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s development strategies. financial literacy and awareness before i close ladies and gentlemen, i would just like to highlight the importance of financial awareness and literacy in our efforts towards extending financial services outreach. the financial literacy working group established through the nfit is working with stakeholders in developing appropriate strategies in this regard. these include : a. integrating financial education into the school curriculum from primary to secondary levels. b. conducting a baseline study on financial competencies of households, to be undertaken in august this year. this will be used to assess and develop appropriate financial education programs for fijian households. c. promoting financial literacy β through public awareness programs and a green ribbon campaign at the upcoming hibiscus festival. i have already mentioned the reserve bank is planning to host microfinance entrepreneurs and financial services providers utilizing a β microfinance village β concept at the hibiscus festival. conclusion ladies and gentlemen, for a number of years the reserve bank has been advocating the development of fiji β s financial services sector and key to this is the extension of financial services to the under - served or the unbanked. we have taken on the challenge of promoting financial inclusion in fiji and ensuring a financial system geared towards supporting this critical area. our intention is to see the poor, or those considered unbankable, being provided access to savings and credit facilities that will ultimately help in reducing poverty. the key areas that i have highlighted may have only provided the platform for financial inclusiveness and prosperity. what the reserve bank would like to see is the on - going support of all key stakeholders towards these development initiatives. as i have mentioned earlier, rbf policies and strategies alone will not be enough β the financial institutions, ngos, donors, government and all other stakeholders need to play a part. the challenge for us here today is to open ourselves to change. thank you. | not necessarily be part of rbf β s core mandates. the question of whether such a role should be played by the rbf or someone else is not something that we should debate about. i am of the view that in a small and open island economy like ours, the central bank can play a more influential development role aside from its traditional monetary policy role to influence prices and ensuring we have adequate reserves to pay for our foreign bills. the challenge is in finding the right balance in our interventions that will complement the efforts of others, including government. more often than not, the reserve bank prefers to play a facilitating and supporting role while encouraging other stakeholders, such as the banks, to come to the party. however there have been times where a leadership role has been required, at least to start the ball rolling. 1. microfinance and greater financial inclusion more recently the reserve bank has taken on an active role in formulating policies and strategies aimed at increasing outreach of financial services to the unbanked or the underserved population. a new department, titled the financial system development and compliance ( fsdc ) group, was set up in the bank in april 2009 to drive these initiatives. i am pleased to announce that through this new group, the reserve bank has been able to make good progress in areas of microfinance and financial inclusion. national microfinance workshop in november 2009, the reserve bank, in collaboration with the pacific financial inclusion programme ( pfip ), successfully organised a national microfinance and financial inclusion workshop. our objective was to harness the strengths and efforts of all the players in the industry towards building a sustainable way forward for microfinance in general and financial inclusion in particular. the workshop provided a consultative forum for stakeholders to review and develop a medium term strategy on the way forward for greater financial inclusion in fiji. at the end of the workshop, the strategic focus arrived at a common vision of β β¦ reaching at least 150, 000 unbanked citizens through a coordinated national effort by the year 2014. β the reserve bank was assigned a lead driving role by all those present, which we readily agreed to take up. we did not want another workshop where lots of brilliant ideas are raised, but quickly fade once everyone went back to the comfort of their respective offices, as so often happens in fiji. in fact all the stakeholders were excited to move things forward. i. nfit the first major outcome of the workshop was the set up of a national financial inclusion | 1 |
francois villeroy de galhau : new year wishes 2023 new year wishes to the paris financial centre by mr francois villeroy de galhau, governor of the bank of france and chairman of the autorite de controle prudentiel et de resolution ( acpr ), paris, 5 january 2023. * * * allow me to extend my warmest wishes for 2023 on behalf of the banque de france and the acpr. i don't know if i dare wish you, or wish us, a year free of shocks after those of 2020, 2021 and 2022. this past year has been marked by a climate of uncertainty, exacerbated by russia's war in ukraine and the energy crisis. it has also seen increased financial market volatility, compounded by the turmoil in the cryptoasset universe. in this unstable environment, i would like to make two double wishes for 2023 : 1 ) less inflation and more stabilisation. activity has, until now, proved more resilient than expected, which is good news ; however, inflation must not become entrenched. it is the number one concern for french people, and defeating it is our number one mission. it fell in december to 6. 7 %, which is encouraging but still not enough. it should peak in the first half, before declining towards 4 % by the end of this year. but our forecast, and our commitment, is that inflation should be brought down towards 2 % by end - 2024 to end - 2025. to achieve this, after raising interest rates to close to the " neutral interest rate " of 2 % in december, we are now embarking on the second phase towards monetary stabilisation : ideally, it would be good to reach the right " terminal rate " by next summer, but it is still too early to say what that level will be. we need to remain pragmatic and to be guided by observed data, including on core inflation, without getting fixated on overly mechanical rate hikes. we will then be prepared to remain at this terminal rate for as long as necessary : the sprint to raise interest rates in 2022 is now becoming more of a long - distance race, and the duration will count at least as much as the level. in parallel, we shall continue to focus on maintaining financial stability, helped by the strong resilience of french banks and insurers. in europe, 2023 | ##m. this can help normalise interbank markets and overcome financial fragmentation. that said, high standard banking supervision is not centred on preventing bank failures at any cost. in fact, to effectively perform its tasks, a supervisor must also be able to let failing banks exit the market. this is the reason why the ssm has also been given the competencies to withdraw from credit institutions, the authorisation to operate. however, given the role of banks in the financial system and in order to safeguard financial stability, the supervisor has to feel confident that the resolution of banks is conducted in an orderly fashion. this brings me to the second pillar of the banking union. the establishment of the srm is the second crucial step towards addressing financial fragmentation and breaking the sovereign - bank nexus. the main point here is that the orderly resolution of banks, even big ones, may contribute to avoid costly rescues by sovereigns that may endanger their own finances. the srm puts in place a single authority responsible for the resolution of banks in the euro area and participating member states. this will enable swift and unbiased resolution decisions, which will address notably cross - border resolution cases in an effective manner. in this respect, the srm should be viewed as a necessary β and logical β complement to the ssm. it would indeed be ill - advised to elevate the responsibility for supervision to the european level, while keeping resolution at the national level. this would create a mismatch of responsibilities, undermine the credibility of the ssm as supervisor, and delay the resolution of banks, a task that has to be done swiftly. an important element of the srm is the single resolution fund, which will be financed via levies on the banking sector and gradually mutualised. starting with national compartments, it will become one truly single european fund in the course of eight years. by mutualising the bis central bankers β speeches cost of bank resolution, this approach will loosen the link between domestic banks and their sovereigns and further level the playing field. a shortcoming of the srm is the absence of a clear common financing arrangement that would provide additional temporary resources when needed. however, the ssm and srm are not enough to completely sever the ties between sovereigns and their domestic banks. the ssm and harmonised supervision may not be enough to build sufficient trust among banks and, on the other hand, the srm may face legal limitations to autonomously manage orderly resolutions of significant banks, using its | 0 |
the spread for south african bonds over us treasuries peaked around 460 bps by late september due to domestic factors but also in anticipation of us tightening and general risk aversion, from 350 bps a year ago. emes in general have experienced varying degrees of vulnerability during 2015, largely owing to negative country - specific factors, which include political uncertainty in turkey and increasing concerns about the economic outlook for brazil. standard and poor β s ( s & p ) downgraded brazil β s sovereign credit rating to sub - investment grade in september 2015. domestic funding costs for banks in south africa have, on the other hand, been negatively influenced by a further dynamic in the aftermath of the gfc, namely more stringent global financial regulations which are being implemented locally. with the upcoming introduction of the net stable funding ratio, the spread to jibar of floating - rate ncds issued by commercial banks increased significantly across all maturities, in some cases more than double the levels seen around mid - 2013, as banks are forced to issue longer - term instruments. there is a general view that financial regulatory reform, while necessary, may have had certain unintended consequences, such as limitations on banks β proprietary trading, reducing the bis central bankers β speeches willingness and ability of primary dealers to hold sizeable inventories of securities, which have contributed to less liquidity in the markets. this lower level of liquidity introduces new risks through an increase in market volatility that could amplify negative spill - over effects in stress situations. another frequently discussed challenge is that of emes β foreign - currency corporate borrowing in us dollars and the impact of the stronger dollar and higher yields on debt - servicing and refinancing risks. the total us dollar exposure from both bank loans and debt securities has been growing rapidly over recent years to approximately usd3, 3 trillion, according to the bis. for south africa, this does not present a significant risk, given relatively low level of foreign liabilities of local companies and banks. however, excessive us dollar appreciation could have ramifications for highly indebted emerging markets, resulting in increased volatility and a selloff in em assets. this might very well spill over to other emes, including south africa. the second sub - channel, the foreign - exchange market, is probably the market that may suffer a more pronounced impact from global monetary policy normalisation. this risk was illustrated during the 2013 β taper tantrum β when the rand β | public lecture by lesetja kganyago, governor of the south african reserve bank, at the university of south africa, pretoria 24 july 2019 delivering on our mandate : monetary policy, inflation, and balanced and sustainable growth good morning, ladies and gentlemen. today, i would like to talk about the south african reserve bank β s ( sarb ) mandate : what it is, how we interpret it, and where we are in our national conversation about the sarb. although central banking has a global reputation for being boring, in south africa it has been getting a lot of attention. much of this is welcome : it is largely a useful opportunity for improving public understanding of what the sarb does, while we at the sarb also learn and benefit from our interactions with people all over south africa. however, some parts of the discussion are problematic because they distract us from more pressing priorities. as mr tito mboweni, the finance minister, has pointed out : this β obsession β, to use his phrase, is getting in the way of a more fundamental discussion about economic growth, job page 1 of 14 creation and dealing with inequality. 1 this economy used to grow at 3 % or 4 % a year, but now it grows at about 1 %. as we in the sarb have tried to communicate : the growth problem in south africa is mainly structural in nature, beyond the reach of monetary policy alone. perhaps part of the problem is that whenever we get a new gross domestic product ( gdp ) statistic, the news bulletins and the newspaper articles end up talking about what it means for the next monetary policy committee ( mpc ) meeting. given this pattern, you might well assume that interest rates have large growth consequences. but we need some perspective. if we reduce rates by 25 basis points, and there are no other reforms in the economy, our modelling tells us that growth will be about 0. 1 percentage points higher, one year later. that β s all. remember that when we cut rates, borrowers have more spending power but lenders have less. exporters may do better from a weaker rand, but firms that use imports do worse. investment may pick up, but that depends on long - term rates, not just the repurchase rate ( repo rate ) β in addition to many non - monetary factors. so the growth effects of a rate cut are small. and if we as a country obsess about the sarb and monetary policy as the only | 0.5 |
stephen s poloz : summary of the latest 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, 17 july 2013. * * * good morning. tiff and i are pleased to be here with you today to discuss the july monetary policy report, which the bank published this morning. β’ global economic growth remains modest, although the pace of economic activity varies significantly across the major economies. β’ the u. s. economic expansion is proceeding at a moderate pace. the continued strengthening in private demand is being partly offset by the impact of fiscal consolidation. β’ in japan, fiscal and monetary policy stimulus is contributing to a rapid recovery in economic growth. β’ in contrast, economic activity in the euro area remains weak. β’ in china and other emerging market economies, real gdp growth has slowed, although it is stronger than in the advanced economies. this is exerting downward pressure on global commodity prices. β’ and, as a consequence, the bank has downgraded slightly its global growth forecast. β’ the global economy is still expected to pick up in 2014 and 2015. β’ in canada, economic growth is expected to be choppy in the near term, owing to unusual temporary factors. the overall outlook is little changed from the bank β s projection in april. β’ annual gdp growth is projected to average 1. 8 per cent in 2013 and 2. 7 per cent in both 2014 and 2015, supported by very accommodative financial conditions. β’ despite ongoing competitiveness challenges, exports are projected to gather momentum. this should boost confidence and lead to increasingly solid growth in business investment. the economy will also be supported by continued growth in consumer spending, while further modest declines in residential investment are expected. β’ growth in real gdp is projected to be sufficient to absorb the current material excess capacity in the economy, closing the output gap around mid - 2015, as projected in april. β’ inflation has been low in recent months and is expected to remain subdued in the near term. β’ the weakness in core inflation reflects persistent material excess capacity, heightened competitive pressures on retailers, relatively subdued wage increases, and some temporary sector - specific factors. total cpi inflation has also been restrained by declining mortgage interest costs. β’ as the economy gradually returns to full capacity and with inflation expectations well - anchored, both core and total cpi inflation are expected to return to 2 per cent around mid - 2015. bis central | david dodge : economic and financial trends in the context of canada β s inflation - control strategy opening statement by mr david dodge, governor of the bank of canada, on the release of the monetary policy report update, 24 july 2002. * * * today, we published our update to the april monetary policy report, in which we discuss economic and financial trends in the context of canada β s inflation - control strategy. canada β s economic recovery, which began in the last quarter of 2001, gathered momentum in the first half of 2002. over the period to the end of 2003, the bank projects continued solid economic expansion at an annual rate of 3 to 4 per cent. this will result in growth of close to 3 1 / 2 per cent on an annual average basis in 2002 and in 2003. both the total and core rates of inflation are projected to be slightly above 2 per cent in the second half of 2002, before steadying out at close to 2 per cent in 2003. given that the canadian economy grew at a faster pace than anticipated in the first half of 2002, there is now less excess capacity than was projected in our april report. the economy is expected to be operating at full capacity in early 2003 - sooner than previously anticipated. in light of these developments, the bank has continued to reduce the amount of monetary stimulus in the economy, raising the target for the overnight interest rate by 25 basis points on three occasions in april, june, and july - to bring the rate to 2 3 / 4 per cent. it remains the bank β s view that the underlying economic situation will require further reductions in the amount of monetary stimulus. the timing and pace of policy adjustments will depend on the strength of the various factors at play and their implications for pressures on capacity, and thus on inflation. there are both upside and downside risks to the outlook for canadian economic growth. on the positive side, growth of domestic demand could turn out to be stronger than projected because of the substantial amount of monetary stimulus still in place. on the negative side, there are the uncertainties associated with global corporate and financial market developments and their potential effects on confidence and world economic growth. at this time, the risks to our projected rate of growth of 3 to 4 per cent growth appear to be balanced. as we go forward, the bank will remain focused on taking actions to achieve the 2 per cent inflation target. keeping inflation low and stable is the best contribution that monetary policy can make to sustained economic growth in canada. | 0.5 |
and public health protection. in closing, ladies and gentlemen, let me say that i have faith in the ability of the caribbean leadership to move beyond talk about the β big conversation β to actual action β seizing opportunities in the blue, green and silver economies. science and technology would, of course, be critical to successfully actioning these opportunities. success will also depend on putting in place sound policy frameworks and effective institutional arrangements. and, in some cases, it may require strong commitment and funding from the international community. i look forward to this inscited conference becoming a model platform for stimulating new thoughts and ideas on how science and technology can help contribute to generating more inclusive economic growth. i also look forward to further collaboration among the oas, nistads and niherst that will be of benefit to science, society and state. i thank you. bis central bankers β speeches | ( gef ) and the climate investment funds ( cif ). here again, science and technology can help to leverage economic opportunities in the green economy. some areas are as follows : β’ devising engineering solutions such as sea defenses, hurricane resistant buildings and the provision of water storage ; β’ developing technological solutions such as using more resilient crops to protect critical biodiversity conservation ; β’ creating new incentive mechanisms such as payment for ecosystem services ; and β’ facilitating the transition to a low - carbon economy. the third frontier of growth opportunity relates to the β silver economy. β population ageing is a global phenomenon, which is having major implications on all aspects of human life in every society. this process is enduring and irreversible. in the caribbean, people are also living longer than ever before but not healthier. at the start of the 21st century, the elderly in the caribbean β persons 60 years or older β represented at least one - tenth of the population, larger than ever before in the history of the region. world bank research warns, however, that non - communicable diseases ( ncds ) are rising rapidly as the caribbean population ages. today, the four leading causes of death in the caribbean are all ncds β heart disease, cancer, stroke, and diabetes. in the caribbean, five times as many people are dying from ncds as from all other illnesses combined. in fact, these findings have spawned the creation of a rather interesting world bank blog entitled β is bis central bankers β speeches fried chicken setting back development in the caribbean? β alluding to the fact that unhealthy eating habits are a major risk factor for ncds. the expansion of ncds is increasing the economic burden on families and on already strained public health systems in the caribbean. in jamaica, for instance, an average individual suffering from ncds spends approximately one third of household income on healthcare services and medicine purchases. in the eastern caribbean, the annual cost for treating a diabetic is more than annual per capita spending for health care in the six countries of the eastern caribbean. again, there is a unique opportunity for scientists and economic policymakers to take advantage of the growth opportunities that arise from reducing the future burden of ncds, promoting healthy aging, and increasing the potential benefit from the demographic transition in the caribbean. and they must do it while ensuring that out - of - pocket health expenses do not inflict severe financial hardship on families, and while narrowing the gap in access to health services | 1 |
bonds are lodged. the construction of the system linkage between the onshore infrastructure institutions is under way. upon completion, the hkma β s central moneymarkets unit will explore with the mainland side on the system enhancements required for bond connect investors to participate in the exchange bond market. 16. this development moves closer to having a single access point to the onshore bond market and will further open up access to the fast - growing credit bond market which remains relatively untapped by international investors. this presents an opportunity for investors to look further along the credit curve for diversification and yield. relatedly, the entry of foreign firms into the onshore credit rating business is expected to facilitate this process, speed up the convergence of local and global ratings standards, and enhance foreign investors β analysis of corporate credit. 17. secondly, mainland and hong kong stock exchanges have reached an agreement to include eligible etfs in the stock connect scheme and technical preparations are under way. this will give global investors direct and efficient access to the rapidly developing onshore etf market, enrich the product range under stock connect and facilitate the healthy development of the etf markets on both sides. 18. thirdly, as mainland bonds play an increasingly strategic and long - term role in investors β portfolios, the demand for hedging tools is also growing. our priority in the next stage of enhancements to northbound trading under bond connect is the inclusion of risk management tools. we are discussing with our mainland counterparts to facilitate access to various risk management products such as interest rate swaps to meet global investors β hedging needs for their bond investment in the mainland. 19. over the years, hong kong has played a central role in intermediating the financial flows between the mainland and the rest of the world. the development of onshore capital markets presents huge opportunities for hong kong β s financial sector. 20. at the hkma, we have been continuously working with mainland authorities and relevant parties to explore new initiatives and introduce market - oriented enhancements to our various connect schemes, with a view to improving foreign investors β access to onshore markets and smoothening the investment experience. 21. we warmly welcome views and suggestions from the industry on ways to leverage the unique attributes of hong kong to better serve global investors, support the development of onshore markets and advance the internationalisation of the rmb. 22. thank you. i wish today β s conference a great success. | we might helpfully serve some catalytic function. let me mention just two areas of special attention in hong kong at present - without denying that there may be others too. the first concerns the stock and futures exchanges, where there is a major agenda for change. notable components of this agenda are the 30 - point programme announced last september for strengthening discipline and transparency in the markets - most of which have now been implemented - and the proposals announced by the financial secretary in march to reform and unify the ownership structures of the stock and futures exchanges and their clearing houses. a tight timetable has been set and progress should be visible later this year. the second concerns the development of the hong kong dollar debt market. this market has progressed considerably in recent years, with the evolution of the markets for exchange fund bills and notes, borrowing programmes by public sector bodies, fundraising by multinational agencies and sizeable funding programmes - mainly at the short end - by hong kong financial institutions. but, except for exchange fund bills, the secondary markets are not greatly active and there has been little activity by local private sector corporate entities to raise longer - term funds directly from the debt market. perhaps the difficulty is simply that market conditions are seldom regarded as propitious on all fronts simultaneously - at present, for instance, the general level of interest rates may tend to discourage issuance at term. and there is definitely a chicken - and - egg problem in that prospective investors would like prior evidence of a liquid market, but liquidity cannot be tested until there has been issuance. dilemmas such as these are certainly not unique to hong kong. i acknowledge also that there are perceived obstacles concerning the tax regime, but it is worth noting that hong kong does have a low overall tax environment. it is hard to find solutions which fully satisfy all parties in such matters. it is also worth noting that, in normal market conditions, there is perhaps less incentive to exploit the potential of the local currency debt market than there might be in other centres, because of our pegged exchange rate : some borrowers may consider the us dollar market a satisfactory surrogate, especially given its established liquidity. in that sense we may be a victim of our own success on the exchange rate front, although i would not wish to place too much weight on this point - it may be a viable alternative only for a minority. however, if funding needs can be properly satisfied via alternative routes, we ought perhaps to rest content. our role at the hong kong monetary authority is | 0.5 |
state governments to facilitate the design and implementation of pro - poor and inclusive livelihood promotion strategies with focus on excluded groups such as women, schedule castes ( scs ), scheduled tribes ( sts ), minorities, below - poverty line and migrant households and involuntarily displaced people. it is indeed an opportune time for ficciundp to release the paper on β a study on the progress of financial inclusion in india β which aims to analyze the role played by banks in creating financial inclusion and the future strategy they need to adopt to make further progress. the important objectives under financial inclusion were aptly deliberated by the committee on financial inclusion and the committee on financial sector reforms headed by respected dr. rangarajan and dr. raghuram rajan. these reports have spelt out the imperative need to modify the credit and financial services delivery system to achieve greater inclusion. the full implementation of the recommendations made in these reports will definitely go a long way to modify particularly the credit delivery system of the banks and other related institutions to meet the credit requirements of marginal and sub - marginal farmers in the rural areas in a fuller measure. bis central bankers β speeches national focus on inclusive growth today, there is a national as well as global focus on inclusive growth. the financial stability and development council ( fsdc ) headed by the finance minister is mandated to focus on financial inclusion and financial literacy. all financial sector regulators including the reserve bank of india are committed to the mission. and, very publicly, so are banks and other financial sector entities. if we are advocating any kind of stability whether financial, economic, political or social and inclusive growth with stability, it is not possible to attain these goals without achieving financial inclusion. financial inclusion promotes thrift and develops culture of saving, improves access to credit both entrepreneurial and emergency and also enables efficient payment mechanism, thus strengthening the resource base of the financial institution which benefits the economy as resources become available for efficient payment mechanism and allocation. empirical evidence shows that countries with large proportion of population excluded from the formal financial system also show higher poverty ratios and higher inequality. thus, financial inclusion is no longer a policy choice today but a policy compulsion. and, banking is a key driver for financial inclusion / inclusive growth. role of banks but, it is well recognized that there are supply side and demand side factors driving inclusive growth. banks and other financial services players are largely expected to mitigate the supply side processes that prevent poor and disadvantaged social groups from gaining access to | by the banks and our objective of achieving universal financial inclusion is attainable. but, it is not automatic and cannot be taken for granted. there are a number of issues and challenges that have to be surmounted. way forward β future of financial inclusion i. one of the major challenges under financial inclusion has been addressing the last mile connectivity problem. for addressing this issue and for achieving the goals set, experts have recommended the business correspondent / facilitator ( bc / bf ) model. though the bc model may not be commercially viable at the initial stage due to high transaction costs for banks and customers, the appropriate use of technology can help in reducing this. the need is to develop and implement scalable, platformindependent technology solutions which, if implemented on a large scale, will bring down the high cost of operation. appropriate and effective technology, thus, holds the key for financial inclusion to take place on an accelerated scale. ii. banks need to perfect their delivery and business model. a number of different models involving handheld devices with smart cards, mobiles, mini atms, etc are being tried out and it is necessary that they are integrated with the backend cbs system for scaling up. a good delivery model is also needed and, perhaps, even more so if there is a glitch and customer grievances needs to be resolved expeditiously. thus, the time is approaching when these various experiments with different models are taken to their logical conclusion and banks start scaling up their implementation. at the same time, banks must also have an integrated business model. these hold the key to the success and failure of the financial inclusion efforts. iii. in addition to this, rbi has advised banks to focus more towards opening of brick & mortar branches in unbanked villages. these branches can be low cost intermediary simple structures comprising of minimum infrastructure for operating small customer transactions and supporting up to 8 β 10 bcs at a reasonable distance of 2 β 3 kms. this will lead to efficiency in cash management, documentation and redressal of customer grievances. such an approach will also act as an effective supervisory mechanism for bc operations. another very important thing is that banks have to realise that for business correspondent ( bc ) model to succeed, the bcs, who are the first level of contact for customers, have to be compensated adequately so that they too see this as a business opportunity iv. as mentioned earlier, banks should strive to provide a minimum of four | 1 |
speech climate change and the financial sector speech by christine lagarde, president of the ecb, at the launch of the cop 26 private finance agenda london, 27 february 2020 climate change constitutes a major challenge, causing both threats and opportunities that will significantly affect the economy and the financial sector, depending on which carbon emission scenario eventually unfolds. that is why central banks need to devote greater attention to understanding the impact of climate change, including its implications for inflation dynamics. at the ecb, the ongoing review of our monetary policy strategy creates an opportunity to reflect on how to address sustainability considerations within our monetary policy framework. today, however, i will focus my remarks on climate change - related risks for the financial sector. broadly speaking, the main risks fall into three categories : risks stemming from disregard, from delay and from deficiency. risks from disregarding climate change disregarding the implications of climate change can generate significant risks for the financial sector. total insurance losses for weather - related events reached 0. 1 % of gdp in 2018, with total economic losses approximately double that amount. the number of catastrophes caused by natural hazards increased from 249 in 1980 to 820 in 2019, peaking at 848 in 2018. adjusting for inflation, overall economic losses increased from around usd 60 billion in 1980, to usd 150 billion in 2019, with a peak of usd 350 billion in 2018. according to the intergovernmental panel on climate change, global warming of 1. 5Β°c above preindustrial times is likely to bring about substantial changes in our climate, increasing the likelihood of more extreme weather conditions. as a result, insurance and economic losses caused by climate - related events are likely to start trending upwards as a share of gdp. insurance and reinsurance companies need to continue to ensure that risk pricing remains appropriate and that reserves are adequate to cover expected losses. banks also need to consider the risks such events create for their credit exposures. losses can arise from both direct damage and from the effects that potentially higher maintenance costs, disruption and lower labour productivity could have on profitability and hence default risk. risks from delaying the response to climate change the second source of risk for the financial sector arises from the pathway taken to a carbon - neutral world. achieving the transition almost certainly requires intervention by public authorities through regulation and taxation. early and coordinated action can help deliver a smooth transition for the economy. but if that intervention is delayed, the reduction in emissions may have to be sharper, resulting in a disorder | 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 | 1 |
jwala rambarran : the road to independence β a manley perspective opening remarks by mr jwala rambarran, governor of the central bank of trinidad and tobago, at the twenty - seventh dr eric williams memorial lecture, port of spain, 28 september 2013. * * * on behalf of the board, management and staff, it is my pleasure to welcome you all to our twenty - seventh dr. eric williams memorial lecture, the first in my capacity as central bank governor. as you may be aware, this memorial lecture series was launched in 1983 by mr. victor bruce, our first local central bank governor, following dr. williams [UNK] passing in 1981. over the past twenty five years or so, the lecture series has emerged as a high level intellectual forum that critically examines issues relevant to dr. williams [UNK] legacy of caribbean nationhood and identity. tonight is no different. in fact, it may be even more poignant. i say this because tonight β s twenty - seventh lecture takes place against the brutal reality that caribbean nations must chart a new economic destiny in extremely uncertain and incredibly unforgiving circumstances. just as dr. williams [UNK] doctoral thesis β economic aspects of emancipation and slavery in the british west indies β challenged the prevailing orthodoxy that the causes of the abolition of slavery were not that the british had become morally offended at this sinful trade in human bodies, but was due to the fact that slavery was no longer profitable to british capitalism, so too must post - colonial caribbean nations challenge the prevailing defeatist attitude that they cannot escape the forces bedeviling their economies and societies and which threaten to permanently erase their uniquely crafted caribbean identity. i am certain that tonight β s lecture entitled β the road to independence : a manley perspective β will be one of those big conversations about the future of caribbean economies. our distinguished speaker, ms. rachel manley, aptly describes herself as of the transitional generation β the last to experience the remnants of unfettered colonialism and the first to experience the coming of age angst of a newly independent jamaica. as she might remind you all tonight, rachel manley was only 15 years old when she witnessed the union jack come down at midnight on august 2nd 1962 and the black, green and gold jamaican flag shimmy up the flagpole to unfurl the dreams of a new nation, jamaica. perhaps more importantly, rachel manley is the granddaughter and daughter of three of jamaica β s national leaders who forever changed jamaica β s intellectual, social and | lars e o svensson : monetary policy and employment β monetary policy is too tight speech by prof lars e o svensson, deputy governor of the sveriges riksbank, to the swedish trade union confederation, lo, stockholm, 16 january 2013. * * * i would like to thank karolina ekholm, gabriela guibourg, kerstin hallsten, per jansson, kerstin af jochnick, pernilla johansson, ulf soderstrom, staffan viotti and anders vredin for useful comments and discussions. anna lidberg and marianne sterner have contributed to this speech. the views expressed here are my own and are not necessarily shared by the other members of the executive board of the riksbank or by the riksbank β s staff. monetary policy is too tight in sweden although i am myself a member of the executive board of the riksbank, it is hardly a secret that i see major problems with swedish monetary policy. in a shorter - run perspective one can note that both cpi and cpif inflation are now significantly below the inflation target of 2 per cent, and that unemployment is way above a reasonable long - run sustainable rate. there is no doubt that monetary policy has contributed to this, in that it has been too tight since the riksbank began raising the policy rate in the summer of 2010. this may of course sound strange given that the policy rate is at a historically low level. but both short and long nominal and real interest rates have shown a negative trend since the mid - 1990s and have fallen in sweden and the rest of the world. this makes it misleading to now make direct historical comparisons of the level of the policy rate. the fact that monetary policy has been and still is too tight becomes clearer when one sees that the policy rate and the short real rates in sweden have been raised since 2010, and then have been kept high in comparison with policy rates and the short real rates in the euro area, the united kingdom and the united states. this is despite the fact that inflation in sweden is significantly lower than in these economies while unemployment is about as high as in the united kingdom and the united states ( figures 1 β 3 ). after having been close to the target in early 2010, cpif inflation in sweden has also since trended downwards to a rate of one per cent or below. 1 average inflation too low and average unemployment unnecessarily high since 1997 in a longer perspective, one | 0 |
speech at the press conference : collaboration on adopting standardized qr code for e - payment dr. veerathai santiprabhob, governor wednesday 30 august 2017 bank of thailand β¦ β¦ β¦ β¦ β¦ β¦ β¦ β¦ β¦ β¦ β¦ β¦ β¦ β¦ β¦ β¦ β¦ β¦ β¦ β¦ β¦ executives from american express, jcb international, mastercard, visa and unionpay international president of thai bankers'association president of government financial institutions council president of association of international banks president of thailand electronic payment trade association president of the telecommunications association of thailand under the royal patronage press members and distinguished guests, i am very pleased that all payment service providers in thailand are here to announce their collaboration on adopting qr code standard for payments. this is considered an important milestone for which the standardized qr code has been implemented in thailand. it is also the first time that five international payment card network providers and thai financial service providers have mutually agreed to adopt the same qr code standard in providing payment services in thailand. it is recognized that electronic payment ( e - payment ) is a crucial component in driving a digital economy, where technologies have been utilized to deliver better services for consumers and businesses, to increase financial inclusion, to raise efficiency and to reduce costs ; thus, enhancing the country β s competitiveness and supporting β ease of doing business β principle. during the past several years, bank of thailand ( bot ) has been working on many important projects to encourage the development of e - payment systems and innovations including : - driving national e - payment master plan : the two main projects, promptpay service and the expansion of card acceptance devices ( edcs ) throughout the country, have been developed and promoted and have got continually good responses. for promptpay service, the registration has reached 32 million identification numbers with an accumulated fund transfers over 100 billion baht. - migrating atm and debit cards to chip cards : by the end of 2019, atm and debit cards must be changed to chip cards in order to enhance security of card payment. this policy coincides with the growth of debit card transactions used by thai people. - elevating security protection in mobile payment transactions : the bot has cooperated with the office of the national broadcasting and telecommunications commission and the telecommunications association of thailand under the royal patronage to strengthen mobile payment security. from the increasing trend of mobile payment volume which has heightened by 100 % from the previous year, we recognize that mobile will be a major payment channel in the near future ; therefore, | ##fication means that the stock of housing could be falling behind demand. rectifying these would put additional pressure on resources, increasing prices already lifted by gst and other taxes / charges. households might start to ratchet up their expectations about future inflation and in such a case the reserve bank could be confronted with the need to increase policy rates to dampen the accelerating inflation outlook. 4. the rugby world cup one driver of growth over 2011 is, of course, the rugby world cup. we think the event will add about $ 700 million to the new zealand economy over the six weeks of the event, contributing approximately a third of a percent to gdp. more optimistic assumptions about multiplier effects would suggest a stronger impact, during months which are normally a tourist down - time. winning the world cup would also boost general confidence. bis central bankers β speeches how likely is it that new zealand will win? we have asked our expert team of forecasters to answer this question. they have pointed out several solid facts : we have always won the world cup at home ; we will have a cantabrian leading the team and another directing the back - line. our expert team of forecasters predict that on average, the all blacks will beat australia in the final at eden park, by 23. 9 to 15. 6. how to plan your business for whatever 2011 brings : sorry, that β s your job! good luck for the year! 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 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 bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches | 0 |
avoiding duplication of supervisory efforts will continue to be top priorities for the international supervisory community, especially as we adopt newer supervisory approaches, such as basel ii. finally, we need to continue to promote investments in strengthening resilience in critical infrastructure in payments and settlement systems and those institutions that play an important role in market clearance systems. this is a critical part of the supervisory and market oversight process we perform, and there is an active public - private effort underway to bring about further improvements in back - up facilities and overall resilience. the innovations that have transformed finance over the past decade have substantially improved the overall stability and resilience of the u. s. financial system. but these improvements are unlikely to have brought an end to what charles kindleberger called β manias and panics β in financial markets. they cannot fully insulate the financial system from the effects of large macroeconomic shocks. and they will not by themselves preclude the possibility of failure in a major financial institution or a critical piece of market infrastructure. for these reasons, it is important that those of you who run financial institutions build in a sufficient cushion against adversity. of course, the overall performance of the financial system and the degree of financial stability depends on more than just the skill of risk managers and supervisors. the unique strengths of the u. s. financial system in allocating capital to where long run returns are highest depend on the overall confidence investors have in the fairness and integrity of our financial markets. these strengths depend on our openness to competition and the opportunities and rewards to innovation that the regulatory environment provides. the stability of the financial system also depends significantly on the quality of macroeconomic policy, not only in terms of the credibility of monetary policy, but also in the degree of confidence investors have in u. s. fiscal management. the current deterioration in the u. s. fiscal position and the acute decline in the net national savings rate represent risks to the financial system and the economy as a whole. these risks are magnified by the size of the u. s. external imbalance and the unprecedented scale of financing requirements it reflects. although the present economic environment looks quite favorable, these broader macroeconomic policy challenges make it even more important that we build on the substantial progress we have already made in strengthening risk management and the resilience of critical market infrastructure. our success in meeting these challenges will help ensure that our financial system proves as resilient in the future as it has in the recent | to firm types. we have worked hard, including through the meeting varied people initiative launched in 2021 [ 3 ], to broaden individual representation on the committee, and our market intelligence network, to ensure we benefit from the widest possible range of views and input. just as the customer base has broadened, the technology used to service it has fundamentally changed. the early minutes of the fxjsc are dominated by descriptions of detailed disputes that could only arise in a voice - execution market. however sophisticated chatgpt and the like may become, i am doubtful they could ever disentangle the misunderstandings of that era! at the same time, few members of the 1970s committees could have foreseen how the market would be revolutionised by the technology to come β from the early reuters terminals via the introduction of the internet, to today β s world of algorithms and vast automated market - making systems marshalling petabytes of data. today β s market structures have the capacity to meet consumer needs in ways undreamt of decades ago. but such decentralisation, dare i say fragmentation, also poses daunting challenges for the unwary, in terms of understanding where they can find the best liquidity, and on what terms. as the market structure gets more complex, transparency has never been more important. [ 4 ] part of the answer here lies in centralised data gathering : the fxjsc itself took an early initiative in the late 1980s to develop the first london market - wide survey, later globalised via the bis. bespoke technologies, including transaction cost analysis ( tca ) tools can also help. but this is an area that will need ongoing attention if we are to reap the potential gains from technological advances of recent years. the evolving toolkit for maintaining safety, soundness and financial stability my final theme relates to how central banks should think about the relationship between fx markets and financial stability. that relationship is not one - way of course : exchange rates, particularly floating ones, can be important buffers against unanticipated shocks, allowing economies to adjust without more painful corrections in less flexible domestic prices. but fx markets can still dry up in stress periods, particularly in the presence of material imbalances in currency demand. that is why the major central banks established a permanent network of standing swap lines in the wake of the global financial crisis. those swap lines proved vital in our fight against the global β dash for cash β following the covid lock | 0 |
envisaged in the original design. the single resolution fund has been created but the resources contributed by the banks, initially subdivided by country, will not be pooled for some time ; and no clear determination to use it has transpired. the single deposit guarantee system has not yet been finalized ; the european commission recently presented a proposal, it too envisaging a lengthy period of transition. in both cases there is no provision for a european public financial backstop, which has been called for since the 2012 report and is necessary to guarantee that banking union has the capacity to safeguard systemic stability. in discussion and in the political debate, the theme of prudential requirements against sovereign exposures is often linked with that of the completion of banking union, on the grounds that risks have to be reduced before they can be shared. the issue needs to be addressed with no preconceived opinions, and without taking hasty decisions that could aggravate rather than mitigate risks. there is no consensus on the overall advantages of the various reform options : furthermore, experience teaches that transitions originally intended as gradual are often suddenly speeded up by the market. in any case, the issue needs to be resolved in a coordinated way at global level and in the proper institutional fora. bis central bankers β speeches poor compliance with fiscal rules in the period preceding the crisis justified their being strengthened, but these last few years have demonstrated how important it is to enforce them taking account, as foreseen by the rules, of exceptional circumstances and the concurrent implementation of longer - term intervention. at the beginning of last year the european commission established the conditions for applying the flexibility clauses of the stability and growth pact, which can allow national budgets to perform the function of macroeconomic stabilization, at least in part, when necessary. however, not all contingencies can be foreseen ; the commission is often compelled to interpret the margin for flexibility provided by the rules in an unavoidably discretionary manner. a common budget, which can only be achieved by further transfers of national sovereignty and an adequate strengthening of the democratic legitimacy of supranational institutions, would make it possible to implement policies consistent with the cyclical conditions in various economies and in the euro area overall, promptly and with no doubts as to their legitimacy. the single currency needs to interact with a single fiscal policy. to be effective, a fiscal union requires the introduction of common debt instruments and, at the same time, decisions on the treatment of pre | luke forau : launch of solomon island's payment system solats remarks by mr luke forau, governor of the central bank of solomon islands, at the launch of the national payments system solats, honiara, 8 april 2024. * * * representatives from ifc and wbg β ms hang, mr. smiley and ms annette dfat and mfat representatives β cbsi directors heads of financial institutions national payment system project managers and your technical teams cbsi management and staff members of the media distinguished invited guests, ladies and gentlemen. a very good morning to you all, and a warm welcome to honiara, to our visitors from abroad. i have great pleasure to welcome you to the central bank of solomon islands to witness the launch of, yet another milestone in our payment infrastructure, the solomon islands automated transfer system, called solomons ats ( solats ). this new platform revolutionizes payments in solomon islands. individuals, businesses, and the government will benefit from secure, efficient, and convenient transactions. solats lays the foundation towards the digitalisation of the solomon islands economy ; it will create the conditions for banks and other financial institutions to offer new products / services. this event is the culmination of years of hard work and collaboration between payments experts from ifc / wbg, montran ( the vendor ), datec ( the network consultant ) and the project teams across the papri countries in the region. you will agree with me that this event also marks the success of the ongoing pacific partnership program between the solomon islands government, multilateral organisations and donor partners. this national payment system project is unique as it introduced us to unfamiliar frontiers given the gaps that existed in the technical and legal infrastructure, and even at the operational level in terms of adequate resourcing, let alone skilled resources to take on the challenges that come with the project requirements. for solomon islands, the project inception began in july 2019 β a year before the covid - 19 disruptions β you can imagine the challenges we all faced during covid - 19. now, that is all history! 1 / 3 bis - central bankers'speeches having reached this stage of implementation, therefore, means that we have successfully bridged the gaps, perhaps, connected the dots and map out the unchartered waters in the local payment ecosystem. on that note, i would like to register our sincere thanks to the banking industry for the invaluable contributions and support that you've rendered | 0 |
wish all success for today's deliberations. thank you. 1 it incorporates various new age features like a data lake and integrated analytics with much higher processing speeds and scalability. data lake is envisioned as a part of cims, which is more flexible than usual database systems, in terms of data fetching from multiple systems ( inside and outside rbi ), data storage ( both structured and unstructured information ) and data processing ( standard and dynamic query based reports ). 2 the innovations implemented in the cims include : ( a ) to improve exchange of data and metadata, a statistical data and metadata exchange ( sdmx ) based repository has been implemented, which consists of the sdmx elements and related artefacts, undertakes data standardisation by aligning the elements with business concepts, and facilitates visualisation at desired level of granularity by drilling down elements ; ( b ) a novel sdmx data conversion tool has been developed and implemented to generate sdmx time series from periodic data submitted by regulated entities ; ( c ) all regtech and suptech data collection features have been implemented through creation of 2 / 3 bis - central bankers'speeches sdmx artefacts / metadata in server - to - server data transmission and data governance ; ( d ) an advanced analytical platform to perform statistical analysis connecting cross domain data has been implemented with integrated programming interface ; ( e ) an sdmx data query functionality provides interactive metadata driven search and data visualisation analytical platform for the general public ; ( f ) power user capability known as common data platform has been implemented ; and ( g ) functionality of regular information submission has been enriched with dashboards for regulated entities, system driven alerts and data submission monitoring utilities. 3 the new standards for national accounts and balance of payments statistics, coordinated by the united nation's intersecretariat working group on national accounts ( iswgna ) and the international monetary fund ( imf ) committee on balance of payments statistics ( bopcom ), respectively aim to meet boarder policy analysis and monitoring needs by integrating elements of social wellbeing and environmental sustainability ; incorporating globalisation and innovation in real and financial sector operations ; incorporating digital transformation ; tracking climate change ; steadiness between stock and flows ; more detailed breakdowns ; consistency with other standards ; and developing new data sources and methods. 4 moore's law 5 kryder's law 6 rao, b. l. s. prakasa ( 2020 ).'c. r. rao : | , established by the enterprise act 2002, enforces both consumer protection and competition law, acting as the uk's economic regulator. in canada, the issue of bank service charges was the subject of a 1988 investigation conducted by the house of commons standing committee on finance. the committee report set out a number of recommendations, which have subsequently been reflected in market practice. the committee β s recommendations resulted in improved disclosure of service charges and the designation of office of the superintendent of financial institutions ( osfi ) for handling and reporting on service charge complaints. in the us, organisations such as consumers β union are fighting to create legislation that will help protect vulnerable consumers from price gouging on checking accounts. they are demanding lifeline banking legislation that will give consumers access to basic banking services. several american states have implemented legislation for minimum no - frills banking services. bank negara malaysia initiated a nation - wide survey in 2003 to assess the requirements, expectations and the satisfaction level of consumers on the quality of products and services offered by the banking institutions. the quality of interface with bank staff and the efficiency of delivery channels were identified as the key factors that customers look for in their banking relationship. secondary requirements represented potential leverage factors such as product innovativeness with value - added features, which can be used to substantially improve overall customer relationship. the central bank of philippines initiated significant measures geared towards protecting both the industry and the public. in 2002, regulations were issued which tightened the rules on credit card and other lending operations by requiring the banks and their subsidiary credit card companies to ascertain that the cardholders were capable of fulfilling their commitments and setting credit limits based on their net take - home pay. a consumer education committee was subsequently constituted to help improve basic financial literacy. credit card issues : recent measures credit card related payments and charges have been one of the most contentious issues in the recent past. late payment charges levied by the banks on credit cards have attracted attention worldwide. recently, the office of fair trade ( oft ) in the u. k. undertook a review of prevailing conditions in the uk. the oft study revealed that the credit card issuers charged consumers excessively for late payment. the oft came to the conclusion that the default charge should not exceed reasonable preestimated administrative cost. in their opinion, such cost should include the cost of postage, stationery, proportionate additional staff, maintenance of premises, etc. on this basis, oft arrived at the conclusion that any charge exceeding the | 0.5 |
buffers. as from 2019, global systemically important banks will have to maintain sufficient total loss - absorbing capacity, or tlac, in the form of debt and equity capital, which can be tapped in a resolution or recovery event. all these measures are designed to reduce the likelihood of larger institutions running into difficulties and to facilitate the recovery or resolution of a failing institution without the need for taxpayer support. but smaller institutions, too, can be a source of risk if they are too interconnected and exposed to similar risks. the countercyclical capital buffer ( ccb ) will be added to the macroprudential toolkit in january 2016 in an effort to combat procyclical risk. banks will be forced to step up their provisioning in times of excessive credit growth, thus bringing capital adequacy levels across the entire banking system into line with economic activity. in the current situation, however, there is no need to ask institutions to set aside more capital because there are no signs of excessively rapid lending growth. financial crises are often triggered by excesses in real estate markets. up to now, germany has not had any macroprudential instruments which directly address the lending relationship between the creditor and the borrower. this deficit prompted the german financial stability committee, in june 2015, to recommend the federal government to create legal foundations for a set of new macroprudential instruments regulating housing loans. these instruments include a cap on the credit volume relative to the property value ( loan - to - value, or ltv, ratio ) and a cap on the borrower β s debt servicing capacity relative to their income ( debt - service - toincome, or dsti, ratio ). our work on these instruments does not necessarily mean that they will be activated in the near future. we do, however, need to be capable of nipping any unwelcome developments in the bud. 7. the european capital markets union before i bring my remarks to a close, i would like to take a look beyond the realm of banking regulation. the banking union was without doubt a huge step forward in curbing risk and making it more manageable. but in a monetary union, financial stability hinges on other factors as well β the functioning of the european capital markets and the way in which they facilitate the distribution of risk. bis central bankers β speeches at the current juncture, cross - border capital flows in europe are largely made up of debt capital β bank loans | entire financial system? are individual market participants very large β that is to say, too big to fail β or too closely interlinked with other market actors, meaning they are too connected to fail. second, can many smaller market participants collectively engender systemic risk given that they are exposed to similar risks β are they too many to fail? for instance, a sharp hike in interest rates could weigh on multiple credit institutions at the same time. the objective of macroprudential oversight and regulation is to identify and contain such risks and misguided incentives. this can only be achieved by ensuring sufficient resilience in the financial system as a whole. bis central bankers β speeches 2. key statements of the financial stability review 2015 against this backdrop, allow me to summarise the current situation in the german financial sector by outlining the key statements made in our report. 1. low interest rates pose risks to financial stability as they squeeze banks β and insurers β earnings. institutions could then assume greater risks without having sufficient capital buffers to be able to cushion the impact of these risks. 2. dangers are also associated with an abrupt sharp hike in interest rates. banks that, for instance, had granted long - term, low - yielding loans would then have higher funding costs. 3. the business volume in germany β s shadow banking sector has grown. we see no evidence of heightened risks at this time, however. 4. macroprudential instruments are gradually being put in place. these instruments are intended to curb scale effects and procyclical effects. instruments that can be employed to mitigate risks arising from mortgage lending are under development. 5. the european capital markets union will be an important complement to the banking union. better developed and integrated equity markets, in particular, could play a role in improving the way in which risks are shared. 3. low interest rates and financial stability the current low interest rates are a global phenomenon. they reflect the low real economic growth and expansionary monetary policy stance observed around the world. consequently, attention is currently focused on monetary policy decisions and their impact on interest rates. however, an expansionary monetary policy can also cause significant risks to financial stability to build up. empirical studies have shown that monetary policy has an impact on the price of shares, bonds and real estate. the longer interest rates stay low, the more incentive market participants have to take greater risks. however, it can end up being a problem if misguided incentives cause risk | 1 |
##d homes to more normal levels will likely involve further adjustments in production. the slowing pace of residential construction is likely to be a drag on economic growth into next year. growth in some manufacturing industries has also slowed of late, and data prepared by the federal reserve show that aggregate manufacturing production declined in september and october. the motor vehicle sector in particular has experienced weaker demand and an accompanying buildup in stocks of unsold cars and trucks over the past year. energy prices have contributed to these developments, as consumers have responded to high prices at the pump by reducing their demand for less fuel - efficient vehicles. the decline in sales caused inventories of these vehicles to surge this past spring. since then, automakers have cut production to reduce the overhang of inventories ; on a seasonally adjusted basis, the pace of light vehicle assembly in october was about 10 percent below the pace in the second quarter. the growth of production in some other manufacturing industries, notably those closely tied to the housing and automobile sectors, has also been slowing. elsewhere in the industrial sector, though, production in high - tech industries has been growing rapidly, and high prices for energy and other commodities have stimulated drilling and mining activity. the global economy continues to be strong, with cyclical recoveries under way in europe and japan and ongoing growth in the emerging - market economies ; this growth abroad should support the continuing expansion of u. s. exports of goods and services. outside of the housing and motor vehicle sectors, economic activity has, on balance, been expanding at a solid pace. perhaps the clearest evidence of this broader economic strength comes from the labor market. although the number of jobs in manufacturing and construction fell in october, most other sectors of the economy experienced solid job gains. private employers in industries outside of manufacturing and construction added nearly 125, 000 workers to their payrolls last month, following an average increase of 140, 000 jobs per month during the preceding three months. with labor demand continuing to expand over the past several months, the national unemployment rate fell to 4. 4 percent in october, its lowest level since may 2001. the strength of the labor market and the associated increases in wage and salary income have supported consumer spending. the data in hand indicate that, the slowdown in housing notwithstanding, inflation - adjusted outlays for personal consumption increased in the third quarter at about the average rate seen since the current economic expansion began in late 2001. the latest retail sales figures suggest an increase in consumption at roughly that pace | helped to draw investment banks to convert to bank holding companies. but the competition for deposits has raised their relative cost, and deposits cannot be expected to make up fully for reduced funding from other sources. the challenge for regulators and other authorities is to create an environment that supports greater bank intermediation, which should help to restore the health of the financial system and the economy. we want banks to be willing to deploy capital and liquidity, but they must do so in a responsible way that avoids past mistakes and does not create new ones. banks need access to funds to make loans β especially with securitzation markets impaired β and the authorities have taken several steps to enhance the supply of funds to banks. the treasury, working with the regulators, has used its authority under the emergency economic the views expressed are my own and not necessarily those of my colleagues on the federal reserve board and the federal open market committee. karen dynan, j. nellie liang, and sabeth siddique of the board staff contributed to these remarks. stabilization act, or eesa, to inject capital into banks so they will be stronger and more stable. the federal deposit insurance corporation has expanded its guarantee on deposits and is insuring new senior debt obligations of banking firms. the federal reserve has reduced the cost of borrowing at the discount window and created a new facility to provide term credit to banks. the federal reserve and the other federal banking agencies have also issued regulatory guidance to promote greater lending by banks. this guidance encouraged banks to meet the needs of creditworthy borrowers in a manner consistent with safety and soundness β specifically, by taking a balanced approach in assessing borrowers'ability to repay and making realistic assessments of collateral valuations. 2 additional capital, liquidity backstops, and regulatory encouragement should all reinforce financial stability and set the stage for increased bank lending. as it is neither realistic nor desirable for banks to meet all financial intermediation needs, the federal reserve and other authorities are also making efforts to stabilize financial markets more broadly. in this regard, the federal reserve has created facilities to lend to primary dealers, to purchase highly rated commercial paper at a term of three months, and to provide backup liquidity for money market mutual funds. we are also creating a facility to support the issuance of asset - backed securities collateralized by student loans, auto loans, credit card loans, and loans guaranteed by the small business administration. in related actions, policymakers are taking steps to address the problems in | 0.5 |
individual households are studied. here it can be added that it was not the household sector that caused problems for the banks during the financial crisis of the early 1990s ; despite the fact that the interest ratio rose to 11 per cent in 1991 and unemployment peaked during 1993 at 8. 5 per cent. with regard to developments in house prices, the assessment is still that swedish house valuations are relatively reasonable. fundamentals such as rising disposable incomes and falling interest costs could to a large extent explain the observed price trend. the demand for housing is expected to grow more rapidly than the supply. however, developments in house prices in sweden vary considerably from region to region. prices in metropolitan regions have risen by a significantly larger amount than for the country as a whole, although prices in the stockholm region have stagnated over the past two years. there has also been a steeper price rise for tenant - owned apartments than for single - family dwellings. it is difficult, at present, to envisage any tendencies towards imbalances that could lead to a substantial fall in prices. some form of unforeseen event, such as changes in regulations or macroeconomic shocks, would probably be necessary to cause prices to fall sharply. the fact that interest rates will rise in the long term should be included in household expectations and can hardly be regarded as an unforeseen event in any economic scenario. the market for apartment buildings has also been characterised by rising prices since 1994. regulations such as those on utility value, and the system of central rent negotiations, normally leads to stable, even developments in the prices of apartment buildings. however, the conversion of rental properties into tenant - owner associations has resulted in recent years in relatively sharp price rises for apartment buildings. price developments can, of course, be affected by changed conditions such as a substantial increase in new construction or a rapid decline in demand. however, a low level of housing construction and a high demand for housing, particularly in metropolitan regions, indicates that this will not be the case. conclusion the riksbank β s work on monetary policy and financial stability emphasises the importance of transparency, clarity and predictability. these are also important factors in the securities markets in which mortgage institutions are active. i hope that mortgage institutions β own actions, coupled with the new legislation, will help to render the market for housing finance more efficient. | lars nyberg : economic activity and housing finance in sweden speech by mr lars nyberg, deputy governor of sveriges riksbank, at a conference, in frankfurt am main, 4 june 2004. * * * i would like to begin by thanking you for the invitation to come here to frankfurt and introduce β eurocatalyst investment focus : nordic covered bonds β. i shall start with a few words about the riksbank β s activities. with the objective of maintaining price stability, the riksbank conducts a clear monetary policy with an inflation target of 2 per cent one to two years ahead, with a tolerance for deviations of plus / minus 1 percentage point. in addition, the riksbank has the task of promoting a safe and efficient payment system. as part of its work on carrying out these two tasks, the riksbank publishes an inflation report four times a year and a financial stability report twice a year. the most recent inflation report was published last week, while the latest financial stability report was published the day before yesterday. for those of you that are interested in economic and financial developments in sweden, i would recommend that you read both reports. economic activity everything i mention now about economic activity and the assessment of inflation is taken directly from the riksbank β s latest inflation report ( 2004 : 02 ), which was presented on friday, 28 may. in the report we forecast gdp growth in the oecd area to average around 3 per cent over the coming three years. with regard to the outlook for sweden, the riksbank foresees an average annual growth rate of almost 3 per cent in the coming years. looking at inflation prospects, the rate of price increases is expected to rise in the period ahead as resource utilisation increases in sweden and abroad. however, a continuation of relatively weak labour market conditions and a favourable cost situation mean that the rise in inflation is expected to be relatively moderate in sweden. our forecast in the report is for a risk - adjusted inflation rate of 1. 1 per cent one year ahead and 1. 8 per cent two years ahead, measured as und1x inflation. swedish housing finance on 1 july this year the act on issuing secured bonds ( 2003 : 1223 ) will come into force. one of the main incentives behind the new act is to offer swedish mortgage institutions the same favourable financing opportunities that these institutions face in european countries that have already introduced similar legislation. so will this new legislation result in a new financing structure | 1 |
the rt hon sir edward george : global economic recovery - where to from here? speech by the rt hon sir edward george, governor of the bank of england, at the lord mayor β s banquet for bankers and merchants of the city of london, mansion house, 26 june 2002. * * * my lord mayor, mr chancellor, my lords, aldermen, mr recorder, sheriffs, ladies and gentlemen. on this great annual occasion last year i spoke about the problems that confronted us in keeping the uk economy on course in the face of the cold winds blowing from abroad. i drew attention to the risk that in seeking to avoid being sucked down into the charybdis of adverse external influences, by lowering interest rates in this country, we could find ourselves thrown onto the scylla of excessive domestic exuberance. in the event, the cruel terrorist attacks on new york and washington on september 11th - had a damaging short term impact on economic conditions everywhere. we were drawn irresistibly towards charybdis despite the resilience of domestic consumer demand, which we sought to sustain by steering towards scylla, with further reductions in interest rates. the economy as a whole became becalmed over the winter. that of course, was disappointing after 37 successive quarters of relatively steady growth. but the economy as a whole still managed to grow in the year to the first quarter - by 1 % on the present data which was somewhat faster than in a number of other g7 countries. the labour market held up well, with the number of people in employment ( on the lfs measure ) rising by 184, 000 in the year to april, to an all - time high ; and while the number of unemployed people on the same measure rose somewhat over the year, it fell on the claimant count basis, to 945, 000 in may, a 26 year low. and inflation, though rather more volatile from month to month, averaged 2. 2 % over the past year very close to our 2Β½ % target, although it fell to 1. 8 % in may. for only the third time in the past nine years the rate of growth in the year to the first quarter fell below the rate of inflation. so we have much to be thankful for, despite the hostile external environment we have had to contend with. we can also be grateful that the difficult international environment has not seriously undermined the stability of the global financial system - though that β s another story. | the key question now is where are we going from here. well, the relatively good news is that the external economic storms seem to be beginning to abate. the us in particular, which experienced negative growth in the middle of last year, saw a surprisingly strong recovery on the back of a reversal of falling stocks, over the winter ; and while this may not have continued on the same scale through the spring, consumer spending has remained encouragingly resilient. the uncertainty looking forward relates primarily to the prospects for a recovery of investment spending as we move into the second half of the year. most economic analysts - including ourselves in the bank - are reasonably optimistic, pointing in particular to the continuing underlying strength of us productivity growth despite the economic slowdown and evidence that demand for computer hardware has picked up. the consensus economic forecast is for overall growth in the us - perhaps after something of a lull in the second quarter - to pick up steadily to around trend - to 3 % or perhaps somewhat more - through the second half of the year into next. but it has to be said that many us businesses themselves seem less convinced about future earnings prospects ; and financial markets, too, remain uncertain, notably about equity valuations - partly as a result of the recent spate of corporate governance and accounting failures. the outcome in the us, of course, is fundamentally important to the prospects elsewhere. but on the reasonably optimistic consensus view for the us, the outlook is for recovery to around trend growth in the eurozone and for modest positive growth even in japan. and there are encouraging signs of stronger growth elsewhere in asia - though parts of south america have problems of their own. if global economic recovery seems likely to provide a more hospitable international environment for our own economy, so, too, do recent developments in foreign exchange markets. last year i pointed out that sterling β s exchange rate was at a 15 year low against the dollar, but close to its peak against the euro. in overall terms sterling β s effective exchange rate index against currencies generally had been relatively stable - at around 105 plus or minus 5 % - for most of the past 2 - 3 years. that pattern of exchange rates made life particularly difficult for the euro - exposed sectors or our economy, and, given that the eurozone represents over 50 % of our external trade, contributed significantly to the imbalance within our economy. happily, from our point of view, and indeed in the context of the global external imbalance, | 1 |
premia from agents β expectations continues to be a top priority in the research agendas of central banks. for example, we constantly monitor inflation swaps and other inflation - linked instruments to check the anchoring of expectations to the ecb β s medium - term target. 21 but the prices of these instruments are significantly affected by timevarying risk premia, which need to be accurately estimated in order to draw policy conclusions. this kind of exercise is more important than ever in the current environment of elevated inflation pressures. i am confident that this workshop will yield new insights on several topics that are highly relevant for investments and for policy - making. i want to thank lti, the organizers, the keynote speaker, the panelists, presenters, discussants, and all of you in advance. i wish you a pleasant and constructive day of discussion. notes 1. ignazio visco ( 2021 ) β the g20 presidency programme on sustainable finance β. remarks by ignazio visco governor of the bank of italy, omfif sustainable policy institute symposium webinar, 30 september 2021. 2. during the italian presidency, the imf and the interagency group on economic and financial statistics were asked to consider climate - related data needs in preparing a new data gap initiative. the financial stability board was requested to make recommendations on how to improve climate - related financial risk disclosures and close data gaps. the g20 sustainable finance study group ( g20 sustainable finance working group, 2021 synthesis report ), co - chaired by china and the us, was re - established. the study group quickly gathered inputs provided by international organizations and delivered a synthesis report, which proposes a set of recommendations to make progress in three main areas : 1 ) improving the comparability and interoperability of approaches to align investments to sustainability goals ; 2 ) overcoming information challenges by improving sustainability reporting and disclosure ; 3 ) enhancing the role of international financial institutions in supporting the goals of the paris agreement. 3. our work covers the sustainability - related aspects of monetary policy, supervision, regulation, financial stability, financial education, market operations and payment systems. we also actively contribute to the analysis of these issues ongoing at the european and international level. 4. for a broader perspective see ignazio visco, op. cit. ; luigi federico signorini ( 2022 ), β sustainable investment choices : emergencies and transition β, speech by luigi federico signorini senior deputy governor of the bank of italy, | is also feared that an active use of central banks β balance sheets would blur the boundaries between monetary and fiscal policies. the new challenges to central bank independence arise as a consequence of prolonged monetary policy accommodation : at the current juncture central banks could be unduly constrained in their choices about the timing and pace of policy normalization by pressure arising both from financial markets that have become overly dependent on their support and from unrealistic expectations about what central banks can deliver. on these issues, the jury is still out. more in general, the crisis has raised the question of whether central banks should revise their objectives or strategies. in my view there is no need to question the current objectives of monetary policy ; in the case of the eurosystem, that of preserving ( medium term ) price stability. i do not believe that there is a particular need for financial stability to become an explicit objective of monetary policy on a par with price stability. indeed, the benefits of our monetary framework have become more, not less, evident during the crisis, with inflation expectations remaining well - anchored throughout. also, assigning financial stability as an explicit additional objective to monetary policy could risk blurring responsibilities and creating potential conflicts. however, i believe that there is no question that preserving financial stability is a crucial albeit not exclusive responsibility of central banks. indeed, the crisis has not put into question the idea that over longer horizons there is no trade - off between price stability and financial stability objectives β rather, there are synergies. °°° the crisis has thus rekindled the long - standing debate on whether central banks should act pre - emptively against signs of financial instability that can morph into systemic risks. a broad consensus has indeed emerged on the idea that macro - prudential policies should be adopted to limit these risks. these policies would address both the cross - sectional dimension of the financial system, with the aim of strengthening its resilience to adverse real or financial shocks, and its temporal dimension, to contain the accumulation of risk over the business or financial cycle. furthermore, countercyclical macro - prudential policies moderating the financial cycle would support monetary policy in the stabilisation of the economy and, by adding a systemic perspective, they would complement micro - prudential policies directed at preserving the stability of individual financial intermediaries. however, a potential for conflicts, or what economists usually refer to as tradeoffs, may arise between monetary, macro - and micro - pr | 0.5 |
. however, while financial innovation has undoubtedly increased vulnerabilities in the global financial system, there is more to the present financial market turmoil than the proliferation of structured finance products. the β originate and distribute β model would arguably not have been possible without the benign economic and financial backdrop notably robust global economic growth, low inflation, a low level of interest rates, low default rates and rising asset prices in many countries, not just in the usa. this goldilocks economy, where conditions were neither β too cold β nor β too hot β, had β as a side effect β masked the gradual build - up of financial imbalances ; a development many of us have seen already before the turmoil. and the bis is one very prominent example that made this very clear already at an early stage of the process. hence, while lending and risk - taking experienced rapid growth, words of warning from central banks and other institutions largely went unheeded with the argument that β this time, developments are surely different from the past β. the fact that minor financial market tensions in the spring of 2005 and 2006 had left financial markets more or less unscathed only served to reinforce that impression. however, once the vulnerabilities in the global financial system were revealed in august last year and financial imbalances started unwinding, we all witnessed that the environment had changed considerably since then. recent financial market tensions : lessons for monetary policy the list of lessons to be learnt from the current financial turmoil covers many areas. i do not want to discuss in any detail the many proposals that are currently being debated in different national and international bodies. as the g - 7 finance ministers and governors have recently stated, it is important to recognise the need for more effective regulation. in that context we remain fully committed to the recommendations of the financial stability forum to improve the resilience of the international financial system. while i do not deny the importance of these aspects, in the following i would like to focus on an aspect that is more related to the general theme of today β s conference, namely the lessons to be learnt by monetary policy makers in their core business of setting short - term interest rates to safeguard macroeconomic stability. i therefore do not intend to describe the reactions of central banks to the current turmoil in terms of money market operations, but take a step back from this sort of crisis management to the more general issue of conducting monetary policy in the face of a procyclical behaviour of financial market participants. in | . rather, it means that central banks should take a longer - term perspective which takes into account the future inflationary consequences of such unfavourable developments. and indeed, empirical work pioneered by the bis has found that excessive money and credit growth has significant leading indicator properties for sharp corrections on asset markets and severe repercussions on the rest of the economy. as financial crises increase the volatility of macroeconomic variables such as inflation and growth, and given that monetary policy operates under the traditional loss functions, these results indicate that a more symmetric policy would improve welfare and macroeconomic stability. moreover, it could be argued that the variance of macroeconomic variables itself is not independent of the monetary policy strategy chosen. a more symmetric monetary policy approach to financial cycles therefore has an additional endogenous impact. given the macroeconomic relevance of financial crises, we have good reason to widen our monetary policy time horizon and give low - frequency movements in credit and monetary aggregates more weight in our analytical frameworks and our monetary policy decisionmaking processes. that is not to say that such an approach would eliminate financial cycles altogether. however, in the medium to long term, a monetary policy that followed a more symmetric course would do more to dampen damaging financial cycles than a monetary policy that merely tries to limit damage after the event using aggressive interest rate measures. given that the eye of the current storm is the us real estate market and that the us federal reserve is well known for actively pursuing a risk - management approach, it comes as no surprise that most debates currently focus on us monetary policy. but given the prolonged period of low interest rates in the euro area over the past couple of years, these issues must also be addressed by monetary policy makers in the eurosystem. here, the eurosystem β s monetary policy strategy already possesses, in the shape of its monetary analysis, such a stabilising element, which is especially suited for the analysis of long - term developments. the recent financial turmoil has shown that the often criticised monetary and credit analysis has a valuable role to play in monetary policy analysis. mtm and financial developments the relationship between monetary policy and financial markets, however, is by no means one that is of interest to policy makers only in the face of a crisis. developments on financial markets have the potential to modify core economic relationships and are therefore of utmost interest for monetary policy. let me therefore move away somewhat from the recent stress episode to discuss other structural issues related to financial innovations and monetary policy | 1 |
work, the content of the forward guidance has to reflect the central bank β s mandate. only then will the central bank β s announcements be perceived as credible. let me explain this in more detail. from a conceptual perspective two types of forward guidance can be distinguished depending on the objective pursued3. first, forward guidance can aim at merely providing greater transparency about policy intentions. this can entail two elements. the first element is to provide greater clarity about the central bank β s assessment of the economic outlook that is relevant for the assessment of medium term risks to price stability and further policy goals it may pursue. the second element is to provide more clarity on how the central bank will react to such outlook. in certain cases, the market β s assessment of the economic outlook may clearly deviate from the central bank β s assessment. moreover, even with a shared assessment of the outlook, the market may expect a systematically different policy response than pursued by the central bank. in these cases, forward guidance can help the central bank in clarifying its assessment of future economic conditions and its reaction function. see brand et al. ( 2010 ), gurkaynak et al. ( 2005 ), kuttner and posen ( 1999 ), bibinger et al. ( 2013 ). see praet ( 2013 ) for a detailed exposition of this distinction. see also campbell et al. ( 2012 ) for the taxonomy of β odyssean β vs. β delphic β forward guidance underlying this distinction. bis central bankers β speeches this can be especially valuable at times when upward volatility in financial markets risks creating risk premia along the yield curve, thereby inducing a premature withdrawal of monetary accommodation. second, forward guidance can serve to communicate to market participants that the central bank β s policy intentions have changed. most notably, the central bank may try to convince markets that it would keep interest rates low, even if this would imply inflation well above its previous objective, at least temporarily. the promise of higher future inflation, if credible, induces private agents to substitute future for current consumption, hence providing additional stimulus today. this type of forward guidance is closer to the academic concept of forward guidance in the strict sense β as discussed, for example, in woodford ( 2012 ). the main challenge of such guidance is its inherent inconsistency over time and thus lack of credibility. when the time comes, the central bank may be tempted to deviate from its prior commitment : once the | the policy - relevant horizon ; and second, to anchor rate expectations more firmly around a path that ensures the degree of monetary accommodation warranted by the outlook for price stability. the ecb β s objective is not to suppress money market volatility. in this crisis, abundant central bank liquidity has compressed prices in many financial market segments. the ability of markets to price two - way risk will be a factor of resilience along the normalisation path. our objective is therefore not to steer money market rates towards a predefined value but to ensure that their fluctuations remain within reasonable bounds and do not hurt economic recovery. when interpreting the governing council β s forward guidance, three elements are particularly relevant. first, it has been provided before exhausting the scope for further reductions in the key ecb interest rates. in fact, the forward guidance formulation, as decided unanimously by the governing council, explicitly incorporates an easing bias, thereby accounting for the possibility of further cuts in policy rates. second, and most importantly, forward guidance is firmly anchored on the ecb β s mandate and monetary policy strategy. in particular, the path of the policy rates remains conditional on the outlook for inflation and will be reviewed over time within the analytical framework provided by the ecb β s monetary policy strategy. this analytical framework assesses both economic and monetary developments relevant for inflation. in particular, the conditionality of the forward guidance reflects the two - pillar strategy. that is : the medium - term outlook for inflation is evaluated in terms of economic analysis indicators confirming a broad - based weakness of real economy ; and it is evaluated on the basis of monetary analysis indicators confirming subdued monetary dynamics. third, forward guidance helps us to focus on our mandate, as it de - emphasises the policy relevance of any single data release and concentrates on the medium term. in other words, through our forward guidance we communicate one β and only one β expectation on how our key interest rates will evolve. it is this β and only this β communication that is relevant to assess our policy orientation. unless this communication changes, the policy orientation remains unchanged. has forward guidance achieved its objectives? it is probably too early to answer. but allow me a preliminary assessment. looking at money market conditions, a number of indicators give us comfort that, in the absence of forward guidance, money market rates would have displayed more upward volatility than was observed. first, the influence of shocks coming from outside the euro area has been dampened ( see slide | 1 |
, during the eventual exit from these extraordinarily accommodative measures. bis central bankers β speeches | m r pridiyathorn devakula : risk management - challenge for the thai financial institutions and regulator opening remark by mr m r pridiyathorn devakula, governor of the bank of thailand, at the market risk management techniques for the bis capital regime seminar, held in bangkok, 12 october 2001. * * * distinguished guests, ladies and gentlemen, i would like to personally extend a warm welcome and to express our deep appreciation to all of our distinguished speakers and panelists who have agreed to come to bangkok at this difficult time. i would also like to thank our co - host, the world bank, in the efforts and interest which they have shown to make this important seminar possible. it is also important to convey my appreciation to the members of the financial industry for your interest and enthusiastic participation in this seminar. as we all know, the new accord proposal is scheduled to be finalized early next year, with its implementation scheduled for 2005. countries that have not yet implemented the consolidated supervision will have until 2008 to comply with the new accord. thailand is in this second category since we have yet to be empowered by law to carry out consolidated supervision. the new banking act with such a provision is expected to take effect next year. even with such a relatively long grace period toward compliance, thai financial institutions have already taken the first step of the journey toward that direction. we have recently conducted a survey of the financial institutions to check their readiness to conform to the credit risk guidelines under the new accord. i have been reported that many plan to be ready for the standardized approach, while others are working towards the irb approach, this is a welcome news. more importantly, financial institutions have all started the effort to strengthen risk management in their respective institutions with some notable progress so far, and we look forward to more progress to come. i would like to take this opportunity to commend all of you for such efforts. after all, the bis capital requirement only serves as a cushion of losses or failure of an institution whereas it is the risk management that reduces the chance of failure. the significant progress you have made in the area of risk management deserves our full support and commendation, particularly so as this is a very difficult time for the financial industries. ladies and gentlemen, coming back to the issue of preparation for the new accord, one can see that significant challenges remain ahead. i will now turn to these challenges. first, the technical and infrastructure aspects. it is important to build up a deep understanding of | 0 |
shown strong commitment to supporting the progress of global economic integration. nevertheless, we should also put the issue of benefits and challenges of financial and economic globalization into a proper perspective. i would like to do this by examining the experience of thailand during the past two decades. over the past twenty years, it is an undeniable fact that globalization has brought substantial gains to thailand. the evidence is all around us. international trade and investment have boomed. thai exports expanded by over 11 percent per year during the same period. our large and vibrant export sector sends goods all over the world. and, in turn, thai consumers enjoy goods from all corners of the globe. on the investment side, healthy joint ventures and foreign investment abound. interaction at the person - to - person level has also grown, underlying the fundamental importance of the sharing of knowledge and skills between nations. and last, but by no means least, this luncheon and our presence here today reflect the progress of globalization. i am glad to say it is a progress that we have made together. ladies and gentlemen, it is also undeniable that thailand has shown a strong commitment to global economic integration. thailand β s economy and openness have grown together hand - in - hand. but openness brings forth not only benefits ; it also invites challenges. as such, we must embrace globalization with our eyes open for potential risks and pitfalls. although globalization has brought considerable gains over the last decades, the path traveled has not always been smooth. in fact, it has been strewn with risks, some predictable and some not. nearly ten years ago, thailand was in the midst of a financial crisis that had been caused by a number of factors. the most telling one was the premature liberalization of the financial sector. that round of financial liberalization encouraged significant capital inflows and massive over - investment, creating financial vulnerabilities which eventually led to abrupt reversal of flows in the period that followed. i am sure many of you can recall the event vividly. and further back in time, nearly twenty years ago, thailand was embroiled in a global oil crisis that thrust the world economy into a period of recession and high inflation. during both episodes, the prognosis for globalization seemed grim. nevertheless, thailand emerged from these crises with a renewed commitment to global economic integration and internal reform. the situation today is nowhere near as grim. but the economic lessons of the past remain relevant. openness comes with challenges. and as the | so that minority shareholders are better represented on the board. audit committees are now a requirement and many banks now have nomination and compensation committees to reduce the power of the major shareholders. most also have risk management committee or, at least, asset and liability management committee. to further increase transparency, commercial banks now have to announce at the end of each month their npl level, penalties and fines imposed by the authorities, as well as the amount of their related lending. by year - end, we will launch the director's handbook for the financial community and further encouraging increased transparency of appointment and compensations. of course, we cannot change others without changing ourselves at the bank of thailand. our reorganization strategy focuses on four aspects, namely organizational structure and work process, human resource management, decision - making process, and database and information technology. our hierarchical structure has now been reduced from a total of seven layers to four. authorities and responsibilities are being further delegated toward a lower level to the operating officers in charge. this helps reduce the previously lengthy approval process and increase our flexibility. new departments have been established to better cope with the rapidly changing economy and the rising information need of the organization. these include the data management group, the information and public relation group, the planning group who conducts a bank - wide risk assessment as well as a new department of risk management and information technology examination, who monitor risk profile and risk management at the financial institutions. in addition, our business processes are now more client - oriented with a new website, new voice - mail, and new central point of contacts being offered as services to our stakeholders. both the netherlands and thailand are small open economies in the world market. to survive the tide of globalization, we both need a well thought out strategies. we have to choose our battleground and cooperate with friends around the world. to do this, local strength has to be further strengthened while lessons and technologies must be learnt from others. here, international co - operations through jointed ventures, through foreign direct investment, or through international trade will play major roles in our successes. on this front, thailand has done remarkably well, registering a substantial increase in net inflow of foreign direct investment in the four years following the crisis despite the overall net capital outflow due to debt repayment within the banking sector. foreign direct investment ( to the non - bank sector ) increased from an average around 1. 4 billion us dollars during 1992 - 1996 to 3. 4 billion us dollars during 1997 - 2000 | 0.5 |
gri guidelines, a few indian banks are beginning to consider reporting on their non - financial parameters. in other international initiatives for sustainable development, corporate social responsibility and non - financial reporting also, the involvement of our banks, financial institutions, etc. is peripheral or at a very nascent stage. 16. for institutions in india β s financial and banking sector, one of the primary drivers of their involvement in activities in social and environmental spheres is their reputation and branding. this is fuelled by the fact that these institutions have high visibility in every business sector and industry. moreover, in emerging markets such as india, financing projects that focus on clean production, good corporate governance and sustainable energy are being increasingly identified as potential business opportunities for financial institutions. furthermore, many financial institutions are also actively publicising their philanthropic activities under the corporate social responsibility banner. all these initiatives point to the sector β s move toward financial institutions banking on their brand and reputation, to make a difference in the community in which they operate as well as, in their new risk management strategies that reflect the socio - environmental aspects of their investments. 17. there are many reasons for this change in mindset. foremost is the increasing globalization of business. as more indian companies expand internationally and acquire interests overseas, whilst at the same time, there is a rapid increase in foreign investment in bis central bankers β speeches indian corporates, demands on transparency from a more β global audience β have put pressure on indian companies to start reporting on sustainability issues. within india, there has also been a change in the mindset and attitudes of stakeholders on issues relating to environmental and social responsibility. recently, government faced public protests and pressure to refuse entry to foreign ships that were brought to india for decommissioning, as they contained large amounts of asbestos and other harmful substances. while the general public opinion on sustainability issues is still evolving, companies taking the first steps can expect intense public scrutiny, which again highlights the need for transparent reporting on operations. another significant push factor has been the role of government as a stakeholder. india has historically had stringent laws on labour, environment, health and safety. over the past few years the government has become increasingly proactive in addressing enforcement. intense media attention and scrutiny on corporate social responsibility has also led to companies taking more cognisance of their activities and engagement with stakeholders. reporting standards 18. while currently there are no officially recognized guidelines or reporting standards on sustainability reporting ( by accounting or regulatory bodies ), there has | orders of " rolling machines " ( i. e., railway vehicles ) and " motor vehicles " by the transportation industry. however, business fixed investment as a whole has picked up with improvement in corporate profits. a leading indicator shows that machinery investment has been supported not only by the manufacturing industry but also by investment related to base stations and 5g networks by the telecommunications industry, logistics facilities - related investment by the wholesale and retail trade industries, and digital - related investment by the construction industry. regarding construction investment, there has been an increase in construction of warehouses on the back of expansion in e - commerce and progress in urban redevelopment projects. in the bank of japan's march 2021 tankan ( short - term economic survey of enterprises in japan ), the plan for fiscal 2021 shows that business fixed investment is likely to increase by 2. 4 percent on a year - on - year basis, indicating relatively high growth compared with the past march tankan surveys. 1 the employment and income situation has remained weak due to the impact of covid - 19. with regard to the number of employed persons, while the number of regular employees has continued to increase moderately, mainly in the information and communications as well as the medical, healthcare, and welfare services industries, that of non - regular employees has decreased, mainly in the face - to - face services industry. in addition, the unemployment rate and the active job openings - to - applicants ratio have been more or less flat, albeit with fluctuations ( chart 5 ). as for wages, the year - on - year rate of change in non - scheduled cash earnings registered a negative figure due to a decline in hours worked, while winter bonuses in 2020 also saw a significant decline from the previous year. nevertheless, employee income is likely to bottom out and thereafter return to a moderate uptrend as the number of employed persons, non - scheduled cash earnings, and special cash earnings turn to an increase, reflecting a pick - up in economic activity and improvement in corporate profits. b. price developments let me now elaborate on price developments in japan. the year - on - year rate of change in the consumer price index ( cpi ) for all items less fresh food, or the core cpi, has been minus 0. 1 percent recently ( chart 6 ). since april, the negative contribution of a reduction in mobile phone charges has been somewhat significant. from a macroeconomic perspective, the output gap, which indicates the supply - demand balance, became significantly negative for the april - | 0 |
success of the vaccination campaigns in europe, which have allowed a significant reopening of the economy. with the lifting of restrictions, the services sector is benefiting from people returning to shops and restaurants and from the rebound in travel and tourism. manufacturing is performing strongly, even though production continues to be held back by shortages of materials and equipment. the spread of the delta variant has so far not required lockdown measures to be reimposed. but it could slow the recovery in global trade and the full reopening of the economy. consumer spending is increasing, although consumers remain somewhat cautious in the light of the pandemic developments. the labour market is also improving rapidly, which holds out the prospect of higher incomes and greater spending. unemployment is declining and the number of people in job retention schemes has fallen by about 28 million from the peak last year. the 1 / 3 bis central bankers'speeches recovery in domestic and global demand is further boosting optimism among firms, which is supporting business investment. at the same time, there remains some way to go before the damage to the economy caused by the pandemic is overcome. there are still more than two million fewer people employed than before the pandemic, especially among the younger and lower skilled. the number of workers in job retention schemes also remains substantial. to support the recovery, ambitious, targeted and coordinated fiscal policy should continue to complement monetary policy. in particular, the next generation eu programme will help ensure a stronger and uniform recovery across euro area countries. it will also accelerate the green and digital transitions, support structural reforms and lift long - term growth. we expect the economy to rebound firmly over the medium term. our new staff projections foresee annual real gdp growth at 5. 0 per cent in 2021, 4. 6 per cent in 2022 and 2. 1 per cent in 2023. compared with our june staff projections, the outlook has improved for 2021 and is broadly unchanged for 2022 and 2023. inflation inflation increased to 3. 0 per cent in august. we expect inflation to rise further this autumn but to decline next year. this temporary upswing in inflation mainly reflects the strong increase in oil prices since around the middle of last year, the reversal of the temporary vat reduction in germany, delayed summer sales in 2020 and cost pressures that stem from temporary shortages of materials and equipment. in the course of 2022 these factors should ease or will fall out of the year - on - year inflation calculation. underlying | erkki liikanen : banking structure and monetary policy β what have we learned in the last 20 years? presentation by mr erkki liikanen, governor of the bank of finland and chairman of the highlevel expert group on the structure of the eu banking sector, at the conference β twenty years of transition β experiences and challenges β, arranged by the national bank of slovakia, bratislava, 3 may 2013. * * * how is today β s perspective on monetary policy different from what prevailed 20 years ago? twenty years ago, the world of today was being formed in many ways. 1993 was the year when the economic and monetary union project was becoming political reality : the maastricht treaty had been signed and was in the process of being ratified. it was also the time when the mainstream approach to monetary policy was beginning to converge to the flexible inflation targeting framework. a number of countries had then just adopted an explicit inflation targeting strategy. in the sphere of banking regulation, too, a new era was beginning. a significant reorientation was going on, away from regulating the conduct of banks and towards the new risk - based approach. the regulatory trend, based on increased freedom for banks but subject to riskbased capital requirements, would continue all the way to the eruption of the financial crisis in 2008. in the eu, the second banking directive took effect from the beginning of 1993, creating a single market in banking. the directive sought to prevent discrimination and to increase efficiency through competition. there was discussion on the implications of this for supervision, but little action. so, while european banking markets were being integrated, financial supervision remained a national competence. in the u. s., deregulation was also moving forward. for instance the glass - steagall act, separating banking from securities and insurance, was under growing criticism and would be ultimately repealed in 1995. one reason for the dissatisfaction with the glass - steagall system in the us was competition from european banks which were less restricted in what they could do. twenty years ago, the striking improvement in macroeconomic performance, later named β the great moderation β by chairman bernanke, was spreading to the whole developed world. the almost surprising success of monetary policy in improving price stability and reducing fluctuations in economic activity, while also keeping interest rates at historically low levels, was interpreted as a major victory for the art of economic policy making. now we know that there was trouble brewing under the surface. the underpinnings of | 0 |
richard w fisher : beer goggles, monetary camels, the eye of the needle and the first law of holes remarks by mr richard w fisher, president and chief executive officer of the federal reserve bank of dallas, before the national association of corporate directors, dallas, texas, 14 january 2014. * * * with reference to peter boockvar, the book of matthew, sherlock holmes, β the wolf of wall street β and denis healey. the views expressed by the author do not necessarily reflect official positions of the federal reserve system. thank you, george [ jones ]. george is a great member of the dallas fed board of directors, and i am honored he would take the time to introduce me. waylon jennings said of your namesake that β if we could all sound like we wanted to, we β d all sound like george jones. β 1 i often feel that way about george at our board meetings. he gives a sharp, crisp, spot - on briefing of banking conditions in that deep, beautiful voice of his and i always think : i want to be just like george when i grow up. again, thank you george for that kind introduction. during the holiday break, i spent a good deal of time trying to organize my thoughts on how i will approach monetary policy going forward. today, i am going to share some of those thoughts that might be of interest to you as corporate directors. at the last meeting of the federal open market committee ( fomc ), it was decided that the amount of treasuries and mortgage - backed securities ( mbs ) we have been purchasing should each be pared back by $ 5 billion, so that we would be purchasing a total of $ 75 billion a month ( in addition to reinvesting the proceeds of maturing issues we hold ) rather than $ 85 billion per month. in addition, it was noted that β if incoming information broadly supports the committee β s expectation ( s ) β¦ the committee will likely reduce the pace of asset purchases in further measured steps at future meetings. β and it was made clear that the fomc expects it will hold the base rate that anchors the yield curve β the federal funds rate, or the rate on overnight money β to its present near - zero rate well past the time when unemployment is reduced to 6Β½ percent. i was pleased with the decision to finally begin tapering our bond purchases, though i would have preferred to pull back our purchases by double the announced amount. but the | richard w fisher : β never let your brains go to your head β ( with reference to the sages of the ages, diana sorensen, john paul jones and β babe β fisher ) address by mr richard w fisher, president and chief executive officer of the federal reserve bank of dallas, for the 151st commencement, bryant university, smithfield, rhode island, 17 may 2014. * * * the views expressed by the author do not necessarily reflect official positions of the federal reserve system. before i begin my formal remarks, i want the candidates for degrees to think about the fact that over 5, 000 people are here today to celebrate your success. these are your parents and grandparents, cousins, uncles and aunts ; your brothers and sisters ; your friends ; your teachers and coaches and counselors. they have been by your side through joyful moments and less - joyful ones. they have encouraged you. they have believed in you. and they have occasionally badgered and hectored you and β¦ driven you nuts. all to good effect. they are here with glad and happy hearts to celebrate your admission to the society of educated men and women. you will be applauded by them many times today. but i want you, the graduating class, to turn the table on them and give them a round of applause. so stand up, turn around, put your hands together and give them a cheer. thank them for loving you. now, please be seated. i also want to salute the outgoing chairman of the bryant university board of trustees, michael edward fisher, β 67. i want to thank him not only for his six years as chairman and for his total devotion to bryant, but also for doing his family proud β especially his little brother β¦ me. blessed to be americans mike fisher and i grew up in what can most charitably be described as β unusual circumstances β. our father started out his life in conditions right out of charles dickens : at the age of 5 years and 2 months, he was arrested for begging for food and sentenced to seven years in australia β s harshest prison, a god - awful place called westbrook reformatory. 1 he was spared the destiny of most inmates there β he was released quickly and lived to see better days β but to say he grew up rough is an understatement. our mother, born in a small south african outpost where norwegians, swedes and danes carved a life out of the β bush β, lost her father | 0.5 |
in the world by the economist intelligence unit of the economist magazine 2010 and 2011. pakistan has become one of the fastest growing markets for branchless banking in the world. these developments include increased competition, technological innovation, new business models, transformation in customers β needs and behaviors, and regulatory proportionality. international development agencies and media have now been highlighting pakistan for its market and institutional environment for branchless banking. moreover, according to a recent cgap publication, β pakistan serves as an example of how public and private institutions together can move a country towards a digital financially inclusive system. β in fact the branchless banking is going to dominate the retail banking landscape in the long - term. branchless banking has also proved to be an effective instrument in channelizing the government to persons ( g2p ) payments in trying times like serving internally displaced persons ( idps ), flood affectees during the last two years, and beneficiaries of the benazir income support programme. in the coming days, this channel is expected to continue playing an important role towards the promotion of financial inclusion and the management of government to person ( g2p ) programs like salaries disbursements, pensions, bisp, watan cards, pakistan cards and tax collections services, etc. the existing branchless banking deployments can cater to the needs of over 10 million potential beneficiaries of g2p payments in pakistan. sbp has partnered with dfid to launch a financial inclusion program. a number of initiatives have been taken to promote access to finance in the msmes, agriculture and housing which creates enabling environment by addressing regulatory barrier market failures and industry bottlenecks and ensuring consumer protection. lack of financial literacy is a major constraint in advancing financial inclusion sbp launched the first ever nationwide financial literacy program last year, the pilot phase of the program has been concluded successfully by targeting about 50000 beneficiaries in various provinces regions and districts with emphasis on low income strata. bis central bankers β speeches sbp has deepened global partnership with world bank, asian development bank and other international and bilateral development agencies to make financial services accessible to the unbanked population. we will see the impacts of these initiatives in near future, which should create more opportunities for the marginalized segment of the society, so they can play their part in the development of this country. at this point in time, you β re curious minds will have a lot of questions, some of them will be answered by your mentors | eli m remolona : message for the annual reception for the banking community keynote message by mr eli m remolona, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the 2024 annual reception for the banking community, manila, 10 january 2025. * * * good evening, everyone. former central bank governors, members of the monetary board, partners from the banking and diplomatic community, government officials, friends from the media, ladies and gentlemen, happy new year! first of all, congratulations to all of you and thank you for a milestone - filled 2024. it has been a remarkable year and i am truly grateful for the hard work that each one of us has put in. indeed, we have much to celebrate. we received from s & p ( global ) an upgrade in our credit rating outlook. with your help, we launched the peso irs ( interest rate swap ) market, and we took significant steps to expand the government repo ( repurchase ) market. we also rolled out the financial services cyber resilience plan and helped pass the anti financial account scamming act. in the midst of all these, we also began circulating the new smarter, cleaner, and stronger polymer banknotes. the year 2024 also happens to be the 75th anniversary of central banking in the philippines. please join me in applauding the services of bsp employees, the current ones, as well as those who served before them, some of them are here with us today. we also have some new faces among us, including two members of the monetary board, walter wassmer and jose querubin. their perspectives have already proven to be very helpful. as we look ahead to 2025 and beyond, i am thrilled to continue working with you to build on our shared successes. let us continue working together on digitalization and financial inclusion. let us also intensify our efforts on open finance to ensure that people can choose financial services that best suit their needs. having worked with many of you over the years, i know that we share the same goal, and we share the same drive to make the banking industry a stronger engine for jobs and growth for the filipino people. let me now call on my fellow members of the monetary board to join me on stage for the ceremonial toast. 1 / 1 bis - central bankers'speeches | 0 |
no history in this creates uncertainty in the markets, mainly about the financial effects it might have. there may be an overreaction of the markets, with increased stress and sharp rises in long - term interest rates. the rising cost of financing this would entail for emerging markets and some eurozone economies more dependent on external financing, would pose important policy challenges for them. in chile, this could lead to increases in both the cost of external financing of companies and banks and higher long - term interest rates domestically. as emphasized in our financial stability report, it is important for banks in this context to keep the exposure of their balance sheets at bay. in any case, the u. s. monetary authorities have argued that if confronted with an unwanted reaction the process could be delayed or even reversed to some extent, so it is possible for the effects of the withdrawal to be fairly limited. moreover, these measures should be adopted in line with a recovering u. s. economy and ongoing financial stability, so this scenario is not necessarily detrimental to the emerging economies, but rather could be a normalization from the extraordinary conditions prevailing in the advanced economies over the last five years. if confirmed, this normalization would reduce concerns about an excess supply of foreign capital that have been emphasized in several financial stability reports. these concerns relate to excessive borrowing by companies and banks abroad and asset price misalignments. domestically, a sharper deceleration of expenditure, and particularly investment, is a possibility. this would entail, with some lag, an also sharper or faster slowdown of the other components of expenditure, triggering inflationary pressures and affecting the course of monetary policy. lately there has been an increase in provisions for consumer credit, coinciding with a deterioration of the payment behavior of this segment, somewhat worse than could be bis central bankers β speeches expected given the economic cycle. although the banking system β s capitalization levels are above the regulatory minimums and the stress tests we present in the financial stability report indicate that they are sufficient to deal with a severe shock to growth and lending conditions, it is essential to closely monitor the evolution of these indicators and any factors that may affect them. in this sense, it is important to avoid any measures that might encourage non - payment. the increase in the current account deficit of the balance of payments has been cause for concern in the latest reports. as has been noted, this deficit is largely explained by fdifinanced investment flows into the tradable | with implications for the permanent income of the female workers affected. in the chilean case, this is illustrated by the fact that 63 percent of the workers who emptied their pension fund accounts after withdrawing their pension savings are women. about women β s expectations for returning to the labor force, the cbc conducted a study that collected the testimony of a group of women who left their jobs to devote themselves to care giving and found three groups with different types of expectations. one group includes those who expect to go back to the work once the sanitary situation returns to normal. another group includes those who believe that they will not return to the labor force after the crisis, with this expectation being more recurrent in older women. finally, those who do β estimating non - remunerated household work 2020 β statistics division, central bank of chile. ipec, may 2021, adimark. edin and gustavsson ( 2008 ), β time out of work and skill depreciation, β industrial and labor relations review ; hernanz and jimeno ( 2018 ), β inestabilidad laboral en el empleo, duracion del desempleo y depreciacion del capital humano, β cuadernos economicos de informacion comercial espanola ice. page 10 of 27 expect to return to the labor market, but in more flexible jobs that allow them to reconcile personal duties and paid work. women β s attitude towards returning to the labor force will depend on both the duration of confinements and school closures, and the recovery of the traditionally more feminized areas of economic activity. however, a higher prevalence of the latter two groups harbors the risk of a slower recovery of participation rates, or that in the future we will see an increase in the underutilization of the female labor force in terms of occupations with shorter working hours or lower productivity, such as self - employment or informality. all of the above should make it clear that while a full normalization of the labor market would require reversing the loss of jobs and the exit of women from the labor force, this will not necessarily occur automatically as activity levels recover. in other words, the abrupt, prolonged and traumatic exit of hundreds of thousands of women from the labor market in 2020 has economic, social and cultural ripple effects that may extend well beyond the normal cycle and become a bottleneck to a robust, sustained and equitable economic recovery. therefore, analyzing the evolution of the | 0.5 |
in order to insulate banks from weak public finances, we need not only appropriate supervision but also suitable regulation ; regulation that will prevent banks from taking on excessive risk through state financing. such regulation should, for instance, include upper limits for lending to governments. it should also encompass appropriate capital backing for government bonds β which is another proposal made by stefan gerlach, incidentally. but the single supervisory mechanism and suitable regulation are just two elements of a banking union, and there are also other means available for severing the link between sovereigns and banks. the third tool in this respect is a european recovery and resolution mechanism for banks that has access to β european β funds. in this context, it is necessary that any such mechanism ensure that investors are first in line to bear the risk of their investment decision. taxpayers must be spared the burden of other people β s investment decisions β at the national level and even more so at the european level β for as long as there is no proper balance between liability and control. ladies and gentlemen, i have very briefly highlighted a few arguments in favour of european banking supervision β the β why β, so to speak. now, let us take a look at the β how β. 3. european banking supervision β the β how β the establishment of the single supervisory mechanism will see wide - ranging banking supervisory functions being transferred to the ecb. at least seventeen countries will give up their sovereignty in supervisory matters to the ecb ; the ecb will be directly responsible for the supervision of the most systemically important banks domestically and at european level. nevertheless, national legal systems and national market structures will still be of utmost importance for the welfare and success of these banks. given the multitude of different s gerlach, a schulz, g wolff ( 2010 ), banking and sovereign risk in the euro area. centre for economic policy research, discussion paper, no 7833. bis central bankers β speeches supervisory traditions, legal systems and people involved in supervision, the ssm will only be successful if appropriate governance and transparent cooperation and task - sharing are installed. one of the β hot β topics when swiftly organising a banking supervisory function for the ecb is future cooperation between the ecb and the national supervisors. organising a european banking supervisory mechanism in such a short time firstly means building upon existing structures. secondly, supervision will only be successful if the ecb is able to benefit from cross - border comparisons, taking into account the macroeconomic and microeconomic knowledge and | caroline abel : launch of nebula fintech limited remarks by ms caroline abel, governor of central bank of seychelles, at the launch of nebula fintech limited, beau vallon, 30 january 2024. * * * vice president, mr ahmed afif, president and chief executive officer of the trade and development bank mr. admassu tadesse, ministers, board members, management and staff of nebula fintech limited distinguished guests, ladies and gentlemen, good morning. i am pleased to have been afforded the opportunity to say a few words, on behalf of the central bank, as nebula fintech limited becomes the newest payment service provider to step into the seychelles financial services landscape. as we are all aware, technology is transforming the design and delivery of financial services and products across the globe, and seychelles cannot be left behind. with this, there is an increased need and interest for new players other than traditional banks to enter the market and offer payment solutions. against this backdrop, the central bank has been actively working towards modernising the financial sector over the last few years by introducing new systems and appropriate legislation that would encourage and facilitate the introduction of innovative financial products and services. the launch of airtel seychelles'mobile money transfer service in 2015, licensed by the central bank, marked the introduction of e - money in the local financial system. nebula fintech limited joining the dynamic and evolving financial services landscape almost a decade later, facilitated by the national payment system e - money regulations, enacted in 2022, symbolises further efforts and progress made to put in place the necessary frameworks to encourage more innovation in the local payments sphere. leveraging innovative financial solutions to support the country's digitalisation agenda is one of the strategic priorities outlined in the central bank's new strategic plan with the aim of maintaining financial stability. hence, pushing forward with the country's modernisation and fintech journey will undoubtedly see continuous collaboration between the relevant stakeholders to develop new initiatives that will spur innovations that respond to the needs and specificities of the various segments of the population. this is key to stimulating competition, increasing consumer choice and fostering access to convenient, affordable, reliable, efficient and safe financial products and services. the relevant regulatory and supervisory frameworks will also be developed and adjusted to ensure the mitigation of potential risks that these developments can bring. 1 / 2 bis - central bankers'speeches it is hoped that the e - money services and other payment solutions that will be offered by nebula fintech limited will | 0 |
inflation effects. if inflation is higher due to these shocks, but inflation expectations don β t move and broader prices and wages don β t accelerate, then shocks will have only temporary consequences and we can afford to look through them. if the consequences are that inflation will deviate from the target in a more permanent way, however, then policy should respond. of course, it is difficult to determine if shocks will be permanent. we have forecasts and surveys to help guide our judgement, but these are imperfect tools. furthermore, by the time you have firm proof of second round effects, the policy response is sure to catch out economic agents that have already increased prices, causing economic dislocation. this implies that we need to take into consideration the expected second round price effects of shocks. in late 2015 and early 2016, policy was tightened. we were experiencing large and simultaneous price shocks β a major drought and sustained depreciation. inflation expectations were already close to or above 6 %, and core inflation was over 5 % and climbing. so there was minimal room for error. the inflation forecast showed a protracted breach of the target range. it was therefore likely that without a policy response, inflation would have shifted outside the target range in a more sustained way. the gradual policy adjustments helped prevent this outcome, while recognizing the relatively weak economic environment. we have not had to tighten policy sharply to achieve high real interest rates, as has been necessary in countries such as brazil, russia, ghana and zambia. all this is in the past. the rate hikes from late 2015 and early 2016 are only beginning to affect the economy now. those hikes help explain why inflation is returning to target. any new decisions will shape economic outcomes in about one to two years β time. we are therefore focussed on the outlook for late 2017 and 2018. we see the shocks of 2016 dissipating. food price inflation is expected to slow from the first quarter of next year as weather conditions normalise. the exchange rate has recovered some ground, and although its volatility reminds us how rapidly these gains could unwind, the rand has appreciated roughly 15 % against the us dollar from january β s lows. accordingly, our forecasts show inflation reaching 5. 5 % by the end of 2018. the mpc noted in the last two policy statements that if these forecasts prove durable, the end of the hiking cycle may be close. one of the biggest questions is over inflation expectations, which remain clustered around | the outlook for monetary policy address by lesetja kganyago, governor of the south african reserve bank at the south african summer macro conference 2016 johannesburg 25 november 2016 over the past five years or so, emerging markets got used to bad news. growth has been slowing, and growth forecasts have been marked down repeatedly. for a number of countries β particularly commodity exporters and countries with substantial external financing needs β inflation has also been accelerating. from the vantage point of late 2016, however, it seems possible we are at a turning point. in south africa, for instance, we see inflation returning to target in early 2017 and then staying within the target range throughout the forecast period. growth is expected to recover slowly from 2016 lows, and our growth forecasts have lately been revised up slightly, breaking a multi - year trend of downward revisions. furthermore, the rand may just about end the year stronger than it started, for the first time since 2010. in the late 2000s, and in the immediate aftermath of the global financial crisis, many emerging markets probably got more credit than they deserved for strong economic outcomes. now, on the other side of the cycle, the pessimism may be overdone. indeed, at the moment it is the advanced economies which have enjoyed the strongest recoveries β specifically the united states and the united kingdom β that now seem less robust, given political surprises and abrupt reversals in growth forecasts. by contrast, a number of major emerging markets are doing, if not better, at least less badly. let me set out some tentative reflections on our most recent global shock, the potential for a shift in us macroeconomic policy. let me stress that we are aware of the risk, and considerable time was spent at our mpc meeting this week discussing the issue. the basic idea is for a shift from fiscal consolidation with accommodative monetary policy to fiscal expansion with tighter monetary policy. this new combination will result in investment shifting out of bonds and into equities, with repercussions for both asset prices and currencies, and considerable volatility in the near term. the cost of financing debt has risen, and this will place pressure on overstretched economies, at least until we see whether the shift results in better real economic growth outcomes. but that outcome will remain unclear for some time. stronger us and global growth rates could entail improvements down the line in emerging market exports and commodity prices, and an improvement in south africa β | 1 |
consequence, i fail to see the reason why the financing of states should not mainly be a matter for the capital markets. and i very much welcome the international community β s efforts to tackle this topic : this summer, the g7 finance ministers and central bank governors identified the regulatory treatment of sovereign debt as a major topic to work on. also, the basel committee on banking supervision has been working on sovereign debt for almost a year now. i believe the following points to be crucial and i hope they will be addressed by the committee next year. 6 european systemic risk board ( 2015 ) : esrb report on the treatment of sovereign exposures. march 2015. dombret, andreas ( 2015 ) : regulatory reform in europe β mission accomplished? speech at the iib annual conference, march 2, 2015, washington, d. c. bis central bankers β speeches β’ first, as i argued before, the large exposures regime should also apply to sovereign debts. β’ second, the zero - weighting of sovereign exposures should be replaced by risk adequate weights and capital requirements. the calibration needs to be careful, and an appropriate phasing - in needs to be implemented. β’ third, and i find this equally important, regulation of sovereign exposures must be consistent for all credit institutions. if we succeed in establishing a regulation consisting of these three points, i see four main benefits. first, if sovereign bonds needed risk adequate capital requirements, banks would have to take greater account of differences in the risk profiles of states. second, countries that burden their budget in an unsustainable manner would have to pay risk premiums β this is the so - called disciplinary force of financial markets. third, a large exposure regime applied to sovereign bonds would prevent banks from being overexposed to a single borrower. related to that, the fourth last benefit, and this is of high importance to me as a banking supervisor β a sovereign debt restructuring would not any longer harm the whole financial system of a nation state and beyond. the regulation of sovereign debt is one topic we must centre our attention on in the nearest future. i am cautiously optimistic that we will come to a transatlantic solution in the basel committee. in this context, i cannot say often enough that each regulatory project β be it basel iii or now the regulation of sovereign exposures β very much calls for international cooperation. if we do not coordinate our approaches towards regulation, we will create a fragmented financial system with vast opportunities for regulatory arbit | the leverage ratio, and there are also two new liquidity ratios, capital buffers, loss - absorbing capital and individual capital add - ons under the supervisory review and evaluation process ( srep ). these are worthwhile additions from a supervisory vantage point because they give us a tailormade toolkit to control the various risks which can cause a bank to fail. but for credit institutions, the new system means that their management systems now have to take into account not just one metric, but several of them. so a decision whether or not to grant a loan no longer depends solely on the return and the efficient allocation of equity, but also, for 3 / 4 bis central bankers'speeches instance, on the impact on the balance sheet structure, which is regulated by the net stable funding ratio ( nsfr ). the toughest challenge probably lies in coping with the interplay between the various minimum standards and the need to simultaneously adhere to minimum capital requirements, the leverage ratio, requirements for an institution β s liquidity and balance sheet structure as well as varying point - in - time and institution - specific criteria β on this magnitude, this is uncharted territory. what all this means is that the optimisation problem suddenly becomes much more complicated, raising the question as to whether compliance can be achieved by means of a simple equation. or does a more multifaceted approach need to be adopted? it is precisely this complexity which makes a smart approach to integrated risk management so crucial. there is the question, of course, of the levels which this integrated management approach ought to address. can different metrics be broken down to individual business activities? or does it make more sense to look at the bank as a whole or at portfolio level in order to identify risk drivers and render management measures more transparent? all this is forcing institutions to rethink both their operational and strategic set - ups. one aspect, i believe, is particularly crucial. institutions should not and cannot steer their business solely on the basis of compliance with the regulatory minimum requirements. even if i do have to concede that the rules which supervisors including myself have created naturally curtail the scope of management action. but there is nonetheless still a great deal of entrepreneurial scope which institutions can capitalise on β by running smart business models, by adopting innovative strategies, and by smoothly putting them into operation. business models that operate solely on the basis of satisfying the regulatory minimum requirements cannot be successful over the long run. adhering to the minimum requirements | 0.5 |
higher expectations of lenders β underwriting standards for consumer credit, and recalibrated the leverage ratio. with detailed contingency planning for the financial stability impacts of brexit, uk companies can be confident of continued access to finance in an uncertain world. reforms mean the uk financial system is working well. net lending to private companies is been growing following six years of contraction. corporate bond spreads are well below their long - run averages ( chart 13 ). and credit conditions among smes have been steadily improving. if the opportunities present themselves, uk corporates could readily draw on this finance as their balance sheets are in good health following a decade of de - levering to ratios amongst the lowest in advanced economies. turning now to monetary policy, the bank operates within an established framework, anchored in the inflation target ( chart 14 ). the mpc set out in advance of the referendum how it would apply that framework, emphasising that the effects of the process of leaving the eu on inflation would depend on its impact on demand, supply and the exchange rate. the committee has repeatedly stressed that, as a result, the implications for monetary policy would not be automatic. the mpc has also clearly set out its reaction function consistent with its remit. under the exceptional circumstances brexit entails ( with an inflation overshoot driven entirely by an exchange rate depreciation caused a large fundamental shock ), the committee is required by its remit to balance a period of abovetarget inflation with a period of weaker growth. as the primary objective of monetary policy remains inflation control, any overshoot of inflation above the target can only be temporary in nature and limited in scope. as such, the mpc has been clear that its tolerance for above - target inflation is limited. since the prospect of brexit emerged, financial markets, notably sterling, have marked down the uk β s economic prospects. monetary policy cannot prevent the weaker real income growth likely to accompany the transition to new trading arrangements with the eu. but it can influence how this hit to incomes is distributed between job losses and price rises. and it can support households and businesses as they adjust to such profound change. see the statistical annex to the bank for international settlements 87th annual report, ibid. all speeches are available online at www. bankofengland. co. uk / speeches as spare capacity erodes, the trade - off that the mpc must balance lessens, and, all else equal, its tolerance for | policy panel : investment and growth in advanced economies remarks given by mark carney, governor of the bank of england 2017 ecb forum on central banking, sintra 28 june 2017 all speeches are available online at www. bankofengland. co. uk / speeches the experience of business investment in the uk since the onset of the financial crisis broadly matches that elsewhere in the advanced world β a sharp fall followed by a feeble recovery ( chart 1 ). peak to trough, the level of uk business investment fell by 20 %, and it was six years before it surpassed its pre - crisis level, putting the recent experience at the bottom of the swathe of past uk cycles ( chart 2 ). in my brief remarks today, i will offer some possible explanations for this performance before concluding with comments on the outlooks for uk investment and monetary policy. i. investment since the crisis in part, weak investment reflects a weak economy, with the recovery following the crash being the slowest since the great depression. weakness in demand is not, however, the whole explanation. business investment has underperformed relative to output since the crisis, with the ratio of the two falling in the uk by around 2 percentage points in the immediate aftermath ( chart 3 ), similar to the experience in other advanced economies. falls in investment tend to be more persistent for recessions associated with financial crises ( chart 4 ). this partly reflects restrictions in credit supply constraining investment, as well as productivity, wages and economic performance more generally. but weak uk investment also reflected a necessary adjustment in the capital stock. that overhang β which peaked at close to 10 % in the uk β is being gradually worked off through a combination of a recovery in output and a prolonged period of subdued net investment ( chart 5 ). and in part weak investment could reflect a misallocation of capital in the run - up to the crisis. in this regard, the situation in the uk was a bit different to that in countries such as spain and the us where significant residential and commercial property construction booms subsequently turned to busts. without a housing glut to work off, the weakness of uk investment is all the more striking. another form of misallocation could be the ability of so - called zombie firms to live on in the very low interest rate environment. the bis β s proxy for this has seen the share of the β living dead β more than double since the crisis. in contrast, the bank of england estimates that the | 1 |
each employee, the rules create significant administrative problems and may conflict with state privacy requirements that restrict access to information concerning an employee's salary. although the rules also allow a bank to pay referral fees in the form of " points " in a bonus program, the rules require that any points awarded must not only be nominal, but also must be the lowest amount awarded for any product or service covered by the bonus program. thus, for example, the points awarded for a securities referral could not exceed the amount of points awarded for a safe deposit referral, even if the points awarded for the securities referral were nominal in amount. failure to address all exceptions or adopt cure or leeway periods the interim final rules also fail to address the scope of a majority of the exceptions to the definitions of " broker " and " dealer " that were adopted in the glb act. given the fact that the board believes that many of the sec's interpretations of the scope of the exceptions it has chosen to address do not comport with the unambiguous words of the glb act and the legislative intent of the congress, we are concerned about the manner in which the sec will interpret the other exceptions. the board fears that if the sec does not adopt rules concerning the scope of all of the exceptions, it will aggressively interpret some of the exceptions through enforcement actions and no - action letters, without banks and other members of the public having the opportunity to comment on these interpretations. the interim final rules also fail to provide any cure or leeway periods to banks that are attempting in good faith to comply with the exceptions when they discover that some of their securities transactions do not comply with the exceptions due to inadvertent errors or unforeseen circumstances. given the complexity of the exceptions, it is expected that banks that are attempting to conform their securities activities to the exceptions will identify some securities transactions that do not meet the terms of the exceptions. in some circumstances, banks will not even be able to confirm that their securities transactions will comply with an exception at the time they are conducted. for example, banks will not be able to confirm that they meet the " chiefly compensated " standard in the trust and fiduciary exception until they review all of their compensation earned at the end of the year. for these reasons, the board believes that the sec must provide banks that have adopted policies reasonably designed to comply with the exceptions a reasonable period of time to cure any inadvertent or unforese | economic research, march ; revised november 2023 ), https : / / www. nber. org / system / files / working _ papers / w31010 / w31010. pdf. see ryan a. decker and john haltiwanger ( 2023 ), β surging business formation in the pandemic : causes and consequences? β paper presented at the brookings papers on economic activity conference, held at the brookings institution, washington, september 28 β 29, https : / / www. brookings. edu / wpcontent / uploads / 2023 / 09 / 4 _ decker - haltiwanger _ unembargoed. pdf. on march 25, 2024, this speech was updated to add a new footnote 6 and renumber the remaining footnotes. - 14 adjustments can ensure that inflation will return sustainably to 2 percent while striving to maintain the strong labor market. i have covered a lot of ground with you today, material that you will learn more about if you choose further study of macroeconomics, or economics more generally. i hope you will find, as i have, that this journey feeds your curiosity, sharpens your thinking, and expands your horizons. note : percent change in the personal consumption expenditures ( pce ) price index from 12 months ago. core refers to the price index excluding food and energy. the gray shaded bars indicate periods of business recession as defined by the national bureau of economic research. the nine shaded recession periods extend from april 1960 through february 1961, december 1969 through november 1970, november 1973 through march 1975, january 1980 through july 1980, july 1981 through november 1982, july 1990 through march 1991, march 2001 through november 2001, december 2007 through june 2009, and february 2020 through april 2020. source : bureau of economic analysis ; personal consumption expenditures price index via haver analytics. 2. subcomponents of personal consumption expenditures price indexes note : data extend through january 2024. the gray shaded bar indicates a period of business recession as defined by the national bureau of economic research. the shaded recession period extends from february 2020 through april 2020. source : bureau of economic analysis via haver analytics. note : percent change in various market - rate rent indexes and the housing services category of the personal consumption expenditures ( pce ) price index from 12 months ago. corelogic, realpage, and zillow measure market - rate rents β that is, rents | 0 |
growth. β bis central bankers β speeches in order to further encourage positive efforts of local firms, we appreciate it if you could utilize the measure effectively. the bank expects you to make efforts to meet challenges ahead and will continue to provide utmost support as a central bank. bis central bankers β speeches | among some european politicians, to develop certain critical technologies on european soil. tremendous effort has been put into developing european regulations to manage these and other digitalisation - related risks. so that european citizens and businesses can take full advantage of new technologies, safe in the knowledge that the risks are well managed. 1 / 2 bis - central bankers'speeches large digital service providers, such as cloud providers, are set to become subject to european oversight, for example. and supervision of crypto service providers is being expanded. however, developments are happening rapidly, and the challenge is to be able to reap the benefits of innovation while keeping out the bad stuff. of all innovations, generative artificial intelligence is undoubtedly the most exciting : with the emergence of incredibly capable generative models and dramatic advances in computing power, we might very well be on the verge of a new technological revolution. who knows soon we can all paint like rembrandt. also here, we must make sure to maintain a healthy balance between harnessing the benefits of innovation while mitigating the risks. when it comes to innovation, some regions, like the us, have traditionally focused more on the opportunities side, with a regulatory environment that's conducive to business innovation. we europeans tend to focus on the risks and call for regulation. but falling behind in adopting new innovations is a significant risk too. so i would call for a balanced approach, and warn against constraining ai - driven innovation too much but that doesn't relieve us of the obligation to monitor the risks that come with it. many of the potential risks of ai may seem new, but if you look beneath the surface, they are strikingly similar to traditional financial risks. risks that we are familiar with. we already have frameworks to assess concentration risk, third party dependence and interconnectedness. this is good news. of course, it's not a simple copy - paste exercise. we may see new forms of interconnectedness in the financial system. for example, autonomous trading agents may interact to create new dynamics in financial markets. and technology that can be used to paint like rembrandt also offers possibilities for creative fraud, from phishing to identity theft. so the nature of the risks may not be different, but the crooks are getting better. that means we are entering a new phase of the never - ending race between risk and risk management. but we are entering this race from a relatively good starting point. ai is not | 0 |
we remain resolute in pushing ahead with our initiatives against climate change risks. however, the effects of climate change are rapidly intensifying and are also become increasingly intertwined with environmental degradation. hence, it is the need of the hour for all key stakeholders of our society, including scientific resources and private businesses, to combine their efforts for the national climate action of mauritius to become really meaningful and inspire positive change internationally. as we look ahead, if we aim to achieve sustainable and inclusive recovery, we should not be oblivious to our green credentials. indeed, building a greener, more sustainable and more climate - resilient economies is now an important part of the growth equation. we, at the bank of mauritius, have 3 / 4 bis central bankers'speeches already begun this journey by taking the right step in launching the climate change centre. four task forces have been set up, and i invite all stakeholders to actively interact with them, and with the climate change centre, to further the climate change agenda and contribute to the elaboration of strategies. the involvement of stakeholders is key especially as regards capacity building, exchange of information and data sharing. there is a dedicated webpage which the bank has created. you can see it on the screen right now. the webpage contains all the relevant information and contact details. ladies and gentlemen, the launch of the bank of mauritius climate change centre is indeed a major step for the country. it is a legacy for future generations. it is even more timely, as it comes to us as a prelude to cop - 26, which is due next month. with these words, i thank you all for your attention and look forward to having a meaningful discussion with you during the break - out session. 4 / 4 bis central bankers'speeches | the unprecedented foreign aid of about $ 13 billion ( which is roughly $ 120 billion in today's dollars ) was crucial in ensuring the effective recovery of the continent. this foreign aid helped considerably in rebuilding destroyed infrastructure. reconstruction investments proved to be a driving force for short - term recovery in europe, boosting economic activity and creating labor supply ( vonyo 2008 ). nonetheless, some economists ( for example barry eichengreen from the university of california, berkeley ) argue that the fundamental secret of europe's success was not the financial support in itself, but institutional readiness to use these resources, and to allocate them effectively ( eichengreen 2010 ). there are several examples of financial support from foreign allies actually harming a recovery instead of boosting it due to a lack of such institutional readiness. 1 the real secret of europe's post - war success can be seen in the fundamental and structural changes. resources flowed quickly and efficiently from public uses to private ones, the labor market and wages were liberalized, and price controls were lifted. measures that helped during the war but that could potentially have harmed the economy in future were removed ( vonyo 2019 ). croatia gives us another lesson in why prudent macroeconomic management and forward - looking policies are crucial for a successful recovery. with its economy almost completely paralyzed after the start of its war for independence in early 1990s, croatia experienced the problems that are common to all war economies : economic contraction, high inflation, depreciation, a lack of foreign financing, together with thousands of deaths and destroyed social infrastructure. increased military expenditures and debt financing via monetary emission placed a huge burden on the economy. that forced the government to cut non - military expenditures, while the central bank started its policy of monetary stabilization. following convincing military successes, economic reforms helped croatia restore private consumption, stabilize its markets, and win the war economically ( schonfelder 2005 ). 5. macroeconomic policies in wartime this is why it is very important to properly shape macroeconomic policies in wartime. the nbu's first steps after the russian invasion were directed at preventing panic and disruptive behavior, ensuring the uninterrupted functioning of the banking system and payments, keeping the economy running under an unprecedented shock, and reining in inflation expectations. for this purpose, in the first day of the war, the nbu fixed the official exchange rate of hryvnia to u. s. dollar through the use of fx interventions, and | 0 |
) monetary policy report 3 / 22 Β». pindyck, r. s. ( 1991 ) Β« irreversibility, uncertainty, and investment Β». journal of economic literature, sims, c. a. ( 2003 ). Β« implications of rational inattention Β». journal of monetary economics, 50 ( 3 ). finansdepartementet ( 2018 ) Β« ny forskrift for pengepolitikken Β». meld. nr. 8 ( 2017 - 18 ). woodford, m. ( 2003 ). Β« interest and prices Β». princeton university press. footnotes [ 1 ] fischer and modigliani ( 1978 ) show that in periods of high and variable inflation the level of investment falls and investments shift towards projects with a shorter horizon. huizanga shows theoretically that this channel is due to greater uncertainty about the real value of new investments. [ 2 ] see woodford ( 2003 ). [ 3 ] high and variable inflation also has unintended effects on wealth distribution. the real value of existing debt is reduced at the same time as the value of savings declines. [ 4 ] in 2018, the government adopted a new monetary policy mandate. the main change was a reduction in the inflation target from 2. 5 percent to 2 percent. the government referred to the other changes as specifications and modernisations β to align the regulation with prevailing practice β ( official norwegian report no. 8 ( 2017 - 2018 ) ). the previous regulation from 2001 stated : β in general, the direct effects on consumer prices resulting from changes in interest rates, taxes, excise duties and extraordinary temporary disturbances shall not be taken into account. β the formulation β extraordinary temporary disturbances β must be interpreted in its historical context. in inflation targeting β s early phase, exception clauses were normally included in the mandates to clarify that monetary policy should not contribute to unnecessary fluctuations in the real economy. after the change in 2018, the mandate reads : β [ i ] nflation targeting shall be forward - looking and flexible β. the specification β forward - looking β means that in its conduct of monetary policy norges bank shall disregard temporary disturbances that do not affect inflation further out and that an exception clause for extraordinary temporary disturbances was, in the government β s view, no longer necessary. [ 5 ] the question of whether monetary policy should disregard imported inflation is related to the choice of price index for inflation targeting. this topic is also discussed in the economics literature ( see literature review in section | timely progress be made in all three areas. the board β s preference is that this progress be made by industry participants, without the need for regulation. in the event that this did not occur, the board would need to consider what steps it might take to promote the public interest. thank you for listening and i am happy to answer questions. 1 auspaynet stands for australian payments network. prior to mid 2017 it was the australian payments clearing association ( apca ). 2 in our most recent consumer payments survey, around 12 per cent of respondents used cash for all of their in - person transactions during the survey week, and cash was used more intensively by older australians and those in rural and regional areas. see doyle m - a, c fisher, e tellez and a yadav ( 2017 ), β how australians pay : 10 / 11 bis central bankers'speeches evidence from the 2016 consumer payments survey β, rba research discussion paper no 2017 β 04. 3 so - called initial coin offerings β crowdfunding - type ventures, typically blockchain - enabled, that allow participants to contribute digital currencies or other funds in return for digital tokens that may provide certain future rights or benefits β appear to be contributing to some of this speculative mania. 4 the concept of electronic cash is actually not new. areport from the bank for international settlements from over 20 years ago noted that e - money innovations β have the potential to challenge the predominant role of cash for making small - value payments and could make retail transactions easier and cheaper for consumers and merchants β ( bank for international settlements ( 1996 ), β implications for central banks of the development of electronic money β, october ). a tokenised eaud could also be seen as an updated version of the 1990s technologies that yielded prototypes such as digicash and mondex. these were ultimately not commercially successful, but they demonstrated that versions of electronic cash were feasible. 5 of course, it might also be possible to pay / charge interest on electronic banknotes as well. this would raise some of the same issues discussed here. 6 these were noted in the bank β s payments system board updates following the august 2017 and november 2017 meetings. 11 / 11 bis central bankers'speeches | 0 |
y v reddy : the roadmap for fixed income and derivatives markets inaugural address by dr y v reddy, governor of the reserve bank of india, at the fixed income and money market & derivatives association of indian and primary dealers association of india, mumbai, 11 march 2005. * * * friends, i am thankful to the fixed income money market and derivatives association of india ( fimmda ) and primary dealers association of india ( pdai ), the organisers, for inviting me to deliver the keynote address today. i have had the pleasure of being closely associated with fimmda and pdai since their inception. reserve bank of india has been taking active interest in the development of fixed income markets and the role of fimmda is becoming increasingly important in this regard. it has played a pivotal role in the design of documentation of repos, commercial paper and certificate of deposits, finalising the daily / annual valuation methodology for fixed income securities. rbi consistently seeks its views on various g - sec market related issues. it is also involved in standardisation of market practices for fixed income securities / money market instruments / fixed income derivatives. it has been emphasising the importance of best practices in the otc interest rate derivatives market and has circulated a guidance note for best practices to its members in this regard. we, in the rbi, understand the need for continued collaborative relationship with fimmda and pdai. it is in this spirit that i look forward to the deliberations today in the sixth annual conference being organised jointly by fimmda and pdai. i am somewhat reluctant to elaborate on the subject of the day, namely, the road map of fixed income and derivatives market, in my keynote address for several reasons. my views in this regard were articulated in a seminar and then published in a bis paper titled β issues and challenges in the development of the debt market in india β. the subject was subsequently updated, elaborated and improved upon comprehensively by my friend and former colleague dr. rakesh mohan, when he addressed this gathering last year in dubai. dr. mohan has already indicated the β road ahead β, which i fully endorse. moreover, one should wait for free and frank discussion on the subject in this conference, in which distinguished persons with several perspectives are participating. let me assure you that we in rbi do look forward to the deliberations of this conference and the suggestions made will be, to the extent possible, examined by the various technical groups in the rbi that | quality of education below the college level. to be sure, substantial reforms in math and science education have been under way for some time, and i am encouraged that policymakers, educators and the business community recognize the significant contribution that a stronger elementary and secondary education system will make in boosting the potential productivity of new generations of workers. i hope that we will see that the efforts to date have paid off in raising the achievement of us students when the results of the 1998 - 99 international comparisons for eighth graders are published. whatever the outcome, the pressures to advance our education system will continue to be intense. as the conceptual share of the value added in our economic processes expands further, the ability to think abstractly will be increasingly important across a broad range of professions. critical awareness and the abilities to hypothesize, to interpret and to communicate are essential elements of successful innovation in a conceptual - based economy. as with many skills, such learning is most effective when it is begun at an early age. and most educators believe that exposure to a wide range of subjects - including literature, music, art and languages - plays a considerable role in fostering the development of these skills. as you know, school districts are also being challenged to evaluate how new information technologies can be best employed in their curricula. unfortunately, this goal has too often been narrowly interpreted as teaching students how to type on the computer or permitting students to research projects over the internet. incorporating new technologies into the educational process is indeed likely to be an important element in improving our schools, but it must involve more than simply wiring the classroom. human capital - in the form of our teachers - and technology are complements in producing education output just as they are in other business activities. to achieve the most effective outcome from new technologies, we must provide teachers with the necessary training to use them effectively and to provide forums for teachers and education researchers to share ideas and approaches on how best to integrate technology into the curriculum. and we must create partnerships among the states, the school systems, labor and industry to develop appropriate standards and guidelines for the teaching of information technology in the classroom. a crucial concern today - and i know that the national governors β association is working hard to address this issue - is that the supply of qualified teachers will be insufficient to meet the demand. indeed, a substantial number of teachers are scheduled to retire over the next decade, and how to replace them and meet the additional demand from rising enrollments is certain to be a | 0 |
the credit cycle, the pricing of risk and systemic risk. i also believe that such policy instruments must be able to operate at the cross - border level since, in today β s financial markets, systemic risk propagates very quickly across national boundaries. the european systemic risk board ( esrb ) is well placed to take the primary responsibility for controlling systemic risk in europe. it will have the expertise, access to relevant information and close cooperation with central banks and financial supervisors. what it may still need is more effective instruments to deal with systemic risk. the first couple of years will be a critical in establishing the esrb β s precise institutional role and operational modalities. the esrb will no doubt face challenges, and the risk of institutional turf wars is real β particularly with strong national supervisors. but we need to be ambitious and provide the esrb with sufficient powers to do its job. again, i hope we can work together with estonia also on this issue. finland and the euro finally, a few remarks on our own experiences from being a member of the economic and monetary union from the very beginning. as in other countries, there was intensive debate in finland on the pros and cons of the emu membership before the final decisions were taken in may 1998. not surprisingly, opinions at that time were widely divided. much attention was devoted to the possibility of β asymmetric shocks β. the finnish economy was judged to be structurally different from those of the so called core european countries, such as germany, france and the benelux countries. the sceptics believed the economic stability of finland was likely to suffer if economic development were too β asymmetric β vis - a - vis the core countries. there were good historical reasons for this early scepticism. the structure of the finnish economy had been one - sided. the share of forest - based industries in industrial production and exports, although declining, was much larger than in other european countries. only one - third of finland β s exports went to the prospective euro area countries, implying that the country was likely to be more vulnerable than others to shocks coming from outside the euro area. there was also a particular concern about exchange rate movements. especially, there were fears that the movements in the swedish krona, the pound sterling and the us dollar vis - a - vis the euro would undermine the competitiveness of the finnish economy. after 12 years in emu it should be possible to draw at least preliminary conclusions about whether these | ##economics discussion paper 11, available at : http : / / www. centreformacroeconomics. ac. uk / pdf / cfmdp2014 β 11 - paper. pdf. hansen, s, mcmahon, m and velasco rivera, c ( 2014 ), β preferences or private assessments on a monetary policy committee? β, journal of monetary economics vol. 67, pages 16 β 32. hayek, f ( 1979 ), β a tiger by the tail : the keynesian legacy of inflation β, cato inst, isbn 978 β 0932790064. hughes, p and white, e ( 2010 ), β the space shuttle challenger disaster : a classic example of groupthink β, ethics & critical thinking journal, vol. 2010, issue 3, pp. 63. iaryczower, m, lewis, g and shum, m ( 2013 ) β to elect or to appoint? bias, information, and responsiveness of bureaucrats and politicians β. journal of public economics 97, 230 β 244. imf ( 2013 ), β key aspects of macroprudential policy β, available at : http : / / www. imf. org / external / np / pp / eng / 2013 / 061013b. pdf. janis, i ( 1972 ), β victims of groupthink : a psychological study of foreign policy decisions and fiascos β, boston : houghton mifflin company. bis central bankers β speeches janis, i ( 1982 ), β groupthink : a psychological study of policy decisions and fiascos β, boston : houghton mifflin company. jensen, m and meckling, w ( 1976 ), β theory of the firm : managerial behavior, agency costs and ownership structure β, journal of financial economics, volume 3, issue 4, pp. 305 β 360. kahneman, d ( 2011 ), isbn 978 β 0374275631. β thinking fast and slow β, farrar, straus & giroux, kahneman, d and tversky, a ( 1979 ), β prospect theory : an analysis of decisions under risk β, econometrica 47, chart 10 shows the fan chart for inflation from the bank β s most recent inflation report, pp 313 β 327. kaplan, a ( 1964 ), β the conduct of inquiry : methodology for behavioral science β, transaction publishers. king, m ( 2010 ) | 0 |
share of national income accruing to workers a second adverse development in recent years has been the apparent reduction in the share of overall national income that accrues to workers. here i will be brief and suggestive because the scholarship is far from settled. but the basic trends in the data are troubling. labor β s share of total income generated in the nonfarm business sector has been on a downtrend since the 1980s and has fallen sharply since the turn of the millennium. it stood at 56 percent at the end of 2013, the lowest level since the bls began collecting data on the measure in 1948. to be sure, various conceptual and measurement challenges make it difficult to compute labor β s share of income with any degree of precision. however, taken at face value, these data have significant implications for the distribution of income in our society, given how skewed the holdings of capital are. economists have focused less attention on the factors underlying the apparent decline in labor β s share of income than they have on the rise in income inequality in general, but among the candidates are technological change, which has allowed for the substitution of capital for labor in the handling of routine tasks, an increase in firm bargaining power, and perhaps a decline in competition in product markets. the increase in inequality of the trends i have identified, the one that has received the largest amount of press attention recently is the rise in income inequality. while income inequality has been increasing since the 1970s, over the past two decades the process has been characterized by what some have called polarization, with those at the top of the distribution accumulating a significantly larger share of income, those at the bottom of the distribution experiencing modest relative gains, and those in the middle of the income distribution falling further behind in relative terms. gauging by one fairly comprehensive measure of income used by the congressional budget office, the share of income garnered by those in the top 1 percent of the distribution more than doubled between 1979 and 2007 to about 17 percent, while the share accruing to those in the 1st through 80th percentiles fell 9 percentage points. 9 and while it is true that those at the upper end of the income distribution were disproportionately affected during the financial crisis, with the result that inequality actually fell a bit in the wake of the recession, high earners also appear to be benefiting disproportionately from the recovery. thus, the crisis does not seem really to | areas has been the target of much of the budget restraint in recent years. even in the area of physical infrastructure, we have fallen behind past efforts. after a surge associated with fiscal stimulus during the recent recession, public spending on infrastructure has tumbled, resulting in the slowest growth ( 1 percent ) in the state and local capital stock since wwii. i certainly am not intending here to join the broader debate on fiscal policy, either short or longer term. but i do note that fiscal policymakers could promote the longer - term prospects of the nation by increased spending in areas that are likely to yield increases in living standards. the amount of increased investment spending that could reasonably be absorbed would be quite modest in comparison with the very large amounts associated with major fiscal issues such as health - care expenses. and even a strong investment agenda would not be a complete response to the economic challenges i have discussed. but, like monetary policy, it could play a useful role. conclusion the longer - term challenges to the american economy that i have identified this evening are real. but i certainly do not regard a continuation of these trends as inevitable. on the contrary, the american economy is still possessed of great advantages and potential that, while always and necessarily evolving, have served us well over the years. 20 my principal aims this evening have been, first, to echo those who have been drawing attention to these challenges in recent years and, second, to encourage more discussion and debate of the specific policies that can best help us meet these challenges. as should be apparent in my remarks on monetary policy and an investment agenda, i believe that there are policies already developed and available to us that can contribute to this effort. my hope is that such policies will be pursued and that others, perhaps yet to be developed, will follow. for more details on the u. s. infrastructure, see american society of civil engineers ( 2013 ), 2013 report card for america β s infrastructure ( pdf ) ( reston, va. : asce ) ; and her majesty β s treasury ( 2006 ), the eddington transport study β the case for action : sir rod eddington β s advice to government ( pdf ) ( london : her majesty β s stationery office ) these advantages β such as the country β s substantial natural resources, a stable but adaptive legal framework for economic activity, a dynamic labor market, and a fostering of entrepreneurship β have contributed to productivity growth that is estimated to have averaged about 2 - 1 / 4 percent over the | 1 |
funds are increasing their allocation to asia, specifically in asian real estate. singapore can play an important role as a gateway for global investors to access asian opportunities via our capital markets. as a leading home for global fund managers, total assets under management in singapore exceed s $ 720 billion with over 50 % of these funds invested into asia pacific. the singapore exchange is an established listing venue for regional property companies based in singapore as well as foreign property developers. alongside singapore β s vibrant reit market, we offer a strong value proposition for real estate players to tap on singapore β s capital market to finance the rapid growth in the asian real estate sector. singapore β s real estate investment trust ( reit ) market singapore was the first country in asia to introduce a regulatory framework to facilitate the offering of real estate investment trusts ( reits ). this framework allows property companies to securitise their completed real estate assets in the capital markets, realise capital gains and re - invest into developing new properties. by offering investors direct exposure to assets with stable cash - flows, reits tap a new pool of investors who are seeking higher - yielding securities, including pension funds and insurance companies. since the first reit listing in 2002, the singapore reit market has become the largest reit market in asia outside of japan. currently, singapore has 16 listed reits, making up a total market capitalization of over s $ 26 billion. singapore reits offer investors access to a diversity of real estate assets including retail malls, office buildings, industrial properties and serviced apartments. in 2006, we also saw the first dedicated hotel reit as well as asia β s first healthcare reit. several key factors have contributed to the growth of the singapore reit market. our established and robust, yet pro - business regulatory framework and competitive tax regime have drawn the attention of global investors, attracting the securitization of not just domestic, but increasingly offshore assets. the number of cross - border reits listed on the singapore exchange has increased, further consolidating singapore β s status as a regional reits hub. these reits offer global investors exposure to properties throughout asia pacific via the singapore market, including properties in china, hong kong, australia, indonesia, vietnam, malaysia and japan. to sharpen singapore β s edge as an asian reits hub, it is crucial for us to maintain a conducive environment both for issuers and for investors. to this end, mas regularly reviews its regulatory regime to | the establishing of a cooperation with other european central banks. the implementation of these and similar projects by the ecb and the eu in recent years, unequivocally confirms their continued determination, commitment and dedication to assist the central banks of the western balkan countries on their way to joining the escb, and later the euro system. on the other hand, the realization of such projects enables strengthening of the cooperation between the central banks of the region and the central banks of the eu, which is inevitable in the process of integrating the entire region in the eu. let me finally thank the ecb and the eu for enabling the nbrm to participate in this project. i wish success for all the institutions involved in the project in anticipation of even greater cooperation and i thank our hosts for organizing this event. bis central bankers β speeches | 0 |
appropriately managed. i am sure that the mpc will play a useful role in helping the industry meet this challenge, by providing training for new practitioners and continuing its work on product development. the recent study on the feasibility and desirability of introducing overnight index swaps in hong kong is one good example of this work. 7. i should perhaps stop here to avoid encroaching further on the valuable time set aside for our guest speaker today. donald mathieson of the imf is no stranger to hong kong. many of you will be familiar with the authoritative reports and analysis of financial markets that he and his colleagues produce. we are fortunate in having been able to grab him for a couple of hours today while he is briefly passing through hong kong. it is my pleasure to welcome him and to join with you all in the launch of this seminar, which will, i hope, be the first of many organised by the mpc over the coming months and years. 8. finally, let me record my gratitude and congratulations to all the committee members of the mpc for the excellent work they have put into the reconstruction of the committee, and my thanks to everyone here for supporting this event today. | prospects remain good. in fund management, global mandates are now increasingly being managed out of singapore. the industry is also expanding in breadth and depth. beyond marketing and portfolio management, fund management firms are also locating regional functions such as trading, risk management and research in singapore. more hedge funds are also setting up here, adding to the industry β s diversity. private banking should continue its sterling performance, as asia - pacific is the fastest growing region for private banking in the world. according to merrill lynch, asia - pacific high net - worth individual wealth jumped 11 % last year, supported by high savings rates and robust gdp growth in key regional economies such as china, south korea and australia. this figure could be an underestimate, given the low penetration of high net worth individuals in asia by private banks. bankers managing private wealth will be attracted to locations which enjoy political and social stability and possess wellrespected regulatory, legal and accounting systems. singapore has all these attributes and is well placed to become a premier centre for private banking business in asia. reputable and well regulated regimes like singapore can provide a location of choice for investors and financial intermediaries alike, especially with the renewed emphasis on corporate governance and integrity after the excesses of the dotcom era. we can exploit this advantage to become a regional risk mitigation centre, for instance in the areas of clearing & settling otc and exchange - traded products. the current outsourcing and off - shoring trend would also present opportunities for us. one estimate is that two million jobs would be created in lower - cost locations like india and china over the next 5 years. while we cannot compete with india and china on cost, we can compete for processing activities which are mission critical and of higher value - added. in the past year, major financial institutions have relocated higher - end middle and back - office operations here. these institutions take the view that singapore β s developed infrastructure, reliability, and skilled manpower make us more suitable for these time - sensitive and mission - critical functions. in the banking sector, we have gone from 7 local banks to 3 over the last 5 years. singapore banks have grown larger and stronger, and they are continuing to build up their regional footprints. as a regulator, mas is happy that they have made progress strengthening management teams and building up risk management systems. last year, one rating agency even ranked singapore banks as being among the strongest not only in asia but in the whole world. 5 however, by international | 0 |
smartphone, which can benefit consumers both in cities and in remote areas. moreover, the ever - expanding universe of new financial services means there are a number of choices and solutions available to fulfill different needs, especially those currently underserved. ladies and gentlemen, as financial technology can help unlock massive potential of our people, it is now up to us, the leaders and policymakers, to play an important role of β the catalysts, β to pave way for greater adoption of financial technology. on this point, i believe there are at least four key areas that catalysts like us must act together : 3 / 5 first, we must encourage common standards of technologies or platforms to avoid market fragmentation. having common standards would improve competition and innovation, as they allow easy access for all players, especially small innovative players. a good example of the common standards is the standardized qr code for electronic payment here in thailand, where banks and non - banks can apply the common standard to their applications. the result of which was the remarkable speed of adoption of qr code for payment ; in less than one year since its launch, qr code payment is accepted by over 2 million merchants all over thailand. more importantly, financial institutions within the region have already taken advantage of the interoperability of the qr code by applying the common standard in their applications for cross - border transactions with their partners. we are certain there will be many similar partnerships in the future. second, we must establish basic and open digital financial infrastructure so that further innovation can emerge to serve a wider range of consumers. open infrastructure enables service providers to build value - added services on top at low cost. for instance, e - payment services were created based on our promptpay infrastructure, such as bill payment and request - to - pay features. these, in turn, have helped facilitate e - payments for merchants and consumers and improved the overall e - commerce business landscape. even charitable organizations are able to take advantage of the open - platform with e - donation. meanwhile, the adoption of electronic payment through a common infrastructure can further create the data essential for information - based lending or for banks to improve on their risk models. third, we must facilitate greater convergence of rules and regulations within our region to make sure that existing regulations do not impede advancement of financial connectivity. efforts are being made in this area. asean central banks are working on initiatives under the asean banking integration framework to make banking regulations more cohesive, aiming at achieving greater consistency | participants with the tools to hedge their bond position, as well as to manage liquidity more effectively. the private repo market will also provide an important link between the money market and the bond market, meaning that liquidity in the secondary bond market can be substantially improved once a well - functioning private repo market is in place. second, the bank of thailand will coordinate with the thailand securities depository to set up a " bond lending and collateral management unit " to activate the bond lending business. this again will help facilitate the private repo market and enhance overall market liquidity. the third is that the bank of thailand will begin integrating the depository system as well as the clearing and settlement system for all debt instruments with the tsd under a multi - year migration plan. this is aimed at enhancing market efficiency and reducing transaction costs in the debt market. the integrated system will also provide an important foundation for future regional linkages of the clearing and settlement system. fourth is the development of hedging instruments. with the current upward trend in domestic interest rates, hedging instruments particularly interest rate swaps will provide the bond market with additional instruments that will be useful in an environment of market volatilities. the interest rate swaps market can help diversify and reallocate risk among various groups of bondholders. the fifth focus is our plan to improve the functioning of primary dealers as market makers. this is to say that their obligations and privileges will be reviewed so that they will be in a strong position to perform their functions as market makers. and the sixth is the ongoing project to strengthen the regional bond market through the asian bond funds project. for the past years, development of the local and regional bond markets has been given an unprecedented emphasis by various regional fora. the most notable is the launching of abf1 project by eleven emeap central banks. that efforts is now being followed by the abf2 project. under abf2, the eleven regional central banks will invest a fraction of their reserves in the local currency denominated bonds issued by sovereign and quasi - sovereign entities in eight emeap markets, namely, china, hong kong, indonesia, korea, malaysia, philippines, singapore and thailand. the passively managed style of abf2 will help attract the interests of both domestic and international investors in the asian bond markets, as it would provide an attractive alternative for investors who seek innovative, low - cost and efficient bond products in the asian financial markets. furthermore | 0.5 |
terms of the headline cpi. [ the snb ] defines price stability in the same manner as the european central bank, [ as ] a cpi inflation rate of less than 2 per cent per year. β 12 β’ an inflation forecast as the main communication tool in order to explain to the public the rationale behind monetary policy decisions. β’ from an operational point of view, a range for the three - month libor rate as the way to actually implement policy decisions in practice. i find from time to time statements suggesting that, with its new monetary policy strategy, the snb has essentially renounced its monetarist past. i believe such a position to be incorrect, and in what follows i will make two main points. first, i will stress the significant elements of continuity with the pre - 2000 monetary policy strategy. second, i will argue that, if one looks carefully at the details, the monetary policy strategy of the swiss national bank is, in many respects, quite close to that of the european central bank. let me elaborate on these points in turn. as stressed by snb staff members 13, the snb β [ β¦ ] retained important ingredients of monetary targeting in its new monetary policy concept. at various occasions, the snb stressed that it continues to monitor two sets of indicators providing leading information on future price developments [ β¦ ]. the first set of indicators is useful for forecasting short - run price developments, i. e. over a horizon of one and a half to two years. it includes various indicators of the cyclical state of the economy, notably the output gap and supply and demand conditions in the labour market, as well as the real exchange rate of the swiss franc. the second set for an analysis of the revolutionary experience with the β assignats β, see sargent and velde ( 1995, section iv, β rise and fall of the assignat β ). see kohn ( 2005 ). see reynard ( 2006 ). see jordan, peyrignet and rich ( 2000 ). see jordan, peyrignet and rich ( 2000 ). of indicators comprises the monetary aggregates, which provide useful leading information on long - run price developments. β the elements of continuity with the pre - 2000 strategy emerge quite clearly, in particular in the form of the important role assigned to a deep analysis of monetary aggregates. the justification for closely monitoring monetary aggregates, their components, and their counterparts, is the same as that given by the european | to meeting the ambitious target deadlines set out in the fintech charter. this allows us to respond to the first criticism levelled against us : the lack of visibility over the application procedure and the amount of time they take. we shall continue our efforts to ensure we gradually get closer to our target deadlines, and not just in average terms ( we have already met it this year ), but for all individual cases. ii. in france and europe, we need to keep pace with the digital transformations under way our attention is focused in particular on another aspect of the digital evolution : crypto - assets. the β crypto winter β caused by the crashes of terra - luna followed by celsius network, by no means signifies that cryptos are over ; it β s more of a weeding - out process. the share of stablecoins that are, in principle, backed by mechanisms to stabilise their value has risen fivefold in 20 months. ensuring a lasting future for stablecoins β which is a legitimate goal β means remaining vigilant with regard to the associated risks. because, in reality, the name covers a wide range of different forms : - β crypto - backed β stablecoins, where the word β stablecoin β is a misnomer as the coins are backed by other crypto - assets ; or algorithmic stablecoins, a category to which luna belonged ; - stablecoins backed by a basket of assets held in reserve, for example commodities or monetary assets, such as money market funds and commercial paper ; in reality these are similar to investment tools and should be treated as such ; - last, stablecoins backed by bank deposits denominated in a single currency, which are designed to be used as global payment instruments. page 4 of 5 regardless of what form they take, stablecoins are, at this stage and in the majority of cases, denominated in dollars and have been developed outside europe. their widescale use within europe would therefore pose a dual challenge, for our strategic autonomy and for our monetary stability ; indeed this is one of the reasons why the eurosystem has launched an investigation phase on a retail digital euro. we are also looking very seriously into the possibility of a wholesale central bank digital currency : it would play a key role as the safest settlement asset, and would thus continue to anchor the monetary and financial system, even as the latter becomes partially tokenised. this is why the ban | 0 |
economic dynamics. although they are likely to play out over a period that is longer than the bank β s typical policy horizon, these trends will have profound implications for central banks. they include changing demography, increasing longevity, inequality, climate change, the increasing importance of emerging economies and the development of digital currencies. by affecting a range of phenomena β from the evolution of real interest rates to risks to the financial sector to the future of money and banking itself β all of these trends have the potential to re - shape our policy challenges. we need research to set us on the front foot to face them. bis central bankers β speeches competitions before concluding, to catalyse interest in the one bank research agenda, i am delighted to announce that today the bank of england is launching two competitions. the first is on data visualisation. to coincide with the release of the new bank data sets, we want to see what novel insights they can yield. the visualisation could be a static description of an interesting pattern or relationship in the data or the creation of an interactive app. entrants are free to focus on whatever they like, as long as it employs some of the newly available data in some way. the second competition is for the best research paper β the β one bank research β competition. we are particularly keen to engage early career researchers across the academic world. for our inaugural competition, the paper should be on some aspect of β the interaction between microprudential, macroprudential, and / or monetary policy β. the winners of each competition will be decided by separate judging panels of bank staff and external academics. the prize for both competitions will be Β£5, 000. further details on how to apply are now live on our website. conclusion economies are complex, dynamic and constantly evolving systems, underpinned by social interactions and behavioural change ; shaped by fundamental forces like technology and globalisation ; and supported β or at times disrupted β by finance. policymakers need research to help understand these phenomena and to craft our responses to them. and research can make some of its most effective contributions by addressing the priorities of policymakers. by focussing on a clear set of research priorities, by opening up our datasets, and by creating tighter links between policymakers and researchers, both within the bank and across the broader research community, we can all help advance the bank β s mission β promoting the good of the people of the united kingdom. thank you. bis central bankers β speeches | peter praet : european financial integration in times of crisis speech by mr peter praet, member of the executive board of the european central bank, at the annual general meeting and conference 2012 of the international capital market association ( icma ), milan, 25 may 2012. * * * i would like to thank ignazio angeloni and steoffphanie stolz for their contribution to the preparation of this speech. it is my pleasure to be here today at the annual icma general meeting. in the last 40 years, ever since european capital markets acquired a global importance, the international capital markets association has played an important role in promoting contact, information exchanges and initiatives among issuers, managers, dealers and investors active in international financial markets. a central goal of icma is to foster the openness and competitiveness of financial markets, globally and in europe. this is an objective that the ecb wholeheartedly shares. in times of crisis, more than ever, we need effective action, so that we can achieve this goal. the topic of my talk today is financial integration in europe : its meaning, its importance, recent developments, and β not least β why the ecb cares about it, and what the ecb does to preserve it. well - developed capital markets are important β as we all know β because they channel funds from savers to investors, promote the efficient use of resources and create more opportunities for individuals and firms, ultimately leading to higher growth. but this is not yet sufficient in a multi - country setting. a united europe, especially one that has decided to have a single currency, needs united financial markets as well. financial integration β that is the cohesion of financial markets and their ability to operate as a single entity β enhances these benefits and gives them a cross - country dimension. not surprisingly, a single market for capital and financial services has been a central goal of the european union for decades. many policy initiatives have paved the way to greater financial integration, the most ground - breaking of which being, without a doubt, the introduction of the euro. this progress towards financial integration was interrupted and reversed by the global financial crisis and, more recently and dramatically, by the european sovereign debt crisis. i will first talk about why integrated financial markets are important, for europe in general and for the conduct of the single monetary policy of the ecb in particular. i will then explain the role the ecb plays in this area. next i will focus | 0 |
and stable inflation, with noticeable effects on economic welfare. i believe that those achievements are largely permanent. i further consider that, as stressed by alan blinder in the introduction to his insightful paper, the debate over some of the core principles for sound monetary policy practice seems to be resolved for now. for example, there is currently substantial agreement, both among academics and monetary authorities, on the need to provide central banks with sufficient formal and effective institutional independence, the superiority of interest - rate operational targets over quantitative instruments, and the pursuit of low inflation as the main objective for monetary policy. both trends - towards deeper and more integrated financial markets, at one end, and towards monetary policies clearly determined to deliver price stability, at the other - are important factors behind the sound macroeconomic performance recorded practically worldwide over the last decade. notwithstanding this positive view on the recent past, central banks must deploy their best efforts improving their monetary policy and regulatory and supervisory arrangements - to preserve and consolidate the attainments i mentioned, since various significant risks and challenges lie ahead. as stressed by frederic mishkin, the final success of the processes of financial liberalisation and globalisation in developing economies hinges crucially on the ability of both policymakers and the private sector to properly respond to a rapidly changing environment. no doubt, the spirit of this proposition applies likewise to developed countries. an increasingly liberalised and globalised financial system necessitates a reconsideration of some key inputs in our current monetary strategies. the greater relevance of markets and their evolving nature requires an ongoing assessment of the different monetary policy transmission mechanisms. this area, while critical to successful monetary policy decision - making, still remains shrouded in considerable uncertainty. undoubtedly, the emergence of new financial assets and financial intermediaries poses fresh questions here. furthermore, the magnitude of the financial funds flowing across different countries at the present time and the uncertainty surrounding the sustainability and the possible effects of an eventual correction of the so - called global imbalances means that central banks worldwide must take a much broader and complex set of indicators into consideration when formulating their policies. moreover, we are probably at a juncture that can be best described as one of β knightian uncertainty β, in that some of the risks we are facing, and the hypothetical consequences following their realisation, are essentially immeasurable. consequently, good monetary policymaking requires not only a continuous reassessment of market conditions and expectations, but also forecasts and projections flexible enough to encompass | us federal reserve has been pursuing a strongly expansionary monetary policy. in this connection it has resorted to a wide array of both conventional and less conventional measures. the federal reserve cut its official interest rates successively until placing them at their natural lower bound, i. e. close to zero, and it embarked on massive securities purchase programmes that substantially expanded its balance sheet. it also pursued a forward guidance strategy, aimed at conveying its intention to maintain monetary expansion for a prolonged period. bis central bankers β speeches in may last year, given the evident improvement in the economic situation, the federal reserve communicated its intention to begin tapering, or gradually reducing the intensity of its expansionary impulses through cutting its monthly volumes of securities purchases. following a period of some confusion around the month of may 2013 ( which impacted the markets to some extent ), this strategy has progressively taken root. the challenge the federal reserve faces in these circumstances is no longer that of a change in monetary tack, but how to trim its expansionary monetary stance, in line with the improvement in the economy β s cyclical position, without endangering economic recovery, which is still not perceived as sufficiently firm. this is a complex challenge that fuels market uncertainty and affects the margin for manoeuvre of other central banks. the monetary policy of the bank of england the situation of the bank of england is somewhat different. like the federal reserve, it also exhausted its scope for conventional measures and likewise resorted intensely to securities purchase programmes and to forward guidance. furthermore, the bank of england pioneered the implementation of measures aimed directly at boosting lending to specific sectors through its funding for lending programme. in short, this programme enabled the institutions most active in specific credit market segments to obtain financing at the central bank at a lower cost. the pick - up in economic activity in the united kingdom has been sharper than in the united states and, according to most analysts, it appears to be underpinned by sounder foundations. inflation is holding on a path consistent with the target of 2 % and it should also be borne in mind that the prices of certain assets, housing in particular, have been moving on a rising trend and have reignited debate on the role the central bank and its monetary policy should play in preventing potential bubbles. here, although the bank of england has not yet modified its accommodative monetary policy stance either, the prevailing expectations are already discounting a more or less immediate change. the latest messages from the bank | 0.5 |
6 %. in addition to inflation, however, a central bank has to pay attention to financial stability. this is a secondary objective, but it may become central if the economy enters a low - inflation credit and asset price boom. financial stability sometimes means regulators, including the central bank, have to go against popular sentiment. the role of regulators is not to boost the sensex but to ensure that the underlying fundamentals of the economy and its financial system are sound enough for sustainable growth. any positive consequences to the sensex are welcome but are only a collateral benefit, not the objective. finally, india will, for the foreseeable future, run a current account deficit, which means we will need net foreign financing. the best form of financing is long term equity, that is, foreign direct investment ( fdi ), which has the additional benefit of bringing in new technologies and methods. while we should not be railroaded into compromising india β s interest to attract fdi β for example, the requirements to patent a medicine in india are perfectly reasonable, no matter what the international drug companies say β we should ensure policies are transparent and redress quick. if we make it easier for young indian companies to do business, we will also make it easier for foreign companies to invest, for after all both are outsiders to the system. this means a transparent and quick legal process to deal with contractual disputes, and a proper system of bankruptcy to deal with distress. both are issues the government has taken on. let me turn finally to the international framework. 4 ) work towards a more open and fair global system as a country that does not belong to any power block, and that does not export vital natural resources but is dependent on substantial commodity imports, india needs an open, competitive and vibrant system of international trade and finance. our energy security, for example, lies not in owning oil assets in remote fragile countries but in ensuring the global oil market works well and is not disrupted. we need strong independent multilateral institutions that can play the role of impartial arbiter in facilitating international economic transactions. unfortunately, the international monetary system is still dominated by the frameworks put in place in the past by industrial countries, and its governance is still dominated by their citizens. to be fair, it is changing, albeit slowly. but there is a more immediate reason for faster change. with slow growth, as well as the need to finance large debt loads, the interest of industrial countries in an open global system | gordon, r. ( 2012 ), β is us economic growth over? faltering innovation confronts six headwinds β, nber working paper 18315. cited in footnote 1. luigi buttiglione, philip lane, lucrezia reichlin and vincent reinhart, deleveraging? what deleveraging?, 2014, geneva reports on the world economy. bis central bankers β speeches immigration and trade, which the middle class is led to believe are responsible for its plight, is very real. the mediocre economic outlook might change. strong us growth could pull the world out its funk, while low oil prices could also give a substantial boost to aggregate demand. the industrial world may well muddle through for a while before it figures how to harness and monetize ( as well as measure ) new technologies. new well - paying middle class jobs that we cannot imagine today may emerge once again, as they always have. but overall, there is a palpable sense of gloom in the industrial world, a belief that growth is unlikely to be strong enough to satisfy for the foreseeable future. if secular stagnation persists, industrial countries will have to figure out how to restructure their promises, whether debt, social security, or low taxes, and how to distribute the burden. after filing for bankruptcy, the city of detroit in the united states has already had to make tough choices, between servicing its pensioners or its debt, keeping its museums open or its police force intact. more such difficult decisions will have to be made. what about emerging markets? slow industrial country growth has made more difficult a traditional development path for emerging markets β export - led growth. indeed, in the last decade, even as china developed on the back of its exports to industrial countries, other emerging markets flourished as they exported to china. emerging markets now have to rely once again on domestic demand, always a difficult task because of the temptation to overstimulate. that task has become more difficult because of the abundance of liquidity sloshing around the world as a result of ultra - accommodative monetary policies in industrial countries. any signs of growth can attract foreign capital, and if not properly managed, these flows can precipitate a credit and asset price boom and exchange rate overvaluation. when industrial country monetary policies are eventually tightened, some of the capital is likely to depart emerging market shores. emerging markets have to take extreme care to ensure | 1 |
alan bollard : financial stability challenges for small open economies remarks by dr alan bollard, governor of the reserve bank of new zealand, at the international symposium on β globalisation, inflation and monetary policy β, organised by the bank of france, paris, 7 march 2008. * * * two asset prices that are of particular interest for policymakers in most small open economies are house prices and the exchange rate. over the past decade, the β global savings glut β, declining interest rates and a search for yield drove up exchange rates for many small open economies such as australia and new zealand and also helped fuel a sharp increase in house prices in many countries. recent developments in global markets stand to have further impacts on housing markets and exchanges rates and create some new challenges on both the monetary policy and financial stability fronts. the experience of the past decade is now doubtlessly familiar. the decline in interest rates was reinforced by the β great moderation β in the apparent variability of most economies. investors became more willing to accept risk, partly in order to maintain returns as risk free interest rates dropped, and partly because the risks seemed smaller. from a monetary policy perspective, the past decade highlighted some of the challenges that we face in trying to run an independent monetary policy in a connected world. in targeting inflation, as many small open economies do, we set a domestic policy interest rate, which has some bearing on domestic monetary conditions. but domestic monetary conditions also hinge on what is happening to interest rates across the rest of the world. sometimes global interest rate developments are β in sync β with domestic monetary policy and support it. at other times, they are β out of sync β and can work against it, making monetary policy spongier, and perhaps less effective at the margin than would otherwise be the case. at times over the past decade, monetary policy in new zealand and some other smaller open economies had to contend with global interest rates that were considerably lower than domestic economic conditions would warrant. financial institutions in these countries were able to access cheaper funding than they could obtain domestically, exchange rates rose to uncomfortable levels on the back of the carry trade and some asset markets β such as housing β were able to surge on the back of lower effective interest rates than domestic policy settings might suggest. a strong element of the capital flow into new zealand β and this is a financial innovation, though now a relatively old one β has been the issuing of fixed income nz dollar securities to international retail investors by very high | quality international names such as the world bank. the willingness of these investors to take nz dollar risk at elevated currency levels has helped keep the currency relatively high and short term interest rates a bit lower than would otherwise have been the case. this has been far from an ideal mix of monetary conditions at a time when most of the inflation pressures have been concentrated in interest rate sensitive sectors like the housing market. the possibility of collateral damage on the country β s tradable sector has to be taken seriously. in new zealand, we have done significant work, documented in a number of studies on our website, on whether there might be additional regulatory measures or other policies that may have helped adjust the balance of monetary policy pressure to better match the underlying inflation pressure. it will not surprise anyone in this room to know we have not found a β silver bullet β, although analysis continues. besides retail investors, we have also seen the presence of institutions such as hedge funds engaged in the β carry β of funds borrowed in low yielding markets to invest in markets like new zealand. an unresolved debate is whether these hedge funds actually provide additional market liquidity for smaller economies or whether they effectively soak it up β particularly in troubled times. the role that these hedge funds can play at the stage where an over - valued exchange rate begins to adjust back to a more normal level is also unclear. whether hedge funds assist the adjustment process or whether they make it more abrupt and costly, is debatable. many countries have seen pronounced strength in property markets over the past decade. strong residential property markets have often gone hand in hand with strong consumer spending. new zealand has been a leading example. house prices have risen substantially as a ratio to income over the past five years. as longer term interest rates have risen recently in new zealand, and housing turnover has slowed, the elevated level of house prices has looked increasingly unsustainable. one interpretation of recent housing cycles is that a β glut of capital β lowered interest rates and putting upward pressure on house prices, creating a persistent tail wind for some economies. as houses change hands and are more heavily borrowed against, equity is withdrawn by the seller, who may often choose to spend the money. this has helped to keep demand very robust in new zealand for a number of years and seems to have supported consumer spending as well. with recent developments in global finance markets, we now seem to be moving into a new era and policymakers are facing some new challenges on both the monetary | 1 |
amando m tetangco, jr : financial stability through collaboration and understanding speech by mr amando m tetangco, jr, governor of the central bank of the philippines ( bangko sentral ng pilipinas ), at the insurance congress of developing countries ( icdc ) 2009, makati city, 25 march 2009. * * * atty. eduardo malinis, insurance commissioner and chairman of the organizing committee of the insurance congress of developing countries 2009, other distinguished speakers, distinguished delegates to this insurance congress, ladies and gentlemen, good morning. to our visiting delegates, welcome to manila! welcome to the philippines! i hope you β ve had or you will have the chance to partake of the many options to help further β stimulate β our domestic economy. i am sure all of us in this room have heard about the different financial stability and fiscal stimulus packages, being pursued by economies across the globe, to help stem the impact of the current global financial and economic crisis. i am certain the organizers of icdc manila 2009 have also put together their β own β version of a post - meeting stimulus package to complement the many interesting conference breakout sessions. for my part, i β d like to encourage all of you to participate as actively in that endeavor as you would in the different sessions in the next three days. let me begin my remarks this morning by thanking commissioner ed malinis and the congress organizers for inviting me to speak before you today. at first blush, the keynote message for a gathering of insurers to be delivered by the governor of a central bank that supervises only the banking sector, may be a bit peculiar. but if one seriously looks at the situation, it is indeed quite reflective of the theme of the congress, which is financial stability through collaboration and understanding. ladies and gentlemen, at no other time than now has the need for promoting financial stability been more imperative. as we are all keenly aware, the current financial turmoil has gone beyond the borders of the epicenter of the financial crisis β the us and the major economies β and has reached the shores of emerging markets. more importantly, the global financial turmoil has transcended the bounds of the financial realm and has crossed over to the real sector of most economies, including several represented here today. you will be pleased to know that my remarks this morning will be brief. i only have two messages that i wish to bring across, in light of our desire for financial stability. first is that, information | , what is incumbent among financial supervisors in order to facilitate and strengthen financial stability at this time, is to create and maintain an information sharing structure that will allow all to react swiftly and preemptively to changes in the operating environment. this will certainly help prevent the occurrence of a crisis of the magnitude and breadth we β re seeing today. ii. conduct of business supervision let me now move on to my second message which, i believe is an issue that is of particular interest to developing countries. one characteristic of developing countries is the relatively weaker financial sophistication of their consumers, which makes the customers quite vulnerable to financial scams, including relatively simple ones. i believe therefore that financial supervision in developing countries should not only focus on setting prudential standards, but also on strengthening conduct of business oversight of financial institutions ( i. e., supervision of the business practices, including dealings with customers ). the increased globalization of the financial industry presents a further complication as globalization improves the availability of and access to complex financial products across developing countries, without necessarily discriminating among levels of sophistication of the target markets. ensuring that financial institutions conduct their business in a proper and transparent manner should therefore be a primary concern for financial supervisors in developing countries. failure to ensure proper business conduct by financial institutions would have adverse implications on market confidence, which, in turn, could threaten the viability of the financial markets as source of funds that could support the productive capacity of the economy. this point could not be more apparent in the developments in the global financial markets we are witnessing right now. the fallout from the global financial crisis left many investors in financial products with substantial losses, and exposed some investment schemes as economically unsound if not totally fraudulent. the immediate impact was the weakening of confidence in financial markets, which played a key role in stoking the crisis. restoring market confidence through conduct of business supervision is therefore essential in order to restore the smooth functioning of financial markets. in the philippines, financial supervisors, independently and in collaboration with the financial sector forum, have already undertaken initiatives and issued rules to improve the conduct of business by financial institutions, especially those relating to complex products and services. the bsp, for instance, came out with circulars requiring banks and trust entities to take a more pro - active responsibility in marketing their derivative and trust products by conducting client suitability tests. under these rules, the bank / trustee shall perform a client profiling process under the general principles on client | 1 |
aimed to voice a single opinion. with the new board, each of the six members is individually accountable for the monetary policy decisions. so ought not each one be allowed to make their voice heard? how could their individual contributions be properly assessed without knowing their positions on monetary policy issues? but how were all the speeches and other statements to be coordinated efficiently in practice to ensure that they conveyed a single, clear picture? with the procedure we have chosen, you know that each of us normally speaks independently of the others. the minutes of the monetary policy meetings are published after a time and record our discussions in outline, besides containing information about how each of us voted. we have deliberately refrained from labelling what we say at the meetings with our names. we believe that would not work very well ; the discussion would presumably be more premeditated than one would wish. but even with the system we have chosen, there is presumably a risk of jeopardising the spontaneous exchange and testing of ideas. our joint communication about monetary policy issues takes the form of the inflation report and the press notices and communiques that are issued after the meetings. we also have an arrangement whereby one of us is entitled to speak for a majority of the executive board. an announcement to that effect is made and to date it has happened only when the governor meets the riksdag β s standing committee on finance. at the press conferences on monetary policy, moreover, the governor and myself, as the member responsible for the preparation of material, speak on behalf of the board. our procedure clearly entails risks. the media may focus most of the time on differences between our views, which could harm the riksbank β s image and possibly also create internal problems. while that has generally not been the case, our system is vulnerable. it would not be difficult for a board member to act in such a way that β conflicts at the riksbank β hit the headlines. we have tried to avoid this, for instance by not arguing with each other in public. we have also refrained from evaluating colleagues β arguments and proposals. before choosing an approach to communication and transparency, we again tried to learn from other central banks. the main issue in the public debate seems to have been the minutes of our meetings. i believe the publication of minutes has advantages. the minutes provide a clear opening for the evaluation of what individual board members contribute to the monetary policy discussion, besides facilitating the democratic control of and insight into our work. | the private sector remains the main driver of monetary dynamics. on an annual basis, loans to the private sector as a whole have continued to increase at double - digit rates over recent months, with borrowing both by households and by nonfinancial corporations rising rapidly. ongoing strong lending to households continues to be explained, in particular, by borrowing for house purchases. the dynamic growth of money and credit, in an environment of already ample liquidity, points to increased upside risks to price stability at medium to longer horizons. monetary developments therefore require careful monitoring, particularly in the light of strong dynamics in housing markets. to sum up, annual inflation rates are expected to remain elevated, at above 2 % on average, in 2006 and 2007, with risks to this outlook on the upside. given strong monetary and credit growth in a context of ample liquidity, a cross - check of the outcome of the economic analysis with that of the monetary analysis confirms that upside risks to price stability prevail over the medium term. a further adjustment of interest rates was therefore warranted. by acting today in a timely fashion, the governing council is helping to anchor medium and long - term inflation expectations at levels consistent with price stability, thereby making an ongoing contribution to sustainable economic growth and job creation. looking ahead, given that our monetary policy continues to be accommodative, a progressive withdrawal of monetary accommodation will be warranted if our assumptions and baseline scenario are confirmed. the governing council will continue to monitor very closely all developments so as to ensure that risks to price stability do not materialise. concerning fiscal policies, given the outlook for economic growth, it is of crucial importance that euro area governments avoid pro - cyclical policies and step up the pace of fiscal consolidation. as budgetary targets for the current year are not particularly ambitious, a rigorous implementation of plans on the expenditure side is especially warranted, and any additional windfall revenues are best used for deficit reduction. beyond the implementation of such prudent policies in the remainder of this year, the medium - term focus of fiscal policies should be on correcting the underlying sources of imbalances in public finances. euro area governments, many of which are now finalising their budget plans for 2007, should take full advantage of the economic environment to bring forward the structural adjustment necessary for the durable correction of excessive deficits, so as to reach their mediumterm budgetary objectives at an early stage and thereby prepare public finances for the acute demographic challenges they must cope with. | 0 |
x p guma : low domestic inflation in an environment of high oil prices, vigorous household spending and credit demand and a widening current account deficit ; and the outlook for interest rates in south africa luncheon address by dr x p guma, deputy governor of the south african reserve bank, at investec, pretoria, 4 july 2006. * * * inflation in the world economy has declined significantly in recent years and has remained relatively subdued over the past few years despite a significant rise in commodity prices and strong economic growth. chart 1, based on world bank data illustrates the trend in world inflation, clearly showing the peak that occurred at a rate in excess of 35 percent per annum in the early 1990s and the rapid deceleration to rates around 5 per cent per annum thereafter. south africa β s inflation performance began to improve during the 1990s, as the next chart indicates ; and subsequent to the adoption of the inflation targeting framework, inflation as measured by cpix entered and has remained within the target range since september 2003. oil prices have risen sharply since 2003 ( as the next chart indicates ), on account of various determinants. during this year, the spot price of brent crude oil has increased dramatically from approximately us $ 59. 9 per barrel in february to levels around us $ 70. 5 per barrel towards the end of april and an average of us $ 68. 15 per barrel in june. continued brisk expansion in final consumption expenditure by households has been underpinned by a steady increase in household disposable income, continued buoyancy in the real estate and securities markets and what some describe as an accommodative interest rate environment. overall household debt as a percentage of annualised disposable income increased to a record level of 68 percent in the first quarter of 2006. robust growth in gross domestic expenditure and a concomitant strong increase in the value of merchandise imports resulted in a sizeable deficit on the trade account of the balance of payments in the first quarter of 2006. given the larger shortfall on the services and income account with the rest of the world and the somewhat subdued performance of south africa β s exports β notwithstanding the buoyancy of international commodity prices, the current account of the balance of payments registered a deficit equivalent to 6. 4 percent in the first quarter of 2006. interestingly, as others have observed, despite the sell - off in emerging markets since may, nonresidents have remained net buyers of south african financial assets and there have | and challenging environment, g - 20 countries have managed to make significant progress towards meeting their 2008 commitments. governor mark carney, in his capacity as the chair of the financial stability board ( fsb ) noted in an open letter to the g - 20 dated 2 september 2013, that major progress has been made in building stronger financial institutions and more robust markets through substantially strengthened international standards. however, work on this front is far from complete. governor carney stated that the g - 20 β s objective of strong, sustainable and balanced growth requires an open, integrated and efficient global financial system. clearly, one aspect of such a financial system is efficient and stable derivative markets that work for market participants in both the advanced economies and in emerging market and developing economies. this workshop is therefore of direct relevance to the global financial reform agenda. bis central bankers β speeches our challenge is to make sure that the reforms that are proposed at the global level for derivatives markets do not have adverse unintended consequences for emerging markets, and can be implemented in ways that ensure we remain active and attractive participants in global financial markets. a β one - size - fits - all β set of regulations without consideration of timing and scope may not be appropriate and reflective of where some economies are in terms of their financial market development. in order to meet these challenges, it is important that we understand the implications of the currently proposed otc derivative reforms and can act, collectively, in the appropriate global, regional and domestic forums to mitigate any adverse consequences and maximize their benefits for markets and our domestic and international stakeholders. the growing presence of emerging market and developing economies in the global regulatory reform process provides an opportunity to shape the outcomes of the process. 3. expanded role and responsibilities of emerging markets and developing economies the international financial standard - setting bodies were historically dominated by the advanced economies. today, emerging market and developing countries collectively account for about half of the global economy, it therefore is no longer feasible that they be excluded from important decisions that are made, which affect the management of the global economy and regulatory reform. as a result, following the crisis that started in 2007 the leaders of the g - 20 agreed to expand the membership of the international standard - setting bodies and to strengthen the mandate and capabilities of the financial stability forum, which was subsequently re - established as the fsb. this has helped these bodies to become more representative and will strengthen their role in developing and encouraging their members to implement policies in the interest of a stable global financial system. | 0.5 |
not necessarily move to equilibrium. government intervention is necessary to achieve stability. macroeconomic policy alone was not sufficient to prevent the crisis, especially in advanced economies. regulation should be one element alongside macroeconomic policy instruments : before the crisis systemic risk was not trivial, it was latent, and it turned out to have been extremely costly to have neglected this variable. price stability is not a sufficient condition to guarantee financial stability ; the relationship between monetary and macroprudential policy should be taken into account. what is required is : proper risk management, awareness of procyclicality and of how risk is distributed, removing the notion of banks as β too big to fail β, surveillance and individual and systemic risk assessment, and awareness of credit growth. 2. recent reforms and macroprudential regulation i will only briefly summarize stylized facts, since throughout the conference we will dig deeper into these issues. the establishment of the financial stability board within the g20 framework was an excellent initiative, as was taking into account macroprudential risks and the establishment of anticyclical capital buffers and a capital conservation buffer, among others. some additional work was also undertaken by the obama administration, in particular updating the legal framework of the federal reserve and exit rules for big banks ; enhancing consumer and depositor protection ; strengthening deposit insurance ; regulating derivatives markets ; requiring a higher level of capital for banks ; and improving control over credit rating agencies ( which ahead of the crisis did not work properly and could not send early warnings to the markets ). there was, and still is, a debate about taxing banking activity, for instance in the u. s. and europe. germany is assessing how to handle the social cost of future financial crises and possible government intervention. we must decide who will face the burden of future crises. hence the current debate on taxing banking activity β although it is important to keep in mind a global tax, since a mere national tax may lead to disequilibrium. the level of tax for each country may be dependent on risk and the size of the financial system. we must be very diligent in this, since imposing taxes does not in itself eliminate the possibility of future crises, and coordination among countries may be required. regarding the reforms to the capital adequacy framework, known as basel iii, one lesson drawn from the crisis was that financial institutions β capital was not enough to protect them from losses. currently, banks have to keep a tier 1 | ##es en la supervision macroprudencial β. cemla - lxxxix meeting of central bank governors of latin america and spain. 13 β 14 may 2010. buenos aires. argentina. as can be noted, the bolivian financial system has sound capital, adequate asset quality and profitability ratios, as well as good ratios of deposits and loans in local currency relative to foreign currency β which is something i would like to highlight. the bolivian case is still the one of a highly dollarized economy. financial dollarization, i. e., deposits and loans in foreign currency, used to be around 90 % of total deposits and loans. as a result of close coordination among the central bank, mefp and asfi, the ratios of loans and deposits in domestic currency over total loans and deposits are, for the first time in several decades, a little higher than 50 % for loans and close to 50 % for deposits. banks β foreign currency liabilities are less than 3 % of total liabilities due to low involvement in international financial markets, as explained before. in bolivia we view financial regulation as important. the prudential regulation measures taken by the central bank of bolivia have improved in recent years and have been closely coordinated internally ( monetary and exchange rate policies ) and with the mefp and asfi. the challenge ahead is to give this coordination a more formal framework. what are the decisions we should make to arrive at coordinated results and decisions? on the one hand, our experience is based upon a sound macroeconomic policy : current account and fiscal surplus, price and foreign exchange stability. on the other, microprudential analysis is performed with emphasis on individual entities, while we also perform macroprudential analysis, for example, our financial stability report, which includes an analysis of stress tests. the following chart uses an approach presented by the governor of the central bank of argentina at the conference β jornadas financieras y bancarias 2010 β. it is based upon the following variables : current account, financial regulation, exchange rate flexibility, monetary policy, fiscal policy and net foreign asset accumulation. as can be seen, before the crisis, emphasis was on monetary policy and exchange rate flexibility. the exchange rate was endogenous and little progress was made in capital account and financial regulation ; net foreign asset accumulation and fiscal policy were not that important before the crisis. bolivia, before the crisis, had a broader scope on these issues. exchange rate stability and net foreign asset | 1 |
β t know how the pandemic will proceed and how that will affect the u. s. economy, but i think we are currently on a good path, and our policy is in a good place. thank you again for inviting me to speak to you today, and i would be happy to respond to your questions. 1 see michelle w. bowman ( 2021 ), β the economic outlook and prospects for small business, β speech delivered at the economic club of oklahoma, oklahoma city, oklahoma ( via webcast ), march 22. 3 / 3 bis central bankers'speeches | loan modification for the borrower. to ensure that modification requests are handled appropriately, we have leveraged the information from our consumer complaint investigation process. as a result of complaints received from consumers and members of the congress on behalf of their constituents, in october 2009 the federal reserve began a review of the loan modification practices of loan servicers for which we have supervisory responsibility. these reviews include on - site examinations that began in the second quarter of this year and are still underway. the federal reserve has emphasized the importance of using loan modifications as a means to avoid unnecessary foreclosures and continues to encourage effective loan modifications. prudent modifications that are consistent with safe and sound lending practices are generally in the long - term best interest of both financial institutions and borrowers. we have sponsored numerous modification fairs and events to bring lenders and borrowers face - to - face to explore alternatives to foreclosure. in addition to promoting loan modifications, the federal reserve has actively supported efforts to help communities that have been hard hit by vacancies and foreclosures. federal reserve staff members in our research, community development, and supervision and regulation divisions are collaborating to encourage foreclosure prevention at the local level and promote neighborhood stabilization initiatives. further, federal reserve staff members are conducting empirical research on mortgage - and foreclosure - related topics, and they are reaching out to industry and consumer experts as well. a key initiative developed under the leadership of the federal reserve bank of chicago has been the mortgage outreach and research effort ( more ). more involves all 12 federal reserve banks and the board of governors in a collaboration that pools resources and combines expertise to inform and engage policymakers, community organizations, financial institutions, and the public at large. in september 2010, more sponsored a discussion among experts and policymakers on effective strategies for stabilizing neighborhoods weakened by real estate owned by financial institutions and vacant properties. this meeting also included a publication developed by the board and the boston and cleveland federal reserve banks that featured analysis and promising practices from leading practitioners and applied researchers. 1 another important resource published this year by more summarizes key actions that the federal reserve has taken to address the foreclosure crisis. 2 in addition to encouraging loan modifications by other holders of mortgage loans, the federal reserve has worked with servicers of mortgages it acquired in actions taken to stabilize the financial system. on january 30, 2009, the board of governors adopted a policy requiring the pursuit of mortgage modifications prior to | 0.5 |
β national bureau of economic research working paper 12659 ( cambridge, mass. : nber, 2006 ). ( β many financial decisions that individuals face are complicated and daunting for those who are not financial experts.. by collapsing a multidimensional set of options into a binary choice between the status quo and the preselected alternative, this intervention increases participation rates by 10 to 20 percentage points among affected employees. β ) ; sheena s. iyengar, wei jiang, and gur huberman, β how much choice is too much? : contributions to 401 ( k ) retirement plans ( pdf ), β pension research council working paper ( philadelphia : university of pennsylvania, the wharton school, prc, 2003 ). ( β using data from nearly 800, 000 employees, β¦ results confirm that participation in 401 ( k ) plans is higher in plans offering a handful of funds, as compared to plans offering ten or more options. β ) 20 see, e. g., daniel navarro - martinez, et al., β minimum required payment and supplemental information disclosure effects on consumer debt repayment decisions, " journal of marketing research, vol. 48 ( november 2011 ), journals. ama. org / doi / pdf / 10. 1509 / jmkr. 48. spl. s60? code = amma - site. ( β they find that while presenting minimum required payment information has a negative impact on repayment decisions, increasing the minimum required level has a positive effect on repayment for most consumers. β ) see, e. g., bridgette c. madrian, β matching contributions and savings outcomes : abehavioral economics perspective ( pdf ), β national 8 / 11 bis central bankers'speeches bureau of economic research working paper 18220 ( cambridge, mass. : nber, july 2012 ). ( β indeed, automatic enrollment is an extreme form of simplification ; individuals who want to save need not do anything. psychologists have long recognized that choice complexity can affect decision - making outcomes. one result is procrastination β individuals put off decision making as choices become more complicated. β ) ( internal citations omitted. ) 21 see, e. g., dean s. karlan, et al, β getting to the top of mind : how reminders increase savings, β national bureau of economic research working paper 16205, ( cambridge, mass. : nber, july 2010 ). see, e. g | . 0 17. 8 31. 5 30. 2 16. 9 40. 1 23. 3 33. 1 35. 6 20. 4 22. 9 14. 9 36. 4 15. 8 41. 4 28. 1 22. 7 29. 4 22. 1 20. 7 17. 2 22. 6 brazil china india indonesia korea mexico philippines south africa thailand 2. 6 7. 9 4. 3 2. 4 1. 5 3. 8 3. 9 2. 6 3. 4 9. 9 4. 0 4. 1 6. 9 5. 7 6. 0 8. 2 10. 7 6. 9 5. 1 4. 3 4. 0 4. 7 5. 7 7. 6 4. 3 4. 2 4. 5 icor 2. 1 4. 8 6. 6 2. 3 2. 5 4. 1 4. 0 6. 2 4. 2 5. 5 3. 8 3. 6 4. 6 3. 6 8. 8 10. 7 8. 0 4. 1 source : world development indicators, world bank. the evidence thus clearly demonstrates that india has achieved its growth in recent years with judicious use of capital accumulation while innovating to achieve significant productivity growth. a conducive macroeconomic policy framework, accompanied by greater efficiency in financial intermediation, which transmits appropriate signals with regard to the cost of capital, has contributed to this pattern of growth. policy changes have also contributed to the rapid growth in trade and capital flows, which have enabled the diffusion of newer technologies and management systems necessary for continuing innovation and productivity growth. this provides comfort that the improvements in productivity, can be sustained in the medium term. role of financial sector reforms in promoting innovation and growth the key issue for innovation and growth in financial sector development is how well the financial system is able to finance new ideas, new products and new entrepreneurs. in a repressed financial system, sans adequate risk management systems and limited depth of financial markets, banks are typically happy to fund incumbents, and exhibit little interest in funding new businesses and new ideas. as financial systems develop, larger corporates can go to the market directly and disintermediation takes place. so, banks have fewer incumbents to finance and so it can be expected that they would be pushed increasingly into financing more and more new projects, new entrepreneurs and new ideas. has this happened in india? financial sector reforms have covered almost all aspects of banking and | 0 |
a 7 per cent share of global economic activity as recently as 2000 ( measured at market prices ) to an estimated share of close to 18 per cent as of 2013. measured in terms of purchasing power parity, the latest number would be even more impressive. the process has had some occasional set - backs, of course, and is not without precedent β i am thinking here of the late 19th and early 20th centuries and the emergence of the united kingdom and the united states. but such growth is nevertheless extraordinary. emerging asia has accounted for more than 40 per cent of the world β s growth over the past 10 years, and hundreds of millions of people have been lifted out of extreme poverty. like most episodes of successful development in the post - war period, the asian miracle has been driven by export - led growth. in many cases this was supported by a fixed exchange rate regime, and an extensive system of currency and capital controls designed to achieve and preserve international competitiveness. of course, there has been considerable variation across countries with regard to their economic circumstances, institutional arrangements and development strategies. the simple picture painted above does not apply to all. nor are asian countries the only ones in the global economy to enjoy sustained external surpluses. more importantly, for every trade surplus, there must be an equal and offsetting deficit, with many advanced countries eager in the past to play this role. bis central bankers β speeches such imbalances are not unusual, but the extent to which capital was β flowing uphill β during the pre - crisis period was. this was clearly unsustainable. it is one thing for relatively small countries to play this game, but when they grow too large, they soon run out of space. foreign reserve accumulation among the emes since 2000 has totalled more than us $ 6 trillion ( chart 3 ). chart 3 the asian miracle has generated large surpluses and large reserve accumulations the crisis as a catalyst for change when the crisis hit, export markets for the emerging asian economies suddenly imploded. fortunately, many of them had the fiscal and monetary policy space to cushion the blow. however, the crisis merely brought forward a process of global rebalancing that was inevitable. advanced economies had exhausted their credit lines, and emes were running out of foreign customers. advanced economies were going to have to boost domestic savings to get out of hock, and emes were going to have to rely on their own consumers for future growth. the coordinated and ambitious economic recovery | should have been more alert to the possibility that the nature of global spillovers can change over time. a better understanding of these dynamics and how policy actions can ripple around the world should enable more effective global responses to future shocks. labour market recoveries and balance sheets next, i β d like to discuss how the labour market has recovered from the pandemic. i β ll also talk about the role that balance sheets have played in making that recovery stronger than recoveries following previous downturns. the left - hand panel of chart 1 shows how unusual the recovery phase of the pandemic has been relative to historical experience. despite an unprecedented initial drop, canadian employment took only about 20 months to return to its prerecession peak. this is about 6 months faster than we experienced coming out of the gfc, and at least 18 months ahead of the tepid recoveries that followed recessions in the 1980s and 1990s. as shown in the right - hand panel, the difference in the recoveries following covid - 19 and the gfc was even more pronounced in the united states. research and history teach us a lot about the forces that made many previous recoveries so slow. one lesson is that recessions that take a significant toll on the financial health of businesses, financial institutions or households are often followed by weak recoveries. 4 4 see r. c. koo, the holy grail of macroeconomics : lessons from japan β s great recession ( singapore : john wiley & sons ( asia ) pte. ltd., 2009 ) ; a. mian and a. sufi, β what explains the - 5chart 1 : relative to past downturns, employment in canada and the united states recovered quickly from the covid - 19 recession index : last pre - recession peak level of employment = 100, seasonally adjusted, monthly data a. employment in canada index b. employment in the united states index 8 12 16 20 24 28 32 36 months since last pre - recession peak in employment 8 12 16 20 24 28 32 36 months since last pre - recession peak in employment covid - 19 recession 1981 β 82 recession covid - 19 recession 1981 β 82 recession 1990 β 91 recession 2001 recession 1990 β 92 recession 2008 β 09 recession 2007 β 09 recession sources : statistics canada, us bureau of labor statistics and bank of canada calculations last observation : august 2022 a good example is the united states during the gfc, when a collapse in house prices left many ind | 0.5 |
andres lipstok : opportunities of the estonian economy in global competition opening address by mr andres lipstok, governor of the bank of estonia ( eesti pank ), at the conference " opportunities of the estonian economy in global competition ", tallinn, 23 may 2007. * * * excellencies, ladies and gentlemen! introduction it is a great honour to welcome you here in tallinn. fifteen years ago estonia regained its currency, the estonian kroon. as we know, money has three key functions β it serves as a unit of account, store of value, and medium of exchange. the rise and fall of an economy depends on how well these three functions are fulfilled. in smaller countries, such as estonia, the meaning of money goes beyond that. stable and credible currency becomes a national symbol of success. that is why the introduction of the estonian kroon is the most important event for our people from the early nineties. the new constitution, the declaration of independence, free elections β all these political events were perhaps more significant. but our own currency was and still is very special for most people. our historical background might partly explain the β euro β scepticism of estonians. the unfortunate truth is that joining the euro area is not very popular right now among estonians. people understand the importance of it but hesitations still persist, price rise fears being the most common. uncertainty is part of the cause as well : the exact date of the euro adoption is not known and there is no time to look deeper into the matter against the background of everyday life. nevertheless, estonians are one of the most pro - eu nations in the whole union. more than 70 per cent of us hold positive or very positive views on the eu. however, the origins of euro scepticism and eu optimism are the same. the european union and eu membership represent common european values, economic prosperity and security for our citizens. our own currency stands for the same values : credibility, prosperity and economic security. the estonian kroon represents these values for a very specific reason. namely, our currency has been pegged to the euro for already 15 years. i cannot resist joking that from the monetary policy perspective we are one of the oldest members of the euro area. a whole generation of estonians has grown up without having to ask what the interest rate of eesti pank is. instead, they know that the value of the kroon will not change and interest rate changes come from | deeper insight into the economy. this is the second most important factor that we took into account. economic growth in the first half of the year has been lower than expected. we predicted that business activity might slow down somewhat at the beginning of the year on the back of the following factors : the vat hike, a likely slowdown in growth of the global economy and demand for russian goods and services, and the implementation period of the major national projects scheduled for the second half of the year. some of these factors had a stronger effect than expected. in particular, budget expenditure dynamics. we will be able to take a deeper insight into the economic growth slowdown after detailed gdp statistics are released. however, the 2018 data released in april and preliminary q1 2019 estimates allow us to update our gdp forecast for this year. in particular, the revision is associated with lower export growth rates and a tempered outlook for growth in the global 1 / 3 bis central bankers'speeches economy and external demand. we have left the forecast for consumer and investment demand unchanged in view of the expected rise in public expenses in the second half of the year. as a result, we have updated the 2019 economic growth forecast from 1. 2 - 1. 7 % to 1 - 1. 5 %. third. proinflationary risks have declined over a one - year horizon. first, we no longer expect any deferred effects of the vat hike. second, the us fed consistently eased it rhetoric since the year start amid the expected slowdown of global economic growth. all else being equal, this constrains the risks of considerable capital outflow from emerging markets. in march - april, we noticed that the risks of accelerated growth in prices of certain food products diminished. overall, they remain moderate, though current food inflation was somewhat higher in may than in the previous three months, seasonally adjusted. moving forward, we expect that record crop areas, early spring, and overall favourable weather will bring a good harvest of vegetables, grains and other crops. domestic and global grain prices have been down since the beginning of the year. this contains proinflationary risks for food products. as regards monthly growth in prices of non - food goods and services, it held close to or below 4 % in annual terms in march - may. fourth. we factored in that inflation expectations of households and businesses remain elevated against both the inflation target and the minimum levels reached in the opening months of 2018. inflation expectations show | 0 |
carl - ludwig thiele : industry dialogue on " distributed ledger technology - potential benefits and risks " introductory statement by mr carl - ludwig thiele, member of the executive board of the deutsche bundesbank, at the g20 conference & quot ; digitising finance, financial inclusion and financial literacy & quot ;, wiesbaden, 26 january 2017. * * * mr von weizsacker, ladies and gentlemen whenever a technical topic attracts as much media attention as blockchain technology has, it must mean it β s something special, especially considering the topic itself is not an easy one. it β s safe to say that there is much anticipation surrounding distributed ledger technology β some feelings of hope, some of fear. and the influence this technology is likely to have extends far beyond the financial sector. the deutsche bundesbank operates large financial market infrastructures and also develops these further in line with technological advances. for this reason, we need to be aware of the potential benefits and risks of this technology early on. together with deutsche borse, we have developed a preliminary prototype for blockchain - based settlement. this prototype has the following capabilities : settling payments based on blockchain technology, transferring securities, processing basic delivery - versus - payment transactions, where securities purchases are settled and paid for simultaneously, and processing basic corporate actions, such as coupon payments on bonds and redemptions of maturing securities. the aim of the project is to learn, step by step : how blockchain technology works, how secure and reliable blockchain - based transactions are, which factors affect the costs of blockchain - based transactions, how efficient and effective blockchain - based processes are, and how existing processes may be improved using blockchain technology. one of the key points here is increasing process efficiency. by using a shared data pool across all entities concerned, it should be possible to standardise and simplify some of the overly complicated transaction monitoring processes we have today. in addition, a shared data pool in combination with a flexible access rights concept would, for example, also establish the conditions in which the relevant regulatory reporting and internal audit requirements could be met with reduced effort and designed more securely. we opted for a concept based on a hyperledger blockchain. the most important considerations for us when designing the hyperledger - based prototype were : 1 / 2 bis central bankers'speeches having a closed β or β permissioned blockchain β β network | ##ystem, as potential issuers, enjoy a high level of confidence among enterprises and the public. this is a foundation that can be built on. a digital euro would safeguard the β anchor function β of government money in our two - tier monetary system in the digital age as well. this way, the ecb ( european central bank ) and the national central banks in the eurosystem would be able to carry on ensuring that payments are safe and efficient. last but not least, a digital euro also fits in well with other digitalisation efforts by european legislators. the digital identity wallet planned as part of the revised eidas regulation could be given an additional boost if a digital euro could also be held in such a β government β wallet. this brings us to the question of β what β a digital euro could deliver. 2 what could a digital euro deliver? in principle, a digital euro could combine efficient and secure payments with a pan - european reach. the following advantages are conceivable : β’ it would be a useful complement to cash, as people would also have access to central bank money in the digital sphere that would be secure, cost - effective and stable in value. β’ the digital euro could offer all groups in society quick and convenient access to a digital means of payment. this is where private payment service providers, with their customer expertise and experience, come in to design suitable solutions. less digitally savvy people could potentially pay with a digital euro on a payment card even without an internet connection, i. e. ( that is ) β offline β. β’ at the same time, the issuance of a digital euro would not be driven by business interests. the data generated by payments would not be used commercially by central banks. more than 340 million people would be able to use cbdc ( central bank digital currency ) to pay anywhere in the single euro payments area ( sepa ( single euro payments area ) ), across borders and independently of international providers. in order for the digital euro to be a success, it must serve the needs of users. to learn more about these, the eurosystem asked various groups in society and smaller merchants what they would expect from such a means of payment. payers said they want a solution that can be counted on to work in as many situations as possible and is accepted across all the sepa ( single euro payments area ) countries β and beyond, if possible. it should be technically simple, free of charge and secure. | 0.5 |
and innovation and expand their presence and their reach throughout the country. as you can tell, this is consistent with our objective of strengthening the rural banking system so it can more effectively serve the countryside and better contribute in promoting balanced and sustainable growth for our nation. in this regard, the rbap plays an important role in ensuring the success of this program, jointly with the pdic and the bsp. beyond the sprb, however, the bsp shall continue to ensure that a sound regulatory framework is in place that would enable philippine banks, including rbs, to cope with both domestic and global challenges. the bsp will also continue to pursue reforms to further strengthen the capitalization of banks and improve the supervisory oversight of risk management of banks. in addition, we will also continue to implement reforms geared towards improving the corporate governance structures of banks, including rbs. sustaining and ensuring the strength of the rural banking sector is not, however, just the role of the regulators. it is a partnership with the regulated. as in the past, we therefore look to the solid support of the rural banks, through the rbap, in effecting important reforms and initiatives that would improve the resilience of our banks, including the rbs, and our financial system as a whole so they will continue to withstand the impact of domestic and global crises and remain important channels for investment, credit and overall economic development. on this note, i wish to congratulate all those who have been instrumental in putting together this program. the bsp looks forward to the success of this program in close partnership with pdic and rbap. thank you and good day! | amando m tetangco, jr : launch of the strengthening program for rural banks ( sprb ) keynote message by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( the central bank of the philippines ), to the philippine deposit insurance corporation ( pdic ), makati city, 8 august 2010. * * * pdic president jose nograles, members of the pdic board, ms. cora miller and other officers of the rural bankers association of the philippines ( rbap ), fellow workers in government, distinguished guests, friends from media, ladies and gentlemen, good morning to all of you. first, let me thank you for inviting me to deliver a message in this milestone event β the launching of the strengthening program for rural banks ( sprb ). it is indeed a pleasure for me to affirm today the bsp β s commitment, support and partnership with the pdic and the rural banking industry in this important undertaking. rural banks are, what i often refer to as, the β natural frontliners β in our national program to broaden and deepen the reach of responsible β¦ and empowering β¦ financial services to local communities. it is therefore incumbent upon the regulators to ensure that the strength and viability of this critical segment of our banking system is sustained, particularly during these challenging times that we face. the sprb is specifically expected to achieve this goal of creating a stronger rural banking system as it promotes mergers and consolidations between or among rural banks and eligible strategic third party investors ( stpis ) under a specific set of guidelines. there are two prongs to the sprb β one, the capital augmentation component, and two, the regulatory relief package. the capital augmentation and direct loan component is to be made available through financial assistance from the pdic. to flesh out the regulatory relief package, the monetary board approved a set of incentives that include the conversion and opening / relocation of head offices, branches and extension offices, the waiver of penalties and other incentives pertaining to rediscounting and emergency loans. in addition to the financial strengthening of the resulting entities, the grant of these incentives is expected to allow such entities to achieve economies of scale, attract more skills, and better manage their liabilities. furthermore, through mergers and consolidations, the resulting banks will achieve higher capitalization, which would then enable them to diversify their portfolios to reduce risk, fund growth | 1 |
. the first is growth in real non - farm gdp. i use non - farm gdp simply because farm gdp can be highly volatile due to droughts and floods. that, as rural producers know only too well, has been a constant feature of the australian experience. on average, growth in the economy in the two periods under review was very similar, at about 3. 4 per cent ( graph 3 ). but there was a marked change in the middle of the 1970s. after a number of years of very rapid growth, the economy encountered much more adverse circumstances from 1974 onwards. that was true for most countries, though australia β s relative performance on some metrics deteriorated. from 1975 to 1979, the average growth rate was a full percentage point lower than in the period from 1971 to 1974. the period was also noteworthy for the close proximity of two episodes of cyclical weakness, in 1974 / 75 and 1977. there was also a recession in the early 1980s. graph 3 real non - farm gdp growth * then and now ; year - ended % % 4. 0 % 2. 9 % - 2 % - 2 % 3. 4 % - 2 - 2 * average annual growth based on hp - filtered trend. sources : abs ; rba the current decade so far has seen average growth of 3. 4 per cent, though the next couple of years will probably see growth noticeably lower than that. what is quite noticeable from the chart is the relative stability of growth in recent years, something that was a feature of the second half of the 1990s as well. this pattern was observed in many economies over the same period. of course, the 1970s makes for a flattering benchmark in that it was the most unstable period in macroeconomic terms in the entire post - war period, so even average performance will look better than that. but, in fact, the period since the mid 1990s has been very stable by any standard. those who have looked into this in detail have posited several possible contributing factors, including better macroeconomic policy frameworks, a wide range of microeconomic reforms in labour and product markets, and luck. the weak growth of the latter 1970s was associated with an upward trend in unemployment ( graph 4 ). from a low of 2 per cent in the early 1970s, it rose to about 5 per cent in the mid1970s recession, and then drifted higher over the remaining part of the decade. similar trends were observed abroad. the big rise in real wages in the | of rule be employed? the 1970s and early 1980s provided important real data and experience in the resolution of these questions. friedman and phelps had already long argued that there was no long - run trade - off and that attempts to reduce unemployment below some structural level by accepting higher inflation would simply result in accelerating inflation and no lasting gain on unemployment. the 1970s seemed to demonstrate that this was right. more strident derivatives of the chicago tradition, however, which insisted that there was not even any short - term trade - off, were found to be wide of the mark. money did seem to matter, since the big rise in inflation in the 1970s had been preceded by a large increase in money growth. a lot of people not only accepted that monetary quantities were the key thing to look at, but concluded that central banks had failed to control them, so that some sort of step away from unconstrained discretion towards monetary rules was advisable. as a result, targets for those quantities were adopted, including in australia. that was the language of discussion when i was a student and when i first started work at the reserve bank in 1980. 1 these days, we have inflation targeting, an arrangement that provides a measure of constrained discretion to the central bank within a medium - term framework. it emphasises the control of inflation over time, but does not seek to fine - tune inflation over short periods. that allows a reasonable accommodation for trends in economic activity and employment over periods of a year or two, about which the reserve bank is required to have concern by its charter as well as by common sense, but preserves the value of the currency over the long run. in the language of trade - offs, this system accepts there is a short - term growth / inflation trade - off, but also accepts there is no long - term one. inflation targeting does not ignore financial quantities, but does not elevate them to the status of an intermediate target and does not see them as an instrument. inflation targeting is not perfect and, on occasion, still leaves policy - makers with some quite difficult decisions to make. it is, however, the best system that has been devised as yet. the fiscal debate of the 1970s was dominated by the budget deficits of the period, and the need to reduce them. on contemporary figuring, the commonwealth β s budget deficit reached about 4 - 5 per cent of gdp in the middle years of the decade. using figures comparable to those in use today, which measure the underlying cash | 1 |
##tailed β took an exceptionally heavy toll. from 2008 to 2016, greece's gdp shrank by more than a quarter. the unemployment rate surged by 20 percentage points at its peak. and just as the economy was recovering and the reforms were bearing fruit, disaster struck again. the pandemic brought travel and tourism to a standstill, and greece's economy contracted by a further 9 % in 2020. throughout this period, greece has also been at the forefront of the global challenges facing europe. the climate crisis has been ever - present, as was demonstrated tragically this summer. and greece has also borne the brunt of the various migration crises that have hit europe. yet, despite this succession of setbacks, the country's resilience has been remarkable. thanks to the hard work that has been done to make the economy more flexible, greece has made an impressive comeback from the pandemic. real gdp per capita is now almost 10 % above its pre - pandemic level β a much stronger performance than the euro area as a whole. the unemployment rate has also declined steeply, and was 10. 9 % in august, the lowest level since the end of 2009. and with a stronger economy, the country has been able to work further through its debt challenge. greece's public debt - to - gdp ratio has dropped 35 percentage points from its peak of 206 % in 2020, one of the fastest falls in the world. two rating agencies recently upgraded greek government bonds to investment grade status. but it is not only the economy that has been resilient β it is also the greek people. there were times when they could have chosen a different path. yet they have remained committed to being at the heart of europe, even in the hardest of times. in fact, greek support for the common currency has risen 16 percentage points over the past decade, with more than three - quarters of the public now in favour. and greece has seen a 19 percentage point surge in favourable views of the eu over that period. this example can serve as an inspiration for all of us as we contend with a more volatile world and the many challenges it brings. it is an example of resilience in the face of great challenges. and it is an example of the importance of being part of something bigger β our shared european destiny. as we stand here in the heart of athens, we see the best of what europe can be β a place steeped in the past, alive | parallel with a recovery in profits. moreover, firms continue to reduce debts as part of their balance - sheet restructuring measures. as a result, credit demand in the private sector has continued to be basically stagnant. in view of this, the underlying tone of private banks β lending remains sluggish. issuance of corporate bonds and cp has been steady. money stock ( m2 + cds ) grew slower in may compared with the previous month on a year - on - year basis. in this financial environment, corporate financing conditions are easing, and the lending attitude of financial institutions is perceived by firms as less severe. it continues to warrant careful monitoring how these favorable developments in corporate financing environment will affect economic activities. | 0 |
it looked as if interest rates and inflation in jamaica were moving closer to convergence with that of the rest of the caribbean as well, but this changed sharply in early 2003 and the convergence for which we hoped was abruptly dislodged. we need to get back to that situation where economic convergence is a likelihood. capital markets need it. conclusion not only do authorities need to deliberately target economic convergence we also need to build incentives into our operational frameworks and to reward desired outcomes. this calls for more specific recommendations and for even closer interaction between market participants and the authorities. it also underscores the need for cooperative mechanisms in building our markets. thank you ladies and gentlemen. | development of capital markets has been retarded partly because of the lack of an entrenched credit culture, and conversely, that a credit culture has not become entrenched because capital markets are not sufficiently developed. however, there is evidence of the formation of credit rating agencies in the region. these can be of assistance to investors who do not have the time or the training to conduct their own credit analyses. efforts by the central bank of barbados lastly, let me touch on the central bank of barbados β efforts with respect to capital market development. the bank has a close relationship with capital markets through its central banking operations. financial and capital markets serve as an important vehicle for transmitting monetary policy to economic agents. if the financial and capital markets do not function sufficiently, policy effects can be dampened. interest rate changes, for example, represent just one example of the importance of an efficient market in the effectiveness of policy as this change works itself through to lending costs and hence to competitiveness and to profits and to asset prices. in terms of new instruments the bank is at the forefront in developing new secondary mortgage market products to potential investors in the belief that capital markets require a wider range of products. it has also started a series of workshops with the objective of assisting in the development of new financial instruments. increasingly also, credit unions need to be more integrally involved in the process of financial development. at the regional level, governments need to include convergence of caribbean economies as an important goal in their national planning since greater convergence of caribbean economies is important for the development of a truly regional capital market. while there has been much progress on the ground in terms of cross border ownership changes, there is still a wide disparity in interest rates and inflation rates across the region. this is not a great deterrent for the growth of a regional equities market and for the cross trading of equities but it is not the most propitious environment for the development of a regional government securities market or for the cross - trading of government securities of a higher interest rate regime in the jurisdiction of a low interest rate regime. the opportunities for arbitrage are tremendous so it is desirable that there be greater convergence of regional economies as soon as possible. the country most out of line both in terms of exchange rates and interest rates is jamaica, as the interest rate and exchange rate regimes of most other countries in the region, perhaps with the additional exception of guyana, are much closer to convergence. indeed, in early 2003 | 1 |
per economic sectors. by comparing these optimal vs. actual lending growth, we have some idea where excessive lending occurs and thus some instruments of macroprudential measures are justified and can be applied. this is the approach that we applied when introducing loan - to - value ( ltv ) ratio to lending to automotive and property sectors in 2012. we then strengthen the ltv ratio to lending to property sectors in 2013, especially to mortgages for the second, third, and so on purchases of certain types of housing and apartments. the measures are also complemented by supervisory actions to banks that we viewed exhibit excessive lending behavior. we note that the formulation and implementation of macroprudential measures require a much detail and complex analysis and calibration, as well as the need for clear communication to the banks and business community. our experience shows that the macroprudential measures and supervisory actions help in reinforcing the effectiveness of monetary transmission mechanism and supporting the financial system stability. even though lending growths increased in the period prior the implementation of these measures, probably banks and their customers wanted to utilize the interim period, they declined substantially in relatively short - period in the subsequent episode. the growth of mortgage on housing for less than 21 m2, for instance, declined from more than 100 % to the negative growth during the period of june to september 2012 ( graph 16 ). likewise, the growth of mortgage on apartment less than 21 m2 dropped from more than 300 % to less than 10 % during the period of january to november 2013 ( graph 17 ). it should be noted that the automotive and property sectors contain substantially large import content, and thus managing lending growths to these two sectors help in reducing the current account deficit. iv. financial market deepening the stage and depth of domestic financial market influence the transmission mechanism and policy response to global monetary factors, in both the ump easing period as well as the normalization process. preceding discussions clearly show the challenges that we face in indonesia. interest rate transmission is lagging in the absence of domestic money and fixed income markets that provide efficient mechanism interest rate and term - structure determination. the shallowness of domestic foreign exchange market often causes excessive volatility and overshooting of exchange rate movements in responding to global monetary and financial shocks. this is the rationale for our focus and priority on financial market deepening, as an integral part of our policy responses to the normalization process of the ump in the advanced countries. in addition to strengthening the economic | turn, boost the competitiveness of the banking industry, and the actors could enjoy a lower interest rate. b. direction of economic policy in 2007 with respect to the projections that i have been discussing, i would like to reiterate that distortions and the unfavourable investment climate are the primary constraints faced that could retard a balanced economic recovery in 2007. from bank indonesia β s perspective, all of the limitations i have mentioned could hamper the array of measures taken by bank indonesia to achieve and preserve macroeconomic stability. the economy will become more vulnerable and less able to mitigate the range of domestic and external shocks. our monetary policy stance would tend to be particularly cautious, especially when unexpected shocks occur that may trigger risk to price stability. in terms of the wider national interest, it will not be possible to permanently and continuously alleviate poverty and reduce unemployment without structural improvements that slash the high - cost economy and enhance the investment climate. i therefore see the benefits of the following policy strategy : 1. from the monetary policy side : the implementation of inflation targeting framework ( itf ), within the wider structure of macroeconomic policy, is a strategic step that must continually be taken by bank indonesia to maintain market confidence on macroeconomic stability and overall financial system stability. a number of issues related to capital flows, exchange rates and the interest rate within a liberal capital account regime and a floating exchange rate environment should be placed in the context of global economic adjustments and the kind of macro - monetary policy response that would be appropriate to deal with them. in this context, policies that provide incentives for long - term capital flows should be prioritized over policies that punish short - term capital flows. in addition, to support the financial market development and to improve monetary policy effectiveness, we also see the need to improve the operational structure of monetary policy. 2. in terms of financial sector policy : bank indonesia acknowledges the importance of bolstering the financial market development to mitigate economic shocks. to this end, and by observing numerous potential shocks in the global and domestic markets over the next 1 - 3 years, some policies to expand and deepen the domestic financial sector need to be instituted without delay in 2007. this requires a coordinated and collaborative effort involving bank indonesia, government institutions and banking institutions β as the primary component of the financial sector β as well as non - bank financial institutions. 3. from the banking policy side : bank indonesia sees the need to promote indirect banking intermediation through diverse efforts to foster | 0.5 |
to quite low rates of inflation in a range of service industries. increased job uncertainty is likely to be one of the factors here, with consumer surveys showing high levels of concern about future unemployment. the third general point is that despite the transmission mechanism looking somewhat different, monetary policy in australia is still working and it is helping to support the australian economy. the area where this is most obvious is in housing construction, where there has been a substantial lift. this part of the transmission mechanism appears to be operating pretty much as normal, with the increase in activity over the past 1Β½ years being in line with our internal forecasts made in the second half of 2013 when the cash rate was first set at 2Β½ per cent. this increased activity is boosting employment in the sector and having flow - through effects to spending on homewares and related items. bis central bankers β speeches the exchange rate channel of monetary policy is also working. there are some signs that the depreciation of the australian dollar is boosting domestic activity, with net exports of services increasing strongly. also, in our liaison program a number of businesses have reported that they see the lower exchange rate as opening up new opportunities. in time, we should see the effect of this on domestic production and spending. monetary policy is, of course, also working through the other channels that i discussed earlier, even if the effects are somewhat different from those in the past. so, overall, monetary policy is continuing to play an important role in supporting demand in the australian economy. at its february meeting, the reserve bank board decided that it was appropriate to provide some additional support. this was not because things had turned for the worse, but rather because of the lack of compelling signs that economic growth was picking up as was earlier expected. no doubt, the factors that i have talked about today go some way to explaining why this has turned out to be the case. at its meeting on tuesday this week, the board maintained the cash rate at 2ΒΌ per cent, but noted that further easing may be appropriate over the period ahead. finally, stepping back from the short term, the low interest rates we are seeing globally and in australia are a direct consequence of an elevated appetite for saving and a muted appetite for real investment in many economies. monetary policy globally has responded to this reality in a way that a decade or so ago would have hardly seemed imaginable. in doing so it has helped the global economy through a very difficult period. but, at the | in human capital development to support the industry. while malaysia β s own experience and aspirations is to evolve into an international islamic financial centre, we also continue to promote a more inclusive financial system to support a more balanced growth. on the international front, the aim is to enhance our international connectivity and thus establish greater economic linkages with other economies. in dubai, the efforts by the authorities to create the islamic economy initiative to further enhance the inter - linkages with other islamic financial centres is also a step towards strengthening the international economic connectivity especially between our regions. the efforts will not only enhance islamic finance as an effective financial intermediary but also as a binding force for the other segments of the islamic economy, including with other parts of the world. our collective efforts in developing islamic finance will provide an important platform to unlock the potential opportunities that lie therein to benefit every segment of the society and the business community that now extends beyond our domestic borders. in this highly dynamic and rapidly changing world environment, efforts will need to be unrelenting on bis central bankers β speeches developing further the enabling infrastructure, the foundations for stability and enhancing the internal capability. and with the greater international linkages, the greater will be the importance of working collectively for the common goals we aspire and for which the benefits will be mutually reinforcing. bis central bankers β speeches | 0 |
understanding of the relationship of monetary policy to inequality has lagged behind the mounting political debate on the issue. bernanke ( 2015 ) proposed a simple β litmus test β to cut through our difficulties in forming a complete picture of the effects of qe : β if the average working person were given the choice of the status quo ( current fed policies ) and a situation with both a weaker labour market and lower stock prices ( tighter fed policies ), which would he or she choose? β this question would appear to offer a fitting background to our discussion here today. 3. inequality in a monetary union in the euro area, the debate has stressed another potential distributional spillover of monetary policy : redistribution of resources not only within countries but also between the member states of the monetary union. naturally, the effects of monetary policy on the member states may well be asymmetric, and very strong views on the way the asymmetry works in this particular case have been expressed. to cite one : β while households in countries strongly affected by the crisis are relieved, others, namely german households, are suffering from the very same measures. β 16 to the extent that within the cross section of households an expansion produces winners and losers and that these are unevenly distributed across countries, monetary policy may of course also reallocate resources across national borders. to be sure, in a fully integrated economic union this would not be an issue. in the euro area it might be, though, because the lack of a common fiscal policy framework means there are no tools to neutralise the potential distributional effects of mp. however, the concerns about the redistributional effects of monetary expansions across euro - area countries reflect an oversimplified representation of the monetary policy transmission mechanism. in fact, understanding these cross - country effects is, if anything, even harder than grasping within - country effects. one difficulty is simply measurement. the data are not comparable across countries because of differences in the definitions of income and wealth, the way taxes are treated, the primary sources used, and often the processing of the data. measuring income and wealth consistently in a large economic area is not easy. 17 and where the status quo itself is measured inaccurately, gauging the impact of a shock ( monetary or otherwise ) becomes problematic at best. 18 β britain β s richest 5 % gained most from quantitative easing, β the guardian, 23 august 2012. holzhausen and sikova ( 2014 ). the statistical traditions of european countries | ignazio visco : the g20 under italy β s leadership in 2021 keynote speech by mr ignazio visco, governor of the bank of italy, at the global foundation β rome roundtable 2020 β which way the world after the pandemic? our inclusive human future β, virtual meeting, 16 - 17 november 2020. * * * your excellences, ladies and gentlemen, it is a great pleasure to join the 2020 virtual edition of the rome roundtable meeting. i would like to thank the secretary general steve howard for giving me the opportunity to address such a distinguished group of guests and the chairman rob knott for his kind introduction. next year italy will chair the group of twenty ( g20 ) for the first time since it started its gatherings in 1999. our presidency, not unlike the one that is about to conclude, takes hold under exceptional circumstances. the covid - 19 pandemic, a human tragedy, has triggered an economic collapse that is unprecedented in recent history. according to the latest imf projections, global activity will contract by 4. 4 per cent this year, the worst result since world war ii. at the time of the global financial crisis, in their statement at the 2009 pittsburgh summit, g20 leaders designated the group to be the β premier forum for our international economic cooperation β. global financial stability was then in danger ; that crisis had sizeable costs, but coordinated actions succeeded in halting a more costly spiral and, also through the work of the financial stability board ( fsb ), making our financial systems more resilient. today β s pandemic crisis brings to the fore another extremely dangerous challenge that must be addressed with ever closer cooperation across countries. we now realise that the risks of a global health crisis have been substantially underestimated. they are by no means the only ones : environmental sustainability, poverty eradication, trade openness, financial stability and knowledge transfer all contain elements of a global public good, whose provision may fall dangerously below desirable levels if national interests and market outcomes are not mediated through the balance of a truly multilateral, consensus - based and far - sighted approach. * * * three keywords embody the overarching priority themes of the italian g20 presidency : people, planet, and prosperity. the agenda of the italian g20 finance track, the work stream led by finance ministers and central bank governors, will then be inspired by those three words. as a cross - cutting issue i want to emphasise | 0.5 |
factor is linked to the eventuality of the non - profit undertaking failing to repay the loan. in this event, a bank bringing action for forced recovery would run the risk of appearing to put its own interests before the social, humanitarian or charitable purposes of the distressed undertaking. financial support can be provided to the non - profit and voluntary sector by intermediaries that exclusively, prevalently or even only occasionally engage in such lending ( so - called β ethical β intermediation ). the record shows a variety of such experiences in many countries. to cite a few significant examples, okobank in germany, which focuses on environmental and peace issues, had 63, 000 customers and 170 billion lire of deposits in 1993 ; in the netherlands, triodos bank, of the eponymous association for social development and environmental protection, accounts for 2. 5 per cent of the country β s total bank deposits ; in switzerland, the banner experience is that of alternative bank abs, which in 1992 had around 106 billion lire of loans outstanding to local non - profit enterprises and associations for thirdworld development. other intermediaries concentrate on fostering small business in the third world or in economically depressed areas of the industrialized countries. the best - known example is grameen bank of bangladesh, which lends to farmers in the poorest rural areas. the key to its success is its technique of forming small groups of customers who take part in training workshops that also serve to select the creditworthy. the small loans disbursed to them are gradually scaled up if each member of the group meets the repayment terms. the bank β s high credit quality testifies to the efficacy both of the method used for assessing creditworthiness and of the system of cross - monitoring among members of a group. the high risk that nonetheless characterizes the bank β s activity made it advisable for it to fund its loans primarily with public contributions and the bank β s own resources, part of which was paid in by the beneficiaries of its lending. in the united states, a very interesting case is that of the illinois neighborhood development corporation, created by non - profit shareholders and licensed to engage in banking since the seventies. the bank initially operated in one of the worst slums of chicago, the south shore, and endeavoured to redevelop the area particularly by giving minority groups more access to credit. the programme β s success allowed it to be extended to other rundown, outlying neighbourhoods. thanks to | be dipped into indiscriminately or as a body of assets whose composition can be altered in order to pursue the most diverse purposes. the foundations are non - profit operators themselves and can actively contribute to the non - profit sector β s development by identifying areas for intervention and nurturing socially useful initiatives. in deciding how to go about pursuing their objectives, the foundations can adopt a directly operational setup and manage one or more socially useful activities themselves, under arrangements already adopted elsewhere and not new to italy. if they should decide instead to continue in the role of grant - making institutions, in order to make a truly effective contribution they must develop sufficient skills in selecting initiatives, monitoring the use of funds and assessing results. grant - making plainly entails a degree of specialization, not only geographic but also by sector of socially useful activity. in effect, the data assembled by the association of italian savings banks ( acri ) via reclassification of the banking foundations β annual accounts and a survey of the grants made by the 81 ex - savings bank foundations offers evidence of growing specialization. sorting the foundations by sectoral concentration of grants shows that 60. 5 per cent allocated over half of their funding to a single sector or more than sixth tenths to just two sectors in 1995. there is some tendency away from small grants, although these are still very common among the smaller foundations, and considerable growth in multi - year grants, whose share in total disbursements rose from 7. 7 per cent in 1994 to 11. 6 per cent in 1995. according to the acri report, disbursements amounted to 211 billion lire in 1995, equal to a little less than one third of the foundations β net operating results and 7. 8 per cent up on the 1994 figure of 196 billion. the banking foundations β activities are hampered by their low return on assets. acri calculates that the ex - saving bank foundations β overall ratio of net operating results to assets was 2 per cent in the 1994 - 95 financial year. this poor performance, though an improvement on 1. 43 per cent in the previous financial year, reflects the modest return on holdings of bank shares, dividends from which account for 80 per cent of the result. thus, the ability of the foundations to fulfil their institutional purposes depends largely on cyclical conditions in the banking industry. it is incumbent on the foundations to seek an optimal return on their capital, in order to preserve its real value and ensure the continuity of their | 1 |
relying as much as possible on the efforts of debtors and private creditors to work things out on their own. the perception in some circles that private creditors are not interested in resolving payment problems expeditiously is mistaken, and stands at odds with recent experience. if nothing else, investors are interested in restoring liquidity to debt instruments in order to move on to new opportunities. there is also scope for exploring creative market - based ways to lever in private participation and stretch the impact of public sector funds. finally, a successful market - based, case - by - case approach also needs to be principled. i would suggest that the essence of an effective case - by - case approach is the development of viable plans that link broader, generally acceptable principles to the particulars of a given situation. β’ to achieve this, a clearer and more transparent articulation of the public sector β s objectives is necessary. greater emphasis and clarity are needed as to the purposes and limits of public intervention, and the extent to which those interests warrant different degrees, modes, and timing of public and private sector involvement, depending on the particular country and circumstances. in this way all parties will be better placed to understand current developments and how the international community might react to future strains. the argument against standstills there are of course other points of view. i would note that some have suggested that perhaps we should go in a different direction, that we should seek to build time back in by calling a time out. in particular, it has been suggested that an early recourse to comprehensive payment standstills ( suspensions of debt service perhaps amplified or reinforced by capital controls ) would increase the manageability of crises and enhance predictability. my reading of the record convinces me that trying to freeze market processes would do the opposite. i would like to share with you my thinking on this point. β’ the desire for certainty and control which seems to underlie standstill proposals is understandable, as it offers the promise of using less public money, and seemingly entails less risk that creditors will be bailed out for poor credit decisions. but the control and manageability that might result may be more seeming than real. β’ for one, a perceived disposition to preemptively lock the door seems likely to send investors heading for the exits all that much sooner. as a result many avoidable crises soon may become inevitable. and the problem of contagion, whereby difficulties in one case spread to many, would seem likely to | a second question is, how we can structure these requirements and other aspects of regulation to damp, rather than reinforce, the natural procyclical tendencies of the financial system? among the challenges will be encouraging firms and supervisors to comfortably allow buffers to be eroded in bad times. interestingly, prompt corrective action under the federal deposit insurance corporation improvement act of 1991 was intended, in part, to induce an element of countercyclical behavior by banks. it gives banks an incentive to build excess capital β on both a risk - based and leverage ratio basis β in good times to avoid prompt corrective action when circumstances are less favorable. now that we are in the latter state of the world, a study of how commercial banks are viewing capital ratios, including the leverage ratio, could inform consideration of the morris and shin proposal. the morris and shin paper also provides a framework for thinking about the federal reserve's credit facilities. on page 9, they note that liquidity makes borrowers feel more robust and lenders less likely to withdraw, raising the odds for a more stable equilibrium for the entire system. that is exactly what we have been trying to do with our various discount lending facilities. the assurance of the availability of liquidity to sound institutions against good collateral should counter the greater uncertainty and risk aversion that have impaired normal arbitrage and intermediary functions by making those institutions more willing to extend credit and take positions in the process of making markets. it should also assure other creditors of those institutions that illiquid markets will not impede the repayment of their loans, and therefore make them more willing to keep lending. a number of markets remain disrupted and illiquid. but i believe that they would have been even more illiquid and the risk of disruptive runs even greater without our various facilities ; that's certainly what market participants are telling us. jan hatzius is trying to gauge the combined effects on spending of the losses generated by the effects of the decline in housing prices outlined in the case paper and the impulse for deleveraging in the financial sector inherent in the processes discussed by morris and shin. to restore capital ratios depleted by mortgage losses and to raise those ratios even further in order to reduce leverage to safer levels demanded by counterparties, banks and other lenders need to reduce assets. they do so by tightening terms and standards across a broad array of credit β and we have seen this behavior reflected in our surveys of bank lending officers and in various | 0 |
different environments : one in which it is difficult to make profits, and the other in which an adequate return can be anticipated by investing with the use of loans. of the two cases, the latter provides a larger economic stimulus. monetary easing effects in japan are expected to strengthen further in the future, considering that economic conditions and prices are heading toward improvement. third, financial markets remain extremely stable compared to other countries, as market participants have been reassured by ample fund provision. reassuring firms and households about their funding plays a role in supporting their confidence, especially at a time when we are witnessing high uncertainty at home and abroad, particularly with regard to the european debt problem. iii. some points about monetary policy so far, i have explained the bank β s powerful monetary easing and its effects. in the conduct of monetary policy, we recognize that there are different opinions. one opinion is that the bank should pursue more aggressive easing. another is that it is too risky to embark on such aggressive measures. for our part, we listen to these opinions and conduct monetary policy as we judge most appropriate. bearing these differences in mind, let me explain our thinking behind the conduct of monetary policy in order to facilitate better understanding of our policy making. level of the β price stability goal in the medium to long term β the first is the level of the price stability goal. the general public β s perception of prices is deeply ingrained and it influences their actions ; thus, it is hard to imagine a situation that does not take account of experiences over the decades ( chart 5 ). although the year - on - year rate of change in the cpi turned negative in 1998, the average rate of inflation since the middle of the 1980s β after the effect of the second oil shock dissipated β is nearly 0. 5 percent. it has consistently been lower than the equivalent rates in overseas economies. during the bubble period ( 1987 β 89 ) when the economy was booming, the cpi inflation was 1. 3 percent. over the last 30 years or so, there were only three cases when the year - on - year rate of change in the cpi reached 2 percent. the first was at the beginning of the 1990s, when the remnants of the bubble were still in place. the second was bis central bankers β speeches in 1997, when the consumption tax was lifted. the third was in 2008, when the sharp rise in energy and food prices hit the household sector. notwithstanding these past benchmarks, simply announcing out of the blue that the bank aims | level accumulation of private - sector debt, their downtrend may become more evident amid the spreading effects of the weaker - than - expected economic growth in the united states and china. in this environment, japan β s real exports for the april - june quarter of 2015 turned negative on a quarter - on - quarter basis for the first time in three quarters, registering minus 3. 6 percent, and i consider that this has become one of the factors behind the weaker - thanexpected real gdp growth rate for the april - june quarter β that is, the temporary lull in the economy. real exports are expected to increase on a quarter - on - quarter basis in the julyseptember quarter, albeit moderately. thereafter, however, they are likely to continue to lack momentum for some time and overall economic growth is expected to be quite modest as a result of the adverse effects on production and employment in manufacturing. c. growth expectations and business fixed investment business fixed investment has continued to be on an increasing trend on the back of improvement for the situation in corporate profits and of higher capacity utilization rates. however, firms β cautious investment stance still has not changed considerably, particularly in terms of business fixed investment in japan. this seems contrary to firms β active stance toward hiring new employees, due in part to strong concern over future labor shortages. in this situation, for firms to become more active in their fixed investment, it is essential to bring about a clear rise in medium - to long - term growth expectations β underpinned as well by the government's growth strategy and measures to respond to the population decline. meanwhile, focusing on the capital stock cycle of business fixed investment, i consider that fixed investment is likely to increase in fiscal 2015, and thereafter the pace of increase is likely to generally peak out toward fiscal 2017, on the assumption that the current growth expectations will be maintained. d. expectations of price rises and private consumption private consumption has continued to lack momentum, despite the favorable environment evidenced by such factors as improvement in the employment and income situation and accommodative financial conditions. one factor behind this may be consumers β expectations of price rises for the time being. since april 2015 in particular, a rise in prices of daily necessities such as food has been widely observed. in my view, comments by respondents in the recent economy watchers survey and the sluggishness in the consumer confidence index in the consumer confidence survey are evidence that this rise has negatively affected consumer sentiment. | 0.5 |
: central bank of mexico using information from bloomberg. the accumulation of international reserves by emes is a phenomenon interesting to analyze in detail. almost two years ago, as he delivered the 12th stavros niarchos foundation lecture, fred bergsten2 said that β the transmission of all monetary policy occurs to some extent through the exchange markets β. he is absolutely right. given the sheer size of quantitative easing in the united states, coupled with the one implemented so far in japan, it is not surprising that emes domestic currencies suffered sharp appreciations in response. this is the main reason that some analysts and policymakers have labeled qe as β competitive easing β. in a way, the aggressive accumulation of international reserves by emes all the way to late 2013 ( figure 6 ) is at least partially the other side of the coin to β competitive easing β. as a matter of fact we might as well call it β competitive reserve accumulation β. in most of the cases, i would agree with this practice, given the blunt distorting effects that qe had on emes. the size of capital flows to this subset of countries was much larger per unit of time than the capacity of such countries to absorb them without suffering substantial distortions. see bergsten, fred. ( 2013 ). β currency wars, the economy of the united states and reforms of the international monetary system β. 12th stavros niarchos foundation lecture. peterson institute for international economics. bis central bankers β speeches figure 6 international reserves billions of dollars emerging and developing asia sub - saharan africa emerging and developing europe advanced economies commonwealth of independent states latin america & the caribbean middle east, north africa 14, 000 12, 000 10, 000 8, 000 6, 000 4, 000 2, 000 2014 q1 2013 q1 2012 q1 2011 q1 2010 q1 2009 q1 2008 q1 2007 q1 2006 q1 source : elaborated by banco de mexico using information from international financial statistics database. international monetary fund ( imf ). * advanced economies. β canada, germany, france, italy, spain, japan, united states & united kingdom. commonwealth of independent states. β armenia, azerbaijan, belarus, georgia, kazakhstan, kyrgyzstan, moldova, russia, tajikistan, turkmenistan, uzbekistan & ukraine. emerging and developing asia. β bangladesh, bhutan, brunei darussalam, cambodia, china, fiji, india, indonesia, kiribati, lao p. d. r. | helped engender a downsizing of public ownership of commercial banks in europe, coupled with rapid development of heretofore modest capital markets, changes which appear to be moving continental europe β s financial system closer to the structure evident in britain and the united states. continental european countries may gain an additional benefit from the increased development of their capital markets. with increased concentration of national banking systems, which will likely be followed by increased concentration of europe - wide banking, comes the risk of an unusually large impact should the health of a megabank become impaired, causing the bank to curtail its lending. having well - developed capital markets would likely help to mitigate these effects, as more firms would have alternative sources of funds. conclusion improving domestic banking systems in emerging markets will help to limit the toll of the next financial disturbance. but if, as i presume, diversity within the financial sector provides insurance against a financial problem turning into economy - wide distress, then steps to foster the development of capital markets in those economies should also have an especial urgency. moreover, the difficult groundwork for building the necessary financial infrastructure - improved accounting standards, bankruptcy procedures, legal frameworks, and disclosure - will pay dividends of their own. the rapidly developing international financial system has clearly intensified competitive forces that have enhanced standards of living throughout most of the world. it is important that we develop domestic financial structures that facilitate and protect our international financial and trading systems, a process that will require much energy and commitment in the years ahead. | 0 |
of singapore. governor subbarao has been a staunch advocate of rbi β s pro - active role in addressing financial inclusion to help those underserved. as the world β s second most populous country, india has faced an uphill task to expand financial inclusion, especially to individuals in remote areas. but the numbers speak for themselves : in 2011, just 35 percent of adults have bank accounts according to the world bank β s global findex report. by 2017 that number has dramatically risen to 80 percent. in his keynote address this morning governor subbarao will share with us india β s remarkable experience on improving financial inclusion by using digital technologies. please join me in giving a warm welcome to governor subbarao. 4 / 4 | one can already see that 2014 will be yet another challenging year for the thai economy. however, with cooperation from all sides, i hope we shall be able to weather the upcoming storms with a common vision and readiness, and that a clear blue sky is beckoning in the distance. thank you. bis central bankers β speeches | 0.5 |
of covid - 19 and we embark on the process of recovery, it becomes clearer that the very structure of our economy is called upon to change. we must now focus on identifying new economic avenues for our future generations. my call to all hr professionals in mauritius is to keep pace with our economic development as you have the key responsibility of preparing our labour force of tomorrow, not only for the banking and financial sector, but across the economy. on this note, as we all pray for better days, may i wish you and your families happy holidays. i thank you for your attention... 3 / 3 bis central bankers'speeches | business continuity across and beyond the confinement period. while serving customers was a priority, the bank also saw to it that all required sanitary protocols were adhered to in order to protect both the public at large and employees in the banking industry. 1 / 3 bis central bankers'speeches the bank of mauritius too initiated several measures to ensure the safety and health of its employees whilst also ensuring that operations were maintained. with a view to mitigating propagation risks, a work from home strategy was implemented in august 2021. currently, around 30 per cent of staff are working from home and we see to it that the disinfection of the bank β s premises is conducted on a weekly basis. thinking and working as a team and making no compromise on our staff β s safety has allowed all functions to be operational during the pandemic. the bank β s internal covid protocol is being continuously adjusted in the light of latest information on the evolution of the coronavirus. ladies and gentlemen, digitalisation and distributed work arrangements may be the answer to some of the pressing challenges that organisations are facing in the wake of the covid - 19 induced disruption. the pandemic has in effect accelerated the shift towards technology - driven and sustainable processes. it is a fact that no enterprise, no organisation, or country can aspire to sustained growth without a healthy, skilled and motivated workforce. this is justly why i am fully committed to enabling the bank β s staff to acquire the necessary skills and provide them with the most appropriate tools and work environment. the objective is to ensure that the bank can continue to seamlessly deliver on its statutory objectives even in worse case scenarios. i know that, just like the banking industry has endeavoured to come to the rescue of the economy, all of you too, as human resource leaders, have played a key role in tackling resourcing and efficiency challenges posed by the pandemic. it is important that due tribute be paid to you for devising solutions to maintain business continuity and to help employees cope both professionally and psychologically with this unprecedented crisis. covid 19 has indeed changed the experience of work for the vast majority of employees. it has forced organisations, both locally and across the globe, to revisit how work is organised and how jobs are designed. another consequence of the pandemic is that the potential for fractures between employee groups has also increased. an example of such fractures is that there now exist groups of people who can work from home and those who | 1 |
the natural rate of unemployment or the potential level of output ) is not observed and very hard to estimate with a reasonably restrained quantitative approximation. in any case, these considerations provide additional proof that inflation expectations, in contributing to determining real interest rates, are a crucial ingredient for the identification of the most appropriate stance for monetary policy. in general, credibility in its pursuit of price stability and, in turn, the anchoring of longer - term inflation expectations, is one of the most precious assets of any central bank. when expectations are firmly anchored to the central bank β s target, monetary policy can protect price stability from supply and demand shocks, and address their effects in labour, goods and financial markets over time in a swift and efficient manner, with lower costs in terms of economic activity. on the the low inflation observed in the last few years even in the face of strong labour markets has stimulated a wave of papers testing the decline ( possibly to zero ) of the slope of the phillips curve. see, for example, coibion and gorodnichenko ( 2015 ), blanchard ( 2016 ), del negro et al. ( 2020 ) and the references cited therein. for some limited evidence on the reversal, see hobijn et al. ( 2023 ). see wicksell ( 1898 ), woodford ( 2003 ) and, for a recent discussion on the difficulties in using this concept as a guide for monetary policy, visco ( 2022 ). contrary, when inflation expectations become de - anchored, a stronger monetary policy reaction to any shock is required, with possibly elevated costs for the real economy. indeed, the need to enhance credibility and guarantee a solid anchoring of inflation expectations underlies one of the most important developments in central banking over the last few decades, namely the increasingly widespread adoption of the monetary policy framework known as ( flexible ) inflation targeting. the existence of a clear and credible anchor for inflation expectations has proved to be a fundamental ingredient to keep actual inflation closer to the price stability objective. 7 measuring inflation expectations despite their key role for monetary policy, measuring, and sometimes interpreting, inflation expectations is not simple. first, the large variety of data that has become available over the years has confirmed that there is no one, single measure of inflation expectations, since different economic agents β households, firms, professional forecasters, market operators β all have heterogeneous perceptions about the future dynamics of prices. a second challenge is connected with understanding how inflation expectations affect economic decisions and what | necessarily add up to the β actual β data shown in the figure. β ( 2 ) the ecb - spf is conducted quarterly, the ecb - sma shortly before each monetary policy meeting of the ecb governing council ; in ecb - spf β long term β is defined as 4 calendar years ahead in q1 and q2 rounds and 5 calendar years ahead in q3 and q4 rounds ; in ecb - sma β long term β is defined as the horizon over which the effects of all shocks will vanish and should be interpreted as around 10 years. figure 4 consumers β inflation expectations in the euro area ( monthly data ; per cent ; median ) source : ecb consumer expectations survey. note : inflation expectations 12 months ahead and between 2 and 3 years ahead. figure 5 firms β pricing intentions in the euro area ( monthly data ; percentages ) source : european commission. note : pricing intentions refer to the balance of the responses β increase β and β decrease β to the question on expected own price dynamics over the next three months. figure 6 inflation tail risks in the euro area ( per cent ) survey - based probability distributions ( ecb - sma, long - term expectations ; average ) probabilities from inflation options ( daily data ; 5 years horizon ) source : bloomberg and ecb survey of monetary analysts ( ecb - sma ). note : ( 1 ) ecb - sma β long term β is defined as the horizon over which the effects of all shocks will vanish and should be interpreted as around 10 years. β ( 2 ) probabilities inferred from inflation options ; Ο < 0 ( Ο < 1 ) is the probability of inflation being smaller than 0 ( 1 ) on average in the next 5 years ; Ο > 3 ( Ο > 4 ) is the probability of inflation being larger than 3 ( 4 ) on average in the next 5 years ; 50 - days moving averages. figure 7 drivers of changes in inflation expectations ( daily data ; percentage changes ) source : hoynck and rossi ( 2023 ). note : 5 - year inflation swap rates ; changes with respect to 3 january 2022. figure 8 credit and money growth in the euro area credit to firms ( 3 - month annualised percentage change ) m1 and m3 ( 12 - month percentage changes ) source : ecb. | 1 |
the mature markets. third, credit counselling can be a potent tool for financial entities to expand the reach of financial education. fourth, it might be of interest for reputed organisations like the national council of applied economic research ( ncaer ) to conduct surveys at periodic intervals to ascertain the degree of consumer awareness about financial products and services. the findings emanating from such studies could be shared with financial entities to enable them to address the gaps in their service delivery and promote informed decision - making. fifth, several bodies, such as the financial planning standards board of india ( fpsbi ), a professional standards setting body constituted with public - private enterprise, are reportedly making proactive efforts to uniformly regulate personal financial planning practitioners. much more of such efforts will be required to guide the development and promotion of standards for financial planning professionals to benefit and protect the public in the country. role of the rbi the rbi, on its part, wishes to advance the cause of financial education in our country as part of an overall strategy. the strategy pursued in this regard can be elucidated as follows. concerted efforts are underway to expand the reach of formal finance in view of recent emphasis on financial inclusion. this needs to be buttressed with financial education to generate greater customer awareness and understanding of financial products and services. concurrently, a process of credit counselling is being encouraged to help all borrowers, but particularly those in distress to overcome current financial problems and gain access to the structured financial system. the banking codes and standards board of india ( bcsbi ) has also been instituted which is expected to ensure that the banks formulate and adhere to their own comprehensive code of conduct for minimum standards of banking services, which individual customers can legitimately expect. and finally, a banking ombudsman scheme has been instituted for redressal of grievances against deficient banking services, covering all the states and union territories. the rbi has also been exploring the possibility of instituting a depositor protection fund ( dpf ). the fund can be utilised towards generating greater awareness for the common man on issues relating to financial education and counselling. this could be complemented with providing greater role to our regional offices to promote financial education in their respective jurisdictions. conclusion the international co - operation of the kind which oecd and pfrda have embarked upon is a welcome development. i would like to congratulate them for undertaking this useful initiative and thank them for giving me an opportunity to be | education. it has recently released a major international study on financial education titled'improving financial literacy'encompassing practical guidelines on good practices in financial education and awareness. these guidelines, in the form of a non - binding recommendation, are designed to help countries devise and implement effective financial education programmes, drawing from the best practices in this area in oecd countries. they promote the role of all the main stakeholders in financial education : governments, financial institutions, employers, trade unions and consumer groups. in addition, they also draw a clear distinction between public information provided by the government and regulatory authorities, and that supplied by the financial analysts. it is also important to devise ways to ascertain whether financial education has achieved its objective, such as generating increased consumer awareness or a changed behaviour, a point i will return to a little later. the balance of evidence, however, suggests that such programmes tend to be effective. for instance, in the united states, it has been observed that workers increase their participation in retirement savings plans funded by employee and employer contributions when the latter offers financial education programmes, whether in the form of brochures or seminars. consumers who attend one - on - one counselling sessions on their personal finances have fewer delinquencies. indian realities prior to the initiation of financial sector reforms in the early 1990s, the indian financial system essentially catered to the needs of planned development. customers had little choice in financial instruments. the segmented and underdeveloped financial markets meant that their exposure to risk was also limited. in such a situation, customers could employ their basic skills to invest in simple financial products with assured returns, unconcerned about their risks. the relevance of financial education was, at best, limited. pursuant to the process of globalisation, the economic and financial landscape in india is undergoing a significant transformation. in the process, the economy has become more diversified with new sources of growth. in tandem with these changes, we have seen the modernisation of the financial sector that has also become increasingly more diversified to meet the new requirements of the economy. the financial sector has also increasingly leveraged on advances in technology which has significantly changed the way financial business is being conducted. as market advances continue to expand the range of financial products and services, consumers are being faced with increasingly multifaceted choices and options in the management of their personal finances and exposure to a gamut of risks. in this complex financial landscape, it becomes important for consumers to have improved access to | 1 |
a necessary policy adjustment later could be far more painful. monetary policy central banks in other countries are deploying strong measures to buoy up economic activity and inflation. key interest rates in many countries are close to zero. central banks in the us, uk and japan have made large - scale bond purchases and thereby expanded their balance sheets in order to push down long - term interest rates. it is likely that the sharply expanded access to long - term liquidity from the european central bank ( ecb ) has reduced the risk of a banking crisis in the euro area. at the same time, ecb measures have contributed to stabilising government bond markets, and short - term funding costs for italy and spain have declined. bis central bankers β speeches chart 9 the eu is working on measures to restore financial market confidence β and public confidence. greece has reached an agreement with its private creditors on a substantial debt restructuring. on this basis, euro area heads of state or government have approved a new loan package for greece. banks have been instructed to increase their core capital. chart 10 bis central bankers β speeches the norwegian economy is still well equipped to withstand the negative effects of the financial crisis. oil prices are high, contributing to norway β s favourable terms of trade. growth is being sustained by high activity in the oil industry. we have room for manoeuvre in economic policy. however, a number of enterprises are feeling the impact of the downturn abroad. some segments of the export industry are feeling the effects of lower turnover and a strong krone. a high level of uncertainty is causing households and enterprises to be more cautious in their consumption and investment decisions. at the same time, house prices and household debt are still rising. capacity utilisation in the norwegian economy is now near a normal level. growth in mainland gdp is projected at about 3 percent this year and in the years ahead, broadly in pace with potential output growth. chart 11 the operational target of monetary policy is annual consumer price inflation of close to 2. 5 percent over time. recently, inflation has been low, close to 1 percent. inflation will be brought back to target, but how long this will take depends on the disturbances to which the economy is exposed and their effect on the prospects for the path for inflation and the real economy ahead. when setting the key policy rate, we do not exclusively assign weight to bringing inflation back to target, but we also take into account the impact of the interest rate on output and employment. the inflation | years will be counterbalanced by good years ahead. but changes in the global economy affect the growth outlook and the balance of risks, and hence financial market returns as well. chart 7 bis central bankers β speeches the yield on the presumably safest long - term government bonds can provide a basis for estimating the return on the fund. returns exceeding this will reflect the risk we are willing to take. in 2001, real interest rates on long - term government bonds averaged around 3 percent internationally. real interest rates have since fallen and long - term real interest rates are now at a historical low of between 0 and 1 percent. over time, we expect equities to yield a higher return than bonds. over the past few years, the fund has increased its allocation to equities, compensating to some extent for low bond yields. however, the excess return on equities must be considerable to keep up the overall return on the fund. this is not impossible, but perhaps more than we can expect. a bolder investment strategy could compensate for low interest rates, although the risk of substantial losses would also increase. this is not a path we are likely to take. table 1 the fiscal rule was drawn up in 2001. today, the situation is different. in 2001, a real return on the fund of 4 percent, or a little higher, based on the then prevailing distribution between equities and bonds, was a reasonable assumption. today, calculations yield a lower figure for expected real return. 1 the real return on bonds in the fund β s portfolio can now be estimated at 1 percent. with a normal risk premium on equities, the real return on the whole fund can be quantified at 3 percent. there is a possibility that the real return will be higher, but it may also be lower. if we spend more than the annual return on the fund, we will be eating into the savings portion. the conclusion is that a more robust approach would now be to base fiscal policy on an annual expected real return on the fund of 3 percent. such an adjustment would underpin the main principles that were behind the establishment of the fiscal rule β stability and sustainability. see norges bank staff memo 6 / 2012. bis central bankers β speeches chart 8 in 2011 the structural non - oil budget deficit was about 3 percent, which is close to such a new path. adapting petroleum revenue spending to a lower expected return should not therefore be particularly demanding. if we wait, | 1 |
11 per cent down ). unemployment we think will continue to rise somewhat during 2010, though a reversal of net migration flows will serve to limit this. the current recession has resulted in a significant deterioration in the labour market position of the young in the worst affected countries. in germany, the unemployment rate has hardly moved during the recession, whether at the aggregate level or among the under - 25s. in the usa, which has seen its aggregate unemployment rate double from about 5 to about 10 per cent, youth unemployment went up only slightly faster from 12 to 19 per cent. but in ireland youth unemployment has jumped from less than 10 per cent to over 31 per cent in the past two years β much faster than the aggregate rate which has gone from 4. 7 to 13. 3 per cent. ( spain has had an even worse experience ). this has to be turned around : and that will require determination. some lessons can be learnt from past experience here. this is the fourth major recession i have lived through, though i was only in primary school for the dip of the mid - 1950s which prompted the sea - change in economic policy and gave us the outward - looking globalised society we live in today. globalisation has allowed us to converge in average living standards to the european frontier, but globalisation also does seem to be associated with heightened volatility, and the depth of the current downturn reflects the over - heated expansion that preceded it, which in turn was fuelled by credit sucked - in to ireland all too readily from the globalised financial system. in short, we did not manage our engagement with the global economy in a manner consistent with stable growth. but if globalised economies can fall far, their recovery can also be vigorous. the spectacular recovery of employment and fall in unemployment after the deep recession of the mid - 1980s has rightly been attributed among other things to the wage restraint that characterized the social partnership from 1987 on. wage restraint is all the more important now, when price levels have been falling, with the result that nominal wage rates that might have been viable a couple of years ago, no longer make commercial sense. the problem is even worse because of the unsustainable upward drift in wages that occurred in the mid 2000s. i am sorry to bang on about this, but central banks aim at overall price stability to help ensure that wage and price planning can be carried out in a manner that ensures stable growth. when, as in ireland today, inflation undershoots | martin redrado : the central bank of argentina passed the test article by mr martin redrado, governor of the central bank of argentina, published in clarin newspaper on 5 august 2007. * * * this time, the epicenter was not latin america, southeast asia or southern africa. the financial turbulence of the past few days comes from the developed world β more specifically, the united states. real estate prices, which have been falling for more than twelve months now, have begun to affect the quality of the assets in the mortgage market. in particular, banks and mutual funds trading mortgages in the subprime market have passed on increased risk to the system. this has led to a massive sale off in most of the higher - yield asset classes, including emerging market securities, to cover losses in the markets of origin. against this turbulent backdrop, which leads to a new risk assessment and tighter credit, argentina has shown that it has the necessary exchange rate and monetary tools to provide its population with a horizon of solvency and predictability. in this context, the central bank of argentina is like a chess player playing simultaneous games, since monetary policy cannot have an erratic or spasmodic behavior. instead, each β move β must be in line with the global strategy applied in multiple chessboards, that is, preserving the value of currency, the stability and depth of the financial system, and the equilibrium in the monetary market. from this perspective, special attention should be given to the downstream effect of each β move, β since often, β sacrificing a pawn β may seem costly in the short - term, but healthy and consistent with the main goals of the framework in place from a strategic point of view. action taken β encompassing a set of financial and banking regulations and direct intervention in the monetary, foreign exchange and financial asset markets β should not be interpreted in isolation. instead, it responds to a preventive and consistent strategy developed in the past few years to ensure the necessary β artillery β to prevent frights in times of international financial turbulence. prudential foreign reserve accumulation is an example that speaks for itself. as with every insurance policy, it represents an β abstract β benefit while it is not used, but a β concrete β one in financial stress situations : the $ 44 billion in the central bank β s coffers were enough to discourage speculation that might have increased uncertainty. if this is coupled with the positive inflow of dollars coming from the external surplus, the potential | 0 |
jean - claude trichet : governance and convergence β the state of play in the euro area speech by mr jean - claude trichet, president of the european central bank, at the conference entitled β euro zone β converging or drifting apart? β, organised by the european parliament ( committee of economic and monetary affairs ), open debate with national parliaments, brussels, 28 february 2007. * * * mesdames et messieurs, messieurs les deputes, permettez moi tout d β abord de remercier mr pervenche beres de m β avoir invite a debattre sur un sujet particulierement important, qui est le degre de convergence des economies de la zone euro. c β est en effet un grand plaisir pour moi de partager avec vous et avec mes collegues et amis jean claude juncker et joaquin almunia aujourd β hui quelques reflexions sur ce sujet. sehr geehrte damen und herren, sehr geehrte abgeordnete, bevor ich beginne, mochte ich zuerst frau pervenche beres danken fur die einladung und das zustandekommen dieser sehr wichtigen offenen debatte zum stand der konvergenz innerhalb des eurogebiets. es ist mir eine besondere freude, mit ihnen und meinen kollegen jean claude juncker und joaquin almunia einige gedanken zu diesem thema austauschen zu konnen. economic and monetary union and the creation of the euro area β a single economy with a single currency at the level of a continent β was, and still is, a formidable endeavour. contradicting all those sceptical β academics, media and other observers β who had anticipated a failure, emu has been a great success. for eight years we have successfully worked together in the euro area with a single monetary policy and a single currency. to those who claim that the euro has played against job creation, i would like to mention here two striking numbers : over the 8 years since the creation of the euro, the euro area created more than 12 million jobs ; over the 8 years preceding the creation of the euro, less than 3 million jobs were created ; of course i | ongoing recovery. this marks a departure from the past when euro area growth was far more reliant on external demand. while world trade has weakened considerably and last year grew at the slowest pace since the financial crisis, growth in the euro area has accelerated. looking at the domestic recovery in more detail, consumption expenditure is a key source of support for growth. rising employment and growth in real disposable income are translating into increased spending rather than increased saving, reflecting households β confidence in future economic prospects. this contributes to a positive feedback loop between consumption, employment and income, further bolstering the recovery. but wage dynamics still lag behind due to the remaining slack. higher incomes are mostly the result of job creation rather than salary or wage increases. investment is also gradually picking up given the favourable financing conditions, the need to 1 / 5 bis central bankers'speeches modernise capital stock after years of subdued investment and the strengthening of corporate profitability. improvements in business confidence and in the production outlook, as reflected in recent business sentiment surveys, should result in higher investment spending. however, public investment is below trend in some surplus countries. also on a positive note, the risk assessment of the growth outlook is more and more balancing. although we still face some risks, in particular regarding the external outlook, political uncertainties and fragilities have consistently evolved in a positive fashion in europe since the beginning of the year. available data also point to an improving external environment. global economic activity indicators suggest robust growth at the start of 2017, which should further support business investment in the euro area as export demand picks up. one could say we have left behind an environment of elevated uncertainty in a knightian sense and progressed to one of calculable risks. but in the euro area the balance of risk for inflation is not where the balance of risk to growth lies. in terms of the labour market, the unemployment rate continues to decline despite growth in the euro area labour force. meanwhile, survey data suggest further improvements in labour demand during the first quarter of this year. while the level of economic slack remains elevated, which subdues underlying inflation, growth rates are above potential so the output gap will continue to close over the policy horizon. this should support wage growth and return inflation towards a level that is close to, but below, 2 % over the medium term. indeed, there are also timid signs of early pipeline pressure stemming from industrial producer prices. against this background, market expectations regarding deflation | 0.5 |
level and policy relevance, it has enjoyed the presence of a large number of distinguished visitors, including the federal reserve board chairman, jerome powell. building on this example, i am pleased to announce a new collaboration between the banco de espana, cemfi, and the universidad internacional menendez pelayo, an annual conference on the spanish economy, the first edition of which is due to take place next week in santander. this conference series seeks to bring together top 1 / 2 bis - central bankers'speeches researchers to present their recent work on topics of critical importance for the spanish economy, and also distinguished policy - makers to discuss their views on these topics. but past successes are simply a good starting point. cemfi has ambitious plans. it has a plan to implement a strategic vision for the future ( underpinned by rigorous external evaluation ), it has outstanding leadership ( current and incoming ) and it has plenty of talent. all these elements have been brought to fruition this year. in fact, the academic year that we are closing today has been full of good news for cemfi, starting with the successful restructuring of the master programme, the refurbishing of the new premises in casado del alisal 12, and the increase in the size of the faculty from 16 to 19 members, in line with the board of trustees'decision to have 25 faculty members by 2025. even so, we should never forget, that all this β the premises, staff, faculty, strategic plans β are merely instruments. you, the students at cemfi are the ultimate purpose. your education and your future. they are at the core of our decisions. apart from the master in economics and finance, the other major academic programme at cemfi is the phd in economics. in this respect, i would like to mention that 10 students have already defended their phd theses or will do so in the near future. they have all done high quality research and have secured good placements, two of them at the banco de espana. i am sure that we will see many papers from their theses appearing in academic journals. the 20 students who graduate today from the master in economics and finance come from seven different countries : argentina, australia, colombia, chile, china, costa rica, italy, and spain. they will join more than 700 alumni of cemfi's master programme. most of the students of this year's class will continue their graduate studies towards a phd, | on a national or on the regional bank we are contemplating? what matters should be decided by unanimity, what by a simple majority? should we consider proportional representation, consensus, or, for the regional matters, touching on discrete national interests, should we have a requirement for even double - majority voting, that is, after an agreement by the bank, a reference back to each nation for ratification? β’ what should be the tenure of office for boards and governors? should they have fixed, or open tenure like some judges dependent on β good behaviour β ; should these jobs be open to competition on merit, and with freer movement of labour, should the choices for employment with national and regional banks be limited on grounds of nationality? this issue is hotly debated now with the world bank and the imf, where, at least for the fund, the next managing director will be appointed in a different manner than has been the case since its creation. β’ how is accountability to be ensured? is that a matter solely for the board, or the shareholders ; at national level should there be a cross - party parliamentary committee of scrutiny ; and what do we envisage for our regional bank to safeguard probity and avoid even the suspicion of loose practice? β’ what is transparency? should documents be open to examination by the board, or by parliament or indeed by the people, under freedom of information? how far should voting behavior be reported ; should it be just the overall outcome or the detailed voting by individual members, as in many parliaments? β’ who should be the shareholders? should this be limited to the states or opened to the private sector and to others ; and, with the rise in shareholder interest in management in many companies, what should be the shareholder rights and powers in central and regional banks? β’ are central banks for the governments, or for the people? how should this choice be reflected in the forms of governance? architecture and performance these are some of the issues emerging, haltingly, on the agenda at national, regional and international levels. the mere fact of raising the questions suggests some answers, or some possible avenues for searching for them. in the final statement from the commonwealth meeting in june, this year, reflecting on the performance of the bretton woods institutions, the judgment was unequivocal : β β¦ such institutions do not have adequate capacity, governance structures, or built - in responsiveness either to anticipate or to address global needs in a timely fashion β¦ β this | 0 |
, i want to touch on the issue of trade - offs in the context of disinflation and labour market dynamics. historically, the slope of the phillips curve described the trade - off between unemployment ( or slack ) and inflation. however, recent work that includes the vacancy to unemployment ratio ( β vu - ratio β ) in the phillips curve raises the important question of whether an easing in labour demand occurs mostly at the hiring margin β in other words, fewer job openings β or whether unemployment also rises. 8 in the us, which started its hiking cycle earlier than the euro area, the adjustment so far has been mainly through a reduction in job openings. at the same time, job switching, an important driver of wage growth dynamics there, have fallen back to pre - pandemic levels. 9 wage growth has also slowed markedly in recent months. for ireland, we only have a short time - series of job vacancy data, so it is difficult to compare changes in the vu - ratio over previous cycles. however, recent job hiring statistics show that the post - pandemic surge peaked in the first half of 2022, and has since fallen back ( figure 9 ). along with the decline in job openings, this is further evidence of some weakening of the demand momentum that built up after re - opening. however, at 6. 7 per cent ( of total employment ) in q1 2023, the new hiring rate remains above its long - run average of around 6 per cent. figure 9 : new hires ( ireland, as per cent of employment ) source : labour force survey ( cso ). new hires are defined as workers with job tenure of three months or less in a given quarter. for the euro area as a whole, we can construct a longer vu - ratio time series back to the early - 1990s. decomposing changes in the vu - ratio, a number of stylised facts emerge ( figure 10 ). first, cyclical variation in the employment rate are typically accompanied by changes in both job vacancies and unemployment ( moving in opposite directions ). that said, there are some cyclical slowdowns where job vacancies declined but unemployment did not rise, for example in the mid - and late - 1990s. the dot - com bust, which shows up as below - trend employment growth during 2002 - 03 is another episode where job vacancies accounted for the bulk of the change in the vu - ratio, although unemployment also rose slightly during this | and the sharp tightening of monetary policy over the last year. this is contributing to historically tight labour markets, although we may have passed β peak tightness β, as seen through the recent decline in job openings in some countries, and weaker forward - looking employment indicators. in the first half of my speech, i will focus on the first two aspects of resilience : strong labour demand and supply. this is important context for the remainder of my speech, where i focus on labour market tightness, wage dynamics and the implications for the inflation outlook. i conclude with an overview of the economic outlook in the recent ecb projections and the central bank β s quarterly bulletin, published earlier this week. the post - pandemic labour market : a tale of demand and supply employment in ireland reached a new record of over 2. 6 million in the second quarter of 2023, up by almost 12 per cent on 2019, and more than 5 per cent higher than pre - pandemic trend growth. in the euro area, employment stands at over 168. 5 million persons, up 3 per cent on pre - pandemic levels and another record high. while 3 per cent euro area employment growth looks small compared to ireland β s 12 per cent growth, it is important to place the figures in context. pre - pandemic trend employment growth was already stronger ireland, for both demand and supply reasons. continental european countries face demographic headwinds due to falling birth - rates and ageing populations ( ireland is on a similar path, albeit some years behind ). 1for example, italy β s working - age ( 15 - 64 ) population decreased by 3 per cent between 2020q1 and 2023q1, but employment increased marginally by 0. 7 per cent, a 3. 7 per cent swing. the higher italian employment rate β up from rising from 58. 4 to 60. 6 per cent β is due to a combination of lower unemployment ( 7. 6 per cent in july 2023, down from 9. 7 per cent in december 2019 ) and increased labour force participation ( up from 65. 6 to 66. 2 per cent ). with the exception of euro area manufacturing, which has only recently returned to pre - pandemic levels, employment growth is spread across sectors ( figure 2a - 2b ). within services in ireland, both business services and public services have had exceptionally strong employment growth in recent years. developments in total hours worked have been weaker than employment ( | 1 |
part in reshaping the global thinking on this front. the effects of the global financial crisis on markets are indeed still fresh in our minds. 1 / 4 bis central bankers'speeches history β and a too late array of empirical evidence and research β has shown how the lack of awareness on the part of consumers in advanced economies drove them to make flawed decisions on the subprime mortgages and synthetic instruments used for trading. the drive for higher returns, coupled with a lack of visibility on the risk side, prompted many people to invest in these securities. these events eventually highlighted the critical importance of financial literacy, prompting its inclusion as a matter of priority on the agenda of policy makers globally. in september 2009, at the g - 20 leaders β summit in pittsburgh, a pledge was made, i quote, t β o support the safe and sound spread of new modes of financial service delivery capable of reaching the poor β. unquote. the pledge also called on financial standard - setters to promote successful regulatory and policy approaches and elaborate standards on financial access. a year later in seoul, the g - 20 committed to the launch of the global partnership for financial inclusion and developed a financial inclusion action plan. at the level of the united nations, financial inclusion is positioned as an enabler of other developmental goals in the 2030 sustainable development goals, where it is featured as a target in eight of the seventeen goals. ladies and gentlemen, poor financial decisions are often not only the result of financial recklessness, but also of bad planning, and lack of information. the implications of these shortcomings can easily spiral beyond control. undeniably, in today β s world, many of these decisions originate from β or are based upon β the increasing use of technology. add to that the consequences of β buy now pay later β targeted campaigns which can unfortunately fuel poor spending habits and ballooning debts. we are all aware that trust is the cornerstone for the effective functioning and stability of the financial system. as the system evolves and becomes more complex, access to financial services also becomes easier. what this implies is that there needs to be an appropriate level of financial education to enable customers to make informed decisions about the suitability of financial products to their specific situation. concurrently, a robust financial consumer protection framework must be in place to shield consumers from abuse and make them become judicious users of financial products and services. this is precisely the rationale behind the elaboration of our 2022 financial literacy strategy | can rest assured that the bank will leave no stone unturned to reach out to the population. i thank you for your attention. 4 / 4 bis central bankers'speeches | 1 |
staff compared to earlier projections mainly reflects the carry - over effect of weaker economic developments in 2004 rather than a downward revision of the expected pick - up of activity this year. there are some signs of an upturn in investment. as far as consumption is concerned, we expect that it will increase in line with real disposable income, which is projected to rise by about 1. 4 % in 2005. despite the increase in oil prices? oil prices are assumed to decrease gradually in the future as implied by futures markets. we are making no assumptions about other factors, such as an improvement in confidence, that could positively influence consumer behaviour. of course, if oil prices turn out to be higher than currently envisaged, they would dampen disposable income and consumption growth. what constitutes a natural interest rate for the ecb? the concept of a natural interest rate refers to an equilibrium real interest rate that reflects productivity and population growth. although most recent analyses seem to indicate that in the euro area it lies within a corridor of 2 % to 3 %, i would not be surprised if the lower bound of the estimated range is revised downwards as a result of the lower growth in productivity in the euro area during the past ten years. owing to the high level of uncertainty surrounding the estimates of the natural interest rate, great caution is called for when using them. the natural interest rate does not constitute an intermediate objective of the ecb β s monetary policy. competitiveness is improving in germany, including as a result of wage cuts. is this a β recipe β for other countries, like italy? germany has indeed succeeded in significantly improving its international competitiveness. without giving advice to individual countries, i must stress that it is essential to improve competitiveness to effectively compete in the global economy. italy β s competitiveness has declined during the past five years. it is therefore important to reverse this developing trend. how? for example, by increasing productivity growth and enhancing market flexibility. the wall street journal views italy as a β fortress β because of its restrictive attitude towards imports. do you support this policy, or is it better to be more competitive? past experience has shown that protectionism is not effective and can never be an appropriate response in the long term. it may even be damaging in the short term, if it leads other countries to introduce protectionist measures as well. besides, such measures are not in accordance with the european union β s fundamental principle of an open and competitive economy. competition is | benoit cΕure : taking stock of the global role of the renminbi speech by mr benoit cΕure, member of the executive board of the european central bank, at the european - chinese banking day, frankfurt am main, 17 november 2014. * * * dear ladies and gentlemen, it is an honour to be invited here to the european - chinese banking day, part of the frankfurt euro finance week, and i would like to thank my hosts for giving me the opportunity to share some thoughts on the issue of yuan ( or rmb ) clearing. clearly, the increasing importance of the chinese economy and its currency over the last decades brings many new challenges, some of which also encompass international payment activities. as a major economy, the euro area is naturally affected by this process. the rise of china has been astonishing. since 1990, its weight in global gdp has increased from just below 2 % to over 13 % this year, and is projected to surpass 15 % before 2020. in ppp terms, china β s share in the global gdp is, as of this year, even larger than that of the us 1. this rapid economic development would not have been possible without china also becoming one of the world β s main trading nations, together with the euro area and the us. this economic prowess is also gradually translating itself into a greater presence in the financial sphere. china has liberalised cross - border financial transactions, first those related to trade and direct investment, but increasingly also those related to portfolio investment. approved investments under the different schemes that allow domestic and foreign institutional investors to make cross - border investments in and out of china have been rising steadily, although, so far, they amount only to about 2 % of china β s gdp. however, we should not forget that financial liberalisation is an ongoing process, which is still not complete. additionally, in the last few years, central banks across the world have started to hold onshore chinese renminbi ( cny ) in their reserves portfolios, usually with the expectation that cny may become a reserve currency in the coming years. many others indicate interest in reserve asset diversification into cny once china β s onshore market opens up further. this is an issue that the eurosystem will also have to further reflect on in the future. also, the shanghai β hong kong stock connect programme, which allows institutional and private investors from mainland china to invest up to a certain quota in hong kong and vice versa, is | 0.5 |
peter praet : economic adjustment in the euro area speech by mr peter praet, member of the executive board of the european central bank, at the institutional money congress 2013, frankfurt am main, 27 february 2013. * * * i would like to thank arthur saint - guilhem, melanie ward - warmedinger and niels bunemann for their contribution to the preparation of this speech. ladies and gentlemen, introduction thank you for inviting me to share some thoughts with you on what has been achieved and what remains to be done in the process of addressing the economic challenges we are faced with in the euro area. i will give you a central banker β s view on the role of monetary policy in managing the current crisis, but i will also extend my discourse to cover the broader institutional landscape, including some thoughts on what policy - makers in other fields than monetary policy could contribute to improve the euro area β s resilience. today, i will focus on three points : first, the european central bank β together with the national central banks of the eurosystem β has acted forcefully within its mandate, in order to counteract any risks to price stability stemming from the crisis. the ecb β s monetary policy during the crisis has invoked both standard instruments such as interest rate changes and non - standard instruments to ensure that the standard instruments would have the intended effects. second, the most distressed countries within the euro area have embarked on a correction of their policies. this correction is painful and requires perseverance of all responsible parties. the reward should be positive results that are now in fact tentatively observable. third, governance reforms at the level of the euro area and the european union at large have contributed to an improvement of the foundation for a better performance in future, and this work is still in progress. the multi - layered crisis when looking at the crisis as it has developed since 2007, it can be helpful to use the metaphor of an iceberg. in each phase of the crisis we have discovered new layers, from the visible tip of the iceberg to the dangerous ice cliffs that linger under the surface β and which, in the economic context, have emerged in the subsequent phases, each time proving to be larger than previously thought. this has challenged policy - makers to acknowledge the real dimensions of the problems, and to adjust their response accordingly. the tip of the iceberg β the liquidity crisis β was revealed in mid - 2007 when the us mortgage market, which lay at the basis | β due to sovereign immunity β are not. we therefore need a super - national structure which guarantees that, should an omt be bis central bankers β speeches activated, government solvency β fiscal sustainability and macroeconomic viability β is in place and sufficiently constraining β national policies. this is why we need programme conditionality and multilateral surveillance as a precondition to initiate omt. moreover, the design of omts entails interventions only in the short end of the government bond market β up to three years β time to maturity β and they will be fully sterilised, meaning that we would absorb all amounts of liquidity injected by omts. early results of economic adjustment now i will turn to the β green shoots β of a nascent recovery that can already be observed. almost six years down the road since the start of the financial turmoil that turned into a crisis, many euro area countries have experienced a significant, but to date still partial, correction of external and domestic imbalances. substantial progress can be seen most clearly in the development of current account balances. in the programme countries β greece, ireland and portugal β current account balances have improved by more than 7 percentage points ( relative to gdp ) between 2008 and 2012. in spain the current account has improved even more dramatically. much of this was driven by an inevitable drop in domestic demand, but we have also seen strengthening exports in a global environment that is not really buoyant. this indicates that the countries β efforts to rebalance their economies are starting to bear fruits. part of this picture is also the partial reversal of previous losses of competitiveness, but here the pace of progress varies across countries. ireland has performed very well, with accumulated unit labour costs falling by 18 percentage points relative to the euro area average. greece, portugal and spain have seen a 10 percentage point relative improvement so far. in some other countries in need of strengthening competitiveness we are still waiting for the correction to become apparent. and in yet other countries, notably some of the countries that joined the euro area more recently, we have actually seen an incipient loss of competitiveness. it is important that these countries take a lesson from the mistakes of others. fiscal balances have shown strong improvements. for example, greece β s structural primary balance ( that is, the fiscal balance adjusted for cyclical developments, interest payments and one - off factors ) is estimated by the commission to have improved by more than 13 percentage points. i acknowledge | 1 |
trend that began in the 1970s, when reserves were first reallocated from us treasury bills to bank deposits, reserve managers have been gradually shifting into higher - yielding, higher - risk instruments. they seem most comfortable managing market risk but are beginning to take on more credit and liquidity risk too. the currency composition of their portfolios, while volatile, has not changed as much as the instrument composition. " it is essential to recognise that reserve managers are already shifting into higher - yielding instruments with a higher risk - return equation, presumably as a result of progressively rising level of reserves. consequently, the financial returns on the free reserves at the margin could be far higher than the average return. in my view, the marginal return appears to be a more relevant concept in the context of alternative forms of investment of reserves. ( v ) quasi reserves with the positive shock emanating from large capital flows resulting in significant reserves accumulation in many emes, a new development in reserve management is to hold a part of the reserves which could be used by the public sector in a country in a manner different from the strictly defined pattern of holding of the external assets by the monetary authorities. such foreign exchange reserves could be termed as quasi reserves. in terms of its holding, such quasi reserves could be easily retrievable when the situation demands. in singapore, the monetary authority of singapore ( mas ) and the government of singapore investment corporation ( gic ) basically manage foreign exchange reserves. gic is the government β s principal investment agent, handling the bulk of the nation β s investments while the mas holds reserves to maintain the stability of the singapore dollar. similarly, temasek holdings invests in singapore as well as manages diversified global portfolio with the aim of creating and maximising sustainable value for the shareholders and providing resources to finance pension and other benefits. on the pattern of the singapore's gic, south korea has recently established the korean investment corporation ( kic ). another interesting example is china, where foreign exchange reserves have been utilised to strengthen the banking system without foreign securities being sold. china has transferred funds from its international reserves, held with the peoples β bank of china ( pbc ) to a new company, central huijin investment company ( chic ), set up in 2003 and jointly managed by the government, pbc and the state administration of foreign exchange. in the pbc's balance sheet, the said amount of reserves was replaced by claims on the chic. the chic | evolved as a mix of various independent functions. thus we have credit functions as a separate activity, deposit taking as another different function, a host of payment facilities - each as a distinct activity, other services and so on. it is now time to look at consolidation of all these inter - related functions. technology has already provided an answer in the form of total branch automation, which has now given way to the core banking systems, and the facility of single - window service at branches. while this traditional approach towards consolidation may be ensuring that the customers of today are retained by a bank, the growth of new clientele will, however, be related to other progressive measures to be taken by banks. an outward looking consolidation holds the key. consolidation of all types of financial services which a customer of a bank may require needs to be offered by banks. while some steps have been taken by banks in the form of universal banking and the offering of related financial services such as insurance, tax advice, securities market operations, depository functions and the like, the future may witness alliances with service providers who may in today β s context appear to have to relationship with traditional banking concepts. for example, a mobile phone user, who is a customer of particular telecommunication service provider, may switch preferences to another bank if the phone company does not link its services to that of a particular bank with whom the user is banking with. thus strategic alliances with varied service providers may become a necessity. the next major challenge arises out of the forces of competition. traditional concepts relating to competition from other players in the same line of business will indeed exist but these will pale into oblivion in the form of competition from hitherto unexplored and unanticipated areas. easy finance schemes by retailers of consumer durable articles will obviate the need for short term loams by customers of banks, thus resulting in a dwindling retail loan portfolio. banks can overcome this challenge by providing refinance to the retailer who would be in requirement of funds for improving his business turnover portfolio. the essence of this is that competition may have to be exploited as an opportunity. planning for the unanticipated and looking for opportunities hold the key to the successful bank of the future. in this connection, i draw your attention to the report of the rbi group on rural credit and microfinance and suggest that banks which are first movers would stand to gain substantially in terms of expanding their retail portfolio. technology implementation comes with its attendant requirements | 0.5 |
##ed investors β confidence but it is important to take a longer term view. the medium and long - term fundamentals of asian economies are strong, driven in no small part by china β s economic engine. i believe we will continue to see strong intra - regional trading volumes and wealth creation. as the asian economies grow, opportunities will arise in the capital markets for financing chinese companies β regionalisation, if not, globalisation efforts. singapore β s value proposition to chinese companies i believe the singapore exchange will be committed to maintain a robust market - oriented framework, which facilitates organisations that would like access to global capital for their business expansion plans. to date, the singapore exchange is one of the most international equity markets globally, boosting 38 % of international listings originated from a myriad of places such as the asean nations, hong kong, india, japan, south korea, north america, europe, and of course, china. singapore welcomes chinese companies to use singapore as a second home, to pursue regional business opportunities, to build international connections, as well as a test - bed for new, innovative ideas. at a point where east meets west, singapore today is home to 26, 000 international companies. of these, approximately 4, 200 mncs have regional activities in singapore to leverage on the singapore connectivity to service their clients from within the region. an increasing number of financial institutions are also using singapore as a regional hub to conduct their investment, fund management and private wealth management activities. singapore β s asset management industry has boomed and flourished, with assets under management surpassing s $ 900 billion. closing the establishment of the singapore exchange β s presence in beijing could not be more relevant, with the chinese market growing at a strong pace, and as chinese companies and markets become increasingly linked to the global community. the strong economic growth in china, singapore, as well as the asean region, gives us a window of opportunity to deepen and enhance market integration, strengthening asia β s competitive edge. the singapore exchange beijing representative office will, i am sure, play an important supporting role in bridging both china and singapore β s equity capital markets, and servicing the current and future listed chinese companies. it also demonstrates singapore β s long - term commitment to china, and i believe both markets will stand to gain in the long run. as a chinese saying goes, spring is the season we sow the seeds in the fields. as the singapore exchange sows its promising seeds in china, i very much hope that both | singapore and the chinese companies who choose singapore as their financing location will enjoy the harvest of good fortune in time to come. with that, i would like to extend my heartiest congratulations once again to the singapore exchange for its representative office opening in beijing. i encourage the exchange to play its role well in serving the specific needs of the chinese companies with the ambition to grow regionally and in doing so, contribute to the strengthening partnership between the china and singapore. have a great evening, thank you. | 1 |
and the largest bank in indonesia, bank mandiri can bring much experience and leadership across the region. bank mandiri β s current scope of activities covering trade financing, sme and micro banking products is highly relevant towards advancing the interests of both malaysia and the broader asean region. the entry of bank mandiri into malaysia via the abif framework would also provide an opportunity to further enhance the regional integration in payment systems between malaysia and indonesia. the current collaboration between the atm switches in malaysia ( meps ) and indonesia ( atm bersama ) to facilitate cross - border cash withdrawals can be enhanced to facilitate cross - border remittances leveraging on over 11, 000 atms in malaysia and 17, 000 atms in indonesia. this can be leveraged upon by both the malaysian and indonesian population including the diaspora groups to undertake safe and efficient cross - border remittances. such collaboration can also be extended to facilitate retail payment card transactions via the domestic debit card schemes of both countries. eventually, i envision atms in malaysia and indonesia will be linked seamlessly. this will reduce cost, enhance safety and expand outreach. conclusion let me conclude with a quote by malaysia β s second prime minister, tun abdul razak hussein, who said in 1967 that, β we cannot survive for long as independent but isolated peoples unless we also think and act together and unless we prove by deeds that we belong to a family of southeast asian nations bound together by ties of friendship and goodwill β we have indeed come a long way in our cooperation and journey between indonesia and malaysia. the potential of bank mandiri as a qualified asean bank in malaysia will be a significant milestone for both our countries and the asean region. it represents the realisation of a vision that was formed more than six years ago with the asean banking integration framework, with roots that go even further back. we should expect greater achievements by both our countries. 2 / 3 bis central bankers'speeches thank you. 3 / 3 bis central bankers'speeches | economy still faces significant headwinds and that there are some meaningful downside risks. in the headwinds department, i would include the run - up in gasoline prices mentioned earlier because that will sap purchasing power, the continued impediments to a strong recovery from ongoing weakness in the housing sector, and fiscal drag at the federal and state and local levels. in terms of downside risks, these include the risk that growth abroad disappoints and the risk of further disruptions to the supply of oil and higher oil prices. on the inflation front, the overall rate of increase of consumer prices, as measured by the 12 - month change of the price index for personal consumption expenditures slowed to 2. 3 percent in february from a recent peak of 2. 9 percent last september. even though the recent rise of gasoline prices mentioned above could interrupt this pattern, we expect this moderation of overall inflation to resume later this year. while the underlying core inflation rate, that strips out volatile food and energy prices, has been somewhat higher than expected a few months back, it appears that the annual rate of core inflation1 has peaked and we expect it to begin to decline later this year. 2 finally, inflation expectations, which play an important role in the inflation process, remain well anchored. by this i mean that people expect that the rate of inflation will continue to be relatively low for some time to come. regional economic conditions so how is the recovery proceeding in the state and region? as i mentioned, the new york fed produces indexes that help us track economic activity in the region. based on these measures, the economic recovery that began in new york state in late 2009 has continued through early 2012, and even gained some momentum. across upstate new york, broadly speaking, the cycle of recession and recovery has been much less pronounced than in the nation, and even the state as a whole. this pattern has been true in syracuse, as well. employment fell by a little over 4 percent during the downturn β a steep drop, to be sure β but only about two - thirds of the decline that occurred nationally. this is quite a change from the region β s past recessions, which have tended to be longer and deeper than the nation β s. one reason why upstate new york weathered the economic storm a bit better than the nation is the resiliency of its housing markets. like much of upstate new york, syracuse β s housing market has been relatively stable and did not experience a | 0 |
choongsoo kim : 60th anniversary of the bank of korea address by mr choongsoo kim, governor of the bank of korea, on the occasion of the bank of korea β s 60th anniversary, seoul, 11 june 2010. the following is an unofficial english translation. * * * dear fellow members of the bank of korea, today we gather to commemorate that day 60 years ago when the bank of korea took its first steps as the central bank of the republic of korea. let me begin by taking this opportunity to express my very deepest gratitude to all former members of the bank, for their dedication to development of the bank and the national economy. i feel sincere appreciation also to all of those who have taken interest in the bank over the years, and been so unstinting in their encouragement and sage counsel to make the bank what it is today. i would like to give warm thanks as well to all current members of our staff, for carrying out your responsibilities so faithfully. looking back over the years, the bank of korea has contributed more than any other institution to the course that has taken our nation, ever since the bank β s foundation in 1950, from a newly emerging poorest country to one that has grown into oecd membership and further into the position as this year β s g20 chair. early on, the bank of korea actively underpinned both the operation of a wartime economy during the korean war, immediately after its foundation, and the work of economic reconstruction that followed the war β s cessation. from the 1960s, the bank endeavored to raise investment resources through promotion of savings and to supply money for economic growth, making it possible for the economy to maintain continued rapid growth for many years. from the early 1990s, the bank of korea pushed ahead very actively with interest rate liberalization, the realignment of policy financing, and capital and foreign exchange deregulation β in the course of economic opening, internationalization, and the shifting into a market economy in korea. during the recent global financial crisis, by putting into place bold and resolute policies to counter it, the bank also contributed notably to the korean economy β s rapid recovery. dear friends and colleagues, the accomplishments of the bank of korea over the last 60 years should be highly evaluated. we can never be satisfied with what we are now, however, if we are to open a glorious new chapter in our history, commensurate with the dignity of our entire nation reaching out to | shocks. 5 meanwhile, the asia - pacific seems to be well placed to a double harvest in terms of the positive effects from the progress of regional financial integration. first, since regional economies show large differences, for example in terms of economic development status, population aging and the degree of financial market development, the wide diversity within the region makes for possible complementary financial transactions within the region. for instance, if an aged country with a high degree of capital accumulation and a low growth rate invests in a country with a younger demographic structure and showing relatively strong growth, benefits accrue to both parties, 6 such as improving profitability and the raising of required funds. we need to set the methods and appropriate degree of financial integration in the asia - pacific, bearing in mind the lessons from the global financial crisis and the latest ones from the euro area. the global financial crisis highlighted the danger of the excessive financial integration of advanced economies, including the u. s. and european countries, 7 and the euro area crisis was attributable to the serious internal imbalances accumulated by financial integration 8 that was blind to the differences in industrial competitiveness within the region. the degree of regional financial integration should therefore be set within a level at which the positive effects, such as risk diversification and sharing, are not offset by the negative effects from spillovers. furthermore, just as a variety of species helps reduce the possibility of the collapse of an ecosystem, 9 financial integration in the asia - pacific that rungcharoenkitkul ( 2011 ). mcguire and rixtel ( 2012 ). jin and jokish ( 2011 ). aizenman et al. ( 2011 ). carton and herve ( 2012 ). haldane ( 2009 ). bis central bankers β speeches recognizes and makes the most of the diversity of regional economies will further strengthen financial system stability. moreover, since the asia - pacific accounts for 30 percent of total global gdp and 46 percent of total global population in 2012, respectively, and includes economies with developed financial markets such as japan, australia, singapore and hong kong sar, the region is fully capable of developing its own regional financial markets. policy tasks for financial stability in the asian and pacific region after undergoing the asian financial crisis from 1997 to 1998, asian emerging economies, while proceeding with capital account liberalization, improved the resilience of their economies by individually achieving moderate inflation, a sound fiscal policy, and a current account surplus and building up foreign currency reserves | 0.5 |
y v reddy : monetary co - operation in asia speech by dr y v reddy, governor of the reserve bank of india, at the imf - mas high - level seminar on asian integration, singapore, 3 september 2005. * * * mr. chairman and distinguished participants, it is a privilege to be associated with the deliberations on asian integration. singapore very vividly signifies both the diversity and potential for prosperity of the asian region. we deeply appreciate the hospitality and excellent arrangements made by the imf and mas for this high level seminar. the discussion paper circulated by the mas is of high quality and is a very useful document. this session is devoted to subjects of special interest to central banks, namely β enhancing regional surveillance and monetary co - operation in asia β. i intend focusing on one of the topics flagged for discussion in this session by the organizers, namely β is there scope for co - operation or co - ordination on exchange rate policies over the long term? β in this brief presentation, i propose to explore the following areas : first, changing dynamics of exchange rate regimes in asia ; second, importance of the asian economies for global prosperity and stability ; third, the asian dynamics of financial integration, fourth, the scope for co - operation or co - ordination on exchange rate policies ; and finally, some thoughts specific to the indian situation. changing dynamics of exchange rate regimes in asia in the period prior to the 1997 crisis, many of the asian economies followed an exchange rate regime of fixed but adjustable pegs. during the east asian crisis, it was realized that such pegs were quite vulnerable to speculative attacks. several east asian economies have adopted different types of exchange rate regimes in the post - crisis period. while some countries continued with pegged regimes, others moved over to some kind of managed floats. thus, it appears that in most economies of asia, the weight of experience seems to be tilted in favour of intermediate regimes, and post - crisis, the choice of the exchange rate regimes generally reveals a growing preference for relatively more flexible exchange rates than before. in this regard, given the current state of relatively benign international financial market conditions, it is possible to speculate that as the comfort level of forex reserves as self insurance is reached, and institutions and financial markets in asian economies acquire further resilience, this shift in preference might grow stronger and wider. the recent moves by the chinese and the malaysian authorities would only substantiate such a notion. an intermediate managed floating regime may | while cmi might have contributed to the exchange rate stability in the the asean + 3 was formed as a gathering of the governments of asean members, china, korea and japan that were asian members of asem, had its first leaders β meeting in december 1997. the saarc council of ministers meeting held in islamabad during january 2 - 3, 2004, desired that the saarcfinance should prepare a concept paper on the proposed south asian economic union and a south asian development bank. the asian bond fund is basically an arrangement for pooling of a portion of foreign exchange reserves of few east asia and pacific countries and the fund portfolio is invested in the liquid us dollar denominated bonds of major asian economies. 3 / 4 region, it has also contributed to closer regional economic and financial integration and co - operation. it is useful to discuss ways of carrying this process forward. there are several fora already established for regional monetary cooperation. the asian clearing union ( acu ), which was established in 1974 at the initiative of the economic and social commission for asia and pacific ( escap ) has eight member central banks. the main objective of the acu is to provide a facility to settle current international transactions among members on multilateral net settlement basis. the acu mechanism also provides for a currency swap type mechanism amongst members for trade transactions. acu aims to promote monetary co - operation amongst the members and has also resulted in closer relations across the banking systems of the member countries. during the last few years trade settled through acu mechanism has grown at a rate higher than that of total international trade of the member countries. yet another forum for exchange of views and experiences, including through visits and training programmes, is saarcfinance. areas covered in recent months include communication policies and practices of central banks and real time gross settlement systems. the recent policy shift in china from a pegged to a flexible exchange rate regime is a significant development in international finance. this step is a watershed in the financial sector reform process now underway in china. going by the available indications, china has long - term plans for development of deep and liquid markets in financial assets, which would encompass foreign exchange, bonds, and equities, as also commodities. some thoughts on india β s approach it may be useful to recall our experience with exchange rate management in india. in september 1975, the government of india proposed a system of determining the exchange rate based on a basket of five currencies, with weighting | 1 |
heart of their strategy, and 31 % are already purchasing the services of fintech companies. many are also partnering with fintech companies. for bank negara malaysia, we have also embraced the fintech agenda, setting up our internal fintech working group in 2016, launching our fintech sandbox not long after that and finally, organising our very own industry conference β the myfintech week in 2019. to be future ready, we are highly committed to support the digital transformation of the financial sector. earlier this year, we issued the e - kyc policy document to enable digital on - boarding of customers to occur anytime and anywhere. this is expected to be a catalyst in the provision of end - to - end financial services, particularly in a β low touch β environment. the financial industry is taking steps to ensure safe and secure introduction of e - kyc, with several banks planning to launch e - kyc solutions in the coming months with more to follow in 2021. we are also currently in the final stages of developing the licensing framework for digital banking, which we envision can enhance access to affordable and quality financial solutions, particularly for the underserved and hard - to - reach market segments. from our sandbox experience, we also observe similar digital alternatives and solutions being developed in the insurance and takaful sector. our shift towards e - payments has also been sustained, with a 47 % increase in the volume of transactions made through internet and mobile banking, and a 260 % increase in active e - wallet users between august 2019 and 2020. furthermore, good progress has been made in enabling the interoperability of e - wallet services offered by banks and non - bank e - money issuers. looking ahead, bank negara malaysia 1 / 3 bis central bankers'speeches will continue to focus on fostering well - designed regulations to facilitate digitalisation and innovation in financial services. all these efforts are intended to support the financial services industry accelerate its transition to an age of digitalisation and innovation. we have high hopes for islamic finance to capitalise on this. in 2017, we launched the value - based intermediation ( vbi ) initiative. vbi encapsulates the industry β s vision to be more impact driven, reinforcing the overarching intent of shariah to promote good and prevent harm on the people and planet, which closely aligns with the global shift towards sustainable finance and esg. through the vbi initiative, islamic financial institutions have also been | policy can make to the economic and financial welfare of canada. inflation, disinflation, and deflation inflation is, of course, defined as a persistent increase in the average price of goods and services ; in other words, a rising trend in the cost of living. in the broadest terms, this is measured by the total, or headline, consumer price index ( cpi ), which tracks the retail prices of a representative " shopping basket " of goods and services over time. it is also the rate that the bank of canada targets for its monetary policy. disinflation occurs when there is a decline in the rate of increase in prices, while deflation refers to a sustained fall in prices ; where the annual change in the cpi actually turns negative year after year. those of you " distinguished " enough to remember the inflation of the 1970s and 1980s may wonder why anyone β particularly a central banker β might be concerned with too low a level of inflation or even a fall in the general price level. the answer is that we are not concerned if these periods are transitory. in fact, as i will discuss in a moment, the bank expects total cpi inflation to be below zero in the second and third quarters of this year before returning to the two per cent target by 2011. while such transitory movements in prices are generally harmless over the long term, greater risks arise from a sustained fall in prices. such deflation, if left unchecked, can weigh on economic activity in two main ways. first, it increases the real burden of debt, making it more difficult for indebted households to consume and leveraged firms to invest. second, if deflationary expectations take hold, purchases and investments may be postponed in the expectation that they can be executed at a lower price at a later date. after all, if prices are falling, why buy that new car or refrigerator β or invest in technology or equipment β when they could be cheaper in six or nine month's time? a mild deflation took hold in japan in the 1990s and was associated with a lost decade of missed economic opportunity. today in the united states, the economy is in the midst of a serious recession and, with the recent dip in u. s. total cpi inflation to below zero, concerns about the possibility of deflation there have increased. recognizing the risks, the federal reserve is responding proactively and presciently β cutting interest rates effectively to zero and committing to using " all available | 0 |
for greater co - operation is the lessons that emerge from the build - up of structural imbalances in the euro area before the crisis. a corollary of monetary integration is the elimination of exchange rate risk, which reduces transaction costs and increases the elasticity of substitution between financial assets issued by member states of the monetary union. in the euro area, financial linkages were greatly facilitated by the introduction of the single currency. a distinct feature of these linkages was the build - up of current account imbalances. deficits accumulated in the periphery were mirrored by a build - up of surpluses in core countries. the financial account counterpart involved significant capital flows from the core to the periphery, with its counterpart in the accumulation of debt β whether public or private. these flows were directed 2 / 3 bis central bankers'speeches mainly to non - tradable sectors ( public consumption and residential investment ). the crisis brought with it a β sudden stop β to these capital flows, resulting in sharp adjustment, largely in deficit countries8. subsequently, much has been done to address what we now recognise as deficiencies in the design of the economic and monetary union β the european financial stability facility and subsequently the european stability mechanism ; the banking union and its components. but more importantly for imbalances, the surveillance framework of eu member states has been strengthened through new rules and procedures, among them, the macroeconomic imbalances procedure. in short, co - operation is important also at the regional level. these changes are also supporting the reform process in greece. conclusions the course and magnitude of global financial flows and our own perceptions of financial openness are being continually reshaped in the 21st century. a period of relative abundance was rapidly brought to a halt with the international financial crisis of 2008. our experience with free capital flows can help us ensure that in the future we harness their benefits and multilateral cooperation is key to achieving that. 1 ( 1 ) see obstfeld, maurice. risk - taking, global diversification, and growth. no. w4093. national bureau of economic research, 1992, van wincoop, eric. β how big are potential welfare gains from international risksharing?. β journal of international economics 47, no. 1 ( 1999 ) : 109 β 135 and agenor, pierre richard. β benefits and costs of international financial integration : theory and facts. β the world economy 26, no. 8 ( 2003 ) : 1089 β 1118. | unlimited congressional policy audits ; adopt a specific equation in setting monetary policy and require from the fomc to justify, through congressional hearings and investigations, deviations from the policy dictated by that equation ; and use the fed as a source of finance to monetize specific government initiatives ( see fischer, 2015 ). in the euro - area, on the other hand, the qe programme has been challenged both for being too expansive, as well as for being too limited. similar criticism has been voiced regarding the effects of monetary policy in the uk. my own verdict is that the challenge should not be in the very concept of independence, but rather in the current economic policy mix : loose monetary policy plus tight fiscal policy. by keeping interest rates in negative territory for too long, the redistribution effects of monetary policy and the perceived degree of success of meeting the mandated objectives become more pronounced. starting with the former, low interest rates redistribute wealth from savers to borrowers ; and result in higher asset prices. reduced real returns on savings have caused reactions from circles representing the savers β constituency, both within and across countries, a point particularly relevant within the emu ; and as the distribution of asset holdings is highly uneven among sections of the population, the benefits of qe programmes may also be seen to be uneven. on the other hand, cbi independence may be questioned as long as recovery in major economies remains fragile ; or is perceived as not achieving equally good performance across the board of its extended set responsibilities including, for example, financial stability. the independence of central banks may be scrutinised due to concerns as to whether a central bank with an extended mandate of objectives can operate transparently and with an appropriate degree of accountability in the context of a democratic political and economic system. all in all, an independent central bank that is subject to democratic accountability needs broader support from the public. clearly, with persistent negative rates you are bound sooner or later to lose major parts of the broad constituency that you need as an independent central banker. central banks have resisted challenges to their independence, pointing to the fact that political pressure onto monetary policy, mainly stemming from the fact that political cycles are shorter than the cycles faced by monetary policy design and implementation, introduces into macro - performance exactly the kind of pressure cbi was initially meant to address. for example, in the us, despite low inflation, survey - based measures of longer - term inflation expectations remain in the area of 2 % ( see fischer | 0.5 |
banks : restoring market function and confidence, β remarks at the panel session β monetary policy boundaries : alternative instruments and policy coordination β at the money and banking conference sponsored by the central bank of argentina on sept. 1, 2009, available online at http : / / www. boj. or. jp / en / type / press / koen07 / ko0909a. pdf. if a decision maker β s confidence is β contaminated β or eroded in the sense that he / she thinks, though with a small probability ( say Ξ΅ ), that he / she is ignorant about the situation he / she faces, his / her rational behavior can be described as β maximin β optimization. in the maximin optimization, he / she is particularly sensitive to the worst - case scenario. see, nishimura, k. g., and h. ozaki ( 2006 ), β an axiomatic approach to Ξ΅contamination, β economic theory, vol. 27 ( 2 ), pp. 333 - 340. also, the fed expanded swap lines with other central banks to enable other central banks to provide further dollar liquidity. a significantly longer duration of liquidity - provision operations helped to substantially reduce financial institutions β fear over procuring longer - term liquidity. the expansion of counterparties and collateral eligibility secured them new no - risk funding sources, that is, central banks, to partly alleviate a lingering fear of counterparty risks in money markets. i think no additional words are needed about their put - option characteristics of the asset purchase programs. looking ahead : no free umbrella against plain old rain clearly, central banks β provision of catastrophe insurance measures has worked quite well, together with various governmental measures of similar characteristics. 4 immediate dangers have subsided, though we are still facing a possibly bumpy adjustment process after the collapse of the β credit bubble β. in order to look ahead, the following two points should be kept in mind. first, these catastrophe - insurance measures are in fact β free β insurance. beneficiaries of these measures do not pay fair, or, in many cases, any premium for these hedges. rather, central banks and governments implemented these measures against the β unusual and exigent β circumstances of contagious confidence erosion. thus, the measures were to be temporary. a permanent provision of such free put - like options obviously distorts the market mechanism and prompts undesirable risk taking or β moral hazard. β to | toshiro muto : the 50 - year - long good relationship between hong kong and the bank of japan speech by mr toshiro muto, deputy governor of the bank of japan, at the reception for the 50th anniversary of the bank of japan representative office in hong kong, hong kong, 24 september 2007. * * * good evening. distinguished guests, chief executive of the hong kong monetary authority mr. yam, consul - general and ambassador mr. sato, ladies and gentlemen, on behalf of the bank of japan, let me extend our gratitude to all of you for our long - standing friendship and your cooperation with our hong kong office. in 2004, i was invited to join the visitors programme sponsored by the government of hong kong, and enjoyed a candid exchange of views with senior officials in the government. the bird's - eye view of hong kong's dynamic economic activities which i saw from a helicopter is really unforgettable. since then, i have felt deeply attached to this great city. by coincidence, this year is also the 10th anniversary of hong kong's handover to china. it is my great honor to visit hong kong again today, and hold our 50th anniversary reception, celebrating hong kong's closer economic ties with the mainland and its prosperity as an international financial centre. pioneer days of the hong kong office there is an interesting story behind the establishment of the hong kong office. in 1953, four years before the opening of the hong kong office, the bank planned to open an office in calcutta, india. at that time, the indian city was important for japan as a source of iron ore and cotton. unfortunately, however, two senior bank staff sent to calcutta became ill, probably due to the difference in climate between india and japan. hence, the bank gave up the plan. after this incident, hong kong was chosen as the location for the bank's first representative office in asia. at the time, hong kong was already the information hub in asia, including china, owing to its trading and financial expertise. in retrospect, the decision was appropriate, given hong kong's current prosperity as a leading financial centre in asia and oceania. however, the new - born hong kong office faced adverse winds in the early stages. until the early 1970's, due to lack of diplomatic relationship between china and japan, staff in the office were not even allowed to have official contacts with banks with mainland origins, let alone to visit the mainland | 0.5 |
and the β status quo β in an ever - changing financial system. i will stop here saying that i believe financial stability should always look towards the future. in this direction, significant progress has been made recently through the development of environmental, social and governance β or esg β investing. in this new paradigm, policy makers should first and foremost learn to assess and monitor new types of risks, such as climate change, and evaluate their growing impact on financial sector stability. in an open letter published three weeks ago on climate - related financial risks from the governor of bank of england mark carney, governor of banque de france francois villeroy de galhau and chair of the network for greening the financial services frank elderson, the significant effects of climate change are highlighted and a call for action from central banks and supervision is issued, with specific recommendations where central banks are encouraged to integrate sustainability into their own portfolio management. in closing, the authors recognize that β climate change is a global problem, which requires global solutions, in which the whole financial sector has a crucial role to play β. today we have unlocked the gates towards exotic, yet newsworthy debates here, in bucharest. therefore, permit me to extend an open invitation to you all for further discussions at the national bank of romania about the impact of climate changes on economies, finance and central banking. we will be honored to host such a conference in bucharest. thank you for your attention. 2 / 2 bis central bankers'speeches | give themselves a margin of error. such buffers could reduce as banks become better at controlling their proportion of high lvr lending. within the speed limit, each bank would make their own assessment of which customers received high lvr loans, based on their own criteria including other risk measures, such as debt servicing capacity, and the potential long - term value of those customers to the bank. exemptions a number of submissions to the recent consultation have proposed targeting particular borrower segments. our preference is to keep the policy simple and effective by not having major exemptions and by minimising the possibilities for avoidance. if for example there was a carve - out for small businesses, the potential for avoidance would increase markedly as individual borrowers set up companies for borrowing purposes. categories where there is a clear case to exempt include housing new zealand mortgageinsured loans, bridging loans, refinancing loans and high - lvr loans to borrowers who are moving home ( but not increasing their lvr or loan amount ). unintended consequences while we believe that lvr restrictions could have significant benefits in terms of reducing systemic risk in the housing market, they are not a panacea. we recognise there would be costs and unintended consequences. most obviously there would be implementation costs. banks will need to change systems and policies, and train staff to implement lvr bis central bankers β speeches restrictions. more substantially, there will be system - wide efficiency costs arising from borrowers and lenders seeking to avoid lvr restrictions. the most obvious channel for avoidance is family loans, which could become more prevalent as a means of reducing the amount of bank finance utilised by first - home buyers. that is a family β s prerogative and there is nothing the reserve bank could or should do about it. alternative channels could include unsecured top - up loans or high lvr mortgages from non - bank housing lenders. such disintermediation will tend to be greater, the longer that any restrictions remain in place. if it becomes widespread, then efficiency costs could become significant at the same time as the effectiveness of the policy is reduced. if avoidance activity is so prevalent as to undermine the effect of the lvr policy then either the lvr restriction could be removed or the lvr policy could be applied more broadly and / or more rigorously. for example, following the introduction of lvr restrictions in 2002, the korean authorities expanded the regulatory perimeter in 2006 beyond banks | 0 |
rate instrument. as a consequence, communicating exit strategies is more complex than in previous tightening cycles. at the ecb, the exit is made easier by the policy instruments used. security holdings of the smp will be held until maturity. excess liquidity is sterilised with reverse operations. banks can pay back long term loans before maturity as market conditions normalise. at the same time, the ecb remains ready to act if conditions deteriorate. the new role of central banks in preserving financial stability is another challenge. following the crisis, the prevailing view suggested to as - sign new powers to central banks, in the form of stronger involvement in bank supervision and macro - prudential policies. some observers argue that conflicts between financial stability functions and the primary goal of preserving price stability might emerge. to safeguard the credibility of the monetary policy function and of the supervisory function we will adopt a governance structure that strictly separates the two. and the hierarchy of goals is clearly set and communicated at the ecb : our primary objective is and will remain price stability. for example, a central bank might find itself in a difficult situation if an interest rate hike necessary to avert risks to price stability would at the same time impact adversely on some banks. allegedly, this could undermine the credibility of the central bank. in this context, communicating clearly and designing appropriate institutional frameworks is crucial. we in europe are very much aware of these challenges. at ecb, the preparation of the single supervisory mechanism ( ssm ) is progressing. the asset quality review of banks to be carried out before the ssm becomes operational will ensure that β hot potatoes β will not be handed over to the ssm. to complement the institutional architecture, we also need a strong commitment towards an effective single resolution mechanism, along with efficient and credible backstops. the latter two elements are a necessary complement to the ssm and will ultimately increase its credibility. bis central bankers β speeches finally, threats to credibility and independence might also make the job of central bankers more difficult. central banks have fulfilled their man - dates and proven successful through their measures and interventions. as a result of the earned credibility, politicians and the general public have now higher expectations as to central banks β ability to manage crisis and the economy. this might overburden central banks and make them more involved in sensitive areas. the new challenges and complexities of today β s environment make clear that communication strategies will play an increasingly important role in the dialogue between central banks and markets | ##ntial supervision within the single supervisory mechanism, to the extent that it could be useful in establishing the eu - level aml / cft supervision. i would like to highlight that the criteria for identifying the selected entities that will be under the direct supervision of the future aml authority are relatively strict. the commission envisages that only between 12 and 20 obliged entities will meet these criteria. based on its experience, the ecb would strongly support amending these criteria such that a wider pool of obliged entities would be directly supervised by the aml authority, including entities headquartered in each member state. this would promote a common supervisory culture and convergence of aml / cft supervisory practices. also, considering the strict, risk - based nature of the selection criteria, the publication of the list of selected obliged entities would be tantamount to indirectly disclosing the high money laundering risk status of selected supervised entities, sending unintended signals to the markets or creating reputational issues for selected obliged entities directly supervised by the new aml authority. the most prominent element of the ecb opinions is the analysis of the proposed limit to cash payments. while the proposed limit of β¬10, 000 euro does not appear problematic, the ecb brings several considerations to the attention of the co - legislators with a view to protecting the legal tender status of euro banknotes, in line with the jurisprudence of the court of justice of the eu. let me now hand over to my colleagues who will present the ecb opinions in greater detail. 2 / 2 bis central bankers'speeches | 0.5 |
factors have played a large role in the increased spreads and standard deviations, we also find some indication of increased liquidity risk. however, i would like to stress that all assessments we can make at this juncture are still preliminary. we are not yet out of the storm, and a more complete and thorough analysis will have to wait for some time to come. my message at this point of time is for us all to remain committed to a continuous integration process in the european financial markets, and resist the tendency to focus on national markets under tension. let us therefore not lose the momentum in these uncertain times. i now turn to the equity markets, where it is considerably harder to measure financial integration. this is not least because stock returns are less directly comparable across countries than returns in the money and government bond markets. notwithstanding this difficulty, our assessment shows signs of continuously increasing integration, and currently, there is no indication that this trend has been affected by the financial crisis. for example, euro area residents doubled their share of euro area cross - border holdings over the past ten years to slightly below one third of their total equity holdings. moreover, according to our indicators, integration here seems to advance faster at the european than at the global level. at the same time, country - specific factors still play a significant role in the equity markets, not least because of the continued fragmentation in the post - trading infrastructure. a paneuropean infrastructure for securities clearing and settlement in the eu would therefore certainly provide new impetus for further integration. equity markets offer me a nice entry point to make you aware of a new type of indicators that we are currently developing. financial integration is an important, but not the only factor that contributes to the efficiency of the financial system. there are indeed other relevant factors, such as the degree of financial development or the quality of the framework within which financial markets operate. in the ecb we are now in the process of extending our analysis from financial integration to the development of financial markets. we understand financial development broadly as a process of financial innovation and organisational improvements. this includes developments that reduce asymmetric information ; increase the completeness of markets ; add possibilities to engage in financial transactions through contracts ; reduce transaction costs ; and increase competition. the idea to extend our work from financial integration to financial development goes back to the ecofin council β s invitation in 2006 to β monitor and assess relevant institutional features that hinder the efficient functioning of the financial system β. one of these financial development | companies. under the prevailing legislative structure the supervisory responsibilities in case of banks, development finance institutions ( dfis ), and microfinance banks ( mfbs ) falls within legal ambit of state bank of pakistan while the rest of the financial institutions are monitored by other authorities such as securities and exchange commission and controller of insurance. in pakistan, while the overall assets of the financial sector have increased from rs. 5. 202 trillion in 2005 to rs. 11. 107 trillion in 2011, the share of the financial sector in terms of gdp is very low at 57. 4 percent. in 2011, banks held 74 percent of the financial assets while the share of nbfis was only 4. 7 percent of the total financial sector assets which was around 7. 6 percent in 2005. the low financial sector to gdp ratio and nbfis shadow banking : scoping the issues : a background note of the financial stability board, 2011. bis central bankers β speeches declining share in financial sector assets clearly underscores the need for financial sector development and diversification of financial sector assets to attract investors with different return expectations and risk appetite and channelize financial resources for the economic development of the country. therefore, today β s conference is very important and we should use this opportunity to understand the key bottlenecks in the way of financial sector development and also come up with concrete measures to address these shortcomings in a sustainable manner. alan greenspan identified the role of nbfis in strengthening an economy, as they provide β multiple alternatives to transform an economy β s savings into capital investment [ which ] act as backup facilities should the primary form of intermediation fail β. 2 on the other hand, the nbfis offer an alternative to typical commercial banking saving - investment products. however, in pakistan, nbfis other than investment banks and leasing companies which offer saving and investment products on a relatively small spectrum need to develop appropriate and affordable products to increase its market share. the key negative outcome of this is that there remains limited access to funding resources and relatively higher risk avenues to earn spreads. here i would like to briefly touch on the major constraints that the nbfi sector in pakistan is beset with : first, although there has been an increasing effort by nbfis to broaden the range of their business activities and product base, thereby diversifying their revenue streams, the sector is yet to make a breakthrough in this regard. second, the sector is fragmented and each nbfi | 0 |
. rebuilding of the disaster areas involves the process of reconfiguring places for industries and employment in accordance with local peoples β needs, by making use of the areas β advantages and competitiveness. needless to say, the first priority is to return the people in the affected areas to safe and comfortable lives as soon as possible. after completing such rebuilding of lives, even if it takes some time, the disaster areas will definitely move forward into the next phase, in which measures with new innovative ideas for regenerating the regional economy will be implemented. moreover, the earthquake disaster has brought a renewed recognition that the japanese islands always hold the inherent risk of earthquakes and tsunami. not only the disaster areas but also japan as a whole need to make efforts to improve both physical and human infrastructures, in order to make the country more resistant to natural disasters. there are many kinds of potential demand, and in order to meet such demand, innovation again plays an important role. b. efforts toward sustaining fiscal balance i have stressed the importance of addressing the challenge of raising the medium - to longterm growth potential of the economy, which is closely related to another challenge : efforts toward sustaining fiscal balance. as the aging of the population will advance further, pension payments and the costs of health and nursing care are projected to increase substantially. in this situation, allowing the fiscal deficit to perpetuate itself would result in the uncontrollable expansion of government debt outstanding, which is not sustainable. once concern about fiscal sustainability heightens, this could impair the smooth issuance of government bonds. moreover, if more people expect that a greater burden on the working - age population is inevitable, the economy could fall into a vicious circle in which more cautious spending by firms and households leads to a further economic downturn and a deterioration in fiscal conditions. as just described, the two challenges of raising the growth potential and fiscal consolidation are not independent but inextricably linked. one challenge should not be given priority over the other, but rather these must be addressed together. the large fiscal deficit has continued since the 1990s on the back of successive fiscal stimulus measures and the rise in social security costs, and addressing fiscal consolidation was an urgent task even before the earthquake. fiscal measures for the rebuilding and revival of the disaster areas will definitely push up fiscal spending further even though it is still difficult to make an accurate estimate. the expected fiscal deterioration in the short run makes it all the more important for the government to present a | systemic risks are identified, policy actions are taken in a timely and effective way, taking into consideration in particular that risks are evolving over time and across institutions and markets. furthermore, i expect an interesting discussion on the macro - prudential aspects of the new capital and liquidity framework ( basel iii ). this topic is of paramount importance from a policy perspective, given the on - going implementation process of basel iii around the globe. in europe, the capital requirements directive iv and related regulation are expected to substantially reshape the macro - prudential policy framework, and i hope in this regard that our panellists will help us better understand the policy implications of this new framework and to find answers to the question how we can strike the right balance between policy measures taken at the national and at the european level. conclusion with these words, i open this conference on β financial stability : methodological advances and policy issues β, and look forward to the keynote addresses, presentations, and the discussions that, i am sure, will help us in carrying out our task of contributing to ensure financial stability. bis central bankers β speeches | 0 |
speeches to achieve this in a way that contains the external risks that can come with innovation, while allowing the opportunity for great new ideas to unfold and take root. as regulators, we are also continuously learning ourselves about the best way to deal sensibly and proportionately with risks associated with innovation. in this regard, i am pleased to announce that the bank will shortly be issuing proposed regulatory parameters for the conduct of electronic know - your - customer or e - kyc processes for remittance transactions. we expect to finalise the standards for e - kyc by october after receiving industry comments. following this, the existing requirement for face - to - face verifications for onboarding new customers will be removed for companies that have received approval to conduct e - kyc. it goes without saying that the bank fully expects msb companies licensed in malaysia to ensure that innovation is not pursued at the expense of obligations to comply with applicable laws and regulations, and to safeguard legitimate interests of customers. having worked hard to build confidence and trust in the industry and to avert the damaging effects of de - risking that continues to a key challenge in more than a few jurisdictions, actions by any firm to undermine the integrity of the financial system will be met with a strong regulatory response from the bank. that said, the bank has been greatly encouraged by the progress of on - going efforts in the industry to ensure that all companies are fully competent through mandatory aml / cft training programmes conducted by the association. steps being taken to require all compliance officers in the industry to be accredited or certified by recognised professional accreditation and certification bodies will mark another important milestone for the industry. conclusion innovation is ultimately a collaborative process whether it is between individuals within an organization coming together to develop new ideas to give the firm a competitive advantage ; or between companies to share common utilities between policymakers to create conditions that encourage innovation or between industry, governments and multilateral institutions to deepen knowledge and advance policies that increase the impact of innovation on growth and development. the best ideas, and more importantly the ability to put them into practice, will come from our ability to overcome natural instincts to erect protective barriers, and to open up individual companies, institutions and economies to new possibilities that can make us more successful, more competitive and more inclusive over the longer term. this conference is a valuable opportunity for the industry to exchange ideas and reflect on how innovation β not just technological but all facets of innovation β can create a game - changing impact in the industry | an unfinished agenda. in many countries, both developing and developed, informal remittances systems remain prevalent. there are legitimate reasons why such systems exist in some countries, for example countries that do not have fully developed formal financial systems. at the same time, legitimate concerns exist over risks associated with such systems, especially in an environment where money laundering and terrorist financing concerns have heightened. opportunities to increase the development impact of remittances have also focused attention on remittances that are now flowing through informal channels. in balancing these considerations, efforts are being made to bring these informal systems closer to formal financial systems β especially by increasing transparency β but without altering their inherent advantages. we don β t always get the balance right. de - risking by banks has been a clear case of market failure in which left to their own devices, different parties acted in their own legitimate interests β 1 / 4 bis central bankers'speeches but with adverse social and economic consequences, including for communities and countries that depend on remittance to raise resources for development. we are seeing positive moves to redress this. in particular, it is critical that continued priority be given to providing clear guidance on risk - based approaches for implementing aml / cft measures, improving the quality of supervision of remittance providers, and achieving more consistency in supervision across borders. confronting the changing nature of competition the nature of competition has also changed profoundly. competition used to be more predictable. you knew who your closest competitors were. and you probably also understood enough about their comparative advantages and constraints to be able to compete effectively. this is no longer the case. competition has become much more unpredictable, and can come from unlikely sources with the advent of peer - to - peer currency exchange platforms, e - commerce and blockchain solutions created by fintech companies. it is also not just about who your competitors are, or even what they offer. whyconsumers prefer your competitors has also become an important factor. it matters to more consumers today whether companies are conducting business with integrity and ethically. ultimately, consumers will almost always prefer to deal with companies that they trust. however, what customers look for to identify with companies that they can trust is changing. advertising campaigns of some of the largest companies that are households names today, centre on universal values of charity towards our fellow mankind, honesty, and respect for one another. these are some of the clearest signs of businesses that understand the shifting preference of a fast growing, new generation of | 1 |
jurgen stark : adjusting monetary policy in a challenging environment speech by mr jurgen stark, member of the executive board of the european central bank, at the β ecb and its watchers xiii β conference, frankfurt am main, 10 june 2011. * 1. * * introduction ladies and gentlemen, it is a great pleasure for me to be here today at the thirteenth in this series of conferences entitled β the ecb and its watchers β. the theme of this session is the return to normality. it assumes that we know what the β new normal β will look like. what we do know is that it will be different from the β old normal β, as the crisis has changed the economic and financial environment in many ways. but it is still too early to characterise what exactly the new normal will look like, also because the crisis is still ongoing. 1 therefore, rather than talking about going back to normal, i prefer to talk about adjustments to policies. indeed, during the period of acute financial stress we have seen many changes in the area of economic and prudential policies. however, this is far less the case for the ecb β s monetary policy. our main objective which is to maintain price stability for the euro area as a whole over the medium term has remained unchanged. of course, exceptional circumstances have called for extraordinary measures. in response to the crisis, we lowered our key interest rates in an unprecedented manner. we have also introduced a number of non - standard measures to support the transmission of our interest rate decisions to the euro area economy. all these measures have lent considerable support to economic activity, while remaining fully aligned with our deep - rooted aim of maintaining price stability. now, economic recovery in the euro area is on a more self - sustained path. looking ahead, we expect the economy to further benefit from ongoing global growth and the still accommodative monetary policy stance. at the same time, for some months by now, we have been observing relatively high inflation rates and continued upward pressure on prices. overall, we see risks to price stability on the upside. this calls for strong vigilance. in this respect, we stand ready to further adjust our still very accommodative monetary policy stance. in the same vein, we will act in a timely manner as regards further steps to phase out our non - standard measures. the concrete steps of adjustment will remain guided by our aim of keeping inflation in the euro area below, but close to, 2 | bankers β speeches the mro rate will become more relevant again in the future, signalling our monetary policy stance. this implies that the overnight rate will be close to the mro rate. we already see that interbank markets are performing better, as shown for instance by the decreasing dependency of banks on ecb refinancing operations. recourse to these operations has declined significantly from close to β¬900 billion in june 2010 to around β¬430 billion today. 5. monetary policy and heterogeneity in public debates, viability of the euro has again been questioned on the ground that the financial crisis has deepened the economic divide across member states. but the ecb β s bis central bankers β speeches monetary policy continues to be geared towards price stability in the euro area as a whole. the single monetary policy of the ecb cannot address different economic growth or inflation across regions of the euro area. such macroeconomic heterogeneity is a normal feature within a monetary union. heterogeneity can even be a desirable feature when it reflects the necessary adjustments to macroeconomic imbalances that have built up. macroeconomic diversity is an issue that national policy - makers should deal with, not the ecb. their primary contribution of course would be to avoid building up unsustainable macroeconomic imbalances. indeed, the bulk of the current imbalances in some euro area countries reflect that countries have insufficiently internalised the participation in a monetary union into domestic policies. to fully realise the benefits of emu requires national policies to adapt to emu. this applies to the areas of fiscal policy ( including taxation ), structural reforms, regulation and banking supervision. without this, imbalances will inevitably reoccur, challenging the proper functioning of emu and thus of monetary policy. it is essential to put in place a european framework that is incentive - compatible and credibly enforceable, to avoid the re - emergence of significant imbalances. national policies should be fully guided by the framework. does this then imply that monetary policy completely ignores developments in individual euro area countries of the euro area? no, but specific national developments play a role for monetary policy only to the extent that they have an impact on the medium - term outlook and risks for price stability in the euro area as a whole. maintaining price stability for the entire euro area is the central contribution the ecb β s monetary policy makes with a view to supporting sustainable economic growth, job | 1 |
the large non - resident indian community and facilitating their fund raising activities from singapore. the middle east has a combined gdp that exceeds asean β s. post 9 / 11, the middle east is increasingly looking towards asia in order to reduce its dependency on the west. there is a window of opportunity for us to play a bridging role. singapore will host the inaugural meeting of the asia - middle east dialogue ( amed ) in june next year. to expand our economic space and strengthen political relations, i have visited several countries in the middle east and will visit more next year. mas should continue to work with other government agencies to deepen our engagement with the middle east. the market estimates that of the us $ 1. 3 trillion in middle east private wealth invested overseas, less than 10 % is invested in asia. some us $ 100 billion or more could flow into regional markets to tap diversification benefits. this presents an opportunity for the asset management companies and capital markets industries here to develop investment funds and structured products, including islamic financial products, to manage a portion of this wealth. maintaining excellence in a riskier environment our second priority is maintaining excellence in our core central banking functions in a riskier environment. in recent years, the external environment has become more volatile and complex. at the same time, our economy has been undergoing significant structural adjustments. we must ensure that the formulation and conduct of monetary policy continue to be robust and flexible. we will further strengthen our monetary policy formulation process by enhancing our forecasting, surveillance and research capabilities. we intend to reinforce our macro - econometric model by introducing new features that will enable us to better assess the impact of risks on key sectors and relationships in the economy. in the area of surveillance, we have started an intensive industry consultation process as part of our exchange rate policy review. we will continue to fine - tune this process. to enhance our understanding of the economy, we are constructing a flow - of - funds framework to get a better understanding of financial flows across different sectors of the economy. changes and increased volatility in financial markets also pose challenges for the implementation of monetary policy. singapore dollar capital markets have grown enormously over the last five years. foreign participation has gone up. more foreign investors are likely to participate in our markets when singapore government securities are included in the world government bond index next january. our market surveillance must broaden as the mix of market participants becomes more diverse. as the volume of trade in singapore dollar securities increases, | jose manuel gonzalez - paramo : the euro exhibition address by mr jose manuel gonzalez - paramo, member of the executive board of the european central bank, at the opening ceremony for the euro exhibition at the museum fur kommunikation, berlin, 19 november 2009. * * * ladies and gentlemen, distinguished ambassadors and members of parliament, it is a great pleasure for me to be here in berlin, at the beautiful premises of the museum fur kommunikation to inaugurate β the euro exhibition β. i would like to thank the museum for its fruitful cooperation with the european central bank, which has given us the opportunity to display our euro exhibition here. this year we are celebrating the tenth anniversary of the euro. let β s take a look back at the short but memorable history of our common currency. on 1 january 1999 stage three of economic and monetary union began with the irrevocable fixing of the exchange rates of the currencies of the 11 member states initially forming the euro area. the number of countries participating in economic and monetary union has grown over the years. today, the euro banknotes and coins are legal tender in 16 of the 27 member states of the european union and are used daily by almost 330 million citizens in the euro area. the single currency is used in an area that stretches from cyprus to ireland and from portugal to finland. we are actually celebrating another anniversary this year. it is 20 years since the process of german reunification began and we all remember 9 november 1989 as the day which marked the fall of the berlin wall. let β s not forget that berlin itself is a city that occupies a special place in german and european history. indeed, currencies can play an important role in shaping a national identity and the deutsche mark is one of the strongest symbols of german reunification. the foundations for political reunification were laid by the treaty establishing monetary, economic and social union, which came into force on 1 july 1990 and enabled the east german mark to be converted into the highly regarded deutsche mark. these days it is the euro that is shaping a european identity. for many, the euro only became a reality when the euro banknotes and coins first entered into circulation on 1 january 2002, replacing national currencies like the deutsche mark. in the eight years that we have been using the euro in our day to day lives, once complex transactions have now become effortless : there is no need to exchange money within the euro area and transferring money within | 0 |
indonesian economy would be more stable, balanced, and growth at reasonable rate in the range of 5, 5 β 5, 9 %. many of the supporting factors remain in place, including stronger export and improving business confidence which should provide an enabling environment for growth. bis central bankers β speeches 26. bank credit is projected to grow at 15 β 17 % range which is reliable with the effort to bring the current account to a healthier. that being said, we expect the current account deficit to continue shrinking below 3, 0 %. indeed, latest trade figure already pointed to an upbeat - sign as shown by the surplus of trade balance in february and march 2014. 27. inflation will remain under control and within its target corridor of 4. 5 % Β±1 % in 2014. with many uncertainties ahead, it is wise to keep the inflation rate low to ensure that the economy remains competitive and to minimize pockets of instability, whether through excessive growth of bank credits or asset price bubbles. closing distinguished guests, ladies and gentlemen 28. i would like to end my talk this morning by stressing that despite many roles that bank indonesia plays in ensuring economic and financial stability, bank indonesia β s policy alone cannot ensure sustainable economic growth. 29. a sustainable growth requires a structural reform for having a reliable infrastructure, β in terms of physical, financial, institutions, and human capital β as an enabler for indonesia to grow and break into the high - income level bracket. 30. if infrastructure development is unable to keep up with expanding economy and growing demand of the population, the economic growth is constantly constrained to achieve its full potential. encouragingly, in indonesia, progress has been observed in many projects although room for improvement remains. 31. i believe the next administration remain placing emphasize on the structural reform, while bank indonesia will continue to ensure a stable financial and economic environment, so that businesses can continue to thrive and individuals can enjoy better standards of living on a sustainable basis. thank you. bis central bankers β speeches | gleaned from the current crisis, we need to consider some more basic questions ; questions that will help guide us when positioning indonesia during this era of globalization. for instance, what is the best equilibrium for our economy : between the domestic market and export market, between the financial sector and real sector, between the outward orientation and inward orientation of our financial sector, particularly our banks, between relying on domestic financing or foreign financing. such questions require a fair, thorough and in - depth thought process. it is imperative to answer these questions if we want to develop a more resilient national economy to future turbulence. prospects and challenges in 2009 distinguished guests, allow me to further explain the horizon we face in 2009. one issue that can be considered undeniable is that all countries around the world face an economic downturn. indonesia is no exception. for us, the effects of the crisis began to be felt during the last quarter of 2008. the economic slowdown will be more obvious in 2009, particularly during the first semester. estimations we ran at end of 2008 projected that our domestic economy in 2009 will grow in the range of 4 % - 5 %. certainly not too bad when compared with the projections of many other countries. however, observing the current global trend, the downside risk will increase. in line with efforts to protect economic growth, the key here is how to maximize domestic market potential to bolster domestic economic activities. the foremost element of this policy is to expedite the implementation of a fiscal incentive package and the 2009 national budget. well - controlled inflation as well as government, political party and public expenditure for the upcoming general election, will also help underpin public purchasing power. in addition, certain policies that must be intensified include measures to improve the business climate and reduced domestic business costs. the implementation of such policy should not require any additional funding, however, more focused and determined actions to detangle the knots are necessary. we hope that during this year of the general election, such policies can be continued and even intensified. meanwhile, along with tumbling commodity and fuel prices as well as solid rice production, the interest rate in 2009 is expected to decline, in the range of 5. 0 - 7. 0 %. if current developments persist, however, the lower limit of this range is expected. questions often arise on the prospect of our balance of payments this upcoming year. based on detailed calculations performed at the end of last year, we estimate that the current account will run | 0.5 |
the sustainability of indonesia β s economic performance in a very challenging and still fragile global economy and financial market environment. recent economic development i will start my brief description on the development of the indonesian economy by emphasizing that what indonesia has been through and achieved, particularly during the most recent global turmoil, is mostly as a result of years of β post 1998 crisis β transformation process. indonesia is now transformed into one of the world largest democratic and structurally different with what it was a decade ago. this is as a result of more than ten years of consolidation and dynamic transition in almost all sectors. the extensive transformation measures that became a continuing agenda with full commitment, despite its challenging process, have provided a more resilience foundation into the indonesian economic development. of course, there are still many agendas to be executed to improve and to increase the efficiency of the whole business and economic activities. but, the progress so far, particularly the consistent prudent practice of macroeconomic management, has proven to contribute to shelter the domestic economy from further adverse impact of the most recent global crisis. among few countries in the region, indonesia was still experiencing a positive growth of 6. 0 % in 2008 and 4. 5 % in 2009. while, in the first half of 2010, supported by a better than expected global the economic recovery is expected to grow at 6 %, which is higher than previously estimated of 5. 7 %. in 2010, the indonesian economy is expected to grow at 6 % and slightly higher in 2011 and 2012. these were mainly sustained by high and inclusive growth of domestic demand, in particular consumption. yet, export performance and investment has also showed a slight increase and expected to sustain their upward trend. inflation has also moderated at 5. 05 % ( year - on - year ) in june 2010, held by adequate supply responses and rupiah exchange rate appreciation, despite that there was a hike in volatile price component. hence, the june inflation is slightly higher than previously estimated. however the recent increase of the volatile food price is expected to be temporary and inflation is expected to be maintained within target range of 5 % + / β 1 % in 2010 and 2011. the core inflation figure is also supportive to bank indonesia inflation assessment. to this respect, the latest monetary policy decision to keep bi rate at 6. 50 %, is considered as adequate to ensure the inflation expectation within the target range and supportive to maintain the growth momentum, as well as to encourage bank lending. meanwhile, the balance of payment | transfers. tourism council of the south pacific, 1990, economic impact of tourism in fiji. fiji β s tourism industry β retention rate and economic impact β’ retention rate : the 1990 study by the tcsp showed the tourism industry in fiji has a retention rate of 44 percent. hence for every $ 1000 of tourist dollars spent in the country, $ 438 is retained in the economy after deducting import requirements ( direct, indirect and induced ). β’ factors contributing to higher leakage : these include : 1. an industry which is not fully integrated into the domestic economy 2. import of food and other requirements 3. repatriation of income and interest payments on foreign loans 4. overseas marketing costs 5. other foreign services β’ tourism β s impact on the economy : based on the methodology and tourism multiplier ( 2. 9 ) provided in an in - house study, which compares well with the 1990 study by the tcsp, and using projections for 2008, the tourism industry is expected to contribute $ 1, 424 million this year, equivalent to 24 percent of gdp. β’ policy implications o given that there is 50 percent spare capacity, strategies must be put in place immediately to increase visitor arrivals!! o improve local input into tourism industry. possible ways are : - improve the quality and consistency of local fruits & vegetables, thereby reducing imports - examine ways to increase production of beef and other meat and dairy products - encourage manufacturers to produce goods demanded by tourists - provide more opportunities for tourists to spend locally ( eg, expanding retail opportunities ) summary β’ tourism is a key driver for economic growth in fiji β’ provides vital support to balance of payments β’ highly resilient, has quick bounce - back β’ industry with substantial spare capacity to immediately propel growth to higher levels β’ need to remain competitive β’ some downside risks : o the global slowdown o rising oil and food prices | 0 |
yielding securities, some lenders began loosening underwriting standards for subprime mortgages in late 2005. loans to subprime borrowers were approved with high loan - to - value ratios and incomplete income documentation. had house prices kept appreciating, loan - to - value ratios would have fallen a more in - depth discussion of developments in the subprime mortgage sector can be found in karen e. dynan and donald l. kohn ( 2007 ), β the rise in u. s. household indebtedness : causes and consequences β, finance and economics discussion series 2007 - 37 ( washington : board of governors of the federal reserve system, august ), http : / / www. federalreserve. gov / pubs / feds / 2007 / 200737 / 200737pap. pdf. calculated from table 4, p. a132, in robert b. avery, kenneth p. brevoort, and glenn b. canner ( 2006 ), β higher - priced home lending and the 2005 hmda data β, federal reserve bulletin, vol. 92 ( september 8 ), pp. a123 - 66, www. federalreserve. gov / pubs / bulletin / 2006 / hmda / bull06hmda. pdf. and some borrowers would have been able to refinance, perhaps into a prime loan with a lower interest rate. but, instead, as the housing market softened and interest rates rose, delinquencies in the adjustable - rate subprime market began to soar and reached nearly 15 percent in july. 6 among other types of nonprime mortgages, delinquencies on fixed - rate subprime mortgages have been fairly steady at less than 6 percent ; rates on mortgages in alt - a pools have increased to nearly 3 percent, up notably from the 1 percent rate of only a year ago. the rise in delinquencies in the subprime market has led to the collapse of some large subprime lenders and inflicted substantial losses on holders of subprime residential mortgage - backed securities ( rmbs ) and of some collateralized debt obligations ( cdos ). as a result, underwriting standards have been tightened, and fewer households are qualifying for subprime loans. in addition, some borrowers apart from the subprime segment are reportedly finding it more difficult to qualify for loans or are having to pay more for them. these | reasons. first, the financial industry incorporated information technology into its business processes many years ago and since then has encouraged innovations in business process to achieve efficiency and security. as a result, industry participants are extremely knowledgeable about technology and the related operations risk. second, financial institutions understand that it is in their best business interest to make business continuity planning an executive management issue, requiring top - level involvement and not insignificant investment. preparations for the century date change gave us a much clearer understanding of the financial system's dependence on technology and on the complexities of managing operations risk. once institutions understood the considerable business risks that would result if they could not serve customers, they moved the management of y2k preparations out of the back office and onto the desks of product - line and senior managers. firms understand that they must manage not only business risks flowing from operational issues but also inherent reputational and legal risks. the century date change provided other benefits as well. in preparing for y2k, financial institutions modernized and incorporated security products and procedures into their information systems. they also updated and tested contingency plans and backup facilities. we found that because of the staff training and industry testing that occurred around the century date change, employees of financial institutions and within our own agencies were still relatively well - informed about contingency procedures and arrangements, and followed them. though not perfect, these plans worked well. third, financial institutions have long understood the need for strong internal controls and physical security. as banks increased reliance on information technology, they naturally incorporated measures to ensure the security of information. moreover, financial institutions recognized immediately that the increasing role of information system networks and the internet in the financial markets engendered new risks, and they became leaders in addressing cyberprotection issues. in 1999, industry participants established and funded one of the first information sharing and analysis centers ( isacs ). more than forty of our largest banks, securities and insurance firms, investment companies, and financial utilities, representing a significant portion of assets in the financial system, participate in the isac. the isac maintains an industrywide database of electronic security threats, vulnerabilities, incidents, and solutions. security specialists analyze reports and distribute to members warnings and information about threats and solutions or mitigation procedures. financial institutions also actively participate in a number of other information - sharing organizations, such as the federal computer incident response center ( fedcirc ) and the system administration, networking, and security institute ( sans ). | 0.5 |
, not as a refusal to use quantitative assessments based on an informed and probabilistic reading of the available evidence. anyway, the general view of the latest official projections is very cautious and correctly postulates that the support deriving from the fiscal stimulus and inventory rebuilding cannot last forever. beyond the short term, it still remains to be seen how soon and how far private demand β consumption and investment β can take up the slack and give rise to a selfsustaining recovery. in fact, in much of the industrial world private consumption is still stagnating at best, and its weakness appears even more significant if one excludes the effects of temporary measures, such as the various β cash for clunkers β schemes in the united states and in the major continental european countries, or the reduction of the vat in the united kingdom. to the extent that subsidies have merely brought part of households β planned expenditure forward, once these programmes expire consumption may lapse again. with anaemic demand prospects and with banks still curbing credit as they deleverage, investment too is bound to simon ( 1972 ), p. 170. see also visco ( 2009a ). be sluggish at best for some time. and without a pick - up in the pace of investment it is hard to imagine any return to a healthy growth path. the main risk is that rising unemployment rates will undermine household confidence and depress spending. as long as jobs are still being lost, there is plenty of potential for destabilizing feedbacks. lower employment can trigger more mortgage defaults and put additional stress on key financial institutions. in other words, as long as the employment picture continues to worsen, the risk that things could deteriorate again remains great. 2. challenges for international cooperation 2. 1 repairing the financial system one of the main challenges is to complete the repair of the financial system so that it can support the return to sustained and stable growth. as the financial markets appear to be regaining confidence, it is important that the reform momentum not be lost. the decisions of the g - 20 summit in pittsburgh point to a renewed effort to overcome the deep flaws that affected the financial environment prior to the eruption of the crisis. although the question of capital requirements for banks is certainly most prominent, it should be considered only part of the solution. to discourage excessive leverage, the quantity and quality of bank capital should be raised. but it is also of paramount importance that the perimeter of regulation | focus on those clients having limited access to alternative source of funding. in the coming months, it will be pivotal for the bank to consider where the resources needed can and should come from. the persistence of low interest rates calls the current business model into question. the current income generation capacity is unable to boost capital to support increased lending, even in the absence of strong cost dynamics. this calls for a multifaceted approach which would not exclude widening the revenue base of the bank, modifying the price of its services, and optimizing its balance sheet, while adhering to the highest standards of budget discipline. | 0.5 |
basis, they also need to assess counterparties on a collective basis. they need to understand how their own actions to protect positions can put pressure on key counterparties, especially when other market participants are likely to be taking similar action to protect themselves. so beyond ensuring that their own individual positions are sound and well protected, banks need to assess whether there is a systematic component to a market that could adversely affect multiple counterparties at the same time, and thereby affect their own risk exposures. as we have seen, a counterparty does not need to be technically insolvent for it to be shunned by other market participants. the anticipation of downgrades, triggers, and so forth could very quickly cause a firm to lose funding and fail. in short, banks and regulators need to understand the type of market conditions that will exist when there is likely to be reliance on collateral, guarantees, or other contract clauses. it is then important to assess the likelihood that the bank's safeguarding actions could worsen market conditions and actually increase its losses. might the bank only realize collateral at substantially reduced prices? would multiple counterparties suffer distress at the same time? would guarantors perform in times of distress? in other words, would the collateral, guarantee, insurance, hedge, and so forth work in precisely the time the institution would need it most, that is, during a market stress event? these are important questions that regulators and supervisors are asking in the basel committee and in the financial stability forum, and i represent the federal reserve system on both of these bodies. naturally, these types of questions underscore the importance of stress testing and scenario analysis that focus on market - wide events. such stress tests would include the potential for key counterparties to fail or suffer difficulty at the same time, for market liquidity to erode and remain low for some time, and for market participants to view the bank itself as an impaired counterparty. and these stress tests, when properly designed, can provide information that typical statistical models may leave out or have trouble capturing, such as abnormally large jumps or market moves, evaporation of liquidity, prolonged periods of market distress, or structural changes in markets. stress tests are most useful when they aim to include potential secondary or " knock - on " effects, which are also often difficult to model with standard techniques. in these ways, stress tests can serve as a complementary tool to other risk measures. even if the ex ante estimate of | for banks to establish good risk management policies addressing the issues i have just discussed, so that strong risk discipline is codified. concluding thoughts of course, it is not just the banking industry, but also those of us in the public sector who have some key lessons to learn. banks and supervisors alike need to undertake additional work to facilitate the building of robust methods of quality assurance in the financial markets that will help to restore and maintain confidence. ensuring that banks exercise good risk management, of course, is an important job for bank supervisors, which includes overseeing their ability to properly capture the risks in the markets in which they operate, as well as their ability to conduct appropriate stress testing to explore potential consequences of different types of market distress. doing so requires that supervisors themselves develop a strong understanding of the value, limits, and potential harms associated with banks'attempts to protect their exposures. at the federal reserve, we have already begun to enhance our supervisory work in this area and are communicating expectations to banks. at the international level, we are working with our colleagues in other countries and within international bodies, such as the basel committee on banking supervision β which is meeting later this week β and the financial stability forum, to investigate whether other practices could be adopted around the world to mitigate the challenges i have outlined above. this work will be a major focus during the next few months and over the course of 2009. randall s. kroszner, 2008, " improving the infrastructure for non - agency mortgage - backed securities, " speech delivered at the federal reserve system conference on housing and mortgage markets, washington, d. c., december 4. | 1 |
help in reducing credit risk through the provision of widely accessible information on the loan repayment profile of borrowers. this should also provide another incentive for lowering of interest rates. ladies and gentlemen, in conclusion i wish to state that the bank of zambia is committed to broadening and deepening the financial sector through effective implementation of the financial sector development plan. bank of zambia will endeavour to contribute towards the creation a stable macro - economic environment. i would therefore like in this particular instance, to call upon the housing finance industry to play its role effectively so that zambian people can have access to affordable housing finance. thank you and god bless you. | caleb m fundanga : broadening access to mortgage financing in zambia opening speech by dr caleb m fundanga, governor of the bank of zambia, at the re - launch of the pan african building society ( pabs ), lusaka, 24 july 2007. * * * β’ the shareholders of pabs ; β’ the board of directors of pabs ; β’ senior government officials present ; β’ the deputy governor - operations and registrar of banks and financial institutions ; β’ the general manager of pabs ; β’ distinguished ladies and gentlemen. it gives me great pleasure and gratitude for having been invited to speak on this occasion of the re - launch of the pan african building society. ladies and gentlemen : today marks an important day in the calendar of pan african building society which brings on board new shareholders. the bank of zambia is happy to note that this development has turned around the financial condition of pan african building society. ladies and gentlemen, as you are aware, there is shortage of housing in zambia and therefore the demand for housing finance is increasing. it follows therefore, that the primary challenge of housing finance institutions in zambia is the broadening of access to mortgage finance particularly to many people in urban areas. due to the prevailing macro - economic stability that the country is experiencing, we have seen substantial growth in the housing finance industry in recent years. for instance, in the last four ( 4 ) years to december 2006, the mortgage portfolio of the building society industry has grown five fold. ladies and gentlemen, in recognition of the need to provide a conducive regulatory environment which promotes sustainability, accountability, transparency and growth of the building society industry in zambia, the building societies act was amended in october 2005 to harmonise it with the banking and financial services act pending the modernization of the building societies act under the financial sector development plan law reform programme. ladies and gentlemen, bank of zambia is concerned about the levels of lending interest rates charged by most financial institutions in zambia, building societies included. with the achievement of relative macroeconomic stability in the recent years as evidenced by a significant reduction in the inflation rate to 11. 1 percent as at june 2007, it is the expectation of the bank of zambia that all prudent lending institutions would make downward adjustments to their lending interest rates to make financial services accessible and affordable. it is also important to note that high lending interest rates can lead to high levels of delinquency. ladies and gentlemen, it is in this light that we anticipate that credit referencing services will | 1 |
slide 2 ). the outstanding amount in these three euro area countries combined has reached β¬350 billion so far in 2012 and the market is well established. apart from products linked to national cpi indices, a large part of these markets consist of bonds linked to the euro area hicp, which we use at the ecb for our analyses of inflation expectations. apart from the inflation bond market, there is a growing swap market ( see slide 3 ). the inflation - linked swap market has gained liquidity and, for us policy - makers, it is another source of signals about inflation expectations and it helps us to understand their term structure. finally, an interesting, but still developing market is the market for inflation options. it potentially can deliver signals on the probabilities of various inflation outcomes, as priced by investors, but the liquidity and segmentation of inflation options remain a significant challenge. let me now say a few words on how we use signals extracted from markets for inflation protection for our daily analysis ( see slide 4 ). the ecb monitors inflation expectations by using surveys and implied signals from swap and bond markets. market - based indicators are more volatile than survey - based indicators. in part, the volatility is related to noise due to the bis central bankers β speeches market turbulence experienced in recent years. however, movements in market - based measures provide information on inflation expectations beyond what is contained in survey information. in particular, monitoring developments in inflation risk premia can help to assess inflation concerns among market participants. looking at the developments in market - based measures of medium to long - term inflation expectations in the euro area during the crisis, inflation expectations seem to be well - anchored in spite of market turbulence and uncertainties regarding future developments ( see slide 5 ). as the chart shows, the anchoring is confirmed by stable survey - based measures as well. comparing euro area data with that of the united states and united kingdom, inflation expectations in the euro area derived from inflation - linked markets seem to have been relatively stable during the financial crisis, in fact more stable than for the other two currency areas ( see slide 6 ). for the euro area in particular, inflation expectations have remained very well anchored following the non - standard liquidity provision measures undertaken by the ecb. the anchoring of expectations at relatively low levels probably reflects continued negative output gaps in the euro area as well as confidence that the ecb will be able and willing to drain liquidity if and when necessary to control inflation. | stability. there are benefits in maintaining a high level of integration with the united kingdom after brexit, and indeed, trade openness is in the dna of the eu. but brexit also entails making important policy choices regarding how open the eu β s financial markets need to be, and what measures need to be in place to ensure financial stability, protect eu consumers and investors and safeguard the single market. while not confirmed, current discussions indicate that the way in which we will interact with the united kingdom in the area of financial services will be based on the eu β s existing equivalence regime, with some expected enhancement. the aim would be to ensure sufficient regulatory and supervisory cooperation, information exchange and mechanisms to minimise unwarranted disruption in the functioning of markets linked to a potential loss of market access. this will of course be vital for the uk - eu situation after brexit, but also provides an opportunity for our relations with other key non - eu countries. however, a key principle underpinning third - country regimes needs to be maintained : we should avoid a situation in which non - eu firms are able to operate across the single market on the basis of a different rulebook and without a proper institutional framework. we cannot permit opportunities for regulatory arbitrage and let risks build up in the financial system. it is also crucial that brexit does not lead to a race to the bottom in regulatory and supervisory standards, and that the efforts that have been made to strengthen the financial architecture of the eu following the crisis do not unravel. the framework thus needs to provide sufficient safeguards for maintaining financial stability. and, as risks differ across financial services, this in turn implies that different financial services may need to be regulated by different third - country models. in the short term, a number of proposals should be adopted. first, on the review of the prudential framework for banks ( the capital requirements regulation and directive ) the european commission proposed that non - eu headquartered banks with subsidiaries in the euro area would establish an intermediate parent undertaking within the eu. this would bring certain non - eu branches under the umbrella of european banking supervision, as is established practice in the united kingdom and united states. going forward, further harmonisation of the regulatory and supervisory framework of third - country branches in the union would be of the essence. second, we need to adapt how large investment firms are supervised to reflect the many similarities between their activities and those of banks. it therefore makes sense | 0.5 |
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