text1
stringlengths 1
3.21k
| text2
stringlengths 1
3.21k
| label
float32 0
1
|
|---|---|---|
are at the low end of the range they have been running since last november. putting these factors together, i would argue that inflation is likely to remain moderate over the foreseeable future. the fomc forecasts for core inflation were concentrated near 1. 8 percent this year, and its forecasts for total inflation were in the range of 1. 5 percent to 2. 0 percent for 2012, 2013 and 2014. my own assessment is that inflation will be at the lower end of these ranges. fed performance these disappointing forecasts pose a challenge for monetary policy. the fed is charged by congress in the federal reserve act to encourage conditions that foster both maximum employment and price stability. this is what you hear us refer to as the fed β s β dual mandate β. given the high unemployment rate and low job growth, i think it is clear that the fed has fallen short in achieving its goal of maximum employment. i will return to this point shortly. as for the price stability component of our dual mandate, the majority of fomc participants β including me β judge our objective for overall inflation to average 2 percent over the medium term. with my own view that inflation is likely to run below this rate over the next few years, i believe we run the risk of missing on our inflation objective as well. two different perspectives on the economy central bankers must formulate monetary policy with the understanding that our knowledge is imperfect. we may have incomplete and sometimes competing views of the forces that generate current economic conditions. this is especially true in the difficult circumstances we face today. in my view, we should try to formulate a monetary policy strategy that carefully balances the risks associated with the reasonable alternative economic scenarios that we face and is as robust as possible to miscalculations as to which of these scenarios is predominantly true. let me now discuss two quite different perspectives that could account for the disappointing slow growth and continued high unemployment that we confront today. these two conditions are important to consider in that they have markedly different monetary policy prescriptions. the first storyline i will refer to as the β structural impediments scenario β. in this scenario, the recent period, which has been referred to as the great recession, was accompanied by an acute period of structural change, skills mismatch, job - killing uncertainties and excessive bis central bankers β speeches regulatory burdens. accordingly, these structural impediments have caused the natural rate of unemployment to increase. the structural impediments scenario | charles l evans : a risk management approach to monetary policy speech by charles l evans, president of the federal reserve bank of chicago, at the ball state university center for business and economic research outlook luncheon, muncie, in, 5 december 2011. * * * introduction it is my pleasure to be here in muncie today to speak to you about my views on the progress of the recovery and on the course of monetary policy. i would like to thank steve smith, president of the muncie forecasting roundtable, for that kind introduction. for those of you who follow monetary policy deliberations, you will certainly be aware that i was the lone dissenter at the last policy meeting held in early november. so it should come as no surprise when i say that the views that i am presenting today are my own and not necessarily those of the federal open market committee ( fomc ) or my other colleagues in the federal reserve system. real output gap four years ago the u. s. economy entered what developed into the deepest recession since the great depression. two and a half years ago the recovery began. yet, despite both accommodative monetary policy and fiscal stimulus, the pace of improvement has been agonizingly slow. real gross domestic product ( gdp ) is only just back to where it stood at its pre - recession peak in 2007, employment growth is barely enough to keep pace with natural growth in the labor force and the unemployment rate remains extraordinarily high. earlier this year, most forecasters thought that the recovery was gaining traction and that economic activity would increase at a solid β though not spectacular β pace through 2012. the labor market was beginning to show some long - awaited improvement, and the financial repair process seemed to be making progress. analysts thought that higher prices for energy and other commodities would weigh on output growth, as would supply - chain disruptions from the disaster in japan. but these factors were expected to be transitory, and most forecasters thought growth would improve significantly once these influences had passed. unfortunately, the news over the past several months has proved this forecast to be too optimistic. to use an automotive analogy, employment and growth are stuck in neutral. job growth has been disappointing, and the unemployment rate just last month dipped below 9 percent. revised data indicate that annualized real gdp growth in the first half of 2011 was only 1 percent and improved only modestly to a 2 percent pace in the third quarter. consumer spending has | 1 |
β ugadi pachhadi β in telugu and β bevu - bella β in kannada, symbolizes the fact that life is a mixture of pleasure and pain, which should be accepted together and with equanimity. people traditionally gather to listen to the recitation of the religious almanac ( panchangam ) of the coming year, and to the general forecast of the year to come. this is the panchanga sravanam, an informal social function where an elderly and respected person opens the new almanac pertaining to the coming year and makes a general benediction to all present. the advent of radio and television has changed this routine somewhat, especially in the cities. nowadays, people turn on the radio or tv to watch the recitation. ugadi celebrations are also marked by literary discussions, poetry recitations and recognition of authors of literary works through awards and cultural programmes. recitals of classical carnatic music and dance are held in the evenings. in maharashtra, it is customary to erect β gudis β on the first day ( padwa ) of the marathi new year. β gudi β is a bamboo staff with a colored silk cloth and a garlanded goblet atop it, which symbolizes victory or achievement. hence, this day is known as " gudipadwa " in maharashtra. the new year is ushered in with the worship of the β gudi β and the distribution of a specific β prasadam β comprising tender neem leaves, gram - pulse and jaggery. the symbolism of tastes is the same as that of ugadi. it is believed that the creator of the hindu pantheon lord brahma started creation on this day β chaitra suddha padhyami or the ugadi day. also, the great indian mathematician bhaskaracharya β s calculations proclaimed the ugadi day from the sunrise on as the beginning of the new year, new month and new day. let me confess that i am not able to predict for the next year, the future of monetary policy in the open economies in general or opening economies like india, since i am yet to hear " panchang sravanam " for the new year named as " sarvajeet ". there is an interesting reason why i could not hear the authentic panchang sravanam. there is a difference of opinion among the top pundits in andhra pradesh as to whether panchang sravanam should be on the 19th or the 20th | ##roved in recent years. the world's largest economy, the united states, currently runs a current account deficit, financed to a substantial extent by capital exports from the emerging market economies. of course, it can be argued that the so - called β global imbalances β are a reflection of incomplete globalisation. but the fact remains that as long as globalization happens to be incomplete, public policy has to manage the consequential " imbalances ". secondly, in a globalising world, the context in which monetary policy is set, often leads to a confrontation with the impossible trinity β independent monetary policy, open capital account and managed exchange rate. the theory holds that at best, only two out of the three would be feasible. in practice, however, there is a shift in preference away from the corner solution with respect to financial imbalances. currently, intermediate solutions, which were earlier regarded as β fuzzy β, are now becoming increasingly relevant. moreover, in recognition of the differences between trade and financial integration β first pointed out by jagdish bhagwati β there is less certainty today about the corner solutions than in the past. thirdly, at a practical level, the recent experience seems to indicate that globalisation may have had accentuated potential conflicts that can impact the fabric of our societies, particularly, in view of rising corporate profits coupled with a reduction in share of remuneration for the labour. in this regard, i was struck by what mr. john micklethwait, editor - in - chief of the economist is reported to have said in an interview, as mentioned in a leading daily yesterday ( march 18, 2007 ). he said this in the context of the process of globalisation : " but as far as globalisation goes, i am worried about one thing : if you look at inequality, particularly in america, the rich have got even richer and the median income has barely budged. what is interesting is that just in the last couple of quarters, you began to see a sign of the wages beginning to rise. what if you have seen in the last ten years is the returns to capital increasing dramatically and returns to labour proportionately going down? what is happening now is that if you have the prospect of a downturn, then inequality will become much bigger issue in the american elections. around the world it is already a much bigger issue, including in places like japan. the corporate boss in japan now is paid 35 times what the | 1 |
this be described as a contractive turn ; it is rather a move that yields a less expansionary stance. in the public debate the riksbank β s monetary policy is sometimes described as though repo rate adjustments were a form of β punishment β or β reward β, aimed at measures that have been taken either by the political system or by labour market organisations in connection with wage negotiations. my point here has been that interest rate adjustments are a natural feature of monetary policy β s path over the economic cycle. of course this does not mean that the construction of monetary policy is not affected by fiscal expansion or contraction, or by low or high wage settlements. what i want to make clear is that adjustments to the instrumental rate in the course of the economic cycle are a natural phenomenon and their purpose is to create conditions for sustained growth and low inflation. if a central bank waits too long before shifting from an expansive to a more neutral monetary stance, problems with bottlenecks are liable to become more widespread and the economy may become overheated. besides entailing rising inflation, this causes firms and households to start accustoming themselves to a high level of inflation. monetary policy may then be forced to adopt a contractive stance in order to bring inflation back to the target rate. so if the central bank waits too long, the interest rate increases may be all the larger. in the meantime, moreover, economic imbalances and tensions may become so great that they lead to economic setbacks. we are familiar with such a course of events from the 1970s and 1980s, and perhaps not least from the early 1990s. against this background, in situations when capacity is coming under pressure, it is clearly better for a central bank to act at an early stage. future inflation the assessment in the inflation report, published just over a month ago, is that growth in the swedish economy will be about 2 per cent in 1997 and around 3 per cent in 1998. in 1999, the rate is expected to go on accelerating to just over 3 per cent. this assessment envisages that, in an expanding world market, export growth remains relatively high. this is accompanied by an accelerating increase in private consumption, while public consumption at least stops falling. economic growth in sweden in 1998 and 1999 would then most probably exceed the potential rate, which is estimated to be just over 2 per cent in annual terms. the broad rise in all the major demand components will therefore gradually exert pressure on the available resources. this successive | s monetary policy that is published next year. 19 but even if the experiences of the past eight years have had limited impact on monetary policy strategies so far, the financial crisis has nevertheless had clear effects on the work of the central banks. if i use the riksbank as a starting point, for instance, the significance of the financial conditions for macroeconomic developments and for monetary policy have come under much greater focus than before, as have financial and banking questions in general. one can see this in the research conducted in the bank, where these areas are currently of central importance. the changes we recently made to our monetary policy report are also marked by the need to better highlight the links between financial conditions, the macroeconomy and monetary policy. the low inflation in recent years has of course also made its mark on our internal work and we have invested considerable resources in trying to understand which factors lie behind it β both from a short - term perspective and in a more structural perspective. so, to conclude by returning to the question of whether everything will go back to the way it was before the financial crisis, i think the answer depends on what one is talking about. when it comes to analysis and working methods, the answer is very clear : they need to be adapted to new experiences and changed conditions to remain relevant. this type of change can be difficult to see for outsiders, but i can assure you the changes are taking place. with regard to major changes in the actual inflation - targeting policy, the answer is not so clear - cut. this remains an open question that spans legislation, research and all those working with monetary policy. references ball, laurence m. ( 2014 ), the case for a long - run inflation target of four percent. imf working paper wp / 14 / 92. bernanke, ben s. ( 2015 ), why are interest rates so low, part 2 : secular stagnation. ben bernanke β s blog, brookings, 31 march. billi, roberto and vredin, anders ( 2014 ), monetary policy and financial stability β a simple story. sveriges riksbank economic review, 2014 : 2, sveriges riksbank. blanchard, olivier ( 2015 ), contours of macroeconomic policy in the future. blog post on imfdirect 2 april 2015, http : / / blog - imfdirect. imf. org /. blanchard, olivier, dell β aricci | 0.5 |
. 8 percent, underscoring the sector's resilience. the gross non - performing assets ( gnpa ) at 3. 2 percent were at a decadal low with net npas at 0. 8 percent. the uptrend in profitability has continued into its fourth consecutive year with return on assets at a healthy 1. 2 per cent and return on equity at 12. 9 per cent. as compared to 2018 when 12 banks were placed under the prompt corrective action ( pca ) framework, today no scb is under pca. 1 / 5 bis - central bankers'speeches as we note the current state of our financial system, it is also imperative to reaffirm our commitment to maintaining and building upon this robust position. our journey towards resilience should not end with achieving impressive metrics ; it requires a continuous dedication to sound financial practices, prudent risk management, transparency and ethics. we need to remain steadfast in our commitment to upholding the elevated standards we have achieved, ensuring that our financial institutions remain resilient in the face of any future challenges. a vibrant and resilient financial sector is a sine qua non for a country's growth and development. as our economy strives to grow in an evolving and uncertain macroeconomic environment, it is imperative that the financial system in general continues to remain resilient through the uncertainties to fuel economic growth. in our financial ecosystem, the strength of individual banks is the bedrock upon which the edifice of financial resilience stands. i believe a resilient future ready bank needs to be : i. financially resilient through adequate capital, liquidity and earnings ; ii. operationally resilient so as to deliver critical services to customers even in times of disruptions and iii. organizationally resilient to anticipate risks early and absorb them efficiently. in this context, i would like to discuss six aspects that, in my opinion, banks may need to delve deeper into in the upcoming period. interest rate risk effective management of interest rate risk is a crucial aspect of prudent banking. recent regulatory changes, notably, the symmetrical treatment of fair value gains and losses as well as removing restriction on htm have given banks greater flexibility in managing this risk in their investment portfolios. however, considering the dynamic nature of the interest rate risk, banks must proactively manage and mitigate this risk. increasing nims that banks are | related to good corporate governance and critical to any banking institution β s well - being is a rigorous internal control apparatus. of course, effective internal control systems have always been centrally important to sound banking. this point becomes clear if we consider for a moment their basic purposes : β’ to provide reasonable assurance that the bank β s and its customers β assets are safeguarded, that its information is timely and reliable, and that errors and irregularities are discovered and corrected promptly ; β’ to promote the bank β s operational efficiency ; and, β’ to ensure compliance with managerial policies, laws, regulations and sound fiduciary principles. with these purposes in mind, it is clear that the long - term success of any banking organization depends on the effectiveness of its internal control apparatus. and never has this been more true than today. as the activities of commercial banks have become increasingly diverse and complex, internal controls have become critically important to the sound and successful execution of banks β strategic objectives. i want to stress this point as strongly as i can. as a former commercial banker myself, i know there is a powerful temptation for management to focus its attention and resources on the front office β those areas and individuals that generate profits for the institution. but if something goes wrong in the back office, it can quickly become the most important aspect of a bank β s operations. we β ve seen this time and time again. it is essential that sufficient resources, staff and managerial attention are devoted to the back office and internal audit functions. firmly rooted on the foundation of good corporate governance and rigorous internal controls is the central importance of effective risk management. banking by its very nature is a business of taking calculated risks. if they didn β t take risks, banks could not perform their essential functions in a market economy. but sound banking also entails the prudent management of those unavoidable risks. each banking institution must have in place the technical systems and management processes necessary to identify the risks associated with its activities β lending and otherwise β and to effectively measure, monitor and control those risks. but even if an institution has an effective risk management and control structure in place, that structure must also be accompanied by an institutional management culture that ensures that written policies and procedures are actually translated into practice, with buy - in at all staff levels. ultimately, an institution's culture is determined β once again β by the board of directors and the senior management it chooses to install. management must take active steps to ensure that its commitment to an operating | 0 |
, the maintenance of the information and the continuity of work in cases of extraordinary events. another crucial issue to be paid a special attention to and where certain deficiencies are present, is the swift system. there needs to be a better administration of the users β profile, in order to observe the three stages of sending the messages ( creation, verification and authorization ), and a division of security officers β duties ( left and right officer ) from the different operational duties at the swift. it is also necessary that the internal bank audit ( or external when provided by consultant companies ) be expanded, including the information technology entirely. this audit, which currently is limited only to the system users β profiles or to the access rights they have in the system, should include issues that relate to the functionality of these systems, the accuracy of generating the information, the changes in the system, the information security during the operation and in transmission ( for on - line branches ) etc. 7. the enhancement of transparency of the bank commissions applied for loan payments, and in particular the decrease or abolition of domestic commissions or of incoming payments, are another measure that the bank of albania is implementing in the context of attracting the public and businesses as far as the banking services are concerned. - - - - - - - - - - referring to the significant decrease of currency outside banks to total money β from 31 per cent in 2002 to 24 per cent over the present year β as an important indicator of the cash economy, it can be said that the abovementioned measures have provided their effect. however, the reduction of the informal economy remains a decisive factor in order to reach to the levels of cash in more developed economies, which is below 10 per cent. in this context, the establishment of the credit information bureau, initiated some time ago by the bank of albania and expected to finalize over the coming year, is believed to make an overwhelming contribution to reducing the business informality in the interbank level. | benoit cΕure : the perils of isolation speech by mr benoit cΕure, member of the executive board of the european central bank, at the council on foreign relations, new york city, 19 april 2017. * * * i would like to thank j. beirne, m. ca β zorzi and m. grill for their contributions to this speech. i remain solely responsible for the opinions contained herein. we are currently seeing widespread concerns in many parts of the world regarding free trade and globalised finance. these concerns mainly stem from perceptions of inequality of opportunities and a lack of inclusiveness in sharing the benefits of international openness, resulting in growing disparities in income. often, these are not only perceptions. in this country, for example, net income inequality has been on an upward trend since the late 1970s. 1 although globalisation might have amplified growing income inequality, empirical analysis tends to suggest that technological progress, and the associated rise in demand for skilled labour over low - skilled, is likely to explain most of the rise in income inequality in advanced economies since the early 1980s. 2 and yet, fears of globalisation appear to dominate public discussion and are likely to have been a key factor in fomenting political opposition to the free movement of goods, services, capital, and people. much has been said about the perils of rising protectionism. today, i would like to focus on a related but distinct risk, namely all the talk of a weakening of the international financial regulatory agreements that were reinforced in the wake of the financial crisis. such a push - back would be all the more difficult to understand as there is compelling empirical evidence that excessive risk taking by the financial sector has contributed to rising inequality. 3 dismantling regulatory standards would therefore not only make financial markets less safe, it would also be unfair to those who feel left behind. indeed, in recent years, through the actions of the financial stability board ( fsb ) and standardsetting committees such as the basel committee on banking supervision, the international community has made important progress in rewriting the international financial rule book with a view to curbing financial exuberance, protecting taxpayers from costly bailouts, and improving cross - border cooperation. 4 these reforms have undoubtedly made global financial markets more resilient. and they have also supported the recovery of loan growth to households and firms despite claims that regulation may hurt economic growth and dent bank profitability. indeed, researchers at the bank for international settlements have | 0 |
be thought of as a symptom of being small, open or having a strong reliance on certain sectors. the historic volatility of the irish macro - financial environment is perhaps the most visible representation of being small, open and highly globalised. recent central bank research has looked at the cross - country volatility or unpredictability of a range of macro economic financial variables since 1980. 22 relative to its european peers, ireland β s macro variables move more, or in other words, have higher highs and lower lows. credit and house prices display the largest divergence to our european neighbours, and with the recent credit boom and house price peaks and troughs this is perhaps no surprise. however gdp, household income, and employment also move more relative to european countries. * * * as evidenced by our volatility, the irish economy has vulnerabilities, these can be cyclical or structural. i will first briefly look at cyclical sensitivities, before speaking in more detail on structural ones. cyclical can be how responsive the irish economy is to the global economic cycle. depending whether the global economy is performing strongly or weakly, how much does this affect ireland. central bank research compares the effect of a global output shock on ireland, the us, uk and euro area. 23 of those large economies studied, over time, ireland is the most affected by, or the most responsive to, a negative global shock. looking further within a subset of small open economies, ireland is less negatively affected than singapore or sweden, but more affected than switzerland and new zealand for example. today, the responsiveness to the global economy is particularly relevant with weakening global growth prospects and subdued global final demand. * * * turning now to structural vulnerabilities. these are features of the irish economy that would mean it is more susceptible to idiosyncratic structural shocks that may have significant macroeconomic effects. one way of looking at the propensity for structural shocks of the irish economy is to compare how much actual economic performance is different to previous forecasts through time. in other words, how hard it is to anticipate future performance from current information. the bigger the differences the harder it can be for businesses and households to prepare for the future. it is illustrative to see how we compare with other countries. the forecast errors for ireland are at the higher end of the scale when comparing across eu member states. 24 in fact, ireland has the highest forecast errors | me turn to financial stability, a core aspect of our mandate at the central bank of ireland, and an area where co - operation and integration with our european and international partners is crucial. the financial system is international, interconnected, and interdependent. it is only by engaging and working together across borders that policymakers can ensure it remains stable and absorbs, rather than amplifies shocks and so, operates in the best interests of consumers and the wider economy. as europe has changed over recent decades, so too has the financial system, notably, with a larger share now operating outside the traditional banking sector. following the financial crisis, for me, the overarching lesson is that do not want to find ourselves in some, suboptimal, β halfway house. β one of the key initial responses to the last crisis was to introduce the european system of financial supervision ( esfs ). the main task of the esfs is to ensure consistent and appropriate financial supervision throughout the eu. as the european commission outlined in 2009, the system of solely national supervision β lagged behind the integrated and interconnect reality of β¦ european financial markets, in which many firms operate across borders. β 9 the esfs consists of a collaborative network centred around the three european supervisory authorities ( the european banking authority, the european insurance and occupational pensions authority and the european securities and markets authority ), the european systemic risk board and national supervisors. https : / / www. centralbank. ie / news / article / speech - irelands - engagement - in - europe - 1 - oct - 20 2 / 5 02 / 10 / 2020 ireland β s engagement in europe and deeper integration of europe - deputy governor sharon donnery from these beginnings, later steps were taken to implement a banking union, which is particularly important in a monetary union as problems in other countries can quickly spill over borders. while we have made progress towards a functioning banking union, with the introduction of cross - border supervision through the single supervisory mechanism and rules for managing failing banks through the single resolution mechanism, it is not yet complete. a key outstanding issue includes the lack of a common system for deposit protection. this is important as within the euro area, depositors in a country hit by a crisis may worry they are not protected to the same extent as depositors in other member states, incentivising them to move funds abroad. this could amplify shocks to our economies and banking systems. to this backdrop, and on | 0.5 |
glenn stevens : interesting times address by mr glenn stevens, governor of the reserve bank of australia, to the australian business economists annual dinner, sydney, 9 december 2008. * * * it is a pleasure once again to address the australian business economists. it was to this group that i gave my first speech as governor, in october 2006. tonight is my 23rd speech since then. between the two occasions, quite a lot has changed, globally and domestically ( though i doubt the speeches have become any more exciting ). many people have said to me recently that the times are β interesting β. my response has been that they are, perhaps, a little too interesting. i need not remind this audience of the international financial turmoil through which we have lived over the past almost year and a half, nor of the intensity of the events since mid september this year, in particular. i do not know anyone who predicted this course of events. this should give us cause to reflect on how hard a job it is to make genuinely useful forecasts. what we have seen is truly a β tail β outcome β the kind of outcome that the routine forecasting process never predicts. but it has occurred, it has implications, and so we must reflect on it. in that spirit, i shall set out a few features of this episode that make it β interesting β. the most obvious one is the prominence of financial events and particularly financial sector impairment in key countries. there have been other episodes where individual financial institutions or sectors, or even the whole banking systems of small countries, have needed recapitalisation. but the scale of capital needed, the number of countries where it is needed and the extent of counterparty risk aversion because of concerns over solvency have been outside the range of experience of the past half century. in the near term, financial stress brings the obvious concern about the ability of the financial system to provide credit to the economies in question. as one measure of this concern, the number of loans approved for housing in the united kingdom in october was 65 per cent lower than a year earlier, and about 50 per cent lower than during the downturn of the early 1990s. the immediate need is to keep ample liquidity, strengthen banks β balance sheets by adding capital and to help confidence, including by lending the strength of the sovereign β s credit rating where necessary. all this has been occurring. what may still be needed internationally is attention to the remaining problem assets, since if their prices continue to decline | electronic payments are kept low and the electronic payments system is resilient. while it will be important to ensure that people who have traditionally used cash and cheques are adequately catered for, the experience of the past few months has demonstrated that the shift to electronic is perhaps not as difficult as many had thought. endnotes [ * ] thanks to faye wang for assistance with this speech. see rba ( 2019 ), β review of retail payments regulation β issues paper β, november. available at < https : / / www. rba. gov. au / payments - and - infrastructure / review - of - retail - payments - regulation / >. see australian payments council ( 2019 ), β payments in a global, digital world β the australian payments council strategic agenda β. Β© reserve bank of australia, 2001 β 2020. all rights reserved. the reserve bank of australia acknowledges the aboriginal and torres strait islander peoples of australia as the traditional custodians of this land, and recognises their continuing connection to country. we pay our respects to their elders, past, present and emerging. | 0.5 |
extensive experience in monetary policy management, and in banking and financial regulation and supervision. he has been at the forefront of efforts to address and resolve the financial crisis that began in 2007 and the subsequent european sovereign debt crisis. as well as for his profound knowledge of monetary and financial matters, governor noyer is known for the extremely courteous and careful way in which he always expresses his opinions and even his most serious disagreements. i am sure, ladies and gentlemen, that you are going to enjoy and benefit from the quality, both in substance and in form, of the address that governor noyer is about to give. ladies and gentlemen, thank you very much. bis central bankers β speeches | luis m linde : introduction to christian noyer speech by mr luis m linde, governor of the bank of spain, introducing christian noyer at the foro de la nueva, madrid, 28 june 2013. * * * ladies and gentlemen, it is an honour and pleasure for me to introduce to you today, here at the foro de la nueva economia, my colleague and friend christian noyer, the governor of the banque de france. with the presence of governor noyer, the foro de la nueva economia continues its tradition of inviting distinguished international personalities from the world of administration, business and politics, to promote the exchange of ideas on matters of particular interest to society. i will begin my brief description of the career of governor noyer by emphasising something in his curriculum vitae : christian noyer is a good friend of our country. the spanish government has recognised this, by awarding him the gran cruz de la orden del merito civil. with a legal training β he studied law at rennes and paris β governor noyer subsequently graduated from the institut d β etudes politiques and the ecole nationale d β administration, the school for senior civil servants and top corporate executives. his professional career began in 1976, when he joined the treasury in the french ministry of the economy and finance, where he held various positions relating to debt management, regulation of the financial industry and the management of public corporations. in the 1990s he was head of the treasury and chief of staff for the ministers of finance edmond alphandery and jean arthuis. during those years he built up considerable european and international experience. he was a member of the european monetary committee and held the office of alternate for the minister of finance at the oecd, the g7 and the g10. as head of the treasury, he also chaired the paris club. in 1998 he was appointed vice - president of the newly established european central bank. in 2003 he succeeded jean - claude trichet as governor of the banque de france, a post that he still holds following his reappointment in october 2009. he is a member of the governing council of the european central bank and chairman, since 2010, of the baselbased bank for international settlements. he is also head of the prudential control authority, one of the two most important regulation and supervision bodies in france. today, christian noyer is one of the most respected and long - serving central bankers. he has | 1 |
mismeasurement of subprime mortgage risks which turned into a systemic problem. ii. macroprudential analysis : a policy - maker β s view [ slide 5 ] economic research has a key role in the design of better regulation. research can inform regulators in their search for the right balance between robustness and sophistication of regulatory rules. we also need high quality cost - benefit and impact analyses of regulation in order to assess the effects of regulation on financial institutions and markets, and, ultimately, on the real economy. a recent example of the use of network analysis is toivanen, m. ( 2015 ) : essays on credit contagion and shocks in banking. doctoral dissertation, university of vaasa. bis central bankers β speeches in addition to the traditional financial regulatory rules we should think of safeguarding financial stability with macroprudential policy more generally. in this more holistic approach the role of analysis and research is, if possible, even more important than in the design of the traditional microprudential regulatory rules. when talking about macroprudential policy, some observers have yet found it useful to make a distinction between it and regulation. paul tucker, for instance, defines macroprudential policy as β dynamically adjusted financial regulation β. given that definition, one could argue that a well - designed and stringently implemented financial regulation is the first line of defense against systemic risks. macroprudential policy β that is, the dynamic adjustment of regulation β is the important second line of defense. 3 high - quality analysis reduces the inaction bias [ slide 6 ] most economists and policy - makers seem to agree that the key objective of the macroprudential policy is to provide additional resilience to financial institutions and the financial system against cyclical and structural systemic risks and vulnerabilities. but that is not sufficient. we also need macroprudential policies that can effectively restrain an excessive build - up of leverage and growth in household and corporate borrowing and thus dampen the credit and financial cycles. in the euro area, this need is particularly acute, as the economic cycles are currently diverging across countries and as the key monetary policy rates will stay low for a prolonged period of time. to prevent or at least dampen potentially destructive financial booms, the authorities must be able to take early macroprudential actions. to do that, the role of reliable early warning indicators is critical. i welcome the strong emphasis of this conference on | and uncertainty about the short - term reactions of financial markets and the real economy. however, they are not unreasonable or radical or inconsistent with our experience in dealing with past crises. they are focused on the longer run β reflecting a sharp awareness that policy geared too long toward extensive accommodation undermines market discipline and encourages speculative activities. put another way, these actions reflect the view that the longer exceptionally accommodative monetary policies remain in place, the greater the danger that resources will be misallocated within and across world economies. given the wide differences in views around these issues, i want to take time this evening to share my perspective on u. s. monetary policy choices and their effects on economic and financial outcomes. recovery is under way the financial crisis is over, and the u. s. economy is recovering. gdp growth in the united states averaged 3. 0 percent from the third quarter of 2009 through the fourth quarter of 2010. and it is worth noting that for the same period, the international monetary fund estimates that global gdp growth averaged 4. 9 percent. also, the united states added bis central bankers β speeches 1. 5 million jobs into the private sector over the one - year period ending in february of this year. other parts of the world, especially asia, have experienced particularly strong growth. while parts of europe and the u. k. have grown less robustly, the fact remains that the u. s. and much of the world is experiencing sustained economic growth. with the united states and many world economies experiencing such growth and with the u. s. financial crisis over, i would expect to see a change in policy in which stimulus put in place at the height of the crisis would be throttled back. however, this change in policy is on hold in the united states. the reason for the delay is the existence of significant productive capacity that remains unused in many of the developed nations. while the u. s. economy has clearly strengthened, it has not yet returned to pre - crisis output and employment levels. its unemployment rate, for example, remains near 9 percent. in the u. k., unemployment remains near 8 percent. thus for many the issue of policy turns on one β s confidence in the long run economic trends and the degree of monetary accommodation needed to ensure that those trends continue. shifting economic risks the monetary policy being implemented currently within the united states and much of the world is more accommodative now than at the height of the crisis. | 0 |
had asked respondents to name those five professions for which they have the highest respect. 6 the results of the survey found the respect for β bankers and bank employees β ranking at the bottom. even the profession of β politicians β was considered more β albeit marginally β respectable. only β tv moderators β fared inferiorly to bankers. such a derogatory view of the financial industry is not a new phenomenon, though. churchill apparently uttered in 1925 that he β would rather see finance less proud and industry more content. β currently no exact definition of the β shadow banking system β exists. according to the fsb, it can broadly be described as β credit intermediation involving entities and activities outside the regular banking system β ( see shadow banking : strengthening oversight and regulation, recommendations of the financial stability board, 27 october 2011 ). financial stability board : key attributes of effective resolution regimes, 4 november 2011. see frankfurter allgemeine sonntagszeitung, 30 october 2011. bis central bankers β speeches the negative perception of the financial industry often focuses on compensation practices. in fact, commentators have frequently expressed their scepticism on whether the activities of bankers and market players deserve those high wages and bonuses compared to the economic rewards earned in other industries. already keynes wondered β β¦ how long will it be necessary to pay city men so entirely out of proportion to what other servants of society commonly receive for performing social services not less useful or difficult? β it is by now well understood that excessive wage and bonus packages in some segments of financial markets have encouraged irresponsible risk - taking. thus, incentives were set inappropriately. against this backdrop, it comes as no surprise that the overhaul of compensation practices in the financial sector appears to have dragged the most broadbased public attention among all the components of the financial sector reforms. let me remark en passant that for improving financial institutions β own corporate governance as well as its public acceptance it will be key that compensation schemes will set incentives to take into account the long term viability and success of such institutions. this includes internalising the repercussions of the risks involved, and not just the maximization of the short term profit objectives. while the growth of wages and compensation in the financial sector is striking, it is not the only dimension at which the financial industry is being criticized to have β outgrown β. let me illustrate this with some key figures. a telling measure of the size of the financial sector is given by | the share of stocks, bonds and loans to the private sector as a percentage of gdp. with the exception of japan, this measure has also trended upwards in major oecd economies. this measure of the size of the financial sector stood around 430 % of gdp in the united kingdom, 315 % in the united states, and 262 % in the euro area, averaged over the period 2005 to 2009. 7 finally, the so - called shadow banking system has been likewise growing rapidly before the crisis. estimates of the assets in the shadow banking system, based on a proxy measure for non - bank credit intermediation for australia, canada, japan, korea, the united kingdom, the united states and the euro area, saw a rise from $ 27 trillion in 2002 to $ 60 trillion in 2007. following a slight subsequent decline, that number stood again at a similar magnitude in 2010. 8 the two or three decades before the crisis have seen a strong increase of the financial sector in advanced economies. viewed together with the negative experiences of the recent financial crisis, it is thus tempting to assert that the financial sector has in fact grown out of proportion. in what follows, i will address this assessment in more detail. the idea that β too much finance β can be detrimental for economic growth, has found some empirical and theoretical confirmation in the academic literature. 9 it evidences a nonmonotonic relation between the size of the financial sector and average growth : if the size of the financial system exceeds a certain threshold, it may have a negative growth impact. one mechanism behind such pattern may be that a larger financial sector would contribute to exacerbating the positive relation between average growth and the probability of sizeable economic downturns. another explanation would be that even in tranquil times, an oversized financial sector may represent a misallocation of financial and human resources that could be better utilized elsewhere in the economy. clearly, further research is needed in this respect. this regards in particular a characterization of the optimal size of the financial sector. nevertheless, it should be already clear that it cannot be the sheer scale of activity in the financial sector per se that matters for growth and economic welfare, but rather the types and qualities of financial sector activity. the figures are based on calculations using data from wfe, imf, datastream and eurostat. financial stability board ( 2011 ), β shadow banking : strengthening oversight and regulation β, october 2011. see, e. g., arcand, j | 1 |
rafael buenaventura : brief overview of inflation in the philippines opening remarks by mr rafael buenaventura, governor of bangko sentral ng pilipinas ( central bank of the philippines ), at the bsp inflation report press briefing, manila, 29 october 2004. * * * good morning, everyone. transparency is a hallmark of good monetary policy, and for this reason the bsp continually strives to bring across its policy message to the public and its reading of the outlook for inflation. this is the main reason why we publish a quarterly inflation report, and we would like to thank everyone here for joining us at this morning β s presentation. conducting monetary policy in the present economic environment is a considerable challenge for the bsp. the continued rise in inflation during the last few months has led to public concern over its likely effects on both the public β s purchasing power and economic activity. in our previous public statements on monetary policy, we have been careful to emphasize that the inflation uptrend over the past year has been driven mainly by supply - side factors arising in large part from a series of shocks coming from the sharp increases in oil prices, food and other key non - food commodities particularly fuel and transport. this view has led to the bsp β s prevailing policy stance of accommodating the supply shocks which are one, transitory in nature and two, if addressed by monetary action, could have adverse impact on growth and in turn inflation itself. the inflation report we will be presenting today outlines the reasons why we have kept our policy interest rates unchanged so far despite perceptions of a need to tighten monetary policy. we believe that supply - side developments continue to play a dominant role in the inflation outlook, and we find as yet no preponderant evidence of demand - driven inflationary pressures or second - order inflationary effects from the ongoing supply shocks. the expected path of future inflation continues to be hump - shaped, as supply factors push headline inflation above the 4 - 5 percent target in 2004 and 2005 before quickly tapering off and reverting to the 4 - 5 percent range by 2006. we find no compelling reason, therefore, to modify the settings for monetary policy at this time. in closing, let me emphasize that the bsp remains strongly committed to good monetary policymaking. we try to ensure our accountability by formally submitting ourselves to public judgment on the basis of how we go about achieving our inflation targets. we also make sure that the stance of monetary policy is | properly communicated to our constituency, the filipino public, through such documents as the inflation report and regular press statements. we welcome your comments on the contents of the report and hope that you will continue to actively participate in the public dialogue on the monetary policy process. thank you and good morning. | 1 |
term economic growth, the composition of the fiscal adjustment is very relevant. moreover, the combination of this consolidation efforts with other structural reforms on which i will focus later might be crucial in order to smooth and reduce the public finances adjustment needs. in addition, given the high degree of decentralisation of public spending in spain, all government decision centres must contribute to this effort. to this end, it is crucial to provide efficient mechanisms to finance the different competences, permitting citizens to identify the bodies responsible for implementing the different public policies. on a related matter, let me mention that the adequate access to external financing by regional governments β be it by credit provided by financial institutions or through the capital markets β is of particular importance to avoid a pro - cyclical stance in the provision of the public services, and guarantee market pressure geared towards fiscal discipline. currently, an exceptional mechanism is in place, namely the β fondo de liquidez autonomica β, whereby the central government provides funds to most regions, in the form of bilateral loans, in exchange for a heightened control over their fiscal policies. however, in the current favourable macroeconomic and financial context, regions should regain market access. challenges of the spanish labour market the second session of the conference is devoted to the challenges facing the spanish labour market. during the last three years, the annual growth rate of employment has been 3. 0 %. in the last five years, the unemployment rate decreased to 16. 5 % at the end of 2017, more than 10 pp below its peak at the beginning of 2013. despite these positive developments, unemployment is still at unacceptably high levels, in fact, the second highest in the euro area after greece. the high incidence of long - term unemployment, which now stands above 50 %, is signalling the risks of hysteresis in the labour market, which would make the reduction of the unemployment rate to pre - crisis levels more difficult. from a longer perspective, the spanish economy also faces three important challenges. first, even at the height of the last expansion in 2006, spain had an unemployment rate of 8. 2 % which was far off the best performers at that time. second, during recent decades, 5 / 9 the segmentation of the spanish labour market has been very marked, with a temporary rate exceeding 25 %, 10 pp above euro area averages, which contributes to exacerbating the volatility of employment and reducing productivity growth. third, the spanish economy should be ready | backed securities, by structuring asset pools into tranches with different risk levels, could potentially contribute to such diversification. there are commissionΒ΄s proposals in other areas. among them : the setting - up of an european monetary fund, which would take over the current functions of the european stabilization mechanism, eventually adding the role of common backstop for the single resolution fund ; the establishment of an european minister of finance, who would also be vice - president of the european commission and chairman of the eurogroup ; and the creation of a common stabilisation tool for investment, which should not preclude the future development of a genuine european budgetary capacity for economic stabilisation purposes. those are proposals that deserve careful consideration. moreover, the crisis has made it clear that the european budgetary framework is very complex, which highlights the need to simplify it. recent proposals, which seek to reduce the current excessive number of rules, by focusing on the public debt to gdp ratio, as a medium - term anchor, and to the expenditure rule, as an operational tool, seem promising. in any event, reinforcing the oversight and control of fiscal rules is necessary to ensure their fulfilment. the aim should be that the budgetary governance framework is able to encourage countries to generate room for manoeuvre during expansionary phases, so that the stabilising capacity of fiscal policy may increase in the euro area, as a whole, at times of crisis. 8 / 9 summing up : much work remains to be done in the coming months and years. we should make good use of the current benign environment to progress in our european integration agenda. much is at stake, most notably keeping our achievements alive, preserving our political, economic and social model, and ensuring a pivotal role for a united europe in an increasingly globalised world. 9 / 9 | 1 |
projection horizon. finally, it uses as a working assumption that public expenditure will follow a trajectory consistent with the fiscal rule and the administration β s announced budgetary consolidation path. the process of growth normalization will be slow. of particular concern is the behavior of investment, which the baseline scenario estimates will drop for the third year in a row. indeed, this year several indicators, among which the survey of the capital goods corporation, the levels of imports of capital goods and business confidence, anticipate a further drop in investment. moreover, the housing sector will have a limited performance after being highly dynamic in 2015, and public investment will follow a trajectory consistent with the objectives of fiscal consolidation. however, towards 2017 non - mining investment should restart growing at a pace matching the recovery of the overall economy ( figure 4 ). about the current account, we believe that this year β s deficit will be smaller than we thought in march and will show no big changes in 2017. in particular, the trade balance outperformed the march forecast in the first quarter, driven mainly by volume exports of goods, especially copper, and tourism - related services. furthermore, a slowdown in capital goods imports is expected because of adjustments in investment. in addition, there are generally upward revisions to non - copper export prices. consumption, meanwhile, continues to grow at around 2 percent. details of the domestic economy β s baseline scenario are shown in table 1. in this context, we foresee further adjustments in the labor market in the coming quarters. lately, annual growth in salaried employment slowed down significantly, to 0. 5 percent in the last moving quarter. the national unemployment rate has adjusted more gradually, thanks to increased self - employment, so it is still low by historic patterns ( figure 5 ). by regions, in the north of the country unemployment has risen more sharply than in other areas. firms interviewed for may β s business perception report β a quarterly publication of the bank β reveal increased labor availability together with lower wage claims. looking into the march survey of the university of chile, we also see an increase in the unemployment rate in greater santiago, to 9. 4 percent, confirming the weakening of the labor market. the evolution of employment and real wages, which have slowed down in annual terms in the last year, implies slower growth in the wage mass. this, coupled with still low household expectations, is consistent with positive, yet moderate, growth in consumption ( figure 6 ). bis central bankers β speeches turning | david opiokello : basel ii and its impact on financial services in uganda address by mr david opiokello, acting deputy governor of the bank of uganda, at the opening of the 6th east african banking school, kampala, 3 july 2006. * * * background i am pleased to speak to you this morning at the 6th east african banking school annual seminar. since launching the banking school, the annual school is increasingly becoming a prestigious regional event for bankers and all other key players in the financial services sector. this is yet another commendable contribution towards capacity building and harmonization efforts within the financial sector of the east african sub - region. it is incumbent upon all of us stakeholders to continuously review the standards set by the school to ensure that we not only maintain but strive to improve them going forward. on behalf of governor e. t. mutebile, the patron of the uganda institute f bankers, i would like to formerly welcome the invited resource persons in their respective capacities and all distinguished participants. the subject i was asked to speak on namely β basel ii and its impact on financial services is a complex one and i wish to state from the outset that the implementation of basel ii remains very much β work in progress β. briefly, the basel committee on banking supervision ( β the committee β ) issued a revised capital adequacy framework which is widely called basel ii in june 2004. this framework has been endorsed by the central bank governors and heads of banking supervision of the g - 10 countries. the group of ten ( g - 10 ) is made up of eleven ( 11 ) industrial countries namely ; ( belgium, canada, france, germany, italy, japan, the netherlands, sweden, switzerland, united kingdom and united states ). the committee believes that the revised framework will promote the adoption of stronger risk management practices by the banking industry worldwide. the new accord is designed mainly for internationally active banks and is to be implemented as of year end 2006. however one year of impact studies or parallel calculations has been allowed for the most advanced approaches to be implemented as of year end 2007. the committee recognizes that the adoption of basel ii may not be the first priority for the nong10 countries. furthermore the imf and world bank are of the view that future financial sector assessments will not be conducted on the basis of adoption of or compliance with the revised capital framework. rather, assessments will be based on the countries performance relative to the requirements of the committee β s core principles for effective banking | 0 |
charles s r chuka : review of the financial sector in malawi address by mr charles s r chuka, governor of the reserve bank of malawi, at the guest of honour at the inauguration of cdh house, blantyre, 24 june 2014. * * * protocol mr franklin kennedy, chairman of the board of directors of cdh investment bank ( cdhib ) and your fellow directors mr misheck esau, chief executive officer, management and staff of cdhib dr grant kabango, deputy governor, supervision mr eldin mlelemba, director of bank supervision and officials from the reserve bank of malawi distinguished invited guests, ceo β s of banks, private and public institutions blantyre city chief executive officer mr ted nandolo ward counsellor, counsellor noel chalamanda the officiating clergy director of ceremonies, mr benedicto malunga members of the press ladies and gentlemen i wish to begin by thanking you chairman and the board for inviting me to perform the honourable task of inaugurating the cdh house. taking tour of the building convinced me that you mean business, that you intend to grow your bank and to be a significant player in contributing to the economic growth of this country. indeed, the transformation from a discount house which operated for fourteen years to a bank in april 2012 is a remarkable achievement. i recall in 1998, when we licensed continental discount house, there had not been such a financial institution before. however, in view of the need that the central bank saw in the market, we found room in the banking laws to license a discount house. the need was to encourage the trading of financial instruments such as treasury bills and others. at the time money market investors were not able to access liquidity from their investments in financial instruments before maturity. with the licensing of continental discount house then, now cdhib, a platform was created for a secondary market in financial instruments to develop. the institution, as we were shown today through the displays, not only traded government financial instruments, but also originated other financial instruments such as commercial paper, negotiable promissory notes, corporate medium term notes and bonds. it is pleasing to note the amount of work that the institution performed in the capital market. in the displays, we saw the milestones in equity issues in various forms such as bonus issues, rights issues and the listing of shares on the malawi stock exchange. it is very clear that the foundation to becoming an investment | victor mbewe : committee of sadc stock exchanges speech by mr victor mbewe, governor of the reserve bank of malawi, at the opening of the committee of sadc stock exchanges ( cosse ) 2008 first meeting, lilongwe, 31 january 2008. * * * the chairman of the committee of sadc stock exchanges ; delegates to the meeting ; distinguished ladies and gentlemen. i welcome all participants to this meeting, aware that some of you are visiting malawi, the warm heart of africa for the first time. i wish you all a pleasant stay. allow me to start by mentioning that we are privileged to host this meeting as it helps us all to take stock of how far we have recently moved towards creating a common market in southern africa. progress toward integration of capital markets on a regional basis will help spur accelerated economic integration goals in other areas. the harmonization of stock market regulations and trading practices that would accompany any regionalization of exchanges could deepen regional integration more broadly in policy areas such as foreign exchange, taxation, accounting standards, corporate governance and legal practices. i am aware that sadc exchanges have been working toward adopting a common framework for clearing and settlement. among other options under consideration are the establishment of a linked network of individual central depository systems tailored to the specific needs of member exchanges. i hope that the committee of sadc stock exchanges is also drawing up common standards for all stockbrokers operating in the sadc region. this would enable brokers based in one sadc member state to establish a presence in any other member state. regulation and surveillance of national exchanges ultimately will be carried out on a regional level. i hope that national exchanges will formalise the practice of regular reporting on your national surveillance and regulations. the exchange of information on national surveillance policies and practices will be used to devise a harmonised system of surveillance and regulation for the sadc region. the committee of sadc stock exchanges should also aim to develop the region β s bond as well as other securities markets, and you must continue encouraging national authorities to actively issue government securities on the region β s exchanges. there is broad agreement that foreign exchange control, regulatory and tax frameworks must also be harmonized before financial markets can actually link up. more specifically, this would involve harmonizing not only stock market regulations, listing requirements, and trading, clearing, and settlement procedures, but also transaction fees, accounting standards, corporate governance standards, disclosure requirements, common standards for stockbrokers, and national rules for capital | 0.5 |
william c dudley : lessons of the crisis β the implications for regulatory reform remarks by mr william c dudley, president and chief executive officer of the federal reserve bank of new york, at the partnership for new york city discussion, new york, 20 january 2010. * * * it is a pleasure to have the opportunity to speak here today. i will focus on the important lessons of the recent crisis and how those lessons should inform the regulatory reform effort. as always, what i have to say reflects my own views and not necessarily those of the federal open market committee or the federal reserve system. in my opinion, this crisis demonstrated that a systemic risk oversight framework is needed to foster financial stability. the financial system is simply too complex for siloed regulators to see the entire field of play, to prevent the movement of financial activity to areas where there are regulatory gaps, and, when there are difficulties, to communicate and coordinate all responses in a timely and effective manner. effective systemic oversight requires two elements. first, the financial system needs to be evaluated in its entirety because, as we have seen, developments in one area can often have devastating consequences elsewhere. in particular, three broad areas of the financial system need to be continuously evaluated : large systemically important financial institutions, payments and settlement systems and the capital markets. the linkages between each must be understood and monitored on a real - time basis. second, effective systemic risk oversight will require a broad range of expertise. this requires the right people, with experience operating in all the important areas of the financial system. in this regard, i believe that the federal reserve has an essential role to play. the federal reserve has experience and expertise in all three areas β it now oversees most of the largest u. s. financial institutions ; it operates a major payments system and oversees several others ; and it operates in the capital markets every day in managing its own portfolio and as an agent conducting treasury securities auctions. also, as the central bank, it backstops the financial system in its lender - of - last - resort role. compared with where we were in late 2008 and early 2009, financial markets have stabilized, and the prospect of a collapse of the financial system and a second great depression now seems extremely remote. even with this progress, however, credit remains tight, especially for small businesses and households. economic growth has resumed, but unemployment has climbed to punishing levels. so while circumstances have improved, they are still very far from where we want them to | ##s globally today ". and, in contrast to some of the other topics discussed at the hamburg summit, the g20 member states were unanimous in supporting the objective of inclusive growth. so what does inclusiveness mean with respect to growth? let β s start by breaking the term 1 / 3 bis central bankers'speeches β inclusive growth β down into its two components : β inclusive β means sharing the benefits of growth amongst all, and β growth β can be simply stated in economic terms as a long - term increase in real gdp. thus, we are talking about economic prosperity for the benefit of everyone. put this way, it becomes obvious that inclusive growth is not a recent invention but rather an economic goal that is just common sense. after all, back in 1957, ludwig erhard, the former german minister for economic affairs and later chancellor, entitled his book on the german social market economy " wohlstand fur alle ", which translates as β prosperity for all ". although the invisible hand at work in a market economy leads to an efficient allocation of resources, it is now widely accepted that the market mechanism on its own creates winners and losers. while technological change generally leads to an increase in production capacities, it affects workers with different capabilities in different ways. obviously, a far - reaching redistribution would hamper incentives. excessive public expenditure β or speaking more generally β excessive redistribution through the tax system might harm the potential for sustained growth because entrepreneurs and workers become discouraged. on the other hand, " excessive inequality is not conducive to sustainable growth " either, as christine lagarde rightly stated. 1 excessive inequality can harm growth because it dampens the prospect for a significant part of the population of ever participating in the country β s prosperity. and so it is a matter of course that in most countries, the public sector shares in individuals β income to a certain degree by imposing taxes, with the majority of these countries imposing progressive taxes. this enables the public sector to supply public goods. achieving social cohesion by means of social security transfers, building human capital by subsidising education, and promoting the labour market participation of women, the long - term unemployed and lowskilled workers β all of these things can boost not only inclusion, but growth as well. bearing this in mind, it is important to find the right calibration of growth policies. the public debate on inclusive growth policies often takes the development of economic inequality over recent decades as a starting point. rising inequality is | 0 |
louis kasekende : shaping the future of smallholder financing in uganda keynote address by dr louis kasekende, deputy governor of the bank of uganda, at the high - level meeting on β developing approaches for financing smallholder household in uganda β, kampala, 20 april 2016. * * * good morning ladies and gentlemen. i would like to thank the organisers of this high level meeting, the uganda agribusiness alliance, for inviting me to give a keynote address. the modernisation of agriculture is probably the most important developmental challenge facing uganda ; without agricultural modernisation it is very difficult to envisage how uganda β s economy will ever be able to achieve middle income status. the vast majority of farmers in uganda are smallholders and they produce almost all of the country β s agricultural output. ninety six percent of total farm output in uganda is produced on farms of five hectares or less in size. there is no feasible route to agricultural modernisation which does not place the smallholder at its centre. although ugandans often perceive themselves as β blessed by nature β our agricultural performance has been poor for several decades. aggregate output growth has been weak and the growth that has occurred has largely been the result of increases in land acreage under cultivation and increases in the agricultural labour force. both average land and labour productivity have been stagnant for decades. the 2012 / 13 uganda national household survey indicated that two thirds of farmers are classified as subsistence farmers. an earlier survey found that even the most commercialised quintile of farmers marketed only 50 percent of their output. modernising smallholder agriculture in uganda will require helping farmers to improve their farm practises, utilise more modern farm inputs, especially high yield variety ( hyv ) seeds and produce more output for the market, thereby raising yields per acre and labour productivity. we know, from the work done on demonstration plots supported by development agencies that farmers can, in principle, achieve large increases in their crop yields even with relatively low input technologies combined with the adoption of good agricultural practises. ugandan smallholder farming has the potential for transformation but the constraints to this transformation are both large and multifaceted. a lack of access to finance by smallholders is one of these constraints, although not necessarily the most binding constraint for the majority of smallholder farmers at this early stage of agricultural development. to tackle the multiple constraints to the modernisation of smallholder agriculture, we need to adopt, and persevere | ##ical responses to the crisis, journal of globalization and development, vol 1, issue 1. bis central bankers β speeches nellor, david c. ( 2008 ), β the rise of africa β s frontier markets β, finance and development. vol 45, no 3. rodrik, dani ( 2009 ), β growth after the crisis β, paper prepared for the commission on growth and development, harvard kennedy school. thornton, john ( 2008 ), β money, output and inflation in african economies β, south african journal of economics, vol 76, no 3 pp356 β 366. bis central bankers β speeches | 0.5 |
12 months up through august 2012, the amount of lending increased by a total of approximately 15 trillion yen for financial institutions that saw a rise in their lending. going forward, if financial institutions manage to increase their lending more aggressively, the amount of funds that the bank can provide will rise accordingly. at present, the bank is in the process of making the necessary arrangements, and we plan to release the details of this facility before the end of the year and start its operation as soon as possible. the bank β s aggressive monetary easing, which consists of its virtually zero interest rate policy and its purchases of financial assets through the program, coupled with measures including the government β s intervention in the foreign exchange market, has fended off the yen β s appreciation to some extent. nonetheless, we have heard the opinion that the bank β s monetary easing is not enough because japan β s economy has yet to overcome deflation. this opinion often refers to the amount of β money β supplied by a central bank. looking at the monetary base β which is the amount of β money β supplied by a central bank, percentage point changes in its ratio relative to gdp since the lehman shock have been more or less the same as in europe and the united states, where the monetary base is thought to have been increased aggressively during this period ( chart 12 ). furthermore, as japan experienced its financial crisis much earlier than other economies, the ratio of the monetary base relative to gdp also started rising in earlier years and has now reached the highest level among the advanced economies. 2 now the question is, how can we further strengthen the effect of monetary easing? in order to answer this question, i would like to discuss the monetary transmission mechanism. this can be divided into two stages. the first stage is the transmission of monetary easing effects from the realm of monetary policy to the financial environment, where firms can raise sufficient funds at low costs on the back of monetary easing. the second stage is the transmission of effects from the financial conditions to economic activity and prices ; in other words, the extent to which firms and households actually take advantage of the accommodative financial conditions to increase their investment and spending ( chart 13 ). as for the first stage of the transmission, the effect of aggressive monetary easing has thoroughly permeated the financial environment, and extremely accommodative financial conditions have been achieved both in terms of interest rates and access to financing. if the effect of aggressive easing permeates the second stage of the transmission | masaaki shirakawa : path toward overcoming deflation speech by mr masaaki shirakawa, governor of the bank of japan, at a meeting with business leaders, nagoya, 26 november 2012. * * * introduction i am honored to be here today to speak and exchange views with business leaders from the chubu region. i would like to take this opportunity to express my deep gratitude for your cooperation with the bank of japan β s nagoya branch. today, i will start by touching upon economic developments at home and abroad, and then move on to explain the bank β s conduct of monetary policy. i will then discuss the economy β s path toward overcoming deflation. i. developments in overseas economies and in exchange rates considering that i have paid this region a visit every year just around this time in november, let me begin my talk by reflecting on developments in the economic environment surrounding japan β s economy over the past year, especially in overseas economies and exchange rates. to start with, i will outline developments in overseas economies. around this time last year, developments with respect to the european debt problem β the biggest risk factor for the global economy at that time β had been highly uncertain and nervousness in financial markets had been so strong that even a worst - case scenario β namely, the collapse of the euro zone β had been envisaged ( chart 1 ). in comparison with last year, the risk of the european debt problem triggering an extreme event such as a global financial crisis has subsided, thanks to progress with reinforcing the safety net including such moves as the european central bank ( ecb ) β s decision to launch a new government bond purchasing program and the inauguration of the european stability mechanism ( esm ). nevertheless, an adverse feedback loop among the fiscal balance, the financial system, and economic activity continues to operate in europe, particularly peripheral countries, and the effects have recently started to spill over to core countries as well. consequently, the european economy has entered a moderate recession phase, as evident in the fact that it has posted successive negative growth since the fourth quarter of 2011. meanwhile, the u. s. economy β its household sector in particular β has been undergoing recovery at a moderate pace. in terms of changes over the past year, it is a positive indication that housing investment appears to be bottoming out despite its continued low level ( chart 2 ). however, the situation regarding the β fiscal cliff β β the same issue as was raised a year ago β has | 1 |
advanced economies ( graph 4 ). r e s e r v e b a n k o f au s t r a l i a graph 4 debt levels for households are also relatively high in australia ( as a proportion of incomes ) ( graph 5 ). combined with the significant rise in outstanding mortgage rates, this has led required mortgage payments β interest plus principal β to increase by 2. 5 percentage points of total household disposable income since may 2022 ; the increase as a share of mortgage holders β incomes is much larger still. these mortgage payments have reached record highs in australia ( graph 6 ). 8 graph 5 graph 6 despite the substantial increase in mortgage payments, there has been little increase in acute financial distress among borrowers. mortgage arrears rates have risen, but they remain low and at similar levels in australia and the united states ( graph 7 ). this is despite the significant rise in required mortgage payments in australia. 9 the low levels of defaults in both economies partly reflects the large savings buffers many households built up during the pandemic as well as benign labour market conditions, since unemployment tends to be a strong predictor of mortgage arrears. 10 r e s e r v e b a n k o f au s t r a l i a graph 7 financial distress has also been contained, in part, by the way that interest rate exposure of australian mortgage holders is managed by banks ( overseen by the regulators ) as well as by the borrowers themselves. in short, these contribute to borrowers having buffers that can lessen the burden of adjustment in the face of a rise in interest rates. banks account for interest rate risk when setting their lending policies and the australian prudential regulation authority ( apra ) ensures that banks maintain prudent lending standards. when a bank determines how much to lend a prospective borrower, they must assess the borrower β s ability to service their mortgage at an interest rate 300 basis points above the current rate while still meeting basic living expenses. 11 this buffer recognises the risk associated with rates increasing as well as other risks β such as to income or unexpected spending needs. 12 borrowers play a key role in managing their own interest rate risk. this starts with their decision on how much to borrow. historically, only a small share of new borrowers took out loans close to the value of the maximums on offer. in 2022, only around 15 per cent of new owner - occup | heng swee keat : monetary authority of singapore β s initiative to develop singapore dollar sovereign - rated sukuks speech by mr heng swee keat, managing director of the monetary authority of singapore, at the 5th annual islamic financial services board summit, amman, jordan, 13 may 2008. * * * introduction it is my honour this afternoon to join my ifsb colleagues in discussion of this very current topic. i am very glad that we are addressing this issue of regional integration of islamic financial services at this point. this is very timely and relevant to both the soundness and vibrancy of islamic finance. let me explain. the global islamic finance industry has grown rapidly β it is estimated that total assets are now over us $ 750 billion. this is impressive. still, this is a small proportion of conventional finance. the potential for growth is hence very large. while each country is taking measures to promote islamic finance, we can grow much faster as well as increase the scope and depth of the industry if we work towards integration at an early stage. integration increases market size, efficiency and liquidity. this in turn provides for more competitive cost of capital, spurring further growth. second, having service providers from different regions allow risks to be distributed across a wider group of players, and can improve the overall stability of the financial system. regional integration between middle east and asia, which may have different business cycles, provides a cushion for financial institutions and investors from country specific shocks. third, integration promotes greater interaction and knowledge sharing, and can help lift the standards of the islamic finance industry. in short, the 3 facets β development, integration and stability of markets β are closely intertwined. proper attention to all these 3 facets will enhance the soundness and vibrancy of islamic financial services. we are in fact seeing greater integration already with more cross borders flows, both within the middle east and asia, and between the two regions. banking and capital markets are opening up to foreign investors, more shariah products are listed on stock exchanges and islamic financial service providers are expanding their operations overseas. this is a promising trend. three tasks we should build on this positive momentum. allow me to share my views on three broad categories of essential tasks in promoting greater integration in the coming years. 1st task : promoting more economic integration first, financial integration and economic integration are deeply linked, and mutually reinforcing. hence, to promote financial integration, we also need to focus on economic integration | 0 |
/ 12 bis - central bankers'speeches there is a balanced progress in commercial loans in line with the desired level of tightness. the corporate sector is provided with a healthy credit flow at sustainable rates, and we see that private banks now have a more active role regarding commercial loans in line with their total asset size. on the deposits side, there has been a strong shift to turkish lira time deposits since end - august amid monetary tightening. in the last five months : turkish lira deposits increased by 2. 4 trillion turkish liras, fx - protected deposits fell by 910 billion turkish liras, fx deposits declined by 1. 3 billion dollars, and in parity - and - price adjusted terms, by 3. 6 billion dollars. thus, the share of turkish lira deposits rose from 30 percent to 43 percent, while the share of fx - protected deposits fell to 16 percent. however, in january, the increase in the share of turkish lira deposits decelerated. we anticipate that our recent regulation will support the increase in the share of turkish lira deposits. deposit rates and turkish lira deposit share will remain essential components of our policy framework. our monetary tightening and simplification steps also reflected positively on the bond market, and aligned the yield curve with the monetary stance. accordingly, the yield curve exhibits normalization. it is also noteworthy that the negative slope has become more pronounced amid this process. the increase in our international reserves on the back of our monetary tightening steps has brought about a significant improvement in market - based risk indicators, despite escalating geopolitical risks in our region. having exceeded 700 basis points in may, the five - year cds premium, fell below 300 basis points, and is trading around 325 basis points as of this week despite the recent volatility in emerging markets. against this background, capital inflows posted a strong increase. the january - may 2023 period saw an average monthly capital outflow of 800 million dollars against a total inflow of 12. 6 billion dollars in the second half of the year. between june and october, the monthly average inflows rose to 600 million dollars. 9 / 12 bis - central bankers'speeches in november and december, inflows accelerated to over 4. 5 billion dollars on average. in january, capital flows lost momentum, but remained in positive territory. our international reserves showed a significant improvement on the back of the favorable trend in capital movements. having dropped to 98 billion dollars | like to thank once again all my colleagues who contributed to the writing of the report and the making of this press conference, primarily the members of the monetary policy committee and the staff of the research and monetary policy department. we can now move onto the question and answer session and our deputy governors will also be happy to answer your questions. 12 / 12 bis - central bankers'speeches | 1 |
as essential in order to fulfil our objectives. this assessment of the role of research has already led to the build up of significant research capacities within the bundesbank. it has been realised by several efforts like the founding of our economic research center, the appointment of a board of research advisers as well as the creation of research professorships and last but not least an ongoing active participation of our economists in the international academic debate about monetary policy and other economic issues. academic conferences like this on financing innovation have almost become a part of our β daily business β. ( although i have to admit a very pleasant one! ) i wish you thought - provoking discussions and a pleasant stay at our conference facilities. thank you very much for your attention. | growth of real loans in germany has been exceptionally low over the last three years. on average loans in real terms to the private sector have even fallen by about one percent per year. this remarkable weakness has to be assessed against the background of a period of very low economic growth. annual real gdp growth was only about Β½ percent over the last three years. this of course reduced the demand for external finance significantly. additionally, investment decreased sharply which possibly has been the most important factor behind low credit growth in germany. the decline in investment has been drastic in comparison to the level of economic activity. between 2001 and 2003 real investment fell by over 5 percent a year. this has driven down the ratio of investment to gdp to about 18 percent. compared to the last forty years we have never seen a period where this ratio has been that low in germany. on average it was almost 23 percent. the decline in the investment ratio could possibly be attributed to two factors. first, constructing activities haven fallen constantly since the peak in the middle of the nineties following the reunification boom. this has caused a medium - term downward trend in investment. second, we have seen a dramatic decline in fixed investment recently. this could possibly be explained by some degree of β overinvestment β during the new economy boom which reduced the need and capacities for new investment in the following periods. we do not have any indications that this outstanding magnitude of the fall in fixed investment could be attributed to a lack of means of finance or even a credit crunch. as a consequence of germany β s weak economic performance credit default risks have increased remarkably during the last three years. the number of insolvencies of private households and enterprises has risen to more than 100, 000 in 2003 - almost 20 % more than 2002. in order to prevent further losses from non - performing loans this has led banks to increase the standards for bank lending. however, this has not led to a general shortage of loanable funds. additionally, our econometric models confirm that the development of real loans is still well explained by weak gdp growth and the downturn of investment. loan growth rates are mostly within the confidence bounds of our empirical benchmarks. this is particularly true for the development of loans to enterprises. the decline of loans in germany was essentially driven by the weak economy and not the other way round. in this connection i β d like to add some remarks on basle ii. the rules of basle ii are intended to improve risk controlling of credit portfolio | 1 |
progress in a number of areas, but more needs to be done. for example, we identified the financial institutions and fmis that could have outsized impacts on the financial system if they failed, and we are subjecting them to more stringent regulation and supervision, including recovery and resolution planning. 23 central banks and international policy organizations have also worked to develop earlywarning indicators of risks to the global financial system. 24 while these are helpful as a starting point, we need to recognize their limitations, particularly if they rely on deviations from historical trends or threshold values. that is why it is important to push the analysis further to properly gauge the risk. stress tests are an excellent way to help us understand what could happen if financial institutions were subject to adverse events, such as a steep house price decline or a brexit vote. they also provide practical information about what might be needed to withstand and recover from these events. the bank of canada works with other organizations, such as osfi and the international monetary fund, to conduct regular stress - testing exercises of financial institutions and to improve our modelling techniques. 25 the unfinished business here is that models used for stress testing capture mainly firstround effects, with limited ability to identify spillovers that we know can end up being even more important. for example, while the bank β s current framework does capture second - round effects that could come from interbank exposures and asset fire sales, it could be improved. the bank, and others who conduct stress tests, could introduce the basel committee on banking supervision has developed quantitative metrics for identifying global systemically important banks ( g - sibs ) and a set of principles ( no quantitative metrics ) for assessing domestic systemically important banks ( d - sibs ) : β global systemically important banks : updated assessment methodology and the higher loss absorbency requirement β ( july 2013 ) and β a framework for dealing with domestic systemically important banks β ( october 2012 ). for example, see bank for international settlements, β early warning indicators of banking crises : expanding the family β ( march 2018 ) ; and t. duprey and t. roberts, β a barometer of canadian financial system vulnerabilities, β bank of canada staff analytical note no. 2017 - 24 ( december 2017 ). 25 k. anand, g. bedard - page and v. traclet, β stress testing the canadian banking system : a system - wide approach, β bank of canada financial system review ( | instead, how we promote road safety and prevent car accidents, which require the simultaneous application of standards for β’ driver education and competence ; β’ automobile operations and safety ; and β’ road quality and appropriate signage. a similar tri - fold approach for financial stability would entail clear objectives accompanied by the necessary powers and instruments for bis central bankers β speeches β’ financial education and information for consumers, lenders and investors ; β’ microprudential regulation and supervision ; and β’ macroprudential monitoring and regulation. a broader contribution for central banks so how can central banks broaden their contribution to financial stability? by promoting financial stability through the following measures : first, by encouraging prudence on the part of borrowers and lenders. most central banks publish or contribute to financial system reviews or financial stability reports. such reviews or reports monitor and assess financial vulnerabilities and risks and serve as an early warning mechanism. in addition, the underlying analysis in them provides a basis for recommendations for pre - emptive policy actions. these publications are thus an important means for central banks to contribute to financial stability. for example, the bank of canada has used its financial system review to inform households and lending institutions of our assessment of the vulnerability associated with elevated household debt in an effort to encourage all parties to exercise appropriate caution. second, by enhancing market discipline through increased transparency. by making their analyses and assessments public, central banks can increase awareness of financial system vulnerabilities, risks and their potential triggers so that investors and other market participants can appropriately price and manage risk. third, by strengthening regulation and supervision of the financial sector. since the crisis, the regulatory and supervisory framework for financial systems has been strengthened, and more rigorous global standards have been implemented in many jurisdictions. central banks contributed to the development of these standards through their involvement in international forums such as the financial stability board and other standardsetting bodies. an important example is the basel iii regulatory reforms, which require banks to hold more and higher - quality capital and meet new liquidity and leverage requirements and have thus made the banking system more resilient. while some central banks, including the bank of canada, are not directly involved in overseeing the implementation of these new standards, they can help evaluate their effectiveness. by working with regulators to implement coherent macro stress tests on the banking system they can jointly assess the ability of the banking system to withstand severe macroeconomic shocks. these tests would incorporate existing vulnerabilities. their main goal is to encourage the institutions themselves, | 0.5 |
provide services to small businesses, increasing the extent to which they compete with community banks. these changes have posed significant challenges for community banks. even so, many community banks have thrived, in large part because their local presence and personal interactions give them an advantage in meeting the financial needs of many households, small businesses, and agricultural firms. their business model is based on an important economic explanation of the role of financial intermediaries β to develop and apply expertise that allows a lender to make better judgments about the creditworthiness of potential borrowers than could be made by a potential lender with less information about the borrowers. a small, but growing, body of research suggests that the financial services provided by large banks are less - than - perfect substitutes for those provided by community banks. 4 consistent with this view, one study finds that the increase in competition from large, geographically diversified banking organizations has not affected the profitability of community banks in urban areas. there is some evidence of a profitability effect in rural areas, but it is actually more likely to be positive than negative. 5 thus, for most community bankers, the increased presence in their local markets of large, geographically diversified banking organizations appears not to adversely affect profitability. this circumstance may be due to the fact that a see, for example, robert adams, kenneth brevoort, and elizabeth k. kiser, ( 2007 ). " who competes with whom? the case of depository institutions, " journal of industrial economics 55, pp. 141 - 67 ; andrew cohen and michael j. mazzeo, ( 2007 ). " market structure and competition among retail depository institutions, " review of economics and statistics 89, pp. 60 - 74 ; and timothy hannan and robin prager, ( 2004 ). " the competitive implications of multimarket bank branching, " journal of banking and finance 28, pp. 1889 - 1911. see timothy hannan and robin a. prager, ( 2009 ). " the profitability of small single - market banks in an era of multi - market banking, " journal of banking and finance 33, pp. 263 - 71. branch manager at a large depository institution typically does not have the same local connections and relationships as a community bank president. furthermore, although survey data indicate that small businesses have increased their reliance on large banks and non - bank financial service providers in recent years, the data show that these same firms have not reduced the average number of financial services | are guided by prudence and sound business sense. at the same time, it wields the sword of transparency and accountability by holding decision makers accountable for their actions and fostering a culture of ethical leadership. to build a strong bedrock of governance, following conditions are critical : i. a diverse and independent board with effective oversight. ii. a robust risk management framework for identifying, assessing, and mitigating risks inherent in the portfolio of distressed assets. iii. transparency regarding disclosure of information about the operations and decision - making processes and accounting practices. iv. effective safeguards and robust policies to identify, disclose, and manage conflicts of interest in a fair and transparent manner. v. 3 / 5 bis - central bankers'speeches v. a comprehensive code of conduct that outlines ethical principles, professional integrity, and accountability. sound governance in arcs, therefore, requires a multifaceted approach that encompasses all the above elements. the onus in this regard lies largely with the boards of the arcs and the top functionaries who will have to develop a strong and robust institutional culture based on these principles. without robust governance mechanisms, it would be a challenging task for arcs to instil confidence in their operations and decision - making processes. arcs also need to be conscious of their conduct vis - a - vis the distressed borrowers. even a single incident of misconduct can potentially snowball into a controversy which the sector should guard against. while we acknowledge the rights of the arcs to recover overdue loans, they or their recovery agents should not resort to harassment of borrowers. a comprehensive fair practice code ( fpc ) for arcs has been put in place which requires arcs to follow transparent and non - discriminatory practices. this becomes that much more critical at present juncture when the share of retail loans in the financial assets acquired by the arcs has increased ( from 9 %, as of march 31, 2020 to 16 % as of march 31, 2023 ). way forward as you are aware, the regulatory framework of arcs was comprehensively reviewed by a committee constituted by the reserve bank ( chair : shri sudarshan sen ). based on these recommendations we have issued a set of revised instructions in october 2022 and they have also been subsequently incorporated in the comprehensive master directions on arcs issued on april 24, 2024. these instructions are aimed at having a robust governance system in place. with a view to enable this and in order to enhance board oversight, it has been stipulated that arcs need to appoint | 0 |
facilitate such reforms. the primary mandate and the best possible contribution of the eurosystem is precisely to ensure price stability in the medium run. then, to the extent that dysfunctional financial - markets are likely to jeopardize our ability to maintain stable prices in the medium run, the eurosystem must intervene. this analysis has motivated our decisions in the past and will continue to motivate future ones. this brings me to the second part of my talk today. 2. measures taken by the eurosystem to fight against the financial crisis our analysis of the recent situation suggests that the weak outlook for economic activity in the euro area is weighing downward on costs, wages and prices. accordingly, the governing council decided twice to lower the key ecb interest rate by 25 basis points, in its early november and early december meetings. changes in the ecb rates ultimately affect inflation through changes in bank lending rates, monetary and financial conditions and aggregate demand. under normal financial - market conditions, monetary - policy transmission mechanisms work properly and non - standard measures are unnecessary. but when transmission mechanisms are impaired, standard policy is likely to be less effective. in such exceptional circumstances, extraordinary, or nonstandard, measures must be implemented. it is in that spirit that the eurosystem has constantly and reactively updated its set of non - standard measures, keeping pace with the crisis β developments. on december 8, we have announced extensive measures to contain the refinancing risks of euro area banks. the eurosystem has announced in particular two longer - term refinancing operations with a maturity of 36 months which will be conducted as fixed rate tender procedures with full allotment as well as the extension of the collateral it considers eligible to borrow its liquidity. we also have reduced the rate of reserve requirements from 2 % to 1 %, which is also contributing to stem collateral constraints of parts of the euro area banking system. i would like to recall again that, in the euro area, banks are the main channel for mobilizing domestic savings and financing investment. this explains why ecb β s non - standard measures have primarily aimed at enhancing access of the banking sector to liquidity and at facilitating the functioning of the euro - area money market. given the topic of the current conference, i would like to take the opportunity to elaborate on one of these non - standard measures, namely the securities market programme, or smp. sovereign yields are central in the transmission of monetary policy, in | particular because government bonds provide a floor to the private - sector funding costs. this is the reason why we launched the smp. bis central bankers β speeches i insist that, through the implementation of all its non - conventional measures β including the smp β the eurosystem has fully played its expected role as a lender of last resort ( llr ), by which i mean that we have and we will intervene to stem liquidity crises that threaten the stability of the banking system. having said that, it is clear that engaging in large - scale asset purchases of sovereign bonds is well beyond what should be expected of a central bank β s role as a llr. moreover, largescale asset purchases are not without risks. while they may help to alleviate upward pressures on long - term interest rates in the short run, they could also affect price and financial stability in the medium - run, by endangering the value of the central - bank money. such risks do not necessarily materialize, but when they do, the repercussions are dramatic. altogether, considering the different tools are potentially at the disposal of policy - makers, it is crucial to gauge the short - to long - run benefits, limits and risks associated with each of them. i do not think that confidence would really benefit from measures that are known to carry non - negligible long - run risks, even if some short - term relief is expected from them. as a way of conclusion, let me shortly consider the progress that has already been made to solve this crisis and list some of the remaining challenges ahead. first, it seems important to welcome the significance of the fiscal stabilization programs many euro - area governments have committed to. as mentioned earlier, this is a necessary step to restore confidence in a sustainable way. although this is a difficult task, the timely delivery of the promised reforms is necessary. second, beyond individual policy actions, the recent progress obtained in the design of a common fiscal governance in the euro area is of the essence. indeed, many important decisions have been taken in that direction : the creation of the efsf and the esm or the agreement on fiscal rules and surveillance mechanisms during the brussels eu summit on december the 8th and 9th are historical steps in the right direction. obviously, most of these newly established institutions, rules and processes would have been unthinkable four years ago. this makes me really optimistic about our prospects for restoring stability and growth in the euro area. thus, | 1 |
bis central bankers'speeches | into the industrialisation process as trade flows expanded at double - digit rates during most of this period. while the east asian economies benefited from this global trend, the economies have not however, been immune to external shocks arising from shifts in international demand. the economies were affected by factors such as swings in commodity prices, significant oil price adjustments, and the slowdown in the major economies. while the impact of these trade - related shocks on the domestic economies of the east asian countries involved costs, in terms of slower growth and dampened domestic economic activity, these economies were able to adjust to the sudden changes. in such an environment, there was also greater predictability in the direction of the economic trends, providing the basis on which appropriate policy responses were implemented to manage the economic adjustment process. emerging economies in particular, in the east asian region participated in this globalisation process and benefited from the enhanced trade activities. in the recent decade however, there has been a distinct change in the nature of the globalisation process. globalisation is no longer confined to trade and direct investment, but increasingly involves large cross - border financial flows. over the recent decade, these financial flows have dominated the global market place. an emerging concern is that this trend would result in a widening of the divide between the developed and emerging and developing economies. in a world in which the magnitude of the financial flows are significant, in which the financial transactions have instantaneous implications, in which the flows are unconstrained by any regulatory framework, then size, the degree of development and the degree of resilience of economies will matter. countries that are small, and have less developed economic and financial systems, are open and liberalized, and that do not have the range of policy options at their disposal, will be highly disadvantaged in this global market place. it is this globalisation process that will contribute towards widening the existing disparities between nations. against this trend, the current global economic and financial environment has been characterised by increased uncertainty. there is uncertainty in the global economic outlook, financial markets and geopolitical developments. the expected strengthening of recovery in the advanced economies has yet to occur. financial reporting irregularities and the weakening of the corporate sector has affected confidence, contributing to the increased volatility in the global equity markets. further risks also remain on the horizon, including those emanating from structural imbalances in some of the advanced economies. these developments have res ulted in unstable and highly volatile conditions in both the asset and | 0.5 |
in the region. and, even as export fell by about 7 per cent, output growth remained positive in every quarter. in terms of macroeconomic stability, we saw an improvement both on the domestic and external fronts. in fact, thailand external position strengthened significantly over 2001. the current account registered a large surplus and external debt continued to fall sharply in 2001. our reserve position remains strong. i am convinced that a flexible mix between monetary and fiscal policies, plus the diversified structure of production and exports, did allow the economy to avoid contraction and build on greater external stability. with the improved environment for growth that i have just noted, i am more comfortable today than last year to talk about an economic recovery. my optimism, however, remains guarded. because on this road to recovery, there are still many risks. such risks, if not managed well, could undermine the sustainability of the recovery process. let me first talk about the macroeconomy and our view for 2002. then i will describe the challenges ahead as well as our thoughts on how to manage them. first, the economic recovery. what do the recent economic numbers tell us? in january, the economy showed signs of continued expansion despite the sluggish global conditions, thanks largely to the momentum in domestic demand. a number of indicators suggested that the economic conditions had improved somewhat from the recent months. for instance, β consumption and investment continued to improve in january. in particular, the private investment index ( pii ) continued to increase. a significant expansion was seen in construction, following the spur in housing demand and construction activities. β it looks like this good news on the domestic demand front warrants a significant increase in the january business sentiment index ( bsi ) and the index looking 3 months ahead. β export quantities continued to improve with the year - on - year growth rate in a high positive. this represents both the pick - up in our trading partners'purchasing power and our staying ability to compete. another factor that continued to firm up the recovery process came from the fiscal front. β during the first four months of fiscal year 2002, the budget disbursement rate accelerated compared to same period last year. this front - loaded fiscal stance will surely contribute to a sooner recovery. i must note here, however, that the jury is still out on what these early signs may portend. i believe the impassioned judgment on the speed of the recovery must await more data. ladies and gentlemen, it is rather unfortunate that while economists | prasarn trairatvorakul : managing emerging market challenges β thailand β s and asian perspectives remarks by dr prasarn trairatvorakul, governor of the bank of thailand, at the reception of the 2011 emerging markets central bank governor of the year award for asia, emerging markets, washington dc, 24 september 2011. * * * distinguished ministers and governors, ladies and gentlemen, it is my great honor to receive this prestigious award, and i would like to thank the emerging markets for your kind recognition. in fact, such recognition is unexpected as i simply fulfill my obligations as central bank governor. to be awarded for doing your job, i guess the job must be quite difficult or challenging. more importantly, i consider this award a recognition of the dedication of the staff of the bank of thailand, who have worked hard to ensure thailand β s sustainable economic and financial stability over the years. as the bank of thailand enters its seventieth anniversary next year, our institution is faced with a great challenge to maintain price stability while sustaining growth in the midst of heightened global economic and financial risks. we have no luxury of taking a wait - and - see approach but to continue our best efforts to better manage the external spillovers on our economy and financial system. with continued volatile global capital movements, central banks in emerging markets need to ensure that our financial institutions and markets remain robust ; that they can safely and efficiently manage foreign capital inflows as well as outflows, without disrupting the real economy. thus, emerging market central banks must be prepared for policy contingencies ahead. at the core, monetary policy must continue to safeguard price stability, while taking into account concerns about economic growth and financial stability. the bank of thailand, on our part, will do our best to steer the thai economy and financial system through the global turbulences, to ensure the continued well - being of the thai people in years ahead. thank you. bis central bankers β speeches | 0.5 |
went into real estate investment. it will be a shame if asia β s considerable savings pool, not to mention the inflows of capital from abroad, goes into speculative real estate instead of productive infrastructure investments that enhance long - term economic growth. having well - developed capital markets is a good way of ensuring that capital is allocated to productive uses. 23. a promising experiment in developing better mechanisms for allocating capital is the world bank - singapore urban hub. established in 2009, it brings together singapore β s public agencies, research institutes, and private sector players to share their experiences with developing countries, in areas ranging from water and waste management, land use planning, and urban development. as a financial centre, singapore provides a suitable platform for public - private - partnership financing frameworks to help channel private capital into infrastructure development in asia. bis central bankers β speeches build expertise for investing capital 24. while pricing capital correctly and improving the channels to distribute it more efficiently are necessary, they will be insufficient if the human expertise to manage and allocate the capital is not well developed. building a successful team of financial intermediaries hinges on identifying the right talent and building the right competencies. 25. in singapore, mas and the industry have worked together to develop the financial industry competency standards ( or β fics β ), aimed at enhancing the professionalism of the financial sector workforce. the accredited programmes of fics are readily accessible, with funding support of up to 90 per cent of the programme fees. mas supports relevant training programmes under the financial training scheme, which co - funds training costs for training courses. 26. substantial investment has also been made in the area of financial research. the work of researchers here helps to increase the body of knowledge and understanding of risks unique to asian markets. many research institutes have been set up in singapore to support these efforts. 26. singapore has put much effort into attracting asset managers to bolster the buy - side of the investment equation. as at end - 2010, assets managed out of singapore stood at s $ 1. 4 trillion, with a rolling 5 - year average growth rate of 16 per cent per annum. the asia pacific region continues to be the key investment destination for singapore - based asset managers, accounting for just over 60 per cent of total assets under management. private equity, venture capital, and other alternative investors have found singapore a conducive centre to access regional and international investment opportunities. such concentrations of investment talent and expertise in the major financial | 35 per cent of gdp, compared to 21 per cent in latin america and 25 per cent in eastern europe. high rates of investment and high rates of economic growth created a virtuous cycle of development in emerging asia during the last 40 years, unmatched in history. 7. but there are growing concerns whether this is too much of a good thing. the investment - to - gdp ratio in developing asia has gone up further, from 30 per cent in 2000 to 38 per cent last year. the ratio of gross capital inflows to gdp has doubled over the same period, from 8 per cent to 17 per cent. these numbers, in themselves, are not cause for concern. indeed, some would argue that emerging asia β s investment on a per capita basis is not very high. the real question is whether these investments are going into the right places. asia β s periodic bouts of asset market bubbles β especially in real estate β are a case in point. michael pettis of beijing university, for instance, warns that asia β s extraordinarily successful development model will eventually run into the constraints of β massive over - investment and misallocated capital β. bis central bankers β speeches 8. the key challenge that faces asia therefore boils down to this : β how can asia harness its sizeable domestic savings and large inflows of foreign capital to realise its economic potential? β there are three things emerging asia needs to do right. first, asia needs to price capital correctly. second, asia needs to strengthen its infrastructure for allocating capital. third, asia needs to build up expertise in investing capital. price capital correctly 9. let me begin with the pricing of capital. history is replete with examples of how mispricing capital leads to serious misallocation of resources, which in turn leads to excessive risk - taking and a build - up of debt that eventually ends in a financial crisis. 10. take latin america in the 1970s. global interest rates were low and capital sought higher returns in a booming region. international creditors lent huge sums for industrial development. external debt quadrupuled between 1975 and 1983, rising to 50 % of the region β s gdp. but when interest rates soared from 1980 onwards, the payments to service this debt began to cripple the economy. at the same time, the projects these investments went into failed to deliver the expected returns. it all ended in a severe debt crisis that set back latin america by at least a decade. essentially | 1 |
at the equivalent of usd262. 5 million. a second foreign currency tranche is expected to be launched later in the year which is open for participation of international investors. in relation to this, malaysia maintains a liberal foreign exchange administration regime where investors are freely able to obtain ringgit and foreign currencies to fund their investments. there continues to be free mobility of inward and outward movement of funds relating to both foreign direct investment and portfolio investments. having developed a comprehensive islamic financial system that is supported by the legal, shariah and regulatory infrastructure, the islamic financial landscape has been liberalised with the entry of new international players. in addition, the foreign equity ceiling in islamic financial institutions has also been raised to a maximum of 49 percent as part of the effort to promote strategic alliances. new licences are also being offered for international islamic banks and international takaful operators to conduct the full range of islamic banking business or takaful and retakaful business in international currencies. these institutions may be established as a branch or subsidiary and are accorded a tax holiday until 2016. these entities may be 100 percent foreign owned and have the freedom on employment in these financial institutions. to facilitate foreign employment, an " executive green lane " is being accorded to expedite applications by expatriates for long - term employment. having a sufficient pool of best talent has been key to the development of an islamic financial hub in malaysia. in 2006, the international centre for education in islamic finance ( inceif ) was established as part of malaysia's commitment to human capital development in islamic finance. inceif, which has an international faculty and students from more than 40 countries, is envisaged to produce high quality islamic finance professionals and specialists not only to meet the domestic requirements but also for the global islamic financial industry. the malaysian economy has for several years now been on a steady growth path. in 2006, malaysia launched the ninth malaysia plan to be implemented in the period 2006 - 2010. one of the objectives of the plan is to achieve developed nation status in 2020. while the government has allocated usd53. 4 billion for development under this plan, the economy will continue to be private sector driven. sectors emphasised in the plan are the high - technology, knowledge - based and skills - intensive activities, and the services sector. under the ninth malaysia plan, several new growth regions have also been identified for integrated development. the first growth area launched is the iskandar malaysia | jurgen stark : taking stock β where do we stand in the crisis? speech by mr jurgen stark, member of the executive board of the european central bank, at the bmw ( bayerische motoren werke ) stiftung herbert quandt, washington dc, 15 april 2010. * * * ladies and gentlemen, introduction : macroeconomic developments and outlook in autumn 2008, the world economy entered the worst financial crisis and the deepest recession since the great depression. both monetary and fiscal policies responded vigorously to this exceptional situation and contributed to the emergence of a recovery in the course of 2009. hence, after falling last year, global activity is expected to grow by around 4 % this year, while global trade is expected to grow by almost 6 % ( imf january weo update ). strong growth in emerging market economies in asia is a major driving force behind these figures, while growth in many advanced economies is forecast to be weak. questions can be raised as to whether such an uneven pattern of the recovery will prove sustainable. in the euro area, recent information indicates that the recovery has continued to expand in the first few months of this year. looking forward, euro area growth is expected to remain moderate, owing to ongoing balance sheet adjustments in the private sector, weak prospects for the labour market and low capacity utilisation. available growth forecasts for 2010 put it at, on average, around 1 %. the crisis is also expected to have lasting effects on our economy, as both the level and the growth rate of potential output are most likely reduced for a longer time. turning to price developments in the euro area, according to eurostat β s flash estimate, annual inflation increased to 1. 5 % in march, from 0. 9 % in february. this was higher than expected. while this does not change our assessment, it is important to understand whether the surge in inflation in march is temporary or more lasting in nature. this is difficult to assess without a breakdown of developments in the overall hicp, which will only become available tomorrow ( 16 april ). however, it seems reasonable to consider energy and food prices as the main drivers behind the higher than expected inflation outcome in march. looking ahead, we expect inflation in the euro area to remain moderate over the policyrelevant horizon. the outcome of our monetary analysis confirms the assessment of low inflationary pressures over the medium term, with money and credit growth remaining weak. at the same time, we need to monitor price developments in the more dynamic regions | 0 |
##ness and, more importantly, our productivity. household indebtedness let us start with household debt. since the beginning of the recovery, household credit has increased at twice the rate of personal disposable income. in the autumn of 2010, canadian household debt climbed to an unprecedented level of 147 per cent of disposable income ( chart 7 ). the relatively healthy financial condition of canadian households at the beginning of the β great β recession helped the canadian economy to better withstand the initial shocks of the crisis. however, going forward, it is essential to maintain the necessary room to manoeuvre to keep household spending on a viable path. this leads us to believe that the rate of household spending will more closely correspond to future earnings, and certain signs to that effect have already been observed. canada β s international competitiveness the second issue is our ability to compete internationally. the slow recovery of exports is due in part to the sluggishness of global economic activity. it is also due to the continued erosion of canadian business competitiveness over the past ten years. this erosion can be attributed to the appreciation of the canadian dollar and canada β s poor productivity performance. thus, canadian exporters are seeing their market shares for a wide range of goods drop in the u. s. market β by far the most important market for canada β while exporters in other countries, such as china and mexico, are gaining ground ( chart 8 ). bis central bankers β speeches as global economic growth continues to take root, we are seeing early evidence of a recovery in net exports. but, at this point, exports are still weak when compared with previous recessions. and in a world of growing international competition, we should not assume that the forces causing the erosion of competitiveness through the previous decade will simply fade away because of a global recovery. this situation highlights the need to diversify our export markets and increase our ability to compete, not only with american producers, but also with other foreign exporters. productivity and investment this brings us to the third issue. as i just discussed, international competitiveness is based on our ingenuity, the efficiency with which we produce, or, for short, productivity. but beyond its influence on international competitiveness, productivity is a fundamental determinant of our economic well - being. to improve productivity, we need investment. the slow recovery of investment in this cycle is particularly surprising in light of relatively favourable financial conditions : interest rates remain low, and the | ##firmation that ibl has consolidated its position in its core banking business and now feels itself secure enough, confident enough and strong enough to spread its wings. the re - launch is also timely from a business viewpoint as it places the bank in a position to participate in the burgeoning capital market, which is now rivaling the traditional banking sector institutions as a preferred source of business financing. it will certainly help that the intercommercial trust and merchant bank would have the capital market experience of both jmmb and cmmb to rely on. over the last five years the value of sovereign bond placements in trinidad and tobago has amounted to more than $ 16 billion while private debt issues have amounted to $ 10. 5 billion over the period. also, with the rapid diversification of the economy, trade and project financing, commercial paper and various forms of structured finance typical of merchant banks, are increasingly becoming important sources of funding business activity. so there is a good case for a re - entry into merchant banking. however, merchant banking has its own challenges. as bankers, you know that dependence on diversified funding sources such as money market instruments and long - term foreign currency borrowings is invariably more risky than dependence on vanilla deposits. on the assets side, secured loans and advances, which are the standard fare of commercial banks, carry lower risk than the investments that are likely to dominate the balance sheets of merchant banks. in short, the shift to merchant banking will create demands for new competencies, new systems and new governance and risk management structures. as you know, the evolving structure of the financial system is also creating new challenges for the central bank as regulator. we are currently addressing these challenges through : ( i ) transforming our supervisory system into a more integrated risk - based framework ; and ( ii ) strengthening our overall legal and regulatory infrastructure, in line with international best practices. in particular, this implies, inter alia : ( i ) ensuring that institutions β big and small β have adequate governance systems in place ; ( ii ) insisting on enhanced reporting and disclosure standards ; ( iii ) putting in place procedures for the sharing of information with other regulators both locally and regionally ; and ( iv ) ensuring that financial institutions strengthen their risk management practices. in this context, the bank is working on amending capital adequacy rules to ensure that all major risks are appropriately identified and mitigated. i was very impressed by the mission statement of the intercommercial trust and merchant bank β | 0 |
positions which are controversial and prone to manipulation2. simpler and more credible and effective rules are needed to ensure that euro area countries safeguard fiscal sustainability and build the necessary buffers to create room for countercyclical stabilisation in economic downturns. recent proposals 3 / 4 bis central bankers'speeches to focus the fiscal framework on a debt anchor complemented by an expenditure rule deserve further consideration. 3 emu also needs a central fiscal stabilisation mechanism to enhance countercyclical stabilisation during severe recessions. past experience shows that the aggregate fiscal stance in the euro area is often suboptimal. during the european debt crisis, for example, it was strongly contractionary, thereby reducing the effectiveness of an expansionary monetary policy stance. while the euro area budgetary instrument currently under discussion is a welcome step to support convergence, it is not designed to fulfil this stabilisation function. work on the fiscal architecture of emu therefore needs to continue to ensure that fiscal policies can play an effective stabilisation role. conclusion let me conclude. the euro, which celebrates its 20th anniversary this year, enjoys broad support among european citizens, with three in four people in the euro area in favour of it. its growing popularity is testimony to the fact that people have trust in the currency and in the ecb β s strong commitment to price stability, which supports investment and job creation. to preserve this trust, we need to step up our efforts at both national and euro area level to strengthen the architecture of the single currency. much has been achieved but some of the failings that caused and perpetuated the crisis remain unresolved. at a time of heightened global uncertainty, completing the euro area β s architecture is also necessary for europe to be able to achieve its other objectives. europeans won β t be able to foster cooperation on security and defence, or to speak with one voice on international affairs, or to complete the single market if they repeatedly have to tackle economic crises which are largely of their own making. a sound and sustainable euro area will help redirect political capital where it is most needed. thank you. 1 see the european fiscal board β s latest assessment of the prospective fiscal stance appropriate for the euro area, published on 25 june 2019. 2 see b. cΕure ( 2018 ), β scars that never were? potential output and slack after the crisis β, speech at the cepii 40th anniversary conference, paris, 12 april. 3 see | jean claude trichet : hearing at the economic and monetary affairs committee of the european parliament introductory speech by mr jean claude trichet, president of the european central bank, at a hearing before the economic and monetary affairs committee of the european parliament, brussels, 7 december 2009. * * * dear madam chair, dear members of the committee on economic and monetary affairs, this is our first meeting since the entry into force of the lisbon treaty. the new treaty is a reason to celebrate : in europe generally, here at the european parliament, but also at the ecb. it will make the union stronger, more effective and more efficient. the powers and responsibilities of the european parliament increase. the ecb formally becomes an institution of the european union, and all its essential features, above all its independence, are confirmed. dans le cadre du nouveau traite, nous nous rejouissons de notre collaboration a venir avec le parlement. la qualite de cette cooperation a ete exemplaire a mes yeux au cours de ces dernieres annees. unsere heutige anhorung ist drei wichtigen themen gewidmet : erstens, unserer einschatzung der aktuellen wirtschaftlichen lage ; zweitens, unserer exit - strategie zum auslaufen der auΓergewohnlichen geldpolitischen maΓnahmen, die wir in dem hohepunkt der krise eingefuhrt hatten ; und drittens, dem thema der systemischen risiken im finanzsystem. 1. economic and monetary developments the economic situation and outlook have continued to improve since my previous hearing before this committee ten weeks ago. the euro area economy shows increasing signs of recovery. economic activity in the third quarter is estimated to have increased by 0. 4 % compared with the previous quarter. in 2010 we expect to see a moderate recovery. this is in line with the latest eurosystem staff projections, which were published last thursday. however, this expectation remains surrounded by a high level of uncertainty. in the view of the governing council, the risks to the outlook remain broadly balanced. as regards price developments, inflation and inflationary pressures have remained low over recent months. in line with our expectations, inflation rates turned positive again in november, reaching an estimated 0 | 0.5 |
31. 082017 welcome address first annual research conference of the banco de espana luis m. linde governor buenos dias, good morning to everybody. let me welcome you all to the first annual research conference of the banco de espana. we plan to make this conference our main research event each year. so, we hope that today β s edition is the first of many to come. our aim is to bring together scholars and policymakers to express views and discuss on the key policy questions for central banking, both from an academic and a practical perspective. the conference reaffirms the banco de espana β s commitment to research as an indispensable tool for economic policy - making. good research strengthens the foundation of our policy framework and lays the groundwork for the models we use in our economic and monetary policy analysis. the banco de espana commits significant resources to research. let me give you some figures. currently, according to the ideas database, our bank ranks third in research among national central banks in the euro zone. in 2016, researchers at the bank published more than 30 working papers. indeed, research is not a matter of quantity, but of quality ; in the last few years our researchers have published in top journals such as econometrica, the american economic review, the journal of political economy, the various american economic journals and the journal of monetary economics, just to mention a few examples. over the last three years, fifteen young economists holding phds from renowned international universities have joined the bank β s staff. i am pretty confident that our research output will be improved and enhanced in the future. challenges for macroeconomic research today and tomorrow you will be talking essentially about macroeconomics. looking forward, macro policies, monetary, fiscal, and macroprudential policies, are facing a number of challenges that require deep theoretical and empirical analysis. perhaps, first of all, we need to understand the causes and consequences of the current levels of low inflation in most developed economies, despite the fact that most major central banks have introduced unprecedented monetary measures to support activity and growth. several explanations, ranging from a β debt supercycle β to a secular stagnation have been proposed. if natural rates at very low or even negative levels are here to stay, central bankers will have to rethink our standard toolbox and to decide which policy measures put in place during the last decade should be maintained. in this respect, i think that the first paper of the conference, which analyze | fernando restoy : challenges for banking resolution closing remarks by mr fernando restoy, deputy governor of the bank of spain and chairman of the frob ( the fondo de reestructuracion ordenada bancaria β fund for orderly bank restructuring ), at its conference, madrid, 4 june 2014. * * * introduction good evening. i welcome this opportunity to share with you some thoughts on banking resolution. i cannot think of a more qualified audience to discuss this matter than that invited by the frob for this conference, with representatives of competent authorities in the field, among others. i will organise my remarks as follows. first, i will briefly describe how i see the general global framework for banking resolution established after the crisis. next, i will review the special features of the european case. and finally, i will concentrate on the lessons to be drawn from the spanish experience, with a special reference to issues relating to the institutional design of banking resolution. the global framework for banking resolution after the crisis we all know that banking resolution has not achieved the status of a well - defined policy area until very recently. actions taken by authorities in relation to failing or likely - to - fail institutions have followed a discretionary case - by - case approach, particularly with respect to the availability of public funds to protect banks β creditors. the idea was that, as there was no ex - ante commitment to possible public bail - outs, the risk of moral hazard in relation to risk management policies and investors β decisions could be sufficiently contained. the recent crisis has however illustrated very clearly the limitations of this β constructive ambiguity β approach. thus, during the crisis, and in particular after the collapse of lehman brothers, the authorities have openly recognised that bank failures β even if they are not particularly large or complex β can seriously impair financial stability, making bail - out a natural policy response. as a consequence, there were widespread bail - outs of creditors of banks under stress. these rescues have obviously confirmed the existence of an implicit guarantee for banks β liabilities which constitutes a serious challenge for fiscal balances and a substantial distortion of the system of incentives for bank managers and fund providers. there is now broad agreement that in order to restore the socially desirable incentives and minimise the use of public resources, it is not enough to work on preventing bank failures by adopting appropriate regulatory and supervisory policies, but rather it is also necessary to be able to deal with non - viable banks in an orderly fashion and obviate the per | 0.5 |
also broadly reflected in the december 2017 eurosystem staff macroeconomic projections for the euro area, which foresee annual hicp inflation at 1. 5 % in 2017, 1. 4 % in 2018, 1. 5 % in 2019 and 1. 7 % in 2020. compared with the september 2017 ecb staff macroeconomic projections, the outlook for headline hicp inflation has been revised up, mainly reflecting higher oil and food prices. turning to the monetary analysis, broad money ( m3 ) continues to expand at a robust pace, with an annual rate of growth of 5. 0 % in october 2017, from 5. 2 % in september, reflecting the impact of the ecb β s monetary policy measures and the low opportunity cost of holding the most liquid deposits. accordingly, the narrow monetary aggregate m1 continued to be the main contributor to broad money growth, expanding at an annual rate of 9. 4 % in october, after 9. 8 % in september. the recovery in the growth of loans to the private sector observed since the beginning of 2014 is proceeding. the annual growth rate of loans to non - financial corporations increased to 2. 9 % in october 2017, after 2. 4 % in september, while the annual growth rate of loans to households remained stable at 2. 7 %. the pass - through of the monetary policy measures put in place since june 2014 continues to significantly support borrowing conditions for firms and households, access to financing β notably for small and medium - sized enterprises β and credit flows across the euro area. to sum up, a cross - check of the outcome of the economic analysis with the signals coming from the monetary analysis confirmed the need for an ample degree of monetary accommodation to secure a sustained return of inflation rates towards levels that are below, but close to, 2 %. in order to reap the full benefits from our monetary policy measures, other policy areas must contribute decisively to strengthening the longer - term growth potential and reducing vulnerabilities. the implementation of structural reforms in all euro area countries needs to be substantially stepped up to increase resilience, reduce structural unemployment and boost euro area productivity and growth potential. regarding fiscal policies, the increasingly solid and broad - based expansion strengthens the case for rebuilding fiscal buffers. this is particularly important in countries where government debt remains high. all countries would benefit from intensifying efforts towards achieving a more growth - friendly composition of public finances. a full, transparent and consistent implementation of the stability and growth pact and of the | and the federal reserve as unnecessary and even counterproductive. as a result, in 1994, the fomc began explicitly announcing its policy decisions. in a bid to further increase transparency, the fomc introduced a balance of risks assessment in early 2000 as part of its policy decisions. the balance of risks assessment was designed as a vehicle to communicate the committee's sense of the economic outlook over the " foreseeable future. " the foreseeable future is one of those wonderful phrases we central bankers get to use. it is not intended to refer to a specific time horizon, and indeed, when the fomc introduced the balance of risks statement, it suggested that the time horizon encompassed by the foreseeable future might well vary depending on the economic circumstances. however, in contrast to the previous " bias " statement, the concept of the foreseeable future in the balance of risks statement was intended to extend well beyond the upcoming intermeeting period. the balance of risks statement is released to the public at the conclusion of each fomc meeting. by contrast, prior to 1999, the " bias " statement was only made known to the public after a six - week lag in the release of the minutes for each fomc meeting. this past march, the fomc took a further step toward increased transparency by including the roll call of the vote on the federal funds rate target, as well as an indication of the preferred policy choice of any dissenters. indeed, press coverage following the september fomc meeting noted the two dissents in favor of a policy easing reported in the announcement following that meeting. so why have the federal reserve and many other central banks moved toward a policy framework involving greater transparency? the principle that central banks should be free of political interference in pursuing legally mandated objectives is now widely regarded as a key tenet supporting central bank credibility and effectiveness. however, democratic societies rightly should expect that central banks, as public institutions, should be publicly accountable for their actions, and greater transparency in central banking is an important factor in ensuring that this is the case. but central banks have found transparency useful for monetary policy purposes as well. by providing a clear rationale for their actions and an assessment of the economic outlook, central banks can reduce unnecessary uncertainties faced by market participants. moreover, investors armed with a clearer understanding of the central bank's motives and views are better able to anticipate future monetary policy actions. this, in turn, | 0 |
! innovations in finance offer new opportunities to the financial sector. this may especially be the case in africa, where these innovations are perhaps less of a β threat β to the traditional banking sector than in β overbanked β europe. but even more important in my view are the benefits of innovation for consumers and businesses. new technology in finance brings more choice, lower costs and greater convenience for users. this not only holds for advanced countries with well - developed banking sectors, but certainly also for africa with its many remote areas and still many β unbanked β inhabitants. indeed, a sustainable and prudent development and use of new technologies in finance will help to further promote financial inclusion in africa. and this is of vital importance. for this relationship between financial inclusion and economic growth has been clearly established time and again. financial services are the lifeblood of an economy. access to financial services allows households to smooth out consumption and invest in their future. for businesses, access to credit enables them to expand and to create jobs. financial inclusion, in short, is one key for promoting strong and stable economic growth. innovations in finance are perhaps the most promising way to advance financial inclusion. that is why it is so important that new technologies in finance are being exploited in africa, as this will help unlock the continent β s massive β unbanked β population. for companies involved in supplying this new type of services this implies that they will continuously need to embrace innovative strategies. in this way, they will be able to shape financial products to fit consumers β rising financial sophistication needs. recent history suggests that african companies are able to do so quite successfully. kenya, for instance, has led the world in innovative financial services based on mobile telephony by introducing m - pesa and m - pesa - derived systems such as m - shwari and m - kesho. this has made several financial services available to anyone with a mobile phone at a fraction of the cost. exploiting innovations in finance is one. strengthening institutions is the other. one of the most fundamental questions in economic science is β why are some countries richer than others β? differences in the quality of legal, political and educational institutions between countries turns out to be an important part of the answer. indeed, the strengthening of such institutions often goes hand in hand with higher economic growth : countries with stronger institutions experience stronger economic growth compared to countries with weaker institutions. there are several reasons why this turns out to be the case. strong institutions | certain economies. this has been an important area of work for the fsb. in 2022, we published a report looking at trends in the structure of emes'external borrowing, focusing on the shift towards non - bank financing. the report examined how these developments contributed to the build - up of vulnerabilities in emes and to the march 2020 turmoil. it discussed policy issues that could be considered when thinking about measures to limit these vulnerabilities. this included measures to tackle the build - up of foreign exchange mismatches ; enhance crisis management tools ; and address data gaps to facilitate risk monitoring and the timely adoption of policies. the fsb also stressed the importance of ongoing work to address vulnerabilities from liquidity mismatches in open - ended funds, which would also help bolster the resilience of emes'financial systems. i am therefore happy to report that the fsb is finalising its policy recommendations to address structural vulnerabilities from liquidity mismatch in open - ended funds, working in close coordination with iosco. 2 / 3 bis - central bankers'speeches enhancing the resilience of the nbfi remains a key priority for the fsb in 2024. the fsb will also continue to build on the lessons from the march 2023 turmoil and to monitor macro - financial vulnerabilities in a higher interest rate environment. let me conclude. vulnerabilities in the global financial system remain elevated. tightening financial conditions and high levels of debt create challenges for both bank and non - bank lenders. in tackling the challenges ahead, formulating policy responses and building resilience, it is essential that there is global coordination and that we pay attention to potential cross - border spill - overs. gatherings like today's forum are an important way of exchanging views and identifying the different ways in which governments and international organisations can work to enhance the resilience of our global financial system. as i mentioned earlier, regional perspectives matter a great deal, and amro's financial stability report is therefore a welcome contribution to the global dialogue on vulnerabilities. for our part, the fsb will remain focused on building resilience, so that the financial system can continue to play its part in building strong, sustainable, inclusive, and balanced growth. thank you. 3 / 3 bis - central bankers'speeches | 0.5 |
constitutes finality of a sale when the entire transaction is conducted electronically. other examples are determination of what constitutes a signature in a fully electronic transaction or of how state law applies to electronic business transactions, some of which are conducted by multiple parties in multiple states. other regulatory issues arise when technological advances allow new entities to leapfrog traditional institutions and command major market positions. this phenomenon is most clearly defined in the securities industry, where the electronic communication networks ( ecns ) - - now only six years old - account for 50 percent of the transactions that take place on nasdaq. these changes, in turn, have important regulatory implications for banking organizations. the definition of what is or should become a " banking business " can rapidly change and in many cases should change if banks are to remain competitive and innovative in financial markets. a second fundamental change involves bank supervision - - it is the shift from a transaction - based to a risk - based focus. as financial institutions increased in size and complexity, it became clear that examiners could not keep pace in the historic manner of examining transactions. instead, examiners needed to evaluate large, complex institutions'ability to identify and manage risk. for example, in evaluating credit - risk exposures, examiners first determine how credit risk is managed. they look, for example, at such basic elements of risk management as the way the institution establishes its risk parameters and more specific elements of credit administration and credit review. they evaluate riskmanagement models or tools that the institution uses and their suitability to the relative sophistication of the institution's loan portfolio. determining the level of individual transaction testing depends, in part, on the results of the initial assessment. banking regulators are still shifting from transaction - based to risk - based examination procedures, but our ability to keep pace with the increasing size and sophistication of our largest institutions necessitates that we successfully make that transition. besides looking at credit risk, the federal reserve also specifically evaluates banks for market risk, liquidity risk, operational risk, legal risk, and reputational risk. the potential exposure of reputational risk has become quite apparent after the recent experiences of enron and arthur andersen. current role of the federal reserve three years ago, the congress concluded more than twenty years of negotiation and produced a major reform of financial services laws and regulations. in very brief summary, this new law allows banks, securities firms, and insurance underwriters to function using common ownership by a newly authorized | cannot be reduced below zero, the federal reserve and central banks in other countries have employed nonstandard policies and approaches that do not rely on reductions in the short - term interest rate. we are still learning about the efficacy and appropriate management of these alternative tools. in the remainder of my remarks i will discuss these issues in the context of current economic and policy developments. i will comment on the near - term outlook for economic activity and inflation. i will then compare that outlook to some quantitative measures of the federal reserve β s objectives, namely, the longer - run outcomes that fomc participants judge to be most consistent with its dual mandate of maximum employment and price stability. finally, i will observe that, in a world in which the policy interest rate is close to zero, the committee must consider the costs and risks associated with the use of nonconventional tools when it assesses whether additional policy accommodation is likely to be beneficial on net. the outlook for growth and employment the arbiters across the river in cambridge, the business cycle dating committee of the national bureau of economic research, recently made their determination : an economic recovery began in the united states in july 2009, following a series of forceful actions by central banks and other policymakers around the world that helped stabilize the financial system and restore more - normal functioning to key financial markets. the initial upturn in activity, which was reasonably strong, reflected a number of factors, including efforts by firms to better align their inventories with their sales, expansionary monetary and fiscal policies, improved financial conditions, and a pickup in export growth. however, factors such as fiscal policy and the inventory cycle can provide only a temporary impetus to recovery. sustained expansion must ultimately be driven by growth in private final demand, including consumer spending, business and residential investment, and net exports. that handoff is currently under way. however, with growth in private final demand having so far proved relatively modest, overall economic growth has been proceeding at a pace that is less vigorous than we would like. in particular, consumer spending has been inhibited by the painfully slow recovery in the labor market, which has restrained growth in wage income and has raised uncertainty about job security and employment prospects. since june, private - sector employers have added, on net, an average of only about 85, 000 workers per month β not enough to bring the unemployment rate down significantly. consumer spending in the quarters ahead will depend importantly on the pace of job creation but also on households β ability to repair | 0.5 |
. the upshot of this is that government bond yields are close to their historical lows. volatility in equity and bond markets has itself been volatile. we have witnessed a number of pronounced spikes in volatility. in early august and again in early september, volatility was almost as high as it had been during major international financial crises such as the β russian crisis β four years ago. for the euro area, the equity market downturn arrived in the midst of an increasing capital market orientation on the part of financial investors and the corporate sector. should we now write off the markets in the same way as we have written off many of our investments in the past? no, i do not think so. disintermediation is an unbroken trend, as may be seen in corporate bond issuance, which has held up fairly well. furthermore, financial markets have proved they are fit to serve investors β needs. to some disappointed investors, this may seem cynical. but think of it in the context of the accounting cheats. once the true figures became known to investors, equity valuations were aligned to the correct fundamentals. once we had transparency, the markets worked their magic. the markets themselves cannot be blamed for the wrongdoings of some dishonest market participants. but we definitely need to adjust the incentives for better transparency. balance sheet fraud is a criminal offence, not a trivial one. tougher sentences might help to make that clear. strange as it may sound, market turbulence in the wake of faulty accounting is an indication of how effective financial markets are. iii. turmoil in financial markets is not confined to the equity markets of the advanced economies. emerging markets have suffered a host of financial crises during the past decade. the most recent crises occurred in turkey, argentina, uruguay and brazil. in contrast to earlier financial crises, today β s investors discriminate better between individual borrowers. emerging market economies can protect themselves to a certain extent from contagion by pursuing sound policies. when argentina defaulted last december, the vast majority of emerging market countries that had pursued better macroeconomic policies escaped unscathed. the stability β or instability β of international financial markets owes much to the framework for crisis prevention and crisis resolution. monetary policymakers have made a major contribution to the international financial community β s thoroughgoing approach to crisis prevention. with regard to crisis prevention, there exists a broad consensus. all necessary steps should be taken to get the incentives right β and that means the | speeches | 0.5 |
njuguna ndung β u : improving access to financial services in kenya address by prof njuguna ndung β u, governor of the central bank of kenya, at the launch of airtel money transfer service, nairobi, 10 august 2011. * * * hon. samuel poghisio, minister for information and communications ; dr. bitange ndemo, permanent secretary, ministry of information and communications ; mr. charles njoroge, director general, communications commission of kenya ; n. arjun, airtel chief projects and transformation officer, airtel africa ; rene meza, managing director, airtel kenya ; distinguished guests : ladies and gentlemen : it gives me great pleasure to be here this morning during this historic launch of airtel money transfer service brand into the kenyan financial sector following the successful application early this year by airtel to re - brand and re - launch the service and subsequent approval by the central bank of kenya. ladies and gentlemen : i am informed that the key objective of airtel money brand in line with this launch is twofold : first, to provide a convenient, affordable, and easily accessible money transfer service to kenyans of all walks of life and second, to provide the banked members of the society with a convenient way to access and transact funds held in their bank accounts. this objective is in tandem with the central bank policy on adoption of innovative technological platforms to scale up access to financial services. in fact, mobile phone financial services have in particular presented kenya with an opportunity to significantly upscale access to financial services cost effectively. it has also shown there is a market and everyone now wants a slice of it. ladies and gentlemen : the kenyan mobile phone financial services story has become a much acclaimed global case study. to date, over 17. 8 million kenyans transfer over ksh. 3. 1 billion to each other daily with over 1. 1 million transactions. in particular, and in terms of registered users and agents β base, i am informed that airtel controls 18 percent of the registered users and 25 percent of agents. further, i wish to commend airtel for planning to carry out an extensive awareness campaign immediately after this launch in order to stimulate the uptake of the service in addition to the recent extensive country wide agent recruitment exercise by the company. it is my firm belief that this will positively impact on the visibility of the airtel brand in the market. in fact, there are so many areas not yet fully covered out there | to be served, go for them and increase the share of the population using mobile phone financial services. ladies and gentlemen : effective and better regulation requires prudential guidelines to provide guidance in all policy and oversight activities of payment system operators and regulators. in this regard, i am gland to inform you that the bank early this year released draft regulations whose objective is to ensure that e - money issuers and payment service providers conduct their businesses prudently and in accordance with the provisions of the relevant legal provisions including the banking act, central bank of kenya act, the proceeds of crime and anti - money laundering act, the companies act, the microfinance act, and the sacco societies act. ladies and gentlemen : the public policy objective of central bank in the national payments systems is to ensure safety, efficiency and effectiveness of the payment system as a whole. in this regard, please allow me to point out that with increased use of mobile phone money transfer services by the wider general public, inherent system - wide implications are bound to arise and therefore it is prudent for all stakeholders to ensure ; bis central bankers β speeches that appropriate measures are put in place to safeguard the integrity of the systems at all times in order to protect customers against risks such as frauds, loss of money and loss of privacy. that the system will provide adequate measures to guard against money laundering among others. that the system is capable of mitigating the risks of access by non - authorized persons such as hackers and others. we have operating platforms within reach and disaster recovery sites in secure locations and tested at all times. ladies and gentlemen : in conclusion, i wish to thank airtel and its management team for the important role it is playing in the economy. with these few remarks i wish to declare airtel money transfer service brand officially launched. thank you. bis central bankers β speeches | 1 |
us $ 306 billion by march 2011. however, the ratio of india β s external debt to gdp has declined over the years from 28. 7 per cent in 1990 β 91 to 17. 3 per cent in 2010 β 11. the debt service ratio declined from 35. 3 per cent to 4. 2 per cent during the same period4. as regards the composition of external debt, there was a distinct decline in the share of government debt from 42. 7 per cent of total external debt in march 2001 to 24. 2 per cent by march 2011 with corresponding increase in private debt ( charts 7 & 8 ). debt service ratio, as measured by the proportion of total debt service payments to current receipts of balance of payments ( bop ), is an indicator of debt sustainability. bis central bankers β speeches although, india β s external debt service position has improved, recently in the wake of moderation in inflows amidst destabilized euro area financial turmoil some of our external vulnerability indicators have worsened. for example, reserves cover of total debt has fallen below 100 per cent ( table 5 ). table 5 : external sector vulnerability indicators ( per cent ) * annualised conclusions what key conclusions can we draw from a review of capital flows and our bop developments over the past two decades since the crisis of 1991? first, global capital flows now increasingly show a two - way movement between edes and advanced economies. however, edes remain vulnerable to volatility and sudden stops in capital flows. this is because edes have limitation in borrowing in their own currencies in international capital markets, a phenomenon known as β original sin β. this is evident from the recent crisis. the epicenter of 2008 crisis was the us but capital flows to edes, including bis central bankers β speeches india, was severely affected. now the epicenter has shifted to europe but capital flows to edes continues to be impaired. second, considerable lessons seem to have been learnt by edes from their past experience debt and currency crises, particularly from the latin american debt crisis of the 1980s and the east asian currency crisis of 1997. this has reinforced the hierarchy of capital flows with a preference by edes for equity flows. this is also reflected in a discernible shift in the composition of capital flows to edes in favour of equity, particularly fdi. third, capital flows to edes depend on push factors emanating from low interest rate and lack of investment opportunity in advanced economies as well as by pull | fundamentals and improved external liabilities position brought to the fore various questions on capital controls again. capital flows have interfered with the simultaneous management of fixed / managed exchange rate peg and inflation targets β a phenomenon known as mundell β s β impossible trinity β. for edes with flexible exchange rates, volatility of the exchange rate and the loss of trade competitiveness prompts central banks to occasionally intervene in the foreign exchange market. this increases domestic liquidity with its inflationary consequences if left unsterilized. but sterilization has quasi - fiscal costs. against this backdrop, the issue of capital controls, especially the imposition of financial transactions tax, some form of tobin tax, is being widely debated among policy makers in multilateral forums like the g - 20, and the imf as well as in academic circles. significantly, the bretton woods institutions have relaxed their earlier position on capital controls. the imf β s own independent evaluation office found that during the 1990s the fund clearly encouraged capital account liberalization in its bilateral policy advice to member countries. the fund β s multilateral surveillance also emphasized the benefits to developing countries of greater access to international capital flows. but following the 2008 crisis, in a policy note in february 2010 the imf noted β circumstances in which capital controls can be a legitimate component of the policy response to surges in capital flows β. the world bank also recognized that β capital controls might need to be imposed as a last resort to help mitigate a financial crisis and stabilize macroeconomic developments β. the g - 20 recognised in october 2011 that β to maintain financial stability, capital controls may be adopted or reversed as destabilizing pressures abate β. against this background, i now turn to evolution of our policy and experience with capital flows. capital account management in india india β s capital account liberalization began in a substantive sense in 1991 following a severe balance of payments ( bop ) crisis. the analytical foundations for reforms were provided by three reports : report of the high level committee on balance of payments ( chairman : c. rangarajan, 1991 ) and the two reports on capital account convertibility ( chairman : s. s. tarapore, 1997 and 2006 ). these reports, inter alia, suggested : ( i ) encouragement to private capital inflows ; ( ii ) shift from debt creating to non - debt creating flows, ( iii ) a shift within the debt inflows from short - term to long - term debt, ( | 1 |
, with advances in regulation and supervision being incorporated as experience was gained in applying them. the committee therefore decided that, in order for the core principles to remain a fully effective, flexible and globally applicable standard, the time had come to update its content. of course, the changes that have taken place since 1997 also include basel ii. however, i would like to point out that the committee has explicitly stated that, despite the advisability of moving towards basel ii, full and strict implementation is a decision that rests solely with the authorities in each country, and that it may not be the first priority for some countries. consequently, it is not the committee β s intention to use the update of the core principles as a way of dragging countries towards basel ii implementation. the revised framework is in no way a necessary prerequisite for compliance with the revised core principles, even though, as i have just said, i think there are powerful reasons for holding basel ii up as the direction in which regulation and supervision should be moving. the revision followed two basic directions. the first was to limit the changes to those aspects that were essential and key to maintaining the effectiveness of the core principles without removing the continuity and comparability with the previous standards. examples of these essential changes are the inclusion of a new β umbrella β principle recommending that banks have integrated risk management systems, which covers all the aspects common to the various types of risk. in the same vein, the emphasis has been placed more on risks that received less attention in the existing version of the core principles : interest rate, operational and liquidity risks. finally, it should be noted that the criteria on the prevention of money laundering and terrorism financing have been updated. thus the revision does not call into question the work carried out on the basis of the 1997 principles, or indeed the planning of reforms on that basis. neither is there an urgent need to update the assessments ; in this respect, one should stress the validity of the self - assessments carried out by the countries themselves, as a complement to the assessments performed by the fund and the world bank during their fsap missions. the second general direction followed by the core principles revision was to keep their character of a single universal standard for assessing the quality of banking supervision, independently of the complexity of each country β s financial system. to maintain this universality, on the one hand, it was decided to place greater emphasis, throughout the text, on the idea that the principles should be applied proportionally, | jaime caruana : implementation of basel ii and other key issues relating to banking supervision in latin america and the caribbean opening speech by mr jaime caruana, governor of the bank of spain and chairman of the basel committee on banking supervision, at the joint meeting of the fsi and asba, miami, 25 april 2006. * * * introduction first of all, i would like to thank rich spillenkothen and josef tosovsky for inviting me to participate in this joint meeting of the fsi and asba, during which we will be able to discuss various key issues for banking supervision in latin america and the caribbean over the next few years. two things are evident from the agenda. the first is that there are a large number of key topics to discuss today and tomorrow, which demonstrates the importance and timeliness of this meeting, which i am sure will be fruitful for all concerned. the second is that basel ii continues to be a central and priority topic for supervisors and the banking industry alike, as evidenced by the presence here today of major banking representatives, whom i would also like to thank for attending. it is well known that the committee has devoted a large part of its efforts over the past few years to first developing and then implementing the revised capital framework. today, we have the opportunity to debate different aspects relating to its implementation and application. once the phase of theoretical debate and standards drafting had been completed, the committee β s activities, in particular through its accord implementation group ( aig ), focused on implementing the framework. the time has therefore come to confront this practical reality, with all its difficulties and problems, through a dialogue with the industry and the global supervisory community. this is a major task, given that the aim is to strengthen banking systems and the international financial system, rendering them more robust, more stable, and thus more capable of contributing effectively to the growth and stability of our economies. despite the importance of basel ii, the proposed agenda also shows us that this is not the only topic currently of interest to the supervisory community. tomorrow, we will be discussing one of the committee β s key projects, which, i am convinced, affects all these supervisors gathered here today. i am referring to the basel core principles. with these introductory words, i would like to provide a general overview of the committee β s work in these areas. first, i will focus on the revision of the basel core principles, before moving on to talk about the implementation of the revised framework | 1 |
technology to widen technical capacities. these measures would essentially reduce operational costs and improve the nation's competitiveness. in this more uncertain environment a stable exchange rate is a major competitive advantage. for an open trade - dependent economy, stability in the exchange rates accords significant advantage in enhancing trade and investment opportunities. by eliminating wide swings in the exchange rates, the pegged exchange rate regime has provided a stable environment for businesses to plan their investments and to undertake their operations. at the same time, stability of the exchange rate also provides an environment that facilitates continuous structural reform to improve malaysia's competitive position. it is through long - term structural adjustments rather than frequent adjustments in the exchange rate that a country can build a strong business foundation, improve efficiency and create the enabling environment that encourage competition and innovation. as a small open economy, malaysia does not have influence over the external factors that affect the economy. however, by working on strengthening domestic economic fundamentals, malaysia will be in a stronger position to manage and mitigate the impact of the volatility in the external sector. three elements are important in ensuring that an exchange rate regime continues to operate effectively. first, it needs to be well supported by the domestic fundamentals. second, there must be flexibility in domestic markets to enable the economy to adjust and absorb the impact from external volatility. third, increased competitiveness is achieved through efficiency and productivity gains rather than relying on currency depreciation. in respect to the conditions prevailing in malaysia, malaysia's strong economic fundamentals, with low rate of inflation, strong external balance, low level of foreign debt, strong reserves levels and strengthened banking sector have provided strong support for the pegged exchange rate regime. malaysia also has sufficient flexibility to undertake adjustments on all sectors of the economy to remain competitive. the diversified economic structure, the enhanced mobility of capital and labour has also provided malaysia with increased resilience to weather external shocks. malaysia also had the flexibility of policy to respond to the circumstances. in all cases, when an exchange rate regime has failed, it was not due to the regime itself, but due to the weaknesses in the economy and the financial system. having undergone significant transformation and emerging with a much strengthened set of fundamentals, the malaysian and regional economies are better able to absorb the volatility in the exchange rates. countries are also more cognizant of the costs of currency depreciation, particularly on confidence. as an example, comparing the response of regional currencies | rules and practices governing bank supervision, financial accounting principles, payment systems and policies and standards on statistics. a number of national laws are also being harmonised. however, there have been delays in realising targets set out in the eamu road map and that there are several challenges that could further impede the full implementation of eamu protocol. it is therefore imperative that we assess the realism in the timelines embedded in the eamu road map and do things right. going forward, i want to re - iterate bou β s full support to the eamu process. i fully believe that there are huge pay - offs for our economies if we harmonise and integrate our monetary, financial and payments systems, even before we actualize a single currency system for the community. may we work steadily towards the realization of the eamu. thank you for your attention. page 2 of 3 | 0 |
own. finally, in addition to certification, it would be helpful to have consistent standards and transparency requirements for organizations that lend to small businesses. such standards and requirements exist for lending to households, and i believe the same justification exists to extend these requirements to small businesses. as a result, small business owners would have greater confidence that they fully understand the terms and conditions of their loan. this, in conjunction with the access to more financial information and education, will help small business owners make better decisions about their use of credit. conclusion in summary, economic conditions in the bronx are improving but more progress is necessary. community banks will play a key role in spurring this progress, so it is essential that they remain financially sound and engaged. the financial crisis provides many lessons for how banks can thrive even in turbulent economic conditions. the vitality of the bronx and other communities depends on the ability of entrepreneurs to establish and grow new businesses. while access to credit is important, success depends on a wide range of factors, and we need to make sure new business owners have the help they need to prosper. bis central bankers β speeches | bank and will analyse developments in south africa and the rest of the world that could affect inflation. finally, the present institutional framework in south africa in the form of the south african reserve bank act, act no. 90 of 1989, provides the reserve bank with a great degree of autonomy in its operations. the reserve bank β s functional independence on monetary and related policies is clearly stated in sections 10 and 35 of the south african reserve bank act. section 35 empowers the board of the bank to make rules β for the good government of the bank and the conduct of its business β. in section 10 the powers and duties of the central bank are spelled out in great detail. most of the functions described in this section are the normal functions that one would expect a central bank to perform. in section 10 ( 2 ) it is also clearly stated that β the rates at which the bank will discount or rediscount the various classes of bills, promissory notes and other securities, shall be determined and announced by the bank from time to time β, clearly giving the bank the right to determine bank rate in an autonomous manner. the personal dependence of the reserve bank is determined by section 4 of the act indicating the conditions of appointment of the governor, three deputy governors and other board members of the reserve bank. this section clearly precludes any person actively involved in politics of becoming a board member of the bank. seven of the directors, including the governor and three deputy governors, are appointed by the state president, while the other seven are elected by the shareholders. by means of these appointments the government, of course, have an effective say in the policies of the bank. the governors are, however, after their appointment normally allowed to operate in an independent manner. the instrumental independence of the reserve bank is clearly spelled out in the act and the reserve bank is precluded in section 13 ( f ) of making excessive direct purchases of government stock. in this last - mentioned section it is stated that the bank may not β hold in stocks of the government of the republic which have been acquired directly from the treasury by subscription to new issues, the conversion of existing issues or otherwise, a sum exceeding its paid - up capital and reserve fund plus one - third of its liabilities to the public in the republic β. this section therefore restricts the direct financing of government deficits. the south african reserve bank is also financially independent from the government because of adequate financial resources and complete control over its own | 0 |
howard lee : opening remarks - asia climate investment seminar opening remarks by mr howard lee, deputy chief executive of the hong kong monetary authority, at the asia climate investment seminar, hong kong, 11 november 2024. * * * good morning ladies and gentlemen : i am delighted to announce a strategic partnership in asia climate investments between the hong kong monetary authority, the asian infrastructure investment bank, the asian development bank, and the international finance corporation. this collaboration marks another significant milestone in our collaborative efforts to address the pressing issue of climate change in asia. the significance of climate investments in asia climate change is a paramount challenge of our era, with asia playing an important role in combating this global challenge. accounting for half of the world's greenhouse gas emissions, asia's dense population and geographical risks to extreme weather require immediate action to increase combat these challenges. regarding investments, the hkma has set a net - zero emissions target by 2050 for the investment portfolio of the exchange fund. we have also been directing resources and capital towards climate investments across different asset classes globally, which is an important component of our strategy to help reduce greenhouse gas emissions while making commercial returns. across the different regions, we believe that asia's rapidly growing economies require significant investments in sustainable energy solutions and decarbonisation. strategic partnership between hkma, aiib, adb, ifc while the hkma has been proactively investing more in asia climate investments, we also recognise that we cannot do this by ourselves. addressing climate change demands sustained dedication and collective effort over an extended period. by working together, we can pool our knowledge, expertise, resources, and networks to support the development of low - carbon infrastructure projects that benefit both the environment and the economy. by collaborating with like - minded institutions and private sector partners, we can amplify our impact and create a more sustainable future for the region. in this context, the hkma, aiib, adb and ifc collectively acknowledge the importance of collaborating to seize the climate opportunities in asia, focusing on making investments that will strive to meet our respective net - zero targets. the strategic partnership aims to set an example, calling on all stakeholders to join forces in addressing climate change. 1 / 2 bis - central bankers'speeches for instance, the hkma, together with aiib, adb and ifc, are investors in the actis asia energy transition fund, which is one of the earliest collaborative investments made under this strategic partnership. we believe that | many investors are now actively looking for investment opportunities in asia, particularly mainland china, to diversify their investment portfolios. at the same time, mainland issuers can also make use of our platform to reach out to the increasingly wealthy investor base in the islamic world. 12. clearly, there is a strong foundation for both sides to work together to complement each other, grow the pie bigger and achieve a win - win proposition in developing islamic finance. for this important reason, the hkma entered into a memorandum of understanding ( mou ) with bank negara malaysia in 2009 to strengthen mutual co - operation in the area of islamic finance. we are very pleased to have worked closely with bank negara malaysia to put together and bring this workshop to hong kong under the framework of the mou. building a deep talent pool is crucial for further development of the islamic finance industry. workshops of this kind will undoubtedly help to promote market awareness and knowledge of islamic finance, while also providing an excellent forum for market players to exchange views and business contacts. we will continue to work closely with the treasury markets association to raise the expertise in islamic finance in hong kong. 13. apart from our continuous efforts to put in place a conducive platform, it is also crucial for market players to maximize their readiness to grasp the opportunities brought by the development of islamic finance in hong kong. after all, market players will be the ones who drive the growth of the market ultimately. so, i highly encourage you all to gear up for the new opportunities ahead of us. on this, i am pleased to note that some financial institutions have already started to get ready by mobilizing their staff in the middle east or malaysia to hong kong, as well as providing training to their staff in hong kong. the fact that you are here today is also a good indication that you are keen to prepare yourselves. i hope you would take the most out of this workshop. 14. thank you. bis central bankers β speeches | 0.5 |
bank of canada, we spend a lot of time thinking about confidence, because it is important to the conduct of monetary policy, which is focused on inflation targeting. we aim to keep the trend of inflation at the 2 per cent target midpoint of a 1 to 3 per cent range. when the trend strays away from that midpoint, either upwards or downwards, we take action to return it to 2 per cent over the medium term. we do that by adjusting our target for the overnight interest rate. over the past decade or so, we have successfully kept inflation at around 2 per cent, on average. here β s where the confidence factor enters into the equation : canadians now expect that inflation will stay near the target - not just for the near term, but into the future. they believe that the value of their earnings and savings won β t be eroded by inflation and that the real burden of their debt won β t be increased by deflation. that confidence has paid a real dividend in terms of monetary policy effectiveness. inflation targeting works best when canadians believe that it will work - in other words, when they have confidence that we will keep inflation near the 2 per cent target. with this confidence, inflation and inflation expectations, as well as interest rates, have become more stable - and this benefits the whole economy. how did we achieve this confidence dividend? by establishing a track record of credible, consistent monetary policy, together with greater accountability and transparency. like many other major central banks, we have embraced the notion that monetary policy is more effective when people can understand what their central bank is doing and why. that is the motivation behind our semi - annual monetary policy reports and updates, our eight interest rate announcements every year, and our many public appearances and speeches. of course, monetary policy does not function in isolation. it works best when it is complemented by fiscal policies aimed at avoiding deficits and lightening government debt burdens. reducing, and ultimately eliminating, the federal deficit in the 1990s helped canada β s international credibility, lowered the risk premium demanded by investors, and gave canada more flexibility to adjust to changing economic circumstances. and continued fiscal prudence has given us the flexibility to weather the recent economic turmoil rather well. canadians have now seen the benefits of low, stable, and predictable inflation, and balanced budgets. and they expect that their central bank and their governments will continue to deliver those benefits through responsible monetary policy and prudent fiscal management. confidence in markets so, good | euro area economy. fiscal measures taken in response to the pandemic emergency should as much as possible be targeted and temporary in nature. the three safety nets endorsed by the european council for workers, businesses and sovereigns, amounting to a total of β¬540 billion, provide important funding support in this context. the governing council also strongly welcomes the next generation eu package of β¬750 billion, which has the potential to significantly support the regions and sectors hardest hit by the pandemic, strengthen the single market and build a lasting and prosperous recovery. in order to fully reach its potential, the package will need to be firmly rooted in sound structural policies conceived and implemented at the national level. well - designed structural policies could contribute to a faster, stronger and more uniform recovery from the crisis, thereby supporting the effectiveness of monetary policy in the euro area. targeted structural policies are particularly important to revitalise our economies, with a focus on boosting investment in priority areas such as the green and digital transitions. we are now ready to take your questions. 3 / 3 bis central bankers'speeches | 0 |
objective increases the credibility of the rules and strengthens their governance. in this sense, the reform proposal by the commission suggests a simple expenditure rule together with a sustainability anchor, based on a debt sustainability analysis framework. yet the concept of debt sustainability is not easy to operationalise. debt sustainability analysis tools provide a way to organise our thinking on these issues and we have some experience using them - for example, within the international monetary fund programmes framework. but their practical application for informing policy decisions remains rather complex. in this sense, it is worth remembering that any framework aimed at providing the necessary adjustment to cyclical developments must rely on the use of unobservable variables. in the case of the debt sustainability analysis, it will be necessary to forecast medium - term nominal gdp growth, which will face problems similar to the measurement of the structural deficit. beetsma, r., x. debrun, x. fang, y. kim, v. lledo, s. mbaye, and x. zhang. ( 2019 ). independent fiscal councils : recent trends and performance. european journal of political economy, 57, 53 - 69. therefore, it seems that we may be shifting complexity away from the rule framework and moving it towards the analysis of debt sustainability. the reform proposal also addresses the possibility of redirecting additional public funds towards the climate and digital targets through the use of an extended period of adjustment. i believe this approach is better than the use of the so - called β golden rules β to finance green investment, which allow governments to exclude some types of expenditure from the calculation of the fiscal targets for several reasons. these rules would add complexity to an already very complicated system, would require negotiating and monitoring the list of expenditure items to be excluded, and would have to be implemented without endangering fiscal sustainability. in any case, the challenges of the green and digital transitions exceed by far the fiscal space of national governments. thus, a more efficient option would be to set up a common european financing instrument, covering the investments needed to meet common objectives, such as reaching net zero emissions and combating climate change. joint funding arrangements would allow us to undertake large - scale programmes subject to common quality standards and to assess their compliance in a homogeneous manner, avoiding any excessive or highly unequal impact on national public finances and any disruptions in the single market. lastly, the european commission β s orientations miss an element that i firmly believe is essential for the success of any reform of the | s motto : mens agitat molem ( minds move matter ). | 1 |
second place in this segment after the dollar, the gap between the two is large. imf estimates have set the volume of foreign reserves held in euro at the end of 1999 at 12. 5 %, compared with a us dollar share of 66. 2 % and a yen share of 5. 1 %. 6 however, one could argue that the euro has held up well in comparison with its predecessor currencies. v at this point, allow me to summarise while at the same time casting a glance towards the future. with the introduction of the euro, the balance of forces within the international financial system has shifted. a second currency now exists alongside the dollar which - given the size and economic strength of the euro area β s financial markets - has the potential to become a significant currency with global status. the extent to which the euro will actually realise this potential also depends on political decisions taken within the euro area and on the confidence which market participants world - wide place in the new currency. thus the first priority must be to guarantee the internal stability of the euro. this constitutes the primary objective of the eurosystem, which has already reacted to imminent inflation risks with several interest - rate increases. however, economic and fiscal policy makers, who are capable of accelerating economic momentum in the euro area through the appropriate structural reforms, are also called upon to act. much has already been undertaken or set in motion, as in the case of taxation policy. however, the markets have not ( yet ) rewarded these efforts. important policy initiatives still have to be introduced in the financial markets as well. the introduction of the euro has succeeded in ending the segmentation into different national currency zones and in intensifying the competition in individual market areas. some obstacles to the integration process only really became apparent once this had been achieved. if one is truly to speak of uniform financial markets in the euro area, priorities for the future will have to include further improvements in the infrastructure of the equity and bond markets and a standardisation of legal and administrative frameworks. transaction costs between two euro - area countries should not entail higher costs than those of purely domestic transactions. moreover, transaction costs within the euro area must not be higher than the international standard, if the euro is to prosper in international competition with other currencies. let me conclude by emphasising that the financial market trends in the euro area should also be seen in the light of the developments in the β real β sector of the economy. the financial | miguel fernandez ordonez : recent developments in the spanish economy testimony of mr miguel fernandez ordonez, governor of the bank of spain, to the parliamentary budget committee, madrid, 7 october 2008. * * * budgetary discussions this year are taking place at a time when the spanish economy is deep in a process of adjustment proving much more pronounced than initially expected. the international backdrop is marked by the weakening of the us economy, sharp rises in oil and commodities prices and, above all, the scale and persistence of the turmoil on international financial markets. given the latest events in the united states and europe, it is no exaggeration to say that we are faced with a global financial crisis without precedent in recent times which will require an overhaul of the principles that have governed the regulation of international finances in recent decades. the world economy is in exceptional circumstances, with a general loss of economic dynamism, surging inflationary pressures and serious financial instability problems. these are exacerbating and accentuating the adjustment of the spanish economy which the exhaustion of the cycle had already set in train, following a long period of expansion. moreover, this is the first occasion on which the spanish economy has faced such a process since joining the economic and monetary union, which provides undoubted buttresses but also poses considerable challenges. the economic policy debate behind the preparation and approval of the budget is thus of crucial importance. the far - reaching changes in the spanish economy in recent decades have equipped it with the wherewithal to overcome this difficult stage and to subsequently resume a path of sustained growth, allowing convergence to continue. but if these factors are to operate, the authorities and all agents must face up to the current circumstances and make the required efforts, and economic policies must prevent any slippage and enable the factors conducive to the resumption of sustained growth to come into play. naturally, i shall focus today on the diagnosis of the situation of the spanish economy and on its economic policy implications. but these would both be incomplete without some, albeit brief, reference to the deterioration of the international setting and to the economic outlook in the euro area which, as you know, will determine monetary policy developments. last year, the growth of the world economy reached 5 %. the forecasts available for this year, however, place the figure below 4 %, with scarcely any scope for the start of a recovery in 2009. moreover, any recovery will be moderate, slow and subject to a degree of uncertainty | 0 |
pre - requisites and the mindset to take the driver β s seat in this area, we now need to start the engine of the new, and all hop in to new heights in the international service provision. in conclusion, curacao has traditionally been an attractive international financial services center, as we have always offered the advantages of compliance and optimal service. therefore, i am confident to state that curacao can look forward to a promising 2019 and beyond. the central bank, as the supervisor of the financial services industry, is open for business as we tailor our regulatory framework to become a 21st century regulator, while meeting international standards to protect the interests of the international clients of our financial services industry. together we should strive to continuously explore new opportunities and develop appealing products, and henceforth, we need to keep re - inventing our entrepreneurial creativity. a final note. i was pleasantly surprised when i saw the check mark ( β ) and not the question mark (? ) in the title : β curacao financial center : ready for 2019 and beyond.. β. because i do share the sentiment that we are ready for the future and that together, we will be better beyond 2019. i thank you for your attention. | the current innovation revolution offers an opportunity for curacao to again take the pioneering lead in shaping the future of regional and global financial services provision. i cannot stress enough the importance of our need to become adaptable and agile to keep our markets efficient, fair, and attractive in an ever - evolving and innovative environment. today i want to touch upon the role of the central bank in promoting our jurisdictional readiness and embracing the new reality. the central bank is responsible for the supervision of the financial sector of curacao and sint maarten, and is not exempted of the responsibility of ensuring integrity, continuity, and resilience of our markets. in our aim to preserve and foster the reputation of curacao as a sound, transparent, and reputable financial center, whilst taking advantage of the changing landscape, we worked to achieve institutional agility and adaptability needed to usher our financial sector into this new era. while we believe that there is no substitute for good regulation, we are also aware that overregulation will impair the ability of our jurisdiction to maintain a competitive position as an international financial center. therefore, a proper balance must be reached between the adequacy and effectiveness of rules and regulations, and the underlying risks that our financial sector is exposed to. our efforts are directed towards complying with the international standards, but keenly taking advantage of the now presenting opportunities. we have successfully and positively been assessed by the major standard - setting bodies over the past years such as the oecd, the imf, the world bank, and the ( c ) fatf, and subsequently, implemented their recommendations. although complying with international standards and principles is a major achievement, we now need to turn our attention to capitalize on our enhanced transparency as a jurisdiction. the collusion of our transition to a new fiscal framework with the current innovation developments is just what we need as a jurisdiction. although the central bank is not a regulator for technology driven institutions, innovation is rapidly affecting and changing our regulatory landscape as well. financial technology or fintech is now driving the financial business narrative in a way that regulators are now scrambling to determine how to regulate highly technological institutions and technology driven products. the central bank has recently installed an innovation committee to explore the possibility to present curacao as the natural alternative for innovation - driven business. regulatory innovation is not only a theoretical concept, but rather a necessity that the central bank is determined to explore. curacao has all the | 1 |
##ing the term premium. uncertainty, by and of itself, is undesirable. but to the extent that the increase in the term premium likely reflected a reassessment of global economic conditions after a long period of subdued macroeconomic expectations β as also reflected in the adjustment of inflation risk premia β it may not constitute an unwarranted tightening. the role of foreign factors in driving euro area yields becomes clearer when considering the indications from another class of models : researchers at the imf have developed a simple yet powerful methodology to identify yield curve drivers using cross - asset correlations involving stock, bond and exchange markets. 9 and these models confirm β as you can see from the chart in front of you β that the bulk of the increase in euro area long - term yields initially came from shocks originating from outside the euro area β the green part. you can also see, however, that after the first initial sharp upward movement in yields following the us presidential elections, it was increasingly an improvement in euro area domestic growth prospects that contributed to upward pressure on yields. you can see this reflected in the increasing contribution of the yellow component in the chart. but what is even more important is that during this period, and despite stronger global and domestic growth prospects, expectations regarding our monetary policy have, on balance, had a 4 / 6 bis central bankers'speeches stabilising effect on yields, according to our analysis. this is the blue part in the chart, which you can see shifted into negative territory after our decision in early december to extend the intended horizon of the app by another nine months. in other words, market participants understood our reaction function and agreed with our assessment in december last year that the absence of a sustained adjustment in the path of inflation warranted continued monetary accommodation. conclusion this implies, and with this i would like to conclude, that the recent measurable increase in longterm yields has not affected our monetary policy stance : current financial conditions remain highly supportive of the ongoing recovery. however, and this is what i wanted to convey in my short remarks this evening, identifying the drivers of yield curve movements in real time is a challenging task. for this reason, we look at a wide range of information and models to obtain a robust assessment. this also means that we don β t want to over - interpret any uptick or downtick that we observe, but rather accept as a fact that some volatility is natural and healthy for the market to function. at the same time | and a term premium. the expectations component reflects the average of current and future expected short - term rates over the maturity of the bond. if the pure expectations hypothesis of the term structure were to hold, this would be all that mattered in terms of explaining movements in long - term rates. but broad empirical evidence suggests that the pure expectations hypothesis fails to hold true in practice, and that there is indeed a time - varying premium that investors require in order to hold a 1 / 6 bis central bankers'speeches long - term bond instead of simply rolling over a series of short - term bonds. 4 monetary policy β and there we are increasingly certain β cannot only influence the expectations component, but also the term premium. three examples demonstrate this more clearly. first, by changing our key policy rates, we can directly impact the short end of the curve β the footing of the expectations component. in normal times, medium to long - term rates would adjust to the extent that market participants would see a change in policy rates as the beginning of an incremental series of changes. but with short - term policy rates approaching levels closer to zero during the early phases of the most recent easing cycle, this channel had become less effective. markets β in the belief that rates could not enter negative territory β stopped short of pricing in the degree of accommodation they would normally have expected in the face of downside risks to our price stability mandate. our decision in june 2014 to introduce negative deposit facility rates restored our ability to steer market expectations and thereby also medium to long - term rates. indeed, by signalling to the market that policy rates could go below zero, we ultimately succeeded in shifting downwards the entire distribution of future expected short - term rates, thereby providing important additional accommodation. 5 second, and related, by communicating about where we see the economy heading, and by clarifying our β reaction function β β that is, by providing forward guidance β we can directly influence expectations regarding future short - term rates. forward guidance has served us well and has contributed to keeping the short to medium end of the yield curve well anchored at times when external shocks were threatening to unduly tighten financial conditions. i will come back to this in a minute. but to the extent that forward guidance reduced uncertainty about the future path of interest rates, it has not only affected the expectations component but also the term premium. yet, the main channel through which we β and other major central banks β have recently exerted measurable downward pressure on the term premium, | 1 |
shkelqim cani : review of the albanian economy statement by dr shkelqim cani, governor of the bank of albania, for euromoney yearbooks, global banking and financial policy review, tirana, 9 august 2004. * * * the albanian economy experienced a recovered pulse of economic growth over the year 2003. positive developments are marked in respect of consolidating the country β s macroeconomic stability, economic growth and a sound development of the financial system. a recovery in economic activity and 6 % growth of gross domestic product in real terms was proved by all sectors of the economy, but was particularly evident in the construction, transport and services sectors, which are the most dynamic sectors of albanian economy. the year 2003 was characterised by a low inflation rate, within 2 % - 4 % of the targeted range. the inflation rate as of december was 3. 3 %, meeting the bank of albania ( boa ) target. despite the various factors this low rate emerged from a diligent management of the domestic demand as an outcome of appropriate fiscal and monetary policies. boa β s monetary policy has been a moderate one throughout 2003. such a trend will continue during 2004 and was recently reflected by the reduction of the core interest rate in the economy. since april 2003 the repo rate has been lowered by 2. 5 %. the 6 % repo rate, decided on may 12, 2004, is the lowest ever in the albanian economy. the policy aims to reduce borrowing costs in the economy and maintain price and financial stability. at the end of 2003 the foreign reserves of boa reached us $ 1. 03bn covering 4. 7 months of imports. boa continues to maintain its view of a free exchange rate regime. this was reflected in the fewer episodes of boa β s intervention in the foreign exchange market during the first half of 2003, when the purchase of foreign currency was almost four times that of the second half of the year. nonetheless, this did not hold back the domestic currency from appreciating against the euro and the us dollar, with a stronger appreciating trend in place in the second half of the year. the appreciation of the domestic currency was one of the factors behind boa β s 2. 0 % interest rate cut during year 2003. monetary indicators have generally been performed in compliance with the forecasts set out in the bank β s monetary programme. the annual growth rate of lek deposits was 19. 1 % by the | end of the year, which is significantly higher than the annual rates of the pervious years. the credit balance rose by l11. 9bn or 30. 9 %. the new credit increased by 50 % meanwhile 76 % is in foreign currency. the loans / gdp ratio is still low, at about 7 %. the banking system experienced important developments during 2003 and in the beginning of 2004. the entry of two new banks of albanian capital was soon followed by the successful privatisation of the savings bank from the raiffeisen zentralbank ( rzb ) austria. now, all in all there are 16 banks in the albanian banking system. the boa has progressed in reforming the banking system towards international standards, with the aim of the developing and refining the country β s banking infrastructure. aips, inaugurated in early march 2004, can be considered as the backbone of the whole banking system infrastructure. the boa wishes to bring its central bank closer to that of the european central bank. therefore, changes and amendments of the bank β s regulations are aimed towards achieving this goal. | 1 |
and that requires millions of skilled people. yet finding even a crane operator is oftentimes a challenge. even as demand for skills increases, the supply side response is lagging far behind. india churns out 350, 000 engineers every year, but barely a quarter of them are employable. we have 7000 itis, but their curriculums are woefully outdated. 24. there is an incentive issue in skill training. skill development is a quintessentially merit good where the societal cost benefit calculus is higher than the individual cost - benefit calculation. the private sector will be reluctant to invest in skills since workers can migrate with their skills. this was the understanding that prompted the government to launch the ambitious national skill development programme as a ppp initiative to train 500 million people by 2022. several states are also allowing vocational training institutions to be set up as ppp initiatives as well as not - for - profit societies. 25. to conclude, we need to focus a lot more on improving productivity across a broad range of areas in order to raise the growth rate as well as the quality of growth. fourth challenge : managing urbanization 26. historically, there has been a strong correlation between urbanization and economic growth across countries and across time with the causation possibly running both ways. empirical studies show that middle income countries reach about 50 per cent urbanization and high income countries typically have 70 β 80 per cent urbanization. china β s rapid growth bis central bankers β speeches over the last two decades, for example, ran concurrently with an increase in urbanization rate from 32 per cent in 1997 to 50 per cent in 2010 consistent with its low middle income status. in india, we are behind on urbanization. in the twenty years since the start of reforms, the proportion of urban population increased from 26 per cent in 1991 to just about 31 per cent in 2011. 27. accelerating growth, therefore, presents two tasks from the urbanization perspective. first, the rate of urbanization has to pick up pace so as to move people up the productivity ladder, and second, we have to manage the pressures of urbanization proactively. 28. the costs of unplanned urbanization are already very visible in terms of the huge strains on infrastructure and sanitation, pressure on utilities and inadequate and low quality social service provision. our cities are clearly unprepared for the influx of migrants on the scale that it is occurring and the result is slums and squat | first instance that taking banking to the sections constituting β the bottom of the pyramid β, may not be profitable but it should always be remembered that even the relatively low margins on high volumes can be a very profitable proposition. financial inclusion can emerge as commercial profitable business. only the banks should be prepared to think outside the box! | 0.5 |
the region has seen. if you look at investment, it β s really shifted to korea, to china and it β s going to probably get much more competitive when china joins the wto. in many ways, a lot of southeast asia has lost its competitive edge. the political problems, economic problems have really hurt the region. so, what you are seeing now is a lot of investors really reassessing their view of this region and moving much more towards the north east of asia. β 1 falling behind the figures confirm this. since 1996, foreign direct investments ( fdis ) to the north have continued to rise, whereas fdis to the south have fallen to about half pre - crisis levels. as a result, southeast asia β s share of total fdis to east asia ( excluding japan ) halved, from 33 % in 1996 to just 15 % in 1999. in equity markets, southeast asia β s weight has declined, while northeast asia β s has increased. before the crisis, southeast asian markets had more than twice the weight of northeast asian markets robert templer of strategic intelligence, interviewed on asia business report, bbc tv, 22 november 2000. ( excluding japan ) in morgan stanley β s msci asia free index. now the position has been totally reversed. lessons from the crisis asean countries must not allow this situation to continue. they should strengthen themselves individually, and also work together to sustain their long - term prosperity. then they can dispel the perception of a region in distress, restore confidence and get on the move again. sound fundamentals what lessons should asean countries draw from the crisis? first, that despite the upheaval, the transformation of east asia over the last two decades was no mirage. the asian miracle was real - the halving of poverty rates, the dramatic improvement in living standards, literacy and health standards, and the modernisation of the economies. asia β s prolonged boom had been underpinned by sound economic fundamentals. these remain a vital positive factor, which can help asean to prosper again. however, many economies had significant structural weaknesses. financial regulation and supervision were weak, transparency was lacking, and there were serious shortcomings in governance and public administration. β kkn β - the indonesian acronym for corruption, collusion, and nepotism - was often a problem. these weaknesses may or may not have caused the crisis, but they certainly contributed to its severity. the weaknesses must be resolutely tackled, otherwise | 3. 0 percent by next year. maximizing expanded toolkit : adjusting the policy rate and managing the exchange rate now, what did we [ at the central bank ] do? it is quite simple : we raised rates. the other one is, we are also an exchange rate - managing central bank. if you look at our record, we are able to build our foreign exchange ( forex ) reserves when the peso is strong. that is why our forex reserves went from us $ 45 billion to almost a hundred billion dollars between 2008 to 2012. on the other hand, we can allow the peso to depreciate if that is part of market fundamentals. looking to history as guide my point is, we are quite confident that we are already on a target - consistent path of inflation. if you count the number of months where we are [ inflation was ] above target, in the past, the longest [ streak ] was 15 months. in this particular case, as i said, we were hit by a really large and long wave of supply shocks. in the last 12 months, everything was 0. 4 percent [ in terms of m - o - m inflation ] or higher. there were months [ when m - o - m inflation was ] of 0. 8 percent or 1. 0 percent and, as i said, january [ m - o - m inflation ] was really terrible at 1. 7 percent. 2 / 4 bis - central bankers'speeches indeed, when you look at every month when inflation is high, you can actually point at exactly what products [ items in the consumer price index ] caused it. this time, we think that we will break our record : [ it may take ] 19 or 20 months of inflation being abovetarget from the previous record of 15 months. policy settings remain reasonable now, is [ a policy rate of ] 6. 0 percent a high or low rate? well, if you look at the current inflation, it looks low, right? [ headline ] inflation is 8. 7 percent [ in january ]. however, relative to our forecasts, it is a reasonable one. our forecast is that by november or december, we will [ inflation ] be below 4. 0 percent. the reality is that the current policy setting is reasonable - not too tight, not too loose monetary policy. part of the [ reason behind elevated ] inflation is due to demand. the reason is, we were all surprised by the 7. | 0 |
interest rate cuts this spring. against that background it is accordingly difficult to claim that aggregate monetary conditions in sweden have become tighter, even though the riksbank raised the repo rate last december and, most recently, at the beginning of july. i should point out here that it is not the krona β s current value that features in the riksbank β s overall inflation forecast and monetary policy. what we use instead, as described in our inflation report, is an assessment of the krona β s future path. the krona β s future path is invariably a major factor behind the riksbank β s inflation forecast. and it is the inflation forecast that forms the foundation for monetary policy. thus, the development of the exchange rate, demand, inflation expectations and so on all affect the interest rate decision indirectly via the inflation forecast. it is never a simple matter to determine the path for the exchange rate in the coming one to two years that ought to be used in the assessment of inflation. but as long as all reasonable assessments point to the swedish economy being in good shape, in the long term that should also motivate an exchange rate that is considerably stronger than we have seen in the past year. in other words, there have been grounds for counting in the inflation report on a somewhat stronger krona even in the period one to two years ahead that guides monetary policy. but when the krona began falling almost 5 per cent in the course of only a fortnight early this summer, it ultimately became difficult to count on the exchange rate becoming as strong as the forecast envisaged in the coming two years. the weaker the initial position, the larger the requisite appreciation. to quote the press release from 15 june, the executive board considered that β the krona β s depreciation since the latest inflation report is the most important single factor that may lead to the inflation target being threatened 1 - 2 years from now β. the riksbank had then initiated currency market interventions with a view to strengthening the krona. when the executive board met on 5 july the krona was still weak. in the light of the current forecasts of resource utilisation, the exchange rate and demand, a majority of the board members concluded that the repo rate should be raised 0. 25 percentage points, to 4. 25 per cent, in order to avoid the risk of inflation exceeding the target 1 - 2 years ahead. the picture also included considerable price increases during the spring which | last year offset the pressure from rising compensation gains on labor costs per unit of output. and non - labor costs, which are roughly a quarter of total consolidated costs of the nonfinancial corporate sector, were little changed in 1996. owing in part to this subdued behavior of unit costs, profits and rates of return on capital have risen to high levels. as a consequence, a substantial number of businesses apparently believe that, were they to raise prices to boost profits further, competitors with already ample profit margins would not follow suit ; instead, they would use the occasion to capture a greater market share. this interplay is doubtless a significant factor in the evident loss of pricing power in american business. intensifying global competition may also be limiting the ability of domestic firms to hike prices as well as wages. competitive pressures here and abroad should continue to act as a restraint on inflation in the months ahead. in addition, crude oil prices have largely retraced last year β s run - up, and, with the worldwide supply of oil having moved up relative to demand, futures markets project stable prices over the near term. food prices should also rise less rapidly than they did in 1996 as some of last year β s supply limitations ease. nonetheless, the trends in the core cpi and in broader price measures are likely to come under pressure from a continued tight labor market, whose influence on costs will be augmented by the scheduled increase in the minimum wage later in the year. and, with considerable health - care savings already having been realized, larger increases in fringe benefits could put upward pressure on overall compensation. moreover, although non - oil import prices should remain subdued in 1997 as the sharp rise in the dollar over the past year - and - a - half continues to feed through to domestic prices, their damping effects on u. s. inflation probably will not be as great as in 1996. the lagged effects of the increase in the exchange value of the dollar will also likely restrain real u. s. net exports this year. in addition, declines in real federal government purchases should exert a modest degree of restraint on overall demand, and residential construction will probably not repeat the gains of 1996. on the other hand, financial conditions overall remain supportive to the real economy, and creditworthy borrowers are finding funding to be readily available from intermediaries and in the securities markets. moreover, we do not see evidence of widespread imbalances either in business inventories or in stocks of capital equipment and consumer | 0 |
hit hard by the pandemic. the first cases emerged in early - march and contagion seemed to stabilize by end april, only to rapidly escalate over the last month and a half. the country is now in its 15th week of the pandemic, with 250. 000 confirmed cases and active cases stabilizing again. while chile currently stands 8th in number of cases in the world, mortality rates remain low and testing broad, thanks to its stronger health system compared with other emes. 10. the spread of contagion has led authorities to adjust their npc strategies. this has included stricter and broader quarantines, which have grown from 20 % of the population in april to 49 % these days. the share of gdp in quarantined areas has moved from 11 % to 52 % in the same period. page 1 of 3 central bank of chile june 2020 11. this has intensified the impact on economic activity. gdp growth remained in positive ground in the first quarter, but economic activity declined 3. 5 % in march and 14. 1 % in april. figures are likely to be worse for may and june in line with the broadening of lockdowns. central bank estimates from last week set the contraction of gdp between - 5. 5 % and - 7. 5 % in 2020, with the range broadened to take into account uncertainty around the persistence of constraints. 12. assuming that constraints will begin to roll back in the third quarter, we estimate gdp to grow between 4. 75 % to 6. 25 % in 2021, and 3 % - 4 % in 2022. 13. while the drop in gdp in 2020 will be the deepest in 35 years, prospects remain better than in other latin american and caribbean ( lac ) countries. this owes to five factors : a. structural factors are more favorable than in other emes. chile has a deeper domestic financial market, where institutional investors play a major role ; remittances have never been a source of foreign revenue, and the composition of foreign trade means that the terms of trade are improving rather than worsening. even the informal sector, while bigger than in advanced economies ( ae ), at 30 % of the labor force is smaller than it is in other lac countries. b. the exchange rate remains operative as a shock absorber due to the low fx exposure of households, government, financial institutions and the non - financial corporate sector. c. foreign liabilities are appropriately matched | setting of a countercyclical capital buffer. 12 moreover, the ecb is empowered to increase the national countercyclical capital buffer, if the level set by the national macroprudential authority is deemed inadequate. furthermore, the national macroprudential authority in a number of countries is also empowered to employ borrower - based measures ( such as loan - to - value ratios or loan - to - income ratios ) to improve resilience and lean against the financial cycle. in addition, national fiscal policies can also play a role in mitigating the financial cycle, both through macroeconomic and microeconomic channels ( lane 2016 ). importantly, the recent quantitative model developed by philippe martin and thomas philippon demonstrates the complementary roles of macroprudential and fiscal policies in limiting macro - financial volatility in the euro area, with joint deployment more effective than if either instrument were used on its own ( martin and philippon 2016 ). in relation to the inter - relation between financial stability risks and low policy rates, it is important to appreciate that the more quickly inflation approaches the target level, the more quickly will 3 / 5 bis central bankers'speeches policy rates re - normalise, allaying fears of a β low for long β stagnation scenario vis - a - vis nominal interest rates. put differently, forceful accommodative monetary policy in the short run is the best method to ensure that policy rates do not stay low for longer than is necessary. conclusions in this speech, i have attempted to provide an overview of the governing council β s current monetary policy stance. the governing council is committed to preserving the very substantial amount of monetary support that is embedded in the ecb staff projections and that is necessary to secure a return of the inflation target over the medium term. if warranted, the governing council will act by using all the instruments available within its mandate. meanwhile, the governing council has tasked the relevant committees to evaluate the options that ensure a smooth implementation of the purchase programme. finally, monetary policy is not the only policy instrument that should be deployed in the current euro area environment. the governing council routinely points out that fiscal policy also has an important role to play in supporting economic recovery through a variety of mechanisms, together with policy actions that would enhance medium - term growth prospects, improve resilience and strengthen the financial system. references brunnermeier, markus k., and yann koby β the reversal interest rate : the effective lower bound | 0 |
. we have started to deal with this problem as well through the zaken committee and we have required that the banks issue a banking id card to customers, which as i mentioned will be sent to bank customers in the coming days. in addition, we are promoting the creation of a central credit register at the bank of israel which will complement the work we have started with the banking id card. by means of directives issued by the banking supervision department, we have worked to reduce bank fees and the cost of banking services, in cases where we have found that a market failure exists. and again, it must be emphasized that the effect of some of these changes is not felt immediately. the recommendations of the zaken committee were implemented over the last few years and it is reasonable to assume that when their full effects are felt, we will see an increase in the level of competition. the bank of israel believes that these measures to increase competition between existing entities are not sufficient and therefore we have created a less stringent supervisory environment for nonbank entities, such as the separated credit card companies or companies that will provide large - scale credit against the issue of bonds. this new category will encourage the activity of these entities, in the recognition that regulation in this case can be less stringent since their activity is not financed by deposits. in other words, the supervision will be riskadjusted. this policy will facilitate the entry of new competitors into the area of credit and acquiring. finally, as is known, the minister of finance and i established the strum committee and the bank of israel is taking a leading role in the work of the committee and in formulating its recommendations ( and many important ones have not generated any controversy or public discussion ). one of the main recommendations of the committee is the separation of two of the credit card companies from the large banks. however, it is important to understand that the credit card companies have systemic importance for the economy and therefore must continue to be supervised by the bank of israel, on a risk - adjusted basis. the transfer of supervision over these companies from the bank of israel to a regulator with a different focus and different expertise raises a real concern that the damage from separating the credit card companies will be greater than the benefit. all of the many steps to improve competition have been carried out responsibly and after a professional and comprehensive examination of the potential benefits and risks involved. it is possible to promote competition without harming stability. we have seen what happens when financial entities | ##s was sacrificed together with the program for sweeping tax reforms, although it is quite simple to do what is necessary without reference to any other reform. what needs to be done is to introduce one low rate of tax, say 5 percent on average, on all interest income above a certain threshold ; that threshold should be determined in such a way that on the one hand it is not worth the trouble of deducting the tax at source, and on the other it is justified on social grounds. the change should be planned in such a way that it is neutral with regard to the total revenue obtained, i. e., the drop in tax revenues on one side should be matched by increases on the other. it is important to ensure that the collection system is simple as far as the definition of the tax base is concerned, and to set a lower rate, say 4 percent, on nominal interest, and a slightly higher rate, say 6 percent, on real or foreign - currency interest. this change could be implemented without much preparation, and would be of great benefit to the economy. clearly it should not made effective retroactively. financing an increase in government expenditure by borrowing from the public financing an increase in government expenditure by borrowing from the public ( by the sale of government bonds ) causes damage in the following ways : β’ the first derives from the fact that the government already has a large debt of nis 430 billion, more than 90 percent of gdp, due to budget deficits in past years. this debt obliges the government to allocate part of its tax revenues each year to service the debt. in 2001 this interest payment will total some nis 30 billion, more than the total education budget, and several times larger than the government β s investments. the increase in the debt caused by budget deficits reduces the government β s ability to use its sources for current purposes, and creates pressure to further increase the debt to enable expenditure to rise nonetheless. β’ the second adverse outcome results from the effect of the government debt on the rate of interest. in israel, as in every economy, the rate of interest on government bonds is used as a benchmark for fixing interest in the private sector. mortgage interest rate is determined in this way, and interest on long - term loans, both those advanced directly by banks and those issued in the form of private bonds on the stock exchange is based on the interest the market requires from the government on bonds it issues. in other words, the greater the | 0.5 |
we have instead decided to use some time to bring inflation back to target. household debt has risen sharply since the mid - 1990s. at the same time, house prices have shown a marked increase. debt developments through the 1990s can probably be viewed to some extent as a delayed adaptation to the deregulation of the housing and credit markets in the 1980s, after many households burned their fingers immediately after the deregulation. at the same time, the credit market has deepened. new loan products have emerged, and it is easier to raise loans. borrowers can choose their repayment schedule. credit and housing market liberalisation provides homebuyers with the opportunity to establish a high housing standard early in their adult lives and draw on this capital later in life. in recent years, household income growth has been solid, household confidence regarding the future has been strong and households probably perceive higher income levels as permanent. this may have resulted in a further rise in house prices and debt. in addition, low real interest rates are currently contributing to this. we have limited scope for restraining structural changes that take place when households increase their debt over several years in order to invest in housing and other property and assets. an interest rate level that effectively restrains this restructuring process would also have had adverse effects on economic activity. however, households are more vulnerable when debt is high. long periods of sharply rising asset prices and debt may be a source of subsequent instability in production and employment. we believe that expectations regarding interest rate developments have a greater impact on household and business borrowing and investment behaviour than actual interest rates. norges bank communicates its analysis of the outlook for the norwegian economy and the interest rate. at this juncture, the outlook for output and inflation suggests that the interest rate should be gradually β in small, not too frequent steps β brought up to a more normal level. 7 the economic outlook is uncertain. we illustrate interest rate uncertainty ahead with a fan chart, which is meant to capture the outcome with a 70 per cent probability. the consequences of higher interest rates for two households are illustrated in this chart. both households comprise two adults and two children. one household has a gross income of nok 800 000 and nok 2 million in debt. the other has an income of nok 600 000 and nok 1. 5 million in debt. the chart shows the two households β income after basic expenses and interest and principal payments have been paid. the household with an income of nok 800 000 can cope reasonably well | more than 80 pp of gdp since the start of the financial crisis ), which is also accompanied by a considerable structural budget deficit. in addition, the banco de espana, along with other institutions and analysts, has in recent years highlighted the vulnerabilities stemming from the increase in certain aspects of inequality in spain, in particular in the area of opportunities. with this backdrop in mind, what lies behind this failure to converge and what role does productivity have to play in this process? first, it should be pointed out that the comparatively low productivity of spain β s firms is a widespread problem, unrelated to the sectoral specialisation of the economy or the size of such firms. the sectoral structure of the spanish economy, skewed more towards services such as wholesale and retail trade and the hospitality sector, only partially explains our country β s poor level of productivity, as measured in terms of output per hour worked. this output stands 14 % below that of the euro area. if spain had the sectoral structure of the euro area, this negative gap would still be 10 %. 2 endogenous growth models show that knowledge is the only factor of production that generates positive externalities and economies of scale. romer ( 1986 ), lucas ( 1988 ) and aghion and howitt ( 1992 ). this figure is a 2020 update on the figures set out in cuadrado, moral - benito and solera ( 2020 ). nor can lower productivity be attributed simply to the smaller size of spain's business sector. when the registry data on firms from spain, germany, france and italy are grouped together by size, spanish firms are between 10 % and 20 % less productive than their european peers, regardless of size. 3 in reality, this lacklustre productivity is symptomatic of an array of interconnected shortcomings. today i will focus on five factors behind these shortcomings. the first factor concerns the very minor role played by innovation in our economy. to give one example : between 2020 and 2021 the ratio of research and development and innovation ( r & d & i ) expenditure to gdp stood on average at 1. 2 % in spain, 0. 8 pp below the euro area average. 4 the private sector β s failings in this area are particularly striking. spain has a lower percentage of innovative firms5 and its industrial sector ( traditionally the most innovative ) makes less of a contribution to value added, while spending on r & d & i is lower | 0 |
have the right risk mindset. 15. we should put once - neglected risks, such as counterparty credit risk, model risk, liquidity risk and technology risks, at the forefront of risk considerations. we have to be bis central bankers β speeches mindful that falling back on historical experience may not necessarily provide the guidance especially when developments are unprecedented. in this regard, boards of financial institutions play a vital role in driving the level of risk consciousness in their institutions and exercising effective risk management oversight. mas will mandate all local banks and significant insurers, following their annual general meetings this year, to have a dedicated risk management committee, and for members of this committee to have the appropriate balance of skills and expertise to discharge their responsibilities. starting this year, we will also be requiring mandatory training for all members of the boards of local banks. at the management level, mas expects risk management units have to be sufficiently empowered and adequately plugged in to the risk - taking activities of the firm. enhancing collaborative partnerships 16. underlying these specific measures is a basic emphasis on having the requisite knowledge, skills and expertise throughout the organisation β s hierarchy in managing risks. in this regard, research and executive education programmes help to increase the body of knowledge and critical understanding of risks in the asian financial industry. 17. one function of research is to explore unchartered territory and break new frontiers. many in academia do this important blue sky research. another significant role of research is in bridging the gap between theory and application. this form of research accelerates market practices in a more immediate and direct way. many research institutes here in singapore, including edhec - risk, is focused on direct application. mas welcomes this. research institutes can use their presence in asia to work with the financial industry in the region and help the region navigate the challenges ahead. conclusion 18. edhec - risk is setting up its base in singapore at a time of great transformation of the economic and financial landscape in asia. a deep understanding of risks provides the foundation for stability and growth. the research and educational activities of edhec - risk institute will help enhance our understanding of risks, and the development of talent. we welcome edhec - risk institute to our research and financial community in asia. your presence adds to another important strand in the deepening relationship between france and singapore. i congratulate edhec - risk institute on the opening of its asian centre, and wish professor amenc, professor | than $ 62 trillion within 8 years. in 2004, outstanding mortgages held in non - agency mbs in the us were just us $ 670 billion. it tripled to over us $ 2 trillion within 2 years. it is a similar story with the origination of subprime mortgages. in the same period, global cdo issuance more than tripled from us $ 157 billion to about us $ 550 billion. these assets were held in banks and non - banks globally. when the financial crisis struck, the world was shocked not only by its severity, but also by the speed in the transmission of shocks throughout financial markets. there is no better illustration of how new sources of systemic risk can build up rapidly. 6. in a similar vein, the sharp deterioration of the fiscal positions of many governments has also led to a re - assessment of sovereign risks. about 10 years ago, investors were concerned that the strong budget surplus of the us federal government might lead to a severe reduction in the supply of us treasuries. today, bond vigilantes are focusing attention on not just the short term fiscal health of governments, but on the impact of demographic changes, large entitlement benefits and unfunded pension liabilities on the longer - term fiscal health of these governments. 7. my third observation is the speed of structural changes in emerging economies and transformation in the patterns of global trade and investment. as these are superimposed on cyclical changes, it is often difficult to disentangle the two. emerging markets, especially asia, have weathered the crisis relatively well, and recovered quickly. this year, the imf expects emerging asia to grow by nearly 7 %, almost double the rate forecast for the global economy as a whole. many analysts expect the differential in growth rate to persist in the coming decade. the global economy went through stagflation in the 1970s, disinflation in the 1980s, and a roaring decade in the 1990s. in 2000s, we had the dotcom bubble, and a severe financial crisis. how the coming decade will turn out, especially for emerging economies, will change many of the risks and return assumptions on a wide range of asset classes. dealing with the implications 8. the growing complexity and interconnectedness in financial and economic systems, the increasing speed of change, as well as the ongoing structural changes in emerging markets will have profound impacts on all sectors of the global financial industry. these driving forces will shape the evolution of the financial | 1 |
). at the same time, the swiss franc had weakened to its lowest level against the danish krone for 8 - 9 years. the decline in net lending may be due to expectations that the swiss franc would rally. this is confirmed by statistical analyses of data for a large number of years. the analyses find significant correlation between a weaker swiss franc and diminishing net lending. it is interesting that the danish carry speculators show a different reaction pattern to the yen carry speculators. the yen carry speculators leave their positions when the yen strengthens, apparently fearing that the strengthening forewarns an imminent stronger adjustment of the exchange rate. our domestic swiss franc speculators increase their positions when the franc strengthens, apparently believing the strengthening to be temporary. the danish swiss franc carry loan strategy is naturally far too small and insignificant to present a threat to the global financial system. the risk is rather related to the economic situation of the individual borrowers if the swiss franc strengthens against the krone. in this case too, the fat tails will sting investors if they strike. another new type of financial product that has appeared in denmark in recent years is indexed bonds. the banks'sales of this type of bonds have increased strongly since the start in 1998. at the beginning of april 2007 the outstanding volume listed on the copenhagen stock exchange was kr. 52 billion ( slide 16 ). in the next monetary review from danmarks nationalbank we will present an analysis of this product. i can already describe some of the results here. the product comprises both a relatively safe investment in bonds and an investment in options. the option investment is pegged to the development in e. g. equities, exchange rates or commodities. the product has expanded the investment universe open to private investors. we can now all speculate in whether the price of copper or of australian dollars is on its way up. one positive characteristic of indexed bonds is that any loss is often limited to a relatively small proportion of the invested amount. however, this is not sufficient to make the investment sound. indexed bonds are illiquid instruments and often have a complex structure that many can find hard to grasp. so what is the pay - off from this complexity? a high yield? not necessarily. at danmarks nationalbank we have reviewed 67 indexed bonds for a nominal value of approximately kr. 18 billion. the bonds were all listed on the copenhagen stock exchange, but have | to determine in advance when a realistic optimism has passed into over - optimism and in its turn pushed up asset prices, investment, consumption and indebtedness. it has rarely been possible to judge, for instance, whether a large build - up in indebtedness has expressed an adaptation to realistically based expectations of future growth prospects or whether the build - up in debt is based on exaggerated expectations. in addition, the target that has been used to guide monetary policy has rarely been able to signal early enough that imbalances were being built up, regardless of whether monetary policy was aimed at a fixed exchange rate or towards a price stability target. to simplify, one can say that the result of an exaggerated optimism in countries with a fixed exchange rate has been that the build - up of financial imbalances was expressed in rising inflation without any depreciation pressure on the currency. it has not been possible to subdue inflationary pressure through raising interest rates while optimism regarding the country's economy and confidence in the fixed exchange rate regime have remained, as a more stringent monetary policy would have reinforced the nominal exchange rate. at the same time, increases in consumer prices have been kept down by the strong currency, temporary increases in productivity, or by demand being aimed towards, property, shares and land β assets whose prices are not included in the central bank's target function. there has thus been no reason for monetary policy to counteract the emergence of financial imbalances. when the financial bubble has actually burst, the country has often suffered a deep and long - lasting recession caused by adaptations to the imbalances that have been built up. a high level of indebtedness, falling asset prices and unprofitable investments have subdued demand for a long period of time. households have chosen to increase their savings to reduce their debts. companies have been unable or unwilling to invest as a result of earlier investment mistakes and poorer prospects for the future. the banks have suffered severe credit losses, which has further intensified the recession, as their capacity to provide new credit has been limited. the situation becomes particularly serious when losses have led to acute bank crises, which has often been due to the banks being greatly exposed to a particular sector. for instance, it was an overheated property market with banks strongly exposed to this sector that was one of the main reasons behind the bank crises afflicting several countries β including sweden β at the beginning of the 1990s. adaptations to large financial im | 0 |
now has its own local advisory council comprising representatives from banks, thrift institutions, and credit unions ; one member from each local council serves on the national council that will meet with the board twice a year in washington. local meetings have already begun, and the first meeting of the national council with the board will take place soon. personally, i am looking forward to hearing more from community bankers about issues ranging from their local economies to regulatory reform. community banks and regulatory reform as you know, a key challenge for community banks in the years ahead will be to adapt to the changing regulatory environment, particularly the regulatory reforms contained in the dodd - frank act, as well as the changes that will be associated with the basel iii reforms. we are certainly aware of and appreciate the concerns that community banks have about these regulatory changes, and, as i have just described, we have stepped up our efforts to understand those concerns and to respond to them as appropriate. i think it is worth emphasizing that the changes we will be seeing in the financial regulatory architecture are principally directed at our largest and most complex financial firms, including nonbanks. consequently, one benefit of the reforms should be the creation of a more level playing field for financial institutions of all sizes. focusing reform on our largest, most complex financial firms makes sense. the recent financial crisis highlighted the fact that some financial firms had grown so large, leveraged, and interconnected that their failure could pose a threat to overall financial stability. the sudden collapses of major financial firms were among the most destabilizing events of the crisis. the crisis also demonstrated the inadequacy of the existing framework for supervising, regulating, and otherwise constraining the risks of major financial firms as well as of the toolkit the government had at the time to manage their failure. as i discussed with you at last year β s meeting, a major thrust of the dodd - frank act is addressing the too - big - to - fail problem and mitigating the threat to financial stability posed by systemically important financial firms. the too - big - to - fail problem is a pernicious one that has a number of substantial harmful effects. critically, it reduces the incentives of shareholders, creditors, and counterparties of such firms to discipline excessive risk - taking. and it produces competitive distortions by enabling firms with large systemic footprints to fund themselves more cheaply than other firms because of the implicit subsidy of too - big - to - fail status. this competitive distortion is not | . accordingly, we must promote financial education, and having been an educator for many years, i am very pleased that the board is actively involved in this area. the board is keenly aware, however, that disclosures and financial education may not always be sufficient to combat abusive practices. indeed, the consumer financial services laws implemented by the board contain a number of substantive protections, reflecting carefully considered legislative judgments that certain practices should be restricted or prohibited. the board also has the responsibility to prohibit other practices by issuing rules, for example, if the board finds they meet the legal standard for " unfair or deceptive " practices under the federal trade commission act ( ftc act ) or the home ownership and equity protection act ( hoepa ). we must be mindful, however, of unintended consequences. crafting effective rules under the " unfair or deceptive " standard presents significant challenges. whether a practice is unfair or deceptive depends heavily on the particular facts and circumstances. to be effective, rules must have broad enough coverage to encompass a wide variety of circumstances so they are not easily circumvented. at the same time, rules with broad prohibitions could limit consumers'financing options in legitimate cases that do not meet the required legal standard. this has led the federal reserve to focus primarily on addressing potentially unfair or deceptive practices by using its supervisory powers on a case - by - case basis rather than through rulemaking. the ftc, which has authority to prohibit unfair or deceptive practices for financial services firms that are not depository institutions, has taken a similar approach. because the prohibition on unfair or deceptive acts or practices applies to all depository institutions as a matter of law, the banking and thrift agencies can and do enforce this prohibition using their supervisory enforcement powers. the board also addresses concerns about some practices under other statutes, such as the truth in lending act ( tila ) or truth in savings act ( tisa ). for example, the board used its hoepa authority to address the " flipping " of high - cost mortgage loans. under tila, we recently proposed a rule prohibiting credit card issuers'from describing their rates as " fixed " unless they specify a period where the rate is not subject to change for any reason. the board also revised its tisa rules to address concerns about overdraft protection programs. the board is committed to addressing abusive practices and will consider how it might use its authority to prohibit specific practices consistent with the legal | 0.5 |
any enduring effect on the level of employment. so what can deliver higher levels of employment on an enduring basis? the answer lies not with central banks but with choices made by governments and societies more generally. it was the soon - to - retire secretary of the australian treasury, mr ted evans, who had the courage to say in 1993 when australian unemployment was 11 per cent of the work - force that unemployment at that level was " a matter of choice " - choices made by governments and societies. he went on to say that " if we are today looking for innovative solutions for reducing unemployment that is partly because, over the last two decades, we have found innovative ways of creating unemployment ; more basically, it is because we choose now to accept the constraints imposed by the many economic and social policy choices made during those decades. " and by saying that the unemployment level was a matter of choice, he was not suggesting that it was a choice for the central bank, but rather a choice of central government and society more generally. he went on to note that " there are now very few economists... who would deny a relationship between labour costs and unemployment - indeed, doing so would require abandoning some of the most basic tenets of our economic training. that said, there are very few, any more, who would see a reduction in nominal wages as the preferred solution to an unemployment problem... such solutions are not preferred in the formalized labour market but we should be quite clear that that reflects a choice. " in other words, he was suggesting, i believe correctly, that in the long - term unemployment is to a substantial extent a function of the relationship between the costs and risks associated with hiring people on the one hand, and the benefits, in terms of increased output, on the other. so job creation and employment levels are ultimately a function of things like labour market legislation, the level of the unemployment benefit, and the education system. and all of these things are matters quite unrelated to monetary policy. rather, they have a great deal to do with government policy and the attitudes of the public, both as providers of jobs and as potential employees. more fundamentally, i suspect that trend growth in output and employment are both a function of culture and social attitudes. how much do we as a society value consumption today as compared to consumption tomorrow? how much do we value education? how much do we value being independent as compared to being dependent on the state? how highly do we regard private property rights | ratio loan to value restrictions liquidity standards collateral standards / rmos lolr foreign exchange intervention infrastructure fmi rules and powers monitoring financial stability report stress testing supervision & engagement thematic reviews enforcement investigations directions monetary ocr policy crisis obr management statutory management ref # 7821869 v2. 0 time event varying figure 2 : the cost of recent bank failures on society fiscal cost as % of banking system assets uruguay korea greece finland czech japan iceland ireland netherlands slovenia sweden uk norway usa belgium austria spain denmark germany france luxembourg italy portugal source : imf ( 2013 ) systemic banking crisis database 0. 0 5. 0 10. 0 15. 0 20. 0 % of banking system assets figure 3 : the capital - output β sweet spot β ref # 7821869 v2. 0 25. 0 30. 0 35. 0 | 0.5 |
meeting that morning with the chancellor, gordon brown, who had explained the proposal for bank independence. it was something for which eddie and i had worked for five years since britain β s departure from the exchange rate mechanism in 1992. now we had a chance to show what an independent central bank could do. although far from clear at the time, the later decision to remove from the bank of england the power to regulate banks would return to haunt us. over the next decade, the new monetary policy committee established a track record of low and remarkably stable inflation. in my first speech as governor in 2003, i warned that this stability was unlikely to continue. and it didn β t. within a few years, and despite low inflation, the advanced economies of the world were plunged into a financial crisis which led to the sharpest decline in world trade since the 1930s, recessions across the world, rising unemployment and the near collapse of our banking system. bis central bankers β speeches so tonight i want to try to answer three questions. first, what went wrong? second, what are the lessons? third, what needs to change? let me start by pointing out what did not go wrong. in the five years before the onset of the crisis, across the industrialised world growth was steady and both unemployment and inflation were low and stable. whether in this country, the united states or europe, there was no unsustainable boom like that seen in the 1980s ; this was a bust without a boom. so what was the problem? in a nutshell, our banking and financial system overextended itself. that left it fragile and vulnerable to a sudden loss of confidence. the most obvious symptom was that banks were lending too much. strikingly, most of that increase in lending wasn β t to families or businesses, but to other parts of the financial system. to finance this, banks were borrowing large amounts themselves. and this was their achilles β heel. by the end of 2006, some banks had borrowed as much as Β£50 for every pound provided by their own shareholders. so even a small piece of bad news about the value of its assets would wipe out much of a bank β s capital, and leave depositors scurrying for the door. what made the situation worse was that the fortunes of banks had become closely tied together through transactions in complex and obscure financial instruments. so it was difficult to know which banks were safe and which weren β t. the result was an increasingly | ##ifiers, and a role for authorities in helping develop those standards, is far from new. let me give a recent example. one major lesson from the great financial crisis was the need to be far better at identifying the many entities and organisations operating within the financial system. when the crisis hit, the lack of any uniform international method of identifying the huge number of legal entities scattered across the world added to the crippling uncertainty over who owed what to whom. we all remember that uncertainty causing panic on the financial markets. so was born the legal entity identifier, or lei β a 20 - character alphanumeric code that uniquely identifies a legally distinct entity. it allows data relating to a single bank, insurer or whoever, to be combined. over one and a half million entities in over 200 countries have now registered for an lei. and it has had a wide range of benefits. it has supported the portability of data between organisations. it has aided the fight against money laundering. and it has been helpful in our data collections : for example, when we ask firms to submit counterparty exposure data to us, it provides a clear way for us to compile data about each entity. so the lei is a growing success. but it also demonstrates that the adoption of standards is a long journey, with a continued need for public sector involvement. the g20 endorsed the lei system as a global standard back in 2012. it has come a long way since then, but it still has further to go, and we will continue to support it. its adoption so far has in part been due to the push from regulators, but it needs to be used by a wider set of participants β we at the bank are continuing to support that wider uptake, including for corporates beyond the financial sector. it needs to be included in new areas such as payment messages β we will soon be mandating the use of leis in payments through our chaps system. more broadly, lei systems and processes need to continually evolve to ensure they can meet the demands of a digital world. all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice the lei shows that standards take time to be designed, refined and adopted, and so reaping their benefits requires patience and persistence. that will be the case for our collective journey, too. our approach to developing standards so how do we plan to go about expanding and improving the use | 0.5 |
##evable path back to full employment and price stability following shocks that push us away from either of our objectives. i regard the policymaking process as a systematic effort to investigate what policy setting would deliver the best achievable set of economic outcomes, 3 taking into consideration all available information, including risks not fully summarized in the base case point forecasts. our approach is not greatly different from those of central banks that operate inflation but, of course, predictability is not an end in itself. a policy could be completely predictable, but also incompatible with the central bank β s goals. the policy response to the extreme shock of the financial crisis was predictably vigorous, even if its detail was hard to specify in advance, and the knowledge that the federal reserve would act β as needed β to promote the dual mandate anchored inflation expectations and helped to avoid a deflation outcome. in formal terms, this approach would be described as a target - rule or forecast - targeting rule. bis central bankers β speeches targeting regimes, but in our case we explicitly seek to promote both aspects of our dual mandate. 4 the basic question is how the fomc should implement monetary policy to best push the economy back to its dual objectives. prescriptions from simple policy rules such as taylor rules, named after stanford economist john taylor, have a legitimate role to play in this evaluation as do more complex simulations such as optimal control rules. in a taylor rule, the nominal federal funds rate depends on the equilibrium or neutral real short - term rate of interest, the deviation of the level of economic activity from estimates of the level of activity that would be consistent with long - run price stability, and the deviation of inflation from the central bank β s target. 5 the taylor rule formulation has a number of characteristics that make it a useful input into the policy - setting process. first, it very explicitly focuses on the two parameters β the long - term inflation objective and the level of potential output consistent with that objective β that map directly to the federal reserve β s dual mandate objectives. second, standard taylor rules are self - equilibrating. they respond to economic shocks and forecast errors in a way that pushes the economy back toward the central bank β s objectives. third, academic research shows that taylor - type rules typically perform quite well across a wide range of economic models. this is important because we want rules that are robust ; that is, not overly sensitive to model - specific assumptions about how the economy performs or how households and businesses alter | timothy f geithner : the fed challenge remarks by mr timothy f geithner, president and chief executive officer of the federal reserve bank of new york, at the national academy foundation β s 2004 dinner, new york, 8 december 2004. * * * thank you, gene, for that generous introduction. it is a pleasure to be here tonight to celebrate the national academy foundation and all of your contributions to this important mission. i am very pleased to accept this award on behalf of the federal reserve bank of new york. i want to compliment sandy weill on his commitment to education and the achievements of the naf. and i want to recognize three important people from the new york fed who are responsible for the fed challenge : steve malin, lloyd bromberg and bob diamant. among these and other contributions to public service, sandy serves as a member of the board of directors of the new york fed. i want to tell you his reaction to a presentation early this year on our work in financial education. sandy listened carefully to the description of the full array of new york fed programs. then, in his typically tentative and understated way, with the same soft approach he brought to building one of the most formidable financial institutions in the world, asked why the bank didn β t limit its role in education to simply supporting the national academy foundation. his belief, with justifiable pride in the foundation, was that there was no more important contribution the fed could make and no more competent institution engaged in this effort than the foundation. fortunately for the new york fed, we have a long and productive collaboration with the foundation. we provide support on curriculum design and professional development. we are working together to help create a new high school in the city with a finance theme. the naf has adopted the fed challenge for its academies throughout the country. and we benefit in turn by using the academy β s work as a model for the economic and financial programs we support and initiate. if you care about the economic future of america, you have to care about educational reform and the mission of the naf. this mission has always been important, but it is particularly important today. confidence in america depends importantly on success in the education mission. improving educational achievement will play a critical role in generating the innovations necessary to drive future productivity growth. and yet, us students remain math challenged, and we are awarding a diminishing share of the world β s phds in science and engineering. improving the quality | 0.5 |
severe demands on the flexibility of a country β s economic policy. the reason for this is that the adoption of a stable currency alone cannot guarantee market confidence on a lasting basis. it is precisely because domestic and external monetary policy will disappear as an option for absorbing undesirable internal and external influences that it is particularly important to maintain in the long term the efficiency of the domestic banking sector, sound public finance and the flexibility of the labour market. the introduction of the dollar therefore requires both a comprehensive economic cost - benefit analysis and a very broad political consensus which takes account of the longer - term national and international implications of such a step. the success of a fixed exchange rate system or of a floating system as well as the adoption of an anchor currency are all dependent on the consistency and credibility of domestic economic policy. when financial markets are strained, short - termism may present those responsible for monetary policy and exchange rate policy with a dilemma. while an increase in interest rates does stabilise the exchange rate up to a point and hence asset prices, too, it can result in a virtually unbearable interest rate burden if short - term debt is substantial, and vice versa. in my opinion, the only effective means of countering the general trend towards short - termism is pursuing a medium - term - oriented stability policy that induces investors to make longer - term investments. c ) regional integration with globalisation and economic recovery at the beginning of the nineties, the integration process in latin america was also given a fresh impetus as a means of economic and political consolidation. there is no doubt that mercosur has been the most important factor at the regional level. within a short period a customs union has been developed among the member states which in the long term is to be extended to form a common market. encouraging interregional and intra - regional trade in the sense of an open regionalism is playing a major role in achieving greater integration. it can make a crucial contribution both to regional and global stability. the creation of a free trade area between mercosur and the eu will contribute greatly to this. its rapid establishment was strongly recommended by entrepreneurs from both regions at the first mercosur / eu business forum in rio de janeiro at the end of last month. i would now like to report on the lessons we have learned so far from the european integration process. 5. european integration a ) european monetary union : a new scenario for all parties the process of regional economic and political integration that began in europe | the impact of social media. 5 for our part, we have been working at international level with the basel committee on banking supervision ( bcbs ) 6 and the financial stability board7 to assess what can be learned from the recent events. we have also helped to define the bcbs standard for the prudential treatment of banks'crypto - asset exposures. 8 your role as co - legislators will be crucial in keeping our framework robust. 2 / 4 bis - central bankers'speeches first, your role is vital in fully implementing the final elements of basel iii faithfully and without delay, as this best guarantees the safety of our banking system. we are very concerned about the numerous deviations from the basel standards introduced in the eu banking package and think they should be avoided. second, we need to swiftly implement in eu law the aforementioned bcbs standard for the prudential treatment of crypto - asset exposures. we need to be ambitious and make rapid progress, in particular on the envisaged exposure limit to reduce contagion between crypto and banks. third, it is imperative that we complete the banking union β the european commission's proposal on crisis management and deposit insurance is an important step towards this goal. conclusion let me now conclude. we are going through a period of high uncertainty marked by a sequence of economic and geopolitical shocks and trade fragmentation. the best way to protect stability in the eu is to ensure closer european integration and a solid regulatory framework. in the coming twelve months before this parliamentary term ends, we can make tangible progress on some key dossiers. first, on fiscal policies, we very much welcome the commission's legislative proposals for the reform of the eu's economic governance. a well - functioning governance framework is essential from an economic, monetary and financial stability perspective. second, on financial sector policies, we need to make progress on the basel iii reforms, crypto - asset standards, and the crisis management package β along the lines just outlined. third, on banking union, the lack of a european deposit insurance scheme is a source of vulnerability ; completing the banking union is essential to pave the way for a stronger and more prosperous europe. thank you for your attention. i now stand ready to take your questions. 1 annual report 2022. 2 feedback on the input provided by the european parliament, as part of its resolution on the ecb annual report 2021. this feedback statement, published on the occasion of the presentation of the ec | 0 |
ecb we had the insurance versus incentives trade - off in mind when designing our non - standard measures. let me briefly conclude with an illustration of this point with reference to our provision of liquidity and to the omt. with regard to our unlimited provision of liquidity, we have applied the classic bagehot principle of providing insurance at penalty rates and against adequate collateral. there is a thin line between bank illiquidity and bank insolvency, and the former can easily morph into the latter. by requiring collateral, the central bank ensures that it only provides credit to a fundamentally solvent institution, and the penalty rate is the means to ensure that central bank liquidity provision is indeed a last resort. these features also apply to all our provisions of liquidity. over the past years, the overnight rate at which non - distressed banks can obtain market funding has fallen to levels close to the rate on our deposit facility. in comparison, the rate on our refinancing operations at which we provide liquidity has effectively turned into a penalty rate β not to mention the rate charged by national central banks when they provide emergency liquidity assistance to distressed banks which is set even higher, above our marginal lending rate. ecb liquidity is also only available against collateral. our collateral policy has evolved in the crisis but strict valuation and haircuts rules are always applied. last but not least, our liquidity is only available to banks, subject to micro - prudential supervision. prudential checks by national supervisors ( and looking forward, by the future prudential arm of the ecb ) ensure that liquidity only flows to fundamentally solvent institutions. the omts also provide partial insurance. to qualify for interventions, countries must have negotiated a precautionary european stability mechanism programme with other euro area governments, with imf involvement. this condition serves to ensure that governments continue to correct existing economic and fiscal weaknesses when omts are activated. moreover, the objectives of the programme are clearly defined. the ecb does not aim to eliminate spreads between sovereign bond issuers. this is because sovereign yields do not have to be identical in a monetary union and market discipline has an important role to play. the ecb will solely buy bonds with shorter remaining maturities. relying on short - term debt strengthens the disciplining power of the right to stop our interventions at any point in time. in short, omts strike a balance between ex ante and ex post efficiency, and | many believe, budgetary austerity and reforms do not penalise governments. indeed, in recent years in europe there has been a positive correlation between political popularity and budgetary rigour ( see chart 1 ). the correlation is much stronger than the one between political popularity and economic growth ( see chart 2 ), which indicates that, for a given level of growth, healthy public finances reward governments. this suggests that political leaders who have the courage and the ability to reconcile balanced public finances with the economic growth are rewarded over time. democratic systems should not to be blamed if advanced economies risk stagnation and do not grow. they are in danger only if people succumb to the illusion or become resigned to thinking that democracies do not allow change. centuries of history demonstrate just the opposite : that without democracy there is no change, and sooner or later there is decline. thank you for your attention. chart 1 trust in national government vs. government balance ( average 2005 β 2009 ) β eu sources : eurostat, eurobarometer and ecb calculations. note : β tend to trust government β is the proportion of respondents to the may 2010 eurobarometer survey who reported trusting their national government. chart 2 trust in national government vs. growth per capita ( average 2005 β 2009 ) β eu sources : eurobarometer, ec and ecb calculations. note : β tend to trust government β is the proportion of respondents to the may 2010 eurobarometer survey who reported trusting their national government. | 0.5 |
economics of regulation. nber conference volume, forthcoming. kroszner, randall and luc laeven and daniela klingbiel ( 2007 ). " banking crises, financial dependence, and growth, journal of financial economics ", vol. 87 ( april ), pp. 187 - 228. la porta, r., lopez - de - silanes, f., shleifer, a., vishny, r. w. ( 1998 ). " law and finance, " journal of political economy, vol. 106, pp. 1113 β 1155. levine, r. ( 1997 ). " financial development and economic growth : views and agenda ( 371 kb pdf ) ", journal of economic literature, vol. 35, pp. 688 β 726. levine, r. ( 2005 ). " finance and growth. " in : aghion, p., durlauf, s. ( eds. ), handbook of economic growth, elsevier science, amsterdam, the netherlands, forthcoming. milesi - ferretti, g. m., razin, a. ( 1998 ). " current account reversals and currency crises : empirical regularities β, nber working paper no. 6620, cambridge, ma. mitton, t. ( 2002 ). " a cross - firm analysis of the impact of corporate governance on the east asian financial crisis ", journal of financial economics, vol. 64, pp. 215 β 241. rajan, r. g., zingales, l. ( 1998 ). " financial dependence and growth ", american economic review, vol. 88, pp. 559 β 596. | of the real economy. more specifically, we find that in well - developed and deep financial systems, sectors highly dependent on external sources of funding tend to experience a greater contraction during a banking crisis than do externally dependent sectors in countries with shallower financial systems. in other words, sectors of the real economy that rely heavily on external finance ( that is, do not fund capital expenditures through cash flow ) tend to experience a substantially slower growth of value added during a banking crisis than those sectors that do not rely so heavily on external funding. this effect is more pronounced in countries with more developed financial systems. our results hold for a wide group of countries and over a long time span, but as i note below, have particular relevance to emerging market countries. while these results are consistent with a so - called credit channel impact of banking crises on real economic activity, there are further implications of the " credit channel " view that we explore in more detail. among firms that depend heavily on outside financing, young firms with short histories and firms with a large fraction of hard - to - measure intangible assets, for example, may have particular difficulties raising funds from the market due to information problems. instead, such firms would tend to depend heavily on banks and other intermediaries for funding. consistent with this, we find a greater negative impact of banking crises on growth for industries dominated by young firms that are highly dependent on external finance and for industries with high levels of intangible assets. while all of these results are consistent with a " credit channel " view of the impact of banking crises on real economic activity, we certainly need to explore some alternative explanations before drawing final conclusions. in particular, many factors may be correlated with the level of financial development of a country, so we want to make sure that the level of financial development is not simply standing in for something else. the differences in financial development, for example, can arise from historical, political, cultural, and legal reasons. there is a well - developed literature emphasizing, for instance, that the nature of a country's legal system and the manner in which laws are enforced can have an effect on the development of its financial system. 9 similarly, other country - specific factors also might have an influence on how financial institutions and markets behave. if one of these factors, rather than financial development, is driving the results, we might have to interpret those results differently. as a way to try to address such questions of interpretation, we controlled for the quality of | 1 |
- go by a certain given deadline. instead, we decided that we should provide a level playing field and afford opportunity for islamic banking to co - exist with conventional banking. we believed that the choice should be left to the individual consumer whether they would like to switch over to islamic banking or stick with their existing banks. the endeavor of the government and the central bank was to ensure that there was no discrimination, preference β overt or convert β policy biases in favour of one system or the other. if, over time, the majority of the consumers decide to opt for islamic banking, the whole system will naturally be transformed and the end point will be reached. in our view, it is not the responsibility of the government or the central bank to impose their will or dictate choices to the people. we have, therefore, opened up the banking system by allowing : ( a ) establishment of stand - alone islamic banks ; ( b ) setting up of subsidiaries of banks for islamic banking ; or ( c ) setting up of full - fledged islamic banking branches of the banks. the initial response has been overwhelming and hundreds of thousands of pakistanis who had never done any banking in their lives are now asking for more islamic banks or branches in their areas. in the very first year, islamic banking segments have captured 1. 6 % of the total assets of the banking system and the rate of growth is extremely fast. in the basis of the current trends, we project that the islamic banks will attain about 10 % of the market share in the next few years. the state bank of pakistan has developed a market - based regulatory framework including a high - powered shari β ah board to provide guidance on the shari β ah compliance aspects of the business and regulations. the institute of chartered accountants of pakistan ( icap ) has prepared accounting standards for islamic modes of finance which are being implemented. these standards are based on the aaoifi standards and are compatible with the international accounting standards. we have developed innovative products such as islamic export refinance scheme in consultation with the islamic banking industry for it to remain competitive with other banks. despite these positive developments which i have sketched above, i will be remiss in my duties if i do not put forth the enormous challenges in islamic finance and let me tell you there are many. ( a ) fund mobilization : the ways in which islamic banks can and do mobilize funds are all non - conventional and, in some ways, new to the regulators. | as to what is actually happening on these fronts. ladies and gentlemen, several of us β the governors of the central banks of islamic countries β worked closely with the international monetary fund ( imf ) for many years and ultimately formed the islamic financial services board ( ifsb ) whose headquarters is in kuala lumpur, malaysia. this body is working on the development of prudent and transparent standards and codes by introducing new or adapting existing international standards consistent with shari β ah principles. i am sure the secretary - general of the ifsb would be in a better position to inform you more about the activities of this body. however, i am satisfied that the work it has initiated through various working groups on risk management, capital adequacy, corporate governance, transparency and market discipline, as well as supervisory review process, is proceeding well and we expect the end products to be rigorous and of high quality. this institution, in our view, will economize on scarce expert resources, come up with a consensus view after rigorous debate and research and create uniformity and standardization of islamic products and services across countries. the second important body which i have also been associated with is the accounting and auditing organization for islamic financial institutions ( aaoifi ), which has so far issued over 50 accounting, auditing, governance and shari β ah standards for islamic financial institutions. islamic banking practices are becoming an integral part of the leading accountancy firms of the world β the big four β and many other countries and are, thus, being disseminated through their national affiliates and consultancy services. in the last few years, a number of other bodies dealing with different components of the islamic financial infrastructure have been formed and are beginning to take shape. they are, of course, at different stages of evolution but together they form the necessary complements. the islamic development bank ( idb ) must be given credit for taking the lead in establishing the international islamic financial market ( iifm ) which is working on the development of liquidity management instruments and markets for islamic financial institutions and more recently, the international islamic rating agency ( iira ) which will provide credit rating, shari β ah rating and corporate governance rating to islamic financial institutions. ladies and gentlemen, i now turn to the example of pakistan where we have vigorously introduced islamic banking in its true letter and spirit. we considered it totally imprudent to dislocate the entire financial system by directing substitution of the on - going banking by islamic banking in one | 1 |
prompting increases in assemblies from the very low levels seen at midyear. more broadly, the slower pace of inventory liquidation likely provided an appreciable boost to manufacturing production in july and august, and should continue to push up factory output further in the near - term. but, more importantly for sustained recovery, final sales began to stabilize earlier this year and have shown some tentative signs of picking up more recently. improvement has been most evident in the housing sector. after three years of steep declines in residential construction, the recent news on housing has been encouraging, given the central role that this sector has played in the recession. sales of new and existing homes have been on an uptrend since early this year, and the rise in sales has pared the inventory of unsold new homes substantially. as demand has strengthened and inventories of new homes have come down, construction of single - family homes has risen markedly in recent months. meanwhile, several measures of house prices, after tumbling for the past two to three years, have increased in the past few months. moreover, survey data suggest that an increasing number of potential homebuyers seem to think that house prices are near their bottoms and will larry slifman and joyce zickler of the board's staff contributed to these remarks. increase over the coming year. and, based on prices from admittedly thinly traded futures, financial market participants appear to have become more optimistic about house prices as well. in light of these developments, i expect housing starts to continue to improve gradually in coming months. in the consumer sector, spending fell sharply in the second half of 2008 as households raised their saving in response to reduced net worth, tighter credit conditions, and increasing uncertainty about job and income prospects. following the steep declines in spending late last year, outlays were essentially flat on average during the first half of this year, and the saving rate leveled out. expenditures appear to have increased in the third quarter, boosted during july and august by the cash for clunkers program and by increased dealer incentives. in addition, the latest figures suggest that real outlays for other consumer goods and services rose considerably in august. the recent firming of consumer spending likely has been aided by the fiscal stimulus package, which lowered taxes and increased transfer payments. however, with the labor market still quite weak and income gains subdued, advances in consumption spending in the coming months likely will be muted. in the business sector, fixed investment plummeted late | the potential for hedge fund leverage to adversely affect market dynamics. perhaps the recent widening of credit spreads will engender increased caution by managers of credit risk. moreover, as in 1999, cooperative private - sector efforts to identify and implement sound risk - management practices have the potential to reinforce the efforts of individual firms and their prudential supervisors. in this regard, a very encouraging development is the recent formation, by leading banks, securities firms, insurance companies, asset managers, and hedge funds, of a new group ( crmpg ii ) to assess improvements in risk management since 1999 and to update the crmpg recommendations to reflect subsequent changes in risk - management practices and in the financial, regulatory, and legal environment. ensuring sound credit - risk management by hedge funds'counterparties remains the most promising approach to addressing concerns about hedge fund leverage. some may believe that government regulation of hedge fund leverage would be more effective. but it would be very difficult to design a set of capital requirements for hedge funds that is appropriately sensitive to the diversity and flexibility of investment strategies that different funds employ and to the lack of diversification in the portfolios of individual funds. a regulatory capital regime that was not extraordinarily risk - sensitive would be ineffective at constraining hedge funds'risk - taking. at the same time, it would impair their capacity to pursue strategies that enhance the efficiency and liquidity of our financial markets and thereby to contribute to the productivity and resilience of our economy. conclusion the rapid proliferation of derivatives products inevitably means that some will not have been adequately tested by market stress. even with sound credit - risk management, a sudden widening of credit spreads could result in unanticipated losses to investors in some of the newer, more complex structured credit products, and those investors could include some leveraged hedge funds. risk management involves judgment as well as science, and the science is based on the past behavior of markets, which is not an infallible guide to the future. yet the history of the development of these products encourages confidence that many of the newer products will be successfully embraced by counterparty risk management policy group ( 1999 ). " improving counterparty risk management practices ( 348 kb pdf ), " report available through the house committee on financial services. the markets. to be sure, for that favorable record to be extended, both market participants and policymakers must be aware of the risk - management challenges associated with the use of derivatives to transfer risk, both | 0 |
gent sejko : address on remittances of the albania diaspora welcome address by mr gent sejko, governor of the bank of albania, at the high - level meeting on the remittances of the albanian diaspora, tirana, 14 december 2018. * * * your excellency, minister majko, dear guests and colleagues, it is a special pleasure to open today β s meeting, which takes place after a year of intensive coordinated effort between our institutions toward the achievement of common objectives in relation to remittances of the diaspora, and other important issues. today, a year after the memorandum of understanding was signed, i have the pleasure of noting that the materialization of these efforts has been reflected in the undertaking of a number of commitments and projects in pursuit of the objectives set out below. the importance of remittances to the albanian economy, to family welfare and to development in general is highlighted in many communications of the bank of albania. in this context, during 2018, the bank of albania engaged its resources in developments aimed at creating the necessary prerequisites for an efficient channelling of such incomes into the albanian economy. international initiatives in the field of remittances underline the importance of reducing the costs and increasing the efficiency of remittance services, thus implying the need to intervene in the retail payment market, in both remittance - sending and remittance - receiving countries. for this reason, the bank of albania, as we have pointed out at the beginning of this cooperation, has engaged in a series of projects aimed at analysing the domestic market with a view to identifying and addressing the needs for intervention. these projects are assisted by the world bank and funded by the seco. i take this opportunity to once again thank these institutions for their contribution and support. moreover, the bank of albania and the national payment systems committee has already adopted and is implementing the national strategy for the retail payments market. this strategy aims to create a contemporary and comprehensive market of retail payments, supported by secure and efficient infrastructures, as well as by a wide range of payment instruments and services that meet the needs of financially capable individuals to make payments across the country. incorporating financial inclusion into the bank of albania β s objectives, this strategy has set ambitious quantitative targets aimed at doubling the number of bank account holders ( from 38 % in 2014 to 70 % in 2022 ) and increasing the number of electronic payments per capita ( from 4. | dimiter kostov : the world of finance is becoming more it address by mr dimiter kostov, deputy governor of the bulgarian national bank, banking department and fiscal services department, before the participants in the 14th financial it forum β the world of finance is becoming more it β, sofia, 19 april 2012. * * * ladies and gentlemen, on behalf of the bulgarian national bank, i have the honour to congratulate you with the opening of the 14th financial it forum. this forum has established itself as an annual opportunity to share experience and ideas, and to view the prospects opened to the financial sector by the information and communication technologies. these results are undoubtedly owing to the organizers of the event, but what is of no less importance is your interest to it. from the point of view of the business, times are still hard for financial intermediation. in the conditions of volatile international financial markets and an unstable economy, the bulgarian banking system is coping well with the challenges and remains stable. the levels of capital adequacy and liquidity remain high. irrespective of the increased impairment costs the banking system continues generating positive results. it is of no little importance, too, that in these conditions the banking system managed to preserve and even to slightly increase its loan portfolio. in the recent three years the economic activity in the country has contracted by about 3 percent, while the loan portfolio not only did not contract, but grew by about 8 percent. the results achieved indicate that in this difficult macroeconomic environment the banking system has not only preserved its reliability, but has continued to perform its economic role of financial intermediary. another positive trend is especially worth noting, prompted by this forum. banks are not focusing only on coping with current issues and obstacles. regardless of the difficulties, banks are putting much thought and effort into developing and implementing new business solutions and products based on the opportunities offered by the information and communications technologies. new solutions are sought not only in the area of good management of risks and business processes, but also in developing new services and sales channels. i would not allow myself to give examples from the experience of one or another bank. the forum will provide plenty of opportunities to find this out for yourselves. i will use as illustration of my words the payment infrastructure. the connectivity achieved by the operator of the main retail payment systems in this country in the past year, presently makes available to the bulgarian banks the so - called sepa connectivity to several thousand banks in the european union | 0 |
and financing. the unavoidable remedial measures in the short term can deepen the impact of the crisis over economic activity, unemployment and poverty, but these costs tend to be much higher if the adjustment measures are postponed or adopted only partially. precisely because of the huge costs involved it is necessary for all advanced economies to devote themselves immediately to resolve the crisis and lay solid foundations to prevent new crises from taking place. this attitude has been crucial for countries like mexico in the past. having laid the foundations during the last 15 years for macroeconomic stability is what has allowed us to grow in todayΒ΄s turbulent times, despite the magnitude and intensity of the external shocks that we have faced. mexico and other latin american countries not only overcame that stage of great economic and financial vulnerability during the seventies, eighties and part of the nineties, but also focused on creating institutional arrangements capable of preventing and avoiding the reemergence of those crises. every financial crisis is particularly different ; however, there are certain stylized facts inherent in all of them that can help us identify some elements that could be extremely useful in the resolution process. allow me to present to you the stylized facts drawn from the latin american experience, that i think could represent guidelines for solving the current crisis in europe. stylized facts of the resolution of financial crises first, during financial crises, expectations must be stabilized as soon as possible. in other words : the immediate goal should be to move from a vicious to a virtuous cycle in expectations. for example : buying now medium - term debt of a country in crisis at spreads of 450 basis points can be very unattractive, but it could be quite the opposite if the destabilizing expectations disappear rapidly, thereby inducing significant reductions in interest rates. lower interest rates stimulates gdp growth, which in turn facilitates the stabilization process by increasing tax collection and payment capacity of debtors, and consequently reducing the bis central bankers β speeches social and political costs inherent to the adjustment. by improving the fundamentals of the economy, expectations keep improving, thus strengthening the virtuous circle. second, in order to adjust expectations the necessary measures must be adopted in a credible way. the perception of markets and society must be that the effort is not only serious but that it will be enough to reverse the situation. in order to achieve this it is essential to : rely on an intellectually honest diagnosis. respond quickly and decisively. be aware β and know how to convey this conviction to society β that the | terminal rate by the end of this year, with independence from the actions that the federal reserve might take in the future. going back to the strength of the mexican peso, this also might be the result of new foreign direct investment associated with the increased attractiveness of the country due to the phenomenon defined as nearshoring or reshoring. indeed, a re - globalization process is underway in which firms now seek to diversify the risk of supply disruptions. thus, the geographical location and the historical context of firm's providers has become relevant once again. mexico has a privileged position to reap the benefits of reglobalization given its geographic location and the trade agreements reached with the united states, canada, and other regions and countries. in that sense, mexico could aspire to become a new global economic hub through the relocation process of different industries. however, in order to ensure the largest possible gains from this process, mexico must undertake specific policies that include increasing public infrastructure investments, reducing insecurity levels, sending clear signals of respect to trade agreements, providing access to key production inputs, and reducing corruption, among others. 2 / 4 bis - central bankers'speeches let me now go back to the specific topics of this year's edition of the conference and briefly describe the papers that will be presented in these seven sessions : first, enrique mendoza and vincenzo quadrini's paper addresses a potential mechanism behind the observed decline in global interest rates. it suggests that the low levels measured for the long - term neutral interest rate ( r * ) are a temporary result of high rate of growth in emerging economies jointly with a change in their financial structure, thus predicting that r * may become higher in the future as this mechanism runs its course. such research may be useful in generating potential scenarios for future global interest rate levels. jonathan eaton's paper provides a new analytical baseline to consider product quality as an additional margin for exporting firms to adjust. it allows economists to approach the changing composition of countries'exports in response to various shocks and may help understand longer term impacts of the usmca on the north american economies. the paper by fabrizio perri analyzes the change in the us net asset position, which was already negative in the 90's and early 2000's, but has become significantly more negative since the global financial crisis. this paper may provide a different perspective on the flows of capital around the globe and on the impact of the recent decline in asset values on | 0.5 |
euro area economy remains depressed. only if all economies act with the necessary force to contain the recession will the loss in output for the entire eurozone be minimized. then there β s the risk of political spillovers if responses are asymmetric. any perception that common action is absent in times of desperate crisis would dilute public support for the european union β an effect that is already visible in countries on the frontline of the health crisis. unchecked, these perceptions will weaken centripetal forces in the union and strengthen centrifugal ones. ultimately, they could erode trust in the euro. so it β s clear why a forceful, symmetric european response is needed. failure to act now will not insulate taxpayers from the costs of this crisis. quite the opposite : it will amplify those costs when they finally come due. it will also weaken the policy responses already being undertaken. 1 / 2 bis central bankers'speeches for example, without visibility on future sovereign funding costs and rollover risks, government guarantees on bank loans will either be priced differently across countries β or fewer such loans will be extended. either way, the result will be fragmentation and a more persistent loss of economic potential. a european fiscal response must be based around three principles. first, the size of the fiscal reaction should be proportionate to the magnitude of the shock. second, it should not aggravate fragmentation stemming from differences in initial fiscal positions. third, it should not skew the playing field within the european single market. viable firms should be able to withstand this crisis no matter where in the eurozone they are located. the fiscal response of european countries has thus far been inconsistent with these principles. the countries least affected by the pandemic have enacted the largest fiscal responses, while the worst - affected countries have taken the smallest steps. this appears to be, in part, because the latter fear being unable to shoulder the debt burden that an optimal response would entail. the threat to the single market is clear : uneven fiscal support implies that a firm β s location, rather than its business model, will be the decisive factor in determining whether it survives this crisis. rather than transfers between member states or a mutualisation of existing debts, what is needed now is for countries to use their collective strength to ensure that the european response is commensurate with the size of the shock and that all countries can benefit from low funding costs and zero rollover risk. as policymakers debate the | fabio panetta : why we all need a joint european fiscal response contribution by mr fabio panetta, member of the executive board of the european central bank, published by politico on 21 april 2020. * * * the case for common european economic action in response to the coronavirus crisis has often been presented as a call for solidarity. as noble as that motivation may be, it β s not the only reason for governments to act together. a strong, symmetric fiscal response that offsets the economic damage from the pandemic is in the economic interest of all countries in the eurozone. the disadvantages of an asymmetric response are self - evident. in the realm of public health, if countries are forced to lift necessary public health measures ( e. g. lockdowns ) prematurely because the economic costs of containment are too high, the virus will inevitably begin to spread again and will further damage the economy. when it comes to the european economy, there β s a similar risk of contagion. the economies of the eurozone are tightly interlinked through supply chains, financial connections and trade relationships. as a result, a slump in a large part of the eurozone will depress growth and employment across the entire region. these dynamics were on display a decade ago during the sovereign debt crisis, but today β s crisis exacerbates them in two ways. first, because of the global nature of the shock, european countries cannot redirect their production to satisfy demand from the u. s. or china, as they did a decade ago. this makes member countries dependent on trade within the eurozone, which represents 45 percent of the currency area β s gdp. second, the amplification of the shock across supply chains will be greater this time. eurozone firms are strongly integrated into global value chains, with participation rates 60 percent higher than for u. s. or chinese firms. this integration is today three times tighter within the region than with the rest of the world. analysis by the european central bank has found that these supply chain interlinkages will multiply the economic damage of the coronavirus lockdowns. as an illustration, we estimate that an initial gdp decline of 5 percent in major eurozone economies would turn into a 7 percent fall in output for the whole area. a gdp decline of 15 percent would provoke a 20 percent loss across the eurozone. and this only considers the recessionary phase, not the subsequent phase of weak trade if the | 1 |
of the recent increase in long - term unemployment. similarly, the fact that labor demand appears weak in most industries and locations is suggestive of a general shortfall of aggregate demand rather a worsening mismatch of skills and jobs. counterexamples like the energy boom in the upper midwest, where there may be some mismatch in the geographic location of suitably skilled workers or an overall shortage of potential workers with relevant skills, might best be interpreted as the exceptions that prove the rule ; a mismatch story would suggest that strong labor demand would be appearing in more sectors or geographical areas by now. an empirical relationship that economists have long used to interpret developments in the labor market is known as the beveridge curve ( figure 14 ). that curve β named after the british economist william beveridge β compares unemployment ( the number of workers looking for employers ) to job vacancies ( the number of workers that employers are seeking ). in good times, when the unemployment rate is low, businesses are growing and workers are harder to find, so job vacancies tend to be high. similarly, in bad times, unemployment is high and few jobs are available ( vacancies are low ). thus, the beveridge curve, the relationship between unemployment and vacancies, is downward sloping. on the usual interpretation, a recession is a period in which the economy is moving down along the beveridge curve ; as output and the demand for labor fall, job vacancies decline and unemployment rises. in contrast, changes in the structural determinants of unemployment are thought to be reflected in shifts of the beveridge curve to the left or right. for example, suppose that, because of changes in technology or in the mix of industries and jobs, the mismatch between the skills of the unemployed and the needs of employers worsens. then, for a given number of job openings, the number of the unemployed who are qualified for those jobs is smaller and the unemployment rate is higher than it would have been before the mismatch problem worsened. graphically, an increase in a skills mismatch would be reflected in a shift of the beveridge curve up and to the right. from figure 14, we can see some outward shift in the relationship between job vacancies and unemployment, consistent with some increase in structural unemployment since the onset of the recession. however, a more in - depth analysis of the evidence suggests that the apparent shift in the | hiring plans have also shown modest gains ( figure 6 ). other indicators, such as new claims for unemployment insurance and measures of the breadth of hiring across industries, also point to better labor market conditions. notwithstanding these welcome recent signs, the job market remains quite weak relative to historical norms, as i β ve already noted. after nearly two years of job gains, private payroll employment remains more than 5 million jobs below its previous peak ; the jobs shortfall is even larger, of course, when increases in the size of the labor force are taken into account. and the unemployment rate in february was still roughly 3 percentage points above its average over the 20 years preceding the recession. moreover, a significant portion of the improvement in the labor market has reflected a decline in layoffs rather than an increase in hiring. this last observation is illustrated by the data on gross job flows ( figure 7 ). the monthly increase in payroll employment, which commands so much public attention, is a net change. it equals the number of hires during the month less the number of separations ( including layoffs, quits, and other separations ). in any given month, a large number of workers are being hired or are leaving their current jobs, illustrating the dynamism of the u. s. labor market. for example, between 2001 and 2007, private employers hired nearly 5 million people, on average, each month. total separations, on average, were only slightly smaller. taking the difference between gross hires and separations, the net monthly change in payrolls during this period was, on average, less than 100, 000 jobs per month β a small figure compared to the gross flows. the recent history of these flows suggests that further improvement in the labor market will likely need to come from a shift to a more robust pace of hiring. as figure 7 shows, the declines in aggregate payrolls during the recession stemmed from both a reduction in hiring and a large increase in layoffs. in contrast, the increase in employment since the end of 2009 has been due to a significant decline in layoffs but only a moderate improvement in hiring. to achieve a more rapid recovery in the job market, hiring rates will need to return to more normal levels. the change in unemployment and economic growth : a puzzle? what will lead to more hiring and, consequently, further declines in unemployment? the short answer is more - rapid economic growth. indeed, the improvement in the labor market over the past year β especially the decline in | 1 |
positive changes and greater organisational success. i am proud to have witnessed your commitment to the training despite your numerous responsibilities and workload. i am even more encouraged by the collective sharing of your learning experiences this afternoon, how you plan to put what you have learnt into practice, and how you would like to continue being empowered to further develop your leadership potential. today's graduation ceremony is definitely not the end goal. i look forward to the positive impact and transformation that your leadership will have on your respective team members, as well as on the performance of your respective divisions, units and the bank as a whole. i also count on you to embrace the upcoming rotation programme being designed to shape cbs leaders into well - rounded central bankers. your commitment to these efforts will contribute to the objective of ushering in a new era of central banking within cbs and building a stronger and more resilient institution. in all of this, it is essential to acknowledge that leadership and learning go hand in hand. i look forward to our collective contribution on how the bank can put the necessary mechanisms in place for the continued empowerment and development of not only the leaders gathered here today but also other existing and future team members with leadership potential. at this juncture, i would like to take the opportunity to thank'it's a learning curve'for partnering with cbs on the leadership development programme and extend my deepest appreciation to andrew and paul for tailoring and facilitating the sessions, with a particular focus on addressing the specific needs of our institution. your expertise and unwavering commitment have undoubtedly contributed to the programme's success. we look forward to more collaboration as we endeavour to continue empowering our leaders. to the graduating leaders, allow me to quote simon sinek, who is well - known for his thoughts on leadership : " leaders are the ones who have the courage to go first, to put themselves at personal risk to open a path for others to follow ". this quote resonates well with your journey. i remember the mixture of sentiments echoed when you were embarking on the programme in october last year - from excitement to uncertainty. nevertheless, you willingly embraced the opportunity. today, i say well done and congratulations to all of you. my greatest desire is to see you uphold the organisational values as you lead and do it with your head, heart, and hands - that is, be mentally, emotionally, and physically engaged in the noble task entrusted to you. i also hope you will maintain the bond formed | privilege afforded to the central bank of seychelles to host this high level dialogue. i also wish to thank both the public and private sector participants, for the overwhelming response to the invitation to attend the event, and for your active participation. to our panellists, thank you for your well prepared presentations and eloquent sharing of your experiences and expertise. we also thank the moderators, who have also done a great job at chairing the presentation of each topics and engaging the audience to contribute towards the debate, as well as the rapporteurs for taking notes and highlighting the key issues that have been raised. i am hopeful that the esaamlg secretariat will work towards the implementation of all recommendations that have come out of this exercise. my sincere appreciation also goes to the staff of the central bank of seychelles for their hard work in putting this event together. as we end, i would like to wish our esteemed international guests and delegates, a safe and pleasant journey, back to your respective homes. for those who are staying in seychelles for a few more days, do take a moment to explore the islands, which boast some of the most breathtaking beaches and amazing sceneries. we look forward to welcoming many of you back in seychelles, in april next year, when we host the esaamlg workshop on digital financial services, bureau de change and money remittances. i thank you all for your attention. | 0.5 |
jens weidmann : welcome remarks at the 3rd imf statistical forum welcome remarks by dr jens weidmann, president of the deutsche bundesbank and chairman of the board of directors of the bank for international settlements, at the 3rd imf statistical forum, frankfurt am main, 19 november 2015. * 1. * * introduction dear mr. zhu, dear otmar issing, ladies and gentlemen, good morning and welcome to the 3rd imf statistical forum. it is probably safe to say that the bundesbank has seldom had the opportunity to welcome such a large body of international statistics experts. the objective over these two days is to bring together data producers, policy makers, academics and other users to discuss how to further improve the provision of statistics for micro and macroeconomic analyses. for central banks this is of vital importance. monetary policy ultimately depends on the availability of good statistics. the monetary and economic analyses that precede any deliberation on the appropriate monetary policy stance are built on a large amount of data on monetary aggregates, financial market data, inflation expectations or labour market indicators. i am therefore particularly glad that the bundesbank is hosting the first imf statistical forum to be held outside washington. and, when i tell you that the bundesbank is attaching great importance to statistics, i am not merely paying lip service to you. the importance the bundesbank attaches to statistics and statistical methods is shown, for instance, by the fact that carl friedrich gauss, one of the most influential statisticians of all time, was portrayed on the 10 deutsche mark banknote for a long time. building on the work of carl friedrich gauss, statistical methods have been perfected and the process of data collection has been refined again and again. often, the great progress made in the field of statistics has been driven by new demands. if you will, the supply of data and new methods has always responded to changes in demand. governments, for example, have always had a demand for statistics on the wealth of their citizens, as this helped them to collect taxes. in the 17th century, this led sir william petty, an englishman, to count chimneys in order to draw inferences about the wealth of an economy. his works can be seen as the foundation of modern social and economic statistics. but to find examples of how the supply of statistics has responded to demand one does not have to go back as far as the 17th century. in the 1930s, the great depression provided | cooperation exemplifies what will be important in the ssm. like us supervisors, ese, too, has recently seen eventful times. last year, we saw a considerable increase in the number of seminar participants β a noteworthy success and confirmation of the excellent work by those responsible for ese. these parties include the programme council, composed of proven supervisory experts and responsible for keeping the content of the training measures up to date at all times. the steering committee and the ese secretariat naturally also play a pivotal role. at this juncture, i would like to express my sincere thanks to the representatives of ese for all that you have done to make ese one of the leading training initiatives for supervisors in europe. 4. the future let us now take a further step β forward β and venture a look into the future. now that the european parliament has approved the draft legislation, the ssm can soon be officially launched. we have a year full of hard work ahead of us. thankfully, the preparations are in progress β through the high level group of ecb and national authorities β representatives and the many affiliated working groups, the basic framework of the ssm has already been laid out. over the coming months, we will define the further details of the cooperation between the ecb and national supervisors and codify them in a framework regulation. we will continue our work on the organisational and operational structure of the new supervisory regime and institute an efficient reporting process. however, in my opinion, it is the balancesheet assessment which represents the greatest challenge in the months ahead of us. the ecb needs a clear picture of the actual risk faced by the banks it will be supervising. moreover, light needs to be shed on which balance - sheet burdens arose under the watch of national supervisors. we therefore need a thorough and rigorous review of balance - sheets. this will be the first test of the ssm and of cooperation between the authorities involved. though we don β t have much time at all to accomplish this extremely complex task, i believe that, if we act in unison, we will succeed. one year from now, the preparations will be completed and the ssm will take the helm. in order for the ssm to exploit its advantages, one thing will be paramount : a consistent supervisory approach incorporating the strengths of individual national approaches and experiences. this common supervisory approach must build on established principles such as risk - orientation, proportionality as well as an integrated micro and macroprude | 0.5 |
mugur isrescu : 50th anniversary of romania's entry to the circuit of international financial institutions speech by mr mugur isrescu, governor of the national bank of romania, on the occasion of 50 years since romania joined the international monetary fund and the world bank, bucharest, 31 january 2023. * * * distinguished audience, in december 1972, romania joined the international bank for reconstruction and development ( world bank ) and the international monetary fund ( imf ). at that time, romania was the first β and remained until 1989 - the only country from the treaty of warsaw and comecon ( council for mutual economic assistance ) that had entered the circuit of international financial institutions. to mark this anniversary, the national bank of romania has launched into circulation, for numismatic purposes, a silver coin. the obverse of the coin depicts the old palace of the national bank of romania, the inscription " romania " in a circular arc, the coat of arms of romania, the face value " 10 lei " and the year of issue " 2022 ". the reverse of the silver coin has the logos of the international monetary fund and the world bank and the inscriptions in romanian " romania's accession to the international monetary fund and the world bank " and " 50 years ". that moment in 1972 became part of a number of further positive decisions that put romania in the global economic family : joining the general agreement on tariffs and trade ( gatt ) in 1971 ; acquiring preferential trading status with the european common market in 1973 ; being granted the most - favored - nation status by the united states congress in 1975 ; obtaining facilitated access to credits from the export - import bank and the commodity credit corporation ( ccc ). over the same period of time, mixed capital companies were established in romania as well as abroad, including, within the banking sector : banque franco - roumaine, anglo - romanian bank, banca italoromena, frankfurt bukarest bank ag, misr romanian bank. the brand of the american bank - manufacturers hanover trust - was visible in university square, right in the heart of bucharest, and in premium data technology romcontroldata was operating in the country. unfortunately, during the 1980s the authorities in bucharest weakened the relationship between romania and the west, including those with the bretton woods institutions, almost close to severing all ties. after the fall of the communist regime, the normalization of the relationship led to a new beginning. as | a partaker to these events, i can say that this process with the imf and the world bank was hardly an easy one, especially due to the lack of trust that had fallen over romania's international economic relations. part of the normalization of the relations with the international organizations was also joining the international financial corporation ( ifc ) β member of the world bank group in 1991. this institution has supported the romanian banking sector too, especially during the privatization process. joining miga finalized the normalization process. 1 / 3 bis - central bankers'speeches throughout the 1990s and up until the eu granted romania the functional market economy status in 2004, and later on, until the actual eu accession in 2007, the imf and the world bank have been our main economic and financial external partners, during the transition. it goes without saying that one central pillar of this transition was represented by the continuous reforms of the national legislation regarding the central bank and the financial sector reforms, which have benefited from the extensive contributions of imf and world bank staff. for instance, the essential legislation governing the banking system was drafted with the assistance of imf experts. in this context, i would like to mention the seven imf stand - by agreements that, in addition to the balance of payments support, have also contributed to the implementation of structural reforms prior to the eu accession. similarly, the world bank's programs have contributed to the development of the romanian financial and banking system ( e. g. the financial and enterprise sector adjustment loan ( fesal ) β focused on reforming the financial sector, and the private sector adjustment loan ( psal ) β offered support towards the privatization of the romanian banks and to the development of the monetary and capital market ). during this transition period marked by major changes, i would like to highlight one element of continuity. since joining the imf, romania has been part of the dutch constituency. in 2012, belgium and luxembourg joined, establishing the dutch - belgian constituency, one of the largest and most diverse constituencies at the imf. i have to mention that the national bank of romania has extensively benefited during the whole transition process from technical assistance from members of this constituency in two essential banking areas, such as bank supervision form the nederlandsche bank ( dnb ) and market operations from the national bank of belgium. actually, the first law on the statute of the national bank of romania was drafted following the model of the national bank of belgium, while the dutch influence goes even further back | 1 |
- bailout clauses : the swiss experience. bis central bankers β speeches way of referendum, which increases its binding force, as violations explicitly run counter to the will of the people. incidentally, we can gain even more detailed insights from the cantonal fiscal rules, which are now in place in nearly all the country β s cantons. available research reveals that stricter cantonal debt brakes also prove to be more effective. 10 by revising the stability and growth pact and the fiscal compact, the euro - area member states have also changed the rules. this served as a counterweight to the introduction of the substantial rescue packages. however, it appears that little remains of the original intention to tighten the fiscal rules. although it is now much more difficult for finance ministers to turn down the commission β s recommendations, the commission β s influence has also significantly increased. and that is not always a positive thing either. the rules, on the whole, have hardly any logic to them, and the commission does not always seem to want to apply a narrow interpretation. but we are learning from the swiss example that the rules need to be strict. i believe that flexibility in interpretation should only be applied, if at all, in well - founded exceptional cases. for this ultimately weakens the structural consolidation requirements and defers them to the future. 5. conclusion ladies and gentlemen, this brings me to the end of my speech. with its decision in favour of substantial government bond purchases, the eurosystem has once again provided ex ante assistance. governments and the european commission must now use the time to strengthen the long - term conditions for growth in the euro area. friedrich durrenmatt once said, β the quickest way to clear up a matter is through dialogue β. therefore, i now look forward to our discussion. see feld et al ( 2013 ). bis central bankers β speeches | david dodge : views on the canadian economy and monetary policy opening statement by mr david dodge, governor of the bank of canada, to the standing senate committee on banking, trade and commerce, ottawa, 3 may 2006. * * * good afternoon, mr. chairman and members of the committee. we appreciate the opportunity to meet with this committee twice a year, following the release of our monetary policy reports. these meetings help us keep senators and all canadians informed about the bank's views on the economy, and about the objective of monetary policy and the actions we take to achieve it. when paul and i appeared before this committee last october, we said that the global and canadian economies were continuing to grow at a solid pace, that our economy appeared to be operating at full production capacity, and that it would remain at capacity in 2006 and 2007. total and core inflation were projected to average close to 2 per cent, beginning in the second half of this year. this projection assumed oil prices at roughly us $ 64 per barrel, a level then indicated by futures prices. our projection also assumed stable commodity prices, government spending that was growing roughly in line with revenues, and a canadian dollar continuing to trade in a range of 85 to 87 cents u. s. in our april monetary policy report ( mpr ), we say that the global economy has shown a little more momentum than had been anticipated : oil prices have been roughly us $ 10 per barrel higher than assumed ; metals prices have risen significantly ; and the canadian dollar had been trading in a range of 85 1 / 2 to 88 aΒ½ cents u. s. in our report, the bank projects economic growth of 3. 1 per cent in 2006, 3. 0 per cent in 2007, and 2. 9 per cent in 2008. total cpi inflation will continue to be volatile and affected by developments in the markets for crude oil and natural gas, and will average close to 2 per cent in 2007 and 2008 ( excluding the effect of any changes in the gst ). core inflation is projected to rise to 2 per cent in the second half of this year and remain there through to the end of 2008. this projection is based on three key assumptions : first, that energy prices will remain roughly as indicated by futures prices ; second, that canadian governments will continue to run budgets that are roughly in balance ; and third, that the orderly resolution of global imbalances will involve a gradual depreciation of the u. s. real effective exchange rate. | 0 |
denton rarawa : 2016 solomon islands money day theme β take part. save smart! β speech by mr denton rarawa, governor of the central bank of solomon islands, at the opening of the solomon islands money day program, honiara, 27 june 2016. * * * permanent secretary of ministry of education and human resources development, commercial banks ceos, primary schools represented here this morning, representatives of government ministries, state owned enterprises, members of national financial inclusion taskforce, ladies and gentlemen. a good morning to all of you. you all look so colourful. thank you for waking up early and also for taking part in the parade from honiara town council to this venue. today we are gathered celebrate two events. first is the 40th anniversary of central banking in solomon islands. cbsi turned 40 on 21st june 2016, after the solomon islands monetary authority began its operation as a legal entity in 1976. solomon islands monetary authority changed name in 1983 to the central bank of solomon islands as we know it today. the second and an important reason why we gather here is to participate in our national financial inclusion public education drive, which is normally celebrated on cbsi anniversary day. we now decided to call this event the solomon islands money day. we hope that solomon islands money day will continue to be organized each year to promote the financial education to the general public each year. this year β s solomon islands money day theme β take part. save smart! β this theme is adopted from this year β s global money week ; which we were not able to hold during the first quarter of this year. we are very excited about this theme because it carries the message that it is time that we empower our children and youths by encouraging them to take part and save their financial resources smartly. for the central bank and the national financial inclusion taskforce, this is the first ever program that is focused on financial education for our children and youth, and it is one of our national financial inclusion goals. as a matter of fact, solomon islands has commitments both regionally and internationally to facilitate financial education in collaboration with the government to integrate financial education in our school curriculum. regionally we have the 2020 money pacific goals and internationally the alliance for financial inclusion maya declaration where central bank of solomon islands is committed to champion financial education through close collaboration with the government to integrate financial education in the existing solomon islands national school curriculum from class 1 to form 3 by year 2013. work to integrate financial education in our school | lseg and deutsche borse had already planned a merger in 2016. the european commission, however, recently announced that it had blocked the plan, which in its opinion would have created a virtual monopoly of the clearing market for fixed - income instruments : in fact the new group would have included the four central counterparties with the largest volume of business in this segment. competition in clearing for equity derivatives would also have been significantly reduced. even if they are controlled by a foreign entity, the trading and post - trading management companies remain fully responsible for all operating processes. they are supervised at the domestic level by the bank of italy and consob. indeed, unlike banks, markets and market infrastructure are supervised at the solo level, rather than on a consolidated basis. controlling shareholders can be located outside the eu provided they meet the requirements of integrity and capital adequacy. when the uk leaves the eu, the bank of italy and consob will need to have closer contacts with controlling shareholders. when some of the cooperation mechanisms envisaged by european legislation are no longer in place, the italian authorities will have to step up their efforts in the sphere of crossborder supervisory cooperation, as well as increase their bilateral cooperation with the uk supervisory authorities. at european level, brexit raises a matter of some importance regarding the supervision of central counterparties, since euro - denominated financial instruments, especially derivatives, are mostly cleared by uk - based entities. 4 we will need to make sure that supervision of uk central counterparties does not fall below the level set by european regulations for the main stability profiles : prudential supervision, currency of cleared contracts, and market control. esma proposed a review of emir to strengthen the process of recognizing the third - country ccps and provide forms of direct supervision by the european authorities. in the weeks to come, the commission will publish its proposed review of emir ; the prospect of the uk β s exit requires this aspect to be carefully considered as well. * * * prime minister may β s letter triggered for the first time the process by which a member state can leave the union. difficult negotiations will now begin, although they will not be lengthy since the treaty imposes strict time limits, given the technical complexity and political sensitivity of many of the issues. both sides will require foresight and good will. for example, in the case of interest rate swaps, 50 per cent of global trades and 90 per cent of standardized swaps ( i. e | 0 |
continue. the eventual level of demand for reserves is less certain but is highly likely to exceed pre - crisis levels when reserve balances averaged only about $ 15 billion. reserves are the ultimate β safe asset, β and demand for safe assets has increased substantially over time because of long - run trends, including regulatory requirements. other liabilities for a more detailed discussion of the longer - run framework, see lorie k. logan ( 2017 ), β implementing monetary policy : perspective from the open market trading desk, β speech delivered at the money marketeers of new york university, new york, may 18, https : / / www. newyorkfed. org / newsevents / speeches / 2017 / log170518. - 11 include the treasury general account, the foreign repurchase agreement ( or repo ) pool, balances held at the fed by designated financial market utilities, and other items. to gain a sense of the possible long - run size of the balance sheet, the next slide shows simulations under three different assumptions for the ultimate level of reserve balances : $ 100 billion, $ 600 billion, and $ 1 trillion ( figure 10 ). 22 these simulations show that, due to the growth of currency and other liabilities, the balance sheet will remain considerably above its pre - crisis levels even if reserves were to fall back to $ 100 billion ( the black line ). at its current growth rate, currency in circulation would reach $ 2 trillion by 2022 and $ 2. 8 trillion in 2027. even in the low case in which reserves decline to $ 100 billion, our balance sheet would be about $ 2. 4 trillion in 2022 and would grow from there in line with currency demand. if the long - run level of reserves is $ 600 billion in 2022, then the balance sheet would be about $ 2. 9 trillion. 23 the appropriate long - run level of reserves will also depend on the operating framework the committee chooses. before the crisis, reserves were scarce, and the committee used open market operations to control the federal funds rate by managing the intermediate figure of $ 600 billion is based on the federal reserve bank of new york β s may 2017 surveys of primary dealers and market participants. following the 2017 study by ferris, kim, and schlusche, the federal funds rate path used in the balance sheet simulations consists of the modal path given in the fomc participants β summary of economic projections ( sep ) ; see erin e. | rather than a substitute, of standard interest rate decisions : they help ensure that standard policy produces its intended effects, rather than aiming to impart additional relaxation to the overall monetary policy stance. this feature distinguishes the non - standard monetary policy measures the ecb used so far from quantitative easing policies as pursued by other major central banks, because quantitative easing is designed as a substitute for standard interest rate policy when central bank rates have reached levels close to their zero lower bound and cannot be lowered further. this feature also illustrates that the introduction of non - standard measures does not imply the need for the ecb to manage a trade - off between short run inflation volatility and price stability in the longer run. the non - standard monetary policy measures that we have see article 127 ( 5 ) tfeu. see, for example, thornton, h. ( 1802 ), an enquiry into the nature and effects of paper credit of great britain, bordo, m. d. ( 1990 ), the lender of last resort : alternative views and historical experience, federal reserve bank of richmond economic review, january / february, or freixas, x., c. giannini, g. hoggarth and f. soussa ( 2002 ), lender of last resort : a review of the literature, in goodhart, c. a. e., and g. illing ( eds. ), financial contagion, crises and the lender of last resort β a reader, oxford university press. bis central bankers β speeches used so far are rather the means to ensure that standard ecb decisions can be effective at all horizons. there should therefore be no concern that our non - standard measures may produce spillovers on the ecb β s ability to maintain price stability. thanks to the possibility to separate standard and non - standard monetary policy actions, our non - standard measures do not restrict in any way our capacity to tighten the monetary policy stance when necessary. this has been clearly demonstrated by the governing council β s repeated decisions to change interest rates over the course of this year, while maintaining its non - standard monetary policy measures. in turn, our non - standard measures are temporary in both their nature and scope. once the impairments to the transmission process disappear they can be phased out, whereas the standard interest rate policy remains. in fact, many of our non - standard monetary policy measures phase out automatically, for example long - term refinancing operations at fixed | 0 |
ben s bernanke : semiannual monetary policy report to the congress testimony by mr ben s bernanke, chairman of the board of governors of the us federal reserve system, before the committee on banking, housing, and urban affairs, us senate, washington, dc, 19 july 2006. * * * mr. chairman and members of the committee, i am pleased to be here again to present the federal reserve's monetary policy report to the congress. over the period since our february report, the u. s. economy has continued to expand. real gross domestic product ( gdp ) is estimated to have risen at an annual rate of 5. 6 percent in the first quarter of 2006. the available indicators suggest that economic growth has more recently moderated from that quite strong pace, reflecting a gradual cooling of the housing market and other factors that i will discuss. with respect to the labor market, more than 850, 000 jobs were added, on net, to nonfarm payrolls over the first six months of the year, though these gains came at a slower pace in the second quarter than in the first. last month the unemployment rate stood at 4. 6 percent. inflation has been higher than we had anticipated in february, partly as a result of further sharp increases in the prices of energy and other commodities. during the first five months of the year, overall inflation as measured by the price index for personal consumption expenditures averaged 4. 3 percent at an annual rate. over the same period, core inflation - that is, inflation excluding food and energy prices - averaged 2. 6 percent at an annual rate. to address the risk that inflation pressures might remain elevated, the federal open market committee ( fomc ) continued to firm the stance of monetary policy, raising the federal funds rate another 3 / 4 percentage point, to 5 - 1 / 4 percent, in the period since our last report. let me now review the current economic situation and the outlook in a bit more detail, beginning with developments in the real economy and then turning to the inflation situation. i will conclude with some comments on monetary policy. the u. s. economy appears to be in a period of transition. for the past three years or so, economic growth in the united states has been robust. this growth has reflected both the ongoing reemployment of underutilized resources, as the economy recovered from the weakness of earlier in the decade, and the expansion of the economy's underlying productive potential, | the region. saarcfinance : the journey saarcfinance was established in 1998 as a network of our central bank governors and finance secretaries to facilitate dialogue on macroeconomic policies and the exchange of mutual experiences and ideas. saarcfinance received formal recognition in january 2002 at the 11th saarc summit held in kathmandu, nepal. over the last two decades, cooperation between our central banks has expanded and strengthened. the swap facility, which has been the cornerstone of this cooperation, has played a vital role in helping to manage external sector pressures during the pandemic. india has also extended financial support in the form of a number of credit lines to saarc partners. policy interface, technical assistance, capacity building and knowledge exchange have all played a vital role in deepening this engagement. in particular, research and policy driven collaborative studies, and symposiums and seminars such as this one, have facilitated this whole endeavour by bringing about greater appreciation of the issues, challenges and successes experienced by each country and the region as a whole. to cite some fulfilled deliverables under the belt of saarcfinance, the governors β group meetings have formalised our cooperation and dialogue on macroeconomic conditions and policies. the saarcfinance website was developed and launched in 2011. the saarcfinance database went live on may 26, 2016 at the governors'symposium held in mumbai. the first issue of the half - yearly saarcfinance e - newsletter was published in december 2006. during india β s chair in 2020 - 21, the portal called β saarcfinance sync β was created as a network of connectivity among our central banks. the scope and coverage of the scholarship scheme was expanded by including more universities, more central banking related courses and by increasing both the scholarship amounts and the number of scholarships that may be granted in a year. efforts have also been made to revamp the saarcfinance newsletter with a new design and format and by expanding its ambit to topical articles. our virtual seminars kept alive our engagement through the pandemic. the financial inclusion platform, a repository of initiatives taken by saarc central banks to promote financial inclusion and financial literacy, has also facilitated policy making by enriching it with pan - regional perspectives. the measures we have taken to deepen cooperation on capacity building are also noteworthy, especially the collaborative studies on a variety of topics. macroeconomic developments : opportunities and challenges our countries have come together | 0 |
and implementing regulation is being closely coordinated ; β fourth, we have put in place cross - border oversight and contingency planning for the largest and most complex global financial institutions, each of which now have functioning core supervisory colleges and crisis management groups. at the level of the essential regulatory policies to buttress financial stability, let me recall : β that with basel iii, we have a fundamentally revised global bank capital framework which will establish stronger protection through improved risk coverage, more and higher quality capital, a counter - cyclical buffer and a constraint on the build - up of banking sector leverage ; β second, as part of basel iii, we will for the first time have a global liquidity standard for banks that will promote higher liquidity buffers and constrain the maturity mismatching that created the condition for this crisis ; β third, as i will describe later, we are making progress in developing a policy framework and tools to roll back the moral hazard risks posed by institutions that are tbtf ; β fourth, we have eliminated the perverse incentives that pervaded securitization, including the scope for leverage to develop in opaque off - balance sheet vehicles through changes to accounting standards and regulatory and prudential rules ; β fifth, we are establishing central clearing of standardised contracts in the otc derivatives markets and a otc global trade repository is now in operation ; β fifth, we have developed a series of supervisory tools to raise standards of governance, risk management and capital conservation at financial institutions. in this context, let me note that : we are making good progress with accounting standard setters towards expected loss provisioning regime for credit losses, which will dampen procyclicality and align accounting and prudential objectives in this key area ; and principles and standards have been issued to better align compensation systems with prudent risk - taking. the standards give supervisors powers to restrain compensation structures and the level of pay - out to conserve capital in the firm. as we move to raise capital levels, we will encourage supervisors to use these powers. i have been selective in my enumeration. but the point i want to leave with you is that we should not underestimate what has been accomplished. each of the above areas are difficult in their own right. that we have been able to progress global policy development and implementation on such a broad front, while fighting a very serious financial crisis, is something that has never happened before. so, the direction in which we are moving | have the power to require changes to a firm β s structure to improve its resolvability. second, the loss absorption capacity of systemic firms should reflect their role in the global financial system and their potential contribution to systemic risk. even with the best possible resolution tools, the failure of a major global firm would cause significant damage. this reinforces the importance of strengthening the resilience of major global firms. higher loss absorption capacity for sifis than the minimum agreed basel iii standards, especially for the largest globally operating sifis, therefore are at the core of our recommendations. a credible process of peer review will be established to challenge the policy choices made within each jurisdiction and to ensure that measures applied on a country - by - country and sifi - by - sifi basis are consistent and mutually supportive. the third area is strengthened oversight and supervision. senior line supervisors have drawn a frank assessment of weakness leading up to this crisis. these weaknesses were not present in equal amounts everywhere, but there is scope for improvements all around. our recommendations in this area have been developed with the imf. one set is focused on the mandates, independence and resourcing of supervisors. another is on improved methods and practices to proactively identify and address risks. fourth, we will be setting out higher robustness standards for core financial infrastructure. these infrastructures β including for central counterparties β are themselves sources of systemic risk were they to malfunction or fail. this is a complex project which will unfold over a number of years. it will need to be consistently implemented in all major countries to maintain a level playing field, avoid regulatory arbitrage and effectively address the risks to the overall system. the already established fsb framework of country and thematic peer reviewing process will address improved resolution frameworks and more intensive supervision in addition for sifis with the potential to create damages at a global level we will establish a mutual policy review process that will review and challenge the national policies towards major global sifis. ahead of us, other issues still require attention : β so far, most of our attention has been on strengthening the resilience of the banking system, and rightly so. yet, the shadow banking sector remains a large part of our financial systems, less regulated, but nonetheless significant in the credit intermediation and maturity transformation, and subject to runs in damaging ways. β we need to make frameworks for macro - prudential policies and systemwide oversight operational. we will | 1 |
a robust, secure and sustainable financial ecosystem for cyprus. 1 / 5 bis - central bankers'speeches let me now update you on another initiative we actioned at the central bank of cyprus. in our effort to promote the digitalisation of the financial sector, to create an efficient financial ecosystem and to support the economy, the central bank of cyprus issued a tender for the implementation of a remote, digital on - boarding platform for the banking sector. the tender has been completed and we will announce the result in the next few days. the digital platform will be implemented in three phases and will progressively bring benefits to individual and corporates, such as reducing the time to on - board clients, reducing the time needed for their bank transactions and upgrading the quality of service they receive. this will be achieved through each phase as follows : phase 1 is the implementation of the technology for the sector to remotely on - board new customers and remotely update existing customer records via a digitalised process. the digitalization will provide an optimised user - friendly interface without the need for physical presence, which will be customisable by each participating financial institution, in accordance to their needs and customer assessment requirements. the following phases will be : - connectivity and interoperability with utilities, such as electricity and water, and governmental services to obtain accurate customer data for verification purposes, thus speeding up the know your customer ( kyc ) process and ensuring the integrity of data entries, and - information sharing between participating institutions when there is an update of customers'data for anti money laundering ( aml ) / kyc compliance purposes or for account opening, which will reduce the need for further engaging the customer in the process, since the customer would have already been on - boarded. this digital platform will improve the efficiency and openness of banking services, while adhering to relevant european regulations for on - boarding clients. we made sure of that. it will create a comparative advantage for the cyprus banking system. although at first the digital platform will be implemented in the banking sector, my intention is to subsequently scale it to other entities regulated by the central bank of cyprus, such as the payment institutions and electronic money institutions. adoption will continue to be voluntary for each institution. ladies and gentlemen, we are witnessing transformative challenges due to digitalisation and innovation. in order to address these, the eurosystem is taking a multi - dimensional approach, by first, promoting instant payments as the'new norm ', and second, by investigating the possible introduction | most observers don β t expect iron ore prices to be sustained at current high levels. residential construction has been a key source of demand for steel in the chinese economy. it currently accounts for around 15 per cent of total steel use. by our estimates, the quantity of steel used in residential construction has roughly doubled over the past eight years. this has been driven by urbanisation and rising incomes, which in turn drive the demand for newer, larger and higher - quality buildings. while we would not expect growth to continue at such a rapid rate, steel use from this sector is not expected to peak for some years. of course, we should not overlook other sources of demand for steel. an obvious one is the expansion in rail networks. the demand for steel for this purpose looks likely to continue to grow strongly, with much work yet to be done to develop rail links both between and within cities. indeed, the ministry of railways plans to increase spending in 2013, and maintain this at high levels in 2014 and 2015. this is but one example of the still considerable scope for china to add to its infrastructure, which underpins a range of forecasts for chinese steel production to continue to grow for another decade and a half. 5 in short, with a lower rate of trend economic growth, chinese demand for commodities will grow somewhat less rapidly than in the past. but the expectation is that it will still grow strongly for quite some time. and because the chinese economy is so much larger now, even a somewhat slower rate of growth represents a large quantity of new demand for raw materials. to help understand the importance of this point, it is worth looking at the example of steel production, which increased by about 9 per cent in 2011. this was equivalent to an extra 58 mt of steel output. in 2004, the much higher growth rate of about 23 per cent was equivalent to only 50 mt of extra output. the outlook for mining investment in australia despite the potential for further growth in the demand for commodities, from china and other developing economies, we expect commodity prices to gradually decline over the next few years. this reflects the extra supply generated by the substantial amount of mining investment underway in australia, and elsewhere. nevertheless, commodity prices are expected to remain at what are historically high levels for a considerable period. the very high price for bulk commodities has helped to drive mining investment in australia to around 8 per cent of gdp currently, some four times larger than its long - run average. this has led to a significant increase in | 0 |
miroslav singer : regulatory earthquake welcoming remarks by mr miroslav singer, governor of the czech national bank, at the basel consultative group workshop on the impacts of basel iii on emerging market and smaller economies, czech national bank, prague, 26 august 2013. * * * dear participants of the basel consultative group workshop, ladies and gentlemen, let me warmly welcome you to the czech national bank, which is proud to host this workshop on the impacts of basel iii on emerging market and smaller economies. i am very glad that my institution is involved in this workstream because i believe it is important for emerging economies not to be merely passive recipients of the regulatory β earthquake β in the banking industry which is spreading from advanced countries. emerging economies should not and cannot blindly adopt new regulatory measures, as their financial markets have their own specific features. what is a priority for regulators in the most developed economies may not be a priority for regulators in emerging economies. on the other hand, the proposed measures within the basel iii framework may have unintended consequences for these countries, so it is worthwhile either to be prepared for them or to try to mitigate them if they are negative. let me start by underlining what i consider to be the two fundamental difficulties of the current regulatory push. the first one is of a general nature, while the second lies in differences in the relationship between the size of the financial sector and the size of the real economy in the most developed economies and the emerging ones. as to the general difficulty, i strongly believe that the world is becoming more fundamentally uncertain. alignment and coordination of regulatory tools and policies can only take us so far. there is no guarantee that rules and harmonisation will produce the right outcome, that the new rules will be significantly better than previous ones, or that in the fundamentally highly uncertain world the β right β set of rules exists at all. therefore, it is surprising to me that we are so focused on the design of the, hopefully, right set of rules and often also on limiting the space for their diversification. after all, diversification is a tried and tested strategy for dealing with fundamental uncertainties. the push for harmonisation at the expense of space for diversification is leading individual sovereigns to take a different approach, namely, that of insulation and buffering. this itself is not such a bad thing. after all, taking as a benchmark the maritime world, in which the rules of shipbuilding are fundamentally clearer, more certain and more effective than the current | i want to make. even if a central bank is actually independent from the government, it cannot over the long term act in direct contradiction to the preferences of society. for example, if the population is not averse to modest inflation, the central bank will have a hard time imposing an ultra - low - inflation environment, with all the associated costs and benefits, over the long run. the experience of the czech national bank, perhaps, serves as a case in point, although in the opposite direction. in general, czechs despise inflation, and the central bank needs to explain repeatedly why it uses the worldwide standard of a 2 % inflation target instead of targeting literal stability of the cpi level, or 0 % inflation. already many decades before the era of independent monetary policy, in the early 1920s, czechoslovakia pursued a strategy of deliberately strengthening the national currency. this policy resulted in deep deflation, in strong contrast to the hyperinflations seen at that time in neighboring countries ( austria, germany, hungary, and poland ; see sargent, 1982 ). so, it comes as no surprise that the czech national bank is rarely applauded for cutting interest 1 / 2 bis central bankers'speeches rates, while hikes are often welcomed by a majority of the population. an important publicrelations test arose for the bank in 2013, when interest rate cuts proved insufficient to return inflation to the target. inspired partly by one distinguished member of today β s panel, the czech national bank adopted an exchange rate commitment to keep the currency from appreciating. the commitment was terminated a year ago. since then, studies by the imf and academics alike have pointed to large benefits of the policy in terms of reducing unemployment, lifting gdp growth, and preventing deflation. within two years after the commitment β s enactment, the czech republic β at least in part thanks to the commitment β turned from a de facto sick man of europe to one of the fastest - growing economies with the lowest unemployment rate in the entire eu. when i attend conferences and seminars at other central banks, my foreign colleagues often assume that such a policy must have been tremendously popular. indeed, the economics behind it is straightforward, and the resulting boost to peoples β wages is hard to deny. in spite of that, the exchange rate commitment caused the sharpest ever deterioration of public confidence in the czech national bank : from around 75 % to around 50 %. confidence only recovered after the commitment was terminated. these were precisely the times | 0.5 |
amando m tetangco, jr : launch of the albay mayon credit surety fund speech by mr amando m tetangco, jr, governor of the bangko sentral ng pilipinas ( the central bank of the philippines ), at the launch of the albay mayon credit surety fund ( csf ), legaspi city, albay, 12 august 2010. * * * governor joey salceda, distinguished leaders of the various sectors in albay, members of cooperatives in albay, fellow workers in government, special guests, marhay na aga sa indo gabos! good morning. on behalf of the members of the monetary board and my colleagues at the bangko sentral ng pilipinas, we welcome albay province under the leadership of governor salceda to the credit surety fund movement or what we call csf. with today β s launch, the albay mayon credit surety fund becomes the 12th csf to be created since 2008. with csf, entrepreneurs gain access to bank loans even without collaterals. before csf, financially - challenged entrepreneurs source funds from informal lenders at very high interest rates. csf is also a positive for banks. even without collaterals, bank loans made under csf are effectively insured against default by the surety fund set up jointly by the lgus and other partner organizations. you may ask, does it really work? well, based on our experience from the first 11 csfs it works! i will share some csf updates with you : as of 31 july 2010, the eleven ( 11 ) csfs set up ahead of albay are in the provinces of aurora, bohol, cavite, compostela valley, davao del norte, davao oriental, negros occidental, negros oriental and north cotabato as well as in the cities of cebu and iloilo. the combined assets of the cooperatives and ngos who are members of the first eleven ( 11 ) csfs is valued at p8 billion, about p2. 6 billion of which represents equity. these eleven csfs are made up of one hundred seventy - three ( 173 ) cooperatives and three ( 3 ) ngos with total membership of close to 200, 000. the sheer financial muscle and reach of the csfs speak of the tremendous potential of the program. the total trust fund of the eleven ( 11 ) csfs have reached p9 | with these financial institutions. in this regard, the bank employs best international practices on prudential supervision methods to ensure financial system stability. a greater part of the standards introduced was focused on good governance practices and the assessment of fit & proper persons for directors and management of these financial institutions. to date, the reforms have vastly improved the conditions and outlook of the financial sector landscape of the country. in the banking sector, there is marked improvements in asset quality with nonperformining loans as a percent of total assets declining from 2. 3 percent in 2000 to 1. 4 percent in september 2005. return on assets of the banking system, which was negative 1. 1 percent reversed sharply to over 6. 0 percent at the end of september 2005. in addition, the banking system remains liquid at 15. 5 percent of total deposits, compared to 4. 0 percent in 2002. these indicators reflect that the banking system is financially sound and provides a strong foundation for sustained macroeconomic conditions. in the superannuation industry, the positive results over the last few years speak for themselves compared to the bad experiences some 6 - 7 years ago where contributors lost a lot of their savings. the tale is different today. prudent and good management are enabling contributors to benefit from their funds. the declaration of huge profits by posf and nasfund are clear testimony of these reforms. similarly, improvements are continuing to be instilled in the life insurance industry. the bank recognizes the importance of the savings and loans movements in ensuring the economic and social well being of the members who participate in it. this can only be realized in a sustainable way if the operators of the societies continue to ensure that these institutions are managed in a prudent manner and supported by strong governance. improved management of the societies combined with stringent level of supervision by the bank of png has enabled the industry to record improvement in its overall performance. between june 2004 and september 2005 total assets increased by over 50 percent to k312 million. the rugged geographical terrain of the country makes access to financial service difficult for the semiformal, informal and the rural population. financial institutions themselves face these difficulties in reaching out. in our endeavours to bring out financial services to these sectors the bank of papua new guinea in collaboration with the asian development bank, the national government and ausaid established the β wau microbank β under the micro finance project. the pilot project is slowly growing into a viable complementary player in the development of the financial system | 0 |
##jellberg, d. and d. vestin ( 2019 ) β the riksbank β s balance sheet and financial independence β, sveriges riksbank economic review 2019 : 2, sveriges riksbank. nessen, m. and d. vestin ( 2005 ), β average inflation targeting β, journal of money, credit and banking, vol. 37, pp. 837 - 863. posen, a. ( 2020 ), β bank of japan β s policies have been a success β, nikkei asian review, march 6. rogoff, k. ( 1985 ), β the optimal degree of commitment to an intermediate monetary target. β quarterly journal of economics 100, pp. 1169 - 1189. rogoff, k. ( 2017 ), β the curse of cash β. princeton university press. sims, c. ( 2016 ), β fiscal policy, monetary policy and central bank independence β, jackson hole symposium. 24 sou 2007 : 51, β riksbankens finansiella oberoende β ( the riksbank β s financial independence ). sou 2013 : 9, β riksbankens finansiella oberoende och balansrakning β ( the riksbank β s financial independence and balance sheet ). sou 2019 : 46, β a new sveriges riksbank act β. sveriges riksbank ( 2020a ), β monetary policy report β, april. sveriges riksbank ( 2020b ), β consultation response, sou 2019 : 46 β. soderberg, g. ( 2018 ), β what is money and what type of money would an e - krona be? β, sveriges riksbank economic review 2018 : 2, sveriges riksbank. ubide a. ( 2020 ), β euro yearbook β. vredin, a. ( 2019 ), β sarskilt yttrande av kommittens sakkunnige anders vredin β ( special comment by the committee's expert adviser anders vredin ), sou 2019 : 46, pp. 1898 - 1908. 25 | are my own. at the same time, i would like to thank david vestin for his help in writing this speech and petra frid for her help with the diagrams. i would also like to thank mattias erlandsson, jesper hansson, pernilla meyersson, ulf soderstrom, anders vredin, frida fallan, charlotta edler, ann - leena mikiver, cecilia roos - isaksson and marianne sterner for their valuable comments on the speech and elizabeth nilsson, calum mcdonald and gary watson for their assistance translating it into english. sweden have, in recent years, seen a development towards a higher share of market financing for swedish companies. as things look now, there is considerable probability that global interest rates will remain low over a long period of time, and then monetary policy will have to find other ways of working to attain the inflation target than those we are used to, and many of the measures will have consequences for the balance sheet. we need to endeavour to attain a better analysis of how measures that have an effect through the balance sheet affect the economy and become as clear and systematic when we talk about these as we have tried to be with regard to steering interest rates. i intend to begin with a historical retrospective β focusing on the past 30 years β and to describe how monetary policy has developed over time. then i will move on to the challenges that monetary policy has faced and that have led to the use of new tools. this takes me to the international discussions about the monetary policy toolbox, and, in conclusion, i would like to discuss what opportunities and limitations the riksbank inquiry β s proposed new act entails. the development of monetary policy β a retrospective ever since central banks in the modern sense were created, their objective has been clear : to provide the economy with a payment system and with a means of payment and to ensure that the value of these funds remains stable over time. central banks have been able to conduct monetary policy to attain their objectives β price stability and a smoothly functioning payment system β by varying the volume of the means of payment or adjusting terms and conditions in their payment systems. the central banks provide liquidity that enables us to make payments smoothly. gold standard and redeemable money create credibility during the second half of the 19th century, the gold standard was introduced. the meant that the value of a banknote, the means of payment at the time, was directly linked to something | 1 |
linah k mohohlo : the financial crisis β impact on africa remarks by ms linah k mohohlo, governor of the bank of botswana and a member of the african progess panel ( app ), on behalf of the app chairman at the meeting on β the financial crisis : impact on africa β, tunis, tunisia, 12 november 2008. * * * i wish to begin by tendering profound apologies from the chairman of the africa progress panel, mr kofi annan, who is unable to be a part of this meeting due to overlapping commitments. he is particularly disappointed by his inability to attend as today β s meeting is taking place partly as a result of conversations between him and the president of the african development bank ( adb ), dr kaberuka. i have, therefore, been asked and accepted to speak on his behalf and on behalf of the other members of the africa progress panel. 1 for those who may not know, the africa progress panel exists to monitor, encourage and support african countries and their development partners in taking specific steps to advance social, economic and political progress in africa. in this context, this meeting is both significant and timely, and president kaberuka deserves commendation for taking the initiative to get us together. the africa progress panel welcomes, in particular, the collaborative approach being taken by the adb, the african union and the economic commission for africa. this will underpin the meeting β s capacity to provide input for upcoming critical events, such as the g20 meeting that is tenable in washington dc on november 15, and the doha meeting on international finance scheduled for the end of november. to that end, the africa progress panel would be delighted if this meeting resulted in a β tunis communique β which would provide guidance on how the global financial crisis can be managed in a manner supportive of progress in africa and its achievement of the millennium development goals. it is to be hoped that such a communique would recognise the africa progress panel β s main concerns. first, it is worth noting that when crises of the nature currently unfolding occur, it is always the least responsible that are usually the worst affected and the least able to cope. in other words, it is the poor who end up paying the heaviest price for the mess they had no hand in creating. hence we must encourage a stronger and shared understanding, in both africa and in global fora, of how the financial meltdown might affect our continent. at the | mario draghi : atlantic council remarks speech by mr mario draghi, president of the european central bank, at the 2015 atlantic council global citizen award, new york, 1 october 2015. * * * ladies and gentlemen, thank you for honouring me today with this global citizen award. and thank you also for honouring, through me, all those who have worked β and continue to work β to maintain the cohesion of the european union, and to bring its integration process closer to completion. the fate of europe is naturally of immediate interest to its citizens. but it is also indeed of direct relevance to the world at large. the european union and its monetary union are regional projects with global implications. this is firstly due to the size of europe in the global economy. though the euro area has not made a major contribution to world growth over the past seven or eight years, it nonetheless accounts for 17 % of global gdp and 16 % of global trade. when the integrity of the euro area was under threat, so too was global prosperity. christine lagarde, who has chaired many imf gatherings where the first topic under discussion was the euro area, can testify to that. by the same token, the return of the euro area economy to sustained growth, under the impulse of our monetary policy, is good news for everybody, everywhere. to my mind, however, there is another reason why the euro area is crucially relevant to the global economy. it comes from the fact that european integration is by far the most advanced experiment in managing issues that cut across borders, through a combination of international and supranational arrangements. 65 years ago, the founders of the eu decided that we could only achieve results if we were united in facing common problems. at the time, the problem was war and the objective was peace. and it worked. but now, the nature of the many challenges we face shows how right this approach fundamentally was : think of migrants seeking refuge in our countries, the threat of terrorism, the consequences of climate change, the recent succession of financial and economic crises. and these challenges are not specific to europe. they are global. i am certainly not suggesting that the path followed by europe to manage them is replicable at a global level. but the experience we have gathered, the experimentation with supranationalism, the failures and the successes, all carry invaluable information for those involved in managing global issues. it may seem at times that we in europe | 0 |
souls, vol. 18 ( 1 ), p. 85 - 4opportunity, with full employment prominent on the list of demands. that march was an extension of the 1963 march on washington for jobs and freedom, which was commemorated this year for its 60th anniversary. in the following years, mrs. king used her considerable and growing stature to advocate for a broad agenda of economic empowerment, centered around the maximum - employment guarantee that had been law for decades. in 1973, the united states was hit with runaway inflation, this time accompanied by what became a deep recession β stagflation. in 1974, mrs. king joined with elements of the labor movement to create the national committee for full employment / full employment action council. she testified and walked the halls of congress, doing just the kind of arm - twisting and coalition - building that louis martin was known for. that work culminated in 1975, with early versions of what would become the full employment and balanced growth act of 1978, also known as the humphrey - hawkins act. in general terms, the law set economic priorities for the federal government centered on promoting good - paying jobs for all americans. humphreyhawkins established the objectives of maximum employment, stable prices, a balanced budget, and a balance of foreign trade, and it defined them by setting numerical goals. coretta scott king testified in favor of the legislation and its mandate of maximum employment. in practice, across the government, the numerical targets and goals in the humphrey - hawkins act were not treated as legally binding. but one of humphreyhawkins β undeniable legacies is how, as it headed toward likely passage, its employment and inflation objectives were enshrined in the 1977 amendments to the federal reserve act, establishing the dual mandate of maximum employment and stable prices. - 5this began a process in which the federal reserve increasingly tied its policy decisions to statutory goals. starting in 1979, the federal reserve board published the monetary policy report, as required by humphrey - hawkins, and, along with the report β s release, the chair regularly gave testimony on the committee β s plans. in 1979, inflation remained a big challenge, and a lasting period of price stability did not return until the 1990s. in 2007, the fomc began publishing a summary of the economic projections of its participants, including the range of estimates of the longer - run unemployment rate, an indication of their views of maximum employment. subsequently, the fomc responded forcefully to the deep recession caused by | target, a flexible exchange rate and a debt to gross domestic product ( gdp ) ratio that trends downward to sixty percent. we no longer have conceptual frameworks for economic management for very small economies. that is the market that we at central bank of barbados are well positioned to claim as our own. we are already out of the boxes. we have a framework for anchoring our exchange rate by the use of fiscal policy to contain aggregate spending and imports. it is, as far as i know, unique in the world. other countries are doing what we do, and like us have kept up the value of their currencies. but they are doing it instinctively, often because they have vast natural resources and small populations. we are the only ones who have a theory and a way to know when we must adjust and by how much. and this is just the beginning. we are working on a tool to measure whether our fiscal policies are sustainable, building on the work we did with colleagues across the region, in the book we published last year. from this work we may derive fiscal rules that make sense for small open economies that are credible and can be implemented. also ongoing is analysis of investment and the current account of the balance of payments ( bop ), intended to demonstrate that the conventional indicators may give misleading signals. bis central bankers β speeches beyond this, we must venture out into the fields of competition and competition policy, financial stability analysis, finance and development, and payments, to name a random few, in search of policies and guidelines that are appropriate for small very open economies. i say this is a golden opportunity for us at cbb to take ownership of policy design for economies like our own, worldwide. nobody else is doing this work. this can become our trademark, and when it does, we will attract talent from around the world to the ars, people with an interest in economic and financial management of svoes. that is the promise of our future. we will go forward in concert with colleagues from across the region. our research agenda will be reflected in the other conferences hosted in the region, and in the research that is undertaken in our universities and reflected in our journals. we have the potential to be a fount of ideas that can spread across the world, because we are coming up with policies that work. we have every reason to look forward to the discussion and debate of the next few days. at the end of our sessions i am confident we would all have gained insight, and | 0 |
ranee jayamaha : budget 2007 β a path ahead speech by dr ranee jayamaha, deputy governor of the central bank of sri lanka, at a seminar organised by the society for international development, colombo, 21 november 2006. * * * let me first elucidate the key themes underlying the budget and identify the strategies and future directions as announced in the budget. i will then try to outline the macro - economic policy framework highlighted in the budget focusing on the need for closer coordination. underlying themes first, the govt. intends to achieve sustainable development, in particular, a growth around 8 - 10 % in the medium term by focusing on productivity increases through enhancement of infrastructure investments, provision of support facilities, diversion of funds, where possible, from recurrent expenditure to capital expenditure and clearing any administrative impediments. second, the 2007 budget attempts to reduce income disparities in different regions and provinces by improving island - wide infrastructure facilities which includes roads, rail roads, port services, airports, telecommunication, etc. and address poverty and unemployment issues. third, the budget aims to improve the service economy to promote sri lanka as a trading and service hub in south asia. accordingly, sustainable development through investments in infrastructure ( rs 735 bn ), the attainment of an equitable growth and improving the service economy are three key themes underlying the 2007 budget. the strategy and way forward or the path ahead the year 2007 budget sets out a 10 - year horizon within which a medium term plan is presented for the period 2006 - 2009. therefore, the budget has to be viewed as a forward looking medium to long term strategy. the sustainable development strategy rests on the following : regional and provincial development with focus on rural roads, housing, electricity, water supply and livelihood development ; human resource development programmes ; and other sectoral programmes. the infrastructure development will expand economic activity, address capacity constraints and bottlenecks. to sustain growth momentum, it is planned to increase investment / gdp ratio to about 30 %. diversification of exports, relocation of export ventures and provision of support services will address regional disparities and unemployment issues. the budget also plans to improve human resource skills and enable youth to further their career paths. the skills imbalance will be addressed through the university curricula and the universities will be persuaded to improve research skills and talents of undergraduates to cater to the demands made by the business community. through infrastructure improvements, such as ports, airports and financial services, it is proposed | the regulatory challenges which have to be addressed by the regulators. in meeting these challenges, the local banks must make best use of the existing resources to minimize the cost of full compliance. they can build on their existing data bases and leverage on the default data available in institutions such as the credit information bureau. they can benefit from data pooling within the industry. all these resources must be harnessed. it is important that the banks do not lose sight of the long term benefits of basle ii of better capital allocation and consequently, better pricing, because they are embroiled in the details necessary to meet the deadline. the ultimate objective is financial stability. i am sure that this dialogue that we have initiated today will result in a fruitful exchange of views on this important subject and will help to consolidate our implementation plans on this long journey that we have all commenced. i therefore wish you all a very stimulating and useful discussion and a very successful seminar. thank you. | 0.5 |
ahead and strengthen the functioning and resilience of the international financial system. a reform agenda for this system will need to comprise many elements. i would like to reiterate three principal elements that i consider fundamental. β’ first, short - termism β that is to say, the excessive focus on short - term returns β has to be addressed. as we have seen, modern financial systems have shown a particular preference for instruments and intermediaries that have promised significant returns in the short term. short - termism can lead to the misjudgement of underlying risk. it can also encourage excessive risk - taking on the basis of relatively small amounts of capital. it is therefore essential to establish the right incentives for market participants, including the use of appropriate internal compensation schemes. β’ second, it is essential that transparency be increased in various components of the global financial system β for financial instruments, markets and institutions. transparency is a key prerequisite for the efficient functioning of markets, and one that prevents markets from overreacting, both on the upside and on the downside. it can thereby help to reduce the scope for β herding behaviour β and contagion. to give two examples, regulators need to tighten up disclosure requirements for markets in which structured financial products are traded and strengthen reporting requirements for unregulated institutions which are relevant for systemic stability. β’ third, it is important to reduce the pro - cyclicality of the financial system, namely its potential to amplify business cycle fluctuations and trigger financial instability. drivers of pro - cyclical behaviour need to be addressed, to restrain financial institutions β excessive risk - taking in upturns and to discourage their excessive conservatism when credit to companies and households is most needed. elements of financial regulation, such as capital requirements, provisioning rules and valuation standards, can act as contributing factors in this regard. a considerable amount of work is under way with a view to addressing the issue of pro - cyclicality, with the basel committee on banking supervision having primary competence in this field and the financial stability forum playing an important coordinating role. these three reform elements are of particular relevance to the functioning and resilience of the international financial system. taken together, these changes will foster greater β discipline β in the system. greater discipline means a reduced likelihood of unwarranted fluctuations, a more appropriate assessment of risks and a better balance between short and long - term investment horizons. in my view, the meetings preparatory to the g20 | jean - claude trichet : 18th frankfurt european banking congress statement by mr jean - claude trichet, president of the ecb, at the 18th frankfurt european banking congress, frankfurt am main, 21 november 2008. * * * ladies and gentlemen, this year β s european banking congress takes place at a very challenging point in time. today β s event is therefore a particularly important one. it is a pleasure to be here amid so many distinguished participants and to be joined on this panel by my central bank colleagues from brazil and the united arab emirates. we are at a critical juncture as far as the set - up and functioning of the international financial system is concerned. the current financial crisis was triggered by a widespread and substantial undervaluation of risk. when the crisis erupted in august 2007, it was at first a systemic threat to the liquidity of the financial system, which mainly affected advanced economies. in mid - september of this year the crisis deteriorated very significantly and turned into a systemic threat to the solvency of important parts of the global financial system. it is no longer limited to advanced economies and is instead also affecting emerging economies. in addition, it has spilled over from the financial sphere to the real economy. global challenges call for global responses. policy - makers across the globe have responded and are taking appropriate action to contain and alleviate the crisis. central banks are playing a pivotal role in this regard, providing the necessary liquidity β sometimes in ways that were scarcely imaginable up until a few months ago β in order to ensure that financial markets and institutions can continue to function. as far as the ecb is concerned, i would like to point out once again that we have acted decisively from the very beginning of the turmoil in august of last year. at that time, when the threat to the liquidity of the financial system first emerged, we provided the system with no less than eur 95 billion of liquidity within a few hours. later that year, the ecb also began to supply liquidity to european counterparties in us dollars through swap arrangements which we established with the federal reserve. since october of this year, we have been granting full allotments in our monetary operations. these are only some of the key measures taken by the ecb in order to support financial markets, and you see from the design of these measures that some of them are literally without precedent. * * * at the same time as we are dealing with the current crisis, we also need to look | 1 |
inflation expectations mostly stand around 2 per cent. nonetheless, some indicators remain elevated and need to be monitored closely. risk assessment the risks to economic growth remain tilted to the downside. growth could be lower if the effects of monetary policy turn out stronger than expected. a weaker world economy would also weigh on growth. russia's unjustified war against ukraine and the 2 / 4 bis - central bankers'speeches tragic conflict triggered by the terrorist attacks in israel are key sources of geopolitical risk. this may result in firms and households becoming less confident and more uncertain about the future, and dampen growth further. conversely, growth could be higher than expected if the still resilient labour market and rising real incomes mean that people and businesses become more confident and spend more, or the world economy grows more strongly than expected. upside risks to inflation could come from higher energy and food costs. the heightened geopolitical tensions could drive up energy prices in the near term, while making the medium - term outlook more uncertain. extreme weather, and the unfolding climate crisis more broadly, could push food prices up by more than expected. a lasting rise in inflation expectations above our target, or higher than anticipated increases in wages or profit margins, could also drive inflation higher, including over the medium term. by contrast, weaker demand β for example owing to a stronger transmission of monetary policy or a worsening of the economic environment in the rest of the world amid greater geopolitical risks β would ease price pressures, especially over the medium term. financial and monetary conditions longer - term interest rates have risen markedly since our last meeting, reflecting strong increases in other major economies. our monetary policy continues to transmit strongly into broader financing conditions. funding has become more expensive for banks, and interest rates for business loans and mortgages rose again in august, to 5. 0 per cent and 3. 9 per cent respectively. higher borrowing rates, with the associated cuts in investment plans and house purchases, led to a further sharp drop in credit demand in the third quarter, as reported in our latest bank lending survey. moreover, credit standards for loans to firms and households tightened further. banks are becoming more concerned about the risks faced by their customers and are less willing to take on risks themselves. against this background, credit dynamics have weakened further. the annual growth rate of loans to firms has dropped sharply, from 2. 2 per cent in july to 0. 7 per cent in august and 0. 2 per cent in september. | loans to households remained subdued, with the growth rate slowing to 1. 0 per cent in august and 0. 8 per cent in september. amid weak lending and the reduction in the eurosystem balance sheet, the annual growth rate of m3 fell to - 1. 3 per cent in august β the lowest level recorded since the start of the euro β and still stood at - 1. 2 per cent in september. conclusion the governing council today decided to keep the three key ecb interest rates unchanged. the incoming information has broadly confirmed our previous assessment of the medium - term inflation outlook. inflation is still expected to stay too high for too long, and domestic price pressures remain strong. at the same time, inflation dropped markedly in september, including due to strong base effects, and most measures of underlying inflation have continued to ease. our past interest rate increases continue to be transmitted forcefully into financing conditions. this is increasingly dampening demand and thereby helps push down inflation. 3 / 4 bis - central bankers'speeches we are determined to ensure that inflation returns to our two per cent medium - term target in a timely manner. based on our current assessment, we consider that rates are at levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to our target. our future decisions will ensure that the key ecb interest rates will be set at sufficiently restrictive levels for as long as necessary to ensure such a timely return. we will continue to follow a data - dependent approach to determining the appropriate level and duration of restriction. in any case, we stand ready to adjust all of our instruments within our mandate to ensure that inflation returns to our medium - term target and to preserve the smooth functioning of monetary policy transmission. we are now ready to take your questions. 4 / 4 bis - central bankers'speeches | 1 |
determining growth. over the last decade, the diverging trend in hourly labour productivity growth has been the main reason explaining the growth differential between the euro area and the us. during the 1980 β s and the first half of the 1990s, hourly labour productivity in the euro area grew on average by 2. 4 %, then it decelerated to 1. 3 % between 1996 and 2006. by contrast, us hourly labour productivity growth rose from 1. 3 % to 2. 1 % over the same period. at the sectoral level, the gap in labour productivity growth between the euro area and the us has been mainly driven by some market service sectors intensively using information and communication technologies ( icts ) namely the wholesale and retail trade sectors as well as the financial sectors. in contrast to the us, in these two sectors, labour productivity growth significantly decelerated in the euro area over the last 15 years. in the wholesale and retail trade sectors, hourly labour productivity significantly accelerated in the us from 0. 7 % to 2. 6 % over the periods 1980 - 1995 and 1996 - 2004, while at the same time it decelerated in the euro area from 2. 3 % to 1. 3 %. in the financial sectors, over the same periods, hourly labour productivity growth has also accelerated in the us and has been roughly 4 times higher than the growth rate observed in the euro area over the period 1996 - 2004. several causes have been mentioned to explain this downward trend in the euro area. specific policies aiming at increasing employment particularly in the unskilled segment of the labour market may have contributed to the observed slowdown in labour productivity growth. however, this apparent trade - off between labour utilisation and productivity is likely to be a temporary phenomenon that should progressively fade, when the economy reaches a higher β equilibrium β labour / output ratio. there is another major reason that explains the big difference in the rate of labour productivity growth in europe compared with the us, which in my view is a major policy issue, namely the fact that the european economy, being more inflexible, does not fully take oecd employment outlook. data for 2006 are partly estimates. there is in particular considerable scope to raise the employment rate of young people and further reform needs to be undertaken to achieve the more ambitious long - term objective of a 75 % overall employment rate. advantage of all the opportunities offered by new technologies, including ict, and by the new division of labour initiated by globalisation | achieved anchoring of inflation expectations over the last eight years. 7 this in turn has contributed to low macroeconomic volatility in the euro area. 8 when inflation expectations are well anchored, temporary deviations of inflation from levels consistent with the central bank β s inflation objective are not expected to be long - lasting. as a consequence, macroeconomic shocks will have a smaller impact on inflation expectations and the evolution of inflation over time will be less persistent, with the result that inflation and economic activity will be more stable. it is certainly true that other central banks which put less emphasis on monetary analysis have also achieved low and stable inflation expectations and low macroeconomic volatility. however, it is important to bear in mind that the uncertainty faced by the ecb has been much higher than that faced by other more established central banks. our success in maintaining low and stable inflation expectations in a rather adverse macroeconomic environment is also due to the commitment to be continuously alert upon monetary trends built into our strategy by the money pillar. this brings me to the second question, on the criticism that our policy actions have not corresponded to the announced role of money in our strategy. i know that this objection is sometimes put forward by critical observers who argue that there is no direct correlation between our policy rate decisions and monetary developments. this kind of criticism does not discomfort me, because the relevance of the monetary pillar can anyway not be judged based on the simple bivariate correlation of policy rates with the growth rate of headline m3 ( or any other single monetary indicator ). first, such a simplistic approach cannot reflect the crucial role of cross - checking the information derived from the economic and the monetary analyses that is a key feature of our monetary policy strategy. second, it overlooks the broad - based and by no means mechanical character of the ecb β s approach to monetary analysis, which jurgen has also stressed yesterday. allow me to elaborate on the second point. monetary data are contaminated by noise at higher frequencies blurring the signal from their low - frequency movements which provide information about medium to longer - run inflation trends. the ecb β s monetary analysis aims to extract this low - frequency signal by assessing a large range of monetary indicators based on statistical tools and judgement in real time. since the signal extracted from the monetary analysis refers to the low frequency it will not change much from month to month. as a consequence, it will, by its very nature, normally not be closely correlated with individual policy moves, but will rather | 0.5 |
on a small set of elementary series, even if they are well known and widely used, invariably produce much poorer results in terms of smoothness and reliability than those obtained by carefully constructing the β common factors β as is done with β¬ - coin ( see figure 4 ). figure 4 : β cherry picking β the second advantage of using many series in a formal way to construct β¬ - coin is the possibility of assessing in continuous time the impact of the news contained in any of these series on the indicator. this can best be seen by referring to a real episode, such as, for example, the recent turmoil in monetary and financial markets and the surge in uncertainty it has produced. since most forecasts are typically derived from quarterly macro - econometric models, they are still necessarily based on information gathered to a very large extent ahead of the recent financial crisis. recent news are typically incorporated in a judgmental way and can usually be reflected in the forecast only as β downside risks β, and even then only rarely with probabilities clearly spelled - out, for instance with the help of a fan - chart. with the information at hand, almost all forecasters have suggested in the last few weeks that the short - term economic outlook for the euro area remains broadly in line with the picture we had before the summer, i. e. the cyclical expansion will continue in the second half of 2007 at a pace only slightly lower than what was expected in the spring. however, an issue worth investigating could be whether the initial conditions underlying these projections have changed or not, perhaps reflecting effects from the recent financial developments. what information does β¬ - coin contain in this respect? first of all it confirms the overall positive outlook pointing to an underlying growth rate still between 2. 5 and 3 per cent for the euro area as a whole. the modest increase in june and july, that interrupted a weakening trend that started in the first half of the year, was followed in august by a return to a lower growth rate. however, the underlying growth is still higher than what was observed until the first quarter of 2006. to assess the impact of the august news on the state of the euro - area economy, we compared the estimate of β¬ - coin obtained at the end of august with an alternative estimate obtained assuming that we had no august data concerning survey expectations and financial markets, thus replacing the actual data with their forecasts, as it is the case for those components of β¬ - coin that are not yet available when the | by the pension funds during the accumulation phase and the end - of - period capital ) are taxed. in contrast, in eet systems ( exempt, exempt, taxed ) the first two components are tax - exempt while the end - of - period capital is taxed. the comparison between the two systems depends crucially on the tax rates applied in each stage. the main advantage of the italian ett system is represented by the very low tax rate on the end - of - period capital ( see cesari, grande and panetta, 2007 ). see cesari, grande and panetta ( 2007 ). there is nonetheless ample room for improvement, as the percentage of enrolled workers remains relatively low. in fact, at the end of june membership rates were equal to only 22 per cent for private sector employees and 28 per cent for occupational funds. as a result of the low membership rates and the short life of the system, the pool of assets managed by pension funds is still very small : in 2005 it amounted to 3 per cent of gdp, against an oecd average of 88 per cent. since then it is likely to have increased by only a few percentage points. in the netherlands, the leading country in europe, pension fund assets are 125 per cent of gdp. 16 the lag that distinguishes our country primarily reflects insufficient information and awareness about the need to supplement public pensions with private schemes, but it is also due to workers β low levels of financial education. the lack of solid trust in the functioning of financial markets is also a factor. but how can we stimulate the growth of this sector? one critical issue is information. despite the efforts recently made by the government, surveys show that italian workers are still not adequately informed on their future pensions. it is therefore crucial to provide workers with additional information about their accrued and perspective pension rights, both in the public and in the private pillar. an example of the benefits of transparent and clear information on the individual rights stemming from the public system is offered by the swedish experience, where every year workers receive information on their past contributions and the rates of return granted by the system on such contributions. valuable additional information could include estimates of the final pension benefits under various macroeconomic and demographic scenarios. another issue that deserves closer examination is the potential benefit, in a phase of transition of the public pillar towards a dc system, of expanding the different types of guarantees offered on the performance of pension funds. in the current framework, pension funds are required by | 0.5 |
than halved since 2013. this clearly demonstrates that, in europe, reforms do have a positive impact. 2. our monetary policy is able to combine clarity and flexibility. let me turn to the consequences for our monetary policy : to deal with uncertainty, we have to combine clarity and flexibility, as we did in our december β s chained guidance. i will come back to this. in the present context, we should favour state - dependent analysis over time - dependent variables. in other words, we should pay close attention to the economic data in coming quarters and in particular we need to assess the extent to which the recent deceleration in growth and the current drop in inflation are temporary phenomenon or more structural in nature : regarding growth, the current slowdown in the euro area is partly driven by temporary factors, such as disruptions causing contraction in the german manufacturing output, and the impact of the yellow vest movement in france. if these drags fade away, and if geopolitical risks recede, gdp growth could rebound from next spring or summer. indeed, consumption remains solid and continues to be supported by rising wage growth especially in the core countries. but should a downturn last beyond that horizon β a less plausible scenario but one which cannot be excluded β we would be ready to adapt our monetary policy guidance. 3 / 6 bis central bankers'speeches regarding inflation, the fall in oil prices will have a significant downward impact in 2019. after peaking at 2. 2 % in october 2018, euro area headline inflation currently stands at 1. 4 % and will fall to around 1 % in some months of this year. beyond these temporary fluctuations, the key trend to watch is core inflation. the improvement in the labour market has already led to a substantial acceleration in wage inflation. however, it has not yet been passed through to core price inflation. though we are recording some early signals of a price acceleration β such as the services component of the hicp estimated at 1. 6 % 6 in january β, we observe a weakening in the pass - through from wages to prices : here also, is this weakening temporary β due to an increased time lag β or attributable to more structural factors? we have to consider this issue carefully, which is also currently at stake in the united states. in this context, i still believe that the gradual normalisation of our monetary policy is desirable. our chained guidance of last december has been less noticed than the successful end to our net asset purchases. but it | ; national association for business economics, vol. 49 ( 2 ), pp. 74 β 84, april. www. perjacobsson. org / lectures / 101213. pdf 4 see kydland, f. and e. prescott ( 1977 ) β rules rather than discretion : the inconsistency of optimal plans β, journal of political economy, 85 ( 3 ), pp. 473 β 92 and alesina, a. and l. summers ( 1993 ) β central bank independence and macroeconomic performance : some comparative evidence β, journal of money, credit and banking 25 ( 2 ), pp. 151 β 162. 5 see nicholas bloom ( 2009 ), β the impact of uncertainty shock β, econometrica, volume77, issue3, pages 623 β 6 the final version is scheduled for publication on 22 february 2019. 7 press conference given by mario draghi, 24 january 2019. 8 β ecb monetary policy and the resilience of the eurozone β, columbia university, new york, 19 april 2017, speech by francois villeroy de galhau, governor of the banque de france. 9 address given by mario soares on the european community of the future ( lisbon, 19 october 1990 ). 6 / 6 bis central bankers'speeches | 1 |
ben s bernanke : the federal reserve β looking back, looking forward speech by mr ben s bernanke, chairman of the board of governors of the us federal reserve system, at the annual meeting of the american economic association, philadelphia, pennsylvania, 3 january 2014. * * * in less than a month my term as fed chairman will end. needless to say, my tenure has been eventful β for the federal reserve, for the country, and for me personally. i thought it appropriate today to reflect on some accomplishments of the past eight years, as well as some uncompleted tasks. i will briefly cover three areas in my remarks : ( 1 ) the federal reserve β s commitment to transparency and accountability, ( 2 ) financial stability and financial reform, and ( 3 ) monetary policy. i will close by discussing the prospects for the u. s. and global economies. transparency and accountability fostering transparency and accountability at the federal reserve was one of my principal objectives when i became chairman in february 2006. i had long advocated increased transparency and, in particular, a more explicit policy framework as ways to make monetary policy more predictable and more effective. our efforts to enhance transparency and communication have indeed made monetary policy more effective, but, as i β ll discuss, these steps have proved important in other spheres as well. when i began my term i expected to build on the monetary policy framework i had inherited from paul volcker and alan greenspan. my predecessors had solidified the fed β s commitment to low and stable inflation as a foundation of broader economic stability, and they gradually increased the transparency of monetary policy deliberations and plans. for example, chairman volcker introduced a money - targeting framework to help guide the fed β s attack on high inflation in the early 1980s, and the practice of issuing a statement after each meeting of the federal open market committee ( fomc ) began under chairman greenspan. i believed that a still more transparent approach would make monetary policy even more effective and further strengthen the fed β s institutional credibility. in particular, as an academic i had written favorably about the flexible inflation - targeting approach used by the bank of england and a number of other central banks. by making public considerable information about policy goals and strategies, together with their economic forecasts, these central banks provided a clear framework to help the public and market participants understand and anticipate policy actions. the provision of numerical goals and policy plans also helped make these central banks more accountable for | the road to recovery, we will wind down these lending facilities at such time as we determine the circumstances we confront are no longer unusual or exigent. not only is the federal reserve using its full range of tools to support the economy through this challenging time, but our policies will also help ensure that the rebound in activity when it commences will be as robust as possible. that said, it is important to note that the fed's statutory authority grants us lending powers, not spending powers. the fed is not authorized to grant money to particular beneficiaries, to meet the payroll expenses of small businesses, or to underwrite the unemployment benefits of displaced workers. programs to support such worthy goals reside squarely in the domain of fiscal policy. the fed can only make loans to solvent entities with the expectation the loans will be paid back. direct fiscal support for the economy is 2 / 3 bis central bankers'speeches thus also essential to sustain economic activity and complement what monetary policy cannot accomplish on its own. direct fiscal support can make a critical difference, not just in helping families and businesses stay afloat in a time of need, but also in sustaining the productive capacity of the economy after we emerge from this downturn. fortunately, the fiscal policy response in the united states to the coronavirus shock has been both robust and timely. in four pieces of legislation passed in just over two months, the congress has voted $ 2. 9 trillion in coronavirus relief, about 14 percent of gdp. this total includes nearly $ 700 billion for the paycheck protection program to support worker retention at small companies and more than $ 450 billion for the u. s. treasury to provide first - loss equity funding for the fed credit facilities that i discussed earlier. while the scale, scope, and timing of the monetary and fiscal policy responses to the coronavirus pandemic are unprecedented and will certainly cushion the blow the shock inflicts on the economy, the shock is severe. depending on the course the virus takes and the depth and duration of the downturn it causes, additional support from both monetary and fiscal policies may be called for. concluding remarks the coronavirus pandemic poses the most serious threat to maximum employment and, potentially, to price stability that the united states has faced in our lifetimes. there is much that policymakers β and epidemiologists β simply do not know right now about the potential course that the virus, and thus the economy, will take. but there is one thing | 0.5 |
), β social relationships and health β, science, vol 241, pp. 540545. klingenberg, c ( 2017 ), β industry 4. 0 : what makes it a revolution β, presented in euroma conference. kurzweil, r ( 2005 ), the singularity is near : when humans transcend biology, viking. lawrence, m, roberts, c and king, l ( 2017 ), β managing automation : employment, inequality and ethics in the digital age β, ippr commission on economic justice, uk. lieberman, m ( 2013 ), social : why our brains are wired to connect, crown. manyika, j, lund, s, chui, m, bughin, j, woetzel, j, batra, p, ko, r and sanghvi, s ( 2017 ), β jobs lost, jobs gained : workforce transitions in a time of automation β, mckinsey global institute, usa. michalko, m ( 2011 ), creative thinkering : putting your imagination to work, new world library. all speeches are available online at www. bankofengland. co. uk / speeches mokyr, r ( 2011 ), β the rate and direction of invention in the british industrial revolution : incentives and institutions β, nber working paper series, no. 16993. murphy, a ( 2018 ), β how did organisations adapt to change in the 18th and 19th century : lessons from the bank of england archives β¦ β, bank underground, 7 november 2018. north, d ( 1991 ), β institutions β, the journal of economic perspectives, vol. 5, no. 1, pp. 97 - 112. parliamentary office of science & technology ( 2016 ), β automation and the workforce β, houses of parliament, no. 534, uk. phelps, e ( 2013 ), mass flourishing : how grassroots innovation created jobs, challenge, and change, princeton university press. pinker, s ( 2018 ), enlightenment now : the case for reason, science, humanism, and progress, penguin books limited. powers, s, van schaik, c and lehmann, l ( 2016 ), β how institutions shaped the last major evolutionary transition to large - scale human societies β, philosophical transactions of the royal society b : biological sciences, vol. 371 ( 1687 ). rosling, h ( 2018 ), factfulness : ten reasons we β re wrong | century brought a further wave of innovation, with digitisation, computing and the internet generating a transformation of business and society. each of these inventions involved a creative leap of imagination. as adoption spread, each became in time a gpt, applicable across sectors, industries and geographies. like fire, these gpts then transformed industries, jobs and lifestyles in ways inconceivable to their creators. in each industrial revolution, a first imaginative step resulted in a great leap forward for societal living standards, a mass flourishing. 18 in that sense the three industrial revolutions of the past three centuries fit the longer - run evolutionary arc of humankind. it is creativity and imagination, fuelled by big brains and nourished by cooked meals, that set humans on their jet - propelled evolutionary path. the rapid, ideas - fuelled, progress made by societies over recent centuries is a continuation of that ever - upward evolutionary arc. except, that is, for one small detail. the evolutionary arc of humans has not been ever - upward. the historical path has not been a north - bound ascent. while human ingenuity and creativity have been ever - haldane ( 2018a ). mokyr ( 2011 ). all speeches are available online at www. bankofengland. co. uk / speeches present, economies and societies have in fact spent protracted periods crabbing sideways. prior to the first industrial revolution, living standards appear to have been essentially static for several thousand years. 19 living standards in glasgow in 1750 were little different than their ancestors constructing hadrian β s wall. levels of poverty, nutrition, infant mortality, height and longevity would also have been indistinguishable. prior to the industrial revolution, societies and economies stood still, financially and physiologically. there was flat - lining, not mass flourishing. societal progress was far from being a social norm. what explains this great pause in living standards? it was not through lack of ideas and imagination. people did not suddenly make like monkeys for millennia. to the contrary, innovation came thick and fast in the pre - industrial era, from the windmill in the 12th century to the mechanical clock in the 13th, from the cannon in the 14th to the printing press in the 15th, from the postal service in the 16th to the telescope in the 17th. 20 it is clear pre - industrial innovation played an important role in fuelling subsequent growth. shakespeare β s imaginative genius would not have been sparked without guttenberg β | 1 |
official opening of absa bank botswana limited shakawe branch keynote speech by moses d pelaelo governor, bank of botswana february 3, 2022 director of ceremonies, distinguished ladies and gentlemen, it is a great pleasure and, indeed, an honour for me to have been invited to be part of this evening β s ceremony marking the of cial opening and launch of the shakawe branch of absa bank botswana limited ( absa bank ). for the reasons that should be obvious to many, this is an invitation that the head of banking supervision department, mr godfrey ngidi and i could not decline. therefore, my colleagues and i would like to thank you, the managing director and, through you, the board of absa bank for inviting us to join you and the people of shakawe on the occasion of the of cial opening of this beautiful branch. director of ceremonies, let me indicate, at the outset, that today β s event, is of major signi cance in a myriad of ways. first and foremost, i can imagine that it responds to a major aspiration of the people of the north west region of botswana, the okavango sub - district in particular, which has been and continues to be comparatively underbanked, even if acknowledging that absa bank has three branches and eight atms in the north west district ; second, the opportunity to project the potential fi fi fi fi fi economic bene ts emanating from broadening of access to nancial services in this region and, third and more broadly, what absa has done is aligned to public policy objectives of growing a more inclusive nancial sector. as many of us would be aware, the okavango region is an important hub for botswana tourism activity, encompassing linkages with the global economy, with wide geographical coverage and, therefore, large distances between any concentration of facilities and service points. furthermore, it has the potential and conditions to make leaps in economic activity ; thus, in some way contributing to the rates of economic growth needed to propel the botswana economy to highincome status by 2036. in the circumstances, any improvement in the provision of nancial services ( number and channels of delivery ) becomes a key ingredient in unlocking or increasing the economic value that is inherent in the unique features of the okavango region. let me also acknowledge that, indeed, as an important infrastructure development, the mohembo bridge would similarly have a large positive impact on | , there are issues of digital currencies and block chain technologies. while distributed ledger technologies, albeit not yet mature, offer hope and opportunities for enhancing the efficiency and resilience of the payment infrastructure, for central banks, digital currencies are not yet convincing and, in my view, rightly remain an area for other stakeholders. this is not to suggest that these developments are not keenly watched and monitored. the bank has also entrenched a transparent and, i would say, effective policy framework for management of inflation and related expectations that has so far been successful. since 2013, inflation has been within and, at times, even below the objective range of 3 β 6 percent. in this environment, there is scope for affordable access to financial resources, their productive deployment and greater opportunities for generating real returns. the transparency of the exchange rate framework and absence of exchange controls removes uncertainty and encourages use of various platforms for financial inclusion, as well as informed decision - making and planning by economic agents. effective supervision of the banking sector and oversight of the payments system and related infrastructure also contributes to financial inclusion. in particular, this is to the extent that policy, legislative and regulatory developments embrace advances in the provision of financial services, new technology and payments methods, while ensuring that integrity, resilience and stability of the financial system is maintained. in this regard, there is continuing patronage and growth in usage of the financial sector and related services, as evidenced by the sustained expansion of financial services and increasing share in gdp. in concluding, distinguished guests, ladies and gentlemen, a stable macroeconomic environment, characterised by low and predictable levels of inflation, safe, sound and inclusive financial sector, supportive regulatory environment and well - informed consumers of financial services is positive for wealth creation and preservation, as well as inclusive growth. i thank you for your kind attention. | 0.5 |
##ntial instruments might not be needed in the direction of tightening, as domestic credit expansion will weaken. distinguished guests, i would like to underscore once more that as the central bank, our primary objective is to achieve and maintain price stability, and that as stipulated by article 4 of the cbrt law, we are responsible for β taking precautions for enhancing the stability in the financial system and taking regulatory measures with respect to money and foreign exchange markets β. therefore, we will continue to act with due diligence in terms of financial stability in the upcoming period as well. however, the central bank is not the only entity in charge of financial stability. other public authorities such as the ministry of finance, undersecretariat of treasury, capital markets board of turkey, and primarily the banking regulation and supervision agency, also have significant authority and policy instruments in this regard. it is essential that in the period we are going through, all policy instruments in hand should be deployed in a coordinated manner for the establishment of a sounder and more stable financial structure. to close my remarks, i would once again like to thank everyone who has contributed to the organization of this event. | ##ra and not permitting households to use fx - denominated or fx - indexed loans encourage the private sector to borrow in turkish lira. the foreign exchange net general position arrangement for the banking sector and allowing the issuance of tl bonds by banks in a controlled manner can also be considered in this context. the fourth and last pillar of the policy framework is to promote the risk management concept. in this respect, steps to be taken regarding financial training assume importance for the smooth functioning of the system. we welcome the efforts towards increased recognition of turkish derivatives exchange, more diversified products and more widespread use of forward transactions. in addition, we believe that the floating exchange rate regime that has been in implementation since 2001 has significantly contributed to the embedding of awareness of exchange rate risk. in short, given the current conjuncture, the avoidance of excessive borrowing both by the public and private sector ; preference of longer maturities in all borrowings, opting to borrow in tl as much as possible and managing risks efficiently will considerably strengthen the resilience of turkish economy against external shocks. the monetary policy adopted by the central bank is composed in a way to make price stability and financial stability complementary. in this context, i would like to evaluate how the cbrt will use policy tools in the upcoming period within the framework of possible scenarios provided in the inflation reports. as also demonstrated on the slide, the current conjuncture supports the cbrt β s stance of keeping policy rates constant for some time, and at low levels for a long period. on the other hand, developments in the aggregate demand composition necessitated that instruments other than the policy rate be brought to pre - crisis levels. in this respect, we have largely completed the exit strategy measures that we announced in april 2010. in the october inflation report, we stated that our baseline scenario was based on an outlook where domestic demand is stronger compared to the previous reporting period, external demand continues to restrain economic activity, and thus aggregate demand conditions continue to support disinflation, albeit to a lesser degree. this baseline scenario assumes a policy framework that the measures outlined in our exit strategy are completed by the end of the year, and that policy rates are kept constant at current levels for some time followed by limited increases starting from the last quarter of 2011, with policy rates staying at single digits throughout the forecast horizon ( in other words, 3 years ). in this respect, noninterest instruments will be actively used in order to address the risks | 1 |
remarks by prof. emmanuel tumusiime - mutebile governor, bank of uganda at the high level stakeholders β engagement on building a 21st century ugandan economy kampala serena hotel tuesday, september 3, 2019 the bank of uganda ( bou ) has not only successfully achieved its inflation objective of low and stable inflation, but has done so while supporting economic activity. in the last two financial years ( fy ), uganda β s economy has grown on average by 6. 1 per cent from a growth of 3. 9 per cent in fy2016 / 17. investor surveys suggest that business conditions and sentiments are strong. credit to the private sector has improved ; helped by accommodative monetary policy stance. the economy is expected to maintain this growth momentum and is projected to grow by between 6. 0 and 6. 3 per cent in fy 2019 / 20, and between 6. 5 and 7. 0 per cent in the medium term. the growth prospects are supported by private sector credit growth ; public investment in infrastructure ; higher agricultural output due to favourable weather and positive government interventions in agriculture ; pick - up in activity in the mineral sector ; improved regional security ( with peace in south sudan and drc ), which are expected to boost uganda β s exports. there are downside risks to growth, including : a ) lower external demand due to a depressed global economy. b ) political and policy uncertainty, which are very elevated in several major economies with global growth continuing to be biased downwards. already, the probability for a global recession is very high. page 2 of 5 c ) climate change which will increase uncertainty of weather patterns and constrain the agricultural sector. domestic inflation remains subdued, with the annual headline and core inflation averaging 2. 7 per cent and 3. 7 per cent, respectively, in the quarter to august 2019. the inflation outlook is favourable, with inflation projected to stabilize around the 5. 0 per cent target in the medium term. given the current inflation outlook, bou has kept the policy rate on hold since october 2018. low inflation protects the purchasing power of ugandans, especially for the poor households. bou has successfully ensured financial sector stability, including through resolving commercial banks that posed systemic risks by being very highly interconnected, both by the number and size of transactions with the other commencial banks. currently, commercial banks are wellcapitalized, liquid, and profitable. improvements in asset quality have contributed to an easing of lending standards | emmanuel tumusiime - mutebile : uganda β s new credit reference bureau speech by mr emmanuel tumusiime - mutebile, governor of the bank of uganda, at the launch of the credit reference bureau, bank of uganda, kampala, 3 december 2008. * * * h. e. mr. reinhard buchholz the ambassador of the federal republic of germany, h. e. mr. anders johnson the ambassador of sweden, h. e. mr. thanduyise chilliza the high commissioner of the republic of south african, members of the committee on national economy, parliament of uganda, members of the board of directors, bank of uganda, the chief executive officers of commercial banks, credit institutions and microfinance deposit - taking institutions, managing director compuscan information technologies of south africa, managing director credit reference bureau b ltd., distinguished guests, ladies and gentlemen. it is my pleasure and honor to welcome you all to this auspicious occasion when we are launching the credit reference bureau ( crb ) and the associated financial card system ( fcs ). this is a major initiative by bank of uganda and government of uganda through the ministry of finance planning and economic development towards improvement of credit risk management in the financial sector. the establishment of the crb is an important milestone in the development of uganda β s financial sector. the absence of a crb in uganda has been a major bottleneck to the expansion of the volume of private sector credit. indeed, ugandan firms - large, small and medium enterprises consistently cite limited access to credit as one of the greatest barriers to their operations. up to now, the infrastructure for information sharing and unique borrower identification has been non - existent. the participating institutions ( pis ) ( commercial banks, credit institutions and microfinance deposit - taking institutions ) had no way of checking and sharing information on the credit history of borrowers. therefore, pis have continuously been exposed to high credit risk on account of inadequate information on borrowers β creditworthiness. this has inevitably resulted in increased cost of borrowing, thereby making credit more expensive than it would otherwise have been. as a step in the right direction, the parliament of uganda passed the microfinance deposittaking institutions act 2003 ( mdi act ) and the financial institutions act 2004 ( fia ), which propelled the process of establishing a credit reference bureau in the country. the fia mandates the central bank or its appointed agent or any other person authorized | 0.5 |
early march β for net asset purchases. 3. degree of commitment however, no central bank can define in advance all the states under which policy rates will remain fixed. in this sense, we cannot totally bind our hands with rules, and should keep some element of discretion facing unexpected data or events. forward guidance is never setting policy on auto - pilot. there will always be an element of judgement, including about the distribution of risks around the staff projections. central banks should be predictable, but not precommitted. forward guidance in uncertain times let me fine tune this general discussion in uncertain times, because we are certainly living through such an unexpected period : the unprecedented β covid economy β, geo - political tensions including ukraine, the energy crisis, and the two great transformations ahead β digital and ecological. forward guidance is a trade - off between the benefits of signalling intentions in advance and the constraints this places on future actions. in periods of high uncertainty, these effects accrue to both sides. on the one hand, indicative policy paths can help reduce unnecessary volatility and clarify ambiguity. on the other hand, in volatile situations, policy makers need to be more agile to respond to new data and risks. let me therefore turn back to the three practical issues i discussed earlier and try to draw three lessons for uncertain times : 1. the time horizon : even in normal times, forward guidance loses power over the longer term, as i said. but the greater the uncertainty, the shorter the forward guidance should be. its reasonable horizon at present should be a matter of quarters rather than years. 2. the balance between calendar and state dependency : in the very short run, dates are more efficient to influence markets and economic agents β expectations. but beyond the horizon of some months, state - contingent forward guidance is more preferable. and it should rely not only on forecasts β models are fragile in uncertain times β but also significantly on actual data. we should listen to the present and real world of price and wage setters β businesses and households β, who are at least as important as macromodelling or market expectations. 3. in the face of uncertainty, not being precommitted is an absolute imperative. the two most important words for central bankers recently are β agility β and β humility β β frankly, these are more than just words, they are the daily reality for us. jay powell rightly promises to be β humble and nimble β. we at the ecb | further converge national legislation and boost competition in the market for payment services, improving the transparency and reliability of the products offered to firms and the public. by standardizing the payment instruments made available by sepa and employing advanced technology for e - commerce and mobile and internet communications it will be possible to create a more modern payment market, in line with european and italian policies to increase the spread of information technology. sepa will bring substantial benefits to all concerned. firms will be able to make and receive payments via a single account at any european bank. using the iso standard, which can be see β la sepa e i suoi riflessi sul sistema dei pagamenti italiano β, tematiche istituzionali, banca d β italia, november 2013 ( http : / / www. bancaditalia. it / pubblicazioni / temist / sepa - riflessi - sistema - pagamenti / testo. pdf ). bis central bankers β speeches integrated with banks β own management software, will foster innovation in several ways, from integrating the collection process to rationalizing accounting procedures. there will be significant advantages for small firms as well. sepa will also facilitate the use of internet and innovative communication systems such as tablets and smartphones, offering consumers flexibility in the use of different means of payment at low costs. users β payments and collections with firms and the public sector will improve with the use of electronic instruments. from the banks β point of view, retail payment services not only account for a large part of total expenditure and revenue, 2 but they are an important route to customer loyalty through the provision of high - quality services at affordable prices. although european market integration may entail a loss of position in the very short term, in a longer perspective it will enlarge the potential supply and open the way for advanced technology products. similar benefits await non - bank providers of payment services and managers of retail payment systems who are called on to create a europe - wide network. i would like to make a final comment on the importance of sepa for italy. non - cash means of payment are used less in our country than elsewhere in europe. paper - based payment instruments are still widely employed, although they are more costly for issuers and less secure for users. the characteristics of the italian market and the payment habits of the population reflect the structural characteristics of the productive system, such as the limited use of more advanced means of communication, | 0 |
haruhiko kuroda : asia β s contribution to the global economy β prospects and challenges for the transition to domestic demand - led growth speech by mr haruhiko kuroda, governor of the bank of japan, at the 4th bank of thailand policy forum, bangkok, 24 july 2014. * 1. * * introduction governor, distinguished guests, ladies and gentlemen, thank you for inviting me to the 4th bank of thailand policy forum. it is a great honor to address such distinguished guests who are leading the thai economy. i would like to extend my heartfelt gratitude to governor prasarn trairatvorakul for giving me this valuable opportunity. thailand was the first southeast asian nation to establish diplomatic relations with japan, and the year 2017 will mark the 130th anniversary of this significant event. the two countries have been engaged in active cultural exchange at least since the ayutthaya dynasty. in more recent years, our two nations have established close ties as important economic partners, providing support to each other in times of difficulty. the bank of japan received generous donations from the bank of thailand and the bank β s staff to help the victims of the great east japan earthquake in 2011. all of us at the bank of japan remain deeply grateful for this kindness. i learned about these donations immediately after i became governor of the bank and felt deep reverence for and strong gratitude to our friends in thailand. i would like to take this opportunity to renew our thanks. thailand is a key base in southeast asia for the economic activities of japanese firms, of which more than 1, 500 are members of the japanese chamber of commerce in bangkok. last year, japan was thailand β s largest importing trade partner, and its third largest export destination. the very close ties between the two countries are shown in the results of a survey conducted by the ministry of foreign affairs of japan, where 97 percent of the people in thailand regarded japan as a friendly nation. today, i would like to share with you my views on asia β s contribution to global economy. these views are based on my 16 months β experience as governor of the bank of japan, and my 8 years as president of the asian development bank before that. i. a change in growth model for the asian economies even when growth in the major advanced economies slowed considerably following the global financial crisis, the asian economies continued to register solid growth. moreover, the region β s economies have contributed significantly to the recovery and subsequent growth of the global economy. | take the necessary action at an early stage. prompt action is needed to preserve the growth momentum of the domestic demand - led economy in asia. iv. global monetary accommodation and domestic credit growth high economic growth is often associated with an increase in domestic credit. the current growth in domestic demand in asian economies is mainly driven by domestic structural factors such as the increase in the middle consumer class. but, it has also been reinforced by a combination of global monetary accommodation and the concomitant expansion in domestic credit. history tells us that bubbles often arise when people β s expectations become bullish due to the experience of continued high growth and domestic demand expansion. examples of such situations where domestic demand growth became excessive and ill - balanced are now all too familiar. we saw this in the bubble economy in japan, in the housing bubble in the united states, and in the overheating in real estate markets in peripheral european countries. these economies eventually fell into financial crises. and the symptoms were common in each case : a rapid increase in credit and an emergence of euphoria based on the belief that the country had entered a new phase. there is also the danger of an unsustainable increase in domestic credit reliant on short - term foreign borrowings. this is due to the lack of deep domestic financial markets. the current global accommodative financial conditions raise the possibility of unhealthy global capital flows into asian economies. such capital flows could result in the build - up of distortions and risks in the financial systems of these economies. for example, several economies have seen considerable increases in real estate prices partly due to foreign capital inflows. needless to say, if there were a substantial decline in real estate markets, nonperforming assets could pile up in the financial sector. such a scenario could hamper growth substantially and for a prolonged period, depending on the magnitude of the problem. to prevent such distortions and risks from building up, commercial banks and financial supervisory authorities need to enhance their credit risk management capacity. they need to instill a credit culture in which credit is proactively managed in response to changes in the environment. these actions could be effective throughout asian economies. another possible course is to use macroprudential policy. while discussions on macroprudential policy continue, particularly in the united states and europe, some asian economies have already gone ahead and introduced them. for instance, the bank of thailand has implemented policy measures such as ltv limits | 1 |
participation. in view of this, it has become vital for african countries to promote investors β confidence in their respective economies. this requires promoting transparent and favourable macroeconomic environment which is crucial for private sector participation. steps would have to be taken by african central banks to reposition themselves as reputable and transparent institutions. 12. ladies and gentlemen, the final session dealt with establishing the role of central banks in financing infrastructure for industrial development. african countries are plagued by gross infrastructure deficit, and most interventions are largely dependent on annual government budget which can hardly bridge the infrastructure deficit gap. it has been said that infrastructure is a precursor for industrial development. african central banks need to develop strategic agenda for complementing fiscal policy, to bridge the wide infrastructure financing gap in the continent. this is an area that we can contribute in by finding creative financing model to help bridge this gap. 13. ladies and gentlemen, i am aware that experienced resource persons have been assembled to lead discussions on these complex issues enumerated above. on this note, i implore all participants to take full advantage of this meeting by contributing effectively to the discussions. it is my hope that your deliberations would reveal series of policy options to effectively and efficiently promote industrialization for inclusive and transformative development in africa. 14. distinguished colleagues, ladies and gentlemen, i wish you all a successful and fruitful deliberation. 15. thank you for listening. bis central bankers β speeches | joseph o sanusi : information and communication technology for the social transformation of nigeria special remarks by dr joseph o sanusi, governor of the central bank of nigeria, delivered at the dinner / investor forum organised by leapfrog venture partners ltd during the national summit on smieis, victoria island, lagos, 10 june 2003. * * * the representative of the honorable minister of industries, the executive governor of lagos state, his excellency, alhaji bola ahmed tinubu, chief executives of banks and other financial institutions, members of non - governmental and multilateral agencies, distinguished industrialists, ladies and gentlemen. it is my pleasure and privilege to make this special remark at this historic investor forum / dinner aimed at educating and enlightening us on the efforts of leapfrog venture partners nigeria limited in promoting and training skilled manpower for the social transformation of nigeria. let me state at the onset that, when the organizers of this forum approached me to be the special guest of honor, i was hesitant in accepting it. however, because of how close this subject is to my heart and in my firm belief of the role of information and communication technology ( ict ) in the promotion of smes in nigeria, i accepted to attend. may i seize this opportunity to congratulate the organizes of the forum, for their foresight and wisdom in selecting such an important and relevant theme, β information and communication technology for the social transformation of nigeria β. the effort is also commendable because currently we require massive investments in information and communication technology in order to develop our socio - economic infrastructure. as you all know, advances in information and communication technologies ( icts ) were pivotal to the recent social and economic transformation in both the industrialized and developing countries. the increasing spread of icts has opened new opportunities for developing countries to harness for the attainment of their socio - economic and developmental goals. it is, pertinent to note that, although there have been several efforts at the highest levels of government and industry to promote the construction of a national information infrastructure, the attempt by leapfrog ventures is a very bold step by a private entrepreneur in this direction. we must all join hands with leapfrog ventures in order for nigeria to reap the predicted social and economic benefits. distinguished participants, ladies and gentlemen, as you are aware, recent advances in digital technologies have separated further, the divide between the rich and poor countries. since there is no comprehensive solution for this problem | 0.5 |
the central bank and the public in general, and the financial markets in particular, and constitutes an important mechanism of control over the central bank, its management and its policies. it enables the central bank to stay attuned to public criticism, and it enables the public to better understand the functions, policy, decisions and achievements of the central bank. the two subjects i have spoken about so far, central bank independence and the requirement for transparency and accountability incumbent on the central bank lead me to my main subject this evening. 3. the new law for the bank of israel the current bank of israel law dates back to 1954, and is not appropriate either to the current reality of israel β s modern economy, or to the global economy. although amendments have been introduced into the law that grant the bank of israel a greater measure of independence, in particular the β no printing law β, the bank β s de jure independence is more restricted than its de facto independence. it is therefore important to bridge the gap by passing a new law that will provide a proper legal basis for the reality that has been created. the new law will clearly define the independence of the bank, its goals, and the mechanisms for decision making, and should impose on the bank a comprehensive framework of transparency and accountability. the new law should thus contain the correct mixture of independence, transparency and control mechanisms for the bank of israel, according to the generally accepted standards in the advanced economies. in my first few months as governor of the bank we cooperated with the ministry of finance, the prime minister β s office and the ministry of justice in producing a bill. we made good progress, but decided to shelve the matter until a new bank of israel wage agreement was reached, and that took longer than we had anticipated. we are now reverting to this issue, and i hope that we will soon have a final version. a. independence the new law will give the bank of israel instrumental independence, i. e., independence in making the decisions on the interest rate as needed to perform its functions and reach its goals. and as i stated above, this independence must also be reflected in the management of the bank. b. defining the targets the new law should clearly define the bank of israel β s targets, along the lines of the targets of other modern central banks. the modern approach, and that adopted in the major central banks such as the bank of england and the ecb, generally define three targets, and determines their | rate of world trade is expected to moderate even more due to the weakening link between global growth and the development of world trade. in israel, the combination of demographic trends ( an increase in the proportion of population groups with relatively low employment rates and a slowdown in growth of the primary working age population ) alongside the fact that the contribution of increased education, as reflected in the average number of years of schooling, has neared its limit, will act to slow the future growth rate. active policy is therefore needed to offset these trends. against the background of these future trends, it is important to examine the labor productivity trends of recent years and the directions in which policy must act in order to deal with the challenges. in terms of productivity β measured as output per work hour β we are not closing the gap with the other advanced economies, even during the period since the global crisis. this gap between output per worker in these industries in israel and output per worker in the same industries in the other advanced economies, is focused mainly on industries that manufacture mainly for the domestic market, which are by their character domestic industries, and are therefore not exposed to competition from abroad. it is important to know that these are industries that produce most of the output, and also employ the vast majority of workers, in the economy. the discussion on productivity seems very theoretical. but to illustrate, if we would close the productivity gap vis - a - vis the oecd average, we would raise the standard of living by about one - third β about the increase that we would receive in per capita gdp. in this context, let us for example take the construction industry, which employs about 7. 5 percent of those employed in the business sector β clearly a domestic industry β and bis central bankers β speeches examine the output per worker in the industry over a long period. productivity in the industry declined in the 1970s and 1980s, and remained at a standstill since the 1990s, in contrast with an increase in manufacturing productivity that accelerated following the program to expose the israeli economy to foreign manufacturing imports in the 1990s ( the exposure program ), and the agriculture industry where there was a moderate increase in productivity throughout the period. the construction industry β benefits β from the availability of foreign workers with wages lower than domestic workers with the same characteristics, and therefore suffers from a significant technological lag. the recent government decision to allow foreign construction companies to enter residential construction projects, if it is implemented to a significant extent, may contribute to a turnaround in the productivity | 0.5 |
globalization, and the collapse of this system offers us a cautionary tale. furthermore, in a world where public and private actors taking part in economic activity are becoming ever more diverse, it would be quite a challenge to agree on what is desirable globalization and what is not. if, in despair, unilateral action, such as trade bans, mandatory domestic incorporation, or forced repatriation, is taken, everybody would become worse off. is there a way out of this predicament? if the objective of global governance is to secure global financial stability, and if global financial stability is a public good, global governance can be analyzed as a microeconomic problem regarding public goods. there are well - known options to solving the problems posed by public goods. the most straightforward is to have the public sector provide the public goods. alternatively, rules could be established regarding the consumption of public goods. another option is to tax the consumption of public goods or subsidize the production thereof. there are still other options, such as changing the public character of the goods by increasing their exclusivity. not all may be applicable to international financial stability, and some may be more easily implemented than others. in view of the discussions during various international fora in which i have participated, i have a feeling that we are making it more difficult for ourselves by opting for the seemingly most obvious option β tasking the public sector with providing international financial stability. as tommaso observed, there is a limit to what individual nation states can provide as global public goods. a coherent set of public goods provided by a single global public entity would be desirable, but there is no workable way of introducing such an arrangement consistent with our democratic principles. international organizations are often criticized for deficits in democratic accountability. on the other hand, a democratically elected world government with the power to tax is unthinkable in the near future. the current situation in the euro area is an example of this intractable problem. we therefore should aim for a more practical approach, combining various options that are known for solving the public good problem. some public goods, such as effective supervision of globally important financial institutions, could be provided at the national level. supranational institutions could be asked to take on specific tasks, such as monitoring global financial developments and identifying macroprudential risks, without undermining democratic principles. private actors could be made to follow certain rules, such as the basel rules on | a very effective and efficient way. we therefore agreed to extend the contract by 11 months and to deepen the work in three areas. this work has now too been fully completed and we are ready to close the programme. in most of the areas covered during this time, the national bank of serbia will continue to implement work that we started together. you can, for instance, look forward to new and updated statistics for the balance of payments and for the financial accounts, which the national bank of serbia plans to start publishing in the next few years. it also has new bis central bankers β speeches analytical tools for both macroeconomic and financial stability analysis, allowing it to speak with a stronger voice in the national and international debate. these are only a couple of examples of what this programme has achieved. obviously the work does not end here. there are still areas within the national bank of serbia that need upgrading before it joins the european system of central banks. in addition, the eu continues to update rules, regulations and best practices, which means that the target is always moving. let me turn to a few points that are not directly linked to the programme, but are important as they relate to current challenges in the eu as well as in serbia. common challenges in the euro area and in serbia while central banks have done what they can to limit the most devastating effects of the global financial crisis, there are limits to what the central bank can do. the ecb can keep interest rates low and resort to non - standard measures as warranted by exceptional circumstances, in line with our mandate of price stability. maintaining price stability is the best contribution that a central bank can make to support economic growth and employment. we cannot, however, address by ourselves the underlying root causes of the problems that relate to fiscal and macroeconomic imbalances, a lack of competitiveness, low growth and high unemployment. governments of eu member states have to do their part of the work through structural reforms and fiscal consolidation to return the economy to long - term sustainable growth and to boost employment. while the challenges are obviously not identical, these same issues are also relevant for serbia. structural reforms to enhance competitiveness and support growth potential, fiscal consolidation and ultimately sustainable convergence are challenges to be addressed by the political authorities in this country in their endeavour to move closer to the eu. the best contribution the national bank of serbia can make to support this is to achieve price stability, based on a sound institutional framework that ensures its independence. turning back to the | 0 |
less due to labour quality. during the pandemics, the bulk of the adjustment in fact went through the tfp which declined close to 5 %, as the overall context was barely conducive for innovative decisions. 1 / 3 bis - central bankers'speeches in this context, global competitiveness index in terms of innovation capabilities and ict adoption locates us at the 97th and 70th rank ( out of 152 countries ), similar to western balkans peers, but much further from the advanced europe. jointly with several countries in the region, we were positioned in the group of efficiency enhancers, meaning that reforms must be intensified to increase the growth efficiency and quality. increasing the technological readiness was one of the identified priorities. thus, in the last decade, the macedonian productivity level has been staggering to around 40 % of the level of advanced economies, such as german economy. this clearly points that if we want to grow at stronger pace and in a more sustainable, green and inclusive way, we need to continue intensively addressing the structural hurdles for the key long - term determinants of the growth : labour, capital and productivity. let me focus on productivity. at this point, i think i can bring in the highlight of the latest transition report, i. e., innovation and digitalisation of the economies. the adoption of digital technologies can unleash productivity revival and possibly counteract some forces that act as drag on growth, such as adverse demographic and emigration trends that dampen the labour supply. what is the pace of digitalization of the macedonian economy? the new ebrd digitalization index points to a progress in both segments that are captured by the index β first, the preconditions for the use of digital technologies ( digital infrastructure, skills, regulation, provision of government services ), and second, the actual use of digital technologies by individuals and companies. the progress is particularly visible in the area of regulation and provision of government services, where score has more than doubled. still, overall we are scored about 59 % for digital preconditions and 48 % for the actual use of digital technologies, which is close to the regional score, but still far from the frontier of 100. i think that the scores are useful guidelines on where the policies should be focused on. in our case, it is clear that efforts should be concerted in setting a more adequate digital infrastructure, but even more in raising digital skills. on the latter, as noted in the report, significant | to their potential usefulness and to the empirical evidence of their impact and effectiveness. the bis analyses have registered many tools used by the asian countries : ( i ) countercyclical capital buffers linked to credit growth ( china ) ; countercyclical provisioning ( china, india ) ; ( ii ) loan - to - value ( ltv ) ratios ( china, hong kong sar, the republic of korea, singapore ) ; ( iii ) direct controls on lending to specific sectors ( the republic of korea, malaysia, philippines, singapore ) oriented toward managing the aggregate risk throughout the business cycle ( i. e. procyclicality ) ; furthermore, ( iv ) capital surcharges for systemically important banks ( china, india, philippines, singapore ) ; ( v ) liquidity requirements funding ( india, the republic of korea, philippines, singapore ; ( vi ) limits on currency mismatches ( india, malaysia, philippines ) ; ( vii ) loan to deposit requirements ( china, the republic of korea ), as a tool for managing the aggregate risk in every point in time ( systemic oversight ). these examples show that the macroprudential tools could have an effect on the vulnerabilities by increasing the financial sector resilience. the basel committee has already proposed the following tools : - countercyclical capital framework. this will require from the financial institutions to build up capital in good times, that can be drawn upon in periods of stress ; - forward looking provisioning. banks are encouraged to allocate provisions based on expected losses, as opposed to allocating provisions on the basis of incurred loss. this approach is less procyclical than the so - called β incurred loss β provisioning model. - capital conservation measures. this measure includes activities aimed at restricting oversized payments of dividends, share buy backs and generous compensation payments by financial institutions. capital requirements are undoubtedly the foundations of the microprudential regulation, but they also have a macroprudent dimension related to the procyclicality of the financial sector. capital buffers which should confront procyclicality should meet two objectives : first, they should help the banking system handle the risks which could materialize in periods of crisis, and second, they should mitigate the reduction of the economic activity in a situation of downward movement of the economy. nevertheless, several key issues remain open for discussion. should the discretionary interventions on the buffers be reduced to the minimum | 0.5 |
period, but taken together, the weight of evidence suggested that the best course for monetary policy was to maintain the existing setting for the time being, but to be ready to tighten should signs of a strengthening of price pressures emerge. the june quarter cpi data, available for the august meeting, showed some pick up in inflation. together with a stronger growth outlook, this information led us to expect a somewhat higher path for inflation over the horizon of the coming one to two years. the judgement we reached was that the risk of unnecessarily damaging growth with a modest rise in interest rates was small, whereas the cost of not responding to a deterioration in the outlook for inflation could well, in the longer term, be substantial. on straightforward macroeconomic grounds, therefore, there was a clear case to make an adjustment to monetary policy. as our statement on wednesday of last week set out, the board considered the recent events in international credit markets in coming to our decision. here, mr chairman, it is worth taking a few moments to set out some history. for some years now, many long term observers, market participants and officials have been troubled by very narrow pricing for risk. in other words, it has been easier and cheaper than had been normal in the past for risky borrowers to access funding. investors were prepared to take more risk in pursuit of returns in a world of low global interest rates. somewhere or other, returns were eventually bound to disappoint someone. as it turned out, the problems emerged in the us housing sector. lenders into the so called β sub prime β market attempted to keep the pace of business up as the us housing sector slowed during last year. but they could do this only by lowering lending standards. before long, arrears began to rise as some borrowers struggled to meet their commitments. once this deterioration in underlying asset returns had occurred, those with exposures inevitably began to see losses. because this type of lending was via securitised structures sold into global capital markets, losses have been coming to light right around the world. in most cases, the losses are embarrassing rather than fatal for the institution concerned. the exceptions have been where particular funds invested mainly or solely in these types of risky assets, and especially where leverage was involved. several hedge funds have borne large losses, including some in australia. all of this created a climate in july and early august in which investors retreated and pricing of risk started to return to levels that could be regarded as | pace of growth in labour costs overall has remained relatively contained. in thinking about why growth has picked up somewhat more than had been expected, we should not overlook the fact that the global economy has surprised, once again, by its strength. the most recent forecasts for global growth made by the imf were revised upward only a few weeks ago, with growth now thought likely to be over 5 per cent in 2007, close to the 2006 result. the us economy has slowed but greater strength elsewhere has, to date, more than outweighed the us softening. australia β s terms of trade have kept rising and stand at a five decade high. this has added about 1Β½ per cent of gdp to the annual growth in australia β s national income over the past couple of years, which is quite an expansionary force. some of the resulting demand spills abroad, but there is also a stimulus to spending on non tradeable goods and services arising from the income gains being experienced. the rise in property prices in western australia is a case in point. it would be imprudent to assume that this trend will continue indefinitely. nonetheless, it has already gone considerably further than most observers anticipated. when we lift our gaze beyond the conventional forecasting horizon, the big picture is that the emergence of potentially very large economies like china and india, at such a rapid pace and with such consistency, is unlike anything we have lived through before. we cannot be confident, therefore, that the cyclical experience of the past few decades is necessarily a reliable guide to how things will develop. in its policy deliberations over several months, the board has weighed conflicting trends. when we were last before you, we were observing an apparent moderation in inflation. we were, as you know, at that time still of the view that there could be a need to tighten monetary policy further at some stage. but having made three adjustments in 2006, we believed that the improving short term trend in inflation afforded us time to watch developments. information that came in over the ensuing period suggested stronger than expected demand in the economy. this meant that the longer term risk of higher inflation was increasing, not diminishing. hence, the likelihood that interest rates would need to be increased at some stage was rising. moderate price and wage outcomes continued, however, for some months, suggesting that, at least temporarily, the supply side of the economy was managing to respond to stronger demand. it was doubtful that this could continue over an extended | 1 |
among persons who are more conservative than β the public opinion β so that the managers are only interested in achieving price stability, without laying much emphasis on the short - term effects of monetary policy on the real economy. another idea is the proposition by carl walsh, under which politicians should agree with the central bank management on a long - term agreement on results, which would reward the management for achieving price stability and punish it for inflation or deflation. i cannot tell how literally or even seriously these researchers have intended their propositions to be taken. in practice, efforts to build up central bank credibility have however been slightly different, mainly comprising the following three complementary approaches. the first one of these is ensuring central bank independence. the european central bank, for example, enjoys full functional and financial independence in relation to the european union's political institutions, and the members of the governing council responsible for the ecb's monetary policy are widely protected in the discharge of their duties. nor are we allowed to take monetary policy instructions from any outside instance. the same requirement for independence also applies to the central banks of all member states participating in economic and monetary union ( emu ). with new member states joining economic and monetary union in the next few years, legislation concerning their central banks will also have to fulfil these requirements. another approach is building up a solid reputation. through the conduct of a consistent, successful and well - founded policy, the central bank may, over time, acquire such credibility as is needed in the implementation of monetary policy. the build - up of a solid reputation may be accelerated by a public commitment to the objective of price stability. transparent communication on policy measures, their underlying economic analysis and rationale, and on factors affecting future policy has added to monetary policy credibility. despite its young age, the european system of central banks ( escb ) has been able to gain a high level of confidence, reflected in, for instance, the fact that inflation expectations in the euro area are fairly well in line with the objective of price stability. in this respect, the ecb has benefited from the confidence and credibility that the german central bank, the bundesbank, had acquired in the course of decades. notably in its first years of operation, the ecb focused on maintaining continuity relative to the traditional monetary policy stance of the largest member state, germany. a third approach to securing monetary policy credibility consists of the coordination of other economic policies with the aim of maintaining price stability. this especially concerns fiscal | jobs that are below their qualifications. countries that lose labour, are deprived of an active labour force, and pressures can aggravate differences in salaries. in the receiving countries, in contrast, employees often reject newcomers as competitors that are willing to work for considerably lower pay. long - term advantages may nevertheless greatly benefit all parties. economic growth in the receiving country accelerates and over time, the salary levels of old employees in the competed sectors also increase. an important factor in the present migration movement is also that the emigrants are more likely to return home than earlier. recent evaluations show that nowadays most emigrants will eventually return home, bringing with them improved skills and accumulated wealth, with which they facilitate economic development in their home region. it is evident that a broad migration in both directions will significantly contribute to improvements in productivity and economic activity within the eu. it will improve the level of education, the transfer of know - how from country to country and networking. these matters must be taken seriously and must be emphasised, even when faced with the problems associated with migration. for the sake of balance it is, of course, important to aim at relatively modest net migration flows. it is evident, for example, that population ageing will affect all eu countries ; it is unlikely that any of them will be able to handle the challenge primarily by attracting young population from other eu countries. migration is β and of course has to be β primarily market - driven. to the extent that changes in the production structure seem unavoidable, they should not be retarded through economic policy ; rather, support should be provided in the event of problems caused by these changes. problems in the transition period must also be acknowledged, but the advantages generated as a result of the changes should be emphasised. member states and the european commission have already provided wide support to the free movement of labour by removing obstacles that limit migration and introducing active measures that facilitate migration. support should be channelled to workers rather than work places. re - education as well as occupational and geographical support and security in connection with migration are key measures that governments should take in order to facilitate the reallocation of labour force. the ecb and other central banks within the eu can enhance the regional and professional allocation of labour force by improving the integration and efficiency of financing markets and payment systems throughout the area. this development work must naturally be shared by governments. to conclude, there still remains much to be done to improve the situation. | 0.5 |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.