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masaaki shirakawa : reviewing the economies of switzerland and japan remarks by mr masaaki shirakawa, governor of the bank of japan, at the 30th anniversary luncheon of the swiss chamber of commerce and industry in japan ( sccij ), tokyo, 10 october 2012. * * * before i begin, i would like to thank chairman thomas jordan for his detailed and informative presentation on the state of the swiss economy and the issues faced by the swiss national bank. i believe that everybody in this room would agree that we have learned a great deal. in the next five minutes, instead of commenting directly on what thomas has just explained, let me offer you some thoughts that come to my mind when i look at the swiss and japanese economies. switzerland and japan are very different. switzerland is land - locked. it is in effect an island in the sea of the european union, where about 60 percent of its exports are headed and 80 percent of its imports derive ( chart 1 ). japan is far more populous. the japanese economy is about nine times as large as the swiss economy. nevertheless, there are similarities. for example, both countries enjoy, or even suffer from, very stable prices. the average annual inflation, measured by headline cpi, over the twenty years from 1992 to 2011 was 1. 1 percent in switzerland and 0. 1 percent in japan ( chart 2 ). in august this year, the year - on - year change was β 0. 5 percent in switzerland and β 0. 4 percent in japan. consequently, interest rates are also low ( chart 3 ). in recent weeks, the yield on ten - year government bonds has been hovering around 0. 5 percent in switzerland, slightly below japan β s 0. 7 to 0. 8 percent range. both currencies, as thomas has explained, are at historically elevated levels. in this regard, the news media and the public are usually focused on a specific traded exchange rate between currencies, such as the swiss franc to the euro or the yen to the u. s. dollar. these rates are important, but there are additional indicators for exchange rates. in order to understand what would happen in an economy when exchange rates fluctuate, exchange rates for all the trading partners must first be taken into account. from this viewpoint, we must look at the nominal effective exchange rate, which is a trade - weighted index of exchange rates. in the case of switzerland and japan, compared with january | : we were encouraged by the progress firms have made. but there is still much more to do. we will give firm - specific feedback to participants, but key themes include : the need for more data on, and understanding of, customers β current emissions and transition plans. this can include looking through complex chains of financial relationships between clients and counterparties to see the underlying emissions. the need to invest in modelling capabilities and doing more to scrutinise data and projections supplied by third - parties. the need for some firms to consider more deeply how they would respond strategically to different scenarios, including thinking through the implications of different paths for climate policy. more generally these results bring home the fact that uncertainty around the impact of climate change β even given a pre - determined scenario β remains extremely high. as you will see if you read the report, the error bands around all these estimates are very wide. [ 13 ] this presents a challenge when considering implications for policy β and highlights the importance of continuing to plug the kinds of capability gaps i discussed earlier. as the results publication sets out, the bank will engage with firms individually and collectively to help them target their efforts, and share good practices identified in this exercise. implications for policy i hope it β s clear by this point that the cbes will be a valuable tool for helping us and financial firms to understand the challenges ahead. this exercise is not going to be used to set capital requirements for banks and insurers. but it clearly sheds light on that debate. the cbes results make clear that climate risk is a first - order strategic issue for the firms we regulate. but in my view it is not yet clear that the magnitude of transition costs require a fundamental recalibration of capital requirements for the system. [ 14 ] a persistent drag on profitability would be very nasty for firms, but so long as they are able to continue to make sufficient profits to maintain their capital buffers, its impact on safety and soundness might be less material. had the results of this exercise suggested a fundamental threat to the solvency of these firms, our response would of course have been quite different. set against that high level view, though, a world with climate change is without doubt riskier than one without. and so i see a number of challenges which underline the need for further work : to the extent that climate change makes the distribution of future shocks nastier, that could imply higher capital requirements, all else equal. so a key judgement will | 0 |
and 41. 3 percent in 2009. the proportion of the financially excluded on the other hand has been falling steadily from 39. 3 percent in 2006, to 31. 4 percent in 2009, and 25. 4 percent in 2013. in a nutshell, kenyans have enjoyed better financial access over that period. kenya committed in 2012 at the g - 20 los cabos summit to achieve a higher level of financial inclusion through targeted interventions and strategies. to this end, a range of policies, strategies, products and technology - enabled delivery channels have been rolled - out by the public and private sectors. ensuring the success of these endeavours is key, as financial inclusion is a vital component of sustained inclusive financial sector development, thus contributing significantly to inclusive growth and poverty reduction. our efforts towards ensuring improved financial inclusion to majority of the kenyan population have not gone unnoticed. i am pleased to note that the brookings financial and digital inclusion project report, 2015 ranked kenya as the top - scoring country in financial inclusion world - wide. we are, however, cognizant that enhanced financial inclusion anchored on dynamic innovations brings forth some risks that we need to manage so that they do not negate the success so far achieved. 3. key findings : the first finaccess geospatial mapping survey took place in 2013 and collected geographical information system ( gis ) data on all the financial services access touch points as well as some operational and transactional data through interviewing the financial service providers. the current finaccess geospatial mapping survey, 2015, bis central bankers β speeches whose results i am pleased to launch today, collected gis data on both financial and agricultural services access touch points as well as some operational and transactional data. this survey, therefore, provides an update of datasets collected in the baseline survey in 2013 and enhanced understanding of the financial inclusion landscape in kenya and its dynamics over time. in particular : β’ the 2013 and 2015 gis data provides a visual spatial distribution of the mapped financial and agricultural services access touch points. analysis of the survey data provides better understanding of the financial inclusion constraints, potential opportunities and evidence - based strategies to expand inclusion. the success of these endeavours is well captured in the 2013 and 2015 survey results. β’ as the results to be launched shortly will show, the financial system is now offering a wider range of financial services and products to more kenyans, while covering a wider geographical spread. compared to the 2013 survey, which captured 64, | 19 note : figures are based on continuing observations following the sample revisions. source : ministry of health, labour and welfare. chart 5 i. economic activity and prices u. s. economy employment and prices policy interest rate % y / y % chg. % target range for the federal funds rate unemployment rate ( left scale ) cpi ( all items, right scale ) cy 19 cy 19 sources : bloomberg ; haver. chart 6 i. economic activity and prices price developments cpi y / y % chg. energy food products goods ( less food products ) aug. 2024 services + 2. 8 % cpi ( less fresh food ) + 2. 0 % cpi ( less fresh food and energy ) - 1 - 2 cy 19 source : ministry of internal affairs and communications. chart 7 i. economic activity and prices developments in services prices price change distribution of general services 2. april 2024 1. april 2023 share of the number of items, % share of the number of items, % low labor cost ratio low labor cost ratio high labor cost ratio high labor cost ratio - 2 or less - 2 or less or more y / y % chg. or more y / y % chg. notes : 1. figures show the cpi for general services ( less housing rent ). figures are staff estimates and exclude the effects of policies concerning the provision of free education and the effects of travel subsidy programs. 2. cpi items are matched to the items in the 2015 input - output tables for japan and grouped in terms of the share of " wages and salaries " and other labor costs in the domestic output of those items. figures for items with a high ( low ) labor cost ratio are for items that fall into the top ( bottom ) 50 percent in general services ( less housing rent ). source : ministry of internal affairs and communications. chart 8 i. economic activity and prices developments in underlying inflation 1. low - volatility items and trend component for services ( reference ) cpi y / y % chg. 2. inflation expectations cpi ( less fresh food ) 4 % 4 % cpi ( low - volatility items ) trend component of the cpi for services scheduled cash earnings of full - time employees - 1 cy 12 sub - index for households sub - index for firms sub - index for economists and market participants - 1 cy 12 composite index of inflation expectations ( 10 - year ahead οΌ - 1 cy 12 notes : 1. in the left - hand chart, figures are staff estimates and exclude | 0 |
and incorporates banks β expectations for the next six - month period ( dashed line ). one possible risk is another wave of geopolitical shocks. it is now clear that diplomatic and military confrontations between countries can have dramatic effects on trade, capital flows, growth and prices. 12 given the current state of international relations, we must hope, but certainly not assume, that the global landscape will be more stable in the future than it has been over the past two years. another risk is an increase in political uncertainty within countries. some of the world β s largest economies have elected or will elect their leaders in 2024, and political turnover physiologically translates into policy uncertainty : households and investors need to form a view on how incoming governments will handle many critical economic and political decisions. it is hard to imagine how this might affect inflation. uncertainty can disappear without consequences. it can trigger capital outflows and currency depreciations, creating upward price pressures. but it could also shake confidence and weaken demand, halting or even reversing the fragile recovery we have seen so far. in short, we know that we don β t know. central banks should be prepared to deal with the consequences of such shocks if and when they materialize. this implies a readiness to use the full range of tools at their disposal to adjust the monetary stance, addressing any threats to price stability, and protect the transmission mechanism of monetary policy. panetta f., 2024, β the future of europe β s economy amid geopolitical risks and global fragmentation β, lectio magistralis delivered at the university of roma tre, 23 april. lagarde c., 2024, β policymaking in a new risk environment β, speech at the 30th dubrovnik economic conference, dubrovnik, 14 june. reichlin l. and j. zettelmeyer, 2024, β the european central bank must adapt to an environment of inflation volatility β, bruegel policy brief, 12 june. 5. conclusions let me conclude. the euro area has emerged from a β perfect storm β, a violent bout of inflation driven by a series of large and unpredictable supply - side shocks. inflation is now on a downward path, and many of the issues that we have debated so vigorously in recent months may become less important going forward. the current macroeconomic picture is consistent with a normalization of the monetary stance. the ecb duly started this process a few weeks ago and | the invasion, inflation was hovering around 5 per cent, and eurosystem economists, analysts and investors broadly agreed that price pressures would recede relatively quickly. in the months that followed, an extraordinary series of energy and commodity price shocks doubled headline inflation, unsettling markets and central banks alike. 5 in short, we entered into a different world. 6 2. should we ( still ) worry about services and wages? in response to the rise in inflation, in july 2022 the ecb started an unprecedented series of rate hikes. this decisive response paid off : supply shocks, bottlenecks and soaring energy prices have not triggered an inflationary spiral, as they had in the past, and inflation expectations remained firmly anchored. the disinflation process is now well under way. inflation fell from a peak of 10. 6 per cent in october 2022 to 2. 6 per cent in may, and the speed of the decline was unprecedented, as the previous increase. however, inflation has not yet returned to target. some commentators have pointed to price dynamics in the services sector and the labour market as possible obstacles in the β last mile β of the price stabilization efforts. we should certainly remain vigilant on developments in these areas, but a closer look at the data suggests that the β last mile β may require nothing more than patience and a careful monitoring of the ongoing disinflation process. 2. 1. the rise and fall of inflation in the services sector the services sector has attracted attention for two related reasons. first, services inflation seems to be more persistent than goods inflation. second, services price growth remains above the ecb target. let me discuss these points in turn. the persistence is only apparent. it reflects the fact that inflation in the services sector started to rise later, peaked later and started to fall later. in turn, this delayed rise and fall depends on the combination of two forces. one is purely coincidental and specifically related to the pandemic episode. initially, the recovery in consumption was mainly driven by demand for goods, in particular the durable goods that consumers were unable to buy during the first stage of the the shocks had a particularly severe impact on europe, a net importer of most commodities β unfortunately including russian gas. the exorbitant energy bills also left european households with far less money to spend on other goods and services than their american counterparts. as this rough summary suggests, and as i have noted on previous occasions, the euro area faced | 1 |
concerns. when inflation surged earlier this year, the rbi had moved quickly to tighten policy. then again, reflecting the unfolding global situation and expectation of decline in inflation, rbi has adjusted its monetary stance over the last couple of months. the endeavour of our monetary stance has been to manage liquidity β both domestic and forex liquidity β and to ensure that credit continues to flow for productive activities. i do not intend to go into a detailed cataloguing of all the measures we have taken, but i do want to mention that we have instituted both aggregate measures as well as sector specific measures. although, we remain vulnerable to global financial and economic developments, the measures taken so far have eased the liquidity and credit flow situations considerably. i must also add that in managing the impact of the global crisis, we have been mindful that no policy initiative is totally costless. managing this delicate balance between costs and benefits has been one of our challenges. going forward, developments in the real economy, financial markets and global commodity prices point to a period of moderation in growth with declining inflation. the fundamentals of our economy continue to be strong. once calm and confidence are restored in the global markets, economic activity in india will recover sharply. but a period of painful adjustment is inevitable. the reserve bank's policy endeavour will be to ensure an orderly adjustment, and to minimise the pain of its impact. in particular, we will try to maintain a comfortable liquidity position, see that the weighted average overnight money market rate is maintained within the repo - reverse repo corridor and ensure conditions conducive for flow of credit to productive sectors, particularly the stressed export and small and medium industry sectors. we hope that all economic agents will plan their business activities on the basis of this assurance. lessons from the crisis the crisis is by no means over. drawing lessons may therefore appear a bit premature. there may yet be surprises. even so, it will be instructive to put our minds together to understand how we got here and how we may avoid the mistakes and excesses in the future. it will be presumptuous on my part to anticipate the whole gamut of issues that you will bring to the discussion. given your collective experience and expertise, that will indeed be a rich contribution. but i want to take this opportunity to raise some of the more important debates thrown up by this crisis. i will refer to five debates. 1st debate : how do we manage global | be earned. this i think we have done to no small degree, so i β m not unhappy about this most important area of central banking. let me, therefore end my statement on this rather hopeful note. | 0 |
jean - claude trichet : interview with paris match interview of mr jean - claude trichet, president of the european central bank, conducted by ms elisabeth chavelet ( paris match ) on 7 december 2005 and published in the edition of paris match dated 15 - 21 december 2005. the publication of the translation was authorised by paris match. * * * paris match. after two uneventful years at the head of the ecb, in december you became embroiled in your first political storm. political leaders, economists, bosses and trade union representatives lined up to condemn the 0. 25 % increase in your headline rate on 1 december. they accuse you of threatening europe β s fragile recovery. has this manning of the barricades made you think again? jean - claude trichet. i would not say that the last two years have been uneventful. it has been necessary to safeguard price stability in a period made very difficult by the increase in oil prices. moreover, it is only to be expected in large and exemplary democracies that different opinions should be voiced. it is up to us to speak out tirelessly and marshal the most convincing arguments. that said, i believe that the public debate did not reflect the true feelings of the 311 million european and 60 million french citizens. all the indications are that that our fellow european citizens require us to be vigilant with regard to price stability and that they are not overly content with the situation as it stands. i would have preferred at least part of the public debate in europe and france to have focused on what our fellow citizens want. we believe that, by remaining faithful to our mandate β which is to safeguard price stability and preserve the euro β s purchasing power β we are doing what 311 million europeans require of us while, at the same time, by doing so we are supporting growth and job creation. p. m. many europeans label the euro a factor of inflation after seeing the price of a loaf of bread rise from five french francs to β¬1, an espresso from five french francs to β¬1. 20, or a scratchcard from ten french francs to β¬2. what do you think of this? j. - c. t. you are exaggerating the increase in the cost of a loaf or an espresso on 1 january 2002! in some economies, the idea that the euro is inflationary remains rooted in the collective consciousness because, at the time of the changeover to the single currency, | β proto - accountants β created the first documents in human history and paved the way for all of the world β s written literature. secondly, there is a relationship between poetry and money which has always struck me. poems, like gold coins, are meant to last, to keep their integrity, sustained by their rhythm, rhymes and metaphors. in that sense, they are like money β they are a β store of value β over the long term. they are both aspiring to inalterability, whilst they are both destined to circulate from hand to hand and from mind to mind. and thirdly, both culture and money, poems and coins belong to the people. our currency belongs to the people of europe in a very deep sense : it is their own confidence in their currency which makes it a successful medium of exchange, unit of account and store of value. our culture is the wealth of literature and art that the confidence of the people has decided to select and preserve over time. today, i would like to reflect on europe β s cultural identity first by exploring a central concept, a spiritual core ; then i β ll review the remarkable diversity of its national cultures ; and finally i β ll consider how european cultural identity aspires to universality. ii. the search for a central concept in europe β s cultural identity one way of shedding light on the cultural identity of europe is to search for a central concept, a β heart β of europe, which would simultaneously be both its source and summary. two references are particularly enlightening in this respect : the vision of paul valery, the poet and essayist, and that of edmund husserl, the philosopher. paul valery, in his essay β the european β [ β l β europeen β ], wrote in 1924 : β partout ou les noms de cesar, de gaius, de trajan et de virgile, partout ou les noms de moise et de st paul, partout ou les noms d β aristote, de platon et d β euclide ont eu une signification et une autorite simultanees, la est l β europe. β translated into english, this means : β wherever the names caesar, gaius, trajan and virgil, wherever the names moses and st. paul, wherever the names aristotle, plato and euclid have a significance and carry weight, that is where europe is. β valery insists on the spiritual character | 0.5 |
. 25 percent, monetary policy is still having a restrictive effect. that is to say, policy is still playing a part in sustainably lowering inflation. whether a further policy rate move will follow in december is something we will decide on the basis of the data available to us at that time. in addition, experts from the ecb and the euro area national central banks β so including the bundesbank β will be presenting new projections for inflation and growth in december. it is important to note that the governing council is not pre - committing to a particular rate path. we decide on the road ahead based on a meeting - by - meeting approach. 4 structural challenges where the german economy goes from here is, as i said, about more than just economic activity. the current weak growth also has structural causes. as promised, i'd like to take a look at those now. there are four factors i want to shine a light on in particular. first, energy prices in germany are likely to be higher than before russia's war against ukraine for some time to come. it's true that gas prices are currently far below the extreme levels seen in the summer of 2022, but they clearly exceed the average recorded in the pre - crisis year of 2019. second, efforts to transition to a net zero economy will entail considerable costs for an extended transitional period at least. third, demographic change is exacerbating the shortage of skilled workers. take, for example, the totality of all persons who could be available to the labour market β what's known as the potential labour force. bundesbank projections show that germany's potential labour force will start shrinking noticeably from 2026 onwards. it is unlikely that immigration will be able to compensate for this decline. fourth, as a highly interconnected part of the world economy, germany clearly stands to lose from increasing protectionism and geo - economic fragmentation. these four structural challenges are also putting the competitiveness of german firms to the test. and to make the german economy more competitive again, investment is required β in real and human capital β and good business conditions. businesses in germany are currently holding back from investing, however. the bundesbank has been conducting a survey among firms in germany for the past four years or so. a year ago, we asked survey participants about the reasons behind weak investment. besides the difficult macroeconomic setting, the responding firms chiefly cited high wage and energy costs and a shortage of skilled workers. among the | deleveraging needs and better labour market conditions. furthermore, the recovery in business investment is supported by improvements in corporate profitability and the very favourable financing conditions. at the same time, euro area exporters are benefiting from the ongoing global economic expansion. these figures give some comfort as to the eu β s economic future. and i personally am confident that this trend can and will continue. however, challenges are looming : two particularly serious ones are brexit and euro area reform. the current, upbeat trajectory has to be harnessed as we set about mastering these historical challenges. 4. brexit looming the first challenge, brexit, began in june 2016, when the majority of uk voters decided to leave the eu. where are we now? brexit is definitely happening, and it is more and more likely to be a hard brexit β by which i mean that there will be a complete exit rather than a partial one. the uk and the eu will go their separate ways. since december of last year, there is a better chance of reaching a sensible agreement before the deadline of march 2019. the eucouncil agreed in december on the brexit divorce issues : basic compromises were reached on three fundamental questions, namely the rights of eu citizens in the uk after brexit ( and vice versa ), the border between ireland and northern ireland, and the uk β s financial contributions to the eu budget over the coming years. this compromise allows us to move forward to negotiate the terms of our future partnership. but let β s keep in mind that substantial progress has yet to be made on the details of the three 2 / 5 bis central bankers'speeches separation issues i just mentioned. now, since negotiations have been going rather slowly, there may be a transition period of two years from 2019 to 2021 β during which the old rules would still apply and the terms of the new partnership could be implemented. what kind of economic partnership this will be has yet to be determined. if no solution is found, the eu and the uk will trade under rules set by the world trade organization β which is in nobody β s interest, but is likely to be particularly harmful to the uk economy, while the economic impact on europe will be limited by comparison. take germany for instance. the uk is an important export market, accounting for ca. 7 % of german exports. but this implies only 2 % of value added to the german economy. my hope is that all the | 0.5 |
basis, as it is in this context that supervisors and supervised entities can extract full benefit from it. this availability of banco de portugal to talk to institutions on an ongoing basis, in strict observance of the diversity of their respective roles, makes behaviours in contravention of the regulatory framework even more unacceptable, an aspect that cannot be emphasised enough. 1 / 4 bis central bankers'speeches 3. the publication of decree - law no 133 / 2009 of 2 june 2009, which transposed the second european directive on consumer credit agreements, was a milestone for consumer rights in portugal. we have come a long way since then. as a result of the consequences of the financial crisis and the greater awareness of the specific practices that could be so harmful to consumers, institutions and the financial system, the regulatory framework and banking conduct supervision requirements have changed profoundly. the impetus from europe, through the publication of various directives, has been key. ten years after the financial crisis it may now be said that the retail banking markets are more transparent, not least in the all - important consumer credit segment. consumers are more protected, in that they have more rights and some of their existing rights have been broadened. the duties of information were made stronger ; upper limits were established for the annual percentage rate of charge ( aprc ) and the nominal interest rate in consumer credit agreements ; the duty of assessing creditworthiness was strengthened ; the consumer assistance obligation was created ; certain banking fees were banned or limited, and, where associated to payment accounts, became more comparable, above all after the format given to the fee comparator launched on 1 october ; a system was created for preventing and managing arrears situations, to mention just a few examples. furthermore, recent changes to the legal framework of credit institutions and financial companies place new obligations on institutions when setting their compensation and evaluation policy for workers in contact with customers in the sale of retail banking products and services, with a view to minimising the risk of conflicts of interest and avoiding potential harm to customers. the requirement was also established for institutions to introduce specific procedures for governance and for monitoring credit products, to ensure that they are suited to consumers β interests, goals and characteristics in terms of design and distribution. very important also is the fact that on 1 january of this year, the legal framework for credit intermediaries came into force, with the aim of broadening the perimeter of banking conduct supervision. indeed, access to banking activity now requires the prior permission | ##zation of the business cycle. these developments contribute to dispel the risks of asymmetric shocks in the future. what does not disappear is the risk of an initial period of excessive expansion of expenditure and debt after joining a monetary union that guarantees a regime of low inflation and low interest rates. we have felt the consequences of this hazardous development. the economy, however, has automatic correcting mechanisms as economic agents soon have to begin restraining their indebtedness and adjusting their spending. in spite of the restrictive nature of this mechanism we could have achieved a gradual soft landing of the economy if two new factors had not made their appearance : the strong deceleration of the world economy and the budget crisis that emerged in 2001. the government had to adopt difficult measures of budget consolidation to reduce the structural deficit from β 4. 6 per cent of gdp to β 2. 5 per cent last year. the recession we are now going through, with annual growth this year around β 1 per cent, is making things more difficult for fiscal policy. more than others, we would have justification not to comply exactly with the present fiscal rules. however, as small nations always have to try harder, we still hope to be able to cope with the situation, in spite of being very much dependent on developments of the world economy. an economic recovery is definitely coming, even if some doubts remain about its intensity or duration. in fact, uncertainties remain in connection to the large unbalances existing in some economies. it is deceptive to think that everything can be solved by exchange rate adjustments. the problem is one of saving rate insufficiency and will require internal financial adjustments. in the process of global economic adjustment europe should not bear the main burden of exchange rate corrections. the responsibility of europe is to implement the necessary reforms in order to increase its rate of potential growth. we need to deal with the very serious consequences of negative demographic developments, of technological shortfalls and the requirements to flexibly adjust markets to the demands of the new international environment. we need good structural policies to restore confidence in the future. these reforms are a condition to preserve the basic features of the european model, that particular combination of stability, growth and social cohesion that has made europe a beacon of civilization. it is indeed in europe that one can find the most humane and progressive societies compatible with the human condition. but, in the present world environment, like in the hegelian β aufhebung β, we have to transform | 0.5 |
agenda of pursuing financial stability and mitigating systemic risks. regulators talk of this continuously and we have set this as a threshold of prudential policy moving forward. many may argue however that financial stability is best left to regulators. after all, each bank is well aware of its own actions, its balance sheet and performance metrics but certainly not of each and every other bank out in the market. should you not then focus on the bottom line and leave the β big picture β to the prudential authority? this is an easy argument to make. but i believe it to be only half true. while regulators need to understand and take action on what can impair the system as a whole, this cannot be simply a task of one stakeholder. how can the greatest good be achieved if not all stakeholders assume collective responsibility? we believe that it is useful for all other stakeholders to have a working appreciation of that same big picture that regulators routinely worry about. from a capacity - building standpoint, this is ground zero. all other training initiatives will emanate from this. capital market issues such as products and markets, pricing and valuation, and market infrastructure easily emanate from the same framework. all these training topics are quite technical in their own regard but there is a direct way to make them part of one common objective. training opportunities in the basel accord, icaap, stress testing, risk management, good governance, compliance framework, among others, can then be brought to bear on this singular prudential goal of achieving stability. final thoughts ladies and gentlemen, while we have made strides, we should not rest on our laurels. to say that much more needs to be done is an understatement. the truth is that a lot more than β much more β must be done if we are to continuously move forward. but the tasks ahead are not independent strands but should instead be seen as part of a single process. just like the relays in athletics, each stakeholder plays a unique role so that the baton is faithfully passed on from one leg to the next. those of you who know the 4 - by - 100 relays understand that the winning team is not always made up of the four fastest runners. relays are not only about sheer speed. rather, most races are won β and lost β in the baton hand - off. capacity - building is just like these competitive relays. the skill set that one develops is the speed that allows us to | constituents who either must execute or those that can benefit from these reforms. it is for this reason that i truly appreciate your theme for the coming fiscal year of β levellingup : linking action with vision β. in a short phrase, you emphasize the need for direction through vision but likewise realize that success requires affirmative action. towards this end, the bsp values the efforts of baiphil to step up its capability - building initiatives. we also welcome baiphil β s move to thoroughly align its varied activities with its vision of providing excellent banking support at par with the best in the asia pacific. achieving this singular goal alone will demand unity of purpose throughout the organization. down the road, we see that this will result not only in a rise in the number of seminars for bank personnel. more importantly, we expect this to translate to responsive training programs that enable bankers to keep up with the fast - changing global environment. it is clear to us that today β s financial market norms are markedly different compared to practices just a decade or two ago. we now live in an era of stricter capital requirements, steeper yardsticks of governance and higher standards of consumer protection. we certainly expect banking practices to evolve as global markets grapple further with the lingering global financial crisis. indeed, the only thing that remains constant is change itself. but financial markets rarely give us the opportunity to pause and dictate the changes that are evolving before us. banks β with all the formalities of an organization and its brick and mortar structures β must always be ready to adjust if they are to meet the changing needs of their own publics. this is a hurdle β¦ but not an impossibility. to be able to put themselves in a position to be this flexible, banks must ensure that both skills and knowledge are already in place before change takes root. the reform agenda as a training guide this seems to be an oxymoron : to ask banks to have skills and knowledge in place well before these competencies will be demanded by the changes in front of us. bis central bankers β speeches however, this investment in capacity is precisely what is dictated by today β s market landscape. we need to anticipate change and by doing so, we allow ourselves the opportunity to parlay the uncertainties of change into opportunities that come with vigilance. there is then a convenient nexus between the agenda of reform and the dictates of capacitybuilding. from our perspective, nothing is more urgent than the policy | 1 |
december 24, 2020 bank of japan response to covid - 19 and medium - to long - term challenges for japan's economy : with an eye on the post - covid - 19 era speech at the meeting of councillors of nippon keidanren ( japan business federation ) in tokyo kuroda haruhiko governor of the bank of japan ( english translation based on the japanese original ) introduction it is a great honor to have this opportunity to address such a distinguished gathering of business leaders in japan today. for eight years now, i have delivered a speech at this end - of - year meeting, and i can say that this year we have experienced enormous changes in the social and economic environment due to the shock of the novel coronavirus ( covid - 19 ). as we wrap up 2020, i would first like to take a look back at economic developments this year, mainly focusing on the impact of covid - 19, and talk about the outlook for economic activity and prices. then, i will explain the bank of japan's thinking behind its policy responses. in relation to the conduct of monetary policy, i will also touch on the conduct of the assessment for further effective and sustainable monetary easing, which the bank decided at the monetary policy meeting ( mpm ) held last week. lastly, i would like to talk about what is necessary in taking advantage of lessons to be learned from overcoming the current crisis for future growth - - that is, challenges regarding japan's economy as a whole that should be addressed when also looking ahead to the post - covid - 19 era from a medium - to long - term perspective. i. economic and price developments during the covid - 19 era and their outlook impact of covid - 19 on the economy let me start with a look back at economic developments this year, mainly focusing on the impact of covid - 19. covid - 19 started to spread from the beginning of the year and became a pandemic within a short period toward early spring ( chart 1 ). governments around the world took strict and wide - ranging public health measures in order to prevent the spread. under these circumstances, the global economy became depressed significantly. however, since the summer season, as public health measures have been eased, the global economy has picked up from that state of significant depression, as seen in the growth rates of each country turning positive on a quarter - on - quarter basis. similar developments have been observed in japan. the quarter - on - quarter gdp | richest countries. about three - quarters of the global fdi stock is currently located in developed countries and the vast majority of fdi funds invested worldwide comes from developed countries. at the same time, fdi patterns are changing most rapidly for developing and transition countries, where funds are concentrated in a handful of countries such as china or india. this is why we will also hear about the asian experience. interestingly enough, some of the motivations for investors β location decisions are not so different between developed and developing countries. factors such as access to large and fast - growing markets or the circumvention of trade barriers are equally relevant to the u. s. as they are to china or india. other factors are more specific to single regions. overall, i am confident that there will be a lot to learn for us β across countries and across regions β during the next two days. i wish all of us an interesting and successful conference. | 0 |
zeti akhtar aziz : creating a sustainable pool of talent for malaysia speech by dr zeti akhtar aziz, governor of the central bank of malaysia ( bank negara malaysia ), at the kijang emas scholarship award ceremony, kuala lumpur, 30 april 2015. * * * in preparing for the future, a future that is going to be fundamentally different from the current environment, talent development has become more important than ever before. the environment before us is rapidly changing and is continuously becoming more interconnected, more complex and certainly more competitive. it is also becoming more uncertain and unstable. malaysia has, however over several decades, demonstrated time and again our ability to face the challenges arising from these transformative changes, supported by our resilience and strong foundations. human capital makes up a critical component of these foundations. developing the talent that we have and making greater investments in our talent pipeline will contribute to generating the development of our future leaders that will be able to effectively operate in this new environment. education and capacity building to generate the new talent with the right skills, mindsets and values, as well as effective talent development strategies and their implementation, have now become key priorities of the nation. the kijang emas scholarship award is an eminent scholarship award that is part of the bank β s commitment to creating a sustainable talent pool for the nation. the kijang emas scholarship is distinct from the kijang scholarship in that the recipients are given the freedom to pursue any field of study at top universities in any country of their choice. the bank also does not impose any bond on the recipients except that they return, contribute and partake in the development of our nation. to date, 44 high potential talent have been awarded the kijang emas scholarship. the recipients have graduated or are currently pursuing their studies in diverse fields of study including medicine, engineering, law, economics, dietetics, actuarial science, accounting, dentistry, biochemistry, genetics, architecture, psychology and geophysics in top universities around the world such as mit, university of pennsylvania and the university of cambridge. thus far, 11 kijang emas scholars have completed their undergraduate studies and have returned to serve the nation, while another seven scholars are expected to complete their studies in the next six months. for the 2015 kijang emas scholarship, we received a total of 212 applications from top spm students scoring straight a + for their 2014 spm. from this, the bank | muhammad bin ibrahim : outstanding contributions to the development of islamic finance in malaysia welcoming remarks by mr muhammad bin ibrahim, governor of the central bank of malaysia ( bank negara malaysia ), at the royal award for islamic finance gala dinner and award presentation, kuala lumpur, 14 november 2016. * * * bismillahhirahmanirrahim. mengadap seri paduka baginda yang di - pertuan agong almu β tasimu billahi muhibbuddin tuanku alhaj abdul halim mu β adzam shah ibni almarhum sultan badlishah, seri paduka baginda raja permaisuri agong tuanku hajah haminah. ampun tuanku beribu - ribu ampun, sembah patik mohon diampun. patik serta seluruh dif - dif jemputan pada malam ini dengan penuh hormat dan takzimnya merafak sembah menjunjung kasih atas limpah perkenan seri paduka baginda tuanku berdua berangkat bercemar duli ke majlis makan malam anugerah diraja kewangan islam tahun 2016. ampun tuanku. seterusnya patik ingin memohon perkenan seri paduka baginda tuanku untuk menyampaikan ucapan kepada para hadirin dalam bahasa inggeris. kebawah duli yang maha mulia paduka seri sultan nazrin muizzuddin shah ibni almarhum sultan azlan muhibbuddin shah al - maghfur - lah, sultan of perak darul ridzuan, and duli yang maha mulia raja permaisuri perak tuanku zara salim. your royal highnesses, your excellencies, distinguished guests, ladies & gentlemen. it is my pleasure to welcome the distinguished audience to the gala dinner for the royal award for islamic finance ( raif ) tonight, which is held to honor an individual for outstanding contributions to the growth and development of islamic finance. allow me to express our utmost gratitude to his majesty seri paduka baginda yang di - pertuan agong and her majesty, and his royal highness sultan of perak darul ridzuan, the royal patron of | 0.5 |
this cooperation has also included active participation in public - private partnership initiatives, including the national scams response centre. as a member of the financial action taskforce or fatf, malaysia will once again be undergoing a mutual evaluations exercise in 2024 and 2025. for the uninitiated, this is an in - depth assessment of the country's measures to combat ml / tf risks and its compliance with the international standards set by the fatf. this will be the fourth time for us and the last one was done in 2014. it is my hope that the stride made in malaysia's aml / cft ecosystem, strong commitment of all institutions towards a highintegrity financial system, and effective cooperation between the industry and public authorities will be reflected in the eventual outcomes of the evaluation exercise. in particular, it is paramount for all staff of reporting institutions to maintain high professional standards, adhere to existing confidentiality requirements, and undergo adequate aml / cft trainings. ladies and gentlemen, i would like to leave you with a line that is often quoted when speaking about integrity : " integrity is doing the right thing even when no one is watching ". while the quote may have been over - used, it has not dimmed its truth one bit. it is much easier to do the right thing under other watchful eyes, the safety barriers of procedures, or even the instruction of prescriptive rules. but oftentimes, the decisions that will matter most are what we choose to do when nobody, but our conscience is watching. it is when an institution knows without doubt that its people will stay the course in these situations that it can truly claim to have achieved the ideal culture. 3 / 4 bis - central bankers'speeches before i end, i would like to congratulate aibim on the launch of integrity year 2023 and it is my sincere hope that all participants, whether in this room today or from your respective institutions, will benefit from a deeply beneficial and fulfilling programme planned for the rest of the year. thank you and assalamu'alaikum. 4 / 4 bis - central bankers'speeches | adnan zaylani mohamad zahid : islamic finance, e - payments and fintech opening speech by mr adnan zaylani mohamad zahid, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the 3rd islamic fintech dialogue ( ifd2020 ), 1 december 2020. * * * it really is a pleasure for me to join you this afternoon to be part of what i am sure will be an illuminating and stimulating dialogue over the next two days. i would like to record bank negara malaysia β s appreciation to isra for organising this, but also more broadly, its continued contribution to the development of islamic finance not just in malaysia but internationally. as a prestigious research academy, it needs to produce prestigious and breakthrough research, and it needs to have events like this dialogue to further advance the knowledge and exchange of ideas and the cause of islamic finance. in 2011, bank negara malaysia issued a 10 - year financial sector blueprint. one of the key agendas we wanted to drive was to promote e - payments ; at the time, greater use of payment cards, internet banking and online fund transfers. little did we expect that β fintech β, which according to google trends was still a nascent term at the time, would grow at the pace and scale we are seeing today. it appears that interest in fintech only picked up rapidly from 2015. today, many countries, including malaysia, have adopted it as a key development theme for their financial sector. indeed, fintech is to take us beyond payments β faster and cheaper delivery of a far wider range of financial services. increasing outreach and inclusion. injection of new competition and transformation of the industry. we see this materialising. there are well over 12, 000 start - ups disrupting the financial market globally with fintech investments reaching a record high of $ 150. 4 billion in 2019. the international monetary fund ( imf ) reported that as of april 2019, there were around 200 fintech start - ups in malaysia in the areas of payments, blockchain, and lending. cpa australia apprised that over 75 per cent of malaysian businesses have embraced at least one fintech product or service over the past 12 months, according to a regional survey. while the disruption continues, traditional financial institutions have been responding. insights from pw c indicate 77 % of traditional financial institutions are increasing internal efforts to innovate, 56 % have put disruption at the | 0.5 |
a more profound panic phenomenon. market participants wonder whether the forms of financial intermediation and functions of financial institutions β long connecting savers with investors β will be implemented in a manner that will enhance, or reduce, economic well - being. some are questioning the efficacy of the remaining vestiges of the existing financial architecture and remain uncertain of the timing, efficacy, and policy preferences for the financial architecture that will ultimately emerge. surely, they applaud the goal of policymakers to reform the financial system to make it more durable through the cycle and less susceptible to shocks. but some query whether policy actions are, on balance, lessening or stoking panic conditions. articles of faith headlines have been dominated in recent weeks by the legal rules that govern contracts. to be sure, markets function best when economic actors comport themselves in a manner consistent with the rule of law. 10 fidelity to the rule of law is not just some aphorism for a judicial system to protect property right disputes among private parties. nor should it be just some preachy truism of economic development for emerging economies. rather, it is the linchpin of modern market economies like ours. and it suffers its greatest blow when the governing authorities are unwilling to uphold their end of the bargain. nonetheless, despite some highly publicized suggestions to the contrary, i remain highly confident that the government will work tirelessly to uphold its obligations. hewing to the rule of law, however, may be the easier part. the panic bred by the loss of confidence in the underlying financial architecture is difficult to remedy beyond the purview of statutes and regulations. a weighty accumulation of unwritten, but no less critical, practices and understandings governs behavior and establishes expectations in market economies. over time, these informal understandings attract deep and loyal followings by economic actors. they become articles of faith. deviations from them tend not to be illegal, but they can markedly change perceptions of risk and return. when that happens, the resulting expectations are unmoored, with significant and often highly detrimental consequences for market functioning and economic progress. panics can thus be understood as periods in which key articles of faith are cast in doubt. how does this happen? after long periods of economic prosperity β in the most recent case, the so - called great moderation β articles of faith accumulate. some of these understandings the global equity markets underperformed those in the united states. the dow jones global index fell 15 percent from | , " fears were raised about others. fund outflows escalated rapidly, threatening the stability of short - term funding to businesses and municipalities. confidence in money center banks plummeted, as was the case a century before. and market participants lost trust in their counterparties. extraordinary actions, however, have been taken β with some notable success β to lessen panic conditions. panics involve losses of confidence in the financial system, when even sound firms find it difficult to borrow. panics are threatening to economic well - being. panics take even less kindly to, and often result from, uncertainty. and panics place a greater burden on the deftness of policy responses than recessions alone. our economic history contains many contractions in output β and losses in wealth β that were unconnected to panics. 5 in the panic of 2008, however, the breakdown in the financial sector has contributed to, and exacerbated, the economic downturn. economic and financial conditions the current financial and economic turmoil is marked by indicia of both recession and panic conditions. by official measures, the current recession is already significant in scale, scope, and duration. and the deterioration in employment conditions in the current episode already ranks comparably to the recession of 1981 - 82. the unemployment rate is 8. 5 percent and likely, in my view, to increase steadily through the balance of the year. economic output, as measured by gross domestic product, contracted at a rate of about 6 - 1 / 4 percent in the fourth quarter of 2008 and is on track to contract sharply again in the first quarter, which would put the current contraction among the most severe post - world war ii recessions. though the pace of decline is likely to abate, i am decidedly uncomfortable forecasting a sharp and determined resumption of growth in the coming quarters. the panic conditions that have marked this period may also have long - run implications. i suspect that the process of an efficient reallocation of capital and labor will prove slower and more difficult than is typical after recessions. policymakers should be wary of policies that make the milton friedman and anna schwarz ( 1963 ), a monetary history of the united states, 1867 - 1960 ( princeton : princeton university press ). see o. m. w. sprague ( 1910 ), history of crises under the national banking system ( washington : government printing office ), p. 259. see joseph davis ( 2004 ), " an annual index of u | 1 |
lael brainard : strengthening the community reinvestment act what are we learning? speech by ms lael brainard, member of the board of governors of the federal reserve system, at the & quot ; research symposium on the community reinvestment act & quot ;, hosted by the federal reserve bank of philadelphia, philadelphia, pennsylvania, 1 february 2019. * * * thank you all for participating in our research symposium on the community reinvestment act ( cra ). i am happy to have an opportunity to learn from your extensive experience and expertise. 1 at the federal reserve, we value the cra as a critical tool for providing support to low - and moderate income ( lmi ) families and their communities. and we are interested in strengthening the cra as it encourages banks to help meet the credit needs of the communities they are chartered to serve. today β s research forum is one part of an extensive outreach effort we are undertaking to gather the best ideas for improving implementation of the community reinvestment act. over the past four months alone, all 12 of our reserve banks have hosted roundtables in locations around the country, from san francisco to boston, and from rapid city to puerto rico. the purpose is to hear ideas on improving the cra regulations from the bankers and community groups that have a stake in the cra β s success. in addition, we held two roundtables at the federal reserve board earlier this week to gather perspectives from national organizations focused on policy topics, such as housing, small business lending, and consumer credit. 2 we have also consulted with our advisory councils to gather their thoughts on cra reform. we have asked our large and community bank advisory councils, the federal advisory council and the community depository institutions advisory council, about their experiences with the cra and suggestions for improvements. we have also sought community perspectives. at our most recent meeting with our community advisory council, we asked for their recommendations for reform. 3 even though we decided not to join the office of the comptroller of the currency in the publication of its august 2018 advance notice of proposed rulemaking concerning revisions to the cra regulations, we have been reviewing the approximately 1, 500 comment letters submitted by academics, banks and banking trade associations, community and consumer groups, and citizens. so what have we learned so far from the comment letters we have reviewed and the roundtables we have held? if there is one common thread, it is that support for the community | hosted by the federal reserve bank of kansas city. i appreciated the robust conversation among knowledgeable individuals whose work touches on the cra every day. sitting around a 2 / 3 bis central bankers'speeches table together provided an opportunity for me to hear community bankers reflect on what has worked well for their communities and what they see as challenges, and to provide thoughtful suggestions on what they think might work best going forward. it was also helpful to be exposed to some differences of views. the best approach to implementing the cra in today β s environment is a complex issue, so i value hearing a wide range of suggestions. in closing, i want to reiterate my own commitment to strengthening the cra, which is widely shared across the federal reserve system. we aim to promote more cra activity, not less. we think that simplifying and clarifying the regulations while strengthening local community engagement will help us accomplish that goal. thank you for your help in this process. 1 i am grateful to amanda roberts for assistance in preparing these remarks. these remarks represent my own views, which do not necessarily represent those of the federal reserve board or the federal open market committee. 2 a summary of the findings will be made public in the spring. 3 a summary of the response is available on our public website at www. federalreserve. gov / aboutthefed / files / cac - 20181005. pdf. 4 see lael brainard, β community development in baltimore and a few observations on community reinvestment act modernization β ( speech at the federal reserve bank of richmond baltimore community development gathering, april 17, 2018 ) ; and β community investment in denver β ( speech at the denver branch of the federal reserve bank of kansas city, october 15, 2018 ). 3 / 3 bis central bankers'speeches | 1 |
sonnemannstrasse 20, 60314 frankfurt am main, germany tel. : + 49 69 1344 7455, e - mail : media @ ecb. europa. eu website : www. ecb. europa. eu reproduction is permitted provided that the source is acknowledged. media contacts copyright 2020, european central bank | that the value of savings for the old age is preserved. the best that reserve bank can do for ensuring a sustainable pension system is to accord high priority to price stability, which is precisely what it is doing. financial protection awareness and financial literacy recent surveys such as those conduced by ncaer 1 in conjunction with max life show that higher rate of household savings at macro level can be explained in terms of increasing concerns for social security, high cost of education, health and meeting other social commitments. saving for old age is not found to be a dominant factor. at the same time an overwhelming 96 per cent of households feel that they cannot survive for more than one year on their current savings in case they lose their major source of household income ; yet 54 per cent households feel that they are financially secure. financially - at - risk urban indians appear to be even more optimistic than their rural counterparts. this clearly indicates that indians do how india earns, spends and saves β results from the max new york life - ncaer india financial protection survey, rajesh shukla. not take a long - term view of their financial security. there is therefore, a pressing need for financial literacy for better understanding of financial risks. at the global level, olivia mitchell 2, wharton professor of insurance and risk management, and chaired professor at singapore management university is also of the same view : β global ageing makes for a much riskier world, inasmuch as people tend to retire too young, save and diversify too little, and outlive their assets. β her research shows that many workers are underestimating retirement challenges, including the risk of outliving their assets, the future cost of healthcare and the erosive power of inflation in retirement and she too, therefore, stresses the importance of financial literacy. another compelling reason for financial literacy is the fact that most employers have moved or are moving away from defined benefit schemes to defined contribution schemes, which require employees to be able to better estimate their old age needs and plan accordingly, starting sufficiently early. such schemes also allow workers to take their savings with them when they change jobs. in this new environment, where individuals have greater responsibility for determining their own retirement income, factors such as general financial knowledge, an understanding of the retirement saving process become critical to achieving one β s retirement objectives. a survey showed that only 18 per cent of the people surveyed answered correctly the question as to how much $ 200 would grow to, at the end of two years, at | 0 |
s s mundra : indian banking sector β emerging challenges and way forward lecture by mr s s mundra, deputy governor of the reserve bank of india, as part of the memorial lecture series launched by state bank of mysore in the memory of his highness sri nalwadi krishnaraja wadiyar, bangalore, 29 april 2015. * * * 1. shri sharad sharma, managing director, state bank of mysore ; shri karthak, regional director for karnataka, rbi ; senior colleagues from the banking fraternity ; ladies and gentlemen! it is a privilege for me to deliver the inaugural memorial lecture in the honour of his highness sri nalwadi krishnaraja wadiyar, former maharaja of mysore. it is quite apt that a memorial lecture has been instituted by state bank of mysore in the honour of sri krishnaraja wadiyar. the prophetic maharaja of mysore, during his lifetime, had earned sobriquets of being a philosopher - king and a β rajarshi β or a β saintly king β from no less a person than the father of the nation. it is a glowing testimony of his popularity and prowess that mysore in his times was regarded as β the best administered state in the world β. as lord sankey noted β princes from other sections of india were sent to mysore for administrative training β and hence, holding this memorial lecture at this newly opened learning centre holds an added significance. during his reign, maharaja wadiyar worked towards social causes like poverty alleviation and economic regeneration by improving rural reconstruction, public health, industry and education ; some of the goals that the policy makers are presently pursuing with support from the banking sector. 2. the banks are the lifelines of the economy and play a catalytic role in activating and sustaining economic growth, especially, in developing countries and india is no exception. our banking system, at the present juncture is, however, facing significant challenges from several quarters. these challenges, if not addressed quickly and adequately, may result in loss of opportunities as and when the economic growth starts picking up momentum. in a sense, it has implications for both - the banks as well as for the economy as a whole, because as i mentioned earlier, a strong banking system is one of the essential prerequisites in the quest for growth. in my lecture today, i intend to focus on the economic landscape and the emerging challenges for the banking system at the current juncture. macroeconomic landscape 3. since the onset of the financial | and should not be seen as an end in itself. side by side, we need to develop strong partnerships so that country ownership is assured. further work is also required in order to enhance the voice and participation of developing and transition countries in the multilateral institutions. while we appreciate that there are no quick fixes, we would stress that on - going dialogue and efforts to evolve solutions that better reflect changed realities is the way forward. together, we would work towards improving the environment where we see the benefits of economic growth percolating to those who have been hitherto denied and to those who have suffered painful adjustments. there is no single mantra that would work everywhere and our policies should recognize this. but, if we are able to develop a real partnership, with each nation allowed to exploit its comparative advantage, and not be held back by artificial barriers and constraints, there is no reason why we will not succeed. | 0.5 |
me start with the role of aml / cft supervisors. in the first instance, it is essential that national aml / cft supervisors encourage the establishment of partnerships for the sharing of information through the development of clear guidance in addition to a verification process that is accessible, transparent, and capable of evolving over time. at the central bank, notwithstanding the fact that the aml regulation will not be applicable until july 2027, work is well underway on developing the necessary framework and governance procedures. the verification process will require not only the review of the application to ensure that it conforms with the requirements of article 75 but will also require the central bank to consult our colleagues in the office of data protection commissioner in relation to the data protection impact assessments ( " dpia " ). it will also be necessary to for the central bank to consult with the financial intelligence unit where necessary. in addition to fulfilling our statutory role in verifying partnerships for information sharing, in my view there is an additional and equally important role that aml / cft supervisors must play in order to realise the full potential of article 75 aml regulation. that is our role in fostering and supporting the development and adoption of technologies that facilitate the sharing of sensitive information through the use anonymisation technologies. the so - called privacy enhancing technologies ( pets ) have the potential to revolutionise information sharing between private sector operators. aml / cft supervisors such as the central bank of ireland can, i hope, act as a catalyst for the development and implementation of such technologies. 3 / 5 bis - central bankers'speeches one such way the central bank can do this is by continuing to enhance our engagement with innovation in financial services. in 2018, we launched the innovation hub for firms to engage directly with the central bank on innovation. since the launch of the innovation hub, the innovation ecosystem has continued to develop at pace in ireland and abroad. in line with the continuous development of the innovation ecosystem, we also have continued to deepen our approach by enhancing our innovation hub and outreach programme. this involves, firstly, enhancing the role of our innovation hub to deliver deeper, clearer and more informed engagement with the innovative ecosystem. secondly, we are establishing an innovation sandbox programme to inform the early stage development of selected innovative initiatives which are consistent with our public policy objectives. in july, we announced the theme of our first innovation sandbox programme that is very relevant to our discussion today, that of combatting financial crime. the sandbox | information " are entirely at odds with the realities of criminal operations, which are not bound by β and indeed actively exploit β international borders to evade civil and criminal sanctions. this undermines law enforcement's ability to build a picture quickly and comprehensively. it also undermines financial institutions'ability to fully understand their exposure to financial crime risk at a global level ". not only do criminals operate without regard to borders, they also routinely use multiple institutions to launder their ill - gotten gains. consequently, it is increasingly difficult for a single private sector operator to identify suspicious activity in the absence of all the pieces of the " jigsaw ". information sharing among private sector operators therefore has the potential to improve the quality and accuracy of suspicious activity reporting. this can ultimately reduce the operational burden in processing and analysing large amounts of low quality data that historically has resulted in large volumes of false positives. some countries - the uk, the us and singapore - have taken the lead in enabling information sharing between private sector operators. america's patriot 2001 act is often described as the gold standard on information sharing. singapore's digital 2 / 5 bis - central bankers'speeches platform β called cosmic - enables six major commercial banks to securely share with each other information on customers who exhibit multiple " red flags " that may indicate potential financial crime concerns. 3 article 75 of the new aml regulation, while not as broad as the information sharing provisions in the usa and singapore, enables for the first time the sharing of certain confidential information between private sector operators under the auspices of what are known as " partnerships for information sharing ". as one would expect, article 75 contains a number of caveats and establishes a number of important guardrails designed to strike the balance between effectively combatting money laundering and terrorist financing and protecting the privacy and the data of all eu citizens. one such guardrail is the requirement that information can only be shared within a partnership provided the information relates to customers deemed to be higher risk and the information sharing is strictly necessary for the purposes of meeting aml / cft obligations. another safeguard is the requirement that partnerships for information sharing must be verified in advance of their establishment by the aml / cft supervisory authorities in collaboration with data protection authorities. successfully navigating the complex set of safeguards and fully realising the full potential intrinsic in partnerships for information sharing will require a coalition of actors working in unison and with ambition. so what specifically will be required of this coalition of actors? let | 1 |
to announce that over 100, 000 mobile payments of top up fees for prepaid mobile telephony use is registered through the dina card system on a monthly basis. our target, of course, is a manifold increase of this number during this year. on this occasion i would also like to announce another new project to be soon realized in cooperation with the telekom that will enable our citizens to request issuance of and mobile payment for excerpts of various personal documents kept on records with the state institutions. finally, allow me to remind you of another topical issue in the european environment that we are striving to join, which can be used to exemplify how technology can bring on a change even to the regulatory systems within our region. i am referring here to the initiation of the system of interbank payments in accordance with the sepa ( single european payment area ) and the ecb initiative. what is it that sepa will bring about? here is an example : an internet user from belgium pays electricity bill for his daughter studying in france from his account opened with a spanish bank and is charged fees for banking services as if all these transactions were taking place in one and the same country. this example is the best illustration of the encouraging impact of high technology not only in respect of the development of the financial services market but also in respect of encouraging market regulators and finding innovative solutions. the nbs hopes that application of similar technologies in serbia will enable faster development of the financial industry. one thing is for sure, the existing multitude of fees charged for banking services would certainly have remained if it were not for the decisiveness of the european central bank and other regulators who insisted on treating all payments within the euro zone as strictly domestic β and only seven years after they began using the same currency. i wish much success to all of you present in this meeting, and hope that we shall all come up with new ideas and initiatives to enable application of the 21st century technologies in the financial market of serbia. | radovan jelasic : developments in the serbian financial sector speech by mr radovan jelasic, governor of the national bank of serbia, on the occasion of the opening of the eighth forum and exhibition of banking technology β tehnobank 2008 β, belgrade, 9 april 2008. * * * ladies and gentlemen, allow me to greet you on behalf of the national bank of serbia on the occasion of the opening of the eighth β tehnobank β meeting which was first organized at the outset of transition of our economy. i wish to thank the organizers for a very interesting programme which, just as the transition itself, forces us to face up to new challenging ideas. the serbian financial sector is developing rapidly and i wish to single out three topics from this year β s agenda which the nbs is particularly keen to develop : β’ business continuity and disaster recovery β’ mobile payment services β’ new sepa regulations why these three? first, because quality and efficiency in performing financial services are of vital interest to any central bank. implementation of the technology which enables business continuity and disaster recovery is a sign of maturity of both the banking industry and the banking market environment itself. the nbs expects that application of such technologies will increase in the near future and, with that purpose in mind, in cooperation with the bank of england, plans to organize an international seminar on this topic to take place in belgrade on 13 through 15 may 2008. the nbs will host this meeting to discuss the targets, significance and the experiences of central banks in managing business continuity as well as the strategy for disaster recovery and averting threats to the normal conduct of business operations. one thing is for certain β in the 21st century, liquidity and solvency are important but are not sufficient to ensure stability of the financial sector if business continuity and disaster recovery do not function immaculately. let us take the uk example of the northern rock where a mistake in that respect actually led in great part to the first instance of bank nationalization after more than a century. mobile payments, however, are a chance for serbia to jumpstart technological development and to implement from the start the most innovative technologies. while many countries are still at the stage of devising extended pilot programs for mobile payments, in many serbian cities mobile telephony is already used for payment of parking space fees, while payment of top up fees for prepaid mobile telephony through sms messaging service is already a matter of everyday use. it gives me pleasure | 1 |
rise in educational attainment β both for college and high school β may soon come to an end. one area where policy may play a role is promoting educational access and readiness for groups for whom educational attainment is relatively low. recent research has shown a substantial return to public investment in early childhood education for economically disadvantaged groups. such programs increase high school graduation, promote income over the life cycle for both participants and their parents, and produce other socially beneficial outcomes, such as greater health. 12 at the other end of the education process, a college degree has long been considered a worthwhile investment, and thus our society should promote access to and readiness for college among a broad range of individuals β in particular through federal support for need - based financial aid. 13 lastly, i will note that ultimately the return on the human capital embodied in our workforce is closely tied to public health. a rise in morbidity or fall in longevity in the u. s. population is not a concern only for humanitarian reasons. workers too ill to perform at their potential represent lost productivity and welfare for society as a whole. research has shown just such a trend among prime - age non - hispanic americans without a college degree. 14 more study is needed to determine what policies would help reverse this trend, and government funding could likely assist the effort. more broadly, programs to promote clean air and drinking water are examples of public health policies that bolster the health and longevity of the present and future workforce as a whole. concluding remarks to conclude, we return to the basic question : how much does productivity growth matter? the basic answer : simple arithmetic says it matters a lot. if labor productivity grows an average of 2 percent per year, average living standards for our children β s generation will be twice what we experienced. if labor productivity grows an average of 1 percent per year, the difference is dramatic : living standards will take two generations to double. 15 but fortunately, when it comes to productivity, we are not simply consigned to luck or to fate. governments can take sensible actions to promote more rapid productivity growth. broadly speaking, government policy works best when it can address a need that the private sector neglects, including investment in basic research, infrastructure, early childhood education, schooling, and public health. reasonable people can disagree about the right way forward, but if we as a society are to succeed, we need to follow policies that will support and advance productivity growth. that is easier said than done. but it can be done | coen teulings and richard baldwin, eds., secular stagnation : facts, causes, and cures. london : cepr press, pp. 83 β 89. pinto, eugenio p., and stacey tevlin ( 2014 ). β perspectives on the recent weakness in investment, " feds notes, no. 2014 β 05 - 21. solow, robert m. ( 1957 ). β technical change and the aggregate production function, " review of economics and statistics, vol. 39 ( august ), pp. 312 β 20. united states. bureau of the census ( 1975 ). historical statistics of the united states, colonial times to 1970. washington : us department of commerce, bureau of the census, september,. 1 one needs also to recognize that changes in either the average workweek or the employment to population ratio may damp or augment the effect of labor productivity on gdp per capita. 2 byrne, fernald, and reinsdorf ( 2016 ) discuss known measurement challenges and conclude they cannot explain the deceleration of productivity. 3 gordon ( 2014, p. 25 ) enumerates the inventions of the information age β the personal computer, the internet, mobile phones, and so on β and notes that for innovation to continue at such a pace, β the achievements of the past 40 years set a hurdle that is dauntingly high. " 4 mokyr ( 2014, p. 83 ) considers advances in research methods and tools and concludes that β the indirect effects of science on productivity through the tools it provides scientific research may dwarf the direct effects in the long run. " 5 david ( 1990 ) cautions that the effect of general - purpose technologies, such as electricity and electronic computing, can take decades to fully unfold. brynjolfsson and hitt ( 2000 ) consider the process followed by firms in leveraging innovations in it equipment and emphasize the role of complementary investment in intangible assets like business reorganization. 6 mohnen and hall ( 2013 ) survey the empirical literature pointing to a link between r & d and productivity. 7 decker and others ( 2016 ) highlight the decline in entrepreneurship and worker mobility ; andrews, criscuolo, and gal ( 2015 ) emphasizes that productivity for firms at the global frontier continues to advance rapidly even as global aggregate productivity growth has slowed. 8 pinto and tevlin ( 2014 ) note that in the context of a long - run growth model, a slow pace of investment is not surprising | 1 |
talking points for the presentation on section 33c of the banking act national assembly departmental committee on finance and national planning dr. patrick njoroge, governor, central bank of kenya february 26, 2019 hon. members, i am delighted to appear today before this departmental committee on finance and national planning. i am grateful to you for the flexibility you allowed in arranging this meeting. at the outset. i want to make three points. first, i acknowledge the letters i received in the recent past requesting me to appear before this committee. i want to state our desire to meet with you, only that the scheduling did not allow this to happen sooner as i indicated in my replies. in replying to the letter of february 5, 2018, i indicated our desire to appear before the committee as soon as we could, and i also answered some of the questions. hon. members, i am prepared to address the remaining concerns. kulingana na methali β mgeni njoo, mwenyeji apone β. second, i want to assure hon. members that the central bank of kenya ( cbk ) serves the public interest. everything we do is according to its mandate, ultimately for the prosperity of all kenyans. on the specific questions, we are responding to the current challenges which are not only national but global β terrorism, money laundering, and corruption β and whose consequences are dire. third, we serve always and everywhere in accordance with the constitution and all applicable laws. nevertheless, a collaborative effort with all bodies is called for. in particular, we appreciate the national assembly β s role and welcome its support. if you will allow me, hon. members, i will now explain the recent amendment to the banking act, ( section 33c ) how cbk has acted to implement it, the difficulties in implementing this amendment, and what is at stake. i will also explain the background to cbk β s circular on large cash transactions. you will see that, as never before, we are looking over the edge of an abyss. the economy has taken many blows over the years and proved resilient. this one though would be self - inflicted. * * * on october 1, 2018, following the coming into force of section 65 of the finance act ( 2018 ) the banking act was amended to include a new section 33c. in one stroke, kenya was on the brink of rolling back key instruments in the fight against corruption, money laundering, and financing of terrorism, bringing | implementation of state - guaranteed loans : to date, 559, 000 requests have been received for a total of eur 105 billion, of which eur 85 billion have already been granted. in france, loans have therefore been rapidly channelled to vses and smes, in contrast with the difficulties seen in italy, the united kingdom and the united states. bernard delas will come back to the measures taken by insurers, but let me just highlight the acpr β s work on the conditions for the payment of compensation for loss of earnings, in order to better identify the challenges faced by the industry. 2. 2 a responsive monetary policy since this morning we have been in the silent period, so i shall limit myself to some retrospective remarks on monetary policy. i have often stressed that monetary policy is not made for the banks, but rather for the entire economy. and the banks have often been overly critical of monetary policy, holding it responsible for all their ills. i therefore think it is all the more important to stress that the ecb β s recent decisions, in the face of the crisis, have aimed to preserve the effective transmission of monetary policy via the bank channel : the conditions for tltro - iiis, these targeted longer - term refinancing operations, have been significantly eased ( up to 50 percentage points lower than the deposit facility rate if the target for lending during the β covid period β is reached, or currently β 1 % ). this radical innovation represents a reduction of several billion euros in annual costs for the european banking system. new operations have also been announced ( bridge ltros, peltros or pandemic emergency longer - term refinancing operations ). since the implementation of these measures, the outstanding amount of refinancing provided by the eurosystem to euro area banks has increased sharply, to more than eur 1, 000 billion, even before the june tltro. the easing of the collateral framework, for its part, has significantly increased the amount of assets eligible for operations, and supported the supply of credit to the private sector. first, by expanding the use of credit claims ( bank loans ) as collateral. but also by temporarily lowering the haircut applied to collateral by 20 percentage points for all assets ( and by an additional 20 percentage points for credit claims ), or by increasing from 2. 5 % to 10 % the maximum share of unsecured bank debt securities in a credit institution β s 2 | 0 |
in the third quarter. incoming data, notably survey results, bolster our confidence that the ongoing economic expansion will continue to firm and broaden. the passthrough of our monetary policy measures is supporting domestic demand and facilitates the ongoing deleveraging process. the recovery in investment continues to benefit from very favourable financing conditions and improvements in corporate profitability. employment gains, which are also benefiting from past labour market reforms, are supporting real disposable income and private consumption. moreover, the signs of a stronger global recovery and increasing global trade suggest that foreign demand should increasingly add to the overall resilience of the economic expansion in the euro area. however, economic growth continues to be dampened by a sluggish pace of implementation of structural reforms, in particular in product markets, and by remaining balance sheet adjustment needs in a number of sectors. the risks surrounding the euro area growth outlook, while moving towards a more balanced configuration, are still tilted to the downside and relate predominantly to global factors. headline inflation has been recovering from the very low levels seen in 2016, largely owing to higher energy price increases. after reaching 2. 0 % in february 2017, euro area annual hicp inflation stood at 1. 5 % in march. this reflected mainly lower energy and unprocessed food price 1 / 2 bis central bankers'speeches inflation, but also a decline in services price inflation. looking ahead, on the basis of current futures prices for oil, headline inflation is likely to increase in april and thereafter to hover around current levels until the end of this year. however, as unutilised resources are still weighing on domestic wage and price formation, measures of underlying inflation remain low and are expected to rise only gradually over the medium term, supported by our monetary policy measures, the expected continuing economic recovery and the corresponding gradual absorption of slack. turning to the monetary analysis, broad money ( m3 ) continues to expand at a robust pace, with an annual rate of growth of 4. 7 % in february 2017, after 4. 8 % in january. as in previous months, annual growth in m3 was mainly supported by its most liquid components, with the narrow monetary aggregate m1 expanding at an annual rate of 8. 4 % in february 2017, unchanged from the previous month. the recovery in loan growth to the private sector observed since the beginning of 2014 is proceeding. the annual growth rate of loans to non - financial corporations declined to 2. 0 % in february 2017, from 2 | changed its fiscal policy and the riksbank did all it could to defend the currency, raising its steering interest rate to 500 per cent. however, sweden was forced to abandon the fixed exchange rate as an anchor to achieve price stability in november 1992. finland had replaced its fixed exchange rate regime earlier in the autumn. the overheating changed into a severe setback at the beginning of the 1990s. between 1990 and 1994 the swedish gdp fell by a total of 4. 7 per cent. in finland the fall experienced during the same period amounted to 10. 4 per cent. finland was hard hit by the large decline in export brought about by the collapse of the then soviet union. open unemployment in sweden rapidly soared from a level of around 3 per cent in 1991 to 8. 2 per cent in 1993. in finland, the number of unemployed increased from just over 6 per cent to 16 per cent. some of this difference can, however, be due to the slightly different form taken by labour market policy in the two countries and to how unemployment is defined. the deficit in public finances increased considerably ; in sweden it was at worst 12 per cent of gdp in 1993 and the borrowing requirement amounted to almost 17 per cent. the deficit in finland in the same year was 7. 3 per cent of gdp. the crisis in the banking system at the beginning of the 1990s hit both swedish and finnish banks hard. sveriges riksbank, like the bank of finland, found itself in a difficult situation at the end of 1992, following the currency crisis. the decision on a new monetary policy strategy was taken in an environment where confidence in monetary and foreign exchange policy was low. earlier actions in economic policy β resorting on several occasions to devaluation in the cost crises that arose β as well as losing the battle of the fixed exchange rate were some explanations for this. alternative strategies for finding an intermediate or direct target for monetary policy were investigated and the riksbank studies solutions used in other countries. as in the case of finland, we in sweden were not used to working in an environment with a floating exchange rate. the last time sweden had a floating exchange rate was for a few years in the 1930s. the general opinion among both politicians and economists was that a fixed exchange rate was the best solution for small, open economies that were very much dependent on other countries. this opinion has since changed β not only in sweden and finland, but also in many other countries. sweden and finland decided on a new | 0 |
council of financial regulators is continuing to review the regulatory treatment of different types of crypto - assets, including stablecoins. this is in line with the senate select committee's view that we need a regulatory framework that better accommodates the various new digital assets. as i said earlier, if stablecoins and other types of privately issued digital payment tokens are to become more widely used for everyday payments, they need to be subject to a clear and effective regulation than encourages innovation and mitigates against risks to users and the financial system. conclusion to conclude, our payments system is changing quickly. both the regulators and the government understand this and are seeking to put in arrangements that encourage innovation and competition and make sure we have a secure and efficient system. we have work to do here, but are moving in the right direction. auspaynet is a valuable partner in this work and plays an important role in the governance of the australian payments industry. i look forward to continuing the cooperation between auspaynet and https : / / www. rba. gov. au / speeches / 2021 / sp - gov - 2021 - 12 - 09. html 8 / 9 payments : the future? | speeches | rba the reserve bank as we grapple with the challenges ahead and seize the opportunities offered by new technologies. thank you for listening and i am happy to answer some questions. endnotes [ * ] i would like to thank my colleagues in payments policy department for assistance in the preparation of this talk. the government's trusted digital identity framework and the private - sector trust id framework. for more details, see < https : / / www. fsb. org / 2020 / 10 / enhancing - cross - border - payments - stage - 3 - roadmap / >. this facility would have inbuilt kyc compliance workflows that ensure entities using the facility can perform kyc compliance checks to a high standard and can demonstrate this to banks and regulators. the materials on this webpage are subject to copyright and their use is subject to the terms and conditions set out in the copyright and disclaimer notice. Β© reserve bank of australia, 2001 β 2021. 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. https : / / www. rba | rba, just as we issue and back australian dollar banknotes. this would be a form of retail central bank digital currency ( cbdc ) β or an eaud. i have said previously that the rba is open to this possibly. to date, though, we have not seen a strong public policy case to move in this direction, especially given australia's efficient, fast and convenient electronic payments system. it is possible, however, that the public policy case could emerge quite quickly as technology evolves and consumer preferences change. it is also possible that these tokens could offer a lower - cost solution for some types of payments than provided by the existing technologies. and, as i will discuss in a moment, there are advantages in digital payment tokens being backed by the central bank. all this means we have been continuing to examine closely the case for a retail cbdc and working with other central banks on this issue. we are working through the relevant technical issues, as well as the broader policy implications of any shift away from a payments system based on the movement of value between bank accounts, to one that uses tokens. as part of this effort, we are planning to work with australia's new digital finance cooperative research centre. we will also be working with the treasury on these issues and welcome the government's announcement yesterday. another possibility is that payment tokens are issued and backed by an entity other than the central bank, though still denominated in australian dollars. these could be a form of stablecoin. if this is how the system develops, it will be important that these tokens are backed by high - quality assets and that they meet high standards for safety and security. one reason i say this is that a lesson from history is that privately issued and backed money all too often ends in financial instability and losses for consumers. this is one reason why national currencies are today ultimately backed by the state. so if privately issued stablecoins are ultimately the way things head, it will be crucial that they meet very high standards. and if there were to be multiple stablecoins, there would be advantages in them being interoperable. the rba is working with domestic regulators and our counterparts around the world on the policy issues here. https : / / www. rba. gov. au / speeches / 2021 / sp - gov - 2021 - 12 - 09. html 6 / 9 payments : the future? | speeches | rba a third type | 1 |
##ll, u. s. banks and investment banks were highly competitive and successful as each specialized in lending to or underwriting businesses all over the world. there is considerable evidence that under glass - steagall the united states was at no competitive disadvantage to europe, with its mingled merchant banking system. the united states led the world β because it had strong, prudently run institutions that knew how to manage money in the best interests of the client. this categorization of financial activities is from matthew richardson, roy smith and ingo walter in chapter 7 of regulating wall street : the dodd - frank act and the new architecture of global finance, edited by viral v. acharya, thomas f. cooley, matthew richardson, ingo walter, new york university stern school of business, john wiley & sons inc., 2010. bis central bankers β speeches second, there is no strong evidence of unlimited economies of scale and even less for wide economies of scope. although both exist, they are captured at an asset size far less than that of sifis today. third, large corporations would have ample convenient access to commercial and traditional investment banking services inside commercial banking. they would have to go to securities dealers to purchase swaps and other derivatives for hedging purposes, something that has been done in the past without difficulty. finally, it also seems improbable to me that any country should be willing or able to expand its safety net or to expose its taxpayers to the undefined risks of protecting ever - larger and more complex banking organizations. instead, what countries should be focused on now is getting back to fundamentals aimed at simplifying highly complex and unstable sifis. the focus should be on financial stability. reforming the shadow banking system a legitimate concern of limiting the safety net is that this could worsen the risk of financial instability by pushing activities to the unregulated shadow banking system. clearly, focusing solely on the regulated banking industry and ignoring the unregulated shadow banking system would not solve the problem and, in fact, might expand the shadow banking sector that was an integral part of the financial crisis. much of the instability in the shadow banking system stems from its use of short - term funding for longer - term investment. the solution to this instability problem is not to provide a safety net for the shadow banks and regulate them more but, instead, to remove exceptions in which money market instruments are treated essentially as deposits. the current exceptions encourage significant short - | just five years, the housing bubble collapsed and asset values have fallen dramatically. the debt levels, however, remain, impeding our ability to recover from this recession. i would argue that the result of our short - run focus in 2003 was to contribute to 10 percent unemployment five years later. that said, i am not advocating for tight monetary policy. i β m advocating that the fomc carefully move to a non - zero rate. this will allow the market to begin to read credit conditions and allocate resources according to their best use rather than in response to artificial incentives. more than a year ago, i advocated removing the β extended period β language to prepare the markets for a move to 1 percent by the fall of 2010. then, depending on how the economy performed, i would move rates back toward more historic levels. i want to see people back to work, but i want them back to work with some assurance of stability. i want to see our economy grow in a manner that encourages stable economic growth, stable prices and long - run full employment. if zero interest rates could accomplish this goal, then i would support interest rates at zero. in my written testimony, i have included three speeches that describe in more detail my position on monetary policy. monetary policy cannot solve every problem. i believe we put the economy at greater risk by attempting to do so. thank you, mr. chairman. i look forward to your questions. bis central bankers β speeches | 0.5 |
of access to financial services to 48 % by 2008 and 50 % by the end of 2009. following the earlier survey, a subsequent study called the β finscope supply β side survey β was conducted in 2007. some of the key findings were that : a. bank charges are unaffordable for 90 % of the rural adult population in zambia ; b. zambian banks generally have high operating costs and interest rate spreads ; and c. the physical coverage of financial outlets may not increase at current cost levels. it is therefore, my hope that this forum will address these and other challenges that slow the pace of financial inclusion in our countries. honourable minister, over the past two years, we have noted with delight that financial institutions in zambia are beginning to rise up to the challenge by beginning to broaden the scope of their financial services and extending their services beyond the traditional customers to include previously unbanked communities. in addition, the zambian financial sector has in recent years experienced growth in numbers of both registered commercial banks and non β bank financial institutions. we in zambia, therefore, see this forum as being timely and providing a unique opportunity for african financial institutions to share knowledge and experiences on how best to promote financial inclusiveness, particularly among our rural and peri - urban communities who have since not been fully integrated in the financial systems of most of our countries. this entails that they are not effectively participating in the economic growth that is being experienced in these countries. this forum also comes at a time that we in zambia have just lost a statesman who was passionate about rural development and empowerment of all citizens. the conference theme therefore, is appropriate for us as we carry on the vision of our beloved late president, dr. levy patrick mwanawasa, sc ( m. h. s. r. i. p ). in this respect, we would also like to acknowledge the many expressions of sympathy extended to us during our time of mourning. distinguished delegates, on behalf of afraca, i would like to thank our various presenters and panelists for accepting to facilitate our deliberations over the next two days. i would therefore, like to implore all delegates to engage fully in these discussions and make the most of the wealth of knowledge and experience represented in the house. ladies and gentlemen, it is my pleasure and privilege once again to welcome you to the second afraca central banks β forum. i now wish to invite our distinguished guest of honour, the minister of finance and national | of licensing and enforcement before moving to the bank of zambia. to say something about my academic qualifications, i graduated with a bachelor of laws degree from university of zambia, thereafter a master of laws degree from harvard where i was a fulbright scholar and a phd from university of london, centre for commercial law studies, queen mary and westfield college. allow me to mention that all my studies were done on scholarship. bis central bankers β speeches apart from my work, i am also involved in service to the public and to the church through sitting on various bodies. i was not appointed to this position my chance ; it took effort and hard work to be noticed. i believed in myself and knew i had to put in the best to achieve anything i wanted to achieve. so what message do i carry for you this afternoon? my theme is that you can do it! to you the students, i want to encourage you to see yourselves as leaders. you are the future of this nation. you are part of the cream that need to push this country forward. i would like you to realise that academic and professional qualifications are an integral part of settings yourselves up for one β s life. by being here, you are establishing a path for your successful career whether as an employee or an entrepreneur. the knowledge that you are gaining is assisting in developing and enhancing your ability to think and perceive as well as manage the various situations that life offers. the outcome of your academic development will obviously have a positive impact on your family, society, culture and country at large. make sure you take full advantage of this opportunity. it sets the stage for the rest of your future. if you graduate from here with poor grades will mean you have limited your access to top notch institutions, should you, for example, wish to get an advanced qualification. you are limited even to apply for scholarships. and in situations of competition, the best will be selected. zcas is one of the renowned institutions in zambia. one thing you must realise is that not everyone has the opportunity to be enrolled in an institution of higher learning to obtain an academic or professional qualification. therefore, you must make the best of this opportunity to be here at zcas and indeed, be thankful to god. many of your friends are not able to have this opportunity. i am also aware that for quite a good number, it is a great sacrifice by your parents to send you here. you should ensure that this investment pays off by putting in your best. discipline for many of | 0.5 |
jointly or via the imf, to lend large sums to another country will always be difficult. in a world of nation states, it is unreasonable to suppose that political considerations will not enter the choice of recipient of such largesse. and the greater the political uncertainty about the willingness to act as an ilolr, the larger the amount of funding that will be required. in turn, the operation will appear less credible, and the authorities are caught in a vicious circle. the current resources of the imf β between $ 125 billion and $ 150 billion depending on how they are measured β are wholly inadequate for an ilolr. nor are resources on the appropriate scale likely to be forthcoming. moreover, serious moral hazard arises when the private sector ignores the risks of lending to a country because it believes that the country would be bailed out by the international community in the event of a liquidity crisis. and investors are encouraged to lend to emerging markets in forms β short - term debt β which are more likely to be bailed out. in the domestic context, the lolr ensures that neither the managers nor the equity holders of the institution receiving support are allowed to benefit. internationally, it is not easy for the imf to penalise those responsible for management of the economy, nor to distinguish between those citizens that have been responsible for excessive risk - taking and those who will be the innocent victims of the consequences of a financial crisis. it is the ordinary taxpayers in emerging market countries who will have to bear the burden of servicing loans from the imf. 5 fischer, s ( 1999 ), β on the need for an international lender of last resort β, imf. a point stressed by calomiris ( β the imf β s imprudent role as lender of last resort β, cato journal, vol. 17 no. 3 1998 ) although he underestimates, in my view, the possibility of liquidity runs as seen, for example, in korea in 1997. absent a world government, it is difficult to see a credible ilolr on the horizon. the reason is the simple maxim : β it β s the politics, stupid β. the second purist solution, at the opposite end of the spectrum, is the imposition of permanent capital controls. in other words, a return to the world in which the bretton woods institutions were created half a century ago. the advantage of capital controls is that they prevent the liquidity runs that result from currency | to give consumers control of their data. this would allow consumers to move their personal information from one platform to another and avoid lock - in effects, opening the door to new services. 19 to some extent, this is what open banking hopes to achieve. although to make this a success means establishing common off the - shelf api standards and operating platforms onto which developers can build. an open platform for sme lending would enable open banking and empower smes. it would help avoid lock - in on existing platforms and enable providers of finance to compete for sme lending, helping to broaden the products available to companies and offer more competitive rates, making access to finance quick, easy and cost effective. 20 it is not for the bank of england to build this platform but we can help lay some of groundwork. the messaging standards we are adopting in the new rtgs will also include tagging payments with a unique id called a legal entity identifier ( lei ). 21 this will be mandated for financial institutions and as a next step we are considering how to extend this to corporate payments. that could mean that the payment data sent via chaps of non - financial firms could be made available for inclusion in a portable credit file. the lei could see : furman, j β unlocking digital competition β report of the digital competition expert panel ( march 2019 ). see : https : / / www. bankofengland. co. uk / research / future - finance. the introduction of legal entity identifiers ( leis ) will enable consistent and accurate identification of legal entities on a global basis. their introduction was pioneered by the financial stability board ( fsb ) following the financial crisis as a means of precisely identifying counterparty risks and exposures. the lei is linked to a publically available database about each registered entity. leis are not yet widely used in payments or supply chains. following a consultation, the bank is making leis mandatory for all payments initiated between financial entities. all speeches are available online at www. bankofengland. co. uk / news / speeches also act as the unique identifier for a digital id, which could help the two - step verification process required for a secure system. the bank will submit a formal response on how to develop an open platform for competitive sme finance to the smart data review referenced by the chancellor this evening. strengthen resilience in the face of new risks the city of london has maintained its pre - eminence | 0.5 |
unemployment remains low and is declining β¦ inflation expectations continue to be firmly anchored, with the forecast close to lower end of target range of 3 β 5 %, so interest rates can be seen to be stable β¦ bop is seen to post a surplus of $ 2. 6 billion. foreign reserves are projected to continue to rise to about $ 77. 5 β 78 billion in 2012 while debt service is expected to remain stable, or even decline β¦ with these, the peso can be expected to trade within reasonable ranges. β¦ banks are seen to remain in good health. ladies and gentlemen, if you are to build opportunities and ride on the wave of our current position of strength, you need to recognize that the choices you make today will have lasting consequences β¦. this was what your policy makers did in 1997. we took on the difficult reforms to correct structural vulnerabilities then. thus we developed the defenses that ensured resilience through the crisis of today. it hasn β t been easy getting to where we are today. so your role in this uneven operating environment is to safeguard the gains so far, for it is these hard - earned gains that will allow you to take advantage of the opportunities going forward. in support, you can be assured that the bsp will craft the requisite enabling monetary, external and banking sector policies. there is no magic formula that will allow us to accomplish all these effortlessly. the key, however, remains to think of the bigger picture β no longer just in terms of individual pay - offs but rather on how our respective actions can produce the shared goal of a strong, steady and upward economic growth trajectory that benefits the greater majority. bis central bankers β speeches | journal of central banking, vol. 8, no. s1, 2012, pp. 137 β 165. 3 summers, lawrence h., remarks at the imf fourteenth annual research conference in honor of stanley fischer, washington, dc, 2013. summers, lawrence h., β demand side secular stagnation, " american economic review, vol. 105, no. 5, 2015, pp. 60 β 65. 4 yellen, janet l., β macroeconomic research after the crisis, β speech at the 60th annual economic conference sponsored by the federal reserve bank of boston, 2016. 5 krusell, per, and anthony a. smith, jr., β income and wealth heterogeneity in the macroeconomy, " journal of political economy, vol. 106, no. 5, 1998, pp. 867 β 896. 3 / 3 bis central bankers'speeches | 0 |
has increased as the economic outlook has worsened and the share of triple - b ratings has grown. concerning the second vulnerability, in several countries debt in the public and / or nonfinancial private sectors is lingering at levels that are high by historical and international standards. this leaves public and private finances exposed to the risk of a sudden change in market sentiment or deteriorating macroeconomic conditions. third, parts of the banking sector continue to exhibit weak performance. banks have improved their capital positions and profitability since the euro area crisis, and the stock of non - performing loans continues to decline at a moderate pace. but further improvements are needed in parts of the banking sector if banks are to achieve sustainable rates of return. in particular, overcapacity and cost inefficiencies weigh on many banks β long - term profitability prospects. the better performance of some banks within the euro area, and in jurisdictions facing similar economic and financial conditions, illustrates the importance of addressing structural issues. the current interest rate environment has various implications for the resilience of the banking sector. banks have benefited, and will continue to benefit, from the lower credit risk for borrowers, and from the higher asset valuations associated with lower interest rates and 1 / 2 bis central bankers'speeches better macroeconomic outcomes. this has helped support bank profitability across the euro area since the deposit facility rate turned negative in 2014. however, the negative interest rate policy also entails costs for banks, and these could increase the longer negative rates are in place, the lower policy rates are set and the larger the amount of excess liquidity held by banks. these vulnerabilities could crystallize if economic growth is much weaker than expected, or if weak growth persists for longer than expected. we thus welcome the measures taken by the banking sector in recent years to improve resilience, and support efforts to further strengthen resilience while conditions are benign. there are also vulnerabilities in the non - bank financial sector, which has significantly expanded its role in financing the real economy in the euro area. total assets held by nonbanks have almost doubled over the last ten years, growing from β¬23 trillion in 2008 to β¬42 trillion in 2018, while the size of the banking sector stagnated over this period. non - banks currently account for around 55 % of the euro area financial sector. while a larger non - bank financial sector has the benefit of helping to diversify the funding sources available to the | luis de guindos : key vulnerabilities for euro area financial stability remarks by mr luis de guindos, vice - president of the european central bank, at the meeting of the financial stability contact group, frankfurt am main, 2 october 2019. * * * let me start by thanking you all for participating in this meeting of the financial stability contact group. these meetings are a key feature of the ecb β s market intelligence gathering activities. the financial stability environment has certainly remained challenging since this group last met in march. the global economic outlook has worsened since then, and political and policy uncertainty has increased in a number of areas. taking this into account, we continue to see four key vulnerabilities for euro area financial stability : ( i ) first, a risk of mispricing of some financial assets ; ( ii ) second, high public and private sector indebtedness in several countries ; ( iii ) third, in view of banks β subdued profitability outlook, we see a risk of hampered bank intermediation capacity ; and ( iv ) fourth, vulnerabilities stemming from increased risk taking in the non - bank financial sector. we see the likelihood of these vulnerabilities unravelling in a disorderly manner over the next 18 β 24 months as remaining largely unchanged. this is because the now widely expected β lowerfor - longer β interest rate environment mitigates many of the possible triggers for corrections over the short to medium term. let me expand a little on these vulnerabilities : repeated downward revisions to the economic outlook and accommodative monetary policy actions on both sides of the atlantic have put downward pressure on global bond yields across the whole maturity spectrum. for the first time in history, large parts of the yield curve for many euro area sovereign bonds, in particular those issued by governments with high credit ratings, have entered negative territory. it is often said that low or negative interest rates inflate asset prices as investors search for yield and take on more credit and duration risk. equity and corporate bond prices, for instance, have appreciated across the globe over the past decade as yields have followed a path of long - term decline. abrupt corrections, especially in equity markets and markets for lower - rated bonds remain a risk, particularly in the face of high economic and political uncertainty. low funding costs can encourage firms to increase their leverage, which might intensify vulnerabilities in the event of an economic downturn. this risk | 1 |
bank β s valuation of collateral plays a key role in protecting the bank against loss in the event of a counterparty default. where available, the bank uses market prices to value a security. where no market price is available or those that are available are judged to be unreliable β for example because they are out of date β the bank calculates a model price to value a security, based on a standard bond pricing model of discounted expected future cash flows. the bank uses its judgment to assess the validity of that model price, including by comparing it to similar traded securities where available, and drawing on any relevant market intelligence it has gathered from market participants. haircuts the bank β s haircuts are designed to reduce the likelihood that the bank would incur a loss if forced to realise and liquidate collateral in the wake of a counterparty default. so the haircuts not only have to protect against the risk of counterparty default ( credit risk ), but also take account of the likely value of that collateral in stressed liquidity conditions ( market risk ). as a result, the bank adopts a graded approach, with β base β haircuts varying by the type of collateral offered reflecting the different associated risk characteristics. it includes the likely correlation of risk e. g. that the value of a counterparty β s collateral will fall as the counterparty itself becomes stressed. over and above those base haircuts, and where appropriate, the bank imposes idiosyncratic haircut add - ons, based on both the type of collateral and the counterparty. in some cases, that reflects stress tests applied to the underlying assets. bis central bankers β speeches changes in market prices can, of course, affect the value of the collateral the bank has taken in its operations. as a result, the bank calls margin on any shortfall. 8 in its sterling operations, the bank calls margin daily and is moving to that standard for all other transactions. limits the bank also manages the risk on its balance sheet using concentration limits. those serve two purposes. first, they help the bank diversify across institutions β for example, counterparties can only bid for a maximum of 30 % of the funds on offer in the bank β s iltrs. that helps ensure that any single counterparty doesn β t corner the market for reserves ( intentionally or by accident ). second, they help diversify across instruments in the wider collateral pool β for example, the bank requires that the adjusted | prasarn trairatvorakul : thai monetary policy in the environment of excess global liquidity speech by dr prasarn trairatvorakul, governor of the bank of thailand, at the thailand focus 2011 β enhancing thailand β s competitiveness over the next decades, bangkok, 28 march 2011. * * * ladies and gentlemen, it β s an honor to speak before you today at the thailand focus conference. early this morning you heard prime minister abhisit vejjajiva speak on thailand β s competitiveness ; and later finance minister korn chatikavanij on fiscal policy. to close the circle, i will speak on monetary policy to complete your view on the investment opportunities and prospects of the thai economy. as international investors, i believe, you want to have a firm understanding of the country β s policy environment. this is what i will discuss today β the monetary policy options going forward in light of my assessment of the global economy and the thai economy. the assigned title of my talk today is β thai monetary policy in the environment of excess global liquidity β. let me stress that i have a different opinion on the issue of excess global liquidity than most. global liquidity is currently problematic in the sense that it is fluid, rather than excessive. let me discuss why. first, let me give you my assessment of the global economy. the global economy has entered a phase of fluid global liquidity amid uneven recovery and shifting risk appetite. this phase is characterized by weak recovery in the advanced economies which prompted loose monetary policy and extraordinary monetary measures such as qe2 in the us that have resulted in artificially low interest rates in the advanced economies. these record - low interest rates encouraged investors to seek out higher return in risky emerging market assets, particularly here in asia. in addition to the push factor of low interest rates and weak recovery in the us and euro area, strong economic fundamentals in asia, as reflected in growth and eventual currency gain, served as a pull factor. as a result, capital became more β fluid β β constantly in search of yield and therefore very sensitive to news and rumors. such search for risky yield resulted in capital inflows into eme assets last year, as you all know. these inflows contributed to the large appreciation of the thai baht last year, and indeed other emerging markets. here i want to emphasize that the inflows was due to a reallocation in global portfolio, or a | 0 |
provided you with a copy of the fatf 40 recommendations, which we think you will find useful as you discuss the merits of the proposed legislation. the anti - money laundering bill has provisions which : i ) make it a criminal offence to launder the proceeds of crime ; ii ) set out money laundering prevention measures, offences and penalties ; and iii ) provide for the seizure, freezing and forfeiture of assets related to money laundering. the bill also provides for the creation of a financial intelligence unit whose function will be to receive and analyse reports of suspicious transactions from banks and other institutions, and to disseminate the results of the analysis to the relevant authorities. there are also provisions relating to international cooperation as well as national policies and a national coordination authority for such policies, a task which is currently performed by the uganda anti - money laundering committee. this workshop will provide hon. members with the opportunity to discuss all of the provisions in the bill. to facilitate the discussion, we have invited several people with specialist expertise, including experts from malawi and the world bank, who will make presentations of different aspects of the legislation. i now wish to request the honourable minister of finance, planning and economic development to make her remarks and officially open the workshop. thank you very much for listening to me. bis central bankers β speeches | has been able to weather the impact of the global crisis quite adequately. this is to say, while the decline in output was unavoidable, economic and financial stability was maintained, the banking sector remained resilient, and the economy was able to adjust to the impact of the turmoil in an orderly manner, with output growth now recovering. in my view, these things were of no accidents. instead, they manifest a number of inherent qualities embedded in the thai economic system that have contributed to the relative resilience of the economy. such qualities include : first, a strong and resilient banking sector resulted from good risk management practices by financial institutions and careful supervision by financial regulators at home ; second, a disciplined conduct of macroeconomic policy that emphasizes prudent fiscal and monetary frameworks with a clear focus on maintaining growth with price and financial stabilities ; and third, the promotion of economic flexibility as a mechanism for the economy and the private sector to adjust to macroeconomic shocks. to me, these qualities are of no accidents. they are our investment returns from past economic restructuring and reforms that were put in place, and they are the qualities that we need to preserve and to further expand upon by continuing with economic restructuring and reform. i probably have used up my allotted time. i hope the talk has been useful, and again i want to thank the rotary club of bangkok south for the invitation. thank you. | 0 |
burkhard balz : is cbdc the money of the future? keynote speech by mr burkhard balz, member of the executive board of the deutsche bundesbank, at the central bank payments conference, kuala lumpur, 10 june 2024. * * * check against delivery 1 introduction ladies and gentlemen, thank you very much for your warm welcome. it is both an honour and a pleasure for me to be here today in the wonderful city of kuala lumpur and to have the opportunity to speak here to such a distinguished audience. a city that has always been a melting pot of cultures and ideas, kuala lumpur is no stranger to innovation and transformation. from the days of trade along the klang river to becoming the financial heartbeat of malaysia, this city has continually adapted to the evolving tides of commerce and technology. as we stand here today amidst the towering skyscrapers and vibrant streets, we are at the cusp of embracing a financial evolution that promises to redefine our experience with money and commerce. this is the context within which i wish to focus the topic of my keynote this morning β central bank digital currencies, or cbdcs for short. a subject that is as timely as it is significant. 2 the future is digital we are living in an exciting time where digitalisation is impacting almost every aspect of our daily lives. it has not only changed the way we communicate, learn, work, and engage with the world around us, it has also reshaped the way that we pay. electronic means of payment have become a widespread alternative to established physical cash and have developed even further in recent times. new digital payment solutions such as instant payments, request - to - pay and pay - per - use are also gaining traction. these are all developments that also pose new challenges for central banks. as central bankers, we need to ask ourselves what our own role in payments should be in an increasingly digital world. after all, citizens'trust in payments depends on this. in an increasingly digital world, banknotes and coins are still the only means of access to central bank money for the general public. it stands to reason that central banks need to provide an additional digital offering to ensure that access to central bank money is maintained for everyone, even in a digital future. note that i deliberately say " additional " here, because in my view, banknotes and coins still have their place as a tried - andtested and still frequently used means of payment. cbdcs | world of possibilities for the development of new financial products and services. smart contracts for automated payments, decentralised finance, and micropayments are just some of the innovative applications that could become a reality in a future cbdc ecosystem. 5 what would a digital euro be? the digital euro would not merely be a digital upgrade of banknotes and coins, but also a symbol of europe's commitment to innovation, financial inclusion, and the seamless integration of europe's economies. ultimately, it would pave the way for our currency to enter the digital age by making it " future - proof " and fit for purpose in an increasingly digital society. the digital euro would be an additional means of payment alongside cash and would give citizens in europe the option to pay electronically with central bank money. and that would be the case throughout the entire euro area in a total of 20 european countries, and potentially beyond, in almost all everyday payment situations β be it at the checkout in retail stores, among friends and relatives, when making purchases online, or even when making payments to or receiving payments from public authorities. 3 / 5 bis - central bankers'speeches it would also offer the highest possible level of protection in terms of user privacy. only cash offers a level of privacy comparable to the digital euro. and cash will continue to exist. a digital euro would be free of charge for private individuals for its basic functions and could be used both online and offline, that is to say without a connection to the internet, as well as for person - to - person ( p2p ) payments. no other digital means of payment in europe currently offers all these functions. the digital euro would be available to users both via their commercial bank's mobile banking solutions and via a dedicated digital euro app that would be accessible to all users. 6 where do we currently stand with the digital euro? so where do we currently stand with our digital euro project in europe? in october of last year, the eurosystem successfully completed its two - year investigation phase. during this phase, the european central bank and the other central banks in the euro area explored the benefits and implications of the possible introduction of a digital euro. one of the main objectives was to delve deeper into the possible future design of the digital currency. and as you can imagine, this was no walk in the park! that said, we now have a clear idea how a future digital euro could look. we also know from a product design | 1 |
is published today. 2 / 3 bis central bankers'speeches as a general rule, the running of budget surpluses during phases of strong economic performance is a precondition for the running of stabilising, counter - cyclical fiscal deficits in the event of a future downturn. if fiscal buffers are not built up, there is a risk of repeating the historical patterns by which economic downturns have been amplified by pro - cyclical fiscal austerity. there are three further reasons to set more ambitious fiscal targets in the current environment. first, it cannot be ruled out that the surge in corporation tax revenues may have some temporary elements, indicating that some part of these revenues should be categorised as a windfall. second, to the extent that the current low interest rate environment is not expected to persist indefinitely, a tighter non - interest budget balance offers protection against future increases in debt servicing costs. third, the legacy of high public and private debt levels mean that ireland is relatively more vulnerable to reversals compared to other countries with less - leveraged public and private balance sheets. in addition to striking the cyclically - appropriate fiscal balance, individual fiscal levers can contribute to macro - financial stabilisation, especially for a country in a monetary union. for instance, raising the vat rate on labour - intensive activities during upturns proxies the stabilising role of exchange rate appreciation, while raising taxes on investment and consumption during phases of strong growth substitutes for the cyclical role played by an interest rate hike in an independent monetary regime. symmetrically, these taxes can be cyclically lowered during a future downturn to provide similar support that would be provided by currency devaluation and interest rate reductions under an independent currency. conclusions in closing, my aim in these introductory remarks has been to describe the current agenda for macro - financial risk management. the current economic performance is very welcome β but it is important to be pro - active in mitigating pro - cyclical dynamics and building up buffers to limit the costs of future downturns. as i have outlined, both regulatory policies and fiscal policy have essential roles to play in macro - financial risk management. 3 / 3 bis central bankers'speeches | of the scale of potential losses and funding challenges. in terms of risk management, the transfer of credit risk and funding risk to the investment funds that buy loan portfolios constitutes a national reduction in macro - financial risk, given that the investors in these funds are primarily overseas. it is critical to stress, however, that the sale of such portfolios cannot β and does not β affect statutory consumer safeguards. the central bank applies itself equally to its twin mandate of safeguarding stability and protecting consumers. accordingly, the central bank is committed to ensuring that loan sales do not affect the consumer protection framework governing mortgages. in particular, loan owners must use a regulated credit servicing firm to manage the loans and these firms are subject to the same codes of conduct as banks and retail credit firms. in addition, we are currently reviewing the code of conduct on mortgage arrears ( ccma ), in order to ensure that it is appropriately designed to address current conduct risks in the handling of troubled mortgages, regardless of the identities of the loan owners. while that review is ongoing, it is worth noting the important role that the ccma and related safeguards have played to date in assisting borrowers in difficulty. to end - march this year, more than 117, 000 principal - dwelling house mortgage accounts have been restructured, with 86 percent meeting the terms of the restructured arrangement. in relation to ongoing supervision, the positive economic climate across europe has been accompanied by a gradual expansion in credit provision. especially during phases of credit growth, it is essential that supervisors insist that risk management and governance frameworks are appropriately designed and consistently implemented if credit and operational risks are to be contained. maintaining confidence in the management and governance standards of banks is essential for financial stability, given the intrinsic opacity of loan portfolios and the dominant role of non - equity investors ( senior and subordinated bond holders, wholesale investors, nonguaranteed large depositors ) in the funding of banks. accordingly, while shareholders ( private or public ) play a vital role in the governance of banks, the leveraged nature of banks means that the stability of the financial system requires that all banks adhere to high risk management and governance standards. fiscal policy over the cycle in line with the mandate of the central bank to provide analysis and comment to support national economic policy development, the governor writes an annual pre - budget advisory letter to the minister for finance. in this section, i explain the advice i offer in this year β s letter, which | 1 |
or something specific to current conditions is not yet known. it is also not yet settled whether this pattern applies in australia ; the existing research focused on other countries. but if this β superstar β pattern has instead only arisen recently, it could be something to do with the nature of current technological developments and their ease of adoption. while some observers have dubbed the current technological wave a β fourth industrial revolution β, innovations like machine learning and artificial intelligence seem to have a very different character to previous general - purpose technologies. prior waves of innovation in general - purpose technologies, such as the industrial revolution, electricity and the previous computing revolution, all had a β democratising β character, in the sense that the new technology could be operated by less - skilled workers than the technology it replaced. https : / / www. rba. gov. au / speeches / 2018 / sp - ag - 2018 - 10 - 11. html 4 / 6 10 / 11 / 2018 supporting growth in the short run and the long run | speeches | rba this wasn't always benign, as the child factory workers who replaced artisan weavers during the industrial revolution could attest. but it did set these technologies up for widespread adoption. the most recent technological wave seems to have a different character, so it might not be so pervasive in the end. using machine learning and other emerging techniques to automate routine business processes seems to involve specialist skills and, often, phd - level training in statistics or computer science. these skills are much rarer and take longer to develop than those required for the jobs that are thereby replaced. that doesn't mean it's impossible, but it could take a long time. if leading - edge technologies are currently unusually costly or difficult to adopt, they become a kind of barrier to entry protecting the firms that are already using those technologies. in that sense, they are a particular case of the more general barriers to entry, that advantage incumbent firms and industries over challengers. [ 2 ] that is a concern, because contestability of markets is another essential element for long - run growth and prosperity. laggard firms will never catch up, and will never become those better firms offering better jobs, if they have no chance of contesting the market or fully competing within it. and if incumbents never face rivals, they are more likely to become complacent. innovation could slow down, and growth in living standards with it. all of this comes back to the question | caleb m fundanga : the financial sector development plan welcome remarks by dr caleb m fundanga, governor of the bank of zambia, at the financial sector development plan ( fsdp ) national financial education strategy consultative workshop, lusaka, 20 october 2010. * * * the guest of honour, honourable situmbeko musokotwane, minister of finance and national planning m. p. ; the fsdp steering committee chairman & secretary to the treasury, mr. likolo ndalamei ; distinguished excellencies ; co - operating partners ; chief executive officers and representatives from banks and non - bank financial institutions ; fsdp working group chairpersons and vice chairpersons ; distinguished invited guests ; members of the press ; ladies and gentlemen. it gives me great pleasure, on behalf of the bank of zambia, to welcome you all to the financial sector development plan ( fsdp ) national financial education stakeholders β consultative workshop. honourable minister, this very important workshop comes at the time when the fsdp is gearing up to implement many of its activities under phase ii which the government approved earlier this year. as you are aware, one of the activities identified under the fsdp ii is the development of a national financial education strategy for zambia. let me hasten to say, financial education needs in zambia are many and varied. they stem from inadequate understanding, by a good proportion of the population, of basic financial terms and concepts on the one hand, and a lack of knowledge of financial products and services that are increasingly available, on the other. at the moment, there is no structured response to address the financial education needs in zambia. there are currently some financial educational programmes being conducted by financial institutions, including the bank of zambia, but these are generally limited in scope and are not being implemented in a coordinated manner. these un - coordinated initiatives leave gaps that can properly be addressed through the development and implementation of a cohesive financial education strategy. ladies and gentlemen, with this realization, the bank of zambia, with financial assistance from the financial education fund under the united kingdom department for international development ( dfid ), is taking the leadership role in identifying and developing a national financial education strategy that will be cohesive for the country. as the formulation of both the first and second phases of the fsdp was done through a national stakeholder consultative process, we have taken a similar approach in the development of our national strategy on financial literacy. the fsdp process has | 0 |
options. however, in view of the numerous applications of mathematics, students have to identify their areas of interest and develop domain knowledge in that particular area. while a career in mathematics research could be pursued by those with a passion for it, others need to focus on building up specialized expertise in their chosen area of application of mathematics. 33. while concluding, i would always want you to be like the mathematician in the story that i am going to tell you : a mathematician, a physicist, and an engineer were traveling through scotland when they saw a black sheep through the window of the train. β aha β, says the engineer, β i see that scottish sheep are black β. β hmm β, says the physicist, β you mean that some scottish sheep are black β. β no β, says the mathematician, β all we know is that there is at least one sheep in scotland, and that at least one side of that one sheep is black! β 34. i would end by once again thanking the organizers for inviting me to this forum which, i am sure, will generate valuable awareness and insight about the prospects for mathematics and mathematicians. i have told you so much about maths, its applicability in central banking and problems with numbers that i encounter in my day to day work at the rbi, i hope that all of you will study mathematics, make a name and a great career for yourself. i wish you all a bright future and the conference all success! thank you. select references 1. weisstein, eric w. β hardy - ramanujan number β. from mathworld β a wolfram web resource. http : / / mathworld. wolfram. com / hardy - ramanujannumber. html 2. statistics and truth ( 1989 ) by prof. c. r. rao, csir, new delhi 3. http : / / www. ams. jhu. edu / financial % 20math / masters. html 4. http : / / www. popmath. org. uk / centre / pagescpm / imahob95. html 5. swami vivekananda ( 1900 ) : the powers of the mind, talk delivered at los angeles on january 8, 1900. 6. laplace : hogben β s mathematics for the million, london, 1942, as available in the discovery of india, jawaharlal nehru, mathematics in ancient india. bis central bankers β speeches | mysteries. why have the seekers of knowledge been attracted to mathematics from time immemorial? i feel the primary charm of mathematics is that it is both interesting and, if you can crack its intricacies, enjoyable. people like its challenge, its clarity, and the fact that in solving problems of mathematics you know when you are right. the study of mathematics can satisfy a wide range of interests and abilities. it helps develop one β s imagination and aids in building a clear and logical thought process. 6. let me share with you an example to illustrate the charm of mathematics. it is a well - known story about ramanujan and his mentor, another famous mathematician, prof. g. h. hardy, who recognized his immense talent and took him to england. at one point of time, ramanujan was unwell and lying in an england hospital where hardy had gone to visit him. hardy told him that he came in a taxi, the number plate of which had a most uninteresting number 1729. ramanujan was very quick in his reply. he said it was one of the most interesting numbers that one came across. it is the smallest positive integer, which can be written as the sum of two cubes in two different ways, viz., ( 12 ) 3 + ( 1 ) 3 and ( 10 ) 3 + ( 9 ) 3. 7. prof. c. r. rao, one of the most outstanding mathematicians in the world, once said, β all sciences are, in the abstract, mathematics β, which aptly captures the immense contribution of mathematics towards the development of other sciences. perhaps, recognizing this centuries ago, gauss termed mathematics as the β queen of all sciences β. why study mathematics? 8. just type the words β why study mathematics β in a google search and you will get around 67 million results β these many people, institutes or articles trying to see the benefits of studying mathematics. study of mathematics is extremely important for many reasons. maths surrounds us in many ways as we go about our everyday life. let me now tell you why you should study mathematics : a. mathematics makes life simple by quantification. numbers, units and dimensions help in comprehending things better and lead to precision and certainty in measurement and expression. b. it helps formulate as well as establish measurement standards in respect of observable phenomena. 9. take some simple examples : bis central bankers β speeches a. β ajay is tall | 1 |
demand picking up, supported by economic stimulus measures. as a main scenario, overseas economies, particularly advanced economies, are expected to continue to grow moderately, and emerging economies are likely to move out of the deceleration phase. on that basis, although japan β s exports are expected to remain more or less flat for the time being, they are likely to increase moderately thereafter. needless to say, due attention needs to be paid to risk factors including developments in the emerging economies and in the global financial markets. ii. japan β s price developments i will next talk about japan β s price developments. the year - on - year rate of increase in the cpi ( all items less fresh food ) increased from minus 0. 5 percent just before the introduction of qqe to 1. 5 percent in april 2014, excluding the direct effects of the consumption tax hike. however, as somewhat weak developments in private consumption continued after the consumption tax hike and crude oil prices declined substantially from summer last year, annual cpi inflation declined and has been about 0 percent since the turn of the year ( chart 6 ). the absence of an acceleration in headline cpi inflation can be attributed to the negative contribution of energy prices. because of this negative effect, the year - on - year rate of bis central bankers β speeches increase in the cpi has been pushed down by about 1 percentage point in recent months. needless to say, unless crude oil prices continue to decline, the negative contribution of energy prices to the year - on - year rate of increase in the cpi eventually will dissipate. simple arithmetic shows that the negative contribution of energy prices falling off alone will push up the year - on - year rate of increase in the cpi by about 1 percentage point compared with the current level. in addition, although the effects of the decline in energy prices have made it hard to discern, the underlying trend in inflation has steadily improved. for example, the year - on - year rate of change in the cpi for all items less fresh food and energy has been positive for 23 consecutive months since october 2013, and has increased to 1. 1 percent according to the latest figure in august. behind such steady improvement in the underlying trend in inflation is that firms β and households β views on prices have changed. the changes in firms β and households β views on prices have been revealed in their wageand price - setting behavior. to begin with, in the spring wage negotiations between workers and management last year, base pay was increased for the | a stable manner. the observed inflation rate could move, reflecting various temporary factors ; thus, in order to achieve 2 percent in a stable manner, the underlying trend in inflation is important. as i described earlier, the trend has been improving steadily. however, the positive feedback loop between the increases in employment and wages and the rise in inflation should gain further momentum in order to achieve the price stability target of 2 percent. bis central bankers β speeches the bank will continue with qqe, aiming to achieve the price stability target of 2 percent, as long as it is necessary for maintaining that target in a stable manner. it will examine both upside and downside risks to economic activity and prices. the bank maintains its policy stance that, when there are changes in trend inflation due to manifestation of risk factors, it will make adjustments without hesitation if judged as necessary to achieve the price stability target at the earliest possible time. concluding remarks lastly, i would like to touch on the point that i believe is most important to ensuring that a virtuous cycle of the japanese economy will continue to work. now firms are enjoying record profits and the labor market is in a full - employment condition. in light of the mechanism of the economy, this naturally would lead to decent economic growth and to moderate increases in wages and prices, a view that i also share. at the same time, it is also true that the pace of increase in fixed investment and wages is lackluster in light of record profits. this is perhaps because deflation has been protracted in japan and it takes time to change the deflationary mindset of firms and households. with this in mind, the bank will continue to strongly commit itself to overcoming deflation and to achieving the price stability target of 2 percent. as i have explained on several occasions, in a situation where the 2 percent target is achieved in a stable manner, the current low interest rate environment would not last and the labor shortage would be more acute. those who act early to move forward to secure opportunities in the future by utilizing profits currently at hand will be rewarded, and i am sure some of you have already started to act. the mechanism of the economy will surely prevail, and the bank will definitely and decisively play its role. i will conclude my remarks by making this promise. thank you. bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches | 1 |
stephen s poloz : release of the monetary policy report opening statement by mr stephen s poloz, governor of the bank of canada, at the press conference following the release of the monetary policy report, ottawa, ontario, 22 october 2014. * * * good morning. carolyn and i are pleased to be here with you today to discuss the october monetary policy report ( mpr ), which the bank published this morning. as i β ve said in the past, the policy decision is not a mechanical one, so i β d like to provide some colour around the issues we are dealing with. i would also like to highlight some advances in our thinking since the last mpr. our outlook for the global economy continues to show stronger momentum in 2015 and 2016, but the profile has been downgraded since july. the good news for canada is that the u. s. economy is gaining traction, particularly in sectors that are beneficial to canada β s exports. and our exports do appear to be responding, with some additional help from a lower canadian dollar. our conversations with exporters indicate that they are seeing a better export outlook from the ground. however, it is clear that our export sector is less robust than in previous cycles. last spring, as you may recall, we identified which non - energy subsectors could be expected to lead the recovery in exports, and which would not. we have since investigated in more detail the subsectors that have been underperforming. after sifting through more than 2, 000 product categories, we have found that the value of exports from about a quarter of them has fallen by more than 75 per cent since the year 2000. had the exports of these products instead risen in line with foreign demand, they would have contributed about $ 30 billion in additional exports last year. by correlating these findings with media reports, we could see that many were affected by factory closures or other restructurings. in other words, capacity in these subsectors has simply disappeared. this analysis helps us understand a significant portion of the gap in export performance. our research also tells us that most of the sectors expected to lead the non - energy export recovery still have some excess capacity. our business outlook survey ( bos ) interviews indicate that while companies plan to invest in new machinery and equipment, few are planning to expand their capacity, at least so far. this helps explain why business investment might be delayed relative to what would be expected in a normal cycle. this | our judgment at this time that the risks around achieving our inflation objective over a reasonable time frame are roughly balanced. accordingly, we believe that the current level of monetary stimulus remains appropriate. some of you may be wondering why we aren β t being more specific about the likely future stance of monetary policy. let me answer by saying that forward guidance remains a key element of the policy tool kit β but one that we will reserve for times when we believe there are net benefits to its use. there will no doubt come a day when we will offer forward guidance again β but not this day. and with that, carolyn and i would be pleased to answer your questions. bis central bankers β speeches | 1 |
does not embody a claim of its holders against the libra association. if libra were to be treated as a transferable security or a different type of financial instrument, both the libra association and any other entities engaged in providing investment services through libra coins would fall within the remit of the markets in financial instruments directive ( mifid ii ). alternatively, if libra were to qualify as a virtual currency then, under the fourth anti - money laundering directive, both calibra and its authorised resellers would become subject to the directive β s anti - money laundering and counter - terrorism financing obligations, and to its registration requirement. given the different regulatory implications of libra β s legal 2 / 4 bis central bankers'speeches characterisation, regulatory intervention is essential, to either confirm libra β s classification under one of the existing legal and regulatory frameworks, or to create a dedicated regime adjusted to its specificities. a second challenge is to ensure that the relevant eu and member state regulatory and supervisory authorities can assert jurisdiction over libra and its network. but how can this be done when the entities behind libra are located outside the eu? one way would be to require national custody of a share of the libra reserve funds equivalent to the amount of libra in circulation in any given eu member state. but there may be other ways to ensure effective public control over libra and its network, and these are worth exploring. ensuring that payment systems are safe and accessible and exercising control over the financial market infrastructures that underpin our economies will remain public good objectives. and the conditions under which collateral or settlement finality are accepted will remain prerogatives of the regulatory or legislative authorities. the third challenge is the need for cross - border cooperation and coordination. because libra will be used across borders, it is a matter of international interest. its global nature would also call for a global regulatory and supervisory response to avoid regulatory arbitrage, ensure consistency of outcomes and guarantee the efficiency of public policy responses to libra. there are welcome signs that the global community is already working together to mitigate libra β s risks. both the g7 and the committee on payments and market infrastructures have evaluated libra, with an emphasis on its potential use in money laundering and terrorist financing. further work is expected by the g20, the financial stability board and other fora with a stake in the stability of the global monetary and financial system. finally, i would like | ##ly preserve public trust in them. so private currencies have little or no prospect of establishing themselves as viable alternatives to centrally issued money that is accepted as legal tender. the stance of central banks towards modern forms of money is bound to evolve with time, and central bankers have embraced technological developments in the field of money and will continue to explore helpful new innovations. but the rise of cryptocurrencies and other forms of privately issued instruments that can only fulfil some, but not all, of the functions of money is unlikely to fundamentally upset the two truths i just described. if anything, it will serve as a useful reminder of central banks β pivotal role as responsible stewards of public trust in money, and stress the need for vigilance towards phenomena capable of undermining public trust in the financial system. i sincerely hope that the people of europe will not be tempted to leave behind the safety and soundness of established payment solutions and channels in favour of the beguiling but treacherous promises of facebook β s siren call. 1 see mersch, y. ( 2018 ), β virtual or virtueless? the evolution of money in the digital age β, lecture at the official monetary and financial institutions forum, london, 8 february. 4 / 4 bis central bankers'speeches | 1 |
observing compliance with environmental laws and standards. even boards too have to learn and adapt to the demands of the new operating environment. relevant skillsets are also critical to support innovation within the financial sector to capture opportunities and improve the delivery of islamic financial solutions. indeed, technology can be better optimised to revolutionise the way islamic finance operates and offer innovative solutions to customers. for example, blockchain or artificial intelligence applications hold enormous potential for simplifying documentation requirements associated with shariah contracts, thus improving the overall efficiency of business operations. it should be abundantly clear by now to any financial institution that is serious about vbi, that, the task of building the human and intellectual capital to achieve and sustain value - based business models cannot be left solely to the human resource departments. it requires nothing less than strategic direction and resourcing decisions at the highest levels of the organisation. changing mindsets einstein once said β the world as we have created is a process of our thinking. it cannot be changed without changing our thinking β. the world today continues to push the limits of social and environmental thresholds, that are posing increasingly serious threats to humanity. vbi is therefore, much more than a current and passing fad, but a deeper conviction of the critical need 3 / 4 bis central bankers'speeches to begin the process of changing mindsets in a lasting way. financial institutions are a key, but not the only catalysts in this process. customers and investors need to be supported with relevant information, along with the means and ability to compare such information, in order to better understand the value propositions of islamic finance. the encouragement of pension and institutional funds with a sustainable investment orientation, particularly in markets where such funds remain largely underdeveloped, would be important to provide a stronger impetus for vbi. credit rating agencies could also be important contributors to a new landscape, with stronger emphasis on economic, social and environmental sustainability in assessment frameworks and methods. and regulators and policymakers need to be appropriately responsive to the adoption of sustainable practices. conclusion in conclusion, the islamic finance industry today faces an important, strategic choice β to either continue on a path that largely ignores the stark social and environmental realities that confront humanity, or to thoughtfully chart a new path that fully embraces the idea and philosophy of finance beyond profits. the latter will be an unfamiliar path in many respects, but one that is far closer to the fundamental premise of shariah on which islamic finance is based upon. | mechanism : if the banks extend more credit, the result will be more spending, more imports, and the use of more foreign exchange, which ultimately could lead to a decline in foreign exchange reserves. the central bank β s monetary policy tries to influence the growth rate of credit extension by the banks to reverse a downward trend in foreign bis central bankers β speeches exchange reserves to prevent the reserves from reaching a level at which the stability of the peg is questioned. during the past decades, the main innovation in the central bank β s monetary policy has been a shift from direct credit controls to liquidity - driven instruments. before the 1990s, credit ceilings were applied to control credit growth at the commercial banks. in the nineties, these ceilings were replaced by a more flexible credit measure, the monetary cash reserve arrangement. for example, excess credit growth was allowed but at a penalty, and unused growth margins could be traded among banks. nevertheless, prolonged use of credit measures causes rigidities in the banks β balance sheets and hampers new banks from expanding, thereby stifling competition in the banking sector. also in the nineties, the first steps towards liquidity driven instruments were taken with the introduction of the reserve requirement and auctions of certificates of deposit ( cds ). under the reserve requirement, the banks have to hold a blocked non - interest - bearing deposit at the central bank determined as a percentage of their domestic liabilities, limiting their access to liquidity for credit extension. the reserve requirement was supplemented by the bi - weekly auctioning of cds, tradable interest - bearing securities, to steer banking liquidity during the fixed reserve requirement period. as of the beginning of this century, the reserve requirement and the auctioning of cds became the central bank β s main monetary policy instruments. the reserve requirement and cd auctions worked well under normal circumstances. however, the debt relief provided by the dutch government during 2009 and 2010 as part of the constitutional reforms caused significant excess liquidity in the banking sector. in the year after the debt relief, the unsustainable high deficit on the current account of the balance of payments again became prominent, combined with high credit growth and a declining trend in foreign exchange reserves and the import coverage. these developments prompted the central bank to tighten its monetary policy by increasing the reserve requirement beginning september 2011. given the high excess liquidity, the increase of the reserve requirement was not effective in reducing credit growth and, hence, moderating the decline in our foreign exchange reserves. that | 0 |
fiscal and external deficits. the removal of labour market rigidities would further support the adjustment process of these economies. increasing product market competition, particularly in the services sectors, would also facilitate the restructuring of the economy and encourage innovation and the adoption of new technologies. such measures are crucial for enhancing productivity growth, one of the main drivers of long - term growth. all these structural reforms should be supported by an appropriate restructuring of the banking sector. sound balance sheets, effective risk management and transparent, robust business models remain key to strengthening banks β resilience to shocks and to ensuring adequate access to finance, thereby laying the foundations for sustainable growth and financial stability. finally, let me recall that the governing council welcomes the economic and financial adjustment programme which was agreed by the irish government following the successful conclusion of the negotiations with the european commission, in liaison with the ecb, and the international monetary fund. the programme contains the necessary elements to bring about a sustainable stabilisation of the irish economy. it addresses in a decisive manner the economic and financial causes underlying current market concerns and will thereby contribute to restoring confidence and safeguarding financial stability in the euro area. the governing council welcomes the commitment of the irish public authorities to take any further measures that may become appropriate to achieve the objectives of the programme. | profits obtained through wage cuts to build up internal funds rather than for investment, aggregate demand in the economy will shrink. and since a decline in aggregate demand will lower corporate profits, firms will be forced to cut wages further. this is a typical example of the fallacy of composition. the vicious cycle of declining wages and declining aggregate demand was initially set in motion by the balance sheet adjustments following the burst of the asset bubble, but it became entrenched due to the spread of deflationary sentiment. ii. quantitative and qualitative monetary easing and the labor market let me now turn to how japan is in the process of escaping from this state of contractionary equilibrium. if uncertainty and concern over the future were the cause of the decline in wages, then for wages to rise, it is necessary that both employers and employees see brighter prospects for the future. therefore, the first step is to change japan β s economy from one suffering from stagnation under deflation to one that grows sustainably under moderate inflation. in this regard, the bank of japan β s quantitative and qualitative monetary easing ( qqe ), which i explained in detail at this symposium last year, has been producing its intended effects. and as a result of these effects, japan β s labor market situation has shown improvement, as mentioned earlier. however, closer inspection shows that the japanese labor market still suffers from some of the problems that arose during the period of deflation. for example, there has been no reversal in the growing reliance on part - time workers. in fact, the recent increase in the number of workers is due mainly to an increase in the number of part - time workers ( chart 7 ). in general, in the early stages of economic recovery, it is demand for marginal workers such as part - time workers that increases first. in addition, the current economic recovery is led by the nonmanufacturing sector, where the share of part - time workers is higher than in the manufacturing sector. furthermore, the continuing shift to a service economy means that demand for part - time workers has increased over time. that being said, most recently, there has been an acceleration in the increase in the number of full - time workers, which is a welcome sign. this shift from growing demand for marginal labor such as part - time workers to growing demand for permanent workers suggests that firms β growth prospects have started to improve. if economic growth is sustained and thus underpins firms β growth prospects, japan is | 0 |
policy stance, especially if sustained over a prolonged period of time, can effectively be countered by targeted micro - and macroprudential measures. conversely, situations that require a tighter monetary policy stance, but for which a more nuanced effect on the real economy is desired, may call for a simultaneous relaxation of prudential measures that perk up economic activity via easier lending conditions, provided the health and stability of the financial system remain within safe margins. 8 lastly, although generally operating over a longer - term horizon, structural reform should also be a strategic part of policy coordination in emerging market economies. by providing incentives to improve the overall functioning of domestic input and product markets, increasing their competitiveness and strengthening the institutions within which they operate, policies that overhaul structural aspects of the economy foster efficiency gains that increase its productive potential. thus, a successful implementation of structural reform can ultimately result in strengthened buffers in other areas of policy as, for instance, an expanding productive capacity may offset the potentially adverse impact of restrictive fiscal and monetary policies on economic activity ; increased competition and efficiency resulting from structural reform alleviate inflationary pressures ; and possibly higher fiscal revenues in a context of faster economic growth, both see garcia - cicco, javier, markus kirchner, julio carrillo, diego rodriguez, fernando perez, rocio gondo, carlos montoro and roberto chang ( 2017 ) : β financial and real shocks and the effectiveness of monetary and macroprudential policies in latin american countries β, bis working paper no. 668, october. actual and potential, reduce the level of public debt relative to the economy β s gdp. naturally, the implementation of structural adjustment policies faces a number of challenges and some resistance is likely to arise, mostly as a result of the redistributive effects, both across time and across sectors, inherently imbedded in them. thus, it will frequently be important to place actions in this realm within the context of a broader - ranging plan that contemplates countering, and coordinated, measures in other fronts. for instance, fiscal and monetary easing may reduce the short - term output costs associated to the economy β s process of adjustment in the aftermath of structural reform, while the enhancement of the social safety net and the enactment of other targeted programs may alleviate the costs of transition. let me turn now to mexico β s experience regarding the role of policy efforts in the above - mentioned areas in overcoming the macroeconomic challenges faced in recent years. inflationary pressures in | in the market are dealing with a wider range of counterparties, and actually trade larger unit amounts. some bank treasurers in paris mention that the average face value in euro of single transaction today is equivalent to the face value of a transaction in french franc in 1998, that is, more than six times higher. β’ second, financial market integration is related to the trend towards the greater share of markets in the allocation of assets. at the end of 2000 financial assets in the euro area were dow jones is 70 % over the period january 1999 - october 2002 ( 70 % when the measure is based on sp500 ), and 100 % between cac and eurostoxx50 ( 97 % between dax and eurostoxx 50 ). split almost equally between intermediated and non - intermediated assets. although credit still plays a prominent role in the allocation of financial resources, credit institutions themselves are relying on the financial markets to manage their balance sheets. these two points suggest that the benefits of enhanced liquidity entail the management of a new range of risks. this should not lead us to conclude that financial integration has necessarily negative side effects from the point of view of financial stability. financial integration may help to foster financial instability. i would like to put forward three reasons for this : β’ first, the setting up of a large currency area eliminates disruptions arising from currency risk that would otherwise prevail between the participating countries. domestic economies are immune to currency misalignment episodes that disturb regional trade. currency risk premia are eliminated from interest rates. β’ secondly, the setting up of a large currency area implies an overhaul of market infrastructure. in this respect both public bodies, such as national central banks and market participants, have a unique opportunity to pool best practices. indeed, this has been the case in the euro area where, for example β the target system, interlinking domestic real - time gross settlement systems, has demonstrated its ability to absorb large volumes of cross - border flows, and to perform well even in critical circumstances such as september 2001. the target system processes today around eur 1500 billion per day, 50 % more than the average in 1999 and an estimated three times the amount that all the large - value payment systems in the 12 euro area countries processed together in 1990. β’ thirdly, a large currency area means deeper and more liquid financial markets. this allows market participants to diversify their risks on a wider basis ; moreover, as currency risk is eliminated, they can focus | 0 |
would add $ 350 million to the country β s foreign exchange reserves. the adb has so far provided $ 333 million. the country has been able to reschedule $ 2. 8 billion which it had to pay to external creditors this year. despite this relief, it maybe pertinent to mention that the country still had to pay $ 4 billion in cash foreign exchange out of its own resources to service its external debt. the pakistan development forum gave a resounding endorsement to the reforms pakistan is undertaking. credit rating of pakistan has improved. overall, there is a perceptible and positive change in pakistan β s standing with the international financial community. this is, therefore, the genesis for the improved perception of external donors about pakistan β s economy. in addition to the imf program implementation there are some key reforms this government has embarked on its own β survey and documentation of the economy to widen the tax net and improve tax compliance, devolution of power to the grass root level whereby the common people are empowered and the old bureaucratic system is dismantled ; accountability of those who had looted national wealth in the past ; recovery of bank loans from defaulters, utility bills and evaded taxes. these measures, on the top of others implemented as part of the imf program, have created their own dynamics and shaken the foundations of the rent seeking culture prevalent in the economy for such a long time. but the sad part is that the rent seekers, who were keeping the overall economy buoyant have withdrawn from the scene. consumption expenditures emanating from the rent - seeking class are much lower than what they used to be in the past. their investment activities have come to a halt. most of them are trying to find safe havens abroad for their wealth. while the group of external donors is pleased that the country had taken all the tough decisions which were postponed by the previous governments for such a long time the same decisions and other measures adopted by the government, have created hardships domestically for several classes of economic agents. what were the expectations of the various domestic classes? it may be pertinent to recall that the expectations from the present government were quite high as the country had faced an atmosphere of uncertainty and despondency for a long time and the military was considered as a savior of the economy. the urban educated unemployed felt that new employment opportunities will be created to absorb them. the fixed income groups thought that the wages, salaries and pensions frozen since 1994 will be raised | easy to establish firewalls and protect banks from risks arising out of non - banking activities. while banks will not be able to directly benefit from any profits of their non bank companies, the overall group will be strengthened. ( iv ) the sponsor shareholding of banking as well as non banking companies will become transparent and help sbp in ensuring that these institutions operate at arm β s length. the majority shareholding in a bank will be channeled through the fhc, and since under the proposed amendments, fhc supervision is with sbp, the shareholdings can be more closely monitored. ( v ) the structure provides organic growth without increasing contagion risk as it is very unlikely that the whole group will fail. in order to facilitate the fhc model, we are also seeking several amendments in the bco covering its definition, licensing and supervision ( which will be by sbp ), capital requirement and various other aspects. in anticipation of these legal changes, sbp is also preparing supportive regulations to aid the effective development of financial conglomeration and their oversight. in conclusion, the proposed legal and regulatory changes, discussed above, to strengthen the oversight of the financial sector, are an integral element of the ten year strategy and blueprint of financial sector reforms prepared by the central bank. concurrently, sbp has also launched wide ranging reforms including capital augmentation of banks, shift to riskbased supervisory approaches, and proper implementation of basel ii. the private sector has responded well to sbp β s initiatives and a number of banks are launching work to take benefit of the emerging legal and regulatory changes to position their financial institutions better to compete in a more aggressive regional and global environment. | 0.5 |
norman t l chan : domestic and international dimensions of unconventional monetary policy opening remarks by mr norman t l chan, chief executive of the hong kong monetary authority, at the conference on β domestic and international dimensions of unconventional monetary policy β, organised by the hong kong monetary authority and the federal reserve bank of new york, new york city, 20 march 2014. * * * mr mcandrews, professor sims, professor woodford, ladies and gentlemen, 1. a very warm welcome to all of you for attending today β s conference jointly organised by the federal reserve bank of new york and the hong kong monetary authority. this joint conference is very timely, as it is neither too early nor too late to examine the effects of the unconventional monetary policy ( ump ) of the fed, including its spill - over effects on the emerging market economies ( emes ). as we all know, the fed has already started tapering and, if everything goes according to plan, would end the asset purchase programme by the end of this year. the fed has made it very clear in its external communications that tapering is not tightening and that there would likely to be a gap between the end of qe and the actual tightening of policy interest rates. however, the market considers that we are now in the phase of β exit β from the ump, which also marks the beginning of the normalisation of us interest rates. when chairman bernanke first talked about a possible timeline for tapering in may last year, there were strong market reactions globally and all emes experienced significant sell - off. the market then calmed down somewhat for several months before we saw another round of eme sell - off in january this year. the question that is most talked about now in the financial and central banking community is the pace of the fed β s exit and its impact on emes going forward. were these two rounds of eme sell - off merely isolated market over - actions or are they warning signals on the turbulence that awaits the emes when us interest rates normalise? 2. to assess what may lie ahead, it is useful to look back and try to understand what happened in the past five years during which the global monetary and financial environment was dominated by the ump of the us and other advanced economies. in 2009, the market expectation was basically that qe would last for a year or so, i. e. β low for a short while β. the expectation then changed to β low for long | norman t l chan : universal banking β hong kong β s perspective keynote address by mr norman t l chan, chief executive of the hong kong monetary authority, at the opening session of the asian banker summit 2011, hong kong, 7 april 2011. * * * distinguished guests, ladies and gentlemen, 1. i am very pleased to address this important conference this morning as it provides a timely occasion for us to take stock of what is happening to our banking industry at a time when the international financial markets are recovering from the global financial crisis. indeed, the landscape of banking has undergone very significant changes since the eruption of the crisis in 2008. and more changes are in store. some might even argue that banking will evolve beyond recognition when compared with what we knew previously. of course the international banking reform package, ranging from the new capital, liquidity and leverage regime under basel iii, the treatment of global systemically important financial institutions to the use of macro - prudential tools etc, will have different implications for different banks and different jurisdictions. it is not my intention to discuss today the new international standards that have been and are about to be adopted as these standards have been talked about very frequently amongst bankers and regulators. what i would like to do here is to share with you our views on the following three issues that have profound impact on the way in which the banking industry, including that in hong kong, should structure itself : universal banking vs. segregated banking universal banking vs. narrow banking branch vs. subsidiary operations. universal banking vs. segregated banking 2. first let me talk about β universal banking β, which may mean different things to different people. by β universal banking β i refer to a business model in which banks are allowed to provide a wide range of banking and other financial services to their customers, whether they are mass retail, high net - worth, smes or large corporates. in this connection, it may be appropriate to regard a universal bank as a one - stop financial supermarket. 3. hong kong has a long tradition of this type of universal banking. notwithstanding the experiences of the recent global financial crisis and the ongoing debate and scepticism in some jurisdictions, we continue to see merit in the model of universal banking. why? let me explain. 4. first of all, universal banking in the form of a one - stop financial supermarket provides what the customers need to meet their rising demand for investments in a wide range of financial and wealth management products. these customers can enjoy the | 0.5 |
board of directors and management and they have a fiduciary duty to manage the institution in a honest and prudent manner. an unfit board and management will run the institution down for sure. the bank has developed and issued prudential standards and guidelines, and directives to allow the licensed financial institutions to develop appropriate risk management tools and practices that limit risks to prudent levels. it is the responsibility of boards, trustees and management of each individual institutions to adhere to these prudential and statutory requirements. the bank also conducts on - site inspections and off - site surveillance based on information provided by the licensed financial institutions. even the most successful supervisory agencies must rely, to some degree, on the information provided by individual financial institutions that it regulates, so that corrective measures can be taken β including placing them on statutory management and initiating liquidation of financial institutions. this brings us to the important issue of corporate governance, which has gained increased attention all around the world, including papua new guinea. although the companies act does not specifically emphasize corporate governance, the bank expects all the financial institutions that it supervises to adopt and implement good corporate governance practices. the issue of strong corporate governance cannot be overly emphasized because the roll - on effect of a financial institution collapsing, particularly in the case of a bank or life insurer, can be very dramatic for both individuals, and can severely affect the stability of the financial system. recent experiences in the asia, us, australia, and even papua new guinea, particularly in the superannuation industry, indicate that the risk of such collapses are heightened where poor corporate governance prevail. the bank, however, is aware that each financial institution is unique, in terms of its structure, objectives and operating environment, and circumstances change over time, particularly in regard to globalization, technology and innovation. it is, therefore, impractical to β prescribe β how an institution should structure its corporate governance practices. the bank, therefore, places the onus on the financial institutions, the need to embrace effective internal control measures, good accounting and strong corporate governance practices, and thorough risk - management procedures. these are fundamental to the institution β s management in achieving its objectives of ensuring proper conduct of business, so that the assets of institutions are safeguarded, fraud is detected and prevented, and accounting records are accurate and completed on time to prepare reliable financial information. external auditors, thus play a very important role in this game because their primary role is to test and ce | fx limits, conditions imposed on a bank β s license, and any other relevant bpng instructions while financial stability is the supervisor β s primary concern and monitors the present and future viability of the institution through the use of financial statements the auditor provides, the auditor, on the other hand is concerned with the institution as a β going concern β and expresses professional view on the β true and fairness β of the institution β s condition expressed in its account. at the end of the day, both the supervisor and the auditor is looking at the same coin but from different sides. this commonality therefore justifies the position for closer understanding and knowing of each other β s concerns, and the need to maintain good working relationship and liaison between supervisor and external auditors in order to promote a sound and stable financial system. it is in this light that i feel the need for auditors and accounting associations of png to come down hard on members who do not properly carry out their tasks, be it deliberate or otherwise. sanctions for such behaviour be punitive and must be enforced and not for show only. our experiences with some of your members in their roles as external auditors leave a lot to be desired. at the very least annual public advertisement of registered auditors is a necessity. how will anyone know if a firm or an individual is a registered member of the png auditors charter? is this information readily available? | 1 |
country. the upcoming strategy for fragility conflict and violence will be a litmus test of wbg engagement in the most challenging environment. several countries, particularly in africa, are experiencing a severe deterioration in both domestic and external debt, which may undermine their progress in economic and social development. we welcome the review of the non - concessional borrowing policy which highlights the weaknesses of current policies and identifies relevant areas for improvement. we expect that the forthcoming sustainable debt financing policy will be inspired by a rigorous rule - based but non - punitive approach whose underlying principles we fully endorse. we welcome the world development report 2020, β trading for development in the age of the global value chains ( gvcs ). β it is well balanced in identifying the sources of the potential threat posed by protectionism. gvcs are indeed more powerful in supporting growth than standard trade and, notwithstanding the diffusion of labor - saving technologies, can continue to boost growth. the report rightly recognizes that with rapid technological change and increasingly complex production arrangements, broad - based structural policies β e. g., skill formation and other policies designed to ensure participation in gvcs β provide the highest payoff in enhancing countries β competitiveness in international markets. a country β s openness β to trade as well as international investments β tends to magnify the benefits of supply - side policies. the success of such a country will then depend even more on its endowment of β immobile factors of production, β such as the quality of infrastructures, the bureaucratic and legal context, the efficiency of the financial system, and human capital. old - fashioned protectionist policies are short - sighted and, at best, ineffective in preserving comparative advantages. they represent the wrong answer to a legitimate demand for political action from those who have suffered the most from the negative consequences of structural transformations. to tackle these critical issues it is necessary to share the gains of economic integration. in particular, it is indispensable to reinforce the adjustment mechanisms and redistribution policies that can reduce the social burden of structural transformations, especially among the most disadvantaged. these include policies that favor labor mobility, while ensuring an adequate social safety net, along with income support for displaced workers that does not discourage labor market participation and foster poverty traps. to address beyond - the - border challenges to gvc participation, as well as enhance support for regional integration, the wbg should devote more attention to trade policy. for instance, helping countries maximize the benefits of the african | ##ries β freedom of action and enhance the flexibility of the banking system. the key criterion is the evaluation of the different forms of risk using common quantitative methods, together with a more accurate correlation between capital requirements and the size of the risks faced. the new rules for assessing the capital and organizational adequacy of banks are based on their own methodologies. the bank of italy β s task is to verify the reliability and rigour of the methods used and, if necessary, to require corrections and improvements. there will be a more intense interaction between the supervisory authority and the banks, but the regulatory formalities will be reduced. the widespread dissemination of the methods for calculating capital requirements developed by each of the leading banks has made adequate techniques available to a wide range of intermediaries, in some cases through participation in consortiums. however, the most advanced calculation methods will initially be used only by some of the major groups. the market will comprise banks applying credit assessment methodologies of varying complexity. the bank of italy is committed to checking that the use of different methods of customer selection does not lead to regulatory arbitrage or adverse selection. the risk - weighting system and the special treatment reserved for small loans mean that the new rules will not result in credit rationing or higher costs for smaller firms. by increasing the role of flexible and market - oriented supervisory instruments and reducing that of detailed administrative prescriptions, the new regulatory system enhances the role and effectiveness of on - site and prudential supervision. again with the aim of directing finance toward stimulating renewed economic growth, the bank of italy intends to submit a proposal for revising the regulation of banks β equity interests in non - financial corporations to the interministerial committee for credit and savings. the rules would be fully aligned with community law by easing the present stringent constraints while introducing rigorous codes of corporate governance in order to safeguard intermediaries β stability and ensure the transparent and correct handling of conflicts of interest. as regards the authorization of acquisitions of controlling interests in banks, the obligation to notify plans to the bank of italy before they have been submitted to the board of directors will be abolished. driven by the single currency and progressive regulatory harmonization, the integration of european banking markets derives additional momentum from developments in the competitive environment. the growth of consumer credit and, more generally, of financial products for households contributes in this respect. such products are becoming increasingly standardized in design and in the technology used, which encourages their large - scale distribution and | 0.5 |
resolution authority and integrated deposit insurance framework that is both credible and consistent with good incentives are likely to be required, as well. the task at hand will likely require each country to give up a small amount of sovereignty with respect to banking oversight so that the outcome is viewed as fully credible. in my view, this is a critical next step in the β one money, one market β project underlying the eu agenda. i β d now like to introduce ambassador vale de almeida as our next speaker. the ambassador has been here in his current role since august 2010. prior to his current appointment, he worked as a director general at the european commission ( ec ) and has had a long and distinguished career at the ec dating back to 1982. so he is extraordinarily well - versed to speak on the issues of interdependence and the policy challenges we face. welcome ambassador vale de almeida. bis central bankers β speeches | difficult for senior management to properly control a firm β s activities and monitor the conduct and behavior of its employees. for these reasons, we need strong internal and external checks on banks β an area to which i will now turn. the complementary roles of regulation, supervision, and culture as i said earlier, a sound financial system is one that is safe and resilient, can support the 3 / 8 bis central bankers'speeches provision of financial services at a reasonable price to the real economy in good times and in bad, and promotes confidence and trust among its customers and counterparties. financial institutions should be prudently managed and subject to strong internal checks β including risk management policies and procedures, internal controls, compliance, and audit. meanwhile, an effective financial regulatory and supervisory regime should be as efficient, transparent, and simple as possible. i think these goals are broadly shared by supervisors and banks alike, which suggests to me that the relationship between supervisors and banks does not always need to be adversarial. indeed, a healthy dialogue helps this supervisory process to work well. for example, it is important that firms are proactive in revealing problems to their supervisors. and, individual institutions can certainly benefit from the horizontal perspective that supervisors bring to examinations. this perspective can highlight where the firm stands vis - a - vis best practices, or where there may be important vulnerabilities in its operations. of course, there is an irreducible amount of tension built into this relationship, given that each party β s roles, interests, and responsibilities will not always coincide. banks are naturally more sensitive to constraints on their profit opportunities or dividend policies and to the costs of regulation. they may also question how much protection is necessary β for example, how stringent the capital requirements or how severe stress testing assumptions should be. these are areas where i would expect perspectives to differ. supervisors are principally focused on compliance with laws and regulations as well as issues of safety and soundness. they also bring to their work a perspective on financial stability that may not match the more narrow interests of the firm. for example, supervisors seek to address the externalities created by the failure of a systemically important firm by imposing higher capital and other requirements than the firm would likely select if left to its own devices. the financial crisis is a vivid reminder that there can be many risks to financial stability, and of the need for strong internal and external constraints on banks. here, the β three pillars β of regulation, supervision, | 0.5 |
are calibrated for the riskiness of their assets and exposures, the proportion of capital required does not vary systematically to counter the cyclicality that arises through elevated asset valuations and other channels. 5 the comprehensive liquidity analysis and review, or clar, is the federal reserve board β s periodic simultaneous supervisory examination of firms β liquidity buffers and risk - management policies. we use clar to analyze and adjust our supervisory program for emerging firm practices and risk areas not captured in the liquidity coverage ratio ( lcr ). for example, clar enables monitoring of firm liquidity positions for buildups of concentrations of risk beyond the 30 - day threshold. it also allows us to look more closely at risks that may emanate from areas such as intraday credit, which are not captured within the lcr but are captured by firms β internal stress - testing frameworks. as the board laid out in its november 2013 policy statement on the scenario design framework for stress testing, it uses a recession approach to develop the severely adverse scenario of the stress tests. see board of governors of the federal reserve system ( 2013 ), β federal reserve board issues final policy statement for developing scenarios for future capital planning and street testing exercises β, press release, november 7. the severely adverse scenario is anticipated to feature an unemployment rate over the first six bis central bankers β speeches tool two : time - varying broad macroprudential tools while our efforts are far advanced in building structural resilience, progress is less advanced in developing time - varying tools that counter the buildup of excesses across the system broadly or in a particular financial sector. these efforts are in earlier stages of elaboration and more of a departure from recent practice. here we can learn from financial authorities in other countries that have recent experience deploying a broader array of macroprudential tools. the classic case for time - varying broad macroprudential tools is to lean against a dangerous acceleration of credit growth at a time when the degree of monetary tightening that would be needed to slow it down would be highly inconsistent with conditions in the real economy. the basel committee agreed on a common countercyclical capital buffer framework for addressing such circumstances, and the federal reserve and the other u. s. banking agencies issued a final rule to implement the basel 3 countercyclical capital buffer for u. s. banking firms in 2013. under the rule, starting in 2016 and phasing in through 2019, the u. s | some time yet. even so, as we said in january, we expect that both exports and investment will return to positive growth later this year. since the start of the year, the labour market has continued to show strength. the adjustments underway in our oil sector will eventually be completed. and firms tell us that they need to make new investments, and the recent rules around capital cost allowances are likely to speed that up. the bank β s role in this process is to maintain a predictable environment for decision making. we have learned from experience that keeping inflation low, stable and predictable is the best contribution we can make to canada β s economic welfare. crucially, our inflation - targeting framework includes a floating exchange rate that helps our economy adjust to external shocks. we only have to look back a few years for an example. following the oil price collapse of 2015, movements in the exchange rate helped to offset the loss of jobs in the oil sector by boosting exports in other sectors. in addition to the solid economic base that comes from our natural resource sectors, we have numerous advantages we can use to create new economic growth. among other things, we have a well - educated and diverse workforce that is growing through immigration. and, we have trade agreements like the canada - united states - mexico agreement, the comprehensive economic and trade agreement with the european union, and the comprehensive and progressive agreement for trans - pacific partnership. these agreements should help to buffer us from some of the negative trade developments i mentioned at the beginning. another possible buffer lies right here at home. recall that when the united states turned protectionist in the 1860s, we responded by uniting our own economic clout through confederation. in today β s trade - uncertain world, it is even more important that we continue to make progress in promoting trade among our own provinces and territories. and enhancing economic links between north and south is even more urgent, given the growing risks around climate change. you are already feeling the impact of climate change here, and it will affect almost every aspect of life in the north. lowering barriers to trade could certainly help mitigate these economic impacts. the good news is that trade in services among the provinces has been growing rapidly over the past 10 years and is already larger than interprovincial goods trade. the bad news is that goods trade between provinces has basically been stagnant for a decade. to make this point concrete, bank staff estimate that canada β s potential economic growth would increase by about 0. 2 percentage | 0 |
that in the global era, the real competition for fier region does not stand in the other regions of albania, but in those similar in the european economies and emerging countries. at present, we do not compete with these economies as we are not and won β t be able to be part of the global market as long as we are not β quoted β in real time, using the same methodology and figures that allow the comparison of costs and opportunities. the creation of these indicators, their calculation and rating in the relevant markets would create the conditions for the real assessment of the competitive advantages that this district has to offer. the help that the local authorities can give in identifying the competitive advantages and the provision of local statistics are perhaps the best investment they can make for the regional and national development. today, more than ever before, all the attention of global economy is oriented towards the markets, as the best estimators of the competitive advantages in the global economy. the developments in these markets are bringing about the reconfiguration of the economic powers at a global level. the new commercial and financial trends appear to be in favour of the utilization of natural resources and competitive advantages, through investments in emerging economies, to later import them in the form of final products, ready for consumption. these are advantages for the albanian economy, which, with the major structural reforms taking place ( privatizations, natural and human resources, creativity and the entrepreneurship spirit ), enjoys all the opportunities and should play an active role in the regional market and beyond, in the global market. i am optimistic and i do believe in our economy and its potentials. thanking you for your attention, i welcome any comments. bis central bankers β speeches | ardian fullani : improving the performance of albania β s banking sector speech by mr ardian fullani, governor of the bank of albania, at the year - end event with the albanian association of banks, tirana, 17 december 2013. * * * dear bank executives, your excellency ambassador sequi, dear mr. ilahi, dear mr. pencabligil, it is a pleasure for me to participate in this year - end meeting, as we reflect about the challenges we faced and the objectives we accomplished in this year, and endeavour to identify issues that may arise over the next year. given the celebrations time and the spirit of this meeting, i would rather not dwell upon all the issues i would have liked to. however, i will share with you my opinion on two issues i consider as important for a good performance of the banking sector over 2014. before moving on, we should acknowledge that the year we are leaving behind was a difficult one for the banking sector. in its development cycle for over more than one decade, this year, the banking sector β s growth slowed down sharply and annual lending levels contracted. deteriorated asset quality, dictated by credit, has led to lower financial profit due to higher provisions needed. these developments have reflected the overall economic slowdown and domestic demand drop resulting from lower private consumption and investments. however, other developments highlighted the banking sector β s capacity to properly respond to and cope with these challenges. the banking sector has maintained ample liquidity and capital levels thanks to the further rise in public deposits and added capital by parent banks. in terms of non - performing loans, obvious efforts have been made to restructure credit and sell off non - performing loans to non - bank financial institutions. the albanian association of banks has played an active role in discussing the problems with relevant authorities and identifying solutions through the regulatory treatment of nonperforming loans, notably, the legal amendments to collateral execution process, which entered into force in september 2013. through its activity, the banking industry may transform 2014 into a better year for both the banking industry and the albanian economy. i think that this may be achieved through harder work in the following aspects : the first aspect pertains to restoring lending to adequate levels in albania. this objective may be achieved by interlinking these three elements : a ) cleaning up balance sheets from non - performing loans. it is indispensible that you should mark evident progress during 2014 to write off loss loans from their balance sheets | 0.5 |
. as required by the dodd - frank act, the final rule defines a β qualified residential mortgage β ( qrm ) and exempts securitizations of qrms from the risk retention requirement. the final rule aligns the qrm definition with that of a qualified mortgage as defined by the consumer financial protection bureau. the final rule also does not require any retention for securitizations of commercial loans, commercial mortgages, or automobile loans that meet specific standards for high quality underwriting. for more information, see the press release on the board β s website. bis central bankers β speeches cleared through central counterparties. these developments may ultimately prove to be stability enhancing, but as the system evolves, we must remain attentive to the possibility of changes that may be destabilizing. more needs to be done to say that the nonbank sector today appears less vulnerable than it did during the global financial crisis, is not to say that authorities in the united states have tamed the nonbank sector. indeed, while progress has been substantial, areas for continued work remain, and i will briefly highlight three of them. let me start with short - term wholesale funding markets. while there have been some improvements in the plumbing of money markets, many nonbank financial firms, including hedge funds and broker - dealers, continue to rely on secured short - term funding to finance their activities, many of which involve longer - term and illiquid assets. this maturity transformation remains a key vulnerability. further, many of the firms that rely on this maturity transformation are highly levered and thus more vulnerable to threats to their solvency. the proposed international framework being developed by the financial stability board for margins on securities financing transactions may be an important tool for limiting the pro - cyclicality and sharp deleveraging that can occur in these markets. second, and more generally, we need to be alert to changes and trends in the financial system that may pose risks to financial stability, particularly those stemming from areas of the nonbank sector that are not subject to prudential supervision. for example, the asset management industry has both grown and evolved in recent years. mutual funds and exchange - traded funds that track the returns of indexes of relatively illiquid assets have mushroomed in size. examples include funds tracking the return on leveraged loans, credit default swaps, and other less liquid assets. these funds offer daily or even intraday liquidity to investors while holding assets that are hard | the financial system. in response to this need, the dodd frank act created the there appear to be two meanings of the word β macroprudential. β at first, it referred to a focus on systemic interactions within the financial system. it is in that sense that we are talking at this point. the second meaning is almost the opposite : it relates to regulatory but not monetary policy measures focused on some aspect of the financial system whose behavior is giving cause for concern. the large firms whose supervision is coordinated by the large institution supervision coordinating committee ( liscc ) are american international group, inc. ; bank of america corporation ; the bank of new york mellon corporation ; barclays plc ; citigroup inc. ; credit suisse group ag ; deutsche bank ag ; general electric capital corporation ; the goldman sachs group, inc. ; jp morgan chase & co. ; metlife, inc. ; morgan stanley ; prudential financial, inc. ; state street corporation ; ubs ag ; and wells fargo & company. for more information, see the liscc webpage on the board β s website. bis central bankers β speeches financial stability oversight council ( fsoc ) to help identify emerging risks and vulnerabilities to financial stability. the council β s annual report on financial stability highlights risks and vulnerabilities for the entire financial system and reflects the council β s own diverse nature : only 3 of the 10 voting members of the council are banking sector supervisors, with the remainder supervising or having regulatory authority related to credit unions, brokerdealers, asset managers, and derivative market participants. among its decisions, the fsoc has designated four u. s. nonbank financial institutions as systemically important financial institutions, which makes them subject to consolidated supervision by the federal reserve board. 7 in addition, the dodd frank act mandated the establishment of the office of financial research in order to help promote financial stability through the measurement and analysis of risks, the conduct of essential research, and the collection and standardization of financial data. a second nonbank reform has been the securities and exchange commission β s ( sec ) adoption of new rules for money market mutual funds. specifically, the sec will require prime money market funds sold to institutional investors to publish a floating net asset value and to restrict withdrawals through a system of gates and fees. these rules, while as yet untested, are designed to reduce the likelihood of runs on prime money market funds. the third nonbank reform i | 1 |
investment rate and, particularly, a negative contribution to growth of total factor productivity. as a response to this situation, the mexican authorities embarked since late 2012 on a farreaching structural reform effort, aimed at increasing the economy β s growth potential. the see world bank ( 2015 ) : β latin america treads a narrow path to growth : the slowdown and its macroeconomic challenges β, semiannual report of the office of the regional chief economist, april ; and organisation for economic co - operation and development ( 2016 ) : β economic policy reforms 2016 : going for growth interim report β, february. bis central bankers β speeches reform package encompassed a wide range of sectors, as well as a significant strengthening of the institutional setting. the structural reform measures are still under implementation, and the full gains from this transformation will take a long time to materialize. however, some results are readily visible. i would like to highlight in particular the evolution of inflation. as of the first half of may, the annual inflation rate in mexico stood at 2. 5 percent, below the 3 percent target. as a matter of fact, we have been observing figures consecutively under the target since may 2015, an unprecedented achievement. this is of course the result of many factors, the implementation of strong macroeconomic policies the most prominent among them. but structural reform has also played a major role in these developments. for instance, the competition brought about by reform in the telecommunications sector has resulted in significantly lower prices for these products, with beneficial effects on inflation. 10 this has also been supported by a reduction in electricity prices, partly the result of reform in the energy sector. the recent performance of economic growth in mexico is also worth noting. during the years before the eruption of the financial crisis ( 2000 to 2007 ), the mexican economy showed an average annual rate of growth of around 2. 7 percent. the figure for 2011 to 2015 is similar ( 2. 8 percent ), notwithstanding the fact that the rate of gdp growth of our main trading partner, the united states, fell by 0. 6 percentage points between these two periods, 11 and that the economy was hit by a number of other external shocks, including a sharp decline in oil prices. it is also worth noting that mexico is one of the few emes where a deceleration of growth is not observed during the two periods under consideration. although it would be very difficult to isolate the different determinants of this performance, there is clearly a possibility that the | and bubbles could be interpreted as unavoidable and even beneficial as they become the means of rewarding good choices and punishing bad decisions. one macroeconomic risk of asset price collapses is the possibility of a growth slowdown or a recession. the empirical evidence of the effects of price falls in stock and currency markets is somewhat mixed. however, the likely negative real consequences of housing bursts more formally, a bubble is defined as rises in asset prices that exceed an asset β s fundamental value. its testable implications are necessarily conditional on the theoretical model chosen. for alternative assessments of classical bubble cases, see garber ( 2001 ) and kindleberger and aliber ( 2005 ). appear to be clearer. statistical analyses reveal that housing prices are strongly pro - cyclical and that they are leading indicators of recessions and expansions. a second, potentially more serious cause of concern over large housing price fluctuations is that they have frequently ended in banking crises. these episodes may involve problems of liquidity and insolvency of certain financial institutions to the extent that the functioning of the economy becomes impaired, for instance, if they produce a generalized panic and loss of confidence. 3 a target of smooth asset price behavior is hardly attainable through economic policy, given the intrinsic uncertainty involved in financial transactions and the imperfect information policy makers have at hand. more important, however, is the fact that such an objective is probably undesirable as it amounts to controlling risk and returns, thereby creating moral hazard and inhibiting innovation and growth. what does constitute a sound policy goal is building conditions to ensure the continuous functioning of the basic financial system, particularly the banking system, without which the economy cannot work. this focus, which operationally requires a delimitation of what a basic system is, gives content to the objective of financial stability and crisis prevention. preventing financial crises the global crisis reflected excessive risk taking and high leverage on the part of economic agents and financial institutions. a basic postulate of economics is that people respond to incentives. hence, to reduce the probability of another financial collapse, it is necessary to learn from experience by identifying the ultimate sources of the incentives that led to the crisis. by this, i mean the environment that economic agents face in making decisions. given this setting, private actions can be regarded as results, not as root causes of problems. examples of the former in the crisis are the high bonuses paid to bankers for placing securitized loans and the poor credit evaluation of these instruments made by | 0.5 |
for february 2016, mainly as a result of an acceleration in food price inflation. following sharp increases in agricultural food prices in earlier months as a result of the severe drought conditions, food price inflation increased markedly by 1, 8 percentage points to 8, 8 percent in february 2016 β the highest level since august 2014. food price inflation at the producer level registered 9, 0 percent in february, significantly up from the 7, 8 percent recorded in january. agricultural food prices on the other hand has also followed a similar trend, increasing by 27, 2 percent in february as compared to 25, 9 percent in january 2016. these increases are expected to impact consumer prices with a lag. in addition, current indications are not encouraging for the expected agricultural output for the coming season. according to the most recent estimates ( february 2016 ), the agricultural land or area under cultivation will be approximately 26 percent smaller than last year. further, maize which has an important direct and indirect impact on overall food inflation will have to be imported in the coming year in order to meet the annual domestic and commercial consumption of roughly 9, 6 million tons. the sarb forecasts as at the march mpc meeting β which did not consider the february inflation numbers β showed that annual cpi food price inflation was expected to peak at 11, 6 percent in the final quarter of 2016 as compared to the forecast of 11, 3 percent at the beginning of 2016. food price pressures, which have intensified in recent months pose a significant upside risk to inflation. bis central bankers β speeches inflation is now expected to average 6, 6 percent and 6, 4 percent in 2016 and 2017, compared to the 6, 8 percent and 7, 0 percent forecasted at the beginning of the year. it is expected to peak at 7, 3 percent in the fourth quarter of 2016 and only return to within the target range during the fourth quarter of 2017. this represents a protracted breach implying that underlying pressures remain elevated. let me now turn to a discussion of some of the underlying inflationary pressures in the economy. the sarb β s forecast shows that core inflation will breach the upper end of the target range in the second quarter of 2016 for four consecutive quarters, with a peak at 6, 5 percent in the latter half of 2016. core inflation is expected to average 6, 2 percent in 2016, and 5, 7 percent and 5, 2 percent in the next two years, respectively. average inflation expectations have remained undesirably close to the upper target | advanced countries ( aes ) is notably weaker and the same can also be said for the emerging market economies ( emes ), with the exception of emerging asia. for some time, the global recovery has been underpinned by the performance in emerging markets with the expectation that the global growth momentum will gain traction as the pace of recovery in advanced countries picked up. unfortunately, these expectations have not been fully realised. emerging market economies, which currently make up around 58 percent of global gross domestic product ( gdp ), still continue to account for a significant portion of world growth. however, the economic performance across emerging markets as a whole is uneven and generally weaker. with the exception of india, most major emerging market economies have had disappointing growth outcomes as depicted by the recent recessions in brazil and russia and the slowdown in china. bis central bankers β speeches of concern, is that the global recovery is not only weaker, but that the deterioration in the global environment over the last year has been accompanied by greater downside risks. the drop in commodity prices, uncertainty in financial markets, volatile capital flows, subdued external demand and geopolitical influences, coupled with the refugee crisis, have been some of the major headwinds adversely impacting global economic developments. unfortunately, these factors will continue to have a bearing on the economic outlook for both emerging market economies and the global economy as a whole. given the globalised nature of emes β south africa included β this implies that international influences, although of an exogenous nature, will form an integral part of the policy landscape in emerging economies. global inflation pressures remain subdued with both current and projected inflation rates below target in most advanced economies. these developments, combined with below potential growth have prompted expansionary monetary policies in a number of advanced economies, which are very likely to persist over the forecast horizon. in contrast, inflationary pressures have been rising in a number of emerging economies, mainly on account of currency depreciation rather than as a result of rising international price pressures. south african inflation outcomes have also been subjected to more prominent exchange rate pressures recently, an issue i will come back to later on. so in general, global inflation remains at modest and subdued levels and, with oil prices projected to remain at low levels, international cost pressures are unlikely to pose a major risk to inflation outcomes across the globe. south africa β s economic outcomes and outlook recent indicators show that real economic growth in south africa slowed marginally to an annualised rate of 0 | 1 |
of core inflation to 5. 0 % this year and 3. 7 % in the subsequent year. the expected increase in some tariffs to the market levels and higher excise taxes on alcoholic 1 / 3 bis central bankers'speeches and tobacco products will restrain the decline in inflation. the nbu has also performed scheduled revisions of other macroeconomic forecasts economic growth will slow in 2019 to rebound in 2020. as well as in january, the nbu forecasts a slowdown in economic growth to 2. 5 %. this will be due to a slowdown in the global economy and trade, restrained fiscal policy resulting from the need to repay large volumes of public debt, and tight monetary conditions required to bring inflation to its target. moreover, the harvest of grains and oil crops is expected to be lower compared to the bumper crop of 2018. private consumption will remain the main driver of economic growth. however, its growth will decelerate due to a slower growth in real household income β wages, pensions, and remittances from abroad. investment demand will be limited by political uncertainty in the year of presidential and parliamentary elections. growth in real gdp will accelerate to 2. 9 % in 2020 and 3. 7 % in 2021. the growth will be propelled by a gradual easing of monetary policy, which will bolster domestic demand, and spur investment activity as the election cycle is over. economic growth will be restrained by decreased volumes of natural gas transit to europe as a result of the construction of bypass pipelines. in 2019, the current account deficit is projected to stay at the previous year β s level, at 3. 3 % of gdp, due to various factors. proceeds from the sales of last year β s record harvest of corn and the effect of favorable trade conditions will be offset, as the economies of ukraine β s main trading partners cool. the cooling will negatively affect exports and remittances from labor migrants. in future, the current account deficit will widen slightly, to 4 % of gdp in 2021, as a result of a decrease in natural gas transit and weak demand from ukraine β s main trading partners caused by stronger investment demand on the domestic markets. the continued fulfillment of ukraine β s obligations under the current cooperation program with the international monetary fund remains the basic assumption of the macroeconomic forecast. this will allow ukraine to attract other official financing, improve the conditions of access to the international capital markets, and support the active interest of nonresidents in hryvniadenominated | , and a pick - up in investment activity, as uncertainty about the political situation diminishes. after widening to 3. 6 % of gdp in 2018, the current account deficit will range between 3 % and 4 % of gdp in 2019 and 2020. in 2019, the deficit will narrow to 3. 1 % of gdp, due to the 2018 bumper corn harvest and a drop in energy prices. in 2020 β 2021, the current account deficit will widen slightly, on the back of a decrease in gas transit, a poorer grain harvest, and a rise in investment imports after the elections. a widening in the trade deficit will be offset by greater private remittances, supported by the higher incomes of labor migrants. a key assumption of the macroeconomic forecast is that ukraine will continue to cooperate with the imf and enjoy relatively favorable access to the international capital markets. 2 / 3 bis central bankers'speeches at the same time, reasonably high interest rates will contribute to the inflow of debt capital, which, together with continued inflows of foreign direct investment, will finance the current account deficit. external official borrowing and the government β s placement of eurobonds will make it possible to repay external public debt, the repayments of which will peak in 2019 β 2020. this will improve the expectations of economic agents and promote macrofinancial stability. as a result, international reserves will hover around usd 21 billion in 2019 and 2020. the usual increase in uncertainty during presidential and parliamentary elections poses the main risk to the said macroeconomic forecast, including ukraine β s ability to meet its inflation target in 2020. this, in turn, could affect inflation expectations. external risks are also important. these include : a more significant slowdown in the global economy, including in the economies of ukraine β s main trading partners ; a drop in the global prices of the commodities exported by ukraine ; persistently strong labor migration and the resulting pressures on wages ; geopolitical risks, such as an escalation of the azov sea conflict, which could cut export earnings ; uncertainty over the volume of gas transit through ukraine starting in 2020, as pipelines bypassing the country are being built to deliver gas to europe. why did the board decide to leave the key policy rate unchanged? taking into account the updated macroeconomic forecast and the above risks, the nbu board deems it necessary to maintain the existing reasonably tight monetary conditions in order to ensure that inflation returns to its target range in q1 | 0.5 |
##laced world economy. the riksbank β s monetary policy framework and strategy let me now, with this as background, move on to describe our monetary policy strategy in slightly more detail 2. the inflation target the statutory objective of the riksbank is to maintain price stability. we shall also promote a safe and efficient payment system. in connection with the introduction of this wording on the riksbank β s tasks into the sveriges riksbank act of 1999, the riksbank was also given greater independence, as i mentioned earlier. monetary policy is now formally the task of the riksbank and the six members of the executive board are expressly forbidden to, as it says in the act, seek or take instructions when fulfilling their monetary policy duties. the riksbank has chosen to specify an explicit target for inflation. the target is for the annual rate of change in the cpi to be 2 per cent, with a tolerance for deviations of plus / minus 1 percentage point. the decision to define the target for monetary policy in terms of a specific figure was of course partly due to the desire to create a nominal anchor that everyone could recognise and base their expectations on. however, another important reason was that a specific target would facilitate assessments of the riksbank β s activities and make it easier to hold the riksbank accountable, which was important when it had been granted so much independence. inflation can be measured in many different ways. the riksbank chose the cpi as target variable partly because it is a broad price index that represents typical purchases made by consumers and the index is familiar to the general public. but the development of the cpi cannot always indicate what monetary policy is needed at a particular time β no single inflation measure can do this. the riksbank therefore uses various measures of underlying inflation to describe the trend rate of inflation and to justify the monetary policy conducted. our most commonly used measure, with the not so pronunciation - friendly name und1x, consists of the cpi adjusted for certain items that are very directly affected by fiscal and monetary policy. so, there are educational gains with using measures of underlying inflation. however, one disadvantage of using different inflation measures in different situations is that it can create uncertainty as to how the inflation measure is defined, even when you try to be clear as to why a particular measure has been emphasised at a particular time. the riksbank has some experiences of this, which have given us reason to consider ways of reducing | higher and also more stable than in the 1970s and 1980s, and real wage growth considerably more favourable. productivity growth has been surprisingly robust β stronger than in the rest of the eu β and there now seems to be broad consensus that the economy β s potential growth rate has been raised. growth in employment has not been quite as good, but it is nonetheless worth pointing out that the situation today is far better than it was in the mid1990s. it is also interesting to study inflation expectations. although inflation has on average remained fairly close to target, there have of course been both shorter and longer periods where inflation has deviated significantly from the target. how have inflation expectations been affected by this? even though inflation expectations can be measured in different ways, i believe that the overall picture is clear. from around 1996 - 97 expectations about inflation a couple of years ahead have been in line with the target. in the shorter term, of course, they have sometimes fluctuated in line with the actual inflation rate. but seen over a longer period of time, expectations have been neither significantly higher nor see berg, c., and l. jonung, ( 1999 ), β pioneering price level targeting : the swedish experience 1931 - 1937 β, journal of monetary economics, 43, 525 - 551. significantly lower than the target. this is a much better development than many people expected when the new monetary policy regime was introduced in the early 1990s. it must also be pointed out that the change in stabilisation policy regime involved not only monetary policy. compared with other countries that have implemented similar reforms, it is perhaps primarily the changes in fiscal policy that distinguish sweden. in the mid - 1990s a vigorous consolidation programme and a framework with an expenditure ceiling and a balance target were introduced. the comparatively sound central government finances have been a great strength for our country over the past ten years. finally, i must in all fairness add that in addition to the shift in stabilisation policy regime there have also been a number of significant changes in other areas that ought to have contributed to the favourable developments over the past decade. i mentioned productivity growth earlier β the strength of this has surprised most economic analysts and forecasters in sweden. it can probably be attributed to a combination of several factors. for example, a rapid development in both the production and use of information technology has probably contributed to improved productivity. other factors may include deregulation of various markets and increased competition β the latter stimulated by eu membership and the increasingly inter | 1 |
mugur isarescu : the power of the mind opening address by mr mugur isarescu, governor of the national bank of romania and president of the romanian association for the club of rome, at the annual conference of the club of rome β the power of the mind β, organized by the club of rome, the romanian association for the club of rome ( arcor ) and the national bank of romania, bucharest, 2 october 2012. * * * dear colleagues of the club of rome, honoured guests, ladies and gentlemen, it is a pleasure and a privilege for the romanian association for the club of rome and for the national bank of romania to be the host of the international conference of the club of rome, here in bucharest, with such a challenging topic : β the power of the mind β. as we all know, 2012 is an anniversary year for the club of rome, since we are celebrating the 40th anniversary of the first report to the club, which was entitled β the limits to growth β. when this report was published, it created shockwaves all over the world, including the communist countries. i can testify this, because i addressed comments concerning this issue when i was a young research fellow, after graduating the university. actually, i confessed to my colleagues that my first public appearance in 1973 was related to the club β s first report. but the debates were not limited to romania or to europe. they were manifest all over the world, and are still continuing today. i dare to sustain that nowadays, with the global economic crisis still ongoing and this fight for resources, the above - mentioned issues appear to be highlighted even more now than in 1972. of course, today, being in recession, particularly we in europe are in recession, we dislike considering limits to growth, except perhaps putting some limit to money supply growth. not all the predictions of the club of rome came true. nevertheless, it has initiated not only debates, but also radical changes in human behaviour, many of them still ongoing today β for example the environmental movement that started early in the β 70s with the first report to the club of rome ; or the need to increase the efficiency of energy consumption ( just recall how big and low efficient american cars were 40 years ago ). but, above all, these debates have changed our way of thinking. like albert einstein used to say, β the world we have created is a product of our thinking ; it cannot be changed without changing our thinking β. related to this | on 6 march 2003, short - term interest rates in switzerland fell to a very low level. since the opportunity costs for holding money were consequently reduced to practically zero, the demand for liquidity increased markedly. immediately following the interest rate reduction, annualised monthly growth rates of more than 15 % were observed for m3. once the demand for liquidity by companies and households has reached the desired higher level, liquidity should only increase in line with nominal gross domestic product and should not pose a threat to price stability. in actual fact, the growth rates of m3 have fallen recently, but nevertheless the economy has more liquidity at its disposal than is compatible with price stability in the medium term. according to our last forecast published in march, given an unchanged monetary policy and a threemonth libor of 0. 25 %, inflation could have climbed to 3 % in the fourth quarter of 2006. the current forecast shows that - on the assumption that the three - month libor will remain stable at 0. 5 % in the next three years - inflation will only rise to 2. 7 % by the end of 2006. at the end of the new forecasting horizon in the first quarter of 2007, inflation would slightly exceed 3 %. by taking a small step towards the normalisation of the short - term interest rate level, we are thus gradually and cautiously siphoning off excess liquidity in order not to jeopardise price stability in the long term either. financial markets is the economic analysis on which our inflation forecast rests in conformity with that of the financial markets? in the recent past, a flattening of the interest rate curve was observed in switzerland. interest rates for maturities of up to ten years in particular moved up. this shows that the financial markets have anticipated a somewhat less expansionary monetary policy. since economic activity began to pick up momentum more rapidly in switzerland than in the neighbouring countries, it became evident that interest rates would rise sooner, which enhanced the attractiveness of the swiss franc somewhat. nevertheless, the competitiveness of swiss companies remains intact. at the very long end of the interest rate curve interest rates have hardly moved, an indication of consistently low inflation expectations. the markets assume that the national bank β s monetary policy is in conformity with its goal of ensuring price stability in the long term. monetary policy still expansionary in march 2001, we initiated a series of interest rate reductions in response to the sluggish business climate and the enduring strength of the swiss | 0 |
six mainstream institutions involved in microfinance, namely equity bank ltd, cooperative bank, k - rep bank, family bank and kenya commercial bank as well as the kenya post office savings bank ( kposb ). these models have had far reaching impact while influencing the microfinance practices and outreach modalities of similar microfinance institutions within the eastern african region. this steady growth in kenya β s microfinance portfolio indicates that prudentially regulated and supervised institutions are more able to mobilize savings on a viable and sustainable basis. this is to say, in other words, that appropriate and effective supervision with necessary and appropriate prudential rules provides a conducive and enabling environment for microfinance business to grow and thrive. this is also an indication that microfinance institutions that will opt to be licensed and regulated under the microfinance act will be in a better position with regard to improved efficiency, effectiveness ( increased outreach ) and long - term sustainability. this will further enable these institutions to establish sufficient and effective linkages to commercial banks and payment systems. ladies and gentlemen ; the central bank acknowledges that prudential regulation and supervision of microfinance institutions is not only intrusive, but has cost implications, not only to the regulator, but also for the regulated institutions. the regulation and supervision of institutions is anchored on a legal and regulatory framework that requires, first and foremost, the assessment of the adequacy of the institutions β capital to meet their business requirements to match their risk profiles and to protect the interests of their depositors. although prudential regulations, which subscribe minimum corporate governance standards, capital adequacy levels, liquidity requirements and adequate provisioning for loan losses etc, create a stringent regime, it is essentially necessary for deposit - taking microfinance institutions. this is to ensure the protection of their financial soundness in order to protect depositors'funds and uphold confidence in the financial system. the central bank also acknowledges that although prudential regulation is considered necessary when there are depositors to protect, it is not appropriate for credit - only mfis which fund themselves from donors β funds or commercial loans. the bank asserts that such mfis require relatively non - intrusive, non - prudential regulation, involving, for example, screening out unsuitable owners / managers or requiring transparent reporting and disclosures. to this end, the microfinance act, section 3 makes appropriate provisions for the deposit | , to deal with structural binding constraints that prevent the cost of credit to re - align itself with available incentives, market conditions as well as returns on investment. 5. ladies and gentlemen : allow me now to briefly focus on the performance of the banking sector. in 2009, the kenyan banking sector has continued to exhibit resilience in the midst of the global financial turbulences. the performance posted by banks and mortgage finance companies in the first three quarters of 2009 surpassed expectations as exhibited by the following indicators as at the end of september 2009 : β’ the sector β s assets increased by 11 percent from ksh. 1. 18 trillion in september 2008 to ksh. 1. 31 trillion at the end of september 2009 as banks continued to expand their lending portfolio. β’ deposits increased from ksh. 895 billion in september 2008 to ksh. 1 trillion on the back of deposit mobilization and expansion of branch networks by banks. β’ the total capital to total risk weighted assets ratio stood at 20 percent which was above the statutory minimum of 12 percent. this is an indicator that the sector has a reasonable cushion against periodic shocks. β’ the sector β s average liquidity at end of september 2009 was 40. 8 percent well above the statutory minimum of 20 percent. β’ the profit before tax for the banking sector increased by 7 percent from ksh. 34. 68 billion for the period ended 30 september 2008 to ksh. 36. 95 billion for a similar period in 2009. this reflects the increased business from expansion and diversification drives by banks. β’ the number of branches stood at 918, an increase of 130 branches from the corresponding period in 2008. 6. ladies and gentlemen : it is worth noting that in the year, significant steps were made in operationalising a credit information sharing mechanism for the banking sector. the banking ( credit reference bureau ), 2008 regulations became operational in february 2009. the regulations empower the central bank to license and supervise credit reference bureaus ( crbs ). the bureaus will collate credit information from banks that will facilitate credit risk decisions. this is the most significant step towards building information capital. it will allow us to influence the collateral technology in use currently. the licensed credit reference bureaus will join the family of financial sector actors. 7. ladies and gentlemen : the national payments system sits at the centre of the financial system. it is imperative that payments systems are secure and efficient. the central bank continues with its initiatives to modernize the national payments system. accordingly, | 0.5 |
in this regard it is critically important that all developments, in particular, large scale tourism developments, are strictly regulated. in this regard, i wish to once again reiterate the need for eco - friendly tourism development which uses more renewable energy technology and building designs to minimise the importation of fossil fuel. the government ministries in charge of planning, environment and energy need to work very closely with the various stakeholders to ensure that we have policies to give effect to these strategies. we do have some policies already in place but one needs to ask how effective these are. if properly implemented, these strategies will add more value to our tourism and differentiate our tourism product from many other destinations. one of the key challenges for the government is to keep the infrastructure developed and maintained. substandard infrastructure will have serious implications for the growth of tourism in fiji. therefore, long term planning is absolutely necessary to develop adequate infrastructure in terms of electricity, water supply, roads, bridges, airports, hospitals, telecommunications, etc. fiji β s infrastructure has been left neglected for a number of years but it is good to see more activity in some of these areas recently. in summary, ladies and gentlemen, the tourism industry is a major contributor to the growth and development of our country. its importance, as i highlighted earlier, underscores the need for all stakeholders, not only the government, but the private sector and the community in general, to work together and make every effort to raise our tourism industry to a level where it can compete more effectively with the rest of the world. against the adverse impact of recent global and domestic developments, tourism contributed significantly to turn the economy around from this year. i am confident that with the efforts of everyone, the tourism industry will continue to grow strongly and achieve its growth target of 1. 1 million visitors and $ 1. 2 billion earnings by 2016, if not sooner. thank you very much. | well!! so we obviously had a comedian amongst our economics team who made all the arrangements! so, on that visit in 2013 i came to know that the institute is an english language school catering to non - english speaking foreigners, who travel to fiji, spend a little time with us and learn the language. i am told the average length of stay is 10 weeks, with the programmes varying from 2 to 50 weeks. many of these students will use their new skills acquired in fiji to assist them in achieving their education and employment dreams across the globe. the institute was established with the approval of the ministry of education in fiji and its, mainly local, teaching staff are licensed by the ministry. from the day the institute first opened its doors in 2004 up to the end of 2015, more than 15, 000 students from 29 different countries have graduated not only with their newfound english - speaking prowess, but with great experiences and memories of their time in fiji. the key student source market over the years has been japan. in 2016 the total enrollment across the two campuses in namaka and lautoka was a little under 1, 500. i understand there is also a smaller ba provincial free bird institute. attracting young people from overseas to come to a strange land to study is not easy, especially when they do not speak the language! it can also be an extremely competitive business. however, it is clear that mr taniguchi has found the secret recipe in his β total immersion β approach for students. i have been reliably advised that the institute has been active in marketing fiji as one of the best places to learn. i visited its website and was greeted by one of the most attractive taglines about fiji which says, β study english in islands closest to heaven β. i thank the institute for helping build on our niche education - tourism sector and supporting our most important foreign exchange earning industry. no doubt our minister for tourism will also be well pleased. listing of free bird institute limited with 10 years of experience in fiji now under its collective belt and an evergrowing international reputation as a respected english language educator, the institute has now set its intentions of extending the opportunity to local investors to be part of its plans and aspirations going forward. being the first company to be listed representing the education sector, today β s listing of free bird institute limited β s shares is an achievement to be celebrated and supported. ladies and gentlemen, the company directors had initially approached the reserve bank and the south pacific stock exchange back | 0.5 |
cyclical buffer or other macro - prudential tools provided for by the eu legislation. as a conclusion, i would like to end my presentation on a positive note ; not only central bankers but also other public authorities are showing great determination in developing the banking union and a lot of progress has been made to correct basic flaws we have had in our internationally integrated financial markets. and in doing that, national interests, and i argue that banks'interests as well, are aligned with the general objectives of the banking union. bis central bankers β speeches | , when combined with data vaults to securely store personal information, can be used to trade objects in a way that protects one's identity from being exploited for profit. while these technological developments are still in their infancy, they have potential applications beyond the crypto ecosystem that could lead to substantial productivity enhancements in other industries. 1 / 3 bis - central bankers'speeches this leaves us with the crypto - assets themselves. the question is, why would someone hold such an asset? what is the value proposition of such an asset? the answer isn't new or unique, but rather is based on economic relationships that result in objects having value. one reason objects have value is because of their intrinsic properties. for example, the value of corn derives in part from the fact that it can be used for food or fuel, or in some cases for thanksgiving centerpieces. intuition suggests that if an object has no intrinsic value, then the price of that object should be zero - why pay for something that has no fundamental value? shockingly, it turns out that objects may be valued well above what their intrinsic properties would suggest. since paul samuelson's seminal work in 1958 on intertemporal consumption smoothing, economists have known that an intrinsically useless object can trade at a positive price. 2 such an object's value is driven purely by belief. if i believe someone will pay a positive price for this object in the future, then i may be willing to pay a positive price now, carry it across time, and sell it when i need to consume other goods and services. samuelson referred to this concept as " the social contrivance of money. " while an intrinsically useless object can trade at a positive price, we also know that there is always a second equilibrium price for this object, which is zero. what if one day, beliefs change and i no longer believe that someone will pay me for this object in the future? then i clearly shouldn't pay anything for it today, so its price goes to zero. there are many intrinsically useless objects that still have value. consider things like baseball cards and celebrity autographs, which are pieces of cardboard and paper with pictures or scribbles on them. based on their fundamental properties, these things have little to no intrinsic value, yet can be in high demand and command staggering prices. what happens if one day, no one wants to collect baseball cards? as valuable as they are today, they wouldn't | 0 |
of appreciation of the rupee in 2017, indicating significant inflows to the foreign exchange market. sri lanka also received the fourth tranche of the extended fund facility ( eff ) of the imf in december 2017. a total of us dollars 759. 9 million has been received so far. this confirms sri lanka β s satisfactory performance in achieving imf - eff targets during 2017 in terms of specified performance criteria and certain structural benchmarks. earnings from exports increased owing to the recovery in key export markets, the central bank policy of maintaining exchange rate flexibility, conducive external trade policies and improved macroeconomic conditions of the country. further, the reinstatement of the eu gsp + facility, the expected conclusion of the free trade agreements with singapore, china and india and strong institutional and policy support are also expected to drive the momentum in exports. we have seen an increased inflow of foreign direct investment ( fdi ) in 2017 and we expect fdi to gain momentum through the commencement of the hambantota industrial zone and the continuation of the colombo port city project. higher inflows to the government securities market and the colombo stock exchange ( cse ) as well as long term financial flows to the government were also witnessed during the year. with these developments on the external front, the central bank was able to build official reserves of over us dollars 7. 9 billion at the end of 2017. on the fiscal front, the government has embarked on a revenue based fiscal consolidation path to strengthen the country β s public finances. the government expects to reduce the budget deficit to 3. 5 per cent of gdp by 2020 and thereby reduce government debt to a sustainable level in the medium - term. it is in the process of implementing several reforms aimed at improving government revenue collection while rationalising government expenditures to adhere to the envisaged fiscal consolidation path over the medium - term. a positive primary balance is expected in 2017 for the first time since the early 1950s and a surplus in the current account is also expected in 2018 for the first time since 1987. the reform agenda of the government includes improving financial viability of the state owned enterprises ( soes ) to mitigate the budgetary implications for the government. while introducing clear frameworks and reforms in relation to monetary and exchange rate policies in 2017, we have implemented several policy measures during 2017 to address the challenges in the financial sector and maintain a stable financial system for effective monetary policy transmission and to support sustainable growth. with a view to | and reduce employment throughout 2002. despite the reduction in business investment, significant improvements in efficiency allowed firms to meet their sales and production goals without having to add workers. these improvements seem to have been the result both of organizational changes in business operations and of innovations in the use of existing technologies, perhaps the result of firms applying more effectively the new technologies they had acquired at a rapid pace in the late 1990s. in 2003, the recovery took hold : the pace of consumer expenditures stepped up, and housing activity boomed. these developments were supported by a pickup in personal income growth as job losses abated and hourly compensation moved up, as well as by rising stock market and housing wealth. in addition, the caution and uncertainty that had weighed on businesses began to dissipate, and investment turned up in the spring. a marked increase in capital spending in the second half of last year was spurred by significantly improving profits, low interest rates, and investment tax incentives. nonetheless, the recovery remained β jobless β until the fall, when growth in private employment began to resume. output in the first quarter of this year continued to expand at the robust pace of 2003, and employment gains picked up sharply. however, economic activity hit a soft patch in the late spring : the growth of real gross domestic product slowed to an annual rate of 3 - 1 / 4 percent in the second quarter after posting a 4 - 1 / 2 percent average pace in the first quarter of this year and over the four quarters of 2003. the second - quarter slowing was particularly evident in consumption, which was nearly unchanged on average between april and june. furthermore, job gains in the private sector, which had averaged close to 300, 000 per month between march and may of this year, slowed to about 100, 000 per month on average during the summer. economic developments this year have undoubtedly been influenced by the steep run - up in oil prices from about $ 30 per barrel for west texas intermediate crude oil in december 2003 to a record level of $ 55 per barrel this past october. this rise in energy prices clearly has had a negative effect on the real purchasing power of households and has raised business costs. nevertheless, the united states is probably less vulnerable to this year β s oil price shock than it was to the shocks of the 1970s and early 1980s, both because energy represents a smaller share of household purchases and business input costs than in those earlier periods and because the higher oil prices reflect, in part, stronger growth in the rest of the world, which | 0 |
% this year, 1. 7 % next year and 1. 6 % in 2019. unemployment has been falling in many euro area countries. in the euro area as a whole, the unemployment rate is now less than 1 percentage point above its average in the pre - crisis years after declining to 9. 6 % last year. the economic upswing and improved employment data in the euro area are likely to drive up price pressures gradually. inflation rose more sharply at the start of the year than anticipated in the december projection. in february, hicp hit a four - year high of 2. 0 %. however, this increase was largely attributable to base effects and higher energy prices. on friday, eurostat published 1 / 5 bis central bankers'speeches its most recent estimate : the inflation rate is expected to hit 1. 9 % in april. meanwhile, core inflation is currently estimated at 1. 2 %. according to the march forecasts, it will slowly increase as the euro area β s economic recovery continues. it is expected to reach 1. 8 % at the end of the forecast horizon in 2019. considering these numbers, an accommodative monetary policy remains appropriate. it goes without saying that opinions differ with respect to the right degree of monetary accommodation. of course, views also vary regarding the point in time at which the price outlook will have firmed enough to justify a change in communication and, ultimately, in the monetary policy stance. let me share three thoughts on this issue. first, the bundesbank has always been critical of government bond purchases by the eurosystem central banks as they lead to a dangerous commingling of monetary and fiscal policy. second, as inflation has increased, the real interest rate has declined even further. the effects are comparable to a central bank rate cut. hence, monetary conditions in the euro area will be looser even without any further central bank action. third, the risk of a deflation scenario in the euro area is extremely low. financial market participants seem to have a similar take on it : according to the respondents to the survey of professional forecasters, the probability of the inflation rate turning negative in the next five years is in the region of only 2 %. against the backdrop of robust growth and inflation rates, public discussion regarding an exit from the ultra - loose monetary policy has already started. that said, as you might already expect, i did not come to new york to comment on the timing of the exit. it | lehman brothers which threatened to produce very adverse economic outcomes with strong reductions in output, deflationary spirals and high unemployment, we made a series of policy rate cuts. these limited the consequences the downturn could have had on the income of households and firms across the euro area. our more recent rate cuts have narrowed the interest rate corridor between the deposit rate and our main policy rate to 50 basis points. these rate cuts have further eased the financing conditions of borrowers in the euro area and they have contributed to a decline in the crosscountry heterogeneity in funding costs. banks from stressed countries which participate most in eurosystem liquidity - providing operations will benefit from the lower interest rate charged for these operations. this will, over time, translate into reduced financing costs and improved access to credit for households and firms in stressed countries. second, apart from standard monetary policy, the ecb has also resorted to a number of nonstandard measures. by re - directing credit to those segments where financial intermediation ceased to function, the non - standard measures supported those areas most in need and thereby countered the increasing heterogeneity. the announcement of outright monetary transactions ( omts ) in particular has played a crucial role : it has improved the transmission of monetary policy by removing the β tail risk β arising from redenomination concerns in certain euro area countries. see m. brunnermeier, and y. sannikov, 2012. β redistributive monetary policy β, paper prepared for the 2012 jackson hole symposium, princeton university. see b. coeure, 2012. β central banking, insurance and incentives β, speech at the ecb conference on β debt, growth and macroeconomic policies β frankfurt, 6 december. bis central bankers β speeches overall, while our non - standard measures were designed for the euro area as a whole, their use has varied among counterparties and across countries. in this regard, our non - standard measures restored the distributional neutrality of our monetary policy by mitigating distortions in certain stressed asset classes or sectors. their impact has prevented very adverse economic outcomes for certain sectors and countries, and because of the effect this would have had on the rest of the euro area, it has thereby also supported medium - term price stability in the euro area as a whole. today we are clearly seeing signs of improvement in financial conditions. spreads in sovereign and corporate debt markets have fallen substantially. deposits placed by the euro | 0 |
expect construction to continue advancing to meet the underlying expansion in housing demand from population growth and the strong economy. in addition, low interest rates will continue to be a key factor supporting growth in housing activity. as reported in the latest summary of economic projections, released in december, most fomc participants see the current target range for the federal funds rate as likely to remain appropriate this year as long as incoming information remains broadly consistent with the economic outlook i described earlier. in closing, let me say that i would also appreciate hearing what is on your minds. as a policymaker, i particularly value opportunities to travel outside of washington to hear your perspectives on the national and local economies. these conversations improve our work at the fed by helping us make better - informed decisions. 1 1. these remarks represent my own views, which do not necessarily represent those of the federal reserve board or the federal open market committee. 2 2. see, for example, aditya aladangady, laura feiveson, and andrew paciorek ( 2019 ), β living at home ain β t such a drag ( on spending ) : young adults β spending in and out of their parents β home, β feds notes ( washington : board of governors of the federal reserve system, february 5 ). 3 / 3 bis central bankers'speeches | ##4 β 35. for a discussion of the role of technology, see federal reserve bank of dallas ( 2018 ), β technology - enabled disruption : implications for business, labor markets and monetary policy, β conference held at the federal reserve bank of dallas, may 24 β 25, https : / / www. dallasfed. org / research / events / 2018 / 18ted. aspx. see lael brainard ( 2017 ), β understanding the disconnect between employment and inflation with a low neutral rate, β speech delivered at the economic club of new york, new york, september 5, https : / / www. federalreserve. gov / newsevents / speech / brainard20170905a. htm ; and lael brainard ( 2018 ), β navigating monetary policy as headwinds shift to tailwinds, β speech delivered at the money marketeers of new york university, new york, march 6, https : / / www. federalreserve. gov / newsevents / speech / brainard20180306a. htm. the michigan survey β s measure of inflation expectations recently moved down to its all - time low. - 11 experience with actual inflation, and that this responsiveness varies over time. 15 we can use such an approach to get an idea of how much, and how quickly, underlying inflation might respond to any particular path for actual inflation. it provides some reassurance that our goal may be achievable if inflation moves only slightly above 2 percent for a couple of years. the sep inflation projections of committee members suggest that many have, over the past year or so, envisaged a few years of a mild overshoot. 16 of course, it is not entirely clear how to move underlying trend inflation smoothly to our target on a sustained basis in the presence of a very flat phillips curve. one possibility we might refer to as β opportunistic reflation β would be to take advantage of a modest increase in actual inflation to demonstrate to the public our commitment to our inflation goal on a symmetric basis. 17 for example, suppose that an unexpected increase in core import price inflation drove overall inflation modestly above 2 percent for a couple of years. the federal reserve could use that opportunity to communicate that a mild overshooting of inflation is consistent with our goals and to align policy with that statement. such an approach could help demonstrate to the public that the committee is | 0.5 |
average of about 0. 5 β 1. 0 % over the same period. in other words, on the face of it at least, there is evidence of the financial sector having undergone something of a β productivity miracle β during this century. this pattern has not been specific to the uk. measured tfp growth in the financial sector exceeded that of the whole economy across many developed countries between 1995 β 2007, a trend that accelerated in the β bubble β years of 2003 β 2007 ( chart 11 ). ( b ) returns to factors of production tfp in a growth framework is no more than an accounting residual. it provides no explanation of the measured productivity β miracle β in finance. a related question is whether the observed productivity miracle was reflected in returns to the factors of production in finance. chart 12 decomposes total gva of financial corporations into income flowing to labour ( defined to include employees only ) and income flowing to capital. broadly speaking, the rise in gva is equally split between the returns to labour ( employee compensation ) and to capital ( gross operating surplus ). the miracle has been reflected in the returns to both labour and capital, if not in the quantities of these factors employed. for labour, these high returns are evident both in cross - section and time - series data. chart 13 shows average weekly earnings across a range of sectors in the uk in 2007. financial intermediation is at the top of the table, with weekly average earnings roughly double those of the whole - economy median. this differential widened during this century, broadly mirroring the accumulation of leverage within the financial sector ( chart 14 ). the time - series evidence is in some respects even more dramatic. philippon and reshef ( 2009 ) have undertaken a careful study of β excess β wages in the us financial industry since the start of the previous century, relative to a benchmark wage. chart 15 plots their measure of excess wages. this shows a dramatic spike upwards which commenced in the early 1980s, but which exploded from the 1990s onwards. the only equivalent wage spike was in the run - up to the great crash in 1929. philippon and reshef attribute both of these wage spikes to financial deregulation. this picture is broadly mirrored when turning from returns to labour to returns to capital. in the 1950s gross profitability of the financial sector relative to capital employed was broadly in line with the rest of the economy ( chart 16 ). but since then, and in particular over the past decade, returns | and non - financial returns rising and falling roughly in lockstep. but from then until 2007, cumulative returns to finance took off and exploded in a bubble - like fashion. only latterly, with the onset of the crisis, has that bubble burst and returned to earth. ( b ) measuring gva in the financial sector to begin to understand these trends, it is important first to assess how financial sector valueadded is currently measured and the problems this poses when gauging the sector β s contribution to the broader economy. most sectors charge explicitly for the products or services they provide and are charged explicitly for the inputs they purchase. this allows the value - added of each sector to be measured more or less directly. for example, gross output of a second - hand car dealer can be calculated as the cash value of all cars sold. the value added of that dealer would then be estimated by subtracting its intermediate consumption ( the value of cars bought ) from gross output. this is also the case for some of the services provided by the financial sector. 1 for example, investment banks charge explicit fees when they advise clients on a merger or acquisition. fees or commissions are also levied on underwriting the issuance of securities and for the market - making activities undertaken for clients. but such direct charges account for only part of the financial system β s total revenues. finance β and commercial banking in particular β relies heavily on interest flows as a means of payment for the services they provide. banks charge an interest rate margin to capture these intermediation services. to measure the value of financial services embedded in interest rate margins, the concept of fisim β financial intermediation services indirectly measured β has been developed internationally. the concept itself was introduced in the 1993 update of the united nations system of national accounts ( sna ). the sna recognises that financial intermediaries for further details refer to, for example, akritidis l ( 2007 ). provide services to consumers, businesses, governments and the rest of the world for which explicit charges are not made. in associated guidelines, a number of such services are identified including : taking, managing and transferring deposits ; providing flexible payment mechanisms such as debit cards ; making loans or other investments ; and offering financial advice or other business services. fisim is estimated for loans and deposits only. the calculation is based on the difference between the effective rates of interest ( payable and receivable ) and a β reference β rate of interest | 1 |
. 11 toward the end of the flash crash, some high - frequency traders intensified their activities as market liquidity declined dramatically. declining market liquidity meant the absence of their usual trading counterparties, and thus these highfrequency traders repeated and intensified their automatic high - speed trading among themselves. their activities led to sizable price volatility in a very short period of time. it should be noted here that, even though high - frequency traders supply liquidity to the market by offering a limit order and thus make a position when it is hit, these high - frequency traders try to close the position immediately after the original transaction. this is indeed why such traders are called β high frequency β traders. consequently, when there are large demand - supply gaps among non - high - frequency traders in the beginning, it is not at all likely in the end that the liquidity provided by high - frequency traders is sufficient to fill these gaps. moreover, if the market is dominated by mechanistic traders, who react to microscopic directional changes in 9 prices rather than to market fundamentals, market prices may deviate further and further from the fundamentals once a demand - supply gap emerges. the flash crash is a perfect example of this, where the end result was just the contrary to the supposed stabilization. this serves to remind us of the utmost importance of market diversity, with respect to sellers and buyers, their strategies, and their referenced information. i would like to insist again that, in order to make markets function well, it is essential to have both non - high - frequency investors and high - frequency traders, of various kinds. just focusing on high - frequency traders is rather misleading in understanding the impact of electronic trading in financial markets. 5. closing remarks as i have documented so far, advances in information and communication technology have sent ripples and waves over the entire financial industry, providing new opportunities for growth and efficiency. at the same time, these advances pose serious challenges to see kirilenko, a., a. s. kyle, m. samadi, and t. tuzun, 2010, β the flash crash : the impact of high frequency trading on an electronic market, β preprint, available at http : / / ssrn. com / abstract = 1686004. maintaining market stability and integrity. thus, to take full advantage of these opportunities, we should work together to maintain the stability and integrity of the financial market and, thereby, the financial system itself | intention. this is particularly because people are accustomed to the deflationary environment and the pace of nominal wage growth has not yet caught up with that of the price increase, partly owing to the consumption tax hike. this is even more so when some time is required to raise expectations for future income. therefore, as i have emphasized several times in the past, it is essential for the bank to boost the effectiveness of its communication strategy by explaining more clearly to the public and the market why it aims to achieve the 2 percent target and how this will improve people β s lives in the medium to long term. i will continue making further efforts in this regard. in addition, views that the effectiveness of qqe has waned tend to grow particularly when the economic data appear less favorable. however, it is clear that the japanese economy is currently in far better shape than it was prior to the introduction of qqe. a virtuous cycle from income to spending, which is the driving force of the economy, is being maintained in the household and corporate sectors. thus, it is crucial for the bank to continue to stick to the 2 percent price stability target without any hesitation. enhancing competitiveness and achieving sustainable economic growth require sensible risk - taking behavior on the part of all entities involved β firms, households, and financial institutions. however, the long - standing deflation - oriented mindset has discouraged such behavior. this is why the bank has adopted its large - scale monetary easing policy with the aim of helping to generate the risk money necessary to energize the economy by transforming the mindset. i sincerely hope that all entities will take full advantage of the opportunity afforded by the highly accommodative financial environment generated by qqe to expand their efforts to produce innovative goods and services, which will lead to the tapping of potential demand and boosting of productivity, in concert with the economic growth strategy and structural reforms implemented by the government. thank you for your kind attention. bis central bankers β speeches | 0.5 |
no guarantee of continued operation for β say β individual banks in a market economy. that is why steps must also be taken to ensure that at least the vicious circle of weak banks dragging down weak sovereigns and vice - versa is broken. this principle of two lines of defence is not new. it has been the basis of the reform of financial market regulation thus far. coming back to the specific question we are looking at, a banking union should therefore ensure that fewer crises arise within the banking system that could potentially overburden the public finances of the member states directly affected, and subsequently cause problems for the rest of the euro area and for the single monetary policy. a banking union should also guarantee that monetary union is better equipped to deal with crises that cannot be prevented. in keeping with these two lines of defence, debate currently centres on two components of a european banking union : common banking supervision and a common restructuring and resolution mechanism for banks. a third component under discussion is a common deposit protection scheme. however, that has slipped out of the spotlight somewhat β and i would say, rightly so. let us start with common supervision and the advantages it offers. i consider four of them to be especially important : β’ first, common supervision increases the transparency of national banking systems. and in particular, more transparency means less uncertainty about the possibility of hidden risks. β’ second, common supervision is likely to make national banking systems less likely to become swept up in the fiscal problems of their respective domestic governments. this is because it is easier for a supranational supervisory authority than national supervisors to intervene when domestic banks are co - opted to provide overly cheap loans to the government or to households. β’ third, common supervision ensures that the same high standards are applied everywhere and, therefore, that competitive conditions, too, are the same. the bis central bankers β speeches concentration of excessive risks in banks β balance sheets, the emergence of hypertrophic banking systems and the financial crisis as a whole were aided and abetted, amongst other things, by differences between individual countries regarding the strictness of their prudential supervisory regimes. β’ and fourth, common banking supervision also facilitates measures to deal with cross - border systemic effects. this, too, would have gone a considerable way towards preventing the current crisis, and would have helped to deal with it more effectively. to sum up : common supervision could make the banking system more resilient and crises less likely. this would take considerable strain off both the public finances of | costs which in the first quarter of this year rose higher than productivity growth. this could be a sign of possible wage - price inflation. intuitive as it may seem, the cake eating analogy as well as several simple analogies you may have heard from our critics is not the whole story. what is missing in them is the reference to inflation expectations. our critics seem to have completely disregarded the important and long - lasting role of inflation expectations. strangely, concerns on inflation expectations, which feature prominently in the public discussion in other countries, seem to be relatively absent in this country. with your help, we can raise the level of public discussion about the forces underlying inflation here. again, central banks may be accused of being concerned on issues like inflation expectations that seem more academic than real. on this, i wish to emphasize that a valuable lesson from the previous two oil shocks thirty years ago is the role of inflation expectations in inflation developments. it is now well established that, independent of demand and supply shocks, an increase in the public β s long - term inflation expectations leads to higher inflation and lower output. failure to keep inflation expectations in check will lead to persistent increases in the price level well after supply shocks vanishes. this is why modern central banks pay so much attention to ensure that inflation expectations do not run away. in general, how well a central bank can anchor the public β s inflation expectations will depend on the extent in which the public perceived the central bank β s seriousness in fighting inflation. such credibility hinges critically on the central banks β actions and what the public expect it to do. words like β behind the curve β are often used to describe central banks that move too slowly to curb public β s inflation expectations. central bank, unlike the government which has a fixed term, has a greater incentive to care for economic stability. while the government tends to be more myopic in their policies, central bank is mandated to optimize the benefits across horizon. history has taught us that a popular central bank is not always the most credible central bank. a pro - growth central bank is prone to inflationary bias which undermines its credibility in fighting inflation. disinflation would then become more costly. inflation targeting is one framework to discipline the central bank by paying attention to price stability. it has been working very well for us and for many other countries in the world that have adopted the regime. but the challenge today is to find the right sacrifice ratio between economic growth and inflation. in addition | 0 |
the global economy through trade and commodity prices and via indirect contagion effects owing to higher risk aversion in international financial markets. the main issue regarding the chinese economy is not whether it slows by a fraction of a percentage point more than projected, but rather the external consequences of such a development. for example, a slowdown in growth to around 6 % of gdp, compared with 7. 3 % in 2014, is no grave cause for concern. in principle, these figures, which largely reflect the change in china β s production model to an economy more geared towards consumption, can be managed by the authorities. the uncertainty lies in the difficulty of evaluating the external effects of such changes, and the fact that the differing forecasts of private and public agents are reflected in greater volatility in financial markets. asian and latin american emerging economies are particularly sensitive to changes in the international arena. in latin america, gdp data for the second quarter show a significant slowdown. the brazilian economy, in particular, is worrying given its high budget deficit and significant current account shortfall ( although the latter has begun to be corrected ), along with inflation that needs to be contained and corrected as soon as possible. the imf projects brazilian gdp will fall by 3 % this year and will fall further, albeit moderately, in 2016. i would like to indicate that the impact of the downturn in the emerging economies on spanish banks, even for those with significant exposure to some of these economies, has been moderate. the geographical diversification of their businesses and the adjustments made to their management have contributed to the stability of their balance sheets. developments in the euro area as for economic developments in the euro area, growth in the second quarter was external demand - led, although internal demand continues clearly to support disposable income arising from lax monetary policy, the neutral fiscal policy stance, low energy prices and the improvement in the labour market. bis central bankers β speeches in september, the ecb revised downwards its growth projections for the euro area to 1. 4 % in 2015, 1. 7 % in 2016 and 1. 8 % in 2017. it should also be noted that the approval and start - up of the third bailout programme for greece has mitigated the risks in the area, a source of uncertainty for the spanish and other european economies. a characteristic of the current situation in the euro area is the trend towards disinflation. the ecb expects to end this year, 2015, with | to the anticipation of problems, minimisation of the use of public funds, reducing capacity, the conditionality of assistance, the emphasis on downsizing balance sheets and the promotion of transparency. first it is very important to anticipate problems. the primary obligation of a banking supervisor is to ensure at all times that the credit institutions operating are solvent and viable. however, good supervisors should not limit themselves to analysing the present, but should also anticipate possible scenarios of non - viability that might arise in the future and attempt to reduce problems to a minimum before they emerge. when the crisis broke, the 45 spanish savings banks then existing were all solvent and viable. however, taking into account the new economic and financial environment stemming from the crisis, it was possible to foresee that while some of them were very well - managed and unquestionably sound, many others, within a matter of years or months, might eventually be non - viable. that is why it was urgent to change the legislation on restructuring, which had been designed to resolve isolated, nonsystemic crises and which, in particular, was not appropriate for managing the restructuring of savings banks. moreover, the legislation then in force involved the use of tools that had been very useful for resolving crises in the past, but that were banned by the monetary union. consequently it was important to create instruments such as the frob to enable preventive action to be taken, before the situation worsened and required a wholesale winding up of institutions. apart from the costs of winding up, there was a risk, especially at a time of global banking crisis, that contagion might spread throughout the spanish financial system. when examining the possible formulae for financial restructuring, the authorities ruled out some that definitely might have speeded up the process of restructuring the banks. they did so on the basis of prudence, since a sudden sharp deterioration in public finances in the midst of the crisis could, as it did elsewhere in europe, have meant that the rescue of the banking system brought the country to the brink of bankruptcy and an eventual bail - out. the containment of public spending matters not only from a medium - term perspective ; given the current vulnerability of sovereign debt on the markets, its short - term effects must also be considered. it is also essential to maintain the criterion of demanding conditionality when designing public assistance, so that this is only received by institutions that adjust their capacity and manage to improve their efficiency, which is easier to do | 0.5 |
zeti akhtar aziz : developing a strong and dynamic sme sector keynote address by dr zeti akhtar aziz, governor of the central bank of malaysia, at the launch of sme credit bureau, kuala lumpur, 16 april 2009. * * * introduction it is my pleasure to be here this morning to speak at the launch of the sme credit bureau. the development of a strong and dynamic sme sector is a priority on our national agenda to promote a vibrant and active sme sector that will contribute towards generating a sustainable and balanced economic growth. malaysia has therefore adopted an aggressive sme development programme to strengthen the viability and capacity of the smes to increase their contribution to high quality growth of the economy. over the recent five years, the smes contribution to economic growth has increased. indeed, the sme contribution to economic growth in the manufacturing sector has increased from 6 % of real gross domestic product in 2001 to 8. 4 % in 2005. the overall sme contribution to the gross domestic product has increased to 32 % while 19 % of total exports are by smes. experience has shown in several of the developed countries, that smes contribute to at least half of the gross domestic product. benchmarked against this, there is clearly a significant potential for smes in malaysia to increase their contribution to the economy. economic outlook and policy response the year 2009 is likely to be a difficult year for businesses. the global economy is expected to remain weak following the synchronized recession in the advanced economies. while there is significant uncertainty on the prospects for recovery, the stimulus measures being implemented across the globe and the measures to address the financial crisis in the advanced economies are expected to contribute to improving conditions in the second half of this year. however, should there be further delays in addressing the impairment of the financial systems in the crisis affected countries, this would be a risk to the economic recovery process. this would in turn continue to have significant spillover effects on the rest of the world. whilst malaysia has successfully maintained the stability of its financial system during this period of uncertainty, the economy is not insulated from these global developments. despite the high degree of openness of our economy, malaysian businesses are however, less leveraged with significantly less foreign financial exposures and therefore better able to cope with the effects of the global economic downturn. during this recent decade, malaysia has aggressively implemented measures to promote domestic demand as a driver for growth and thus achieve a more balanced growth. while the | - keynesian paradigm with its prescriptive approach to optimal monetary policy. the weakness of this paradigm was, and is, its inability to recognise the importance of financial frictions and the role of credit and money. this has to do with the fragility of the theoretical foundations that formalise the links between the real economy, financial imbalances and the level of confidence. ignoring money is tantamount to assuming an absence of risk and uncertainty. without risk, keynes would have said, there would be no money. the preference for liquidity is not justified in an economy without uncertainty. but the neo - keynesian model excludes the possibility of default. in it, risks in the financial sector can be isolated and therefore have no effect on the real economy. the financial crisis has clearly highlighted the weaknesses of this system. macroeconomic theory has begun to reflect on the neo - keynesian system and these studies are now one of the liveliest areas of analysis. these studies β at least their early results β confirm the farsightedness of some of strategic choices of the ecb. liquidity, money, credit have always been β since 1998, when the bank received its mandate from the founders of the monetary union β qualifying variables of the ecb β s reference model and its strategy. the monetary analysis requires a constant monitoring of banks β assets and liabilities as sources of information on the assessment of risk in the markets and the economy as a whole. this analysis commits the governing council to adjust the tenor of monetary policy to ensure the the pre - crisis new - keynesian paradigm and the monetary policy strategy of inflation targeting derived from it are outlined in clarida, r., gali, j. and gertler, m., β the science of monetary policy : a new keynesian perspective β, journal of economic literature, vol. xxxvii, 1999, pp. 1661 β 1707. these were superbly expounded in woodford, m., interest and prices, princeton : foundations of a theory of monetary policy, princeton university press, 2003. bis central bankers β speeches long - term growth of monetary aggregates and credit consistent with the potential for economic expansion. in this sense, the monetary pillar of the strategy can be interpreted as a strategic reinforcement that helps to prepare correction mechanisms in situations where macroeconomic imbalances are having difficulty in manifesting themselves in inflationary pressures. the monetary analysis gave important warning signals in the years preceding the crisis regarding | 0 |
be difficult to identify in their early stages. moreover, addressing the pervasive problem of pro - cyclicality in the financial system will require efforts across financial sectors. to help address these issues, the administration has proposed the establishment of a financial services oversight council composed of the treasury and all of the federal financial supervisory and regulatory agencies, including the federal reserve. the board sees substantial merit in the establishment of a council to conduct macroprudential analysis and coordinate oversight of the financial system as a whole. the perspective of, and information from, supervisors on such a council with different primary responsibilities would be helpful in identifying and monitoring emerging systemic risks across the full range of financial institutions and markets. a council could be charged with identifying emerging sources of systemic risk, including : large and rising exposures across firms and markets ; emerging trends in leverage or activities that could result in increased systemic fragility ; possible misalignments in asset markets ; potential sources of spillovers between financial firms or between firms and markets that could propagate, or even magnify, financial shocks ; and new markets, practices, products, or institutions that may fall through the gaps in regulatory coverage and become threats to systemic stability. in addition, a council could play a useful role in coordinating responses by member agencies to mitigate emerging systemic risks identified by the council, and by helping coordinate actions to address procylicality in capital regulations, accounting standards ( particularly with regard to reserves ), deposit insurance premiums, and other supervisory and regulatory practices. in light of these responsibilities and its broad membership, a council also would be a useful forum for identifying financial firms that are at the cusp of being systemically important and, when appropriate, recommending such firms for designation as systemically important. finally, should congress choose to create default authority for regulation of activities that do not fall under the jurisdiction of any existing financial regulator, the council would seem the appropriate instrumentality to determine how the expanded jurisdiction should be exercised. a council could be tasked with gathering and evaluating information from the various supervisory agencies and producing an annual report to the congress on the state of the financial system, potential threats to financial stability, and the responses of member agencies to identified threats. such a report could include recommendations for statutory changes where needed to address systemic threats due to, for example, growth or changes in unregulated sectors of the financial system. more generally, a council could promote research and other efforts to enhance understanding, both nationally and internationally, | demand has persistently outstripped even accelerating potential supply. as i have previously noted, we cannot be sure in an environment with so little historical precedent what degree of labor market tautness could begin to push unit costs and prices up more rapidly. we know, however, that there is a limit, and we can be sure that the smaller the pool of people without jobs willing to take them, the closer we are to that limit. as the fomc indicated after its last meeting, the risks still seem to be weighted on the side of building inflation pressures. a central bank can best contribute to economic growth and rising standards of living by fostering a financial environment that promotes overall balance in the economy and price stability. maintaining an environment of effective price stability is essential, because the experience in the united states and abroad has underscored that low and stable inflation is a prerequisite for healthy, balanced, economic expansion. sustained expansion and price stability provide a backdrop against which workers and businesses can respond to signals from the marketplace in ways that make most efficient use of the evolving technologies. federal budget policy issues before closing, i should like to revisit some issues of federal budget policy that i have addressed in previous congressional testimony. some modest erosion in fiscal discipline resulted last year through the use of the β emergency β spending initiatives and some β creative accounting β. although somewhat disappointing, that erosion was small relative to the influence of the wise choice of the administration and the congress to allow the bulk of the unified budget surpluses projected for the next several years to build and retire debt to the public. the idea that we should stop borrowing from the social security trust fund to finance other outlays has gained surprising - and welcome - traction, and it establishes, in effect, a new budgetary framework that is centered on the on - budget surplus and how it should be used. this new framework is useful because it offers a clear objective that should strengthen budgetary discipline. it moves the budget process closer to accrual accounting, the private - sector norm, and - i would hope - the ultimate objective of federal budget accounting. the new budget projections from the congressional budget office and the administration generally look reasonable. but, as many analysts have stressed, these estimates represent a midrange of possible outcomes for the economy and the budget, and actual budgetary results could deviate quite significantly from current expectations. some of the uncertainty centers on the likelihood that the recent spectacular growth of labor productivity will persist over the | 0.5 |
follow, but its gains gave rise to imbalances in incomes and in trade. when combined with the economic consequences of the peace, disaster ensued. today, new technologies, the new economy and the new finance have the potential to unlock more sustainable and inclusive growth. consumers can have greater choice and better - targeted services ; small and medium sized businesses can access new credit to grow ; banks themselves can become more productive, and the financial system overall can become more resilient. most fundamentally, unlike in keynes β time, the gains from new technologies will not be limited to men or captured by denizens of the city. proudman, j ( 2018 ) cyborg supervision. available https : / / www. bankofengland. co. uk / speech / 2018 / james - proudman - cyborgsupervision. all speeches are available online at www. bankofengland. co. uk / publications / pages / speeches / default. aspx the new finance must be inclusive, allowing everyone to be better connected, better informed and more empowered. by adapting our hard and soft infrastructure, the bank of england will help create the conditions for such innovation to flourish to promote the good of all the people of the united kingdom. all speeches are available online at www. bankofengland. co. uk / publications / pages / speeches / default. aspx | fixed and the banking union completed. otherwise, market participants will continue to fear that local vulnerabilities could eventually spread and destabilise the european banking system before all the firefighting tools are ready to be deployed. the aim must be to move forward swiftly on both risk reduction and risk sharing. risk sharing involves both the public and private sectors, for example by ensuring the same level of deposit protection through a european deposit insurance scheme, but also by continuing to build a capital markets union in europe. the eu and emu also need to face up to their institutional weaknesses. on average, people β s trust in both national and eu political institutions is very low. as regards the national level, we know from the economic literature that strong institutions are crucial for sustainable economic growth and governance indicators suggest that there is room for improvement in many member states. as regards the european level, the gap between people β s expectations and the eu β s institutional setup is widening : β’ first, the perceived legitimacy of the eu remains low. the eu is not regarded as β efficient β and only a minority of citizens feel that their voice counts in the eu. β’ second, opinion polls suggest that citizens are not opposed to european decisionmaking. specifically, they want the eu to concentrate on their key concerns, notably to protect them better from economic and security risks, and to provide solutions. when responding to these expectations, the eu and emu face however two challenges : β’ the first has to do with subsidiarity : it should be made clearer where the eu has an advantage over member states in terms of exercising competence and where not. a better demarcation of competences between the european and national level is desirable β but not easy. loose coordination at european level may give the impression that a competence has been passed to the european level, when in fact it continues to be exercised by member states. the result tends to be that the eu gets blamed for apparently seeking to interfere in national affairs when in fact it does not effectively have the power to do so. it should not be so surprising that in such situations the practical result is a lack of coherent action across the eu. this, in my view, means that responsibilities and accountability lines should be more clearly defined and assigned, as europe has done with the single monetary policy and the creation of the european central bank. β’ the other challenge has to do with intergovernmentalism. the rationale for the intergovernmental approach is to ensure that decisions | 0 |
focused on issues that have dominated the activity of the bank of albania over 2024. the authors have addressed problems related to climate change, financial education and inclusion of the population, and payment systems. this attention inspires us to do more in these areas in the future. 2025 will be a jubilee year for us, as it marks the 100th anniversary of our central bank. in the context of this anniversary, some of the topics have focused on the field of historical research, analysing the character and evolution of trade agreements, as well as monetary and financial developments. i am pleased to say that the topics align with our expectations and meet the best characteristics of scientific work. they remain focused on the real problems of the economy and finance, hence embodying a particular value for the authorities and the private sector. i thank all the participants in this competition and their mentors for the attention given to issues of interest to the central bank. 2 / 3 bis - central bankers'speeches we, the members of the selection committee, have the pleasure of reading the papers, but at the same time, we also faced the difficulty of selecting three winners among them. after many discussions, the committee reached a unanimous decision on the winners of the governor's award for the best diploma thesis, who will be presented below. i congratulate the winners and encourage all applicants to continue showing the same dedication and intellectual ambition in the future! 3 / 3 bis - central bankers'speeches | gent sejko : bank of albania's achievements in 2024 address by mr gent sejko, governor of the bank of albania, at the end - of - year meeting with the media and the governor's award ceremony, tirana, 16 december 2024. * * * dear media representatives, dear students, dear participants, welcome to our traditional end - of - year meeting! the bank of albania holds this annual event every end of year to extend our gratitude and to thank you, media colleagues, for your work in conveying and communicating our policies and activities. as traditionally, we also hand out the governor's award for the best diploma thesis. dear journalists present here today, as well as all those who, for various reasons, were unable to join us in this year - end celebration ; throughout 2024, you have worked tirelessly to transmit with objectivity, truthfulness, and in real time the entire activity of the bank of albania. for this, i sincerely thank you! through your work, the bank of albania has been able to communicate to the public its decision - making in the field of monetary policy and financial stability, announce regulatory amendments, and provide the latest updates in the areas of banking supervision, payment systems, financial education and inclusion, and financial digitalization. your professionalism has enabled us to have an effective communication, helping to transmit our policies in the economy, and consequently, preserving price stability, financial sector stability, and macroeconomic stability in the country. new technological developments and global uncertainties render the communication of central banks with the public even more important. for albania, this communication becomes even more valuable, as individuals are challenged by the unsatisfactory level of financial literacy, particularly digital literacy. nevertheless, thanks to your work and in close collaboration with you, we have succeeded in conveying to the public the stance and expected consequences of every policy undertaken, reflecting the truth and eliminating any misinterpretation or deviation from it. since this is also our closing meeting for this year, i would like to briefly address some of our most recent achievements and the challenges we are facing. the latest data for 2024 on macroeconomic developments in albania, show that the positive performance of the economy coupled with the increased employment and revenues, have led to elevated income for businesses and households, which in turn are reflected in higher household's spending and business investments. in parallel with these developments, inflation has been rapidly declining, fully recovering from the | 1 |
. but growing fiscal pressure means that public balance sheets will not be able to sustain the current or even higher level of spending that is needed. bank lending has been the other main source of infrastructure financing, but this is increasingly constrained by macroeconomic factors and potentially regulatory developments. the global project finance bank loan market registered a 7 % fall y - o - y in 2012. the eurozone bis central bankers β speeches crisis saw many prominent project financing banks deleverage and become more selective with clients and transactions, while basel iii may lower the volume and raise the costs of project finance loans. hence the balance of financing sources will eventually have to shift. policy makers have recognised the need for broader private sector participation. long - term investors such as insurance companies, pension funds and sovereign wealth funds can be alternative sources of financing, as the life cycles of infrastructure assets match their long - term liabilities. however, these investors are not participating actively enough in the infrastructure space, especially in debt financing. i am sure we all recognise that there are many reasons including a lack of familiarity with the asset class and bespoke nature of infrastructure projects. some see higher perceived political risks in asia, and a limited range of investment instruments relating to infrastructure. to catalyse broader private sector participation to complement the traditional bank lending space, a few things could be considered. firstly, we recognise that investors have varying risk appetites, and that the expertise to evaluate and undertake greenfield project risks still resides mainly with banks. banks should therefore consider bringing in different types of capital at different stages as the risk profile of a project changes over time. for instance, transactions could be structured such that banks finance the construction stage of projects using their balance sheets, and the bank loan is then refinanced in the bond market post - construction. this way, institutional investors gain exposure to a steady stream of cash flows from operating projects, while banks can recycle capital to lend to new greenfield projects. there have been precedents in other parts of the world. last year, the topaz solar farm project in california was structured with a us $ 1. 2b debt package featuring us $ 850m of bonds. banks took the construction risks, and the loans were subsequently refinanced via bond issuances. in the asian context, there may be additional considerations in refinancing bank loans via the capital markets, given the greater reliance on bank lending in this region. project sponsors need to get more comfortable accessing the | tharman shanmugaratnam : update on the singaporean economy statement by mr tharman shanmugaratnam, managing director of the monetary authority of singapore, delivered at the mas annual report 2000 / 2001 media conference in singapore on 12 july 2001. * * * introduction mas has had an eventful year, shaping monetary policy in a challenging and uncertain environment and continuing to liberalise and enhance standards in the financial sector. monetary policy in january this year, mas decided to maintain the existing exchange rate policy stance of allowing a modest appreciation of the trade - weighted singapore dollar within an unchanged policy band. this policy was aimed at capping medium - term inflationary pressures, while continuing to be supportive of economic activity as growth came off its cyclical high and moderated to a slower pace. economic activity slowed much more in the first half of 2001 than was expected, causing market sentiment to shift against the singapore dollar. strong demand for us dollars to fund merger and acquisition activities by domestic corporates, and a strengthening of the us dollar against the major currencies, exerted further downward pressure on the singapore dollar. the s $ neer weakened over the period, from the top of the policy band at the start of the year to the lower half of the band at end june. this trend was consistent with the change in underlying economic and market conditions. against the backdrop of a weaker external economic environment and a more protracted global electronics downturn, near term growth prospects for the singapore economy have turned significantly weaker while inflationary pressures are subsiding. the slowdown reflects a decline in demand, not an erosion of competitiveness. there is no reason for any persistent weakening of the singapore dollar. mas has therefore shifted to a neutral exchange rate policy stance, with a policy band centred on a zero percent appreciation of the s $ neer. mas will continue to guide the s $ neer within this exchange rate band, and stands ready to intervene to dampen excessive volatility should this become necessary. financial sector supervision and development mas'financial sector policies seek to promote a sound and resilient financial system while facilitating innovation, dynamism and competition. recent and ongoing initiatives by the mas have focused on : Β· harmonising regulation across the financial sector ; Β· liberalising access to the domestic industry ; Β· promoting corporate governance and market discipline ; Β· implementing a risk - focused supervisory framework ; and Β· developing talent in the financial sector. harmonising regulation convergence of financial activities and consolidation of financial | 0.5 |
, instead of today β s 40 cents? none of these benefits show up very clearly in gdp statistics, but all of them have made a big, and a beneficial, impact on our lives. few of us would want to lose them. but what about economic growth? surely growth in gdp has been disappointingly slow since 1984, and this proves beyond reasonable doubt that the reforms have failed? certainly, taking the whole 15 year period growth has been disappointing. i am not at all sure, however, that it is legitimate to conclude that therefore the reforms have made no difference to our potential growth rate. in the first several years of the period, the new zealand economy was going through huge changes made inevitable by the decision to abolish quantitative import controls, to reduce tariffs, to abolish export subsidies, to corporatise and then privatise many state - owned enterprises, to deregulate the banking sector, and to reduce inflation from levels well above the developed country average. a lot of the capital built up in the period before 1984 was destroyed when the subsidies and protection on which that capital was totally dependent were eliminated. while there is some debate about the speed with which subsidies were eliminated, there is little or no debate that abolishing those subsidies was in the interests of the long - term health of the new zealand economy. but inevitably the short - term result of these moves was to leave the overall level of gdp looking pretty flat. it was, on a small scale, similar to the kind of trauma which the former soviet bloc countries have gone through in recent years, with whole industries wiped out and, in their case, overall gdp shrinking substantially. new zealand β s gdp did not shrink to any significant extent, but for six or seven years it barely grew at all. from the early nineties, however, the picture is much more encouraging. in the six years from 1992 to 1997, growth in gdp averaged 3 per cent per annum β not the 4 or 5 per cent per annum which we achieved when we were first emerging from the recession but better over those six years than the growth in japan, in continental europe, and in the united kingdom, and almost identical to the growth in australia, on average over those six years. we would of course like to be growing faster, and unless we do we will not regain any of the ground lost relative to australia during the sixties, seventies and eighties, when we were growing quite a bit more slowly than australia and other developed | countries. but we still did very much better in the six years to 1997 than we did in the previous three decades. but what about 1998? i suspect the fact that australia grew at more than 4 per cent in 1998 while we grew not at all in that year is at the root of a lot of our current gloom. how could we bomb out so badly, when both countries had a very similar exposure to the asian crisis? this isn β t the place to provide a comprehensive answer to this question, and indeed i don β t think anybody yet has a comprehensive answer to this question. some blame poor monetary policy decisions by the reserve bank for the difference. i don β t share that view and see the impact of new zealand β s severe drought as being a much more relevant factor, but then i am clearly not an objective observer. but even if, for the sake of the argument, monetary policy caused all of the difference between australian growth and new zealand growth in 1998, that was at most a temporary impact, and monetary policy in new zealand was eased very substantially over the course of 1997 and 1998. official forecasts suggest that growth in new zealand over the next two years will be closely similar to that in australia, as it was for the six years prior to 1998. so it is hard to see strong grounds for pessimism there. but what about productivity? now we are getting to the heart of the matter, and there has been some pessimism, even among professional economists, that new zealand β s productivity performance has not improved discernibly as a result of 15 years of reform. to shed some light on this issue, the reserve bank, the treasury, and the department of labour commissioned some work on productivity by denis lawrence, director of the tasman asia pacific economic consultancy, and erwin diewert, professor of economics at the university of british columbia, and their conclusion, as summarised by them in the new zealand herald exactly one week ago, was that β to the extent we can make like - withlike comparisons between new zealand and australia ( another country that has had a sizeable but more gradual reform programme over a similar period ) new zealand β s performance ( in multi - factor productivity ) appears to be at least comparable β. 22 indeed, they suggested that if sectors where productivity is very hard to measure ( such as banking and community services ) are excluded from the numbers on both sides of the tasman, new zealand productivity seems to have been as good | 1 |
fund sector to significantly disrupt the smooth functioning of the financial system. this of course calls for an adequate regulatory and supervisory framework so as to avoid the vulnerabilities to materialise in the future. we therefore welcome from the financial stability point of view the project of the european commission to provide a new prudential framework for insurance companies to which the ceiops is currently contributing. 3. the role of ceiops 3. 1 general consideration on the state of achievement of the internal market in the different financial sectors let me now turn to the current regulatory and supervisory framework at the european level. more specifically, today i would like to make some reflections : first about the existing differences in the eu regulatory framework among financial sectors ; second, on the lamfalussy framework and the specific work carried by ceiops in the insurance sector ; thirdly, on cross - sectoral issues. i will start with the remark that the pace of the harmonisation process had a different speed among the three sectors. although the general principles enshrining the internal market for financial services, namely the mutual recognition and the home state control as basis for the european passport, have been common to all the three sectors, the level of community - wide harmonisation has been different. this was due to both historical and political reasons. for the banking sector the role and contribution of the basel committee which provided an internationally accepted common framework is to be acknowledged. as we all know, the european capital adequacy rules for banks β which in the eu are also applied to investment firms β draws largely on the basel framework. to also note that the recent revision of the basel accord had prompted the review of the european prudential framework, and the new capital requirements directive has been adopted in a quite short time considering the technical complexities involved. the committee of european banking supervisors ( cebs ) is now working on a number of projects related to the implementation of the new regime. in the securities sector the pace of regulatory harmonisation accelerated thanks to the political impetus given for the completion of the ambitious agenda laid down by in the financial services action plan ( fsap ). also the committee of european securities regulators ( cesr ) has been very effective in helping the commission to settle difficult technical issues. with the adoption of the remaining level 2 measures for the mifid and the transparency directive, a brand new regulatory framework will be in place. the fsap was initially less focused on other financial sectors, such | reformed and is now witnessing growth coming back faster than expected β even though the unemployment rate is still very high. can β t we ask for extra time for some countries in terms of their fiscal adjustment policies? the stability and growth pact does in fact include some room to manΕuvre in terms of fiscal adjustment and these margins must be used. more generally the euro area β s difficult economic situation demands that all growth levers be activated : the monetary lever, of which the ecb is in charge, the fiscal lever for countries which have the possibility to use it, and the structural reform lever. these three levers are complementary and the most important one is that of reform. this was the meaning behind mario draghi β s speech in august in jackson hole. supporting a country β s supply capacity means re - creating fiscal resources and providing fiscal room to manΕuvre in order to, for example, reduce taxes on modest households. we cannot expect miracles of fiscal β flexibility β. first, the stability and growth pact text speaks of β major structural reform β the cost of which has to be quantifiable. then this cannot affect the goal of fiscal balance which is not one of europe β s inventions but which is inevitable to prevent debt from spiralling, especially in a period of low growth. and finally there is the issue of equal treatment. how can we explain to countries which have made the necessary effort without any preferential treatment, and which are now starting to reap the benefits that the countries which are starting their reform later will be treated differently? in my opinion the best way to limit the negative effect of deleveraging on growth is to work on the quality of budgetary adjustment ( i. e. reducing unproductive spending without sacrificing tangible and intangible investment ) and to design reform in the shape of a programme as a whole that fosters investment and employment. incidentally this is what the french government is doing. there is however a limit to these plans : they are national and benefit indirectly from the reform policies of others, therefore very little. there is not really any european logic being implemented to support european reform projects and programmes. you are right. drawing up a european approach to reform is the immediate priority. much has been provided via the stability of the euro and will be provided as of this year by greater stability in the banking sector. but we need greater coordination in terms of economic policy ; i think that this is the main lesson to be | 0.5 |
day, but this came to a net 9 trillion yen or a quarter of the amount of the original transactions. 2 second, in the event of a participant β s default, a ccp guarantees performance of delivery and payment obligations to other participants ( chart 3 ). in such an event, the ccp becomes unable to receive securities from the participant in default, which would result in the failure of delivery to other participants on the settlement day, the so - called " settlement fails. " it would immediately attempt to purchase securities from the market and therefore resolve settlement fails. 3 for payment obligations, the ccp borrows funds to make payments to other participants as scheduled. it repays funds by liquidating the securities that were originally intended for delivery to the participant in default. a ccp cannot function well without appropriate risk management measures. a ccp needs to be equipped with contingency liquidity funding arrangements to continue the performance of payment obligations. moreover, it needs to have adequate financial resources and losssharing arrangements among the participants, so as to be prepared for potential losses arising from the closing - out of a defaulter β s outstanding positions. jgbcc and other ccps in japan have been working to strengthen risk management measures. thanks to these continuous efforts, the existing risk management controls have proved effective and the operations of ccps have been ensured during the recent financial crisis. with lbj β s default, jgbcc had to fund significant amounts of liquidity very quickly. nevertheless, it managed to raise funds from external sources using the existing liquidity arrangements. in addition, while jgbcc and other ccps suffered losses from the closingout of lbj β s outstanding positions, those losses were fully covered by collateral that lbj provided. 4 having said that, there is still room for improvements in ccps β risk management framework. moreover, there is also a long - standing issue with respect to jgbcc. the netting ratio of jgbcc is not high, because not all major market players participate in jgbcc. although it is fundamentally a matter between jgbcc and the participants, a higher netting ratio would benefit all market participants. from this perspective, the bank expects ccps in japan to provide the lead in efficient and safe clearing business with strengthened risk management framework. for monthly statistics of major payment and settlement systems in japan, see the payment and settlement statistics released on the bank β s web site ( http : / / www. boj. or. | ##rrency collateral for settlement in their accounts ( chart 2 ). transfer of funds between cls and its participants takes place on their accounts at the central banks, currency by currency. cls deals with seventeen eligible currencies, and the cls settlement process takes place during a five - hour window corresponding to the morning hours in europe, early evening in japan, and very early morning in the united states, respectively. cls has played a critical role throughout the recent financial crisis. on an average day, cls settles 3 to 4 trillion u. s. dollars, which accounts for almost 60 percent of the foreign exchange settlements worldwide. 1 while the value further surged immediately following the failure of lehman brothers, cls completed settlement of the significant amounts of payments in a stable manner. the effective functioning of cls was particularly important because, over the course of the recent global financial crisis, the functioning of the u. s. dollar funding market was severely impaired and non - u. s. financial institutions, including japanese and european financial institutions, became increasingly dependent on foreign exchange swaps as a source of u. s. dollar funding. if cls β s pvp mechanism had not existed and financial institutions had confronted foreign exchange settlement risk under the rapid undermining of confidence in the soundness of financial institutions, they would have had much more difficulty in funding u. s. dollars through the foreign exchange swap market. simultaneous multi - currency settlement in cls acted as a bulwark to protect against the intensifying shock of the global financial crisis. b. ensuring settlement of jgb transactions a second example is that jgb transactions continued to be settled without serious problems despite the significant shock arising from the failure of lehman brothers japan ( lbj ). i will explain the jgb settlement process, focusing on a central counterparty ( ccp ) called japan government bond clearing corporation ( jgbcc ). see bank for international settlements, committee on payment and settlement systems ( 2008 ). a ccp replaces a bilateral contract between parties with two contracts between the ccp and the individual party. thus, the ccp becomes a buyer to every seller and a seller to every buyer. this brings two benefits. first, the ccp offsets a large number of obligations and claims across the participants, thereby reducing the amount of securities and cash needed for settlement. for example, in september 2009, an average of 35 trillion yen worth of jgb transactions was submitted to the jgbcc every | 1 |
, and perhaps also spillovers to professional services and other complementary industries. 4 this would help underpin the pickup in productivity growth that we are forecasting at the aggregate level. i am less confident, because i put more weight on the view that pre - crisis growth in finance sector productivity was simply unsustainable. much of the apparent growth in finance sector productivity before the crisis reflected profits on the risky lending that led to the crisis itself. indeed the way finance sector output is measured meant that the rate of bank balance sheet expansion translated directly into the measured contribution of the finance sector to productivity growth. strong pre - crisis growth in manufacturing productivity, meanwhile, was largely caused by structural changes in the sector catalysed by globalisation. increased competition from abroad, especially from china, created a more challenging climate for uk manufacturers, incentivising them to raise productivity ( often supported by significant foreign direct investment ) or scale back production. the uk manufacturing sector is now much more productive as a result β but is also smaller. looking ahead, the risks to productivity from this channel also appear to be to the downside. the tensions between the us and china have led to increased tariffs which have contributed to a slowdown in world growth and a sharp slowing in goods trade. and in the uk, brexit, on our forecast assumptions, is likely to lead to a reduction in the uk β s integration with the eu in goods and services trade, which appears unlikely, at least in the near term, to be offset by an equivalent increase in integration with the rest of the world. putting all this together leaves me a little more pessimistic on productivity growth than the mpc β s central forecast. since productivity growth is a key determinant of how fast the economy can sustainably grow β what i just described as the economy β s β speed limit β β that also means that, all else equal, i am a little more pessimistic about future gdp growth. my second lesson from the crisis was that we need to think about resilience much more broadly. reflecting that, economic policy makers now think as much about stability over the financial cycle as we do over the business cycle β a broader definition of resilience. one major response to the financial crisis was the creation of a new financial policy committee as part of the bank of england, giving it an explicit mandate to identify, monitor and take action to remove risks to the financial system. the committee β s goal is | . by this i do not just mean right in a moral sense. for sure, occupy have touched a moral nerve in pointing to growing inequities in the allocation of wealth and incomes globally. the 99 % certainly agrees. but so, more interestingly, do a high and rising share of the 1 %. yet it is the analytical, every bit as much as the moral, ground that occupy has taken. for the hard - headed facts suggest that, at the heart of the global financial crisis, were and are problems of deep and rising inequality. we have seen, first, inequality - induced crisis and, latterly, crisis - induced inequality. the 99 % have faced double - jeopardy. let me explain why. the up - escalator globalisation has conferred many benefits to the poorest in the world and narrowed global inequality. but it is well - known that income distributions within many advanced economies became increasingly skewed in the decades prior to the crisis. there was no single cause of this rise in inequality. longer - term structural factors, such as dispersed levels of educational attainment, were clearly a key factor. bis central bankers β speeches but so, too, were financial factors. james galbraith β s recent book on inequality and instability argues that the biggest single cause of rising levels of inequality in the us was the asset price boom which commenced in the early 1990s. this rising tide of asset prices added to aggregate wealth. but it did not lift all boats. the asset rich, in particular the owner - occupying rich, became a lot richer. meanwhile, the assetless and indebted fell further behind. in other words, the pre - crisis asset price bubble acted like a regressive tax. as raghu rajan describes in his book faultlines, the response to this inequality problem, in the us but elsewhere too, was simple and, on the face of it, brilliant. it was to make assetholders and owner - occupiers of us all. but for the majority there was one small problem : these assets had to be financed with debt. so what followed was an era of ultra - cheap credit globally β the heineken era, in which credit reached the parts of society it previously had not reached. levels of debt, in particular among households, rose pretty much exactly in line with levels of inequality. rising credit meant expanding bank balance sheets. to maintain this expansion, banks began to manufacture new financial products, slicing and dicing | 0 |
ardian fullani : a short overview on the latest albanian banking system achievements speech by mr ardian fullani, governor of the bank of albania, at the ebrd 2005 annual meeting and business forum, belgrade, 22 may 2005. * * * ladies and gentlemen, it is a great pleasure to participate in this prestigious event of the ebrd annual meeting and business forum. for this purpose, i would like to thank the organisers of this meeting who provided us such an opportunity to present our achievements and ambitions for the future. allow me first to tackle an important issue, which within the context of this meeting, i believe, is of paramount importance. i mean by that the regional co - operation, an initiative that has been completely supported by the european central bank. we have already taken the first steps in this regard through establishing bilateral relationships in banking supervision with national bank of macedonia, central bank of montenegro and banking and payment authority of kosovo. meanwhile, we are in the process of negotiating with national bank of bosnia and herzegovina, national bank of serbia etc... i estimate that regional co - operation is an important forerunner of the integration process of the region with the rest of europe ; therefore i will not stop working to encourage a regional co - operation of high standards among the financial systems of balkan countries. i hope that you share the same opinion with me, because only in this way, our region will be more credible and efficient to have its european dream. on the other hand, a developed and financially integrated region will be more attractive for foreign strategic investors, opening up the path toward regional development projects, particularly infrastructure ones where region β s banks might be directed in financing and investment. further on i would like to give to you a short overview on the latest albanian banking system achievements. after many years of difficult transition, in this late spring of 2005 the banking system is growing on a stable basis. dear participants, i would like to ensure you that recently there are many qualitative developments of the albanian banking system. i use the opportunity of this event to express that positive assessments on the banking system have been given also in the report prepared by the world bank and international monetary fund after the completion of their assessment made on the albanian financial system ( fsap - financial system assessment program ). of course, this is good news. conclusions of fsap, of this important international passport, are an indication of our earliest conclusions that the albanian financial system is characterized by a supervised and | as a key instrument for boosting the efficiency of the albanian economy, through continuously investing for the development of : financial markets ; the payment systems ; as well as innovation and digitalization of financial services. third, boosting financial education and inclusion, as a prerequisite for expanding access to financial services and payment services and for a prudential approach towards the personal finances management. fourth, enhancing attention to green finance and strengthening public awareness regarding climate change, as a necessity for the sustainable growth of the country. last, i would like to emphasise that our policies must be coordinated with prudent fiscal policies and supported by structural reforms. in particular, the creation of a more 2 / 9 bis - central bankers'speeches stimulating environment for promoting domestic and foreign investments, coupled with the investments in human capital and infrastructure should be encompassed in the priorities of structural reforms. also, these reforms should aim at expanding the sectoral base of economic growth and bolstering its sustainability. honourable committee members, allow me to focus more specifically on the main directions of our work over the past year, highlighting the measures taken and the results achieved. * * * 1. economy, inflation and monetary policy of the bank of albania the 2023 was characterized by a solid growth in economic activity, employment and wages, as well as by the improvement in the main indicators of albania's economic and financial stability. according to instat data, the volume of economic activity in albania grew by 3. 4 % over the past year, by gradually improving the growth pace over the course of the quarters. in parallel, employment rose by 2. 2 %, while the unemployment rate dropped to a new historic low of 10. 7 % at the end of the year. from the demand perspective, the expansion in family consumption, private investments, and in the export of tourism services underpinned the economic growth. on the other hand, the fiscal policy maintained a consolidating stance while the export of goods has been declining. the expansion in the demand for goods and services reflected the sound financial balance sheets of private sector, the gradual improvement in businesses and household's confidence, the stable financial environment, the increasing bank credit, inflation coming down, and the rapid growth in the income from tourism. in the sectoral perspective, economic growth was reflected in the expansion of the activity in the sectors of services and construction, while the volume of activity in industry and agriculture trended downwards. the heightened demand for goods and services drove to | 0.5 |
lorenzo bini smaghi : emu @ 10 β the first ten years of economic and monetary union and future challenges introductory comments by mr lorenzo bini smaghi, member of the executive board of the european central bank, at a public hearing on emu @ 10 : the first ten years of economic and monetary union and future challenges, brussels, 24 june 2008. * * * madam chair, dear members of the econ committee, it is a pleasure to be here today and to share with you my assessment of the challenges facing economic and monetary union in the years to come. 1 in order to do that, i believe that there are a series of clarifications to be made, starting with an assessment of the past ten years. in any balance sheet there are assets and liabilities. the last ten years are full of assets, in many respects. one is the euro, and the creation of an area of monetary stability. very few believed ten years ago that this could be achieved. i would like to quote alan greenspan, who in his recent book stated β we have in front of us a historically unique institution, an independent central bank with the exclusive mandate to maintain price stability in an economic area producing over a quarter of the world gdp. it β s an extraordinary result. i can β t stop my admiration for what my european colleagues have been able to achieve β. 2 let β s consider the negatives. what are the liabilities of the last ten years? some will claim that growth has been unsatisfactory over the past ten years. but is this really true? looking at the euro area as a whole, growth on average has been the same as in the decade preceding the euro. there have been no recessions, while there was one in each decade before. cyclical variability has been reduced. budget deficits have been substantially lower. employment growth has been much faster in the last ten years and unemployment has reached a 25 - year low. overall, in terms of economic activity, the last decade might not have been particularly brilliant, at least in the eyes of some, but it has been at least as good as the previous one. incidentally, this is not the case for the us, which saw weaker economic growth overall in the last decade compared with the previous 10 years, and even a recession. some will claim that growth has been geographically patchy, with certain countries performing better than others. indeed, eight out of the first 12 euro | policy can take care of exchange rate as long as there is no conflict with inflation. and, we have no target level for the thai baht in mind. foreign exchange market is intervened when there is too much volatility in the market. the objective is to smooth the country β s adjustment during the transitional period. looking forward, the baht movement would depend largely on external developments which i have already discussed. moreover, there are also internal drivers : large surplus in current and capital accounts. the thai stock market remains one of the most popular destinations in emerging markets for foreign investors, given its relatively low p / e ratio. during the first 7 months of this year, foreign investors became net buy about 4 billion us dollar. such inflows together with foreign direct investments have also added pressure on the currency. ladies and gentlemen, i would like to turn to the third and final part of my talk today, which is thailand β s approach in coping with the risks and challenges posed by globalization. indeed, the challenges of globalization are constantly changing. to meet these challenges from without, it is critical that the thai economy build strength from within : by continuously improving the flexibility and efficiency of its firms, the resiliency of its households, and the competitiveness of its business environment. but beyond getting the fundamentals right and strengthening them, the thai economy needs a strategic policy package that builds a system that allows for constant self - correction β one that also let the economy regain its strength quickly after a severe negative shock. that system should be underpinned by a strong link to the world economy, which will encourage innovation and efficiency. specifically, i should underscore that this approach requires policy markers to focus on achieving three key objectives, namely managing volatilities especially those emanating from volatile global capital movements ; building resiliency in both real and financial sectors ; and fostering long - term productivity improvement. looking ahead, the pressing and practical challenges we face in the near term are three - fold and indeed they are also inter - related. they are β hot money β inflows and large inflows in general, pressure for rapid domestic currency appreciation, and finally, the potential loss of monetary autonomy in the sense of independent interest rate policy. being part of the fast growing asia, thailand and its neighbors have become attractive destinations for international investors β although the more powerful underlying reason may ironically be a medium - term flight from us dollar assets since 2002. with large capital inflow | 0 |
ed sibley : opening statement - joint oireachtas committee on finance, public expenditure and reform, and taoiseach opening statement by mr ed sibley, deputy governor ( prudential regulation ) of the central bank of ireland, before the joint oireachtas ( national parliament ) committee on finance, public expenditure and reform, and taoiseach ( head of parliament ), dublin, 15 december 2020. * * * good afternoon chairman, committee members, i am joined today by grainne mcevoy, director of consumer protection. we welcome the opportunity to appear before you today and discuss banking matters and hear committee members β views on the sector. firstly, i would like to address the committee β s invitation to discuss the natwest strategic review of ulster bank β s future direction. in order for us to supervise effectively, and for connected legal prohibition reasons, we are not able to publicly discuss our engagement with individual firms on confidential matters. in the same vein, it would be inappropriate for us to appear at a hearing with a regulated firm. this is why we respectfully declined the request to attend last week β s meeting. we indicated in our response that we remained available, as always, to the committee on all matters relating to our mandate. we take our engagement with this committee, and our accountability to the oireachtas, very seriously. such engagement is one of several ways in which we demonstrate accountability for the work we undertake in safeguarding monetary and financial stability and working to ensure that the financial system operates in the best interests of consumers and the wider economy. we would welcome the opportunity to discuss further how we can improve our engagement with the committee, such that we can help support you in meeting your objectives. i will now briefly outline some of our current areas of focus in relation to the retail banks in ireland, with households, businesses and the wider community as a whole to the forefront of our minds. covid - 19 much of the central bank β s focus this year has been on mitigating the unprecedented impact of the covid - 19 pandemic. the central bank β s intertwined responsibilities β consumer protection ; monetary policy ; prudential regulation ; payments, and so on β have strong interconnections with each other. this positions us well to understand and mitigate the effects of the pandemic β including through monetary policy, macro prudential tools and supervision. distressed debt a key priority for us is that there are suitable supports in | the experience of their international peers in that margins on traditional business had fallen over the longer term. however, because of the high level of demand in ireland, profitability was maintained without recourse to investing in structured products or conduits as described earlier. the re - pricing of risk in international financial markets and the associated turmoil was triggered in mid - 2007 when international investors became nervous about the underlying value of their investments in assets that consisted of pools of us subprime mortgages. these assets had been created under the β originate and distribute β model whereby mortgages were issued to borrowers by an originator ( i. e., a bank or broker ) but were subsequently packaged together and sold on to investors. an increasing number of these mortgages have become non - performing since mid - 2005. these losses became an international problem, as many of the investors including banks that had bought these assets were located outside the us. uncertainty about the size and the identity of those investors holding the losses gave rise to increased risk aversion in the marketplace and marking down of the value of these types of assets. the uncertainty rippled through a variety of financial markets and caused disruption. arising out of concerns about banks β exposures to risky assets, counterparty risk heightened and problems began to spill over to the interbank market β where banks borrow from and lend to each other. as a result, there was increased uncertainty in key markets where banks traditionally raised funds. disruption to funding markets is particularly problematic for all banks since they regularly need to renew portions of their funding. the bout of turbulence in international financial markets has persisted for longer than many commentators would have predicted. since mid - 2007, there remain ongoing tensions in international financial markets amid a steady flow of negative news. through late - 2007 and into 2008, central banks β including the ecb β have continued to provide funds to promote a smoother functioning of the interbank money market. however, the cost of term borrowing for banks in this market has remained high. in addition, other longer - term bank funding markets remain relatively closed, as banks continue to be reluctant to lend to one another other than for short maturities, while many asset - backed securities, leveraged loan and structured credit markets are virtually inactive. term premia are expected to remain elevated for some time because of wider problems in the financial system such as uncertainties regarding the valuation of complex products, counterparty mistrust and continuing uncertainty about the ultimate location of mounting losses on assets | 0.5 |
stephen s poloz : release of the financial system review opening statement by mr stephen s poloz, governor of the bank of canada, at the press conference following the release of the financial system review, ottawa, ontario, 15 december 2016. * * * good morning. senior deputy governor wilkins and i are happy to be here to discuss today β s financial system review ( fsr ). let me begin with a few remarks about governing council β s deliberations. first, a brief reminder about our methodology. most of the analysis in the fsr is about vulnerabilities here in canada. these are pre - existing conditions that may interact with changes in our economic situation to present risks to the financial system. macroeconomic shocks happen all the time and economies adjust to them. but if significant financial vulnerabilities are present, the effects of those shocks on the economy and on the financial system may be magnified through interactions with the underlying vulnerabilities. the metaphor we have used is that of a large tree with a crack in it β the situation may improve or worsen over time, but there β s no immediate crisis until the wrong sort of storm comes along. within this analytical framework, many possible shocks could, in theory, transform financial vulnerabilities into financial stability risks. we offer illustrative risk scenarios in the fsr. of course, it is possible to draw logical links between almost any macroeconomic shock, anywhere in the world, and financial stability here in canada, like a β butterfly effect. β we make no attempt to catalogue all of these possibilities, the consequences of which would all look quite similar. instead, we focus more of our analysis on underlying vulnerabilities in canada. that being said, household financial vulnerabilities continue to rise in canada. we separate these vulnerabilities into two areas, household indebtedness and housing market imbalances. this separation is important, since although they often go hand - in - hand, it is possible that over time one of them will diminish more than the other. this separation has always been present in our analysis, but governing council sought to sharpen the distinction in this fsr. this is because macroprudential measures have been introduced in recent months that will serve primarily to mitigate the potential consequences for the financial system of rising household debt. these measures relate to mortgage qualifying criteria, which will raise the underlying quality of household indebtedness over time | well following the uk referendum on leaving the european union and the us election. this issue continues to draw attention at the international level. in this fsr, we bring some new analysis to the table, which draws upon an in - depth market survey conducted by the canadian fixed - income forum, an industry group established by the bank. governing council acknowledges that there are pockets where liquidity problems are more evident, such as corporate bonds, off - the - run government bonds and certain repo markets. but we also recognize that markets have yet to fully adapt to the new regulatory requirements. further, the pre - crisis period may not be the best standard for comparison, because liquidity was excessive and virtually costless at that time. it is reasonable to expect that liquidity will be marginally more costly β and market - making less lucrative β under the new regulatory regime, and that market participants will continue to adapt against the backdrop of a more resilient financial system. we will continue to monitor market behaviour and to engage with market participants, while pursuing work on the impact of regulatory reforms at the international level. with that, ms. wilkins and i will be happy to respond to your questions. 2 / 2 bis central bankers'speeches | 1 |
war, the economic linkages again became significant. finland had to pay war reparations to the soviet union. these were to be paid mostly in the form of products of engineering and shipbuilding industries, in effect forcing the development of this sector. until then, finland's exports had consisted largely of the products of the wood - processing industry. however, when reparations ended, in the early 1950 β s, finland had an engineering industry the products of which were much in demand in the soviet union, willing to pay for these products mainly with energy and other raw materials. the finnish - soviet trade was carried out in barter terms, with a bilateral clearing arrangement. engineering products remained important in finland's export to the soviet union, but in the 1970s finland also carried out large construction projects in the soviet union. in the 1980s more than half of the export to the soviet union consisted of consumption goods. the bulk β about 80 per cent β of imports from the soviet union was crude oil. the barter arrangement facilitated finland's adjustment to the oil shocks of the 1970's and the early 1980's, because the increased oil bill could be paid for with finnish industrial products. however, the barter arrangement also made some finnish industries very vulnerable to the fate of the soviet economy. in 1991, the soviet system was no more, the barter trade had suddenly disappeared, and the trade relationship with russia had to be rebuilt almost from scratch. in the early 1990s, after the collapse of the soviet trade, finland encountered a severe economic crisis, with gdp declining by some 15 per cent in only two years'time. this was followed by a fast recovery, and by the year 2000, finland's output per capita has again exceeded the average level of eu - 15. now, russia emerging as one of the fastest growing economies of the world, finland's russian trade is booming again and russia is, once more, one of our biggest trade partners. in addition to producing a variety of goods of the russian market, finland has also become a significant channel of transit trade for russian imports. this has been facilitated by our excellent port and transportation facilities close to the russian border. investment in human capital and educated labour force entering a phase of innovation - driven development has presupposed the interplay of several fundamental factors, including an efficient education system, a consistent and predictable policy environment, and a sound basic infrastructure. most of these preconditions were in place before the | in demand. at the same time, estimates indicate that the return on investment in education has remained high, implying that the demand for educated labour has kept pace with the rapid increase in supply. investment in research and development a very important feature of the finnish β miracle β of the 1990 β s and thereafter has been the spectacular rise of the ict industry, especially mobile telephony. the large share of the ict sector in finnish exports and the economy as a whole explains an important part of the country β s rapid productivity growth since the 1990s. the rise of the finnish ict sector has attracted a lot of attention from many countries and governments which would like to enjoy a similar positive transformation. an important milestone in the rise of the ict cluster was the early liberalisation of the telecommunication sector in finland, which heightened competition, drove prices down, and led to the growth of mass markets for wireless communication, providing a test laboratory for the equipment industry. standardisation among the nordic countries, in particular the common nordic nmt standard of mobile telephony, gave an early start for the internationalisation of the mobile telecommunication industry. the later gsm standard was a result of a european research and standardisation effort, and opening of the telecom market in europe gave access to new entrants in telecom services. as a consequence, integrated and technologically advanced mass market for wireless communication was created in the whole of europe. as early starters, the nordic telecom equipment manufacturers were well positioned to respond to the growing demand. a necessary condition for success is that there has been in finland, at least since the 1980s, a consistent commitment by decision makers, private and public, to foster an innovation - driven economy. successive governments have invested in a lot research and development. as a result, the total research and development expenditure in finland is 3. 5 % of gdp, highest in europe after sweden, and higher than in the united states. the government has contributed a third of the total while private sector has answered for two thirds of the finnish r & d outlays. an important part of the research has focused on the ict. public agencies, foundations and universities have promoted open r & d cooperation with private companies. finland and the finnish companies have also been active participants in eu research programs. the ict sector is not the only one to improve its productivity in a big way, however. banking is another industry worth of attention. it is actually a lesson on the connection of competition with productivity. finland had a major banking crisis in | 1 |
is efficient in combining clarity about the sequencing β full reinvestments will last for an extended period after a first rate - hike β and flexibility about the timing of each step. consequently, financial markets tend to adapt their calendar expectations β and hence financial conditions β to the perceived outlook : our chained guidance already provides some stabilisation function, without prejudice to our future decisions. beside flexibility in the calendar, let me stress another capacity of our monetary policy : pragmatism in its intensity, thanks to the powerful β trio β of instruments at our disposal : the reinvestments of assets, interest rates and liquidity. concerning this third instrument ( provision of liquidity ), everybody is aware of the forthcoming expiry of the tltro - 2 programme, starting in june 2020. the governing council will decide about this in due time, with two prerequisites. as mario draghi stressed, β there should be a good case for monetary policy β 7 for the euro area as a whole : our policy cannot be designed according to the specific needs of some banks or jurisdictions. and secondly, we should look at the whole spectrum of possible tools, including various forms of ltro, to decide about the recalibration of conditions and maturities. regarding interest rates, i have often stressed in the past the usefulness but also the obvious limits of negative interest rates. let me quote what i said as early as 2017 : β they are difficult to accept by households and smes, and so impossible in practice to pass through to them β 8. and thus they are believed by many, if maintained for too long, to weigh negatively on the profitability of financial intermediation with possible adverse consequences for the smooth transmission of monetary policy. hence, if we had to use negative rates for a longer period than expected, we should study pragmatically how to contain their possible adverse effects on the bank transmission of our monetary policy. 3. relentless efforts towards a stronger europe let me come back to the european spirit i pleaded for. today, it is also an economic requirement : faced with the slowdown and the uncertainties, monetary policy cannot be the only game in town. this is a german worry i fully share with many others. but then, we need to push relentlessly for a strengthening of our economic union. the commitment of mario centeno, as chairman of the eurogroup, is essential. the advances made by the european council in december 2018 are a step | bellagio event in paris β 11 january 2024 international monetary spillovers : financial and intellectual linkages speech by francois villeroy de galhau, governor of the banque de france press contact : page 2 sur 6 it is a great pleasure to welcome the bellagio group in paris. the 80th anniversary of the d - day landings this year is an important reminder that american and european histories are so closely inter - twined. today this relation materialises through tight economic and financial linkages, the subject of my talk this afternoon. 1. financial interlinkages and global monetary policy spillovers in a globalized world, economies are linked through trade and financial flows. while these linkages help when domestic demand falters or domestic savings are scarce, they can also transmit adverse developments across borders. this is the essence of international risk sharing, which if taken to the limit would imply a common global cycle. due to global value chains, spillovers and comovements in goods production have indeed risen over recent decades. however, there is less commonality in the production of services. the rising share of services in overall production has offset the increased integration of goods, so that the co - movement of economic activity between countries has not increased. 1 the disruptions caused by covid and russia β s unjustified invasion of ukraine have shown the fragility of extended supply chains. noticeably, there had already been some retrenchment in globalization indicators following the great financial crisis, as shown in figure 1 ( slide 2 ). however, fewer spillovers do not necessarily imply less volatility. in autarky, countries depend entirely on their own industries and there is less ability to adjust to domestic shocks. on the financial side, the globalized economy features similar patterns. on the one hand, increased openness implies rising exposure to the global financial cycle 2. on the other hand, improved policy credibility and better monetary policy frameworks have allowed more countries to have freely floating exchange rates and independent monetary policy to meet domestic objectives. bonadio, b., huo, z., levchenko, a. a., & pandalai - nayar, n. ( 2023 ). globalization, structural change and international comovement, nber working paper # 31358 rey, h., ( 2013 ), dilemma not trilemma : the global cycle and monetary policy independence, proceedings - economic policy symposium jackson hole. page 3 sur 6 however, monetary policy | 0.5 |
conference of the european systemic risk board, frankfurt am main, 8 december ; and schnabel, i. ( 2021 ), β monetary policy and inequality β, speech at a virtual conference on β diversity and inclusion in economics, finance, and central banking β, frankfurt am main, 9 november. 7. see, for example, cavallo, m. et al. ( 2019 ), β fiscal implications of the federal reserve's balance sheet normalization β, international journal of central banking, issue 61, pp. 255 - 306. 8. see also arrata, w. et al. ( 2020 ), β the scarcity effect of qe on repo rates : evidence from the euro area β, journal of financial economics, vol. 137, issue 3, september, pp. 837 - 856 ; and brand, c. et al. ( 2019 ), β from cash - to securities - driven euro area repo markets : the role of financial stress and safe asset scarcity β, working paper series, no 2232, ecb, january. 9. the latest adjustment on lending limits against cash took place on 10 november 2022. 10. these concerns were related to additional cash inflows from the eurosystem β s non - monetary policy deposits, as the remuneration of these deposits was initially unclear. ultimately, however, net inflows to repo markets were limited during the episode of market strain, suggesting that behavioural factors have played a predominant role. 11. the remuneration of deposits held under the eurosystem reserve management services framework was adjusted accordingly. 12. see, for example, schnabel, i. ( 2022 ), β finding the right sequence β, speech at a virtual policy panel on β unwinding qe β at the first annual bank of england agenda for research ( bear ) conference, frankfurt am main, 24 february. there are attempts to quantify the equivalence between changes in the balance sheet and interest rates, see wei, b. ( 2022 ), β quantifying β quantitative tightening β ( qt ) : how many rate hikes is qt equivalent to? β, working paper series, no 2022 - 8, federal reserve bank of atlanta, july. 13. see krishnamurthy, a. and vissing - jorgensen, a. ( 2011 ), β the effects of quantitative easing on interest rates : channels and implications for policy | exchange control department also initiated a number of measures in order to create a more conducive environment for both local microfinance sector, thus facilitating greater financial inclusion. also, as the sole authority for issuing currency, the bank has continued to ensure that all cash transactions take place smoothly. we consider that communication is an integral part in pursuing policy actions and discharging our responsibilities. considering the utmost importance of clear communication and enhanced transparency, we attach priority to formulating our policies in a forward looking manner, which will help economic agents to make their economic decisions in a more informed manner. and foreign investors. the new foreign ladies and gentlemen, today, we are exchange act is designed to effect living in a challenging world. sri lanka is further improvements in this regard. a gradually transforming to an upper number of measures will be taken in the middle income economy. however, the medium term to further relax foreign objectives of the government and the exchange transactions. the central bank aspirations of the people cannot be met is also the manager of the employees β through β business as usual β on the part provident fund, which is the largest of the public and private sectors. superannuation fund in the country. government policy making needs to be through the activities of the regional proactive. it has to be more data driven development department and the and less influenced by short - term provincial offices, the central bank seeks political expedience. equally, the private central bank of sri lanka β road map 2017 sector needs to recalibrate its risk when we review sri lanka β s post - appetite and take advantage of independence economic performance, it opportunities generated by improving is clear we could have done better. in macroeconomic policies and a more the central bank β s context, the conducive, enabling environment for perennial excess aggregate demand in business. we would all like progress to the economy, created by large fiscal be faster but the direction of travel is deficits, has complicated monetary and clearly positive. there is also the exchange rate policies. likelihood that, as the reforms gain momentum, the pace of change will accelerate, provided there is the commitment to persist with the measures that are necessary to place the economy on a higher trajectory of growth, employment generation and incomes. as the central bank, we have a pivotal role to play while being at the heart of this much needed transformation. the government is putting forward many new initiatives to develop the country. this is happening at a time when the global economy is undergoing yet | 0 |
to the rescue. of course this has significant imbalances for the new zealand outlook. demand from western countries is gradually improving, but still not very encouraging. the sad us housing story is bad for our wood exports, the uk fiscal retrenchment is hurting our uk tourist numbers and the fragile japanese recovery restrains our food exports. our own internal rebalancing is progressing, but very slowly. substantial fiscal stimulus helped cushion the economy over the past few years. the fiscal deficit will need to be closed and private demand take over public sector support. moreover, it appears that some of the fiscal deficit is structural and unwinding this support will subtract from growth for a number of years, with our housing market remaining weak, consumption impaired, balance sheets fragile and businesses remaining cautious. private demand is still impaired. what is yet to come however at the same time the strong growth in east asia and australia emerging markets has been very beneficial. these markets were much less affected by the financial crisis, have themselves enjoyed strong export prices, and are now being buoyed by growing domestic demand. russia, brazil, energy exporters, south africa and the southern american countries are also in this group. they are developing a much stronger geopolitical voice for the g - 20. the chinese and india stories exemplify this β not by any means a simple picture, but here are two economies with continued strong export demand, government building of infrastructure, and evolving domestic demand. these economies have strong connections to regional growth that will benefit new zealand indirectly over and above our direct trade exposure. other medium term implications look particularly interesting for new zealand. post - war evidence shows that as emerging markets develop significant middle classes, there is a commensurate increase in demand for protein, increasingly animal - based. that has been the pattern across a number of countries with different cultures in different geographies. many of these countries are limited in expanding their own food production, by lack of suitable land, lack of water, increasing climatic volatility, and high oil prices. a recent nomura report 2 argues that real food prices will need to rise significantly. new zealand is not a huge food producer ( not being among the top half dozen producers of any of the world β s key food product groups ). however our food exports ( as a % of gdp ) top the world, and we are the best placed in competitive terms in nomura β s food vulnerability index. food trade is volatile in | alan bollard : the recovery, the aftershock and the economic future speech by mr alan bollard, governor of the reserve bank of new zealand, at the deloitte tax conference, auckland, 19 november 2010. * * * the crisis the global financial crisis has been the major economic event of our time. as we continue through the recovery phase and encounter unexpected aftershocks it is timely to reconsider what this means for new zealand. the global financial crisis was not as harmful as the 1930s depression, but from that event we learnt that recovery to economic normality can be a slow, fragile, uncertain process with temporary set - backs and aftershocks. the 2008 global financial crisis has been different from the 1930s : it was widespread and internationally synchronised, it hit deep, but not long. it originated from the banking sector, spread virally across a number of sectors, hit the housing sector particularly hard, and was ultimately arrested by active government stimulus. the global financial crisis finally troughed in mid - 2009 in an internationally - synchronised way. there was general relief as the macroeconomic data became more reassuring, and the very large contractions in economic activity ceased. at that stage our focus turned to what the recovery would look like. the history of major financial crises shows a consistent pattern emerges : a long period of building up stresses ( averaging a decade ), a rapid unwinding, then an equally long period of gradual recovery 1. carmen m. reinhart & reinhart, vincent r. ( 2010 ) β after the fall β, jackson hole symposium. following regular post - war business downturns that were not associated with financial and banking crises, economies have traditionally recovered speedily and strongly. not this time in the west. instead we have seen businesses very cautious about reinvestment, with scarcely any credit growth. in the us, households have been traumatised by the twin fear of losing their jobs and their houses. we have observed two particular aftershocks to the crisis, neither of which was expected, as countries struggle to rebalance in two distinct ways. external rebalancing we are seeing an external β aftershock β playing out across the globe right at the moment with big movements in exchange rates to cross - rate extremes not seen for decades. the need to rebalance externally has been driven by the record build - up of international imbalances that created the pre - conditions for the global financial crisis. | 1 |
cpi inflation. for example, while wti oil prices in us $ have increased by more than 70 % from a year ago, domestic electricity tariffs and petrol prices rose by around 30 % each. similarly, while the imf global food and beverage index has soared by 43 % from a year ago, domestic food prices picked up by a more moderate 9 %. the effects of our policy tightening will continue to restrain cost and price pressures going forward. 8. however, we cannot totally insulate ourselves from the increases in global food and oil prices. hence, we must ensure that inflation expectations remain firmly anchored and that external price changes do not trigger second round effects. for monetary policy, our objective continues to be price stability over the medium - term. at the same time, other policy responses, as well as changes in household and business behaviour have been complementary toward this end. 9. mas β current monetary policy stance announced on 10 april 2008 remains appropriate given our assessment of current external economic developments. the next monetary policy statement will be released in october as scheduled. financial stability 10. the international financial system and the global economy are still facing significant challenges and downside risks. so far, prompt action by financial authorities in the us and europe has helped avert a wider crisis. but financial markets remain uncertain and volatile. 11. singapore banks have limited exposure to us mortgage related securities, and they remain well capitalised. over the past year, mas has intensified our monitoring of financial markets and our supervision of financial institutions. we have also conducted stress tests of singapore banks and the domestic operations of the large foreign banks here, and the results reported by the banks showed them to be resilient. nevertheless, there is no room for complacency. the current crisis provides important lessons on the areas we have to work on to enhance the resilience of the singapore financial system. mas is also participating in several international working groups that are reviewing ways to strengthen supervisory practices and standards. strengthening resilience : basel ii, liquidity management and standing facilities 12. as new international regulatory standards and practices are finalised, mas will consider strengthening our standards and market infrastructure where appropriate while taking care to avoid a disproportionate response. let me highlight three areas, where we had started reviewing our regulatory framework before the crisis and have proceeded to implement these new measures to further strengthen the resilience of our financial system. 13. first, an area found to be wanting elsewhere in the credit crisis was | the inadequate capital requirements that basel i placed on banks in respect of their securitisation activities. on 1 january 2008, all singapore - incorporated banks have adopted basel ii, a more risksensitive capital framework. the greater focus on enhancing internal risk management required under this new framework is especially timely given the volatile and uncertain environment. 14. second, mas has been working on improving liquidity risk management of banks before the current crisis. events in recent months reinforced the critical importance of liquidity management. to enable banks to better manage their liquidity risk, mas has put in place a revised minimum liquid assets framework. banks can apply to adopt a more risk - sensitive methodology for determining their regulatory liquidity reserves, which takes into account their risk management capability. 15. third, at the macro - level, to enhance liquidity management in the system, we will be making some changes to the mas standing facility that has been in place since june 2006. 16. the standing facility allows banks to place excess funds with or borrow from mas against singapore government securities collateral. this has helped to moderate intra - day volatility in interest rates as banks can avoid any undue scramble to square large, and potentially destabilising, positions in the market. the standing facility is currently open to the 11 primary dealer banks which are the most active banks in the singapore dollar money market. non - primary dealer banks could access the facility through the primary dealer banks. 17. while the existing arrangement has worked well, experience in other developed markets has also demonstrated that such a facility is particularly useful in times of unusual market volatility, as this enhances confidence that liquidity needs in the banking system will be met. 18. hence, to enhance the robustness of the system, mas will widen participation in the standing facility to meps + participating banks, subject to necessary documentation. the psa / isma global master repurchase agreement continues to be a requirement for banks to access the borrowing facility which will remain collateralised against singapore government securities. we will provide more details on this to the banks over the next few weeks. corporate governance, market conduct 19. apart from dealing with issues relating to the safety and soundness of banks, and the stability of financial system, mas has also been working on improving the responsiveness of our rules, as well as on improving corporate governance and market conduct. 20. mas is proposing amendments to the securities and futures act and the financial advisers act. the amendments aim to | 1 |
provision of precautionary lending create moral hazard and counteract the original purpose of advancing financial stability. furthermore, they have already left the fund with a very high risk concentration. as liabilities to the international financial institutions now account for a large share of some debtors β foreign borrowing, conflicts of interest between the borrowers, imf shareholders and private creditors could put the imf financing mechanism at risk. ultimately, the entire concept of imf lending may end up in danger of being undermined. the bundesbank therefore welcomes a return to a lending policy more in line with the catalytic role of imf financing, a policy which the imf generally endorsed last year. establishing credible ex - ante clarity about financial assistance is crucial in this respect. the single most important element in a revised lending strategy would be a restrictive exceptional access policy stringently conditioned on acute needs and debt sustainability. exceptional access must be reserved for only a few true emergency cases. lending criteria need to be applied without exception. care must also be taken to ensure that prolonged use of fund resources does not intrude upon the world bank β s territory of catering to longer - term financing needs for development purposes. over the years the imf has repeatedly expanded its policy of lending to debtors that are in arrears to the private sector ( lia policy ). the bundesbank advocates the establishment and application of transparent and operational lia criteria and recommends that the regular access limits be respected. considerations to install a new precautionary lending facility after the expiration of the contingent credit line should not be pursued any further. uncapped precautionary lending without acute needs would push the imf towards the role of a general risk insurer. this would distort creditors β risk assessment, ie invite moral hazard and undermine debtors β incentives to build strong institutions and to implement sound policies. the international financial architecture will have to be constantly evolved through formal and informal international cooperation, with a special view to building strong institutions and to creating incentives that propagate stability. | economy at large. for the financial sector, in particular, it is therefore becoming increasingly important to press ahead with measures in order to defend against cyber risk such as : optimise centralised and decentralised protective measures on an ongoing basis. foster a culture of cybersecurity. bolster the resilience of financial market infrastructures. 3. cybersecurity as a quantifiable metric is feasible looking at the examples that i have cited, it would be fitting to find that financial market participants were complying with a uniform security standard. but this is not the case. what difference would such a β uniform security standard β make? first of all, as we draw up our defensive measures, it is vital that we all borrow from established standards such as the international code of practice for information security management ( iso / iec 27002 ), the us nist cybersecurity framework or the german it baseline protection catalogues of the federal office for information security. compliance with these standards is important and guarantees a middling level of protection. generally speaking, however, attackers are not interested in firewalls β they are interested in their weak points. it is therefore important that enterprises identify their own vulnerabilities and rectify these using standardised procedures. let β s take a look at the top 20 critical security controls. these standards were put together by a large number of government and industry experts in cybersecurity and represent a prioritised, risk - based recommendation for implementation. such procedures would help us increase awareness of existing weaknesses. in addition, they would serve as a guideline for implementing effective processes and tools to appropriately secure our systems. 3 / 7 bis central bankers'speeches in this context, constant monitoring, automating processes, providing uniform evaluation metrics, and acquiring knowledge of real attacks are all crucially important with respect to developing effective defence systems. this is what we can do, and i appeal enterprises to follow these procedures. this is because we need to first reach a point where we can identify the current state of cybersecurity using established risk management procedures before going on to 1. find room for improvement and 2. continually improve quality standards ( β majority level β ). effectively searching for and finding weak points is therefore one of our main tasks, especially since our capabilities in this regard pale in comparison to those of the attackers. liability for manufacturers besides the enterprise itself, what can others do? just like federal minister of the | 0.5 |
nine indicators, in april 2017, the nbrm officially launched the initiative to join this highest data dissemination standard. at that time, we were already sure that we passed the right path and that we came within an ace of attaining our goal β to the moment that we mark with today β s event. dear ladies and gentlemen, on a global scale, it has long been resolved that quality data dissemination is key to use the benefits of statistics. therefore, i can say for certain that 28 january 2019 is a date of historical significance for the macedonian statistical system. but also for the macedonian economy, because it now has an opportunity to be one of the eighteen economies in the world that have a set of statistical indicators according to the highest international data dissemination standard. our cooperative journey to the sdds plus does not end here. we will have to fight off more challenges. we need to continue to work with the same commitment as so far to deliver the other four indicators. we are already actively working in this field and some of these data, in particular the data on the sectoral financial accounts produced by the nbrm, have been experimentally submitted to eurostat. i am sure that we will successfully reach our final destination. we have a vision, we have teams of responsible professionals who work every day to achieve the goals set by the sdds plus, we have excellent interinstitutional cooperation... and all this, which is also necessary to build and develop modern and quality statistics, guarantees us that we will succeed to the end. thank you. 2 / 2 bis central bankers'speeches | anita angelovska bezhoska : the republic of macedonia has accessed the highest statistical data dissemination standard of the imf - sdds plus address by ms anita angelovska bezhoska, governor of the national bank of the republic of macedonia, at the event marking the adherence of the republic of macedonia to the imf β s special data dissemination standard ( sdds ) plus, skopje, 1 february 2019. * * * dear ladies and gentlemen, it is my great pleasure that the idea which at the national level was initiated by the national bank of the republic of macedonia several years ago, and accepted and actively supported by the state statistical office and the ministry of finance, today is already a reality. on 28 january this year, the republic of macedonia officially became a member of the highest statistical standard of the international monetary fund β sdds plus. we have jointly succeeded our country to become part of an international data dissemination initiative, which so far included only seventeen countries, including the united states, canada, france, germany, austria, italy, sweden, japan... the republic of macedonia is the eighteenth country in the world, the second from southeast europe, and the first among the countries of the region that are still not members of the european union. this successful project is a clear confirmation of the commitment of the three institutions for the continuous upgrading of national statistics and their harmonization with the latest, highest international statistical standards. what actually does this standard represent? as emphasized by the director of the state statistical office, mr. apostol simovski, the republic of macedonia has long been integrated into the system of the so - called imf β s data standards initiatives. this system is extremely dynamic and started to develop since the mid - 1990s, in response to the then international financial crisis, in order to promote transparency of both economic and financial data. i say dynamic, given that its construction blocks have been continuously changing and increasing. its last, third construction block is the sdds plus which reflects the weaknesses identified in the statistical data infrastructure that surfaced with the latest global economic and financial crisis from 2008. it is a fact that the genesis of the crisis was not located in the lack of data, but fact is also the identified need for an enriched data set for conducting more effective economic policies. this crisis has clearly shown how inadequate regulation and excessive risk - taking can lead to a collapse of the financial system. it has shown how the underestimation of the strength of the | 1 |
stringent, forward - looking assessment of prospective losses and revenues at the 19 largest u. s. regulated financial institutions. we took the unusual, if not unprecedented, step of releasing publicly the methodology and findings of the scap, including the capital needs and loss estimates for the 19 institutions. the decision to make this information public was made in the context of a systemic crisis, in which markets were hungry for information and in which the treasury stood ready to inject capital into any of the 19 institutions that were found to need it. even so, it was much debated within the federal reserve, in part because of concerns that weaker banks might be significantly harmed by the disclosures. but i think that regularizing both stress tests and the release of information relevant to them deserves serious consideration for at least two reasons. first, in line with my earlier discussion of market discipline, releasing such information could assist investors in the difficult task of valuing loan portfolios that at present are not very transparent. second, releasing details about assumptions, methods, and conclusions would expose our supervisory approach to greater outside scrutiny and discussion. whether the result is critique or validation of our approach, the reaction of informed investors and analysts to our assumptions and methods would be beneficial. i have previously identified several ways we might increase the transparency of our stress tests. 2 there are doubtless additional possibilities. there are, to be sure, countervailing concerns. in economic times more normal than those prevailing when we conducted the scap, market participants will not be fearing the worst and banks will not have access to government capital injections as a backstop. at such a moment, the revelation that some major banks may have capital needs under a stress scenario might be unnecessarily destabilizing, though the possibility of this kind of market reaction may be lower if such information is released frequently. major unpleasant surprises would be less likely with see daniel k. tarullo ( 2010 ), β lessons from the crisis stress tests β, speech delivered at the federal reserve board international research forum on monetary policy, washington, march 26. frequent, detailed disclosures. in any case, i hope that interested parties will consider the merits of these possibilities and help advance the debate. there are other ways to incorporate non - governmental views into the regulatory system. we have already taken steps in this direction in conjunction with the federal reserve β s overhaul of its approach to supervising the largest financial holding companies. as part of this effort β and with the aim | s ability to provide the additional currency would be constrained by its gold reserves. to protect themselves, the commercial banks and the central bank established clearing houses to provide, in case of the run on any particular participating bank, the currency to each other. that was in fact a financial stability remedy, of course, being a product of its time. after the second world war the abandonment of the β golden standard β changed things completely. the introduction of the fiat money changed the monetary policy framework dramatically, forcing the financial stability issues to take back seats in the central banks considerations. there were two main reasons for financial stability being less of a worry. first, by using the fiat money the role of the lender of the last resort was not limited anymore. the central bank could lend to commercial banks as much as they wanted to borrow, just printing new money. there was no need to hold a parity to anything. second, many central banks faced serious troubles in order to meet their ultimate target, the price stability, within the new fiat money environment. therefore the policy focus shifted and huge effort was concentrated on finding a new appropriate policy framework. the situation was even more complicated due to the fact that both aforementioned points were closely interdependent. to illustrate this point, let's assume that there was an inflationary pressure which caused redistribution disturbances to the financial system as it led to the redistribution of wealth from lenders to borrowers. the central bank either had not established the appropriate framework for dealing inflation yet, or even worse, inflation had not been viewed as an undesirable phenomenon. on the other hand, the central bank was ready to fulfil its role as a lender of last resort. but saving the commercial banks from imminent bankruptcy further increased inflationary pressures. at the end this caused kind of inflationary trap. it was not surprising that during those times the financial stability was not of a main concern for the central bank. as the central banks learnt during the second half of eighties to deal more properly with inflationary disturbances, the price stability was broadly achieved again. consequently, the interest in financial stability issue has been increasing during the nineties. in my opinion, there are two main reasons for it. first of all, central banks have learnt one important rule : that their role of the lender of last resort is something the central bank should be ready to fulfil, but in fact it is optimal, never to do it in practice. second of all, the | 0 |
but the foundations of our free society remain sound, and i am confident that we will recover and prosper as we have in the past. as a consequence of the spontaneous and almost universal support that we received from around the world, an agreement on a new round of multilateral trade negotiations now seems more feasible. such an outcome would lead to a stronger global market system. a successful round would not only significantly enhance world economic growth but also answer terrorism with a firm reaffirmation of our commitment to open and free societies. but before the recovery process gets under way, stability will need to be restored to the american economy and to others around the world. arguably, that stability was only barely becoming evident in the united states in the period immediately preceding the acts of terrorism. aggregate measures of production, employment, and business spending continued to be weak. that said, consumer spending moved higher in august and appeared to be reasonably well maintained in the first part of september. industry analysts suggest that motor vehicle sales were running close to august levels, and chain store sales were only modestly lower. purchasing managers had noted an improvement in the orders picture in august. moreover, the dramatic rate of decline in profits was slowing. to be sure, these signs were tentative but, on the whole, encouraging. during the past week, of course, the level of activity has declined. the shock is most evident in consumer markets where many potential purchasers stayed riveted to their televisions and away from shopping malls. both motor vehicle sales and sales at major chain stores, some of our most current information on consumer spending, appear to have fallen off noticeably. and, the airline and travel industries have suffered severe cutbacks. the unprecedented shutdown of american air travel and tightened border restrictions have induced dramatic curtailments of production at some establishments with tight just - in - time supply chain practices. automakers, for example, are reported to have pared production and even closed some plants in the past week, largely owing to supply shortages, though, doubtless, short - term demand uncertainties have also played a part. the effect on financial markets of the devastating attack on the world trade center was pronounced, as telecommunications and trading capacities were severely impaired. but the markets are mostly functioning now, albeit in some cases using contingency arrangements, and, as in the past, the infrastructure will be rapidly restored. for a brief time, the terrorist attack markedly disrupted payment transfers that are usually measured in terms of trillions of | michelle w bowman : brief remarks on the economy and bank regulation brief remarks by ms michelle w bowman, member of the board of governors of the federal reserve system, at the ceo / executive management conference, sponsored by the mississippi bankers association and the tennessee bankers association, banff, canada, 2 october 2023. * * * thank you for the invitation to join you today. it is a privilege to speak to so many bank leaders from mississippi and tennessee together at the same time, and i appreciate the opportunity to be here with you. 1 as a former community banker, one of the most informative, enjoyable, and productive aspects of my role is the time i spend with community bankers, listening to issues that are important to you and that affect you and your customers, including, of course, the impact of the fed's regulation and supervision. community banks play a key role in supporting economic growth and lending to serve their customers and communities, which is an indispensable role in the u. s. economy. before we turn to our conversation, i'd like to offer a few thoughts on the economy and monetary policy, following our federal open market committee ( fomc ) meeting last month. as you know, at that meeting, my colleagues and i voted to maintain the target range for the federal funds rate at 5 - 1 / 4 to 5 - 1 / 2 percent, after raising rates sharply over the past year and a half to reduce inflation. since then, there has been considerable progress on lowering inflation and the fomc has responded this year with a more gradual pace of increases. in keeping with this approach, we held the policy rate steady in june, raised it by 25 basis points in july, and then held steady again last month. inflation continues to be too high, and i expect it will likely be appropriate for the committee to raise rates further and hold them at a restrictive level for some time to return inflation to our 2 percent goal in a timely way. most recently, the latest inflation reading based on the personal consumption expenditure ( pce ) index showed that overall inflation rose, responding in part to higher oil prices. i see a continued risk that high energy prices could reverse some of the progress we have seen on inflation in recent months. at the same time, the economy has remained strong as the fomc has tightened monetary policy. real gross domestic product ( gdp has been growing at a solid pace. consumer spending has remained robust, and the housing sector | 0.5 |
debt levels raise the risk of a recession, especially if there are persistent negative supply shocks. comparisons with the current conjuncture suggest a mixed prognosis across these factors. overall, for the global economy to successfully stay on the ridge, inflation needs to peak soon, underpinned by improved demand - supply balance as multiple driving factors reequilibrate. this would lessen the constraints facing central bank β s responses β allowing the pace of monetary policy tightening to ease off by year - end. at that point, a relatively contained period of sustainable below trend growth should ensue with inflationary pressures gradually receding into 2023. if instead, the global economy veers off the ridge to a hard landing and equilibrating forces are stifled, the result will be higher inflation for longer, a more protracted period of monetary tightening, possibly higher unemployment, and mounting debt vulnerabilities. i note, but will not address here, that the eurozone and other regions face additional idiosyncratic concerns which bear close monitoring. singapore economy : some pro - equilibrating shifts some growth moderation the singapore economy is moderating, with average growth of 4. 1 % ( y - o - y ) in h1 2022. following the strong rebound of 7. 4 %, last year, the economy β s output gap is estimated to be mildly positive at mid - year. manufacturing activity is slowing after a robust showing throughout 2021. the travel - related and domestic consumer - facing sectors are strong, as domestic mobility indicators have returned to pre - covid levels. it is estimated that domestic economic output has reached close to its pre - pandemic trajectory ( i. e., the present level of gdp envisaged in january 2020 ). singapore β s gdp growth is likely to come in between 3 and 4 % this year, which would bring the average pace of expansion over 2021 - 22 to around 5. 5 %. this outlook is strongly predicated on the prospects for singapore β s three main final demand markets β china, asean - 5 and the us. growth will be led by the domestic - oriented and travel - related sectors, while the contribution of the trade - related sectors could retract from last year. ongoing costs pass - through core inflation rose to 3. 8 % y - o - y in q2, reflecting both imported cost - push and broader demand - pull pressures. core inflation is expected to remain elevated this quarter, | . as schedule supply - side factors have featured prominently in the inflation run - up. there are nascent signs of an easing in supply frictions which, if sustained, can take some of the burden of restoring price stability away from demand, and incur a smaller trade - off between inflation and growth. a pick - up in productivity growth, and some rise in the labour force participation rate ( lfpr ) would also relieve cost pressures. however, productivity gains of the mid - nineties that allowed the federal reserve to hike by 300bps with minimal output loss were exceptional and are unlikely to be replicated. is schedule interest rate sensitive sectors need to respond sufficiently to the tightening of policy in order to moderate demand, without tipping the economy into a sharp or broader downturn. tighter financial conditions can restrain demand via transmission channels working through higher mortgage rates, more selective credit underwriting and wealth effects from lower equity prices. if these channels begin to restrain growth in 2022 at a time when corporate and household balance sheets are still strong, they contribute to achieving a soft landing. phillips curve combined with labour supply improvements, employment needs to moderate sufficiently to cool wage growth without eliciting a sharp rise in the unemployment rate. some relief could come from a rise in the lfpr. post - covid normalisations could see the return of some of the β missing β 1 - 1. 5 million workers that have exited the labour force because of the pandemic. the present strength in labour demand is reflected in an unusually high ratio of two vacancies for each unemployed person. some reduction in vacancies will not generate negative income effects in the same way that outright layoffs would. for a β soft landing β, the non - accelerating inflation rate of unemployment ( nairu ) would have to converge to its lower pre - covid level at a faster pace than actual unemployment rises. a return of the nairu to its value before 2020 would verify the absence of labour market scarring. soft landings a recent bank for international settlements ( bis ) study [ 1 ] usefully identified some stylised facts on hard versus soft landings in the global economy. this was based on a comparison of 70 policy tightening episodes in 19 advanced economies ( aes ) and six emerging market economies ( emes ). strong growth and high job vacancies, as well as front - loaded rate hikes can help prevent a hard landing. conversely, rapidly rising inflation, low term spreads and elevated | 1 |
. that path entails obvious contradictions ; for this reason, the deutsche bundesbank recommends we shun such an approach. conclusion ladies and gentlemen, we find ourselves in a situation in which difficult and, perhaps, uncomfortable decisions are unavoidable. this situation is aggravated by uncertainty in the markets and among the general public. this uncertainty has to be eliminated if we want to break free of the present crisis. yet this uncertainty cannot be eliminated by repeatedly topping up the rescue fund. instead, what we need are decisions which address the root causes of the crisis. besides a swift and ambitious fiscal consolidation, i would highlight three main points. we need clarity regarding greece β s future. greece must fulfil the conditions of the aid programme ; if it does not, there is no basis for granting further support. a greek default β which most certainly no - one wishes to see β cannot therefore be categorically ruled out. we need clarity regarding the banking sector β s resilience. it has to be strengthened where it is too low in order to prevent contagion effects. this explicitly includes recapitalisations. this is justified even though the banks are not to blame for the high level of sovereign debt in several european peripheral countries. and we need clarity regarding the future of the monetary union. i have outlined two different paths in my address. which of the two paths is chosen is in the hands of our politicians. it is now up to them to decide quickly. we therefore expect clear and landmark decisions by the european council this coming sunday. bis central bankers β speeches | understand is the drivers that have led to the development of two new zealand dollar debt markets : one with resident issuers and one with non - resident issuers ( e. g. eurokiwis and uridashi ). attracting domestic and offshore issuers and investors into new zealand β s capital market would promote financial efficiency, allow larger domestic borrowers to reduce their reliance on the banking system, and continue new zealand β s integration into the global economy. evidence internationally and theoretically suggests one important component of a robust capital market is the existence of a reliable and liquid government bond benchmark yield curve. a challenge for new zealand is to consider the overall net benefit of the government continuing to borrow ( i. e., issue debt ) even as it is starting to build a significant net asset position. this challenge is increasing as the new zealand government debt market becomes increasingly illiquid. the government is undertaking a review of financial products and providers. the key objective for the review is to develop an effective and consistent framework for the regulation of non - bank financial institutions, intermediaries and products. the australian government recently decided to continue issuing debt despite its persistent financial surpluses due to the perceived welfare enhancing features of a liquid government benchmark yield curve. the australian experience also suggests that once broad based credit markets develop around the risk - free government yield curve, it is possible to scale back the government debt on offer. the new zealand treasury does not undertake its government bond funding with the primary objective of maintaining a benchmark yield curve. more recently, however, the debt management office have shown a willingness to re - issue bonds that the market has expressed demand for and is working towards offering facilities that will help ensure that debt market participants can borrow parcels of government securities when they are unavailable on the open market. in addition, the reserve bank recently reduced the need for banks to hold government bonds as collateral in the interbank payment system, freeing up the supply of government bonds in the secondary market. we also introduced a β bond lending facility β that improves the liquidity in the government bond market. market participants have indicated a preference to see fewer but larger tranches of government bonds offered by the treasury to consolidate liquidity in a few key sectors of the yield curve. moreover, unlike australia, where the supply of commonwealth government bonds is similarly tight, new zealand has not developed a liquid government bond futures market to provide a substitute. bond futures ( as opposed to physical government bonds themselves ) are the most actively traded instruments | 0 |
income households and enterprises that lack traditional tangible collateral. demand for tangible assets to secure loans has for many years locked out the bottom pyramid from the more affordable credit market. opening up this market to them enables them join the formal sector and engage in more inclusive businesses that generate better and sustainable incomes and benefit from inclusive growth. β’ expansion of bank branches and mfis to reach the lower pyramid due to lower barriers to entry, enhanced competition and declining costs of maintaining accounts. the numbers of branches have consequently increased exponentially from 534 in 2005 to 1272 in 2012. the expansion in bank branches is not only enhancing financial inclusion, but also funding more inclusive businesses. ladies and gentlemen : the innovation that spurred most of these developments has ensured increased financial inclusion, which is a sure way of tapping potential in the lower pyramid into inclusive businesses through creation of stable formal sector employment opportunities that pay sustainable incomes, reduce cost of operations, enhance inclusive growth and reduce poverty sustainably. the bank will therefore continue to work with market players and stakeholders, including the g20 challenge partners to enhance financial inclusion and build inclusive businesses that employ the poor. thank you very much for your kind attention. bis central bankers β speeches | fatf ), the body that evaluates the anti - money laundering regimes of individual countries. meanwhile, section 4 of circular no. 1389 dated 13 april 1993, as amended, requires any person who brings in or out of the philippines an amount exceeding php 10, 000 to obtain prior bsp authorization therefore. the rule was promulgated to help prevent speculation against the peso and maintain the convertibility of the currency. vigilance in the implementation of the bsp rules, particularly in the transport of foreign currencies, is important in addressing incidents such as recent events involving the discovery by u. s. customs authorities of large amounts of undeclared foreign currency found in the possession of filipino citizens arriving in the u. s. we are glad that we will be assisted by other government agencies in this regard. the moa defines the functions and responsibilities of the various government agencies involved and aims to promote harmony and maximum cooperation in the implementation of bsp rules on the transport of currencies. the moa demonstrates the strong commitment of the government, thru the heads of the various agencies who are signatories to the agreement, in instituting measures versus money laundering in the philippines. again, thank you for your support and we look forward to the smooth implementation of the moa. | 0 |
policy horizon, prospects show no big changes with respect to the march report, remaining above 3 %. the expectations implicit in financial asset prices have also risen further, but these increases have been concentrated on the one - year horizon. the inflation expectations of businesses have also increased. both the central bank's survey of price determinants and expectations ( edep ) and the imce indicate that firms expect inflation to be close to 8 % in a year's time. moreover, almost 80 % of the firms surveyed under the may business perceptions report expect inflation to be well above what is considered to be normal over the next twelve months. ( figure 3 ). data for early 2022 show that the economy has already entered an adjustment phase, with a slight decline from the high levels it reached last year. in the first quarter, the seasonally - adjusted gdp series declined 0. 8 % from the previous quarter, with a drop of 0. 2 % in non - mining gdp. in april, the seasonally - adjusted imacec series showed a 0. 3 % drop compared to march ; however, this variation was positive ( 0. 2 % ) for the non - mining imacec. demand has evolved with a marked difference between private consumption and investment, where the former is persistently high. first - quarter data show that private consumption has not lost any significant dynamism and remains above expectations in march, remaining around the highs observed during 2021. consumption of durable goods has undone part of the fall of the end of last year and services consumption has continued to perform strongly, especially in areas such as health care, restaurants & hotels, and transport, reflecting that the economy has been easing restrictions. gross fixed capital formation ( gfcf ), in contrast, has shrunk in its every line, as we anticipated in march. in the first quarter, its seasonally - adjusted series fell by almost 6 % from the previous quarter. the most notable decline was seen in the construction and other works component, although machinery and equipment also fell ( figure 4 ). in the labor market, the demand for work has lost strength. this is reflected in the decline in the online job postings index from its peak of a few months ago, although it is still above its levels of mid - 2019. the background data for the may business perceptions report also points to less dynamic employment in the months ahead, in line with business expectations as reported in the imce. this is consistent with declining | francois villeroy de galhau : monetary and fiscal policy - mix addressing the disease of inflation speech by mr francois villeroy de galhau, governor of the bank of france, at the eurofi financial forum 2023, santiago de compostela, 15 september 2023. * * * ladies and gentlemen, it is a great pleasure to be here for this final day of the traditional september eurofi meeting, and i extend my warmest thanks to didier cahen and david wright for organising this event, this time in the holy city of santiago de compostela. let me start with good news about a favourite eurofi topic : banking regulation and basel 3. i say it as bis chair and former chair of ghos : we had in monday an important ghos meeting in basel, and we unanimously welcomed the decisive progress made this year in the implementation of basel 3. by 2025, all jurisdictions β including europe and β yes β the us β should have implemented it in a broad compliance with the standards. i know each banking industry, on both sides of the atlantic, tends to consider that the other side has undue advantages. it's simply not right, and our motto is now straightforward : let us now close this page, and implement the european compromise, no less and no more. no less as some banks would perhaps still dream of, and no more as some theoreticians of regulation would perhaps imagine. and we should now turn to the priority learned from the banking turmoil : " strengthening supervisory effectiveness " i rather than focusing on further regulation. let me now turn to my theme which is the policy mix to fight our main economic disease : inflation. well, santiago has not yet produced a miracle for inflation, but there is indeed some encouraging news : headline inflation has passed its peak since the beginning of 2023, and it seems that core inflation is following suit. indeed, the latter started to recede, to stand at 5. 3 % in august ( down from 5. 5 % in july and 5. 7 % in march ) in the euro area. obviously, these inflation rates remain too high : we must and we will bring inflation back towards our 2 % target by 2025. i reiterate this morning this clear commitment which is fully consistent with our latest ecb forecasts. monetary policy is the first line of defence, and the main remedy for this disease. i won't make comments about yesterday's governing council and monetary decision | 0 |
2020 ), β index of common inflation expectations, β feds notes ( washington : board of governors of the federal reserve system, september 2 ), doi. org / 10. 17016 / 2380 β 7172. 2551. the cie data are available through the second quarter on the board β s website at www. federalreserve. gov / econres / notes / feds - notes / research - dataseries - index - of - common - inflation - expectations - 20210305. htm. return to text 3 / 3 bis central bankers'speeches | of our debt in terms of foreign currencies would then automatically decline, inducing foreign wealth - holders to make further portfolio shifts, perhaps even including increasing their stock of dollar - denominated debt. this ( september 17, 2003 ) and rudolph g. penner and c. eugene steuerle, budget crisis at the door ( the urban institute, october 2003 ). see, for example, peter hooper, karen johnson, and jaime marquez, β trade elasticities for g - 7 countries β, princeton studies in international economics, vol. 87, ( august 2000 ). even this claim may be overoptimistic. see, for example, thomas laubach, β new evidence on the interest rate effects of budget deficits and debt, β finance and economics discussion series working paper ( april 2003 ). among other things, laubach has an interesting way to remove cyclical effects from his dependent variables, interest rates. denomination effect would not permanently prevent any relative price adjustment, but it could lengthen the process. beyond that, for pragmatic reasons this conventional adjustment process could be extended or distorted even further. by way of illustration, asian central banks have now accumulated more than a trillion dollars of international currency reserves - largely in dollar - denominated assets - equal to roughly half of the outstanding net debt of the united states. these central banks are not traditional wealth - holders motivated by expected risks and returns. instead, they seem motivated more by the prospect of preserving low domestic currency values for their exporters. 10 to pursue this objective, they can print money to buy u. s. securities. this monetary expansion could generate domestic inflation unless it is sterilized with other open market sales of securities - and the mere scale of present and expected future debt stocks may make continued sterilization impossible. but if these central banks continue behaving this way, the so - called credibility range could be extended significantly. while trade deficits should ultimately correct themselves, perhaps after a long trek through the credibility range, there are really no natural self - corrective mechanisms for budget deficits. once the u. s. economy gets through the credibility range, interest rates on the increasing government debt will have to rise to induce people to hold the debt. this rise increases the interest burden and causes total deficits to rise further, all the time subtracting more and more funds from capital accumulation. once this process begins, market psychology may hasten the adjustment. 11 hence, while natural | 0.5 |
not regarded as being worth overcoming. for we thought we knew something about the financial markets which has now turned out to be false. we believed the financial markets would generally perform their task efficiently and smoothly. and if financial markets do what they are supposed to, at least most of the time, there is no need to model them specifically. however, it was the financial crisis, if not beforehand, which showed that the financial markets sometimes do not do what they are supposed to be doing β and on a large scale. let me briefly give an example of a problem in the financial markets which, i believe, played a central role in the crisis : banks β systemic importance, the β too - big - to - fail β problem. it is a core tenet of market economies that firms can fail. joseph schumpeter called this β creative destruction β ; allan meltzer put an even finer point on it : β capitalism without failure is like religion without sin. it doesn β t work. β not taken into account with regard to banks were the side effects of failure. and one thing came to light in the crisis : these side effects can be so severe that failure is no longer the basis of a healthy market but, in a worst case scenario, the downfall of the market. in order to prevent such a downfall, central government has to intervene and rescue banks. by creating flawed incentives, this implicit government guarantee ultimately exacerbates the underlying problem β a problem that the markets believe has still not yet been solved, as studies by the imf and other institutions show. are these really new insights? no, this is certainly not news. it is precisely here in germany where the premises of the ordo - liberal school of thought are cited in this context. walter eucken is quoted again and again with respect to the β too - big - to - fail β problem. more than 60 years ago, he came up with a short and snappy solution to the problem : β whoever reaps the benefits must also bear the liability. β incentives are appropriate only where the banks β shareholders and creditors are liable. and only where the banks β shareholders and creditors are liable will taxpayers not be asked to foot the bill. the knowledge that regulatory policy came up with a fundamental answer to the β too - big - to - fail β problem decades ago is not the end of the road, however. although the principles of ordnungspolitik are pointing in the right direction, | ##ies which have provided credit risk protection. if these counterparties were found not to be in a position to sustain the losses, credit risk β insurance β might not be available when claims are ultimately made. on the other hand, if the functioning of the credit risk transfer market were impaired, for instance if financial market volatility rose unexpectedly, this could have an adverse impact as banks might not then be able to lay - off their credit risk in the way they have become accustomed which could, in turn, induce greater caution in their lending to lower quality borrowers in particular. iii. 3 euro area corporate and household sectors turning to developments in the euro area corporate sector, over the past six months there have been mounting signs that an adverse turn in the credit cycle seems increasingly likely, driven by factors such as rising leverage ratios, a further tightening of monetary conditions and expectations of a future slowdown in the pace of profit growth. a favourable economic environment together with the persistently low cost of issuing corporate sector debt and greater investor appetite for lower quality credit have created conditions that have been conducive to a surge in global merger and acquisition ( m & a ) activity [ see chart on the left of slide 8 ], and in particular of leveraged buy - outs ( lbos ). such transactions have become an important source of growth in leveraged loans. 1 [ see chart on the right of slide 8 ] the rapid growth in the value of lbo transactions has taken european leveraged loan issuance beyond levels last seen at the height of the telecom boom of the late 1990s. at the same time, the average degree of leverage in these loans β measured by debt - to - ebitda ratios2 β has increased substantially. as a result, the credit quality of different market organizations and lenders define leveraged loans in different ways ; however there are two broad ways to classify loans as leveraged or nonleveraged. the first is based on credit ratings, and the second is based on a loan β s initial interest rate spread over libor. the extent to which a credit is leveraged reflects, other things being equal, the leverage ratios of a borrower with higher ratios resulting in higher spreads or lower credit ratings. ebitda stands foe earnings before interest, taxes, depreciation, and amortization. issuing companies has deteriorated. it cannot be excluded that certain features of the leveraged loan markets, such as debtor - friendly re - payment structures and an increasing | 0 |
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 | opening remarks by gerardo esquivel hernandez, deputy governor of banco de mexico, on the occasion of the 16th annual conference of the international operational risk working group ( iorwg ) mexico city, september 20, 2022 good morning, good afternoon, good evening, everyone. on behalf of banco de mexico, i am pleased to welcome you to the 16th annual conference of the international operational risk working group ( iorwg ), hosted by banco de mexico, and jointly organized along with banco de espana and the federal reserve bank of philadelphia. this event takes place in a context in which the covid - 19 pandemic has tested the resilience of countries and institutions, including central banks. we have faced unprecedented challenges to achieve an extremely difficult balance between different objectives : maintaining the continuity of central banks'operations, prioritizing the health of the staff, and making sure that central banks are able to fully perform their functions and attain their objectives and purposes. although central banks already had operational continuity strategies, most of them were not entirely prepared for the type of contingency we experienced during the pandemic. however, the mere existence of these strategies was a key element that helped us to rapidly find new ways to perform and maintain operations. in fact, the pandemic contingency transformed our institutions into even more resilient organizations, capable of coping with adverse scenarios, by developing prevention, response, adaptation, recovery, and learning mechanisms. the degree of commitment and responsibility that we have with our institutions, which is a fundamental pillar of financial stability in our countries, was truly brought out during this emergency. in terms of resilience, we rapidly adapted our work schemes and transitioned to a general remote work setting which, in the case of banco de mexico, had only been implemented as a business continuity strategy for critical processes and in very specific areas. by doing so, we confirmed that the central bank staff is the most important and valuable asset of the institution. its capabilities, solidarity, adaptability, and flexibility were key elements in getting through the pandemic, and contributed decisively to fulfill the mission of our institution uninterruptedly. the lessons learned from what we have undergone over the last two years will certainly strengthen us as central banks. we must now adjust to the challenges that this new environment imposes on us. we are now moving from a world of face - to - face interaction to a hybrid reality that has allowed us to broaden the possibilities | 0 |
must also ensure that there is just enough money in circulation to meet the requirements of the country. the amount of money in circulation must not be too low that it could lead to higher interest rates and slower economic growth. on the other hand, money supply must not be too high that it will be inflationary and reduce the purchasing power of the peso. this is a complex and challenging balancing act. as mentioned before, it is imperative that the banking sector remains sound and healthy as it provides the funding requirements of the economy, using essentially money entrusted to it by the people. in fact, funding for more than 70 % of the resources of the banking system come from deposits which, as of june 2006, had reached p3. 2 trillion. ensuring the stability of our payments and settlements system is equally important. as the bank of banks, the bangko sentral serves as an effective clearing house for high value inter - bank transactions as it holds cash balances of the banks. for this purpose, the bangko sentral operates a real - time gross settlement system which we call the philippine payments and settlements system or philpass which processes about 2, 000 transactions with a total value of about 300 billion pesos β¦. daily. this is therefore a vital service as it minimizes settlement risks for high value transactions that may adversely affect the stability of the financial system. i hope that you will continue to support bangko sentral's policies and programs ; in the same manner, you can depend on our support β¦. if there is convergence on what our respective institutions want to accomplish. indeed, with appropriate programs of cooperation and complementation, the government and the private sectors can unleash the synergy which could sustain growth and development of our economy ; jobs and income for the man on the street ; as well as peace and prosperity for our country. let us therefore work together to sustain our growth momentum and continue to implement our reform agenda. remember, in the face of increasing global competition and millions of filipinos who remain mired in poverty, we either innovate β¦. or stagnate. let us choose to innovate β¦ together. maraming salamat sa inyong lahat. | benjamin e diokno : towards the implementation of a robust philippine id system speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the moa signing between psa and bsp on the philippine id, manila, 7 october 2019. * * * undersecretary, national statistician and civil registrar general claire dennis s. mapa ; fellow civil servants from the philippine statistics authority and monetary board members, deputy governors and colleagues from the bangko sentral ng pilipinas ; distinguished guests, ladies and gentlemen, good afternoon. the bsp is honored to sign the memorandum of agreement with psa that starts the implementation of the β philippine identification system ( philsys ) act. β as you know, this is thirty years in the making. the law is universally - beneficial for filipinos as it provides β a means of simplifying public and private transactions β through a reliable and nationally - accepted proof of identity. having this proof of identity has far - reaching benefits, especially in promoting financial inclusion. with the β philippine id, β unbanked filipinos will have a proof of identity which is a key requirement in accessing formal financial services. this will enable more of our underprivileged countrymen to enjoy gains from and participate more actively in the country β s growing economy. as such, the bsp is happy to take part in this undertaking. under the moa, the bsp shall produce one hundred sixteen million pieces of blank cards for the phil id for three years. we will also provide needed equipment and space for the embedding of personal information onto the blank cards, which will be done by the psa. with this philippine id, the bsp widens its area of cooperation with psa. while our numbercrunching agencies have a long history of interaction on statistics, the production of national ids is a trailblazing field for both institutions. with this, the bsp looks forward to working with the psa in bringing the vision of philsys into reality. maraming salamat po and good afternoon to all. 1 / 1 bis central bankers'speeches | 0.5 |
ourselves. business and consumer confidence initially fell as the asian events unfolded, but they did not fall excessively - for the most part they fell from well above average to about average. in the past three months, they have tended to rise moderately again as figures about the economy have confirmed that it has performed better than most expected. the fourth explanation for why growth has held up is a catch - all one - the economy just seems to be more flexible and adaptable than before. the only clear evidence of this is that productivity whether labour productivity or total factor productivity - has increased faster in the 1990s than in earlier decades. for example, total factor productivity has increased at an average annual rate of 1. 7 per cent during the expansion of the 1990s, compared with 0. 7 per cent in the 1980s and 1. 2 per cent in the 1970s. to me, this suggests that the painful adjustments that have been made over the past decade or so are paying off. by this, i mean the changes that have been made to increase competition in previously sheltered industries. this, of course, includes greater export orientation, but also greater competition in utilities and transport, which has reduced costs to other industries. it also includes the downsizing of the public sector, which has released resources. finally, our labour relations practices and wage setting machinery now have a degree of flexibility that has surprised the sceptics. i now come to a fifth factor, which most commentators view as being important - namely, the fact that in response to a contractionary external shock, the australian dollar was allowed to float down. this is the way the textbooks say the situation should be handled, and is in sharp contrast to the severe domestic squeeze that can result in the cases of countries with fixed or quasi - fixed exchange rates. the domestic economy has benefited from the lower exchange rate because exporters β incomes have been held up and the incentive to export maintained ( while at the same time assisting those industries that are competing against imports ). the domestic economy has also benefited because we have not had to put up interest rates in order to maintain our external parity ( as in a fixed exchange rate ) or to prop up a floating rate that threatened to fall so far that it would have had undesirable inflationary consequences. raising interest rates in response to an external contractionary shock is not something that you normally would want to do, although in extreme circumstances it may become necessary. i have heard people say that it is a good thing that, | assets and exchange rate sustainability will continue to curb growth in consumer prices. 1 / 3 bis - central bankers'speeches the course of the full - scale war continues to be the key risk to inflation dynamics and economic development the nbu's january macroeconomic forecast was based on the assumption that the security situation would improve significantly from 2025. however, the risk of protracted russian aggression against ukraine still exists. the protracted war would slow economic recovery and make it more difficult for the nbu to keep inflation close to the 5 % target in 2025 β 2026. the risk of insufficient inflows of international financing also persists. that said, positive developments have been seen recently in this respect. at the end of february, the council of the european union approved the launch of ukraine facility instrument to the total amount of eur 50 billion for 2024 β 2027. under this instrument, ukraine should receive eur 4. 5 billion of bridge financing already in march. ukraine has also reached the staff - level agreement on the third review of the program with the international monetary fund and expects to receive the decision of the imf executive board in a week. overall, the country might receive more than usd 10 billion in march β april. a pickup in external assistance inflows in the near future will allow ukraine to significantly increase its international reserves. in addition, the following risks remain relevant : the emergence of additional budget needs to maintain defense capabilities or cover substantial quasi - fiscal deficits, in the energy sector in particular significant damage to infrastructure, especially port infrastructure, which will limit exports the continuation of the partial blockade of freight transportation at border crossings with some countries, which will reduce exports and make imports more expensive the deepening of adverse trends in migration. on the other hand, positive scenarios could also materialize. thus, a significant expansion of the capacity of the maritime corridor could help ukraine's exports recover faster, and given the enhanced effectiveness of currency supervision measures, increase foreign exchange earnings. the implementation of large - scale reconstruction projects in ukraine could give considerable impetus to economic recovery. discussions have also recently intensified about the use of immobilized russian assets in ukraine's favor. the implementation of these initiatives could significantly improve key macroeconomic indicators. taking into account the further deceleration of inflation and a steady improvement in expectations, a stable fx market, and a partial reduction in the risks associated with obtaining international assistance, the nbu board decided to cut the key policy rate by | 0 |
russia had hard times owing to the slump in raw material prices in the global market, while east european countries have been impacted by the tightening of funding conditions on a global level. in contrast to many emerging countries, the albanian economy has been sustained by domestic demand, while β although upward β foreign demand in the form of albanian exports has provided a proportionally lower impact over the economic growth. economic activity at home has been almost entirely sustained by domestic financial resources, while foreign financing in the form of credit lines or portfolio investment has been less considerable. operating within all the parameters of financial soundness, the albanian banking system has been dynamic and effective in channelling the savings towards the funding of corporate production or household consumption. this process has been also facilitated by the macroeconomic stability which enabled the fall of risk premiums in economy and helped to gradually extend the investment horizon. these features led the economic activity at home to record adequate growth in the first three quarters of 2008, a period which is covered by statistical data. with regard to the last quarter, indirect data on economic activity β mainly financial ones β suggest a slight slowdown of economic activity, however, remaining within the projections for 2008. manufacturing, where construction continues to share the main weight, provided the main contribution to the increase of turnover indicator in terms of volume. investment in major road infrastructure projects and the recovery of construction permits from the prolonged constraints triggered high growth rates in construction activity during this period. in addition, the sector of services continues to provide the primary contribution to economic growth at home. the positive developments in domestic production have been also evidenced by the increase of economic tendency indicator, derived from the business and consumer opinions, and by the increased number in employed persons. in annual terms, unemployment rate fell by 1. 5 percent to 12. 62 percent, being mainly triggered by the increase in the average number of employed persons in the private agricultural sector. notwithstanding the inflationary pressures of early 2008 β mainly triggered by supply - side shocks β cpi annual inflation was brought back within the bank of albania β s target during the second half of 2008. in the second half of the same year annual inflation rates stood close to the central bank β s target β 3. 0 and 2. 5 percent, respectively, in both quarters. the performance of the inflation rate in the second half mirrored the global effect of the fall in basic commodity prices ( mainly foodstuff and oil prices ) as well as a more favourable price conjuncture of goods and services in the | ardian fullani : prevent rather than recover greeting speech by mr ardian fullani, governor of the bank of albania, at a technical seminar on surveillance systems to assess and monitor economic and financial stability, tirana, 24 july 2006. * * * honourable participants, i would like to thank you all for your participation in this very important seminar. allow me first to welcome ms. alvarez - plata and mr. kholodilin, two experts representing the distinguished german institute for economic research diw, who will be holding presentations over these two days and discuss the introduction and implementation of early warning systems for the financial markets and the exchange rate stability. over the recent years, the bank of albania has been working closely with prominent international partners, such as the gtz, in various projects, which aim at enhancing and further consolidating the work of the bank in achieving our main objectives. i avail myself of this opportunity to thank prof. bolle, who has been coordinating our cooperation with the gtz and ms. guda, local gtz coordinator, for making this seminar possible, as a series of activities we have been organizing jointly with the gtz. today β s seminar focuses on an issue we have already begun working on. last year in april, we organized a regional seminar in tirana with the topic β stress - testing β, wherein were discussed the ways of identifying timely the financial system weaknesses, which may jeopardize the maintenance of its stability in case macro and microeconomic conditions are unexpectedly aggravated. today β s seminar focuses on similar issues, but it provides more progressive approaches as far as early warning systems are concerned. such approaches and discussions bear a high level of technique, however, allow me to explain briefly and somehow simply the purpose of their implementation. last week, the bank of albania changed its core interest rate. as you may have already been informed of from our statements, the increase in the interest rate came as a consequence of future expectations effect and of a variety of factors which relate to inflation. what is important to the policies we conduct is the anticipation and prevention of destabilizing pressures in advance, rather than their correction after they have already occurred. waiting to take the proper measures after the signals have become a fact may be costly in two aspects. first, the maintenance of stability is not stable, as long as the measures are taken upon the aggravation of the macroeconomic situation. second, post - destabilization measures generally have their effects after | 0.5 |
monetary board including dr. vicente valdepenas, jr. ; atty. raul boncan, sr. ; mrs. juanita amatong ; atty. nelly favis - villafuerte ; mr. alfredo antonio ; and socio - economic planning secretary romy neri. let us also acknowledge our three hardworking deputy governors, in alphabetical order β nesting espenilla, diwa guinigundo and andy suratos ; assistant governors jun de zuniga, vic aquino, dolly yuvienco, eve avila, tessie hatta ; and finally, all the other officers and staff of the bangko sentral ng pilipinas! you all make me proud to be a central banker! marami pong salamat sa inyong lahat! mabuhay ang bangko sentral ng pilipinas! | . the cs of afi β s success the success of afi can be attributed to what we can call three cs : ( 1 ) commitment, ( 2 ) collaboration, and ( 3 ) concrete results. commitment is an important first step in the attainment of any goal. as one of the pioneer members, the bangko sentral ng pilipinas ( bsp ) can attest to the steadfast engagement of afi members and partners in activities and programs toward financial inclusion. we have benefitted from the commitment of visionary funding partners who believed in the concept of afi and sustained us in our journey toward increasing access to financial services for the poor. the trust and support of the bill and melinda gates foundation, german a kind of west indian ( originally trinidadian ) music in syncopated african rhythm, typically with words improvised on a topical theme ( oxford dictionary ). bis central bankers β speeches international cooperation ( giz ), federal ministry for economic cooperation and development ( bmz ) and other donors like the australian agency for international development ( ausaid ), facilitated the exponential growth of afi. within six short years, it is now a network of 120 member institutions from 95 developing countries. future commitments from like - minded donors will surely fortify afi β s ability to continuously undertake its important mission. afi would not be what it is now without the commitment of members who devoted substantial time, resources and expertise to make afi activities fruitful and successful. if we count just the face - to - face meetings of the seven afi working groups 2, we get a total of 57 meetings from 2010 to 2014. steering committee meetings, and those of the subcommittees on independence, host country evaluation and global standards, are not yet accounted in this number. if β time is gold β, then it is clear that the membership definitely invested so much in the afi journey. underpinning this investment in time and resources is afi members β commitment to achieving our shared vision of a financially inclusive world. afi members firmly supported the maya declaration in 2011 and the consequent sasana accord in 2013. these declarations are documentary proof of members β dedication to implement concrete and measurable policies and programs that expand inclusion in their respective jurisdictions. to date, 47 out of 120 member institutions have publicly articulated their own maya commitments. while targets and accomplishments vary from country to country on account of domestic contexts, the most significant outcome of the maya declaration is increased institutional accountability. by afi β s count, a total of 71 | 0.5 |
in the u. s. one key purpose of macroprudential policy is to limit excessive exuberance that could come about during β good times, β for example, by requiring financial institutions to hold extra capital or by putting a cap on how much they can lend during an economic upswing. an implicit message behind this is that these policies will not only help strengthen the financial system β s resilience, but also moderate financial institutions β actions from being too optimistic during an economic upturn or too pessimistic during an economic downturn β the behavior known as β procyclicality β of the financial system that exacerbates the business cycle. all in all, it is envisioned that the combination of monetary policy and macroprudential policy will effectively safeguard financial stability and hence macro stability at large. on institutional arrangements, the global financial crisis clearly shows that the independent regulator model does not live up to its promise. some countries would have been better off in dealing with this crisis had the regulatory power remained with the central banks. the most notable example here is perhaps in the uk where the government will abolish the financial services authority ( fsa ) and transfer its regulatory responsibility back to the bank of england. while the uk may be an extreme case, a growing consensus has emerged that central banks should play a key role in preserving the overall stability and smooth functioning of the financial system. in this respect, having supervisory authority over systemically important financial institutions, such as commercial banks, would make the central bank β s job a little easier. clearly, having monetary policy, lender of last resort function, and macroprudential policy under the same roof allows for better policy coordination. ladies and gentlemen, against the backdrop of the changing policy philosophy in the global central banking community, let me now turn to the second part of my talk which is what the bank of thailand has been doing in the past few years with regard to the maintenance of financial stability. through the 1997 asian financial crisis, we learnt firsthand the importance of financial stability to the real economy as well as the need to preserve it. indeed, that the thai economy recovered rapidly from the global financial crisis this time can be attributed in part to policies that put a strong emphasis on the health of the financial system. in july 2004, upon an assessment that the booming economy may result in the buildup of certain financial imbalances, the monetary policy committee made the monitoring of β factors contributing to financial imbalance | on thailand β s trade finance business. the challenge here is therefore to weigh carefully the benefits, the costs, the necessity, and the appropriate timing for the adoption of the new international standards so as to ensure that our financial system is not overburdened by unnecessary rules. again, this highlights the tradeoff between financial stability and financial efficiency ladies and gentlemen, in closing, let me reiterate that the bank of thailand gives great care to both price stability and financial stability. the policy responses undertaken by the bank over the past few years have helped preserve the thai financial system β s resiliency which in turn contributed to the economy β s turnaround. despite challenges in the period ahead, we will try our best to ensure that thailand β s economic and financial stability continues to remain intact so as to support the economy β s sustainable long - term growth. thank you very much for your attention. | 1 |
zdenek tuma : the interrelationship between monetary policy, price stability and financial stability speech by mr zdenek tuma, governor of the czech national bank, at the european banking and financial forum 2005, prague, 22 march 2005. * * * mr. president, excellencies, governors, distinguished guests, it is an honour to be opening the central bankers'forum. as the main part of the conference program concerns the financial sector challenges and opportunities in the β new europe β, the central bankers'panel has to necessarily reflect the close, particularly topical, issue of the financial stability and its relationship to a reasonable monetary policy conduct. while my colleagues will discuss mainly the particular issues of financial stability, i, having the privilege to be the chairman of the panel, would like to frame the discussion using a more general and historical context. bearing this perspective in mind, i would like to point to the interrelation between the ultimate goal of monetary policy, the price stability, and the financial stability. first of all, let me start with the definition of financial stability, simply assuming that price stability does not need any further explanation. to be as brief as possible, financial stability can be defined as the soundness of the financial system, that is, its resilience against various shocks. what i understand as a sound financial system can be thought of as a system that, firstly, enables individuals to do all the payments they want at the very moment they like, and, secondly, enables individuals to smooth their consumption across time by saving and borrowing. in this respect, the financial stability issue, which arose during the nineties, is not a completely new one. indeed, it has been of a significant importance since banking emerged. the long years of commodity money system ( so called β golden standard β ) could be characterised as years when money supply, i. e. the supply of gold, was so exogenous that it was even out of the central bank's control. consequently, monetary policy was relatively easy to do, just establishing the parity between the central bank banknotes and the gold, but the role of the central bank as a lender of last resort was relatively constrained. under those circumstances, the financial stability was naturally of a high importance, because for any commercial bank the attempt to β run β the bank could be deadly. moreover, this could cause stampede runs on others banks and bring the whole system to an end, as the central bank ' | s ability to provide the additional currency would be constrained by its gold reserves. to protect themselves, the commercial banks and the central bank established clearing houses to provide, in case of the run on any particular participating bank, the currency to each other. that was in fact a financial stability remedy, of course, being a product of its time. after the second world war the abandonment of the β golden standard β changed things completely. the introduction of the fiat money changed the monetary policy framework dramatically, forcing the financial stability issues to take back seats in the central banks considerations. there were two main reasons for financial stability being less of a worry. first, by using the fiat money the role of the lender of the last resort was not limited anymore. the central bank could lend to commercial banks as much as they wanted to borrow, just printing new money. there was no need to hold a parity to anything. second, many central banks faced serious troubles in order to meet their ultimate target, the price stability, within the new fiat money environment. therefore the policy focus shifted and huge effort was concentrated on finding a new appropriate policy framework. the situation was even more complicated due to the fact that both aforementioned points were closely interdependent. to illustrate this point, let's assume that there was an inflationary pressure which caused redistribution disturbances to the financial system as it led to the redistribution of wealth from lenders to borrowers. the central bank either had not established the appropriate framework for dealing inflation yet, or even worse, inflation had not been viewed as an undesirable phenomenon. on the other hand, the central bank was ready to fulfil its role as a lender of last resort. but saving the commercial banks from imminent bankruptcy further increased inflationary pressures. at the end this caused kind of inflationary trap. it was not surprising that during those times the financial stability was not of a main concern for the central bank. as the central banks learnt during the second half of eighties to deal more properly with inflationary disturbances, the price stability was broadly achieved again. consequently, the interest in financial stability issue has been increasing during the nineties. in my opinion, there are two main reasons for it. first of all, central banks have learnt one important rule : that their role of the lender of last resort is something the central bank should be ready to fulfil, but in fact it is optimal, never to do it in practice. second of all, the | 1 |
debt needs to be sufficient to ensure that public funds are not at risk in the event that a resolution of a firm is necessary, making this long - term debt a component of management compensation might also be used to help reduce the likelihood of a default. long - term debt provided by outside creditors exposed to risk of default can create useful market discipline. however, outside creditors do not have the same information or decision rights as inside management. structuring a long - term debt requirement so that a meaningful component consists of deferred compensation held by senior management would presumably strengthen the incentives for proactive risk management. in my opinion, more research is needed into how the structure of management compensation for financial firms could incentivize good risk management and limit the appetite for excessive risk. 1 even if every jurisdiction were to successfully implement these types of initiatives and consequently reduce the default risks associated with their g - sifis, the risk of failure would not be fully eliminated. this means there would always be some residual risk of major disruptions to financial markets due to a disorderly default of a large financial firm. consequently, the development and implementation of credible resolution mechanisms for g - sifis is the second key component of a global strategy to improve financial stability. by credible, i mean that if the situation of an impending g - sifi default arises, the home authorities will proceed with the resolution plan, rather than give in to pressure to intervene to prevent the failure. this requires that the resolution mechanisms be capable of significantly mitigating the negative externalities associated with winding down a failing g - sifi. although the specifics of the resolution mechanisms will necessarily vary to some extent across jurisdictions, reflecting differences in institutional structures, legal frameworks, and regulatory regimes, the goal is common β to be able to resolve any g - sifi regardless of its home structuring this in a way to get the incentives right is critical. for example, one would want to be certain that in no circumstance would management see a benefit from putting the firm into resolution in order to convert its debt holdings into equity. bis central bankers β speeches jurisdiction, even in periods of stressful financial market conditions, without taxpayer funds, in a way that minimizes knock - on effect to financial markets and other financial institutions. as i have indicated in earlier speeches, i endorse the federal deposit insurance corporation β s ( fdic ) single point of entry ( spe ) resolution framework for the united states. for the sp | luis de guindos : presentation of the european central bank annual report 2023 to the committee on economic and monetary affairs of the european parliament introductory remarks by mr luis de guindos, vice - president of the european central bank, to the committee on economic and monetary affairs of the european parliament, brussels, 18 april 2024. * * * introduction i am pleased to appear before this committee to present the ecb's annual report for 20231, a year in which the ecb consolidated progress in its fight against inflation. as well as assessing economic developments in the euro area in 2023, our annual report gives an account of the eurosystem's monetary policy and other activities conducted by the european system of central banks ( escb ). in response to european parliament resolutions, it also includes a box explaining how the ecb's secondary objective is considered in the conduct of the ecb's monetary policy and reporting activities. today we are also publishing our written feedback statement, which provides responses to the european parliament's resolution on our previous annual report. 2 in my remarks today, i will start by focusing on the economic outlook for the euro area and the monetary policy decisions taken at our recent monetary policy meeting. i will then briefly update you on our current financial stability assessment before going on to discuss the importance of a resilient financial system. the euro area economy and our monetary policy as detailed in the annual report, euro area growth slowed to 0. 4 % in 2023 after expanding by 3. 4 % in 2022. this slowdown was to some extent attributable to the economic repercussions of russia's war against ukraine. the impact of higher interest rates alongside spillover effects from the weak industrial sector to services also weighed on growth. euro area headline inflation declined by 6. 3 percentage points over the course of 2023 to reach 2. 9 % at the end of the year. the decline was broad based across all the main components of inflation, reflecting the fading impact of previous large supply shocks, lower energy commodity prices and tight monetary policy. this year, economic indicators suggest that activity has got off to a weak start and will recover only gradually. consumer spending is set to remain sluggish in the near term but should strengthen as real disposable income continues to recover. private investment is expected to show continued weakness in the period ahead before the impact of weak final demand and tight financing conditions starts to fade. 1 / | 0 |
maja kadievska - vojnovik : foreign investment β s importance to the republic of macedonia β s economy speech by ms maja kadievska - vojnovik, vice - governor of the national bank of the republic of macedonia, at the presentation of the business climate survey in macedonia, macedonian - german economic association, skopje, 10 april 2014. * * * dear mr. martin knapp, dear guests, it is an honor and pleasure to have this opportunity today to attend the presentation of the business climate survey in the republic of macedonia, which is part of a regional survey of the representative offices of german chambers of industry and commerce in central and southeast european countries. namely, the survey provides significant information on the companies β perceptions about the macedonian economy, and i would like to keep to some of its important aspects. it is more than clear that there are tight connections between macedonian and german economy, which are being realized through several channels, such as : β’ trade channels β’ capital flows and β’ through the remittance channel. first, germany is and it raises its importance as the largest trade partner of the republic of macedonia. the share of the trade of goods with the eu member states in the total trade of rm of 52 % before the crisis, in 2008, reached 67 % in 2013. this significant strengthening of the trade relations with the eu member states is mostly a result of the intensified trade with germany, and moreover, such development is fully conditioned by the increase in the exports of rm to germany. thus the share of the export of goods to germany in the total export of goods of rm in 2008 equaled 14 %, while in 2013 it climbed to high 36 %, or in absolute amounts, from euro 383 million, for only five years, it reached euro 1, 154 million. it is a significant increase, a triple increase. it means that, despite the crisis in the euro area and its negative implications, the strong economy based on sound and solid economic fundaments β such as the german, proved to be our certain partner for placement of more than a third of the exports. besides the traditional export products, i. e. the export of the domestic textile and metal manufacturing industry, in the last two years, germany is important destination for export of the new capacities in the technological industrial development zones ( tidzs ), i. e. for the export of machinery and equipment and equipment of automotive industry. second, germany is our | leading industry - wide initiatives to operationalize the national retail payment system ( nrps ) to enable customers to make payments and transfer funds between and among accounts using any digital device. the goal is for us to transition into a cash - lite economy. we are seeing progress in this area. first, with the establishment of the payment system management body, incorporated as philippine payments management, inc., there is now an organized governance structure of retail payment systems in the country. we are also currently 3 / 5 bis central bankers'speeches working with the industry on the formation of two priority automated clearing houses ( achs ), the batch credit push eft ( called pesonet ), and the real - time eft credit ( called instapay ). the pesonet is set to launch on november 8, 2017. the bsp is also mindful that fintech also poses technology - related risks. with this in mind, the bsp follows a test - and - learn approach that allows an enabling environment for new collaborations to prosper. we encourage bank and non - bank partnerships with fintech startups to maximize the benefits of innovative digital platforms, efficiency of gains, and cost savings. we are also aware that new entrants may cause disruptions in the financial ecosystem since traditional players may be unable to immediately respond to increasing competition. hence, we monitor fintech activities to better understand their business models, processes and systems. moreover, the bsp has enhanced existing regulations to ensure that non - banks such as pawnshops and money service businesses are properly supervised as they compete in delivering bank - like services. relatedly, we regulate entities that use virtual currency as underlying instruments for remittance. the bsp has also provided guidelines on bsp - supervised financial institutions to ensure that risks resulting from usage of social media are adequately assessed and managed. lastly, the bsp is enhancing its information security framework to consider cybersecurity controls. while the term, β financial infrastructure β refers broadly to a system that allows for the effective operation of financial intermediaries, encompassing even the legal and regulatory framework... i would like to think of finfrastructure as one that addresses the very heart of why infrastructure exists : to connect people, to enable inclusion and to provide a network for more filipinos to enjoy the benefits of economic progress and development. leveraging on fintech fosters inclusion the bsp is committed to promoting financial inclusion. ( incidentally, | 0 |
##tails less headroom to provide stimulus in recessions with low inflation, further lowering inflation expectations, and so it continues. in this setting of historically low natural rates, a loss of interest rate policy scope and risk of a deanchoring of inflation expectations, the major central banks have deemed it necessary to rethink their monetary policy strategy, i. e. how they express their monetary policy targets and how they pursue them with the tools available. to date, under their strategic frameworks, most central banks have followed variants of what is known as inflation targeting, which entails targeting an inflation rate that is close to a specific number ( for example, 2 % ) over a medium - term horizon. yet alternative monetary policy strategies exist under which central banks attempt to make up for past deviations of inflation from its target. these are the so - called make - up strategies, 12 one of which is known as price - level targeting. in this case, the central bank announces a target growth rate for the price level ( for example 2 % ). unlike under inflation targeting, should inflation temporarily fall below 2 % for any reason, the central bank will have to ensure that it rises above 2 % in the future so that the price level returns to its target path. this strategy requires the central bank to correct in the future any past inflation deviation from the value consistent with its price - level target. a strategy that is less radical, albeit similar in spirit, is known as average inflation targeting. in this case, the central bank attempts to keep average inflation at its target level over a given period. unlike traditional inflation targeting, it includes a component to make up for past deviations from the target set, but only over a specific period of time. this contrasts with price - level targeting, where all past deviations must be made up for, regardless of how long ago they occurred. it is sometimes pointed out that one of the problems with make - up strategies is that their strict symmetric application may create problems for the credibility of the strategy. for example, if there is a commitment by the central bank to react equally to both inflation undershooting β which, as we have seen, are the really problematic deviations in the current context β and overshooting, we could find that, following a period of above - target inflation the central bank would have to reduce inflation below the target, which would require depressing economic activity and employment. given that such a commitment may not be entirely credible, it has | recently been proposed that such strategies be temporary. in other words, the central bank operates normally within a traditional inflation targeting framework, but, in the event of a low inflation crisis driving see banco de espana ( 2020a ) for a detailed discussion of make - up strategies. interest rates close to their lower bound, it commits to a make - up strategy to recover the β lost inflation β over that period in the future. 13 against this background, in late august 2020 the federal reserve announced the main findings of its strategic review. among other changes, it has adopted a new asymmetric average inflation targeting strategy, albeit without specifying some of the parameters of this strategy, such as the length of the period over which the average inflation to be stabilised is calculated. in particular, in its new strategic framework the federal reserve affirms that in response to periods when inflation has been running persistently below 2 %, it will aim to keep inflation moderately above 2 % for some time. 14 this asymmetry in the federal reserve β s response to the undershooting of the average inflation target ( with a relatively stronger expansionary response ) as opposed to overshooting ( which the federal reserve promises to tolerate temporarily ) is an attempt to address precisely the credibility problems referred to above. in january 2020 the ecb announced the launch of its monetary policy strategy review. the outbreak of covid - 19 has delayed this process, which is now expected to be concluded later this year. given that this process is ongoing, the conclusions are as yet unknown. however, i can say that that the outcome is open ; both the ecb and the eurosystem β s national central banks are conducting a great deal of analysis and are seeking the opinions of civil society, academic economists and other professional and social groups. the ecb β s strategy review is very ambitious ; not only does it analyse matters such as possibly adopting strategies involving making up for past deviations of inflation from its target, but it also addresses additional topics such as the design and optimal use of the various monetary policy tools ; the measurement of inflation ; the interactions between monetary policy and macroprudential policy ; the institution β s communication policy ; and the impact of climate change, digitalisation and globalisation on monetary policy. all these facets and others covered by the strategic review may be relevant when delivering on our price stability mandate. indeed, one of this review β s key aspects will be the definition of the ecb β s price | 1 |
potential growth as before for a while. could europe experience what japan has experienced? i don β t think so. the development in wages will be always different from japan. there is more rigidity in wages in a recession ( in europe ) and that is an important factor and that is why i never really feared we would have actual deflation in europe. wages will not be as flexible down as they were in japan. most of euro area gdp comes from services and inflation in services is basically about wage developments. it is very difficult to go to a situation of deflation in europe. that β s a difference with japan. will divergence continue in the euro zone? no. we saw an initial phase of catching up and convergence. then came the crisis. if you look to the development of the economy in the u. s. and europe, the recoveries are very similar until 2011. then europe had a double dip because of the recessionary adjustment. after painful adjustment and many reforms, ireland, spain, portugal, slovenia and cyprus grew faster than the euro area average in the first half of this year. the only exception is italy which is growing slightly less than the average. we have growth again. we need to strengthen the confidence in peripheral countries. that has to be achieved by deepening integration. the greek turmoil raised doubts. these doubts have to be now closed by additional institutional reforms. what doubts were raised about the euro? it raised doubts for the markets that countries like greece could cope with the challenges of monetary union. there was never any doubt among the majority of member countries. we maintain that the euro is irreversible. legally, no country can be expelled. the actual prospect of that happening was never for real. do you fear that some people in europe may lose faith in its institutions? at the ecb, we are doing the utmost within our mandate. we are aware that there are excessive expectations about what central banks can do. unemployment is destabilizing the continent. european values are being eroded in several countries as a result of the fear that unemployment creates. it is for other policy makers to do their job. does a change in the stance of the federal reserve have implications and has market volatility become a permanent feature? we don β t know what the reaction of markets will be. monetary policy is not about fine tuning volatility in financial markets. we have medium term objectives and that helps to stabilize expectations. central banks should be independent from financial | risks on global economic activity. we believed that as we worked toward our next projection, published in today β s mpr, we would probably be downgrading the economic outlook. that would mean a longer period of economic slack in canada, and would translate into a downside risk to inflation later in the forecast horizon. accordingly, six weeks ago, even though measured inflation had already ticked up, and looked likely to tick up even more, we indicated that the downside risks to our inflation outlook remained as important as before. in effect, the risks associated with the starting point for inflation had diminished, but the downside risks to the underlying fundamental drivers of inflation were growing. today, our report notes that total cpi inflation has moved to 2. 3 per cent, and core inflation to 1. 7 per cent. this pickup in measured inflation is attributable to the temporary effects of higher energy prices, exchange rate pass - through and other sector - specific shocks. it is not coming from any change in domestic economic fundamentals. bis central bankers β speeches today β s mpr presents a new economic projection in which there are both upside and downside risks to the inflation outlook. we believe these risks are roughly balanced. the downside risks to inflation associated with a below - target starting point have clearly diminished. the projection now includes a lower track for global economic activity, and a slower return of our economy to its full potential. our serial disappointment with global economic performance for the past several years of course means that we remain preoccupied with downside risks to economic activity and the fundamental drivers of inflation. as the temporary effects pushing inflation up begin to dissipate during 2015, unless the economy β s slack is absorbed over a reasonable timeframe, inflation will drift back down well below target. this will require above - potential economic growth fuelled by rising exports, followed by investment in new capacity. we believe that the ingredients are present for an eventual return to balanced and sustainable growth, with inflation on target, in 2016. we are anticipating that global demand will strengthen and, with the lower canadian dollar, indeed, will lead to a pickup in canadian exports and business investment. we expect real gdp growth to average around 2 1 / 4 per cent during 2014 β 2016. the economy is expected to reach full capacity around mid - 2016, a little later than we said in april. meanwhile, household imbalances continue to evolve constructively and recent data are broadly consistent with a soft landing in canada β s | 0 |
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