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the general collateral ( gc ) pooling repo curve as well as yields on euro area treasury bills and notes have further adjusted. woodford, m., 2001, β monetary policy in the information economy β, paper presented at the federal reserve bank of kansas city economic symposium at jackson hole ( 30 august β 1 september ). for a review of the impact of non - standard monetary policy on money market functioning, see monnet, c. and m. bech, 2013, β the impact of unconventional monetary policy on the overnight interbank market β, reserve bank of australia 2013 annual conference volume on β liquidity and funding markets β. bis central bankers β speeches the eonia has regularly been set in negative territory since 28 august together with stable trading volumes ( the average daily eonia volume from january to june 2014 was β¬ 26. 1 billion and was β¬ 28. 9 billion since june ) ( slide 5 ) and homogenous transmission to closely substitutable market segments, such as gc pooling repo, are evidence that a large fraction of unsecured money market transactions can take place at negative rates without hampering market functioning. this reflects an effective and well - coordinated preparation of market participants since the ecb first mentioned the possibility of bringing the dfr below zero. the fact that money market trading volumes did not fall ( they actually rose ) is remarkable given the fears some observers had expressed, informed by the japanese experience of the 1990s, on the potential impact on market functioning of a negative dfr and of very low policy rates more generally. will the transmission of lower short - term rates to a lower cost of credit for the real economy be as smooth? while bank lending rates have come down in the past in line with lower policy rates, there is a limit to how cheap bank lending can be. the mark - up that banks add to the cost of obtaining funding from the central bank compensates for credit risk, term premia and the cost of originating, screening and monitoring loans. the need for such compensation does not necessarily fall when policy rates are lowered. if anything, a central bank lowers rates when the economy needs stimulus, which is precisely when it is difficult for banks to find good loan making opportunities. it remains to be seen whether and to what extent the recent monetary policy accommodation translates into cheaper bank lending. 11 another concern with lowering rates is that it may contribute to the instability of the financial sector. while this can be a valid concern, in | new geopolitical environment, productivity losses for european firms turn out to be partly structural. given the delays with which these data become available, we cannot wait until we have all the relevant information. to do so could risk being too late in adjusting policy. but in the coming months, we expect to have two important pieces of evidence that could raise our confidence level sufficiently for a first policy move. first, we will have more data to confirm whether wages are indeed growing in a way that is compatible with inflation reaching our target sustainably by mid - 2025. the latest data point in this direction. growth in compensation per employee edged down to 4. 6 % in the fourth quarter of last year β slightly below our march projection β 4 / 6 bis - central bankers'speeches from 5. 1 % in the third quarter. negotiated wage growth, which accounts for the lion's share of compensation per employee growth, also decreased from 4. 7 % to 4. 5 % in the fourth quarter. similarly, the ecb's forward - looking wage tracker, which anticipates the development of negotiated wage growth in the euro area, is showing early signs that pressure is easing. average wage growth in 2024 for all existing wage contracts9 fell from 4. 4 % at the time of our january governing council meeting to 4. 2 % at the time of our meeting in march. the coming months will help us form an even clearer picture. we will receive data on negotiated wage growth in the first quarter of this year at the end of may. and many wage negotiations are currently taking place in large sectors, the outcome of which will be entered into our wage tracker as soon as the negotiations are concluded. employees whose contracts ran out last year and have not been renewed, or will run out by march 2024, account for around one - third of those in our wage tracker. second, by june we will have a new set of projections that will confirm whether the inflation path we foresaw in our march forecast remains valid. these projections will also implicitly give us more insight into the path of underlying inflation. we will have more visibility on the strength of the recovery and the likely direction of the labour market, and therefore on the consequences for wages, profits and productivity. in addition, we will have had a longer window to assess whether inflation data continue to fall broadly in line with our projections. if they do, we can be more confident that our models are now better accurately capturing inflation | 0.5 |
nestor a espenilla, jr : coming together for msme development speech by mr nestor a espenilla, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), during the moa signing of the bsp, dti, mcpi and append, manila, 17 september 2018. * * * department of trade and industry ( dti ) secretary ramon m. lopez ; mr. kamrul h. tarafder, board trustee of the microfinance council of the philippines, inc. ( mcpi ) ; mr. edgardo f. garcia, chairperson of the alliance of philippine partners in enterprise development, inc. ( append ) ; members of the monetary board ; co - workers in government ; fellow bspers and advocates of financial inclusion and msme development ; ladies and gentlemen ; good afternoon. the msme sector is a crucial driver of the economy, making up 99. 6 % of our country β s enterprises or registered business firms. msmes generate 61. 6 % of employment. thus, developing, empowering, building the capacities of msmes and including them in the financial system, fuels the foundation of our economy as the engine for broad - based growth. there are currently many existing initiatives for msmes. dti β s negosyo centers, among many other programs, serve as β one - stop - shops β for msme registration, business development and advisory services, and market exposure, among others. our network of microfinance nongovernment organizations ( mf ngos ) is a significant source of financial products and services for our country β s microentrepreneurs. but despite existing efforts, challenges with msme development still persist. these challenges include lack of access to resources such as technology, skilled labor, and information. today, however, we shall focus on the particular issue of financial access. msmes are unable to reach their full potential because of difficulty of credit and financial access. currently, only 6. 6 % and 9. 8 % of total loans in the banking system and total businesses comprise investments to msmes. this low level of investment in msmes translates to capital constraints compelling msmes to resort to internal savings or earnings. a world bank report states that 81. 2 % of philippine enterprises rely mostly on internal funds to finance their investments. only 10. 1 % of enterprises use bank financing. as a staunch advocate of financial inclusion and of promoting | rafael buenaventura : new year message 2005 speech by mr rafael buenaventura, governor of bangko sentral ng pilipinas ( central bank of the philippines ), at the annual reception for the banking community, manila, 18 january 2005. * * * a warm welcome to all! let me begin by thanking all of you for joining us tonight at this traditional annual reception to officially welcome 2005. but more than your presence tonight, we thank you for your full cooperation and support in working with us to keep our economy steadily moving forward, to preserve overall confidence, and to steadfastly implement reforms. the year 2004 was again another very challenging year for the banking community, being a presidential election year with all the uncertainty that usually surrounds such a major political event. we also bore witness in the second half to a sharp increase in oil prices that inevitably had major impact on the whole economy. but in spite of all these, the economy still turned in a very respectable outcome. gdp growth is estimated at 6. 2 percent. headline inflation has picked up to around 7. 9 percent in december 2004, due mainly to the feed through from energy price adjustments and other supply side shocks, but more broad - based inflationary pressures were held in check. our accumulation of international reserves, at $ 16. 1 billion at end - december 2004, was at the high end of our expectations. the peso exchange rate finished firmly at p56. 267 and has been appreciating since then. undoubtedly, record remittance inflows that will definitely exceed p8 billion for the whole of 2004 has once again shored up our economy. commendable outcomes were also contributed by our export sector. on the domestic front, healthy consumer demand helped keep the economic momentum going. in the financial system, the reform agenda relentlessly forged ahead undeterred by all the potential distractions. the long overdue asset cleanup finally got going under the spv law. as of end 2004 about p26 billion was already done and another p54 billion was firmly in the pipeline or a total of p80 billion so far. assuming these transactions would all be completed in due course, we can look forward to a lowering of the npl ratio to less than 10 percent by end - 2005 from the current 13 - 14 percent level, given 2005 economic growth projection. still, the improving npl outlook would still be more than double than the pre - 1997 crisis ratio of less than 5 percent. this under | 0.5 |
economic and financial stability should be further enhanced, in order to increase our resilience to shocks and to decrease our financing costs. third, it is becoming increasingly clear that our financial systems have become over - reliant on banks. looking ahead, we should rely more on capital markets in order to finance 1 / 3 bis central bankers'speeches domestic growth. fourth, a common complaint frequently heard from potential foreign investors is the limited attractiveness of small and fragmented markets. while partly incorrect, we should do more to increase our trade and infrastructure integration. fifth, in competing for the same pool of international investors, countries in the region often attempt to raise their individual profile through offering tax break or other subsidies. this race to the bottom does not prove to be productive. resolving any of these issues requires foresight, strong institutions, determined policy action, and regional coordination. institutions and integration our region is actively involved in the eu integration process. this objective is the lighthouse for our institutional reform efforts and has produced notable benefits. the eu integration is aiding authorities in the region to anchor their institutional reforms and policies. on the other hand, the eu institutions provide oversight and lend credibility to the process. additionally, since individual countries are working towards common objectives, regional policy is better coordinated. however, i also believe countries in the region could do more to share their experiences and learn from each other. albania offers a positive example in terms of economic and financial stability. macedonia has done exceptionally well in terms of attracting high - value - added fdis. serbia is on the regional vanguard of financial market development. all of us should learn from our individual success stories ; all of us should avoid mistakes we have individually made in the past. our countries share more commonalities than differences : what works for one is more likely than not to work for others, and vice versa. furthermore, i believe we should look at regional integration as a goal in itself, rather than as an instrument to eu integration. joint eu integration would supersede certain regional integration frameworks, such as trade and factor mobility, but it would not supplant the need for further policy dialogue and common regional perspectives and solutions. let me now to briefly describe the role of institutions in structural reforms in albania. institutions and structural reforms in albania it is virtually impossible to do justice to the breadth and depth of reforms in albania over the limited allotted time. therefore, i will try to highlight only its main items. in order to improve our business environment, | i believe there is scope for greater regional dialogue and greater policy convergence, at all relevant areas of public policy and private sector development. second, i believe there is more to be done in order to finish the job of regional integration. in particular, standards on products and services should be agreed upon. third, beyond the convergence of financial development policies, i remain convinced we should explore the idea of joint financial development projects. although fraught with difficulties, a regional stock exchange is a meaningful potential project. fourth, i believe the region should strive towards establishing the lowest acceptable common denominator in terms of tax, labour market, financial sector, and environment regulation. β beggar - thy - neighbour β policies through constantly undercutting each other in any of these areas are only damaging the region in the long term. fifth, the regional infrastructure remains rather fragmented. this refers not merely to the transport infrastructure, but also the electricity and it network. honourable participants, some of the issues i professed here might seem utopian or unrealistic. however, i remain convinced that through an honest common endeavour, such ideas might, someday, in the nottoo - distant future, become reality. thank you! 3 / 3 bis central bankers'speeches | 1 |
] eesti pank decided to convert foreign currency at a rate of eight estonian kroon to one deutsche mark. [ 18 ] this way, seigniorage revenue would accrue to estonia, but the supply of base money was exogenously determined by the monetary policy decisions of the bundesbank and capital inflows. broader monetary aggregates expanded at a different rate through the private creation of money in the estonian banking system. initially, reserve backing was facilitated by the restitution of pre - war gold. in principle, prices, wages, cash, and deposits of households and firms were converted at a rate of 10 roubles to one kroon ; less favourable conversion rates applied to larger deposits and deposits held by non - residents. [ 20 ] initially, the exchange rate was set at an undervalued level. [ 21 ] the kroon floated freely against other currencies. estonia was not the only country that opted for a currency board arrangement to stabilise the monetary system. several other transition countries like bulgaria and lithuania followed a similar path later on. a currency board is the most radical way of tying one β s hands and importing credibility from abroad. in this sense, foreign institutions β lent stability β to the transition economies. [ 22 ] credibility is key to addressing an inherent time inconsistency as generating inflationary surprises can have positive output effects. monetary policy may also fall under fiscal dominance. covering fiscal expenditure β directly or indirectly β through monetary expansion may always seem an easier route to take than raising taxes or cutting spending. monetary policy may also fall under financial dominance if distressed financial institutions β unless supported by the central bank β have to be restructured or wound down. pressure on the central bank to supply favourable loans was indeed acute in the transition economies. a two - tiered banking system with a central bank and commercial banks had only just emerged out of the monobank system under central planning. the transition to a modern banking system in estonia started with a banking crisis : out of the 40 commercial banks that were active in estonia in 1992, only 22 remained in operation in early 1993 as the central bank tightened capital and liquidity requirements. [ 23 ] lending to the real economy declined sharply. non - performing loans, reflecting the restructuring of the real economy, increased but remained below 10 %. [ 24 ] the share of non - performing loans was lower than in other transition economies due to relatively strict requirements to write off non - | andreas dombret : the situation in the german banking sector β challenges in striking a balance between weak profitability and the lowinterest - rate environment speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the press conference to unveil the deutsche bundesbank β s financial stability review, frankfurt am main, 25 november 2015. * 1. * * banking supervision : successful first year in the ssm ladies and gentlemen before i delve into the risk situation in the german banking sector, i would briefly like to look back with you on year one of european banking supervision. on 4 november 2014, the ecb assumed direct responsibility for supervising the largest 120 or so banks in the euro area. those included 21 german institutions, although the number has risen to 22 in the meantime. given the sheer scale of the project and the very short time available for preparation, many were doubtful about whether european banking supervision could actually work. my answer after one year of the single supervisory mechanism ( ssm ) is : yes, it is working, and i am confident it will continue to meet the high expectations placed in it. cooperation between the ecb and the national supervisors is running pretty smoothly, and we are indeed observing a gradual europeanisation of banking supervision. so i β m satisfied with the first year of european banking supervision. there are a few points we can improve on. these include, for instance, decision - making structures and processes. in this regard, i believe that an adequate distinction is still not being made between important processes and routine decisions ; having said that, however, my comments are by no means intended to imply criticism. of course, european banking supervision has heralded a lot of changes, especially for the major banks. communication with banking supervisors is increasingly taking place in english, cross - border peer comparisons between banks are growing more important, and the supervisory approach has taken on a more quantitative slant on the whole. these factors all entail more work for the banks, of course ; but the banks, too, ultimately stand to benefit from improved supervision and a europe - wide level playing field. looking to the future, another topic that β s on the table right now is a european deposit guarantee scheme ; indeed, the european commission presented a plan only yesterday. i take quite a critical view indeed of this project because i don β t believe that the groundwork has been laid for such a scheme yet. we have a common currency and a | 0.5 |
fundamentals have caused a sharp deterioration in the credit quality of cre loans on banks'books and of the loans that back commercial mortgage - backed securities ( cmbs ). pressures may be particularly acute at smaller regional and community banks that entered the crisis with high concentrations of cre loans. in response, banks have been reducing their exposure to these loans quite rapidly in recent months. meanwhile, the market for securitizations backed by these loans remains all but closed. with nearly $ 500 billion of cre loans scheduled to mature annually over the next few years, the performance of this sector depends critically on the ability of borrowers to refinance many of those loans. especially if cmbs financing remains unavailable, banks will face the tough decision of whether to roll over maturing debt or to foreclose. see board of governors of the federal reserve system, fdic, office of the comptroller of the currency, and office of thrift supervision ( 2008 ), " interagency statement on meeting the needs of creditworthy borrowers, " joint press release, november 12. see board of governors of the federal reserve system ( 2009 ), " federal reserve board makes announcement regarding the supervisory capital assessment program ( scap ), " press release, november 9. recognizing the importance of this sector for the economic recovery, the federal reserve has extended the talf programs for existing cmbs through march 2010 and newly structured cmbs through june. moreover, the banking agencies recently encouraged banks to work with their creditworthy borrowers to restructure troubled cre loans in a prudent manner, and reminded examiners that β absent other adverse factors β a loan should not be classified as impaired based solely on a decline in collateral value. 5 the job market in addition to constrained bank lending, a second area of great concern is the job market. since december 2007, the u. s. economy has lost, on net, about 8 million private - sector jobs, and the unemployment rate has risen from less than 5 percent to more than 10 percent. 6 both the decline in jobs and the increase in the unemployment rate have been more severe than in any other recession since world war ii. 7 besides cutting jobs, many employers have reduced hours for the workers they have retained. for example, the number of part - time workers who report that they want a full - time job but cannot find one has more than doubled since the recession began, a much larger increase than in previous deep recession | , particularly in the non - manufacturing sector, but also to keep a close eye on the extent to which companies β views regarding the economic outlook become more bullish as the recovery continues. outlook for prices and the conduct of monetary policy the japanese economy has been in a recovery phase since the summer of 2003. domestic corporate goods prices have been rising partly due to high crude oil prices. consumer prices, however, have been on a slightly declining trend due to the fact that the rise in corporate goods prices has mostly been offset by higher productivity and labor cost restraint. the bank has been providing ample liquidity in accordance with its commitment to continuing with the quantitative easing policy until the year - on - year rate of change in the consumer price index ( excluding fresh food prices, on a nationwide basis ) registers zero percent or higher on a sustainable basis. the positive impact of the commitment on the economy, acting via interest rates, has increased as the economic recovery has progressed. this impact is expected to become stronger as corporate profits continue to increase in line with the economic recovery. the bank β s thinking on the future conduct of monetary policy was explained in the outlook for economic activity and prices published in october 2004. the bank said that if higher productivity and other factors continue to broadly contain the upward pressure on prices as the economy follows a sustainable and balanced growth path, this will give the bank more latitude in conducting monetary policy. here, the β conduct of monetary policy β includes monetary policy decisions relating to the timing of the termination of the current monetary policy framework and the pace at which the bank will raise short - term interest rates to keep them consistent with economic conditions at the time. if prices remain less responsive to increased economic activity, the bank can more flexibly and effectively respond to emerging economic situations. for example, it could choose to continue with the quantitative easing policy as long as possible, or it could choose to raise interest rates at a moderate pace after the termination of the policy. whatever policy option is chosen in the future, it seems unlikely that the bank will be required to take precipitate action. it is in this sense that it enjoys β latitude β in making monetary policy decisions. as an end to the quantitative easing policy approaches, the bank will further endeavor to offer a lucid explanation of its assessment of the economic situation as well as the thinking behind its conduct of monetary policy. furthermore, the bank will continue to enhance its communication with market participants so that they will be better able to predict the conduct of | 0 |
chilean economy to the changes in terms of trade and external financial conditions accurately reflects the operation of our policy regime. over the years, the central bank has shown its commitment to take action to safeguard price stability. we have been consistent over time and we have built a credibility record that gives us room to use monetary policy in a counter - cyclical fashion when it is advisable. our policy framework allows for timely adjustments of the real exchange rate and the interest rate, which provide the right signals to keep the domestic economy growing around potential, smooth the adjustment of the capital account, while inflation and inflationary expectations remains anchored. this makes a difference with our economic history. some time ago, when we had more rigid exchange rate systems, less adapted to cope with external shocks, when confronted with tighter external financial conditions, we needed to fight against the depreciation of currency to avoid destabilizing balance sheet and inflationary effects. we had to tighten monetary policy to reduce the speed of private capital outflows and sold massive amounts of foreign reserves to contain the depreciation of the currency. most experiences ended badly. final remarks the changes we are seeing in the world economy are part of the development that comes in the footsteps of the global financial crisis. the time has come for the recovery of developed economies, and therefore, the extraordinary monetary stimulus packages they brought about in the past must be withdrawn. by historical standards, the global financial conditions we faced in the past few years were very good, but we knew that sooner or later they would end. this is a healthy development. what is important is where this new situation will find us, as economies that managed to keep strong fundamentals and prevented macroeconomic imbalances from building up, or on the opposite lane. how costly a moving toward a β more normal β world will be for each of our countries will depend on how wisely we have administered our economies during the good times. in chile, the policy framework that has been in place during the recent decades, has given us more tools to help the economy to accommodate the effects of changes in the external environment. however, we must always bear in mind that we are not immune to events abroad. for the moment, our economy has slowed and despite a sharp depreciation of our currency, inflation expectations have remained in line with the target, allowing us to steer monetary policy to a more expansionary instance. thank you very much. bis central bankers β speeches | massive monetary stimulus packages, and the focus has shifted to when and how fast will it begin raising the fed funds rate. financial conditions began changing last may, when the talk about tampering of the asset purchasing program in the us began. since then, the interest rate on 10 - year us treasury bonds has fluctuated within a range between 2. 5 % and 3 %. while still low by historic standards, it is 100 basis points above its previous level. and we must add to this rise in the treasury bond rate the increase in the foreign credit premiums facing the emerging economies. emerging markets β currencies have depreciated substantially against the us dollar, and their market capitalization is lagging behind the advanced economies β stock markets. the external financial conditions facing our economies are entering a normalization stage, but they are still favorable from a historic perspective. in short, after six years since the outbreak of the global financial crisis, international conditions are returning to normal. this scenario implies that most latin american countries, including chile, will be getting a weaker impulse from abroad at least in the short run, due to bis central bankers β speeches the drop in the terms of trade and the more stringent external credit standards. still, over the medium term, a recovery of developed economies β growth is certainly good news. and much more so, if we consider that a persistent β easy money β era may create economic and financial imbalances which, the longer they last the higher the price that has to be paid in terms of economic and balance sheet adjustments down the road. the question is, where do the emerging economies stand to deal with this transition? there is no simple answer to this. some have used the boom years to consolidate their fiscal accounts, balance sheets and macroeconomic policies. others have vulnerabilities in some of these areas, which may have been magnified by access to inexpensive, abundant credit in international markets. chile β s macroeconomic framework chile has gradually developed a scheme of macroeconomic policies that permits us to deal with the natural volatilities of the business cycle of any open, commodity - exporting economy. this scheme has evolved over time to address the new challenges, such as a growing degree of financial integration to the global economy. this scheme leans on several pillars. one such pillar is our fiscal policy based on a structural balance rule. this rule dictates clear fiscal commitments that ensure that public finances are both sustainable and predictable. our fiscal policy is | 1 |
2 / 11 19 / 10 / 2020 deglobalisation, disrupted education and debt : economic policy challenges following the pandemic | deutsche bundesbank more generally, in order to maintain price stability, monetary policy aims to smooth aggregate demand over time by adjusting interest rates. for example, if a shortfall in aggregate demand were to weigh on the inο¬ation outlook, the central bank would cut its policy rate or bring long - term interest rates down by purchasing bonds. however, while this mechanism is helping to stabilise the economy, it cannot, on its own, address the economic dislocations caused by the pandemic shock we have witnessed. as economist michael woodford recently noted : β while it may well be [UNK] for restaurants or theaters to suspend the supply of their services for a period [ β¦ ], the loss of their normal source of revenue may leave them unable to pay their rent ; loss of rental income may then require the real - estate management companies to dismiss their maintenance [UNK] [ β¦ ] ; the furloughed maintenance [UNK] may be unable to buy food or pay their own rent [ β¦ ], and so on. β in other words, the sectoral shutdowns have disrupted the ο¬ow of payments within the real economy and thereby severely constrained the spending of many businesses and households. monetary policy can only help in those cases where liquidity is scarce or interest rates are too high, but it cannot make up for the loss of income due to payments not made. instead, ο¬scal transfers directly address the fundamental problem at hand, since they substitute for lost income. by modelling such a situation of β effective demand failure, β woodford spelled out a key economic rationale for rapid and large - scale ο¬scal support in the current crisis. in practice, policymakers in germany and elsewhere have been particularly concerned about the danger of businesses β temporary liquidity shortfalls turning into solvency problems. indeed, a recent study found that, across a sample of advanced economies, many small and medium - sized enterprises could fail during the crisis. assuming impaired access to credit and no government intervention, the estimated bankruptcy rate would double from roughly 9 % to 18 %. [ 4 ] a broad wave of corporate insolvencies would likely destroy a large number of jobs and raise unemployment persistently. while this would scar the overall economy, the resulting burden would not be shared equally. indeed, a disproportionately large number of women and low | would be poorer and in the short run there would be immense disruption. β 11. the indian forex markets have been fairly stable in recent months. as you know, the reserve bank is mandated to maintain orderly conditions in the foreign exchange market. its intervention in the forex market is solely directed at curbing sudden turbulences not backed by the economic fundamentals. as has been said repeatedly, market operations are not intended to achieve any target exchange rate or band of rates. it must be pointed out that the exchange rate dynamics in india for more than a decade has been driven by capital flows rather than current account balances. as an aside, india has mostly run a current account deficit, notwithstanding a bilateral trade surplus with the us, marginally more than usd 20 billion during 2018. though long - term flows related to fdi and long - term debt have been fairly stable keeping in tandem with the economic fundamentals, the portfolio flows have their own dynamics depending as much on 2 / 3 bis central bankers'speeches attractiveness of returns of indian assets as the global factors determining their risk appetite. gyrations in the forex market in these circumstances leave no option other than market intervention to restore orderliness in the market. one also need to bear in mind that india β s forex reserves are borrowed reserves and not built out of export surplus. inasmuch as it provides a bulwark against sudden flow reversals, it enhances the country β s ability to cope with the fall out and indeed, contributes to global stability as well. 12. the policy regime is also oriented to providing adequate instruments of hedging to all resident economic agents who have exposure to a foreign currency as well as all non - residents who have a rupee exposure. the onshore markets are fairly deep and liquid but needs further strengthening. there is a wide menu of hedging instruments available and further expansion would be in keeping with understanding of their risk implication. in recent times, global institutions and investors have shown a healthy appetite for rupee denominated assets, which while ensuring flow of foreign exchange protects the indian issuers from exchange risk. this trend needs to be given further policy nudges. 13. in fine, i would like to say that though there are discouraging portents for the global economy and uncertainties arising from trade tensions and geopolitical developments, i am optimistic that coordinated policy response and dispute resolution within a multilateral framework will see us through the day. 14. | 0 |
nina stoyanova : adaptation and management of digital portfolios, digital banking services and client contacts in a pandemic crisis speech by ms nina stoyanova, deputy governor and head of the banking department of the bulgarian national bank, at the opening of the videoconference " adaptation and management of digital portfolios, digital banking services and client contacts in a pandemic crisis ", organized by the banker newspaper, 17 november 2020. * * * i would like to welcome you to the video conference on β adaptation and management of digital portfolios, digital banking services and customer contacts in a pandemic crisis ", organized by the banker newspaper. in its β strategy for the digitalisation of eu financial services ", the european commission states that the future of finance is digital. however, we can safely say that not only the future but also the present of finance is inextricably linked to digitalisation. this was clearly seen in the unprecedented situation caused by the coronavirus, in which it was through digital technologies that the continuity of the provision of financial services to consumers and businesses was ensured. the pandemic is about to permanently change our way of life, accelerating the processes of digitalization in all spheres of life β work, entertainment, shopping, administrative services. we are witnessing the emergence of new business models, services and solutions that create value, save time and effort, but at the same time are accompanied by new risks and challenges β both technological, this trend in the development of the financial sector is particularly visible in the dynamic and customer - oriented area of payments. undoubtedly, the catalyst for these processes is the european legislation in this area, namely the second payment services directive, known as psd2. as the main innovations in it we can highlight two aspects β opening access to payment accounts ( the so - called β open banking β ) and increasing the requirements for the security of electronic payments. these were the areas in which in 2020 the efforts and attention of both the business and the regulator continued to be focused. as part of the first aspect, the directive introduced two new types of payment services provided entirely on the internet β payment initiation and account information services, and regulated the activities of providers offering them. the provision of new services requires interaction between payment service providers who maintain customer accounts ( most often banks ) and the respective providers that offer new services. most payment service providers holding accounts in our market have chosen to achieve this interaction by creating special interfaces for automated access to their managed payment | you for your attention. 1 www. ecb. europa. eu / pub / economic - bulletin / articles / 2021 / html / ecb. ebart202103 _ 02 ~ 6612ab7923. en. html 4 / 4 bis central bankers'speeches | 0 |
production in the middle east, along with increased concerns about prospects in other oil - producing countries, are doubtless key factors behind the nearly $ 9 per barrel rise in distant crude oil futures since 2000. this run - up presumably reflects a broadening of demand for claims on oil inventories beyond traditional commercial buyers and sellers of crude oil and petroleum products. the marked rise in the net long positions of non - commercial investors in oil futures and options since may 2003 has increased net claims on an already diminished global level of commercial crude and product inventories. oil prices accordingly have surged. at some point, however, investors will have achieved the level of claims on oil that they seek. when that occurs, their demand will presumably stop rising, thus removing some of the current upward pressure on prices. nonetheless, the increased value of oil imports has been a net drain on purchasing power, spending, and production in the united states. moreover, higher oil prices, if they persist, are likely to boost core consumer prices, as well as the total price level, in this country. the recent modest declines in oil and natural gas prices may or may not signal a trend but are nonetheless welcome. * * * the end of deflationary fears and the onset of modest upward pressure on costs, coupled with a strengthening economic outlook in the united states, have driven long - term interest rates higher, which has spurred a marked shift in credit flows and has prompted many firms to focus on the possibility of further interest rate increases in developing their hedging strategies. the rise in rates, for example, has induced a dramatic fall in mortgage refinancing and, hence, has produced a pronounced rise in the duration of mortgage - backed securities ( mbs ). owing to the volume of the earlier wave of mortgage refinancing, there is now a paucity of existing mortgages at rates appreciably above current levels, implying that the extent of further duration hedging is likely to be quite modest. as a consequence of record levels of refinancing in the second half of 2002 and the first half of 2003 which, by our estimates, encompassed roughly 45 percent of the total value of home mortgages outstanding - mbs duration fell to exceptionally low levels. as mortgage and other long - term rates rebounded last summer, a consequence of rapidly improving economic conditions and the fading of deflationary concerns, refinancing fell sharply, removing most downward pressure on duration. holders of mbs endeavor | of credibility. trust is not an abstract concept, but an attitude developed by actual people based on their beliefs, information and actual experiences. third, by focusing on stakeholders, trust can help institutions to pay closer attention to their environment, changes in social values and standards, thus reinforcing their end beneficiaries rather than structures or procedures. this may be especially important for technocratic and independent organizations, like central banks, that may tend to isolate themselves despite mandates in the general interest. finally, as we will see below, recent work shows that trust can be deconstructed into a series of components that can be linked to institutional actions. this may provide a stronger lead to how trust can be protected, built, or eroded. in what remains, i will argue that public trust is the cornerstone for safeguarding central bank independence as a stable outcome of the way modern societies decide to allocate powers across institutions. 3 a central bank that is not trusted is vulnerable to political pressure to deviate from its mandate, regardless of whether it is formally independent or not. it is therefore crucial for modern central banks to understand better the concept of trust, the mechanisms for fostering and maintaining it, and to think about strategies and tools for the management of public trust. what is public trust? what can be done about it? available data indicates that public trust in government differs substantially across countries, but it tended to deteriorate after the gfc. within countries, trust may also vary significantly across specific public institutions, being stronger for social services than for political bodies. cross - section evidence shows a strong, positive relationship between public trust and per capita income, suggesting an association between trust and development, albeit causality is unclear. 4 the broader concept of trust in government institutions is not delinked from the more specific one on central banks. for the case of new zealand, hayo and neumeier ( 2017 ) find a statistical connection between overall trust in government institutions and public trust in the reserve bank of new zealand. there is also evidence on the statistically positive relationship between trust and central bank independence, though the link is not linear ( berggren et al., 2014 ). page 4 of 8 central bank of chile july 2019 to dig deeper into the drivers of public trust and its impact on institutional effectiveness we can draw on recent work developed by the oecd on the subject ( oecd, 2017 ). this work proposes a taxonomy distinguishing five dimensions of trust : reliability, | 0 |
mark carney : summary of the latest monetary policy report opening statement by mr mark carney, governor of the bank of canada, at the press conference following the release of the monetary policy report, ottawa, 18 january 2012. * * * good morning. tiff and i are pleased to be here with you today to discuss the january monetary policy report, which the bank published this morning. the outlook for the global economy has deteriorated and uncertainty has increased since the bank released its october mpr. the sovereign debt crisis in europe has intensified, conditions in international financial markets have tightened, and risk aversion has risen. the recession in europe is now expected to be deeper and longer than previously anticipated. the bank continues to assume that european authorities will implement sufficient measures to contain the crisis, although this assumption is clearly subject to downside risks. in the united states, the rebound in real gdp during the second half of 2011 was stronger than anticipated. however, the bank expects the recovery will proceed at a more modest pace going forward, owing to ongoing household deleveraging, fiscal consolidation and the spillovers from europe. chinese growth is decelerating, as expected, toward a more sustainable pace. prices for most commodities are expected to remain relatively elevated, although at levels below those anticipated in october. the bank β s overall outlook for the canadian economy is little changed from october. while there was more momentum than anticipated in the second half of 2011, the pace of growth going forward is expected to be more modest than previously envisaged, largely due to the external environment. household spending is now projected to grow at a steady pace through 2013. reflecting an upwardly - revised profile for residential investment, household expenditures are now expected to remain high relative to gdp over the projection horizon and the ratio of household debt to income is projected to rise further. while dampened somewhat by the external environment, business investment is expected to grow at a solid pace. net exports are expected to contribute little to growth, reflecting moderate foreign demand and ongoing competitiveness challenges, including the persistent strength of the canadian dollar. the bank estimates that the canadian economy grew by 2. 4 per cent in 2011 and projects that it will grow by 2. 0 per cent in 2012 and 2. 8 per cent in 2013. while the economy appears to be operating with less slack than previously assumed, given the more modest growth profile, it is only anticipated to return to full capacity by the third quarter of 2013. the dynamics for inflation are similar to | those anticipated in october, although its profile is marginally firmer. both total and core inflation are expected to moderate in 2012 before reaching 2 per cent by the third quarter of 2013, as excess supply is slowly absorbed, labour compensation grows modestly and inflation expectations remain well - anchored. several significant upside and downside risks are present in the inflation outlook for canada. bis central bankers β speeches the three main upside risks to inflation in canada relate to the possibility of stronger - than - expected inflationary pressures in the global economy, stronger - thanexpected growth in the u. s. economy and stronger momentum in canadian household spending. the two main downside risks to inflation in canada relate to sovereign debt and banking concerns in europe and the possibility that growth in household spending could be weaker than projected. overall, the bank judges that these risks are roughly balanced over the projection horizon. reflecting all of these factors, the bank yesterday maintained the target for the overnight rate at 1 per cent. with the target interest rate near historic lows and the financial system functioning well, there is considerable monetary policy stimulus in canada. the bank will continue to monitor carefully economic and financial developments in the canadian and global economies, together with the evolution of risks, and set monetary policy consistent with achieving the 2 per cent inflation target over the medium term. with that, tiff and i would be pleased to take your questions. bis central bankers β speeches | 1 |
its intrinsic tendency to complacency. three intrinsic weaknesses need correction. first, the transparency of the financial structures needs to be enhanced. financial innovation cannot be built upon β and exploit β gaps in investor information and lack of financial literacy. all institutions, instruments and markets of any relevance for systemic stability need to enhance risk disclosure. second, short - termism in the design of financial contracts. market participants were given strong economic incentives to focus on short - term profits. β due diligence β was not a concern in the pre - crisis world. collectively, this has resulted in excessive risk taking. third, and perhaps foremost, the pro - cyclicality of the financial system needs to be mitigated. the quality and quantity of bank capital and their liquidity buffers have to be improved in good times to provide a sufficient buffer for bank equity to withstand the inevitable increase in credit risk when the cycle turns. the cyclicality of market economies is inevitable. but the financial system should not be allowed to amplify swings. these three points β and others β are now in the mission of the g - 20, the new prime forum of international cooperation. the g20 has entrusted many of these tasks to the financial stability board β headed by mario draghi. the business activities that you represent here should benefit from financial reform. lenders will be made more attentive to the real economic prospects of their borrowers. long - term value creation will β once again β be the criterion for granting credit to the economy. structural change entrepreneurs will be important actors of structural change, my third way forward. here we can build on assets that have made our real economies in the continent successful : our openness to trade ; our balanced and dynamic business structures ; our talented and well - trained workforces. none of these factors is single - faced. i mentioned already that the openness of our economies has been seen as a major challenge. greater openness has meant that our economies have been more exposed to the international crisis. but the past trend to global trade integration has already called for a major adjustment in the euro area production patterns. many countries in the european union have adjusted their export portfolios according to the technological advantages of advanced economies. in italy, about half of the firms with 20 or more employees are engaged in restructuring. many of them are consolidating their technological edge and diversifying their markets. they have moved towards products that are more skill - intensive and more capital - intensive. | and industry more content β. between, say, 2005 and much of 2007 the system was quietly sliding into a state of metastability. a system is meta - stable when any external shock β even a trivial disturbance β can tip the balance of stability and trigger an avalanche. when, on 15 september 2008, lehman brothers filed for bankruptcy, the turmoil that had started a year earlier turned into an avalanche. the system moved into a chaotic state, mathematically and metaphorically. the crash in times of financial panic, banks and other financial intermediaries have an instinct to change the composition of their assets. they shed risky and illiquid investments and rush to liquidity. in the process, banks β intermediation is reduced, and loans to companies are curtailed. if the process is let unfold in a disorderly manner, it can create severe damage for borrowers and for the broader economy. after the demise of lehman, liquidity hoarding was so intense that we feared bank intermediation would suffer a complete and lasting collapse. the ecb was the first central bank in the world β a whole year before the lehman crisis β to recognise the severity of the situation. as the failure of lehman precipitated the crisis, the ecb took several measures to protect against a disorderly correction in credit and liquidity conditions. the ecb provided liquidity in unlimited volumes and with longer maturities. we insured banks against present and future liquidity shortfalls. you know that the flow of credit is primarily channelled through banks in the euro area. a complete breakdown in the funding relationships that constitute the inter - bank market for liquidity would have derailed the bank lending channel altogether. the interruption of the bank lending channel would have turned the financial crisis into a profound depression. by granting unlimited access to central bank liquidity we put banks in a position to maintain their crucial role in the financing of the real economy. by reducing the interest rate at which banks can borrow liquidity from us we facilitated the transmission of our credit support to the economy. as i speak, the funding ability of banks appears no longer to be a restraining factor for bank lending. since the second half of last year, easy funding conditions have been supporting banks β core business : making loans. we still see β in our bank lending survey β a residual slight prevalence of banks declaring a tightening in their credit standards for loans to enterprises. but this is now entirely due to macroeconomic uncertainty. a number of | 1 |
irma rosenberg : monetary policy and the labour market speech by ms irma rosenberg, first deputy governor of the sveriges riksbank, at simra, stockholm, 22 may 2007. * * * introduction thank you for the invitation to come here! after the economic crisis and the changeover in economic policy at the beginning of the 1990s, the swedish economy has functioned much better than anyone could have imagined. gdp growth has been higher than in the 1970s and 1980s, inflation has been low and more stable and real wages have increased much more quickly than during both of the previous decades. however, developments in the labour market have not been as favourable. unemployment rose tangibly in connection with the crisis in the 1990s and has since then remained at a higher average level than before. inflation has on average been slightly lower than the riksbank β s inflation target since it was introduced in 1985. during the years 2004 - 2005 inflation was noticeably below the target. it may therefore be relevant to claim that the high unemployment is largely due to incorrectly balanced monetary policy. there are also debaters who have implied that an economic policy that aims at low inflation can in itself contribute to unemployment being higher than necessary. i intend to devote my speech today to explaining my views on this. i also intend to briefly comment on how i viewed the current situation in the labour market in connection with the monetary policy meeting in may and what significance this had for my stance at the meeting. however, i will not give any new monetary policy signals. but first i shall begin by providing some historical perspective on this issue by giving an account of the background to the economic policy change of regime at the beginning of the 1990s. from fine - tuning stabilisation policy to " stable game rules β unemployment is currently high in comparison with the levels that prevailed during the 1970s and 1980s. open unemployment at that time varied between 1. 5 and 3. 5 per cent. in the mid - 1990s open unemployment went up to just over 8 per cent, while during recent years it has varied between 4 and 6 per cent. however, the factors that contributed to holding down unemployment during earlier decades at the same time contributed to the economic crisis at the beginning of the 1990s and also to the need for an economic policy change of regime. from the 1950s up to the mid - 1970s the authorities in sweden attempted to conduct what is usually known as fine - tuning stabilisation policy. this involved trying to parry fluctuations in economic activity with an active fiscal policy | extremely complex financial products, along with other debt securities and sold to insurers and investors. these securities, known as β cdos β, developed exponentially in the 1990s and 2000s, and came to represent colossal sums on the balance sheets of many financial institutions worldwide. these instruments were intended to disperse credit risk. but when the value of the underlying subprime loans bis central bankers β speeches collapsed in 2006 / 2007, it became clear, on the one hand, that the risk had not disappeared and, on the other, that by increasingly dispersing this risk, it was everywhere. this was the crux of the first episode of the crisis. investors then realised that these products were opaque and toxic and they became distrustful. the collapse of a number of hedge funds in summer 2007 as a result of these products led to a freeze in interbank markets and banks stopped lending to each other. in september 2008, these dynamics and the attendant loss of confidence culminated in the folding of the major us investment bank lehman brothers. the seizing up of the interbank market and the magnitude of the shock for banks was even greater and had an immediate impact on the real economy. lending to the economy declined, investments and international trade collapsed and all regions of the world went into recession at the end of 2008. this is a brief recap of the first leg of the crisis. you can see that at the outset it was a real estate and financial crisis whose epicentre was in the united states. epicentre no. 2 : since 2009, the euro area but how did this first crisis transform into the euro area crisis that has been raging for the past two years? in two words, the answer is public debt. indeed, the financial crisis of 2008 had far - reaching consequences on the public finances of most countries : tax revenues fell due to declining activity ; welfare spending rose due to higher unemployment ; stimulus plans had to be implemented and, in many countries with the notable exception of france, the cost of rescuing the financial system was huge. government deficits in numerous countries increased and their debt exploded. as an indication, the ratio of government debt to gdp of most industrialised countries rose by over 20 points between end - 2007 and today, which is very significant. if the fiscal positions of these countries had been sound before 2007, the situation would be very different today. but most countries had large deficits and high debt levels before the crisis. creditors started to question the ability of some countries to | 0 |
meet the capital needs of the psbs under basel iii norms particularly since the projections are based on minimum requirements. we also have to remember that pillar ii assessment has not taken off effectively / fully as of now. the psbs will have to chart out a clear capital raising plan over the next five years. the psbs should actively consider several options including, non - voting rights share capital, differential voting rights share capital, golden voting rights share capital, etc. bis central bankers β speeches b. secondly, there is a need to reflect on the holding company structure in respect of the psbs. the nayak committee recommendations in the matter look at the bank investment company structure from the limited perspective / single angle of separating the goi investments from the psbs. there are deeper ramifications on this aspect and the whole issue must be looked at from multiple dimensions including that of the financial stability perspective. the suggestions made in the shyamala gopinath report on the bank holding company structure need to be given a serious consideration. the objective must be threefold β i ) help reduce capital requirement impact on the goi ii ) financial stability perspective, and iii ) strengthening corporate governance by reducing government influence and interference ; c. thirdly, the performance appraisal system ( pas ) needs a complete revamp. currently the pas makes no meaningful distinction between individuals for identifying or deploying talent, skills and / or specialisation ; nor does it guide determining compensation. the system needs reshaping so as to serve as the mainstay for evaluating employees β performance, assessing compensation and developing leadership. d. fourthly, the public sector banks ( psbs ) have hardly any meaningful participation in the financial markets, i. e in the bcd instruments. this restricts / curtails the financial market development. a selected set of foreign banks and the new private sector banks dominate the financial markets in india. psbs need to engage proactively, especially, in the derivative instruments for hedging their risks. treasury function is relatively weak in psbs. well established and robust treasury is a must for the purpose ; they must build up specialisation and should have sufficient number of specialists. the vigilance aspect on treasury losses / losses from transactions will need to be rationalised just as in other areas of psb operations. e. fifthly, the psbs should have a relook on their portfolios. currently, their portfolio share in advances to agriculture, industries, services | christian kettel thomsen : risks related to geoeconomic fragmentation, cyber, and the green transition speech by mr christian kettel thomsen, governor of the national bank of denmark, at the annual meeting of finance denmark, copenhagen, 2 december 2024. * * * check against delivery introduction december is a month of tradition β a month when predictability reigns with christmas lights, christmas trees and rituals. for many years, we may have thought the same thing about globalisation β a stable and almost obvious tradition. however, we can no longer count on globalisation as a fixed backdrop. i would like to talk about that today. when i stood here last year, inflation was the most important macroeconomic issue. today, inflation is under control and the economy is well balanced. but unforeseen shocks to the economy and our everyday lives can occur quickly, as we have experienced in recent years. think of the pandemic, when denmark was locked down. from one day to the next we could not buy various goods because major international ports were closed or factory workers had been sent home. or russia's war in ukraine, which caused the price of energy to rise rapidly and dramatically. and i guess we are now in a situation where we are all unsure of what is going to happen in the coming years. as a result of wars, signs of disruption in international trade and other factors, we now face the risk of an increasingly polarised world. what we also call geoeconomic fragmentation. geoeconomic fragmentation geopolitics is affecting your customers'everyday lives in a way we probably have not seen since the cold war. trade barriers are on the rise, and many companies are considering moving production closer to their headquarters. there are also clear signs that some countries are trading less with each other today due to conflicting political interests. we can see this, for example, if we consider the world as two blocs centred around the eu and the us on one hand and china and russia on the other. if we compare the 1 / 6 bis - central bankers'speeches period before the war in ukraine with now, trade growth between the blocs has decreased significantly more than trade within the blocs. globalisation has also led to a marked specialisation of certain products. this means that in some cases production is concentrated in just a few countries. while this has economic benefits, it also poses a significant risk. when we become dependent on specific countries for strategically important goods, we create vulnerability | 0 |
a reference value for a monetary aggregate, and not a target value. this means that, although monetary developments will be used as the main indicator of potential inflationary or disinflationary pressures, the escb will not react in an almost mechanical way to correct deviations from the reference value in the short term. secondly, the escb will not focus solely on the analysis of monetary aggregates, but will complement this analysis with a broadly based assessment of the outlook for future price developments. on the one hand, the chosen strategy will, in my view, ensure as great a degree of continuity as possible in relation to the existing strategies of national central banks in the euro area. on the other hand, due consideration has simultaneously been given to the unique situation created by the transition to monetary union, in which a possibly growing international role of the euro is but one element. 3. what are the prospects for international policy co - ordination between central banks? are target zones for the key currencies conceivable, or even desirable? the ecb, acting on behalf of the escb, is already beginning to play a major role in international fora, such as those at the bank for international settlements ( bis ), the oecd and in a g7 and g10 context, and i expect this role to grow considerably in significance once the escb is operational. in all fora, the ecb's role will be to contribute to the international policy discussions from the perspective that price stability in the euro area is its prime objective. at the same time, the ecb will seek to make the best contribution it can to stable international developments. in particular, the introduction of the euro will reduce the number of major currency blocs in the global financial system. in principle, this should simplify the exchange of views on financial issues at the global level. each of the main partners β the united states, the euro area and japan β will be in a position to speak for a comparatively large economic area and will be similarly vulnerable to possible consequences of instability. they may thus have a greater incentive to take on a share of the responsibility for helping to maintain a stable global environment. on the question of exchange rates and target zones, i would like to state clearly that, in its monetary strategy, the escb does not have an exchange rate target. nor do the united states and japan. an exchange rate target for an area as large and relatively closed as that of the euro | in substance, this statement is similar to what other central banks call β minutes β. as far as i am aware, no other central bank regularly communicates in such a prompt and open manner with the public immediately after its monetary policy meetings. giving these press conferences immediately after the governing council meetings also ensures that decisions and information are disseminated rapidly and even - handedly across the entire euro area and beyond. these press conferences are a tangible expression of the eurosystem β s commitment to be open, transparent and accountable in its conduct of monetary policy. they are supplemented by our appearances before the european parliament, by our monthly bulletin, annual report, working paper series and numerous speeches and presentations such as my remarks here today. in my view, the eurosystem β s commitment to openness should not be in doubt. turning to another point, critics of the eurosystem have argued that the single monetary policy has focused too closely on cyclical developments, in contrast to the public commitment made to a medium - term orientation. these criticisms are supported by the claim that the interest rate cut in april 1999 was made so as to support employment and growth prospects in the short term. let me be clear. the single monetary policy has had, and will continue to have, an appropriate medium - term orientation, in line with the strategy i described a moment ago. in this respect, monetary policy must always remain focused on the maintenance of price stability over the medium term. in april 1999, downward risks to price stability were appearing, which stemmed from the cyclical slowdown that occurred in the aftermath of the financial turmoil in emerging markets during mid - 1998. these downside risks made it necessary for the governing council to act. interest rates were cut. the focus on the primary objective of price stability driving this decision does not exclude, however, that β given risks to price stability are very often related to cyclical developments β in many cases the policy action required to maintain price stability may also help sustain real activity. the governing council β s decision to lower interest rates in april 1999 clearly helped to sustain confidence and thereby real activity in the short term. nevertheless, this decision was made to ensure the maintenance of price stability over the medium term. of course, central bankers should and do welcome the opportunity to help sustain the real economy and employment β even if the sustenance provided is only temporary. however, we must not raise expectations that the short - term impact of necessary monetary policy actions on real activity will always | 0.5 |
of continued access to financial services. policies were placed to ensure access to formal financing channels by retail clients, including msmes, during the crisis. the use of information technology in carrying out financial transactions was highly encouraged during the lockdown. support for continued financial services delivery. the bsp granted operational relief measures to assist bsfis in focusing their limited resources on the delivery of financial services to financial consumers, including msmes, and support their subsequent recovery efforts. support for sufficient level of domestic liquidity and economic activity. monetary policy measures were also adopted to support domestic liquidity and extend cheaper financing to borrowers, including msmes. following these time - bound, strong and swift measures, a crucial question is how philippine banks are holding up through the pandemic. based on our recent assessment, our key findings suggest that : a. core funding remains relatively strong following covid - 19 outbreak ; b. bank lending slightly rises ; c. loan quality slightly weakens as borrowers experience cash flow interruptions and sustain 2 / 7 bis central bankers'speeches losses due to the pandemic ; we don β t see this trend to extend in the long - run, however. d. financial assets continue to grow but a slower pace as banks opted to reduce treasury activities to be liquid ; e. net income declines as additional provisioning rises. however, this is likely to be offset by lower operating expenses and deferment of capital expenditures and non - essential expenses ; and f. liquidity and capital buffers are intact. the banking system β s credit growth continued amidst the pandemic. the banking system β s gross total loan portfolio grew year - on - year by 1. 6 percent to p10. 7 trillion as of end - september 2020. from the funding side, the banking system β s total deposits rose by 10. 0 percent as of end september 2020 to reach p14. 4 trillion. outstanding deposits are mainly composed of savings deposits ( 47. 0 percent of total deposits ) followed by demand and now deposits ( 26. 9 percent ) and time deposits ( 24. 1 percent ). savings deposits increased by 14. 0 percent as depositors prefer to hold on to cash following the lockdown in luzon in march 2020. in any case, there has been a surge in the use of digital platforms during the lockdown that started in mid - march 2020. the use of pesonet rose remarkably, both in volume and value from september 2019 to september 2020. payments | year β a surprising improvement from our previous forecast of 5 percent contraction β of remittances are projected to rise by four percent next year. on the external front, the overall external position will remain healthy. the balance of payments will post a surplus of usd 8. 1 billion this year and usd 3. 4 billion next year. the current account will also remain in surplus, at usd 6. 0 billion this year and usd 3. 1 billion next year. meanwhile, the country β s gross international reserves reached us $ 103. 8 billion as of end october 2020. at this level, the gir remains more than adequate as it can cover 10 months β 1 / 7 bis central bankers'speeches worth of imports of goods and payments of services and primary income. the received doctrine is three months β worth of imports cover is enough. while the impact is still unfolding, the good news is that the financial system is in a strong position to both weather the adverse effect of the covid - 19 pandemic and support the country β s economic recovery. at the outset of the pandemic, the banking system had significant capital and liquidity buffers, built up due to both the strict bsp regulatory requirements and many years of favorable banking conditions. interestingly, the result of our stress tests suggest that banks can continue to lend and prosper through a broad range of adverse scenarios. to assess the impact of the pandemic, the bsp conducted a comprehensive baseline survey in april 2020 and intensified its off - site surveillance of all its supervised financial institutions. the results of these bsp initiatives proved useful for our supervision departments. as the financial sector supervisor, the bsp needs to strike a balance between enabling banks to lend to the firms and households, on one hand, and ensuring the promotion of safe and sound practices to contain the risk exposures of banks on the other hand. the bsp β s relief measures are classified in five ( 5 ) main objectives : extension of financial relief to borrowers. bsfis were given regulatory relief to enable them to grant equivalent financial relief to their borrowers, including msmes, in the form of more flexible and favorable lending terms. incentivize lending. the bsp β s prudential measures aim to promote financing to msmes and enable these enterprises to carry on with their business during the covid - 19 crisis, as well as hasten recovery and sustainability of their operations, during the post - crisis period. promotion | 1 |
ben s bernanke : the dodd - frank act testimony by mr ben s bernanke, chairman of the board of governors of the federal reserve system, before the committee on banking, housing, and urban affairs, us senate, washington dc, 21 july 2011. * * * chairman johnson, ranking member shelby, and other members of the committee, thank you for the opportunity to testify on the first anniversary of the dodd - frank wall street reform and consumer protection act of 2010 ( dodd - frank act ). 1 on this anniversary, it is worth reminding ourselves of why the congress passed sweeping financial reforms a year ago. the financial crisis of 2008 β 09 was unprecedented in its scope and severity. some of the world β s largest financial firms collapsed or nearly did so, sending shock waves through the highly interconnected global financial system. critical financial markets came under enormous stress. asset prices fell sharply and flows of credit to american families and businesses were disrupted. the crisis, in turn, wreaked havoc on the u. s. and global economies, causing sharp declines in production and trade and putting millions out of work. extraordinary actions by authorities around the world helped stabilize the situation, but, nearly three years later, the recovery from the crisis in the united states and in many other countries remains far from complete. in response to the crisis, we have seen a comprehensive re - thinking and reform of financial regulation, both in the united states and around the world. among the core objectives of both the dodd - frank act and the global regulatory reform effort are : enhancing regulators β ability to monitor and address threats to financial stability, strengthening both the prudential oversight and resolvability of systemically important financial institutions ( sifis ), and improving the capacity of financial markets and infrastructures to absorb shocks. i will briefly discuss each of these objectives. first, to help regulators better anticipate and prepare for threats to financial stability, legislatures in both the united states and other developed economies have instructed central banks and regulatory agencies to adopt what has been called a macroprudential approach to supervision and regulation β that is, an approach that supplements traditional supervision and regulation of individual firms or markets with explicit consideration of threats to the stability of the financial system as a whole. under a macroprudential approach, regulators are enjoined not only to look for emerging financial risks but also to try to identify structural weaknesses or gaps in the regulatory system, thereby helping the regulatory framework keep pace with financial | and harm to the reputation of the international monetary fund and its ability to raise funds outside europe. i am therefore very glad that this session is devoted to the facility, whose importance to europe and especially to the euro area is much greater. bis central bankers β speeches i could list other problems, such as the delayed consolidation of the european banking system and the related recapitalisation of banks, and in particular the fact that the existence of the euro area has widened the long growing imbalance in the exchange of goods, capital and savings between euro area countries. the short - term rescue of the euro will not directly solve the long - term problem of imbalances, and in particular the gradually emerging path towards a fiscal pact with no significant redistribution of resources at european level will require the elimination of, or at least a considerable reduction in, the imbalances in the euro area. in the context of the three change drivers i mentioned earlier, i would like to say that the time that the ecb β s pre - christmas actions gave the euro area, the european financial sector and many european states to solve their problems is useful but not infinite. i believe that the potential of the fiscal pact to become a true change driver is smaller than generally assumed, and i expect that the future formulation of the pact in the constitution of each country will contain ( abusable ) escape clauses. i base this view in particular on the fact that throughout its existence the euro area has had a tendency to soften or bend the criteria for its operation. be it the not - always - proper manner of fulfilment of the maastricht criteria by accession countries or the revision of the stability and growth pact or the purchase of government bonds by the european central bank, we have repeatedly seen how things that are initially unthinkable become reality over time. i am doubtful that investors, who are well aware of europe β s relationship to the rules, will change their attitude as a result of the fiscal pact. my overall view on the current design of the facility is none too optimistic. to enhance its ability to face the debt crisis, we need to find a clear consensus on its mission. we need to precisely identify whom it is supposed to help, under what circumstances and to what extent, and to derive from that the amount of funding it needs. this will predetermine the solutions to all the issues surrounding its operation. we have time to solve all these problems, but not much time. thank you | 0 |
rasheed mohammed al maraj : key developments in bahrain and the region speech by his excellency rasheed mohammed al maraj, governor of the central bank of bahrain, at the 4th annual middle east insurance forum, manama, 8 may 2007. * * * your excellencies, ladies and gentlemen : good morning. it gives me great pleasure to welcome you to the 4th middle east insurance forum. this event has established itself as one of the region β s leading insurance conferences, and my thanks go to the organizers, sponsors and speakers for producing what promises to be a fitting 4th edition of this conference. this year β s theme for the forum β β growth opportunities in a dynamic region β β is particularly apt. we are, of course, experiencing a sustained period of vibrant growth and liquidity that hasn β t been seen in over twenty years. underpinning this has been some significant developments in terms of structural reforms, both political and economic. these developments, naturally, have not gone unnoticed by the rest of the global business community. in particular, a number of international insurance groups have recently moved to establish regional offices, or to gear up their existing presences. we welcome this trend, and look forward to working with these groups in further developing the region β s insurance markets over the years to come. by way of setting the scene for the presentations and discussions to follow, i propose this morning to spend a few minutes highlighting some of the key developments that have taken place in bahrain and the region since we last hosted this event. the key message, i believe, is that the regulatory foundations built up by cbb are now beginning to bear fruit, and offer firms a solid base from which to tap into significant regional opportunities. for its part, the cbb has over the past year continued to refine and implement the completely new regulatory framework that was developed following the creation of a single regulator in 2002, and implemented from 2005 onwards. comprehensive solvency reporting by insurance firms has now been rolled out, as have on - site examination visits. these efforts are helping raise standards in the local industry, and will help strengthen its competitiveness over time. they have also been achieved in a spirit of cooperation, and i should like to take this opportunity to thank the industry for their support. a related key development over the past year has been the start of reporting under the new international financial reporting standard no 4, and the significant impact it has had on the insurance industry in terms of reporting. the | nbs ips qr code using our mobile banking applications. today, instant payments are available at merchants β points of sale and electronic points of sale, and several online merchants have enabled instant payments in their internet shops. among the first in europe, the users of financial services in serbia can also conclude distance contracts on financial services. they can do so with full transparency, security and protection of their rights. opening a payment account, or applying for a payment card or a loan is possible without going to the bank, which proved to be very practical during the pandemic, when it was important to provide financial services and maintain health at the same time. what do the figures tell us? last year, the number of distance contracts concluded increased by around 62 % relative to 2019, and the number of contracts concluded with the use of video identification of users is also on the rise. we are facing a period of even greater use of these options. however, here, too, i want to repeat that innovation makes life easier, but technologies must serve people, and not the other way round. they are instruments for achieving goals, not the goal in itself. technology alone cannot solve economic challenges : it cannot set priorities or make decisions about spending or investments. only people can do that. that is why knowledge and human capital remain one of the key drivers of development and change in the 21st century. respected participants of the business forum, i don β t think anyone can declare victory over the coronavirus or an end to the fight for even greater growth and a better quality of life. on the contrary. i think there are no final victories, in life or economy. also, i think that the pandemic hasn β t changed the reform momentum. since 7 / 8 bis central bankers'speeches we are here today in the β ivo andric β hall, there β s no one better to quote but him : β whoever does good is expected to give even more good. β i believe that we lack neither progress nor tasks. it is our obligation and task to leave a stronger country to future generations and to preserve the foundations of growth despite the pandemic, because life must go on once the pandemic is over. we continue to fight for every job, for greater ease of life and business and for a better future for our children. and because of this, i am sure that everyone in serbia, president vucic above all, will do everything that this year β s growth exceeds all our | 0 |
given that the eurosystem has bought time for national action, i don β t think that bringing to mind the pledges that were made to embrace consolidation and structural reforms constitutes meddling in national affairs. in the euro area, we share a common currency, which means that a lack of reform in one country has implications for the euro area as a whole and for the stability of our monetary union. while adjustment has to happen primarily in the deficit countries, countries running a current account surplus, such as germany, face challenges as well, as i have outlined before. last sunday β s victory in the football world cup should not blind us to reality, either. as gideon rachman wrote in a financial times comment : β germany is undoubtedly going through a golden moment β on and off the football - field β but there are reasons for fearing that it will prove all too momentary. β in any case, deliberately weakening the competitiveness of germany β s export sector would harm, rather than benefit, the stressed countries β economies. we should bear in mind that german exports contain imported intermediate inputs from other euro - area countries amounting to 9 % of the overall added value. if germany were to accept the economic advice to excessively boost its wages in order to stimulate domestic demand, it would harm employment in germany and, as a consequence, the economic situation in the entire euro area as simulation results show. bis central bankers β speeches despite this, it is clear that against the background of germany β s strong cyclical position and the tight labour market, wages will rise faster than in the rest of the euro area. we expect effective wages to rise more than 3 % this year and next year. strengthening emu β s institutional architecture however, when it comes to taking action at the european level, the challenges facing monetary union are also considerable. the safeguards originally put in place for the stability of monetary union, the stability and growth pact and the no bail - out clause, failed to prevent the crisis. as i have already pointed out, there are additional macroeconomic imbalances which likewise pose a threat to the stability of the euro area : a steady loss of competitiveness, persistent current account deficits and high levels of private debt. measures to address these deficiencies, such as the strengthened stability and growth pact, the fiscal compact and macroeconomic surveillance, have been implemented. i will come back to this in a minute. ultimately, the risk of contagion between countries was also underestimated when | it is not yet clear whether the new rules do really bite. strict and consistent application of the stiffened rules is therefore important. here, the commission has a special responsibility. metaphorically speaking, we need to make sure that the commission does not go beyond its role as a referee and move the goalposts mid - game. in this regard, some doubts are warranted, as is evident from the recent debate surrounding a flexible interpretation of the stability and growth pact. the pact, which was reformed less than three years ago, grants a great deal of discretionary scope. moreover, there is a risk that recent decisions by the european council will provide even more of a pretext for lax interpretation. however, an excessively generous interpretation of this leeway would certainly undermine the credibility of the stability and growth pact. it was only last week when mario draghi warned : β to unwind the consolidation that has been achieved, and in doing so to divest the rules of credibility, would be self - defeating for all countries. β and let us not forget : in the medium term, the pact stipulates balanced or close to balance budgets. the 3 % mark that is frequently used as a yardstick is therefore a ceiling and not intended to be a regular target. this is, incidentally, also true of the 60 % debt ratio that almost all euro countries breach. a look in the rear - view mirror shows how poorly the fiscal rules have worked as a speed limit. since the introduction of the euro, the economically important member states of france and italy have exceeded the upper public deficit limit of 3 % of gdp in nine out of 15 years. germany, meanwhile, has had seven β entries in the class register β. and as for 2014, we expect six out of 18 countries to exceed the limit. in the long run, consolidation does not inhibit growth ; rather, it is a precondition for sustainable growth. more debt is not a prerequisite for successful structural reform. quite the opposite is true : sound public finances are a crucial element of a successful reform strategy. any attempt to trade off reforms against higher structural deficits would pave the way for budgetary arbitrariness, undermining the credibility of the rules. judging by past experience, it is clear to me that it will take more than simply stiffening the rules to enforce the principle of individual responsibility. essentially, this principle requires sovereigns, banks and investors to bear the consequences of their decisions. ju | 1 |
rundheersing bheenick : review of the financial sector in mauritus statement by mr rundheersing bheenick, governor of the bank of mauritius, port louis, 13 october 2013. * * * β time for us to move on and sharpen our focus on our next destination β a high - income economy β¦ β looking back over the global landscape in recent years, characterised as it has been, by painful adjustments in financial and economic affairs, it is hard to avoid the conclusion that we have been lurching from crisis to crisis. we have continually seen elusive signs of recovery, buffeting both business confidence and consumer sentiment, and nurturing continued apprehensions about the adverse impact on world markets and on the vulnerable emerging economies in particular. can we now, at long last, expect the global economy to secure itself on a firmer footing? what about the risks still looming on the horizon? i am a strong optimist β had it not been so, i can hardly imagine how i could have stayed on this job. whenever i am asked how we, in mauritius, an isolated, vulnerable, and small open economy turned in such a creditable performance in such an unpromising environment, i reply β we never allowed ourselves to lose our nerve, or our focus. β despite global uncertainty, the mauritian economy stood its ground and logged a growth rate of 3. 2 per cent in 2013. this growth was driven by all sectors, except construction. unemployment remained stuck around 8 per cent. we succeeded in anchoring inflation expectations. indeed, since 2009, the annual average rate of inflation has been close to 4 per cent, and its volatility much reduced compared to previous years. we did everything within our statutory powers to achieve a low - inflation environment, hand - in - hand with a stable exchange rate, to ensure a solid basis for sustainable, equitable, and broad - based growth. headline inflation and year - on - year inflation stood at 3. 3 per cent and 4. 0 per cent, respectively, in june 2014. domestic and external imbalances remained contained. we continued with our reforms domestically to secure a sound financial sector through a series of initiatives detailed in the report. we expect our economy to grow by about 3. 5 per cent in 2014, and inflation to remain below 4. 0 percent in 2014. on current trends, we do not expect the international economic environment to improve significantly. it is time for us to move on | in anticipation of the rolling - out of ifrs9 had to enlist the services of statisticians, economists, and econometricians. and the discussion, surprisingly, was not about accounting but about data, databases, and building models β a realm in which economists and econometricians, unlike accountants, generally excel. the rest of my remarks will touch briefly on ifrs9 as a new accounting standard in replacement of ias39, thereafter the initiatives of the bank of mauritius with regard to the implementation of ifrs9 will be reviewed and finally, i β ll end with a concluding note. the circumstances which brought about ifrs9 are well known by now. post gfc 2008, at the request of the g20 and the financial stability board, the international accounting standards board ( iasb ) stepped up its work to replace ias39, which had started in the early 2000s, and in july 2014, the iasb released the new accounting standard ifrs9. there are 3 aspects of ifrs9 namely ( 1 ) classification and measurement of financial instruments ; ( 2 ) impairment ; and 1 / 3 bis central bankers'speeches hedge accounting. the main focus of my remarks will be on impairment. loan - loss provisioning under ias39 was deemed to be too little too late as the incurred loss model required objective evidence of impairment, such as an actual loss event occurring, in order for provisions to be booked. the backward - looking incurred loss model was conflicting with the prudential regulation on credit risk management as enunciated in the bcbs core principles for effective supervision. ifrs9 expected loss model is forward - looking and more aligned to prudential regulation with regard to credit risk management. the expected loss model computation will not only use historical loss experience data but also all information available whether current or future, including macroeconomic factors. further, banks will have to start provisioning on the very day the loan is booked based on expected losses over a 12 - month period, i. e. on stage 1. should credit risks increased significantly as a result of macroeconomic or financial factors relative to the initial recognition at stage 1, provisioning would increase accordingly based on lifetime expected losses computation. the move from stage 1 to stage 2 will depend on whether there is a significant change in credit risks. stage 3 is where there is evidence of impairment. deloitte β s global ifrs banking surveys have revealed that the expected credit loss model would substantially increase banks | 0.5 |
capital flows in the australian economy ; one of three noteworthy changes in recent years. in the decade prior to the global financial crisis, around two - thirds of foreign capital flows into australia was directed to the financial sector, amounting to an average inflow of around 6Β½ per cent of gdp over this period. since 2007, as i have noted on other occasions, 5 inflows into the banking sector have declined considerably to the point where the banking sector has been a net repayer of offshore borrowing ( graph 4 ). graph 4 at the same time, foreign purchases of australian government debt have increased significantly, which has seen the foreign ownership share of commonwealth government securities increase from 50 per cent to around 70 per cent currently, even as the stock of issuance has risen fivefold. the abs began publishing an industry breakdown of capital flows data in september 2006. debelle g ( 2011 ), β in defence of current account deficits β, address at adbi / unisa workshop on growth and integration in asia, adelaide, 8 july. bis central bankers β speeches both of these two large changes in the composition of capital flows directly relate to the upheavals in global financial markets over the period. in contrast, the large increase in capital flows to the resources sector is not related to the financial crisis β being obviously a direct product of the resources boom, which is itself a function of the large increase in commodity demand from emerging markets. in thinking about the effect of capital flows on the value of the australian dollar, it is important to take account of all of these changes in capital flows. simply focusing on the developments in only one particular type of capital flow can give a partial picture of what is going on. moreover, i have not talked at all here about changes in the outward flows of capital. while these flows are also large, over the period in question here, changes in their size have not been so noteworthy. so in terms of the effect on the australian dollar, of the three major changes in capital flows we have seen over the past six years, two of them : the capital inflow to the resource sector to fund investment along with the increased purchases of government debt, have been putting upward pressure on the currency. but at the same time, the reduction in offshore borrowing by the banking system has been putting downward pressure on it. the net effect of all these flows however, is that the australian dollar is higher than one would expect, given fundamentals such as the terms of trade | gent sejko : intensifying mutual cooperation between albania and turkey speech by mr gent sejko, governor of the bank of albania, at the signing of the memorandum of cooperation between the bank of albania and the central bank of the republic of turkey, tirana, 6 november 2017. * * * honourable governor cetinkaya, your excellency ambassador bayraktar, dear members of the delegation from the central bank of the republic of turkey, dear guests, ladies and gentlemen, i have the pleasure to have the governor of the central bank of the republic of turkey, mr murat cetinkaya, as our guest on a one - day visit to the bank of albania, on the occasion of the signing of a memorandum of cooperation. this memorandum is an expression of our common will and desire to continue and intensify the mutual cooperation that has been already in place for years. opening addresses are supposed to be brief and i would rather not break with such tradition. however, i find it appropriate to share with you some thoughts on : ( i ) the international context surrounding the signing of this memorandum ; ( ii ) the current level of the bilateral relations between albania and turkey ; and, ( iii ) the main aspects of future cooperation. 1. international context our institutions β the respective central banks β play a significant role in promoting and guaranteeing monetary and financial stability, supporting the sustainable development of our countries and the welfare of our citizens. the central banks draft, implement, monitor and assess their monetary, micro and macro - prudential policies against the backdrop of a highly integrated and interdependent global economy. on the one hand, integration bolsters economic growth, enabling a more efficient distribution of labour and capital, thus facilitating the transfer of knowledge and of technology, and promotes the adoption of best practices in economic and financial management. on the other hand, experience has shown that globalisation may spill over and amplify negative shocks among the countries, hence creating risks to financial stability, which interfere with central bank mandates. the experience of albania during the transition period and onward perfectly illustrates these aspects. the albanian economy has benefited from integration with the global economy ; but, recently, we have also been under the pressure from consequences that some of our trading partners experienced due to the financial crisis. therefore, our response functions have become increasingly complex, relating not only to the adjustment of the domestic product, labour and capital markets to external shocks, but also to the performance of international | 0 |
by the global community. the bulk of the evidence, and appropriate risk considerations in the weak economic environment of today, suggest much caution should be exercised when implementing short - term fiscal consolidation measures, especially in those cases where the long - term sustainability of public finances is not threatened. structural reform fatigue is settling in, with electorates weary in both creditor and debtor countries to pursue tough measures to ensure medium - term fiscal consolidation and containment of the sovereign crisis in europe. moreover, financial markets remain jittery as the final outcomes of agreed commitments are not a foregone conclusion. the risk of disorderly outcomes is high, and balance sheet repair, especially of those banks most exposed to the european periphery, should be bolstered. hoping for the best is no substitute for preparing for the worst, and the markets are well bis central bankers β speeches aware of that. more extreme measures on debt restructuring might be unavoidable if fiscal transfers are ruled out and fatigue settles in debtor countries. in an environment of financial uncertainty and fiscal retrenchment, monetary policy should remain supportive. emerging market economies ( emes ) and smaller, financially stable aes, are threading carefully in this uncertain environment, and as we saw a few years ago, it is unlikely that full decoupling will occur under most scenarios. the fund β s advice should properly recognize that the rebalancing challenges are not the same across this heterogeneous group of economies ; thus, an adequate level of differentiation in terms of policy advice is called for. in this regard, we would like to note that : if the external scenario should worsen significantly, many emes with flexible exchange rates and inflation - targeting regimes would have scope to adjust monetary policy, thanks to a timely process of raising interest rates to contain overheating risks. going forward, these economies will be able to react flexibly to changing global circumstances in a context of anchored inflationary expectations. other emes have limited room for maneuver, as their economies have expanded beyond their potential output, with widening fiscal and external deficits, and thus today face the risk that external shocks might unhinge inflationary expectations and force pro - cyclical monetary and fiscal policy adjustments. a third group of emes has maintained structurally high national saving rates throughout the expansion phase of the global cycle and might be subject to a natural deceleration as the global economy cools down. in these cases, undertaking reforms to boost domestic demand would help sustain | with which we discuss and express our judgments, thereby undermining the capacity to make appropriate decisions on monetary policy. the more transparent, the more cautious board members will be in pronouncing their judgments. that is why we have decided not to reveal board members β names in the minutes, so as not to inhibit an open, technical and independent discussion. in the pursuit of monetary policy effectiveness and predictability, we feel that the discussion itself is more important than names. a recent study by meade and stasavage ( 2008 ) compared the fed β s federal open market committee discussions before and after 1993, at which time it was decided to publish detailed records of deliberations of the meetings five years after they had been held. the study concluded that knowing the transcripts were to be made public had made members of a monetary policy committee more reluctant to offer dissenting opinions. in general, transparency and its limits depend chiefly on the characteristics of the board. for example, at one extreme we have the european central bank which does not keep minutes and dissent is very limited ; and at the other extreme we have the bank of england where each board member has individual responsibility. 4 chile, like the united states, takes an intermediate stance. that β s why blinder ( 2004 ) says, there is no β one - size - fits - all β approach to communication and transparency. communications policy the central bank website carries a document called β communications policy β which specifies the principles and norms governing the bank β s communication with the public. it states that the bank communicates with the public by way of official notices and publications, minutes, previously announced public conferences, interviews or public declarations made by board members. it also says that the governor is directly responsible for all the information the bank puts out, except for whatever the individual board members might publish or say in public. at the same time, the policy rules that the bank must publish all information or resolution relevant to the market as soon as it has been validated, thus obliging itself to give out all market - sensitive information as quickly as possible. whenever a board member or bank executive gives a talk with information that could be relevant for the market, it is published on the website. any public presentation given by the governor is posted on the web as soon as they begin so that the general public has access to the information at the same time as those present. in my own case, and so that there is no discrimination between those who attend | 0.5 |
of other assets. to put this easing into perspective, from july to the end of october, the yield on the ten - year treasury increased about 1 percentage point. since the fomc's last meeting, which ended november 1, the ten - year rate has fallen six tenths of a percentage point. longterm interest rates are still higher than they were before the middle of the year, and overall financial conditions are tighter, which should be putting downward pressure on household and business spending. but the recent loosening of financial conditions is a reminder that many factors can affect these conditions and that policymakers must be careful about relying on such tightening to do our job. the october data i have cited on economic activity and inflation are consistent with the kind of moderating demand and easing price pressure that will help move inflation back to 2 percent, and i will be looking to see that confirmed in upcoming data releases. before the next fomc meeting we will get data on pce inflation and job openings, and a job report and supply manager's survey for november. cpi inflation will come out on december 12, the first day of the fomc meeting. all of that data will tell us whether inflation and aggregate demand are continuing to move in the right direction and inflation is on a path to our 2 percent goal. 1 see christopher j. waller ( 2023 ), " something's got to give, " speech delivered at the distinguished speaker seminar, european economics and financial center, london, october 18. the views expressed here are my own and not necessarily those of my colleagues on the federal open market committee. 4 / 5 bis - central bankers'speeches 2 see board of governors of the federal reserve system ( 2023 ), statistical release g. 17, " industrial production and capacity utilization " ( november 16 ). 3 after job creation in september was initially reported as 336, 000, it was later revised down to 297, 000. 4 the survey is available on the nfib's website at https : / / www. nfib. com / surveys / small - business - economic - trends / 5 the pace of increase in asking rents and rents on new lease contracts - which do reflect contemporaneous rental market conditions - slowed since early 2022. this moderation has put downward pressure on shelter inflation this year, which should continue going forward. 6 see maximiliano a. dvorkin and maggie isaacson ( 2022 ), " recent trends | christine lagarde : hearing of the committee on economic and monetary affairs of the european parliament introductory statement by ms christine lagarde, president of the european central bank, at the econ committee of the european parliament, brussels, 2 december 2019. * * * madam chair, honourable members of the economic and monetary affairs committee, ladies and gentlemen, i am very happy to be back before this committee for my first regular hearing as ecb president. i want to express my personal and sincere gratitude to this house for the support i received during the appointment process. and i look forward to a constructive and positive relationship between our two institutions going forward. the connection between the ecb and the european parliament is especially valuable today as a means to reinforce trust in european institutions. in the euro area, support for the single currency has grown steadily in recent years, rising from a low of 62 % in 2013 during the crisis to an all - time high of 76 % today. trust in the ecb has grown in that time as well β but its recovery after the crisis has been less dynamic. 1 my predecessors at the ecb were alert to this and already acted to address the challenge. the ecb β s accountability practices have evolved2, as has its communication strategy. and the ecb β s transparency, ethics and good governance frameworks have been harmonised, strengthened and extended to all members of the governing council and supervisory board. 3 but it is important to me that our focus on connecting with the people we serve continues and grows stronger β in particular by improving the ways in which we communicate with the general public. and this is why your role in the parliament is so important : you make sure that the people β s voice is heard by the ecb and the ecb β s voice is heard by the people. communication is a two way street and it is vitally important for democracy, a founding principle of europe. it is in this spirit that i will approach this hearing β and those we will have together in the future. the current economic situation and monetary policy let me start by looking at the current economic situation in the euro area, before moving on to the longer - term questions for monetary policy about which you have enquired. euro area growth remains weak, with gross domestic product growing by only 0. 2 %, quarter on quarter, in the third quarter of 2019. this weakness has been mainly due to global factors. the world economy outlook remains sluggish and uncertain. this | 0 |
##lsters the banking sector's resilience. this makes a loss of confidence in national banking systems less likely. and less danger of a fragmented financial system stabilises lending, particularly in turbulent times. a common european deposit guarantee scheme could, in theory, even heighten this confidence. however, as with any insurance policy, one would have to make sure in this case, too, that the insurance does not cover losses which have already occurred, like bad loans already on banks β books, and that the insurance does not encourage careless behaviour in the future. and, in my view, the preferential treatment of sovereign debt on banks β balance sheets has to be done away with in europe to avoid a mutualisation of sovereign risks through the back door. credit to general governments is not risk - free, as the sovereign debt crisis reminded us in no uncertain terms. one precondition for a european deposit insurance scheme, then, is that the size of government bond portfolios that banks hold on their books is limited. credit to sovereigns should not be treated any differently from credit to enterprises or individuals. 4 / 5 bis central bankers'speeches 6. conclusion ladies and gentlemen on that note, i would like to conclude by recalling something else president kennedy said : " there are risks and costs to action. but they are far less than the long - range risks of comfortable inaction. " to me, that aptly describes the situation germany and the euro area find themselves in. i now look forward to exploring promising avenues of action with you, and wish us all an exciting and rewarding conference! 1 raphael auer & claudio borio & andrew filardo, 2017. β the globalisation of inflation : the growing importance of global value chains ", bis working papers 602, bank for international settlements. 2 see deutsche bundesbank, the international spillover effects of an expansion of public investment in germany, monthly report, august 2016, pp. 13 - 17, and studies with similar results cited there. 3 allard, c, p k brooks, j c bluedorn, f bornhorst, k christopherson, f ohnsorge, t poghosyan and an imf staff team ( 2013 ), β towards a fiscal union for the euro area ", imf staff discussion note, 13 / 09. 4 adalet mcgowan m and d andrews ( 2016 ), β insolvency regimes and productivity growth : a framework for analysis " | german economy to participate in the potentially more dynamic economic growth elsewhere. of course, demographics alone cannot explain the entire german surplus β according to imf estimates, aging accounts for about three percentage points β but it should be taken into consideration. additionally, it should be noted that the latest distinct rise in germany β s trade surplus was due to the low oil and commodity prices and a relatively weak euro. and with regard to the latter, the heightened trade surplus is also a reflection of the ecb β s very accommodative monetary policy stance regarding the euro area on average. bearing that in mind, it is disputable whether the national current account balances of member states in a monetary union are meaningful at all. on a global scale, it would be more appropriate to refer to the euro area balance, which is significantly lower. while the german current account surplus is projected to decline over the next few years, the current account is not expected to become well - balanced. it will be interesting to see whether the experts in our afternoon session conclude that there is a need for active policy measures by the german authorities. and i am curious to learn what measures would be seen as appropriate, if any. after all, the german surplus is the result of millions of decisions made by enterprises and consumers in germany and abroad. i do not know of any misaligned incentives such as protectionist measures to impede imports or promote exports. and there is obviously no manipulation of the exchange rate to create current account surpluses in germany ; the euro is a free - floating currency. of course, a current account surplus reflects a surplus of savings over investment. to the extent that capital is flowing out of the country due to missed investment opportunities, public policy action is certainly called for. the way to go, then, is to create a more investment - friendly environment in germany. the panellists possibly share my view that improving efficiency in engineering the policy switch to renewable energy or in fostering digitisation, for instance by broadband network expansion nationwide, could serve to stimulate private investment. additionally, removing barriers to entry in the services sector and opening up closed professions could provide an impetus for stronger productivity growth. 5. strengthening the euro area β s resilience facing economic challenges head - on will not only prove a boon to citizens β prosperity. it will also raise the equilibrium real interest rate. and this will make the job of a central bank substantially 3 / 5 bis central bankers'speeches easier, as it adds | 1 |
jobs numbers for some time to fully get the country back to work. the labor market indicator that gets the most media attention is the unemployment rate. but that statistic may not be the best measure of the overall health of the labor market because people who temporarily drop out of the labor force don β t get counted as unemployed. it β s vital that we look at a wide range of indicators to gauge the health of the labor market. one measure that i find useful is the employment - to - population ratio, or β epop β as it β s affectionately known. epop is the share of the population that have jobs according to a monthly survey of households. before the pandemic, when the labor market was quite strong, epop was about 61 percent. by april of last year, it had fallen nearly 10 percentage points, which translates to 25 million fewer people working β an astounding drop. fortunately, epop has risen considerably since then, but it β s still more than three percentage points below pre - pandemic levels. that difference translates to about eight and a half million fewer people working, close to the statistic i cited on the number of lost jobs that is based on a survey of employers. these are aggregate numbers and only tell part of the story. it β s also important to understand that the downturn has disproportionately affected certain sectors of the economy and segments of society. service - sector jobs, especially those in hospitality and leisure, fell dramatically with last spring β s shutdown of the economy. and a large share of the job losses fell on black and hispanic households. now i β ll turn to inflation, the other half of our dual mandate. with recent rises in energy prices and the reversals of last spring β s large price declines, the inflation rate has increased from the very low levels seen during the earlier stages of the pandemic. as the economy further reopens, these dynamics will continue to play out, and i expect inflation to run somewhat above our 2 percent longer - run goal for the remainder of this year. it β s important not to overreact to this volatility in prices resulting from the unique circumstances of the pandemic and instead stay focused on the underlying trends in inflation. my expectation is that once the price reversals and short - run imbalances from the economy reopening have played out, inflation will come back down to about 2 percent next year. although the u | question : what are the potential challenges in implementing the countercyclical capital buffer? 51. as we noted earlier, a critical component of the basel iii package is a countercyclical capital buffer which mandates banks to build up a higher level of capital in good times that could be run down in times of economic contraction, consistent with safety and soundness considerations. this is conceptually neat, but is challenging in operational terms, as indeed evidenced by spain β s recent experience. the foremost challenge is identifying the inflexion point in an economic cycle which should trigger the release of the buffer. it is quite evident that both tightening too early or too late can be costly in macroeconomic terms. the identification of the inflexion point therefore needs to be based on objective and observable criteria. it also needs long series data on economic cycles. so, what we need is both a better database and more refined statistical skills in analyzing economic cycles. 52. the countercyclical capital buffer as prescribed in basel iii was initially based on the credit / gdp metric. is this a good economic indicator from the indian perspective? a study undertaken by the reserve bank shows that the credit to gdp ratio has not historically been a good indicator of build up of systemic risk in our banking system. 53. furthermore, some economic sectors such as real estate, housing, micro finance and consumer credit are relatively new in india, and banks have only recently begun financing them in a big way. the risk build up in such sectors cannot accurately be captured by the aggregate credit to gdp ratio. the reserve bank has so far calibrated countercyclical policies at the sectoral level, and i believe we need to continue to use that approach. the basel committee also has now recognized that no single variable can fully capture the dynamics of the economic cycle. appropriate calibration of the buffer requires country specific judgement backed by a broad range of other simple indicators used in financial stability assessments. 9th question : what are d - sibs? will any indian bank be classified as a d - sib? 54. the moral hazard relating to too - big - to - fail institutions which encourages risky behaviour by larger banks has been a huge issue on the post - crisis reform agenda. basel iii seeks to mitigate this externality by identifying global systemically important banks ( g - sibs ) and mandating them to maintain a higher level of capital dependent on their level of systemic bis central bankers β speeches importance. the | 0 |
accompanied by effective institutional governance oversight arrangements β a responsibility over which you as hr directors have a direct contribution. as you deliberate on the important factors driving central banks in the 21st century, therefore, please pay attention to the need to distinguish between the external aspects of governance ( mandate and accountability ) and the internal ones ( structure, management and staffing ). staff, at all levels must understand the business of central banks and understand the environment in which banks operate for effective performance and service delivery in the fulfillment of central bank β s core mandate. ladies and gentlemen, one main issue that may bis central bankers β speeches need to remain under closer focus throughout this three day symposium is the daunting task central banks face as they prepare to enter an era of institutional and modernization reforms arising from changes in government policies and changes in the global financial markets. for those of you who manage human resource, you may need to seek answers to the following questions : how will duties of central banks change with anticipated global development and global responsibilities? how have demands on central banks changed β nationally and expectation? what capabilities need to be built? what can human resource do to facilitate the desired changes and ensure central bank executives have the right set of skills at all levels? central banks β modernization to conform to the ever - changing business environment and benchmarking against best practice is no longer an option. these changes will continuously take central banks into new horizons that bring forth both opportunities and threats that we need to mitigate against. ladies and gentlemen : in april 2011, i presided over a similar conference organized by the indian institute of banking and finance. at that event, i acknowledged the importance of such platforms for enabling banks to not only share experiences, but also to exchange ideas on innovations and other emerging issues that require the preparation of bank staff to cope with the ever evolving trends in the global financial scene. i therefore challenged institutions with similar mandate to embrace such platforms as an avenue for bringing together hr practitioners and policy makers in the banking sector to share ideas on innovations that require proactive hr training and development. i am therefore very pleased that ksms together with the cmi took up the challenge to organize this symposium as a forum for participants to reflect and debate current and emerging hr challenges that are likely to impact on the performance and service delivery of central banks in the region. ladies and gentlemen : there are a number of salient hr issues that are of concern to central bank operations and performance in the 21st century. let me list them : 1. | on leverage and additional guidance to limit liquidity mismatch for irish property funds. more broadly, we are working to develop and operationalise a framework for macroprudential policy in the non - bank sector with our european and international partners. international coordination is essential for such a framework and we will continue to push this agenda in eu and international fora ( like the esrb, fsb, and iosco ) to intensify the monitoring of vulnerabilities, including work to obtain a more complete picture of leverage in the financial system and addressing data and policy gaps. conclusion in conclusion, yes we've addressed the old fragility but no, our work can't stop there. in fact, we have much work to do to continue to build the resilience of the financial system. and in my view the non - bank financial sector should continue to be a top priority for financial stability policy makers in europe and across the globe. ultimately, financial fragility arises because of the lack of resilience. and resilience exists because it is actively looked for, not by waiting for a crisis to happen so that it can be addressed directly but by being front - footed, learning from history, and acting systematically and with urgency. 1 the incomplete nature of the banking union remains a key deficiency in the post - crisis reforms to the european regulatory architecture for banks, and is most notable in the ongoing failure to agree on the proposal for a european deposit insurance scheme ( edis ). a fully fledged edis remains the most comprehensive way to address the component of the bank - sovereign nexus that is channelled through reliance on national dgs schemes, which are underpinned by explicit or implicit sovereign guarantees. without edis, the european banking system will remain vulnerable to the banksovereign doom loop while measures to promote greater integration and cross - border banking will struggle to overcome persistent home - host cleavages at european level 2 the implementation of the final tranche of post - crisis reforms under basel iii, designed to ensure a consistent measurement of risk on bank's balance sheets, risks being drawn out through a number of deviations contained in the european council and european parliament's amendments as a result of which the full implementation of basel iii within the eu may not be achieved until 2032 at the earliest. 3 / 3 bis - central bankers'speeches | 0 |
##s to bank lending and deposit rates appears rather slow, government bond yieldsin malta have already begun to increase. such increases and tighter financing conditions abroad will eventually be reflected in a higher cost of funding for domestic banks, and eventually, households and corporates. it is essential to be reminded that on monetary, financial and economic terms malta is very much integrated with the rest of europe and that the decisions taken in frankfurt ripple across the whole euro area, malta included. 2 / 5 bis - central bankers'speeches the transmission of tighter monetary conditions to the interest rates that banks offer to their customers is necessary for inflation to return to the policy target of 2 % in a timely manner. but it is not sufficient. other policy actors also need to do their part. in particular, fiscal support has to be temporary and targeted, so that it avoids supporting demand for longer than is necessary. it should also be complemented with structural reforms that improve the security of supplies and reduce vulnerability to adverse global conditions and addresses market imperfections that propagate inflationary pressures. let me now turn to financial stability and macroprudential policy. financial stability may well be at its most vulnerable at the cusp of the ongoing shift in monetary policy, coupled with uncertainty on the euro area economic growth path spurred by the energy crisis. in such a regime shift, macroprudential policy has definitely a role to play. financial cycles are notoriously elusive to economists, as we lack a stable standard by which to gauge them. so rather than worrying too much about where we are exactly in the cycle, we should focus more on making sure that the system is adequately equipped to withstand possible shocks. covid - 19 has taught us a few lessons here. as macroprudential authorities, we need to ensure that our banking systems are resilient in the face of risk materialisation, which remains elevated in the euro area. this week, fellow eurozone countries reported that they not only stepped up their macroprudential measures, but are also using combinations of tools from the framework to buttress further the resilience of their financialsystems. management buffers mitigate the risk of procyclical impact on lending, preserving resilience. these are not popular measures in any country. but macroprudential authorities must remain true to their primary objective - to ensure financial stability, just as monetary authorities need to remain loyal to price stability. carving out resilience from within is always less painful than having to build | edward scicluna : pursuing price and financial stability address by prof edward scicluna, governor of the central bank of malta, at the annual dinner of the institute of financial services, saint julian's, 2 december 2022. * * * president and members of the committee of the institute of financial services ( ifs ) malta, distinguished guests, good evening. last year's annual dinner took place at a time economies were gradually re - opening and forecasts for economic growth were being upgraded. policy rates in the main advanced economies were still negative or mildly positive. fiscal stimulus was gradually being withdrawn. the spike in inflation was also expected to go back to moderate levels in the course of 2022. and then came war. apart from the human loss it has caused, the war in ukraine has amplified shortages of certain commodities and unleashed an unprecedented energy shock which has disproportionately affected europe. lately, supply bottlenecks have started to dissipate, as reflected in globalsurveys ofsupplier delivery times and mainstream freight rates. yet, inflation has remained elevated. in the euro area, inflation increased from just above 5 % in january this year, to 10. 6 % in october, moving into two - digit territory for the first time in decades. meanwhile, hicp excluding food and energy, has broadly doubled, standing at 5. 0 % in october, in part reflecting indirect effects from higher energy costs but also the lagged effects of rising non - energy costs. inflation has also remained on an upward trajectory in malta, despite the generous subsidies which kept wholesale and retail fuel and electricity prices at 2019 levels, hitting 7. 4 % in september and remaining at that level in october. still, they are nowhere near the level of prices experienced in most other euro area countries. the assessment of malta's hicp excluding energy is even less encouraging. while since the start of the year, food inflation has been only moderately below that in the euro area, non - energy industrial goods ( neig ) and services inflation have exceeded the corresponding euro area averages. in particular, services inflation in malta averaged 5. 8 % since january, far above the rate of 3. 4 % recorded for the euro area. in part this reflects the higher cost of imported inputs used to generate services, but it also reflects domestic inflation processesthat have been triggered by the strength of demand for services aβ¬ β the latter in the context of a tight labour market, households ' | 1 |
that these policies focus on individual behaviour, and given that these policies can have distributional consequences thus requiring broad political support. these decisions are outside the realm of ( independent ) central banks. the bundesbank, for example, is a member of the german financial stability committee but has no responsibilities with regard to consumer protection. at the same time, the typical division of labor often prevents an efficient coordination between the different policy areas. i thus see two main areas for cooperation between authorities in charge of macroprudential policies, financial education, and consumer protection. seite 16 von 27 deutsche bundesbank, directorate general communications wilhelm - epstein - strasse 14, 60431 frankfurt am main, germany, tel : + 49 ( 0 ) 69 9566 3511 or 3512, fax : + 49 ( 0 ) 69 9566 3077 presse @ bundesbank. de, www. bundesbank. de reproduction permitted only if source is stated. develop common data and evaluation strategies developing common data and evaluation strategies can be an important area of cooperation between policies that aim at enhanced financial literacy and financial stability. the indicators that are relevant to monitor the sustainability of individual - level finances are very similar to those needed to assess the stability of the financial system. as regards the housing market, for example, loan - to - value ratios and debt - to - income ratios are relevant, at the level of households and of the financial system. also, information about financial knowledge might be relevant for financial stability analysis. hence, defining data requirements needed for the monitoring of risks jointly across the policy areas can be an important contribution to reducing reporting costs and ensuring consistency of indicators. similarly, assessing the effects and the effectiveness of policy interventions related to household finance ( consumer protection ) and financial stability will rely on similar microlevel mechanism. developing common protocols and strategies for policy evaluation can be useful. develop common narratives a second area where different policies can benefit from closer cooperation is communication. often, the narratives that can be used to explain why policy measures are needed are very similar. for example, the resilience of individual households with regard to shocks to the mortgage market is related to loan - to - value and debt - to - income ratios. similar indicators matter when assessing the probability of a systemic crisis to the mortgage market and its severity. explaining financial stability issues can thus build on narratives that are related to individual experiences with the assessment of credit risks. at the same time, communicating financial stability needs to | nationally and internationally. however, from the current perspective, the risk of a credit crunch in germany is fairly remote. in summary, the driving forces behind the current upswing of the german economy remain fundamentally intact. as a consequence, i see no compelling reason to paint a bleak growth scenario for the german economy in the ongoing year. the eurosystem β s monetary policy stance strong upward pressure on global inflation can, to a large extent, be explained by sharp hikes in energy and food prices. a combination of protracted and robust global economic growth and increasing capacity constraints drove commodity prices to new record highs. consequently, inflation has increased markedly all over the world, a development which, in industrialised countries, has been particularly pronounced since the second half of 2007. this is also true of the euro area. the annual harmonised index of consumer prices ( hicp ) rose to a worrying 3. 6 % in march. this is the highest rate since the euro β s launch in 1999 and well above the eurosystem β s definition of price stability β inflation rates of below 2 % in the medium term. looking ahead, energy and food prices are likely to keep the eurozone β s inflation rate at elevated levels for longer than initially expected. hence, we will witness temporarily high inflation rates for a more protracted period than previously anticipated, though rates will eventually decline towards 2 %. what does such an outlook mean for the eurosystem β s monetary policy stance? to put the issue into a broader perspective, let me note that a central bank cannot adequately react to the ( temporary ) first - round effects stemming from increases in oil and food prices, indirect taxes and the like. nor should it attempt to do so, since a change in monetary policy impacts on the price level only with a considerable time lag of several quarters. consequently, a central bank reacting mechanically to first - round effects would be likely to do more harm than good. in the medium run, however, the persistence of high energy and food price inflation is cause for serious concern. protracted relative price changes may translate into medium to longerterm inflation expectations becoming less well anchored and drifting slowly over and above a central bank β s price stability threshold. elevated inflation expectations could give rise to a damaging wage - price spiral, thereby generating the so - called β second - round effects β. given the costs of curbing such inflation dynamics once they have started, the stability - oriented eurosystem has to fight the risk of | 0.5 |
the best uses for emerging technologies. as an example, the federal reserve is working to improve the current system through the introduction of instant or fast payments via the fednow service. 2 the service will be designed to maintain uninterrupted processing β 24 hours a day, 7 days a week, 365 days a year β with security features that will ensure payment integrity and data security. the target launch date is sometime in 2023. * the federal reserve is also doing its part to examine the role of new technologies. experiments with central bank digital currencies ( cbdcs ) are being conducted at the board of governors, as well as complementary efforts by the federal reserve bank of boston in collaboration with researchers at mit. in addition, a recent report from the bank for international settlements and a group of seven central banks, which includes the fed, assessed the feasibility of cbdcs in helping central banks deliver their public policy objectives. 3 relevant to today β s topic, one of the three key principles highlighted in the report is that a cbdc needs to coexist with cash and other types of money in a flexible and innovative payment system. 1 / 2 bis central bankers'speeches improvements in the global payments system will come not just from the public sector, but from the private sector as well. as today β s second panel, β of lions and unicorns, β described, the private sector has the experience and expertise to develop consumer - facing infrastructure that improves and simplifies how the public engages with the financial system. digitalization of financial services, combined with an improved consumer experience, can help increase financial inclusion, particularly in countries or areas with a large unbanked population. and the last two panels of the day, β addressing legal barriers to cross - border payments β and β harmonised data to oil the cross - border payments machinery, β highlight that improving the system must be a collaborative effort. by definition, cross - border payments involve multiple jurisdictions. so it will only be through countries working together, via all of the international forums β the group of seven, the g - 20, the cpmi, the fsb, and others β that solutions will be possible. and, finally, it is only by engaging all stakeholders β policymakers, private - sector participants, and academia β as this conference is doing, that we will achieve the improved payments ecosystem we are striving toward. the covid crisis has brought into even sharper focus the need to address the limitations | , combined with the fact that many connected participants can update the shared ledger, means that end - point security is another critical component of any successful implementation of the technology. adverse actors that can take over a participant β s access to the ledger remains a key security concern, as thefts of cryptographic keys in bitcoin continue to demonstrate. thus, advances in cryptography will remain a key priority to enable widespread adoption of distributed ledger technologies, along with systems for securing private keys, the management of access to private keys, and differentiated permissions for participants in the system to read and write to the ledger. recent episodes have illustrated the importance of having protocols agreed at the outset to determine whether and under what circumstances to reverse transactions once they have been recorded in a distributed master ledger. finally, it will be important that users and administrators of distributed ledger technologies can meet their responsibilities to combat money laundering, terrorist financing, and other key law enforcement concerns. some of the new technologies would potentially allow authorized access to certain data records in a much more efficient manner than has previously been possible. for example, distributed ledgers could be developed to collect personally identifiable information and 3 / 4 bis central bankers'speeches country identifiers that enable banks to identify and report on suspicious activity. it will be important that these new technological developments and their implementation perform in a safe and sound manner that is transparent and satisfies regulatory requirements. while prevention will remain the preferred approach, realistically, resiliency and recovery will also need to be high - priorities. indeed, many firms have suggested that the distributed data storage concept has the potential to increase the level of resiliency and data integrity. the basic idea is it should be harder to corrupt multiple copies of the same data simultaneously such that digital ledgers could reduce the vulnerability associated with a single point of failure. we must press firms and experts to identify the strengths and vulnerabilities of this concept, even as we all look for ways to make databases more secure and resilient. in an interesting development, some financial institutions have also begun to consider using distributed ledgers to back up critical databases and enable quick recovery from potentially virulent cyberattacks. we will be interested in whether such techniques can make new contributions to cybersecurity. overall, the public needs to have confidence that any system employing distributed ledgers will operate properly, particularly in stressed conditions, and know that when adverse scenarios do occur, there will be robust management and governance to respond effectively | 0.5 |
. in kader mia β s case, the price he had to pay for his economic β unfreedom β was death. this is why we are here β to do our part to help many, like kader mia, who remain shackled by their circumstances, achieve economic freedom. this forum seeks to address not just the question of facilitating transfers more efficiently, but how to make such transfers go further and do more to meet today β s most pressing global challenges β from access to healthcare and education, equal economic opportunity for all, to protection of the environment. without addressing these challenges, economic freedom would remain an elusive dream for 1 / 5 bis central bankers'speeches many. this forum will cover a broad range of issues β not all of which will have clear solutions. but we will most certainly learn more, understand better and hopefully, be able to determine what our next steps must be. with that in view, let me take this opportunity to offer some brief reflections on what those steps might be. reinvigorating financial services to drive the sdgs first, we need to do more to reinvigorate financial services to drive the united nations sustainable development goals ( sdgs ). many countries in this region, including malaysia, have made important progress in the adoption of the sdgs under the national development agenda. certainly, malaysia has had a long - standing commitment to the pursuit of sustainable and inclusive growth. malaysia β s national economic development policies adopted since more than four decades ago reflect many of the sdgs. like many central banks in this region, financial inclusion is an important priority of bank negara malaysia β one that is in fact legislated as a mandate of the central bank, which is actually not all that common in many countries. because it is a statutory mandate of the central bank in malaysia, it has enabled bank negara to lead and drive the financial inclusion agenda with the support of our key domestic partners and stakeholders. with growing global concerns over rising inequality and the disproportionate impact of crises on the poor, there has been considerable focus by governments and policymakers to ensure that no segment of society is left behind in participating and benefitting from the nation β s development. but what of the role of the financial services industry? it is worth noting that 14 out of the 17 sdgs include specific targets that focus at some level on the financial sector. to mention a few : on poverty : the sdgs include a specific target to build resilience | intaglio by no means is the only security feature. there are many more watermark, electrotype numeral, see - through register mark, windowed colour shifting security threads with texts, hologram stripe, gold patch, to name a few, are among the basic security features that we should know on our currency notes. all this features can be easily be verified or authenticated using the β fltc β method, that is to feel, look, tilt and check without using sophisticated devices. indeed, it will take only a few seconds to authenticate our currency notes. for example, to apply the simplest β look β technique, what is needed is only for us to hold the currency notes against a light. this will allow us to verify simultaneously at least four important security features in all of our currency notes ; the 3d agong β s watermark, bright electrotype numeral, perfectly register see - through mark or windowed colour shifting security threads with texts. this technique is the easiest and the simplest manner as no special gadget is required. coupled with a few other techniques contained in the my ringgit apps we can make a firm conclusion on the authenticity of the currency notes. bis central bankers β speeches similarly, our new coins are also sufficiently protected by unique security features. in the course of designing the coins, the bank had engaged with various stakeholders to ensure that the new coins are not only practical but sufficiently protected as well. each coin denomination is unique in term of size and security features to ensure no fake coins can pass through the coin authentication machines. as part of our financial education effort, bank negara today is launching a mobile application called my ringgit. this application enables the general public to learn about the most practical and easiest techniques to authenticate our currencies and learn in greater detail the security features found in our currency notes. there are numerous security features but fortunately, we need to know only a few major ones to enable us to tell the difference between genuine and counterfeit notes. it would be in our interest to download and use this application so that we are able to differentiate a genuine and a counterfeit note. in the process, we will get to know and appreciate better our unique characteristics of the design and security features of our currencies. the my ringgit application also contains useful information on the locations of the coin deposit machines of participating institutions throughout malaysia. users of this app will also receive a β push notification β message from time to time on news relevant | 0.5 |
because there has been a lot of work. but have companies actually prepared for a plan b? if there is a no - deal brexit, what would it mean actually for growth in europe? you say : systemically, we β re okay β¦ systemically we are okay. for the functioning of the financial sector, which is a lot in london, as we know, i think most of the players are well prepared now. do you worry about a big shock, though, to pmis, to gdp if there is a no - deal brexit? that would be a big shock to the uk economy. how much will it ripple around? we don β t know yet, but there would be an impact, of course. given this environment, can the ecb hike rates this year? as i said, we are monitoring the data. we have this rate guidance : we say we are not going to move before through the summer. we could change it, we could extend it. the market sends a 1 / 3 bis central bankers'speeches signal that it expects the rate hike to be much later than what we have said. it is part of the functioning of our rate guidance ; it shows that the rate guidance works well to anchor expectations. it β s too early to have the discussion because we are still ( in the process of ) understanding the nature of the shock. are you comfortable with how the market took the president β s comments yesterday? yes, we are. we β ve seen quite a lot of flattening of forward curves, even ahead of the governing council, and that, in itself, provides financial accommodation, so it β s part of the solution. we are comfortable with it. if the market were to overreact, if at some point we see market expectations which don β t fit the way we see the economy, then we would have to react. we would adjust our guidance ; and we may have to do it at some point. would that be after march? i don β t know. it β s a thought process and it β s very much data driven. what tools does the ecb actually, or could the ecb, deploy to counteract this slowdown? looking back, any time we β ve had to adjust to a new environment, we β ve done so, either using existing instruments or finding new instruments within our mandate, legally. we β ve been able to do it. what we have today in our tool | , a., webb, s. and neyapti, b. ( 1992 ), β measuring the independence of central banks and its effect on policy outcomes β, the world bank economic review, vol. 6, no 3, pp. 353 β 398 ; and berger, h., de haan, j. and eijffinger, s. ( 2001 ), β central bank independence : an update of theory and evidence β, journal of economic surveys, vol. 15, no 1, pp. 3 - 40. 4 see, for example, tucker, p. ( 2018 ), β pristine and parsimonious policy : can central banks ever get back to it and why they should try β, in hartmann, p., huang, h. and schoenmaker, d. ( eds. ), the changing fortunes of central banking, cambridge university press. see also summers, l. ( 2017 ), β central bank independence β, bank of england : β independence β 20 years on β conference. 5 there appear to be almost no limits to the ideas for new fields of activity to entrust to central banks, as our long list of opinions on the subject shows. see, for example, the ecb opinions mentioned in the ecb β s 2018 convergence report, pp. 30 β 32. 6 mersch, y. ( 2017 ), β central bank independence revisited β, keynote address at the symposium on building the financial system of the 21st century : an agenda for europe and the united states. 7 there is a wide range of empirical evidence demonstrating the effectiveness of unconventional measures 4 / 5 bis central bankers'speeches across a range of countries. see, for example : joyce, m., lasaosa, a., stevens, i. and tong, m. ( 2011 ), β the financial market impact of quantitative easing in the united kingdom β, international journal of central banking, vol. 7, no 3, pp. 113 β 161 ; wu j. and xia, f. ( 2016 ), β measuring the macroeconomic impact of monetary policy at the zero lower bound β, journal of money, credit and banking, vol. 48, no 2 - 3, pp. 253 β 291 ; and eser, f. and schwaab, b. ( 2016 ), β evaluating the impact of unconventional monetary policy measures : empirical evidence from the ecb β s securities markets programme β, journal of | 0.5 |
ardian fullani : inflation targeting in practice greeting address by mr ardian fullani, governor of the bank of albania, at the regional seminar on inflation targeting in practice, tirana, 10 october 2005. * * * dear participants, it is a great honour for me to address the opening speech of the regional seminar β inflation targeting in practice β organized by the centre of central banking studies in association with the bank of albania. i am delighted to see that the audience has an international composition. at the same time, i would like to take the opportunity to give my cordial thanks to mrs. gill hammond, ccbs deputy director and all speakers accompanying her during the proceedings of this seminar. i would also like to thank the bank of england and in particular the director of the centre of central banking studies, mr mario blejer, an old friend of mine, who continues to give his contribution to the improvement of the albanian image in the world, just like many years ago. this seminar is being organized in a very opportune time for the bank of albania. in less than two months, i shall be once more in front of a very distinguished international audience, to address the opening speech of the open forum on β pre - conditions for launching inflation targeting in albania ". the object of this forum is to discuss the prime pre - conditions to be met by the bank of albania before launching the implementation of a new monetary policy strategy, with a particular emphasis on albania β s membership to the european union in the long - term run. the fact that we have been successful in controlling inflation during the last years holds true. we have managed to attain a general stability and i believe the policy adopted by us has been one of the key factors. another fact which holds true is that, for some time, we have been considering to take another step, attempting a more sophisticated, effective and certainly a more responsible and transparent monetary policy approach. to this aim, we have come to the conclusion that the actual framework of the monetary policy requires the necessity of being further completed and perfected with standard elements, adopted by other countries in the world and where the targeting inflation regime has proven to be successful. we are aware that this is not an effortless initiative to be seized. therefore, i consider that this is a great fortune for the bank of albania to have the possibility, on the verge of discussing the preconditions of adopting this regime, to closely discuss and consult the distinguished guests present in this seminar | central banks is essential to ensuring a country β s stability and prosperity. i am certain the bank of albania has accomplished its mission with professionalism providing a stable environment, especially with regard to banking system stability. this, however, is not accidental. not wanting to repeat myself, i have to restate that the bank of albania has been vigilant, monitoring scrupulously the financial soundness of the system, both before and after the onset of the crisis. with professionalism, dedication and farsightedness, we have succeeded in consolidating the independence of the institution, thanks to constant communication with all market actors, upholding the β independence - accountability β principle. transparency is the basis of decisionmaking in the field of monetary policy and financial stability. our effort to inject rational optimism with regard to the behaviour of economic agents has been in the synthesis of our stance throughout the difficult period that the global crisis has imposed on us. looking ahead, i believe it is indispensable for this spirit to be embraced and transmitted to the economy by all policymakers, economic agents, financial market, including the members of the public. the gist of this philosophy consists in comprehensive structural reforms that would accelerate our progress towards sustainable long - term development of the country. dear participants, the albanian central banking needs a date of birth. this date provides the opportunity to honour the efforts of the fathers of the nation to establish a central bank and consolidate the albanian state ; commemorate the efforts of all contributors to the development and promotion of this institution ; and look at future challenges and find ways to face them. the bank of albania will continue to be a responsible and reliable actor, to accomplish its legal mission and support the country's sustainable development. this first centennial of central banking in albania is a good omen for all of us. bis central bankers β speeches | 0.5 |
andrew bailey : recovery and resolution plans remarks by mr andrew bailey, executive director for banking services and chief cashier of the bank of england, at the santander international banking conference, madrid, 17 november 2009. i am grateful to victoria cleland, chris daniels, iain de weymarn, andrew hauser, andrew hewitt, tony lomas, orla may, maggie mills, sally reid, paul tucker and andrew wardlow for their comments and advice. * * * it is a pleasure to be in madrid today, not least because finding time to reflect on the future of the banking system means that we are at some distance from the urgent fire - fighting that has characterised the past two autumns. but i would not wish thereby to downplay the importance and urgency of the rebuilding task. the past two autumns were in many ways taken up with doing what had to be done in crisis conditions. and what had to be done involved the use of public money on a scale that has been unprecedented and was previously unimaginable. there was nothing easy about that task, and from the perspective of resolving the problems of the system too often we have had to grit our teeth, accept that β we are where we are β and get on with the job in hand. fire - fighters don β t get to choose the fires they fight, or even sometimes how they fight them. but fire prevention is better than fire - fighting. we cannot justify having a banking system that depends on the use of public money to douse the fire when the crisis comes. and we also cannot allow conditions to exist where risks are taken on the basis that this backstop exists. β too big β or β too important to fail β are shorthand for institutions that exist in their chosen form as a result of underwriting with public money. i don β t believe that there is anything controversial about a statement that no industry can take on a form which is a consequence of such a massive potential, and of course recently actual, call on public money. the big issue is therefore what to do to correct the situation. there are three elements to the debate : regulation, structure and resolution. we can re - design and re - build the fire prevention systems in the existing landscape. this is the regulation element. at the heart of this is action on capital requirements, including a role for contingent capital and larger liquidity buffers. but we may also conclude that we want to prevent fires by having a different landscape of | funding model where the bank was excessively dependent on cash deposits from the securitisation master trust but with a hard rating agency trigger linking that funding to the position of the bank, thus creating a severe amplification of any stress? finally on northern rock, how would the bank deal with a funding stress when it was having to encumber such a high proportion of its good quality assets in order to over - collateralise its securitisation master trust? a very good example of the need for resolution plans is the case of lehmans in europe. two questions are relevant here : what should the resolution plan have contained ; and what changes to its organisation and operations might have made the massive task of dealing with lehmans more straightforward? you will, i hope, appreciate that i can only scratch the surface of the lehmans case in the time available so i apologise for the laundry list approach. starting with the useful content of a resolution plan : a detailed balance sheet for all relevant corporate entities in the group at the most recent month end ; a clear mapping of financial and operational interdependencies between affiliates ; wind - down plans for all business areas linked to a comprehensive information data room ; and a contact plan for major stakeholders. now, listing the changes to lehmans β organisation and operations that should have resulted from drawing up robust rrps : corporate entity based accounts and management information to supplement the business - line version ( because corporate entities fail ) ; clear segregation of handling client asset activities ; controls over depositing client money with affiliates ; employees hired by the entity for whom they work ; a clear record of each entity β s title to business and associated intellectual property ; robust risk systems that allow ready provenance of the balance sheet ; contracts for the provision of key business services ( eg banking systems ) that allow continuity of provision of services in the event of a resolution ; and arrangements for continuity of access to payment and settlement systems. this has been a very brief run through some very relevant case studies. but i hope it has illustrated the role that rrps should play and the pressing need to have them in place. rrps have come a long way in a short period of time, which is both essential and gratifying. but, of course, we haven β t actually produced any yet. this situation will not last much longer, certainly not in the uk, because the authorities are very keen to see real implementation of rrps, alongside the continuing international work on | 1 |
in some cases contributed to unethical and illegal behavior by banking organizations and their employees. the federal reserve has made improving risk management and internal controls a top priority. for example, the comprehensive capital analysis and review, which includes the stress tests that i mentioned, also involves an evaluation to ensure firms have a sound process in place for measuring and monitoring the risks they are taking and for matching their capital levels to those risks. also, supervisors from the fed and other agencies have pressed firms to improve their internal controls and to make their boards of directors more directly responsible for compensation decisions and employee conduct. changes to regulatory and supervisory focus as i noted, the financial crisis revealed weaknesses in our nation β s system for supervising and regulating the financial industry. prior to the crisis, regulatory agencies, including the federal reserve, focused on the safety and soundness of individual firms β as required by their legislative mandate at the time β rather than the stability of the financial system as a whole. our regulatory system did not provide any supervisory watchdog with responsibility for identifying and addressing risks associated with activities and institutions that were outside the regulatory perimeter. the rapid growth of the β shadow β nonbank financial sector left significant gaps in regulation. in response, the dodd - frank wall street reform and consumer protection act of 2010 ( doddfrank act ) expanded the mandate and authority of the federal reserve to allow it to consider risks to financial stability in supervising financial firms under its charge. within the federal reserve system, we have reorganized our supervision of the most systemically important institutions to emphasize what we call a β horizontal perspective, β which examines institutions as a group and in comparative terms, focusing on their interaction with the broader financial system. we also created a new office within the fed to identify emerging risks to stability in the broader financial system β both the bank and nonbank financial sectors β and to develop policies to mitigate systemic risk. the dodd - frank act created the interagency financial stability oversight council, chaired by the treasury secretary, and the federal reserve is a member. it is charged with identifying systemically important financial institutions and systemically risky activities that are not subject to consolidated supervision and designating those institutions and activities for appropriate supervision. and it is charged with encouraging greater information sharing and policy coordination across financial regulatory agencies. where we stand my topic is broad, and my time is short. let me end with three thoughts. first, i believe that we and other supervisory agencies have made significant progress in addressing incentive for a discussion of total | papers on economic activity, vol. 2, pp. 1 - 40. stock, james, and mark watson ( 2007 ). " why has u. s. inflation become harder to forecast? " journal of money, credit, and banking, vol. 39 ( february ), pp. 3 - 34. | 0.5 |
luigi federico signorini : the journey to financial well - being through financial inclusion introductory speech by mr luigi federico signorini, senior deputy governor of the bank of italy, at the seminar " the journey to financial well - being through financial inclusion ", organised by the bank of italy, rome, 4 november 2024. * * * today's event will explore the connection between financial inclusion and financial wellbeing. why is this important? financial inclusion has become a widely shared goal of government policies and a topic of interest for central banks and financial authorities at the international level. it has received a lot of attention over the years as an instrument to foster growth, reduce inequalities, increase employment, and alleviate poverty. 1 financial inclusion may help people cope with macroeconomic and idiosyncratic shocks, as it facilitates financial planning and the intertemporal shift of financial resources. from the policymaker's standpoint financial inclusion is important as it improves the individual's economic and financial well - being, whilst having a positive impact on the economy as whole. studies find that the benefits of financial inclusion can be substantial even in countries with well - developed financial markets, because it can translate into higher wealth accumulation and greater resilience of low - income households. other studies, focusing on emerging and developing countries, find that increased usage of bank accounts via debit cards has boosted the saving rate significantly because it reduces transaction costs for people to access their money. 2 the digitalisation of finance has significantly contributed to promoting financial inclusion through more efficient and effective technologies and through increased competition, which leads to higher quality products and services and to lower costs. over the last decades, notable progress has been made around the world in increasing access to financial products and services for more individuals, with 76 per cent of people worldwide having a bank or mobile money account in 2021. this represents a significant increase from 2011 when the figure stood at 51 per cent. 3 nonetheless, progress has been uneven across regions, even controlling for income levels. increased access to digital financial products and services has not translated, in some cases, into higher actual usage of financial products and services. moreover, in some instances, financial innovation has resulted in the lower financial inclusion of rural households4 or in the worsened financial well - being of individuals, particularly as the result of over - indebtedness and exposure to fraud and scams. 5 possible causes include market failures, lack of competition, inadequate consumer protection rules and an insufficient | level of digital and financial literacy. 6 even in advanced countries β where the offer of financial services is regulated and transparent, 1 / 3 bis - central bankers'speeches and consumers are better protected from intermediaries'improper behaviour β authorities continue to consider how to improve the regulatory environment to manage new risks. a specific matter of concern is the exclusion of those who do not possess adequate digital skills for accessing and using the financial services. the data show that the elderly, those with lower education levels, and those living in rural areas suffer from limited access. the shift to digital channels will continue ; appropriate actions need to be put into place to ensure that everybody can reap its benefits. it is generally understood that financial inclusion has three dimensions : access, use and quality. the first is the possibility for individuals to access basic financial services and products. the second is the actual ability of individuals to use such services and products in an effective way. the third ( and subtler ) dimension consists in creating the conditions for financial services and products to work best to improve people's financial well - being. progress along all three dimensions β access, use and quality β should ideally be simultaneous. achieving better results on all three fronts is important to ensure the empowerment of consumers, so that markets can actually work in their best interest. the first dimension requires good infrastructures, which are a prerequisite for enabling the efficient and secure provision of financial services. it also requires a competitive environment, to foster higher cost - efficiency, a more diversified offering of financial products and services, and greater consumer choice. the second and third dimensions require consumer protection measures and financial education. ex ante transparency rules work to ensure that customers are well informed before purchasing a financial product. ex post rules need to envisage effective recourse if something goes wrong. conduct supervision monitors the correct implementation of rules. free and open competition is once again essential to enable consumers to exploit the full potential of transparency and conduct rules. nothing, however, will work very well unless consumers are endowed with the minimum knowledge that is necessary ( 1 ) to make effective use of the information provided, ( 2 ) to activate in practice the tools through which services are offered, ( 3 ) to compare in a meaningful way the products offered on the market, and ( 4 ) to take full advantage of consumer protection rules. therefore, financial and digital education initiatives are important. given the growing complexity of financial markets, and the new opportunities offered by digitalisation, the | 1 |
i β ll close with a discussion of my dissents on recent fomc decisions. after that, i β ll be pleased to answer any questions you may have. and before i begin, i should remind you that my comments here today reflect my views alone and not necessarily those of others in the federal reserve system, including my fomc colleagues. the federal reserve bank of minneapolis is one of 12 regional reserve banks that, along with the board of governors in washington, d. c., make up the federal reserve system. our bank represents the ninth of the 12 federal reserve districts, and by area, we β re the second largest β thanks in no small part to the great state of montana. our district also includes the dakotas, minnesota, northwestern wisconsin and the upper peninsula of michigan. eight times per year, the fomc meets to set the path of monetary policy over the next six to seven weeks. all 12 presidents of the various regional federal reserve banks β including me β and the seven governors of the federal reserve board, including chairman bernanke, contribute to these deliberations. ( currently, there are only five governors β two positions are unfilled. ) however, the committee itself consists only of the governors, the president of the federal reserve bank of new york and a group of four other presidents that rotates annually. right now, that last group consists of the presidents from the minneapolis, philadelphia, dallas and chicago federal reserve banks. bis central bankers β speeches i β ve said that the fomc meets ( at least ) eight times per year. but how do these meetings work? at a typical meeting, there are two so - called go - rounds, in which every president and every governor has the opportunity to speak without interruption. the first of these is referred to as the economics go - round. it is kicked off by a presentation on current economic conditions by federal reserve staff economists. then, the presidents and governors describe their individual views on current economic conditions and their respective outlooks for future economic conditions. the presidents typically start by providing information about their district β s local economic performance. we get that information from our research staffs, but also from our interactions with business and community leaders in industries and towns from across our districts. the chairman speaks at the end of the first go - round. he briefly but thoroughly summarizes the preceding 16 perspectives. i can assure you that this is no easy task β and the chairman β s balanced and | . ( currently, there are only five governors β two positions are unfilled. ) however, the committee itself consists only of the governors, the president of the federal reserve bank of new york and a group of four other presidents that rotates annually. right now, that last group consists of the presidents from the minneapolis, philadelphia, dallas and chicago federal reserve banks. i β ve said that the fomc meets ( at least ) eight times per year. but how do these meetings work? at a typical meeting, there are two so - called go - rounds, in which every president and every governor has the opportunity to speak without interruption. the first of these is referred to as the economics go - round. it is kicked off by a presentation on current economic conditions by federal reserve staff economists. then the presidents and governors describe their individual views on current economic conditions and their respective outlooks for future economic conditions. the presidents typically start by providing information about their district β s local economic performance. we get that information from our research staffs, but also from our interactions with business and community leaders in industries and towns from across our districts. bis central bankers β speeches the committee next turns to the second go - round, which focuses on policy. again, the staff begins, with a presentation of policy options. after that, each of the 17 meeting participants has a chance to speak on what each views as the appropriate policy choice. this set of remarks is followed with a summary by the chairman, in which he lays out what he sees as the committee β s consensus view for future policy. the voting members of the fomc then cast their votes on this policy statement and thereby set monetary policy for the next six to seven weeks. my description of an fomc meeting highlights how the structure of the fomc mirrors the federalist structure of our government. representatives from different regions of the country β the various presidents β have input into fomc deliberations. and, as i β ve described, their input relies critically on information received from district residents. in this way, the federal reserve system is deliberately designed to give the residents of main street a voice in national monetary policy. fomc objectives i β ve said that fomc participants seek to adopt what they view as the appropriate policy choice. that provides a natural segue into my next topic : the policy objectives of the fomc. the fomc has a dual mandate, established by congress : to set | 0.5 |
. i will come back to the maltese situation later. ) the european central bank ( ecb ) has sought to avert a credit crunch and a bank funding crisis via a number of measures, including the two 3 - year longer term refinancing operations ( ltro ) launched last december and february. these have been provided on a full allotment basis and at the average marginal refinancing operations ( mro ) rate over the three year term. these operations have helped to stabilise bank lending to the private sector as well as the banks β holdings of government securities. however, the effectiveness of these operations has been reduced, as banks have preferred to place a substantial part of the additional funds with the ecb β s deposit facility. bis central bankers β speeches in fact, in chart 2, the blue line shows the sharp increases in the volume of bank liquidity provided by the ecb through its longer term operations over the course of the crisis. the red line shows the increases in the volume of funds placed by the banks with the ecb deposit facility. the inflow of funds into the ecb β s deposit facility has neutralised a substantial part of the added liquidity. this reflects a persisting lack of activity in the interbank market and a hesitation on the part of the banks to provide more credit to households and businesses. this accumulation of excess liquidity comes at a cost to the banks, currently amounting to 0. 75 % β the difference between the 1 % mro rate charged by the ecb on the ltro and the 0. 25 % paid by the ecb at its deposit facility. in a similar manner chart 3 shows the path followed by various monetary aggregates during the crisis. the monetary base β shown as the blue line β includes mainly bank deposits with the central bank. the base consists of those central bank liabilities that form the foundation for expansion of the money supply β m3, represented by the red line. bis central bankers β speeches the sharp rise in the monetary base reflects the scale of the injected liquidity. on the other hand, the banks β tendency to hold on to their liquidity has resulted in a growth rate in bank loans ( and investments ) that is considerably slower than that of the monetary base. the result is that the growth rates in bank loans ( represented by the green line in the chart ) as well as in m3 have been substantially slower than that in the monetary base. a return to a fully functioning monetary | edward scicluna : price stability and beyond β understanding the impact of the ecb β s strategy review speech by mr edward scicluna, governor of the central bank of malta, at the finance malta conference, valletta, 20 july 2021. * * * the european central bank ( ecb ) recently published its new monetary policy strategy, following a year - long review process that encompassed multiple layers of stakeholders β including the public. all the monetary policy instruments and concepts were minutely examined by both the experts and the governing council. a number of important changes were made as a result of the review β which was last carried out in 2003. the world has changed since then, and central banks β including the ecb β face numerous new challenges. we need to keep in mind that the ecb β s primary mandate β according to the treaty on the functioning of the european union β is price stability. however, the treaty does not specify what price stability means. that is where the ecb β s monetary policy strategy comes in, which quantifies price stability and in turn helps to anchor inflation expectations. for some time, the ecb saw high inflation as being the red flag. this is why the target has till now been an inflation rate of β close to but below 2 % β. what has changed since 2003? structural developments have lowered the so - called β equilibrium real rate of interest β β the interest rate that is consistent with inflation at its target rate and where the economy is operating at its optimum. this equilibrium rate has gone down β while in tandem the global economy has had to weather several major shocks, from the global financial crisis to the pandemic. now, low inflation rates are being seen as just as much of a cause for concern and as a result, the target has now been set to 2 % β over the medium - term β and the red flags are not only rates above that, but also rates below it. this decision was aimed at the possibility that the persistent low - inflation environment was being exacerbated by ambiguity about the level of the inflation aim and a perception of the aim being asymmetric. this decision was taken after an extensive assessment of the ecb β s unconventional monetary instruments, which looked at which ones were effective in raising output, employment and inflation β as well as how they affected each other. the new symmetric target is straightfoward, clear and unambiguous. this means that it will provide a more solid anchor | 0.5 |
contributes to stabilising the krone exchange rate. we must, nevertheless, be prepared for fluctuations in the krone that are more in line with the fluctuations observed in other countries. changes in the global economy can affect the krone exchange rate. the exchange rate may also react to and contribute to curbing the effects of domestic disturbances. the floating exchange rate is by and large a well - suited instrument for absorbing unforeseen disturbances to the economy. a stronger krone may, for example, prevent demand pressures from translating into higher price inflation. as history and the experience of other countries have taught us, the real economic losses associated with eliminating high inflation and curbing inflation expectations are considerably higher than those associated with a variable nominal exchange rate. if oil prices fall to such a low level that investment on the norwegian shelf comes to a halt, a weaker krone would contribute to facilitating the restructuring in the business sector and the rest of the norwegian economy. historically, a stable krone exchange rate has been the nominal anchor in the norwegian economy. labour costs among trading partners provided an important reference. now, the inflation target is the nominal anchor. the norwegian krone has appreciated by 2Β½ per cent since the beginning of 2002 and by more than 8 per cent since the spring of 2000. high interest rate differentials and oil prices have played a part in this development. at present, the krone exchange rate is close to the levels in 1990 - 92 and 1996. the cost - competitiveness of norwegian manufacturing companies has deteriorated by 10 per cent since 1996. this is due entirely to pay increases awarded by manufacturing industry β s organisations and companies. underlying this cost inflation is a tight labour market that reflects high growth in employment in public and private services as well as extensive working hour reforms in recent years. the increase in labour costs is important when norges bank assesses the outlook for price inflation and sets interest rates. excessively high wage growth, both in manufacturing and other industries, will affect the internationally exposed sector through two channels. first, high wage growth will reduce earnings and employment. second, the interest rate will be increased. normally, this will lead to an appreciation of the krone, with a further reduction in earnings and employment. manufacturing will, therefore, feel the effects of excessively high wage growth to an even greater extent than earlier. at present, the labour market is relatively tight, which is reflected in high wage growth. in other countries, the situation is different, with slug | provided fertile soil for the trust the bundesbank has enjoyed as a defender of stable money up to the present day. the events in argentina in 2007 led to the initiation of a research project at the mit sloan school of management to collect price data from retailers on a daily basis using scraping technology. the project, currently referred to as the billion prices project ( see http : / / bpp. mit. edu / ) is primarily associated with the mit researchers alberto cavallo and roberto rigobon. the project started on a very small scale where in 2007. cavallo used the technology to collect price data from supermarkets across argentina, and he showed that inflation in argentina was between twice and three times as high reported in the official figures. today, the project is being continued under the direction of the private company pricestats, which provides data collection and processing services. the billion prices project currently involves the collection of price information from more than 70 countries and daily inflation series are published for over 20 of them. fortunately, argentina proved to be the only country where price indices using the new scraping technology bis central bankers β speeches situation in norway in the 1950s, when the government subsidised some goods in the index to avoid automatic wage increases. 22 the monetary system has also become more intricate along another dimension. today, cash accounts for only 5 percent of the money supply. payments are primarily made using deposit money, which involves electronic signals created by the banks themselves, via cards, mobile phones or online payments. 23 millions of transactions between individuals, companies and banks take place every day. these payments are settled at norges bank four times daily by transferring money between banks β accounts in norges bank. norges bank does not regulate the issuance of deposit money directly. by setting the interest rate on banks β sight deposits with norges bank and by securing settlements between the banks, the central bank is nevertheless the fundament of a vast and complex payment system. 24 the central bank / norges bank history has shown that monarchs are not always to be trusted to safeguard the monetary system. 25 an institutional solution is to delegate the task of issuing money to a central bank and shield it from the authorities β temptation to focus on short - term interests. 26 were systematically on a much higher level than the official inflation figures. thus, it appears that in today β s open societies, it is difficult to conceal true developments. incidentally, argentine inflation figures from pricestats continue to show much higher | 0.5 |
delisle worrell : risk and efficiency opening remarks by dr delisle worrell, governor of the central bank of barbados, at the regional central banks information systems specialists ( rcbiss ) annual ( xxiii ) conference, bridgetown, 3 june 2013. * * * today i want to celebrate with you an outstanding success story of caribbean regional integration. for over two decades information specialists from central banks from across the region have met like this, to network among yourselves, share common experiences and take advantage of each others β expertise. similar networks now exist in almost every sphere of central banking activity in the region, to such a pervasive extent that we now take them for granted. we should commend ourselves on this achievement, and seek to use our networks ever more effectively, in attaining the objectives of our central banks. that is what this conference is about. how do we use the opportunities which new technologies offer us to deliver central banking services as efficiently as possible, without exposing the banking system to unacceptable levels of risk. we need to pay attention to all the elements in this statement. we should always bear in mind that the ultimate goal is to make our central banks more efficient in providing the services which are our responsibility. meetings like this one are an opportunity to ask ourselves how well we are performing in this regard. are our technologies being used to provide faster and more efficient banking services for the government, the commercial banks and other financial institutions that we hold accounts for? are our transactions in government securities, foreign currencies and securities, and other financial transactions increasing in efficiency as we improve our technologies. are we able to bring information more effectively to bear in the formulation of economic policy? and are we communicating more clearly and persuasively to the general public, with cogent analysis that is fully backed up with relevant data? is our oversight of the financial system keeping up with the world β s best regulatory guidance? the answers to these questions will tell us how effective our information technology strategies have been, and how we might need to adjust our strategies in pursuit of further gains. the second part of my statement above refers to maintaining risks at an acceptable level. the management of risk is a very complex matter, and i can make only a few observations about it in this morning β s address. first we have to determine what is an acceptable level of risk. that depends on the cost of the risky event, at every level of risk, and the availability of insurance against that | jaime caruana : implementation of basel ii and other key issues relating to banking supervision in latin america and the caribbean opening speech by mr jaime caruana, governor of the bank of spain and chairman of the basel committee on banking supervision, at the joint meeting of the fsi and asba, miami, 25 april 2006. * * * introduction first of all, i would like to thank rich spillenkothen and josef tosovsky for inviting me to participate in this joint meeting of the fsi and asba, during which we will be able to discuss various key issues for banking supervision in latin america and the caribbean over the next few years. two things are evident from the agenda. the first is that there are a large number of key topics to discuss today and tomorrow, which demonstrates the importance and timeliness of this meeting, which i am sure will be fruitful for all concerned. the second is that basel ii continues to be a central and priority topic for supervisors and the banking industry alike, as evidenced by the presence here today of major banking representatives, whom i would also like to thank for attending. it is well known that the committee has devoted a large part of its efforts over the past few years to first developing and then implementing the revised capital framework. today, we have the opportunity to debate different aspects relating to its implementation and application. once the phase of theoretical debate and standards drafting had been completed, the committee β s activities, in particular through its accord implementation group ( aig ), focused on implementing the framework. the time has therefore come to confront this practical reality, with all its difficulties and problems, through a dialogue with the industry and the global supervisory community. this is a major task, given that the aim is to strengthen banking systems and the international financial system, rendering them more robust, more stable, and thus more capable of contributing effectively to the growth and stability of our economies. despite the importance of basel ii, the proposed agenda also shows us that this is not the only topic currently of interest to the supervisory community. tomorrow, we will be discussing one of the committee β s key projects, which, i am convinced, affects all these supervisors gathered here today. i am referring to the basel core principles. with these introductory words, i would like to provide a general overview of the committee β s work in these areas. first, i will focus on the revision of the basel core principles, before moving on to talk about the implementation of the revised framework | 0 |
are appropriate and efficient. that is particularly true if the planned enlargement of the eu, and also of emu, is taken into account. there is a lot of evidence suggesting that the latest amendment of the ec treaty by the treaty of amsterdam ( known as the maastricht ii treaty ) has failed to solve these major problems. all this makes two things very clear : 1. the launch of the euro is a political act, and far more than a mere technical development. it has substantial implications for economic and political structures and responsibilities in europe. 2. the stability of the euro is a major challenge not only to the eurosystem but likewise to the economic and fiscal policies of member states and to the coordination of those policies. to sum up, i should like to emphasise once again that, all in all, the euro has got off to a good start, also in the light of the counterinflationary policy setting. but the acid test still lies ahead. the major opportunities afforded by the euro are accompanied by corresponding risks and challenges. the fate of the euro in the years ahead will hinge crucially on whether member states become aware of this task, and on how they address it. this issue will certainly also play a major role in the forthcoming debates in the uk and other countries on joining the eurosystem. i very much hope that the behaviour of the euro member states will make it easier for the nations and governments in question to reach a favourable decision. | time being, and so that the broader process of de - leveraging can be accommodated with as little disruption as possible. central banks have stepped up their liquidity efforts in a major way, with a number of them providing much more in the way of own - currency funding against a wider range of collateral. but the most visible impact is on the federal reserve β s balance sheet, where assets have nearly doubled in the past six weeks as a result of increases in the fed β s various facilities. an increase in swap lines with other central banks, which allows the supply of dollar liquidity in asian and european time zones, has been one large contributor to the expansion ( and the rba has participated in these lines ). the most recent development has seen this liquidity operate on tap in several major countries β at a fixed price, in any amount market participants require, for terms extending out to three months. as a result, there is a now a huge amount of us dollar liquidity in the system. but while liquidity provision helps, it can, at best, ameliorate the impact of counterparty risk. it cannot eliminate it. the second thing that is needed is a restoration of confidence in the key financial institutions. because the lack of confidence is, ultimately, about solvency, re - capitalisation of the relevant institutions is required. the lesson of past banking crises, moreover, is that when there are really serious problems in private balance sheets, capital may be available in sufficient quantity only from the public purse. this should of course come with appropriate conditions β private shareholders should absorb the losses from past problems, governments that put in new capital should share in the upside and guarantees that are offered should be priced. governments should plan to divest their holdings in banks in due course. the uk government β s plan announced a couple of weeks ago, which seems to have become something of a template for these sorts of intervention, appears to have the key elements needed to restore health to the key international institutions. it increases further the supply of liquidity for the short term. it also provides for an increase in the capital of key uk institutions, from the public sector if needed, via the government underwriting capital raising. and it provides some confidence for term funding markets by offering a guarantee of the debt obligations of the relevant banks for a period of time. this guarantee is not free to the banks β they will pay for it on commercial terms, which in the current environment are unlikely to be cheap | 0 |
an important element of basel ii. full implementation of pillar 2, would impose a significant enhancement in basel core principle compliance. under pillar 2, a bank would be required to maintain a capital cushion above the regulatory minimums to capture the full set of risks to which the bank is exposed. these include liquidity risk, interest rate risk, and concentration risk. the third pillar of basel ii is market discipline. the idea is that market forces ought to supplement supervisors β oversight of financial institutions. in this way, banks learn from investors how their risks are perceived, and supervisors learn from the market as well. the keys to market discipline are informational transparency and well - functioning financial markets. sound accounting systems are necessary for informational transparency. these issues are important and can make a difference to how investors evaluate firms β capital positions. under pillar 3, banks will be required to disclose to the public the new risk - based capital ratios and more - extensive information about the credit quality of their portfolios and their practices in measuring and managing risk. such disclosures should increase transparency and improve market discipline. there are several approaches to measuring credit risk. the standardized approach and the internal ratings based approach, either foundation or advanced. the standardized model of basel ii relies on impartial actors to assist in the calculation of regulatory capital. here, i make reference to the external credit assessment institutions. the higher the penetration of rating agencies and the more confidence there is in the workings of the rating market then the more attractive the approaches become relative to the new accord. the internal ratings based approached relies on the banks β skills and the banks β judgments but requires more input from the organization. basel ii also sets standards for risk measurement and management and for related disclosures that will give banks ongoing incentives to improve their practices. the proposal appears to be complex but this is mainly a question of familiarity. it would not have been appropriate to continue to assess complex matters with simple approaches which do not grapple with all the issues. commercial banks will desire to avoid unnecessary regulatory costs. we will be discussing with banks over the next several weeks which methodology they will be using. while we would wish banks to exercise preference, this may not always be possible in the light of the cost of overseeing too many systems at the same time. it may therefore be necessary to fine - tune our approach further to economize on resources. there were a number of areas of basel i which we needed to make sure were in place before moving on to basel ii | . given our resources and the structure of our economy, we are doing at least as well as could be expected, perhaps a little better ; and we have encouraging prospects, including in areas where we are just getting up to speed, such as alternative energy. this is not to make light of the formidable challenges we face. in the tourism sector, financing is needed for the refurbishment and upgrade of properties which cannot qualify for the borrowing they need for this work, because of the prolonged recession. in the international business and financial sector there remains a serious data and information deficit. we are making efforts to address this, with the help of funding from the european union, and the central bank has enquired about the possibility of collaboration in a joint initiative of the financial stability board and the imf on improving data flows in the international financial sector. barbados β well regarded systems of supervision of international banks are constantly being upgraded, and government is proceeding with legislation and implementation of equally strong supervisory arrangements for the rest of the sector. although barbados remains untainted by international financial malfeasance, this is another area where upgrading is an ongoing exercise. in addition, there are new initiatives afoot. in tourism, the renewed foray into the brazilian market seems to make sense, in view of the market potential just of one or two urban centres of that vast nation, and of brazil β s growing interest in the caribbean, most obviously in the case of guyana. encouragingly, it appears that the promoters have a multi - year perspective, perhaps as a result of their reflection on the previous abortive exploration of this market. new initiatives are also appearing in the area of alternative energy systems. government has just concluded a loan agreement with the interamerican development bank for support of these activities, and central bank will soon announce the formation of an alternative energy network based on a new website, www. aen. bb, to facilitate collaboration and an exchange of ideas towards the implementation of alternative energy systems. in sum, the world economic storm has not yet abated, and the good ship barbados has taken on water, but we are in no danger of sinking, and in much better shape than countries much larger, better endowed and richer than ourselves. we know from our past experience that we are a resilient, inventive people, and we have strong institutions of governance and collaboration between government and people, to inform decision making by government, by businesses and by individual households. there are formidable challenges ahead | 0.5 |
to be appropriate for firms of all sizes, while providing appropriate protection for investors. j. allen, w. engert, and y. liu. " are canadian banks efficient? a canada - u. s. comparison. " financial system review. ( december 2006 ), p. 61. the need for improved enforcement let me turn now to enforcement. markets work more efficiently when they operate under clear, transparent, and reasonable rules and principles. but even the best rules won't help if they are not enforced. while we have seen some first steps to strengthen enforcement over the past couple of years, there still is a perception, both in canada and abroad, that canadian authorities aren't consistent in their efforts to enforce the rules against insider trading and other offences, nor tough enough in rooting out and punishing fraud. the investment dealers association's task force to modernize securities legislation, chaired by tom allen, has recently argued that information should be made more readily available to - and shared more readily by - investigators and prosecutors, and that training for these groups should be improved. a federal - provincial working group was recently formed to address these issues. but we cannot lose any momentum in this area. it's vital that we move quickly and forcefully to strengthen enforcement, so that investors and firms are confident that everyone is playing by the rules. i recognize that improving enforcement will require considerable effort and extensive co - operation among prosecutors, the police, securities commissions, and industry groups. but we can't lose sight of the fact that this will pay off in the long run. for example, at the bank, we've put a great deal of effort into co - operating with law - enforcement agencies, and the justice system, to fight counterfeit currency. and while levels of counterfeits are still higher than we would like, we have seen a steady decline in the number of counterfeits detected since the beginning of 2004. thanks to increased effort and co - operation, we're moving in the right direction. pension regulation pension regulation is another important issue for the efficiency of canada's capital markets. there is a crucial need for a framework that provides the appropriate incentives for employers to establish and maintain pension plans, so that the vast pools of capital in these plans can make their maximum contribution to the efficiency of the canadian economy. but our current regulatory framework instead provides a number of disincentives for firms to establish or maintain defined - benefit ( db ) pension plans. | for the canadian economy. today, a similar effort is needed. while canada's macroeconomic policies are second to none in supporting efficiency, our structural policies need work. we need to revisit the spirit of the porter commission and build regulatory frameworks that promote competition, innovation, and efficiency. in particular, we need action to support efficiency through the way that we regulate our financial institutions, securities markets, and pension funds. equally importantly, we need action to improve the way we enforce our regulations. but improving efficiency is everybody's business. once policy - makers do their job, it is up to the private sector to respond and take advantage of the opportunities to improve efficiency. the bank of canada remains committed to doing its part. if we all promote efficiency, then we all can reap the benefits of a more efficient financial system and a stronger economy in the future. j. hately. " the'maple bond'market. " financial system review. ( december 2006 ), p. 35. | 1 |
effects of home working on productivity. 5 pre - covid, the lion β s share of these studies suggested home - working improved productivity. as one example, bloom et al ( 2015 ) conducted a randomised control trial in a call centre of a chinese travel company, randomly allocating some workers to work from home and others to work in the office, before measuring their respective performance. home - working improved worker productivity by around 13 % almost a day β s extra output, a massive gain. interestingly, after the trial the company allowed everyone who wanted to work from home to do so. that improved company performance by 22 %. these productivity effects do not appear to be fixed across different demographics, firms, tasks and sectors. 6 for example, studies suggest productivity gains from home - working are largest for creative tasks, perhaps reflecting the benefits of a quieter, less distracting home - working environment. 7 it is also worth saying that some of the evidence of productivity gains may be biased upwards by self - selection, with those opting to work from home more likely to be able to do so productively. when it comes to the productivity effects of home - working during the covid crisis, the evidence β while thinner β points in a different direction. survey evidence for japan suggests around a 7 % hit to labour productivity from home - working. 8 similar evidence can be found in studies of the uk. 9 survey data from the ons paints a similar picture, with almost a quarter of workers believing their productivity has been negatively affected by home - working, compared with only 12 % saying it has improved. 10 these differences in the productivity effects of home - working, pre and post - covid, are perhaps unsurprising. mandatory home - working thrust large numbers of workers into an alien working environment β their kitchens, bedrooms and attics. there was no option of self - selecting. that meant, for many, not only a worse working environment but a steep learning curve as they adapted to new ways of working. productivity, predictably, was hardest hit among those with least prior experience of home - working. 11 these shifts are also likely to affect other labour market and economic behaviour, such as labour market participation and wage growth. see, for example, mas and pallais bartik et al dutcher ( 2012 ). morikawa ( 2020 ). see felstead and reuschke ( 2020 ). ons ( 2020b ). morikawa ( 2020 ). all speeches | never taken place virtually in the more than 20 years prior to march. mpc deliberations have been no less effective, and mpc decisions no less expeditious, for this shift. what virtual meetings risk losing, however, is the capacity to explore uncharted territory, to share tacit knowledge and personal information. those informal between - meetings conversations are, in my experience, the bedrock of relationship - building and the key to trust β building. it is the loss of those informal opezzo and schwartz ( 2014 ). barrero et al ( 2020b ). all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice moments that has resulted in many of us running down our past stock of social capital for the past six months. this cannot be done indefinitely. i always knew that i picked up a lot of information from the unscheduled time between meetings, when informal and sometimes chance conversations take place. having now lived without them for 6 months, i now realise these informal non - meetings were often my main source of information. the informal chat in the 5 minute walk from the lift to my office often contained more useful knowledge than the subsequent one - hour meeting in my office. the other week i spoke to the bank β s new crop of graduates. when i was in their shoes, almost all of my knowledge came from informal conversations in the pub with my graduate cohort on their jobs, bosses and experiences, rather than from listening to talking heads like me. this year all of that is lost and, with it, a significant down - payment of social capital. those losses are being replicated among organisations right around the world. this social capital, once lost, will be difficult to reacquire. whether it is creative sparks being dampened, existing social capital being depleted or new social capital being lost, these are real costs and costs which would be expected to grow, silently but steadily, over time. they weigh on the other side of the ledger when it comes to assessing the case for home - working. they cast doubt on whether it will lead to the promised land of improved productivity and greater happiness. if you asked me if i am happier working from home, i genuinely would not know. i do not miss the commute. but i feel acutely the loss of working relationships and external stimuli β the chance conversations, listening to very different people with very different lived | 1 |
k c chakrabarty : financial literacy β challenges, strategies and instruments welcome address by dr k c chakrabarty, deputy governor of the reserve bank of india, at the reserve bank of india - organisation for economic co - operation and development ( rbi - oecd ) international workshop on financial literacy, bengaluru, 22 march 2010. * * * 1. mr. pranab mukherjee, hon β ble finance minister, government of india, dr. d subbarao, governor, reserve bank of india, mr. richard a. boucher, oecd deputy secretary general, mr. andre laboul, head, oecd financial affairs division and chair, international network on financial education ( infe ), ms. flore - anne messy, principal administrator, oecd, distinguished guests and workshop participants from all over the globe, ladies and gentlemen 2. a very warm welcome to you all to the first ever rbi - oecd initiative on financial literacy workshop in india at this garden city of bengaluru, lovingly referred by the global community as the silicon valley of india. in fact, there could have been no better place than this city as it can not only boast of locating some of the world β s best known financial and knowledge - based services technology providers, but the state of karnataka has taken pioneering initiatives in promoting financial literacy through school curriculums. 3. it is a matter of profound pleasure and privilege to welcome mr pranab mukherjee, the hon β ble minister of finance, govt. of india who, despite his hectic schedule and multiple responsibilities, has kindly agreed to deliver the keynote address and spare some thoughts for the attendees to work further on. hon β ble finance minister, sir, while welcoming, we express our sincere gratitude to you. 4. i also extend a very warm welcome to dr subbarao, governor, reserve bank of india, who has successfully steered the policy course of the rbi through one of the difficult phases in recent times. i welcome you sir. it was your idea that rbi β s platinum jubilee celebration should be marked with an event of international impact and long - lasting importance in the financial services sector. this workshop is a fructification of your idea, sir. 5. my special welcome for mr. richard a. boucher, deputy secretary general, oecd for making this workshop possible, along with other oecd officials, who are partners in conducting this workshop | nestor a espenilla, jr : beginning a meaningful conversation - first coordination dialogue on developing the local debt market speech by mr nestor a espenilla, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the local debt market development workshop, manila, 25 august 2017. * * * the securities and exchange commission, the bureau of treasury, and the bangko sentral ng pilipinas are no strangers to coordination and collaboration ( many of our achievements come from working together! ) and while this is not our first time to collaborate, it is the beginning of a new and meaningful conversation. today, we mark a milestone as we unveil the philippine roadmap for developing the local debt market. at the same time, we look forward to engaging in an initial discussion with market participants. this is a great time to begin this conversation! recently, our capital market was recognized as an emerging investment hub in asia by three major debt watchers β moody β s, standard and poor β s, and fitch. robust economic conditions coupled with government β s thrust to promote infrastructure create favourable conditions for capital market deepening. government β s vision of a β golden age of infrastructure β to support value - added output to the housing, manufacturing, connectivity and agricultural sectors is a game changer. 1 a deeper capital market will mobilize long - term savings for the financing requirements of these priority industries. moreover, gdp is projected to grow at 6. 8 percent in the medium term, with the inflation outlook for the next two ( 2 ) years manageable and within the government β s three ( 3 ) percent Β± one percentage point target. our international reserves are at a level of eighty point eight billion us dollars ( usd80. 8b ) as of end - july 2017 β enough to cover eight point six ( 8. 6 ) months of imports and payments of goods and services. as if these are not encouraging enough, our discussion on capital market reform received support via technical assistance from the imf. the time is right to talk and take up reforms. colleagues and friends, it is our pleasure to start this conversation with you and to make local history. i am honoured to represent the bsp in this regard. sec commissioner ephyro amatong, treasurer of the philippines, rosalia de leon, representatives of the bankers association of the philippines ( bap ), headed by president nestor tan and bap open | 0 |
banking union, stronger integration in the fiscal realm did not result in the establishment of effective fiscal instruments and institutions at european level to ensure stability. that β s why, as a second priority, work needs to continue on designing a more complete fiscal architecture. despite many reforms, the common fiscal rules that should deliver this outcome have lost traction. 4 europe, therefore, needs to regain faith in its fiscal rules by having a frank discussion on how to make them more effective and anti - cyclical. the rules themselves will, however, not always be enough because sound domestic policies are not always enough. markets do at times overreact and penalise sovereigns over and above what may be needed to restore a sustainable fiscal path. this is why there is also a need for public risk sharing through a stabilisation capacity. designing a stabilisation instrument for the euro area is neither straightforward nor easy. but that should not be an excuse for avoiding such a discussion and for taking concrete steps towards establishing it. proposals have already been put on the table, for example in the form of a fiscal capacity with a 4 / 7 bis central bankers'speeches direct focus on stabilisation in the shape of investment protection or an unemployment insurance mechanism. other suggestions refer to a common budget that can provide public goods through spending on joint investment projects or the broader political aims of the european union, such as defence. regardless of the exact form, it is vital that any euro area fiscal instrument comes with powerful incentives to counteract moral hazard, avoid permanent transfers and ensure sound policymaking at national level. bolstering long - term growth through structural reforms and allocative efficiency the elements i have discussed so far β notably, more stable financial integration and common fiscal instruments β can provide a shield against events that trap countries in downward spirals. long - term economic growth, however, is ultimately derived from increased allocative efficiency and innovation, which can only be achieved by modernising the euro area β s economies. looking at the last 15 to 20 years, euro area countries with sound economic structures from the outset have shown much higher long - term real growth and are more resilient. some euro area countries adopted ambitious reforms during the crisis and they have also seen good results afterwards β and the full effects are still materialising. nevertheless, over the past five years, structural reform implementation in the euro area has overall been sluggish at best. very few reforms identified at the european level have been substantially implemented in the last | few years. reversing this trend and putting our economy on a higher convergence trajectory is thus a priority. as structural reforms remain essentially in the hands of national governments, those governments should be the first ones to step up their efforts. nevertheless, european policies, if further developed, can be a significant catalyst and provide a strong engine for both growth and employment, in various ways. first, there is scope for a better use of the eu β s budget. the discussions on the 2021 - 27 multiannual financial framework offer a vital opportunity to enhance its role in addressing europe β s structural challenges. second, the single market as an engine for convergence should be used to its fullest potential. for consumers, the single market has already boosted competition in markets across the eu yielding large benefits for consumers. 5 but also on the supply side, the single market provides large productivity dividends by encouraging the integration of european value chains into global chains. these chains have resulted in higher wages at all skill levels. how can these positive effects of the single market be further harnessed? for one, by completing it and expanding its reach into new policy areas, notably services. services make up over 70 % of total eu gdp but only 5 % relate to cross - border services. 6 expanding the market will drive economic progress, to the further benefit of consumers, businesses and the economy as a whole. conclusion let me conclude. we have gone a long to repair the flaws in the financial, regulatory and supervisory framework which led to the crisis. we have taken bold steps to ensure that the euro is able to withstand future shocks. 5 / 7 bis central bankers'speeches reform fatigue always sets in over time. after all, the first calls to reform the international banking rules were made directly after the crisis in 2008. 7 this year, ten years on, we are finalising the last details of these reforms, which won β t all be fully implemented until 2028, 20 years on! 8 similarly, the srf is only being gradually built up and will not reach the target level until 2024, ten years after the implementation of the srm regulation. reforms take time. but we should not stop now. minsky9 taught us that good times breed complacency, exuberance and optimism among market participants. they can also lead to complacency among public authorities. while we cannot say that we are completely out of the woods, economic growth in the euro area is currently solid and broad - | 1 |
joseph o sanusi : management of nigeria β s domestic debt keynote address by dr joseph o sanusi, governor of the central bank of nigeria, at the 7th monetary policy forum organised by the central bank of nigeria at the cbn conference hall, abuja, 22 may 2003. * * * distinguished senators, honourable members of the house of representatives, distinguished invited guests, ladies and gentlemen, it is my honour and privilege to welcome you to the 7th edition of the cbn monetary policy forum. the theme of today β s forum β management of nigeria β s domestic debt β has been chosen in view of the increasing concern over the rapid growth of nigeria β s public debt and its implications for economic stability. an escalating debt profile presents serious obstacles to a nation β s path to economic growth and development. the cost of servicing public debt ( domestic and external ) may expand beyond the capacity of the economy to cope, thereby impacting negatively on the ability to achieve the desired fiscal and monetary policy objectives. furthermore, a rising debt burden may constrain the ability of government to undertake more productive investment programmes in infrastructure, education and public health. to avoid such a situation, it is imperative that the quantum and structure of the nation β s debt be carefully managed in a manner that is consistent with the country β s growth and development aspirations. to appreciate the dimension of nigeria β s domestic debt burden, it would be pertinent to undertake a brief review of its development. first, nigeria β s domestic debt stock stood at n23. 5 million or 1. 0 per cent of gdp in 1960 and subsequently, increased rapidly to n8, 231. 5 million or 16. 2 per cent of gdp in 1980, reaching n1, 160. 0 billion or 83. 6 per cent of gdp as at end - december, 2002. the sharp increase in domestic debt stock, over the years, was attributable largely to the failure to embark on necessary adjustment, particularly at the time of declining revenue, that resulted in growing fiscal deficits and further domestic debt accumulation. secondly, the bulk of the debt has been in short - term treasury securities with maturities of less than one year. thirdly, the banking system, mainly the cbn remains the dominant holder of federal government securities. ladies and gentlemen, it bears repeating that one major problem that has hindered the attainment of macroeconomic stability and sustainable growth has been the excessive reliance by the federal government on borrowing from the banking system, | of the debt management office should therefore be seen as a positive development that will enhance the efficiency of not only domestic debt management but also the effectiveness of monetary policy. indeed, in spite of the bank β s best endeavours in the prudent management of government β s domestic debt, not much has been achieved by way of rationalizing public expenditure and trimming the size of domestic public debt stock. some of the outstanding problems that call for urgent solutions include : Β· how to ensure that borrowed resources are productively utilised, such that economic and social rate of return is higher than the future servicing cost. Β· the restructuring of the existing public debt in favour of long - term in a way to compel better quality evaluation of the loans. Β· how the capital market can play an increasing role in the funding of the federal government fiscal operations. Β· the problem of intergenerational equity argument arising from debt over - hang. Β· how to reduce cbn funding of government and bring it in line with the government β s obligation under the west african monetary zone protocol. acceptable progress has, however, been made in this regard during the last two years. against this background, this forum has been organised to proffer practical solutions on how to tackle the problem of the burgeoning domestic debt of the federal government. participants are therefore challenged to come up with a credible framework that would prepare the road map, which will guide the nigerian government in resolving this problem. to this end, ladies and gentlemen, we have assembled today scholars, seasoned professionals and other key stakeholders in the economy to lead the discussions. i therefore urge all the participants at this forum to discuss freely and frankly in order to come up with useful ideas that will crystallize into an enduring solution to the country β s debt problem. once more, i welcome you to this forum and wish you fruitful deliberations. | 1 |
still rules β. bis quarterly review, march 2018. available at https : / / www. bis. org / publ / qtrpdf / r _ qt1803g. pdf. while the jury is still out on whether we will have a cbdc, the debate is already bringing benefits. many central banks, including banca d β italia, are experimenting with new technologies such as dlt and artificial intelligence, studying how they work and how they can be put to productive use. this research contributes to the advancement of the technological frontier, and helps make the financial system more resilient to technological and cyber risks. these benefits are here to stay, independently of whether one day we will live in a world with digital cash. designed and printed by the printing and publishing division of the bank of italy | product innovation and the reduction of unit costs must be to the benefit of firms and households. they must be turned into an improvement in the quality of the products supplied and be reflected in the prices of retail services, above all for payment services and asset management. in a period of low inflation it is only right for banks to limit the fees charged on retail services. progress in this direction, correct and professional conduct strengthen the relationship of trust with customers and are conducive to the orderly growth of intermediation business. in collaboration with the antitrust authority, we have launched a fact - finding inquiry with the aim of ascertaining the existence, for some services, of strategies and costs that discourage customers from changing bank. over the last ten years, the banking system has been marked by a process of consolidation and a progressive increase in the average size of individual intermediaries, whereas the industrial and service sectors have experienced further fragmentation, with inevitable adverse effects on the productivity and competitiveness of the whole economy. the number of large industrial groups, essential for the spread of new technologies, is limited. the system of industrial districts, which in past decades helped to generate the synergies and efficiencies typical of large groups within clusters of small firms, now seems less able on its own to sustain a further drive to improve competitiveness. the shortage of infrastructure and the cost of energy and services for firms are a drag at national level. spending on research by both the public sector and the private sector is particularly low in italy by comparison with the other advanced economies. the proportion of value added by high - technology sectors is very small. this affects italian products β penetration of international markets. italy β s share of world exports of goods and services in volume terms was approximately 4. 5 per cent in the mid - 1990s ; in 2004 it fell below 3 per cent. industrial production follows the performance of exports. for several years now, as we have documented on other occasions, its growth in italy has fallen appreciably short of that recorded both in the euro area as a whole and in the area β s two largest countries, germany and france. in 2004 italy β s index of industrial production showed a slight tendency to decline. to a degree, the transfer of traditional production to countries with low labour costs and rapidly expanding demand is normal. in italy the phenomenon has intensified since the mid - 1990s ; the number of workers employed in foreign companies invested in or controlled by italian firms has reached one | 0.5 |
speech the european climate law and the european central bank keynote speech by frank elderson, member of the executive board of the ecb and vice - chair of the supervisory board of the ecb, lustrum symposium organised by dutch financial law association amsterdam, 1 december 2022 i am honoured to speak at this 20th anniversary dinner, with so many distinguished lawyers around me. in this setting, i feel quite comfortable dwelling on legal issues for a while. a topic close to my heart β apart from the law β is the ongoing climate and environmental crises. i am glad that we have long since moved on from the time when only scientists and activists were concerned with this topic. it is now high on policymakers β agendas, as we saw at the recent united nations conference of parties ( cop27 ) at sharm el - sheikh, at which β along with world leaders and a wide range of policymakers and interest groups β the ecb was also represented. i was struck by one story in particular. [ 1 ] the tiny pacific nation of vanuatu is badly exposed to cyclones and rising sea levels. to the inhabitants of vanuatu, climate change is a human rights issue. and, as vanuatu β s president, nikenike vurobaravu, stated, β we are measuring climate change not in degrees of celsius or tonnes of carbon, but in human lives. β vanuatu now plans to ask the un general assembly to seek an opinion from the international court of justice on the human rights implications of the climate crisis. that opinion could determine the rights of countries most exposed to climate change. it could also touch on the obligations of those most responsible for driving the climate crisis. let β s now focus on europe and the possible implications of these developments in international law for my own institution, the ecb. under the paris agreement adopted at cop21 in 2015, many countries committed to the long - term goal of holding the increase in the global average temperature to well below 2Β°c above pre - industrial levels. to fulfil its commitment as one of parties to the paris agreement, the eu last year adopted the european climate law. [ 3 ] the implications of the climate law are significant. before going into why, let me first explain what the climate law does. the climate law has three key elements. the first is its objective that the eu reduce its greenhouse gas emissions by at least 55 % by 2030, with a new reduction target to be set for 2040. the eu should achieve | . let β s turn briefly to 2015 and the run - up to last december β s increase in the federal funds rate β also an important focus of the paper. the authors and many market participants are critical of communication around the september meeting. with the june 2015 summary of economic projections ( sep ) showing that 15 of 17 fomc participants judged that appropriate policy would entail an initial increase in the federal funds rate by the end of 2015, markets saw about a 50 percent chance that the first increase would occur in september. this probability fell to about 30 percent after global markets experienced a sudden bout of volatility following china β s surprise devaluation of its currency in august. at the september meeting, the fomc decided to wait to see how global markets and the economy evolved, noting in its statement that β recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term. β 13 a data - driven committee, making decisions meeting by meeting, is likely to surprise markets from time to time. the authors join many others in criticizing the β measured pace β period of 2004 through 2006, during which the committee increased rates by 25 basis points at 17 consecutive fomc meetings. a common criticism has been that this high level of predictability made investors complacent, encouraging a buildup of leverage and helping set the stage for the global financial crisis. that criticism may well overstate the importance of the committee β s communications ; nonetheless, a number of fomc participants have said that the committee intends to be β data driven β and not fall into an excessively predictable, datainsensitive path. lower predictability implies more surprises. in the statement released after its october 2015 meeting, the committee reemphasized data dependence and focused on the importance of incoming data for the committee β s decision β at its next meeting, β which led the market to increase its estimated probability of a december rate and employ its other policy tools as appropriate, until such improvement is achieved in a context of price stability. in determining the size, pace, and composition of its asset purchases, the committee will, as always, take appropriate account of the likely efficacy and costs of such purchases. β ( board of governors of the federal reserve system ( 2012 ), β federal reserve issues fomc statement, β press release, december 12, paragraph 4. ) ben s. bernanke ( 2015 ), the courage to | 0 |
mugur isarescu : economic governance in the european union speech by mr mugur isarescu, governor of the national bank of romania, at the conference β economic governance in the european union β, jointly organized by the european commission, the ministry of finance and the national bank of romania, bucharest, 10 june 2011. * * * ladies and gentlemen, distinguished audience, it is a pleasure be the host of the conference on β economic governance in the european union β, an event jointly organized by the european commission, the ministry of finance and the national bank of romania. we are glad to welcome you all and our special guests : mr. gheorghe ialomitianu β the romanian minister of finance, mrs. elena flores, director for policy strategy and coordination in the european commission β s dgecfin, mr. theodor stolojan, member of european parliament and former prime minister of romania, mrs. iuliana dascalu, director in the finance ministry of romania, mr. hans martens, chief executive of the european policy centre think - tank and mr. daniel daianu, economics professor, former member of european parliament and finance minister of romania. a special note of thanks to my colleagues deputy governor cristian popa and the chief economist valentin lazea, who, together with our special guests, have responded to the challenge of debating a hot topic. in these challenging times, economic governance was brought to the spotlight by the recent global economic and financial crisis. governance may be seen as the manner in which power is exercised in the management of a country β s social and economic resources for development. we all know that good governance involves setting adequate policies, programs and regulations, which then have to be translated into legislation. as i often say, sustainable development hinges on the consistency of economic policies β there is no substitute for consistent, sound and stability - oriented economic policies. in this context, institutions are central to the way a country is governed and these are the formal and informal rules in a society. as the nobel prize winner douglas north pointed out β the formal rules are set by the state through laws and regulations, while the informal rules come from the culture, history and experience of each society β. only in the last 10 β 15 years most economists have discovered good governance β with its four pillars : transparency, accountability, predictability and participation β as a major determinant of economic growth. thus, economic governance implies the need to ensure stable, transparent | mugur isarescu : the macroeconomic perspective in romania welcome speech by mr mugur isarescu, governor of the national bank of romania, at the romanian - czech business forum, bucharest, 20 may 2014. * * * your excellency, president zeman, you are most welcome here, at the national bank of romania, a place that holds within its walls countless pieces of history, tails of how romania has grown into a modern state. we are privileged to greet here, today. distinguished guests, ladies and gentlemen, allow me to extend a very warm welcome and thank you all for gracing us with your presence at the romanian - czech business forum. it is a great pleasure for the national bank of romania, and an honor for me and for the members of the board, to host what will be a substantial discussion about the challenges currently facing europe, in particular the development of economic relations between the czech republic and romania. here, at the national bank of romania, we take pride in having always been a forum for debating, in an open and profound manner, the themes and trends defining our age. a few weeks ago we celebrated the 134 - th anniversary of the romanian national bank, a central bank ranking 16 - th in the world. during the break, after the working sessions, you are kindly invited to visit / walk the outstanding halls of the old palace of our national bank. let me salute the presence of mr. jaroslav hanak, president of the czech confederation of industry, mr. karel novotny, deputy minister of the czech ministry of industry and trade and mr. bogdan pandelica, state secretary of the romanian ministry of economy. they will address the audience right after my brief remarks. i extend a warm welcome to his excellency mr. jiri sitler, the ambassador of the czech republic. the forum will focus normally on micro level, on real economy issues. allow me to say a few words about the macroeconomic perspective in romania, which is the main area of interest for central bankers. the macro perspective is relevant since is the canvas on which the picture of business relations is to be set up. no doubt the crisis has taken its toll on romania β s economy, given the large imbalances which had been steadily accumulating during the boom years. whether the crisis has ended or not at european level is still a matter of debate. what may be said for certain is that romania undertook the necessary adjustments during 2009 β | 0.5 |
to come out of poverty. such an initiative is expected to be a win - win situation for both banks as also the large section of poor people residing in the rural areas. bis central bankers β speeches combination of branch and bc structure we are advocating a combination of brick and mortar structure with click and mouse technology for extending financial inclusion, especially in geographically dispersed areas. banks have to make effective use of technology to provide banking services in remote areas. in addition to creating a large network of small branches in rural areas, the reserve bank has permitted banks to utilise the services of intermediaries in providing banking services through the use of business correspondents. the bc model allows banks to do β cash in β cash out β transactions at a location much closer to the rural population, thus addressing the last mile problem. leveraging on technology penetrating banking services through the traditional brick and mortar model was expensive for banks. we realized that the task of financial inclusion was gigantic and would not be possible without actively leveraging on technology. we have therefore encouraged banks to leverage on technology to attain greater reach and penetration for minimizing the cost of providing financial services in far flung areas of the country. with adoption of technology it has been possible for banks to deliver banking products and services to the doorsteps of villages. engaging business correspondents : the reserve bank has permitted banks to engage business facilitators ( bfs ) and business correspondents ( bcs ) as intermediaries for providing financial and banking services. the bc model allows banks to provide door step delivery of services especially to do β cash in β cash out β transactions, thus addressing the β last mile β problem. the list of eligible individuals / entities who can be engaged as bcs are being widened from time to time and we have adopted a test and learn approach to this process. now, even for profit organisations excluding nbfcs and telcos have been permitted to operate as bcs of banks. relaxation of kyc norms : the strict kyc norms inhibited linkage of common people with the banking system. know your customer ( kyc ) requirements for opening bank accounts have been relaxed for small accounts. further, in order to leverage on the initiative of uidai, we have allowed β aadhaar β as one of the eligible document for meeting kyc requirements and very recently have also allowed banks to provide e - kyc services provided through the aadhaar platform. simplified branch authorisation : to address the issue of uneven spread of | digital footprint, these banks face significant operational risks from growing cyber threats, digital frauds, and possible data breaches. the cyber security landscape is evolving rapidly, and sfbs must stay ahead of emerging threats to protect their customers'data and maintain operational resilience. the sfbs should adopt robust business continuity plans and effective it outsourcing strategies. there is also a need to ensure rigorous change management processes, comprehensive data protection measures, vigilant transaction monitoring, stringent access controls and network security protocols. these measures will help sfbs to significantly enhance their it resilience against possible disruptions. operational risk fourthly, while i have covered cybersecurity threats, i would also like boards of sfbs to be mindful of the larger issue of operational risks. during periods of rapid growth, the focus on increasing market share, launching new products, and acquiring customers can lead to a neglect of essential risk management practices. for example, hastily onboarding new customers without thorough kyc due diligence or rushing the deployment of technology solutions without adequate testing can increase the likelihood of frauds, errors and service disruptions. growth is important for the success of small finance banks. however, it must not come by overlooking operational controls. another significant area of concern for operational risk is the high attrition rate among staff in small finance banks. while the branch network and employee headcounts are expanding, the sector faces a very high attrition rate of nearly 40 per cent, particularly among frontline staff and junior management. such elevated turnover, though mostly at the entry and junior management levels, poses substantial operational risks, as it can lead to a loss of institutional knowledge, disruption in service delivery, and increased 4 / 5 bis - central bankers'speeches training costs for new hires. to mitigate these risks, board - level efforts are essential to focus on employee retention strategies at all levels. further, the absence of succession planning for critical managerial positions is a common issue across sfbs, which requires immediate attention from boards to ensure a smooth transition of leadership and maintain operational effectiveness. conclusion in conclusion, sfbs with their outreach to rural and semi - urban areas, are intended to be one of the key enablers in credit offerings to individuals, weaker sections, entrepreneurs, shgs / jlgs and msmes. they have a large role to play in achieving our aspirational goal of becoming a developed nation by 2047. as rbi celebrates 90 years of its foundation | 0.5 |
of the reserve bank of new zealand ; and ( b ) promote the prosperity and well - being of new zealanders and contribute to a sustainable and productive economy. bank β s objectives 1. the bank β s main objectives are β economic objective a. the economic objective of achieving and maintaining stability in the general level of prices over the medium term ; and financial stability objective b. the financial stability objective of protecting and promoting the stability of new zealand β s financial system ; and central bank objective c. otherwise acting as new zealand β s central bank in a way that furthers the purposes of this act. deposit takers act 2023 purposes 1. the main purpose of this act is to promote the prosperity and well - being of new zealanders and contribute to a sustainable and productive economy by protecting and promoting the stability of the financial system. 2. to that end, this act has the following additional purposes : a. to promote the safety and soundness of each deposit taker : b. to promote public confidence in the financial system : resilience as a pathway to prosperity unclassified unclassified c. to the extent not inconsistent with subsection ( 1 ) and paragraphs ( a ), ( b ), and ( d ), to support new zealanders having reasonable access to financial products and services provided by the deposit - taking sector : d. to avoid or mitigate the adverse effects of the following risks : ii. risks to the stability of the financial system : iii. risks from the financial system that may damage the broader economy. insurance ( prudential supervision ) act 2010 purposes 1. the purposes of this act are to β a. promote the maintenance of a sound and efficient insurance sector ; and b. promote public confidence in the insurance sector. 2. those purposes are achieved by β a. establishing a system for licensing insurers ; and b. imposing prudential requirements on insurers ; and c. providing for the supervision by the reserve bank of new zealand ( the bank ) of compliance with those requirements ; and d. conferring certain powers on the bank to act in respect of insurers in financial distress or other difficulties. financial market infrastructures act 2021 purposes 1. the purposes of this act are to β a. promote the maintenance of a sound and efficient financial system ( including by responding to threats to the stability of, or confidence in, the whole or a significant part of the financial system ) ; and b. avoid significant damage to | economic recovery, while mitigating any potential impact on the stability of the financial and banking system in our country. i also wish to underline that the bank has consulted, and is keeping the imf fully briefed about all measures it is taking. we, at the bank, stand ready to put in place what is required, and we will do whatever it takes to save our economy. i thank you for your attention. 4 / 4 bis central bankers'speeches | 0 |
the market. we need a certain amount of flexibility, because market conditions can change quickly. is the ecb still in control of affairs, especially now that self - imposed purchase limits are becoming increasingly relevant? we are able to conduct our asset purchase programme. the important thing here is that we want to remain market - neutral. and we shouldn β t overdo the discussion on the composition of the β¬30 billion. including reinvestments, we will still be buying securities for more than β¬50 billion in some months. the question of whether we invest, say, β¬1 billion more or less in corporate bonds is not decisive. to what extent have the governing council β s discussions been affected by the steinhoff issue β that is, losses resulting from the purchase of bonds issued by the beleaguered furniture retailer β especially given that council members hold very different views on corporate sector asset purchases? the steinhoff case hasn β t resulted in any discussion in the governing council about changing the asset purchase programme. we have certain rules regarding the suitability of individual instruments. we don β t blindly buy 100 % of a given bond, we watch the market constantly. the important thing for me is that we don β t take on excessive risk. we also keep a constant eye on our risk management framework and adjust it if we see a need to do so. the governing council doesn β t want to consider raising interest rates until β well β after the end of net qe purchases, which is known as β sequencing β. this follows the example of the federal reserve in the united states. but the federal reserve never had negative rates. doesn β t at least the negative deposit facility rate need to be scrapped more quickly? the slightly negative interest rates support our asset purchase programme. if we had not had them, we might have needed to buy greater volumes to achieve the same effects. but the net purchases are becoming increasingly less significant. and the sequencing is something that the markets have understood very well. so we need to move step by step towards a normalisation of our monetary policy, we shouldn β t rush it. 2 / 5 bis central bankers'speeches but isn β t the negative rate a special case? there are very different views about negative interest rates. we haven β t seen any excessive distortions so far, and the advantages predominate. but this does not lead me to conclude that we should hang on to negative rates for a long time to come. can you imagine that a whole | adjustment in unit labour costs and the adjustment in the harmonised index of consumer prices ( hicp ) reflects the lack of competition in the domestic economy. it also reflects other cost factors affecting the evolution of prices, including fiscal consolidation being partly achieved through higher indirect taxes and administrative prices. 5 it calls for great determination in reducing the excessive profit margins that result from monopolistic competition, in particular in sectors sheltered from international competition. 6 reducing rents is not only a matter of efficiency in the adjustment process : it is also a matter of equity in sharing the burden of adjustment. and this point leads me to the second part of my talk. the aggravating factors [ slide 7 ] the adjustment has been costly, in some cases very costly. some of the costs in terms of falling output and employment were, unfortunately, unavoidable. in particular, some of the job losses in the non - tradable sector are the outcome of the necessary rebalancing towards tradables and away from previously unsustainable domestic demand growth. however, the rise in unemployment in a number of countries has been aggravated by delays in structural reforms and, as i said, by a lack of downward flexibility in prices and wages after 2008. job losses were largest among low - skilled, temporary workers in spain and in the non - manufacturing sectors. 7 as employment fell, unemployment β particularly of the young β jumped, especially in greece and spain, where more than a quarter of the total labour force is currently without a job. there was also a sharp increase in unemployment in the baltic states β it rose from 5 % in 2007 to 18 % in 2010 on average in estonia, lithuania and latvia. however, since 2010 in all three countries unemployment has fallen relatively quickly. by the end of 2012 it had improved by about 10 percentage points. 8 in the most stressed euro area countries, there are no signs of a reversal yet. this is the result of the inherited very rigid product and labour markets, which have started to change and need to continue to do so vigorously to prevent further job losses. again, this is not only a matter of efficiency, but also a matter of equity. europe cannot afford a lost generation. see ecb monthly bulletin box ( 2012 ), rebalancing of competitiveness within the euro area and its implications for inflation, june 2012, pages 64 β 66. the higher profit margins of the past two years need to be interpreted carefully as they in part represent a rebound after | 0.5 |
near - term inflation expectations are quite elevated. in the ces, the medium - term inflation expectations of households also remain well below the near - term inflation expectations. across all available sources, macroeconomic expectations ( and prospects at the individual level ) suggest a high degree of concern about a potential economic slowdown, a general recognition that supply shocks will generate both near - term inflation surges and a decline in the economic outlook, which in turn will constrain the persistence of inflation. this profile is consistent with a profile in which market participants, experts and households broadly understand ( albeit to varying degrees ) that supply shocks and temporary factors have pushed inflation up to the current high levels but that these factors are expected to fade over time, reinforced by the understanding that monetary policy actions ( as captured by the expectations of substantial rate hikes in the coming months ) will ensure the return of inflation to target. in terms of the feedback loop from inflation expectations to nominal and real dynamics, it is important to appreciate that, for any given nominal yield curve, if high near - time inflation expectations are accompanied by expectations of a deteriorated macroeconomic outlook and significant uncertainty then the inflation cycle is less likely to be amplified through an endogenous increase in consumption, investment and credit compared to an alternative scenario in which high near - term inflation expectations are accompanied by macroeconomic optimism. put differently, cost - push inflation shocks are less likely to give rise to a pro - cyclical real interest rate channel compared to demand - driven inflation shocks. at the same time, market - based indicators of inflation risk and the right - tail of responses in the expert and household surveys also clearly show that the risk of inflation not returning to target in a timely manner is priced by market participants and feared by some survey respondents. as indicated in our recent monetary policy statements, such above - target revisions to some indicators of longer - term inflation expectations warrant close monitoring. in tracking these right - tail indicators, two conjectures are especially relevant. in one direction, more attentive traders, experts and individuals may identify more quickly a persistent shift in inflation dynamics, while inattentive participants adjust more slowly. under such scenarios, as highlighted in the pioneering work of ricardo reis, right - tail measures will be leading indicators for a generalised revision in long - term inflation expectations. [ 2 ] however, under other scenarios, the right tail might be populated by those who over - react to high spot inflation readings and mis - perceive as permanent what turns out | current high uncertainty about inflation dynamics and monetary policy transmission means that a multi - step adjustment path towards the terminal rate also makes it easier to undertake mid - course corrections if circumstances change. while upside risks to inflation are currently more intense than downside risks, if the incoming data ( new shocks, updates on the relative strength of opposing adjustment forces ) call for a downward shift in the terminal rate, this would be easier to handle under a step - by - step approach. such risks not only include downside scenarios to the economic outlook but also external factors that could tighten financing conditions independently of domestic monetary policy actions ( such as the spillover impact of monetary policy tightening in other countries or shifts in risk sentiment in global markets ). for this reason, even if the general direction of monetary policy is shaped not only by the centre of the risk distribution but also by the current net upside skew, the agility to adjust the scale and speed of interest rate hikes remains vitally important. the incoming data on inflation expectations play an important role in our integrated assessment of economic, monetary and financial conditions. all sources β market - based data, the survey of professional forecasters ( spf ), the survey of monetary analysts ( sma ), the consumer expectations survey ( ces ), the partial data on firm - level expectations from the corporate telephone survey ( cts ), the survey on the access to finance of enterprises ( safe ) and national sources, the surveys of the european commission, and a range of external surveys β are closely examined in relation to the formation of near - term, medium - term, and long - term inflation expectations. we also assess, where available, expectations about macroeconomic indicators ( and the reported individual prospects of the surveyed households and firms ). even under scenarios in which long - term inflation expectations are firmly anchored, the evolution of near - term and medium - term inflation expectations and macroeconomic expectations play important roles in determining inflation and macroeconomic dynamics over these horizons. clearly, the worst - case scenario would be characterised by the deanchoring of long - term inflation expectations, which would be very costly to fix. except under very artificial model specifications, inflation outcomes and macroeconomic outcomes will be important factors in determining inflation expectations and macroeconomic expectations, as individuals update their beliefs based on realised inflation and economic developments. by and large, the market - based indicators of inflation compensation and the expert surveys indicate that long - term inflation expectations remain close to the two per cent target, while | 1 |
financial risks from climate change that arise from the increased frequency of weather events and from the transition to a carbon - neutral emission economy. the test will motivate firms to address data gaps and to develop cutting - edge risk management consistent with a range of possible climate pathways : ranging from early and orderly to late and disruptive. this test will be the first of its kind to integrate climate scenarios with macroeconomic and financial models. the bank will develop the approach in consultation with industry, including insurers, and other informed stakeholders including experts from the network for greening the financial system and the pra β s climate financial risk forum. with this new supervisory approach, the bank will help ensure that the financial system is resilient to the risks and can take full advantage of the enormous opportunities in a carbon - neutral economy. the path to a carbon - neutral economy will affect every institution in this country β very much including the bank of england. we need to do more than just cutting out cups and bringing up bees. 35 we must lead by example. from next year, the bank will become the first central bank to adopt the tcfd recommendations across our entire operations. and to improve our strategic resilience, the bank will reduce the bank β s carbon footprint by almost two thirds by 2030, consistent with a transition to a 1. 5 degree world. 36 conclusion the new finance has the potential to unlock stronger, more sustainable and more inclusive growth. by taking the measures i outlined this evening, the bank can enable the new economy ; empower greater competition and ensure the resilience of the financial system. available at : https : / / www. bankofengland. co. uk / - / media / boe / files / prudential - regulation / supervisorystatement / 2019 / ss319. pdf? la = en & hash = 7ba9824bac5fb313f42c00889d4e3a6104881c44. see : https : / / www. bankofengland. co. uk / news / 2019 / march / first - meeting - of - the - pra - and - fca - joint - climate - financial - risk - forum. the bank has cut its use of cups and food boxes by over 80 % since 2016, that β s over 2 million fewer items of single use plastic each year. we are also working on promoting natural biodiversity at our | major factor in advancing this project as well, but also the future ones. let me also underline the major role played by the successive top - management teams of the national bank of moldova in carrying out these numerous bilateral cooperation projects and i take this opportunity to thank them and express my appreciation to those with whom we have worked. ladies and gentlemen, we find ourselves, today, at a juncture where governments and central banks alike have promptly stepped in globally to counter the negative impact of the coronavirus pandemic through social, economic, fiscal and monetary policies. the unprecedented mobilisation of the authorities 1 / 2 bis central bankers'speeches in a complex and determined manner has largely ensured the proper functioning of markets, and of the economic and social mechanisms. in this regard, enhancing the response capacity to adverse situations is essential, and this goal can also be achieved by strengthening corporate governance, supervision, and risk management in the financial sector. these are the key coordinates of the new twinning programme as well. the twinning project we are launching today has a wide scope, not only for the banking sector, but also for the entire financial market in the republic of moldova. it aims to be beneficial for both the national bank of moldova and the national commission for financial markets of the republic of moldova, by strengthening institutional capacity and governance, as well as developing the regulatory, supervisory and operational frameworks for enhanced functionality. from my perspective, the national bank of romania has gained over time, after 1990, with the support of its partners in the european union β including the support of de nederlandsche bank, which i would like to mention explicitly β a solid experience and expertise. it is now our turn and duty, as senior partner in this twinning project, to pass on the know - how to the republic of moldova and we are able to do this efficiently, having the advantage of the romanian language. the complexity of the new project, over the two - year period, brings together a remarkable project team. the activity will comprise five highly technical components, in the areas of financial macrostability, prudential supervision, the non - bank financial sector, the internal regulatory framework for supervision and the regulatory framework for payment infrastructure and its functionality at european standards. on this occasion, i express my deep gratitude to our current partners β de nederlandsche bank, lietuvos bankas, as well as the romanian financial supervisory authority and the romanian national authority for consumer protection. let me conclude by wishing success | 0 |
a crucial step. the benefits of strengthening european integration far outweigh the alleged advantages of weakening it. choices must be made responsibly. we cannot fear only the risks of action and disregard those of inertia. bis central bankers β speeches | the cooperative banking groups formed just under a year ago are now in a position to face the challenges posed by the recession by reaping the benefits of integration. the ability to raise funds on the capital markets is vital today ; any steps backward from what has already been achieved would constitute a grave and costly regression. close ties to local communities and their mutualistic spirit do not remove the need for strong governance and skilled managers, both in the parent company and in the member cooperative credit banks. profitability must be sufficient to ensure that they are adequately capitalized, a precondition for the performance of their cooperative role. banca d β italia the governor β s concluding remarks annual report 2019 in financial intermediation, too, the public health emergency and the containment measures have made the advantages of digital solutions even more tangible. this will inevitably lead to an acceleration of investment in new technologies, which with the achievement of appropriate economies of scale can be made at a lower cost and to greater advantage. these savings, in turn, will make it easier to raise the resources necessary to support investment, including through access to the financial market. there are many areas that could benefit from technological innovation : service distribution, customer creditworthiness assessment and monitoring, and regulatory compliance processes. in the retail payments sector, a traditional incubator of innovation, the opportunities offered by technology can provide real benefits to users of the services. the supply of bank loans to firms through digital channels, which is still very limited in italy, can now make rapid and substantial progress. the bank of italy is active on a number of fronts to address the changes prompted by technological innovation in financial services. we have strengthened dialogue with operators through our innovation hub, our fintech channel, and through new procedures to authorize market access ; we are collaborating with the ministry of economy and finance in a forum for authorities on digital innovation and participating in the launch of a regulatory sandbox ; we support the development of system solutions designed to ensure the proper balance between the need for standardization and competition in innovative sectors, procedures for updating regulations and legal certainty, new investments and risk mitigation. we will soon establish a dedicated unit tasked with proposing and coordinating fintech initiatives, as well as monitoring retail payment services and instruments. this will allow us to capitalize on the synergies between banknote circulation, electronic payments and digital services, and strengthen our capacity to observe phenomena that could lead to the development of new products in the future. our efforts remain focused | 0.5 |
##b endevours to increasingly establish an enabling regulatory environment for innovation to take place. one of the benefits of payments innovation is the potential expansion of access to financial services and achieving financial inclusion to reach the under - and unserved see the national payment system act, available at www. resbank. co. za > regulation and supervision > national payment system ( nps ) > nps legislation. page 6 of 9 consumers and to reduce transaction costs while providing greater transparency with simpler products and greater convenience and efficiency. by leveraging technology and proactively shaping a conducive environment for innovation through regulation, the payments system can serve as a gateway to achieving financial inclusion and address the need to deepen and strengthen access for both consumers and providers. as the payments industry becomes increasingly innovative and continues to improve the traditional payments landscape, regulatory and legislative frameworks need to be flexible and adaptable to these changes and provide an enabling environment for innovation to thrive. furthermore, the regulatory framework should remain robust and resilient to risks that may be posed to the safety and efficiency of the payments system. a number of developments have necessitated a rethink of the adequacy and relevance of the existing payments regulatory framework. these include global policy developments, relating to financial inclusion, access, financial stability, financial integrity and competition, international best practice and standards, and recommendations from global policy - setting structures, including the assessments undertaken by institutions such as the world bank and the international monetary fund. how the south african reserve bank collaborates with the industry in 2015, the sarb initiated a project to develop a vision for the national payment system. this process culminated in the drafting of the national payment system framework and strategy : vision 2025 document ( vision 2025 ). the sarb is currently in the last phase of consultations with the industry regarding the strategies that will be implemented to advance the development of the national payment system. the vision 2025 process has and will continue to be consultative and collaborative. in march 2016, the sarb executive approved the establishment of an internal virtual currencies ( vcs ) and distributed ledger technologies ( dlts ) steering committee ( steerco ) and working group. subsequently, we established a fintech steerco and working group. these structures are tasked to strategically review the emergence of fintech initiatives and assess the related use cases. their primary responsibilities page 7 of 9 include the facilitation of the development and review of policy positions for the sarb across its | is conducted. in particular, it has affected the volume of international financial transactions. international transactions in goods and services have become considerably less important than financial transactions. the closely linked financial markets have changed the monetary transmission mechanism, and shocks that occur in one country can easily have an impact on other countries. as a transition phase of or perhaps as an alternative to globalisation, considerable emphasis has been placed on closer international co - operation, convergence and integration since the end of world war ii. many regional economic co - operation arrangements have been formed or are under consideration. the aim of these regional arrangements is to free international trade and financial transactions between a group of countries. but many of them also want to encourage the movement of labour across domestic frontiers and the eventual attainment of political unions. the establishment of the european union is, of course, the best example in this regard. this regional arrangement has created the largest government bond market in the world and led to the development of the euro into a major international currency. another important structural change in the world β s financial market has been the achievement of greater price stability. over the past twenty years the rate of inflation has declined dramatically in most countries of the world. the disinflation process was at first mainly concentrated in the industrialised countries. according to the international monetary fund the average annual inflation rate in the major advanced countries already started to decline from the early 1980s from 12, 3 per cent in 1980 to 1, 7 per cent in 2003. by contrast, the average inflation in emerging - market and developing countries continued to increase from 25, 0 per cent in 1980 to 107, 7 per cent in 1992, before declining sharply to 6, 1 per cent in 2003. these developments brought the average rate of inflation in the world as a whole down to only 3, 7 per cent in 2003. this disinflation process has been so strong that some countries even experienced declines in their average price indices. consumer prices have actually been declining in japan and hong kong for quite a while, while some other countries such as china recorded decreases for a short period. as could be expected, disinflation to low positive values has been accompanied by a corresponding decrease in short - term interest rates to low levels. finally the financial sector, just like all other activities in the world, has been severely influenced by the revolution experienced in information technology and telecommunication. in central banking the advances made in information technology and telecommunication have particularly led to a more efficient payment system catering for real | 0.5 |
risk - based supervision focuses on strategic and operational risks. strategic risk supervisory objective in strategic risk supervision, supervisors have to ensure that financial institutions have efficiently managed their it resources and are prepared for the future development of core businesses. supervisory areas therefore, to achieve such objective, supervisors will assess risks that may arise in the following areas. policy perspectives since enterprise activities require information from it to meet business objectives, effective it strategic planning is mandatory. the strategic plan refers to how to utilize it in an organization. it must be aligned with and enable the enterprise to take full advantage of its information, thereby maximizing benefits, capitalizing on opportunities and gaining a competitive advantage. as such, it policy, plan and procedure are the concentrated areas for supervisors to examine. we anticipate a financial institution's policy to cover all necessary areas pertaining to it activities including contingency plan, security, and out / in - sourcing. in addition, the policy should cover new product issuance such as internet banking and e - money. the process of formulating, implementing and maintaining of such policies should be considered. a continuous risk assessment and monitoring should also be part of an area of examination. management support and oversight it is ultimately a responsibility of a financial institution's board and management to extend governance to it and provide the leadership, organizational structures and processes to direct and control the enterprise. management must monitor to ensure that it resources are properly managed to promote business objectives. it governance during the last few years, financial institutions have increasingly invested in technology infrastructure to improve their internal processes and servicing capabilities. investment in technology infrastructure normally involves huge amount of funds and other resources. technology also carries risks, which can adversely affect financial institutions if not properly managed. financial institutions need to understand the strategic importance of it, manage it to effectively deliver value to business, and mitigate risks arisen from the use of it. it governance focuses on how financial institutions make the best use of their invested technologies. it is a high - level it control framework related to the formulation of it strategies, the management of it processes to deliver value, the performance measurement, and the management of it - related risks. we believe that effective it governance process will enable financial institutions to effectively utilize their technologies to meet business'expectations and to add value to their business. in that way, it will truly help the organizations to improve competitive advantage, customer satisfaction, cost efficiency, and ability to grow and innovate the business. eventually, it will help | a result of the catching - up process, the accession countries will probably find their equilibrium real exchange rates increasing in the years ahead. 3. as inflation rates in some accession countries are still considerably different from those in the current eu countries, the exchange rate regime must also take account of the risk of higher current account deficits and of competitiveness. in the transition period from eu accession to joining emu, efforts must therefore focus on the consistency of exchange rate strategy and macroeconomic policy. participation in the exchange rate mechanism is only appropriate if pegging the exchange rate more closely to the euro is in line with the general macroeconomic situation. in my opinion, the european exchange rate mechanism is an adequate way of preparing for adoption of the single currency. this mechanism can help to limit exchange rate fluctuations in a credible multilateral system, without preventing a certain degree of exchange rate flexibility. however, it should be noted that there may be cases, in which even the broad bands of erm ii may not be wide enough to accomodate the necessary exchange rate adjustments during the integration process. this may be due, for example, to liberalisation measures or persistent changes in the relative see frankel, j. ( 1999 ), β no single currency regime is right for all countries or at all times β, nber working paper no. 7338, cambridge. see von hagen et al. ( 2001 ), β sustainable regimes of capital movements in accession countries β, presented at the bundesbank conference held in eltville on 26 - 27 october 2001. see wolf, h. ( 2001 ), β exchange rate regime choice and consequences β, presented at the bundesbank conference held in eltville on 26 - 27 october 2001. prices. it is therefore best to wait until the initial impact of eu accession is over before taking part in erm ii. this is the best way to avoid speculative attacks. this is particularly true of the present free floating currencies, whose proponents consciously stress exchange rate flexibility or the advantage of an autonomous monetary policy. premature participation in the exchange rate mechanism could prompt the foreign exchange markets to β test β this mechanism. in countries which have already maintained a fixed exchange rate peg to the euro for some time, it is argued that the current high degree of integration is β relaxed β by accession to erm ii, in other words by adopting an exchange rate band. this could lead to the risk of distortions. but in this context it should be taken into | 0 |
##omc members resume their discussion, focusing now on their policy preferences. in the twenty fomc meetings in which i have participated, chairman greenspan's participation in the discussion until this point has been limited. i suspect that this fact might surprise most fomc observers as chairman greenspan, like virtually all of his predecessors, is considered almost the personification of monetary policy. yet before the chairman offers his first substantive comments at these meetings, eighteen other participants, representing literally hundreds of hours of study and analysis, have provided their input. considering the complexity of the u. s. economy and the implications of monetary policy on the world economy, the issue facing each fomc member is deceptively simple. we establish a target interest rate for what is known as federal funds - or, more commonly, fed funds. fed funds constitute an interbank arrangement that allows banks with surplus balances at their federal reserve bank to loan those funds overnight to banks that temporarily need to borrow to meet their balance requirements. an individual bank's balances on their federal reserve accounts can vary significantly depending on the dollar amount of the checks cleared that day, the volume and sequence of wire transfers in and out of the bank's account, and changes in investment or lending at the bank. in the aggregate, fed funds are an important indicator of liquidity in the banking system and, by implication, the money supply. all fed funds loans are for a single day, and the interest rate is reestablished daily. fed funds rates thus are an excellent barometer of both the price of money and the changes in the money supply. the federal reserve act requires that monetary policy promote maximum employment, stable prices and moderate long - term interest rates. happily, in this instance, congressional intent is also sound monetary policy. former federal reserve chairman paul volcker once said, β no central bank can - or should, in my judgment - conduct policies for long that are out of keeping with basic, continuing objectives of the political system. β 2 when i was a young banker in the 1960s, many of my loan customer's decisions were affected at least in part by memories of the great depression. while depression fears were widespread, the ravages of high inflation elsewhere, such as post - world war i europe, had not been experienced here. in fact, many people had a positive view of inflation as leading rising property values and were not convinced that inflation was inherently bad. public policy decisions with inflationary implications - | β are engaged in a similar process. i can assure you that the federal reserve has not spared any effort in preparing its internal systems and the financial services and products we provide to financial institutions for the year 2000. we have completed y2k preparations for our services and products, and in june 1998 we opened a testing facility for our customers. to date, more than 9, 000 financial institutions have tested the services they use with the federal reserve. these represent all of our major customers in terms of transaction volume and dollar amount of the items processed through the federal reserve. we also have tested the automated payment services we provide to federal agencies such as the social security administration to ensure that banks can receive government payments and then post the deposits to their customers β accounts. the new york clearing house, in particular, and other private commercial entities that process wholesale and retail payments have followed testing programs similar to ours. no one can say with certainty that there won β t be any problems or disruptions during the century rollover. however, based upon the information i have shared with you, we expect that any disruptions or glitches in the united states that do occur will be minor and of limited duration. moreover, because there is an expectation that something somewhere will go wrong, the financial sector β from the regulators to the markets and payment systems to the smallest introducing broker or bank branch β is preparing contingency plans. i would also like to emphasize that a percentage of automated systems are down every day without causing serious disruptions to commercial transactions and markets. for example, 1 β 2 % of atm machines in the united states are down at any given moment β some simply because they are out of paper β yet consumers know to go down the block to another machine or into the bank branch or local supermarket to obtain the cash they need. even more serious disruptions periodically occur : the new york stock exchange and, only last month, the chicago board of trade computers have experienced glitches that caused their markets to close temporarily without causing serious disruption to the us financial markets. in all of these situations, americans react with typical aplomb : they prioritize and address the most serious safety and well - being issues first, and they usually are willing to tolerate some inconveniences and delays related to less - critical needs. increase in readiness information and readiness of other domestic sectors as i said earlier, my assessment of the financial services sector is based on publicly available facts and information. even as late as | 0.5 |
price moving about too much : it is not only domestic prices that matter for price signals to the domestic economy. and, in any case, consumers care about the cost of living ( ie aggregate prices ). regard as the bedrock or base of good economic policymaking - the application of common sense. in circumstances where countries are receiving large capital inflows which are difficult to absorb, the first question might be whether something could be done to slow down these capital inflows without distorting the economy too badly, in order to help the transition process. the sorts of things which might be done here are very intrusive prudential supervision and various rules ( or at least monitoring ) on all those who borrow overseas, if only to try to put some β sand in the wheels β. chilean - style capital inflow controls might also be a possibility. direct foreign investment may be easier to absorb ( the goods inflow comes as part - and - parcel of the capital inflow, so the transfer takes place with less upward pressure on the exchange rate ). having done whatever is feasible and sensible to try to rein in the capital flows ( and hopefully make them less volatile by slowing down the herd ), what should be done then? there is little doubt in my mind that the exchange rate should appreciate. this is part of the necessary process of bringing about the real transfer of resources ( a current account deficit ) which is the counterpart of the financial flows. but, to the extent that the exchange rate may well overshoot in this process, intervention is a legitimate policy option. we all know the constraints and difficulties with this. in particular, it is fiscally very expensive. but it can be a useful instrument in the toolbox, for moderate, occasional and discrete use. the extra element which can, it seems to me, be legitimately applied in these circumstances is to be vigilant in the face of asset price rises, and to use whatever instrument ( within reason ) can be used to prevent such bubbles from occurring - prudential rules, taxation, and even the classic fall - back, bureaucratic red tape. of course, there is some hope that the rising exchange rate might discourage the capital inflows ( the textbooks say that it should ), although i have little faith that this mechanism will work at all smoothly, and there is too much evidence of herd and euphoria behaviour to give me any confidence that flexibility in the exchange rate will be an effective break on the | we have the flexibility to pursue our price stability objective while taking into account developments in balance sheets in a way that can be difficult to do in more rigid monetary policy frameworks. so that is australia. welcome. there is a lot to like here. in the spirit of openness and transparency though that i mentioned a moment ago, we are not without our challenges. i will talk about a few of those in a moment. i first want to say a few words about openness to trade and investment and its role in australia β s prosperity. 1 / 4 bis central bankers'speeches australia is a country that has benefited greatly from the open international trading system. our ability to sell to the rest of the world goods and services that we can produce really well has boosted our living standards. we also benefit from being able to buy goods produced overseas. and the need to compete with others is one of the things that leads us to strive to do things better. australians have also benefited from the relatively free flow of financial capital. year after year, for more than two centuries now, capital from the rest of the world has helped build our country. if we had had to rely on just our own resources, we would not be enjoying the prosperity that we do today. our asset base and our productive capacity would be lower, and so too would our standard of living. as investors, australians have also benefited from being able to diversify our portfolios by buying foreign assets and by building strong businesses overseas. so, again, that is australia. we provide a very good illustration of how a medium - sized country that is committed to an open international order, has a strong role for markets and a floating exchange rate, a largely open capital account and a dynamic and innovative financial sector can prosper in today β s complex world. i promised openness and transparency. so now to some of the issues, or challenges, that we face. the first is to reinvigorate productivity growth. australia, like many other advanced economies has experienced slower productivity growth over the past decade. in our case, this has been partly due to a large increase in mining investment in response to soaring commodity prices. in recent years though, as the new production made possible by all this investment has come on stream, the productivity figures have improved. this is clearly good news, although underlying productivity growth remains relatively modest. a number of structural factors are at work here. if we do not address these factors, then we will have to adjust | 0.5 |
joanne kellermann : the challenge of diversity in central banks speech by ms a j kellermann, executive director of the netherlands bank, at the european central bank ( ecb ) diversity forum, frankfurt am main, 28 march 2011. * * * within de nederlandsche bank, role models are important for the emancipation of its female staff. as the first and only woman on dnb β s governing board, i am glad to act as a role model in that sense. although dnb may appear to be a male bastion, it β s good to remember that its continuance β shortly after its establishment β depended on a woman : the widow borski. when king willem i founded de nederlandsche bank in 1814, not all of the 5000 issued shares were sold immediately. however, madam borski had confidence in the newly established bank and, in 1815, she decided to buy the remaining 2000 shares. her purchase was subject to a secret condition that the king would not issue any extra shares for three years. many years later madam borski sold her shares at a tidy profit. introduction β general many women are inclined by nature to wait until the organisation notices their management potential. they only apply for a position if they comfortably meet all the job requirements. when interviewing job candidates of their own sex, recruiters tend to more easily recognise gender - specific aspects and to value them more highly. personal within our organisation too β despite our successful diversity policy β these gender aspects sometimes play a significant role. as a woman member of dnb β s governing board, i see it as my task to speak out in such situations. for example, not a single woman was included in a recent list of potential candidates for the position of divisional director. however, i was able to intervene to add the name of a good female candidate to the list. why do we need a diversity policy? dnb is convinced that diversity among its staff will lead to better results. in view of the tighter labour market, dnb is keen to use female potential. finally, as a guardian of financial stability, dnb has an important social role. in keeping with our social responsibility, we wish to pursue a diversity policy that ensures that our workforce is a good reflection of our society. this means that diversity within dnb embraces more than just the gender aspect, which i am focusing on today. cases in point are employees with different cultural backgrounds, an occupational handicap or different sexual preferences. i β m glad | prasarn trairatvorakul : economic transformation and inclusive growth in frontier economies welcome and opening remarks by dr prasarn trairatvorakul, governor of the bank of thailand, at the conference on β economic transformation and inclusive growth in frontier economies β, jointly organized by the international monetary fund ( imf ) and the japan international cooperation agency ( jica ), bangkok, 28 january 2013. * * * ministers and central bank governors, distinguished guests, ladies and gentlemen, 1. it gives me great pleasure and honor to welcome each and every one of you to thailand, and more specifically, to the conference on β economic transformation and inclusive growth in frontier economies β. this event is the second in a series of conference jointly organized by the international monetary fund ( imf ) and the japan international cooperation agency ( jica ). 2. the topic of the conference is timely and relevant to current developments in the region. frontier economies are new and becoming large markets. they all have the potential to grow into tomorrow β s emerging economies. in recent years, we witness faster economic growth in frontier economies than larger emerging economies. we have seen frontier economies integrate into the regional and global economy. 3. frontier economies are full of potential. however, continued efforts on strengthening policy frameworks are still needed. this is to ensure long term economic growth and sustain robust economy. and i believe that today β s conference will contribute to these efforts as we will share and learn the appropriate lessons of others. one can leap jump the process, without repeating the mistakes. our discussion will revolve around the critical decisions on policy considerations for economic development and the way forward. 4. sharing lessons about economic development leads naturally into a discussion about the development experiences of thailand. thailand β s rapid growth between the late 1970s and 1997 was the result of the structural transformation. we moved from primary production to industrial production, mostly manufacturing and high - value agricultural products. the combination of ( 1 ) processed agricultural products, ( 2 ) import substitution industrialization, and ( 3 ) export promotion was the principal feature of economic development. 5. moving up global production chains elevated thailand β s per capita income of $ 100 in the early 1960s to nearly $ 3, 000 after 1997. more importantly, the process has resulted in the dramatic fall in poverty and improved the living conditions of the thai people. the rate of poverty had been reduced from 57 per cent in early 1960s to around 24 per cent in 1981 and to 8 | 0 |
comments to make on that matter, but let me say that governor georghadji is a trusted member of the governing council of the ecb and has worked hard for the well - being of cyprus. after reading what the government spokesman said on monday i am pleased to see that there is no disagreement between the governor and the government and that the issue is abating. bis central bankers β speeches | make banks β shareholders and investors more prudent and will better protect european taxpayers from any misbehaviour by banks. that said, the best way to prevent crises in the future is to make sure that our economies are prudently managed and that we don β t let financial imbalances develop, as was unfortunately the case before the crisis. 4. the biggest challenge that cypriot banks have to face today is how to manage and resolve the extremely difficult and sensitive issue of loan servicing β¦ the cypriot economy needs a functioning banking sector which contributes to the economic recovery. that can only be achieved if the non - performing loan issue is addressed forcefully. for that, the structure of incentives would have to be changed, so that both borrowers and lenders have a common interest in finding a pragmatic solution to the debt problem. the data tell us that this is not happening. conversely, non - performing loan levels are continuing to increase. the reform of the foreclosure process is part of the change that has to come about. in this respect, i welcome the supreme court decision on the unconstitutionality of the four parliamentary bills concerning the foreclosure law. this will help to contribute to the reduction of non - performing loans in the banking system and recreate margins of manoeuvre for banks to extend loans to profitable projects supporting the recovery. bis central bankers β speeches 5. the cypriot economic adjustment programme was well on track until recently. however, when political decisions touch upon legal reforms, such as foreclosures and privatisation, delays arise amid reactions β¦ the work of the cypriot authorities and their commitment to the programme has been commendable. those measures were painful and they have imposed a large short - term cost on the economy and cypriot society. but they have started to pay off. they have helped to stabilise the economy and to improve the confidence of international investors. institutional and legal reforms are fundamental to enhancing the business environment and boosting economic growth and job creation. this raises difficult political discussions in cyprus, as in any country, but such discussions are nonetheless indispensable, as this is about changing the business model of the cypriot economy, and we are in a democratic society. 6. policy in the euro area is characterised by the lack of a common approach, given that the ecb is willing to proceed, if necessary, with further monetary policy easing and has called on those governments that have room for manoeuvre to loosen | 1 |
michael c bonello : fiscal reform - an imperative for sustainable growth and development speech by mr michael c bonello, governor of the central bank of malta, at the institute of financial services annual dinner, st julians, 11 november 2004. * * * i should first of all like to thank you, mr. president, for inviting me to your annual dinner and for the opportunity to share my thoughts once again with such a distinguished audience. i must also congratulate you on your recent election as president of ifs - malta and wish you and your committee every success in your endeavours to ensure that the institute β s educational programmes remain relevant in today β s complex financial services environment. as you rightly pointed out in your first message to your members, in a situation which is rapidly evolving, β we must be prepared to embrace change. β i have a similar message to convey tonight. inspired by the words of george washington that β there is no practice more dangerous than that of borrowing money β, mine is essentially an appeal to the country to leave behind its spendthrift ways and to learn to live within its means. i shall therefore make a case for fiscal reform. now some might wonder why a central bank governor should be so concerned about the state of the country β s public finances. put simply, the reason is that a persistent excessive deficit situation represents a potential threat both to price and financial stability, which are key objectives of most central banks today. the central bank of malta seeks to achieve these objectives through the operation of an exchange rate peg. the bank β s ability to maintain the peg in an environment where capital flows freely across borders, however, depends crucially on financial market perceptions regarding the effectiveness and sustainability of macroeconomic policy, particularly fiscal policy. in this context, the present deficit scenario is not helpful and, if not corrected, could oblige the bank to raise interest rates. the role of governments how and why have fiscal deficits become a problem? in the first decades after the second world war, governments came to play a key role in promoting economic growth and social development. in today β s free - market economies, moreover, they provide indispensable support to the activities of the private sector and also play an important role in curbing its excesses. another function of governments concerns economic stabilisation. they can intervene to stimulate aggregate demand in periods of recession and to restrain it at times when the economy is booming. under appropriate demand and supply conditions, | such intervention can contribute to a more favourable investment environment and, in turn, to growth. perhaps the most important tool governments use to pursue these objectives is public expenditure. taxation and borrowing may be viewed as ways of financing such expenditure, but they also constitute important tools in their own right. effectiveness of government intervention government intervention in the economy has important implications not only for competitiveness and growth, but also for the promotion of the social dimension of development. it is thus essential to ensure that society obtains full value for the resources devoted to public sector activities, both in terms of the quantity and the quality of the outputs produced. now whereas in the private sector failure to deliver value for money eventually results in bankruptcy, there exists no such effective sanction in the public sector. this is partly because expenditures are typically financed through general taxation and borrowing, and the funds thus raised are not directly earmarked for specific expenditures. inadequate enforcement of accountability standards is another reason. it is also the case that industrial relations and human resource management in the public sector are often undertaken without sufficient consideration for budget constraints, while job security and tenure are taken for granted irrespective of performance or productivity levels. a further dimension of this problem is the fact that the success of government spending tends to be measured more in terms of its potential to produce electoral dividends than in a longer - term growth perspective. all of these factors reduce the incentive to use resources efficiently. similar arguments apply to the welfare system, where the size of the expenditure can easily exceed that required to maintain social cohesion and the focus be diverted away from genuine needs. this situation has materialised in a number of countries, including the more advanced economies in the eu, which are now facing hard choices regarding the future of health and pension systems. invariably, the most difficult challenge in implementing reforms in these areas is to convince people that services which were hitherto provided by government for free, or at a subsidised cost, are no longer affordable by the country. there are, therefore, a multitude of pressures to increase government expenditure over time. and as tax revenues often prove unable to keep pace with such commitments, fiscal deficits emerge leading to an accumulation of debt. in turn, this produces a growing debt - servicing burden, creating a vicious circle in which unproductive outlays effectively crowd out the scope for productive expenditure. fiscal deficits are also the result of inadequacies in the design and implementation of tax structures. in this regard | 1 |
market. central banks and governments share the responsibility to facilitate and promote the development of local bond markets, remove market friction and unnecessary restrictions, and provide an environment that is conducive to both supply and demand, that is to both the issuers and investors. bond market development has been targeted by the central bank over the past years through various initiatives. this included the establishment of an appropriate market infrastructure that facilitates costeffective and secure trading, and a transparent price discovery process. with regard to secondary market development, you all know that we set a secondary market cell within the bank in 1994. we established a primary dealer system in 2002. treasury bills have been listed on the stock exchange of mauritius since 2003. we have re - introduced sales of treasury bills and treasury notes at the counters of the bank of mauritius last july. the deepening of local currency bond market across a range of maturities will encourage increased participation by institutional investors. we have started issuing medium β to long β term bonds on a more regular basis to develop a benchmark yield curve for government securities across the whole spectrum. this will facilitate the development of a corporate bond market. in 2007, the european investment bank, with the state bank of mauritius and west lb from south africa as lead managers issued synthetic mauritian rupee debt in the international market. we are now considering a proposal from the world bank for the government to allow them to issue mauritian rupee denominated or linked bonds in the end, however, there is only so much that the authorities can β or should β do. whilst these initiatives add up to the necessary conditions for market development, they are unlikely to prove sufficient on their own. however good the infrastructure may be, it is for the players themselves, that is the issuers, investors and the financial intermediaries to eventually determine the shape and size of the market. it is also of paramount importance that market players adopt a participative approach for the development of the money market, as the existence of trading limits are impeding the development of these markets. allow me now to dwell a little on the challenges that a small country like mauritius is currently facing in the conduct of monetary policy. today, the bank of mauritius finds itself confronted with the important challenge of reducing the rate of inflation, which stood at 9. 0 percent at the end of february 2008, and preserving the competitiveness of the export - oriented sectors. and we must meet this challenge against a backdrop of unprecedented capital | extended benefits expire. 16 moreover, at least some of the recent outward shift in the beveridge curve appears to reflect cyclical rather than structural influences. for example, vacancies typically adjust more quickly than unemployment to changes in labor demand, causing counterclockwise movements in vacancy - unemployment space that can look like shifts in the beveridge curve. indeed, as is evident from the figure, such counterclockwise movements have occurred in most previous recessions. finally, it is worth emphasizing that most of the co - movement between unemployment and vacancies in recent years does not appear especially unusual. in particular, low vacancies and elevated layoffs β likely driven by weak labor demand β can account for much of the increase in unemployment that has occurred since mid - 2008. 17 this observation is in accord with the recent behavior of inflation, which, as noted above, has trended down over the past three years, consistent with a decline in rates of resource utilization. likewise, nominal wage growth has fallen noticeably over the past several years and remains quite low. in sum, while deficient labor demand may not be the only factor boosting unemployment currently, and while disentangling the various influences on unemployment is not straightforward, weak labor demand appears to be the predominant factor keeping the unemployment rate elevated. this weakness, in turn, implies that current resource utilization is likely well below normal levels, mitigating the risk that the policy stimulus from our asset purchase program will lead to excessive inflation. inflation and bank reserves. a second reason that some observers worry that the fed β s asset purchase programs could raise inflation is that these programs have increased the quantity of bank reserves far above pre - crisis levels. i strongly agree with one aspect of this argument β the notion that an accommodative monetary policy left in place too long can cause inflation to rise to undesirable levels. this notion would be true regardless of the level of bank reserves and pertains as well in situations in which monetary policy is unconstrained by the zero bound on interest rates. indeed, it is one reason why the committee stated that it will review its asset purchase program regularly in light of incoming information and adjust the program as needed to meet its objectives. we recognize that the fomc must withdraw monetary stimulus once the recovery has taken hold and the economy is improving at a healthy pace. importantly, the committee remains unwaveringly committed to price stability see barnichon and | 0 |
target is irrelevant and should be scrapped, we have, given our mandate, an obligation to bring this up to discussion and point out that we consider it to be a problem. when it comes 10 see, for instance, calmfors ( 2018 ) and calmfors et al. ( 2019 ). it should be pointed out that there are studies indicating a certain amount of wage flexibility with regard to changes in unemployment at a regional level, see carlsson et al. ( 2019 ). 11 down to it, sweden is not the only country with an inflation target of 2 per cent and an industrial sector exposed to international competition. important to have perspectives on the krona development let me now go over to the other area i wish to delve deeper into ; the exchange rate and development of the krona. when sweden introduced an inflation target in 1993, we chose an exchange - rate regime at the same time. as i just pointed out, a fixed exchange rate and an inflation target with a floating exchange rate are two different ways of trying to provide the economy with a nominal anchor, that is, a benchmark for price - setting and wage formation. an inflation target tries to steer expectations in the economy directly, while a fixed exchange rate tries to steer them indirectly, by virtue of it becoming more costly if price increases and wage growth are higher than abroad. as we have established, the latter disciplinary mechanism did not work well for sweden. so all that remained was to test an inflation target. my firm conviction is, as i have already touched upon, that the political system clearly supports the system with an inflation target of 2 per cent and a floating exchange rate, and my perception is that the same applies for a large majority of the swedish people. it is reasonable to assume that they therefore also expect the riksbank to do what it can to maintain confidence in the inflation target. it would be odd if the idea was for sweden to, on the one hand, have an inflation target but that, on the other hand, it was not so important for the target to be credible, nor for the riksbank to try to ensure that this was the case. if the view is that confidence in the inflation target is important, it follows, or at least should follow, that there is an acceptance that, when the riksbank conducts an expansionary policy to maintain confidence in the inflation target, the krona exchange rate will be affected. this occurs via the normal exchange - rate channel of | lars nyberg : some swedish experiences with financial stability surveillance speech by mr lars nyberg, deputy governor of sveriges riksbank, at the bank indonesia, jakarta, 10 december 2003. * * * introduction first of all i want to express my thanks to the bank of indonesia for inviting me to this conference. financial stability - or the lack of it - is a very topical subject in the light of events in the past decades. furthermore, financial stability issues seem to be strikingly similar between countries, whether they are big or small. it makes good sense, therefore, to have different central banks talk about their experiences. and, as always, the best experience comes from mistakes made. with this in mind, i shall tell you a little of how we in sweden look at stability surveillance today. first, some background. systemic stability came under serious threat during the swedish banking crisis at the beginning of the 1990s. as was later the case in indonesia, the risk of severe financial instability led to government intervention. a decision at very short notice was required of sweden β s government and parliament in the autumn of 1992 : should they choose to support swedish banks financially without really knowing how expensive the support might have to be, or should they risk a financial crisis with unforeseeable consequences for the swedish economy? the decision that was taken was the only reasonable option - to rescue the swedish banks. the government issued a general guarantee for the banks β liabilities and set up a special bank support authority to cope with the banks that were in serious difficulties. the government, explicitly supported by the opposition, acted just as vigorously and promptly as the situation required. but this did entail making a decision on the basis of insufficient information about the causes and depth of the crisis - that could have burdened the government budget with at least 10 billion us dollars. having to take such important decisions at short notice and without adequate information about the financial system is an experience we do not wish to repeat. the riksbank is accountable to the swedish parliament with regard to keeping a stable price level our inflation target - but also with regard to promoting financial stability and a safe and efficient payment system. after the crises there was room for some self - criticism in this respect. in practice, we had not supported our stability target with any systematic analytical work on overall stability. to address this, we started to build up knowledge and analytical capability in the field of stability. by publishing a financial stability report in 1997, we were among | 0.5 |
, the weight on the former will be increased while the weight on the latter will be reduced. these are interesting ideas, and we will explore them in greater detail. finally, let me turn to consumer literacy and protection. as we reach more and more of the population, we have to be sure that they understand the products they are being sold and have the information to make sensible decisions. caveat emptor or let the buyer beware is typically the standard used in financial markets β that is, so long as the buyer is not actively misled, she is responsible for researching her product choices and making purchase decisions. while this puts a lot of burden on the buyer to do due diligence, it also gives her a lot of freedom to make choices, including of course the freedom to make bad choices. but with poorly informed and unsophisticated investors, we should consider the dr. nachiket mor committee β s recommendation of setting some guidelines on what products are suitable for different categories of investors. broadly speaking, the more complicated the product the more sophisticated should be the target customer. should we move to a norm where a suite of simple products is pre - approved for dissemination to all, but as products get more complicated, financial sector providers bear more and more responsibility to show that the buyer was sophisticated and / or appropriately counseled before she purchased the product? of course, the longer run answer is for customers to become more savvy. can the technology sector help educate people in financial matters? after all, finance is not something most people learn in schools, but it is something they encounter every day in the world. low cost but high quality distance finance education is something the country very much needs and we look to entrepreneurs here to think of innovative ways to provide it. before i conclude, one caveat. technology can magnify the reach of finance for bad purposes as well as good. many of you must receive frequent emails, purportedly from me, informing you of a large sum of money that awaits you at the rbi, and urging you to send me bis central bankers β speeches your account details so that i can transfer the money to you. let me assure you that the rbi does not give out money, i do not send these emails, and if you do fall for such emails, you will lose a lot of money to crooks and be reminded of the adage β if anything looks too good to be true, it probably is not true. | 3. 8 per cent in 2009 β 10 ( table 1 ). however, the inflation rate backed up and stayed near double digits during 2010 β 11 and 2011 β 12 before showing some moderation in 2012 β 13. given india β s good track record of inflation management, the persistence of elevated inflation for over two years is apparently puzzling. second, the deceleration of growth and emergence of a significant negative output gap has failed to contain inflation. it is understandable if inflation goes up in an environment of accelerating economic growth. there could be a situation when the real economy is growing above its potential growth that could trigger inflation what economists call an overheating situation. it is like an electric cable exploding if we overload it with appliances beyond its capacity. but, that is not the case. the reserve bank estimates suggest that the potential output growth of the indian economy dropped from 8. 5 per cent pre - crisis to 8. 0 per cent post - crisis and it may have further fallen to around 7. 0 per cent in the recent period. even against this scaled down estimate of potential growth, actual year - on - year gdp growth has decelerated significantly from 9. 2 per cent in the fourth quarter of 2010 β 11 to 5. 3 per cent in the second quarter of 2012 β 13. the loss of growth momentum that started in 2011 β 12 got extended into 2012 β 13. during a boom, economic activity may for a time rise above this potential level and the output gap becomes positive. during economic slowdown, the economy drops below its potential level and the output gap is negative. economic theory puts a lot of emphasis on understanding the relationship between output gap and inflation. a negative output gap bis central bankers β speeches implies a slack in the economy and hence a downward pressure on inflation. so, india β s current low growth - high inflation dynamics has been in contrast to this conventional economic theory. real gdp growth has moderated significantly below its potential. yet inflation did not cool off. third, the reserve bank raised its policy repo rate 13 times between march 2010 and october 2011 by a cumulative 375 basis points. the policy repo rate increased from a low of 4. 75 per cent to 8. 5 per cent. still it did not help contain inflation. the critics of the reserve bank argue that monetary tightening rather than lowering inflation has slowed growth. interest rate is a blunt instrument. it first slows growth and then inflation. but the growth slowdown has not | 0.5 |
calls, partial tear - up or variation margin gains haircutting. such an assessment is critical in enabling a resolution authority to develop a credible ccp resolution strategy and in informing its decision on whether or not to place a ccp in resolution. a specific challenge in this context is the lack of granular data on central clearing interdependencies due to the strict confidentiality of data on the exposures of individual participants. while cross - ccp supervisory stress testing has proven helpful in gauging the systemic contagion risks arising from central clearing interdependencies, we have only seen a few such coordinated efforts so far. similarly, crisis simulation exercises to test the operational preparedness of authorities for potential stress events have been very limited. more also needs to be done to conceptualise non - default loss scenarios, reliable tools for absorbing the associated losses, and the roles and responsibilities of the various stakeholders. there are far fewer prefunded resources available for non - default losses than for default losses, so the risk of entering into ccp recovery or resolution for non - default related reasons may be higher than for default - related reasons. it is therefore critical to make progress in this area. in this context, we also need to reflect on how to ensure a fair loss allocation. while our choice can be guided by the basic premise that those taking the decisions should also be responsible for any losses, it is not always clear where we should draw this line. for example, the general principle that operational losses should be borne by ccps may not hold in the case of contagion risks emanating from a clearing member that has suffered a cyberattack. in addition, given the small amount of ccp capital, it is uncertain whether comprehensive loss absorption could be ensured in all circumstances. recourse to insurance or voluntary capital injections from parent companies may not be sufficient to ensure a reliable, timely and comprehensive response. in the area of client clearing, we currently see very diverse arrangements for sharing information and involving ccps in the relationships between clearing members and clients. this may result in uncertainties regarding ccps β ability to port client positions of a defaulting member in a timely manner, particularly as some clients hold very large directional positions. given the growth of client clearing and the increased degree of client clearing concentration in a few major clearing members, this may expose the financial system to unacceptable risks. joining forces to enhance coordination on risks in central clearing in order to address the problems i | jean - claude trichet : interview with bild am sonntag interview with mr jean - claude trichet, president of the european central bank, in bild am sonntag, conducted by messrs walter mayer and michael backhaus on 27 october 2011, and published on 30 october 2011. * * * mr president, your term of office comes to an end on monday. the euro is in stormy waters and the captain is leaving the ship. how hard is that for you? it has been an immense honour and responsibility to be president of the ecb for the last eight years, and to have been able to maintain price stability since the inception of the euro. the last four years have been a very challenging period for all the staff of this institution. this global crisis has presented all of us β both governments and central banks β with considerable and thoroughly unexpected challenges. in any case, this eight - year mandate, which is not renewable, is an essential feature of the independence of the ecb. in recent weeks and months you β ve spoken forcefully about this being the most severe crisis since the second world war. can you now give the all - clear, following the decisions taken by the heads of state or government this week? the global crisis began in the united states, before spreading throughout the industrialised world. the crisis is not over. it has laid bare the weaknesses of advanced economies. we are now seeing the weaknesses of the us and japanese economies β but also, of course, europe β s weaknesses. europe β s governments have made serious mistakes, such as failing to comply with the stability and growth pact. and they did so despite the fact that the ecb was emphatic in warning them of the importance of complying with the requirements of the pact. in addition, some countries failed to pay sufficient attention to their own competitiveness. the critical issue now is for the rules of the pact to be comprehensively tightened up and implemented. the european council was in full agreement on this point. what would be the worst case scenario were all of the member states β precautionary measures to fail? the decisions taken at the summit meeting need to be implemented with great precision and speed. the euro area β s heads of state or government have a plan, and national governments and the european commission now have some hard work ahead of them. swift and full implementation of those decisions is now absolutely critical. we will monitor this process very carefully. now is the time for action. | 0.5 |
, the citizens grow increasingly dissatisfied with policy - making and become detached from their leaders β actions. the gap is then filled by extremism and populism, two evolving diseases of societies today. moreover, despite an immense stock of knowledge that is accessible to an unprecedented number of people, we notice a lack of appetite for this knowledge, most surprisingly among younger generations. therefore, it appears that our real problem is not the lack of knowledge, but the lack of interest for knowledge. 1 / 2 bis central bankers'speeches i have to tell you that the national bank of romania has established 9 years ago its activity of financial education and last year we created a specialized department for this purpose. this conference is organized under the umbrella of our broader project academica, meant to stimulate the contacts between the academic world, our central bank experts and the public. with this triangle of knowledge, we hope to become more and more successful in reaching the hearts and minds of citizens, but also of policymakers and company managers. we have a long way to go in both directions. we still see large groups of population that have insufficient or zero knowledge about the economy and the risks to their economic life. the last survey on financial literacy in romania revealed that only 22 % of the adult population could be considered financially literate. this means that the rest of respondents have problems in understanding the perils of inflation or the risks associated with a bank credit. therefore, it goes without saying that in order to have successful policies, we have not only to integrate more knowledge in our policy design, but also to convince people to integrate more knowledge in their financial decisions. and this is twice as hard to achieve. these facts oblige us to realize that challenging the status quo means in the end challenging mentalities, both those of policymakers and of citizens. it is a very complex process, but we see it as an opportunity as well. we can transform education and awareness in very effective policy tools, to everybody β s benefit. we can surpass the objective limits of our policy actions, by making people more aware of these very objective limits. bridging the knowledge gap can lead to more financial inclusion, to more access to finance, which is good news for banks, companies, citizens and public authorities alike. ladies and gentlemen, my conclusion and my message for you, distinguished participants to this conference, and i do not want to sound old fashioned, is that we need research and economic analysis that is practical and can fill | issues. for example, she has signaled the major risk in not addressing climate change saying with humor : β our kids will be grilled, fried, toasted and roasted. β she also militates for encouraging women to seek education and enabling them to be more independent and provide for themselves and for their children. christine lagarde is chevalier de la legion d β honneur since july 2000, and commander of the order of merite agricole. she has an honorary doctorate from katholieke universiteit leuven ( belgium ). madame lagarde will address you today on a thought - provoking topic : eastern europe and romania : the path to prosperity. the format will be the following : after her presentation we will allow three questions from the media and three from our guests. madame lagarde, s β il vous plait β¦ the floor is yours. bis central bankers β speeches | 0.5 |
among others more volatile long term interest rates. but we shall deliver by 2025 with increased confidence : expect our next meetings, as said, to be a bit more boring. but if this is synonym for somewhat reduced page 14 sur 14 uncertainty and intelligent patience before future rate cuts, nobody should regret it. thank you for your attention. f. fukuyama, the end of history and the last man, 1992. g. gopinath, the temptation to finance all spending through debt must be resisted, financial times, 27 october 2023. iii f. villeroy de galhau, the future of multilateralism : three hard facts, three needs and one belief, speech at emerging markets forum, 11 october 2023. iv p. - o. gourinchas, resilient global economy still limping along, with growing divergences, imf blog, 10 october 2023. v g. lorenzoni, and i. werning, " inflation is conflict ", working paper 31099, national bureau of economic research, april 2023. vi o. blanchard, " the wage price spiral ", the quarterly journal of economics, august 1986, 101 ( 3 ), 543 - 565. vii c. lagarde, policymaking in an age of shifts and break, speech, jackson hole, 25 august 2023. viii f. villeroy de galhau, monetary policy in uncertain times, speech at london school of economics, 15 february 2022 ix below 2. 5 %, attention is low and insensitive to the actual level of inflation, but when inflation is above this threshold, inflation attention rises strongly with inflation. korenok et al. ( 2022 ) find similar results for a large sample of countries using google searches for inflation. o. de bandt et al., ( 2023 ) also show the good forecasting properties on future inflation developments from data on inflation perception derived from newspapers. this warrants monitoring such data from newspapers and social media. x f. villeroy de galhau, how monetary policy will defeat inflation : channels and locks, speech at centre des professions financieres, 17 february 2023. xi w. churchill, house of commons, 4 june 1940. i ii | . access through the portal is simple and quick ; in three clicks users can access free content carefully chosen for its educational qualities, neutrality and freshness. we have opted for a similar approach to the dutch " money wise " platform, in that it is both practical, with a limited amount of entries and materials, as well as cooperative, offering a variety of sources from all of our partners. in order to ensure that the national strategy is rapidly implemented, we rely on the operational committee, which i chair, and which is responsible for management and coordination. our roadmap for 2017 is clear : during the first half of the year, operational objectives will be defined and available resources will be identified ; and during the second half, a robust and effective assessment methodology will be developed. we are already actively working on introducing specific mechanisms for people in financial difficulty and students. to help those experiencing financial difficulties, we are working closely with social service providers to produce practical educational materials covering seven concrete subjects : budgeting, relationships with banks, credit, bank payment incidents, banking inclusion, overindebtedness and complaints. from june 2017, these materials will be made available to social workers and associations so that they can be used with people in financial difficulty. by the end of the year, the banque de france's teams have planned to hold nearly 900 meetings to present in detail these educational materials, as well as the " mes questions d'argent " portal, to 14, 000 social service providers. for students, in december 2016 the ministry of education set up a group of experts in which the banque de france and the french institute for public financial education actively participate. the group's objective is to develop appropriate educational materials that help teachers to introduce primary school pupils to the concepts of money, budgeting, credit and savings, and then to build on that knowledge in secondary schools and, if possible, up to the age of 18. the first information kits approved by the group of experts will be supplied to teachers for the beginning of the new school year in september 2017. the banque de france will promote their use to teachers in academies in accordance with its brief defined by the ministry of education. * * * 2 / 3 bis central bankers'speeches allow me to conclude by quoting the american musician, pete seeger, who had these wise words : " do you know the difference between education and experience? education is when you read the fine print ; experience is what you get when you don β | 0.5 |
see proposals by the market itself to create such systems for collective use, and we are ready to participate and see what the bank of russia can do. in general, the proposals put forward by mr aksakov, there are many of them regarding several areas β we will, of course, carefully develop them together with you. some have been worked out, some require further development, and we will maintain constant dialogue with you. we also understand that we have a fairly consistent, intense, and constructive dialogue with the association, and we value it very much. in conclusion, i would like to say that yes, every crisis entails losses. yet, there are not just losses, there are opportunities. it is a platitude, but we can see from the situation in the banking sector that this could be a new impetus and, above all, could kick - start the expansion of digital banking. that should be taken advantage of. on our end, as a regulator, we will do our best to ensure that all banks are on an equal footing in this race. to close, i would like to highlight that the way the banking system is handling the situation really inspires optimism. rapidly adapting to new conditions, restructuring its work all the while implementing large - scale restructuring programs ( i do not recall there being such large - scale restructuring programs in recent history ), and at the same time not stopping lending β it really was a very serious challenge. the banks are dealing with it honourably. there are rough edges of course. there are always problems and we are discussing them, but in general, of course, we are coping. i hope that at this new stage, the economic recovery stage, banks will be full participants in the economic recovery process, expand lending, create new services, and, in fact, add new value for their customers by responding to the needs of the people and business. i wish you all every success. thank you for your attention. 7 / 7 bis central bankers'speeches | an increase in prices for a broader range of goods and services. this in turn explains the readiness to pay more and pushes prices upwards. actually, we are already observing such an environment, which once again proves that households β inflation expectations are currently not anchored yet. when i say that they are not anchored, i do not imply the level of households β inflation expectations, but rather their response to one - off factors. the fact that households β inflation expectations are significantly higher than current inflation is typical not only of russia, but of a whole range of countries ( even where inflation is very low ). in terms of monetary policy, this is the sensitivity of inflation expectations to temporary or local factors which induces risks, rather than the fact that households β inflation expectations exceed inflation measures. this is clear from the analysis of the reasons causing inflation deviation away from our october β s forecast. this deviation is quite notable β + 0. 7 percentage points. according to preliminary estimates, 0. 2 percentage points of this deviation stem from a faster rise in sugar and sunflower 1 / 4 bis central bankers'speeches oil prices and 0. 3 percentage points β from the growth of grain export prices and their passthrough to prices for both bakery products and a broader range of food products. the remaining 0. 2 percentage points are interpreted as additional steady inflationary pressure. it may result from both a faster revival of demand in a number of industries already facing supply - side constraints and secondary effects brought about by increased inflation expectations. this is what may impact a steady level of inflationary pressure in the future as well. therefore, today it is rather important how the situation will be unfolding in the future, including how inflation expectations will be changing and whether secondary effects may become more intense. this may result in a longer - lasting influence of one - off factors on prices. moreover, we should take into account that a rise in inflation expectations may speed up the growth of the demand for consumer lending which has already been expanding materially amid the accommodative monetary policy. monetary conditions are the third factor we discussed when making our decision. monetary conditions remain accommodative. coupled with the government β s support measures, this promotes lending across all segments, including the households, corporates, and small and medium - sized businesses. the annual growth of corporate lending reached its five - year high in october. the offering of corporate bonds has also been expanding. mortgage lending continues to increase significantly. the portion of | 0.5 |
part of the twentieth century, the role of the financial system was perceived as mobilising the massive resource requirements for growth. since the 1970s and 1980s, development economics underwent a paradigm shift. the financial system is no longer viewed as a passive mobiliser of funds. efficiency in financial intermediation i. e., the ability of financial institutions to intermediate between savers and investors, to set economic prices for capital and to allocate resources among competing demands is now emphasised. developments in endogenous growth theory since the late 1980s indicate that efficiency in financial intermediation is a source of technical progress to be exploited for generating increasing returns and sustaining high growth. these changes have provided the rationale for many developing countries to undertake wide - ranging reforms of their financial systems so as to prepare them for their true resource allocation function. as important financial intermediaries, banks have a special role to play in this new dispensation. the sharp downturn in global macroeconomic prospects and the continuing sluggishness in domestic industrial activity have necessitated a revision in the forecast for india β s real gdp growth in 2001 - 02 from 6. 0 - 6. 5 per cent expected at the time of the april 2001 monetary and credit policy statement to 5. 0 - 6. 0 per cent in the mid - term review of the policy. the downward revision is primarily predicated on the outlook for the industrial sector which grew by barely 2. 2 per cent in april - october 2001 as against 5. 9 per cent in the corresponding period of last year, mainly on account of the slowdown in manufacturing and mining and quarrying. capital goods production declined by as much as 6. 6 per cent and several sectors recorded a slow down in growth rate or an absolute decline. on the other hand, agriculture sector, supported by reasonable monsoon, recorded a rebound in growth. the kharif output is expected to cross a new peak of 105. 6 million tonnes and prospects for the rabi crop are also good. on the external front, merchandise exports increased marginally by 0. 5 per cent in the first eight months of 2001 - 02. while oil imports fell by 13. 4 per cent, the non - oil imports showed an increase of 8. 4 per cent. despite a moderate widening of the trade deficit, continuing buoyancy in net invisible receipts has kept the current account deficit very low. according to available data, net capital flows are also likely to be of a higher order | there are concerns that the various regulatory reforms taken together may lead to a pullback in trade finance and long - term investment financing. the global regulatory community and national governments have become increasingly sensitised to these concerns. in the area of trade finance, the basel committee consulted the world bank, the world trade organisation, and other relevant bodies. a number of adjustments were made to the capital and liquidity rules to facilitate trade finance. β’ in the area of capital rules, the basel committee waived the one year maturity floor for certain trade finance instruments under the advanced internal ratings - based approach for credit risk. it also waived the sovereign risk - weight floor for certain trade finance - related claims using the standardised approach for credit risk. β’ in the area of liquidity, the basel committee issued guidance for national supervisors to apply relatively low run - off rates for trade finance commitments. preliminary data suggests that the availability and cost of trade finance has not been greatly impacted to - date by the implementation of basel iii. spreads have normalised post - crisis and pricing appears to be influenced more by broader macro factors and competition. further, there are many well - capitalised banks, especially in asia, that are well - placed to operate in the new regulatory regime ; and many of them have stepped up. we should continue to monitor closely the impact of regulatory changes on trade finance. trade is the lifeblood of asian economies. but we have a bigger challenge in long - term financing, especially for infrastructure. it may be the case that the post - crisis financial system may not be adequately structured to provide certain types of long - term financing. β’ first, longer - term corporate and project finance loans already attract a higher capital charge compared to short term loans. coupled with the increased overall capital requirements under basel iii, this may create a disincentive for long - term loans. β’ second, to meet liquidity requirements, banks may substitute long - term lending activities with short - term lending. in calculating the net stable funding ratio, lower weights are assigned to loans with maturities of less than a year. β’ third, solvency ii, which will impose higher risk charges on longer - dated assets, may result in insurers de - risking by taking on shorter - dated assets. β’ fourth, the interaction between central clearing, margining and capital requirements may impact the variety and liquidity of some derivatives such as long - dated interest rate swaps used to hedge risks associated with long - term financing. bis central | 0 |
p. and in the retail segment by 0. 8 percentage point since the beginning of the year. this allows banks to lend at lower rates without losing too much of their margins. but there is a flip side of the coin here too : it affects the attractiveness of deposits versus other forms of savings. this year we have seen a record flow of retail funds into alternative savings instruments, and capital market instruments. in general, this flow does not affect the total amount of savings in the economy, or their availability as a resource base for investments. but banks, when determining their policy on deposit rates, need to take into account this growing competition from the securities market and other instruments. and in the structure of the deposit products they offer, accommodate for the fact that over a medium - term horizon, as disinflationary factors and disinflationary risks are exhausted, a return to neutral monetary policy is inevitable. now about banking sector profit β in the first 7 months of this year it stood at 761 billion rubles ( return on capital β about 13 % year on year ). that said, of course, it is necessary to consider that more than 70 % of this profit was made in q1, while in q2 profit fell to 102 billion rubles. it is difficult to make profit forecasts right now. however, in light of the normalisation of the economic situation, the extension of a number of easing measures and the timetable for additional provisioning, a profit this year of about 1 trillion seems achievable. the fact that most banks maintain profitability ( in general, the proportion of unprofitable banks has probably not changed significantly during the pandemic and in general the share of assets of unprofitable banks in the assets of the banking sector is now about 5 %, i. e., in general, the share of unprofitable banks is not very large ). all of this allows banks to ramp up lending and maintain capital reserves. in general, the overall sector β s capital reserves, measured against key capital ratios, stand at about 5. 9 trillion rubles. this is enough to reserve, if necessary, an additional approximately 11 % of banking sector lending, which is a very serious safety margin. that is, suppose even if about a third of those restructured loans end up defaulting ( which is not a small amount ), the capital reverses cover this amount threefold. let me clarify that this is | with an increased debt burden on borrowers. to ensure that this situation does not increase pressure on banks β capital, we have reduced macroprudential buffers by 30 β 50 percentage points. the maximum reduction is for borrowers with a low debt burden, so that the recovery of retail lending occurs without a dangerous increase in household debt overburden. 2 / 7 bis central bankers'speeches arrears grew more in the retail loan portfolio than in the corporate portfolio but also moderately β from 6. 6 to 7. 9 %. impairment was mostly seen in unsecured loans, while mortgage quality has remained consistently high. at the same time, non - performing loans are well covered by reserves ( more than 75 % ). significant loan impairment was avoided thanks to numerous support measures for borrowers by the government and support measures for banks, and the easing of the reserves on restructured loans adopted by the central bank. since the start of the pandemic, banks have restructured within the framework of their programs as well as repayment holidays about 10 % of the total portfolio ; the significant amount of 1. 5 trillion mr aksakov referred to mostly concerns small and medium businesses and individuals. and if you take all the restructuring that banks carried out on large loans and large enterprises β it comes to more than 5 trillion, i. e. it is a rather large amount of restructuring. its peak was in may, and as of july there has been a steady decline in the demand for restructuring from borrowers, which also suggests there is a normalisation and gradual recovery of economic activity. restructuring was really important during the most serious period of the pandemic when a significant chunk of businesses ceased operating and many people β s incomes declined. we have permitted that reserves on such loans may temporarily not be increased so that banks can carry out this large - scale, really large - scale, programme, spread losses over time, and enable businesses and households to regain their creditworthiness. but in the short term, i urge banks to do this. banks must assess the real loan portfolio quality. it is very important that the recognition of losses on non - refundable loans is not overly delayed. i understand that banks will want to drag out this regulatory easing, but β delaying β the recognition of losses can lead to banks not being able to direct resources to lending to effective companies. having non - performing assets on the balance sheet reduces investor confidence. there are many examples in global practice where there | 1 |
β irish agriculture : economic impact and current challenges β, conefrey, thomas, economic letter vol. 2018, no. 8. 26 byrne, s and j rice : non - tariff barriers and goods trade : a brexit impact analysis, central bank of ireland research technical paper, vol. 2018, no. 7 27 central bank of ireland : the macroeconomic implications of a disorderly brexit, quarterly bulletin 1 8 / 8 bis central bankers'speeches | the subsequent fall in prices did not affect these sellers : their gains were β in the bag β. in contrast, the purchasers at bubble prices experienced losses when prices fell. as most of the purchases were funded by debt accumulation, many of these borrowers β whether household or corporate β found themselves with negative equity and, in the wider downturn, many soon also became unable to service their debt. when borrowers defaulted, these transactions ultimately resulted in losses also for the banks β shareholders ( and sub debt holders ), and β notoriously β for the government which stepped in to prevent other creditors of the banks losing. naturally, much attention has rightly focused on the β¬40 billion or so of ultimate losses assumed by the government under that heading. a broadly similar amount was lost by bank shareholders, etc. and there are two other big categories of capital gain and loss : i think the aggregate gains by irish property sellers are plausibly of the same order of magnitude, as are the aggregate losses being nursed by borrowers. but, large though these four categories of winnings and losses from property transactions at bubble prices are, they need to be considered alongside the even larger and still growing bis central bankers β speeches accumulated difference between income in the actual irish economy and that in the counterfactual scenario. i won β t pretend to have precise figures on how aggregate income and employment would have panned out in the counterfactual scenario of no property bubble, but the broad outlines are clear. the counterfactual no - bubble irish economy would have grown much more slowly than actual in the period up to 2007, and much faster in the post - crisis years. for example ( according to one simulation ) some 130, 000 fewer houses would have been completed over that period, with total employment about 60, 000 smaller by 2007, and despite less migration into ireland, the unemployment rate would have drifted more than 2 percentage points higher than actual. lower revenue would have pushed the government accounts into deficit and a higher debt ratio at the outset of the global financial crisis. household incomes would have been much lower too, with per capita personal consumption running about 8 per cent lower than actual in 2007. of course, different households were affected in differing degrees, resulting in large distributional shifts which are the subject of important ongoing research. heading into the global recession, then, the irish economy would have been smaller, with more moderate wage rates and a somewhat higher government debt and deficit. it would have | 0.5 |
faith in the banking industry and restore the image of bankers as decent, trustworthy and upstanding businessmen. by β us, β i mean banks, other companies in the financial industry, and supervisors. regulators can create a proper regulatory framework, set the right incentives and encourage good conduct. however, taking the necessary action β that is, implementing a code of conduct and focusing on ethics and culture in daily corporate life β is the responsibility of each financial company. but how can banks and financial companies achieve this aim? i already stated earlier that ethics and culture are highly personal. individual values and ethical norms are informed by individual life experiences, family and cultural background, the generation one belongs to, and many other things. but nonetheless, it is crucial for companies to find a common basis : a set of values accepted and lived by each individual employee and the company as a whole. this is not a trivial task : in the realm of culture and ethics, there are neither universal β best practices β, nor are there metrics by which success can be quantified. it is thus very difficult to develop specific criteria that define the culture of a company. to present an example : at the bundesbank we have introduced six leadership principles, in order bis central bankers β speeches to set a good tone from the top. these principles are : recognition, communication skills, responsibility, equal opportunities, judgement and motivation. of course, others may choose different leadership principles, but each entity has to make its own choice. however, these principles, although chosen for a different purpose, of course also influence the bundesbank β s corporate culture. β responsibility β is a value i would like to discuss with you. what about actions that are not expressly prohibited? does that mean they are permitted? as seneca said : β shame may restrain what the law does not prohibit β. so, by which standards do we define what is permitted? i think each bank should try to fulfil its corporate social responsibility. this is a kind of self - regulation by which companies commit to live up to their responsibility towards their stakeholders : their customers, their owners and their staff. of course this is not legally binding, but if a company it should try to meet these expectations and have its customers β interests at heart. this should also be in the banks β self - interest, because there is a feedback loop between a company and its stakeholders. so if the bank respects its stakeholders, it will generally be rewarded : stakeholders will | decline. labor market now let me turn to the labor market. even as the economy has grown at a solid pace, a wide range of indicators have pointed to a continued normalization in the labor market following the red - hot period in 2021 and 2022. today, most of these measures have moved from the tightest they've been in over two decades to levels more consistent with the good labor market that existed in the period before the pandemic. one measure that understandably gets a lot of attention is the unemployment rate, which has risen by nearly a percentage point from its very low reading in early 2023. still, it remains relatively low by historical standards, and some of this increase reflects 2 / 4 bis - central bankers'speeches a cool - down in the labor market from an overheated state. in addition, the increase in unemployment has occurred in the context of a strong increase in labor supply, rather than from elevated layoffs. to get the full picture of the labor market and what it means for monetary policy, it's important to monitor a wide range of data in addition to the unemployment rate. for example, i take the temperature of the labor market by looking at surveys of both households and businesses ; the rates of quits, hiring, and job vacancies ; and the job - tojob transition rates and flows between unemployment and employment states. taken together, these data indicate that the labor market is now roughly in balance and therefore unlikely to be a source of inflationary pressures going forward. monetary policy what does this mean for monetary policy? in its july statement, the fomc said it " judges that the risks to achieving its employment and inflation goals continue to move into better balance ", and that it is " attentive to the risks to both sides of its dual mandate. " 6 regarding the path of policy going forward, the committee said it " will carefully assess incoming data, the evolving outlook, and the balance of risks " and that it " does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent. " the accumulated evidence has increased my confidence that inflation is moving sustainably toward 2 percent. the current restrictive stance of monetary policy has been effective in restoring balance to the economy and bringing inflation down. with the economy now in equipoise and inflation on a path to 2 percent, it is now appropriate to dial down the degree of restrictiveness | 0 |
the sole issue. it is equally important for the euro area to facilitate and encourage the spread of new technology from the frontier to the laggard firms. simply by diffusing better the technology we already have in the euro area, we could make sizeable gains in productivity. in other words, there is much we can still do to reverse the aggregate productivity slowdown and dispel pessimism about our future. 1 gordon, r. ( 2016 ), the rise and fall of american growth : the us standard of living since the civil war, princeton university press. 2 see fernald, j. ( 2014 ), ` productivity and potential output before, during, and after the great recession ', federal reserve bank of san francisco working paper series ( 2014 β 15 ) and cette, g., fernald, j. g., and b. mojon, 2016. β the pre - great recession slowdown in productivity. β federal reserve bank of san francisco working paper 2016 β 08. 3 see, e. g. brynjolfsson, e. and a. mcafee ( 2014 ), the second machine age : work, progress, and prosperity in a time of brilliant technologies, w. w. norton & company. 4 see veugelers, r. ( 2016 ), β the european union β s growing innovation divide β, bruegel policy contribution, issue 2016 / 08, april 2016 and mazzucato, m. ( 2013 ), the entrepreneurial state : debunking public vs. private sector myths, anthem. 5 bloom, n., sadun, r. and van reenen, j. ( 2012 ), β americans do it better : us multinationals and the productivity miracle β, american economic review, 102 ( 1 ) : 167 β 201 and van welsum, d., overmeer, w. and van ark, b. ( 2013 ), β unlocking the ict growth potential in europe : enabling people and businesses β, report prepared for the european commission. 6 for example, syverson, c. ( 2004 ) : β product substitutability and productivity dispersion. β review of economics and statistics, 86 ( 2 ) : 534 β 50 shows that within four - digit industries in the us the top 10 % of firms are, on average, two times as productive as the bottom 10 %. 7 see, for example, acemo | particularly important that a session of this forum is devoted to the subject of merger and acquisition activity in the insurance industry. my third issue is closely related to the second. one reason why shareholders have been slow to grasp the need for industry consolidation has been the expectation that the returns on capital that they were able to achieve during the boom years will swiftly return. during the boom years all sections of the financial industry were able to achieve returns on equity that were quite exceptional. however, we need to recognise that the global financial crisis was not just a temporary interruption, and that we will soon return to the period of strong profits and quick and easy returns. as we gain more perspective on the global financial crisis it is becoming increasingly clear that the boom years immediately before the crisis were the exception rather than the rule. shareholders and investors in all financial firms, including in the insurance industry, will need to adjust to a world in which the returns on their investments will be lower than they came to expect in the boom times. in the insurance industry, with its many competing firms, this adjustment is particularly important. we are currently living through a period of adjustment. once shareholders and investors recognise that they will need to accept lower returns on their investments than during the boom years, the process of industry consolidation is likely to begin. improved returns on investment will require greater efficiency, better standards of customer service, and new product innovation, all of which are more likely to be delivered by larger more diversified insurance firms. let me conclude by returning to the title of this keynote address. successfully supporting the next phase of development for the regional insurance markets is a process that must be led by the industry itself, particularly by its shareholders and managers. the next phase of the development of the insurance markets is likely to require the consolidation of firms, the development of new product offerings, the expansion of insurance firms in the region, and high standards of customer service that only the private sector can deliver. while we as the regulator can work to ensure a sound and stable insurance market and the protection of policy - holders, ultimately it is for you in the industry to take advantage of the growth opportunities that the middle east and north africa region can offer. as the regulator, the cbb will continue to provide a strong framework of rules based on international best practice and will apply them in a transparent and fair way. we will continue to consult with the industry and to ensure that we are responsive to your needs. ultimately, however, the future of the industry is in the | 0 |
and presentation of data on the money supply ( monetary aggregates ), banks'interest rates on approved credits and accepted deposits, and many other data on the banking sector ; β’ balance of payments statistics that includes processing and compiling data on the developments in the balance of payments in the republic of macedonia ; and β’ external debt statistics that includes processing and presentation of data on the foreign debt of the country. the national bank has developed all these major sets of macroeconomic statistics in line with the international recommendations and standards. the harmonization of the method of developing such statistics with the international recommendations and standards has permanently been subject to verification by international institutions and organizations, primarily by the international monetary fund, as an institution that creates the methodological standards and recommendations in the area of central banking statistics. i would like to take this opportunity to mention the report of the so - called imf rosc ( report of the observance on standards and codes ) mission, where the assessments of the central bank statistics are particularly positive, i. e. the development of the nbrm monetary and balance of payments statistics is largely harmonized with the international recommendations and standards. we are particularly focused on the given comments and recommendations for the purposes of further improvement and development of the statistics. we, however, consider that we still lack a sufficiently good statistics, but we have a good foundation for that purpose. by ascertaining this, i do not only imply to the necessity of ongoing methodological harmonization of the various statistics with the international standards and what has not been done in this light, but particularly to the satisfaction of the new needs and requirements for new statistical researches. challenges of the statistics the change in the conditions of the operating environment of the central banks brings about a change in their needs and interests in statistical data. i would therefore like to underline several events in the economy that happened over the recent several years that considerably affected the development of the statistics and that indicate the need of new statistical researches : β’ first, the rapidly increased role of the financial sector that significantly affected the dynamics, quality and structure of the economy in the future. for the central banks, this means an obligation to make deeper analyses in this area, requiring an availability of more detailed and relevant statistical data. here, i especially refer to more detailed data on and from other financial institutions ( investment funds, private pension funds, insurance companies, etc. ) and to the new financial instruments developed in line with the development of the financial market. β’ second | the central banks ) are seen as overly constraining the room for maneuver, revisiting them should not be taboo. after all, mandates are a means to an end. β concerning the instruments, the current debates focus on whether the unconventional tool kit is temporary, as initially considered, or will become conventional tool supplementing the traditional monetary instrument. this is, in particular, in the context of the ultra - low interest rate environment and still anemic recovery. some of the instruments ( balance sheet policies ) have even blurred the clear lines between the fiscal and monetary policy, and challenged the notion of central bank independence. given the importance of the good statistics on monetary policy decision making, what does this new financial landscape imply for statistics? the crises usually tend to provide an impetus for reshaping of our thinking about the statistical concepts / frameworks of proper policymaking. thus, the great depression shifted the focus to development of national accounts, growth of the euro - dollar markets during 1960 s and 1970s to the development of international banking statistics, and asian financial crisis shifted the focus to strong linkages between the financial and external stability being conducive to development of data standards initiatives ( gdds, sdds, and roscs ). the emergence of the latest crises again bis central bankers β speeches put the spotlight on the financial sector, revealing the devastating impact of lax regulation of the financial sector in the more advanced economies on the global economy and once again accentuated the need for tighter surveillance of financial stability. the cross - border linkages, internationalization and integration of the financial markets and institutions were underestimated, and so were their global economic consequences. this time it was the international dimension of the financial system that was emphasized and very importantly, the macro - financial linkages. both of them do have major implications for the production of statistics and for the regular set of required data, needed for making informative decisions in monetary policy and in the micro and macro prudential area. while the crisis was not a result of a lack of proper data and the quality of statistics in the pre - crisis period was deemed satisfactory, still the crisis brought to the surface some areas that were rather poorly covered by the statistics. highly globalized world marked by high and rising trade and especially financial interconnectedness among economies, as well as strong interlinkages between different sectors within the economies, in particular financial sector ( including non - regulated segment ) and non - financial corporations due to strong macro | 0.5 |
william c dudley : the competitiveness of puerto rico β s economy β reducing the cost of doing business and improving labor market opportunities remarks by mr william c dudley, president and chief executive officer of the federal reserve bank of new york and chairman of the committee on the global financial system ( cgfs ), before the puerto rico chamber of commerce annual convention, fajardo, puerto rico, 29 june 2012. * * * good morning and greetings from new york city. i sincerely thank the chamber for giving me the opportunity to address your annual meeting. unfortunately i am unable to be in puerto rico in person, because i have a broken leg and am under doctor β s orders not to fly. the good news is that i am on the mend and that i have this opportunity to speak to you via video. we at the new york fed are pleased that puerto rico is part of the second federal reserve district that we represent in the federal reserve system. we are committed to the people of the island and to its growth and prosperity. our commitment is reflected in our ongoing work with our many partners on the island. last spring, with the puerto rico chamber of commerce and other local partners, we co - sponsored a forum aimed at helping small businesses in puerto rico learn about export opportunities. we have been involved with education on the island for two decades, including by helping to set up the alianza. today we help promote financial literacy through a video competition in partnership with the puerto rican bankers association. our banking supervisors work to strengthen the financial system so it can readily supply credit to families and businesses, while our research economists monitor and analyze local economic conditions. this analysis β along with similar analyses from other regions across our nation β feeds into the decisions the federal reserve makes on monetary policy. in support of this work, i and other senior officials have traveled to puerto rico a number of times in recent years and met with a wide range of stakeholders, including university officials, students, business leaders, entrepreneurs, bankers and government officials. what we learn during these engagements helps to shape our understanding of the puerto rican economy and our efforts to support it. i have seen numerous examples of expansion and growth. this gives me confidence that puerto rico has the capability to be an economic success story. nevertheless, these local engagements have also confirmed to me that conditions are not what we want them to be β in particular, growth and expansion are not happening broadly enough. the task of putting the island on a path of robust, | sustainable and inclusive growth remains a work in progress. during my visit here in march 2011, a number of business and community leaders expressed their concern that the economy had loss competitiveness. these local leaders asked if we would look at what might be holding back growth on the island. much high quality work has already been done on this subject by local experts. however, they thought it might be helpful for the new york fed, as an independent third party, to evaluate what might be done to promote competitiveness and productivity on the island. i readily agreed that we would do so. i commissioned a team of economists from our research group and other experts from our international and outreach teams, to analyze the challenges facing puerto rico. i asked them to put forward some recommendations on how to capitalize on the island β s strengths and restore growth. the report released today on the competitiveness of puerto rico β s economy, is the product of their work and extensive consultation with local, national and international experts. i have bis central bankers β speeches read it closely and commend it to your attention. the report is intended as nonpartisan technical analysis and should be viewed in that vein. even those who do not agree with every aspect of the analysis, i hope, will acknowledge that this is a serious, good - faith effort to examine, in detail, a number of important issues that deserve attention. of course, many of these issues can only be considered as part of the political process. it is for the people of puerto rico to judge the appropriate trade - offs involved β not me, certainly, or my staff at the new york fed. in a few moments jamie mcandrews, executive vice president and director of research, will summarize the report and its recommendations. before he does so, i would like to share with you my assessment of economic conditions on the mainland and in puerto rico. as always, what i have to say reflects my own views and not necessarily those of the federal open market committee ( fomc ) or the federal reserve system. national economic conditions the mainland u. s. economy has continued to slowly recover from the after - effects of the housing boom and bust and the financial crisis. but the recovery has been disappointing. despite a monetary policy that has been extraordinarily accommodative by historical standards, the economy has grown only about 2 percent over the past year. after a brighter start to the year, economic momentum has slowed in the last few months | 1 |
financial markets opened on monday, 30 march, ccm would be subject to a crisis of confidence on the bond markets and further withdrawals of deposits from its branch network that could prompt a liquidity collapse. the delicate situation of ccm required the immediate activation by the banco de espana of the precautionary measure provided for in the rules governing the replacement of the board and the appointment of new managers. to speed the process and avoid unnecessary delays that might exacerbate liquidity problems, and to halt any possible contagion to other parts of the system, the banco de espana took the swiftest of decisions while fully observing the provisions of the law on the discipline and intervention of credit institutions. the conduct of the banco de espana has been informed by the lessons that all supervisors have drawn from the unfolding of the financial crisis in other developed countries. in particular, it is our resolve to prevent the problems of an individual credit institution degenerating to such an extent as to spread to other domestic banks and savings banks. the speed behind the banco de espana's decision also justifies the urgency of and need for the royal decree - law adopted by the government. without going into details on the legislation, i would like to stress that the granting of guarantees by the treasury has a dual purpose. first, it allows the banco de espana to act with full force, providing a very high volume of guarantees backing potentially significant funding. such provision is necessary if the ailing credit institution is to meet all its commitments and honour all its payments. since autumn 2008, when the suspension of payments by lehman brothers led to a risk of widespread collapse on the international financial markets, no country has allowed any credit institution active on international markets to suspend payments. spain has followed the lead of the developed countries, and you should rest assured that ccm will meet all its commitments to depositors and other creditors. second, the maastricht treaty prevents central banks from extending emergency liquidity assistance to an ailing institution, such as ccm, without the appropriate collateral. given the amounts that might have to be committed, the spanish treasury had to provide explicit guarantees to the central bank, so as not to infringe the treaty β s prohibition on central banks extending " monetary financing " to public treasuries. * * * having explained the substance of and the reasons behind the urgent replacement of ccm β s directors, allow me to offer greater details on the banco de espana β s past supervisory | the world. however, a central bank is a public institution and a public institution must be accountable to the public, through its elected representatives in parliament. consequently, although parliament cannot give instructions to the central bank on how to implement its responsibilities, it must be able to provide oversight of the operations of the central bank and make criticisms of it where this is warranted. the main bodies within parliament which provide oversight of the bank of uganda are the specialist committees, in particular the committee on commissions, statutory authorities, and state enterprises ( cosase ) and the public accounts committee ( pac ). the bank of uganda β s annual report and audited accounts are submitted by the auditor general to the speaker of parliament, who can refer them to a parliamentary committee. myself and my staff frequently appear before parliamentary committees, both to answer questions about our own operations and to explain our views in regard to economic and financial issues. if a central bank is to maintain the confidence of the public in the independence of its operations, it must be prepared to be fully transparent and explain its actions to legislators and to listen to the views of these legislators, who represent the public. together with my staff, i will be pleased to answer any questions you may have and to hear your own views on these matters or any others in which you are interested. thank you all for listening. | 0 |
, our monetary policy projections and the actions we take cannot be static. if economic circumstances change, then monetary policy needs to change too. otherwise, we will not be able to achieve our objectives. thank you for your kind attention. i would be happy to take a few questions. bis central bankers β speeches | , because they affect the saving and investment decisions of households and firms. the dollar is but one component of these financial conditions. the level of short - and long - term rates, credit spreads, and equity prices are also important components of the financial conditions that we closely monitor. if international developments shift u. s. financial market conditions β including the dollar β then we need to take this into consideration in our u. s. monetary policy decisions. third, i have found that market participants broadly appreciate that the fomc needs to take a risk management approach in its conduct of monetary policy. there are at least two important aspects of this approach. the first is whether the balance of risks to the outlooks for either economic growth or inflation are skewed to the upside or downside. the second is whether the efficacy of monetary policy itself is asymmetric when monetary policy is at, or close to, the zero lower bound for interest rates. in this situation, it may be easier to implement a tighter monetary policy through raising rates, than it would be to implement a looser policy using unconventional tools. also, the effects of a policy of raising rates may be more predictable compared to the effects from using unconventional tools. as i noted earlier, i think the medium - term risks to the u. s. economic growth outlook are somewhat skewed to the down side. thus, this needs to be taken into consideration in terms of the appropriate stance for u. s. monetary policy. with respect to the efficacy of monetary policy, given how close we remain to the zero lower bound for interest rates, i also think the risks are asymmetric. therefore, we need to be a bit more careful about the risk of tightening monetary policy in a manner that proves to be premature, as compared to the alternative risk of being a little late. if we were to realize that we were slightly late, policy can be adjusted by raising short - term interest rates more quickly. 2 all three of these reasons β evidence that u. s. monetary policy is currently only moderately accommodative, the fact that u. s. financial conditions have been influenced by economic and financial market developments abroad, and risk management considerations β argue, at the moment, for caution in raising u. s. short - term interest rates. so, directionally, the movement in investor expectations towards a flatter path for u. s. short - term interest rates seems broadly appropriate. that said, to my eye | 1 |
some of their earlier difficulties but continue to struggle. the effect on financial markets of the devastating attack on the world trade center was pronounced, as telecommunications and trading capacities were severely impaired. but the markets are mostly functioning normally now, and as in the past, the infrastructure will be rapidly restored. for a brief time, the terrorist attacks markedly disrupted payment transfers, leaving those counting on receiving payments caught short. those needs ultimately were met by the federal reserve, both through record lending at the discount window and through an extraordinary infusion of funds through open - market operations. to facilitate the channeling of dollar liquidity to foreign financial institutions operating in the united states, thirty - day currency swap lines were arranged with major central banks, again in record volumes. it was essential in such an environment to meet all appropriate demands for dollar liquidity. as repair of the financial markets and payment infrastructure proceeded apace, loans were repaid, open - market operations could be scaled back, the unusual swap lines were allowed to expire, and the temporarily bloated balance sheet of the federal reserve largely returned to normal. but even as market functioning and liquidity flows were restored, the potential for heightened uncertainty to damp household and business spending for a time persisted. to cushion these effects, we have eased the stance of monetary policy appreciably since september 11. * * * we in the united states have assumed ourselves to be fairly well - insulated from terrorism or, at most, subject to limited and sporadic episodes similar to those previously observed on a number of occasions in europe. we have been aware of the possibility for losses on a much greater scale. but i suspect that those possibilities were deemed so remote that they were never seriously incorporated into most conventional assessments of economic risk. the shock of the tragedies at the world trade center and the pentagon has reshaped those assessments of risk and required an abrupt realignment of prices in many markets to reflect the expected costs of operating in what we now recognize as a more hostile world. these circumstances pose a difficult challenge for business decisionmaking, not so much because the costs are inordinately large, but because the events, which have potentially substantial consequences, are so uncertain. insurance deals with this problem by spreading the risk and converting potential large unknown costs into a steady stream of known insurance premiums that facilitates the forward planning so essential to an effective business operation. obviously, sharp increases in insurance premiums for all forms of businesses are to be expected. some higher | individual communities across the nation. each of the reserve banks has an active, well - staffed community development function - - one of the great benefits of the federal reserve β s structure. we get important and timely information on the state of local economic and financial conditions, including those affecting low - and moderate - income, as well as other underserved, communities. our community development staff provide us with a more nuanced understanding of current economic and financial conditions. they also help people in low - income and underserved communities overcome the challenges they face. we support numerous initiatives in rural communities across the country, several of which i would like to highlight. the first initiative is the federal reserve bank of st. louis β s longtime commitment to the mississippi and arkansas delta region. this region has struggled for decades with persistent intergenerational poverty and a lack of resources and capacity to address this challenge. most recently, in 2016 the st. louis fed launched the delta communities initiative, and since then it has held 26 regional forums with more than 500 participants. these forums help to build awareness of promising tools and strategies system, september 25 ), https : / / www. federalreserve. gov / econres / notes / feds - notes / labor - market - outcomesin - metropolitan - and - non - metropolitan - areas - signs - of - growing - disparities - 20170925. htm. see, for example, economic innovation group ( 2016 ), the new map of economic growth and recovery ( washington : eig, may ), https : / / eig. org / recoverymap. - 3for community and economic development. a recent survey of participants suggests that these forums are making a real difference. a second example is the federal reserve bank of dallas β s commitment to advancing digital inclusion in low - income rural communities. despite significant effort and advances made by public, private, and nonprofit organizations in recent years, nearly 30 percent of rural households continue to lack access to broadband internet service. also, fewer than half of households earning less than $ 20, 000 per year have such service. 3 in an increasingly digital economy, lack of access to high - speed internet and the knowledge of how to make the best use of it limits the ability of families and entire communities to reach their full potential. to address this problem, the dallas fed has explored the role of the community reinvestment act ( cra ) in addressing the digital divide, the | 0.5 |
cross - border securities transactions. 4. lessons of the recent market turmoil turning to more recent events, the emergence of structured products, where the creditor is separated from the debtor by a complex financial infrastructure that transforms and repackages the underlying asset, might create significant legal challenges and this might become an important concern in the light of the recent market turmoil. who pays if debtor a defaults, in case his debt has been repackaged by bank b, sold to the non - bank intermediary c and finally to investor d? these are legitimate questions that need to be addressed carefully. but answers have to be given if the uncertainties surrounding the current environment are to vanish. as you know, a number of policy initiatives have been launched at the global level since the summer, for instance by financial stability forum 5 or by the porto informal ecofin 6 and it is still difficult to anticipate precisely the legal aspects which will be examined more particularly by the various international and european fora and bodies involved in this discussion. however, these initiatives provide an indication of possible legal considerations which might emerge, in particular in the european context. legal certainty should go hand in hand with transparency. the focus on the transparency of complex financial instruments, of institutions and vehicles and on the appropriate disclosure of information on securitised debt and other structured financial products indicates that there is a need for regulatory and supervisory authorities to have a closer look on the legal frameworks applicable to securitisation transactions and market standards and how special purpose vehicles are currently regulated and supervised in the various eu member states and at also at the international level. the report of the european financial markets lawyers group ( efmlg ) of may 2007 on legal obstacles to cross - border securitisations in the eu 7 contains recommendations for further convergence of securitisation laws in the eu and invites the commission to consider the adoption of a eu directive on specific legal aspects of securitisations which would enable member states to adopt a certain number of principles common to all jurisdictions to ensure a high level of transparency, efficiency and legal certainty with regard to securitisation transactions. 8 see financial stability forum, fsf working group on market and institutional resilience, preliminary report to the g7 finance ministers and central bank governors, 15 october 2007, available at : http : / / www. fsforum. org / publications / publication _ 24 _ 88. html. the informal ecofin of porto considered that | , while enhancing market efficiency, financial innovation also raises obvious challenges to the regulatory and supervisory authorities. in this context, the economic and financial committee ( efc ) was invited ( i ) to review how to further improve transparency of complex financial instruments, of institutions and vehicles, as well as how to improve valuation processes, risk management and liquidity stress testing. the efc is also invited to consider the role of rating agencies in structured finance. available at www. efmlg. org. in its report on financial integration in europe ( march 2007 ), the ecb indicates that it has been active in various initiatives of the efmlg to overcome legal barriers to financial integration, such as through the closer harmonisation of securitisation laws in the eu and contributed in particular to the efmlg report on cross - border legal obstacles to securitisation. in two opinions concerning draft laws on securitisation in luxembourg and france, the ecb indicated that it stressed that, looking beyond the commission β s financial services action plan, it saw merit in a strategy of increased harmonisation in the area of securitisation at the eu level ( see in this respect ecb opinion in the context of the current financial turbulence, another issue which is often mentioned is the methodologies followed by rating agencies in the field of structured finance and the need to benefit from legal opinions assessing in an appropriate manner the legal risks related to the securitisation deal β s core components and identifying properly the rights of investors. at this point, let me not abuse of your time any longer. i hope that i have effectively conveyed the message that we, as policy - makers, care that the global financial system is put on a solid legal footing. i wish you all the best for this conference in contributing to this endeavour. thank you for your attention. con / 2004 / 30 of 14 september 2004 at the request of the french ministry of economic affairs, finance and industry on a draft decree concerning fonds communs de creances ( securitisation funds ) and ecb opinion con / 2004 / 3 of 4 february 2004 at the request of the ministry of finance of the grand duchy of luxembourg on a draft law on securitisation ). | 1 |
their strength is that they target the problem directly at the root. slide 7 summarizes the two main dimensions of systemic risk : the β structural β dimension, which covers the possible risks associated with individual institutions whose failure would endanger the entire system ; the β cyclical β dimension refers to systemic risks which are not directly linked to an individual institution, but which stem from financial institutions β collective responses to business or financial fluctuations and adverse shocks. β structural tools β strive to reduce the impact of institutional failure by strengthening individual institutions. their potential utility is often cited with regard to institutions which are considered β too big to fail β or β too interconnected to be liquidated β and whose failure would impact the entire system. β countercyclical tools β aim to address the cyclical dimension of risk by reducing feedback loops. as slide 8 shows, these are designed to counter problems associated with the actions of individual financial institutions, which can lead them all to act in the same way after an initial shock, thus amplifying the initial movements of the markets and leading to a new wave of similar reactions. 19 this is because individual financial institutions tend to react to a shock by shedding risks, either because it is rational to do so or because regulation oblige them to do so. if the system is not designed with the explicit aim of stopping such movements, a negative cycle can set in with dangerous consequences for individual institutions and the system as a whole. countercyclical measures are intended to modulate, reduce and potentially prevent such instability. the aim of β capital buffers β is to ensure that, in good times, banks acquire capital base that is well above the minimum. the buffers can then be released in more difficult times, allowing financial institutions to absorb substantial asset price falls before legal constraints become binding. they should thus help avoid the mentioned pro - cyclical behaviour that typically leads to so - called β fire sales β. what is appealing in theory is not necessarily easy to implement in practice. few doubt that there are challenges to defining and calibrating the indicators used to determine when capital buffers should be triggered, and by how much. however, to quote borio, β while calibration is assenmacher - wesche and gerlach ( 2010 ). hott and monnin ( 2008 ). for examples of models which illustrate downward spirals, please refer to markus brunnermeier and lasse pedersen ( 2009 ), stephen morris and hyun | withdraw their funds from the bank. in the case of the repo market, lenders raised the haircuts required for the repo loans or refused to roll over the repo loans collateralized by subprime mortgage assets. this is equivalent to a partial or a complete withdrawal of funds from the market by the lenders. 13 in addition, the higher haircuts forced the owners of the assets to come up with additional cash which typically meant that they were forced to sell assets. given that there was little appetite to purchase mortgage - related assets, high - quality assets had to be sold in order to raise this cash. this put downward pressure on the prices of these assets and increased the uncertainty regarding their future values leading to demands for higher haircuts on these assets, as well. the haircut spiral, can be seen in chart 6. a fire sale dynamic developed, which depressed asset prices further leading to additional upward pressure on haircuts. the rapid deleveraging of the shadow banking system as the run progressed led to a sharp contraction in credit. we saw this earlier in chart 2 with the near complete collapse in the asset - backed security market. banks were also adversely affected by this run on securitization markets since they used these markets as well to fund many types of loans. several banks had to bring onto their balance sheets previously off - balance sheet entities that they had used to securitize loans. this used up balance - sheet capacity making it more difficult for banks to make up for the credit contraction going on outside of the banking system. the problems in the financial system spread to the real economy. when lehman brothers declared bankruptcy, a money market mutual fund β the reserve fund β β broke the buck β. the unanticipated losses incurred by the reserve fund expanded the bank run to the money market mutual funds. since these funds were significant investors in the commercial paper market, this transmitted the strains to the commercial paper market. dollar funding pressures were also increasing for firms operating outside the united states as their ability to access dollars through the foreign exchange markets began to become strained. the an overnight repo loan as compared with a longer term repo loan is the closest in nature to a demand deposit. see tobias adrian, christopher burke and james mcandrews. 2009. β the federal reserve β s primary dealer credit facility β. current issues in economics and finance 15, no. 4 ( august ). gary gorton. 2010. β | 0 |
point β or around $ 70 billion given the scale of us life insurers β balance sheets. 6 if done quickly, this could be a potent procyclical amplifier. similar patterns are evident among life insurers in other countries. a second piece of indirect evidence comes from the behaviour of regulators. there have been several incidences over recent years of regulators loosening regulatory constraints to forestall concerns about pro - cyclical behaviour in a downswing. for example, uk regulators loosened regulatory constraints on insurance companies in the early 2000s following the bursting of the dotcom bubble. this was due to fears of selling pressure on equities being amplified as insurance companies de - risked their portfolios as they neared regulatory constraints. pension fund regulators have taken similarly - motivated actions recently due to depressed real yields boosting the market value of liabilities. a third piece of evidence comes from analysing the impact of icpf asset allocation decisions on asset prices. in particular, at the bank we have analysed the impact of purchases of longterm uk indexed - linked debt by uk icpfs since the early 1990s ( zinna ( 2014 ) ). over this period, the combination of accounting and regulatory rules led to large cumulative purchases of long - term government debt by icpfs. at the same time, long - term real yields fell from around 4 % to around β 1 %. controlling for other factors, such as the supply of government debt, research at the bank has sought to identify the impact of icpf purchases on the yield curve. it finds the impact to be material, especially at the longer end of the yield curve. over the period 1990 to 2010, it finds that pension funds purchases lowered the two - year real yield by around 70 basis points data are adjusted to remove impact from re - valuation effects. bis central bankers β speeches and 20 - year real yields by around 165 basis points, with the price pressures most acute during the period 1996 to 2004. for insurance companies, the bulk of the buying pressure comes somewhat later ( 2006 to 2010 ) and the impact is somewhat smaller ( 30 basis points and 75 basis points respectively ). nonetheless, if these ready - reckoners are even roughly right, they suggest a very significant impact of icpf portfolio allocation on yields, and hence on incentives to hedge further, in a pro - cyclical spiral. this evidence, while far from conclusive, provides some important clues. there are indications of correlated, pro - cyclical | recapitalized and restructured. about a year ago, the banking system was comprised of 17 banks. within the next few months, there will only be three large banks and a few small ones. what had been a credit crunch, as banks deleveraged, is being reversed. now confidence is returning. how do you know that? i β m proud that the bank of greece protected financial stability in difficult β even dramatic β times. no greek has lost a single euro in his bank account. and now deposits are even coming back! depositors emptied 87 billion euros from their accounts during the crisis, more than one third of the deposit base. they sent the funds abroad or hid them under their mattresses. since june the funds are returning to the banking system. so far around 15 billion euros have returned. in december alone 6 billion euros returned in deposits. why did greece β s fiscal position became so difficult despite the programme? the main reason for the deterioration of the debt dynamics was that we lost 20 percent of gdp since 2009. so if we are able to change the mood and boost confidence and growth, the debt dynamics will improve fast. in 2010 you were also optimistic that, under the may 2010 adjustment program, greece will get out of the crisis without help from outside. after greece started implementing the program in may of 2010, bond spreads halved the following months. that is why i was optimistic greece would continue with the progress. but after the fall of 2010 a kind of reform fatigue set in. and then there was the talk about private sector involvement that eroded investors β confidence. was the debt restructuring a mistake? what is a mistake in this situation? if investors fear to lose their money, confidence is lost. had greece followed through with reforms, fully implementing its program, and in the absence of talk about the restructuring of private sector debt, the debt restructuring for the private sector could have been avoided. there was a criticism of you because you received a large severance payment after leaving your post in the bank piraeus after only two years. bis central bankers β speeches in early 2008 when i left that bank for the central bank, the situation in the banking sector was very different from the present situation. at that time, there was still extreme optimism. my payment was made in such a situation and was also stipulated under my contract. it was approved by all the relevant bodies, including the shareholders of my previous bank at their general assembly. let me also point out that the | 0 |
instructions to a more active role in assessment of loan applications before making credit decisions. this is not an easy change. it involves both time and considerable adjustment in the thinking. besides, good tools are a must for a good job : bank employees have to increase their knowledge of the banking business in a market economy and enhance their professional standards. this is precisely one of the objectives of the institute of bankers, and with its newly launched representative office in beijing, the institute will extend its existing good work to the mainland. it will help promote the training of bank employees on the mainland, thereby contributing to the effective financial intermediation and smooth functioning of this crucial part of modern economy. the economies of the mainland and hong kong are now highly interdependent. the institute β s beijing representative office will not only serve to enhance professionalism of the mainland β s banking sector as a whole, but also contribute to the financial stability and development of both the mainland and hong kong. let me end this address by wishing the institute β s beijing representative office every success in its future endeavours. | overall infrastructure investment needs of asia at us $ 8 trillion over the 2010 β 2020 period. and, with the mainland authorities implementing the β belt and road β strategy to enhance connectivity within the region through increased infrastructure investments, there is likely to be an even greater financing requirement. as such, hong kong is well positioned to develop into a major financing hub for investments in this field. 8. indeed, the establishment of iffo has three main objectives : β’ building a cluster of key stakeholders in infrastructure financing, including equity and debt investors, project sponsors and developers, professional advisors, and relevant agencies from the β belt and road β countries ; β’ providing a platform for information exchange, experience sharing and capacity building on infrastructure financing among the cluster members ; and β’ promoting hong kong as a major platform for belt and road infrastructure project sourcing, financing and fund management, leveraging on our role as an international financial centre. 9. the hkma is now in the process of setting up iffo and the response, to date, has been most encouraging. in - principle support has been received from the asian infrastructure investment bank, the asian development bank, and the international finance corporation under the world bank group. and others have also indicated an interest. iffo will be launched in july and we look forward to sharing with you more information about its work. corporate treasury management 10. i would now like to turn to issues of more immediate concern to you in your treasury management roles, and to share a few factors which i believe are shaping your business : 11. first, the continuing liberalisation of the mainland β s capital account. as i mentioned earlier, the mainland authorities have continued to implement measures to liberalise cross - border fund flows. i am sure many of you are familiar with the progress, but let me just quickly name a few key measures introduced in recent years : bis central bankers β speeches β’ the shanghai - hong kong stock connect has been in place and operating smoothly since november 2014, allowing international investors access to the a - shares listed in shanghai through the stock exchange in hong kong, and vice versa. β’ the mainland - hong kong mutual recognition of funds scheme was implemented in july 2015, allowing mainland and hong kong funds to be distributed in each other β s markets through a streamlined approval process. β’ the qfii arrangement was refined in february this year by relaxing individual quotas and shortening the investment lock - up period, among other improvements. β’ the people β s bank of china announced in february a | 0.5 |
caleb m fundanga : the central bank, the media and the legislature β can they work together? remarks by dr caleb m fundanga, governor of the bank of zambia, at the 35th anniversary of the central bank of swaziland, mbabame, 21 may 2009. * * * governor m. g. dlamini, fellow central bank governors, your excellencies the members of the diplomatic corps, distinguished guests, ladies and gentlemen, and may i simply say all protocol observed, mr. chairman, it is indeed a great pleasure for me to be with you today as we commemorate the 35th anniversary of the central bank of swaziland. i consider it a great honour and privilege, on behalf of the bank of zambia and indeed on my own behalf, to have been invited to give a keynote speech at this historic event. mr. chairman, allow me to first of all congratulate the central bank of swaziland, the government and all other stakeholders for having come a long way in promoting the effective conduct of monetary policy in this great country over the last 35 years. we at the bank of zambia have noted the important role that the central bank of swaziland has played not only in the development of the swazi economy, but in enriching the knowledge of central bankers throughout the region, through its participation in the regional groupings such as the committee of central bank governor β s in sadc. therefore, as you celebrate this great milestone, we join you in anticipating further progress and effectiveness in the execution of your mandate. mr. chairman, the central theme of my address today is the important role that information plays in economics in general and in financial markets in particular. in 1970, some 39 years ago, or 4 years before the establishment of the central bank of swaziland, an economist called george akerlof published a paper called β the market for lemons. β by lemons he was referring to used cars in the united states of america. akerlof, who would later win the nobel prize in economics for his work, demonstrated how information asymmetries between two contracting parties, a used car seller and a used car buyer, could lead to an inability of the car dealer to sell cars. more broadly, the moral of his story was that information asymmetries that allowed for no credible assessment of value of a given transaction, could lead to market collapse β in this instance the market for used cars. mr. chairman | β it was just not possible to control inflation. and then we would have ended up with no social benefits β no more growth, no extra jobs β but with high and stubborn inflation instead, just as it did for burns. but the story of south african central banking, in the democratic era, is not one of regret. the 1980s and early 1990s made it very clear that high inflation creates uncertainty, destroys savings, and undermines growth. the growth / inflation trade - off doesn β t work. we realised that inflation targeting, as a transparent and accountable policy framework, provided our best shot at price stability with growth. in fact, the inflation - targeting era has been one of lower inflation and lower interest rates than prevailed previously. following our mandate, inflation has been kept under control. 4 even now, at this very difficult time for the economy, we can see the inflationplease see arthur burns, 30 september 1979, β the anguish of central banking β, available at http : / / www. perjacobsson. org / lectures / 1979. pdf, p. 15. 2 ibid, p. 13. 3 precisely, cpi inflation averaged 6. 5 % during burns β tenure as fed chair ( february 1970 β march 1978 ). for the 1970s as a whole, inflation averaged 7. 1 %. for the 1960s, it was 2. 3 %. for the 1950s, it was 2. 1 %. ( data from the st louis fed fred database. ) 4 for this period, inflation has averaged 5. 9 %. the volatility of growth, inflation and interest rates has also been lower. specifically, for the periods 1970 - 2000 and 2000 - 2020, the standard deviation of growth has declined from 4. 3 to 2. 6, the standard deviation of inflation has fallen from 3. 9 to 2. 4, and the standard deviation of interest rates ( the lowest sarb lending rate ) has gone from 4. 9 to 2. 5. the pattern of lower volatility following the introduction of inflation targeting also holds when contrasting 1980 - 2000 with 2000 - 2020 ( i. e. two 20 - year windows ). targeting framework functioning properly, delivering historically low interest rates in the context of low inflation. what are the chances, 20 years from now, that we will still have price stability and low interest rates? will we be agonising, 20 years from now, over how we lost control of inflation? today, there is a new | 0 |
deflation. next, i would like to present the results of the opinion survey on the general public β s views and behavior. the bank conducts this survey on a quarterly basis, based on the responses collected from individuals who are chosen through a stratified two - stage random sampling method. this survey is an opinion poll designed to gain insight into the general public β s perceptions on their household circumstances, including questions with regard to the perception of price levels ( chart 14 ). according to recent survey results, among the respondents who felt that prices have gone up, more than 80 percent viewed the price rise as β rather unfavorable β. in contrast, among the respondents who felt that prices have gone down, about one third of them deemed the price decline as β rather favorable β. while the exact number changes from one survey to the next, the responses have tended to be rather stable. reading the newspaper, in contrast, one often comes across an article stressing the necessity to overcome deflation and representing this as the voice of the general public in japan. given that deflation is a state in which prices keep declining, these two outcomes are inconsistent with each other. how can we reconcile these outcomes? in my view, the answer lies in the fact that β deflation β means different things to different people. some use this terminology in the context of consecutive declines in prices, while others believe it means deteriorating economic activity and the rest view it as declining wages. there are even those who use deflation in the context of falling asset prices. according to the opinion survey that i have just mentioned, most japanese people are not hoping that prices would simply rise. if prices rise while real gdp remains stagnant, this will lead to higher nominal gdp, which represents a situation where costs rise in a number of items and cost - push inflation prevails. this does not lead to a higher living standard. in the minds of most people, overcoming deflation is not simply a state in which prices rise in general, but rather one where better economic conditions are realized by increasing corporate profits, employment, and income. in economists β jargon, it represents a rise in the real gdp growth rate. when the real gdp growth rate rises, the demand and supply balance improves, generating upward pressure on prices and wiping out deflation. the question is how to raise the real gdp growth rate. there is a combination of forces that needs to be addressed : first, strengthening the economy β s growth potential | in such a short time. while a difficult task, the european monetary union has progressed over the years under the grand vision to realize peace, prosperity, and stability in the region through political and economic integration. in order to realize this vision, a strong political will is imperative. i sincerely hope that the european authorities β by taking advantage of the responsiveness that has been nurtured and the mutual trust that has been established through the course of history in europe β will take bold measures to address the fundamental problem. iv. growth potential japan β s growth potential so far, i have addressed the issue of overseas economies. i would now like to change the subject to the domestic economy and present the third topic : japan β s growth potential, or potential growth rate. to have some idea of where the potential growth rate lies is vital both in terms of making policies and managing firms. this is because the output gap of japan β s economy has tightened to about β 2 percent at present, and the economic growth rate over the next 10 or 20 years is largely underpinned by the potential growth rate. both monetary policy and fiscal policy are aimed at stimulating demand by closing the output gap, and neither is quite able to raise potential growth. to understand potential growth, let us look back at the long time - series of real gdp growth rates in japan. while it was around 4. 4 percent in the 1980s, real gdp declined gradually, reaching around 1. 5 percent in the 1990s and around 0. 6 percent in the 2000s ( chart 12 ). the real gdp growth rate can be decomposed into the growth rate of the workforce and the bis central bankers β speeches growth rate of real per capita gdp, i. e., the growth rate of value - added productivity. the decline in real gdp from the 1980s to the 1990s owes much to the declining growth rate of value - added productivity ( chart 13 ). this is mainly due to the remnants of the bubble ; in other words, economic activity stagnated during the course of removing excesses in terms of business equipment and debts that had accumulated during the bubble period. however, its decline from the 1990s to the 2000s owes much to the fact that the working - age population started to decrease, rather than increase, while the growth rate of value - added productivity stopped declining. the decline in the workforce reflects the rapid aging of the population that is in progress. what is going to happen in the next 10 years? assuming that the labor participation of | 1 |
response programs. in sum, the bsp has injected over php2. 2 trillion or approximately us $ 41. 9 billion into the financial system. this is equivalent to about 11. 2 percent of the gdp. and third, the bsp put in place key regulatory and operational relief measures for banks, which helped maintain the financial system β s stability and ensure the public β s continued access to financial services. as we transition from one administration to another, the central bank will continue to fulfill its mandate of ensuring sound macroeconomic management. on the whole, there are clear indications of continuity of key reforms under the new administration. as the economy recovers and gradually returns to normalcy, the bsp is mindful that the extraordinary measures will need to be scaled back. the timing and conditions of the bsp's exit strategy will be guided by the inflation and growth outlook over the medium term, the state of public health, and domestic and global risks to the economy. earlier, the bsp's provisional advances to the national government of p540 billion - or usd10. 3 billion - in 2020 and 2021 was reduced to p300 billion - or usd5. 7 billion in january 2022. today, the national government will fully settle these advances, ahead of the maturity schedule of june 11, 2022. unwinding the extraordinary measures was one of the messages highlighted during the imf - word bank spring meetings held last april. balancing the need to safeguard economic recovery and controlling inflation would be a key challenge for policymakers going forward. the balancing act requires a well - planned, well - calibrated, and well - communicated exit strategy to avoid causing substantial market volatility, reduce potential spillovers, and continue the recovery momentum. for the philippines, economic recovery came sooner than expected. the economy grew by 8. 3 percent in q1. we expect the economy to grow much faster in q2, making the growth target for this year of 7. 0 - 9. 0 percent doable. employment is nearing its pre - pandemic rate. the purchasing managers index hit 54. 3 in april, the highest in four years. in response, we have started the normalization process. yesterday, we raised the policy rate by 25 basis points to 2. 25 percent. we entered the pandemic with strong macroeconomic fundamentals. our healthy external accounts, marked by hefty gross international reserves, helped maintain relative order in the financial markets amid | partnered with international organizations to help us benchmark our practices, share our learnings and exchange ideas. these include : 1 ) the international network for finance education ( infe ) created by oecd to promote and facilitate international cooperation on global financial education issues ; and 2 ) the group of the alliance for financial inclusion ( afi ), which counts as members policy makers and regulators in the developing world who are committed to financial inclusion. ladies and gentlemen. in scaling up its activities for consumer protection, the bsp is also intensifying its information campaign to ensure that intended benefits actually accrue to financial consumers. for instance, we have been working on enhancing transparency in credit transactions to make sure people are not overcharged with β flat β interest rates and similar misleading methods. to ensure proper and immediate dissemination of such consumer protection measures, no less than our deputy governors explain the issues through mass media, including radio. this may not mean much to some, but for tricycle drivers, for instance, who pay their motorcycles on installment,.... the right to demand correct pricing translates to higher income for him and his family. it is not enough therefore to craft responsive policies. we need to communicate and educate the people on what these means for them. on the other hand, we also need our people to be responsible and vigilant in protecting their rights. indeed, financial capability is a life skill that can lead to a better life. i wish all of you therefore a fruitful and successful financial education summit. thank you and mabuhay! bis central bankers β speeches | 0.5 |
jean - pierre roth : snb commemorative publication β the swiss national bank 1907 - 2007 β remarks by mr jean - pierre roth, chairman of the governing board of the swiss national bank and chairman of the board of directors of the bank for international settlements, at the launch of the commemorative publication β the swiss national bank 1907 β 2007 β, zurich, 21 june 2007. * * * ladies and gentlemen it is with pleasure and some pride that i present our commemorative publication today or β as the german language puts it so well β our festschrift, or celebratory work. there is indeed good reason to celebrate. one hundred years of doing business, crowned for the most part with success, certainly warrants celebration. the publication of a festschrift is one of the events being held to mark this anniversary. it is the fourth such work to be published, following on from those of 1932, 1957 and 1982. it is somewhat different, however, insofar as it commemorates an entire century of the national bank β s existence. we wanted this commemorative publication to be a learned work, which at the same time is accessible to a very broad readership. we wanted it to be both unpretentious and modern, yet in keeping with the tradition of the previous works. i make no secret of the fact that significant resources were deployed to prepare the book. work first started over three years ago and some fifty or so bank employees were involved in the project. the work which i am presenting to you today is divided into three sections. the first tells the history of the snb over the first seventy - five years of its existence. as the previous commemorative publications have already dealt in detail with this period, it was no longer necessary to recount all the events again. we thought that it would be more interesting to take a fresh and critical look at certain episodes from a historical perspective. this is why we called upon the services of three distinguished economists and historians, asking them to explore this period, and leaving them free to choose the salient points of their analysis. michael bordo of rutgers university and harold james of princeton university took a detailed look into the first half - century of the snb, in other words, from its jean - pierre roth snb founding in 1907 to the end of the second world war. an exciting yet troubled time, which included the surge in inflation that came in the aftermath of the first world war, the laborious return to the gold standard, the 1936 | a brief recap of the three elements of our strategy and explain the impact this adjustment will have. the first element is our definition of price stability. the snb equates price stability with a rise in the swiss consumer price index of less than 2 % per annum. price stability is to be ensured over the medium term. this primary goal of our monetary policy remains unchanged. the second element is our conditional inflation forecast. this is drawn up quarterly, with each forecast having a horizon of three years. the inflation forecast gives us an indication as to whether our current monetary policy stance is appropriate for keeping future inflation within the range consistent with price stability. it is our compass, so to speak, showing us whether we are heading in the right direction. it plays another important role in that it gives the public an indication with regard to the need for monetary policy adjustments going forward. the inflation forecast is based on the assumption that a given interest rate remains unchanged over the entire forecast horizon. to date this has been the three - month libor, and from now on it will be the snb policy rate. this brings me to the third element of our monetary policy strategy. this determines how we communicate the level of money market rates we seek to maintain. to date, we have used the target range for the three - month libor for this purpose. we will now do so by setting the snb policy rate. in implementing our monetary policy, we will ensure that the secured short - term money market rates are close to the snb policy rate. in this regard, we are focusing on saron, the most representative of the short - term swiss franc rates. saron is an overnight rate. given that we are now focusing on an overnight rate rather than a three - month rate, there is no further need for a target range. this was previously necessary because expectations regarding future monetary policy could strongly influence the three - month rate. the snb policy rate also sets the terms for monetary policy - related transactions with the snb. the conditions on the money market are currently determined by the interest rate banks pay on their sight deposits at the snb. we have decided that the interest on these deposits will at present correspond to the snb policy rate, and will thus remain at β0. 75 %. i will now summarise the importance of the snb policy rate. from this point onwards, we will use the snb policy rate in taking and communicating our interest rate decisions. | 0.5 |
in order to be able to cope with high private debt ratios and to deleverage reasonably quickly, the strength of the insolvency framework is important. also, recent analysis from the european commission found evidence that in the presence of a high stock of private debt, the quality of insolvency frameworks is important for financial stability and for spurring entrepreneurship and thereby mitigating the impact of deleveraging on growth. in particular, it was found that a good insolvency framework is associated with speedier adjustment of non - performing loan ratios. 4 see oecd, β economic policy reforms 2015 : going for growth β, 2015. aiyar, s., bergthaler, w., garrido, j. m., ilyina, a., jobst, a., kang, k., kovtun, d., liu, y., monaghan, d. and moretti, m., β a strategy for resolving europe β s problem loans β, imf staff discussion note, september 2015. carcea, m. c., ciriaci. d, cuerpo, c., lorenzani, d. and pontuch. p., β the economic impact of rescue and recovery frameworks in the eu β, european economy discussion paper no 004, september 2015. bis central bankers β speeches to highlight the differences in insolvency frameworks across euro area member countries, let me mention a few country figures : in slovakia it takes on average 4 years to resolve an insolvency case, while in portugal it takes 2 years and in ireland it takes less than 5 months. when looking at international practices, one can find three types of procedures through which firms can deal with debt restructuring : 1. out - of - court procedures ; 2. hybrid preventive restructuring procedures ; and 3. formal insolvency or restructuring procedures. in the euro area countries formal insolvency procedures are very common, while out - of - court procedures have been much less used so far. however, voluntary out - of - court restructuring can provide a speedy, cost - effective and market - friendly alternative to court insolvency proceedings. this tool is particularly useful in cases where there is a lack of confidence in the institutional capacity to support the operation of the insolvency system. in the past few years insolvency laws have been amended, in particular | ##rs. the fintech ecosystem in india has indeed evolved and is poised for a giant leap. 10. let me now touch upon some of the other initiatives taken by the rbi in this area. the regulatory sandbox framework was released in august 2019 with a view to foster innovation. with this, the reserve bank entered the select group countries that have their very own regulatory sandbox ecosystem. after four theme - based cohorts on retail payments, cross - border payments, msme lending and prevention of financial frauds, a theme neutral fifth cohort was announced earlier this month. it reflects our keen desire to increase the footprint of innovation in the fintech space. the success stories emanating from our regulatory sandbox initiative include, among others, the β framework for facilitating small value digital payments in offline mode β and the recently launched upi123pay which was aimed at enhancing digital financial inclusion by enabling over 40 crore feature phone users to access the benefits of upi in a safe and secure manner. 11. the reserve bank, for the first time, organised a global hackathon titled harbinger 2021 β with a view to make retail payments more innovative. this witnessed enthusiastic response. we received 363 proposals including 22 from abroad from countries like the usa and the uk. this exercise gave us a glimpse of the creative talent pool that india possesses and reinforced our belief that india is well positioned to provide leadership in the fintech space. i understand that the winners of harbinger 2021 are also participating in this global fintech festival to further showcase their creativity and talent. 12. more recently, the rbi has set up the reserve bank innovation hub ( rbih ) as a subsidiary in bengaluru. the hub has an eminent board of directors drawn from the private sector and domain experts. the rbih is currently undertaking several important projects. i am confident that going forward, the rbih will benchmark itself as a centre of excellence. 13. we have also created a new fintech department in the rbi from january 2022 to give focused attention to this evolving and dynamic sector. the objective of this department is not only to promote innovation, but also identify the associated challenges and opportunities and address them in a timely manner. all matters relating to facilitation of constructive innovations and incubations in the fintech space, with wider implications for the financial sector and markets, are being dealt with by this department, in addition to inter - regulatory issues and international cooperation. 14 | 0 |
2 the study spells out the relative advantages of different types of funds for different kinds of projects β preservation versus development, for example β and details which funds are best for the early, middle, or late stages of a project. turning to support for small businesses, community development staffers across the federal reserve conduct extensive research and analysis of the challenges and opportunities facing small business owners. for example, the 12 federal reserve banks collaborate on the annual small business credit survey, which surveys business owners about their financing needs and experiences to provide timely insights to policymakers, service providers, and lenders. 3 in addition to providing information on small business credit conditions, the federal reserve is trying to advance understanding of the best economic development strategies for supporting small businesses. the kansas city fed has helped lead on these issues through its β grow your own β entrepreneurship - based economic development guidebook, and its 2018 growing entrepreneurial communities summit. 4 these are just a few of the ways that federal reserve banks and the board of governors support the efforts of community development organizations. i hope that our work will be useful as you chart a path forward for your second decade of service to utah, and i look forward to continued collaboration between the federal reserve and community development organizations such as ucns. together, we can help support thriving communities across the wasatch front, the state of utah, and across our nation. thank you again for inviting me to speak, and congratulations again for 10 years of building stronger communities in utah. 1234 1 ucns is the parent organization of four separate organizations that, in combination, work to advance access to affordable housing, including homeownership and housing near high - capacity or high - frequency transit ; support economic development and job creation by funding small businesses ; and improve access to important community infrastructure. 2 2. elizabeth mattiuzzi, β funds for kickstarting affordable housing preservation and production : lessons for new investors, β community development research briefs ( san francisco : federal reserve bank of san francisco, march 2019 ). return to text 3 see www. fedsmallbusiness. org / for more information. 4 the guidebook is available at www. kansascityfed. org / ~ / media / files / publicat / community / gyo / entrepreneurship - econ - dev - local - communities. pdf. 2 / 2 bis central bankers'speeches | roger w. ferguson, jr : understanding financial consolidation remarks by mr roger w. ferguson, jr., vice chairman of the federal reserve board, at a conference sponsored by the securities industry association and the university of north carolina school of law, new york, new york, 27 february 2001 * * * good afternoon. it is my pleasure to speak to you today, and i thank the securities industry association and the university of north carolina school of law for inviting me to participate in this conference. consolidation of all types of business activities has been a prominent feature of the economic landscape for at least the past decade. the financial sector has participated actively in this development. indeed, the last few years have witnessed an acceleration of consolidation among financial institutions. thus, your choice of topics for this afternoon's session is a timely one. in recognition of the importance of this marketplace evolution, and especially its potential effects on a wide range of public policies, the finance ministers and central bank governors of the group of ten nations in september 1999 commissioned a major study of the possible effects of financial consolidation on matters of policy concern to central banks and finance ministries in the g - 10. this study, which i was privileged to direct, was released to the public late last month. today i would like to discuss the study's major findings and their implications. before reviewing these findings, however, let me make a few comments about current economic conditions. as always, the views i will be expressing are my own and are not necessarily shared by other members of the board of governors or of the federal open market committee. current economic conditions recent data on the u. s. economy confirm that a significant deceleration in activity has occurred. our economy is clearly undergoing a stock adjustment to bring the supply of and demand for inventory and capital goods in some sectors into better alignment. one key question is : when will the stock adjustment run its course? unfortunately, this question is not answerable with certainty at this stage. the predominant risk remains that growth will be notably slower than would be consistent with the economy realizing its full potential over time. one factor pointing to a risk of unacceptably slow growth is the uncertainty about consumer sentiment, which has been a feature of the recent period. it is therefore useful to explore more deeply economists'understanding of consumer confidence. usually, consumer sentiment closely mirrors contemporaneous economic conditions, and it generally moves closely with the growth in household spending. not surprisingly, the key influences on household spending, | 0.5 |
, in implementation of the ecb governing council β s december decision. the bank of italy β s selection of the new collateral assets is subject to strict standards and controls, further refined of late. hopefully, banks will adapt in order to take full advantage of this opportunity. the eurosystem β s liquidity support measures were made possible by the credibility that its monetary policy had gained over the years and the stability of inflation expectations. the governing council β s decisions responded fully to the mandate of the ecb. it was essential to keep monetary policy from losing effectiveness and being transmitted unevenly in different countries. the brusque cessation of the flow of credit to the economy and the interruption of the orderly working of markets would have entailed extremely serious threats to financial stability. bis central bankers β speeches in europe, the safeguarding of financial stability is entrusted to the regulatory authorities and the central banks. macro - prudential oversight is the responsibility of the european systemic risk board, within which the central banks play a leading role. the primary objective of the eurosystem is to ensure price stability over the medium term ; under the treaty, it contributes to preserving the stability of the financial system. when financial stability is jeopardized, price stability itself is put at risk. monetary policy cannot redress all the imbalances within the euro area, but it can stop contagion, avert systemic crises and ease tensions. its contribution in sustaining markets and supporting liquidity remains essential. today, an exit from the present policy framework would be absolutely premature. the financial system and the bank of italy β s supervision since the outbreak of the crisis, italian banks have made considerable progress in strengthening their capital. they have turned to the market in difficult circumstances. since 2007 the core tier 1 ratio of the five largest banking groups has been raised from under 6 per cent to 10 per cent. for the other banks it has remained stable at around 10 per cent. based on risk analyses, the bank of italy has invited banks to take the necessary steps to maintain or achieve capital ratios well above the regulatory minimum. the advance towards basel iii is on schedule. in these years the stability of italian banks has been assured by a series of factors : low exposure to structured finance products ; regulation and supervisory controls to prevent excessive risk - taking ; low leverage by comparison with other banks in europe ; and a high proportion of capital instruments effectively capable of absorbing losses. contributory factors were the absence of any real - | ranging from education to justice and health. the task is to rationalize and prune the regulations and prevent total public expenditure from increasing. yet spending priorities can be revised, the budget balance remaining constant, for instance in favour of education and research. the country can ask its entrepreneurs to make an extra financial effort to strengthen their firms β capital when they benefit from a thorough streamlining of the regulatory and administrative environment. investment will benefit, the real economy will be more robust, firms β relations with banks will improve. economic policy action can be undertaken serially, one matter at a time, but the overall design and the stakes must be clearly communicated and reasserted. getting out of this tight spot will impose costs on all of us. they are bearable costs if they are properly shared and seen to have a clear purpose. the journey will not be short. italian society cannot avoid confronting a changed world in which no position rents are allowed. at the same time, politics must ensure the prospect of a profound renewal that nourishes hope and responds to the aspirations of the younger generations. bis central bankers β speeches | 1 |
was set up in a β partnership β with the financial sector. the financial system helped to shape supervision as we know it. in other words, the currently much - acclaimed dutch polder model concerns not just the cooperation between government and social partners, but in a sense also the supervision exercised on the financial sector, with all parties involved acknowledging that proper supervision serves a common purpose. obviously institutions have commercial goals, but they are also aware that the public β s confidence in the financial system is conditional upon sound supervision. an open relationship has consequently grown up between the bank and the institutions subject to its supervision. yet the bank maintains a sufficient distance vis - avis the institutions, to safeguard objectivity and the authority to act when and where necessary. it is this mix of cooperation, efficacy and forceful action which makes the supervision exercised by the bank so potent. i would like to point out that a partnership does not equal self - regulation where the supervision of the financial sector is concerned. the experience gained by the financial sector with self - regulation has not always been positive. though widely sustained by the sector, financial supervision also clearly stands above it. as the civil society will not be able to function properly without impartial supervisory bodies, it will need to delegate part of its competencies and responsibilities to them. conclusion i am nearing the end of my address. i am all for striving for a civil society in europe. it means, however, that we need to analyse the obstacles that we find on our way to that goal. the model of the civil society is up against several constraints. first, the externalities of the behaviour evinced by those taking part in the civil society. second, possible reprehensible behaviour by individuals - to the detriment of others. third, the tendency to lose sight of the interests of weaker groups in society. i have attempted to show that the limitations that the civil society is up against also constrain the financial sector ; there the remedy has been found in the establishment of a supervisory authority which sets standards and ensures compliance. ideally, financial supervision is a partnership between the supervisory authority and the financial sector. at the same time, the supervisor should stand above the sector, and be capable of intervening forcefully and effectively. what does all this mean for the civil society? though the constraints on the civil society can be remedied in part by society itself, some form of supervision is ultimately indispensable. the best illustration i can think | should a bank fail, something that cannot be wholly precluded by supervision, the supervisory authorities can resort to other ways and means to keep it going. in the early - 1990s, the swedish government made vast amounts of funds available to the swedish banking system when a major financial crisis threatened to paralyse the entire financial sector there. if and when a central bank will actually act as lender of last resort is known only to that central bank. this is to prevent banks from engaging in β moral hazard β behaviour. if banks knew under what conditions liquidity support is given to the banking system, they might anticipate such action, rather than shoulder their own responsibility for the continuity of their business. this brings us back to the civil society. even though there may be an authority which supervises the functioning of the financial sector, at the end of the day it is up to banks themselves to bear responsibility at the very least for their own continuity. supervisors do not act for bankers. in other words, rules and standards - and the establishment of an agency which ensures compliance - may help to internalise externalities in the civil society ; ultimately, the participants of the civil society must shoulder their own responsibilities. key elements of the civil society : reprehensible behaviour the second constraint on the civil society is reprehensible behaviour on the part of individual participants in respect of certain standards and values. those who advocate a civil society assume that everyone is more or less concerned with the common good. everyone operates on the common ground between self - interest and the greater good. there are, however, always people who have only their own best interests at heart, and who have no qualms about sacrificing others in the process. this is considered reprehensible behaviour. in this sphere, too, there is a need for an agency to demarcate the boundaries between acceptable and unacceptable behaviour, as well as to ensure that these boundaries are not transgressed. reprehensible behaviour is completely out of the question in the financial sector. individuals entrust their money to financial institutions. abuse of that trust will damage the reputation of the bank in question, and with it possibly its continuity. that is why financial supervisors are paying increasing attention to the integrity of financial institutions. this brings us to an area of great activity. in the past, supervisors focussed notably on the prudential aspects of banks β operations. over the years, however, their attention has shifted to the | 1 |
group peer learning program on financial inclusion. the united nations now has her majesty queen maxima of the netherlands as their special advocate for inclusive finance for development and she is also honorary patron for the g20 global partnerships for financial inclusion. the alliance for financial inclusion held its latest annual global policy forum in malaysia in september. major regional and donor organisations such as the oecd, cgap, adb, ausaid and giz have been organising workshops and bis central bankers β speeches discussions on financial inclusion and there have been inter - regional country meetings such as those in africa and in asia. at the highest global levels, there is the clear recognition that deliberate financial inclusion measures and initiatives are essential if we are to reach the 2. 5 billion people who do not have access to any form of financial services and products and who remain in poverty. regional coverage in our own pacific region, we have come to also recognise the importance of embracing financial inclusion. in 2005, the united nations development programme estimated that around 6. 5 million pacific islanders and 80 percent of low income people1 did not have access to formal financial services, making it one of the most neglected regions in the world in terms of banking services. i am glad that the microfinance pasifika network took on the advocacy role in the pacific. in its vision statement, it says that β β¦ the network shall be committed to improving quality of life through the provision of inclusive and sustainable micro financial services, such as savings, credit, remittances and payment services and insurance, to the economically disadvantaged... β however, i am also glad to say that our own central banks and authorities together with other committed stakeholders, have also taken on the baton theme of forum β importance of access and impact ladies and gentlemen, our theme, β microfinance in the pacific β increasing access, enhancing impact β, brings a number of questions to mind. how do we reach the unbanked or those that do not have access to microfinance or any form of financial service and how do we make a difference to their lives? technological innovation such questions require the capacity to think outside the box. the problems and the difficulties are such that one cannot approach and derive a solvable position in many cases unless one takes a non traditional and non conventional approach to problem solving. this calls for innovative thinking. our problems in the pacific are fairly similar. we are small island countries that are dispersed over a wide area of sea. our economic growth rates | β’ honourable members, you may be surprised to know that almost 2. 0 percentage points of the 5. 5 percent inflation outcome at july end was driven by higher kava prices. even though kava constitutes only 2. 5 percent of our consumer price index ( cpi ) basket, it contributed substantially to the inflation out - turn. as a result, while yaqona farmers benefitted from the high prices, kava consumers had to fork out significantly more for their favourite brown label drink as prices almost doubled by july and rose three - fold by january this year. β’ for those of us who don β t drink kava, our inflation was effectively around 3 percent. external stability β’ as a small open economy dependent on imports of a variety of goods such as medicine, food, fuel, machinery, etc. we need to maintain a sufficient level of foreign reserves otherwise there will be pressures on our exchange rate. β’ the international monetary fund has set a benchmark on the level of foreign reserves which states that it should be sufficient to cover 3 months of import. β’ for fiji, we like to build in an additional buffer above this benchmark as we are prone to natural disasters, which can affect our export sector including tourism as well as external shocks which can significantly increase our import bill, and in turn significantly impact our foreign reserves. β’ honourable members, i am pleased to inform that in regards to external stability, fiji β s foreign reserves remained well above the benchmark throughout the review period. β’ at the end of july 2016, our foreign reserves were $ 1, 982 million, just $ 18 million shy of the $ 2 billion mark and was sufficient to cover 5. 5 months of retained imports. β’ these foreign reserves are what the rbf holds in its accounts. in addition, we have allowed a number of non - bank financial institutions to invest offshore. at the end of july 2016, foreign reserves held by other institutions amounted to more than $ 500 million. financial stability β’ honourable members, it is paramount that our financial system is safe and sound whereby depositors, pensioners, policyholders and unit holders β funds are protected. the safety and soundness of our financial system is also crucial in ensuring the confidence of investors and international agencies. β’ in this regard, i am pleased to inform the committee that the fijian financial system remains safe and sound supported by a growing asset portfolio which rose marginally from the end of 2015 to july 2016 to just over $ 16 billion. this is almost | 0.5 |
njuguna ndung β u : innovative products in the banking industry in kenya address by prof njuguna ndung β u, governor of the central bank of kenya, at the kcb biashara banking launch, nairobi, 28 june 2007. * * * mrs. susan mudhune, chairman of kcb group directors of the board of kcb group, mr. martin oduor - otieno, ceo of the kcb group invited guests ladies and gentlemen : it is indeed a great honour for me to stand here during this launch of the kcb biashara banking. i feel personally privileged because i am also a long time customer of this bank and one that feels proud of innovative products in the banking industry. kcb has been a major player in the lives of kenyans and continues to play a pivotal role in the socio - economic development of our nation. kcb as a bank symbolizes the prosperity of indigenous enterprises and its ongoing success is a major boost to our confidence in the kenyan entrepreneurial spirit. i would like to congratulate the board and kcb team for the excellent performance that the bank has been reporting in recent years, a reflection that the bank continues to be a major financial market player in the country today. allow me also to commend the board and kcb team for the excellent corporate social responsibility agenda that you have been undertaking. i am informed that kcb has supported key community initiatives through donations to operation smile kenya, the kenya red cross society and ndakaini dam environmental conservation organization among other worthy causes. i urge you to continue with your sterling corporate citizenship efforts. it is now clear that the sme sector is the source of livelihood for majority of kenyans and there is need to nurture it so that it can grow into a huge sector in the kenyan economy. it is however widely acknowledged that the sector faces constraints in accessing financial services. it is in this light, that i must commend kcb for launching the kcb biashara banking product that targets this bedrock sector of the economy. i do hope that most entrepreneurs will take advantage of this product to grow their businesses to greater heights. ladies and gentlemen, as i had earlier alluded, the sme sector in kenya has been constrained in accessing credit. one of the key factors responsible for this constraint has been the lack of a β credit history β for these enterprises that can be used by banks in lending to them. the kcb on | , the central bank has, in consultation with the kenya bankers association, prepared relevant regulations, which will soon be gazetted in order to provide a framework for the licensing and operation of credit reference bureaus under the banking act. we will expect banks to make effective use of this mechanism as a credit analysis tool before extending any credit. 8. the central bank recognises the need to bring the legal framework for regulating the banking sector up to speed with international developments. in consultation with the ministry of finance and the kenya bankers association, the central has undertaken a comprehensive review of the banking act in order to align it to the best international practices and address some of the weaknesses which have been identified over time. we anticipate that once enacted, the legal framework will provide a conducive environment for a more robust banking sector. 9. allow me to conclude my remarks by appealing to banks to explore ways of enhancing the efficiency in service delivery. by enhancing efficiency banks are capable of offering more affordable banking services. this has the potential of drawing a larger number of kenyans to the financial system resulting in an expanded banking clientele. following the recent study on cost of banking services, the central bank will soon be launching the results of the survey and a sensitisation program to educate the public for more effective market discipline. we believe that these measures will encourage efficiency in the banking sector and resultant lowering of bank costs for the benefit of both the banks and the economy. 10. finally, let me extend my gratitude to the board of directors for inviting me to be with you on this auspicious occasion of the opening of the nakuru branch of fina bank. 11. it now gives me great pleasure and honour to declare the nakuru branch of fina bank officially open. thank you all for your attention. | 0.5 |
, the overnight rate. the ecb, like most other modern central banks, conducts monetary policy with mandatory remunerated reserves and a corridor around the policy rate defined by two standing facilities. this means that the signal of one particular policy rate can coexist with different levels of bank reserves β so long as our β liquidity management operations β ensure that the liquidity provided is neither excessive nor insufficient in relation to the demand by profit maximising banks that react to the opportunity cost of reserves. what matters for managing liquidity is the targeted policy rate and the amount of liquidity that is necessary to achieve it. in our case, we keep the banking sector in a liquidity deficit and supply liquidity via lending to the banks through a system of auctions. other central banks supply liquidity mostly through outright purchases of securities, normally short - term government paper. both models of liquidity provision have changed during the crisis. in the case of the us, the federal reserve started to buy longer maturities and some private paper. in our case, in october 2008 we abandoned the system of auctions with variable rates and entered a mode of fixed rate, full allotment β supplying as much liquidity as banks β demanded, provided they had eligible collateral to pledge. on top of this, in december 2011 and february 2012, we launched extraordinary operations with 3 - year maturities that totalled 1 trillion euro. the net increase in our monetary base was around 500 billion euro as banks reduced their use of shorter maturity facilities. our particular method of supplying primary liquidity makes the future absorption of liquidity in excess of the minimum reserve requirements easy to achieve. banks have to repay what they have borrowed when maturity is reached. in reality, as their situation has improved, they are anticipating the repayment of the ltros. they have repaid 362 billion euro ( or 64 % of the net increase of 500 billion euro ) and excess liquidity, which reached a peak of 813 billion euro in march 2012, has now fallen to 218 billion euro. we have been exiting quietly and smoothly from an extraordinary phase of high central bank liquidity provision. however, this new mode of conducting monetary policy also presents challenges. as the overnight market rate is determined by the volume of excess liquidity and the size of the corridor between the policy rate and the deposit facility rate, it is more difficult to influence its level β and correspondingly, to influence other short term money market rates. for instance, if excess | of bank business models, cost inefficiencies, overcapacity and still - large stocks of npls for parts of the euro area banking sector. first and foremost, it is up to the banks themselves to undertake the needed adjustment. but an effective reduction of npls will require action from all stakeholders, and will need to include legal and institutional reforms. in particular, active policies are needed to improve the efficiency of judicial systems, increase access to collateral, introduce swift out - of - court procedures and create liquid markets for distressed debt. last month the ecb published its final guidance to banks on npls. furthermore, it is crucial to complete the global regulatory reform agenda as soon as possible in order to significantly strengthen the regulatory framework for banks and ensure a period of regulatory stability and certainty for market participants. while the economic recovery in the euro area is firming, the reform process needs to be reinvigorated to transform the cyclical pick - up into stronger and persistent long - term growth. to that end, structural reforms have to be implemented much more decisively, including reforms addressing key institutional weaknesses and improving private debt workout mechanisms which are necessary to improve the investment environment. in many cases, these reforms entail fairly low short - term economic cost. given that national reform efforts remain limited in euro area countries, it is also important to foster the use of existing tools, most notably a full and consistent application of the eu β s macroeconomic imbalance procedure. likewise, full and consistent implementation of the stability and growth pact remains crucial to ensure confidence in the eu β s fiscal framework and to safeguard public debt sustainability. in the current environment of a firming economic recovery, a broadly neutral euro area fiscal stance strikes an appropriate balance between aggregate stabilisation and sustainability needs. however, the contribution of individual member states to the area - wide stance is sub - optimal. some member states need to take additional measures to ensure compliance with the fiscal rules while others have scope to use available fiscal space. all euro area countries should strive for a more growth - friendly composition of fiscal policies. more broadly, a stronger and more complete economic and monetary union ( emu ) is essential to ensuring the future resilience of the euro area economy. the european commission started a general reflection on the future of the eu by publishing a white paper last month, which will be followed by a paper on emu in may 2017. we need to make progress on completing the banking union by moving forwards in | 0.5 |
on just where the balance is struck - the onus for resolving the situation has to fall back on the borrowing country and on its creditors, who cannot avoid taking ultimate responsibility for their own lending decisions. so there is a link between the review of the imf β s facilities and what has come to be called - in the jargon - psi, or private sector involvement in crisis resolution. and that link remains to be clarified. just how these issues are resolved will have an important bearing upon global economic and financial stability, and in turn, upon the safety of our national banking systems. somewhat similar considerations apply in the narrower national context. where, for whatever reason - which may be a result of macro - economic mismanagement by the authorities themselves or a result of mismanagement by banks or other financial institutions - there is a threat to the stability of a sizeable part of the financial system as a whole, it is the national authorities ultimately that have to deal with it. they can seek to reduce the risks of systemic problems originating in the financial sector in particular in a number of ways. firstly, there is regulation or supervision of individual financial intermediaries which may, as here in sri lanka be undertaken by the central bank itself or by a separate financial supervisory agency as now in the uk. financial supervision - including banking supervision - is a powerful instrument for preventing systemic financial disturbance, even when - as in the uk - the primary objective is to provide a degree of protection to the investors or depositors in individual financial intermediaries rather than to protect the system as a whole. but it necessarily has its limitations. the job of the supervisor in this context is essentially to set appropriate minimum standards for the authorisation and prudential conduct of financial institutions and to satisfy himself ( or herself! ) as far as possible that these standards are being observed. it is not the job of the supervisor actually to micro - manage the institution or the particular risks that it takes. that has to be the job of the management of the institution - indeed the taking and management of financial risk is the essence of their contribution to society ; it β s what they are paid for! nor is it the job of the supervisor to prevent each and every bank failure. indeed, if the supervisor were to attempt to do so, it would inevitably involve such rigorous prudential standards and enforcement that it would effectively stifle innovation and competition, at the cost of reducing the efficiency of the financial system in meeting the needs of | countries in difficulties, this β safety net β or lender of last resort ( lolr ) capacity needs to be used with great discretion if it is not to give rise to a similar kind of moral hazard - encouraging banks and their creditors to take excessive risks. it is only to be used where there is a genuine risk of systemic financial disturbance - where other banks are liable to be affected by contagion either as a result of their direct exposure to a failing institution or because they are likely to be seen themselves to be exposed to the same sort of pressures that affected the failing institution, and therefore likely to be similarly vulnerable and subject to loss of confidence. it is only in those circumstances - which i agree are difficult to recognise with total confidence - that official intervention can be justified. the safety net is not there to protect every individual institution that gets into trouble as a result of its own failings. even where it is judged that there is a systemic threat - and a public interest in containing it - a judgement that will properly need to be openly justified at the appropriate time - last resort assistance like imf assistance to its member countries - has to come with conditions. the purpose of last resort assistance is not to protect either the shareholders or the management of an illiquid, even less an insolvent institution, and the appropriate outcome may well be an orderly run - down or sale of the business. that may sound severe - even threatening to commercial bankers. but it is necessary both to ensure that moral hazard does not undermine the safety and soundness of the banking system and to maintain its competitive efficiency. pulling all this together the β authorities β - governments, financial supervisors and regulators, and central banks - have a vital role in creating and sustaining a safer, sounder, banking system. but in the end it depends critically on you - the professional, commercial, bankers. yours is a tough job at the best of times. it is especially challenging in today β s environment of rapid financial change as a result in particular of the inter - action between deregulation and increasing competition, globalisation and the revolution in information technology, which are constantly bringing new dimensions to your unenviable task of risk management. your own survival and prosperity - and that of the institutions that you manage - depend ultimately upon your abilities as risk managers. but to the extent that each of you individually succeeds in your own business, you also make a vital contribution to the safety and soundness of the banking system as a | 1 |
- traditional assets to resurrect its domestic economy. β’ the us fed is buying mortgage - backed securities. its balance sheet has more than tripled to us $ 3 trillion, or 19 % of gdp. β’ the ecb has made long - tenured loans to banks through its ltro programme and is prepared to buy sovereign bonds through its omt programme. the eurosystem β s balance sheet has more than doubled to β¬3 trillion, or 31 % of gdp. β’ the bank of japan is buying government bonds, but has also purchased corporate bonds and real estate investment funds. quantitative easing by the boj has amounted to 100 trillion yen, or 21 % of gdp. β’ the bank of england is buying gilts, and some commercial paper and corporate bonds. its asset purchase programme is now Β£375 billion, or 24 % of gdp. 26. central banks cannot expand their balance sheets indefinitely. the incremental benefits of further monetary easing are diminishing while the potential costs are increasing. 27. on the benefit side, it is not clear that additional monetary stimulus is an appropriate tool at this stage of the cycle. we would do well to remember the words of john maynard keynes in 1936, β if.... money is the drink which stimulates the system to activity, we must remind ourselves that there may be several slips between the cup and the lip. β 28. the problem is not liquidity but credit. capital - strapped banks are unwilling to lend and the private sector is unwilling to borrow, a reflection of uncertainty over fiscal policies, high indebtedness, and low income growth. 29. and we should be vigilant of the potential costs of cheap money. as market stresses subside and money multipliers recover, the abundance of liquidity could fuel a strong monetary expansion with adverse consequences for prices, which would eventually require large hikes in interest rates to counter. easy money over a prolonged period can also lead to a mispricing of risks and unsustainable asset prices, compromising both price stability and financial stability. 30. given the long lags in monetary policy, central banks must look forward now and prepare a strategy for a smooth transition back to normalcy. asian economies : dealing with desynchronised global macroeconomic cycles 31. the second key aspect in securing a return to normalcy is the adjustment of macroeconomic policies in the emerging market economies to spillovers from the advanced world. i will speak with | β’ the green bond grant scheme defrays the additional costs of obtaining an external review for green bonds. β’ foreign green bond issuers include indian renewable energy development agency as well as canadian insurer manulife. infrastructure financing is another avenue for investors looking to opportunities in asia. and singapore, as a full service asian infrastructure financing hub, is a good place to look for such opportunities. β’ singapore has strong connectivity to the region and has deep capabilities in project development, urban solutions, and financial and professional services. we have set up infrastructure asia : a go - to knowledge centre for infrastructure players and investors in asian infrastructure. β’ the office will facilitate infrastructure investment and financing, availing investors to infrastructure investment opportunities. singapore is developing two significant initiatives to facilitate the take - off of asian infrastructure financing. first, an infrastructure debt distribution facility to help crowd - in institutional investors. β’ we are working with industry partners to securitise a pool of brownfield regional project finance loans from banks into a collaterialised loan obligation that institutional investors, including insurance companies and pension funds, can invest in. second, creation of investment benchmarks to make infrastructure an investable asset class. β’ this will allow investors to compare the returns of privately - held infrastructure debt and equity against other asset classes. http : / / www. imas. gov. sg / news - and - publications / speeches - and - monetary - policy - statem... 21 - 07 - 18 connecting global markets supporting asias growth page 7 of 7 let me conclude. the asian growth story will dominate the investment agenda in the next decade. capital and investment will continue to flow into asia. as an international financial centre, singapore β s role is to connect global investors to asia, and to bring asian opportunities to global investors. and that is why nomura has gathered you here. i wish you a stimulating forum, fruitful investments, and an enjoyable stay. thank you. last modified on 05 / 06 / 2018 copyright Β© 2018 monetary authority of singapore http : / / www. imas. gov. sg / news - and - publications / speeches - and - monetary - policy - statem... 21 - 07 - 18 | 0.5 |
relevance of network effects are being taken into account. the market for credit default swaps ( cds ) has clearly revealed its systemic importance, as the default of one major counterparty has put the whole system under severe strain. therefore, i welcome very much that central counterparties for credit default swaps have been established to address first, the high degree of interconnectivity between cds markets and credit and cash securities markets, second, the high leverage embedded in these financial instruments, and third, the significant concentration of related risks in a small group of major market players. effective implementation of central clearing of derivatives enables a significant reduction in counterparty risk, hence addressing some of the negative externalities that stem from the over - the - counter network that has formed over the years. 4 interlinkages within the financial system are nothing fundamentally new. however, business strategies developed by financial institutions over the last 20 years and financial innovations have made the system much more interconnected, complex and opaque than it was in the past. i believe that policy - makers and regulators of today will be judged in the future on the basis of the regulatory measures and analytical tools they have applied to address the root causes see imf ( 2009 ), β global financial stability report β, chapter ii on assessing the systemic implications of financial linkages, april, and e. nier et al. ( 2007 ), β network models and financial stability β, journal of economic dynamics and control, vol. 31, pp. 2033 - 2060. see also ecb ( 2009 ), β otc derivatives and post - trading infrastructures β, september. of the crisis. a key challenge is to transcend a purely national or sector - specific perspective and to take an approach that matches the global nature of financial networks. a key prerequisite for network analysis as a surveillance tool remains, however, the availability of relevant data. this holds true especially on a cross - border basis, but also at bank level. going forward, regulators and overseers should continue to develop ways to systematically collect and analyse data. the crisis has clearly demonstrated that data confidentiality must not stand in the way of improvements in systemic risk analysis and assessment by policymakers. once more, i welcome you to this workshop and i wish you productive and enriching discussions on this very relevant topic. | gertrude tumpel - gugerell : recent advances in modelling systemic risk using network analysis introductory remarks by ms gertrude tumpel - gugerell, member of the executive board of the european central bank, at ecb workshop, frankfurt am main, 5 october 2009. * * * introduction ladies and gentlemen, i would like to welcome you to the workshop on β recent advances in modelling systemic risk using network analysis β here at the ecb. a workshop on systemic risk that provides an analytical focus on the financial sector as a network of financial agents could not come at a more timely moment. in 1896 the german sociologist georg simmel stated in his book β the philosophy of money β : β money is the spider that spins society β s web β. with this, simmel already at the time pointed to the network aspect of money, how financial innovation can transform the economy and society ; and the transformation process as changes in the complexity, size and nature of economic and societal networks. the recent financial crisis has strikingly illustrated the interconnectedness that characterises the global financial system. in providing a framework for strengthening financial stability, policy - makers are currently not only refining the regulatory and institutional set - up, but also looking for new analytical tools that help to better identify, monitor and address sources of systemic risk. therefore, i believe network analysis can make a relevant contribution and i am delighted that you have come together today to present and discuss new work in this field. let me give you three questions ( from the perspective of a policy - maker ) which today β s workshop would ideally shed light on : β’ what are the key channels and systemically important players that need special attention? β’ how can macro - prudential supervision take the interconnectedness into account? β’ and can network methodologies provide us with a useful tool in this respect? with these questions in mind, i have structured my introductory remarks into three parts. i will first give a short assessment of the relevance of systemic risk in the modern financial system. then i will discuss the use of network theories for the analysis of systemic risk. finally, i will briefly refer to network applications to payment and financial systems. 1. systemic risk in the modern financial system systemic risk refers to the possibility that a triggering event such as a bank failure or a market disruption could cause widespread disruption of the financial system, including significant difficulties in otherwise viable institutions or markets. preventing these negative externalities from impairing the functioning of the system and from spilling | 1 |
andreas dombret : systemic risk, too big to fail and resolution regimes speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the salzburg global seminar β out of the shadows : should non - banking financial institutions be regulated? β, salzburg, 19 august 2013. * * * introduction good afternoon, ladies and gentlemen it β s a great pleasure to take part in this salzburg global seminar. many thanks for inviting me back. over the next twenty minutes, i would like to share my views on how to deal with systemic risk and moral hazard. while concepts have been developed to initiate regulatory reforms, it troubles me tremendously to have to state that the β too - big - to - fail β problem still remains unresolved. market participants continue to anticipate that governments will rescue systemically important financial institutions β or sifis β in the event of their failure. the resulting refinancing advantage is reflected in so - called rating β uplifts β. rating agencies usually calculate two different ratings for banks. one is a β stand - alone β rating that measures a bank β s genuine creditworthiness. the other is the β all - in β rating which includes the likelihood and extent of external support available for the bank β s debt. the difference between these two ratings is the β uplift β. it delivers a proxy for funding subsidies, which are benefiting sifis. although these uplift factors have recently shrunk to some degree, they unfortunately remain substantial. 1 this could be taken as an indicator supporting my claim that the β too - big - to - fail β problem remains unresolved. however, in this regard we need to achieve two objectives at the same time. first, taxpayers should not have to foot the bill for bank failures and, second, systemic disruptions must be avoided. the experiences following the lehman collapse five years ago show how important financial stability is β and how fragile. so, what can we do about the β too - big - to - fail β problem? solving the β too - big - to - fail β problem 2. 1 how to make bank failures less likely i am convinced that overcoming the β too - big - to - fail β problem will require a multi - track approach. the main goal is to make sifis less likely to fail by increasing their loss - absorbing capacity. basel iii represents a landmark change in this respect. these rules are much more rigorous | is now very low. the labour market is tight. unemployment has not been as low since the second half of the 1980s, and employment has risen sharply this year. wage - earners and enterprises have both fared well. cheap imported goods have resulted in a subdued rise in consumer prices and a substantial increase in wage - earners β real wages. high export prices have restrained the rise in real labour costs. combined with high productivity growth, this has resulted in high corporate earnings and solid growth in employment. at the same time, wage - earners share of corporate value added has been reduced, from around 75 per cent at the end of the 1980s to 70 per cent at the end of the 1990s, and now stands at below 65 per cent. solid productivity growth and high prices for export goods and deliveries to the petroleum sector have contributed to the reduction in the wage share over the past few years. the ample supply of labour has probably had a dampening effect on wage growth. increased globalisation may have provided greater opportunities for norwegian enterprises to relocate production to other countries if labour costs become too high. this probably places some restraint on wage demands among workers in sectors where enterprises have such opportunities. historically, a high wage share has tended to be accompanied by low unemployment. developments in recent years have provided the basis for strong growth in employment while the wage share has fallen. is it possible to sustain the combination of low unemployment and a low wage share? first, it partly depends on whether the positive supply - side conditions are sustained. there is probably symmetry here. should the terms of trade deteriorate, productivity growth slacken and foreign workers return to their home country, the wage share will increase, profits fall and unemployment increase. there is now a prospect of slower global growth. there are also signs that the strong growth in productivity that has been evident in other countries β for example in the us β is moderating somewhat. and we may see a similar trend in norway. second, even without a reversal, profits may fall and unemployment rise. the implications of this will depend on how far businesses, in their search for qualified labour, will go in bidding up wages. it will also depend on how wage - earners react and on their ability to adapt to change. furthermore, it must be expected that the strong krone will shave profits in some enterprises and industries at the moment, even though many have used currency hedging to safeguard their income. even though demand for labour is strong, there is | 0 |
lars heikensten : challenges for the swedish fixed income market speech by mr lars heikensten, first deputy governor of the sveriges riksbank, at the rantevent, modern museum, stockholm, 8 may 2001. * * * the swedish fixed income market has undergone a fantastic development over the past 20 years. this refers to both the volumes traded and the level of sophistication. however, the journey here has by no means been a simple one. at times, both profitability and activity have been quite low. today the market is facing new challenges. profitability appears to have fallen and with it both the number of players and the volumes traded. the risks are now also covered to a greater extent by swedish players trading in, for instance, the german market. the swedish fixed income market has thus lost ground, relative to other countries. it also appears to have lagged behind in the sense of technology. a year or so ago there was an attempt to introduce a new instrument, a swedish fixed income future, with the aim of increasing the market's powers of attraction. this attempt did not live up to expectations, however. today we are gathered here partly because of a new initiative, a platform for electronic fixed income trading. let me start by saying a few words about the way i see the role of the riksbank in this context. our fundamental objectives are to safeguard price stability and promote a safe and efficient payment system. there are connections to the fixed income market in both of these considerations. however, this does not mean that we have an opinion on which system solutions the market chooses as long as they fulfil reasonable requirements for security and efficiency. this area lies outside of our core objectives. this is why we also remained outside of the discussion on a fixed income future a few years ago. given this, i would like to share a few, brief reflections with you. firstly, i shall go through the advantages of electronic trading. my views on this are mainly a matter of principle. after that i intend to make some brief comments on a few aspects of the swedish fixed income market today and in this context say a few words on the consequences that electronic trading may entail. finally, i intend to take up a more specific question, settlement on the fixed income market. we do not consider that this functions sufficiently well from a financial stability perspective. electronic trading, an opportunity let me begin by pointing out that electronic trading systems are being used | and the share of community banks that operate primarily in rural markets has increased slightly, from 53 percent to 54 percent. while there are more rural community banks than urban community banks, the latter consistently account for a larger volume of deposits, loans, and offices than the former. this difference is due, in part, to the average size of an urban community bank, in terms of total assets, being about two and a half to three and a half times that of the average rural community bank ( figure 2 ). as community banks have increased in asset size, they have also grown their branch networks. the average number of branches for an urban bank is about 1. 7 to 2 times that of a rural bank ( figure 3 ). looking next at the total amount of deposits held by all urban community banks and all rural community banks, we can see that both have been trending upward over time ( figure 4 ). growth in total loans outstanding was strong for both urban and rural community banks between 1997 and 2008 ( figure 5 ). declines in lending between 2008 and 2011 were more severe for urban community banks than rural ones. coming out of the recent recessions, rural community banks have seen quite modest loan growth since 2011, while the pace of growth in urban community bank lending has been strong since 2013. this divergence in recent growth rates may be due to the fact that the recovery - 7from the recent recession has been much more robust in urban areas than in rural areas of the country. when it comes to performance measures, rural community banks consistently outperform urban community banks with regard to return on assets ( figure 6 ) and return on equity ( figure 7 ). this difference was particularly pronounced during the financial crisis, when profitability fell much more sharply at urban community banks than at rural community banks. looking at charge - off rates ( figure 8 ), we see that they have been quite similar for the two types of community banks over most of the past 20 years, except for the period from 2008 to 2013, when rural community banks had lower charge - off rates than urban community banks. this data suggest that, despite facing a more challenging economic environment, rural community banks appear to be holding their own relative to urban community banks. market - level trends for all banks and community banks now i would like to shift my focus from the banks themselves to the communities they serve by exploring whether access to banking services - - provided by community or larger banks - - has been declining in urban or rural areas | 0 |
for maintaining price stability. the maastricht treaty also states that the eurosystem shall support the general economic policies in the community without prejudice to the objective of price stability. there is a widely held view that maintaining price stability is the best contribution monetary policy can make to a high level of output and employment in the medium term. with regard to fiscal policy, in 1997 the stability and growth pact was agreed among the governments of the eu. this pact requires fiscal authorities to meet the medium - term budgetary objective of positions close to balance or in surplus. it thereby provides the right incentives for the conduct of sound and disciplined fiscal policies across all participating member states. safeguarding sound government finances is a means of strengthening the conditions for price stability and achieving strong sustainable growth, which is conducive to employment creation. in addition, structural reforms in labour and goods markets are the best way to address the underlying causes of the currently high level of unemployment in europe, in particular the structural rigidities in the labour market. this clear division of responsibilities enhances the credibility of monetary and economic policies in europe, increases transparency and facilitates accountability. at the same time, it requires national policies and labour and goods markets to be increasingly flexible in order to be able to respond effectively to economic shocks. well - functioning labour and product markets are needed to enable adjustments to be made to wages and prices if local or global economic conditions change. against this background, an open exchange of information among policy - makers is most helpful for a proper assessment of the impact that fiscal policies have on developments in the euro area as a whole. this assessment will form one input β among others β into monetary policy decisions aimed at maintaining price stability over the medium term. the eurosystem β s monetary policy strategy given the well known lags in the monetary policy transmission mechanism, it is important that monetary policy is conducted in a forward - looking manner with a clear focus on the medium term. transitory factors that are not under the control of a central bank, such as sudden oil price shocks or changes in indirect taxes, may influence prices in the short term. to the extent that such factors represent one - off changes in the price level, these effects cancel out if a longer time horizon for the stabilisation of prices is chosen. the eurosystem, like any other central bank, influences future inflation by adjusting short - term interest rates. in the transmission of monetary impulses to the real sector, the behaviour of financial institutions, corporations | alejandro diaz de leon : climate change and its impact on the financial system remarks by mr alejandro diaz de leon, governor of bank of mexico, at the conference on climate change and its impact on the financial system, mexico city, 5 december 2019. * * * good evening everyone. on behalf of banco de mexico, i am pleased to welcome the participants of the conference on climate change and its impact on the financial system. it is a great pleasure for banco de mexico to collaborate jointly with cemla, the center for latin american monetary studies, the ngfs, network for greening the financial system, and the university of zurich in organizing this meeting. the sessions that comprise the conference cover some of the main topics in climate change and its economic and financial impact. climate change and environmental degradation constitutes a challenge at national and global levels and is a source of financial risk. climate change is presenting challenges related with extreme weather events, rising sea levels, declining productivity of agriculture and fisheries, trade and supply chain disruptions, the degrading of ecosystems, reduced welfare of communities due to air and water pollution, and even mass migrations in the territories most adversely affected. in some emerging and low - income economies, poverty, an inadequate institutional framework and a weak rule of law has created a fertile ground for a predatory behavior that has significantly degraded the environment, in some cases irreversibly, deteriorating both the welfare and development opportunities of the population affected. call for global action the growing recognition of climate change consequences is influencing the core tasks of central banks. for banco de mexico, the sound development of the financial system, one of our key objectives, requires from the central bank, not only to foster financial stability and better services for the benefit of households and corporates, but also to eradicate financing and risk management practices that avoid recognition of environmental and social negative externalities and risks. globally, the voices behind this call for action are expanding rapidly. multilateral organizations are focusing increasingly their portfolios on green and sustainable activities and several central banks are in favor of decisive action. ngfs, the network for greening the financial system, was originally set up by 8 central banks and now has 51 central banks and financial supervisors together with 12 observers. the fact that this technical expert group was just created two years ago, highlights the global commitment to address climate related risks in the financial sector. the ngfs supports an orderly transition towards a low pollution and low carbon economy by promoting best practices, improving data availability | 0 |
70 % co - funding support from the financial sector development fund gaining international mindshare to create greater international mindshare, ibf launched the financeconnectsingapore website to profile singapore β s financial sector, to provide more information on the career opportunities here and to promote singapore as a choice location to live, work and play. to date, the website has registered over 100, 000 visits. ibf recently partnered with contact singapore to provide a job portal for financial institutions to post job openings targeted at financial professionals from overseas. bringing value to ibf members i have outlined some of the initiatives undertaken by ibf over the past year. going forward, ibf will continue to take a proactive role in promoting best practices and thought leadership in talent management strategies. on thought leadership, i am delighted to warmly welcome our keynote presentation speaker professor ronald collard for this year β s annual conference. professor collard will speak on the topic of β talent strategies for sustained profitable growth β. i believe you will learn much from professor collard β s extensive experience and expertise in the area of talent strategies. i also wish to thank the panelists, david, richard, robert and mark for their participation, and look forward to a lively discussion later. as ibf management is quite confident that professor collard and our panel of speakers will whet your appetite for more learning, i am pleased to announce that we will be holding the beacon series for hr professionals in october and the distinguished speaker series for business leaders in november. the year ahead will be exciting. many of you have contributed to ibf in various ways. i wish to thank my fellow council members, the fics steering committee, the fics working group members, and ficps for your contribution to promoting the fics framework. let me extend my appreciation to our industry associations and partners, including the embassy of switzerland in singapore, swiss house singapore and swiss business hub asean for partnering ibf in its organization of the workshop on β talent development in wealth management β in november last year ; and pricewaterhousecoopers without whom we would not have had the pleasure of listening to professor collard today. i also wish to thank the singapore workforce development agency and the monetary authority of singapore, for their close collaboration with ibf. i look forward to more of such collaboration between ibf and our industry associations and partners in the year ahead. i wish you a fruitful session ahead. | heng swee keat : talent management strategies in singapore opening address by mr heng swee keat, managing director of the monetary authority of singapore and chairman of the institute of banking & finance ( ibf ), at the 2nd ibf annual conference, singapore, 20 june 2008. * * * welcome to the 2008 ibf annual conference which is held in conjunction with our 33rd annual general meeting. when we held our last agm and annual conference in may last year, the mood among global financial institutions was buoyant. the outlook for the global economy and financial markets was positive. the main concern among firms was the severe shortage of staff. today, the mood is cautious. the credit crisis is still working its way through, inflation has become a major concern everywhere, and economic prospects are more uncertain. in asia, investors and economists remain cautiously optimistic about the growth prospects of the economies. while financial institutions had limited exposures to sub - prime assets and related credit derivatives, financial markets in asia are not isolated from global markets. we are seeing a similar rise of risk aversion and tightening of credit conditions. the situation in the coming months will remain fluid and we must remain vigilant. talent management β a strategic imperative the developments in global financial markets in the last one year have important implications on human resources strategy. for instance, among the many findings in the report released by the senior supervisors group is that firms which weathered the recent crisis better have senior management members who have expertise in a range of risks. this underscores the need to attract and develop talent not only in the frontline, but across critical functions and at various levels of the organisation. financial institutions planning to expand must treat talent development as a strategic priority, and such development has to be undertaken in a holistic way, across the entire organisation. but this is not an easy task. there is a chinese saying that it takes ten years to grow a tree, and a hundred years to develop an individual. talent development requires consistent focus and commitment, from leaders at all levels of the organization. the efforts need to be sustained over many years, through good times and difficult times. the demographic changes in asia coupled with rapid growth in the economies will make this task even more challenging in the coming years. building a world class financial sector workforce ibf is committed to working with the industry to drive the development of talent in the financial sector. let me now turn to some of the key initiatives undertaken in the last twelve | 1 |
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