprudential measures adopted by member states that, so far, we have decided not to aggravate. concerning the governance framework, we have created an internal macroprudential coordination group and established the macroprudential forum β integrating the governing council and the supervisory board β to discuss all matters related to financial stability and macroprudential policy. we are taking our new responsibilities very seriously. the robustness of our assessments is key and, for this reason, analytical and research work in the macroprudential policy area has been stimulated and has been fruitful, as evident in my gross, m. and j. poblacion, ( 2015 ), β assessing the efficacy of borrower - based macroprudential policy using an integrated micro - macro model for european households β, ecb working paper no. 1881. see also ampudia, m., h. van vlokhoven and d. zochowski, ( 2016 ), β financial fragility of euro area households β, journal of financial stability, forthcoming ; see also : ecb working paper series no. 1737. for details, see the household finance and consumption network webpage, https : / / www. ecb. europa. eu / pub / economic - research / research - networks / html / researcher _ hfcn. en. html. bis central bankers β speeches remarks. since march this year, the ecb started publishing a macroprudential bulletin 18 that will inform about the analytical work being done, the policy decisions adopted and assessed, as well as analysis of relevant regulatory developments. this will further contribute to enhance transparency in our assessments. we look forward to maintaining a lively dialogue with the community of people in official institutions, in the financial sector and in academia who are interested in the | the eventual terms of the uk β s departure from the european union. on the home front, interest rates on government securities remain a significant risk factor. the protectionist stance of us trade policy vis - a - vis china, with which a complex negotiation is under way, and the european union, already hit by last year β s introduction of aluminium and steel tariffs, could be accentuated. further uncertainty stems from the slowdown under way in the chinese economy, partly linked to initiatives designed to limit private sector borrowing, and from the difficult political and economic conditions of important emerging economies. a no - deal brexit could have serious consequences even if the direct impact on international trade, while strong for the united kingdom, may prove limited for italy and for the eu as a whole. any financial market malfunctions could have major repercussions for all the countries involved and this issue is currently being looked at very closely. together with the supervisory authorities the italian government has prepared a number of contingency measures. these provide for an adequate transition period to guarantee the integrity and business continuity of the markets and of intermediaries β both british intermediaries operating in italy and italian intermediaries established in the uk β and to safeguard investors and customers. important decisions have already been taken by the european commission, which is currently working to ensure the continuity of financial transactions between european intermediaries and british central counterparties. the single resolution board ( srb ) has also announced that it will be flexible with european banks in the event that securities issued in the uk no longer count towards the minimum requirement for own funds and eligible liabilities ( mrel ). as national and european authorities have recalled on many occasions, banks must nevertheless play an active role in the preparations for a no - deal scenario. since the mid - november peak, yield spreads between ten - year government bonds and the corresponding german securities have narrowed by around 80 basis points. at 250 basis points on average this week, the risk premium on italian government bonds nonetheless remains high, around double what it was on average in the first four months of last year. the uncertainty surrounding fiscal policy has not disappeared. an agreement with the commission was reached for 2019, but for 2020 - 21 numerous questions remain open, especially the future of the β safeguard clauses β, whose cost has now gone up to 1. 2 per cent of gdp in 2020 and 1. 5 per cent in 2021. were they to be deactivated without any countermeas | 0 |
closer to 2 % in the absence of load - shedding. south africa's underwhelming economic performance is not new ; the country's chronic low - growth problem predates the pandemic. in the five - year period before covid - 19, growth averaged just 1 % β compared to the 3. 5 % growth achieved by a typical emerging market economy. one of the main challenges to achieving higher growth is weak investment levels. south african investment lingers close to 16 % of gdp compared to the 25 % level achieved by comparative peers. from a macroeconomic perspective, a key constraint to achieving higher investment levels in south africa is persistent fiscal dissaving. high public debt levels raise the risk premium, pushing up the cost of borrowing to around 11 % today. 2 / 7 bis - central bankers'speeches the low - investment problem is worsened by the composition of public spending, which is geared more towards current consumption than infrastructure. the reversal of the economy's terms of trade risks worsening the fiscal outlook. between january 2020 and march 2022, the prices for south africa's major commodities β such as gold, iron ore, platinum group metals and coal β doubled. since then, however, these prices have been falling consistently and by as much as 23. 8 % over six months alone. as funding needs grow, and as domestic saving remains weak, the need for foreign savings has widened. the current account deficit is now expected to expand from 0. 5 % in 2022 to 3. 3 % by 2025. headline inflation rose sharply this past year, surpassing the upper end of the 3 β 6 % inflation target band in april 2022 and reaching a 13 - year high of 7. 8 % in july 2022. inflation has since moderated, albeit with some volatility, and finally returned to the target band in june 2023, when it reached 5. 4 %. the moderation can largely be attributed to lower global food and fuel prices in recent months, as well as lower imported inflation due to easing supply chain disruptions and easing demand conditions. a more pronounced moderation in inflation is expected in the latter years of the forecast horizon, with headline inflation expected to ease to an annual average of 5. 0 % in 2024 and 4. 5 % in 2025. the risks to inflation are still assessed to be on the upside. rising services inflation and elevated administered price inflation continue to put upward pressure on prices. these pressures are | ; and sexual harassment. as we know, diverse organisations are more resilient and more responsive, and better placed to serve the public. that spirit of public service extends to our engagements with stakeholders through our economic roundtables, publications, investor sessions, monetary policy and financial stability forums, as well as our corporate social investment ( csi ) work. our csi efforts are geared towards broadening the understanding of monetary policy, growing the pool of skills in areas such as economics and finance, and supporting people from disadvantaged communities. this includes bursaries for 102 students from first - year to master's level, and partnerships with four universities, to develop programmes that focus on monetary policy, financial stability and economic journalism. conclusion 6 / 7 bis - central bankers'speeches as the sarb is approaching the final stretch of its strategy 2025, i am pleased that significant progress has been made in its implementation. despite the prevailing global and domestic economic conditions, we remain on course to deliver against our five strategic focus areas ( sfas ) and the enablement functions that support our strategy. as i indicated earlier, high inflation remains a concern and played a significant role in the sarb's inability to achieve its target set out in its sfa 1 : keeping inflation within the target range of 3 β 6 %. appropriate monetary policy actions have contributed to an easing of inflation, with the consumer price index at 5. 4 % in june 2023. this again underscores the sarb's commitment to price stability. enhancing resilience to external shocks, the basis of sfa 4, also proved challenging in the face of high government debt levels. despite the many challenges to central banking that have emerged in recent years, both globally and domestically, i am confident that we have the human capacity to analyse those challenges and to work together with our partners in the public and private sectors to increase the resilience of our economy and financial system to meet any challenges head - on. in this ongoing process, central banks need to remain focused on their core mandates as the best way to ensuring that the economy can grow. we must hold fast to our mandate of ensuring price stability in the interest of balanced and sustainable economic growth β and we must do so without fear, favour or prejudice. in doing so, we will ensure that the economy has a stable foundation β one that is resilient and flexible in addressing the many challenges we will undoubtedly continue to face. i would like to express a heartfelt | 1 |
their profit levels were slightly lower than those for larger community banks prior to the crisis, but they performed similarly until 2015, when banks of this size showed a decline in profits not experienced by any other size grouping of community banks. time will tell whether this is an anomaly or the beginning of a pattern. - 6looking at the smallest community banks, those with less than $ 100 million in assets, gives some hints for why their numbers have declined. the average roa for the smallest banks ( in purple, with circles ) has been consistently lower than that for the nextsmallest class of banks since 1995. the already lower level of profits for the smallest banks began to decline further in 2006. since 2009, profits for the smallest banks have increased slightly but remain below their levels of profitability prior to the recession and below the roa levels for larger banks. 5 data on nonperforming loans ( npls ) show a mixed picture. 6 a breakdown of community banks by size indicates that the ratio of npls to total loans peaked for every size category in 2010 ( figure 8 ). prior to 2007, the smallest community banks consistently had a higher ratio of npls than did larger community banks ; but from 2007 until 2013, their npl rate was below that of larger community banks. in the past two years, npls on the balance sheets of the smallest banks have declined more slowly than for larger banks so that banks with less than $ 100 million in assets once again have the highest npl ratio. let me turn now to consider changes in the number of community banks over the past 20 years at a more local level. for purposes of this discussion, i define local banking markets as counties in rural areas and as metropolitan statistical areas in urban areas. the patterns for return on equity ( roe ) are similar to those for roa, although community banks as a whole had negative roe in both 2009 and 2010. the largest community banks, with $ 1 billion to $ 10 billion in assets, suffered much greater negative returns on equity in these years than did smaller community banks. midsize community banks, with $ 300 million to $ 1 billion in assets, fared better than their larger and smaller counterparts. the smallest community banks showed an unusual pattern in their roes. ( it should be noted that, for banks of this size, roe can be a questionable measure of profitability because such banks tend to be either privately held or very thinly traded. ) these banks were in | ##aging and paring of business lines β are likely to prove highly consequential to the near - term outlook for the real economy. changing forms of financial intermediation are expected, given higher volatility and less leverage, in some cases building on old - fashioned banking products. commercial and thrift deposits, for example, backed by a loyal customer base, may offer greater franchise value. investment banks may reconfigure capital structures and core trading businesses to maximize benefits in a higher volatility environment. asset - gatherers, whether in the form of traditional money - management firms or hedge funds, that survive this time of testing may rely more on term funding and seek equity returns across beaten - down classes of structured and debt products. and dependable, recurring revenues, even at lower levels, may warrant a premium valuation in the public markets. the case for opportunistic capital is improving. some curative steps by incumbent financial institutions are in the offing. financial institutions should continue to reassess their sources and uses of funding, their risk - management systems, risk tolerance, and human capital. generally, they should not hesitate to pare their dividend and share repurchase programs. and, they should raise new capital to strengthen their balance sheets. these actions, in my view, are important signs of strength, and will ensure that financial institutions thrive in the emerging financial architecture replete with new opportunities. these actions will have concomitant benefits on real economic activity. plot line 3 : federal reserve's policy formulation the central bank's responsibility is not to individual firms but to financial markets, and only then, to the extent that financial market stresses affect the real economy. given the fragility evidenced in financial markets, and the toll it is taking on real activity, the federal reserve agreed to take center stage. this is a role for which we did not volunteer, but one in which we are prepared to serve. the role has been thrust upon us by a loss of confidence in our existing financial architecture. hence, we should remain at center stage as long as is necessary, but no longer. the fed responded aggressively to mitigate spillovers to the real economy, exercising some authorities for the first time in decades. to prevent more serious financial fallout, the fed established and expanded various lending facilities to depository institutions and primary dealers. 7 some facilities allow daily access to variable amounts of funding, and others primary dealers are banks and securities broker - | 0 |
oil prices. domestic wholesale prices are levelling off due to the progress in inventory adjustment as well as an increase in prices of some products closely related to international commodities, such as those of petroleum products. consumer prices continue to be unchanged. corporate service prices are still falling, although the pace of the decline is slowing. as regards the movements of overall prices in the future, they are likely to be flat, this report was written based on data and information available when the bank of japan monetary policy meeting was held on 13 october 1999. the bank β s view on recent economic and financial developments, determined by the policy board at the monetary policy meeting held on 13 october as the basis of monetary policy decisions. as the rise in crude oil prices to date will continue to be passed on to prices of other products for a while. however, substantial narrowing in the output gap led by a recovery in private demand is unlikely for the time being, and wages continue to decline. thus, downward pressure on prices is expected to remain. in the financial market, the overnight call rate has stayed at nearly zero, and financial institutions have been confident about the availability of overnight funds. as for interest rates on term instruments, short - term rates maturing before the year - end have been moving at a historically low level. meanwhile, rates maturing beyond the year - end are relatively high due to market participants β concern over the year 2000 problem. the japan premium has continued to be nearly zero for short - term transactions, but a small premium has been observed for transactions maturing beyond the year - end. yields on long - term government bonds declined from late august to the level of around 1. 6 percent. they rose somewhat thereafter and have recently been moving between 1. 7 and 1. 8 percent. the yield spread between government bonds and private bonds ( bank debentures and corporate bonds ) has been stable and noticeably smaller than before. stock prices fell below the 17, 000 yen level in late september against the background of the weak tone in u. s. stock prices and the rapid appreciation of the yen, but subsequently rebounded reacting to the recovery in u. s. stock prices and the restoration of stability in the foreign exchange market. the prices are presently moving around 18, 000 yen. in the foreign exchange market, the yen surged against the u. s. dollar and reached the 103 β 104 yen level in the middle of and late september, but then declined to the current level of 106 β 108 yen to | the dollar. the amount outstanding of funds in the call money market has remained generally stable since the middle of june. to date, this has not led to any difficulty in funds settlement, but close attention should be paid to future market developments. with regard to corporate finance, private banks have basically retained their cautious lending attitude. however, constraint that had been caused by severe fund - raising conditions and insufficient capital base has eased considerably. under these circumstances, major banks have gradually become more active than before in extending loans, while carefully evaluating the credit risks involved. however, credit demand for economic activities such as business fixed investment remains weak. in addition, some firms have been trying to reduce debts using their on hand liquidity. as a result, credit demand in the private sector has continued to be weak, and thus private banks β lending has remained sluggish. meanwhile, issuance of corporate bonds and cp has recently been steady. the year - to - year growth rate of money stock ( m2 + cds ) has declined to around 3. 5 percent mainly due to the weakness in credit demand in the private sector. in this financial environment, credit conditions have eased somewhat. the following continue to warrant careful monitoring : how actively investors will take risks ; how far private banks will ease their lending stance ; and how these changes will affect economic activities. | 1 |
mean that we are likely to see, nor should we seek to see, a return to the unsustainable levels of residential real estate activity that preceded the financial crisis. that did not end well. instead, the perspective i will offer today is one of sustainable improvement in housing in the context of a broader economic recovery. then, i will close with some thoughts on monetary policy. before i continue, though, i will note that my views are my own and not necessarily those of the federal reserve board or my colleagues on the federal open market committee ( fomc ). bis central bankers β speeches economic conditions so, let me begin with an overview of the u. s. economy. we are almost five years into a recovery that began in june 2009. growth accelerated in the second half of 2013 but faced some stiff winter headwinds in the first quarter of this year. yet, i think most of us now view this as a temporary weather - related slowdown and not a risk to the underlying recovery. snowstorms and frigid temperatures affected every aspect of the economy, from sales and hours worked to logistics and supply chains during the first quarter of the year. you can β t sell a house if buyers can β t get in the front door. you can β t sell a car if it is buried in snow. and even if your factory is producing goods, you can β t deliver them to your customers as scheduled if trucks can β t navigate the highways or if trains have to slow down to half their normal speed. my own view is that it will take another month or two before we can hope to see a somewhat clearer picture of the economy. the first estimate of gdp growth for the first quarter of 2014 showed that the overall economy was essentially flat, expanding at an annualized rate of just 0. 1 percent. the underlying details are more encouraging. consumer spending increased 3 percent, marking the 19th consecutive quarter of growth. this growth is supported by the fact that households have reduced their debt and strengthened their balance sheets over the past few years. and as the values of equities and real estate have risen, consumer savings rates have fallen and consumption spending has increased. the weakness in the overall gdp figure comes predominately from lackluster investment, both by businesses and homebuilders, as well as some pullback in exports and imports. our business contacts as well as our surveys confirm that economic activity was greatly hampered by the winter weather in the northeast | delisle worrell : the strength of barbadian institutions and the resolve of barbadians will see us through the crisis op - ed article by dr delisle worrell, governor of the central bank of barbados, 15 august 2013. * * * barbadians have every reason to be confident that we can cure the foreign exchange imbalance which has emerged in the last three months, and revive the growth of our economy. first, we have the highest standard of living in the caribbean, and we have earned it by transforming the economy and investing in infrastructure and human resources, over many decades. figure 1 compares the human development index ( hdi ) for barbados with the rest of the caribbean. the hdi is the best indicator of the quality of life available for countries worldwide. second, barbados has strong institutions for decision making : our social partnership is the envy of countries worldwide ; our economic information systems are the equal of many industrial countries ; our media are knowledgeable ; and we have a strong mechanism for putting policy into effect. thirdly, we have preserved the value of our dollar, protecting the value of people β s savings, and providing more predictable returns for investors. fourthly, we have reserves which are more than sufficient to ride out the storm, as may be seen in figure 2. with these resources we may confidently address the challenges, which are twofold. the first is to balance foreign exchange inflows and outflows. following the june 27th economic consultation, government is in discussion with the social partners on measures that will be introduced to reduce the fiscal deficit. the required adjustment is considerable, about 4. 5 % of gdp, but not sufficient to cause major social disruption, as may be seen in figure 3. the adjustment will protect the value of our currency, which is vital to barbados β economic prosperity. figure 4 shows how the caribbean countries which have devalued have fared, compared with those that have maintained an unchanged value of their currency in terms of the us dollar. economic growth is the second challenge. the social partners continue to pursue actions to revive the economy. investment amounting to $ 2. 3 billion is in prospect for the foreign exchange sectors, and government contemplates $ 1 billion of infrastructure and other projects. initiatives are underway to improve access to finance by small and medium enterprises. labour is charged with an urgent need to improve productivity and quality of service in every area of activity, so that barbados becomes a byword for | 0 |
message conveyed by robert schuman exactly 52 years ago today, in his famous declaration that led to the creation of the european coal and steel community and that historians generally recognise as the starting point of the process of european integration. l'europe β these are the words of schuman β ne se fera pas d'un coup, ni dans une construction d'ensemble. elle se fera par des realisations concretes, creant d'abord une solidarite de fait. europe will not be made all at once, or according to a single plan. it will be built through concrete achievements, which create a de facto solidarity. how the euro contributes to this solidarity β perhaps more than any other achievement so far β is what i'd like to reflect on first of all. a social contract what is money? economists know that money is defined by the functions it performs, as a means of exchange, a unit of account and a store of value. but, just as importantly, money is also defined by the community for whom it performs these functions. because it is an economic instrument for each of its users, it is also a political and cultural bond between them. consider this simple fact : we engage in an exchange of goods and services everyday by using money as the means of exchange ; and we offer our labour in exchange for money, which, in itself, has no value. we only do this because we believe that we will, in turn, be able to exchange that money for more goods or services. this fact tells us much about the confidence that we place in money itself. and it tells us much more about the confidence that we place in each other. hence, money is, in essence, a social contract. the euro, probably more than any other currency, represents the mutual confidence at the heart of our community. it is the first currency that has not only severed its link to gold, but also its link to the nation - state. it is not backed by the durability of the metal or by the authority of the state. indeed, what sir thomas more said of gold five hundred years ago β that it was made for men and that it had its value by them β applies very well to the euro. every currency is a symbol of the community it serves. it is a symbol of the society as a whole, but also represents the political and cultural bonds between the members of that society. surely this uniting power must have been | low rates on the volume and riskiness of bank loans. but over time, falling rates will squeeze bank interest margins. in the longer run, there are also risks to financial stability if low interest rates result in asset price bubbles, which are vulnerable to sharp reverses once interest rates rise. similarly, if banks β search for yield β by increasing lending to lower quality borrowers or if they roll over non profitable, β zombie β loans to ailing companies, there may well be a higher aggregate default risk. ecb staff estimates suggest that recent monetary policy actions in the euro area have so far been net positive for bank profitability, relative to a scenario of no policy action, 7 and we don β t see today asset price bubbles which would threaten the euro area β s financial stability. but if rates are low for too long, the negative effects may well dominate and impair the effectiveness of our measures. of course, low interest rates are not the only factor affecting bank profitability in the euro area. europe as a whole is overbanked, and a number of jurisdictions have suffered from low profitability and high cost - to - income ratios for several years. with interest rates likely to remain low for the foreseeable future, even once monetary policy normalises, banks will have to revisit their business models to ensure continued profitability over the medium term. the monetary policy reaction faced with activity below potential and inflation below its objective, the ecb has sustained accommodative monetary policy since the onset of the crisis. we have responded to the fall in equilibrium rates and the negative output gap by cutting our main refinancing rate to zero and our deposit rate into negative territory. our targeted long - term refinancing operations have encouraged lending by banks and helped to mend the transmission mechanism. more recently, our asset purchase programme ( app ) has sought to influence a broader range of interest rates. this recognises that there is in fact not just one equilibrium rate, but a constellation of rates across a range of maturities and credit conditions that are important for the borrowing decisions of firms and households. it is clear that the accommodative monetary stance is having the desired effect in the euro area. gdp growth continues, albeit still at a sluggish pace. according to the european commission β s most recent estimates, the negative output gap has more than halved since 2014, from β 2. 5 % to 4 / 6 bis central bankers'speeches | 0.5 |
mohamed s fofana : managing sierra leone β s post - conflict economy keynote address by mr mohamed s fofana, deputy governor of the bank of sierra leone, at the opening ceremony of the regional forum on economic and financial management for legislators, freetown, sierra leone, 12 july 2004. * * * mr chairman, hon. minister of justice, your excellency, the high commissioner of the gambia, hon. members of national parliaments of waifem countries, director general of waifem, directors of the bank of sierra leone, distinguished guests, facilitators and participants, ladies and gentlemen, introduction it is my honour and privilege to extend a hearty welcome to all of you on behalf of the government and people of sierra leone, governor jd rogers who is unavoidably absent today, the board, management and staff of the bank of sierra leone and on my own behalf, on the occasion of the opening of the regional forum on economic and financial management for legislators organized by waifem. as host, i would like to urge you to take time out of your crowded programme to visit freetown and behold the many attractions of this rejuvenated city. ladies and gentlemen, permit me to briefly dwell on the state of the west african economy. the sub - region came into the new millennium with a combined gross domestic product ( gdp ) of us $ 80 billion, representing about 10 percent of the gdp of spain and against a backdrop of high unemployment, it is not surprising that income per capita averages 386 us dollars for our sub - region one of the lowest in the world. in addition, virtually all the countries are burdened by a huge debt overhang. indeed, only two of the 15 countries of ecowas are not classified among the highly indebted poor countries ( hipc ). ladies and gentlemen, i do not intend to spoil your day with depressing statistics about the economic performance of the sub - region as this would be tantamount to showing you only one side of the coin. the more pleasant face of this coin shows a sub - region parading some of the world β s leading exporters of crude oil, diamonds and gold, as well as abundant maritime resources. many of our countries also perform well in the global market for other commodities, including cocoa, cotton and groundnuts. however, when the abundant resource - endowment of the sub - region is set against its pandemic poverty, we see a development | a result, there was a significant increase of 20. 52 percent in domestic revenue collection in 2003. nevertheless, the fiscal out - turn, excluding grants, resulted in an overall deficit of 16. 7 percent of gdp. this represents a 3 percentage point reduction over the level recorded in the preceding year. as a result of the high credit expansion to both government and the private sector, there was a large injection of liquidity into the economy as broad money growth accelerated to 21. 9 percent against the planned target of 14 percent. consequently, inflation reared its ugly face in 2003, crossing the doubledigit threshold for the first time in five years. the case for a legislature / executive partnership distinguished ladies and gentlemen, i am informed that this is the third in the series of special forums for legislators and senior officials of the executive arm of government organized by waifem. i want to commend waifem for this initiative which has become an important platform for policy dialogue between the two arms of government and more importantly, strengthening the capacity of the parliaments in the vital areas of economic and financial management. it is in the realization of the useful role of such platforms in forging greater understanding among key stakeholders in the policy process that the committee of governors of central banks of ecowas member countries called for the reactivation of the periodic consultative forum of ministers of finance and central bank governors of ecowas countries at its meeting in dakar, senegal on june 16, 2004. looking at the pertinent issues to be dealt with in the course of your deliberations and the calibre of resource persons to facilitate the process, i have no reason to doubt that you are in for a round of stimulating and fruitful deliberations. permit me therefore, to anticipate that you will come up with concrete and implementable proposals to facilitate a harmonious working relationship between the legislature and the executive in pursuance of their shared economic management objective. towards regional monetary integration this has become particularly urgent in the light of the need to ensure that west african countries stay the course in their commitment to achieve economic convergence. but as you are aware, virtually all the countries have found it difficult to achieve and sustain, over time, the required level of economic performance under the convergence criteria. the persistent slippages do not augur well for the july 2005 deadline for the launch of the second monetary zone. in this regard, it is imperative that all hands be put on deck in pursuing the monetary integration project | 1 |
of licensing and enforcement before moving to the bank of zambia. to say something about my academic qualifications, i graduated with a bachelor of laws degree from university of zambia, thereafter a master of laws degree from harvard where i was a fulbright scholar and a phd from university of london, centre for commercial law studies, queen mary and westfield college. allow me to mention that all my studies were done on scholarship. bis central bankers β speeches apart from my work, i am also involved in service to the public and to the church through sitting on various bodies. i was not appointed to this position my chance ; it took effort and hard work to be noticed. i believed in myself and knew i had to put in the best to achieve anything i wanted to achieve. so what message do i carry for you this afternoon? my theme is that you can do it! to you the students, i want to encourage you to see yourselves as leaders. you are the future of this nation. you are part of the cream that need to push this country forward. i would like you to realise that academic and professional qualifications are an integral part of settings yourselves up for one β s life. by being here, you are establishing a path for your successful career whether as an employee or an entrepreneur. the knowledge that you are gaining is assisting in developing and enhancing your ability to think and perceive as well as manage the various situations that life offers. the outcome of your academic development will obviously have a positive impact on your family, society, culture and country at large. make sure you take full advantage of this opportunity. it sets the stage for the rest of your future. if you graduate from here with poor grades will mean you have limited your access to top notch institutions, should you, for example, wish to get an advanced qualification. you are limited even to apply for scholarships. and in situations of competition, the best will be selected. zcas is one of the renowned institutions in zambia. one thing you must realise is that not everyone has the opportunity to be enrolled in an institution of higher learning to obtain an academic or professional qualification. therefore, you must make the best of this opportunity to be here at zcas and indeed, be thankful to god. many of your friends are not able to have this opportunity. i am also aware that for quite a good number, it is a great sacrifice by your parents to send you here. you should ensure that this investment pays off by putting in your best. discipline for many of | achieving an inflation rate of 2Β½ per cent two years ahead. norges bank β s views on the inflation outlook are presented three times a year in the inflation report. our projection for inflation in the period ahead is presented as well as our assessment of the balance of risks surrounding this projection. the executive board β s updated assessments are presented in connection with the monetary policy meetings every six weeks. immediately after each meeting, the bank issues a press release and holds a press conference. the key interest rate is set on the basis of an overall assessment of the inflation outlook two years ahead. our inflation projections and our views on the balance of risks associated with these projections provide a summary of these assessments. norges bank β s inflation projection is our assessment of the most probable outcome of the rise in cpi two years ahead. in setting interest rates we also place emphasis on the probability distribution β or the balance of risks β surrounding the projection. therefore, we also publish our judgement of the risk associated with our own projections. the phasing in of petroleum revenues has to be counteracted by a tighter monetary policy than would otherwise be the case. this may be accomplished through an adjustment of the interest rate, an appreciation of the krone or both. small countries have experienced fairly wide exchange rate fluctuations. the swedish krona has depreciated by more than 10 per cent since summer 2000. the australian dollar has weakened by over 30 per cent since spring 1997. the uk, canada and new zealand have also experienced wide exchange rate fluctuations. the norwegian krone, on the other hand, has been relatively stable. a monetary policy that is oriented towards low and stable inflation will contribute to stabilising aggregate demand and output. as a result, the central government budget will not normally have to be used actively to stabilise the economy. an increase in unemployment that is due to a higher rate of increase in labour costs than implied by productivity growth cannot be offset by low interest rates or higher public spending and tax cuts, but requires changes in the functioning of the labour market. the planned use of petroleum revenues implies that the sheltered sector will lay claim to a larger share of the labour force. this will probably cause a decline in manufacturing employment. the ensuing deterioration in competitiveness may lead to restructuring. in the long run, monetary policy cannot influence overall employment or its distribution across industries. norway β s terms of trade flucture widely. this is largely attributable to variations in the oil price. however, | 0 |
of allaying any doubts regarding the eurosystem β s commitment to stability. through the aforementioned press conference, the ecb has a means of communication at its disposal that provides the opportunity to explain monetary policy decisions in a timely and comprehensive manner. the introductory statements are not designed to provide a comprehensive view of the range of opinions held by the members of the ecb β s governing council. for this purpose, the governing council has, since 2015, published what it calls β accounts β β detailed written summaries of its monetary policy meetings. these also show the range of arguments put forward. certain other central banks also publish the minutes of their meetings, naming who voted for what ; however, the ecb governing council has avoided doing this from the outset, for good reason. this is intended to prevent the decisions made by members of the governing council being judged from a national perspective in their home countries and thus to ward off the risk of monetary policy becoming politicised. as it happens, the bundesbank set great store by communication with the public even at a fairly early stage, back in the days of the deutsche mark. one reason for this was its marked independence, which, as i already mentioned, compels it to be accountable. at the same time, however, the bundesbank was quick to recognise how much the success of a stability - oriented monetary policy hinges on a well - informed public understanding the monetary policy strategy and appreciating the value of a stable currency. had the german public been less appreciative of its stable currency, it would have been harder for the bundesbank to implement its policy, especially as it was not always welcomed by all. thus, central bank communication in the days of the deutsche mark was not so much aimed at steering expectations. this would have put the bundesbank far ahead of its time ; after all, the importance of steering expectations as a monetary policy strategy was only recognised in the mid - 1990s. on the contrary : until well into the 1990s, central bankers did not shy away from springing a surprise interest rate decision on the markets now and then. nowadays, preparations for monetary policy decisions are communicated so far in advance that often the decision itself barely comes as a surprise. good central bank communication is also characterised by its emphasis on the state contingency of monetary policy decisions β in other words, it clarifies that the monetary policy 3 / 9 bis central bankers'speeches stance is contingent on the economic | jens weidmann : central bank communication as an instrument of monetary policy lecture by dr jens weidmann, president of the deutsche bundesbank and chairman of the board of directors of the bank for international settlements, at the centre for european economic research, mannheim, 2 may 2018. * * * 1 introductory remarks professor wambach, ladies and gentlemen i would first like to thank you very much for inviting me to speak here at the centre for european economic research as part of the β first - hand information on economic policy β series of lectures. when i hear the phrases β economic policy β and β hand β, i can β t help but think of harry truman β s famous demand for a one - handed economist. by always assessing everything β on the one hand... on the other hand β, the economists clearly got on the then us president β s nerves. in this case, it goes without saying that β first - hand information on economic policy β has little to do with β one - handed β economists. no, β first - hand β in this sense means β directly from decision - makers β. with that definition in mind, as bundesbank president and member of the ecb governing council, i should obviously talk about monetary policy. it has now been seven years since i delivered my first speech as bundesbank president, and i have given a few more in the meantime. i haven β t been keeping count, but the database of public speeches on the bundesbank website now contains more than 150 entries. not all of my speeches, but a large number of them, are partially or even primarily about matters of monetary policy. speeches have become a vital means of communication for monetary policy decision - makers. the six members of the ecb executive board alone have given 150 public speeches over the past year. and speeches are just one means of communication. other channels of central bank communication are interviews, press conferences, and regular publications of reports. close attention is paid, in particular, to the ecb president β s introductory statement at the beginning of the press conferences following ecb governing council monetary policy meetings. ecb watchers scrutinise every word. changes in communication are very keenly noticed and analysed. and it is not only what is said but also what is left unsaid that can send a message. β one cannot not communicate. β from that perspective, this well - known quote by communication theorist paul watzlawick also applies | 1 |
ΓΈystein olsen : monetary policy and financial stability considerations speech by mr ΓΈystein olsen, governor of norges bank ( central bank of norway ), at the european banking & financial forum, prague, 27 march 2012. * * * the text below may differ from the actual presentation. this speech does not contain assessments of the current economic situation or interest rate setting. introduction the past few years have clearly shown the costs of financial instability. the near collapse of the financial system in autumn 2008 led to the most severe economic downturn of our time. there was a dramatic decline in international trade, and total world output fell from one year to the next for the first time in generations. when financial markets failed, the authorities had to intervene. bailout packages for banks shifted debt from private to public hands. governments increased spending in order to curb the fall in activity. many countries are now trying to rein in large deficits and rising government debt under difficult conditions. pension rules and tax systems are under review. the costs of such structural reforms would have been lower in good times. a financial crisis has to be met with appropriate measures, but the main objective in our work on financial stability must be to reduce the risk of crises emerging. history tells us that a financial crisis typically arises when debt has accumulated over a long period. an important task is therefore to contain the buildup of imbalances and secure a robust financial system. a decade of inflation targeting the norwegian economy emerged quickly and fairly painlessly from the recent global economic downturn. since 2001, economic policy in norway has been guided by a fiscal rule and a flexible inflation target. with solid government finances based partly on petroleum revenues and firmly anchored inflation expectations, there was room for manoeuvre both in monetary and fiscal policy when the financial crises hit. inflation in norway is currently low, but it has been close to target over the past decade. during this period, monetary policy has faced demanding trade - offs, and the application of judgment has been put to a test. we have gradually learned more about the functioning of our economy under an inflation targeting regime. let me touch upon some of these insights. fairly soon after we had adopted inflation targeting, we learned how demanding it may be to strike a balance between different monetary policy considerations in a small open economy. when the key policy rate is raised to restrain a pronounced rise in domestic inflation, it may strongly impact the exchange rate, as we experienced in the period 2002 β 2003. both the real | things stand now, the rise in prices will be notably higher than wage growth this year. indebted households will face both higher interest expenses and higher electricity and food prices. many households will be facing a tighter financial situation, and i am fully aware that some of them will also be facing a financial struggle. most households will be able to cope with higher interest rates on their loans. unemployment is very low. many will be able to cut down on other expenses or draw on their savings. chart : monetary policy meeting on 17 august we could have decided to raise the policy rate more gradually. but then we would have run the risk of inflation becoming entrenched at a high level. that would have made it more difficult to bring inflation down and could have required a sharper tightening of monetary policy somewhat further out, increasing the risk of an economic downturn. inflation has surprised to the upside in recent months. this is why the policy rate has been raised somewhat more rapidly than signalled earlier. and the economy might evolve differently from what we have envisaged. the level of uncertainty is high. limited spare capacity in the norwegian economy and persistent external inflationary pressures may lead to inflation accelerating further. on the other hand, the rise in interest rates and high inflation may cool down the housing market and curb household consumption faster than currently envisaged. there is also a risk of a sharper slowdown in global growth. the future path of the policy rate will depend on how the economy evolves. we cannot make any promises about the policy rate. the promise we can make is that we will continue our efforts to fulfil the mandate of keeping inflation low and stable and to promote economic stability. 1 a new set of forecasts was not prepared for the monetary policy meeting on 17 august. updated forecasts will be presented when monetary policy report 3 / 22 is published on 22 september. 3 / 3 bis central bankers'speeches | 0.5 |
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