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from β ethical drift β to β ethical lift β : reversing the tide of misconduct in global financial markets remarks given by minouche shafik, deputy governor, markets and banking panel discussion at the federal reserve bank of new york conference on β reforming culture and behaviour in the financial services industry β 20 october 2016 all speeches are available online at www. bankofengland. co. uk / publications / pages / speeches / default. aspx introduction misconduct in financial markets has existed for as long as commerce has existed. thousands of years ago, chinese merchants found ways to hide trading profits through a variety of financial techniques. from the great south sea bubble in the 1720 β s to the mis - selling of railway stocks in the mid - 1800 β s through to more recent events such as the collapse of bank of credit and commerce international and the failure of barings in the mid - 90 β s β we have had a long and inglorious record of rogues, fraudsters and embezzlers in the financial services sector. but the wave of misconduct which has emerged in the aftermath of the financial crisis suggests that β this time is different. β the magnitude of the misconduct fines is indicative of the scale of the problem : since 2009, uk banks have paid almost Β£35 billion in fines and redress costs, roughly equivalent to the private capital they have raised in the same period. the global picture is even more unsettling β the roughly $ 275 billion in legal costs for global banks since 2008 translates into more than $ 5 trillion of reduced lending capacity to the real economy. never before has misconduct occurred so systematically, in such a scale and across multiple jurisdictions. clearly it was not the case of a few bad apples, but something was rotten in the entire barrel. a combination of factors caused β ethical drift β across the industry where bad behaviour went unchecked, and became progressively more widespread and accepted as the norm. market structures ( such as poorly designed benchmarks, unmanaged conflicts of interest, and possibilities for collusion ) presented opportunities for abuse. systems of governance and control focused on second and third lines of defence that were weaker than highly profitable and powerful trading desks. weak market discipline, particularly from the buy side, meant that poor market practices were allowed to continue. remuneration and incentive schemes stressed short term returns over longer term value enhancement. and finally ; a culture of impunity was prevalent because of a perception that the likelihood of being caught | philip n jefferson : on the assessment of current monetary policy speech by mr philip n jefferson, member of the board of governors of the federal reserve system, at the " how to get back on track - a policy conference ", hoover institution, stanford, california, 12 may 2023. * * * accompanying charts of the speech good afternoon, everyone. thank you to the organizers for inviting me to speak. it is a pleasure to be here. i welcome hearing diverse views on how to best conduct monetary policy, and this conference is certainly providing an invigorating debate on that topic. before i begin, i want to address quickly some news from this morning. i am deeply honored by the trust president biden and vice president harris have shown me with the nomination to be the next vice chair of the board. i am humbled by this extraordinary opportunity and thankful to my colleagues, friends, and family for their support. turning back to the conference, as i join this debate, let me remind you that the views i will express today are my own and are not necessarily those of my colleagues in the federal reserve system. introduction the title of the conference " how to get back on track : a policy conference " is potent. its intent and ambiguity are striking. first, the title presupposes that u. s. monetary policy is currently on the wrong track. second, the webpage for this conference advances a puzzling definition of the phrase " on track. " how so? according to the hoover webpage, " a key goal of the conference is to examine how to get back on track and, thereby, how to reduce the inflation rate without slowing down economic growth " ( emphasis added ). 1 as this audience knows, there are macroeconomic models that permit disinflation with no slowdown in economic growth, but the assumptions underlying these models are very strong. 2 it's not clear, at least to me, why such a strict metric would be used to assess real - world monetary policymaking. third, the definition of " on track " in the title contrasts with more commonplace definitions such as " achieving or doing what is necessary or expected, " as offered by a standard reference such as the merriam - webster dictionary. 3 my view is that this commonplace definition provides a more practical lens through which to assess real - world policymaking. against this semantic backdrop, i will begin my remarks with my perspective on the current inflation and economic situation. then, i will | 0 |
savers. savers would only put their money in banks if they are confident that it will be there when they need it. in turn, the banks will lend this money to the borrowers when they are certain that it will get repaid. so at the end of it all, money goes around and everyone is happy. when we examine our financial system in these terms of soundness and efficiency, we can see that we have come a long way in the last ten years. fiji voluntarily subjected its financial system to a financial sector assessment program by a joint international monetary fund and world bank mission in 2006. this comprehensive study while pointing out several improvements, confirmed that fiji β s financial system is sound. with the implementation of these recommendations, we can look ahead confidently to a financial system that is even more versatile in fiji. this augurs well for businesses, investment and growth. at this stage, i wish to clarify that the reserve bank regulates and supervises only the financial institutions that we licensed. these currently include commercial banks, insurance companies, credit companies and foreign exchange dealers. we have added the fiji national provident fund to the list since 2003. the key intention of this supervision is to protect depositors, the policy holders, members and the financial system as a whole. there are some finance companies that we do not license and we do not therefore supervise. we have put out an advertisement to this effect. we advised the public to exercise caution when investing with finance companies that are not licensed by the reserve bank. the bank will take appropriate legal action against unlicensed finance companies that are found to be carrying out banking business in fiji. banking business is generally defined as accepting deposits from the public. one key issue that we monitor closely in our supervision is the quality of the financial institution β s loan book together with the provisioning level that they have allowed. i am pleased to say that despite the economic downturn this year, the quality of the industry β s assets remains intact with more than adequate provisioning. at the same time credit growth has slowed markedly. this is again good from the point of financial stability and soundness. efficiency on the other hand very much depends on modernisation, technology and competition. we have seen several initiatives in technology and modernisation on both the individual bank level and the industry wide level. at the individual bank level, we now enjoy modern banking services like eftpos, internet and phone banking and atms. we can also send money anywhere in the | , visitors and workers of the surrounding business area. the branch services will include international money transfer service, moneygram. the nakasi branch, like the port denarau one, has a modern look and feel and even features a telephone and internet banking kiosk in - branch for customers who wish to access westpac β s internet or telephone banking services. westpac has a long and proud history, serving the fiji islands for the last 106 years. the bank of new south wales, westpac β s forerunner is fiji β s longest continuing bank as well as the first australian bank to open a branch in fiji on 12 august 1901. it has grown from a 3staff operation in 1901 to an operational network of 19 banking ( branch and agency ) sites offering a full range of retail, commercial and corporate products. we can all agree that westpac has played a valuable role in advancing fiji β s financial system and also its economic development through its services, innovative products and the latest banking technology. concluding remarks finally, i would like to thank mr. john cashmore and ms margaret deveau for their kind invitation. westpac β s recent progress has been interesting with their association with moneygram, american express as well as the opening of 2 branches within 3 Β½ months with another one in the pipeline soon. i again congratulate john, margaret and the westpac team on the opening of the nakasi branch in fiji. i also wish westpac all the best in its future endeavours. official opening i now have much pleasure in declaring this nakasi branch of westpac open. thank you. | 1 |
speech embargo 5 september 2019, 6. 00 pm currencies, money and digital tokens 30th anniversary of the wwz and vbo, university of basel thomas j. jordan * chairman of the governing board swiss national bank basel, 5 september 2019 Β© swiss national bank, zurich, 2019 ( speech given in german ) * the speaker would like to thank oliver sigrist for his support in preparing this speech. he also thanks simone auer, nicolas cuche - curti, matthias gubler, christoph hirter, carlos lenz and alexander perruchoud, as well as snb language services. page 1 / 7 ladies and gentlemen it is a great pleasure, and an honour, to be invited to speak to you today, on the occasion of the 30th anniversary of the university of basel β s faculty of business and economics ( wwz ) and the vereinigung basler okonomen ( vbo ). i congratulate you wholeheartedly on reaching this milestone. there is a long - standing and close association between the swiss national bank ( snb ), on the one hand, and the wwz and the university of basel on the other. many snb economists were trained here and some of our staff regularly give lectures at the wwz. i would like to thank the university of basel and the organisers for inviting me to this special event. i am sure that the ties between our institutions will continue to be close for many years to come. for central bankers, basel is a special place. we regularly meet with our counterparts from all over the world at the headquarters of the bank for international settlements ( bis ), not far from the wwz, to discuss the challenges facing us. these challenges have always revolved around monetary policy and financial stability. the increasing digitalisation of the financial sector opens up another area for discussion. against this backdrop, the bis announced a few months ago that it was launching an innovation hub. the aim of the hub is to study technological developments with the potential to improve the functioning of financial markets and support central banks in fulfilling their mandates. furthermore, it will provide a network for central banks to exchange knowledge on innovations. one of the hub β s three regional centres will be in switzerland, and will be operated jointly with the snb. the word β innovation β brings me to the subject of my speech tonight. issuers and types of money ladies and gentlemen, how do you pay | ##nb is following developments closely, and is actively involved in the debate, not least through its future participation in the bis innovation hub i mentioned earlier. thank you for your attention. page 7 / 7 currencies, money and digital tokens thomas j. jordan chairman of the governing board swiss national bank 30th anniversary of the wwz and vbo university of basel, 5 september 2019 types of money in switzerland currency issuer type cash state banknotes and coins state private private book money digital token money sight deposits held at the snb for financial market participants swiss franc tokens for financial market participants sight deposits held at the snb for all households and companies swiss franc tokens for all households and companies bank deposits stable coins ( value stable against swiss franc ) stable coins ( minimal fluctuations in value against official currencies, e. g. libra ) private crypto tokens ( e. g. bitcoin ) existing types of money 05. 09. 2019 potential types of money currencies, money and digital tokens | thomas j. jordan | Β© swiss national bank | 1 |
among some european politicians, to develop certain critical technologies on european soil. tremendous effort has been put into developing european regulations to manage these and other digitalisation - related risks. so that european citizens and businesses can take full advantage of new technologies, safe in the knowledge that the risks are well managed. 1 / 2 bis - central bankers'speeches large digital service providers, such as cloud providers, are set to become subject to european oversight, for example. and supervision of crypto service providers is being expanded. however, developments are happening rapidly, and the challenge is to be able to reap the benefits of innovation while keeping out the bad stuff. of all innovations, generative artificial intelligence is undoubtedly the most exciting : with the emergence of incredibly capable generative models and dramatic advances in computing power, we might very well be on the verge of a new technological revolution. who knows soon we can all paint like rembrandt. also here, we must make sure to maintain a healthy balance between harnessing the benefits of innovation while mitigating the risks. when it comes to innovation, some regions, like the us, have traditionally focused more on the opportunities side, with a regulatory environment that's conducive to business innovation. we europeans tend to focus on the risks and call for regulation. but falling behind in adopting new innovations is a significant risk too. so i would call for a balanced approach, and warn against constraining ai - driven innovation too much but that doesn't relieve us of the obligation to monitor the risks that come with it. many of the potential risks of ai may seem new, but if you look beneath the surface, they are strikingly similar to traditional financial risks. risks that we are familiar with. we already have frameworks to assess concentration risk, third party dependence and interconnectedness. this is good news. of course, it's not a simple copy - paste exercise. we may see new forms of interconnectedness in the financial system. for example, autonomous trading agents may interact to create new dynamics in financial markets. and technology that can be used to paint like rembrandt also offers possibilities for creative fraud, from phishing to identity theft. so the nature of the risks may not be different, but the crooks are getting better. that means we are entering a new phase of the never - ending race between risk and risk management. but we are entering this race from a relatively good starting point. ai is not | between banks and sovereign is that banks tend to overinvest into bonds issued by the home government compared to a well - diversiο¬ed international bond portfolio ( de marco and macchiavelli 2016, horvath, huizinga, and ioannidou 2015 ). to what extent this pattern reο¬ects a β home bias β in banks β investment portfolios is hard to assess, given that investment patterns depend on preferences, incentives, regulations, and transaction costs. the regulatory treatment of sovereign debt certainly affects portfolio choices of banks ( deutsche bundesbank 2014, 2017 ; kirschenmann, korte and steffen 2017 ). under current bank capital regulations, exposures of banks to sovereign debtors in the country β s own currency are assigned a risk weight of zero. in addition, these claims are exempted from limits on large exposures that would otherwise apply to large exposures to non - sovereign entities. similar exemptions apply to liquidity regulations. yet, claims on governments are not immune to the risk of default or of illiquidity. c ) implicit subsidies and systemic risk implicit guarantees for liabilities of ο¬nancial institutions are a key channel through which private and public debt are linked. they are contingent liabilities for the government which can turn into explicit payment obligations in times of crisis. quantifying this implicit subsidy and thus the expected bailout that debt holders expect to receive is not an easy task. funding costs advantages of banks which are deemed β too big to fail β ( tbtf ) may serve as a proxy ( siegert and willison 2015 ). the size of the funding cost advantage for a bank depends on the expected probability of default, the loss given that a default has occurred, and the expected recapitalization through the government. the probability of being bailed out, in turn, is inο¬uenced by factors such as the resolution regime and the ο¬scal capacity necessary to make the implicit guarantee credible. financial institutions that are deemed β too - big - to - fail β are indeed a recurrent theme in the history of ο¬nancial crises. individual banks can become too big, too interconnected with the rest of the ο¬nancial system, or too complex to disorderly exit the market. in 2011, g20 members thus agreed on reforms addressing the β systemic and moral hazard risks associated with systemically important ο¬nancial institutions β ( fsb 2011 ). three sets of policies have been implemented | 0 |
confederal agreements for collective bargaining, habitually signed by social agents, restrict the capacity to adjust wage increases to industry - or firm - wide productivity developments, in addition to setting a floor for the increase in nominal wages. the indexation clauses included in a high proportion of agreements have particularly harmful effects when exogenous price - rise shocks occur, as with the current hike in oil prices, since they tend to reinforce the upward inertia of wages. collective bargaining arrangements should be made more flexible to provide a framework in which, establishing the necessary guarantees for workers, wage and working conditions are adapted more readily to the needs of an efficient and competitive functioning of firms and industries. it is also crucial to promote permanent hiring, to correct the duality persisting in the labour market, since the ratio of temporary to total employees has continued to increase in 2005 and in 2006 to date. the agreement on labour market reform recently signed by the social agents and the government is a very timid step in this direction ; although it seeks to discourage temporary hiring ( with results that are difficult to assess in advance ), it leaves some of the core problems underlying the restrictive use of permanent hiring largely unchanged. in particular, although a more transparent system of rebates has been introduced for this type of hiring, the dismissal costs linked thereto have not been changed. in this connection, mention may be made of the extension to 2007 of the period in which employers can convert temporary contracts into permanent ones, availing themselves of the employment - promoting contract, which envisages a smaller redundancy payment. the issues pending in the field of labour reform are very important, since this is a very significant area for the effectiveness of the numerous liberalisation measures implemented first, under the plan de dinamizacion ( plan to bring about a more dynamic economy ), and further under the national reforms programme. the proper implementation of these programmes, which have been favourably assessed in the european commission's follow - up of the lisbon agenda, is vital if the spanish economy is to leave behind the path of low productivity growth on which it has been moving. undoubtedly, the high availability of labour is a factor that partly explains the low increases in productivity. but this should not mask the difficulties faced in increasing and modernising productive capital, in properly training labour and in incorporating technological advances, difficulties that must be overcome to improve the competitiveness of the productive system. market flexibility and efficiency is a vital requirement for sustaining long - term | contrast between this optimism on financial markets and the wariness of companies, mirrored by slack investment in the real sector which is particularly striking if regard is had to the favourable trend of corporate profits. several explanations have been offered for the muted performance of business investment in recent years, such as the difficulties in valuing investment in intangible assets appropriately, over - investment in the second half of the nineties ( which caused surplus capacity in recent years ), the ongoing reduction in corporations'financial leverage, the uncertainty generated by globalisation and companies'caution following the recent changes in the legislative and accounting framework in the wake of the corporate scandals in some countries. insofar as some of these factors are probably transitory, greater investment momentum may be expected in the coming years. the buoyant global demand for commodities and the attendant rise in their prices were conducive to the economic growth of the commodities - exporting countries, while widening the room for manoeuvre of their economic policies. the latin american countries benefited from this positive effect on their terms of trade, enabling them to reconcile relatively high growth rates with current - account surpluses. in this respect, a clearly contrasting use was made of this greater flexibility by the latin american countries : while some have sought to strengthen their macroeconomic fundamentals and reduce their vulnerability by limiting and improving the terms of their debt, others have given an interventionist bias to their policies which seriously undermines the maintenance of legal security and dents their mediumterm investment and growth prospects. as stated, an essential ingredient in the stability of the world economy has been the maintenance of moderate inflation, despite the rise in energy and other commodities prices. admittedly, the dynamism of china and other emerging asian economies has contributed to this increase in commodities prices ; but their penetration in the international markets for manufactures has also helped contain wage and price pressures. the greater anti - inflationary credibility of monetary policies is, in any event, responsible for anchoring inflation expectations at moderate levels, having prevented the so - called " second - round effects " β via prices and wages β that prompted a global inflationary spiral in the eighties in the wake of dearer energy. this diagnosis, far from making us complacent, should be a reminder that such credibility cannot be taken for granted ; rather, it has been attained thanks to policies clearly geared to safeguarding price stability, policies which we are bound as central banks to persevere with. what does the immediate | 1 |
. a few months following y2k, the stock markets began the steep decline that has reversed much of the remarkable rise witnessed over the latter half of the 1990s. that decline has been one source of the weakness that has undermined the expansion of the economy over the past two years. in recognition of that experience, many have characterized the extraordinary rise in stock prices in the late 1990s as a bubble - a significant and protracted departure in asset prices from fundamentals - and the subsequent decline as a popping of that bubble. our recent experience has given renewed spark to a vigorous debate about the appropriate response of monetary policy to financial bubbles, with some economists criticizing the federal reserve for not having done more to stem the expansion of the bubble. economists agree that bubbles can impair the functioning of the economy by promoting a misallocation of resources when they are inflating and by provoking severe dislocations when they pop. but because we are talking about economists, you can be sure their opinions differ substantially after that. one branch of economists holds the view that monetary policy should not be influenced by any perceived financial market bubbles. an extreme version of this view is that bubbles probably do not exist - that rational market processes always price assets at their fundamental value. a more moderate version is that even if bubbles do exist, they cannot reliably be identified, and even if bubbles can be identified, we do not know how they respond to monetary policy. the extreme view at the other end of the spectrum holds that central banks should pop bubbles as soon as they can. according to this view, by raising interest rates when a bubble begins, the central bank can avoid the volatility that occurs when a bubble fully inflates and then pops. central bankers need to be practical, not extreme, and consequently my view falls somewhere in between. on the one hand, i am skeptical that central bankers or anyone else can accurately identify bubbles as they are inflating, and i know of no central banker who understands with great certainty how bubbles respond to monetary policy. on the other hand, the fomc does attempt to take into account the effect of asset values on the economy when setting interest rates and does consider the likely reaction of asset prices to our policy decisions. another type of financial instability that can influence monetary policy in a way that is very difficult to embed in a rule occurs when important intermediaries - banks, securities dealers, hedge funds - fail or when markets seize up in a financial | , the results were less than perfect. but we commend the bankers for their extensive efforts and thank them for their patience in producing results under less - than - perfect circumstances. in the future, we expect to have better assessments of the framework's impact on u. s. banks before it is fully implemented. and as we move forward in this process, we expect that additional information provided by u. s. supervisors - - through rulemaking and guidance - - would allow bankers to produce regulatory capital results that are more accurate and likely more in line with our expectations. one of the most important findings from qis4, obviously, relates to the overall decline in regulatory capital requirements. capital serves as an important backstop against risk - taking and we need to ensure that an adequate level of capital is produced by the basel ii framework. to be frank, the federal reserve would not be comfortable qualifying any bank based on the results of qis4, if basel ii were to be applied today. but as i noted above, qis4 does not represent the final version of basel ii in the united states and we realize that bank data and risk - management systems required by basel ii are not yet fully developed and implemented as expected by the framework. to be sure, by the time that basel ii " goes live, " bankers would have significantly more information regarding our expectations and more robust default and loss - severity data. banks will also have to adhere to the qualification standards set by supervisors. but given some of the uncertainty that still remains about the impact of basel ii, it is important that we continue to effectively use the safeguards designed in the basel ii process. as i just mentioned, qis4 was one of a series of studies conducted with banks to test the methodology and identify implementation issues. the process also requires banks to successfully complete four quarters of running their basel ii systems in parallel with the capital requirements of basel i, before they can qualify for the next stage. the current framework then requires banks to demonstrate continued reliability of their process for two years, during which floors on minimum regulatory capital exist to prevent an unintended drop in capital. the public comment process and transparency in our implementation process would provide added checks and balances. i would also like to emphasize that market participants are also expected to play an important role as basel ii is implemented. not just supervisors will be expected to evaluate information provided by institutions. as basel ii rolls out, bankers would be expected to disclose where their institution is | 0.5 |
bank money more efficient and secure. in particular, we are assessing the potential of dlt and the extent to which it could improve our services. market players that are active in payments and securities settlement, such as banks and financial market infrastructures, are already experimenting with dlt. our ongoing engagement with these stakeholders reveals that many of them expect dlt to experience a significant uptake in the financial industry. this would entail a shift from using centralised databases for transferring cash and assets to using decentralised networks instead. proponents of dlt highlight a range of benefits, such as the possibility of settling transactions instantly, around the clock, in a wider range of assets and with a broader spectrum of participants, potentially including non - financial corporations. users of dlt platforms could also program transactions to be settled automatically based on predefined conditions. stakeholders expect dlt to be used prominently for securities post - trade processes, where it could help to reduce costs, processing times and the need for reconciliation. some market players see the potential for efficiency gains by using dlt along the whole lifecycle of a security. and in the area of wholesale payments, market stakeholders see the potential for dlt to improve cross - border and cross - currency transactions, as it would overcome some of the frictions related to correspondent banking. but experiments conducted by both private firms and central banks must still prove that dlt can offer more benefits than existing technologies. indeed, the potential advantages of dlt can also be obtained in other ways. fast payment systems β such as the eurosystem β s tips β prove that 24 / 7 instant payments do not require dlt. and questions about who can access central bank money for wholesale transactions, or which types of assets should be settled against central bank money, are unrelated to the technology used. furthermore, automated and conditional payments can also be initiated through application programming interfaces ( apis ). notably, there are initiatives that seek to improve wholesale transactions using conventional technologies. for example, interlinking existing systems could improve the efficiency of cross - currency transactions. where similar objectives could be achieved both with and without dlt, the costs and merits of each option should be compared before moving in either direction. and we need to consider the potential drawbacks of dlt. for example, the consensus mechanisms that some dlt networks use to validate transactions are inefficient, both from an environmental point of view β as they require large amounts of energy β and in terms | stefan ingves : cash management - an important social issue speech by mr stefan ingves, governor of the sveriges riksbank, to the first meeting at the sveriges riksbank of the cash management advisory board, stockholm, 26 april 2006. * * * i would like to welcome you all to the first meeting of the new cash management advisory board. all of you sitting at this table are in some way concerned with cash management in the economy : banks, cash - in - transit companies, representatives of the retail trade, trade unions and authorities such as finansinspektionen ( the swedish financial supervisory authority ), the police and the swedish work environment agency. my hope is that the advisory board will function as a forum for identifying and discussing issues in the field of cash management. the idea is that we should meet once or twice a year, and i look forward to fruitful discussions. before opening the debate, i would like to mention two questions that i believe can form a starting point for our discussions : β’ the process of change undergone by cash management in recent years and the new structure for cash management that the riksbank is establishing together with the banks. β’ the social problem comprised by the many and increasingly violent robberies of cash transports. towards a more expedient structure for cash management one of the riksbank β s tasks is to promote a safe and efficient payment system, and we are responsible for issuing banknotes and coins. these are important function with regard to cash management in the economy. at the end of the 1990s, the riksbank began work on achieving greater efficiency in cash management. we observed in the surveys made then that there were deficiencies in the system. this was partly due to the way the riksbank organised its work. by offering a service to the banks without charging in full for it, the riksbank had contributed to the preservation of an outdated cash management structure and inefficient methods of working, which included extensive cash - in - transit transports to and from the riksbank for the sole purpose of avoiding interest costs overnight. this system was very costly, while it led to unnecessary risks for cash - in - transit companies. the riksbank therefore wanted to make the cost of cash management more visible and allow the banks and other participants to bear the costs, which would give them a clear motive to make operations more efficient. the aim was to stimulate greater competition and increased product development for services | 0 |
michelle w bowman : high inflation and the outlook for monetary policy speech by ms michelle w bowman, member of the board of governors of the federal reserve system, at the american bankers association community banking conference, palm desert, california, 21 february 2022. * * * before we get to our conversation on community banking, i would like to briefly discuss my outlook for the u. s. economy and my view of appropriate monetary policy. 1 as i see it, the main challenge for monetary policy now is to bring inflation down without harming the ongoing economic expansion. inflation is much too high. last year i noted that inflationary pressures associated with strong demand and constrained supply could take longer to subside than many expected. since then, those problems have persisted and inflation has broadened, reaching the highest rate that americans have faced in forty years. high inflation is a heavy burden for all americans, but especially for those with limited means who are forced to pay more for everyday items, delay purchases, or put off saving for the future. i intend to support prompt and decisive action to lower inflation, and today i will explain how the fed is pursuing this goal. in the near term, i expect that uncomfortably high inflation will persist at least through the first half of 2022. we may see signs of inflation easing in the second half of the year, but there is a substantial risk that high inflation could persist. in january, the consumer price index rose to a 12 - month rate of 7. 5 percent, which, consistent with other recent monthly readings, was even higher than expected. employment costs for businesses, as measured by average hourly wages, also rose last month. and continued tightness in the labor market indicates that upward pressure on wages and other employment compensation is not likely to moderate soon. my base case is that inflation will moderate later this year, which will depend, in part, on appropriate actions by the federal open market committee ( fomc ). but with wage growth lagging behind inflation for the past year, many families may find it challenging to make ends meet and continued rising home prices will likely prevent many from entering the housing market. in addition, rising costs and hiring difficulties continue to be burdens for small businesses. turning to the labor market, which continues to tighten, indications are that the omicron infection surge earlier this year has not left a negative imprint on the economy or slowed job creation. i expect to see continued strength in the job market this year, with further gains | clients ( typically corporate entities and formal sector employees ), at a high cost, within a narrow geographical location ( typically the major towns and peri - urban areas, and they have made high returns in doing so ( see table 2 ). disappointingly, nbfis have typically served the same client base and have not offered effective competition to commercial banks. 4. 1 initiatives to expand access to financial services there are a number of strategies being implemented by both the private and public sectors to make the financial sector more inclusive, thereby increasing the benefits to the poor of participating in the formal economy. 4. 1. 1 financial service providers currently, there are signs that a number of financial institutions are re - positioning themselves in terms of location and product offerings. this is evidenced by an expanding branch network and the range of lower - cost products that are now available in the market. for instance, some commercial banks have begun to offer new financial products and services, particularly in retail and community banking. this expansion has also been noted in the microfinance sector which is growing to fill the supply gap for finance that arose from the closure of banks and branches in rural and peri - urban areas earlier on. with the microfinance regulations issued in 2006, the number of microfinance institutions licensed by boz, for instance, has grown from 3 in 2006 to 15 as at june 30, 2008, with several other applications currently under consideration. this change in strategy is partly due to the strengthened fiscal position of the government and the significant fall in annual inflation to single digit levels in 2006 for the first time in three decades. these developments have resulted in reduced returns on investment in treasury bills and government bonds thus compelling banks and nbfis to actively seek other investment avenues. to this end, domestic credit to the private sector as a percentage of gdp has increased from 18. 7 percent at the end of 2005 to 43. 0 percent at end of 2007. in the same period, the proportion of national savings increased from 18. 1 percent to 21. 6 percent. 4 these statistics are good indicators of improving access to financial services. 4. 1. 2 government the government is encouraging the state - owned nbfis, that already deal with the lowincome market to deepen and broaden their services. some of these already have an increasing presence country wide and have developed strategic development plans, aimed at extending financial services to the low income population. the role of government as shareholder of public nbfis | 0 |
economy β may not regain momentum soon. therefore, i am carefully monitoring these developments. b. domestic demand economic recovery this time has been led by the nonmanufacturing sector so far, mainly driven by private consumption. in order to have continued firm domestic demand, it is important to maintain a situation in which improvement in the employment and income situation supports consumption. another important factor in considering the future of domestic demand is the increase in firms β business fixed investment. turning to indexes related to consumption, private consumption remains resilient, but there is a sign of slowing in its growth momentum. the household activity - related diffusion indexes ( dis ) for current and future economic conditions in the economy watchers survey, which seem to reflect consumer confidence, dropped for the fifth consecutive month since april 2013. this development is consistent with that of real consumption expenditure in the family income and expenditure survey. the sign of slowing in consumption is also reflected to the latest gdp statistics. the real gdp growth rate in the july β september quarter of 2013 registered 0. 5 percent on a quarter - on - quarter basis. on an annualized quarter - on - quarter basis, it slowed to 1. 9 percent from around 4. 0 percent in the first half of the year. private consumption also slowed compared to the first half of the year, to 0. 1 percent on a quarteron - quarter basis. business fixed investment on the whole grew for the third consecutive quarter, reflecting an improvement in corporate profits, to 0. 2 percent on a quarter - on - quarter basis, but the recovery in the manufacturing sector still shows a lackluster performance. meanwhile, exports β which largely affect investment by manufacturing firms β lack resilience and decreased for the first time in three quarters, to minus 0. 6 percent on a quarter - onquarter basis. i think the key to the future of domestic demand lies particularly in the extent to which business fixed investment will grow under these circumstances, but that a full - fledged recovery of such investment will take time. c. outlook for prices as for the outlook for prices, i formulated a proposal to make the following changes in the october 2013 outlook report, although it was defeated by a majority vote during the bis central bankers β speeches monetary policy meeting ( mpm ). first, with regard to the outlook for prices toward the latter half of the projection period, i proposed to change the current expression that the year - onyear rate of change in the cpi β is | in the public sector rose by 2 % to over 17, 000 employees. there was also a pickup in both the locally based work force and seasonal workers in australia and new zealand. consumer price pressures rose in 2018. headline inflation reached 4. 2 percent in december against 1. 8 percent at the end of 2017. this rate was within the bank β s forecasted range and was driven by stronger supply - side domestic inflation, along with the rise in imported prices. categories responsible for the spike in consumer prices during the year were education, transportation, food, and alcohol and tobacco. external conditions remained firm during the year. despite a reduction in the trade surplus, improved investment income and tourism receipts narrowed the current account deficit. as a result, the country β s gross foreign reserves increased by 10 percent to $ 5 billion. this level of reserves was sufficient to cover nearly 13 months of imports and is well above the cbsi β s precautionary import cover threshold of 6 months. developments in the monetary sector also point to sustained growth. broad money rose by 7 percent to $ 5. 2 billion due to increases in both net foreign assets and private sector credit. lending by banks to the private sector grew by 4 percent to $ 2. 4 billion during the year. major borrowing industries were construction, distribution, transportation and manufacturing. nonetheless, interest rate margins remained high at around 10. 5 percent. meanwhile liquidity levels in the banking system continued to accumulate, rising by 14 percent to $ 2. 2 billion and was largely driven by the growth in net exports. excess liquidity remained high, although we believe it is not inflationary, particularly in view of the much lower credit growth and the supply - side nature of inflation in the country. with respect to government β s finances, 2018 was a positive year. the fiscal position returned to an estimated surplus of $ 191 million after two successive years of deficits, reflecting considerable fiscal consolidation. revenue in particular rose on strong collection from tax and trade - related duties, while total expenditure only grew marginally, amidst a reduction in development spending. meanwhile, government debt increased moderately and remained at around 11 percent of gdp. turning to the outlook for the economy, cbsi projects the solomon islands economy to grow by 3. 7 percent in 2019. this moderation in growth reflects the key assumption that forestry will finally decelerate as part of the government β s new policy to achieve sustainability in the forestry sector. nevertheless, growth is expected to be driven by | 0 |
anselmo l s teng : conference on human resources issues ( closing remarks ) closing remarks by mr anselmo l s teng, chairman of the monetary authority of macao, at the 12th conference of central banks of portuguese speaking territories on human resources, macao, 16 september 2009. * * * dear delegates, ladies and gentlemen, in the past two days, we have listened to a series of professional and indepth deliberations on the big topic of human resources. the knowledge imparted to us will no doubt provide food for further thought and subsequent practical implementation. i am here today not to repeat what have been said, but to present to you my observations on human resources issues related to the recent financial tsunami. what caused the financial crisis which triggered a recession not seen since 1930? the postmortem report will tell you a number of reasons, such as excess liquidity, savings glut, carry trade etc. i would however share with you some of the causes which are related to human resources, the main theme of this conference. the most popular motto on the wall street before the financial tsunami was β greed is great β. remunerations of originators, traders and top level executives were based on profit of current period. such a policy increased appetite on the part of employees to take unwarranted risks on behalf of the institutions they were working for. it is never too late to mend. after all, we all learn from mistakes. it is therefore imperative in human resources management to devise a fair compensation scheme for financial institutions. it is my personal conviction that compensation for risk taking should be based on the following principles : 1 ) an executive compensation scheme should adequately reflect the performance of the executive in the medium and long term. therefore, executives and traders should not be compensated based on current year revenue but the average income of a financial institution in a defined period. 2 ) executives and traders who are compensated on deals done basis should never get their shares immediately after the completion of the transaction. there should be a vesting period to make sure that the profits are not illusory. 3 ) compensation schemes based on deals done should be symmetrical. that is to say, when failures ensue, penalty should be imposed. this is to avoid the one way traffic of paying out enormous rewards once the transaction has been completed while the responsible staff would come out unscathed when the deal turns sour later. to avoid another financial tsunami, | . while these funds aim to avoid reductions in net asset values, this objective may not be attainable if rates in the market are negative for a considerable period of time, prompting large outflows and closures and reducing liquidity in a key segment of the financial system. for insurance and pension funds, a low - for - long interest rate environment poses challenges, which may even be exacerbated if rates enter into negative territory. they may find themselves unable to meet fixed long - term obligations. life insurance companies will also be less able to meet guaranteed returns. iii. excessive risk - taking : increased financial stability risks, stemming from search for yield and higher leverage. keeping interest rates at negative levels for a long time increases borrowing attractiveness in key sectors of the economy and the risk of bubbles. this can not only lead to an inefficient allocation of capital, but leave certain investors with more risk than they appreciate, as investors in search of higher yields necessarily turn to excessive risky assets. iv. disincentive for government debt reduction : with interest rates at negative levels, governments are under no pressure to reduce their debt. negative rates actually encourage them to borrow more. and if government borrowing becomes a sort of free lunch, there is a clear disincentive for fiscal discipline. ultra - low interest rates flatter the debt service ratio, painting a misleading picture of debt sustainability. for instance, persistent negative rates may potentially act as an β anaesthetic β to governments of eurozone countries, especially in the europeriphery, meaning that they will proceed only slowly with fiscal and structural reforms, given the fiscal space that they gain from lower debt servicing costs.. v. operational risks : the issuance of interest - bearing securities at negative yields may face design challenges. areas that are commonly mentioned as sources of concern are interestbearing securities, particularly floating - rate notes ( renegotiating, collecting interest, use as collateral ) in the context of negative interest rates. more generally, if negative rates were to bis central bankers β speeches prevail for long, they may entail the need to redesign debt securities, certain operations of financial institutions, the recalculation of payment of interest among financial agents, and other operational innovations, the costs of which may offset negative rate benefits. for instance, most option - pricing models either do not work or do not work well with negative interest rates, particularly entailing risks for the compatibility of trading systems and | 0 |
of asset - backed securities and cdos and to the proliferation of vehicles such as abcp conduits and sivs. in this respect, the failings of lighttouch regulation and the short - sighted focus on the banking system appear overwhelmingly clear. on the one hand, the tail risks hidden in the payoff profiles of highly rated securitisations were not understood by financial supervisors. on the other hand, the migration of risks outside the traditional banking sector into a thinly capitalised shadow banking system lacked appropriate oversight. this process resulted in a weakening of the prudential rules, a sharp deterioration in bank capital, an overall decline in lending standards, an unsustainable growth of leverage, a persistent under - appreciation of risks and, ultimately, in an unprecedented degree of fragility and interdependence in the financial system. looking ahead, supervision will have to move towards taking a proactive and forward - looking approach. likewise, the regulatory net needs to be cast wide enough to encompass all financial institutions and activities capable of generating systemic effects. finally, an assessment must be made of how the supervisory authorities applied the tools available to them and whether their decisions were taken on the basis of an independent judgement or were somehow influenced by external factors. historical experience offers ample evidence that inadequate arrangements as regards the independence of the supervisory authorities contributed to the emergence of financial instability. the east asian crisis of 1997 β 1998 is a frequently quoted example of weak regulations and forbearance, resulting from political interference in supervisory activity and leading to a financial crisis. institutional arrangements should ensure that supervisors are independent from the political authorities and not at risk of regulatory capture by the supervised institutions. in some cases the desire to enhance the competitiveness of domestic financial institutions may have influenced decisions that allowed such institutions to behave in a less prudent manner. these are important issues, and should be part of the international debate on how to enforce effective supervision so as to strengthen the capacity to mitigate future financial crises. 3. compensation of top executives let me now turn to the topic of executive compensation. remuneration of top executives has recently attracted special attention, notably in the financial sector, where the distribution of sizeable severance payments, entirely disconnected from the institutions β performance, has caused a public outcry. moreover, the financial crisis has revealed that inappropriately designed compensation mechanisms could lead to excessive risk - taking and should therefore be subject to policy intervention. the principles for sound compensation practices elaborated by | christine lagarde : ecb press conference - introductory statement introductory statement by ms christine lagarde, president of the european central bank, and mr luis de guindos, vice - president of the european central bank, frankfurt am main, 22 july 2021. * * * good afternoon, the vice - president and i welcome you to our press conference. at today β s meeting, the governing council focused on two main topics : first, the implications of our strategy review for our forward guidance on the key ecb interest rates ; and, second, our assessment of the economy and our pandemic measures. in our recent strategy review, we agreed a symmetric inflation target of two per cent over the medium term. our policy rates have been close to their lower bound for some time and the medium - term outlook for inflation is still well below our target. in these conditions, the governing council today revised its forward guidance on interest rates. we did so to underline our commitment to maintain a persistently accommodative monetary policy stance to meet our inflation target. in support of our symmetric two per cent inflation target and in line with our monetary policy strategy, the governing council expects the key ecb interest rates to remain at their present or lower levels until we see inflation reaching two per cent well ahead of the end of our projection horizon and durably for the rest of the projection horizon, and we judge that realised progress in underlying inflation is sufficiently advanced to be consistent with inflation stabilising at two per cent over the medium term. this may also imply a transitory period in which inflation is moderately above target. let me turn to the assessment of the economic outlook and our pandemic measures. the recovery in the euro area economy is on track. more and more people are getting vaccinated, and lockdown restrictions have been eased in most euro area countries. but the pandemic continues to cast a shadow, especially as the delta variant constitutes a growing source of uncertainty. inflation has picked up, although this increase is expected to be mostly temporary. the outlook for inflation over the medium term remains subdued. we need to preserve favourable financing conditions for all sectors of the economy over the pandemic period. this is essential for the current rebound to turn into a lasting expansion and to offset the negative impact of the pandemic on inflation. therefore, having confirmed our june assessment of financing conditions and the inflation outlook, we continue to expect purchases under the pandemic emergency purchase | 0.5 |
##riah are the principles of ihsan and adil, hence, solutions should be tailored to commensurate with the current situation and challenges faced by customers, for example, the expansion of targeted repayment assistance to the broader society and businesses from the prolonged movement control order, or incorporation of the financial standing of customers in pricing recalibration for the restructuring and rescheduling of facilities, as well as schemes such as itekad and skim cakna. to further encourage innovation, the impetus for leaders and members of the institution can be put in place such as performance monitoring mechanisms and compensation frameworks that are tied to the sustainable development goals ( sdgs ) or vbi initiatives. thirdly, a collaborative mindset is a must for leaders to deliver holistic outcomes. to collectively advance the nation β s transition towards sustainable development, concerted efforts by many, across sectors are necessary to provide an enabling environment and address gaps that would otherwise hold back progress. among these include data gaps, and market awareness or incentives to encourage change within consumers. within the financial sector, coordination of data among fis could contribute to customisation of value - driven solutions for consumers, particularly the underserved. there is an abundance of data within the financial industry but a dearth in coordination. industry platforms such as vbi - cop and the jc3 could potentially play a central role to β intermediate β the data. as a first step, conversations between the islamic banking and takaful operators to identify impact - driven and innovative financial solutions under vbi and vbit, can take place to facilitate respective outreach to the underserved or unbanked population. outside the financial sector, fis can embark on collaborations with organisations sharing similar sustainability aspirations including state religious authorities, waqf institutions, business industry associations and advocacy groups, or non - governmental organisations who are at the heart of the vulnerable communities. for example, fis can collaborate with government agencies and utility companies to support the consumers β shift to energy - efficient residential homes or vehicles. beyond the existing sustainable financial products offering preferential rates for the purchase of electric vehicles ( ev ) or green residential properties, more can be done to raise consumer awareness and to develop complementary infrastructure namely, charging stations. initiatives such as the development of the vbiaf sectoral guides which are now underway for the manufacturing, construction and infrastructure, as well as oil and gas sectors, is a step in the right direction to streamline the cross - sectoral | understanding of sustainability issues, thus allowing for better coordination of efforts to address sustainability risks throughout the value chain. in conclusion, it is our fervent hope that with sustainability, an innovative and collaborative mindset, we can come to develop value - driven solutions and discover new avenues for synergistic collaboration. i believe that the line - up of expert contributors for this programme will 2 / 3 bis central bankers'speeches be able to provide delegates with insightful perspectives on best practices to lead the transition to sustainability. the network built today among delegates can continue and be built upon for future collaborative initiatives, either through a local platform by ibfim or internationally, through cisl. to end my remarks, i would like to share this quote by winston churchill, β i never worry about action, but only inaction. β with that, i wish all of you a productive programme. thank you. 1 industries most and least impacted by covid - 19 from a probability of default perspective β september 2020 update 2 covid - 19 to add as many as 150 million extreme poor by 2021 3 / 3 bis central bankers'speeches | 1 |
yields, the stronger the impact of government bond purchases. what effect do you expect in the case of the ecb? given the low interest rates in the euro area, i have my doubts as to whether the economic effects of the purchase programme will be able to reach the desired order of magnitude β¦... and finance ministers are pleased that they can cheaply run into debt. that is a crucial disadvantage of the purchase programme. i am absolutely aware of the danger that the low costs of financing alleviate the pressure on governments to consolidate their public budgets and tackle the necessary structural reforms. expansive monetary policy can only provide an impetus for more growth. the decisive impulses must come from economic policies. are zero per cent yields on german government bonds justified too? depending on the class of securities, we are in negative territory in some cases. to the extent that the decline in yields on german government bonds can be traced back to the purchases by the ecb, i take a critical view. in germany the low interest rates are threatening to overheat the economy. i would not speak of an overheating of the economy, of an excess of economic growth in germany. the german economy may be able to absorb a higher key rate of interest but the same cannot necessarily be said for the euro area as a whole. a crucial point is that the ecb has to pursue monetary policy for the whole euro area, not just for one country. and it β s also essential that we look at price stability in the medium term and at medium - term inflation expectations. however, medium to long - term inflation expectations have clearly fallen ; that is why the current low key interest rates are definitely justified. but we should not forget that we cannot have a low key interest rate without undesirable side - effects. we must bring interest rate levels back to normal as soon as possible. do you understand why savers, banks and insurance firms become critical when they suffer from extremely low interest rates? i can well understand those concerns. a prolonged low inflation rate environment carries risks for banks and insurance firms. low interest rates increase the danger of riskier investment behaviour ; overheating or price bubbles in other asset classes can easily arise.... especially, when an economic region as heterogeneous as the euro area is governed by a single interest rate. the more heterogeneous an economic area, the harder it is to govern with a single interest rate. that is of course felt especially painfully when economic | conditions are tough. we therefore need the euro area member states to pursue economic policies that will ensure sustainable economic growth for all. the competitiveness of each individual member state must be strengthened through sound fiscal policy and structural reforms. and in places where we see overheating occurring, we must use targeted macro - prudential supervisory tools β¦.... that is supervision of the whole financial system with targeted regulation. such oversight enables us to identify the systemic risks and outliers in individual countries and individual markets and to counter them in some sections. given such complex tasks in different countries, are we asking too much of the ecb? no, the ecb is not on the frontline in macro - prudential oversight ; in europe this involves many institutions in all member states, which have a vast amount of information and considerable analytical capacity. in germany these are the bundesbank, the federal bis central bankers β speeches financial supervisory authority and the federal ministry of finance, which all work together in the financial stability committee. do we already have a housing bubble in germany? up to now, the rise in property prices has been concentrated in the larger cities. in some of these there are definitely overvaluations. but have we seen excessive growth in lending too? broadly speaking, that does not seem to me to be the case. the bundesbank, and we ourselves, will certainly continue to monitor the situation closely. bis central bankers β speeches | 1 |
jurgen stark : does the euro area need an economic government? statement by mr jurgen stark, member of the executive board of the european central bank, at the hec european executive campus, brussels, 22 january 2008. * * * i am delighted to be here today to participate in this session on economic policies and governance. the topic of our panel discussion is very well chosen : β does the euro area need an economic government? β this is indeed an important and highly topical issue. the advocates of an economic government for the euro area argue that such an institution is needed in order to 1. improve the coordination of national economic policies in the euro area ; and 2. establish a dialogue with the ecb in order to discuss the monetary strategy for the euro area. i will give you my conclusions straight away : i do not agree with these claims. we do not need an economic government for the euro area to improve the coordination of national economic policies. effective and efficient coordination can be achieved within the current institutional framework if all policy makers respect its provisions and use the existing procedures and instruments more responsibly. indeed, the idea of establishing a political entity in order to institutionalise a dialogue with the ecb with a view to influencing monetary policy in the euro area represents a fundamental attack on the euro area β s monetary policy framework, which has proved very successful over the last nine years. the institutional framework of emu is based on clearly specified objectives, a clear allocation of responsibilities to different policy areas and a sound framework for the coordination of national economic policies. the economic objectives of the community, which are listed as β tasks β in article 2 of the treaty establishing the european community include β harmonious, balanced and sustainable development of economic activities, a high level of employment [ β¦ ], sustainable and noninflationary growth, a high degree of competitiveness and convergence of economic performance β. the treaty of lisbon transformed these tasks into β objectives β and reworded them but made no substantive changes. one noteworthy, welcome, amendment is the addition of price stability to the list of objectives, which further strengthens the focus on stability of the eu β s policy framework. in order to achieve these objectives, the maastricht treaty established a clear allocation of responsibilities, reflecting the fact that assigning policy instruments primarily to one single policy objective and making individual policy - makers responsible for one single policy instrument ensures a high level of effectiveness and accountability. the single monetary policy was given the task of maintaining | that price stability is effectively achieved and maintained. a necessary condition for the achievement and maintenance of price stability is a credible commitment to ultimately pursuing a price stability - oriented monetary policy. it is universally accepted, on the basis of a vast amount of theoretical and empirical literature, as well as historical experience, that the best means of having monetary policy credibly committed to the pursuit of price stability is to have an independent central bank. it is therefore crucial that the different dimensions of the ecb β s independence are fully respected, namely institutional, personal, financial, functional and goal independence. in this context, it is important to stress the benefits of price stability for economic prosperity and to emphasise the fallacious nature of the view, heard occasionally, that an overriding focus on price stability means that the needs of the real economy are neglected. the relationship between inflation and economic performance in the long run has been studied extensively. as i have recently argued, one could say that the long - run phillips curve, describing the long - run relationship between inflation and economic activity, has virtually been rotating in the minds of macroeconomists and policy - makers over the last few decades. around 35 years ago it was positively sloped, suggesting that a little more inflation would have the permanent effect of giving rise to a little more real income. the experience of the stagflation of the 1970s and the rational expectations revolution in macroeconomic theory led to attention being focused once again on a long forgotten principle, namely the concept of the long - run neutrality of money, the insight that monetary policy measures will, in the long run, influence only the level of prices, leaving growth and employment levels unchanged. any attempt by central banks to systematically stimulate output and employment is ultimately doomed to failure, the only certain outcome being inflation. the perceived trade - off between inflation and growth will, sooner or later, reveal its true nature. although it is tempting to believe that such a trade - off exists, it is in fact a mirage. new empirical evidence and new insights in monetary theory have shown that even moderate levels of inflation have considerable negative repercussions for long - term economic performance, and maintaining price stability is therefore the best contribution that monetary policy can make to economic welfare, growth and employment. by maintaining price stability, monetary policy fosters economic prosperity by eliminating distortions arising from high and volatile inflation. in particular, contrary to the view, heard occasionally, that a monetary policy that seeks to safeguard price stability will | 1 |
1. 9 % in march 2024. banks'profitability has also improved lately, as the net interest income of most lenders benefited from the increase in interest rates. recall that, at some point in time over the previous decade, the average return on equity ( roe ) for eu banks was barely positive. with march 2024 data, the average roe for eu banks reached 10. 6 %. finally, eu banks enjoy ample liquidity with a solid deposit base and full access to the wholesale and capital markets. in march 2024, the average liquidity coverage ratio ( lcr ) of eu banks was 161. 4 %, well above the supervisory minimum of 100 %. the positive macroeconomic environment is also supporting the financial fundamentals of eu lenders. however, risks to financial stability have been rising : geopolitical risk remains high for some time now, since the russian invasion of ukraine, and is further fuelled by the tensions in the middle east. political developments in the us and the eu are also creating uncertainty. geopolitical risk is an exogenous risk factor which could potentially have immense repercussions on the banking sector. a reassessment of risk premia following a sudden shift in market sentiment could put asset prices under strain with potential implications for the sector of non - bank financial institutions ( nbfi ). past events showed us that the non - bank financial sector can amplify worsening markets conditions through forced asset sales to 3 / 4 bis - central bankers'speeches address margin calls or potential liquidity needs. risks and vulnerabilities in the non - bank financial sector could essentially create spillovers to banks ( via loans, securities, etc. ) and to the real economy. the recent rise in interest rates alongside high inflation rates put the balance sheet of some firms and households under strain. against this backdrop - and despite the recent drop in the interest rates -, a deterioration in asset quality and a rise in loan loss provisions for european lenders with a time lag cannot be ruled out. in addition, weakening economic growth along with high interest rates could weigh heavily on the demand for new loans and the implementation of banks'business plans. note that the improved profitability following the rise in interest rates masked structural deficiencies in many banks, such as in terms of cost efficiency and digitalisation. the increase in borrowing costs over the past few quarters has led to a cooling of the real estate market in the euro area, notably the | savings and investment by the private sector and government. it should not be surprising, then, that the nominal exchange rate cannot be relied upon to bring about lasting adjustment. such adjustment requires changes in an economy β s structure, and, as i have argued, membership in a monetary union can encourage those changes. iii. conclusions i have argued that ways of thinking about monetary union have evolved considerably from the early days of the literature on optimum currency areas. developments in modern macroeconomics recast the goals of monetary policy. the focus nowadays on price stability and the creation of the conditions necessary to support growth and employment changes the balance of the arguments about the cost of giving up an independent monetary policy. provided that the monetary policy framework at the union level delivers price stability, there is little to be lost from transferring monetary policy to the union level. the success of the euro area has demonstrated that one size can fit all. let me briefly mention three pieces of evidence which support this. first, inflation dispersion has declined and has been around 1 percentage point since the second half of 1999. this compares favourable with inflation dispersion across a monetary union of similar size, the us. second, the decline in inflation dispersion has not been at the expense of higher growth dispersion. growth dispersion has remained close to its historical average of around 2 percentage points and, if any trend is discernable, it is a downward one. finally, business cycles appear to have become more correlated. the evidence from almost 10 years of monetary union in europe points to a euro area which is endogenously adapting itself to become an optimum currency area. the euro area provides clear evidence that the criteria identified in the earlier literature do not need to be exogenously in place prior to monetary union. i do not want to leave you with the impression, however, that euro area policy - makers can sit back and relax because all the necessary work has been done. after all, i began this lecture by remarking that the adoption of the euro created new challenges for economic policy. the adoption of the euro was neither the beginning nor the end of an optimum currency area among european countries. the process is ongoing, and much more needs to be done, especially in regard to structural policies, to ensure that the euro area becomes a more dynamic force for growth in the global economy. it is my view that the experience of the euro area to date only serves to highlight the fact that a currency union | 0.5 |
urban banks ( tafcub ), constituted in states that have signed memorandum of understanding ( mou ) with the rbi. the tafcub has representatives from state government, ucb sector and the rbi. till april 16, 2008, mous had been signed with 16 state governments and central government, which encompass 1586 ucbs constituting 87. 1 per cent of the total number of banks, which account for 93. 8 per cent of the total deposits of the ucb sector. 33. i may mention that a medium - term framework for urban co - operative banks up to the year 2010 has been drawn up in order to facilitate the development of this sector into a strong and vibrant system comprising entities conforming to all prudential requirements. the standing advisory committee for urban co - operative banks is increasingly being used for continuous dialogue with the various stakeholders of the sector. the deposits with the grade i and grade ii ucbs ( the banks with no / low supervisory concerns ) as a proportion of total deposits of the ucbs, excluding the two banks in gujarat and andhra pradesh, which faced the crisis, amounted to 77. 5 %. this indicates that, at the moment, there is considerable improvement in the regulatory comfort as far as ucbs are concerned. the process of improved cooperation and collaboration with all stakeholders under the mou is likely to strengthen the position further. impact of ucbs on the amount of claims settled by the dicgc 34. in the context of the ucbs, it is appropriate to mention the impact of their operations on the pay out by the dicgc to the depositors affected by the weak ucbs. it is instructive to note that since the inception of dicgc in 1962 till the year 2000 - 01, claims paid to cooperative banks by the corporation amounted to rs. 71. 9 crore, which constituted 27. 43 per cent of the total claims paid by the corporation during the period. however, since the year 2001, the quantum of claims paid in respect of co - operative banks multiplied manifold, on account of failure of large ucbs since then. thus, during the period between 2000 - 01 and 2006 - 07, the claims paid in respect of cooperative banks aggregated rs. 2226. 60 crore. further, out of total claims of rs. 2594. 30 crore paid in respect of all the banks up to 2006 - 07, over 88 per cent of the amount paid was in respect of 176 ucbs alone. | global tech cycle and growing trade tensions. the modern services cluster will be the main driver of growth this year, supported by healthy regional demand and increased investments in digitalisation as the domestic economy undergoes transformation. domestic industries will make a modest, positive contribution to overall growth, as the construction sector turns around, and retail and f & b benefits from firm labour demand conditions and efforts to lift productivity. inflation and monetary policy inflation in singapore remains subdued and within expectations. mas core inflation this year is expected to come in near the mid - point of the forecast range of 1 β 2 %. while there will be some domestic cost pressures from firm labour market conditions, underlying inflationary pressures should remain contained. first, the slower pace of gdp this year is expected to close the positive output gap. in recent years, gdp was growing faster than potential. second, the fall in global oil prices in q4 2018 and the deregulation of the electricity distribution market have exerted a dampening effect on inflation. third, the two rounds of monetary policy tightening last year by mas will continue to have a restraining effect on inflation. cpi - all items inflation for the year is projected to be between 0. 5 and 1. 5 %. private road transport costs could pick up slightly from 2018 with higher car prices more than offsetting lower petrol prices. accommodation costs are likely to decline, but at a slower pace this year. overall inflation in singapore remains well below the historical average. mas β monetary policy stance remains appropriate against the backdrop of subdued inflation and weakening growth prospects. last year, mas began the process of monetary policy normalisation by exiting from the zero percent appreciation path of the nominal effective exchange rate ( s $ neer ) policy band. mas increased slightly the slope of the policy band in april 2018 and again in october 2018, against the backdrop of healthy economic growth and gradually rising inflation. in april this year, with inflationary pressures stabilising and the output gap beginning to narrow, mas kept the policy stance unchanged. our current stance of a modest and gradual appreciation path of the s $ neer policy band will help to keep the economy close to potential and ensure medium - term price stability. financial stability globally, risks to financial stability remain elevated, amidst high levels of indebtedness. in the eurozone, the large exposure of banks to government securities means the risk of a sovereign - bank debt crisis remains. in the us, corporate debt has increased by 30 % since the global financial crisis, with | 0 |
to reconsider their approach to risk β to look beyond their own direct operational exposures and their relationship to directly connected partners. a holistic and systemic global β or at least european β approach is needed, to the widening of risk assessment and coordination with other partners along the value chain, so that risk and crisis management procedures can be optimised. fourthly, in a rapidly changing global financial market, innovative products are developed. these new products may have an impact on the safety and efficiency of the post trading market and on the stability of financial markets, if their volumes become significant. for instance, total global otc derivative contracts have doubled within the last two years to approximately eur 10 trillion in ( gross ) market values ( usd 14 trillion β more than the annual gdp of the euro area 1 and similar to the total outstanding amount of debt securities issued by euro area residents in euro. the credit default swaps market has grown more than eight times in ( gross ) market value during the last two years. i suggest that monitoring and risk management measures needs to be intensified, to closely monitor the dynamics of the derivative markets and to strengthening the financial infrastructures by improving arrangements for clearing and settlement of otc derivatives in order to reduce systematic risks. i am confident that we can find the right balance, so that europe co - operates to harmonise, monitor and compete to deliver the economic benefits of the single financial market. thank you very much. euro area gdp eur 8. 9 trillion. | , has been assigned to an independent central bank with a clear primary objective of maintaining price stability. in addition to the ecb, the escb is also mentioned in the first part of the constitution, thus acknowledging the federal nature of the monetary authority of the european union and its sui generis character. finally, the more specific provisions concerning monetary policy in the current treaty as well as the statute of the ecb and the escb will remain unchanged and form part of the constitutional texts of the union. by contrast, budgetary and other economic policies will remain under national competence in the future constitution, in recognition of the fact that the vast majority of β public goods β, such as defence, for which revenues are raised and subsequently dispensed, are still provided at the national level. that said, the draft constitution also prescribes a close co - ordination of economic policies within the union. i very much welcome the fact that the fundamental features of the current set - up of emu have been preserved. after all, the stability of the institutional architecture is a crucial element of the credibility of the single monetary policy and the public β s confidence in our currency. concluding remarks clearly it is now up to the governments of the member states to move forward in the forthcoming intergovernmental conference and give the final form to the text prepared by the convention. if i, as a central banker, am allowed to present my assessment, i would argue that the convention has done a very good job of incorporating the substance of the emu chapter into the new constitution, while also introducing clarifications, additions and updates in the current texts where necessary and appropriate. what i do miss is that the convention has not taken over our suggestion to incorporate somewhere in the text the notion of eurosystem, which stands for the core concept of our central banking system, i. e. the ecb and the national central banks of the member states that have adopted the euro. the eurosystem is not mentioned in the treaty as it stands, nor in the draft - constitution. conclusion : we still have some work to do....!!! thank you for your attention. | 0.5 |
closing remarks by dr. chiranjibi nepal, governor, nepal rastra bank, at the 21st apg plenary meeting 27th july 2018, kathmandu distinguished apg co β chairs, executive secretary and officials of apg fatf senior officials, distinguished delegates, ncc members and secretaries nepalese officials media representatives, ladies and gentlemen, very good afternoon! 1. i am privileged to speak at conclusion of this 21st apg plenary meetings running for a week. i am indeed honored to be with you at this august gathering with a brief closing remarks. 2. it is an immense pleasure for nepal to host this meeting and plenary. i am very much delighted with the apg and its members, fatf, the observers, and international institutions for the opportunity extended to us to host this occasion in kathmandu. 3. i have been informed that the meetings discussed mutual evaluation reports of indonesia, myanmar, palau, and cook islands. number of follow up reports and status reports were also considered in the course of meetings. intense discussions were made on mutual evaluation procedures, governance issues, technical as well as other seminars under international cooperation review group have been eyesight for members and observers. 4. the ta & t forum was another great opportunity for members and dap groups to sit together and find solutions for development of sound aml / cft systems and make effective global implementation. 5. managing de β risking, identification of beneficial ownership and recovery of assets are the common threats facing by countries globally. i hope the conclusion from the seminar and discussion on these topics will certainly guide us to reorient our aml / cft related strategy toward addressing such problems. ladies and gentleman, 6. financial crime can inflict on the smooth functioning of the financial markets, payment systems and ultimately the financial sector stability goal of central banks. fin β tech and virtual currencies are also posturing challenges to the central banks in dealing with aml issues. 7. the shift of fatf standards toward risk β based approach, will support our financial system in the direction of inclusive growth and access to better financial services by discouraging the de β risking. 8. the basel 2017 aml index report shows, during the period from 2012 β 2017, the index did not reflected significant change, indicating slow progress, high rates of perceived corruption, lack of judicial strength, lack of resources, and deficiency of financial transparency in the developing world. in addition to this, a large β scale of tax evasion | as a credit to their members for different income generating activities. in this regard, cooperatives are felt to be an important provider of rural financial services to spurt inclusive growth. ladies and gentlemen, government of nepal in financial sector development strategy ( fsds ), issued in january 6, 2017 has recognized the importance of the cooperative sector to achieve economic development and in this regard, has devoted a separate chapter to its elaboration. this is recognition of importance of cooperative sector in economic development ; however government of nepal and nepal rastra bank ( nrb ) have already been involving themselves in the policy formulation and program initiation regarding the rural financing since almost four decades. i would highlight that nrb has also joined hands with the government to establish and manage a wholesale lending fund, that is the rural self - reliance fund, which lends concessional fund to the cooperatives of rural areas for further lending to the deprived and poor households. the establishment of five rural development banks in five development regions during 1990s decade to do micro financing activities replicating grameen model is another instance on nrb's commitment on enhancing access to finance for rural poor. currently, these banks have been merged. we are also exercising to harness the mechanism of technology to enhance its inclusive nature with regard to rural financing. ladies and gentlemen, allow me at this juncture to provide a glimpse of nepal β s experiences with regard to rural financing. the country is basically a rural economy with more than 80 percent of its population residing in rural areas. it is expected that nepalese economy will perform very well in 2016 / 17, registering a growth of 6. 9 percent. this trend is expected to continue in the current fiscal year 2017 / 18, given the series of election are going to be held, which is expected to raise domestic demand. as the agriculture sector presently contributes more than one - third to the country's gross domestic product ( gdp ) and employs more than two - third of total labor force, economic growth of the country is largely determined by the performance of the agriculture sector. moreover, a better performing agriculture is instrumental in promoting rural jobs, improving trade imbalance, reducing poverty and fostering equitable distribution of income. ladies and gentlemen, cictab, set up in 1983, has been providing an effective forum for exchange of experience in agricultural banking and related fields between different developing countries of this region. in this respect, i am delighted to note that some of the innovative financial products and services developed and mainstreamed | 0.5 |
%. taking into account all available information, the euro area economy is currently experiencing an episode of weak activity characterised by high commodity prices weighing on consumer confidence and demand, as well as by dampened investment growth. we expect this episode to be followed by a gradual recovery. in particular, if persistent, the fall in oil prices from their peak in july will help strengthen real disposable income, with the level of employment remaining high and the unemployment rate low by historical standards. moreover, growth in the world economy is expected to remain relatively resilient, benefiting mainly from sustained growth in emerging economies. this should support external demand for euro area goods and services and thereby investment. this outlook is also reflected in the september 2008 ecb staff macroeconomic projections for the euro area. the exercise projects average annual real gdp growth in a range between 1. 1 % and 1. 7 % in 2008, and between 0. 6 % and 1. 8 % in 2009. in comparison with the june eurosystem staff projections, real gdp growth figures for 2008 and 2009 are lower. in the view of the governing council, the uncertainty surrounding this outlook for economic activity is particularly high at the current juncture and, generally, downside risks prevail. risks stem particularly from renewed increases in energy and food prices, which could dampen consumption and investment. moreover, downside risks continue to relate to the potential for the financial market tensions to affect the real economy more adversely than currently foreseen. the possibility of disorderly developments owing to global imbalances also implies downside risks to the outlook for economic activity, as do concerns about rising protectionist pressures. with regard to price developments, annual hicp inflation has remained considerably above the level consistent with price stability since last autumn, standing at 3. 8 % in august according to eurostat β s flash estimate, after 4. 0 % in june and july 2008. this worrying level of inflation is largely the result of both the direct and indirect effects of past surges in energy and food prices at the global level. moreover, wage growth has been picking up in recent quarters, at a time when labour productivity growth has decelerated, resulting in sharp increases in unit labour costs. looking ahead, on the basis of current commodity futures prices, the annual hicp inflation rate is likely to remain well above levels consistent with price stability for quite some time, moderating only gradually during the course of 2009. consistent with this view, the | is to mobilise up to us $ 5 billion in total under the fast - p platform. fast - p will target three key areas of green and transition investments that are most pertinent in the asian region. the energy transition acceleration theme will cover transition projects such as the managed phase - out of coal together with renewable energy replacement. the green investments theme will invest in projects involving mature technologies, such as scaling renewable energy, grid modernisation, and electric vehicle infrastructure. the clean technologies theme will focus on more emerging green technologies that are being piloted, such as the use of hydrogen and carbon capture, utilisation and storage. financiers and investors will form partnerships, managed by an asset manager, with dedicated investment and impact objectives for each investment theme. i am happy to share that we have formed partnerships with reputable like - minded players for two of the three investment themes. mas has signed a memorandum of understanding with allied climate partners, the international finance corporation, and temasek holdings on a green investments partnership. we will be entering an mou in two days'time with the adb and global energy alliance for people and planet ( geapp ), which is backed by the rockefeller foundation, bezos earth fund, and ikea foundation, on the energy transition acceleration partnership. conclusion let me conclude. we need to act fast, and we need to act together. 7 / 8 bis - central bankers'speeches in the 250 years since the industrial revolution, the world has built a highly carbon and energy intensive industrial structure, urban landscape, and modes of transportation. we now have less than 25 years to fundamentally restructure economies and societies to reach net - zero emissions. we need to act fast. public finances all over the world are in stressed conditions. there is ample private capital in the world - some $ 400 trillion in assets under management β yet so little of it is going into the net - zero transition effort. only by synergising the catalytic power of public capital and the abundance of private capital can we get transition finance right. we need to act together. so, act fast, and act together. thank you and i wish you a fruitful day at the singapore pavilion. 8 / 8 bis - central bankers'speeches | 0 |
$ 380 billion. in the aggregate, the shift from deficit to surplus in the current account of the emergingmarket world over this period largely reflected increased saving as a share of output rather than a decline in the rate of capital investment. however, changes in saving and investment patterns varied by countries and regions. for example, in the countries of developing asia excluding china, most of the $ 150 billion swing toward external surplus between 1996 and 2004 was attributable to declines in domestic investment. in china, rates of both saving and investment rose, but saving rates rose more, leading to an increase in that country's current account surplus of about $ 60 billion. outside of developing asia, oil exporters in the middle east and the former soviet union were also important contributors to the large increase in emerging - market current account balances. the combined current accounts of the two regions increased from a surplus of $ 20 billion in 1996 to a surplus of $ 162 billion in 2004, an increase of about $ 140 billion. this rise largely reflected higher saving rates, as domestic consumption fell behind the surge in oil revenues. among other emerging - market economies, higher saving also accounted for an increase in the aggregate current account balance of latin america. of course, as emergingmarket countries switched from being net borrowers to being net lenders, they began to pay down their international debts and to acquire assets of industrial countries. statistical discrepancies, both within the national income and product accounts ( nipa ) and between the balance of payments definitions and nipa definitions of certain international transactions. i am using the terms " emerging - market " and " developing " interchangeably. as shown in the table, the surplus of industrial countries other than the united states increased from about $ 150 billion to nearly $ 350 billion over the period, and the japanese external balance rose from $ 66 billion to $ 172 billion. the increase in the japanese current account balance as a share of gdp, from 1. 4 percent to 3. 7 percent, occurred despite a substantial fall in the gdp share of the saving rate, from 30. 4 percent to 26. 8 percent, as the gdp share of the investment rate fell even more dramatically, from 28. 9 percent to 23. 0 percent. for the euro area as a whole, the current account balance remained at about 1 percent of gdp between 1996 and 2004, as aggregate investment and saving ratios remained largely unchanged. within the euro area, germany's current account balance increased almost 5 percentage | points of gdp β from - 0. 6 percent in 1996 to 4. 3 percent in 2004 β as saving moved up and investment decreased. however, this development was offset by declines in the balances of some other euro - area countries, including france, italy, and spain ; the decreases were mostly associated with higher investment rates. data on saving, investment, and current account balances for countries other than the united states are drawn primarily from the international monetary fund, world economic outlook database, april ( www. imf. org / external / pubs / ft / weo / 2007 / 01 / data / index. aspx ) ; in some cases, data are drawn from national sources. i have noted the expansion of the u. s. current account deficit and the associated increases in current account surpluses abroad over the 1996 - 2004 period. a third key development in that period was a sustained decline in long - term real interest rates in many parts of the world. for example, the real yield on ten - year inflation - indexed u. s. treasury securities averaged about 4 percent in 1999 but less than 2 percent in 2004. the difference between the nominal long - term treasury yield and the trailing twelve - month rate of consumer price inflation, another measure of the u. s. real interest rate, showed a similar pattern, falling from about 3. 5 percent in 1996 to about 1. 5 percent in 2004. similar movements were observed in other industrial countries : in the united kingdom, the real yields on inflation - indexed government bonds fell from an average of 3. 6 percent in 1996 to just below 2 percent in 2004 ; in canada, the analogous figures were 4. 6 percent in 1996 and 2. 3 percent in 2004. real interest rates measured as the difference between government bond yields and consumer inflation also fell in germany, sweden, and switzerland. however, in japan, real interest rates remained low throughout the period. in sum, considering the 1996 - 2004 period, we have three facts to explain : ( 1 ) the substantial increase in the u. s. current account deficit, ( 2 ) the swing from moderate deficits to large surpluses in emerging - market countries, and ( 3 ) the significant decline in long - term real interest rates. many observers have focused on the expansion of the u. s. current account deficit in isolation and have argued that it is due largely to domestic factors, particularly declines in both public and private saving rates. but accounting identities assure us that | 1 |
shyamala gopinath : approach to basel ii keynote address by ms shyamala gopinath, deputy governor of the reserve bank of india, at the iba briefing session on " emerging paradigms in risk management ", bangalore, 12 may 2006. the assistance of shri k damodaran in preparing this address is gratefully acknowledged. * * * ladies and gentlemen, it is my pleasure to be here at this program on emerging paradigms in risk management. as expected of me, in my address today, i intend to share with you the broad contours of the regulatory approach, process and thinking in regard to some of the issues arising in context of basel ii. basel ii aims to encourage the use of modern risk management techniques ; and to encourage banks to ensure that their risk management capabilities are commensurate with the risks of their business. previously, regulators'main focus was on credit risk and market risk. basel ii takes a more sophisticated approach to credit risk, in that it allows banks to make use of internal ratings based approach - or " irb approach " as they have become known - to calculate their capital requirement for credit risk. it also introduces, in addition to the market risk capital charge, an explicit capital charge for operational risk. together, these three risks - credit, market, and operational risk - are the so - called " pillar 1 " risks. banks'risk management functions need to look at a much wider range of risks than this - interest rate risk in the banking book, foreign exchange risk, liquidity risk, business cycle risk, reputation risk, strategic risk. the risk management role of helping identify, evaluate, monitor, manage and control or mitigate these risks has become a crucial role in modern - day banking. indeed, it is probably not exaggerating the importance of this to say that the quality of a bank's risk management has become one of the key determinants of a success of a bank. the policy approach to basel ii in india is to conform to best international standards and in the process emphasis is on harmonization with the international best practices. commercial banks in india will start implementing basel ii with effect from march 31, 2007 though, as indicated by governor, a marginal stretching beyond this date cannot be ruled out in view of latest indications of the state of preparedness. though the basel ii framework provides various options for implementation, special attention was given to the differences in degrees of sophistication and development of the | the government β s 2 % target for cpi inflation. despite missing the target for much of the past five years, i β ve no doubt that the credible nominal anchor it provided served our economy well during the crisis. indeed, without that credibility it wouldn β t have been possible to loosen monetary policy as aggressively as we did in order to support output and jobs. as we have seen, the good news is that inflation has fallen sharply over the past few months and the 2 % target is now in sight for the first time in over 4 years. but this isn β t a time for complacency. to repeat, inflation has been above the 2 % target for most of the past five years. there are good reasons why policy wasn β t tightened in order to bring inflation back to target more quickly. but ultimately, the mpc will be judged by the success of our actions, not the elegance of our arguments. we need to demonstrate our commitment to bring inflation back to target and to keep it there. but we have also needed to trade off the speed with which we bring inflation back to target against the support that monetary policy can provide to the recovery. the mpc β s forward guidance gives greater clarity about our view of the appropriate trade - off. more important for us today, our guidance is rooted in the recognition that it β s a long way back to the economy being fully recovered. the damage and losses associated with the financial crisis and the years of frustration and disappointment that followed won β t be reversed simply by one or two quarters of strong growth. our guidance makes clear that we intend to maintain the current exceptionally stimulative stance of monetary policy until we β ve bis central bankers β speeches seen a sustained period of strong growth and the margin of slack in the economy has narrowed significantly, as long as this does not pose risks to either price or financial stability. as you may know, our guidance was framed in terms of so - called thresholds and knockouts. the mpc intends not to raise bank rate or reduce the stock of asset purchases at least until the unemployment rate reaches a threshold of 7 %, subject to three knockouts designed to guard against risks to price and financial stability. but abstracting from the details of these thresholds and knockouts, our message to you β the businessmen and women driving this recovery β is clear. you can plan for the future in the knowledge that the mpc intends to keep interest rates low until we have seen a prolonged period of | 0 |
β s consumers. they need to do this by looking both inwards and outwards, and seize new opportunities using technology and innovation. ( inwards ) insurers must look inwards to transform themselves, to embrace innovation at all levels, and create an environment where staff are empowered to be like start - ups : nimble, flexible, and creative. this is necessary to allow incumbents to compete on an equal footing with new challengers who are not bogged down by pre - conceived notions. moreover, the very notion of an innovation lab signifies the value of experimentation. it should be recognised that every success will likely be accompanied by several failures, and lessons learnt from failed projects must contribute to a blueprint that ultimately diagrams how success will look like. ( outwards ) insurers must also look outwards to seek collaboration. collaboration will be the crux to unlock new and non - traditional sources of talent and partnership outside of the financial sector. through collaboration, insurers can gain access to potentially disruptive ideas and new technologies. meanwhile, start - ups gain access to the scale of established players to accelerate the development of solutions and test them in a commercial environment. i understand lumenlab already has an existing relationship with nus, and aims to seek more partnerships across industry sectors such as data analytics, market research, pharmaceutical, and technology, to explore new business opportunities. lumenlab is a prime example of how a large enterprise can create an environment like this within its the lta and a * star has been working on the singapore autonomous vehicle initiative ( savi ) since august 2014, and has successfully rolled out autonomous vehicle ( av ) trials in one - north in march 2015. telemedicine is the use of telecommunications and it to provide remote clinical healthcare. oscar health is a new york - based start - up that provides policy holders with telemedicine tools, enables drug and doctor searches, price comparison for healthcare services, and rewards policy holders for hitting activity goals. obamacare start - up oscar health hits a $ 1. 5 billion valuation, forbes ( 2015 ). bis central bankers β speeches structure, to foster a culture of innovation and entrepreneurship, and partner with organisations across industry sectors and academia in singapore to identify opportunities for innovation and growth. singapore as a smart financial centre singapore, too, needs to position ourselves for this new future. we had set our vision to become a smart nation that harnesses technology to discover breakthrough solutions in the areas of age | eddie yue : climate business forum - asia pacific keynote address by mr eddie yue, chief executive of the hong kong monetary authority, at the climate business forum : asia pacific, hong kong, 27 february 2024. * * * good morning everyone, it is my great pleasure to welcome you all to the climate business forum : asia pacific, co - hosted by the international finance corporation ( ifc ) and the hong kong monetary authority ( hkma ). for those of you coming to hong kong from overseas, i would like to extend a very warm welcome to you all and i hope that apart from this forum you can find time to enjoy our lively and vibrant city. today's forum is the anchor event of the first hong kong green week. it brings together top executives and thought leaders in asia pacific and provides a platform to facilitate the exchange of ideas and knowledge, and the building of new networks and relationships. we hope that all these will help incubate new business opportunities and contribute towards addressing the bigger issues of climate change and sustainability. sustainability has always been a very complex and challenging issue. but sometimes, as we live in a complex world, we are distracted by other more eminent issues, whether it is market volatility, a pandemic, or the complex geopolitics we are facing. but climate change is not a problem that will go away on its own. in fact, it has become increasingly pressing and also intertwined with other global challenges that we face. the apac region is highly vulnerable to the impact of climate change. according to a report by the united nations development programme, asia - pacific countries experienced, on average, six natural disasters a year over the last 30 years aβ¬ β which is about twice as many as developing countries of latin america and the caribbean, and about three times as many as in sub - saharan africa. the region has seen an escalation in the intensity and frequency of extreme weather events, a decline in biodiversity, rising sea levels, and an increase in climate - induced disasters. asia pacific is also a key contributor to the problem, as we are producing more than half of the world's carbon dioxide emissions. and for the region as a whole, we need to reduce emissions, adapt to climate change, build resilience, and embrace innovation. it is not just about addressing a global issue that affects everyone, but also about protecting and helping our own people in asia. this need does not suggest a regression in our developmental | 0 |
vittorio corbo : the fund β s medium - term strategy β a view from latin america and a dialogue with high - level officials keynote speech by mr vittorio corbo, governor of the central bank of chile, at the high - level seminar β the fund β s medium - term strategy : considerations for a new liquidity instrument for crisis prevention and effective surveillance. dialogue with high - level officials β, organized by the international monetary fund and the central bank of chile, santiago, 11 december 2006. * * * latin america has benefited substantially from the fast growth experienced by the global economy during the last four years and from domestic policies that have contributed to enhanced macroeconomic stability. external current accounts and primary fiscal balances are in surplus, exchange rates are more flexible, and inflation is no longer a major issue as it was for several years and after surpassing the average of 400 percent per year during the 1990s. likewise, the structure of public debt has become less vulnerable, characterized by lower shares of short - term and foreigncurrency debt in most countries as compared with the early 2000s. at the same time, there is renewed appreciation in the region that a solid commitment to maintaining macroeconomic stability is a necessary condition to achieve high and sustainable growth rates in the medium term. a distinguished feature of the region is that fiscal revenues are highly dependent on natural resources. in the current favorable context for commodity prices, primary fiscal surpluses have clearly shown positive numbers, averaging around 4 percent of gdp of the region. it is therefore imperative that policymakers in the region consider the risks of a possible turnaround of this positive cycle, and carefully monitor fiscal spending. expenditures should be established in coherence with the permanent levels of fiscal revenues so as to ensure that, once the current boom is over, public finances are not depleted, and public spending is shielded from commodity price fluctuations. although the region β s economies have made significant progress regarding integration to the global markets, they are still vulnerable to international financial volatilities. a yellow light was turned on by the episodes of may - june of this year, when the market correction hit hard on some currency and stock exchanges of emerging economies. the main challenge for our region at this point is to take advantage of the opportunities provided by the actual international situation by making progress in the design of policy framework and institutions so as to consolidate macroeconomic stability, and strengthen the conditions necessary to achieve high and sustainable growth rates. this is the best strategy to prevent future crises. | pol is going to reflect on these questions in much more detail in this lecture. robert hausmann. 2020. transformation of global supply chains in the manufacturing industry as a result of the coronavirus pandemic. financial and economic review 19 ( 3 ). 130153. dani rodrik. 2020. will covid - 19 remake the world? project syndicate. april 6, 2020. page 2 von 2 | 0 |
bonds and corporate bonds ) and government bonds remain virtually unchanged. stock prices continue to be weak reflecting the uncertainty about the domestic economic outlook. the nikkei 225 stock average is recently moving at around 8, 500 yen. in the foreign exchange market, the yen fell back slightly toward the end of january as market participants became sensitive to market intervention by the authorities, while the u. s. dollar has been weakening on the whole mainly due to the strained situation in the middle east. the yen is currently traded in the range of 120 - 122 yen to the u. s. dollar. with regard to corporate finance, private banks remain cautious in extending loans to firms with high credit risks while they continue to be more active in extending loans to blue - chip companies. the lending attitudes of financial institutions as perceived by firms, particularly small ones, are severe. in the corporate bond and cp markets, the issuing environment for firms with high credit ratings is accommodative, but the environment for firms with low credit ratings is severe. credit demand in the private sector continues to follow a downtrend mainly because business fixed investment remains sluggish and firms are continuously reducing their debts. amid these developments, private banks β lending continues to decline by about 2 - 3 percent on a yearon - year basis. the amount outstanding of corporate bonds and cp issued is moving at around the previous year β s level. meanwhile, according to business surveys, the financial position of firms, particularly that of small firms, remains severe. the year - on - year growth rate of the monetary base dropped to around 10 - 15 percent in january. the year - on - year growth rate of the money stock is at around 2. 0 percent. funding costs for firms continue to be at extremely low levels on the whole. against the above background, the financial developments are summarized as follows. money market conditions continue to be extremely easy. long - term interest rates remain at low levels. the money stock and the monetary base maintain high growth rates relative to that of economic activity as a whole. however, stock prices remain weak. in corporate finance, the fund - raising environment of firms with low credit risks is accommodative on the whole, but with regard to firms with high credit risks, the stance of investors is severe and the lending attitudes of private banks continue to be cautious. developments in the financial and capital markets, the behavior of financial institutions, and the situation of corporate finance continue to require close monitoring. | that for japan β s economy it is important to both reap the fruits of global economic growth and to lay the groundwork for expanding domestic demand. the second point that i think is important in overcoming deflation is the need to establish a supply system that corresponds to potential demand and thereby raise productivity. in order to make the most of the demand from expanding new markets in emerging and developing economies, we need to change the goods supplied and the supply system by taking into account the characteristics of individual markets. if we are able to provide goods and services that meet potential demand, sales will increase and consequently productivity will rise. while discussions of β productivity β typically refer to producing existing products efficiently, unlocking potential demand and establishing the necessary supply system also raises productivity. what is important, therefore, are efforts by firms to adapt existing human and management resources to new markets in order to link potential needs with actual demand. moreover, in order to support such efforts at the firm level, it is critical to review systems and mechanisms so as to ensure the flexibility of japan β s economic structure in response to changes in the economic environment at home and abroad. for example, both firm entry rates and firm exit rates in japan are about 5 percent, which is roughly half of the corresponding rates in the united states, suggesting that japan β s economic metabolism is low. while there is not enough time today to go into this in detail, to improve this situation and create a mechanism in which productive resources are smoothly transferred to areas where there is a strong need for them, the role of financial markets is also important. in addition, the necessary social safety net should be put in place to deal with adverse effects arising during the process. these are two of the issues i think are important to raise the potential growth rate of japan β s economy. looking back at japan β s economy in the past, we have a record of overcoming difficulties and achieving prosperity through people β s wisdom and efforts. to truly bring japan β s economy back onto a sustainable growth path, proactive efforts such as the ones i just mentioned are essential. while the process of putting such efforts into practice will not be without pain, it is unavoidable given the drastic economic changes taking place on a global basis. in this regard, what somewhat worries me is the recent mood of pessimism that fails to recognize the strengths of japan β s economy. for example, while japan β s financial system has remained relatively stable during the recent crisis, this fact seems | 0.5 |
growth pact. this was intended to keep national fiscal policies in check. one of its tenets was that annual government budget deficits should not exceed 3 % of gross domestic product. a complex procedure was performed regularly to monitor member states β compliance with this limit. the penalties for breaching the deficit limit could be escalated all the way to financial sanctions. there is one more key building block in the edifice of the euro area alongside the stability and growth pact : the no - bail - out principle, which forbids member states from assuming liability for the debts of other member states. the guiding principle of monetary union was therefore individual responsibility : member states β individual responsibility for the consequences of their policies and financial market agents β individual responsibility for the consequences of their investment decisions. despite these rules, however, member states β borrowing has not been effectively contained. why not? mainly, because the rules of the stability and growth pact were not only circumvented but even bent. this was possible thanks to a crucial flaw in the system : countries that violated the deficit limit were not automatically punished. instead, the other member states voted on a sanction. and this β to quote the ecb β s former chief economist otmar issing, led to a situation in which sinners passed judgement on fellow sinners. this, of course, encouraged a β you scratch my back and i β ll scratch yours β. put differently : β i won β t punish you today if you don β t punish me tomorrow. β looking back, it must also be noted that the financial markets did not have the desired disciplining effect on fiscal policy. investors turned a blind eye to the misbehaviour of some member states for far too long. by the time the interest rates on government bonds started to rise, the horse β in this case, the greek minotaur β had already bolted. and, once the horse has bolted, the no - bail - out principle is gone with it. as i β m sure you will remember, no member state is allowed to assume liability for another β s debts. this principle was, at the very least, stretched quite far when assistance was granted to greece. this, however, was not entirely unjustified : the euro - area countries are now so closely integrated that problems in one country can spread quickly to envelop the entire euro area, in a bis central bankers β speeches phenomenon known as contagion. when push came to shove, | really are soaring once again β particularly in germany. in january 2017, goods and services in germany were 1. 9 % more expensive than one year earlier. in the euro area as a whole, too, the rate of inflation jumped to 1. 8 %. however, this is primarily due to higher oil prices and the fact that prices bottomed out one year ago. the effect of this rise will wash out of the inflation rate over the course of the year, provided oil prices do not continue to climb and there are no second - round effects. leaving the oil price effect to one side for a moment, domestic price pressures are still 7 / 9 bis central bankers'speeches comparatively low right now. core inflation, which excludes energy and unprocessed food, last stood at around 1 %. however, the eurosystem β s projections suggest that domestic price pressures β boosted by monetary policy β will also pick up gradually, pushing the inflation rate into the target range of below, but close to, 2 %, on a lasting basis in 2019. in my view, recent price developments clearly show that deflation β that is to say, a downward spiral of falling wages and prices, which was conjured up by some in the past and used to justify the purchase of government bonds β is now a mere blip on the distant horizon. even prior to this, i viewed the risk of a downward price - wage spiral as rather remote. against this backdrop, an expansionary monetary policy stance is appropriate for now. that said, one can certainly wrangle over whether we should be keeping the monetary policy gas pedal to the floor. the recent rise in inflation caused the real interest rate, ie the price - adjusted interest rate level, to further contract, which has made the monetary policy stance even more expansionary. what β s more, the only means of pursuing such a highly expansionary monetary policy stance is by implementing non - standard measures, most notably government bond purchases. however, the cost - benefit calculation of non - standard measures, in particular, is quite different from that of our standard monetary policy instruments. this is why i have always cast a critical eye on government bond purchases and said that, to my mind, such large - scale purchases serve purely as an instrument of last resort to be used, for instance, to avert deflation. quite apart from the fact that i neither see nor saw the risk of such a downward spiral arising, the major drawback of such purchases | 0.5 |
john c williams : bridging the skills gap remarks by mr john c williams, president and chief executive officer of the federal reserve bank of new york, at the " skilling the gap : building local talent for indemand careers ", columbia - greene community college, hudson, new york, 21 october 2022. * * * as prepared for delivery thank you for that kind introduction. i'm so pleased to be here - especially at this time of year, when the autumn colors light up the region. in fact, my wife and i have fallen in love with this area - so much so, that we are now splitting our time between columbia county and new york city. of course, i'm not just here as your neighbor. part of my job as president of the new york fed - one of the best parts - is to meet with business and community leaders from across the federal reserve's second district. this gives me the opportunity to see and hear the challenges they face. and throughout the second district - which includes new york state, northern new jersey, southwestern connecticut, puerto rico, and the u. s. virgin islands - the issues i hear about consistently have to do with labor shortages and the skills gap. employers can't find enough skilled workers - and workers can't obtain the skills they need to move up the economic ladder. before i go any further, i will give the standard fed disclaimer that the views i express today are mine alone, and do not necessarily reflect those of the federal open market committee or others in the federal reserve system. the struggle to fill jobs in the current environment, filling jobs can be a challenge. employers - including those here in columbia and greene counties - are facing significant worker shortages. many are struggling to hire people, especially at the entry level - in construction, nursing, and manufacturing. the skills gap is a big obstacle. in 2020, more than half of available job seekers in columbia and greene counties had a high school diploma or less, and only a quarter had an associate degree or higher. 1 employers, especially those in trucking and the trades, grapple with developing a pipeline of skilled workers. an aging population is another issue. over the past 20 years, the size of the workforce here has declined as the population has stagnated. residents here are older - the median age is late 40s, as opposed to late 30s for all of new york state. in some cases, residents don | many open questions remain on the subject of treasury market liquidity. 2 at the same time, the agenda for this conference makes it clear that there are many other important questions beyond market liquidity worthy of consideration and debate. the breadth and expertise of the attendees at this conference make this forum an excellent opportunity to advance our collective thinking on this range of important subjects. while the recent joint staff report on the events of october 15 certainly revealed that much has changed, it is also important to recognize that both private and official sector efforts to ensure a healthy and efficient treasury market have been ongoing for some time. 3 one obvious example is the treasury market practices group, or the tmpg. set up in february 2007, the what i have to say today represents my own views and not necessarily those of the federal open market committee or the federal reserve system. see regulation and liquidity provision, remarks at the sifma liquidity forum, september 30, 2015. joint staff report : the u. s. treasury market on october 15, 2014. bis central bankers β speeches tmpg is a group of market professionals committed to supporting the integrity and efficiency of the treasury market. 4 a core purpose of the tmpg is to develop and update a set of best practices related to trading, settlement and risk management, thereby establishing a set of behavioral norms to which market participants are expected to adhere. most recently, the tmpg updated its best practice guidance to address automated trading, and published a companion white paper on the subject. and no discussion of the tmpg can go without mention of the β fails charge. β instituted in may 2009, this practice provides a standard procedure for market participants to assess β or pay β a fee for settlement failures, and this has proven to be a highly effective remedy for curbing the volume of fails in the treasury market. 5 i want to thank the entire tmpg for their leadership in supporting the efficiency and integrity of the treasury market. i β d like to single out tom wipf with a personal thank you. tom has served with distinction as the tmpg β s chair since its inception, providing credible, balanced and independent leadership to the group. i would be remiss if i did not also mention the ongoing work of the inter - agency working group on treasury market surveillance, or the iawg. after the salomon auction bidding scandal in january 1992, the official sector established the iawg. since that time, it has been a | 0.5 |
gertrude tumpel - gugerell : a case for rapid euro adoption introduction for panel discussion by ms gertrude tumpel - gugerell, member of the executive board of the european central bank, at the austrian national bank conference on european economic integration on β the euro β s contribution to economic stability in cesee β, vienna, 16 november 2009. * * * ladies and gentlemen, 1 it is a pleasure to be at this conference among such distinguished panellists to speak about the european economic integration and the adoption of the euro. for us at the ecb, the topic of the optimal timing of euro adoption for the eu countries in central and eastern europe ( cee ) that have not yet done so is very important. according to the maastricht treaty, all eu countries are called upon adopting the euro at some stage. so it β s not a question of if, but rather on when to join. however, to ensure that the monetary union is working smoothly, it is essential β and the maastricht treaty has foreseen this β that the countries joining the euro area have achieved a sufficient degree of sustainable convergence. this is first of all in the interest of the country concerned. moreover, sustainable convergence is a cornerstone of the european monetary union on which the success story of the euro is built. since its introduction back in 1999, the euro has become one of the major currencies of the world. the low inflation environment in the euro area can be largely attributed to the well anchored inflation expectations and the high credibility of the ecb β s monetary policy strategy to ensure price stability over the medium - term. during the global financial crisis, it became apparent that the euro has been an important shelter for the euro area countries to protect them against what otherwise may have resulted in an exchange rate and balance of payments crisis. this led to the widespread perception that the euro area is a safe haven. let me in the following speak about the economic situation in the cee countries and their prospect on joining the euro. the cee countries have been strongly hit by the financial crisis following the bankruptcy of lehman brothers, the cee countries have been strongly hit by the global financial crisis, although at varying degrees across countries. due to the slump in global activity, heightened risk aversion by international investors and a de - leveraging by financial institutions, most cee countries have seen a significant weakening of export demand and a substantial worsening of their external financing conditions. it seems | economies ( in particular montenegro ) have also illustrated, the unilateral adoption of the euro is not the magic tool that automatically provides protection against the impact of external shocks. concluding remarks let me conclude my remarks. the cee countries have already made significant progress with respect to their catching - up with the euro area. however, some of the countries have been severely hit by the financial crisis. this clearly has an impact on the state of the convergence process of the cee countries and has potentially moved euro adoption further into the future. the timetables of the euro adoption have to be carefully assessed, given particularly the large uncertainties that are associated with the current economic and financial situation. one thing, however, needs to be very clear. the financial crisis has not changed our policy for adopting the euro. therefore, to prematurely adopt the euro, in particular if not accompanied by a sufficient degree of sustainable convergence, is certainly not a solution to overcome the impact of the crisis. only a credible euro adoption strategy helps stabilising the economies, also with respect to the crisis impact. achieving sustainable convergence can be seen as an important anchor and an opportunity for the cee countries to adopt economic policies that will eventually lead to the successful adoption of the euro, hopefully not in the too distant future. | 1 |
##uance may also result in lower spreads as the market β s familiarity with the issuers increases. this would, of course, reduce the cost of a subordinated debt requirement. on the other hand, a lower required frequency of issuance may allow banks to signal their financial condition through their timing of issuance. flexibility with respect to issuance may also allow banks to avoid the unnecessary cost of issuing subordinated debt during periods in which the bond market is turbulent. on balance, a mandated frequency of once or twice a year would seem reasonable, and would be in line with current practice for larger banking organizations. should subordinated debt with standardized characteristics be required? there are also tradeoffs associated with requiring banking organizations to issue a standardized debt instrument with the same maturity, option characteristics, and covenants. the benefit of standardized debt is fairly obvious. it makes it easier for market participants to decipher the signals of a banking organization β s condition. the costs are also pretty clear. a standardized debt instrument could be more costly for some banks to issue than for others because bank capital structures differ across organizations. and, a standardized debt instrument may be very costly during certain market conditions. for example, in periods of actual or expected interest rate volatility, spreads on debt without put options may be relatively high. i would expect that the benefits of standardization in ensuring a purer signal about the relative risk of different banking institutions would outweigh the costs associated with such a restriction. should put options be required? some proposals have advocated that the required subordinated debt have put options. these options have been suggested for two reasons. first, they would provide debt holders with a powerful tool for increasing the cost of bank risktaking. with a put option, debt holders would be able to force early repayment of debt when a bank changed its risk profile. second, under some proposals, put options take the closure decision out of the hands of the regulators and place it in the hands of the debt holders. not coincidentally, these proposals arose in the wake of the savings and loan crisis during which regulators were criticized for their forbearance. put options may also increase indirect discipline if they trigger supervisory actions. as disciplinary as they may be, there are strong arguments against the inclusion of put options. first, the exercise of put options can be extremely draconian, inducing liquidations and possibly premature closures. second, the high correlation of risks across banks may induce a simultaneous exercise of put options, which could | mr meyer β s remarks on market discipline as a component of banking supervision and regulation speech by mr laurence h meyer, a member of the board of governors of the us federal reserve system, at the conference on reforming bank capital standards in new york on 14 june 1999. good afternoon. the topic of this conference β reforming bank capital standards β could not be more timely. reform is very much an issue on the minds of all supervisors and market participants. but regulatory capital standards are only one component of the overall framework for maintaining bank safety and soundness. this overall framework can be described, as in the consultative paper recently released by the basle supervisors committee, in terms of β three pillars β β bank supervision, market discipline, and regulatory capital standards. there are two approaches to assessing the adequacy of the overall framework. first, we could consider merely rebalancing the existing components, in search of the most efficient combination. some have argued, for example, that enhancing market discipline could permit reduced reliance on the more intrusive and burdensome regulatory and supervisory components. second, to the extent that recent changes in banking and financial markets have made bank regulation and supervision more difficult, we may also need to incrementally improve capital standards and supervisory practices as well as enhance market discipline. my remarks today will focus on the market - discipline component of the three - pillars framework, specifically on how we might enhance market discipline in banking as we adapt to changes in banking and financial markets that have made bank supervision and regulation more difficult. there is an irony here in that it might take additional regulation β for example, increased disclosures and / or a mandatory subordinated debt requirement β to enhance market discipline. i will also discuss practical issues that must be considered and questions that must be answered if we are to move in this direction. adapting to change as we all know, financial markets and institutions are evolving at a rapid and unprecedented pace. this evolution has been driven in part by statutory reforms and dramatic regulatory changes. the abolition of interstate banking constraints has allowed for the creation of a growing number of very large banking organizations. the erosion of legal and regulatory barriers has permitted banking organizations to expand their scope of activities. and both the relaxation of trade barriers and the freer flow of capital have facilitated the operation of banks across national boundaries. financial and technological innovations have had an equally dramatic effect on financial markets and institutions. as a result of technological innovations, the increased speed and reduced cost of transacting have | 1 |
zeti akhtar aziz : economic ties between china and malaysia address by dr zeti akhtar aziz, governor of the central bank of malaysia, at the launch of industrial and commercial bank of china ( malaysia ) berhad, kuala lumpur, 28 april 2010. * * * it gives me great pleasure to be here today on the official launch of industrial and commercial bank of china ( malaysia ) berhad ( icbc ). the establishment of icbc in malaysia, the largest commercial bank in the world today, represents an important development in forging stronger economic and financial ties between the people β s republic of china and malaysia. this licence is issued pursuant to the arrangement entered into between the government of malaysia and the people β s republic of china in 2009, reinforcing a long - term relationship that has been strengthened over the years. the presence of icbc, in our financial system will pave the way for increased business and investment opportunities between our two countries. as asia leads the global recovery and with the progressive liberalisation in the region, the economic integration of the asian region can be expected to strengthen further. today, intraregional trade in asia has increased to an average of 50 % of the total exports of the region as compared to 32 % in 1995. the underlying structural and demographic changes in asia are expected to reinforce this trend. in addition, as domestic demand in the regional economies increases, it will provide further impetus to intra - regional trade and to the overall prospects for asia. in the area of infrastructure development in asia, the overall investment requirements for the next ten years are estimated to be about usd8 trillion. to support these developments, the regional financial integration process in asia needs to be accelerated and deepened. significant progress has already been achieved in strengthening cooperation and collaboration efforts amongst regional policymakers within the asian region to ensure that financial stability in the region is preserved. efforts have also been taken to develop the financial markets in asia. in addition, after a decade of financial reforms, the financial systems in asia have emerged resilient. while the financial systems in several of the advanced economies continue to be confronted by unresolved challenges, financial systems in the region have continued to function and perform well to support private sector economic activity. financial institutions in asia, have in fact, continued to expand their reach within the region during this period to support and facilitate the regional financial and economic integration. as regional financial integration accelerates moving forward, this would contribute towards sustaining the future | range of users from households to micro enterprises and small and medium scale enterprises. also important is the development of the enabling environment conducive for innovation of the range of financial products and services needed for the spectrum of society and businesses and for cost effective pricing to take place. this will be reinforce by the supporting infrastructure for the effective management of risks by financial institutions ; strengthening of the development financial institutions ; and putting in place a comprehensive consumer protection, redress and education framework. these strategies are pursued under a collaborative approach that effectively combines with the efforts by the private sector. let me conclude. policymakers have a critical role and a distinct opportunity in these present times to effect significant and positive change in the development of more inclusive financial systems. this change will not only catalyze progress for the poorest and marginalized segments of society, but also uplift those groups that are already in the financial mainstream but are highly challenged by the environment. this will ultimately serve to achieve truly inclusive growth and development. this is an important agenda, and our efforts must be trained on interventions that will encourage competition, provide the right incentives to both financial service providers and individuals, and help overcome access barriers in ways that will contribute to growth and stability. while the challenges are significant, the prospects for improved living standards and hopes for the millions of people in poverty and the struggle for survival should encourage us to persevere and advance forward with greater focus and purpose. before i end my remarks, allow me to express my appreciation to our key partners in making this forum a reality. i wish to record my appreciation to her royal highness princess maxima for her support to this forum in her capacity as united nations special advocate for inclusive finance for development. the alliance for financial inclusion, the consultative group to assist the poor and the oecd β s international network on financial education have become important collaborators in our aspirations to promote more inclusive financial systems. i would also like to thank representatives from aflatoun and centiq in the netherlands and all the policymakers who are participating as speakers and experts at this forum. on that note, i wish all of you a productive forum over the next two days. bis central bankers β speeches | 0.5 |
. progress on fiscal and external rebalancing and on structural reforms has also been very significant. looking ahead, we need to prevent any return to the complacency of the past. this means that we must make fuller use of the tools at our disposal in the economic governance framework, at the eu and the emu level. the european parliament and national parliaments have a key role to play in this respect, in the context of the 2014 european semester. let me reassert here that the excessive deficit procedure ( edp ) and the macroeconomic imbalance procedure ( mip ) are equally important and should be strictly enforced. the lesson of this crisis is that the cost of not intervening where imbalances are identified would be a more brutal adjustment later. the role of parliaments in the β fourth stage β of emu the crisis revealed that national policies need to be a matter of common concern. therefore, national policies need to be discussed at the european level and the european dimension needs to be brought into national debates. national parliaments and the european parliament are the natural fora for such exchanges. there is clearly a demand for this. the most recent eurobarometer data ( autumn 2013 ) indicates that an overwhelming majority of euro area citizens ( 79 % ) support a stronger coordination of economic policies among euro area countries and 63 % support the emu and the euro. at the same time, two - thirds of europeans consider that their voice does not count in the eu. at the ecb, we attach great importance to our accountability, as reflected in our close dialogue with the european parliament and most recently in the inter - institutional agreement with the european parliament on the accountability of the ssm. as regards monetary policy, the governing council of the ecb is examining how it can enhance the transparency of its decision - making processes by publishing an account of its discussions. i am personally convinced that this would help the public understand our decisions better. at the same time, the european parliament and national parliaments have a responsibility to engage with the public on the political and economic implications of economic and monetary union. above all, only in a truly european public space can common solutions emerge. bis central bankers β speeches let me now conclude. 15 years ago the third stage of emu started. it was believed to be the β final β stage. the crisis made clear that we needed to embark on what i would call the β fourth stage β of emu, as described in particular in the | conditions, it is not yet sufficient to compensate for the low interest rate margins. the continued economic recovery should, however, reduce the negative impact of cyclical factors over time, as banks β balance sheets adjust. but most importantly, a number of structural challenges continue to dampen bank profitability. these factors vary across countries and banks and include incomplete business model adjustments, cost inefficiencies and excess capacity. the stock of npls also remains high at some banks. let me elaborate on each of these issues in turn. starting with the issue of business model adjustment, our analysis shows that, in the past, diversified banks have been more successful in generating higher revenues from net fees and commissions and trading when faced with pressure on interest income. this is perhaps no surprise, as banks engaging in custodian, asset management or investment banking activities are likely to be better able to gear themselves towards fee - generating activities, whereas commercial banks may not have access to such opportunities for diversification. 1 at the same time, one has to acknowledge that it is not only the low yield environment and lack of income diversification that is challenging banks β business models. the rapid pace of technological advances and the ensuing change in the competitive landscape are both a key strategic opportunity and a challenge for banks. for example, a shift from branch networks towards digital banking has enabled many banks, notably in the nordic countries, to reduce costs while maintaining sound customer bases and market shares. but clearly, a successful transformation is likely to hinge on the support of beneficial structural factors such as labour laws, how the market is structured and the digital readiness of the economy. policy action may thus have a role in supporting these conditions. incumbent banks also need to be prepared for the increasing competition from the non - bank financial sector and β fintech β, fuelled by the increasing role of technology in financial services. increased competition in lending, investments and payments is bound to increase pressure on retail banking revenues. it will subject deposits to more intense price competition, and may erode revenues related to overdrafts and payments. adjustments to business models are closely linked to the second challenge : the need to improve cost efficiency. i already mentioned that digitalisation can enable substantial cost savings. however, on aggregate, euro area banks have so far been unable to meaningfully reduce operating costs in the aftermath of the financial crisis. in fact, euro area significant institutions β operating expenses have increased by over 5 %, on aggregate, since 2010, despite a | 0.5 |
abdul rasheed ghaffour : malaysia international islamic financial centre - uk business forum 2024 opening address by mr abdul rasheed ghaffour, governor of the central bank of malaysia ( bank negara malaysia ), at the malaysia international islamic financial centre ( mifc ) - uk business forum 2024, london, 10 september 2024. * * * assalamualaikum and good morning, first and foremost, allow me to express our gratitude to his royal highness sultan nazrin shah, for gracing our forum today and for his unwavering support and leadership in advancing islamic finance. his royal highness in various capacities including as the royal patron of the malaysia's islamic finance initiative and his global humanitarian involvements, continue to inspire all of us. over many years, his royal highness has been active in advocating for the transformative potential of islamic finance and social finance in addressing the pressing challenges facing the world today β extreme poverty, climate change, human displacement due to geopolitical conflicts, among others. just last saturday, at the 15th sc - ocis roundtable, his royal highness has called for restoring of humanity in finance, emphasising the importance of balancing more carefully the paramount goal of economic growth with the goals of environmental stewardship and social inclusion. like all of you here today, i look forward to the insights and perspectives from his royal highness'keynote address shortly. it is with great honour that i welcome all of you to the mifc - uk business forum. we gather here today not only to exchange ideas but to forge meaningful connections and explore what we can do together to catalyse islamic finance. malaysia and the uk have long sustained strong economic and financial ties. the uk has always been an important partner for malaysia. we hope that these strong interlinkages can pave the way for innovative collaborations in islamic finance, sustainability, and trade to further bolster our economies. let me first share some insights on malaysia's economic landscape and prospects that offer opportunities to investors. for many years, malaysia has carefully navigated unprecedented challenges β not just crises such as the asian financial crisis, the global financial crisis and the covid - 19 pandemic, but also the ever - evolving economic landscape, global and regional geopolitics, as well as our own shifting domestic landscape. through thick and thin, our financial market remained orderly, and our economic fundamentals remained sound, supported by resilient domestic demand and a robust external sector. in | trade, malaysia is now the world's 20th largest exporting economy. our mix of export products and trading partners is highly diversified. malaysia's resilience is further contributed by a current account surplus, manageable external debt, a positive net external asset position and an adequate level of international reserves. today, malaysia's economic growth continues to be driven by strong private consumption, robust investment growth and a steady pick - up in external demand. in 2024, we expect gdp growth to be closer to the upper - bound of the 4 to 5 % forecast range. what is exciting is the robust 1 / 3 bis - central bankers'speeches expansion in investments. this is attributed to new and ongoing multi - year projects by both the public and private sectors, further progress of key infrastructure projects and realisation of approved investments. the investment share of gdp rose to 22. 2 % in the second quarter of 2024 compared to 19. 7 % in 2022. these developments are testaments that malaysia is a highly attractive investment destination. ladies and gentlemen, now, let me turn to our vision for the financial sector to play a pivotal role in realising malaysia's economic aspirations. we are seeing flows into high quality investments that are in line with our investment aspirations which include uplifting malaysia's economic complexity, enabling high - value added activities, generating high - income jobs and creating strong economic linkages, both domestically and globally. we also see sustainable finance and islamic finance as important levers to address the economy's funding needs as well as to serve as an international gateway for asia and oic markets with respect to shariah - compliant investments. at the heart of islamic finance are principles of justice, inclusivity, resilience, and sustainability β values that are critical in today's economic landscape. in malaysia, islamic finance is anchored by value - based intermediation ( vbi ) strategies and sustainable and responsible investment ( sri ) framework. the central bank of malaysia and securities commission malaysia are actively working to unlock the full potential of new growth sectors by integrating islamic finance with sustainable and green finance initiatives. these developments build upon the progress made over four decades ( since the introduction of islamic finance in malaysia ) in developing a progressive, inclusive and resilient financial ecosystem. malaysia is also taking decisive steps towards achieving our net zero target in 2050, guided by strategic frameworks such as the national energy transition roadmap ( netr ), the hydrogen economy and technology road | 1 |
undermining the confidence of savers in the credibility of the debt reduction process. as the bank of italy has pointed out on more than one occasion, the success of long - term debt reduction is also dependent on how well the public finances can cope with rising expenditure tied to the ageing population. the update indicates, rightly, that the pension reforms introduced in the last 20 years have significantly improved both the sustainability and the intergenerational fairness of the italian pension system. it is critical that we do not lose ground on these two fronts, especially when β as demonstrated by the european commission β s latest long - term age - related expenditure projections β the risks to the sustainability of the public finances are also increasing due to worsening demographic projections. * * * restoring the italian economy to a path of sustained economic development is a structural matter ; it depends on the continuation of the reform process of all those aspects of public action and the functioning of the economy and society that affect firms β ability to compete. much has already been done : gross domestic product, while still lower than it was before the crisis, has risen by more than 5 points since its 2013 trough ; investment has increased by about 15 points ; the number of those in employment, which has risen by more than 1 million, has hit an all - time high. the productive fabric of the country has strengthened, especially in the export sector ; the difficulties encountered by the banking system have been alleviated with the improvement in the real economy and the reduction in non - performing loans ; the balance of payments has recorded a current account surplus since 2013 ; in june our country β s net debtor position was equal to 3. 4 per cent of gdp, almost 20 percentage points lower than it was in 2013. there remain, however, large imbalances in the labour market, widespread income losses compared with ten years ago, and serious problems of poverty and social exclusion. although the worst of the crisis is now years behind us, there is still much to do to place the italian economy on a stable path to higher growth. greater wealth and job creation is also key to helping those who are most vulnerable. public services should be made more efficient, the quality of our human capital improved, and competitive mechanisms strengthened. in addition to this, the debt - to - gdp ratio should be lowered decisively. the debt is, for italy, the great multiplier of turbulence. given its size and the need to service each year a significant amount ( around | ignazio visco : awards ceremony for the g20 techsprint on green and sustainable finance welcome remarks mr ignazio visco, governor of the bank of italy, at the awards ceremony for the g20 techsprint on green and sustainable finance, organized by the bank of italy and the bank for international settlements, milan, 25 october 2021. * * * i am delighted to welcome you to this awards ceremony for the second g20 techsprint on green and sustainable finance organized by the bank of italy and the bank for international settlements. i would like to thank benoit cΕure, andrew mccormack and the whole team from the singapore bis innovation hub for their invaluable cooperation in all the steps of our techsprint. techsprints are technological competitions designed to spur innovation, collaboration and creative solutions to daunting problems. our g20 techsprint had a very ambitious goal. it was designed to help financial markets in sharpening their assessment and selection tools for channeling funds towards green and sustainable finance, leveraging on the latest technologies. fintech and innovators were summoned to put forward their best solutions. i am very pleased that the improvement in the public health situation, following remarkable progress in the vaccination campaign, allows me to be here in milan to acknowledge the achievements of the 21 brilliant finalist teams who have offered valuable technological contributions in a very special area. indeed, finding ways to foster appropriate green and sustainable finance to invest in the crucial fight against climate change has been one of the key priorities of the italian presidency of the g20 this year. the urgency of acting to stop climate change and of mitigating its consequences is plain to see. the increase in the intensity and frequency of extreme weather events has obvious, and major, social, as well as economic, consequences. central banks and supervisory authorities, international institutions and market participants have therefore been paying significant and increasing attention in recent years to developing a better understanding of the implications of climate change for the financial sector and financial stability. in fact, climate change - related financial risks pose both micro - and macroprudential concerns, but analysis and research are still at an early stage. although there is broad consensus within the scientific community on the trends and causes of climate change, the timing and magnitude of future climate outcomes remain uncertain. this range of possible future physical outcomes arising from climate change is crucial to understanding β climate risks β ( or better again, β | 0.5 |
tiff macklem : release of the monetary policy report opening statement by mr tiff macklem, governor of the bank of canada, at the press conference following the release of the monetary policy report, ottawa, ontario, 26 october 2022. * * * good morning. i'm pleased to be here with senior deputy governor carolyn rogers to discuss today's policy announcement and the bank's monetary policy report ( mpr ). today, we raised the policy interest rate by 50 basis points to 3. 75 %. this is the sixth consecutive increase since march. quantitative tightening continues and is complementing increases in the policy rate. we also expect our policy rate will need to rise further. how much further will depend on how monetary policy is working to slow demand, how supply challenges are resolving and how inflation and inflation expectations are responding to this tightening cycle. our decision today reflected several considerations. first, inflation in canada remains high and broad - based. inflation has come down in recent months, but we have yet to see a generalized decline in price pressures. second, and related, the economy is still in excess demand - it's overheated. households and businesses want to buy more goods and services than the economy can produce, and this is driving prices higher. third, higher interest rates are beginning to weigh on growth. this is increasingly evident in interest - rate - sensitive parts of the economy, like housing and spending on big - ticket items. but the effects of higher rates will take time to spread through the economy. fourth, there are no easy outs to restoring price stability. we need the economy to slow down to rebalance demand and supply and relieve price pressures. we expect growth will stall in the next few quarters - in other words, growth will be close to zero. but once we get through this slowdown, growth will pick up, our economy will grow solidly, and the benefits of low and predictable inflation will be restored. finally, we are trying to balance the risks of under - and over - tightening. if we don't do enough, canadians will continue to endure the hardship of high inflation. and they will come to expect persistently high inflation, which will require much higher interest rates and potentially a severe recession to control inflation. nobody wants that. if we do too much, we could slow the economy more than needed. and we know that has harmful consequences for people's ability to service their debts, for their jobs and for their businesses. | - system infrastructure, parallel to our work on the oversight of major payments systems and the provision of liquidity in canada, we have been studying these issues from a global perspective as members of various committees at the bank for international settlements. and we have been contributing to the development of standards for the sound operation of such systems. the bank has also been closely involved in international efforts to reduce the risks associated with the settlement of foreign exchange and securities transactions. finally, there is the issue of private sector involvement in crisis resolution. we all recognize that, even with the best prevention efforts, we will not totally eliminate the possibility that foreign economic and financial disturbances will affect national economies around the world. in the event of an emergency, the international community has agreed to new assistance facilities for distressed imf member countries. imf resources, however, are not limitless. so there is a need for the private sector to play a key role in the resolution of crises. greater clarity about the size of available official assistance is essential to encourage private sector debtors and creditors to work together to find solutions in difficult circumstances. and although we hope that most situations could be resolved voluntarily, it is important to recognize that, under certain conditions, an orderly standstill ( a temporary suspension of debt - service payments ) may be appropriate to give a distressed debtor country some breathing space in which to take steps to address its problems. broad international consensus on limits to official lending and on standstills is still lacking. so we will continue to work away at these issues. before summing up my main points today, i would like to give you a quick update on the canadian economy. recent economic developments in assessing the near - term course of the canadian economy, we are all facing a number of uncertainties. the most important relates to the abruptness and extent of the slowdown in the u. s. economy. the fact that the recent economic data for north america are mixed adds to this uncertainty. while these data confirm a slowing in the pace of activity, some have come in weaker, and some stronger, than expected. this is certainly the case here in canada. but even in the united states there have been both negative and positive reports. in the united states, the number of positive indicators, while not decisive, provides some hope that the end of the slowdown may not be far off. we continue to believe that u. s. economic growth will rebound in the second half of the year, supported by the decline in | 0.5 |
the building & construction have reached $ 125 million followed by transport, storage & communication ( $ 21 million ), electricity, gas & water ( $ 16 million ) and manufacturing ( $ 16 million ). other miscellaneous approvals totalled $ 72 million. recent figures show a moderate recovery in bank lending. fiji β s tourism industry β’ visitor arrivals : visitor arrivals are at historical highs. a strong recovery in visitor arrivals by an annual 12 percent was seen in the first seven months of the year. using the fiji islands visitors bureau β s growth forecast of around 571, 000 visitors for 2008 translates to a projected annual growth rate of around 6 percent. β’ visitor arrivals by country : our nearest neighbours, australia and new zealand, account for more than half ( 56 % ) of our visitor source market. the growing markets of us ( 12 % ), canada ( 3 % ) and europe ( 15 % ), provide us with 30 % of our visitors. β’ tourism earnings : while we note historically high levels in visitor arrivals, tourism earnings is what ultimately matters β for the industry and for the country in terms of foreign exchange, employment and investment. tourism earnings have largely been flat since 2004. in 2008, we expect a marginal improvement over 2006 earnings levels, a 6. 7 percent rise in 2009 and a 14. 6 increase in 2010. thereafter we are hopeful that the tourism earnings will reach and surpass the $ 1 billion mark. β’ gross foreign exchange earners in 2008 : tourism is the major source of foreign exchange for fiji forming around 23 percent of total foreign exchange receipts in gross terms. β’ occupancy : there has been a huge level of investment into the hotel industry in the last few years where we have seen new hotels, renovations / extension of existing ones and an expansion of services provided ( weddings / spas / conventions ). the increase in hotels and rooms have seen occupancy levels fall. 50 percent of tourism capacity in terms of room days is unutilised. the challenge for the industry and for the country is to fill these rooms. β’ employment : the hotels & restaurants sector directly employed around 9, 000 workers in 2007. using the hotels employment multiplier of 2. 6, the total employment generated by the tourism industry is approximately 23, 400 workers. the employment multiplier was sourced from a 1990 study by the tourism council of the south pacific ( tcsp ). foreign exchange receipts include exports of good ( fob ) and services, income and | . in contrast, the transitory scenario would have assumed that inflation was purely supply - driven and the inflation pressures were temporary, and therefore, the central bank would be committed to supporting an economy still recovering from covid. this framework might have helped major central banks to better manage the constraints on monetary policy during the recent transition from a low - to highinflation environment. controversies in the transition to scenarios - based cfg despite its attractiveness, there are also considerable objections to applying scenariosbased conventional forward guidance to emerging markets. first, monetary policies in emerging market and small open economies are heavily affected by policies in advanced economies. they may have improved their independence from the government, but still cannot be independent from the fed. therefore, rather than solely relying on the interest rate, alternative policy tools, such as fx intervention, macroprudential tools, and sometimes capital flow management measures, need to be utilized as well. the integrated policy framework ( ipf ) by the imf and macro - financial stability frameworks ( mfsfs ) by the bis address this issue. in these circumstances, some believe that it is technically impossible to construct a simple baseline and reasonably small number of alternative scenarios. communication difficulties are another problem. the information contained in conventional forward guidance may be useful to market experts in that alternative scenarios can guide them when the realized state of the economy deviates from the baseline. however, the realization of an alternative scenario could be interpreted differently by the general public, as perhaps that the central bank is an incompetent forecaster. a recent bank of korea policy decision is a good example that illustrates these controversies. in july, the bok raised its policy rate by 50 bps for the first time in its history. given that market participants already anticipated a 50 - bp rate hike, forward guidance on the future policy path, rather than the current interest rate hike, became even more important. after debating the aforementioned pros and cons, a compromise approach was taken. in the official statement, we only included qualitative remarks such as β the board sees continued rate hikes as warranted. β then, we provided more detailed forward guidance during the press conference, such as saying that β gradual, 25 - basis - point increases will be appropriate for some time as long as inflation paths remain as currently presumed. β this was intended to give us more flexibility on the future policy path, while providing the minimal forward guidance that market experts would like. concluding remarks in conclusion | 0 |
##term interest rates. see ben s. bernanke ( 2012 ), β monetary policy since the onset of the crisis, β speech delivered at β the changing policy landscape, β a symposium sponsored by the federal reserve bank of kansas city, held in jackson hole, wyo., august 30 - september 1. for simulation results showing the effects of the fomc β s asset purchases, see hess chung, jean - philippe laforte, david reifschneider, and john c. williams ( 2012 ), β have we underestimated the likelihood and severity of zero lower bound events? β journal of money, credit and banking, vol. 44 ( february supplement ), pp. 47 β 82. for a study focusing only on the second large - scale asset purchase program that finds comparable effects, attributing to that program a bit less than a 1 percent increase in output and 700, 000 new jobs, see jeffrey c. fuhrer and giovanni p. olivei ( 2011 ), β the estimated macroeconomic effects of the federal reserve β s large - scale treasury purchase program, β public policy briefs 11 β 02 ( boston : federal reserve bank of boston, april ). for a study using different methodologies that finds significantly smaller effects, see michael t. kiley ( 2012 ), β the aggregate demand effects of short - and long - term interest rates, β finance and economics discussion series 2012 β 54 ( washington : board of governors of the federal reserve system, august ) ; and for one that finds larger effects, see christiane baumeister and luca benati ( 2010 ), β unconventional monetary policy and the great recession : estimating the impact of a compression in the yield spread at the zero lower bound, ( pdf ) β european central bank working paper series 1258 ( frankfurt : european central bank, october ). see board of governors, β fomc statement, β in note 10. bis central bankers β speeches conclusion in sum, the u. s. economy continues to be hampered by the lingering effects of the financial crisis on its productive potential and by a number of headwinds that have hindered the normal cyclical adjustment of the economy. the federal reserve is doing its part by providing accommodative monetary policy to promote a stronger economic recovery in a context of price stability. as i have said before, however, while monetary policy can help support the economic recovery, it is by no means a panacea for | human interaction between bank personnel and their customers β now their customers are faceless telephones and mobile calls and clicks of the mouse! now it is not just borrowers who choose the bank which offers a competitive price but even depositors who call for tenders for placing term deposits! we have indeed come a long way. in the area of foreign exchange, almost all needs of foreign exchange can be met by banks, without requiring rbi β s approval. in fact now that we are so liberal we find very few takers. but we at rbi are constantly reviewing the quality of service, rendered by banks in order to bring about more improvements. therefore, to address the issue of banking services to the common man in particular, rbi recently appointed a committee, styled as committee for procedures and performance audit of public services ( cppaps ) under the chairmanship of shri s. s. tarapore, a former deputy governor of rbi β some of you might be well aware of his contribution in the field of banking and finance in india, especially his contribution as chairman of the committee on capital account convertibility β which till date remains a bible for capital account convertibility. the committee observed that there is a wide gap between the intent with which policies are formulated and the procedures followed by banks which totally derail the intent of the policy. this committee was unique in many ways. first, it focussed solely on the services rendered by banks to the common man. secondly, in its evaluation of services it started from the customer - end. the committee undertook incognito visits to bank branches including rbi β s offices for a first hand experience of difficulties faced by the public at large. thirdly, it observed that issuance of instructions by banks to its branches and their implementation at the grassroots level were two different things. the rbi has initiated action on the basis of the recommendations of the committee. to illustrate, let me mention a few of them : β’ let me begin with the rbi itself. the reserve bank has introduced a standardised application form for government of india savings bonds popularly known as rbi bonds. the application form also includes rights and responsibilities of applicants. it clearly indicates within how much time customer should expect the bond to be delivered to him and also to whom one should approach if appropriate service is not provided. β’ the reserve bank has introduced oltas to render more efficient tax collection. β’ banks have been advised to review their existing policies and procedures with regard to delivering of cheque book over the counters, | 0 |
susan s bies : retirement savings, equity ownership, and challenges to investors speech by ms susan s bies, member of the board of governors of the us federal reserve system, at a joint presentation to the national economics club and the committee on the status of women in the economics profession of the american economic association, washington, d. c., 27 february 2003. * * * good afternoon. i am delighted to be here to speak about some of the new challenges and opportunities that american families face from changes in retirement savings and equity ownership in the united states. i know that many of your members are economists who work in policy advisory roles in government. as an economist who enjoys getting back to her ph. d. roots, i want to also address how traditional economic theory about consumer behavior and corporate governance are, at times, in apparent conflict with the practices that we observe. this in turn raises issues about the appropriate economic and policy frameworks for decisionmaking. there has been a dramatic shift in employer - sponsored retirement plans over the past two decades - a shift from plans in which pension managers controlled most investments and retirees received preset benefits to plans in which workers directly control their investment portfolios and keep their investment returns. many american families have responded by purchasing corporate equity - frequently through investments in mutual funds or other institutional accounts. with increasing control over their pensions, and broader participation in equity markets, americans have far more options for financial planning than they did twenty years ago. but with the new opportunities come risks and responsibilities. households with more control of their resources for retirement have a greater need to employ sound financial planning. moreover, though many might be unaware of it, stock - owning households share responsibility for oversight and governance of the corporations they own. the headlines of the past couple of years have highlighted the importance of these risks and responsibilities. we have all witnessed a precipitous fall in stock prices and some spectacular corporate failures and have read accounts of retirement savings accrued over long careers only to be lost in a matter of weeks. some of those corporate meltdowns were accompanied by the revelation of shoddy auditing practices and stock analyses tainted by conflicts of interest. and those who should have been ensuring sound corporate governance were often unwilling or unable to protect the interests of shareholders. recent developments suggest that households may, in coming years, take on even more responsibility for their retirement saving and assume additional responsibilities for corporate governance. the president's recently released budget for 2004 would considerably expand taxpre | you don β t teach the banking system a lesson by letting it collapse once in a while, but by ensuring proper regulation and supervision, even if some people don β t like it. similarly, you don β t make countries improve their fiscal discipline by making it possible for them to easily get away with restructuring their debts. this may actually create a disincentive, i. e. an incentive not to adopt the corrective measures which are needed to reform the economy. this is what actually happened in the case of greece last spring. as talks of restructuring spread from some euro area capitals, the greek government started thinking that this could be a nice way to go easy on the adjustment effort and it delayed some of the measures agreed in the programme. questioning the signature of the sovereign has very negative effects on the confidence of wholesale and retail investors, both at home and abroad. since public debt instruments play a key role in domestic financial markets and are an essential means of saving for the population, restructuring has very large wealth effects, with direct repercussions on the economy and also on society and on the democratic system. it is no coincidence that nearly all countries which have restructured their debt in the past were relatively poor and often undemocratic. as a result, psi, when applied to states, may end up costing taxpayers even more. in particular, additional financial assistance must be provided to a country which restructures its debt in order to avoid an abrupt interruption in the flow of credit and the collapse of the domestic financial system. such additional assistance may even be as large as the savings obtained from the restructuring of private sector credits. the 21 july agreement with greece, for instance, which aimed at saving around β¬50 billion of debt held by the private sector, required the disbursement of about β¬20 billion of extra assistance to recapitalise the greek banking system to avert its collapse and a larger amount to enhance the credit rating of greek bonds to be used as collateral for refinancing with the eurosystem. what β s the solution in this case? to prevent countries from getting again into the same difficulties as they experienced prior to the crisis we need tougher governance, with more stringent rules β not only on fiscal discipline but also on banking supervision β automatic sanctions and greater stringency on domestic decision - making for countries which request financial assistance. the negative experience with the stability and growth pact over the last decade should not undermine efforts to further strengthen the | 0 |
was formulated to upgrade the existing south african payment system to comply with world - best standards. in may 1994, a strategy - formulation team, consisting of representatives of the reserve bank and the banking community, was established. a collaborative consensus building approach was adopted. the reserve bank acted as facilitator, and it took the task force approximately 14 months to produce a first draft of a proposed strategy for the upgrading of the nps. this document was intensely discussed amongst the many stakeholders before it was finally presented to the south african council of banks ( cosab ), for approval. the document, entitled the south african national payment system : framework and strategy, which has become known as the blue book, is widely recognised as a product of the south african banking industry and its recommendations are accepted as the basis for the official strategy for the reform of the payment system. the national payment system framework and strategy identified the lack of a sophisticated electronic settlement process as a major shortcoming in the south african payment system. to this end a strategy was formulated to introduce an online central bank settlement system that would enable banks to effect interbank fund transfers electronically and in real time, when required. 2. development of a new electronic interbank settlement system the project to implement a new electronic interbank settlement system was identified as the cornerstone for the introduction of a new national payment - processing infrastructure. the south african multiple option settlement ( samos ) system, introduced on 9 march 1998, was developed over a period of two years as a collaborative venture between the reserve bank, private banking institutions, and the technology suppliers. the system ushered in a new era in electronic payment and settlement in south africa and will have a major impact on the future development of the national payment system. furthermore, the new system has already enabled the reserve bank to introduce new operational procedures for the execution of monetary policy. under these new arrangements, banks now participate in a daily tendering system, based on repurchase agreements ( repos ), to obtain funds from or repay funds to the reserve bank. to this end, the settlement system became a convenient vehicle to establish market liquidity needs and to facilitate payment flows, resulting from repo transactions, between the reserve bank and the banks. 2. 1 features of the new settlement system the introduction of the new interbank settlement system represents a major reengineering of the way in which banks exchange value amongst themselves. it provides participating banks with a range of additional functions and business opportunities, including : β’ | online real - time link between participating banks all banks participating in the new system are linked to an online real - time network provided by the reserve bank. these banks are able to link to the reserve bank service either directly or via swift, the highly secure international funds transfer mechanism. the system enables banks to exchange payment messages with the reserve bank and, through the reserve bank, between themselves. β’ secure high value fund transfers between participating banks the samos system processes all fund transfer messages received by the reserve bank. samos will eventually enable banks to effect their payments in real time through a fully auditable and robust system. the system will provide a highly secure vehicle for interbank payment flows and ensure the authenticity and non - repudiation of all transactions. all fund transfers will be final and irrevocable and processed successfully by the system. this will be accomplished by effecting payment transactions directly on the settlement accounts of banks held in the reserve bank. β’ settlement risk reduced by prefunding the risk of settlement failure by any individual participating bank is avoided through application of the principle of prefunding. a request to the system to transfer funds will therefore be carried out only if the bank issuing the fund transfer instruction has sufficient funds in its settlement account ; otherwise, the instruction will be rejected. this implies that banks cannot build up exposures to one another within the system. all funds transferred are irrevocable, and the underlying transactions can thus be finalised during the course of the business day, as and when the bank and the customer require. β’ collateral managed dynamically the system operates on the principle of full collateralisation of all intraday loans. banks can reserve financial instruments to be used as collateral should they require additional funding during the day. these instruments have to be in electronic form, that is immobilised at either the central depository ( cd ) or in the financial instrument register ( fir ) of the reserve bank. should a bank not have sufficient funds in its settlement account to carry out a fund - transfer request, the system will automatically determine whether the bank has any financial instruments available to be pledged as collateral for a reserve bank loan. if this is the case, the system will automatically raise a loan of the required amount against this collateral and transfer the funds necessary to process the fund - transfer instruction from the bank β s loan account ( or marginal lending facility ) into its settlement account. the samos system will now be able to effect the transfer of funds to the receiving bank | 1 |
to take your questions. | green - the unemployment rate ramps up quickly, shortly after the easing cycle began. in both these cases, the economy weakened rapidly. 3 / 6 bis - central bankers'speeches in the easing cycle that began in january 2001, moderating growth over the second half of 2000 gave way abruptly to sluggish growth around the end of the year. economic weakness spread and intensified over the first half of 2001 and - as shown by the blue line - a year after the easing cycle began, the unemployment rate had increased just short of 2 percentage points. in the easing cycle that began in september 2007, the macroeconomic data were not showing much weakening at the time of the cycle's first couple of rate cuts, although financial markets were exhibiting heightened and broad - based volatility and short - term funding markets were significantly impaired. it was only in december 2007 that incoming data started to show more significant spillovers of the housing downturn to other parts of the economy, while several financial firms also began to report largerthan - expected losses. as the green line in the chart shows, the unemployment rate was around 4 - 1 / 2 percent at the start of the 2007 β 08 easing cycle - having remained broadly stable around that level in 2006 - but then rapidly rose to 6 percent within a year of the first easing. my motivation for discussing these two episodes is to highlight how quickly economic activity can weaken. another reason why policymakers need to watch all available information and be nimble in their decisionmaking is that developments concerning inflation can likewise change rapidly. this was highlighted recently by russia's invasion of ukraine in march 2022. the invasion compounded the effects of post - pandemic supply constraints on inflation. in addition, we always need to keep in mind the danger of easing too much in response to improvements in the inflation picture. excessive easing can lead to a stalling or reversal in progress in restoring price stability. former fed chair paul volcker stressed this danger in a 1981 speech, when he pointed to 1967 as a year when monetary policy eased in response to concerns about slowing economic growth and reduced inflation concerns, yet inflation subsequently turned back up. finally, another observation from reviewing past episodes is that careful easing in the july 1995 easing cycle allowed the fomc to assess incoming data and other information to make sure that inflation was under control. as i noted earlier, the july 1995 easing cycle is associated with the so - called perfect soft landing. in this particular easing cycle, the fomc | 0.5 |
andriy pyshnyy : national bank of ukraine press briefing - monetary policy decisions speech by mr andriy pyshnyy, governor of the national bank of ukraine, at a press briefing on monetary policy decisions, kyiv, 14 march 2024. * * * dear colleagues, the board of the national bank of ukraine has decided to cut the key policy rate to 14. 5 % effective 15 march 2024. a further decline in inflation, sustained stable fx market conditions, and positive developments in the prospects to receive external assistance lay ground for an earlier resumption of the easing cycle of interest rate policy. at the start of 2024, inflation slowed more rapidly than expected by the nbu in february, inflation decelerated to 4. 3 % yoy. among other things, this was facilitated by higher supply of some food products and effects from last year's strong harvests. the reorientation of some producers to the domestic market also had an impact on food prices. in addition, the moratorium on raising some utility prices continued to restrain inflation. core inflation decelerated as well, to 4. 5 % yoy. stable fx market conditions β among other things, owing to the nbu's monetary policy and currency supervision measures β improved inflation and exchange rate expectations across the majority of respondent groups. this reined in underlying price pressures. the official and cash exchange rates became almost equal, and the hryvnia exchange rate fluctuated moderately in both directions, which was in line with the managed exchange rate flexibility. since the previous monetary decision taken in january, market rates on hryvnia instruments have not changed much. yields on bank deposits and domestic government debt securities continued to exceed inflation expectations of businesses and households. together with the controlled situation on the fx market, this supported interest in domestic currency savings. in particular, ukrainians'holdings of domestic government debt securities increased, and retail deposits placed for three months and longer showed steady growth. inflation will remain moderate, in particular thanks to the nbu's consistent monetary policy the nbu estimates inflation will remain within the target range of 5 % Β± 1 pp in the coming months and will accelerate only moderately in h2. a gradual increase in incomes of ukrainians and higher business costs during the war will fuel the inflationary pressure. at the same time, some utility tariffs being frozen and the nbu's monetary policy aimed at supporting the attractiveness of hryvnia | yakiv smolii : opening speech " central bank communications : from mystery to transparency " opening speech by mr yakiv smolii, governor of the national bank of ukraine, at the fourth annual research conference " central bank communications : from mystery to transparency ", hosted by the national bank of ukraine in collaboration with the national bank of poland, kyiv, 23 may 2019. * * * dear participants, i take tremendous pleasure in opening the fourth annual research conference, which the national bank of ukraine is hosting in collaboration with narodowy bank polski. representatives of the central banking community from over 30 countries are gathered here today. that includes europe, north america, latin america, asia, and africa. i am glad to see more international participants this year than in the past years. we are all different. we have different economic models. we face different problems and have different ways of resolving them : advanced economies are busy fixing the problem of negative interest rates and their normalization. emerging markets are worried about a potential capital outflow affecting their currencies. exporter countries are concerned that the global economy is cooling off. importer countries are keeping a close eye on commodity prices. but what brings us all together is the need to answer one question : how to make ourselves heard in a world overwhelmed with information? what is more, how are independent central banks supposed to survive in a world of post - truth, where emotions draw more attention than facts and where populism spreads like a virus? gone are the days when central banks could afford to be closed technocratic institutions that spoke in numbers and vague terms. in this day and age, central banking is, first and foremost, about transparency, openness, and accountability. in the years to come, central banks will have to be client - oriented and capable of maintaining direct dialogue with the public. that is why not only central bankers have gathered in kyiv today. among those present here today are journalists, analysts, financial market players, academicians, government officials, and representatives of international institutions. all of them are clients of central banks. last year, we developed and made public the first - ever medium - term strategy of the national bank of ukraine. to us, this is a milestone document since it identifies seven strategic goals that the nbu as an institution will have to meet in the next few years. thus, the medium - term strategy gives the public a simple outline of what the nbu expects to achieve. however, | 0.5 |
in the second quarter, leaving it at 5. 2 percent in june. this revision suggests that household resources for future consumption are actually in good shape, although data and anecdotal evidence suggests lower - income groups are struggling. these revisions suggest that the economy is much stronger than previously thought, with little indication of a major slowdown in economic activity. that outlook is supported by consumer spending that has been and continues to be strong. though the growth in personal consumption expenditures ( pce ) has moderated since the second half of 2023, it has continued at an average pace of close to 2. 5 percent so far this year. also, my business contacts believe that there is considerable pent - up demand for durable goods, home improvements, and other big - ticket items, demand that built up due to high interest rates for credit cards and home equity loans. 1 / 6 bis - central bankers'speeches now that rates have started to come down and are expected to come down more, consumers will be eager to make those purchases. for business spending, purchasing managers for manufacturers describe ongoing weakness in that sector, but those for the large majority of businesses outside of manufacturing continue to report a solid expansion of activity. now let's talk about the labor market. only a couple months ago, it appeared that the labor market was cooling too quickly. low numbers for job creation and a jump in the unemployment rate from 4. 1 percent in june to 4. 3 percent in july raised risks that the labor market was deteriorating. to remind you of how bad the markets viewed the july data, some fed watchers were calling for an emergency fomc meeting to discuss a rate cut. while the unemployment rate ticked down in august, job growth was once again well below expectations. many were arguing that the labor market was on the verge of a serious deterioration and that the fed was behind the curve even after a 50 basis point cut in the policy rate at the september fomc meeting. then we got the september employment report. job creation in september was unexpectedly strong at 254, 000 and the unemployment rate fell back down to 4. 1 percent, which is where it was in june. the report also showed big upward revisions to payroll gains for the previous two months. together, the message was loud and clear : while job creation has moderated and the unemployment rate has risen over the past year, the labor market remains quite healthy. along with other new data on the labor market, the evidence is that | aspect of the budget and its economic impact. the unified budget deficit, projected forward a certain number of years, is an important measure that is already included in the congressional budgeting process. however, the unified budget deficit does not fully capture the fiscal situation and its effect on the economy, for at least two reasons. cbo ( 2005 ), the long - term budget outlook, p. 3. i discussed this issue in ben s. bernanke ( 2006 ), " the coming demographic transition : will we treat future generations fairly? ", speech delivered before the washington economic club, washington, october 4, www. federalreserve. gov / boarddocs / speeches / 2006 / 20061004 / default. htm. first, the budget deficit by itself does not measure the quantity of resources that the government is taking from the private sector. an economy in which the government budget is balanced but in which government spending equals 20 percent of gdp is very different from one in which the government's budget is balanced but its spending is 40 percent of gdp, as the latter economy has both higher tax rates and a greater role for the government. monitoring current and prospective levels of total government outlays relative to gdp or a similar indicator would help the congress ensure that the overall size of the government relative to the economy is consistent with members'views and preferences. second, the annual budget deficit reflects only near - term financing needs and does not capture longterm fiscal imbalances. as the most difficult long - term budgetary issues are associated with the growth of entitlement spending, a comprehensive approach to budgeting would include close attention to measures of the long - term solvency of entitlement programs, such as long - horizon present values of unfunded liabilities for social security and medicare. to summarize, because of demographic changes and rising medical costs, federal expenditures for entitlement programs are projected to rise sharply over the next few decades. dealing with the resulting fiscal strains will pose difficult choices for the congress, the administration, and the american people. however, if early and meaningful action is not taken, the u. s. economy could be seriously weakened, with future generations bearing much of the cost. the decisions the congress will face will not be easy or simple, but the benefits of placing the budget on a path that is both sustainable and meets the nation's long - run needs would be substantial. thank you again for allowing me to comment on | 0.5 |
central bank could pursue price stability unconstrained by fiscal considerations. we did this by giving full independence to the central bank, while constraining fiscal policies through the rules of the stability and growth pact, and now of the fiscal compact. one can debate the details of this framework, but on its own terms it succeeded : in no cases have fiscal policies caused the central bank to lose its price stability focus. take the example of the ecb β s recent decision to extend its asset purchase programme. this has been taken in full independence to achieve our medium - term price stability mandate. and in our decision, we have taken into account the specificities of the euro area, meaning that we operate in an environment of decentralised national fiscal authorities, and the ecb has no mandate to engage in large scale pooling of fiscal risks. but we have also learned from the crisis that policy interdependence has different dimensions. there are more subtle interactions between policies than our framework initially acknowledged. and these involve not just monetary and fiscal policies but financial and structural policies as well. what is at issue is not the classic idea about one policy causing another to lose focus on its mandate. it is ex post coordination failure, where some policies miss their mandate, causing others to do more precisely to be faithful to their own β what one might call β weak dominance β. for example, if financial supervisors do not encourage a fast and efficient clean - up of bank balance sheets, central banks β interest rate cuts are less likely to be passed on to the classic reference is sargent, t., and n. wallace ( 1981 ), β some unpleasant monetarist arithmetic β, federal reserve bank of minneapolis quarterly review, vol. 5. see also the discussion in leeper, e. ( 1991 ), β equilibria under β active β and β passive β monetary and fiscal policies β, journal of monetary economics 27, p. 129 β 147. bis central bankers β speeches entrepreneurs. and this is exactly what we saw in the euro area until the single supervisory mechanism was decided. and if at the same time governments do not make it easier to open a new business, those entrepreneurs are less likely to ask for a loan and take advantage of those low financing costs. and this is also what we have seen. in short, monetary policy becomes more effective in impacting the real economy if other policies act in a supportive way ; and if they do not, it has less impact and expansion | ##p over the current quarter to continue to be conducted at a significantly higher pace than during the first months of the year. we will purchase flexibly according to market conditions and with a view to preventing a tightening of financing conditions that is inconsistent with countering the downward impact of the pandemic on the projected path of inflation. in addition, the flexibility of purchases over time, across asset classes and among jurisdictions will continue to support the smooth transmission of monetary policy. if favourable financing conditions can be maintained with asset purchase flows that do not exhaust the envelope over the net purchase horizon of the pepp, the envelope need not be used in full. equally, the envelope can be recalibrated if required to maintain favourable financing conditions to help counter the negative pandemic shock to the path of inflation. we will continue to reinvest the principal payments from maturing securities purchased under the pepp until at least the end of 2023. in any case, the future roll - off of the pepp portfolio will be managed to avoid interference with the appropriate monetary policy stance. net purchases under our asset purchase programme ( app ) will continue at a monthly pace of 1 / 4 bis central bankers'speeches β¬20 billion. we continue to expect monthly net asset purchases under the app to run for as long as necessary to reinforce the accommodative impact of our policy rates, and to end shortly before we start raising the key ecb interest rates. we also intend to continue reinvesting, in full, the principal payments from maturing securities purchased under the app for an extended period of time past the date when we start raising the key ecb interest rates, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation. finally, we will continue to provide ample liquidity through our refinancing operations. in particular, the latest operation in the third series of targeted longer - term refinancing operations ( tltro iii ) has registered a high take - up of funds. the funding obtained through tltro iii plays a crucial role in supporting bank lending to firms and households. these measures help to preserve favourable financing conditions for all sectors of the economy and thereby underpin economic activity and safeguard medium - term price stability. we will also continue to monitor developments in the exchange rate with regard to their possible implications for the medium - term inflation outlook. we stand ready to adjust all of our instruments, as appropriate, to ensure | 0.5 |
jens weidmann : banking supervision and regulation β what action does the bundesbank consider necessary? speech by dr jens weidmann, president of the deutsche bundesbank, at the club of hamburg - based economic journalists ( club hamburger wirtschaftsjournalisten ), hamburg, 30 august 2013. * 1. * * introduction mr nicolai ladies and gentlemen i β m delighted to have the opportunity to speak to you today at the club of hamburg - based economic journalists. of course, i can hardly say that i don β t have much contact with economic journalists. but it β s unusual for me to have the chance to discuss current issues with so many members of the media at once. the contact between central bankers and the press is so close because we need you, the economic journalists, to help the public understand our decisions and actions. despite our best efforts, our publications simply do not reach the same number of people as your media. but it is incredibly important for the public to understand our decisions so that they have confidence in our work. and this confidence is vital to maintaining a stable currency. after all, monetary policy mainly works by influencing expectations β the current issue of β forward guidance β being a case in point. yet the public have to be confident not just in a central bank β s monetary policy decisions but also in its role in payments or banking supervision and regulation. there are no half measures : either a central bank has the public β s trust or it doesn β t. and bearing in mind the old adage that it takes years to build up a good reputation and only minutes to ruin it, it β s easy to see why we central bankers β especially those in europe β are focusing so intensely on banking supervision and regulation at the moment. today, i β d like to give you a brief overview of the state of play in banking supervision and regulation and the steps that still need to be taken. 2. year five of the crisis β where are we up to? the financial and sovereign debt crisis has exposed substantial flaws in the financial system, which various reform projects are now seeking to address. many banks proved unable to withstand losses on their assets without outside help and had to be bailed out by taxpayers. this shook the foundations of some countries β public finances, too. some european countries became less and less solvent, worsening the banks β economic woes, as they had to take write - downs on their government bond holdings. the crisis therefore revealed | its target, the more likely it is that its credibility will be called into question. against this background, the ecb governing council was without a doubt confronted with a difficult situation. as you are aware, the bundesbank takes a sceptical view of the government bond purchases. after all, the low level of inflation in the euro area is primarily the result of the drop in energy prices. lower energy prices can only be expected to dampen inflation rates temporarily. they are also clearly boosting growth in the euro area because its member states are net importers of oil on balance. the risk of a deflationary spiral driven by falling prices and wages, which the bundesbank and other institutions already considered to be low even before the start of the purchase programme, is now even lower. however, the risks associated with the purchase programme and those which result from the increasing fusion of the boundaries between monetary and fiscal policy, together with potential risks to financial stability that could result from a very loose monetary policy are, in our view, higher. this could result in the urgently needed consolidation of public finances in the crisis countries bis central bankers β speeches being put on the back burner. the associated danger of monetary policymakers being pressured into maintaining the expansionary course for longer than necessary should not be underestimated. 2. cash cycle and recycling ladies and gentlemen you can see that monetary policy in the euro area is in somewhat of a predicament. against this backdrop, the bundesbank β s cash department also has to address the subject of β crises and crisis prevention β. for us, it is important that we are able to react to external shocks independently. to do so, we need an infrastructure and a level of involvement in the cash cycle which gives us the necessary degree of flexibility to respond accordingly. that is why we do not promote an unlimited amount of cash recycling outside of the bundesbank. rather, the bundesbank always ensures that it assumes an adequate level of involvement in the cash cycle. the processing of 15 billion banknotes per year, as is formulated in our strategy, and the corresponding branch network, which will comprise a total of 31 branches in future in line with a decision by the executive board, are indispensable in order to ensure a functioning provision in the event of crises and emergencies. however, the cash cycle not only faces challenges from external shocks. the creation of the eurosystem alone has inevitably led to the commingling of different cultures | 0.5 |
e - money distribution network and the availability of online cash - in facilities in the country. however, the journey remains long and challenging. if we look at the current statistics, around 33 % of the maldivian adult population still do not hold a bank account. even though the level of penetration in the formal banking sector is relatively high in the country, providing easier access to finance and acquiring payment services in most of the islands remain as main challenges in the country. looking at payment methods, cheques are still the dominant mode of making interbank transactions although the volume of transactions carried out through rtgs and ach have increased over the past two years. among electronic payments, card payment is the most 1 / 3 bis central bankers'speeches common payment method in the greater male β area and the usage of mobile payment is still not very common across the country. for example, if we look at how pension and social benefits payments are made, these payments are deposited to a bank account wherein around 96 % of the beneficiaries hold bank accounts at one particular bank. and this bank makes regular trips to islands to facilitate account holders to withdraw cash. this is mainly because of the gaps in the financial infrastructure and inefficiencies in the banking system. some of them include ; unavailability of a common platform to connect banks and mobile service providers lack of an efficient payment system infrastructure lack of a comprehensive legal framework to support the payment infrastructure the low level of automation in the banking sector ; for instance, there is no proper it setup in some of the banks and a lot of payments are still processed manually ladies and gentlemen, in spite of these hurdles, we do have a very ambitious plan to upgrade and modernize the national payment system in our country. promoting financial inclusion has, and will always be, a key priority of the mma in its function of fostering the development of the financial sector. therefore, one of the foremost priorities in the mma β s strategic plan for 2018 β 2022 is to develop a safe and robust payment infrastructure. because we understand that if we were to embrace the promise of fintech and foster the benefits of these innovations, we need to invest in the supporting infrastructure. well! that is just one key component. we also need to strengthen institutional capacity by investing in human resources as it is a key ingredient in catalyzing benefits from the much needed local fintech solutions for a country like the maldives since the financial landscape of the maldives is unique and differs from | me for the conference. i would also like to take this opportunity to welcome the asian bankers association and to thank them for choosing the maldives to host the general meeting and conference. i β m sure that we are in for a highly informative day, full of fruitful discussions and presentations. i wish the best to all the speakers! welcome and thank you once again. 3 / 3 bis central bankers'speeches | 1 |
central bank of barbados tom adams financial centre, spry street, bridgetown p. o. box 1016 telephone : ( 246 ) 436 - 6870 : fax. ( 246 ) 436 - 7836 e - mail address : info @ centralbank. org. bb website : www. centralbank. org. bb remarks by mr. cleviston haynes governor, central bank of barbados at β debt exchange β risks and opportunities : leveraging the jamaican experience β courtney blackman grande salle thursday, november 15, 2018 on behalf of the management and staff of the central bank, i welcome everyone to this workshop, which is geared towards sharing insights on the functioning of the money and capital markets in the aftermath of the restructuring of barbados β domestic debt. i take this opportunity to thank ncb capital markets barbados limited for its willingness to share with us their experience and knowledge gained from the jamaica debt restructuring exercise in 2013. on june 1, 2018, the newly - elected administration announced the unprecedented decision that barbados had decided to suspend the servicing of commercial foreign debt payments and restructure both domestic and external debt. the purpose was to limit foreign reserves outflows, while securing meaningful and gradual debt reduction, thereby reducing financing needs and restoring debt sustainability. the subsequent launch of a comprehensive domestic debt restructuring exercise on september 7 2018, as a critical component of the barbados economic recovery transformation ( bert ) programme, achieved near unanimous acceptance of the debt exchange proposals, with 97 % participation by creditors. the terms of the new instruments involve some sacrifice by all bondholders, as government seeks to balance the fiscal imperatives, including anchoring the bert programme through a reduction in the debt - to - gdp ratio to 60 % by 2033, against the need to preserve financial stability and protect the long - term interests of small bondholders. the restructuring comes in the intermediate aftermath of the adoption of the new accounting standard ifrs9. this will have implications for how financial institutions, regulators and auditors assess balance sheets going forward. from a capital market perspective, the fundamental question is how will the domestic capital market behave? will activity decline and, if so, for how long? will investors be predisposed to some instruments over others? these questions are relevant given the size and comprehensive nature of the restructuring and the limited availability of alternative investment instruments. at the same time, new instruments and institutional arrangements are likely to influence the functioning of the market. the new debt instruments are markedly different from those that existed before | . the new coupons are lower and maturities are longer, with limited issuance of short - term treasury bills. in addition, several of the new instruments will be redeemed in tranches rather than as bullets, enabling a gradual reduction in the debt stock. an added feature of some of the new securities structures is a natural disaster clause, which takes account of our nation β s vulnerability to natural disasters by affording government the option to defer debt service payments, on the occurrence of a catastrophic weather event. apart from the passage of the debt holder ( approval of debt restructuring ) act 2018, which gives effect to the debt restructuring, there have been consequential amendments to the existing body of legislation governing public debt issuances, namely the local loans, treasury bills and tax certificates and the savings bonds acts. in addition, parliament also passed the dematerialisation of government securities act 2018 to provide for the issuance of statements rather than physical certificates for the new instruments. this change to the issue format, as well as in the nature of the securities, has resulted in the need for the bank to alter its pre - existing software to facilitate ease of issue of statements. the process has taken somewhat longer than originally envisaged, but our staff has been working assiduously with our software providers to manage this transition in an effort to enable the timely issuance of the new statements. i have been advised that, pending any last minute technical glitches, the process for issuing statements in the new format should begin today. an important benefit of the issuance of securities in this book - entry format is the resultant settlement efficiency that can be facilitated. currently, the trading of government securities on the secondary capital market is characterised as thin and one impediment to trading activity is the length of time it takes for securities β transfers, with respect to the registration of ownership. with securities now being issued in a dematerialised, book - entry format, it is envisioned that secondary market activity will be executed more timely and efficiently, compared to what was feasible with physical certificates. the central bank is planning to introduce a web - based interface between its bond registry, the brokers and the barbados stock exchange, whereby brokers will have read - only access to verify the holdings of investors seeking to divest their securities. this will be supported by a messaging facility with the central bank to ensure that the transfer process is effectively completed. at the outset, it is unlikely that there | 1 |
heritage. due to the courage and sacrifices of those who preceded us, we now reap the benefits of a prosperous economy and a healthy currency. our gratitude also extends to the authorities and to the swiss people. we are appreciative of the confidence placed in us by the federal council and by parliament. in guaranteeing our independence, the federal constitution gives us the means to act entirely in the interests of monetary stability. the political authorities can count on us using our freedom of action solely in the interests of fulfilling the mandates with which we are entrusted by the legislator. we are also aware that, despite our efforts to communicate our decisions, the general public often finds them difficult to understand. that is why we truly value the confidence that the public places in us. it helps to sustain us when carrying out the mandate with which we are entrusted under art. 99 of the federal constitution, that of conducting a monetary policy that serves the interests of the country as a whole. finally, i would also like to thank you, the shareholders of the swiss national bank. as representatives of cantons, cantonal banks, collective bodies or swiss public law institutions, or as individual shareholders, you have faithfully supported the swiss national bank since its foundation in 1907. you have remained at its side throughout all the ups and downs of its history and we are grateful for your support. your presence is the guarantee of our independence, an essential factor in the success of our efforts to preserve the monetary stability of our country. | via the socalled'zweiter bildungsweg'and began studying economics at the university of regensburg. after only two years there, markus moved to the us, where he earned a master's degree in economics from vanderbilt university. a few years later, he completed his phd at the london school of economics. markus was then appointed assistant professor at princeton university. in 2006, he was promoted to full professor. 1 / 3 bis - central bankers'speeches much like a carpenter spotting a leak in the roof, markus has a keen sense of where additional research is most needed. whenever economists lack good models for analysing current developments, markus tries to close these gaps. a defining event early in his career was the dot - com bubble. in the years before the bubble burst in 2001, the stock prices of many technology companies reached levels that were no longer connected to fundamentals. even more puzzling was the fact that many investors who bought these stocks probably knew they were overpriced. markus showed in a paper co - authored with stefan nagel that us hedge funds β which are generally considered to be well - informed β invested heavily in technology stocks. at the time, economists struggled to explain how such price bubbles could form and why even sophisticated investors participate. together with dilip abreu, markus developed a model to explain this phenomenon. the key insight is that even if many investors individually know there is a bubble, no one knows for sure how many others know about this bubble and when they will sell the stock. it can therefore be perfectly rational for informed investors to ride the bubble while it lasts, and then try to sell their stock before others do. the macroeconomic effects of the dot - com bubble were limited compared with those of the global financial crisis of 2007 / 08. economists were faced with a difficult question : how could losses in a particular segment of the us mortgage market trigger the largest global economic crisis since the great depression? the standard macroeconomic models of the time were not suitable for answering this question, since they largely abstracted from the role of the financial sector. here too, markus took on the challenge of bridging the gap between theory and reality. together with yuliy sannikov, he developed a macroeconomic model with a financial sector that has since become standard in the literature. in their model, the resilience of the financial system is severely impaired when it operates with little equity. in such cases, even modest losses | 0.5 |
. how the imf and the central banks provide forward guidance will be key to sustaining global economic growth while maintaining financial stability. 13. i have highlighted a few concerns that have caused me to introspect considerably on the future of the global monetary and financial system, especially as we confront these challenges on a day - to - day basis at the rbi. a global search for effective solutions is underway. this quest must be armed with the lessons of history and experience, and in this context, i commend this book for your reading. thank you. 1 carney, mark ( 2019 ), β pull, push, pipes : sustainable capital flows for a new world order β, speech at the 3 / 4 bis central bankers'speeches institute of international finance spring membership meeting, tokyo, june 6 4 / 4 bis central bankers'speeches | oversight over individual countries β exchange rate policies. the fund β s mandate was updated in 2007 to clarify that exchange rate manipulation was associated with β fundamental misalignment β that results in external instability. fears of labelling among the membership led to several reviews culminating in 2012 when an integrated surveillance decision was adopted, which emphasised the connection between domestic and external stability as well as global risks and spillovers. 6. in pursuit of this mandate, the fund, in its article iv consultations every year, undertakes indepth assessment of members β economic developments and policies, including and especially exchange rate policies. this is backed by rigorous technical evaluation through a suite of models. the consultations report is published and any case of exchange rate misalignment and / or multiple currency practices is candidly brought to the notice of national authorities for correction. this is mandatory, as the articles of agreement constitute an international treaty ; and in india, they are underpinned by parliamentary legislation in the form of the international monetary fund and bank act, 1945. given this multilateral framework, the overlay of bilateral labelling that i talked about earlier raises questions, including on the role of the fund itself. 7. admittedly, like any policy - making institution, the fund β s policies and practices will not always be the right or the best in terms of their efficacy. as its own independent evaluation office ( ieo ) pointed out in 2005, a major reason for the fund failing to meet its core responsibility of exchange rate surveillance was a strong sense among some member countries of a lack of even - handedness in surveillance β that somehow, it was tolerant of currency depreciations but not of countries resisting appreciation. this criticism by the ieo persists in its evaluation update of 2017. notwithstanding such criticisms, the imf is open to learning and deservedly remains a well - respected institution. we, therefore, look forward to engaging with the fund on its april 2019 proposal for a more integrated framework encompassing the interaction of monetary, exchange rate, macro - prudential and capital flow management policies. i strongly believe that a multilateral framework under the aegis of the imf is the most appropriate approach to deal with these issues. 8. it is important to appreciate the context in which emes operate so as to foster a shared understanding of their challenges. first, the nature of shocks which these countries face has changed from balance of payments strains to full - blown financial crises. second, in the | 1 |
mugur isrescu : 30 years of partnership between the world bank group and romania speech by mr mugur isrescu, governor of the national bank of romania, at the 30 years of partnership between the world bank group and romania event, bucharest, 7 november 2022. * * * vice president bjerde, directors vincelette, akhalkatsi and karadsheh, prime minister of romania, vice - chairman of the senate, vice - chairman of the chamber of deputies, presidential adviser, your excellencies, ladies and gentlemen, next month we will celebrate the 50th anniversary of the accession of romania to the world bank and the international monetary fund ( imf ) in 1972. romania was the first among the countries of the former communist bloc that joined the international financial institutions. unfortunately, during the 1980s the authorities in bucharest had weakened the relationship between romania and these two institutions, almost close to severing all ties. the normalization of the relationship, after the fall of the communist regime, led to a new beginning. the opening of the world bank's office in october 1991 β the moment we are celebrating today β signifies a milestone that marked the start of a new historical point of reference in romania's relations with the world bank and our transition towards a market economy. the 1990s were perhaps the most difficult ones. we had benefited from the direct support of the imf and the world bank. i recall that, shortly after my appointment as governor in september 1991, i received, from a world bank expert, the first report regarding the transition from a mono - banking system, common to a centrally planned economy, to the two - tiered banking system ( central banks β commercial banks ) we have in place today. truth be told, if i were to mention all the partners and friends from the world bank, with whom i have worked over the past 30 years, i would exceed my allotted time. the world bank provided support on multiple fronts. this has been highlighted by the previous speakers and i will not repeat what has already been said. however, there is something that i would like to emphasize. the transition from a centralized economy to a market economy entailed not only loans and financing, but also new laws, building new institutions and good practices. access to the world bank knowledge and expertise helped romania to implement the reforms that followed. 1 / 2 bis - central bankers'speeches in this context, i would mention two of the world bank's programs, | ewart s williams : lessons from the financial crisis address by mr ewart s williams, governor of the central bank of trinidad and tobago, at the launch of the ansa euro income fund, port - of - spain, 17 november 2009. * * * i am pleased to participate in this ceremony this evening, not to endorse the merits of any particular product, since obviously ; it is not something that the central bank as regulator could do. instead, i want to commend this initiative which, to me, in this challenging economic environment, represents a vote of confidence in the economy and another step towards the development of the capital market. it is certainly a positive note against the background of the negative hum that has overwhelmed us for the past several months. globally, the negative news has been around for much longer β for more than eighteen months or so, following the financial meltdown that has been attributed to a variety of factors, and the sharp global recession that ensued. even now when there are signs of recovery, we have become so jaded that most projections are now accompanied by a series of caveats in which the downside risks are given equal prominence. now in the us, uk and eurozone there are signs of recovery β green shoots, we are told β but we are advised not to rule out the possibility of a double - dip recession, meaning another likely downturn in 2010, or an l - shaped recession, meaning that we may just face a prolonged period of slow, tepid growth or virtual stagnation. i guess the cautiousness that now engulfs policy makers in the advanced economies is, in part, a reflection of how far they have come : how close we have been to a collapse of the global financial system and how deep the recession has been in several of the advanced countries. i guess that the concerns that now pervade the developed countries also have to do with the recognition of the colossal re - balancing that is taking place in the world β a re - balancing that has meant a shift in the poles of global growth from the us and europe and for a while japan, to the new powers β china and india and the smaller economies in asia along with one or two emerging market countries in latin america, like brazil and chile. the caribbean, including us here in trinidad and tobago, has also had more than its share of bad news. up the islands, tourism is sharply down and with unemployment in the us topping 10 per cent, workers | 0 |
external imbalance, and for achieving the interim and final objective of the monetary policy, remaining prepared to futher undertake additional measures, if necessary. v. in the end, one more information. today, the council of the national bank of the republic of macedonia held its 3rd session this year. among other issues, on this session, the council has adopted the 2008 annual report of the national bank of the republic of macedonia ; the 2008 annual report on managing foreign reserves ; the 2008 internal audit report. all these documents shall be available on our web site in the following days. | in the financial system. financial education is a powerful driver of empowerment of consumers β skills. it empowers them with tools and knowledge on how to manage and make their personal financial decisions and budget. smart financial planning such as the personal budget, savings, investments and retirement can help every household to enjoy better lives while diminishing financial shocks at the same time. financial education can play a key role in getting to these outcomes. the financial education supports not only the individual well - being, but also the financial stability in one economy. referring to the recent financial crisis, consumers that can make informed and sound decisions about financial products and services are helping to promote sounder bis central bankers β speeches economic stability. not only the consumers will gain knowledge through financial education, but more important is that they are assured of fair treatment. consumers need to apply the economic way of thinking while making their important financial decisions. in order to develop important skills, we need to provide them good quality education that will enrich their behavior with critical thinking and decision making skills as well. to provide contextual and conceptual effective financial education, we need to include financial education in the schools curriculums. financially literate consumers can assess risks and make informed decisions about the suitability of financial products to their specific situation. the individual responsibility for financial planning takes on greater importance. consumers need to clearly understand how the system works and what the new products really offer. at the institutional level, in 2011, the national bank of the republic of macedonia launched its own financial education project that has been growing and developing year after year, embracing many different activities mainly focusing on financial education for children and youth. we are trying to build financial capabilities among the population lunching the project that has a goal to raise the awareness for the importance of savings. at the national level, by improving the cooperation between the regulatory authorities, it is vital to ensure that the respective strategies are aligned to achieving the common goals of financial education and financial inclusion. since last year, there have been some efforts for institutional arrangements to bring authorities together in the coordinating body of the regulatory authorities for financial education in macedonia to secure a joint commitment towards clearly defined and measurable financial education and financial inclusion goals. with joint strength, we will establish national co - ordination frameworks, and our main goal is to define the national financial education and financial inclusion strategies. while we focus on financial education initiatives at the national level, equally important is that adequate attention be accorded at the global level. we begin | 0.5 |
has adopted : the ecb considers a market for a given set of financial instruments or services to be fully integrated when all potential market participants in that market ( i ) are subject to a single set of rules when they decide to deal with those financial instruments or services, ( ii ) have equal access to this set of financial instruments or services, and ( iii ) are treated equally when they operate in the market. let me now explain our definition of financial integration in more detail. one can say that a financial system consists of three principal components, namely the financial markets, the related financial infrastructure and the financial institutions. the ecb β s definition of financial integration uses the term β market β in a broad sense, covering all possible exchanges of financial instruments or services, be it on an organised market, such as a stock exchange, or an over - the - counter market created by a financial institution β s supply of a financial instrument or service. furthermore, a financial market can never be fully integrated without the integration of the related market infrastructure, in particular the payment and securities clearing and see the article entitled β the contribution of the ecb and the eurosystem to european financial integration β in the may 2006 issue of the ecb β s monthly bulletin. settlement systems. in this sense, you should also note that the term β rules β as contained in the ecb β s definition is used in a broad sense, and includes features such as laws and regulations, supervisory arrangements, market conventions and self - regulation, and standards and practices related to financial infrastructures. finally, financial integration can also be fostered by financial institutions establishing branches and subsidiaries in other euro area countries or by two institutions merging across borders. the wide coverage of the ecb β s definition of financial integration is attributable to the fact that if only the first condition is fulfilled, i. e. the existence of a single set of rules for a given market, potential participants might still be discriminated against in terms of access to the market. consequently, the ecb β s definition includes a second condition whereby participants should not be discriminated against in their access to a market. the third condition for full financial integration is that once all potential market participants have accessed the market, they should be treated equally in their operations within that market. these latter two conditions in particular should also be seen within the general treaty provision that the eurosystem acts β in accordance with the principle of an open market economy with free competition, | , it is easier for the central bank to support the economy as healthier banks tend to lend more. the worst case, to say it very bluntly, is of a central bank providing liquidity to banks just to buy or carry legacy assets, and the banking sector doesn β t restructure. this was typically the japanese situation in the early 2000s. perhaps paradoxically, a rigorous aqr and stress test helps monetary policy. appropriately treating banks β holdings of sovereign debt according to the risk that they pose to banks β capital makes it unlikely that the banks will use central bank liquidity to excessively increase their exposure to sovereign debt. this is because banks will be wary of the constraints placed on sovereign debt by the stress tests to which they are subject at the same time. therefore, should the procyclical impact of the aqr be significant, then monetary policy would be able to act β without hesitation and being reassured that the side effects of a liquidity injection that we have seen for the 2011 β 2012 operations would be minimised. so how would you assess whether the aqr was procyclical? don β t forget we have our two pillar approach : we analyse the business cycle, but we also look at money and credit. we will see from the second pillar very quickly if the credit situation doesn β t improve. at this stage of the recovery, what we see at the moment is quite normal. the big corporate firms do not have as many constraints as the smes. they have around β¬2trn in excess cash, they can access debt markets. the reluctance to invest comes more from the business confidence side. and if you did act because of the impact of the aqr, what exactly would you do? depending on the situation, the central bank can decide on the most effective way liquidity provision can be provided. there are no restrictions on the way a central bank provides liquidity to the banks via repo, a priori. bis central bankers β speeches you want to reach your price stability objective. at the same time, you want to be sure that when you provide liquidity against adequate collateral, it doesn β t reduce the incentive to restructure the banking sector. and so by having a well - designed comprehensive assessment β like the one we β re preparing now β we are easing the job of the central bank. bis central bankers β speeches | 0.5 |
stanley fischer : past, present, and future challenges for the euro area speech by mr stanley fischer, vice chair of the board of governors of the federal reserve system, at the ecb forum on central banking conference β inflation and unemployment in europe β, sintra, portugal, 21 may 2015. * * * it is an honor and a pleasure to participate in the ecb forum on central banking, and i thank you, president draghi, and other members of the ecb board, for inviting me to take part. 1 although the topic of the conference is inflation and unemployment, i will take another perspective by discussing some of the past, present, and future challenges that have and may in future confront the ecb and the euro area. my theme is taken from jean monnet, who in 1976 wrote : β europe will be forged in crises, and will be the sum of the solutions adopted for those crises. β 2 this quote is discussed in the interesting recent paper by luigi guiso, paola sapienza, and luigi zingales, whose view of monnet β s contention can be deduced from the title of their paper : β monnet β s error? β 3 there are similar quotes from others, among them jacques chirac in 2003 and the former chief economist of the ecb, ottmar issing, in 2010. 4 i first heard a statement to this effect from jean - claude trichet at the 2011 jackson hole conference. 5 an extended 2015 version of the monnet contention would take the form : β the first step on the road to european union was the creation of the coal and steel community in 1951. at the start, we did not have a road map, but we had the goal of ensuring that the countries of europe would never again go to war, and to that end, we had to build an institutional structure that would make another european war impossible. from time to time we encountered obstacles in that process. these obstacles often led to crises, but the crises were overcome, and from each crisis, the prospects for a united, prosperous, and peaceful europe emerged stronger. and that is what will happen this time too. β i am grateful to brian doyle, jane haltmaier, stacey tevlin and paul wood of the federal reserve board for their assistance. the views expressed are my own and not necessarily those of others at the board, on the federal open market committee, or in the federal reserve system. see jean monnet ( | of the economy heavily exposed to international trade. monetary policy has played a key role in achieving these outcomes through deferring liftoff relative to what was expected a little over a year ago. the october 2015 fomc statement indicated that it may be appropriate to raise the target range for the federal funds rate at the next meeting in december, though the outcome will depend on the committee β s assessment of the progress β realized and expected β that has been made toward meeting our goals of maximum employment and price stability. 10 of course, as policymakers, we must always be vigilant to events unfolding differently than we expect, and we must be ready to react accordingly. references board of governors of the federal reserve system ( 2014 ). β minutes of the federal open market committee, june 17 β 18, 2014, β press release, july 9. the sep is an addendum to the fomc minutes. for the june 2014 sep, see board of governors ( 2014 ). the september 2015 sep is available in board of governors ( 2015b ). for the october 2015 fomc statement, see board of governors ( 2015a ). bis central bankers β speeches β β β β ( 2015a ). β federal reserve issues fomc statement, β press release, october 28. β β β β ( 2015b ). β minutes of the federal open market committee, september 16 β 17, 2015, β press release, october 8. bussiere, matthieu, simona delle chiaie, and tuomas a. peltonen ( 2014 ). β exchange rate pass - through in the global economy : the role of emerging market economies, β imf economic review, vol. 62 ( 1 ), pp. 146 β 78. gopinath, gita ( 2015 ). β the international price system, β nber working paper series 21646. cambridge, mass. : national bureau of economic research, october. hofmann, boris, ilhyock shim, and hyun song shin ( forthcoming ). β the risk taking channel of currency appreciation, β bis working paper. loretan, mico ( 2005 ). β indexes of the foreign exchange value of the dollar ( pdf ), β federal reserve bulletin, vol. 91 ( winter ), pp. 1 β 8. yellen, janet l. ( 2015 ). β inflation dynamics and monetary policy, β speech delivered at the philip gamble memorial lecture, | 0.5 |
salvatore rossi : finance for growth β a capital markets union keynote address by mr salvatore rossi, senior deputy governor of the bank of italy, at the rome investment forum 2015 β financing long - term europe β, rome, 11 december 2015. * * * i would like to comment on the proposal for a capital markets union ( cmu ) by raising three questions, and giving some tentative answers to all of them. the first question is : do we actually need a cmu in europe? should it really be a priority in the european policy agenda? my answer is a resounding β yes! β. the question may seem rhetorical, given the tide of apologetic documents, papers, and seminars ( including perhaps this one ) that have been dedicated to the project since its official launch last year. however, i think it β s important to keep in mind the reasons for that β yes β, because hesitations and even open dislike are quite widespread in some countries and sectors. the fact is that the european economies, with the partial exception of the uk, are strongly dependent on banks for their financing needs. too dependent. let me explain why. a wide literature ( i have in mind for example a very recent piece of empirical research by langfield and pagano, 2015 ), shows that economic growth tends to be lower in economies with a bank - based financial structure, particularly at times of falling asset prices, and systemic risk to be higher. a β bank bias β, as l & p dub it, is bad, in any circumstance. but even if we believed, just for the sake of the argument, in the optimality of banking dominance in our financial systems, here comes another hard fact : also as a consequence of the new regulatory and supervisory framework, banks are less and less willing to lend money to risky borrowers such as smes, because of the heavy burden of non - performing loans which is the legacy of the crisis ; because more capital is required against risky assets, and capital is costly. requests for more capital buffers come from all international regulating bodies, both at the global level ( financial stability board, basel committee ) and at the european level ( single supervisory mechanism β ssm ), as a shield against a new, devastating financial crisis. up to now, in europe the effect has been procyclical : notwithstanding the cheap, abundant liquidity supplied by the ecb, banks are reluctant to increase lending to the real economy. the corporate sector, especially in southern | banks β health. it also requires banking and market supervisors to resist the temptation to ring - fence liquidity and capital within national boundaries. this is a classic problem of collective action : uncoordinated national reactions to heightened uncertainty could be collectively lethal to the single market for capital. two sets of actions seem to be key in tackling these concerns at their root : one set to strengthen bank balance sheets and another set of actions to break the self - reinforcing loop between bank and sovereign debt risks and move to truly unified european supervision. to strengthen bank balance sheets, first, adequate capital ratios must be reached in the banking system. the eba capital exercise, with eu banks being expected to reach a core tier 1 capital ratio of 9 % by the end of this month, will be an important milestone. regulators should then make sure that the subsequent transition to the basel iii framework does not result in a weakening of the capital buffers. the heterogeneity of capital ratios must also be reduced. the median core tier 1 capital ratio of large euro area banks is not significantly lower than that of their global counterparts. however, the variation in this ratio across institutions is substantially wider in the euro area, introducing asymmetries in banks β access to funding and funding costs. second, leverage in the euro area banking system must be reduced. the aggregate leverage ( asset - to - equity ) ratio of large euro area banks remains comparatively high by international and historical standards. 17 the adverse feedback loop between banks and sovereigns, in which doubts about the solvency of the sovereigns feed doubts about the solvency of the banks, and vice versa, will be broken more readily by the establishment of a true banking union. see, for example, v. acharya and s. viswanathan, β leverage, moral hazard and liquidity β, journal of finance, vol. 66, no 1, 2011 ; f. allen and d. gale, β financial contagion β, journal of political economy, vol. 108, no. 1, 2000 ; and m. brunnermeier and l. h. pedersen, β market liquidity and funding liquidity β, review of financial studies, vol. 22, no 6, 2009. for more information on the deleveraging process in the euro area banking system, see special feature a, financial stability review, ecb, june 2012. bis central bankers β speeches this should include the creation of a pan - euro | 0 |
##rementally. this is important to ensure orderly adjustments ; avoid β overshooting β or over - reaction among affected parties ; and minimise unintended deleveraging. timely calibration, and where required, uplifting or introduction of other measures are critical in this aspect. the effectiveness of macroprudential measures are inherently difficult to assess. it is therefore extremely important that macroprudential measures are well - supported by effective surveillance systems and capability. this provides the agility for authorities to respond to market reactions which can often be unpredictable. very often, there will be a need to extend or recalibrate the measures to ensure that they remain effective. for example, following the implementation of the ltv ratio limit of 70 % on the third and above outstanding housing loan per individual in november 2010, we observed an increasing growth of housing loans undertaken by non - individual ( registered business ) borrowers, i. e. they used their business entities to buy properties. this was clearly a circumvention of the measures, leading to the introduction of a ltv ratio limit of 60 % on housing loans by nonindividuals in december 2011. we need to actually look at how the market reacts to the measures introduced. it can only be done if we have an effective surveillance framework. fifth, effective communication is crucial 4cs β clarity, concise, consistent and credible β core features of effective communication : i. clarity β market, investors and public typically fear the worst in absence of clear information. ii. concise β β more β is not always effective ; we allow for some β constructive ambiguity β. iii. consistent way of communication across time and different stakeholders would strengthen credibility. bis central bankers β speeches iv. credible β reducing misinformation helps shape and influence expectations. it may not always be possible to engage with affected parties prior to the implementation of some macroprudential policies. for example, there was a spike in the growth of average house prices in the few months leading up to the announcement of the first ltv ratio limit. this could be due to a rush to lock in financing at a higher ltv ratio prior to rumoured timing of implementation of the limit. some developers and banks also used aggressive marketing campaigns ( e. g. β buy before the ltv ratio limit kicks in! β ) before the effective date of the measure. in this case, we opted to impose the measures with immediate effect on the date of announcement | expenditure side ). the message signalled by the international financial markets to south africa in 1996 therefore was to restore macroeconomic equilibrium and to come to live within the means of its own production capacity, or to lift the production potential permanently to a higher level. south africa took on the challenge both ways. the financial policy reaction was : β’ to let the exchange rate depreciate to a level that would satisfy the markets in respect of their expectations of future sustainability. the rand depreciated by 23. 2 per cent from 15 february 1996 up to 31 october 1996 ; β’ to let the outflow of foreign currency payments related to the overall balance of payments deficit drain domestic liquidity from the south african banking sector. in the process, the average daily amount of the money market shortage increased from r4. 9 billion in january 1996 to r10. 6 billion in march 1997 ; β’ to allow interest rates to adjust to underlying conditions and to reflect the shortage of funds that developed in the markets. interest rates indeed already started moving up during the course of 1994 / 95 under the pressure of the increasing domestic demand for loanable funds. the rate on three months bankers β acceptances, for example, rose from 10. 15 per cent at the end of 1993 to 12. 50 per cent at the end of 1994, 14. 60 per cent at the end of 1995 and 17. 00 per cent at the end of 1996. in line with these movements, the reserve bank raised its bank rate in five steps from 12 per cent at the end of 1993 to 17 per cent in november 1996 ; β’ a rise in the rate of inflation became inevitable after the depreciation of the rand in 1996. the authorities nevertheless adopted a restrictive monetary policy stance to ensure that the adjustment in relative prices of tradable and non - tradable goods would not perpetuate into a long - lasting new era of high inflation. the rate of increase in consumer prices rose from 5. 5 per cent over the twelve months up to april 1996, to 9. 9 per cent in april 1997. the government β s response to the other part of the challenge, that is to raise the production capacity of the south african economy permanently to a higher level, was provided with the publication of the macroeconomic strategy for growth, employment and redistribution ( gear ). this economic structural adjustment programme will obviously take a longer time to produce results than the shorter - term measures introduced last year to restore business cycle equilibrium by restricting growth in | 0 |
john a rolle : the importance of financial inclusion in mending social and economic disparities welcome remarks by mr john a rolle, governor of the central bank of the bahamas, at the alliance for financial inclusion ( afi ) convergent meetings of the digital financial services working group and the consumer empowerment and market conduct working group, nassau, 26 march 2019. * * * welcome to the bahamas. we are pleased to host both the digital financial services working group and the consumer empowerment and market conduct working group meeting in the bahamas this week. the central bank of the bahamas joined afi less than one year ago, in order to benefit from a structured approach to promoting financial inclusion goals, and to learn first - hand from countries that are actively pursuing such ideals. the range of countries that make up this alliance illustrate aptly that financial inclusion is intended to mend social and economic disparities that are often obscured in average measures of economic wellbeing and income. the bahamian experience draws this out. on a per capita basis, the bahamas has the third highest gdp in the western hemisphere. our financial sector is highly developed, when considered in terms of the size of the deposit base and outstanding credit of the domestic banking system, relative to gdp ; and in terms of the share of the population that has access to basic banking services. moreover, relative to the size of the population we enjoy the 35th highest density of bank branches in the world and the 15th highest density of automated banking machines in the world. 1 from an identity perspective, members of the population do not have extreme difficulties acquiring birth certificates or primary documentation needed to apply for identity documents. but financial access is very uneven. on many of our rural island communities basic banking services are not available, or only available in very constrained conditions. the rising costs of providing banking through traditional physical channels have further scaled - back this access. also, high concentrations see the imf β s 2018 financial access survey database : data. imf. org /? sk = 388dfa60 β 1d26 β 4ade - b505 - a05a558d9a42. of undocumented immigrants are excluded from access to financial services, even when these services are available in the same spaces for documented persons. equally problematic for countries like the bahamas, there has been a dilution of access from the disproportionate application of global anti - money laundering and counter financing of terrorism standards, on low - risk, retail | private sector. this makes it crucial to restore the treasury β s good credit rating. not only will this pave the way for domestic enterprises to external financing, it will also significantly reduce the likelihood of a fire sale of domestic assets once the capital controls are lifted. the principal task of the economic recovery programme drafted in co - operation with the imf is to restore confidence in the treasury β s ability to meet its foreign currency obligations. how can this be done? first, by practicing sufficient fiscal restraint to convince financial markets that, despite a temporary spike in indebtedness in the wake of the banks β collapse, the treasury will be fully capable of meeting its international obligations ; i. e., that its debt position is sustainable for the long term. second, the treasury has to demonstrate that it has access to sufficient foreign currency reserves to repay, if it comes to the crunch, loans maturing over the next two years. we still are just short of reaching this position, as efforts to achieve it have been delayed for reasons known to all of us. here it is important to bear in mind the common saying that banks, domestic as well as international, are ready to offer you an umbrella on a sunny day, only to demand it back promptly once the rain starts to fall. anyone needing an umbrella when it β s raining has to show that he can get alternative one on demand. loans from the imf and others are our umbrella. in the third place, co - operation with the imf is important not only because of the access to credit contingent on the progress of the programme. the fund serves as a sort of validation agency for the economic policies of countries that find themselves in economic difficulties. its stamp of approval is a precondition for obtaining credit not only from other countries, but also from foreign banks and investors. in many instances it is a premise for foreign investment in domestic industry. this view has been clearly expressed in interviews with numerous foreign bankers, who are prepared to take iceland to the global credit market as soon as the uncertainty delaying the progress of the programme is eliminated. many find the medicine prescribed by imf bitter, and have requested a more palatable economic strategy without the fund β s involvement. of course, it would be desirable to use automatic fiscal stabilisers or discretionary fiscal policy to mitigate the economic cycle. countercyclical fiscal policy, however, is a privilege reserved for countries whose credit rating has not been tarnished. iceland does not enjoy | 0 |
on the quantitative aspects of validation. data issues are another critical challenge facing banks and involve both quality and quantity aspects. on the quality side, it appears that the awareness of data integrity generally remains low on the management agenda. some banks may still have the misconception that data management only requires an it system to keep the numbers, and does not require senior management attention. in fact senior management need to take the lead in improving data quality. apart from making available the necessary it infrastructure and resources, this includes establishing an appropriate data management program as well as policies, standards and control mechanisms, and from time to time, emphasising the importance of data quality to the relevant personnel. on the quantity side, since the notions of internal rating systems and the quantification of credit risks remain relatively new to the industry, some banks may have kept the relevant default and loss data only for recent years. insufficient data consequently becomes an obstacle to the implementation of the irb approach by banks, in particular that the data collected so far may not be long enough to cover a complete business cycle. as such, the stability of an irb system under different economic conditions cannot be meaningfully evaluated. the problem is especially consequential in asia, as economic fluctuations in the region have tended to be faster and greater in magnitude than those in more mature banking markets. the third challenge banks in asia may face in adopting the irb approach is the paucity of internal resources necessary for rating system development and validation. many banks have relied, or intend to rely, on external parties such as consulting firms and model vendors. employing third - party services can be beneficial in respect of areas like professional expertise, knowledge transfer, the utilisation of a more comprehensive data set and assuring independence in the validation process. however, over - reliance on external parties does carry certain risks. one example is that banks may not have the internal expertise to assess the quality of the rating systems delivered by model vendors. and it is not just the banks that face resource issues, it is the supervisors as well. in common with supervisors in the more developed markets, we face the challenge of limited internal resources and expertise with which to implement the irb approach. moreover, banks and supervisors are often competing between themselves for the relevant expertise. in addition, the support to supervisors in asia from external parties, such as academia, vendors, consulting firms and rating agencies, is more limited than in the developed markets. finally, both banks and supervisors face a very | susan schmidt bies : a supervisor β s perspective on enterprise risk management remarks by ms susan schmidt bies, member of the board of governors of the us federal reserve system, at the financial women β s association washington briefing, washington dc, 12 june 2006. * * * thank you for the invitation to speak here today. i am impressed by the range of interesting subjects covered in your program, and i hope that my remarks on enterprise risk management will be informative as well. today i will look at some recent cases in which we believe bankers and supervisors have learned some key lessons about enterprise risk management, or erm. these lessons demonstrate how good risk management increases business efficiency and profitability. naturally, what we've learned from the banking industry can be more broadly applied to other industries and sectors. indeed, one could argue that erm can improve management of many different types of entities, including government agencies and nonprofit organizations. but before i start discussing particular examples, i want to take a step back and give you my thoughts on erm generally. general thoughts on enterprise risk management the financial services industry continues to evolve to meet the challenges posed by emerging technologies and business processes, new financial instruments, the growing scale and scope of financial institutions, and changing regulatory frameworks. the federal reserve, as the supervisor of state member banks and bank and financial holding companies, has been working with other regulators and financial institutions to improve the effectiveness and relevance of regulation and supervision in this changing environment. the federal reserve has long emphasized the need for appropriate and strong internal controls in institutions we supervise, and we have taken a continuousimprovement approach to our risk - focused examinations. for many years, enterprise risk management across multiple organizational units within an entity has received increased scrutiny. in some cases, firms may be practicing good risk management on an exposure - by - exposure basis, but they may not be paying close enough attention to aggregation of exposures across the entire organization. rapid growth can place considerable pressure on, among other areas, an organization's management information systems, change - management controls, strategic planning, credit concentrations, and asset / liability management. an organization must also understand how its various business components, some of which can be quite sophisticated and complex, dynamically interact. a successful erm process can help an organization to meet many of these challenges. of course, enterprise risk management is a fairly broad topic that can mean different things to different people. for our purposes here today, i will define er | 0 |
sabine lautenschlager : banks business models - keeping pace? statement by ms sabine lautenschlager, member of the executive board of the european central bank and vice - chair of the supervisory board of the single supervisory mechanism, at the seventeenth annual conference on policy challenges for the financial sector, washington dc, 1 june 2017. * * * ladies and gentlemen, there are 19 countries in the euro area. they all share one currency, but differ in many other respects. their economic structures, tax codes and legal frameworks differ. their macroeconomic characteristics, such as growth, inflation and employment, also differ. this mix of economies requires a mix of banks. and in the euro area, banks are indeed varied. there are large banks that operate on the global stage and small ones that focus on domestic business ; there are banks which are profitable and there are banks which have not earned their cost of capital for several years now. all these banks face similar challenges. first, they have to deal with geopolitical risks, that is, with higher uncertainty. second, they have to deal with a challenging macroeconomic environment ; and that includes low interest rates. hence, banks have to adjust. they have to become more costefficient and diversify their revenues. third, they have to deal with overcapacities in the european banking market ; many banks compete for the same customers. fourth, they have to deal with technological change, such as digitalisation. that change attracts new competitors to the market, the famous fintechs. this makes the market even more competitive. and fifth, they have to deal with tougher rules. that includes higher capital requirements, more reporting and higher demands with regard to the scope and quality of risk management β just think of the bcbs 239. so banks are important, and they face challenges. that β s why we take a very close look at how banks in the euro area make profits and how their business models work. that is a core element of our annual supervisory review and evaluation process, or srep as we call it. when we assess business models, we combine two things : an analysis of hard data and the judgement of experienced supervisors. this helps us to be unbiased, holistic and forwardlooking. and we benefit from our european viewpoint, of course. unlike national supervisors, we can compare and benchmark 125 banking groups across the entire euro area. that is a big advantage. altogether, we have | defined nine different categories of business model, ranging from large universal banks and domestic lenders to specialised asset managers. we then place each bank in one of these categories and can thus compare it to its european peers. like all supervisors, we ask one very general question : can a bank generate sufficient returns within a framework of suitable risk appetite and on the basis of a clear and sustainable funding structure? 1 / 3 bis central bankers'speeches for us, a business model is viable if it can generate such returns over the year ahead. and it is sustainable if it can generate such returns over a three - year period and through a full business and economic cycle. the first step we take when we analyse a business model is to map out the general strategy of the bank. we try to understand its main sources of profit and how they might be affected by economic developments. we then refine the map by comparing the bank with its peers across the euro area. as i just mentioned, this is one of the main benefits of european banking supervision. the next step is then to derive an automated score. this score is based on indicators such as the return on assets and the cost - to - income - ratio. and as i already said, we then complement the scoring with expert judgement. in doing so, we take a forward - looking approach. and what we look for are key vulnerabilities. we assess how profits might evolve over time. we analyse the bank β s strategic plan ; we take into account its financial forecasts and assess how it might be affected by internal and external factors. in the light of this assessment, we might adjust the score. the final result then feeds into the srep and guides us when we determine supervisory capital add - ons and other measures. as the ecb is still a young supervisor, we still need to learn more and dig deeper. that β s why, in 2016, we launched a thematic review of banks β profitability drivers at firm level and across business models. that review is still ongoing and will provide some more tools to support us when we analyse business models and monitor profitability. it will strengthen our ability to identify banks with structurally low profits ; and it will examine in depth how banks respond to weak profits β now and in the future. the thematic review will conclude at the end of this year. are we satisfied with the business models of banks in the euro area? are we satisfied with the progress banks have made by learning the lessons | 1 |
the economic expansion in china has now been in progress for a number of years, and together with the recovery in the japanese economy it contributed to high growth in several asian countries last year. growth in the euro zone has been relatively weak, but last year there were signs that economic activity was beginning to improve there, too. at the same time as growth in demand in the world economy has been strong, price pressures have been held back. although oil and other commodities have become significantly more expensive for consumers, the general price increases have been relatively small on the whole. this can probably be partly explained by increasing international competition. the upswing in global economic activity has also characterised developments in the swedish economy, which has grown strongly in recent years, with the exception of a slowdown at the end of 2004 / beginning of 2005. despite the good growth in demand, inflation has been low in sweden. this is largely attributable to import prices excluding oil developing weakly and to cost pressures being held back, partly by the strong productivity growth and low capacity utilisation. the development we envisaged in the february inflation report was that international growth would continue to be good. there were some question marks regarding developments in the united states and in the euro area, where preliminary statistics for the fourth quarter of 2005 were surprisingly weak. our assessment was that this could largely be explained by transient factors and that the upswing could nevertheless continue, although possibly at a slightly slower rate. our assessment for the swedish economy was that domestic demand would be strong over the coming years, with gdp growth peaking in 2006. the forecasts indicated that household consumption would rise and investment would continue to increase, but at a slightly slower rate than last year. we also envisaged continuing strong exports as a result of the good international activity. with regard to the labour market, we could observe an apparent upturn in demand for labour and that there were many indications that employment in terms of both persons in employment and of hours worked would increase further. economic resources were expected to become increasingly strained and the rate of wage increase to become gradually higher. however, we assumed nonetheless that the increase in cost pressures would be relatively moderate as a result of continuing good productivity growth over the coming years. all in all, inflation was expected to rise, although at a modest rate, as a result of dampening effects from the developments in productivity and import prices. our forecast was that underlying inflation would rise gradually and approach the 2 per cent target a couple of | annual review meetings are being held with cmds of banks to ensure top management support and commitment to the fi process. what has been achieved so far? 15. a snapshot of the progress made by banks under the fips ( april 10 β march 13 ) for key parameters, during the three year period is as under : nearly 2, 68, 000 banking outlets have been set up in villages as on march 13 as against 67, 694 banking outlets in villages in march 2010 about 7400 rural branches opened during this period nearly 109 million basic savings bank deposit accounts ( bsbdas ) have been added, taking the total no. of bsbdas to 182 million. share of ict based accounts have increased substantially β percentage of ict accounts to total bsbdas has increased from 25 % in march 10 to 45 % in march 13 with the addition of nearly 9. 48 million farm sector households during this period, 33. 8 million households have been provided with small entrepreneurial credit as at the end of march 2013 with the addition of nearly 2. 25 million non farm sector households during this period, 3. 6 million households have been provided with small entrepreneurial credit as at the end of march 2013. about 4904 lakh transactions have been carried out in ict based accounts through bcs during the three year period 16. it is important to analyse this progress against the some disconcerting trends that were noticed in the run up to the structured financial inclusion initiatives that the banks launched since 2010 onwards. first, the number of banked centres in the country between 1991 and 2007 had actually come down ( from 35236 to 34471 ). second, the number of rural branches during the same period had also declined significantly ( from 35206 to 30409 ). against this backdrop, the progress made during 2010 β 13 is certainly remarkable. financial inclusion plan 2013 β 16 17. in order to continue with the process of ensuring access to banking services to the excluded, banks have now been advised to draw up a fresh 3 year financial inclusion plan for the period 2013 β 16. banks have also been advised that the fips prepared by them are disaggregated and percolated down up to the branch level. the disaggregation of the plans is being done with a view to ensure involvement of bank staff across the hierarchy, in the fi efforts and also to ensure uniformity in the reporting structure under the financial inclusion plan. the focus is also now more on the | 0 |
essential to further strengthen and develop the single market. in the area of financial services we have made significant progress. the single market for financial services is now supported by the single rulebook for banks and by common supervisory institutions. within the euro area we went further with the banking union. as i have said, we are not at the end of this process. for instance, financial integration through a fully fledged capital markets union could diversify financing sources for european companies. by fostering private risk - sharing, it can also contribute to a more resilient european economy. conclusion let me conclude. it is encouraging to see that recent opinion surveys show support for european integration increasing since the uk referendum, contrary to the expectations of many. at the same time, there are lessons to be learnt. the key lesson is that the european union has to deliver on key objectives from the citizens β perspective if it is to rekindle trust in the european project. and to address the widespread feelings of insecurity, including economic insecurity, the european project needs strong economic foundations. for the euro area economy, this means strengthening the recovery, preserving financial stability and addressing the remaining vulnerabilities of economic and monetary union. thank you for your attention. i am now looking forward to our discussion. 3 / 3 bis central bankers'speeches | . let me stress a point which is often underestimated. what looks perfectly appropriate with the benefit of hindsight, moving down interest rates to such low levels β exploring secular uncharted waters β was indeed bold ex ante for a new institution, which in mid 2003 was exactly 5 years old β and for a new currency β that at that time was 4Β½ years old. it had not been done to that extent by either the fed or the bank of england! in retrospect, we have been bold and equally lucid. there is no doubt that the governing council used appropriate judgement in granting high weight to the decrease of inflationary pressures stemming from the downside risks to economic activity. and there is also no doubt that the resolute action of the ecb, based on its own inflationary analysis, not only permitted to stabilise inflation and inflationary expectations, but also helped to forestall a much deeper slowdown in the economy. the behaviour of inflation expectations brings me to the other episode i have mentioned. long - term inflation expectations, which had remained well anchored at levels in line with the ecb definition of price stability from the outset of monetary union in january 1999, started displaying signs of upward instability in the second half of 2003 after the last decision to decrease rates. the ten - year break - even inflation rate ( beir ) suggested an incipient rise in longer - term inflation expectations [ see chart 2 ]. survey - based data also revealed that the probability assigned to inflation outcomes being above our definition of price stability at long horizons was rising [ see chart 3a ]. movements in these indicators of long - term inflation expectations possibly reflected concerns that the policy stance was incompatible with the inflationary impact of the surge in oil prices, accompanied by a pick - up in economic activity and protracted conditions of ample liquidity, which could be seen as favouring spending propensities and granting firms increasing pricing power. 5 the rise in inflation expectations was considered very carefully by the ecb β s governing council. it was of utmost importance to regain control of these expectations. for all reasons that would be common to all central banks plus three which were peculiar to the ecb. first, as i have already explained, we had been bold in exploring new territory in the lower side of interest rates, and we had to dissipate any wrong sentiment in the markets that we could have neglected our main objective, namely price stability. second, we also had to eliminate | 0.5 |
partners β currencies, the real effective exchange rate of the dinar remains close to its equilibrium level. therefore, the exchange rate played, to a large extent, its role as an external shock absorber, reflecting its flexibility, supported by the bank of algeria β s interventions in the interbank exchange market. third, as a result of the sharp contraction in fiscal oil revenue and the expansion of public spending, the fiscal deficit rose to 16 percent of gdp in 2015 from 7. 3 percent in 2014. however, public debt has remained historically low, representing 13. 6 percent of gdp at end 2015. fourth, the significant reduction in the treasury β s financing capacity in 2014 and 2015 is well reflected in the aggregate monetary survey, with the treasury becoming a net borrower in 2015 vis - a - vis the banking system for the first time in many years. on the other hand, the decline in net external assets and the significant slowdown in the growth of credits to the economy more than offset the reversal of the treasury β s net position. overall, monetary expansion, as measured by m2 growth, was only 0. 12 percent in 2015, the lowest rate ever, mainly reflecting the magnitude of the impact of the oil price decline. excluding hydrocarbon sector deposits, the money supply increased by 2. 8 percent. bis central bankers β speeches the credits to deposits ratio rose from 69. 5 percent by end 2013 to 74. 7 percent by end 2014 and 86. 7 percent by end 2015, indicating a decline in the surplus of banks β collected resources compared to extended credits. the evolution of credits, in particular medium and long term credits, in a situation of stable deposits, is the main factor explaining the decline in the public banks β short term liquidity ratio. deposits in the banking sector, which rose in 2013 ( 7. 5 percent ) and 2014 ( 17. 5 percent ), slightly declined in 2015 ( - 0. 2 percent ) as a result of the sharp contraction in the deposits of the hydrocarbon sector ( - 41 percent ). consequently, the banking sector β s liquidity, in excess since 2002, declined gradually during 2015 to reach dinar billion 1833 by the end of the year ( a decline of 33 percent ), after relative stability in 2014 ( dinar billion 2731 by end 2014 ). with a milder recession in the hydrocarbon sector in 2014 and an upturn as of 2015, economic activity strengthened during these two years despite the external shock. growth was | mohammed laksaci : impact of the oil price decline on the algerian banking system keynote address by mr mohammed laksaci, governor of the bank of algeria, at a meeting with bank executives, algiers, 26 april 2016. * * * i would first like to point out that in terms of external shocks, the algerian economy, which is closely linked to hydrocarbon sector resources, has particularly suffered from the shock inherent to the sharp and sustained fall in world oil prices. it is therefore from this perspective that i start my presentation. i shall talk first of the macroeconomic implications of this external shock, before outlining its impacts from the perspective of financial stability, in light of the new challenges for the banking system in the financing of non - hydrocarbon growth. 1. macro - economic stance economic and financial performance during 2001 - 2008, particularly the significantly improved external financial position and a substantial accumulation of budget savings, enabled the algerian economy to demonstrate resilience in the face of the severe external shock in 2009 inherent to the intensification of the international economic and financial crisis. following the strengthening of the external financial position over 2010 - 2013, algeria continued to preserve monetary and financial stability during 2014, in a context of persistent fiscal deficit and a return to a balance of payments deficit. the impact of the oil price decline on the algerian economy can be examined through the main recent economic and financial developments. first, following the sharp decline of hydrocarbon prices in 2014, the large contraction of hydrocarbon exports in 2015, in a context of still high imports after the significant increase of imports of goods over the period 2007 - 2014, resulted in a high external current account deficit ( - 16. 4 percent of gdp ). with hydrocarbons remaining algeria β s main export, the external shock resulted in a significant contraction in international reserves, from us $ billion 179 in 2014 to us $ billion 144 in 2015. nonetheless, this level remains comfortable, representing 27 months of imports of goods and services, in a situation of historically low medium and long term external debt ( 1. 8 percent of gdp ) and the absence of any external indebtedness of the hydrocarbon sector for more than a decade. second, the exchange rate of the dinar vis - a - vis the us dollar depreciated by 20 percent in 2015, while it depreciated by only 3. 8 percent vis - a - vis the euro. in view of the large depreciation of algeria β s main | 1 |
leaders is to find innovative ways to ensure that all mothers across the city have the care they need to fully participate in the economy and that their children are positioned for a healthy start. today you β ll hear from an exceptional lineup of panelists : leaders in the medical, academic, and policy worlds. we β ll close with a panel of my colleagues, fellow reserve bank presidents, who will share their reflections on what we β ve learned and discussed today. so, with that, i β ll hand it over to marielle segarra of marketplace who will moderate the next part of the program. thank you all again for joining today β s event. 1 centers for disease control and prevention, introduction to covid - 19 racial and ethnic health disparities, updated december 10, 2020. 2 hye jin rho, hayley brown, and shawn fremstad, a basic demographic profile of workers in frontline industries, center for economic and policy research, april 2020, and tiana n rogers, charles r rogers, elizabeth vansant - webb, lily y gu, bin yan, fares qeadan, racial disparities in covid - 19 mortality among essential workers in the united states, world medical & health policy, august 5, 2020. 3 ruchi avtar, rajashri chakrabarti, and maxim pinkovskiy, understanding the racial and income gap in covid - 19 : essential workers, liberty street economics, january 12, 2021. 4 ruchi avtar, rajashri chakrabarti, and maxim pinkovskiy, unequal burdens : racial differences in icu stress during the third wave of covid - 19, liberty street economics, august 9, 2021. 5 new york fed on medium, new initiative focuses on the social determinants of health, april 7, 2021. 6 new york fed on medium, exploring the economic benefits of broader support for mental health, june 2, 2021. 7 new york fed, the fourth trimester and beyond : the case for broad investments in maternal and child health. 2 / 2 bis central bankers'speeches | john c williams : opening remarks β β racism and the economy : focus on health β remarks ( via prerecorded video ) by mr john c williams, president and chief executive officer of the federal reserve bank of new york, at β racism and the economy : focus on health β, 9 september 2021. * * * as prepared for delivery good afternoon, and welcome everyone. i β m john williams, president and ceo of the federal reserve bank of new york. i β m here to kick off what is now the eighth installment of a landmark series on the topic of racism and the economy sponsored by the 12 federal reserve banks. these events examine structural racism β s toll on the economy and identify potential actions that can improve economic outcomes for all segments of society. there is no facet of our society immune to racism, health included. so, this afternoon, we will be looking at key issues around race and the economy through the lens of health β a focus never more urgent and critical. before we move on with the program, i β d like to share more broadly why this is so important for the federal reserve, what we β re learning, and what we β re doing. and with that, i must give the standard fed disclaimer that the views i express are my own and do not necessarily reflect those of the federal open market committee or anyone else in the federal reserve system. having poor health is a challenge on many levels. we β re keenly aware that health can be a huge driver of economic inequality. people who lack good health or healthcare often struggle to participate fully in the economy. on top of that, social determinants of health β economic stability, housing, and education β can be barriers to employment and affect the kinds of jobs people get. of course, we at the federal reserve are neither healthcare workers nor healthcare policymakers. but a major part of our core mission is to foster a strong economy and promote maximum employment. and to put it simply, we need healthy people to have a healthy economy and workforce. that β s why understanding the nexus of race, health, and the economy is central to achieving our goals. we are deeply committed to doing so, both in this series and beyond. the pandemic demonstrated just how acute many of the connections are between physical and economic health for individuals and communities. and it exposed just how dramatic racial disparities can be, especially in accessing healthcare and other critical resources. the convergence of a health crisis | 1 |
stress is that control activities need to be an integral part of the daily operations of an institution. examples of this include : top level reviews of performance and risk exposure ; appropriate activity controls that monitor performance and exceptions at the departmental or divisional level ; segregation of duties ; physical controls on access to assets ; periodic checking for compliance with exposure limits ; a system of approvals and authorisations for transactions over certain limits ; and a system of verification and reconciliation of transaction details and activities. the objective should be to ensure that all areas of the institution are continually in compliance with established policies and procedures. on information and communication, it should be self - evident that an institution needs comprehensive and timely financial, operational and compliance data, and so needs to have good information systems. but having the information is only the first step. equally important is the second step, that the information should get to the right people at the right time. finally, on monitoring, it cannot be overstressed that that monitoring of the effectiveness of an institution β s internal controls should be a continual and ongoing process, and that monitoring of key risks should be an integral part of the daily operations of the institution. effective and independent internal audit and compliance functions have an important role to play here. this requires these functions to have direct access to senior levels of the organisation so that potential criticisms of systems or transactions cannot be blocked by the line management concerned. these, then, are what i would regard as the key elements of a financial institution β s internal controls. as regards how these are applied to individual institutions, my expectation as a banking supervisor is that any financial institution, regardless of size, should have an effective system of internal controls that is consistent with the nature, complexity, and risk of its activities and that responds to changes in the institution β s environment and conditions. i am not saying that i expect every institution to be using state - of - the - art risk management and control techniques. but what i do expect is that every institution should have control systems that adhere to the basic principles i have just discussed, and which are as state - of - the - art as they need to be given that particular institution β s activities. i also expect these systems to be kept under review as things change. let me now move on to discuss some of the things that can go wrong when controls break down. i will not go into particular case studies, but will try instead to draw together some of the common threads of recent problem bank cases. the bas | andreas dombret : the first six months of european banking supervision β an nca β s perspective speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the ilf ( institute for law and finance ) conference on the banking union, frankfurt am main, 4 may 2015. * 1. * * introduction ladies and gentlemen thank you for inviting me to speak at today β s ilf conference on the banking union. it is a great pleasure to be here. and again, the ilf has shown impeccable timing : it is six months to the day since we erected the first pillar of the european banking union. for on 4 november 2014, the ecb became the direct supervisor for the 123 largest banks in the euro area. together, these institutions account for more than 85 % of the aggregate total assets of the euro area β s banking sector. that makes the ecb one of the world β s biggest banking supervisors. yet the ecb is not walking alone ; it is being accompanied by the national supervisors. ultimately, european banking supervision rests on the shoulders of both the ecb and the national supervisors. let me therefore share with you my view, as a national supervisor, of the first six months of european banking supervision. 2. the benefits of european banking supervision shifting banking supervision from the national to the european level harnesses three specific benefits. first, european banking supervision makes it possible for banks throughout the euro area to be supervised according to the same high standards. these standards will emerge from sharing insights and empirical findings internationally, and from adopting best practices from each national approach to banking supervision. the option of conducting cross - border peer reviews is another way in which the goal of establishing a common set of high standards can be achieved. second, european banking supervision makes it possible to effectively identify and manage cross - border problems. this is essential, because large banks usually operate in more than one country. the failure of the franco - belgian bank dexia in 2011 is a classic case in which banking supervision with a cross - border focus could have improved crisis management. another example is germany β s hypo real estate, which folded in 2009. third, shifting banking supervision from the national to the european level adds a layer of separation between supervisors and the banks they supervise. this will prevent domestic supervisors from handling their banks with kid gloves out of national interest. at a more general level, the ultimate forte of european banking supervision is that it blends | 0 |
symmetrical inflation target. crucial to the success of such a policy is the ability to anchor inflation expectations on the target. for this to be the case, the target must be clear and well understood. from may 1997 the target was 2Β½ % for rpix inflation. but in december the chancellor gave the monetary policy committee a new target for inflation. it is 2 % as measured by the consumer prices index or cpi, formerly known as the harmonised index of consumer prices. what is this new inflation measure, and how will it affect monetary policy? on the rpix measure, inflation was at or above target for the whole of last year. in contrast, the cpi measure of inflation was below 2 % throughout the same period. indeed, cpi inflation has been below 2 % for all bar three months since may 1997, and it is almost six years since it was last above 2 %. how can it be possible for inflation to move from above to below target - just like that? to answer that question, we need to examine how inflation is calculated. inflation is measured as the increase in the price of a particular basket of goods and services over the previous twelve months. so there are as many measures of inflation as there are baskets. since no two people in this room spend their income on exactly the same items, in principle each of you could construct your own measure of inflation. the office for national statistics calculates an average inflation measure by weighting together the inflation rates of over 650 different goods and services, using as weights the estimated expenditure on each item for a representative household. but where unpublished writings of j. m. keynes, copyright of the provost and scholars of king β s college, cambridge to whom i am grateful for permission to publish this extract. a reference to the letter appeared in skidelsky, r. john maynard keynes volume 1 : hopes betrayed, 1883 - 1920, macmillan, london, 1983, page 280. the official attendance on 13 september was 38, 575 ; the villa scorer was the incomparable clem stephenson, who may have lacked pace but whose passes were, according to contemporary observers, β as sweet as stolen kisses β ; and the β most expensive β right winger for blackburn rovers was john β jocky β simpson who cost blackburn a record fee of Β£1, 850 when he was transferred from falkirk in 1911. do those prices come from? each month - on β index day β ( either the second or third tuesday of the month ) - around | i would like to return to four of these again today. strong frameworks for policy the first is the importance of strong, credible frameworks for economic policy. for monetary policy, this means a strong nominal anchor in the form of a medium - term inflation target. and for fiscal policy, it means a credible fiscal framework that deals with the medium term and the intertemporal budget constraint. since the early 1990s, australia has been well served by a flexible inflation target centred on 2 to 3 per cent. this target has successfully anchored inflation expectations and provided the organising framework for monetary policy decisions. we have seen the benefits of this anchor over the past year or so ; without it, we would have faced a much more challenging environment. at one point during my term, when inflation was low, there were calls to lower the target. and recently, some have called for a higher target, hoping to avoid the costs of disinflation. i have consistently argued against such calls. it wouldn't be much of a nominal anchor if the target was moved just because the tide was running in one direction for a while. people would rightly wonder what would happen when the tide ran the other way. having chosen a target, it is best to keep with it unless there is a compelling case for change, which there is not. for fiscal policy, an anchor is also important. governments face many demands on their budgets and when they borrow today, they need to be able to service that debt into the future. some countries have not dealt with this intertemporal aspect of fiscal policy very well and public debt levels have kept rising, storing up problems for the future. australia has done better on this front, but we are not immune to the pressures on the public purse and these pressures are growing. given this, a strong commitment to a fiscal framework that addressed the intertemporal budget constraint would help. a credible medium - term framework is also useful in the area of infrastructure investment. australia's growing population means that we need to keep investing in public assets. some years ago, i spoke about my concerns that we were not doing 3 / 7 bis - central bankers'speeches enough here, partly due to governments seeking to avoid taking on debt. more recently, my concern has been that we were seeking to do too much, in too short a time. a wellestablished framework, based on rigorous independent cost - benefit analysis, would help the country plan and sequence public investment. it would | 0 |
the future is maori panel remarks delivered to the institute of directors new zealand leadership conference in tamaki makaurau on 6 may, 2021 by christian hawkesby, assistant governor and general manager, economics, financial markets and banking group written with evelyn truong 1 1 with thanks to naomi mitchell, ngarangi haerewa, emily laws, adrian orr, ngarimu parata, gael price, adam richardson, juliet tainui - hernandez and tania te rangingangana simpson for their input and ongoing work in this area. 2 the terrace, po box 2498, wellington 6140, new zealand telephone 64 4 472 2029 online at www. rbnz. govt. nz mihimihi ( greeting ) e nga mana, e nga reo. e nga karanga maha o te wa. tihei mauri ora! ( to all authorities, all voices, to the many chiefs gathered here. behold the breath of life! ) no rangiora ahau ko waimakariri te awa ko aoraki te maunga kei te whanganui - a - tara ahau e noho ana kei te putea matua ahau e mahi ana ko christian hawkesby toku ingoa tena koutou katoa ( hello, my name is christian hawkesby : my home town is rangiora ; my river is the waimakariri ; my mountain is aoraki / mt cook ; i reside in wellington ; and i work at the reserve bank of new zealand. ) e te rangatira, kirsten patterson ( kp ) karanga mai mihi mai whakatau mai tena koutou katoa ( thank you to the leadership of the institute of directors who have called us here ; who have welcomed us here ; who have looked after us here. thank you very much ). whakatakinga ( introduction ) as a member of the institute of directors, i was delighted to see the important topic of te ohanga maori ( the maori economy ) on the agenda for this conference. it will shape the role of directors in the years to come. today i want to talk about why an understanding of te ao maori ( the maori world ) needs to be a core competency of all new zealand directors. i β ll do this in two ways : β’ first, i want describe my own journey into te ao maori. i β ll highlight some of the | alan bollard : the evolution of monetary policy speech by dr alan bollard, governor of the reserve bank of new zealand, to the rotary club of wellington, wellington, 25 november 2002. * * * as a new central bank governor, what i would like to do first is to give you an overall perspective on the role of the reserve bank in the new zealand economy. i will then focus in on the role of monetary policy, and the implications of the new policy targets agreement, and conclude by discussing how all this relates to achieving strong and sustained economic growth. monetary policy formulation is a key function of the reserve bank, and it is often in the news. but the public attention obscures the other important tasks that the reserve bank undertakes. in the hubbub, the fact that monetary policy is part of a larger picture is often lost. the overall purpose of the bank, as i see it, is to maintain the stability and efficiency of the new zealand financial system. by the financial system, i mean the tools with which new zealanders make transactions with each other and with the rest of the world. for very simple transactions, new zealanders use notes and coins issued by the reserve bank. as you may know, nowadays our bank notes are made out of a polymer material that lasts much longer than in the days of paper money. this reduces the reserve bank β s costs. a side effect is that you β ll be seeing dr brash β s signature around the place for a while yet. polymer notes are also very difficult to forge, because of their modern security features. that relates to our goal of an efficient financial system. a banknote that is easy to forge would make transactions difficult. imagine having to check every twenty dollar note that came out of an eftpos machine. of course, nowadays most significant payments are made using electronic means of transferring funds provided by the financial system. these are much cheaper, faster, and more secure than using large volumes of cash, particularly over long distances. the financial system also facilitates transactions that involve borrowing and lending. for example, individuals accumulate savings in our financial system, and invest those savings in assets like shares and term deposits. these funds then often find their way to new zealand corporations and households, and are used to build new zealand β s infrastructure. typically, the individual investor receives a return on those investments, and is able later on to draw on the originally invested funds. we often take this system for granted, | 0.5 |
cent despite the adverse effect of drought and uncertainty on account of oil prices. as the inflation rate has decelerated, it has also had a positive impact on inflationary expectations. this is clearly reflected in the downward trend in nominal interest rates. for instance, the overnight call money rate has fallen sharply from about 13 per cent in august 2000 to the current levels of 5. 5 per cent. similarly, the 91 - day treasury bill rate declined from 10. 5 per cent to 5. 4 per cent and the 364 - day treasury bill rate from 10. 9 per cent to 5. 6 per cent over the same period. the long - term interest rates too have declined. the yield on 10 - year government securities has declined from 11. 5 per cent in august 2000 to the current levels of about 6. 3 per cent. similarly, interest rates on corporate paper have fallen significantly. for example, the interest rate on 5 - year aaa rated corporate paper has declined from 12 per cent in august 2000 to about 6. 7 per cent currently. the banks have also reduced their deposit rates. the term deposit rates of public sector banks over one year maturity have declined from a range of 8 - 10 per cent in august 2000 to 6 - 8 per cent now. this fall in the interest rates in the recent period has been in consonance with the monetary policy stance of a soft and a flexible interest rate regime. despite the fall in deposit rates, depositors have received positive real interest rates of close to 2 per cent in the second half of the 1990s, which is much higher than the real return on deposits during the first half of the 1990s. on the other hand, lending rates of banks have not come down as much. while banks have reduced their prime lending rates ( plrs ) to some extent and are also extending sub - plr loans, effective lending rates continue to remain high ( table 1 and graph 1 ). it is estimated that the average lending rate of scheduled commercial banks has declined from a peak of about 17 per cent in 1995 - 96 to about 14 per cent by 2001 - 02. hence, while nominal interest rates have come down, they have not fallen as much as the inflation rate. consequently, the effective real lending rate continues to remain high. this development has adverse systemic implications, especially in a country like india where interest cost as a proportion of sales of corporates are much higher as compared to many emerging economies. table 1 real interest rates year weighted weighted average | centres. this work is also very much a public sector β private sector partnership. we are being ably and vigorously supported in this work by a group of market participants, chaired by david puth, ceo of cls. the group contains people from all around the world on the buy side, including corporates and asset managers, and the sell side, along with trading platforms, ecns and nonbank participants, drawing from the various foreign exchange committees ( fxcs ) and beyond. hugh killen from westpac is the australian member of this group, representing the australian foreign exchange committee ( afxc ). all parts of the market are being involved in the drafting of the code to make sure all perspectives are heard and appropriately reflected. there are two important points worth highlighting : first, it β s a single code for the whole industry and second, it β s a global code. on the first point, the code is replacing the existing codes of conduct that have been present in the fx market, including the aci model code used here in australia. importantly, the code covers 1 / 3 bis central bankers'speeches all of the wholesale fx industry. this is not a code of conduct for just the sell side. it is there for the sell side, the buy side, non - bank participants and the platforms ; its breadth is both across the globe and across the whole structure of the industry. hence the code is relevant for all of you here in this room. the way it is relevant will depend on your engagement with the market. the guidelines for appropriate conduct are relevant for the buy side as well as the sell side. on the buy side it will also help to give you guidance as to what you can reasonably expect from your counterparty as you transact your fx business. as i mentioned earlier, the first phase of the code was released earlier this year. it covers areas such as ethics, information sharing, aspects of execution and confirmation and settlement. we are well advanced with the second phase which is covering further aspects of execution including e - trading and platforms, prime brokerage, as well as governance, and risk management and compliance. we are currently in the process of incorporating nearly 2000 comments received from market participants on the draft that we circulated in early october. we will be sending out a revised version for comment in the first week of december. the distribution to market participants will be principally through the fxcs but also through other industry associations as well. again, we are endeavouring to | 0 |
. an important regulatory priority for bank negara in this regard is to align incentives with a sound risk culture and ethical conduct, underpinned by effective independent oversight by the board. on this, bank negara recently published several proposals to enhance the corporate governance framework for financial institutions in malaysia to address these issues. while proposals on board composition appear to have generated more attention in the media, the most significant enhancements actually relate to expectations for the board and senior management to set the right β tone from the top β, and the explicit responsibilities placed on them to play a more critical role in shaping the core values and culture of the institution. this includes expanded requirements on compensation practices and disclosures to strengthen market discipline. banks must also put in place a transparent whistleblowing policy that enables the escalation of concerns without the risk of reprisal. good governance is ultimately driven by a workforce that is committed to the highest standards of knowledge, competence and conduct. competition for talent in the financial industry has intensified greatly, in an environment where public opinion of banks globally is also at an all - time low following the last crisis. recent trends among graduates of leading business schools worldwide indicate a shift towards other well - paying alternatives to careers in banking, notably to technology and consulting firms. according to the financial times, the popularity of banking as a career has dropped 41 % since 2008. globally, banks β reputations have also been dented to varying degrees by poor quality of service, staggering control failures and misconduct. the professionalisation of the banking industry is therefore critical to strengthen the talent pipeline, while restoring and maintaining public trust in the banking industry. an important step in this direction is the transformation of institut bank - bank malaysia ( ibbm ) into the asian institute of chartered bankers ( aicb ) as the professional body for bankers and the asian banking school as the education service provider. the aicb plays a key role in spearheading the vision of professionalising bankers through the development of professional qualifications, a specialised certification track to support continuing professional development and a membership framework that subjects members to a strict code of conduct, professionalism and ethics. the prestigious chartered banker qualification, for example, aims to provide comprehensive education on banking to support sound judgment and decision - making. the industry should therefore take full advantage of these opportunities to build a solid team of professional bankers that are able to perform effectively in a rapidly evolving landscape. fundamental role of banks to support inclusive financial participation for all it is important to bear in mind | . given the high degree of openness of the malaysian economy and the increased integration with the international financial system, external developments have continuously affected our domestic economy. but the economy has been able to weather these challenges and have remained on a steady growth path of 4 to 6 % over the past five years. in recent quarters, economic growth, however, has moderated. this was attributable to a number of external and domestic shocks affecting the economy since late 2014. the major policy reforms such as the implementation of the gst also saw households and businesses adjusting their spending. as we move forward, these shocks will gradually dissipate and growth of the malaysian economy will improve. further support is also forthcoming in the bis central bankers β speeches form of government measures to increase disposable income ; thus, facilitating households and firms β on - going adjustments. the assessment is therefore for the economy to grow by 4 to 4. 5 % for 2016. importantly, our financial system remains resilient and supportive of the economy. it is important to recognise the underlying reasons for the resilience of the malaysia economy. this resiliency has been as a result of the continued strength of our fundamentals and the successful reforms and structural adjustments we have undertaken over the last decade. three changes to the economy have been particularly instrumental. firstly, the structure of the economy has become more diversified and over - reliance on any particular industry has been mitigated. secondly, growth has also become more balanced, driven by continued private sector activities with imbalances and excesses kept in check through keys measures implemented by the government and bank over several years. this has been complemented by crucial fiscal reforms that, while having short - term costs and being very unpopular, ultimately put the economy on a more sustainable growth path. third, is the continued strength of our external position. this can be seen from our high level of international reserves, the manageable level of external indebtedness and the continued surplus in the current account balance. together with the greater flexibility of our exchange rate, this has strengthened the capacity of our economy to cope with external shocks and ensure that financing to the private sector is not interrupted. going forward, continuity in bank negara malaysia β s financial sector policies will be preserved. we will continue to strengthen our prudential regulatory framework in line with global standards, while introducing new developmental initiatives and maintaining a strong focus on the fair treatment of financial consumers. following transformational measures taken in the | 1 |
emmanuel tumusiime - mutebile : banking issues in uganda speech by prof. emmanuel tumusiime - mutebile, governor, bank of uganda, on the occasion of eid - el - fitri celebrations at bou western gardens, kampala, 25 september 2009. * * * your eminence the mufti of uganda distinguished guests ladies and gentlemen asalaam aleikum, eid el - fitr, al - mubarak. it gives me great pleasure to welcome you to this annual auspicious occasion when we at the bank mark the end of the holy month of ramadthan and the celebration of eid el fitr. let me take this opportunity to congratulate your eminence and all muslims in uganda for having been steadfast in observing the fast throughout the holy month of ramadthan. to the bank muslim staff who observed the fast, i highly commend you and urge you to maintain this noble act of worship. the virtues of fasting should be upheld throughout your daily life both at work and elsewhere. the bank of uganda as a public institution upholds the freedom of worship for every member of staff. it is our conviction that religion plays a great role in enhancing morality in the society leading to ethical conduct, discipline in the work place and invaluably contribute to better outcomes. our commitment is demonstrated by the bank values which each staff is required to uphold. this blends very well with the requirements of fasting in the holy month of ramadthan. fasting brings a reminder to all of us to go back to god, to do the right things and shun evil. let me take this opportunity to address you on the health of the uganda's financial sector. first of all there was a baseless rumour in the red pepper of september 14, 2009 that a β top bank faces closure over gadaffi cash β that the workers of " an islamic founded bank " were about to become jobless and that the top management faced arrest because the bank was being used as a conduit for money " to some officials at mengo " from foreign sources. let me reiterate the statement in the press release i issued on september 15, 2009 β β i assure everyone that no bank in uganda is under any threat of closure whatsoever β. the general public should continue to ignore these completely baseless allegations. all banks and other supervised financial institutions are well managed, well capitalized | , profitable, and in good shape. our supervision staff are well trained and adequately equipped to carry out the bou mandate to foster a sound financial system. the second issue relates to the licensing of islamic banks in uganda. the bank of uganda has received some inquiries for opening islamic banks or banks which offer islamic banking products. as you are aware the licensing and regulation of financial institutions in uganda is governed by the financial institutions act ( fia ) 2004. some of the provisions of the fia 2004 are not compatible with the islamic banking model, a matter which is currently under review. bank of uganda is in the process of amending the relevant provisions of the fia act with a view to accommodating islamic banking, or enabling existing banks to offer islamic banking products. the bank of uganda has also received technical assistance from the islamic development bank ( idb ) to train the bank supervision staff for full understanding of islamic banking and finance so that they are in position to effectively regulate these institutions once they are established and licensed to operate in uganda. i am therefore confident that, as soon as the law is amended, we should be having an islamic bank or banks offering islamic products in the not too distant future. let me conclude by wishing you once again happy celebrations. may almighty god bless you all eid mubarak, eid mubarak, eid mubarak. | 1 |
lean against the wind in an effort to slow or limit the growth of unsustainable asset bubbles ( as through maximum loanto - value ratio requirements ). the crockett speech holds up very well today. with the benefit of the experience gained from the intervening financial crisis, an intense period of analysis from a macroprudential perspective, and a variety of regulatory initiatives, i offer these five propositions both to reinforce and to supplement the views sir andrew expressed 13 years ago. five propositions for a macroprudential approach to regulating financial institutions 1. a macroprudential perspective should dominate the regulation and supervision of large financial institutions. sir andrew entitled his speech β marrying the micro - and macroprudential dimensions of financial stability, β suggesting an equal partnership between the two regulatory dimensions, as he called them. my own sense is that we need to concentrate our post - crisis efforts to reshape the regulation and supervision of large financial institutions andrew d. crockett, general manager of the bank for international settlements and chairman of the financial stability forum ( 2000 ), β marrying the micro - and macro - prudential dimensions of financial stability ( pdf ), β speech delivered at the eleventh international conference of banking supervisors in basel, switzerland, september 21. reading between the lines, one wonders whether sir andrew anticipated that his call for action might not be taken up by banking regulators. he styled his remarks as β provocative β and concluded by suggesting they were but β a small awareness - raising step in what, if pursued, is likely to be a long road. β crockett, 2000 speech : β a review of the instances of financial instability would reveal some shared stylised elements. there is first an over - extension phase during which financial imbalances build up, accompanied by benign economic conditions. in this phase, asset prices are buoyant and their surge tends to feed, and be fed by, rapid credit expansion, domestically or internationally. leverage, in overt or hidden forms, accumulates in balance sheets, masked in part by the favourable asset price developments. the trigger for a reversal is essentially unpredictable. it can originate either in the financial sphere ( e. g., an asset price correction ) or in the real economy ( e. g., a spontaneous unwinding of an investment boom ). the process then moves into reverse. ex post, a financial cycle is evident. β bis central bankers β speeches on measures reflecting the macroprude | and thus susceptible to particularly sharp declines in a serious recession. to the extent that firms learn over time that such assets will be treated that way, there is at least a mild disincentive to hold them. as i will discuss in a moment with respect to countercyclical capital requirements, we should not overstate this lean - against - the - wind effect, but perhaps not dismiss it out of hand either. for example, if the loss to the financial system from the failure of a systemically important firm would be five times that resulting from failure of the non - systemic firm, then the firm would have to hold additional capital sufficient to make the expected probability of failure one - fifth that of the non - systemic institution. among the useful efforts along these lines are a measure of conditional value - at - risk ( covar ) ( see tobias adrian and markus k. brunnermeier ( 2011 ), β covar ( pdf ), β federal reserve bank of new york staff reports 348 ( new york : federal reserve bank of new york, september ), and a measure of systemic risk based on each firm β s contribution to the expected capital shortfall of the entire financial system in a crisis ( see christian t. brownlees and robert f. engle ( 2011 ), β volatility, correlation and tails for systemic risk measurement, β new york university working paper ( new york : new york university, june ). the concept behind the latter measure is also described in viral v. acharya, christian brownlees, farhang farazmand, and matthew richardson ( 2011 ), β measuring systemic risk, β in regulating wall street : the dodd - frank act and the new architecture of global finance ( new york : wiley publishers ), pp. 87 β 119. updated systemic risk rankings are maintained by the authors here. a helpful review of the efforts to measure systemic risk is monica billio, mila getmansky, andrew w. lo, and loriana pelizzon ( 2010 ), β measuring systemic risk in the finance and insurance sectors ( pdf ), β mit sloan school working paper 4774 β 10 ( cambridge, ma : mit sloan school of management, march ). bis central bankers β speeches 3. time - varying measures will play a more limited role. some discussions of macroprudential policy appear to contemplate a somewhat regular adjustment β up and down β of both resiliency and lean - | 1 |
short - term money market rates to long - term government bond yields. the low interest rates had an impact on investor behaviour. in particular, many institutional investors were bound by nominal or real return objectives. including acharaya, viral v, richardson, matthew : restoring financial stability new york 2009 ; fox, justin : the myth of the rational market, new york, 2009 ; tett, gillian : foolΒ΄s gold : london 2009 ; wessel, david : in fed we trust, new york 2009, see also gylfason, holmstrom, korkman, soderstrom, vihriala ; nordics in global crisis, vulnerability and resilience, helsinki 2010. as it was no longer possible to achieve these objectives by means of traditional investment instruments, investors began to look for higher - yielding assets. insurance companies, pension funds and other institutional investors, public and private alike, reverted to riskier investments. as the demand for riskier investments grew, risk premia fell to historic lows. so, money was cheap, nor was much compensation demanded for risk. the second element underlying the crisis was a lack of financial market transparency. interest rates were low and financial markets full of money looking for higher yields. because there was an inadequate supply of traditional, safe investment options, financial innovations β especially securitisation β came to rescue of investors. securitisation was the midas touch that turned even low - grade raw materials, such as subprime credits, into securities with the top ratings. in part as a consequence of securitisation, in part on account of capital adequacy regulation, increasing use was made of another type of financial innovation, ie derecognition and transfer of securities from financial institutions β balance sheets to special purpose vehicles. the β shadow banking sector β ballooned. securitisation and special purpose vehicles weakened the regulation of banks β capital adequacy and the quality of available information on financial markets. investors were unable to adequately assess the risks inherent in securitised assets, and risks were not always widely understood inside the banks either. similarly, bank balance sheets shed less light on banks β real exposures, as the bulk of the risks had been transferred to special purpose vehicles. impaired information quality led to the third element of the financial crisis, a variety of agency problems and moral hazard. because of the inability to assess the risks of securitised loans, the discipline needed to enforce credit | to keep the banking system operational, world trade shrank by 20 β 30 % within a few months and unemployment and government deficits went on the rise. the challenges for economic policy and economic thinking the financial crisis forced economists and economic policymakers to reconsider some basic issues : how to get through the crisis, and how to avoid a replay. the challenges are many, but i will pick upon just three of them. the first is to correctly understand the root causes of the financial crisis and to prevent their recurrence. the second challenge is to repair the damage the crisis has done to the public finances, and the third relates to the need to draw the right conclusions for economic analysis. so, the first challenge is to prevent similar crises in the future. the financial crisis taught policymakers many things β perhaps most importantly the holes in our understanding of systemic risk. the concept of systemic risk is not new as such, but the crisis revealed some new dimensions of systemic risk. before the crisis, it was not understood how multifaceted the links are between the global financial markets and that a sufficiently wide disruption could paralyse the markets. global financial markets did not collapse in october β november 2008. but the collapse was so near that such a risk could no longer be tolerated. efforts are now under way on numerous fronts to get systemic risk under control. on one hand, important revisions to the supervision of financial institutions are in process. the basel committee on banking supervision recently published its first consultation papers on the matter. these are truly significant initiatives β as evidenced by the scale of resistance to the proposed changes on the part of banks. another lesson from the crisis is that supervision of individual financial institutions is not enough. financial markets must also be supervised and regulated at the systemic or macro level. macroprudential supervision has already been under discussion for some 20 years, but it is only now that the tools and institutions for macroprudential supervision are being set up for the first time. the eu council has reached an agreement on the establishment of the european systemic risk board, and the european parliament is expected to consider the matter before next summer. there has been lively debate in various fora on the best instruments for controlling systemic risks. this discussion includes the possible role of monetary policy. there is talk about β leaning against the wind β. this idea meets with two types of opinions within the central banking community. on one hand, there is wide agreement that monetary policy should take greater account of certain monetary | 1 |
with covid having provided a further impetus towards localisation, it seems unlikely globalisation will remain as powerful a disinflationary force in the future see, for example, the work of richard baldwin here and here. all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice as it has been in recent decades. and it is certainly possible trends in globalisation could even go into reverse in the period ahead, adding inflationary impetus. 20 chart 16 : global trade and growth per cent - 5 - 10 - 15 world trade - 20 world gdp source : imf weo, world bank, bank calculations. on top of these long - standing supply - side forces came the covid crisis. one of the casualties of this crisis, from a supply - side perspective, is likely to be capital formation. the mpc β s projections assume around a 6Β½ % hit to the capital stock from covid, and a long - term scar on the uk economy β s supply - side of around 1. 75 %. this will also serve to tighten supply - side constraints as demand increases. there are very significant uncertainties either side of these scarring estimates. on the one hand, the hit to capital could be larger if firms β risk appetite remains subdued or if the debts accumulated during the crisis act as a drag on investment. for example, in the uk office for budget responsibility β s ( obr ) downside scenario, scarring reduces output by as much as 6 %. baldwin and freeman ( 2020 ). all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice on the other hand, it is possible investment and the capital stock rebounds faster than in a typical recession β for example, if there is catch - up investment or if firms seize the opportunity created by the covid crisis to improvement their digital estates and digital skills. this would reduce, but not eliminate, any scarring. the balance of these effects on investment is something i will discuss in a future lecture. ( d ) fiscal policy after the global financial crisis, the major tool of macro - economic demand management was monetary policy, which was loosened significantly in most countries. by contrast, fiscal policy in most countries was loosened only modestly and in some, including the uk, was tightened. this fiscal response added to the burden placed on monetary policy. the | that determine the trend change in prices. as a measure to prompt an improvement in the aggregate supply and demand balance, in terms of interest rates, the bank has kept the policy rate at the effectively zero level. to encourage a further decline in longer - term interest rates in the money market, the bank introduced in december 2009 a new funds - supplying operation, through which funds with a maturity of three months are provided at an extremely low interest rate of 0. 1 percent, and the total amount of loans to be provided through this operation was set at approximately 10 trillion yen. the total amount of loans was increased to 20 trillion yen in march 2010. in terms of funds provision, the bank has been providing ample funds through various fundssupplying operations, including the new operation. furthermore, the bank has made its stance clear that it will consistently maintain the extremely accommodative financial environment. as for inflation expectations, the other determinant of prices, the bank has, to prevent people β s expectations for prices from declining, clearly showed its stance, in the form of the β understanding of medium - to long - term price stability, β that it is critical to achieve a positive year - on - year rate of changes in the cpi. to overcome deflation and achieve a sustainable economic growth with price stability, the bank will continue to consistently make contributions as central bank. | 0 |
, the share of nepal on total transactions of the acu member countries routed through acu mechanism accounts for roughly 0. 40 percent, which is fluctuating around same figure over the last few years and its transactions during 2013 has declined by about 30 percent compared to 2012. similarly, there is a decline of its transactions by about 23 percent over the first three months of the current year compared to the same period of the previous year. its exports to acu member countries is hovering around 5 percent of our total exports and the share of imports from acu member countries has been around half percent of our total imports excluding the trade data with india. as more efforts are needed to promote trade through the acu mechanism, nepal rastra bank is committed to work together with other member central banks towards creating an enabling environment for the same. in this opportune occasion, i would reiterate nepal rastra bank β s commitment and belief in the mission of our union. i am confident that this meeting would be instrumental in exploring new avenues of co - operation and further simplification in the existing payment mechanism in the pursuit of fostering its effectiveness for facilitating trade amongst member countries and enhancing monetary as well as technical co - operation among us. before concluding, i would like once again to thank dr. seif and the central bank of ir of iran for the kind hospitality and excellent arrangements made in hosting this meeting. thank you mr. chairman. bis central bankers β speeches | yuba raj khatiwada : overview of nepal β s recent macroeconomic performances speech by dr yuba raj khatiwada, governor of the central bank of nepal, at the 43rd asian clearing union ( acu ) board of directors meeting, kish island, iran, 23 may 2014. * * * honorable chairperson mr. valiollah seif, fellow governors and members of the acu board of directors, acu secretary general mrs. lida borhan - azad, other attending delegates and observers, ladies and gentlemen let me join fellow governors to express my sincere thanks to governor mr. valiollah seif and the entire team of central bank of islamic republic of iran for the warm hospitality extended to us and also for the excellent arrangements made for the meeting in this beautiful kish island. i also thank the governor of state bank of pakistan for successfully handling the chairpersonship of acu for 2013 and the secretary general of acu for efficiently managing the union β s operation during the same period. fellow governors and distinguished delegates, we are meeting at this forum to foster regional trade through the promotion of a credible payment system. while talking regional trade, we have our eyes on the global recovery from the crisis, as it has significant bearing on our trade and investment activities. as we know, the global economic growth has shown marginal improvements in the later part of the last year and early part of the current year, impetus coming especially from advanced economies with supportive monetary conditions and fiscal consolidation ; but their growth remains uneven. inflation in these economies, however, has undershot projections reflecting commodity price decline and output gaps. activities in emerging market economies and developing economies have not shown very encouraging trend, although they continue to contribute more than two - thirds of global growth. the challenges of the emerging market economies and developing economies have increased with financial volatility posed by unexpected normalization of us monetary policy. despite that low - income countries have succeeded in maintaining strong growth reflecting better macro - economic policies, their external environments remain challenging. in essence, the global recovery is still fragile despite improved prospects and significant downside risks. the challenge to growth has further fueled by recent geo - political risks, a sort of deflation in euro zone and external environment, which could result in further financial turmoil. fellow governors and distinguished delegates, i take this opportunity also to shed some lights on nepal β s recent macroeconomic performances. as an upshot of the economic and financial slowdown of the world | 1 |
now offered widely, at least for a period of up to 3 - 5 years. by choosing a fixed - rate loan, households with a large net debt have more predictable expenses for servicing their debt. the more long - term distributional effects of monetary policy are completely different. if interest rates are kept at a low level over a longer period, price and cost inflation will eventually pick up and longterm interest rates will rise. rising wage and price inflation reduces the real value of assets and debt. in isolation, this will naturally benefit individuals and enterprises that have a high debt, while others will see a decline in the value of their savings. at the same time, low interest rates could lead to a rise in property prices and other asset prices. a sharp rise in house prices and advances in stock markets imply a substantial shift in favour of those who are already well positioned in these markets. many young people will find that the price of entering the housing market is too high. income less net interest expenditure. cyclical fluctuations, income developments and asset prices will show greater volatility in an economy without a nominal anchor. the policy of devaluation and low interest rates in the 1970s and the beginning of the 1980s contributed to pronounced cyclical fluctuations and sharp variations in property prices. the winners and losers as a result of such instability are to some extent arbitrary. some will always manage to come out ahead ; those who take their profits in boom periods will also be able to secure and withdraw from exposed positions in time. others - who do not use resources for these activities to the same extent - are often the losers. the economic downturn and unemployment which often follow when the bubble bursts will primarily affect the most vulnerable segment of the labour force and have very negative distributional effects. monetary policy cannot and shall not steer price developments in the housing market or other asset markets, but a monetary policy that inspires confidence will curb wealth effects because the potential for the emergence of bubbles is reduced. nominal stability is the best contribution monetary policy can make to the distribution of income and wealth. interplay between economic policy components - the role of monetary policy the basis for achieving stable economic growth is created through a successful interplay between the various components of economic policy, ie between fiscal policy, monetary policy, the system for income settlements and other measures aimed at improving the functioning of the economy - often referred to as structural policy. the norwegian economy is vulnerable to abrupt shifts in the global economy. we cannot fully shield ourselves against external | global systemic crisis. how to react to that? if the crisis is β imported β and the country cannot meet its financing needs, the imf should provide liquidity and contribute to any kind of anti - cyclical adjustment. in that regard, the authorities of leading economies should usefully consider to allow the imf to issue bonds. in a moment of de - leveraging, when we are talking about re - leveraging, a leveraged imf would have increased ability to meet its rising challenges. in regard to the world bank, it should focus on poor countries, the ones that not only require liquidity or loans, but effectively need financial support. and for both the imf and the world bank, a critical question today is legitimacy. and the way emerging market economies are playing a more important role in the global economy β not only they are representing a larger share of world output as compared to before, but also represent at this point a solution for the crisis β it is imperative that these countries have a proportional weight in the governance structure of the two bretton woods institutions. another fundamental development these days is the increasing role played by the g20, for the very same reason of the growing participation of emerging markets economies in global output. it is clear today that the g7 alone or even the g10 are not able to address all relevant issues that affect the world economy, which are better dealt by a larger group as the g20. evidently there is always a trade - off, the larger the group, the more difficult its effectiveness. but that is a challenge that we have to face. the first meeting of heads of states of the g20 was an essential step towards making the g20 a more effective decision - making forum. the next topic is a global supervisory authority. the g20 suggested the creation of a college of supervisors, following a financial stability forum recommendation. president kohler raised here the idea of having the imf playing this role. we are in the very preliminary phase of this discussion and many challenges lay ahead in that regard, particularly deciding what should be subject to international supervision and what should be subject to national or regional supervisory entities. much of the discussion today evolves around crisis prevention. in terms of crisis resolution, the recommendation is for every country to take all the necessary actions to restore the regular working of its financial system, consumer and investor confidence and the level of economic activity. but every country must act according to its needs and resources. countries were financial institutions faced | 0 |
the bsp, our work could not be accomplished by the bsp working alone, but only through continued discussion and cooperation with others, like government agencies, institutions, other regulatory bodies, private organizations and entities. this is a belief we strongly hold and will continue to hold here in the bsp. this morning we have one - hundred and forty six ( 146 ) outstanding partners that we acknowledge. you are government agencies and departments β¦ private businesses β¦ leaders in your respective industries. you, our honorees and stakeholders are here today because you helped the bsp in its programs. but did you know that beyond the altruism you displayed, where you extended assistance willingly and often without expectation of anything in return from the bsp, there was in your actions, a reward that will ultimately redound to the fulfillment of a shared vision and dream? in the bsp, all employees know our vision by heart. memorize nila ito. our vision is to be a world - class monetary authority and a catalyst for a globally competitive economy and financial system that delivers a high quality of life for all filipinos. a high quality of life for all filipinos. this includes each person here in this assembly hall. and with your contribution, with the assistance you gave us, this is precisely what you are helping us achieve. so, for this, we thank you. 1 / 3 bis central bankers'speeches please give yourselves a warm round of applause. this is not rhetoric. for example, the outstanding survey respondents and information partners here who assisted the bsp, helped us in formulating data - driven monetary policy. the responses you gave and the information you provided underpinned enabling decisions that allowed the philippine economy grow by 6. 4 percent in the first quarter of 2017. you helped so that the philippines continues to be one of the fastest growing economies in asia. stakeholder participation is essential so that even amidst confounding global developments such as the brexit and the united states β seeming turn to protectionist policy, we can stand resilient and stay calm, with inflation at 3. 1 percent in the first half of 2017, well within the government β s inflation target range for the year. our external payments position remains manageable. robust remittances from overseas filipinos and ample receipts from the business process outsourcing sector continue to fuel economic growth. the country β s external debt remains at sustainable levels, with the ratio to gdp improving in q1 2017 to 24 | the area of payments, amending the payment services directive, and also proposing a new payment services regulation. these developments are important to strengthen further the resilience of supervised entities, combat and mitigate payment fraud and level the playing field between banks and nonbanks. furthermore, the enactment of the digital operational resilience act ( dora ) of the european union earlier this year, is a critical milestone and accomplishment. the european banking authority and the other european supervisory authorities, have a critical role to play in its smooth implementation. dora introduces advanced ict risk management requirements, threat - led penetration testing and, importantly, oversight of third party providers, including bigtechs. 2 / 3 bis - central bankers'speeches going forward, legislators and supervisors need to ensure that the existing and prospective legal framework does not leave significant room for undetected risks, while the level playing field should be strengthened. in addition, mechanisms should be developed at the global level to enable supervisors to cooperate effectively across borders. in this way, the stability of the financial system will be safeguarded, while combating money - laundering risks and protecting consumers. i take this opportunity to say a few words about the innovation hub that the central bank of cyprus set - up earlier this year. we see the innovation hub as a vital platform to encourage, promote and support fintech innovation, while maintaining regulatory oversight. the innovation hub can serve as a bridge between regulators, fintech startups and established financial institutions, facilitating dialogue, collaboration and knowledge - sharing. it provides a safe space for fintech firms to enter into a confidential dialogue with the central bank of cyprus, presenting their innovative products and business models and receiving feedback on regulatory requirements. the hub also enables the central bank of cyprus to gain valuable insights into emerging technologies, risks and trends, allowing us to adapt our regulatory framework effectively. an equally important initiative is the project on " digital onboarding " for the banking sector, which was launched by the central bank of cyprus, despite the fact that it is not within our duties to do so. we initiated this project, as we are convinced it brings multiple benefits to banks and to the real economy. in parallel to this, and with the aim to address the risks associated with the general digital transition, the central bank of cyprus has already required licensed institutions to carry out a series of actions on an annual basis, including annual anti - intrusion testing of their critical systems to address cyber risks. the importance of cyber risk has increased over the past | 0 |
philip lowe : remarks on a panel at the australian national university's crawford australian leadership forum remarks by mr philip lowe, governor of the reserve bank of australia, on a panel at the australian national university's crawford australian leadership forum, canberra, 19 june 2017. * * * thank you for the invitation to be part of this panel at the crawford australian leadership forum. the central issue is : where does the future growth in the global and australian economy come from? there are four points that i would like to make. 1. for a while, growth can come from a cyclical upswing in the global economy. over 2017, the global economy has improved. it is not just a story in one or two countries, but one that is broad based. after nearly a decade, the healing process after the financial crisis is well advanced, although there is still plenty of scar tissue. the chinese economy has continued to grow, although there are some fault lines. and in europe, it has been a few years now since the underlying problems last erupted. globally, monetary policy remains accommodative, there has been a lot of financial system repair and fiscal policy is no longer contractionary. this is all helping. so we are in a better position than we have been for some time. to be clear, we are not talking about a boom and there are still plenty of risks out there. but globally things are better. animal spirits have been missing for quite a while and they might just be starting to come back. 2. at some point, the cyclical upswing will run its course. beyond that, much depends upon demographics and technology. here there are reasons for pessimism and for optimism. many developed economies, as well as china and korea, face big demographic challenges. populations are stagnant or declining. they are also ageing. older societies want to save, rather than invest, especially so when there will be fewer people tomorrow than there are today. and older societies are likely to be more risk averse. so this is a major issue. on technology, i am more optimistic. there are great advances being made in science : in the material sciences, in power generation and storage, in genetics and the health sciences, and in computing and artificial intelligence. it is hard to be sure how these will all play out, but advances in these areas open up possibilities that few of us can imagine. they can transform our economies and form the basis for a new wave of | gains in incomes, asset prices and accumulated savings during the pandemic. however, these sources of support are being eroded to some extent by high inflation, rising interest rates and falling housing prices, and this is expected to contribute to a slowing in consumption growth from early next year. graph 8 gdp growth year - ended % forecasts actual previous current - 5 - 10 % - 5 - 10 sources : abs ; rba demand for labour remains strong but employment growth has been modest recently, suggesting that limited spare capacity remains in the labour market. the unemployment rate is forecast to remain around 3Β½ per cent until mid - 2023 before rising to 4ΒΌ per cent by the end of 2024 as economic growth slows ( graph 9 ). broader measures of labour underutilisation that include workers who are underemployed are also expected to remain around their lowest levels in many years in the near term. graph 9 unemployment rate % forecasts % actual current previous sources : abs ; rba it is worth emphasising the positives that strong labour market conditions will continue to deliver for australians. even with the modest increase in unemployment that we have forecast to occur as the economy slows, the unemployment rate will still be close to its lowest level in decades. a higher share of australians have a job than ever before. female labour force participation is near its record high and there are opportunities for young australians to gain employment. reviewing the forecasts before i talk about some of the uncertainties around the outlook, i want to take a few minutes to talk about how we review our forecasts. forecasting is difficult at the best of times. it is unlikely that gdp growth, unemployment or inflation will exactly match point forecasts. as the past few years demonstrates, however, it is more often a question of how wrong the forecasts will be. this could be because unforeseen shocks hit the economy or households and businesses behave differently to what we expected. so although we only publish updated forecasts once a quarter, we in fact keep a close eye on how our forecasts are going throughout the quarter by closely analysing the incoming data and information from our own business liaison to see if the economy is evolving as expected. we also review past forecast errors. each year, a review of the accuracy of the bank β s economic forecasts is presented to the board to assess what we have learned about the economy and our forecasting approach over the previous year. the annual review draws on a | 0.5 |
philosophy of central banking. since the war's onset, we have accumulated a unique base of knowledge and solutions that has proved effective amid high uncertainty. over this time, the financial sector and the economy have gone from survival and adjustment stages to gradual recovery. along with solutions, we have also developed several insights that i expect you and i will augment during the panels today. 1. central banks should prepare for crises. in emergencies, we do not rise to the level of our expectations, we fall to the level of our preparedness. the idea of crisis preparedness is nothing new. it lies at the core of ensuring financial stability, which became a widespread part of central banks'mandates after the asian market crisis and was cemented as such by the 2007 β 2008 global financial crisis. in essence, crisis preparedness involves creating a system of buffers and an early warning system that operate on the principle " prepare today for what may come tomorrow. " central banks should not be afraid to take into account the relevant experience from different cases. the nbu started preparing immediately after russia annexed crimea in 2014. thanks to prearranged action protocols and a package of anti - crisis measures put into effect on 24 february 2022, we were able to stabilize the situation. we managed to prevent panic, stem capital outflows, and help the country fight and defend its independence. we pegged the exchange rate to the u. s. dollar and imposed administrative restrictions on fx transactions and cross - border movement of capital. we activated the banking system's business continuity protocols. have you ever heard of any countries where people could easily use payment cards amid a full - scale war, even on its first day? i know of only one such country. ukraine. not a single payment was denied, not a single ukrainian bank stopped operating. people had uninterrupted access to their money and continued to keep their deposits in banks. we supported the country's budget by issuing uah 400 billion in monetary financing as ukraine waited for financial support from partners. we did it because the defense forces needed immediate funding. a tactical medicine phrase i often use to explain the essence and importance of crisis response is very apt. in the event of severe injury ( which is how you can describe the invasion's impact on the ukrainian economy ), compress the damaged blood vessels with a tourniquet to stop the bleeding as soon as possible. our emergency measures became such a tourniquet for the financial system | % on refinancing loans. the interest rate on three - month certificates of deposit will continue to equal the key policy rate. 3 / 4 bis - central bankers'speeches on the one hand, taking into account improved inflation expectations and the inflation forecast, the current and projected decrease in interest rates on nbu operations will maintain the attractiveness of hryvnia savings. on the other hand, the cut in nbu interest rates will support economic recovery on the back of persisting macrofinancial stability. the nbu will continue to cut its key policy rate, provided the fx market remains stable and inflation declines over the forecast horizon. when easing fx restrictions and transitioning to a more flexible exchange rate regime, the nbu will take into account the need to maintain the high attractiveness of hryvnia assets. the nbu's revised macroeconomic forecast envisages further key policy rate cuts. the key policy rate will be cut gradually, and provided the conditions allow it, so as not to undermine the trend towards a steady decline in inflation or fx market stability. that said, the nbu is not compelled to stick to its key policy rate forecast. given high uncertainty, any further decisions and revisions of the nbu's key policy rate forecasts will largely depend on whether or not the forecast's assumptions materialize, as well as on the trends of key macroeconomic and financial indicators. thank you for your attention! 4 / 4 bis - central bankers'speeches | 0.5 |
stephen s poloz : models and the art and science of making monetary policy remarks by mr stephen s poloz, governor of the bank of canada, at the university of alberta school of business, edmonton, alberta, 31 january 2017. * * * introduction the alberta school of business sits a couple of hundred metres east of the centennial centre for interdisciplinary science, which houses a number of telescopes. when you look at a star through a telescope, you see it not as it exists today, but as it existed years in the past, when its light started heading toward earth. in that sense, a telescope is something like a time machine. if only those telescopes could do the reverse and see into the future! economic forecasting and policy making would be a snap. but since we do not have a machine that lets us see the future, we have to make do with the next best thing : the economic model. models have become indispensable to the conduct of monetary policy. this is because central banks typically use monetary policy to target a variable, such as inflation, in the future. policy actions take time to affect targets. for example, it takes up to two years for a change in interest rates to have its full effect on inflation. this means that there is little point reacting to the latest movement in inflation. rather, central bankers need tools that can forecast where inflation is likely to be two years from now and tell them how to adjust policy today so inflation will hit the target. of course, economic models are not crystal balls. they generally explain what happens in the economy on average β they always make errors, but the errors are expected to offset each other over time. the fact that models can deliver only an approximation of the truth means that conducting monetary policy is not a mechanical exercise. it is a complex blend of art and science β in effect, it is an exercise in risk management. sooner or later, something extraordinary happens to the economy that a model cannot explain, pushing it persistently off track. a forecaster can rationalize a string of prediction errors for a while and adjust his or her judgment around the outlook accordingly, but eventually the time comes to rebuild the model. the global financial crisis of 2007 β 09 is one such event : a significant outlier in economic history. models have struggled to explain the forces that led to the crisis and the behaviour that followed. this experience is now guiding the work of model builders. and in the bank β s most recent medium - term plan | paul jenkins : trends and challenges in the global economy and what they mean for canada and ontario remarks by mr paul jenkins, senior deputy governor of the bank of canada, to the london chamber of commerce, london, ontario, 2 april 2008. * * * good morning. first, i would like to thank the london chamber of commerce for inviting us here today. it's a pleasure for me to be back in london, given my close family ties and my years at the university of western ontario. as is the case for so many cities and regions in canada, london's economy and that of southwestern ontario are directly affected by changes in the global economy. and, as with so many things in life, the better we understand the forces of change, the better equipped we are to deal with them. what i'd like to do this morning is discuss some of the key trends in the global economy, as well as the challenges they present, and then talk about some of the implications for canada and for ontario. and because one of the main reasons that we have come to london is to hear your thoughts and concerns, i'll leave plenty of time for your comments and questions. macroeconomic trends in the global economy the turbulence in global financial markets, which has been with us since last august, continues to be a major focus. but rather than starting there, allow me to first step back and provide a perspective that covers the past five or six years. from 2002 to 2007, the world economy expanded strongly, growing by an average of 4. 6 per cent per year, measured in terms of real gdp. the growth of world trade was even more impressive, at about 7 per cent on an annual average basis. this period of robust growth benefited most nations, and was strongest in emerging - market countries such as china, india, and brazil. in industrialized countries, growth was also steady and solid. what we are now confronting is a marked slowdown in global economic growth, emanating primarily from the sharp correction under way in the u. s. housing market and the associated tightening in credit conditions linked to the collapse of the u. s. subprime - mortgage market. i will come back to discuss these financial developments in a moment. but in keeping with the theme of taking a longer - term perspective, it's important to note that some slowing in global economic growth was necessary. after five to six years of nearly unprecedented growth, levels of economic activity around the globe | 0.5 |
1 percent in the past two years. the extent of deflation in japan is much smaller than that during the great depression, which was well over minus 10 percent. in addition, japan is suffering from the burst of asset price bubbles in the late 1980s. asset prices fell dramatically. now, stock prices are one - third of the peak, and real estate prices are about a quarter of the peak during the bubble period. although stock prices are rising recently, real estate prices are still falling. asset price deflation, the decline in real estate prices in particular, is making a greater negative impact on the banking sector than the falling prices in goods and services. as japan is the only one among industrialized countries that suffers from the decline in both the general price level and asset prices, the bank of japan is the front runner in the fight against deflation among central banks around the world. under such circumstances, the bank has been, and will be innovative in the conduct of monetary policy. one unconventional policy measure is the purchase of risk assets, such as asset - backed securities and corporate stocks. the bank now purchases asset - backed securities, or abs for short, with corporate obligation as the underlying asset. we hope the abs market will grow with our purchase as a catalyst, and that it will help strengthen the weakened transmission mechanism of monetary policy. as businesses rely heavily on banks for their funding in japan, it is an important policy agenda to expand the channels of financial intermediation, such as the abs market, which are not vulnerable to banks'risk - taking capability. with a view to strengthening banks'intermediation function, the bank of japan purchases corporate stocks held by commercial banks. this is also an unconventional measure for a central bank. in japan, due to cross - shareholdings between banks and businesses, some large banks hold a substantial amount of corporate stocks. because of these holdings, banks are exposed to the impact of stock market volatility on their balance sheets, which may constrain their risk - taking capability. the sale of stocks to the bank of japan by commercial banks alleviates the potential negative impact on their financial position and enhances their risk - taking capability. in the course of taking these unconventional measures, we have learned a number of new things. among these, let me share with you two of them. first is the side effect of quantitative easing. within the quantitative easing framework, the market function is weakening in the money market. under zero interest rates, market | participants with their cautious investment attitude feel little incentive to lend in the money market, and as a result the market is shrinking. we firmly believe that the well functioning market is quite important in the efficient allocation of financial resources, and we do not in any way take such market shrinking lightly. this side effect, however, is unavoidable in my view. in implementing any policy measure, we need to weigh their effects and side effects against the economic situation. and, we judge that the positive impact of quantitative easing outweighs the side effect of shrinking money market, given the current japanese economic situation. second is how to maximize the precommitment policy effect under quantitative easing. during the period of zero interest rate policy from 1999 through 2000, the bank announced in its policy statement that it was committed to continuing with the policy until deflationary concerns were dispelled. compared with this rather descriptive announcement, the current commitment under quantitative easing is far more concrete and objective. the bank maintains that it continues with the existing policy until the published data of the core consumer price index show zero percent or above in a stable manner. the commitment reduces the freedom about the future course of monetary policy. because of such constraint, the policy impact tends to become more powerful. compared with the zero interest rate policy, medium - term interest rates under quantitative easing are lower and their volatility is smaller on average. in fighting against deflation under zero interest rates, we have found that the constraint of zero interest rates on monetary policy is an important issue for central bankers around the world. from our experience so far, it seems that the extent of policy constraint depends very much on the factors shaping the economic and financial situation. one factor, which influences the effectiveness of policy response under zero interest rates, relates to the banking system and the financial markets. both the banking system and the financial markets are the transmission mechanism of monetary policy. they need to be sound and efficient for the transmission mechanism to function effectively. in japan, at the moment the transmission mechanism is not functioning as is described in the standard textbook. the purchase of risk assets such as abs and corporate stocks is a policy measure to improve this mechanism. the banking system has not yet fully restored its soundness and stability, and the financial markets have not developed to the degree that they can smoothly provide " multiple avenues of financial intermediation. " the situation is quite different in the united states, where the banking system is sound and the capital markets are well developed | 1 |
29. 03. 2021 the spanish economy and the covid - 19 crisis : assessment, outlook and challenges europa press informative breakfast pablo hernandez de cos governor * english translation of the original speech in spanish good morning, ladies and gentlemen. i would like to thank the organisers of this event for their kind invitation. i shall begin with a brief assessment of the period since the covid - 19 crisis broke. i shall then set out the banco de espana β s view on the outlook for the spanish economy. finally, i shall describe the medium - term economic policy challenges at the national and european level. taking stock of a year of pandemic : an unprecedented, persistent and uneven impact covid - 19 has caused a global economic recession of an intensity which, in most geographical areas, is unprecedented. the crisis is, moreover, proving very persistent : as of today the pre - pandemic levels of activity have not yet resumed in most countries. indeed, the successive waves of the pandemic have checked the recovery, particularly in the sectors most exposed to the restrictions. in spain, this impact is particularly marked. gdp declined by 10. 8 % in 2020 as a whole, a slump appreciably greater than that in the euro area ( - 6. 8 % ). at end - 2020, spanish gdp was still 8. 9 % below its pre - pandemic level, while this gap was 4. 9 percentage points ( pp ) in the euro area. several reasons account for this more pronounced impact in our country. one was the greater intensity of the pandemic initially, which led to harsher containment measures in spring last year. another was the greater weight of the sectors most affected by these measures. but the impact is also the outcome of the smaller size, on average, of our firms. smes are less adaptable to this shock, given that they usually face greater obstacles in gaining access to external financing ; their fixed costs are, in proportion to their turnover, higher ; and their levels of digitalisation are generally lower, which hampers their access to remote working. the first two editions of the banco de espana β s survey on business activity confirm these circumstances. the impact of the crisis has been very uneven, as the sectoral outlook evidences. thus, while effective social security registrations1 were, in february, 6. 8 % down on their prepandemic level, the figures were significantly worse in the sectors whose activity has most | ' s monetary policy strategy, policy tools, and communication practices and will include outreach to businesses, community groups, academics, and other interested parties. as chairman powell has indicated, with labor market conditions close to maximum employment and inflation near our 2 percent objective, now is a good time to take stock of how the federal reserve formulates, conducts, and communicates monetary policy. as part of this outreach effort, the federal reserve system will hold a research conference june 4 - 5, 2019, hosted by the federal reserve bank of chicago and featuring outside speakers and panelists. the federal reserve board and reserve district banks will also be holding outreach and public events as we seek views from a wide range of interested parties. beginning in the summer of 2019, the fomc will draw on what it has learned from the conference and the system outreach events as it assesses possible ways in which the fed's strategy, tools, and communication practices might evolve to best achieve, on a sustained basis, the twin goals of maximum employment and price stability assigned to it by the congress. we anticipate making our findings public after the fomc concludes this review sometime in 2020. concluding thoughts the u. s. economy enters 2019 after a year of strong growth, with inflation near our 2 percent objective, and with the unemployment rate near 50 - year lows. that said, growth and growth prospects in other economies around the world have moderated somewhat in recent months, and overall financial conditions have tightened materially. these recent developments in the global economy and financial markets represent crosswinds to the u. s. economy. if these crosswinds are sustained, appropriate forward looking monetary policy should seek to offset them to keep the economy as close as possible to our dual - mandate objectives of maximum employment and price stability. as we have long said, monetary policy is not on a preset course. going forward, we need, i believe, to be cognizant of the balance we must strike between being forward looking and preemptive and ( 2 ) maximizing the odds of being right. for example, were models to predict a surge in inflation, a decision for preemptive hikes before the surge is evident in actual data would need to be balanced against the cost of the model being wrong. speaking for myself, i believe we can afford to be patient about assessing how to adjust our policy stance to achieve and sustain our dual - mandate objectives. we begin the year as close to our assigned | 0 |
. namatanai sub - branch of a bank closed down due to communication and power problems and failures. i recently visited dogura. there is no mobile phone communication link between dogura and alotau in the milne bay province. β’ law and order / security issues are a serious concern. the law and order problems have caused the banks to reduce the size of their representations throughout png. over the years, banks had to close down in provincial centres. the closure of branches in popondetta twice in the last few years is an illustration. β’ an alarming law & order issue is the threat to staff of financial institutions. officers and families of staff employed in the financial system should not be placed in situations of psychological stress and anxiety caused by unsavoury elements of our society. the cases of kidnapping and threatening staff and their families is a problem that must stop. bank staff must be allowed to contribute to the development of our nation without threat or intimidation in carrying out their duties. microfinance microfinance institutions and development orientated institutions are important vehicles for involving those at the bottom of the pyramid to become financially included. the rapid growth of microfinance institutions over the last few years have began to make a positive contribution to providing banking services to those in the rural area and the informal sector of the economy. under the bfia, 2 microbanks were licensed by the bpng and they continue to expand their branch network and outreach to rural areas and informal sector, which were previously under - banked. to expand this outreach further into the remote rural areas, the png - adb microfinance project is piloting linkages of 3 rural groups to the nationwide microbank. this linkage involves provision of financial literacy and banking services to the members of these 3 groups, and will form the basis for expanding these arrangements to other areas of the country. traditionally, savings and loans societies in papua new guinea have been the vehicle for providing financial services to members who do not have access to banking services in the rural areas. two types of savings and loans societies ; provincial based societies and employer based societies. the provincial based societies have extensive branches at the provincial level, particularly to those in rural areas, while the employer based societies provide least expensive financial services to members of that institution. the savings and loans movement in papua new guinea have grown significantly over recent year in assets value. total assets increased to k730. 3 million as at end of march 2009, from k23 | down from k659. 0 million or 17. 3 percent in march 2008, and partly reflects the impact of the global financial crisis and the economic recession in the major industrialised countries. despite its significance to the local economy, financial resources channeled to the agriculture sector remains dismal. commercial banks β lending to the agriculture sector, excluding forestry and fisheries, totaled k147. 7 million in the march quarter of 2009, which was 3. 1 percent of total lending. this compares to k104. 1 million and 4. 0 percent of total lending in march 2008. these amounts compare poorly against lending to the other sectors of the economy, including commerce ( retail and wholesale trade ), manufacturing, transportation, construction and services such as hotel and real estate ( see chart 3 ). the financial sector reforms have created the foundation for an efficient and sound financial system that assist the course for stability and growth, which provides an opportunity for the financial sector to introduce new financial products that are suitable for the papua new guinean economy. the new area of banking that has been successful in several developing countries is electronic or mobile money banking. electronic banking products have enabled banks to capture the un - banked population, provide financial literacy and significantly reduce the cost of banking. mobile phone banking and branchless banking operating through agents have become a norm to bring banking services to the rural areas. the fragmented characteristics of the png economy suggest that mobile money or electronic banking is the way forward to provide financial services to the mass in the rural areas. the rapid economic growth in the last five years has created opportunities for bank expansion. the increase in business activities requires commercial bank presence in respective regions of the country. the presence of a fully licensed conventional bank can increase the efficiency of the financial intermediation process and promote economic development. however, many banks have indicated that some of the branches are unprofitable due to the high cost of operations. to circumvent the high cost of running full branches, the commercial banks have expanded the net work of atms and eftpos, which has complemented branch net work and in some instances have become substitutes for branches to a limited extent. the existences of atms and eftpos have made banking easier and efficient in the rural areas. however, these developments will not succeed if : β’ infrastructure is not in place for investors to build on. mobile banking and branchless banking requires transport, power, and communication infrastructure. e. g | 1 |
. in the following weeks, coming to such an agreement was very difficult and necessitated tremendous efforts from all those involved. but i am grateful that in the end, an agreement was reached. if it is completely implemented, the new programme will put greece in a position to grow again and to reap the full benefits of participating in our common currency. the ecb contributed, in line with the provisions laid out in the legal framework, to the negotiation of the programme. in addition, the ecb closely monitored the provision of emergency liquidity assistance by the bank of greece according to our rules, taking into account the prospect of a successful completion of the negotiations at any point in time. completing emu : following up on the five presidents β report the negotiations over the summer revealed again the fact that our institutional framework is still not commensurate with the requirements of sharing one currency. in the five presidents β report that we published shortly after the last hearing, the five authors shared one common conviction, namely that to make monetary union stable and prosperous, a more complete union is necessary. but we did not only outline this common conviction ; we also presented a concrete roadmap showing how to attain this objective. this roadmap should now guide our discussions in the months to come. from our perspective, two elements are of particular importance. first, despite the best efforts of all actors involved, the crisis has shown that monetary union requires a political centre ; a centre that can take the relevant fiscal, economic and financial decisions for the euro area as a whole in a swift and transparent manner with full democratic legitimacy and a clear set of responsibilities given to it by the legislators. it is in this spirit that i have called repeatedly for a move from rules - based coordination to sharing of sovereignty within common institutions. the report proposes a euro area treasury as one example. such ideas now need to be spelled out. but we should also go further with regard to our policies. the report makes clear that emu will also need to strengthen its tools to manage and prevent the build - up of fiscal, financial and other macroeconomic risks. in the last few years, notably with the reforms strengthening the economic governance framework and setting up the esm, ssm and srm, we have bis central bankers β speeches made important first steps in improving our crisis prevention and crisis management toolkit. but we are not there yet. most imminently, we should move towards completing banking union through a common backstop for the single resolution | a commitment from policymakers either to ensuring the swift achievement of this aim or to going beyond the aims envisaged in these programmes once economic growth has picked up. let me turn now to the contribution that stability - oriented structural reforms, particularly of euro area labour markets, can play in reducing unemployment and in supporting the stability of the euro. the high level of european unemployment is quite rightly a source of deep concern and should be addressed at a fundamental level. clearly, the approaches that are most likely to have a lasting effect are those that address the root causes of the problem, not just the symptoms. the root causes of high unemployment in the european union are structural rigidities in the labour market as well as tax and public transfer policies. this view is supported by a wide body of academic literature and was also a key finding of the oecd jobs study. it is obvious that structural problems require structural solutions. implementing an inflationary monetary policy would not result in lasting reductions in unemployment, but would actually serve to exacerbate the problem over the medium term. i recognise that structural reforms are not always easy to implement. the benefits are often enjoyed in the medium term, while short - term costs for some groups may mean that reforms are vigorously opposed by interest groups. although there is a common objective of reducing unemployment, there is no common programme of reforms that will work in all countries. while it is possible to learn from the experience of others, each member state will wish to develop workable policies that reflect its own particular circumstances. although the path of structural reform is not always an easy one, it is the only way in which we can achieve the lasting reductions in unemployment that are so urgently needed. only structural reforms that aim to create stable labour markets in which there is flexible interaction between supply and demand will ensure that the benefits of emu in terms of economic growth are achieved to the maximum extent possible. conclusions to conclude, economic and monetary union provides a great opportunity to create and maintain a large zone of price stability and economic prosperity in europe. however, while price stability is a necessary condition for fully grasping the opportunities of emu, it is not, in itself, sufficient. stability - oriented polices regarding the development of national fiscal positions and the functioning of labour markets are also of crucial importance. as i have explained, the benefits of emu will not come in a quasi - automatic way. while monetary policy will make its contribution by following policies that maintain price stability, other economic policies | 0.5 |
brothers. it then became clear that many banks lacked sufficient resilience to the sudden changes in the financial markets. it also became clear that the current regulations for the banks did not sufficiently manage the risks to which the banking system was exposed. one conclusion drawn by the basel committee was that some banks had neither enough capital nor sufficiently good quality of capital to be able to manage the losses that arose. another conclusion was that global regulation was needed regarding the banks β liquidity risk management. a new reform work aimed at remedying these shortcomings and supplementing basel ii was begun by the basel committee. in 2010, a package of new reforms was presented in the form of what is usually termed the basel iii. the main aim was to strengthen the bankΒ΄s capital and to introduce new requirements regarding their liquidity management. the work on finalising basel iii is now being completed. when this work is done, what remains is for the basel committee members to incorporate the new regulations into their national legislation. this will probably be a time - consuming process. sweden will be dependent on how this will be incorporated into eu regulations and directives and we will of course be involved in this work. i will now turn to some of the changes the coming bank regulation will entail. a leverage ratio requirement counteracts unhealthy build - up of debt one lesson from the financial crises we have experienced is that most of them have their origins in one or more actors having borrowed far too much money. the larger the debt, the more serious the problems will be in a crisis situation. it is in this context that it is important that we are now introducing a requirement that is not risk sensitive to complement the risk - weighted capital requirement. the leverage ratio requirement is a simple and transparent measure that will limit the banks β capacity to borrow too much regardless of what operations they conduct. more specifically, a bank β s leverage ratio is its capital in relation to its total assets. the basel committee has previously agreed on a lowest leverage ratio requirement for banks of three per cent and for global systemically important banks an even higher leverage ratio requirement. for the last two years, the riksbank has been recommending that a leverage ratio requirement of five per cent should be introduced gradually for the four major 5 swedish banks. however, it is not self - evident what level the leverage ratio requirement should have. there are several academic studies in this field which indicate that a leverage ratio requirement should be much higher than the levels now being | the purpose of setting out formal targets is to provide a clear indication of the downward path for inflation over the medium term so that firms and individuals can take this into account in their economic decision - making.... the inflation targets also provide information on the specific objectives to which the monetary policy actions of the bank will be directed in the period ahead and through the medium term. this information should make the bank β s actions more readily understandable not only to financial market participants but also to the general public and should provide a better basis than before for judging the performance of monetary policy. see bank of canada ( 1991 ). bank of canada ( 1991 ), pp. 10 - 11 credibility, inflation, and inflation expectations after inflation fell to 2 per cent, the expectations of forecasters and businesses soon began to fall in line with the targets. at first this was for expectations at the 2 - year horizon. this then lengthened to the 6 - to 10 - year horizon. finally, long - term expectations of inflation in financial markets, as expressed by the difference between 30 - year yields on conventional and index - linked bonds, fell in line with the 2 per cent target midpoint in 1997. what was particularly noticeable after just a couple of years of targeting was that expectations over a 2 - year horizon or longer tended to be affected very little by what was happening to current inflation rates, whether for the total cpi or for a measure of core inflation. this was in marked contrast to earlier periods in canadian history, in which expectations for the future had been fairly tightly linked to recently observed inflation rates. with the low inflation target becoming increasingly credible, the whole nature of the inflation process seemed to change. the short - run response of inflation to measures of excess demand and supply appears to have fallen during this period. and the response of inflation to relative price shocks, such as changes in the exchange rate and energy prices, also seems to have declined. these changes have had the effect of reinforcing the stability of the inflation process and, therefore, of inflation itself. overall, it became increasingly evident through the last decade that the inflation target deals with expectational problems. among close observers of the economy, as well as businesses and those bargaining over wages, it promotes a much greater degree of confidence and understanding than monetary targets or a vaguely expressed desire for price stability ever did. people care about inflation. therefore, when the focus of policy is on inflation itself and when accountability is in terms of a specific measure of | 0 |
, but i thought it would be more effective if we engage with all the directors together. it is the joint responsibility of the chairman of the board and the directors, both whole time as well as non - executive or part time directors, to ensure robust governance in banks. ii. ensuring requisite qualification and expertise in the board 7. the banking regulation act prescribes certain qualifications for appointment as directors in the board of banks. additionally, the reserve bank has issued guidelines on the β fit and proper β criteria for the directors. the objective is that board members should have requisite expertise and demonstrate competence and integrity. for this, it is of utmost importance that the directors keep themselves updated with material changes in the bank β s internal environment as well as the external factors that have a bearing on the bank. a balanced combination of skills, diversity and expertise commensurate with the size, complexity and risk profile of a bank is what will drive it towards sustainable resilience. these skills should be enhanced by ongoing orientation programmes for the directors. directors must exercise care, prudence and diligence in the discharge of their functions. duty of loyalty implies an undivided and unselfish loyalty to the bank and demands that there shall be no conflict between duty and self - interest6. iii. objective and independent board 8. individual directors should not have any conflict of interest which may hamper their objectivity and independence. it is the responsibility of the board to ensure that policies are in place to identify potential conflicts of interest and deal with them. in this respect, it is necessary that β independent β directors are truly independent ; that is, independent not only of the management but also of controlling shareholders while discharging their duties. they have to always remember that their loyalty is to the bank and no one else. directors should keep watch on actual or potential related party transactions. they are expected to ask pertinent questions and obtain the required information from the management before taking decisions. i am not advocating any the corporate governance of banks, jonathan r. macey and maureen o β hara, frbny economic policy review / april 2003 confrontation, but only stressing the need for the required level of alertness among all directors. iv. role of chairperson, board committees and managing director / chief executive officer 9. the role of chairperson is akin to the captain of a ship. for the chairperson to be able to navigate the board discussions and functions in the right direction, he / she should | ##oquence in several fora β including the g30 conclaves. in my brief address today, i will make a few observations on india β s prospects for growth with stability in both short and medium terms, by highlighting a few important aspects. during the discussion that follows, we could interact on the major focus, as well as specifics, that is of interest to the gathering today. short - term prospects for policy purposes, real gdp growth has been estimated to be in the range of 8 to 8. 5 % for the year 2008 - 2009 ( year ending march 2009 ). there are several reasons why this expectation is realistic. over the last five years, the indian economy has expanded on an average at 8. 7 percent per annum. in fact, gdp growth was 9. 6 percent in 2006 - 2007 and has moderated to an estimated 8. 7 percent in 2007 - 2008. this moderation is partly attributable to preemptive monetary policy actions that sought to dampen excessive demand pressures, while continuing with enabling environment to enhance supply - side responses in terms of investments. while there is a growing importance of global factors, india β s growth is mainly driven by domestic demand and supply factors. gross domestic savings continue to be around 35 % of gdp and available evidence points to continued increases in productivity. the realisation of the expected growth in the current year assumes normal monsoons and a slow - down in global growth by not more than what is currently assessed. monetary policy in india accords appropriate priority for price stability in recognition of its significance for the large segment of the poor who have no hedge. further, the policy recognizes that high growth benefits the poor with a lag, while inflation adversely affects them instantly. hence the current high - level of inflation is totally unacceptable, especially in terms of impact on inflation expectations. the monetary policy, however, reckons the complexities of the current bout of inflation. accordingly, the recent emphasis is on liquidity management with option to take recourse to all other measures, as necessary, so that demand pressures are contained consistent with supply - side responses from the markets and from the central and the state governments. the annual policy plans for a reduced rate of money supply in the range of 16. 5 to 17 % in 2008 - 2009, while correspondingly placing growth of non - food credit at around 20 %. as per indications, the currently elevated level of the wholesale price index may start moderating noticeably as monetary | 0.5 |
states the financial crisis and its aftermath have posed severe challenges around the globe, particularly in the advanced industrial economies. thus far i have reviewed some of those challenges, offered some diagnoses for the slow economic recovery in the united states, and briefly discussed the policy response by the federal reserve. however, this conference is focused on longer - run economic growth, and appropriately so, given the fundamental importance of long - term growth rates in the determination of living standards. in that spirit, let me turn now to a brief discussion of the longer - run prospects for the u. s. economy and the role of economic policy in shaping those prospects. notwithstanding the severe difficulties we currently face, i do not expect the long - run growth potential of the u. s. economy to be materially affected by the crisis and the recession if β and i stress if β our country takes the necessary steps to secure that outcome. over the medium term, housing activity will stabilize and begin to grow again, if for no other reason than that ongoing population growth and household formation will ultimately demand it. good, proactive housing policies could help speed that process. financial markets and institutions have already made considerable progress toward normalization, and i anticipate that the financial sector will continue to adapt to ongoing reforms while still performing its vital intermediation functions. households will continue to strengthen their balance sheets, a process that will be sped up considerably if the recovery accelerates but that will move forward in any case. businesses will continue to invest in new capital, adopt new technologies, and build on the productivity gains of the past several years. i have confidence that our european colleagues fully appreciate what is at stake in the difficult issues they are now confronting and that, over time, they will take all necessary and appropriate steps to address those issues effectively and comprehensively. this economic healing will take a while, and there may be setbacks along the way. moreover, we will need to remain alert to risks to the recovery, including financial risks. however, with one possible exception on which i will elaborate in a moment, the healing process should not leave major scars. notwithstanding the trauma of the crisis and the recession, the u. s. economy remains the largest in the world, with a highly diverse mix of industries and a degree of international competitiveness that, if anything, has improved in recent years. our economy retains its traditional advantages of a strong market orientation, a robust entrepreneurial culture, and flexible capital and labor markets. and | its way out of our fiscal imbalances, but a more productive economy will ease the tradeoffs that we face. finally, and perhaps most challenging, the country would be well served by a better process for making fiscal decisions. the negotiations that took place over the summer disrupted financial markets and probably the economy as well, and similar events in the future could, over time, seriously jeopardize the willingness of investors around the world to hold u. s. financial assets or to make direct investments in job - creating u. s. businesses. although details would have to be negotiated, fiscal policymakers could consider developing a more effective process that sets clear and transparent budget goals, together with budget mechanisms to establish the credibility of those goals. of course, formal budget goals and mechanisms do not replace the need for fiscal policymakers to make the difficult choices that are needed to put the country β s fiscal house in order, which means that public understanding of and support for the goals of fiscal policy are crucial. economic policymakers face a range of difficult decisions, relating to both the short - run and long - run challenges we face. i have no doubt, however, that those challenges can be met, and that the fundamental strengths of our economy will ultimately reassert themselves. the federal reserve will certainly do all that it can to help restore high rates of growth and employment in a context of price stability. bis central bankers β speeches | 1 |
some time, statistics have been suggesting a change in this behaviour. in contrast to the first phase, no additional customer deposits have been forming following the sale of foreign currency. one possible explanation for this development is that, instead of holding francs on their accounts, domestic investors have been keeping their assets in the relevant foreign currency, but have been hedging them using derivatives ( forward foreign exchange transactions and foreign exchange swaps ) ; 8 investors may, via their banks, have been purchasing francs using forward contracts, for instance. the banks, in turn, may have hedged the resulting foreign currency risk by demanding swiss francs on the spot market. this demand then ultimately resulted in upward pressure on the swiss franc, which the snb countered by means of appropriate foreign currency purchases. the rise in hedging transactions using derivatives is notable at swiss pension funds. for a long time, diversification and return considerations have prompted institutional investors to hold a significant portion of their assets in foreign currency investments. however, the associated currency risk is increasingly being hedged using forward foreign exchange as far as equity prices are concerned, the development of the swiss market has been similar to that of the rest of europe. cf. snb quarterly bulletin 3 / 2016, p. 26. for a detailed description of methodology and calculation of this item, cf. altermatt, lukas and baeriswyl, romain ( 2015 ), β the effect of the monetary base expansion on the balance sheet of domestic banks β, snb quarterly bulletin 1 / 2015, pp. 34 β 45. another possibility is that there have been significant changes in transactions with banks abroad. cf. auer, raphael a. ( 2015 ), β a safe haven : international demand for swiss francs during the euro area debt crisis β, snb quarterly bulletin 2 / 2015, pp. 40 β 52. seite 6 / 7 transactions. thus, as can be seen in chart 9, the pension funds β foreign currency exposure after hedging has declined steadily, while the share of their assets in foreign currencies has simultaneously risen to almost 50 %. in retrospect, full hedging of currency risk has turned out to be advantageous, due to the significant appreciation of the swiss franc and the comparatively low interest rate differential with other countries. at present, we are proceeding on the assumption that the economic outlook for the global economy will continue to firm. in the us, policy rates have been rising for some time and markets | currency area. what is theoretically uncontested is the following : in order to form a so - called optimal currency area, the member countries must be structured along similar lines or exhibit a high degree of flexibility. the benefits of a monetary union consist in a reduction of transaction costs for changing money, the elimination of internal exchange rate uncertainty, tighter competition thanks to easier price comparisons, the expansion of trade within a region, the prevention of competitive depreciation and speculative attacks on a currency, and growth in the liquidity of the financial markets. those advantages, in particular, that are associated with an increase in competition and an expansion in the trade of goods and services need time to develop. the costs of adopting a common currency include, first, one - off expenditure in connection with the introduction of notes and coins. in the european monetary union, these were estimated to be around 0. 5 % of gross domestic product. naturally, these costs are evident from the start and of a merely temporary nature. potentially the most significant costs of a currency union, however, arise from the loss of the individual countries'independent monetary policies. particularly at the early stage, these costs are a considerable factor. depending on the further economic development of the monetary union, they might eventually decline over the years. so where is the problem? the loss of autonomy in monetary policy is felt all the more with the growing number of asymmetric shocks. such shocks are disruptions that affect the economic structure, business activity and inflation of member countries in different ways. thus, they cannot be combated with a uniform economic policy. the recession of 1990 - 92 vividly illustrates the potential consequences of a single currency in regionally diverging economic situations. at that time, britain and italy withdrew from the european exchange rate mechanism and devalued their currencies. this measure permitted them to recover relatively quickly from the recession but they had to put up with higher inflation instead. conversely, and at the same time, germany had to contend with the inflationary effects of reunification. therefore, the german bundesbank had to raise interest rates to support price stability. what would have happened if the monetary union had already existed at the time and if italy, britain and germany had been members of the monetary union? italy and britain would not have been able to devalue their currencies. the sole instrument would have been monetary policy. the european central bank ( ecb ), had it already existed then, might possibly not | 0.5 |
shown any signs of panic or confusion. the bank of albania considers that the rationale behind is the prudence shown in the recent years with respect to the banking system β s financial stability. the high level of resilience and the quick recovery were a consequence of a number of important decisions. by adopting the new banking law in the republic of albania and a range of other monetary policy and banking supervision - related decisions, we have aimed at firming up the macroeconomic balances further and strengthening financial stability. at the focus of the bank of albania β s strategy were the good governance and better risk management, improved banking activity transparency to the customer and the strengthening of internal control. this strategy peaked with a large - scale, exceptional and contemporary programme of open and constant communication with the public. i believe that the favourable liquidity and capital situation characterizing the albanian banking system on the eve of the financial crisis last fall helped to cope with the withdrawal of deposits during september - october 2008. however, the bank of albania deemed as necessary the prudent monitoring of the situation and took a number of actions, which alleviated the pressures over the banking system substantially. these actions helped to relax the liquidity situation and they were in harmony with the ecb β s operational response to the crisis. first, an ad - hoc task force was set up. its main responsibility was and remains the daily monitoring of each individual bank. our direct conclusion was that the analysis should consider all micro - level aspects, each and every cell of the system and indicators. second, a number of facilities were adopted for the incessant supply of the system with the required liquidity. the type of auction for the injection of liquidity changed to fixed - price auctions, the collateral base for repo agreements expanded, the use of the required reserve increased from 20 to 40 percent, and the spread between the bank of albania β s key interest rate and overnight loan reduced from 175 to 75 basis points. third, through a special act, the bank of albania required higher capitalization of banking activity from the banking sector, adding to the guarantee of the banking sector β s financial soundness. current financial system developments show that the overall situation in the banking sector has improved constantly. deposits are back to the banking system, attesting to the improved public confidence. credit to economy has also shown signs of recovery. another positive development relates to the fact that lending in the albanian lek has increased considerably. the european markets have been | ardian fullani : monetary & financial stability policies β lessons from the crisis speech by mr ardian fullani, governor of the bank of albania, at the 8th international conference of the bank of albania : " monetary & financial stability policies β lessons from the crisis ", tirana, 17 september 2009. * * * honourable mr. prime minister, dear governors, distinguished guests, i feel deeply privileged to open the proceedings of the 8th international conference of the bank of albania entitled : β monetary & financial stability policies β lessons from the crisis β. i hope the proceedings will help the participants better realize the issues facing the global economy during this period and draw the proper lessons. i am personally convinced that the prominent speakers β reputation is a guarantee in this regard. before i invite the guests to discuss the features and lessons drawn from the global and regional crisis according to their viewpoints and experiences, allow me to say a few words on this conference. the topic chosen to be dealt with in this conference is at the forefront of the institutions β agenda, responsible for macroeconomic policies and financial system surveillance at a national and international level. the panic that followed the lehman brothers β failure almost a year ago transformed the turmoil in the u. s. mortgage loan market into a genuine globalwide financial crisis. the integration of the financial markets caused the crisis to spread swiftly, while the vital role of the credit system in free market economies transformed it into a global recession, hitting the east and south - east european countries as well. the experience gained so far has allowed a better acknowledgment of the causes that led to the crisis and the factors that triggered and accelerated its spreading, and a reassessment of the diverse supervisory and regulatory practices. i would like our discussions on the crisis to focus on two directions : what we learnt and what we could not learn from the crisis. among the numerous aspects debated at length, i would like to distinguish three of them : the dichotomy between the state and the market, the degree of confidence in the forecast models, and the importance of coordinating the pre - emptive measures. with respect to the β state vs. market β debate, i would like to re - stress my unwavering confidence in the market and our commitment as policy - makers to make it operate by the rules and efficiently 24 / 24. the last few years have witnessed the rapid development of forest models and techniques. avoiding the tendency to underestimate their high importance to the day - 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. 2 percent, deposits by 8. 8 percent, loan portfolio by 2. 6 percent, and net profit by 35. 0 percent. moreover, non - performing loans remain manageable, capitalization stays above the regulatory requirement, and liquidity is ample. following the government β s recent shift in strategy to contain covid - 19 β from imposing widearea lockdowns to granular quarantines β there has been a substantial improvement in the country β s covid situation. 1 / 4 bis central bankers'speeches daily confirmed cases stood at 1, 297 last november 18, significantly down from the peak of 26, 303 last september 11. against this backdrop, we expect the economy β s recovery to gain more traction. now let me go back to f. i. r. e. first, f for flexibility. the importance of flexibility β the ability to adapt and evolve β has come to fore in efforts to survive and thrive in the crisis. as far as the bsp is concerned, we exhibited flexibility by implementing unorthodox measures to ensure ample liquidity and maintain financial stability at a critical time. we extended short - term loans and remitted dividends in advance to the national government to support its covid - relief measures. we started purchasing government securities in the secondary market. we were also flexible enough to temporarily relax some regulations. the relief afforded to banks encouraged them to help their hard - hit customers as well. for instance, the bsp β s move to count loans extended to micro, small, and medium enterprises ( msmes ) as part of banks β compliance to the reserve requirement, to lower risk weights for certain msme loans, and to allow staggered booking of loan losses gave incentive for banks to lend. as we recover from the crisis, focus will shift from trying to survive the crisis to navigating the uncertainties of the recovery and post - crisis periods. individuals, organizations, and economies that are able to seize opportunities from the crisis and adapt will be the champions of tomorrow. this is a solid example of flexibility. this brings me to bsp β s key agenda : the digital payments transformation roadmap that we launched last year. the roadmap envisions a cash - lite economy where 50 percent of financial transactions are done digitally by 2023. last year, we saw a leap in digital payments to 20 percent of total financial transactions in the country versus only 1 percent in 2013. let me proceed to the next | and at every renewal, the bank β s intent has been to target low and stable inflation to ensure that canadians can make their economic decisions without worrying that inflation would erode the value of their money. 2and it has worked. this monetary policy framework has kept both inflation and expectations of future inflation low. longterm inflation expectations in canada declined from 4 % in 1990 to stabilize at 2 % around 1995. 3 although we don β t have measures of canadian inflation expectations in the 1970 β 80s, it is likely that they were as high in the 1970s as they were in the united states. there, inflation expectations averaged around 7 % over the mid - 1970s to mid - 1980s ( based on the university of michigan surveys of consumers ). inflation targeting has allowed households and businesses to spend less time and energy on trying to compensate β or find workarounds β for rising consumer and input prices. or put another way, it has allowed workers to bargain for and β expect β wage gains that recognize their skills and experience, not the need to compensate for the erosion of purchasing power. a perfect storm of higher prices this brings me to the humbling topic of where inflation is today, and why we have been surprised by its strength and persistence. inflation pressures have been higher and more tenacious than we expected, largely because the economic conditions of the pandemic were unprecedented. chart 7 says it all. back in january 2021, we projected an uptick in inflation β but we expected it would be transitory, falling back as supply chain disruptions eased quickly. but as you can see, we have revised inflation projections higher in each monetary policy report ( mpr ) since. this is largely due to repeated updates to our view of the strength and persistence of supply chain disruptions. 3 / 5 bis central bankers'speeches in fact, we can now say that we have faced a β perfect storm β when it comes to global and domestic inflation. first, the recovery took on a unique characteristic. goods consumption and housing activity quickly rose above pre - pandemic levels. that is, the pandemic generated a sharp shift toward goods consumption ( chart 8 ). this in turn strained and disrupted already weakened global supply chains, which i spoke about in my last speech. this sharp rebound in global demand for goods, along with pandemic - related restrictions and some weather - related events, created the perfect storm. the global supply of goods did not meet rapid growth in demand, causing goods prices to | 0 |
weathered these shocks reasonably well. inflation remains low by historical standards, and within the mandate to keep future inflation between 1 to 3 percent, on average, over the medium term. but this relative stability should not be taken for granted. good policy today does not necessarily guarantee good policy tomorrow, particularly when there is considerable uncertainty when confronting new shocks. new shocks can often necessitate new ways of confronting a dynamic economic landscape. many of these new challenges and associated price pressures can be linked to the growing role of china and other emerging market economies. globalisation and the increased interconnectedness this entails also implies that shocks to inflation ( and economic growth ) can be more easily and rapidly transmitted from place to place. indeed, the on - going financial market turbulence that began last august is a timely reminder of both the interconnected world we live in, and how quickly events can unfold. what began as difficulties in the us housing sector and the associated securitisation of mortgage - backed financial products, has developed into a re - pricing of risk more generally, increased global financial market volatility and tighter credit conditions. since the december monetary policy statement there has been ongoing turbulence in international financial markets and a deterioration in the outlook for the united states and european economies. we will be watching these developments closely, particularly their implications for the asian and australian economies and for world commodity prices. at a structural level, financial globalisation also highlights the possible limits to conducting monetary policy in a small open economy such as ours β particularly when our business cycle is out of synch with the rest of the world. relatively low global interest rates over the past five years have impacted on the transmission mechanism of monetary policy, essentially acting to delay the effects of reserve bank policy changes on household and firm behaviour, and ultimately on inflation. both current and longer - term factors act to test the limits of our monetary policy framework on a regular basis. nevertheless, new zealand β s policy framework remains well within the norms of international central banking practice. although there are, as always, challenges facing the conduct of monetary policy as we move forward, we are well - placed to take them on. references fitch ratings ( 2007 ) β house prices and household debt β where are the risks? β special report, 29 july. imf ( 2007 ) world economic outlook, october. imf ( 2006 ) world economic outlook, october. imf ( 2006 ) world economic outlook, april. rbnz ( 2007 ) finance and expenditure select committee inquiry | into the future monetary policy framework β submission by the reserve bank of new zealand, july. rbnz ( 2007 ) monetary policy statement, december. sill, k. ( 2007 ) β the macroeconomics of oil shocks β philadelphia federal reserve business review q1, p. 21 - 31. stock, j. and m. watson ( 2002 ) β has the business cycle changed and why β, nber working paper 9127. | 1 |
the whole economy. in that case, we would have had a much poorer development than is indicated in figures 1 and 2. when it comes down to it, the repo rate has not been higher than 1 per cent for around one year now. sometimes it is claimed that even this is a high level. but usually one is then comparing it to countries that have been hit harder by the crisis, such as the united states and the united kingdom, where housing prices have already fallen substantially and one therefore does not need to worry so much about a continued upturn from an already high level. moreover, the relationship between the policy rate and credit growth, which is of course important in this context, is not straightforward. figure 3 shows, for instance, that credit growth in sweden is higher than in the euro area, despite the riksbank β s policy rate being higher than the ecb β s. the riksbank β s strategy has been to combine a marginally higher repo rate with communication that emphasises that we find the development of high credit growth worrying. the slightly higher interest rate does have some effect in itself, but perhaps its main function is as a concrete β reminder β of the risks, making it an important part of the communication. one may of course discuss how effective this type of policy is. however, i am fairly certain that, combined with the measures taken by finansinspektionen ( the swedish financial supervisory authority ), it has had at least some effect in the desired direction β that both indebtedness and housing prices in recent years would otherwise have increased more and faster than they actually have done. i am even more convinced that the policy and the communication surrounding it have helped increase awareness of the problems. my view is that the risks linked to developments in the credit and housing markets have been given an increasing amount of attention in the media and in the general economic debate recently, which appears to be confirmed in figure 4. despite the relatively good developments in sweden in recent years, and the fact that the repo rate is still low, the policy conducted by the riksbank has given rise to considerable debate. some arguments in this debate have been understandable and natural. the size of the risks linked to household debt and developments in the housing market is, for instance, one question that certainly can and should be discussed. this is something that is inherently this was something that also affected policy to some extent before the crisis, see for instance nyberg | the banking sector and in the oversight of the payment and securities settlement systems ( system oversight ) - but also contributes actively to overcoming crises. in a crisis, the national bank - like any other central bank - is primarily responsible for maintaining liquidity. on the one hand, it can do this by ensuring that the market is amply supplied with liquidity. and on the other hand, as lender of last resort ( lolr ) it can also provide emergency liquidity assistance to individual banks that are illiquid but still solvent. here too we adopt internationally accepted procedures. many central banks still prefer not to inform the commercial banks in too much detail about their role as lolr. quite understandably, they want to prevent the banks from being lulled into a false sense of security. the jargon term for this is β constructive ambiguity β. by contrast, the swiss national bank has opted - after carefully weighing up the moral hazard implications of its conduct - to communicate its terms to the banks both clearly and well in advance. the modalities are described in the guidelines of the swiss national bank on monetary policy instruments of 30 april 2004. to receive an lolr credit, a bank must on the one hand be systemically relevant and, on the other hand, be solvent and able to furnish sufficient collateral. without collateral, the national bank cannot grant any credit. this fundamental principle is enshrined in the national bank act. by disclosing our terms to the banks in advance, we are eliminating any possible misinterpretation of the liquidity risks and helping to ensure that preparations are in place for a liquidity crisis which can never be ruled out altogether. this is what we refer to as β constructive clarity β. conclusion to sum up, i would like to reiterate that the situation of the swiss financial system is stable. however, this gratifying conclusion should not allow us to rest on our laurels. maintaining a stable financial system in the long term calls for constant efforts to prevent and cope with crises. while this challenge must primarily be met by the private sector, the authorities can, should and must support its efforts. financial stability report 2004 ( 424 kb ) | 0 |
. this means that the solution needs to originate from within the firms, from their leaders. what do i mean by the culture within a firm? culture relates to the implicit norms that guide behavior in the absence of regulations or compliance rules β and sometimes despite those explicit restraints. culture exists within every firm whether it is recognized or ignored, whether it is nurtured or neglected, and whether it is embraced or disavowed. culture reflects the prevailing attitudes and behaviors within a firm. it is how people react not only to black and white, but to all of the shades of grey. like a gentle breeze, culture may be hard to see, but you can feel it. culture relates to what β should β i do, and not to what β can β i do. stephanie chaly, james hennessy, steven manzari, hamid mehran, thomas noone and joseph tracy contributed to this speech. saabira chaudhuri, β banks β legal tab still running higher. β wall street journal, july 23, 2014. o β toole and bennis, β what β s needed next : a culture of candor. β harvard business review, june 2009. bis central bankers β speeches a number of factors have contributed to the cultural failures that we have seen. an important question is whether the sheer size, complexity and global scope of large financial firms today have left them β too big to manage. β large problems can originate in small corners of these firms, as illustrated by the financial products group experience at aig, and the β london whale β episode at jpmorgan. differences in attitudes and business practices across countries can also be difficult to reconcile within a firm β s overall compliance function. recent fines against bnp paribas for violating u. s. sanctions programs and providing dollar funding to a country engaged in genocide and against credit suisse for facilitating tax evasion by u. s. citizens, point to these challenges. another important element affecting culture has been the shift in the prevailing business model away from traditional commercial and investment banking activities to trading ; that is, from client - oriented to transaction - oriented activities. clients became counterparties β the other side of a trade β rather than partners in a long - term business relationship. in general, interactions became more depersonalized, making it easier to rationalize away bad behavior, and more difficult to identify who would be harmed by any unethical actions. high - powered pay incentives linked to short | story. in typical recessions, the challenge is that there are not enough jobs available for the number of people seeking work. in today β s job market, demand for labor is very high β we hear that from employers who are finding it hard to fill all their openings β and a lot of people are getting hired. at the same time, people are leaving their jobs in large numbers, either to look for new work or exit the labor force altogether. this cycle of hires and quits reflects the extraordinary nature of the pandemic, as workers and employers adapt to rapidly changing circumstances. these vacancies won β t be filled instantly β it takes time for employers to find the right workers. but as demand for workers and progress on hiring remains strong, i am confident that we will continue to see meaningful job gains and continued progress toward maximum employment. the last aspect of the outlook that i β ll speak about is inflation. recent data show core inflation, which excludes volatile food and energy prices, running at about 3 - 1 / 2 percent, which is well above the federal reserve β s longer - term 2 percent goal. taking a closer look at the data, it β s clear that this spike in inflation largely reflects the transitory effects of the rapid reopening of the economy, which is pushing supply and demand in extreme ways. as the economy gets through these unusual dynamics, i expect inflation to come back down to around 2 percent next year. given the complexity of this topic, i β ll go into this in more detail. i find it helpful to view recent developments in terms of three categories. the first is related to prices for goods and services that underwent huge declines during the pandemic but are now rebounding as the economy reopens. for example, in the first year of the pandemic, prices for airfare and lodging fell sharply as people cut back on travel. since then, we β ve seen these rebound toward their pre - pandemic trends, pushing the inflation rate up. one simple way to get a better read of inflation that is not overly influenced by these big swings in prices is to take the average inflation rate from the start of the pandemic. that calculation shows that core inflation has averaged 2 - 3 / 4 percent since february of last year. but even that number is heavily influenced by the effects of the pandemic on the second category : used vehicles. even though used cars and trucks are a small category, their soaring | 0.5 |
##8. this allows the bank of namibia to focus on its mandate to authorize payment instruments such as nampost smart card and electronic money instruments such as issued by mobipay. to assist the bank of namibia in carrying out the functions of oversight of the abovementioned service providers to ensure compliance with set standards. since its establishment, pan has developed in terms of both its structural arrangements and its stature. today, pan has a governing council, an executive office which is being launched today, and several payment clearing house ( pch ) working groups or committees. this has increased its operational efficiency and service delivery. bis central bankers β speeches pan has achieved many goals over the last several years. although i do not want to go into details of all the particular achievements, allow me to highlight a few major milestones at this occasion. pan facilitated the development of the national payment system vision 2015 which casts the roadmap for both bank and non - bank stakeholders to participate in a broader payment system which is efficient, cost - effective and secure. pan currently runs three pchs, each representing a retail payment stream being ; cheque, cards and electronic funds transfer ( eft ). this has increased the operational efficiency and effectiveness of the industry for the benefit of the national payment system in the provision of these services. ladies and gentlemen, with the commissioning of this office, pan will be better positioned to continue to be the co - ordinating body through which payment system stakeholders are able to voice their views, contribute to a mutually beneficial national payment system and through which payment system projects can be co - ordinated. any providers of payment services that are not authorised by pan are operating illegally and we therefore call on any payment service providers to please enquire at this office. it is with great pleasure therefore, that i commission the office of pan together with its new logo and website. please join me in congratulating pan on these achievements which pave the way towards an exciting and bright future for the national payment system of namibia. in conclusion, i have no doubt that pan will live up to its mission, β to maintain a world - class payment system that meets domestic, regional and international requirements β. thank you. bis central bankers β speeches | we cannot manage our own economic affairs without the departed colonial powers β assistance. it is astonishing to know that many an african country will still prefer a european consultant to advice on economic matters. this is in spite of the fact that over the years, africa has spent enormous amounts of financial resources on education and training. unfortunately, we are still reluctant to practically demonstrate our skills. we still want to think that we are less experienced to be experts in economic matters. as a result, we continually believe that we need to build new capacities or we need assistance from the departed colonial powers. what we forget is that expertise comes with practice and if we fail to practice what we have learned, we will never become experts at anything. i am not advocating a position where africa should not have any economic ties with other continents. on the contrary, what i am advocating is economic ties with other continents that are mutually beneficial. for too long africans have been hoodwinked by non - africans where, in our desperation to gain their acceptance, we agreed to non - beneficial economic deals. the lesson we must have learned from these experiences should be that, as a general rule, no nation helps another nation unless it is in its self interest. it is therefore time that as africans we must start believing that we have the capabilities and the expertise to run our economic affairs to our benefit. the third factor i would like to mention briefly is that of culture and tradition. while i firmly believe that a nation without culture and tradition will be a lost nation, we should also recognize the fact that all cultures do evolve. a particular culture or tradition that was cultivated at a particular period of time may hinder our economic development if we were to continue to practice such a tradition without any adaptation. for example, i am told of an african tradition where when a man dies, all his cattle are slaughtered at the time of his burial. in most african countries, we still continue to practice communal land tenure system. these are some of the practices that have the potential to hold us back to achieve our full economic potential. what is then the way forward to emancipate africa economically? it can be done and all what we need to do is to re - focus our mind on what is important for our economic development and less on what is convenient. i believe that we can create the necessary momentum for our economic emancipation if we continue to address those issues that are important to africa β s economic development. following are some of the issues that we need | 0.5 |
##c maintains its current strategy of not reinvesting those proceeds. in addition, about $ 140 billion of treasury securities mature between now and the end of 2011, giving the fomc scope to reduce its asset holdings even further if it chooses to not replace some of those maturing securities. while the passive strategy of relying on redemptions may be appropriate for now, it might not be sufficient over the longer - term. one problem is that relying only on redemptions would still leave some mbs holdings on our balance sheet for several decades. as indicated in the minutes from the january meeting, the fomc intends to return to a treasuries - only portfolio over time. this consideration could motivate the fomc to sell its agency debt and mortgagebacked securities at some point, once the economic recovery has progressed sufficiently. draining tools : control of short - term rates under the strategies just described, the fed β s asset holdings are likely to still be elevated at the time that the fomc wants to raise short - term interest rates. that creates a challenge for controlling those rates, because of the large amounts of reserves that were created from the fed β s purchases of those assets. it is therefore important for the fed to determine the way in which it will raise short - term interest rates in an environment with so much liquidity β a topic that i will now cover. the primary vehicle for making adjustments to short - term interest rates in that environment is the ability to pay interest on reserves. we would expect changes in the interest rate on reserves to have a significant influence on other short - term interest rates. however, in order to ensure our ability to influence those other short - term interest rates, we have been developing two tools that can be used to reduce the large amount of excess reserves in the banking system β term deposits with banks and reverse repurchase agreements ( reverse repos ) with a broader universe of financial institutions. let me first provide an update on the progress we have made in developing these tools. on term deposits, the federal reserve has received public comments on the proposed structure of the facility that was published in december, and we are working toward its final form. as described in the recent monetary policy report, the federal reserve expects to be able to conduct test transactions in the spring and to have the facility fully ready, shortly thereafter, to conduct transactions when needed. on reverse repos, we have already successfully run small - scale operations using treasury and agency debt | but also operational risk, credit risk, regulatory risk, reputational risk, you name it β libor has it all. so the possibility of a failed libor transition is something that should keep all of us up at night. but let β s try and stay positive in these rather dark times β let β s talk about what progress has been made, and what you can do now to minimize the uncertainties that remain. my remarks will focus on the transition in the united states for u. s. dollar libor, but i will touch on some international developments that are relevant to that transition. libor : the end of an error some people have asked whether the end of libor will be pushed out somehow to allow more time for transition. some people, i suspect, may even hope that this ends up being the case. after all, the task is daunting. but i would remind folks that the adage is not β why do today what can be put off https : / / www. newyorkfed. org / newsevents / speeches / 2020 / hel200929 1 / 6 30 / 09 / 2020 the libor countdown has not stopped - federal reserve bank of new york until tomorrow? β quite the opposite. indeed, the uk β s financial conduct authority ( fca ) has reiterated that the pandemic has not altered the central assumption that firms cannot rely on libor being published after the end of 2021. 3 in fact, the fca has said that even though libor will continue until then, announcements about its end could come as early as this november or december. 4 the financial stability board ( fsb ) β which is chaired by randy quarles, the federal reserve board β s vice chair for supervision β has also emphasized that the pandemic should not prevent firms from removing any remaining dependencies on libor by the end of 2021. 5 the alternative reference rates committee ( arrc ), which is the private - sector committee convened by the federal reserve to facilitate the transition away from u. s. dollar libor, has recommended that floating - rate notes, syndicated loans, consumer loans, and securitizations should already include definitive fallbacks to cope with the end of libor, and has set target dates by which no new libor - based products should be issued. 6 the arrc also has provided a timeline and resources to ensure that vendors and operational systems are ready for the switch to alternative rates | 0.5 |
the us and in global financial markets drove a significant downturn in demand for new zealand β s exports and damaged business and consumer confidence. conclusion our modelling work indicates that the real effective exchange rate is above the level that can be justified by cyclical economic variables and that its current level is unsustainable over the longer term. the nominal twi is currently 4 percent below the historical high reached in july 2014. this decline in the twi is small in relation to the 45 percent fall in global dairy prices since february 2014. we expect a significant further depreciation of the exchange rate as a result of the weakening in price of our dairy and log exports. past experience suggests that when the new zealand dollar begins depreciating from an unjustified and unsustainable level, the ultimate adjustment can be large. some of this reflects the limited overall liquidity in the new zealand dollar markets, and the potential for pricing discontinuities when overall investor sentiment changes markedly and investors cut or exit their positions in volume. several factors could cause such a change in financial market sentiment. these include a deterioration in global risk appetite as the result of an adverse economic or geo - political shock, further declines in new zealand β s commodity export prices, a slowing in new zealand β s or china β s economic growth, and stronger indicators of economic growth in the us. under the current us outlook, the federal reserve is expected to start raising interest rates in the second or third quarters of next year. a stronger outlook for the us economy would likely trigger greater investor flows into the us dollar on the expectation that the federal reserve would begin to tighten sooner. bis central bankers β speeches in the reserve bank β s view, the combination of these factors makes the new zealand dollar susceptible to a significant downward adjustment over the coming six to nine months. such an adjustment would be welcomed by the bank as a move towards a more sustainable exchange rate level. bis central bankers β speeches | is often associated with the culture of technology companies - a " move fast and break things " philosophy that can be incompatible with prudent banking practices. prudent banking, in contrast with a startup culture, requires a cautious approach to new business models, a recognition of and respect for operating in a regulated industry, and an appropriate degree of expertise and oversight. merging these philosophies - the need to innovate in an increasingly competitive banking industry, and the need to have management and board oversight that is appropriate in the highly regulated banking system - can be difficult but is critical for long - term success. having appropriate expertise to engage in new activities within a bank can be particularly challenging with the seemingly constant advent of new 4 / 7 bis - central bankers'speeches technologies, like artificial intelligence, that have the potential to transform banking. while innovation in banking is important, banks may have difficulty attracting relevant expertise. but with the potential of new technologies comes grave responsibilities to ensure that they are well understood, well - managed, and used appropriately when they are introduced in a banking environment. the banking system is not an unregulated petri dish. regulators play a vital role in making sure the banking system is safe and sound in light of these evolving risks. at a threshold matter, regulators must consider the many tradeoffs involved in how to support banks in their quest to be agile in offering new services and responding to new and evolving risks, and in how to appropriately identify, supervise, and regulate these risks. in my view, one of the most important roles of regulators in the face of changes to the banking system is to support responsible innovation as banks provide credit to their communities and customers. 3 in doing so, they must provide clear guidance to regulated institutions to help facilitate effective risk management, and support safety and soundness. the " start - up " mindset can be a particular challenge for regulators, as the communication of traditional supervisory messages may not resonate when delivered to directors and bank management that are not accustomed to interacting with examiners, or who are unfamiliar with operating a business in a regulated industry. in these situations, regulators must communicate clearly to ensure bank leadership understands and recognizes that safety and soundness must always be a key priority. the approach of asking forgiveness instead of permission is not compatible with the banking system. neither regulators nor banks have the ability to predict the future, and yet as we look back on large structural shifts in the banking system, many of these longer - term trends | 0 |
. i would like to conclude with a beautiful quote from albert camus :'true generosity toward the future consists in giving everything to the present '. not sacrificing the long term to the'tyranny of urgency ', but preparing for the future unencumbered by the present. this sums up the professional commitment of each and every one of you, and our responsibility. you can count on the banque de france to support these wishes of lucid esperance so that in 2025, more than ever, it can reduce uncertainty and act as a beacon of stability. happy new year to you all, and to our dear country! i eurostat, flash estimate - december 2024 ii insee, consumer price index β provisional results for december 2024 iii 18, 2 % for the third quarter of 2024 iv banque de france, macroeconomic projections, december 2024, 16 december 2024 v letta ( e. ), much more than a market, report published on 17 april 2024 vi draghi ( m. ), the future of european competitiveness, report published on 9 september 2024 4 / 5 bis - central bankers'speeches vii nagel ( j. ), villeroy de galhau ( f. ), a common call for a franco - german revival, tribune, 22 november 2024 viii villeroy de galhau ( f. ), " towards a realistic simplification : untying some of the knots in european banking regulations ", speech, 26 november 2024 ix camus ( a. ), the rebel, 1951 5 / 5 bis - central bankers'speeches | legislative proposals. iii the sooner an agreement is reached β hopefully by end - 2023 β, the faster we can build on these tools to regain control of debt dynamics. let me say upfront that the commission β s proposal is a step in the right direction. that said, the β fiscal rules trilemma β iv provides a useful matrix to analyse its merits relative to current rules. the trilemma states that it is impossible to fulfil simultaneously the following three objectives : ( i ) simplicity, which can also be understood as political intelligibility and ownership ( ii ) flexibility, i. e. the ability to adapt to specific economic situations or unforeseen developments, and ( iii ) enforcement, i. e. the extent to which the rule is binding. in practice, the current stability and growth pact includes too many β and too complex β flexibility provisions and escape clauses to compensate for the β one size fits all principle β, while efforts to improve its enforceability proved ineffective. the reform must strike a better balance between these three features β simplicity, flexibility and enforcement β in order to make the fiscal framework more effective and operational. as regards simplicity, the fact that the new framework is built around a single operational indicator, i. e. a net primary public expenditure aggregate, is a major improvement compared to structural deficits. in principle, this new indicator should be easier for governments to measure and oversee, and would entirely fall within their control. it is also simpler to use as a communication tool in the public debate, which would help to make the new rules politically intelligible and acceptable. on flexibility, the proposal goes a long way towards better tailoring the efforts required to country - specific circumstances. the expenditure path would be defined in a pragmatic process, based on a debt sustainability analysis and after a thorough discussion between the commission and member states. each country would commit to a national medium - term plan including structural reforms and public investment programmes. this process acknowledges that page 4 sur 4 debt heterogeneity is too high between member states to dictate a single debt reduction rule β 66 % of gdp in germany vs 144 % in italy in 2022 β while enhanced dialogue with national authorities should improve political ownership and hopefully compliance with the framework. but this brings me to enforcement. we should nevertheless seek to ensure that the national plans do not turn into political negotiations and result in insufficiently ambitious fiscal adjustments. i must admit that i do not 100 | 0.5 |
groups should be targeted and designed so as not to increase overall activity in the economy. this otherwise would further feed inflationary risks. measures should ideally also not be price - distorting to ensure that the price mechanism continues to work to reduce energy demand. in denmark, measures taken so far have mostly been in line with these recommendations. i see this as a testament to a sound economic policy setup. in fact, since i returned to denmark a few years ago after spending more than twenty years abroad, i have observed and been impressed by β and proud of β the extent to which sound economic advice plays a role in framing the policy debate in denmark. this tradition goes back perhaps 60 years to when the danish economic council was established. but the fixed exchange rate regime and its requirements of sound fiscal policy and sustainability arguably also play a role. this is a valuable feature of our regime. looking ahead the fixed exchange rate regime has advantages and drawbacks. i believe that the balance of these is such that the regime will continue to serve us well. most importantly, the fixed exchange rate policy provides a simple, credible and transparent nominal anchor for monetary policy, resting on the commitment and credibility built over 40 years of experience. it provides an important pillar in our stability - oriented framework for macroeconomic policy. it entails a clear separation of responsibilities between the monetary and the fiscal authorities. as i have already pointed out, the broad political support is an important part of the success of the regime, but also a feature that further reinforces the stability - oriented setup in its own right. * * * but there are also trade - offs * * * the choice of any currency regime, including our peg, also involves trade - offs. for one, the peg reduces destabilising currency swings against page 5 of 7 the euro. but it comes with the trade - off that it also eliminates currency movements that would have been warranted by macroeconomic fundamentals. it also removes the policy rate from the toolbox for targeting domestic financial conditions. this cost should not be overstated. in a small open economy closely integrated with global capital markets, financial conditions will always to some extent be driven by global factors. 2 but a clear trade - off we have experienced is episodes where pressure on the krone required a change of the policy rate in the opposite direction to what would have been desirable from the point of view of domestic economic conditions. for example, we increased the policy rate in 2008 going into the global financial | time, there has been a considerable decrease in prices for our imports, such as clothing, footwear and electronic equipment. from 2003 to 2008, this improvement in norway β s terms of trade alone boosted national income by more than 20 per cent, or a good 4 per cent per year. the picture of norway β s favourable situation has been reinforced by the very severe impact of the financial crisis on other western economies, while norway seems to have emerged with nothing more than a mild downturn. nevertheless, there are many challenges ahead. chart 1 relative labour costs deviation from the average for the period 1970 β 2009 per cent, 1990 β 20101 figures for 2010 are an average for the period 1 january β 19 august 2010. a rising curve indicates weaker competitiveness. sources : statistics norway, technical reporting committee on income settlements ( tbu ), oecd, ministry of finance and norges bank. norwegian labour has never been as costly as it is now. norwegian businesses may lose out in the competition for contracts given the current high level of spare capacity in other countries. there are frequent reports of businesses relocating activities to neighbouring countries, such as sweden. labour in sweden is perhaps as much as 30 per cent cheaper than in norway and the two countries are closely connected in terms of language and culture. the management of norway β s oil wealth poses another challenge. history has shown that countries that suddenly gain access to an abundance of resources have a tendency to deplete the values rapidly and then fall into decline. 9 since the introduction of the fiscal rule in 2001, oil revenue spending in norway has been increased by close to nok 110 billion. oil revenues now fund about 1 / 6 of government expenditure. without a fiscal rule, spending the paradox of plenty. oil booms and petro - states by terry lynn karl ( 1997 ) provides a good description of the problems facing oil - exporting countries. would probably have been higher. in the 1950s, 60s and 70s, the tax burden was steadily increased to finance higher government expenditure. the return on our oil wealth has now taken over as the source of funding for increased public consumption. chart 2 oil revenue spending1 in billions of nok, 2002 β 2010 structural non - oil deficit. source : ministry of finance. but looking ahead, funding norway β s welfare system will be demanding. increases in oil revenue spending cannot be sustained for much longer. oil production will decline. at the same time, we have been through a period in which the need for | 0 |
christopher kent : financial conditions and the australian dollar recent developments address by mr christopher kent, assistant governor ( financial markets ) of the reserve bank of australia, to the xe breakfast briefing, melbourne, 15 february 2019. * * * i thank david jacobs for excellent assistance in preparing these remarks. introduction thanks to xe for the opportunity to be here in melbourne to speak to you. a lot has happened in financial markets globally and in australia since late last year. i thought it would be helpful to summarise the key developments, including revisions to the global economic outlook, concerns about downside risks and changes to market expectations for monetary policy paths. i'd also like to discuss their implications for the australian economy and the australian dollar. but first, a brief caveat is in order on the topic of exchange rates. it's often said by reserve bank staff that we are not in the business of forecasting exchange rates. but, just as importantly, we also need to be humble when explaining the past behaviour of exchange rates. in that regard, it is worth recognising that models of exchange rates provide only rough estimates of the more enduring relationships. the international backdrop after a lengthy period of relative stability, global financial markets have been more volatile over the past few months. the incoming data from around the end of 2018 was associated with a tightening in financial conditions : global equity prices declined ; corporate credit spreads widened ; issuance of corporate debt eased ; and volatility picked up across most markets ( graph 1 ). and in the space of only a couple of months, the market's expectations for monetary policies changed markedly and there was a notable downward shift in yield curves. graph 1 1 / 11 bis central bankers'speeches what prompted these changes? in part, market participants reassessed their expectations for global growth. this reflected a run of data that was a bit weaker than had earlier been expected, particularly for the industrial sectors and trade. however, this was not true of all of the incoming data. indeed, labour markets have remained in good health ; the us labour market data of late have been especially strong. moreover, labour market tightness is evident more broadly and wages growth is picking up in a range of advanced economies. forecasts for growth of global economic activity have been revised lower, but only marginally. in late january, the imf's forecasts for global growth were trimmed for 2019 and 2020, by 0. 2 and 0. 1 percentage points, | the renminbi, which collectively comprise nearly 40 per cent of the twi. the yen appreciation may have been driven by the tendency of japanese investors to bring some of their funds back home during β risk - off β periods in global financial markets. graph 8 8 / 11 bis central bankers'speeches the decline in australian bond yields relative to other advanced economies is likely to have contributed somewhat to the modest depreciation of the australian dollar of late ( graph 8 ). however, over much of the past 18 months or so, higher commodity prices appear to have worked to limit the extent of australian dollar depreciation. 5 indeed, commodity prices have increased noticeably of late. this largely reflects disruptions to supply, particularly of iron ore. in short, there are a number of forces affecting the australian dollar, but they have been pulling in different directions. accordingly, the australian dollar remains within its relatively narrow range of the past few years. having noted the low volatility of the exchange rate over recent years, i need to briefly touch on the recent flash event in currency markets that no doubt caught the attention of many of you in this room. 6 on 3 january, in the span of a few minutes, a sharp appreciation in the yen against the us dollar quickly cascaded into the australian dollar, which depreciated by up to 7 per cent against the yen ( graph 9 ). at the same time, bid - ask spreads had widened significantly. however, trading conditions quickly returned to normal and currencies largely retracted their earlier moves. graph 9 9 / 11 bis central bankers'speeches it is difficult to draw firm conclusions on the causes of such events, but as we outlined in the recent statement on monetary policy, three factors are likely to have contributed. first, there was the liquidation of β carry - trade β positions, notably from highly leveraged japanese retail investor accounts. these appear to have been automatically triggered following the initial appreciation of the yen. second, these liquidations occurred at a time when market liquidity was seasonally low, such that the foreign exchange market was more exposed to imbalances between buy and sell orders. recent flash events have tended to occur around this same time of day, in between the close of us markets and the start of asian trading. it was also early in the new year and a public holiday in japan. third, as in previous flash events, algorithmic trading strategies may have amplified the move, for example, by adding to demand to | 1 |
, on the horizon of years 2008 - 2010. 3. internal stability a ) reforms all necessary economic reforms were / are to be introduced before fulfilling maastricht criteria that the least possible disturbing factors may appear once given up own monetary tools. pension reform is under the process of final discussion in the parliament, new labor act has been introduced recently, major tax reform is to be introduced soon and health care reform and public administration reform is underway as well. another major reform, tax reform, aims to make the tax system more transparent and simple. this unique and radical reform based on fiscal neutrality introduces unified flat tax rate of 19 % for vat and rise of other indirect taxes on the one hand and introduces the same, decreased, direct tax rate of 19 % for individual income tax as well as corporate tax on the other hand. this reform will change the situation of both companies and households dramatically. it also counts with gradual delegation of minor taxes and fees to the lower level, to communities, which will collect these to relocate resources for projects developing local infrastructure and solution of the ecology related problems. pension reform introduces three - pillar system. the first pay - as - you - go pillar fulfils the role of full merit and the second capitalization pillar fulfills the role of pension savings ; both of which will be obligatory. the third supplementary pillar fulfills the role of additional pension insurance choice. the objective of this reform is to adjust the system to demographic changes and to changing features of the society. this reform is assumed to bring more effective management of the social system in future. healthcare reform aims to solve two main issues. these are introduction of deductibles for health care services. two functions of this measure shall prevent misuse of free healthcare services and collect resources in order to support financial stability of the system. moreover, the reform includes other stabilization measures, which aim to slow down or even stop the sector indebtedness. public finances reform aims to make public finances more transparent as well, introduces strategic planned budgeting and more effective allocation of resources. this reform includes introduction of forecasting systems for stable medium - term framework of public finances. all these and other introduced and planned reforms are structured in detail, timed and co - organized with all other important economic interventions as well as with ability to comply with maastricht criteria, especially budget deficit. 3. internal stability b ) fiscal and monetary consolidation in 2002, the general government deficit amounted to 7. 2 % of gdp, | marian jusko : approaching the euro speech by mr marian jusko, governor of the national bank of slovakia, at the conference " challenges of eu accession ", prague, 1 april 2003. * * * ladies and gentlemen, i welcome the opportunity to address you tonight and i would like to thank the cnb for including me into this panel, where i can speak and discuss the most challenging and demanding topic, which is the emu accession. we all, central bankers, know that the main role will not be played by us, but crucial will be the decision and actual steps of national governments. let me present the views and approach of the national bank of slovakia, which, however, cannot be considered as the official statement of the slovak republic. nowadays, there is the joint strategy of the central bank and the government under preparation, which will be approved by the slovak government in the second quarter and which will also be a part of our pep ( pre - accession economic programme ). the intention here is to officially announce the term of our preparedness for examination, which also serves as the yardstick and anchor for all our current and future decisions. the general approach of the nbs, which can be slightly ( in terms of its schedule ) modified by our government, is the earliest possible approach towards the euro adoption and emu membership. at the same time, we prefer the shortest possible membership in the erm ii mechanism. the main idea behind the formulation of the earliest possible strategy of emu accession is our belief that slovakia may enter the emu earlier, but must not become a member of the eurozone later than other associated countries. this is based on our latest experience, when we were treated as an outsider in the second wave of the eu, oecd and nato enlargement, with a long lasting effect on fdi inflows, costs of debt service and the overall macroeconomic development. i do not want to bother you with all these well - known and clear reasons for entering the emu, which are, above all, the savings on transaction costs and a decline in the exchange rate volatility and exchange rate risk. this is extremely important for slovakia with its high level of openness. the share of exports and imports of goods and services in gdp increased to 156. 5 % in 2001 from 117. 3 % in 1993, while 60 % of exports and 50 % of imports were related to eu countries in 2001. after including the cec5, these | 0.5 |
, the bank will continue to involve all stakeholders particularly the industry for better appreciation of new policies introduced. the insurance industry is expected to continue its positive growth momentum in the near term. growth in the life sector should continue to receive support from the encouraging demand for savings and investment - driven products such as endowment and investment - linked insurance. the increasing awareness among the consumers of the importance of risk protection, relatively low penetration level and large mortality protection gap also underpin strong future growth opportunities for life insurers in the more traditional risk product lines such as term ( including credit - related term ) insurance. also contributing to the growth opportunities for risk products is the growing preference among the more sophisticated consumer segments for unbundled investments and protection solutions which offer greater flexibility with investment choices, without affecting protection levels. amidst these prospects and as the financial services industry transitions to a more deregulated and market - driven environment, the regulatory and supervisory approach will continue to evolve into one that is more principle and risk - based, providing greater operating flexibility to insurers. in this regard, the proposed risk - based regulatory regime which includes the new risk based capital framework that is going to be introduced in due course is a move in this direction. this would further strengthen the incentives for improved risk management practices of insurance companies. the new requirement would also facilitate more efficient capital structures that are more reflective of the different risk profiles of individual institutions, whilst providing greater investment flexibility to insurers without compromising on prudential standards. such insurance companies would be well - positioned to reap the opportunities abound in the insurance market place. under this risk - based regulatory regime, the responsibility for the implementation of sound risk management and market conduct governance, as well as assessment of risks and management of the financial condition of an insurer, will increasingly rest with the board of directors and senior management of the insurer. this will ensure that the financial system is able to continuously adapt whilst maintaining a clear focus on sound risk management that will continue to be a critical pillar to support a resilient insurance industry. it will also enhance public confidence in the efficiency and performance of the financial system to contribute to the overall development of the economy. this approach is also a move towards a differentiated regulatory and supervisory approach whereby companies that demonstrate strong corporate governance standards and risk management practices will be accorded'lighter regulatory touch ', which implies that they will be given greater regulatory flexibility. this underscores the importance of capacity building by the financial institutions in | research and development and re - engineering of business processes in search of operational excellence and enhanced customer service delivery. a strong culture of excellence is therefore vital : one that is embedded in all levels of the organisation ; one that fosters and rewards innovation and service quality. a customer - centric focus is, and will continue to be, the winning formula for a successful financial services provider. in particular, insurers must ensure suitability of products sold or advice given ; play an active role in enhancing financial capability of consumers ; and ensure policyholders are treated fairly. this regulatory approach will basically benefit those companies that are efficiently - run and wellcapitalised. in this regard, axa affin will benefit from this new regulatory approach if it puts in place a risk management system that could be used to capitalize incentives accorded by the new framework. the synergies derived from the strengths of the bank and the experience of foreign insurance partner should be harnessed to benefit from this new environment, particularly in the bancasurance line of business. ladies and gentlemen, i am confident that axa affin life should be able to strategise itself by optimizing and leveraging on each others'strength and expertise, experience and infrastructure so as to offer diversified products and enhanced customer service. on that note, it is my pleasure to officially launch axa affin life insurance berhad and wish axa affin life insurance berhad every success in its endeavours and i look forward to its contribution towards further development of the domestic insurance industry. terima kasih. | 1 |
haruhiko kuroda : monetary policy β its effects and implementation opening remarks by mr haruhiko kuroda, governor of the bank of japan, at the 2015 bojimes conference, hosted by the institute for monetary and economic studies, bank of japan, tokyo, 4 june 2015. * i. * * introduction good morning, ladies and gentlemen. it is my great honor to say a few words at the beginning of the 22nd boj - imes conference. on behalf of my colleagues at the bank of japan and myself, i would like to express my sincere welcome to all of you. at last year β s conference titled β monetary policy in a post - financial crisis era, β we had active discussions on fundamental issues of monetary policy during the period of slow economic growth following the global financial crisis. since then, there has been further progress in research on the effects of unconventional monetary policy in academic and central bank circles. besides, growing attention has been paid to renewed debate over the slow recovery after the financial crisis, as represented by the thesis of secular stagnation. against the backdrop of these factors, we have selected β monetary policy : its effects and implementation β as the theme of this year β s conference. the aim is not only to keep monetary policy at the center of the discussion, but also to put greater emphasis on implications for policy conduct in practice. i hope that, in light of the progress in monetary policy research and the recent developments in the global economy, we will have frank and lively discussions on the monetary policy challenges that we central bankers currently face. to kick things off, i would like to raise some issues relevant to these challenges. ii. global economic conditions and current issues concerning the conduct of monetary policy over the past year, the global economy as a whole has been recovering moderately. however, we have observed considerable differences in developments of economic activity and prices among countries and regions. in reflection of these differences, diverging directions of monetary policy among the united states, europe, and japan have become increasingly apparent. this certainly was a major feature of monetary policy in the global context for the past year. meanwhile, headline inflation rates dropped globally, due primarily to a plunge in crude oil prices. with these significant developments in mind, i would like to raise three current issues concerning the conduct of monetary policy. the first issue concerns the effects of unconventional monetary policy and its transmission channels. in terms of monetary policy implementation, the european central bank launched the expanded asset purchase programme | ##fsn in an evolving global economy, β eighth high - level conference on the international monetary system sponsored by the international monetary fund and swiss national bank, in zurich on may 8, 2018a. powell, jerome h., β monetary policy in a changing economy, β speech at the federal reserve bank of kansas city β s economic policy symposium on β changing market structure and implications for monetary policy, β in jackson hole on august 23 β 25, 2018b. rajan, raghuram g., β competitive monetary easing : is it yesterday once more? β macroeconomics and finance in emerging market economies, 8 ( 1 β 2 ), 2015, pp. 5 β 16. svensson, lars e. o., β monetary policy after the financial crisis, β presentation at the second international journal of central banking fall conference in tokyo on september 17, 2010. white, william r., β is price stability enough? β bis working paper no. 205, bank for international settlements, 2006. | 0.5 |
of the domestic financial system throughout this shock. more broadly, while market attention has focussed on banks in recent months, potential vulnerabilities in the non - bank sector have not gone away. liquidity mismatches, leverage and interconnectedness are key potential sources of vulnerability in non - bank financial intermediaries. the 2022 uk gilt market episode was a prominent example of the speed with which risks can crystallise in this sector. further progress is needed at a global level to strengthen resilience of non - bank financial intermediation. 1 / 3 bis - central bankers'speeches monetary policy is transmitting to the global real economy. in practice, this means higher borrowing costs for governments, households and businesses, tighter credit conditions for those looking to borrow, increasing rates on bank deposits, and ultimately some slowdown in economic activity so as to bring inflation back to target. domestically, despite the range of global risks i set out earlier, the irish economy has continued to surprise with its resilience. our domestic growth forecasts have improved relative to late last year, although of course we must remain mindful of the range of adverse outcomes that may materialise, as inflation continues to erode real incomes and businesses continue to face challenges related to high costs. rising interest rates have already had immediate effects in the commercial real estate market, and appear to be slowing the housing market in recent months. households and businesses are front and centre in our financial stability assessment. undoubtedly, many are experiencing challenges with the increase in the cost of living. however, at the system - wide level, lower levels of indebtedness, continued household income growth and robust employment remain a key source of strength. they are supporting mortgage repayment capacity, and are of course a key determinant of the revenues of local businesses. our assessment is that, if the economy continues to evolve in line with our expectations, we are likely to see only modest increases in financial stress among domestic borrowers, despite clear challenges for some groups of borrowers. turning to the domestic banks, higher levels of bank profitability are likely to continue under our central assumptions. of course there are tail risks that we must continue to factor in and be ready to address. however, the banking system has ample headroom above regulatory requirements in both capital and liquidity, with very high levels of cash reserves. all of these support the resilience of the sector. under this central outlook, we are therefore continuing - as | gabriel makhlouf : opening remarks to the international operational risk working group opening remarks by mr gabriel makhlouf, governor of the central bank of ireland, to the international operational risk working group, virtual conference hosted by the central bank of ireland, 18 may 2021. * * * welcome to dublin and the central bank of ireland. over the past decade, we have been witnessing significant changes to the risks our respective institutions confront. in many cases our mandates have expanded since the global financial crisis, complicated by the need to effectively process and analyse big data, often now at higher frequency intervals, and compounded by the phased migration from legacy to new technologies. the cyber and information security risks are evolving, and hybrid threats can arise as these overlay with physical security and data protection risks. in his book, against the gods, the remarkable story of risk, peter bernstein notes that β the essence of risk management lies in maximizing the areas where we have some control over the outcome while minimising the areas where we have absolutely no control over the outcome and linkage between effect and cause is hidden from us. β traditionally our respective institutions have predominantly focused on financial risk, but rebalancing over the past decade to strengthen nonfinancial risk management. however, over time, the lines between financial and non - financial risk have started β and will continue β to blur. this is apparent when one considers recent targeted cyber - attacks on critical infrastructure ( very timely in ireland this week ), the opportunities and risks presented by financial innovation driven by technological change, not least potential developments on central bank digital currency, and our learning from the recent response to the pandemic. and of course our shared risk and the necessity for collective action to address climate change as well as our collective efforts in support of sustainable finance. we believe in the importance of an independent central bank that is transparent, accountable and connected across all public policy domains, in ireland, in europe and across the world. we embrace diversity and inclusion as they strengthen us, as individuals and as an organisation. it is important that we foster a cultural foundation that supports implicit risk management, to avoid groupthink, while also implementing proportionate risk management frameworks, embedded to provide a systematic approach to explicit risk management that creates organisational value. effective operational risk management is a core enabler to the achievement of our vision to be trusted by the public, respected by our peers, and a fulfilling workplace for our people. it is a | 0.5 |
##ances, i suppose most would nowadays agree that a balanced financial system with multiple, lively channels of financial intermediation is likely to provide both healthier competition and better resilience to shocks. research has shown that when banks are distressed frictions in credit provision have negative real effects ; 10 in countries that have well - developed markets, firms can borrow by issuing securities when banks tighten credit supply conditions. 11 on the other hand, banks can smooth temporary shocks affecting borrowers and somewhat shield them from financial market shocks by supporting financial flows, as suggested by the evidence from studies using microeconomic data on bank - firm relationships. 12 cross - country evidence on various stages of the recent financial crisis has r. levine, β bank - based or market - based financial systems : which is better?, β journal of financial intermediation 11 ( 4 ), 2002 ; for a review of the finance and growth literature see r. levine, β finance and growth : theory and evidence, β handbook of economic growth vol. 1, part a, 2005. a. demirguc - kunt, e. feyen, and r. levine, β the evolving importance of banks and securities markets, β world bank economic review, 27 ( 3 ). β as economies evolve, the benefit of further developing traditional financial institutions tends to decline whilst that of markets increases. moreover, an imf study shows that the relationship between financial development and growth is bell - shaped : financial development increases growth, but the effect weakens at higher levels of financial development, and eventually becomes negative. considering sub - indices of an overall financial development index, this bell - shaped relationship is due only to the β depth β components of the index ; β access β exhibits a positive linear relationship with growth, while β efficiency β has no robust association with longterm growth ( imf staff discussion note β rethinking financial deepening : stability and growth in emerging markets, β 15 / 08, may 2015 ).. g. dell β ariccia, e. detragiache, and r. rajan, β the real effects of banking crises, β journal of financial intermediation, 17 ( 1 ), 2008 ; r. krozner, l. laeven, d. klingebiel, β banking crises, financial dependence, and growth, β journal of financial economics 84, 2007. t. adrian, p. colla, and h. s. shin, β which financial | 2016 or speech before the committee on economic and monetary affairs of the european parliament on 28 september 2016. 10 w. churchill addressing the crowd on place kleber in strasbourg on 12th august 1949, day of the first session of the consultative assembly of the council of europe. 8 / 8 bis central bankers'speeches | 0 |
speech 23 september 2022, 6. 00 pm safeguarding the principles of regulatory policy speech at the university of lucerne thomas j. jordan chairman of the governing board * swiss national bank lucerne, 23 september 2022 Β© swiss national bank ( speech given in german ) * the speaker would like to thank christoph hirter and tanja zehnder for their support in preparing this speech. he also thanks claudia aebersold, petra gerlach, carlos lenz, alexander perruchoud and the snb language services. page 1 / 5 ladies and gentlemen today β s event focuses on the question β is monetary policy still regulatory policy today? β. i congratulate the university of lucerne on choosing this important topic. discussions surrounding regulatory policy have faded somewhat into the background of late. for the swiss national bank, however, the principles of regulatory policy β in particular those concerning monetary policy β remain of great significance. i am pleased to give you our view on this topic. in my remarks, i will therefore pay special attention to switzerland and the snb. first, i will look at why, for the snb, the two regulatory principles of a clear focus on ensuring price stability and independence from politics are closely related. i will then show why these principles are contradicted by a number of recently launched political initiatives. to conclude, i would like to explain the snb β s current monetary policy. narrow mandate and independence as foundation in general, regulatory policy comprises all measures which a government puts in place to create appropriate framework conditions for the longer - term development of the economy. if, in doing so, the government follows sensible principles, it creates conditions in which the economy can optimally develop its potential and the prosperity of the population increases over time. an essential component of good framework conditions, and of good regulatory policy, is price stability. in the absence of price stability, the smooth functioning of an economy is inconceivable. inflation as well as deflation hinder the steering role of prices in ensuring that labour and capital are used as productively as possible. inflation also reduces household purchasing power and especially impacts the more vulnerable sections of society. in order to ensure price stability in the long term, two principles of regulatory policy are key : - first, price stability must be the fundamental guiding principle of monetary policy - and second, a central bank must be independent from politics. both of these principles are today reflected in the legislation of many countries. in switzerland, | bojan markovic : macroeconomic developments in serbia speech by mr bojan markovic, vice governor of the national bank of serbia, at the presentation of the november 2011 inflation report, belgrade, 16 november 2011. * * * ladies and gentlemen, esteemed members of the press and fellow economists, despite repeated media announcements about the β waves of price hikes β, inflation continued down over the past several months and settled at 8. 7 % in october. we expect this downward trend to persist and inflation to retreat within the target tolerance band in the first quarter of 2012. at the same time, pessimism over global growth prospects intensified, particularly in the euro area prompting us to revise the economic growth forecast for serbia down to around 2. 0 % in 2011 and 1. 5 % in 2012. in response to subsiding inflationary pressures, the national bank of serbia cut the key policy rate during the last six months. the key policy rate currently stands at 10 %, and its further cautious lowering is likely in the coming period. chart 1 inflation projection ( y - o - y rates, in % ) chart 2 gdp growth projection ( y - o - y rates, in % ) - 2 - 4 12 3 12 3 12 3 12 3 iii iv i ii iii iv i ii iii iv i ii iii iv i ii iv today we will present in more detail our view of past macroeconomic developments and our expectations for the period ahead. * * * mounting doubts about the sustainability of public debt in advanced economies and unfavourable growth indicators for the second and third quarters have led to a downward revision of the global economy growth forecasts, particularly that of the euro area. the third quarter witnessed a drop in share prices and a rise in interest rates on public debt in a number of countries. the prices of primary commodities, such as oil, base metals and agricultural products, also declined in the third quarter. though financial markets showed some recovery in october, global economic growth will no doubt be slower than expected until recently. also, the governments might not be able to respond with fiscal stimuli as they did during the first wave of the crisis, primarily due to high public debt. turbulences in the global financial market led to an increase in serbia β s risk premium ( measured by embi ), albeit smaller than those of other countries in the region. as a result, the dinar was more stable during this period than the currencies of other east european countries with flexible | 0 |
ignazio visco : divergence in monetary policies across the atlantic? remarks by mr ignazio visco, deputy director general of the bank of italy, at the policy panel of the ceders β 3rd meeting on open macroeconomics and development β the euro area, the euro and the world business cycle β, aix - en - provence, 3 - 4 july 2008. i am grateful to sergio nicoletti altimari for comments and suggestions while remaining solely responsible for the views here expressed. * * * in my remarks, i will first start with the basic question raised to the panel : are there differences in the fed's and ecb's behaviour? i will then tackle two issues that have probably become more pressing in light of the current financial turmoil : i ) are there obvious limitations in the monetary frameworks and how should they be addressed?, and ii ) do we need some form of monetary policy coordination? 1. fed β ecb divergences a popular belief is that the dual mandate of the fed, as opposed to the overriding price stability objective of the ecb, is the major source of policy differences across the atlantic. in this respect, if we take a medium - to long - term view, and we agree that over those horizons money cannot affect potential output ( the phillips curve is vertical ), then the different mandate should not be relevant. indeed : β’ the track record of the fed in the past 20 years, as well as the positions expressed repeatedly by its executives, speak by themselves of the centrality the fed attributes to the price stability objective ( see figure ). β’ an important difference is of course that, contrary to the ecb, the fed has not announced a quantitative definition of its goal : this may give the ecb some ( slight ) advantage in anchoring expectations, as some recent studies appear to suggest, 1 and thus perhaps a more favourable shorter - run trade off. it is at the shorter horizons, in the strategic conduct of monetary policy by the two central banks, that we may more likely find some differences : β’ a starting point in this respect is the observation that since the start of the euro in 1999 the volatility of policy interest rates in the us has been two times larger than in the euro area ( see figure ). 2 β’ understanding why this is the case is not easy, as the difference may reflect differences in the conduct of policy, in the structures of the economy, in the size and nature of | economic shocks. indeed, the few analyses that have tried to address the m. j. beechey, b. k johannsen and a. levin ( 2007 ), β are long - run inflation expectations anchored more firmly in the euro area than in the united states? β, cepr discussion papers no. 6536. the standard deviation of the ( target ) fed fund rate since 1999 is 1, 83 percentage points, compared with 0, 89 percentage points of the policy rate of the ecb. the average policy rate has been 3, 6 for the fed and 3, 1 for the ecb. issue in a systematic way give some hints that all of these factors may have played a role. 3 in particular : o shocks : differences in the type and intensity of shocks ( especially productivity shocks ) have probably played a major role in the last decade. o structure : higher wage and price flexibility may explain part of the higher volatility of policy rates in the united states. o policy : the ecb may have, at least according to some estimates, a higher degree of policy inertia, which may grant it with more leverage on long - term interest rates. there is however no crystal clear evidence of a significantly different response to measures of economic slackness, which may indicate that the different mandates do not impinge too much even in the shorter term. besides this, we have to be very careful in judgement as we are far from being in a position to state how close to optimal is any of the two policies, given structure and preferences in the two economies. the recent financial turmoil and the different policy responses across the atlantic have once again spurred a debate ( particularly in europe ) on whether the different mandate is the source of divergence ( and political calls on the ecb to adopt a fed - like response ). again it is likely that a combination of factors are at play : β’ if we compare, for example, the change in the forecasts of the two central banks in the last year, we see that the fed has changed its forecasts of growth for 2008 by much more than the ecb ( - 2 % vs. - 0, 5 % ), while the reverse is true for inflation ( + 0, 4 % vs. + 0, 9 % ). these changes in the respective outlook go some way towards explaining a different policy response : after all, and notwithstanding the strict financial linkages, we should not forget that the sub - prime crisis originated in the | 1 |
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