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. m. friedman ( 1967 ) β the role of monetary policy β ; the american economic review, vol. 58, no. 1 ( mar., 1968 ), pp. 1 - 17. those who attend the monetary policy forums of the south african reserve bank ( sarb ) will have heard requests, indeed demands, for such interventions at various times. logically, therefore, if monetary policy is to provide a stable background for the economy, it must do so by deliberately employing its powers to that end. 3. in all places : at all times? in stating the aforegoing, in free translation, i should not be misunderstood. i do not wish to imply that one monetary policy is always and everywhere appropriate. such a rendition of this narrative would do injustice not only to the principal author to whom i have referred but also to his antecedents, contemporaries and successors most of whom had and have, respectively, a keen sense of history. for it is the case that the political, economic, social and international environment of central banks is in constant flux. at the same time central banks are quite dissimilar in their constitutions. no two banks are exactly alike. 3 nor is it the case that the issues to be addressed are identical at all times in all places. the central proposition remains, however : it is that monetary policy can do certain things ; in particular, provide a stable background for the economy. in so doing, this policy will enable producers and consumers, employers and employees to proceed with full confidence that one aspect of an otherwise unknowable future is predictable : namely, the rate of price inflation, or its mathematical inverse, the purchasing power of money. 4 in these conditions, entrepreneurs can plan and act ; savers can save without fear that their savings will be wiped out by inflation and borrowers can borrow in orderly markets at interest rates that are not unduly raised by inflation risk premia. resolution of challenges in the real sector ; for example skills shortages or drought β induced agricultural losses requires other policies : stated differently as old people here used to say β nobody can use another person β s teeth to smile β. so to end the analogy, the teeth which will bring a smile to the resolution of those issues cannot be drawn from the mouth of monetary policy. 4. is price stability enough? but this surely cannot be enough. for we all are aware of the strained circumstances of the international economy in 2009 : and are no doubt cogni | from the process of catching up. a single currency will greatly enhance prospects for bringing in new industries, as the elimination of exchange rate risk will encourage firms to produce closer to their markets. large infrastructure projects already underway β and financed through the community support programmes β will improve competitiveness and provide a further inducement for firms to move to greece. it is therefore likely that the conditions after emu entry will be favourable to growth and employment creation in the greek economy. to argue that the incidence of country specific disturbances will diminish is not, however, to say that such shocks will disappear altogether. in those circumstances, in which a change in the exchange rate or national monetary policy would have been helpful, alternative adjustment mechanisms will have to be provided for responding to macroeconomic disturbances once national authorities have lost monetary and exchange rate independence. to achieve this it is assumed that greece would need growth of 3. 5 % a year, a cost of public borrowing of 5 %, and a primary budget surplus of 6. 7 % of gdp. it is also assumed that the general government takes on contingent liabilities and debt of public enterprises ( outside the general government ). at the macroeconomic level, it was argued earlier that, in the case of greece, public finances will have to regain the necessary room for manoeuvre to cope with adverse economic developments and country - specific disturbances. where structural adjustment, rather than mere macroeconomic stabilisation, is called for, an improvement in price competitiveness will be needed. this brings me to the crucial role of structural reform. structural reform on the structural front, there has been much progress in several areas over recent years and it is beginning to yield substantial benefits to the economy. but, given the breadth and the magnitude of the structural problems, much still remains to be done. i focus here only on a few selected issues where i feel that significant breakthroughs would make a major contribution to preparing the economy for the exigencies of monetary union. in particular, more stress needs to be placed on enhancing competition in product markets and improving labour market flexibility. greater market flexibility will not only allow greece to cope with country - specific disturbances more easily, but it will also, by reinforcing greece β s competitiveness, ensure a tension - free macroeconomic growth process and increase the employment - content of growth. although legislation was passed in 1998 aimed at addressing some key rigidities in the labour market ( the inflexibility of working time, wages, the ineffective | 0 |
guy debelle : remarks on financial integration in the asia pacific speech by mr guy debelle, assistant governor ( financial markets ) of the reserve bank of australia, at the launch of the australian centre for financial studies report on financial integration in the asia pacific, sydney, 16 june 2015 * * * thanks to marc - oliver thurner and david norman for their assistance. accompanying charts can be found on the reserve bank of australia β s website. it is a pleasure to speak at the launch of the australian centre for financial studies ( acfs ) work on financial integration in the asia pacific. i have had some first hand experience on financial integration through the asian bond fund ( abf ) initiative, working with my fellow central bankers in asia through emeap. in particular, in launching abf2 and the pan - asian index fund ( paif ) around a decade ago, we got direct exposure to some of the impediments to financial integration in the region, both regulatory and tax. we worked together to reduce some of those impediments, which helped to pave the way for an expansion in cross - border fixed income investment in the region. i would like to talk about some issues that come to mind when thinking about financial integration. in doing so, my aim is to pose questions that the acfs work might consider, without providing any answers. the first issue is about developments over the past decade or so, which show that financial integration is not a monotonic process. it is not always onwards and upwards. there was a reversal in some metrics of financial integration after 2008. in particular, cross - border banking flows declined steeply in 2008 and 2009, and have, in aggregate, continued to shrink until fairly recently. interestingly, cross - border flows involving chinese and japanese banks have been increasing while those elsewhere, particularly in europe, have been declining. we have seen that here in australia, with lending by chinese and japanese banks into australia growing quite rapidly ( albeit from a low base ), as lending from european banks has been declining ( graph 1 ). some chinese banks have obtained australian banking licences while some european banks have given them up. in light of these developments, one question that is worth contemplating is whether there is such a thing as an optimal degree of financial integration? can there be too much of it? the experience of the financial crisis shows that at least some forms of financial integration didn β t go too well. relatedly, what is the | of attention in the asian region and will once again come into sharp relief when the fed raises its policy rate. the increase in cross - border flows into emerging markets over recent years, particularly in the asian region, has contained a large amount of market - based finance. asset managers have a much higher share of emerging asia in their funds under management today than they did a decade ago. how stable are these flows likely to be in a more volatile environment? what is the behaviour of the investors who have allocated a higher share of their portfolio to emerging markets? how much of that increased share is a result of a search for higher yield which might reverse when yields in traditional developed markets increase? how much of it is a structural diversification into the emerging world as it has become a much larger share of the global economic and financial landscape? a major influence on the future path of financial integration in the asia - pacific region will be developments in chinese financial markets. china is on a path of financial deregulation and capital account liberalisation. almost no other country has managed this process without encountering significant problems. while china has endeavoured to learn the lessons from all the other countries that have gone down this path, including australia, it will be a significant achievement if they are able to pull it off without encountering some problems. investing in china β s domestic markets has become easier over the past year, with a range of new initiatives gradually opening the capital account, at this stage, primarily by allowing more portfolio flows between hong kong and the mainland. the new schemes expand the avenues for investing in china β s domestic debt and equity markets from the existing rqfii and qfii programs, which at the end of may accounted for around us $ 140 billion of foreign investment in china. the shanghai - hong kong stock connect scheme, which started in november last year, is at about half its northbound capacity of around us $ 50 billion. a shenzhen - hong kong stock connect is expected to be announced soon. the mutual recognition of funds agreement, effective from july, will allow fund managers registered in hong kong to offer investment fund products to mainland residents ( and vice versa ). from an australian perspective, these avenues should provide an opportunity for australian banks, asset managers and their clients to increase their exposure to the chinese domestic financial market. australian international portfolio investment has been growing strongly over recent years from around a $ 450 billion in 2010 to over a $ 750 billion at the end of 2014 ( graph 3 ). while the | 1 |
payments system to make transactions. the payee should insist on the payer to use this new system for payments. fijiclear payments to date i am encouraged by the results so far of the use of the new system. on the first day of its operations, total payments that went through the system was about $ 172 million of which commercial bank payments was about $ 10 million. gross payments over the last 6 weeks have averaged above $ 850 million of which commercial bank payments exceeded $ 120 million every week. customer payments are rising and we have seen payments as low as $ 90 being made through fijiclear. the number of transactions is also rising. the system has the capacity to process 1, 000 transactions every 5 minutes. so there is a lot of space for growth. i am confident that we will see more and more payments made via fijiclear in future. security i would like to assure everyone that the payment system is secure. we have established a secondary site which is on line which means that if necessary we can operate the system from this alternative site. the site also acts as data backup. in addition, the communication lines are dedicated to the system and are secure. there is a dedicated team in the reserve bank monitoring and overseeing the transactions during the day. this team will provide adequate liquidity during the day to allow the system to work smoothly. it backup support and service agreement is in place. i am confident that with these measures, the system is extremely secure and reliable. charges let me say something about the cost of using fijiclear. because of what we believe the importance of the system nationwide and the financial sector, the reserve bank has shouldered all the establishment costs. after some discussions, we have agreed with the commercial banks to a fixed operating cost for the first year which in my view is quite a reasonable sum. we will review this maintenance charge after the first year of operation. in turn, i am confident that commercial banks will review their charges of using the system if they have not done so already and pass on the savings to their customers. we will monitor these charges closely. rtgs software provider logicacmg, a listed company on the london stock exchange provided the software and will also provide support and maintenance services. it is a leading payment software provider with a long list of central bank clients all over the world, including the european central bank and central banks of chile, turkey, sri lanka and philippines. it has also contracted a leading local it firm to provide appropriate back | savenaca narube : launch of a modern payments system in fiji speech by mr savenaca narube, governor of the reserve bank of fiji, at the launch of the rtgs system or fijiclear, suva, 16 october 2007. * * * chairman of the association of banks in fiji, mr. laurie melsop ; invited guests ; ladies and gentleman : introductory remarks a very good afternoon to you all. one of my visions after rejoining the reserve bank in 2000 was to modernize the payment system. this vision was driven by the need that i saw to make the payment system more efficient and secure. in my view, such a modern payment system would act as a launching platform for other modernization in our entire financial system. it therefore gives me great pleasure that this vision is now a reality. i am delighted that we are officially launching this modern payment system today. i welcome everyone to this ceremony and thank you for joining us to celebrate this important milestone in the history of fiji β s financial system development. as some of you are aware, the system went live on 30th august and i am glad and somewhat relieved to say that the system has been running smoothly for over 6 weeks now. fijiclear central banks normally give a name to their real time settlement system. for instance, trinidad and tobago named theirs β safett β ; philippines, β philpass β ; and the thai system is called β bahtnet β. we have decided to name our rtgs system, β fijiclear β : β fiji β denotes a nationwide system while β clear β signifies secure clearing process. we started the ground work on the project almost 5 years ago. i was delighted when the commercial banks readily shared our vision to get the project rolling. we issued a joint statement with the association of banks in fiji and set up a working committee to oversee the project. the formal contract with the software vendor was signed in march 2006. the projects like many other projects had its share of hurdles. for the reserve bank, the biggest challenge was to get a proper appreciation of the scope of this rather technical project which none of us had any prior experience in. in addition, we lost the lead manager of the project program half way through. establishing the infrastructure like secure communication channels was not that easy as you may appreciate in fiji. lastly, we had to negotiate the difficult issue of cost sharing with our commercial banks colleagues. i am extremely glad that we were able to overcome all these hurdles. | 1 |
cecilia skingsley : inflation - targeting after the financial crisis speech by ms cecilia skingsley, deputy governor of the sveriges riksbank, at almega ( employer and trade organisation for the swedish service sector ), stockholm, 22 may 2015. * * * accompanying charts can be found at the end of the speech. i would like to thank bjorn andersson and mikael apel for their help with this speech. this coming sunday is pentecost, β the day of rejoicing β, to quote esaias tegner. and it is certainly easy to rejoice at the season and see green shoots springing up, the result as tegner writes, of β the friendly flames of the spring - sun β, even in the economic statistics. for a long period of time now we have had a development where production and the labour market have been improving, but inflation has been too low. this has also affected expectations of inflation in the longer run. the riksbank has cut the repo rate and its forecast for the future repo rate to very low levels to bring up inflation, as well as purchasing government bonds to make monetary policy even more expansionary. it appears as though this policy has had an effect. but we are not home and dry yet, which is shown, for instance in the unexpectedly low inflation outcomes in april. it takes time until inflation is back at a level around the inflation target and there is still spare capacity in the economy and scope to increase activity further. the risks of a setback in economic activity should not be underestimated either. as we executive board members pointed out, we are always prepared to make monetary policy even more expansionary if we assess that the upturn in inflation is threatened. but even if the focus of the debate in sweden is now of necessity on current monetary policy, we must not lose sight of the longer perspective. there is a lively international debate on whether, and if so how, inflation targeting should be changed in the wake of the financial crisis and the ensuing period of a long - drawn out economic recession, very low inflation and very expansionary monetary policy. what do the past eight years mean for the functioning of the economy and for monetary policy? will we return to the way things looked before the financial crisis? it is important that we also take time in the swedish debate to focus on these fundamental issues so that the discussions of our own monetary policy framework remain well - informed and productive. | amortisation requirements have arisen recently, however, and it is important that they are resolved quickly. see, for instance, blanchard ( 2015 ). a survey of the debate is provided by, for instance, smets ( 2013 ). see, for instance, schularick and taylor ( 2012 ) and jorda, schularick and taylor ( 2013 ). bis central bankers β speeches this is not something that monetary policy should do. one argument was that it is too difficult to identify bubbles and that in practice it may make things even worse if one tries to counteract them. 4 the fact that the earlier consensus view is now up for discussion is of course due to the experiences from the financial crisis that show that the economic costs to society of financial imbalances can be substantial and that it is not so easy for monetary policy to β clean up β afterwards when the economy has suffered. the inflation target is still the foundation there are different ways of justifying why monetary policy should take financial stability into account. different arguments lead to slightly different conclusions regarding exactly how inflation - targeting should be adapted. should, for instance, financial stability be included as a new objective for monetary policy, together with price stability and macroeconomic stability? 5 or can the objectives, as before, apply to price stability and macroeconomic stability but with consideration to financial stability included in the prospects for these two quantities in the slightly longer run? 6 theoretically, there may thus be some differences between different ways of including consideration of financial stability in inflation - targeting. in practice, i do not think the differences are so large β regardless of the underlying reason, the results are in practice that monetary policy is slightly adjusted to counteract potential imbalances on the financial side of the economy. 7 it may be worth pointing this out : a monetary policy that β leans against the wind β in this way does not actually scrap the inflation target and swap it for a target for asset prices or indebtedness. the inflation target is still the foundation. what this means is that in some situations monetary policy can be adapted so that it takes slightly longer for inflation to get back to the target that it would have done otherwise if one had not taken financial stability into account. a necessary condition for being able to give such consideration is that confidence in the inflation target is firmly rooted and does not risk deteriorating because it takes somewhat longer for inflation to attain the target. a monetary policy that leans against the wind thus assumes that inflation expectations | 1 |
helps savings flow to high - value investments. spreading risk makes risk easier to bear, and more - efficient investment increases real incomes in the long run. of course, as always in finance, mistakes can be made. sometimes projects are financed that turn out to be fraudulent or otherwise unworthy, and sometimes national financial systems are not ready to deal with the higher volumes of capital flows and the quicker and harsher market discipline that comes with globalization. in the past couple of decades, we have no comprehensive data on this phenomenon. here are two indicators : ( 1 ) the share of u. s. merchandise exports destined for further processing by a foreign affiliate of a u. s. multinational corporation rose from 14 percent in 1982 to 19 percent in 1999, the latest available year of data ( bureau of economic analysis ) and ( 2 ) the share of u. s. merchandise exports to mexican maquiladoras rose from 3 percent in 1992 to 8 percent in 2004 ( mexican national institute of statistics and u. s. department of commerce, bureau of economic analysis ). see carol corrado, paul lengermann, and lawrence slifman ( 2003 ), " the contribution of multinational corporations to u. s. productivity growth, " paper presented at the oecd workshop on the impact of multinational enterprises on productivity growth, paris, november 5. see robert z. lawrence ( 1996 ), single world, divided nations? international trade and oecd labor markets ( washington : brookings institution ), and per krusell, lee e. ohanian, jose - victor rios - rull, and giovanni l. violante ( 2000 ), " capital - skill complementarity and inequality : a macroeconomic analysis, " econometrica, vol. 68 ( september ), pp. 1029 - 53. see edward e. leamer and peter k. schott ( 2005 ), " the rich ( and poor ) keep getting richer, " harvard business review, vol. 83 ( april ), p. 20. some major recessions in emerging - market nations appear to have been associated with boom - and - bust cycles in capital flows. but barriers to capital flows are not a realistic choice for emerging - market nations in the long run because these nations are unlikely to join the ranks of advanced economies without open capital markets. globalization also presents challenges for corporate treasurers and for other corporate decisionmakers. the importance of managing risk related to foreign exchange rate fluctuations usually grows with the | size of a firm's foreign sales and production. and operational risks have also become more important at many firms. examples include political risks - such as disruptions to operations or sales associated with political upheaval in a given nation or with changes in law - and reputational risks flowing from the challenges of conforming to a broader array of legal and cultural norms. i would encourage you to consider the degree to which each of your institutions has accurately measured and effectively managed these and other risks associated with global operations. implications for public policy policymakers should and do pay attention to globalization. to some extent, they have helped to promote it by removing or lowering barriers to cross - border investment, migration, and trade. i hope policymakers continue to take steps to facilitate globalization. but progress probably will also depend on other factors, like further advances in information, communication, and transportation technology, as well as changes in the habits of individuals and firms, all of which are largely out of the hands of policymakers. besides broad efforts to facilitate it, how should public policy respond to globalization? as i noted earlier, some are concerned that financial globalization leads to boom - and - bust patterns in capital flows and investment, especially in emerging - market nations. a return to capital controls is probably not the best choice here. more likely to be helpful is attention to the institutional environment, which encompasses the supervision of financial institutions, policy transparency, legal systems, control of corruption, incentives for good corporate governance, and macroeconomic stability. a recent international monetary fund study argues that countries that have benefited the most from globalization have been those with the strongest institutions. 25 we are currently experiencing a net outflow of capital from the developing world toward the industrial countries, a movement contrary to the prediction of simple economic theory. one important factor in this movement is that, on average, the institutional framework in industrial countries is perceived as being more favorable to investors in terms of allocating capital efficiently and protecting investors from fraud, waste, and expropriation. there is every reason to believe that capital flows will resume to those emerging markets that demonstrate a commitment to sustained improvements in their domestic institutions. the dislocation that can be caused by changing trade patterns poses another challenge to policymakers. this dislocation is not different in any meaningful way from the dislocation caused by technological progress. just as our economy would be a lot poorer if we had protected horses and buggies by outlawing automobiles, so it will be poorer if we | 1 |
was the secretary of the treasury. and one of the first things i noticed when he hosted a meeting was that he didn't involve just the top people in the treasury department. he included the people who were closer to the issue, such as a research assistant or junior analyst. and he would ask them questions and engage them, and he cared what they thought about the issue. while they didn't necessarily have the same judgment or context as more senior people, they had a lot of knowledge and analytic chops and sometimes a new way of thinking about a problem. and i've carried that approach to my job today. many of the people in my meetings at the federal reserve are quite junior in the organization, but they speak up in a way that can change how i think about a problem. please know that you can make a difference as a very junior person and in a very large organization. 1 / 3 bis - central bankers'speeches even if today marks the conclusion of your time in the classroom, it isn't the end of your education. the best career advice that i can offer is also the best advice for a happy lifewhatever you do, try to put yourself in a position where you are always learning, every day. this is something my father - a labor lawyer by day and a poet by night - tried to live by. seeking out a role where you are learning every day will guide you to work that stimulates and motivates you, making you a more knowledgeable and hopefully wiser person, even when the lessons imparted are hard ones. as they often are. this striving to always be learning has guided me to fulfilling work and it has told me, at times, when i needed to take a risk and put myself out there. i was not anyone's first choice for the job i have now, or the job leading the ford school, or running point on financial reform at treasury. but i did all of those things. as you will in your lives, when opportunities come along that you never expected. when i was graduating, i had no idea what i would eventually do in life. and that was scary. that is okay. that is normal. you don't need to know what you want to do for the rest of your life. none of us older people know that either. we're figuring it out as we go. i've just mentioned one of the ingredients to doing your best - | of being a leader. being tough doesn't mean being hard or insensitive. one can be resilient, make tough decisions, and stand up to pressure in ways that treat people with respect - the kind of respect that you hope others will show you. one of the primary ways that we show respect for others is to listen. if you are always learning, that means you are always listening, taking on board what you hear from others, even if it is very unwelcome, and perhaps, adjusting your views and gaining knowledge from that input. and it means talking in a way that others can hear. one can make tough decisions and hold people to high standards while treating others well. treating others well, for me, boils down to a simple rule - don't be a jerk. all of us have had enough experiences with others acting like jerks to understand this advice, but it's a bit harder when applied to yourself. at least for me it is. humility is an attribute that i consider essential to avoid being a jerk. life often gives one the opportunity to learn and relearn the lesson of humility - and i am humbled every day. humility is recognizing the limits of knowledge, confidence, and self - regard. it is the line between what we truly know and understand, and what we don't really know and cannot grasp. humility means being open to new information, to weighing information in an objective way, and being able to take on that input and sometimes change one's mind. in a practical way, it means being open to and seriously considering the views of others, and in that sense, it is often a vital way to connect with other people. let me leave you today with two words, the most important two words that you will ever know, or ever say. those words are " thank you. " " thank you " means the recognition that someone has done something valuable for you. gratitude binds us together. so please turn to your parents, your partners, your friends and other family, your teachers and mentors, your fellow students, and say, thank you. congratulations, class of 2024, and thank you, for listening to me today. 3 / 3 bis - central bankers'speeches | 1 |
klaas knot : simplicity in the financial sector speech by mr klaas knot, president of the netherlands bank, at the 20th riskminds global risk regulation summit, amsterdam, 2 december 2013. * * * ladies and gentlemen, thank you for inviting me to speak at the risk minds conference today, also as this enables me to congratulate you on its 20th edition. twenty years have passed since the first risk minds conference, and i β m glad to say that risk management has made substantial progress during this period. the past few years have certainly underlined the importance of proper risk management. as i see it, risk management is a key building block for ensuring sufficient capital and liquidity buffers in the financial system. strong and reliable financial institutions are one of the vital elements of financial stability. and financial stability in turn is of prime importance to de nederlandsche bank as a central bank and prudential supervisor. and that is because central banks have a mandate to promote financial stability. and we β ve seen in recent years, that this is not an easy task. in hindsight, we can say that the financial sector had become too complex and non - transparent. technological advances had created various new financial products and instruments whose risks were often unclear. this particularly held for products and instruments involving the packaging and repackaging of exposures, the sale of cdos ( collateralized debt obligations ) and cdo2s, and the use of sivs ( structured investment vehicles ). the financial sector β s increasing globalization has also made it more difficult to assess risks properly. it was because of lehman brothers β global presence that its failure had such an impact on the world. in every country where lehman brothers had a branch, its bankruptcy had to be filed for and resolved. the financial environment that we faced in the run - up to the crisis β and, by β we β, i mean the public, investors, counterparties, supervisors and regulators β was non - transparent, and the risks were getting more and more complex. and then it all went wrong, and many financial institutions had to be bailed out by governments. it was no wonder that the public β s confidence in the financial sector fell sharply. and it still hasn β t recovered. how can we regain the public β s trust? for one, by making the financial sector less complex and more transparent. the crisis has highlighted various fundamental problems in the design of the financial system. the level of complexity, the | . a follow - up event is planned for later this year, focusing on recent developments in the international payment system. it is a great opportunity for dnb to keep track of indonesia's highly innovative payment system, and dnb is proud to have such a close and fruitful relationship with bank indonesia regarding such an important topic. indonesia is one of the largest and fastest growing countries in the most densely populated region in the world : southeast asia. with a population of approximately 280 1 / 4 bis - central bankers'speeches million people, it is the fourth most populous country in the world. if you take the map of indonesia and you lay it on top of that of europe, it reaches all the way from ireland to kazakhstan. for the dutch participants of this conference : let that sink in for a moment. with a real gdp of around 3. 4 trillion us dollars, it is currently the world's 7th economy. over the last decade, the indonesian economy has expanded at a rapid and robust pace. during this period, real gdp has increased by at least 5 percent annually β except in the covid years of 2020 and 2021. in that same period, inflation has been kept under control : averaging around 3. 7 % per year. this is a testament to the readiness of indonesia's central bank, which raised its benchmark interest rate last month in an effort to support the rupiah. this was a strong policy response, as a strong dollar took a toll on asian currencies amidst market uncertainty around the us federal reserve's rate outlook and escalating global economic uncertainties. indonesia's economy continues to perform strongly, with inflationary pressures moderating, macroeconomic policies returning to their pre - pandemic settings and a stable, profitable financial sector serving businesses and the public. this highlights the maturity of the country's institutions and macroeconomic frameworks as it has navigated a highly challenging global environment. but there are also clouds on the horizon. over the past years, the threats to free trade and investment have increased globally. scepticism about globalisation has grown. international cooperation is in retreat. brexit, ongoing tensions between the us and china, the russian invasion of ukraine and the conflict in the middle east have put further pressure on globalisation. in response to geopolitical developments, countries and blocs are now often likely to pursue strategic autonomy. according to the imf, around 3, 000 trade restricting measures were imposed last year | 0.5 |
18 % of gdp in 10 years β time. it is not difficult to get an idea of the potential scale of such flows by simply punching the calculator : this will give a good sense of why we say the potential is huge. 11. so, given the huge potential outward portfolio investments from mainland china, how will they be allocated across different financial markets? our internal research shows that, despite the advances in telecommunications and technology, home bias is still very much there, and people do like investing in markets closer to their home countries. as such, hong kong is likely to be one of the key destinations of mainland β s opi. apart from being the final destination for these investments, hong kong can also act as an ideal launch platform for these investment flows to reach other major global markets. 12. since the introduction of the qdii scheme, us $ 64 billion worth of investment quotas have been granted up to june this year. it is likely that a significant portion of these moneys is managed out of hong kong. in fact, over 40 mainland companies providing fund management, securities and futures, insurance, and other services have already established a presence in hong kong to manage the funds flowing out of the mainland and engage in fund advisory businesses. 13. so, the implications from the gradual liberalisation of mainland china β s capital account are clear. hong kong is bound to be a key destination as well as the management hub for the gradual increase in the portfolio flows from mainland china. this trend will present huge opportunities to financial institutions, private banks, fund managers, and other financial service providers looking to tap these funds. 14. having said that, one should expect that the process of financial liberalisation in mainland china will be a gradual and controllable one, in a manner that will fit the chinese saying of β crossing the river by feeling the stones β so that one can adjust the speed and tactics of crossing the river without fear of falling in and getting drowned. it is, however, important to realise that this process has already begun : this is something that global financial firms, especially asset managers, should not ignore in their business planning process. the wider external use of the rmb 15. rmb. now, let me move on to the second important trend : the wider external use of the 16. since the global financial crisis, mainland china has taken steps to allow a greater use of rmb outside the mainland. the rationale behind this policy move is easily understandable | make the most of that time? unfortunately, not to a sufficient extent. yes, considerable efforts have been and are being made, and results are already visible. institutions have considerably improved their solvency and liquidity. some institutions have made, and are continuing to make, considerable efforts to restructure. but in many cases, unsustainable strategies have not yet been sufficiently adapted. in this context, i regard the criticism of allegedly over - strict regulation, which has recently become acceptable again, as problematic. i often have the impression that eight years were enough to suppress the memory of the crisis of the century. the challenges associated with the new, improved regulations are not new burdens. on the 2 / 6 bis central bankers'speeches contrary, the fact that risky business operations are now less lucrative for institutions, that they have to manage themselves more sustainably and develop durable internal risk management, is the result of legacy issues from times when regulation was too lax. complaining about this confuses cause and effect and distracts from the actual problems faced by the financial system. 4. new challenges in the midst of the economic climate change not all institutions have to struggle with old pre - crisis legacies to the same extent. some of them were doing solid business even before the crisis. nevertheless, these institutions are just as vulnerable to the new challenges. and these challenges are massive. in many cases, the excessive debate about the details of digitalisation, the low - interest - rate environment or other future challenges overlooks the fact that we are in the middle of an economic climate change. since i don β t intend to send you to sleep, i will just address the four most important aspects of this from the point of view of banks : namely, the risk of an economic downturn, demographic change, the low - interest - rate environment and digitalisation. there is much talk at the moment about whether the era of ever - increasing economic prosperity in industrialised countries is over. 1 this is a complex debate which is likely to affect each society differently. the essence from the point of view of financial institutions is that we in germany are currently still experiencing relatively comfortable economic activity by international standards, but that this could definitely slow down in the foreseeable future. at the moment, it is difficult to predict whether this will happen. but from the point of view of the banking sector, it is important to bear in mind that the present, very comfortable economic situation and the low credit default rates associated with | 0 |
, retail space, and industrial structures are classified as β commercial real estate ", the classification of multi - family dwellings is not clear and depends on whether one follows the perspective of users or investors. data availability remains challenging, too. the number of transactions is lower than for residential real estate, and heterogeneity is more pronounced. in the absence of official data, analysts rely on private data provided by market observers. figure 5 depicts deviations in the measurement across indicators for price changes in german property markets. with regard to residential property prices in germany, analysts may consider four main indicators published by different data providers. in this case, they are confronted with measurement deviations of about 1 percentage point for the annual price change of the total market on average ( left - hand column ). for office and retail space, the mean absolute deviation is considerably larger at 2Β½ percentage points. this is one of the underlying challenges of assessing such data. 5 / 8 bis central bankers'speeches given that real estate prices have increased strongly, are risks to financial stability building up? two issues need to be considered. first, changes in prices need to be compared to changes in fundamentals such as income expectations, demographics, and the macroeconomic environment. these factors may indeed explain a significant share of the price increases in germany. but there is still an unexplained component, and that component seems to have increased over time. 3 second, risks to financial stability emerge if a strong rise in real estate prices coincides with a strong expansion in credit volumes and an easing of credit standards. the house price momentum has caused credit growth, too, to accelerate since the beginning of the upswing on the german property market. housing credit to households increased by 3. 7 per cent in 2016. this is lower than the long - run average : since the early 1980s, the growth rate of housing credit has been about 5 per cent annually. it is important to note that germany currently has no consistent reporting on credit standards, eg the loan - to - value ratio or the debt service - to - income ratio. the relevance of and urgent need for progress in the measurement of real estate prices is widely acknowledged. i am looking forward to the contributions that will be presented at this conference and encourage the statistical community to push ahead with this strand of research and practical implementation. 5. summing up to sum up, what can the conference contribute to these debates? let me return to the three questions raised at the beginning | expenditure weights from one base year to another, price and quantity effects often move in opposite directions. this suggests that substitution plays a significant role. in parallel to discussions about the boskin report, the ground was being prepared for the launch of the euro in europe. a number of key questions needed to be answered : why did eurostat conceptualise the hicp as a cost - of - goods index? why does the eurosystem define price stability as an increase in this index of below, but close to, 2 per cent over the medium term? papers presented at the 1999 meeting of the ottawa group provided answers. the eurosystem β s definition of price stability includes a safety margin against deflation. 1 / 8 bis central bankers'speeches within any country and, in particular, across the different economies within a monetary union, there is a need for structural change and adjustment of relative prices. in the presence of nominal rigidities, positive inflation allows for the required adjustment of relative prices. figure 1 shows that inflation differences in the euro area have been quite significant in the past 20 years, demonstrating the need for the adjustment of relative prices. price indices should be transparent and easy to communicate. the euro area β s hicp is a pure price index based on the laspeyres formula, which has advantages over a cost - ofliving index. a cost - of - living index requires the definition of consumer baskets with the same standard of living in the context of changing relative prices. this requires a utility framework. but how to define and measure individual preferences? how to aggregate across individuals? these questions are difficult to answer. such problems can be avoided with a pure price index. apart from substitution effects, shifts in expenditure weights are explained by other factors such as income effects. against this backdrop, hicp weights are updated more frequently in order to accommodate these changes. in april 2014, the ecb concluded in a monthly bulletin box that, β [ o ] n the basis of the available evidence, it is not possible to estimate measurement bias in the euro area hicp ". in short, much remains to be done for researchers and statisticians to reexamine this important topic in price statistics. 3. the impact of digitalisation on price statistics digitalisation obviously has an important impact on price statistics. consumer behaviour and channels of distribution have changed profoundly, and weighting schemes need to take these changes into account. do updates of consumer baskets sufficiently account for the introduction of new ict goods? 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quality securities against securities facing illiquidity risks. this becomes necessary to unfreeze the markets in general. after the global crisis, asset quality, particularly liquidity, has received greater policy focus. money market rates also reflect market expectations of how the policy rate could evolve in the near term. as per standard expectations hypothesis, money market rates for different time duration should equal expected future short - term rates, plus term premium and risk premium. bernanke ( 2004 ) 1 had examined how expectations of the likely future course of the federal funds rate respond to the fed β s policy actions and statements and noted that β... our findings support the view that fomc statements have proven a powerful tool for affecting market expectations about the future course of the federal funds rate β. empirical research suggests that if the shortest end of the money market, which is influenced the most by policy rate, is stable, or less volatile, then it may help in keeping term premium lower, compared to a period when volatile short rates get transmitted to the entire money market and simultaneously the term premium rises. with the sophistication of financial markets rendering the money, output and price relationship unstable, by the early 1980s, major central banks began to emphasise on the price channel, i. e., policy interest rate for monetary policy transmission. as a result, the role of money market became all the more important for signaling and transmission of monetary policy. thus, the development of money markets across countries in terms of instruments and participants with varying risk profiles has necessitated changes in the operating procedures of monetary policy. in the case of india, the ultimate goals of monetary policy, i. e., price stability and growth, have remained unchanged over the years. in the recent years, financial stability has been considered as an additional objective of monetary policy. however, operational and intermediate objectives of monetary policy have undergone periodic changes in response to changes in the economic and financial environment. the development of the money market over the years and relative stability in the call money market enabled the reserve bank to move away from quantity - based instruments to price - based instruments under its multiple indicators approach adopted since 1998. accordingly, the overnight call rate, which was used implicitly as operating target since the institution of liquidity adjustment facility ( laf ) in 2000, became explicit after the adoption of a new operating procedure in may 2011. bernanke, ben s. ( 2004 ), β central bank talk and monetary policy β, at the | japan society corporate luncheon, new york, october 7. bis central bankers β speeches money market in india financial reforms in india began in the early 1990s. however, various segments of domestic financial markets, viz., money market, debt market and forex market underwent significant shifts mainly from the 1990s. earlier, the indian money market was characterised by paucity of instruments, lack of depth and distortions in the market micro - structure. it mainly consisted of uncollateralised call market, treasury bills, commercial bills and participation certificates. following the recommendations of the chakravarty committee ( 1985 ), the reserve bank adopted a monetary targeting framework. at the same time, efforts were made to develop the money market following the recommendations of vaghul committee ( 1987 ). in this regard, important developments were : ( i ) setting up of the discount and finance house of india ( dfhi ) in 1988 to impart liquidity to money market instruments and help the development of secondary markets in such instruments ; ( ii ) introduction of instruments such as certificate of deposits ( cds ) in 1989 and commercial papers in 1990 and inter - bank participation certificates with and without risk in 1988 to increase the range of instruments ; and ( iii ) freeing of call money rates by may 1989 to enable price discovery. however, the functioning of the market continued to be hindered by a number of structural rigidities such as skewed distribution of liquidity and the prevalence of administered deposit and lending rates of banks. recognising these rigidities, the pace of reforms in money market was accelerated. following the recommendations of an internal working group ( 1997 ) and the narasimham committee ( 1998 ), a comprehensive set of measures was undertaken by the reserve bank to develop the money market. these included : ( i ) withdrawal of interest rate ceilings in the money market ; ( ii ) introduction of auctions in treasury bills ; ( iii ) gradual move away from the cash credit system to a loan - based system. maturities of other existing instruments such as cp and cds were also gradually shortened to encourage wider participation. most importantly, the ad hoc treasury bills were abolished in 1997 thereby putting a stop to automatic monetisation of fiscal deficit. this enhanced the instrument independence of the reserve bank ( table 1 ). table 1 major developments in money market since the 1990s 1. abolition of ad hoc treasury bills in april 1997 2. full fledged laf in june 2000. 3. cblo for corporate and | 1 |
should conduct an urgent investigation on the role of management and staff in dealing with agents, to ensure that there had been compliance with australian laws. these suggestions and some other proposed drafting changes were accepted. mr battellino also asked that the npa manager, who had played a key role in preparing the may 2007 npa board paper, had assisted the audit, and who had voiced concerns to mr campbell in april, be requested to come to the reserve bank β s head office in sydney and to put any concerns he had directly to the bank, and to do so in writing. the npa manager agreed to do so, but only on the condition that his visit be kept strictly confidential and having been assured that his statement would be read only by a very small number of people β the deputy governor and perhaps the governor. ( it was not provided to the governor. ) the meeting between the npa manager and the deputy governor took place on 5 june, the same day as the draft audit report became available. at the request of the deputy governor, on 8 june the npa manager supplied a written statement through his lawyer to the reserve bank β s legal counsel on strict terms of confidentiality required by him. the deputy governor read it. the same document with some very minor changes was, at the bank β s request, subsequently provided by the npa manager β s lawyer directly to the freehills team who were engaged by the npa board sub - committee, also on terms of strict confidentiality and on the basis that it would be returned to the npa manager β s lawyer which it was. on 7 june 2007 the reserve bank senior management discussed the draft audit report with mr thompson. it was agreed that the draft audit report contained serious findings and that the npa board needed to meet and put in place a detailed response to the matters raised. it was agreed that, in line with the audit recommendations, the npa board should establish a sub - committee to investigate npa management and staff in their dealings with agents. it was also agreed that a similar audit of the use of agents by securency should be requested, pending which payments to securency β s agents would be suspended. the final npa audit report, which contained the strengthened recommendations, was provided to the npa board on 8 june 2007. on that day, mr battellino sent to the reserve bank audit committee a copy of the audit report, as well as a copy of a file note of the meeting with | that our counterparties sign the statement of commitment, just as we will ourselves. given that we provided the full text of the code to the market only last month, there will be a period of time for market participants to adjust their practices where necessary to be in line with the principles in the code. i would not expect much time should be required to do this. this period of time might potentially be as short as six months, but no more than twelve months for the vast majority of market participants. how much effort this might require will in part depend on the nature and extent of engagement with the fx market. in drafting the code, we have always kept the principle of proportionality at front of mind. finally, it is vital that the code remains up to date and evolves as the market evolves. the code will be collectively owned, maintained and updated by the global foreign exchange committee ( gfxc ), which met for the first time in london in may. this will continue the public sector β private sector partnership which has supported the development of the code. the gfxc will regularly assess whether new information or market developments warrant updates or additions being made to the code. as the first example of this, given diversity of views on the use of last look in the market, the gfxc is currently requesting feedback on trading in the 3 / 4 bis central bankers'speeches last look window. 7 on a less frequent basis, the gfxc will oversee a more comprehensive review of the code. conclusion the global code is the culmination of two years of work by a group of people from both the private and public sectors. the work reflected a very constructive and cooperative effort between the central banks and market participants. we all undertook this work in addition to our regular responsibilities, at all hours of the day and night. this contribution of time and effort reflected the fact that all of us recognise the need to restore the public β s faith in the foreign exchange market. we share the view that the global code plays an important role in assisting that process and also in helping improve market functioning and confidence in the market. 1 an app version has also been made available by an external party : app. policystore. ch / c / fxcode /. 2 see < www. bis. org / press / p150511. htm >. 3 www. globalfxc. org / adopting _ the _ global _ code. htm 4 | 0.5 |
jumped to an annual rate of 1. 62 million units in october, a record high for this series. moreover, sales of both new and existing homes have also held near historical highs. as i noted before, the business sector has been the locus of weakness in this expansion. however, the extreme caution that had been gripping firms now appears to be dissipating. real outlays for equipment and software rose at an annual rate of 15Β½ percent in the third quarter, after an increase of 8ΒΌ percent in the second quarter. moreover, businesses also are hiring again. private non - farm payrolls increased at an average pace of about 120, 000 per month in september and october, and further declines in initial claims for unemployment insurance suggest that this improvement in the labor market has continued into november. finally, manufacturing production is perking up. although light vehicle assemblies have slipped from the very high levels of the summer, production of other goods rose 0. 2 percent in september and an additional 0. 4 percent in october, reflecting fairly widespread gains across industries. the sustainability of the recovery will depend importantly on future trends in employment, household spending, and business investment. twice before in this recovery we have seen short periods of strong growth, followed by a return to sluggish, subpar growth. given the strength of the incoming data that i have just outlined, the risk that the economy will again stall out must be given a smaller probability than that assigned just a few months ago, but the risk cannot be discounted completely. for example, the strength in consumer spending in the third quarter might prove to be temporary - a one - time surge related to the fiscal stimulus. indeed, analysts who subscribe to this view would take some solace in the latest data on non - auto retail sales. under these circumstances, businesses likely would remain very cautious about the demand conditions they expect to prevail in the year ahead. this would make them reluctant to expand and hire new workers - factors that would hold down economic expansion in 2004. while the consensus forecast for next year calls for a growth rate of 4 percent ( on a fourth - quarter - to - fourth - quarter basis ), which seems reasonable, a weaker outcome than that is not hard to imagine. productivity, potential growth and inflation one of the most prominent characteristics of this economic expansion has been the rapid gains in labor productivity. output per hour rose at an annual rate of 4Β½ percent in the first half of this year and at an | to an end, namely to enhance the welfare of our citizens. the achievement of sustainable convergence and competitiveness is vital for the successful membership of the euro area. to conclude i would like to thank our host governor bogov. as stated in the report of the programme we are closing today, he has already brought the nbrm in line with or close to european standards in many areas. i wish him every success in working on the remaining issues and offer our services and support to this end wherever possible. i thank ambassador orav and the european union for funding this initiative and hope that, given the importance of strong institutions, the eu also will support central bank cooperation with the nbrm in the future. and finally i would like to thank my colleagues from the ecb and the national central banks who are also represented here today for their efforts and contribution to this very successful cooperation programme. bis central bankers β speeches | 0 |
to turn around a deteriorating situation and avert failure ; certainly the experience of the financial crisis are sobering in that respect. that underscores the need to develop with alacrity and diligence meaningful recovery and resolution planning for systemically important firms and continue to build a strong international resolution process. recovery planning by firms helps to increase the margin of time available for firms by shortening reaction time when distress occurs and reducing the impediments to recovery and resolution when firms are healthy. similarly, resolution planning gives financial authorities a better starting position and more ability to move swiftly and decisively in a financial firm failure. taken together, augmented resolution powers, recovery and resolution planning and better identification of systemic risks can move us substantially forward in dealing with failing systemically important institutions. thank you for the opportunity to share these views with you. | ##ishing capital and liquidity and recasting the business plan was designed around loan exposures, but continues to be relevant today. the challenges are to adapt such a program to the many financial institutions strongly oriented toward capital markets activities with the resulting volatile balance sheets and income streams and to apply the program timely. time also plays an important role when a financial firm is subject to an insolvency process. another stylized fact is that the market value of the assets and business lines often suffer a substantial markdown when a financial institution enters insolvency and may decay further thereafter. the federal deposit insurance corporation ( fdic ), the resolution authority for banks in the united states, routinely experienced losses in resolving banks in the 1980s, when it was required to wait until the bank's book value had reached zero. that led to the provision in fdicia 1991 that a bank can be declared insolvent when its tangible equity falls below 2 percent of assets. a supervisory innovation : recovery planning the potential for rapid decay of asset and business line values unless assets and liabilities are transferred to a permanent owner quickly is a large part of what sets financial institutions apart from other companies entering insolvency. this difference motivates efforts to avert insolvency through supervisory action, as i described earlier. it also motivated u. s. banking supervisors in the early 1990s to ask some troubled banking companies not only to apply the three - part program but also to develop a meaningful contingency plan for reducing risk and raising capital if the first round of actions did not succeed. the supervisors incorporated the requirement to develop contingency plans in its supervisory agreements with those institutions. the cbrg has recommended that all systemically important financial institutions develop recovery plans. i believe the development of such plans by healthy institutions and their discussion by a college of the firm β s principal regulators constitute important innovations in the supervision of financial institutions. the cross border crisis management group has provided momentum and a forum for discussion of progress and challenges as supervisors initiate discussion of recovery plans with firms. the discussions we have held in the united states involve the financial institution, its major u. s. regulators and the regulators of the foreign legal entities containing its principal business operations. those discussions have included both the development of a global liquidity contingency plan and a plan to reduce the risk profile of or β derisk β the financial firm by winding down or selling business operations or financial assets. the intention is to have recovery plans, | 1 |
to the worsening of the crisis in 2008. but the financial markets are still functioning much less efficiently than normal. it is also still difficult for companies to finance themselves in the capital market. the riksbank has also implemented a large number of unconventional measures to safeguard financial stability and mitigate the negative effects of the financial crisis. during the second half of 2008 the riksbank increased its lending to the banks by more than sek 450 billion. almost sek 200 billion of this was comprised of loans in us dollars. we have largely financed this through a swap agreement with the fed. our own foreign exchange reserve was not sufficiently large to manage such extensive lending in dollars. the increased lending has meant that the riksbank β s balance sheet grew during the second half of 2008 from around sek 200 billion to around sek 700 billion. we have also changed our collateral requirements so that the banks can offer more types of security as collateral and thus more easily sustain their functions in the market. we have given special liquidity assistance to kaupthing and carnegie to safeguard financial stability and ensure the functioning of the financial markets. we have begun offering loans with commercial paper as collateral to facilitate companies β financing. we have also signed swap agreements with iceland and latvia to support crisis management in these countries. and we have cut the interest rate. since the monetary policy meeting in february we have further extended these unconventional measures. we have decided on loans with longer maturities, with variable interest rates and with smaller supplements and we have signed a swap agreement with estonia. the swedish national debt office and finansinspektionen ( the swedish financial supervisory authority ) have also taken action to alleviate the financial crisis. the government has raised the state deposit guarantee and extended it to cover all types of deposits in accounts, it has introduced a guarantee programme, established a guarantee fund and decided on means of capital injections to the banks. at the same time, the government is conducting a more expansionary fiscal policy than before. i now intend to move on to describe international developments. international developments will be weak this year the world economy was in a slowdown phase even before september 2008. since then the deterioration in the world economy has been rapid. all of the large, developed economies are now in recession. during the fourth quarter of last year gdp growth in the united states and the euro area fell by around 6 per cent calculated on an annual rate. in japan the fall was even greater, more than 12 per cent calculated | financial stability fund were used. the second recapitalization took place in 2014, following a macro - prudential stress test, but involved only private equity capital injections. a further recapitalization took place at the end of 2015, mainly due to the uncertainty that prevailed in the first half of that year, which had a negative impact on macroeconomic and financial fundamentals. following agreement on the third adjustment programme, a financial envelope of β¬25 billion was provided for the banking system. in august 2015, the ecb launched an asset quality review and stress - test exercise for the four systemic greek bis central bankers β speeches banks. the ecb was the appropriate authority because, since november 2014, the four systemic banks have been supervised by the single supervisory mechanism ( ssm ). the bank of greece undertook a similar exercise for the smaller banks. the result of this exercise was identification of capital needs under both a baseline and an adverse macroeconomic scenario. the actual amount of capital raised was that identified under the adverse scenario, namely β¬14. 4 billion. thanks to the coordinated efforts of the greek authorities and the bank of greece, successful rights issues resulted in the full coverage of the shortfall by december 2015, with private investors subscribing about β¬9 billion. these efforts minimized hfsf participation and helped to restore confidence in the longer - term viability of greek banks. as a consequence, greek banks now have among the highest capital ratios of banks in the euro area. those deemed non - viable were resolved with their β good β part absorbed by systemic banks. the resolution tool used had to meet two main criteria. first, resolution had to be done in such a way as to ensure continued stability of the financial system. to that end, all deposits from resolved banks were transferred to systemic banks. this process also ensured a minimum of disruption for customers of resolved banks. the second criterion was to minimize the costs of restructuring for tax - payers. the bank of greece assessed that the costs of using the purchase and assumption resolution tool were lower than any alternative. with 14 such resolutions having successfully taken place since 2011, this process has also facilitated considerable restructuring of the banking system, eliminating excess market capacity. e. challenges ahead, the way forward and concluding remarks ladies and gentlemen, with the successful completion of the first review, a number of positive benefits are likely to ensue for the banking system. the reinstatement of the waiver will allow greek government bonds to | 0 |
day to come. in the next hour, we will examine the reasoning for macroprudential policy from an international perspective, from a financial stability perspective, and from a theoretical perspective. we hope this will establish common grounds for the discussions we will have the rest of the day. my co - hosts poul thomsen from imf and david lando from copenhagen business school will guide you through session 2 and 3. here, i would like to let you know that both session 2 and 3 are conducted using chatham house rule. the keynote speech will be given by william r. white from c. d. howe institute in toronto. he will give you some food for thought about " what is macroprudential policy not? " i am looking forward to an interesting day with some juicy discussions. page 4 of 5 i now leave the stage to the first speaker francesco mazzaferro, head of the european systemic risk board secretariat. page 5 of 5 | speech by governor lars rohde at the macroprudential policy conference in copenhagen 2018 19 november 2018 check against delivery dear guests, i am very pleased to welcome you to this macroprudential policy conference in copenhagen. the conference is a result of our excellent cooperation with the european department at the imf and the center for financial frictions at copenhagen business school. the ambition for today is to have an open debate about the merits and limitations of macroprudential policy. and to discuss current challenges and the way forward. to me, the essence of where we stand today with macroprudential policy is best captured in a quote by the danish philosopher sΓΈren kierkegaard : " life can only be understood backwards ; but it must be lived forwards. " * * * so let me start with the beginning. 10 years ago, the financial crisis demonstrated that financial risks can potentially affect both the financial system and the real economy. it also underlined that financial crises are expensive and affect the welfare of citizens. the lesson was that we need to ensure that the financial system can serve the real economy in good and in bad times. there was a clear need for better and more comprehensive regulation. as a result, macroprudential policy moved up on the political and academic agenda. the idea being that dosed correctly, prudential measures could reduce the likelihood and costs of financial crises. in my view, there are three important things we have to focus on to reduce the likelihood and costs of a financial crisis in the future : page 1 of 5 1. it is important that the incentives in the banking sector reflect those of any other private company. 2. it is important to limit procyclical behaviour of borrowers and lenders. 3. it is important to build strength in good times to overcome bad times. let me elaborate. * * * first, on getting the incentives right. one important lesson from the financial crisis is that bail - out creates the wrong incentives for banks. we need to break with the old model where profits are privatised and losses are socialised. to avoid excessive risk taking by shareholders, creditors and management, all banks must be able to fail. therefore, in my view, the most important eu initiative since the crisis has been the bank recovery and resolution directive. the purpose of credible resolution plans is to ensure that all credit institutions can be resolved β without the use of taxpayer funds and without distressing the economy. the directive paves | 1 |
david carse : documentation risk, operational risk and the new capital accord speech by mr david carse, deputy chief executive of the hong kong monetary authority, at the asia pacific loan market association documentation launch, hong kong, 24 may 2002. * * * ladies and gentlemen, i am very pleased to be able to speak at this special luncheon to launch the aplma standard documentation. i am told that there has been an unprecedented demand to attend this event. i would like to think that this reflects my own attractions as a speaker. but i am realistic enough to recognise that the real star of the show is the documentation itself ; and your attendance here today reflects the level of interest in the outcome of the association β s hard work in bringing the first phase of this project to fruition. my purpose today is to stress the importance of good documentation and to place it in the more general context of the increased regulatory focus on operational risk that is a feature of the basel committee β s proposed new capital accord. i will also briefly describe the latest developments in the new accord and bring you up to date on the revised timetable. the work of the association it is over three years since i spoke at the inaugural luncheon of the association in hong kong. i said on that occasion that the association promised to become a vital part of the market infrastructure in hong kong. i noted particularly that the association could play a role in three main areas : by acting as an industry representative and interlocutor with regulators ; by establishing common standards and documentation ; and by promoting market transparency and efficiency. i am glad to say that the association has delivered on its promises in each of these areas. its website is, for example, now up and running, and is an important source of information for both members and non - members. if i could put in a plea, however, it would be for more market statistics to be made available on the parts of the website that are open to non - members - or honorary members such as the hkma. in its representational role, the association offered very helpful comments last year on the draft guideline that the hkma prepared on the management of the risks associated with syndicated lending. our initial draft generated a certain amount of heat. this was i think largely due to a feeling on the part of the industry that we had overplayed the inherent risks of syndicated lending. we therefore made it clear in the final version of our guideline - which we issued in non - statutory form | currencies including rmb. ladies and gentlemen, we have made good progress on rmb internationalisation. the future trajectory depends on the joint effort of policy makers and, more importantly, market participants including both the real sector and the financial sector. the hkma will continue to proactively engage with the various stakeholders to maintain a conducive environment that supports this journey. with that, i wish you all a fruitful and insightful event. thank you. 3 / 3 bis - central bankers'speeches | 0.5 |
pressures are characterised by short - term supply shocks, while the generated inflation by domestic demand is low, as reflected in the relatively stable situation of core inflation. this performance is conditioned by the existence of free capacities in the albanian economy as well as contained monetary expansion and anchored inflationary expectations of consumers, businesses and agents in the financial market. the bank of albania deems that, in general terms, these factors will continue to be present during 2011. on the other hand, the bank of albania, in its inflation outlook, has factored the projections on the situation of fuel and food items made so far by the imf and fao. in the absence of added and unpredictable supply shocks, or second round chain phenomena, inflation rate is expected to be in line with the bank of albania target. bis central bankers β speeches i would like to continue with a more detailed analysis of current and expected developments in the albanian economy and financial markets, also assessing their implications on the expected consumer price inflation. economic activity in the absence of direct data and based on a number of indirect indicators, the bank of albania assesses that the albanian economy continued to grow during the fourth quarter of 2010. the economic growth was supported mainly by the external demand for albanian exports. however, domestic demand has shown lately signs of recovery, as evidenced by the positive trend of bank lending, indirect consumption indicators and improved economic sentiment indicator of the albanian businesses and consumers. consumption and private investment, the two most important components of aggregate demand, experienced a slow progress during 2010. while disposable income of the albanian consumers is considered to have increased in real terms, high uncertainty and tightened lending terms and conditions by the banking system deterred the domestic consumption. on the other hand, the albanian businesses encountered insufficient demand for them to use their full capacities and higher financing costs. this situation has most affected sectors of the economy such as construction, which relies totally on domestic demand and, at a lower extent, other sectors such as industry, which generates most of its activity from external demand. under these circumstances, investments pace was relatively lower, compared with previous years. the bank of albania considers that domestic consumption and investments will have a better performance during the current year. conditions for funding the private sector demand appear improved, while risk premia in financial markets appear lower. uncertainty for the future should gradually decrease. additionally, the expected positive influence of external demand and fiscal policy during 2011, are expected to stimulate domestic demand. correction of fiscal conduct is followed by | the growth rate of loans to the private sector reached 10. 6 % year - on - year. in addition to private businesses, which were the main users of credit funding during 2010, positive signals come from household consumers, whose demand for loans increased during the last quarter of 2010. financial markets are characterised by dropping risk premia and liquidity, reflected in a further decline of yields in the primary market and interest rates in albanian lek deposits and loans. in the inter - bank market, short - term interest rates remained close to the key interest rate and showed low volatility. foreign exchange trading in the domestic market was also calm. the albanian lek continued to depreciate in annual nominal terms against foreign currencies, although more slowly compared to 2010. * * * taking into account the information summarised above, the supervisory council deemed that inflationary pressures for the medium - term horizon remain contained. consumer price situation is expected to be under the pressure of price increases in world markets, but, in the absence of second round effects, their impact is expected to be transitional. on the other hand, the actual insufficient demand will continue to condition levels below the potential domestic capacity utilisation, exercising downward pressures on inflation. inflationary expectations continue to be anchored around the inflation target of the bank of albania. in the absence of unexpected shocks to the economy, inflation is expected to be close to the bank of albania mid - term target. the bank of albania will continue to monitor the nature of these external shocks and their impact on prices in the domestic context, for a timely reaction in order to eliminate stable inflationary pressures. after the discussions, the supervisory council concluded that the monetary conditions remain appropriate for meeting the medium - term inflation target and decided to leave the key interest rate unchanged at 5. 00 %. bis central bankers β speeches | 1 |
amando m tetangco, jr : strengthening the bonds of partnership for better education remarks by mr amando m tetangco, jr, governor of the central bank of the philippines ( bangko sentral ng pilipinas ), at the ceremonial turn over to deped of computers under β tulong barya para sa eskwela β and teachers β guides on saving & money management, manila, 31 july 2007. * * * secretary jesli lapus, monetary board members juanita amatong and alfredo antonio, dr. cielito habito, our other partners from the department of education, fellow central bankers β good morning and welcome to our turnover ceremony with the department of education. i am very pleased that you all took the time to join us in this simple but significant event. a warm welcome to all! today, we see, in very concrete terms, the results of the successful partnership of the department of education and the bangko sentral ng pilipinas. first, we have the symbolic turnover of more than 500 brand new computers from bangko sentral to public elementary schools under the department of education. these computers were funded from the award - winning β tulong barya para sa eskwela β the joint program of the deped and the bangko sentral to promote efficient recirculation of our coins by encouraging coin donations for public elementary schools. if you recall, schoolchildren were at the forefront of the campaign, serving as agents of change in their homes and communities in the proper appreciation of the value of coins. over a six - moth period, β tulong barya para sa eskwela β generated benefits worth p14. 88 million : p6. 65 million in cash donations from the public which have been turned over to deped and p8. 23 million in coin production savings for bangko sentral. in recognition of the schoolchildren β s role in the successful campaign, the members of our monetary board unanimously approved the donation of bangko sentral β s entire savings of p8. 23 million through the purchase of computers for public elementary schools. ladies and gentlemen, let us thank our schoolchildren and our monetary board with a round of applause! based on our initial estimates, we would be able to donate 472 computer units from our savings. but because of the close cooperation of our it department, the corporate affairs office, and our bids & awards committee we are getting a total | of 512 brand new and branded computer sets. i understand that this number may go up further to about 540 units if we generate additional savings. let us therefore give these groups as well a well - deserved round of applause! but beyond the computers we are turning over to the department of education today, i am so inspired by the change in the public mindset about the barya. when we started our coin recirculation program, our slogan simply declared : β ang barya mahalaga, huwag bale - wala - in gamitin. β when we launched β tulong barya para sa eskwela β our slogan changed to β ang barya mahalaga, lalo na kapag pinagsama - sama. β i believe this national lesson in saving proved to our schoolchildren that every little amount saved adds up and can be the start of wealth creation. such is the power of barya! β tulong barya β therefore is a perfect introduction to the integration of saving and money management into our public elementary school curriculum. i am pleased to announce that today, we are turning over a total of 104 lesson plans on saving, money management, and basic economics to be incorporated in three subjects : social studies, character education and work education. i understand lessons on entrepreneurship are featured extensively in the teachers β guides for the work education subject. the development of these teachers β guides, the first step in the integration process, was completed by deped β s lesson exemplar writers from luzon, visayas and mindanao last april here in manila under the collaborative work of economic policy reform and advocacy or epra, bangko sentral and the deped. to continue the integration process, the monetary board unanimously approved the budget for the pilot - testing of the teachers β guides. today, try - out teachers with their principals and supervisors are in mandaluyong to complete a two - day launching and orientation for pilottesting in luzon. similar programs will be held in the cities of angeles, cebu and davao within the next two weeks. overall, pilot - testing for saving, money management and basic economic concepts will be conducted from august to september and will cover 9 regions, 15 provinces, 18 towns and cities, 36 schools, 180 teachers and approximately 9, 000 pupils. this morning, therefore, we turn over to the department of education, 484 copies of teachers β guides that will be used for the pilot - test phase. from | 1 |
in some quarters as a source of insecurity rather than a bulwark against it. one country has even decided that it is better to reverse that process than continue it. this insecurity in part reflects common factors emerging across western democracies, such as fears about immigration, globalisation and social change. but in europe there are also unique forces at play. in particular, the severity of the euro crisis has weakened faith in the eu as a foundation of economic security. so europe, and even more so the euro area, faces a moment of decision. we need answers to the questions that citizens are asking. but those answers also need to be balanced : there are things that need to change in europe, but there is much we can be proud of as well. european integration has produced many achievements and we should not let our current difficulties diminish them. on the contrary, we need to be confident in the progress we have made β and clear that we would be worse off without it. 1 / 6 bis central bankers'speeches but where things evidently need to be better, we need to make them so. most importantly, that means making the changes in our monetary union that all can see are necessary. the significance of the single market since its formation in 1957, the european project has been built, above all, on a commitment to openness, epitomised by the establishment of a single market among its member states. this commitment was idealistic, but it was also eminently pragmatic. the founders of the eu had witnessed the damage caused by the inwardness and protectionism of the interwar years. they understood that sustaining economic growth was vital to drain support for divisive nationalism, and the best way to achieve this was through open markets. though the last decade has been difficult, over the long sweep of post - war history their vision has been proved right. since 1960 cumulative growth in gdp per capita has been one - third higher in the eu15 than in the united states. private wealth, which had been twice wiped out by the wars of the twentieth century, has also doubled as a percentage of national income. this was of course partly driven by the natural catching - up process after the second world war. but there is plenty of evidence that growth has been accelerated by integration. according to one estimate, the eu β s gdp per capita would be as much as one - fifth lower today if no integration had taken place since the war. 2 another | schuler et al. ( 2015 ). see ari, kok, paries and zochowski ( 2015 ). plantin, g. ( 2015 ). harris, opp and opp ( 2014 ). bis central bankers β speeches interaction with financial cycles. this is also because cross - country spillovers tend to be stronger the more integrated financial systems are. they might thus gain in importance with the launch of the banking union. macro - prudential policies could be weakened or strengthened because of cross - border spillovers. spillovers depend on the behaviour of both borrowers and lenders following a macro - prudential policy action. positive spillovers reduce risks to financial stability, while negative spillovers raise these risks. let me give you an example. if a country ( say, country a ) raises capital requirements in response to excessive domestic credit growth, a neighbouring country that also experiences excessive credit growth ( say, country b ) might benefit from this measure. if financial markets are integrated, banks in country a will reduce their lending in country b, thus contributing to a slowdown in financial exuberance. however, if financial markets are segmented, or if financial cycles are not synchronised and country b is experiencing weak credit growth, the sign of the spillovers from the same macro - prudential measure may turn from positive to negative. negative spillovers clearly pose a threat to the effectiveness of macro - prudential policy. for policy - makers, it is therefore crucial to be aware of the possibility of such spillovers and their respective propagation channels, co - ordinate policies to the best extent possible and apply mitigating measures to minimise leakages. the sign and the strength of these spillovers depend on the type of macro - prudential instrument, the linkages between the two economies and their financial sectors as well as the level of the synchronisation of the cycles. to add another layer of complexity, the spillovers from ltv policy could be qualitatively different than those from capital policy. following the introduction of a ltv cap, banks may find it profitable to reallocate lending abroad, thus generating negative spillovers on the neighbouring country. based on the available literature, the empirical quantification of cross - border spillovers remains limited. some evidence based on the u. k. experience suggests however, that resident foreign branches increased lending after capital requirements were tightened for local banks. additional evidence based on | 0.5 |
scope of operations. the result has been the creation of some extremely large and diverse financial institutions with high earnings capacity. in 2003, 18 u. s. bank holding companies and six securities firms each earned more than $ 1 billion, with the five largest bank holding companies earning a combined total of nearly $ 46 billion, over 40 percent of the banking industry total. along with capital, these earnings provide a substantial cushion to absorb losses, significantly moderating the consequences of an adverse event. the wider scope of activities and greater domestic and international geographic diversification of these firms also provide a more stable revenue base. advances in risk management have also enabled firms to hedge risks more effectively and, in the aggregate, to disperse risk more efficiently across firms in the financial system. given advances in data collection and risk modeling, banks and other financial firms are able to do better risk - based pricing. firms now have the capacity to view credit and other key risks from a portfolio perspective rather than in isolation, leading to more efficient risk sharing and better capital allocation. in concert with better risk modeling, securitization and credit derivatives have facilitated the dispersion of credit risk across firms and across sectors of the financial system. these changes have led to significant risk transfers within the banking system, as well as a net transfer of credit risk from commercial banks to other financial intermediaries. as a result, we believe we are seeing a more efficient risk allocation within the financial system as a whole, since risks can be transferred to firms where they will diversify, rather than reinforce, risks arising from core businesses and to parts of the financial system that are significantly less leveraged than banks and securities firms, such as institutional investors and mutual funds. these risk management advances have been accompanied by the growth of key derivatives markets that have lowered the costs of hedging market - price - sensitive positions and activities. one important example of this is the growth of the market for long - dated swaps, which are now used by banks to hedge mortgage securities and whole loans. the notional value of long - dated interest rate derivatives ( those with maturities of more than 5 years ) has more than tripled since the end of 1998, considerably faster growth than for comparable shorter - dated instruments. the growth of these markets reflects a very substantial increase in hedging capacity, and this β wider pipeline β seems likely to facilitate the ease with which the market adjusts in conditions of stress. growth in these otc derivatives markets has been accompanied | the stronger payment and settlement system infrastructure make our financial system stronger today than it has been. with these favorable developments, however, come a range of challenges. i want to discuss a few of these and their implications. this is not meant to be, and is not, a comprehensive list. the first is the challenge of complexity. with financial growth and innovation, we have seen a dramatic increase in the complexity of the risk management challenge. the frontier of innovation inevitably advances somewhat ahead of the pace of improvements in the risk management and supervisory infrastructure. the models used to inform credit judgments, to measure exposure, and to price risk in the newest instruments and trading strategies are by definition less grounded in experience. the process of assigning fair or market value is much more subjective and less amenable to objective verification. consensus on the appropriate accounting treatment is less well established. as the complexity of risks has grown, so have the demands on firms to understand how exposures might evolve, especially in times of market stress. as an example, basis risk - in which hedged positions only partially offset one another - is an increasingly important concern for many firms, especially those that deal in complex products such as options. assessing and managing these more complex risks requires risk management tools with a commensurate level of sophistication. in particular, the further development of techniques for stress testing and scenario analysis and of methods for translating stress test results into concrete risk management outcomes are important areas for additional progress. the risk management challenge is complicated by the nature of the institutions at the core of the system. large, diversified financial institutions comprise many separate, highly specialized business units, each of which can have its own approach to tracking and managing risk exposures. integrating across these businesses to develop a firm - wide, portfolio risk perspective is an important challenge, one that has many guises within a large, complex firm. for example, managing the complex pattern of risk exposures that derive from membership in multiple payment and security settlement systems, each of which has loss - sharing arrangements that generate contingent exposures among and between their members, is just one small facet of the broader challenge facing such firms today. the difficulty of managing the conflicts in dealings with customers is also significantly enhanced for these large, diversified institutions, given the multiple roles that they play. more generally, it is increasingly challenging for many large, diverse financial institutions to get an accurate picture of their aggregate exposure to individual creditors when their business contacts can come through so many different | 1 |
of emu in 1999, which compares very favourably with the somewhat more than two million increase in the eight years before 1999. according to the latest spring forecast by the european commission, prospects are for another 3. 8 million employed persons in the euro area in the period 2007 - 08. financial regulation, supervision and stability let me now turn to an issue you have asked me to discuss today, which is the framework for financial regulation, supervision and stability and the way in which it can cope with the challenges stemming from increasing financial integration. starting with financial regulation and supervision, the lamfalussy framework was introduced with the purpose of speeding up the process of adopting community legislation and making its implementation more consistent at the national level in line with the needs of the single financial market. as such the lamfalussy framework represents in itself an important institutional innovation and therefore we have always shared the stance that it should be exploited to the maximum possible extent before considering any far - reaching institutional changes. this entails in practice that all four levels of the approach should work at their best and, when this is not the case, appropriate measures should be taken. it is therefore important β as it has been the case so far β to monitor systematically the concrete implementation of the framework to identify areas for possible enhancement. while at the beginning, the monitoring activity concentrated on the regulatory part of the approach ( notably the level 1 and 2 ), the focus has rightly turned more recently to the supervisory level ( i. e. the level 3 ). one of the main challenges concerning the level 3 activity is to ensure that the deliberations taken by the supervisory committees concerning co - operation and convergence are applied consistently in practice. in this respect, the concrete implementation of the recommendations contained in the report on financial supervision prepared by the financial services committee and endorsed by the ecofin council on 5 may 2006 represents certainly an important milestone. more generally, the forthcoming review of the lamfalussy process represents an important occasion for further reflections about the efficiency and effectiveness of the current eu supervisory setting. in this context, an important objective of the review should be the identification of concrete measures to further strengthen the supervisory role of the level 3 committees. turning to the framework for financial stability, the ecb supports in general the current discussions at the eu level to enhance the arrangements for handling financial crises, never forgetting that a crucial responsibility must remain with the private sector itself. it is important indeed that all competent authorities for financial stability, namely central | ( smes ) access to finance, the report also analyses how financing patterns differ across large, medium and small enterprises. finally, the report discusses the recent trends observed in the corporate finance landscape of the euro area over the past few years and how they have influenced the availability of external finance for firms. let me briefly summarise some of the results contained in the report : first, firms β financial structures are relatively homogeneous across euro area countries. still, even after taking into account the average firm size and sectoral composition across countries, some crosscountry differences remain which may be explained by the remaining differences among legal and institutional frameworks. second, regarding smes, the report indicates that several of the differences in the financial position of firms according to size which had been identified in previous studies are driven mainly by the relative weights of smes and large firms in the various sectors, and also to some extent by the relative weights of smes in the various countries. at the same time, the report also highlights that some differences across size classes remain regarding the reliance on bonds and the share of financial to total assets β which is lower for smes β and in terms of the reliance on bank loans and cash β which is higher for smes. the latter may point to the need of keeping liquid balances to finance future projects. small and medium - sized firms tended also to be in a somewhat weaker financial situation as indicated, for example, by their higher indebtedness. finally, concerning the role of financial intermediaries in providing finance to firms, a two - tiered process has been identified. firstly, bank lending has become even more prominent in the last two or three years. secondly, the link between the banking sector and the markets has been strengthened significantly, with commercial banks shifting from acting as traditional financial intermediaries to functioning as credit risk originators and sellers as a result of securitisation processes and the increasing use of credit derivatives. from the point of view of monetary policy, four main conclusions can be drawn. first, the growing importance of structured finance and increased competition between banks and other financial intermediaries may provide corporations with easier and cheaper access to external finance. second, as credit granted is evaluated on a more mark - to - market basis and the banking sector becomes more and more competitive, the speed of transmission of monetary impulses to bank interest rates is expected, ceteris paribus, to quicken. third, it is likely that credit | 1 |
in their ongoing operations. in addition to a range of tactical steps, such as enhancing security measures, updating communication plans, and strengthening real - time data backup, institutions also are making some interesting strategic choices. for example, many institutions use a traditional model of business continuity that is based on an " active " operating site with a corresponding backup site, often with separate sites for data processing and for business operations. this strategy generally relies on relocating staff from the active site to the backup site and on maintaining backup copies of technology and data that are up - to - date. in the traditional model, backup capabilities are ensured through periodic testing. even so, maintaining the effectiveness of backup sites, staff, and systems that are not routinely used for production is often difficult. for example, during the week of september 11, many institutions found that disaster - recovery plans of particular business lines were not always accessible or up - to - date, and sometimes the backup and primary sites used different hardware and software versions. finally, the assumption that key personnel could be relocated was not always well founded. in contrast, some institutions are now moving toward a " split operations " model, in which two or more active operating sites provide backup for one another. each site can absorb some or all of the work of another for an extended time. for banking organizations with nationwide operations ( particularly those that have grown through mergers ), such sites are often hundreds of miles apart. for international firms, routine workloads can be shared among sites in different countries or different continents. this strategy can provide almost - immediate resumption capacity, depending on the systems supporting the operations and the communications and operating capacity at each site. the strategy also addresses many of the key vulnerabilities of the traditional model. for example, technology must be kept current at all active operating sites for normal business operations to proceed. at the same time, the split - operations approach can have significant costs, in terms of maintaining excess capacity at each site and of adding operating complexity. this approach may be more suited to some types of business activities, such as trading, clearing, and settlement, than to others. other business - continuity models may be able to provide a high degree of resilience. over time, technological change will significantly affect the range of business continuity strategies and, importantly, their relative costs and benefits. whatever operating model they chose, financial institutions clearly are reassessing the range of scenarios they need to address in their business - continuity planning. such | - interest banking capital, particularly short - term capital. i am glad to inform you that these three broad principles have guided us in india during the 90s in the management of our external sector, particularly after the asian crisis of 1997. the results have been extremely positive. we have doubled our foreign exchange reserves in the last three years - and increased them several times over since the beginning of the 90s. they are now adequate to take care of all reversible capital flows as well as current account deficits, and are more than required under the conservative β guidotti rule β ( which suggests reserves coverage for one year β s capital account liabilities ). india β s short - term debt is also very low - and central bank β s forward liabilities have been reduced to less than 1 per cent of reserves. this has gained us the confidence of the markets. this has been more than evident even during the recent period of uncertainties. similarly, we have a flexible but managed exchange rate system. according to the latest assessment by the imf and other authorities, our exchange rates have been less volatile than other emerging markets. our exchange rate by any criterion of competitiveness is also believed to be broadly realistic and competitive. we have also witnessed a substantial increase in capital flows particularly foreign direct investment, and much greater confidence by foreign investors in our macro - economic stability. finally, and the fourth point that i want to make, is that international institutions and international community must play a supportive role in resolving a crisis whenever it occurs. for an agency, such as the imf, to play such a role, the essential requirements are : β’ a substantial increase in its lendable resources in line with increase in the size of international capital flows in the 90s. β’ a greater automaticity in the availability of finance, subject to a country following reasonable macro - economic policies. the best way to achieve this objective would be to make imf facilities β automatic β provided the annual article iv consultations with the country have been positive and favourable. β’ a third requirement is to provide developing member countries with a much larger voting power than now. it is one of the ironies of the last forty years that, although developing countries as a group, have grown much faster than the developed countries and their relative economic strength in terms of output and trade has increased substantially, their actual voting power in bretton woods institutions has tended to decline! to sum up, let us recognize that the present bretton woods international financial architecture was not equipped | 0 |
, when combined with data vaults to securely store personal information, can be used to trade objects in a way that protects one's identity from being exploited for profit. while these technological developments are still in their infancy, they have potential applications beyond the crypto ecosystem that could lead to substantial productivity enhancements in other industries. 1 / 3 bis - central bankers'speeches this leaves us with the crypto - assets themselves. the question is, why would someone hold such an asset? what is the value proposition of such an asset? the answer isn't new or unique, but rather is based on economic relationships that result in objects having value. one reason objects have value is because of their intrinsic properties. for example, the value of corn derives in part from the fact that it can be used for food or fuel, or in some cases for thanksgiving centerpieces. intuition suggests that if an object has no intrinsic value, then the price of that object should be zero - why pay for something that has no fundamental value? shockingly, it turns out that objects may be valued well above what their intrinsic properties would suggest. since paul samuelson's seminal work in 1958 on intertemporal consumption smoothing, economists have known that an intrinsically useless object can trade at a positive price. 2 such an object's value is driven purely by belief. if i believe someone will pay a positive price for this object in the future, then i may be willing to pay a positive price now, carry it across time, and sell it when i need to consume other goods and services. samuelson referred to this concept as " the social contrivance of money. " while an intrinsically useless object can trade at a positive price, we also know that there is always a second equilibrium price for this object, which is zero. what if one day, beliefs change and i no longer believe that someone will pay me for this object in the future? then i clearly shouldn't pay anything for it today, so its price goes to zero. there are many intrinsically useless objects that still have value. consider things like baseball cards and celebrity autographs, which are pieces of cardboard and paper with pictures or scribbles on them. based on their fundamental properties, these things have little to no intrinsic value, yet can be in high demand and command staggering prices. what happens if one day, no one wants to collect baseball cards? as valuable as they are today, they wouldn't | be worth much, if anything. this brings us to crypto - assets. to me, a crypto - asset is nothing more than a speculative asset, like a baseball card. if people believe others will buy it from them in the future at a positive price, then it will trade at a positive price today. if not, its price will go to zero. if people want to hold such an asset, then go for it. i wouldn't do it, but i don't collect baseball cards, either. however, if you buy crypto - assets and the price goes to zero at some point, please don't be surprised and don't expect taxpayers to socialize your losses. the upshot of this is that crypto - assets are risky and many of the firms dealing in them are in their infancy. that has come to bear in the past year as several prominent cryptorelated firms have filed for bankruptcy, including payment platforms, exchanges, crypto lenders, and hedge funds. the declines in crypto - asset values and associated business failures have led to many investors in the crypto industry getting hurt. as i mentioned in a speech last summer, surveys conducted indicated that somewhere between 12 and 20 percent of u. s. adults have owned, traded, or used crypto - assets. 3 as losses mount, the debate is turning to whether there should be better investor protections in place. but even institutional investors, with significant resources to conduct due diligence of investments, have felt the pain of the so - called crypto winter. for example, it has been reported that at least 15 public pension funds, which manage public employee retirement funds, had investments in the now - bankrupt crypto - asset exchange, ftx. 4 2 / 3 bis - central bankers'speeches while i don't care if people take on risky investments or engage in risky business ventures, banks and other financial intermediaries must engage in any activity they do in a safe and sound manner. i'm supportive of prudent innovation in the financial system, while at the same time concerned about banks engaging in activities that present a heightened risk of fraud and scams, legal uncertainties, and the prevalence of inaccurate and misleading financial disclosures. as with any customer in any industry, a bank engaging with crypto customers would have to be very clear about the customers'business models, risk - management systems, and corporate governance structures to ensure that the bank is not | 1 |
accordingly displays kinks, reflecting the liquidity premium commanded by select securities / tenors. to a certain extent, this is the result of the market microstructure in india, dominated as it is by β buy and hold β and β long only β investors. we need to develop a yield curve that is liquid across tenors. 26. second, expansion of the investor base is key to further development of the market. the rbi, together with the government, is making efforts to enable international settlement of transactions in g - secs through international central securities depositories ( icsds ). once operationalized, 4 / 5 bis central bankers'speeches this will enhance access of non - residents to the g - secs market, as will the inclusion of indian gsecs in global bond indices, for which efforts are ongoing. to encourage direct retail participation in g - secs, rbi has announced the β retail direct β scheme, a one - stop solution to facilitate investment in government securities by individual investors. 27. third, liquidity in g - secs market tends to dry up during periods of rising interest rates or in times of uncertainty. while the market for β special repo β facilitates borrowing of securities, it is worthwhile to consider other alternatives that ensure adequate supply of securities to the market across the spectrum of maturities. it may be recalled that discussions were held on the introduction of securities lending and borrowing mechanism ( slbm ) with a view to augment secondary market liquidity, by incentivizing β buy and hold β type of investors ( e. g., insurance companies, pension funds ) to make available their securities to other market participants. useful feedback was received on the subject from the fimmda and the pdai. i would urge that these discussions be carried forward with a view to evolving market - based mechanisms that enable the lending and borrowing of securities as part of overall market development. 28. fourth, the interest rate derivatives ( ird ) market has developed over the years with the availability of a wide range of products. the only major liquid product, however, continues to be the mumbai interbank offer rate ( mibor ) based overnight indexed swaps ( ois ) market. participation in the ird markets is also largely limited to foreign banks, private sector banks and primary dealers. i am happy to note that based on rbi directions, fimmda formulated the operational guidelines for trade in swaptions in consultation with market participants and trading in swap | be studied in depth for adoption in india third, in regard to development of gold market, the establishment of a gold exchange would help in efficient price discovery and emergence of healthy and transparent practices in the market. the basic framework for such an exchange already exists with 13 banks active in import of precious metals. five of them have launched the gold deposit scheme also. they are exploring possibilities of introducing β paper gold β products like gold accumulation plans. these banks are fully authorised to sell / lease gold to the market players. they can also enter into forward contracts in a limited way. a committee set up by the rbi has studied the feasibility of introducing futures trading in gold and this is being examined by the forward markets commission. once the banks start trading among themselves, with mmtc, stc and also with big traders according to the demand / supply dynamics, a formal move towards a gold exchange is appropriate. they can even use the infrastructure available with an existing stock exchange like national stock exchange ( nse ) for this purpose. fourth, as part of the positive approach to consumers, the present initiatives by bis may be supported, strengthened for improvement, reviewed and further measures considered. for example, several banks and other institutions, which are currently importing gold in large measures, could consider establishing a gold market development agency as a voluntary self regulatory organisation with participation from gold trade and bis to devise mechanisms by which the efficiency of the market and the integrity of the products are ensured and augmented. for example, banks can play a role by prescribing different margins for loans extended against the pledge of gold with hallmark and those without. similarly, the banks could take into account, the practice of issuing gold content guarantee certificates by the gold jewellers while extending credit. this would also help banks in making proper assessment of the inventories of the traders. finally, with a full recognition of the importance of gold, not only in the indian economy, in terms of import, export, or consumption, employment, etc., but also in the indian society, it would be desirable to encourage research and policy studies on various aspects relating to a positive approach to gold markets and gold policy. illustratively, these may cover three broad areas, viz., gold reserves and their role in the forex reserves ; the development of gold markets in conjunction with financial markets ; and the macro economic implications of gold policy and gold markets, especially in the context of financial savings. let me again thank the organizers for giving me this | 0.5 |
clear that monetary policy can fill all the cracks. monetary policy flows into all the cracks no doubt, but some cracks are just too big to fill. 28 financial vulnerabilities are not evenly spread across the economy. they tend to be concentrated in specific sectors and segments, such as in real estate. so, even when monetary policy has configured overall liquidity and risk - taking settings appropriately, specific pockets of financial market vulnerabilities, e. g. a property bubble, could remain. 29 monetary policy is too blunt an instrument for addressing such specific risks to financial stability, and it can cause significant collateral damage on the rest of the economy if it tries to do so. bis central bankers β speeches β’ during a property boom, compared to interest rates, expectations of price appreciation may have a greater influence on current prices. β’ kenneth kuttner and illhyock shim estimate that a 100 basis point increase in the short - term interest rate would lower real annualised credit growth by less than 1 percentage point in the following quarter. such a rate hike will also reduce real housing price growth by only 1 percentage point. β’ using monetary policy to prick a property bubble may therefore require very sharp increases in interest rates to be effective. but this may have unintended spillovers on other parts of the economy. macroprudential policy : targeting the cracks 30 this brings us to the third approach to securing financial stability : using macroprudential policy, while monetary policy continues to focus on price and output stability. macro - prudential policies can be more effective for β targeting the cracks β where specific vulnerabilities are concentrated. 31 but what exactly are macroprudential policies? given its recent rise to prominence, it is still a nebulous concept with differing definitions. let me offer my thoughts on what macroprudential policy is and what it is not, from the perspective of singapore, which has been an early experimenter and practitioner in this area. 32 first, it is closely related to yet distinct from microprudential policy. some have called macroprudential policy β old wine in new bottles β. yes and no. many of the tools are indeed the same as the microprudential limits familiar to regulators : loan - to - value ratios, debt - toincome ratios, debt service ratios, and so on. 33 but there are some key differences. when these prudential limits are used for macroprudential purposes, | 2011. we are the leading insurance centre in asia. β’ singapore plays host to about 190 insurance institutions meeting the protection needs of the economy and society across the region. β’ the industry has built up expertise in complex and specialist risks β including marine, energy, aviation and credit and political risks. we have one of the most developed bond markets in asia. β’ singapore β s total market capitalisation has grown by over 150 % in the last decade, to 270 billion us dollars in 2011. we are the fourth largest foreign exchange trading centre in the world. β’ fx and fx derivatives turnover in singapore has more than tripled in the last decade, with an average daily traded volume of about 360 billion us dollars. we are asia β s leading commodity derivatives trading hub. β’ most of the major global banks have their regional hubs in singapore. β’ according to some estimates, singapore accounts for more than half of asia β s otc commodity derivatives trades. to succeed in the new financial landscape, singapore must comprehensively support asia β s long - term financing needs. let me highlight two strategic areas where we will harness our diverse financial ecosystem : debt capital market and infrastructure financing. debt capital market in a world of deleveraging and higher regulatory constraints on banks, it is now more urgent than ever to develop strong capital markets to complement bank lending and help to provide a better match for longer term funding requirements. bis central bankers β speeches the fundamentals for a strong debt capital market are in place. β’ the singapore bond market is fully accessible to all issuers and investors globally with no capital controls, hedging restrictions, or withholding taxes. β’ there is diversity of issuers β financial institutions, corporations and government agencies. β’ there is variety in instruments issued, including structured and securitised debt. last year, i announced three initiatives to further improve the efficiency and liquidity of the singapore dollar bond markets. we have made good progress since. the provision of swap liquidity to primary dealer banks handling singapore dollar debt issuance for corporations is fully operational. mas is now able to support swap transactions at market - determined rates. the singapore dollar corporate bond securities lending facility will become operational by june this year. the facility will provide market makers an avenue to borrow securities and make prices more freely. the price discovery initiative to provide end - of - day prices for singapore dollar corporate bonds was completed in june last year. this price transparency has already spurred industry - led efforts to create a singapore dollar corporate bond index | 0.5 |
economies goes further in its implications for the way in which monetary policy has to be operated. four possible effects can be identified. first, because they are undergoing significant structural change, many emerging market economies may be more vulnerable to shocks than fully - developed economies. of course, all economies experience shocks, but the frequency and scale may be greater in emerging market economies. these shocks can have their origin in the domestic economy ( a poor crop ) or arrive unexpectedly from overseas ( higher oil prices ). either way, they are difficult enough to handle if they impact on the demand side, but more often the emerging market central banker has to grapple with sharp movements in cost pressures on the supply side. the orthodox response to shifts in supply conditions is to accept the first - round effect on prices and concentrate monetary action on heading off second - round impacts that can otherwise generate an inflationary cycle. this may be conceptually clear, but in practice it is a hideously difficult distinction to have to translate into monetary decisions. it is a good discipline in these circumstances to remind oneself regularly that higher interest rates will not help to make the maize crop grow higher. south africa's experience in 2001 - 02 is a good case in point. a precipitate and largely inexplicable fall in the exchange rate in the latter part of 2001 combined with higher fuel costs and increases in domestic food prices to deliver a severe inflationary shock. the central bank's response, to raise interest rates in progressive steps in 2002, was exemplary and appears to have worked well, with inflation now falling steadily back towards target range as the shock recedes. but the consequences were to make the central bank's task of embedding low inflation in the fabric of the economy much more challenging, because of the inevitable questions this experience raised as to whether, faced with such shocks, monetary policy really could achieve permanently low inflation. that it can, and is doing so, is now gaining wider acceptance, as reflected in continuing evidence of falling inflationary expectations. but it has required, alongside carefully - timed monetary tightening, a strong effort by the central bank to communicate its determination. the prevalence of supply - side shocks would thus seem to be one area in which emerging market economies may face particular challenges in operating monetary policy. another may arise from the impact of the exchange rate. movements in exchange rates may have a relatively larger impact in emerging market economies, and their currencies may be more exposed to underlying volatility. | relevant skills are often a key constraint on economic development as whole. the same applies, too, more generally to knowledge of the transmission mechanism : understanding of functional relationships across the economy is bound to be less secure when the structure of the economy is undergoing rapid change. the existence of a large informal economy further complicates the task. this leads to a fourth implication for monetary policy in an emerging market economy. this is the critical role played by confidence in, and the credibility of, the policy framework. this has both a domestic and an international dimension. domestically, there is a critical need to win public acceptance of the value of low inflation and public confidence in the determination and ability of the central bank to achieve it. internationally, confidence that the policy framework will be adhered to can have a powerful influence on investment inflows and on the exchange rate. these factors are, of course, crucial to monetary policy in any country. but the task of buttressing them is the more challenging in emerging market economies because the track record of commitment is relatively much shorter. these can be argued to be some of the distinctive challenges faced by monetary policy - makers in emerging market economies. are they, however, sufficiently distinctive as to require any fundamentally different approach in the conduct of monetary policy? the answer, to quote evelyn waugh, has to be, β up to a point, lord copper. β they are not different in kind from the factors which central banks in any country have to face. but they do perhaps play a more predominant part in the monetary policy judgement in emerging market economies than elsewhere. this suggests two final observations. first, because of the uncertainties, central banks in emerging market economies may understandably tend to be relatively cautious in adjusting their policy stance, in the sense of spacing adjustments in relatively smaller steps over more extended periods. no central banker need ever apologise for being regarded as being cautious. but it does mean that, even in circumstances in which there may be a case for contemplating more bold action, the balance of risks may argue against such an approach. secondly, given the challenges, can an inflation targeting framework realistically be expected to deliver the desired results in the emerging market context? if the various distinctive features identified above - periodic unexpected shocks, exchange rate volatility, imperfect information sources and public confidence that is not yet fully robust - occurring in whatever combination, result in the central bank missing its target for any extended period, there is of course a danger | 1 |
contributed to a worldwide shift in preferences for risk - free assets, which may have been partly responsible for the build - up in financial imbalances prior to the financial crisis. uneven coverage pooling reserves would seem to be one obvious solution to these costs and inefficiencies. and indeed there have been moves in that direction at a regional level with the expansion of the chiang mai multilateralization initiative and more recently the brics contingent reserve arrangement. but pooling at a regional level is ineffective against shocks that affect the entire region and these regional mechanisms remain untested, with the exception of the european stability mechanism. regional arrangements are also complicated because of the difficulties of imposing reform conditions on a neighbour ( as the eurozone learned with greece ). moreover, many emerging market economies do not have access to regional financial arrangements at all [ chart 4 ]. so while regional insurance is a welcome layer of the safety net, it needs to operate in concert with a better global system including possible imf facilitation of lending. 5. the role of the imf if we are to continue to benefit from global financial integration then we need a system that can effectively and efficiently provide liquidity insurance to fundamentally sound sovereigns in order to contain spillovers to other parts of the globe. as with an independent central bank that houses supervision and liquidity provision under one roof, there are advantages to combining country surveillance and lending in one global institution, with an impartial and experienced staff. and risks are most efficiently pooled at a global level. this is the raison d β etre for the imf. bank of england staff estimates based on the spread between returns on reserve assets and those paid on domestic bonds. bis central bankers β speeches unfortunately, signs of fragmentation of the global financial safety net are obviously in part a reaction to the failure to implement the 2010 quota and governance reforms to bolster the imf β s resources and the representation of emerging market economies. the priority must be to implement those. but we also need to consider whether and how the temporary resources collected by the imf in the form of bilateral loans when it passed the hat around in 2012 could be put on a more permanent footing. one possibility is to extend these bilateral loans further. another possibility is for the imf to borrow directly from capital markets 9 during a systemic crisis which would create safe assets when demand for them is high, allowing funds to be recycled to those parts of the world with temporary liquidity needs. | ##ul needs to be more apparent. as it currently stands, many view it as being no different from insurance. some even view it as being unnecessary. it is disheartening to learn that 51 % of respondents to a mta survey cited these very reasons on why they have little knowledge or interest in takaful products. the issue of misperception also remains, with many non - muslims deeming takaful as being only for muslims. opportunity to reposition takaful for the future this is the grim reality of the state of the industry, but it need not be so. in fact, i am positive about the prospects and potential of takaful. however, to get out of this β predicament β, we need an immediate and radical change. takaful must shed its image as being an imitator, a follower or impersonator of conventional insurance. takaful operators, including the financial groups to which they belong, must see beyond takaful as yet another line of insurance products. in this, we need the right leadership, shareholders included, to set the right tone from the senior leadership that takaful must offer distinctive benefits highly valued by all. its impact must be lasting and profound. this is especially so in our system, where takaful is competing side by side with the insurance industry. 1 / 6 bis central bankers'speeches all this considered, allow me to suggest three priorities for the industry to embark on to realise the full potential of takaful : first, fulfill the promise of takaful in helping protect people and businesses. takaful is derived from the arabic word β kafal β, which means β to help β. to my mind, this calls for the industry to reach out beyond its comfort zone of focusing on mandatory products, such as motor and fire, or those that are easy to sell, namely mortgage related products. it must make serious inroads in other areas where protection gaps exist, such as in agricultural risk, annuity and trade credit. something that is consistent with the needs of our economy. ultimately, the industry must be ahead of the curve to innovate and deliver solutions that are truly needed and highly valued by customers, both individuals and businesses. in family takaful, the industry must position itself as a trusted and valued solution provider for all malaysians. it must dispel the image of takaful as being an overly - complicated form of insurance suitable | 0 |
and that β s exactly what they are doing. central government and several federal state governments have decided to invest their pension portfolios according to sustainable criteria. c. financial sector this brings me to the financial sector itself. here, too, we have been seeing attempts to adjust to climate change for a long while : by the banking industry, insurers and funds. a huge amount of capital needs to be mobilised for the transition to a climate - friendly economy β public capital, but even more private capital. in future, this will also mean that sustainable financial products will grow more important in the investment advice given to retail investors β which is what the eu wants. at the same time, financial institutions have to comply with regulatory ratios concerning liquidity and solvency, for example. that β s not always an easy task. nonetheless, the past few years have seen a lot of movement in sustainable and, in particular, green forms of financing, both at financial institutions and in the financial markets. financial institutions and financial markets play a central role in the effective and efficient allocation of capital in the real economy. 4 / 7 bis central bankers'speeches financial institutions and financial markets help decide which projects are financed β and which ones are not. we need to leverage this steering effect and thus support the necessary structural change β the transformation of the real economy. here, financial markets have two special features : first, financial markets respond faster to new information than the real economy can. second, the financial system is a global network β this means that climate risks do not remain confined to local or regional areas : they can travel. for their own risk management, financial institutions have to constantly ask themselves anew : which risks are looming where in the balance sheets? how high is the danger of those risks materialising? with climate risk, it is vital to extend the observation horizon. the search for yield is sometimes focused on the short term. climate risk, on the other hand, is of a more medium to long - term nature. it has to form part of the analysis β chiefly because some of the consequences of climate changes are irreversible. but besides risks, there are also opportunities for the financial sector. by allocating capital in a smart way, the financial sector can generate returns and at the same time act as a driver of innovation and growth in the fight to mitigate climate change. the un has recognised this potential and brought together a group of the world β s largest pension funds and insurers | am convinced that restoring market mechanisms where they have so far been impeded is crucial for strengthening the euro area β s institutional framework as well. a constitutive element of any functioning market monti, mario ( 2010 ) : a new strategy for the single market. bis central bankers β speeches economy is the principle of liability. or, as walther eucken put it, β he who profits must also bear the losses. β when it comes to two of the biggest economic actors in the monetary union, this principle applies only to a limited extent. banks and sovereigns being a priori deemed systemically important, since turbulence on either front threatens the stability of the financial system, would not bode well for the future stability of the monetary union. a framework in which two of the biggest players are at least partially exempt from the disciplining forces of the market would invite future aberrations and lack resilience. if we are to put monetary union on a sounder footing, such vulnerabilities need to be addressed as a matter of urgency. and, as both problems are so closely intertwined, any attempt to tackle one of them in isolation would be likely to fall short of what is required. let me first take a step back and look at why the close link between banks and sovereigns has proved to be so problematic in this crisis. if many banks get into trouble at the same time, possibly because of a large asset bubble bursting, financial stability as a whole is put at risk. the government then often has no option but to step in if it wants to prevent a meltdown of the real economy. but such a rescue rewards excessive risk - taking and can place a huge strain on government finances β which is what happened in ireland, where the need to support the financial system pushed the deficit above 30 % of gdp in 2010. conversely, weak government positions can destabilise banks β directly through their exposure to sovereign bonds, and indirectly through worsening macroeconomic conditions. breaking the link between banks and sovereigns is important for making the euro area more stable. a banking union can be a big step in that direction β but again, we need to harness the disciplinary forces of the market, not do away with them. core elements of a comprehensive banking union therefore have to be not just an effective single supervisory mechanism, but also a comprehensive bail - in of bank creditors, and a cap on exposure to individual sovereign as well as an adequate risk - weighting of | 0.5 |
( such as visa ) and european institutions in order for serbia to come closer to the european level of interchange for all banking cards issued in the country. as always, we believe that the serbian chamber of commerce provides an optimal framework for the discussion between banks and merchants on this highly topical issue in europe and worldwide. the performances of the payment cards market ( 31 may 2008 ) are as follows : β’ number of transactions performed in serbia over the past 12 months β close to 90 million β’ number of pos terminals β 60, 000 thousand β’ number of atms β over 2, 200 β’ number of payments by mobile phone in the dinacard system in may β 100, 000 however, we will not let these results lull us into satisfaction ; to the contrary, they will only serve to encourage us to work more, with increased efficiency, in the following key directions : payment card charges : it will not be an overstatement to say that payment card charges are excessive and out of proportion to the actual operational costs. i am sure than many merchants would use payment cards much more readily if this form of payment did not lower their turnover by up to 3 %. and i hope we all know what 3 % means in the 21st century! payment cards, rather than being an objective in themselves, represent a means to having a more efficient banking / payment / tax ( money laundering, declaration of income ) system. the present level of margins, however, does not promote the achievement of this objective over the medium and still less over the long run. and so we arrive at the typical dilemma for banks and card systems : to keep the margins at their current level and only slowly increase the volume of transactions ; or to slash margins, inducing a super - proportional increase in turnover, which would eventually bring even higher profits than in the first scenario. the nbs will work on promoting the latter alternative as the most beneficial for all participants β and we cannot spare any more time. mobile telephony has come to play an increasingly important role in the payment system, both when it comes to local payments and to foreign remittances. by mid - 2008, there were around 9 million mobile phones registered in serbia, each of which is a potential β payment card β. let me remind you that the sole objective of the nbs regarding the payment system is clearly defined by the law : β the nbs shall regulate and upgrade the payment system of the country, supervise the performance of payment transactions in banks, etc. | around six hundred thousand users are registered for the transfer service. at end - 2023 close to 4. 2 million users β individuals, legal entities and entrepreneurs were registered for e - banking service, around 2. 5 times more than at end - 2016. at end - 2023, around 4. 2 million users were registered for m - banking services, around 5. 5 times more than at end - 2016. the law on financial service consumer protection and other regulations enabled distance contracts, and the data confirm that this boosted the development of digital credit products, too. the number of signed distance contracts was over 176 thousand in 2023, which is four times more than in 2019. over a fifth of these contracts were signed using video identification of consumers, nd almost a half of them were in relation to cash loans. we also enabled bank account opening and a change of a bank without the need for visiting the old bank or even a new one. let us now move forward. 1. this year, we will complete the harmonisation with eu regulations by transposing the psd2 directive into domestic legislation, which enables open banking in the republic of serbia. 4 / 5 bis - central bankers'speeches 2. alignment with the psd2 directive is a part of our preparations for joining the sepa, i. e. the single euro payments area. joining the sepa will enable the reduction of payment costs between the eu and western balkan economies, which will mean cheaper transactions for both citizens and businesses. 3. ahead of us are demanding activities concerning the development of the technical infrastructure for connecting the nbs ips system to the ecb target instant payment settlement ( tips ) scheme. to this end, we have initiated talks with the ecb. 4. the nbs ips system has also been recognised as significant by rakuten viber, with which we started cooperation, expecting instant payments to be easily initiated via viber as well. this will be an important novelty given the number of viber users in serbia. 5. we are preparing the implementation of the 3ds standard, which will further enhance the security of online payments. 6. also, within the nbs ips system we have developed a fraud management module, aimed at establishing a mechanism for detecting potential payment frauds. this module is based on adaptive machine learning and is available to all nbs ips participants that can integrate it into their information systems. the module is currently active in the nbs ips | 0.5 |
##a on the supply side, many people want to work part time. indeed, in many workplaces, employees have long been asking for greater flexibility, including the ability to work fewer hours. part - time work leaves time for other activities, including education, caring for others and leisure. some insight into why people work part time can be gained from the hilda survey, which asks people for the main reason that they work part time ( graph 3 ). the most common response is that they are studying. other frequent responses are that they are caring for children or that they simply prefer parttime work. for many people, part - time work is what they want. the fact that we have been able to accommodate this desire is a positive feature of our labour market. graph 3 there are demand factors at work as well. many businesses benefit from having employees who work part time. but there is an element to the demand side that is not so positive. some people are working part - time because they can't find a full - time job and others are working part - time because of job requirements. while most part - time workers are not seeking full - time employment, around one - quarter want to work more hours than they currently do. on average, they are looking to work an additional 14 hours per week, although many are not taking active steps to secure those additional hours. https : / / www. rba. gov. au / speeches / 2017 / sp - gov - 2017 - 07 - 26. html 4 / 13 7 / 26 / 2017 the labour market and monetary policy | speeches | rba so many people want to work part time, but some of these would like more hours than they currently have. this represents an additional source of unused capacity in our labour market that is not reflected in the unemployment rate. given this, as part - time employment has grown, the rba has paid additional attention to alternative measures of labour market slack. one measure that has conceptual appeal is an hours - based underutilisation rate, which measures the additional hours sought by workers ( including those currently unemployed ) relative to the total number of hours that workers would like to work. this measure shows the same general pattern as the unemployment rate, although the gap has tended to widen gradually over time ( graph 4 ). graph 4 now turning to the second longer - term trend shift we have seen in our labour market β the shift to employment in the services sector ( graph 5 ). https : / / | www. rba. gov. au / speeches / 2017 / sp - gov - 2017 - 07 - 26. html 5 / 13 7 / 26 / 2017 the labour market and monetary policy | speeches | rba graph 5 today, almost 80 per cent of australians work in service industries, broadly defined. by way of contrast, in the 1950s only around 50 per cent of employed australians worked in the services sector. in the past, it was common to have a full - time job producing goods. in our more modern economy, this is no longer the case. in an effort to better understand the growth in services - sector employment, one of the exercises that we have done at the rba is to classify around 300 individual service - sector occupations into jobs that pay hourly wages that are below average, around average and above average. [ 3 ] we have then tracked employment growth for each of these three groups since 2000 ( graph 6 ). https : / / www. rba. gov. au / speeches / 2017 / sp - gov - 2017 - 07 - 26. html 6 / 13 7 / 26 / 2017 the labour market and monetary policy | speeches | rba graph 6 the picture is pretty clear. the growth in service - sector employment has been strongest in those occupations with above - average rates of pay. since 2000, over a million new higher - paying jobs have been created in the services sector. some of the occupations where there have been large gains in employment are : medical professionals, it managers, project administrators and sales managers. there has also been strong employment growth in occupations with lower rates of pay. we have also conducted the same analysis for the business services and household services sectors separately ( graph 7 ). the growth of higher - paying jobs has been much more pronounced in business services, than it has been in household services. for the household services sector, the growth has been strongest in jobs with below - average wages. some of the occupations where there has been a big increase in employment here include : baristas and waiters, childcare workers and aged - care workers. so it's a mixed picture. https : / / www. rba. gov. au / speeches / 2017 / sp - gov - 2017 - 07 - 26. html 7 / 13 7 / 26 / 2017 the labour market and monetary policy | speeches | rba graph 7 i am often asked where future jobs growth will come from. the short answer is that it will come mainly from where | 1 |
benoit coeure : savers aren β t losing out opinion piece by mr benoit coeure, member of the executive board of the european central bank, published in handelsblatt on 11 november 2013. * * * complaints about the european central bank ( ecb ) favouring borrowers over savers with its low - interest - rate policy are getting ever louder. in countries such as germany there is even talk of a β cold expropriation β of those who save money for their old age. i don β t think this assumption is appropriate. the current low returns for savers are mainly an ongoing result of the recent deep recession and of the fragmentation of the financial market in the euro area. against this background, low interest rates are a tool to maintain price stability. and price stability is a pre - requisite to bring the economy back onto a sustainable growth path. higher key interest rates would have exacerbated the recession, delayed the recovery and contributed to deflationary risks. higher interest rates would therefore hurt savers. they are not the losers under the ecb β s monetary policy, as many are claiming. it β s true that the ecb β s interest rates have never been as low as they are today. the main refinancing rate β the rate at which banks can borrow money over the short term from the central bank and which is perceived by the public as the β key rate β β now stands at 0. 25 %. what matters more to german savers, however, is that interest rates for long - term investments that are considered safe have fallen to their lowest level since the establishment of the monetary union. investors in ten - year german bonds currently get an interest rate of around 1. 76 %. the main reason for this is that because of the european sovereign debt crisis investors prefer investments which they consider to be particularly safe. in the end, it can be said that the ecb with its monetary policy has, above all, kept the interest rate low for very short - term loans. but the returns on longer - term investments considered safe have fallen so much primarily as a result of the increased demand. there remains the question of whether the key rates in the euro area are unreasonably low. what would be the level if interest rates could freely form on the market, without monetary policy intervention? this so - called β natural β interest rate would fall in a shrinking economy over a prolonged period and rise again during a recovery. | justify the confidence that the people of the euro area have in their money. there β s a lot more to be seen in this exhibition, which i hope you will all find as interesting and entertaining as i did. so without further ado, allow me to declare it open. bis central bankers β speeches | 0.5 |
in placing sale and buy trade orders. iv. cash settlement of all trades through this system will take place through the kenya electronic payment and settlement system ( kepss ) also known as real time gross settlement ( rtgs ) domiciled at the central bank of kenya. v. the trading process will be premised on a delivery versus payment ( dvp ) arrangement. vi. transactions settlement cycle will be at t + 3, but parties can opt to shorten this period. it is our sincere hope and expectation that the roll out of automated trading for treasury bonds, together with the recent automation of corporate bond trading, will mark the turning point for trading of fixed income securities at the bourse. this also comes at a time when re - opening of benchmark bonds has been very successful, creating adequate liquidity around each bond. this fits in very well with the roadmap for capital markets development as envisaged in vision 2030. 4. recent trading developments i am pleased to note that since the roll out of this new system on 27th november, 2009, the market has witnessed renewed interest and enthusiasm from bond traders. as of today, we have recorded 11 completed trades totaling kes. 1. 72 billion and 16 trades totaling to kes. 2. 235 billion are at various stages of processing. as we successfully move away from the manual / open outcry method of trading in treasury bonds to the new system, we expect to see more activity in this segment of the market. we trust that market players will carry out their functions professionally, observing the highest standards of integrity and transparency so that the investing public can reap full benefits arising from the same. we at the central bank will continue to review the operations of the system and related processes to ensure that it meets the expectations of investors and conforms to best practice in the market. 5. appreciation finally, may i take this opportunity to thank all stakeholders and members of the ats technical committee for working tirelessly to ensure that the project succeeds. thank you all for your attention. | come to interesting conclusions, but the most important is policy coordination. why is policy coordination important? β’ monetary policy is about short - run decisions on the direction of prices, and affects nominal variables ; while fiscal policy affects real variables. β’ it makes it easier for policy makers to achieve their stated policy objectives in a coherent and efficient manner. bis central bankers β speeches β’ ensures commitment to mutually agreed upon objectives, thus helping to eliminate the problem of time inconsistency in the design of policy. β’ it enhances the credibility, anchors public expectations, ensures sustainability of fiscal and monetary policies, thus promoting macroeconomic stability. ladies and gentlemen, to ensure success of policy coordination we need either of the following : β’ a continuous interaction between the fiscal and monetary authorities to decide jointly on aspects relating to policy design and implementation, or ; β’ a set of rules and procedures that minimize the need for frequent interaction. but we know all these, why was the eu zone not successful? as noted by sargent and wallace in their famous article β some unpleasant monetarist arithmetic β, β tighter money today leads to higher inflation not only eventually but starting today β. the paradox for tight monetary policy and heavy debt expansion will lead to economic stagnation, eddie buffie has demonstrated this for a number of countries in this region. moreover, ladies and gentlemen, the lack of credibility of the overall policy framework caused by the long - term inconsistency of such mix in signals diminishes the effectiveness of monetary policy. our experience with fighting inflation in kenya suggests that inflation may be occasioned by demand side as well as supply side factors. monetary policy uses interest rate as an instrument to fight inflation and anchor inflationary expectations. fiscal policy on the other hand raising debt domestically and using a mix of debt instruments drives the domestic interest rate structure. how policy makers coordinate and consolidate their efforts not only affects expectations concerning future policies and outcomes but can also affect the outcome of economic activity. ladies and gentlemen, several papers that link fiscal policy, monetary policy and inflation have been lined up for presentation today. as you listen to the presentations and the discussions, it is important that we filter the conclusions first to reach to the frontier of this subject matter and provide renewed thinking in the policy arena. the recommendations of these papers should fit in the policy dialogue and policy making process to support growth and employment as envisaged in vision 2030 in kenya. as i conclude, i would like to thank all the participants present. i hope | 0.5 |
stability mechanism, could directly recapitalise banks under certain conditions ; and they pledged to use the instruments of the rescue funds flexibly and efficiently. another important element of the package was to create a β single supervisory mechanism β, as it was called. banking supervision was to be taken from the national to the european level. just two years later, european banking supervision became reality. in november 2014, the ecb began to supervise banks in the euro area. but how does the new european system work? and why is it better than the old national ones? some people think that the ecb has become the sole supervisor of all banks in the euro area. well, it is true that european banking supervision has put an end to the patchwork of national 1 / 6 bis central bankers'speeches supervision. but in essence, it is a common european undertaking. in the euro area, we divide banks into two groups : large ones and small ones. and it is the 126 largest banking groups which are directly supervised by the ecb β they are called β significant institutions β and account for 82 % of the euro area β s banking assets. for each of these large banks, we have set up a β joint supervisory team β, or jst. these jsts are headed by ecb staff and comprise supervisors from both the national authorities and the ecb. it is these teams that actually supervise the banks. they are at the heart of european banking supervision. alongside the 126 largest banking groups, there are around 3, 300 smaller ones, the β less significant β institutions. these banks are still directly supervised by the national authorities. nevertheless, the ecb plays a role, too. together with the national authorities, it develops and implements supervisory standards for the smaller banks, and it ensures that supervisors apply these standards across the euro area. and not only is the day - to - day supervision of banks a joint task. decisions are also jointly prepared and adopted. the main bodies in this regard are the supervisory board and the governing council of the ecb. the supervisory board is chaired by the ecb and includes representatives from all the national supervisory authorities. the governing council of the ecb in turn comprises the governors of all the euro area central banks and the executive board members of the ecb. it is true to say that national authorities are no longer responsible for supervising their largest banks. but they share their knowledge and experience with the ecb, which directly supervises the largest banks and oversees the entire | . the ecb is involved in the oversight of uk central counterparties through supervisory colleges and a memorandum of understanding with the uk authorities. this framework enables us to monitor risks to the euro β also due to good cooperation with our british colleagues and legal certainty afforded by the european court of justice. in view of brexit, some might now ask whether it would make sense in the future for the majority of euro clearing to take place outside the eu. well, that depends on whether the new framework will offer us the same level of involvement as we have today. and it depends on whether the new framework will be strong enough to ensure financial stability in the euro area. to sum up : access to the european market is important for the financial sector. and the financial sector is important for the british economy. losing that access would therefore have an impact β not only on the banking sector itself but also on the uk β s economy. we are talking about jobs, income and prosperity. the question therefore is : will london remain a global financial centre? yes, it will. but at the same time, it might lose part of the business, while europe might attract some of it. the race is on, and many cities are competing for the banks β either to keep them, in the case of london, or to attract them, in the case of other cities in europe. in the end, there probably won β t be a winnertakes - it - all scenario. some banks might go to dublin, some to paris, others to frankfurt or elsewhere in europe. as i said, the ecb is neutral. still, the competition must not result in a race to the bottom with regard to regulation, supervision or taxation β neither in the uk nor in the rest of europe. such a lowering of standards might work in the short term, but in the long term it would do more harm than good. that is why european banking supervision will not change its policies in the wake of brexit. in fact, strong rules and strong supervision should attract banks β they boost the reputation of banks, increase people β s trust, and that β s good for business. and above all, strong rules serve a purpose : they help to prevent future crises β not only at a national but also at a global level. and financial crises can be very costly. the financial sector will always test the boundaries of regulation ; it will always look for the best deal β globally. we therefore need global rules to make the | 1 |
. williamson, j. 2009. " why sdrs could rival the dollar. " peterson institute of international economics : policy brief 09 - 20. zhou, x. 2009. " reform the international monetary system. " people's bank of china, beijing, 24 may. available at < http : / / www. pbc. gov. cn / english / detail. asp? col = 6500 & id = 178 >. | . in the current environment, such determinations are more important than usual. recent indicators point to the start of a recovery in canadian economic activity following three consecutive quarters of sharp contraction. this resumption of growth is supported by monetary and fiscal stimulus, increased household wealth, improving financial conditions, higher commodity prices, and stronger business and consumer confidence. however, heightened volatility and persistent strength in the canadian dollar are working to slow growth and subdue inflation pressures. the current strength in our dollar is expected, over time, to more than fully offset the favourable developments since july. on 20 october, the bank reaffirmed its conditional commitment to maintain its target for the overnight rate at the effective lower bound of 1 / 4 per cent until the end of june 2010 in order to achieve the inflation target. to put it simply, the bank looks at everything, including the exchange rate, through the prism of achieving our inflation target. for example, we do see a risk that a stronger - than - assumed canadian dollar, driven by global portfolio movements out of u. s. - dollar assets, could act as a significant further drag on growth and put additional downward pressure on inflation. as i mentioned previously, movements in currencies could reflect current challenges in the operation of the international monetary system, which may result in the displacement of adjustment pressures onto a handful of currencies. whatever happens, the bank retains considerable flexibility in the conduct of monetary policy at low interest rates, consistent with the framework that we outlined in our april monetary policy report. if downside risks materialize, the bank will use that flexibility to the extent required in order to achieve our price stability mandate. if upside risks materialize, the bank will also act to achieve our price stability mandate. while the underlying risks to our october economic projection are roughly balanced, the bank judges that, as a consequence of operating at the effective lower bound, the overall risks to our inflation projection are tilted slightly to the downside. conclusion to conclude, this crisis was caused in part by failures to meet the same challenges that bedevilled previous international monetary systems. the common lesson of the gold standard, the bretton woods system, and the current hybrid system is that it is the adjustment mechanism, not the choice of reserve asset, that ultimately matters. in this regard, any greater use of sdrs might be best suited to encouraging a transition from the current hybrid system to an international monetary system characterized by more flexible exchange rates for all systemic countries. | 1 |
historical experience upon which to draw. in the past 4 decades, the only time that australia has had an unemployment rate close to 4 per cent was during the peak of the resources boom. so there is some uncertainty about how aggregate wages will respond at lower rates of unemployment. given this lack of historical experience, 2 of my colleagues at the rba β james bishop and emma greenland β have approached this issue from a different angle. [ 2 ] in particular, they have examined the relationship between the unemployment rate in nearly 300 individual local labour markets across australia and the average increase in labour income in these markets using data from the australian taxation office. the results are shown in graph 12. the vertical axis shows how much growth in income in a particular labour market varies from the average and the horizontal axis shows the unemployment rate in each of the local labour markets. graph 12 employee income growth and unemployment employee income growth * ( deviation from overall average ) based on 289 local labour markets for the period 1998 / 99 β 2017 / 18 ppt 1. 5 estimated relationship 1. 0 0. 5 0. 0 - 0. 5 - 1. 0 - 1. 5 unemployment rate % * average of all labour markets with a particular unemployment rate ( to the nearest 0. 1 ppt ) in a given year ; the size of each dot is proportional to the number of region - year observations at each level of unemployment sources : abs ; national skills commission ; rba these results suggest a clear relationship : the lower unemployment is, the higher is relative income growth. this relationship is stronger when the unemployment rate in a local labour market dips below 5 per cent and strongest when unemployment dips below 4 per cent. while these results are subject to a range of qualifications, they suggest a couple of conclusions. first, tighter labour markets do generate stronger wage increases β the laws of supply and demand still work. and second, the relationship seems to be stronger at unemployment rates below 5 per cent. these are important conclusions from a policy perspective, especially given the rba's strategy is to get the unemployment rate down so that wages growth picks up and inflation returns in a sustainable way to the target range. monetary policy this brings me to our monetary policy decisions earlier this week. at our meeting on tuesday, the reserve bank board agreed to : retain the april 2024 bond as the bond for the yield target and retain the target of 10 basis points continue purchasing government bonds after the completion of the current bond purchase program in early september. | consolidation will continue. the government has shown its commitment to this process by continuing to adjust expenditure where the revenues fall below budget. additionally, the government has demonstrated its commitment to fiscal transformation with the commencement of the phased implementation of the central treasury management system, which will result in more efficient management of public sector finances. the process to divest the government of public bodies that are a drag on the budget has achieved major milestones and is continuing. with these developments, there is going to be a continuing decline in the fiscal deficit and the debt ratios. lower demand for financing from the domestic market by the government will continue to result in more and more resources being available for private sector credit. repeated success in meeting the quantitative targets under the imf - sba has led to increasing confidence about the prospects for the economy. we saw this in the strong preference for jamaica dollar assets during the fiscal year and the steady appreciation in the exchange rate. the bank ended 2010 with strong net international reserves ( β nir β ) of bis central bankers β speeches us $ 2. 17 billion, an increase of us $ 442. 1 million for the year. gross international reserves, at us $ 2. 98 billion, represented 23. 7 weeks of projected goods and services imports. in the context of the relatively stable market conditions during the year, the bank lowered the interest rate on its 30 - day certificate of deposit by 375 basis points to 6. 75 per cent by endfebruary 2011. in addition, the bank increased the pool of loanable funds in the system by reducing the cash reserve requirement for both jamaica dollar and foreign currency deposits. market - determined interest rates also trended down during the year at a faster pace than the central bank β s policy rate. despite emerging challenges from rising international commodity prices, headline inflation continued its progress towards the achievement of the target for the fiscal year of 7. 5 to 9. 5 per cent. statin released its inflation report for february ten days ago although this may come as a surprise to you as the news media appear to have concluded that the results in the report are not sufficiently newsworthy to be reported in a timely manner. interestingly, i read a statement in one of today β s newspapers that food prices rose by 25 per cent last year in an environment where the minimum wage is j $ 4, 500 per week. well, not exactly. in the same inflation report for february that was released by statin ten days ago, prices in the food category | 0 |
ardian fullani : educating and inspiring albania β s young generation speech by mr ardian fullani, governor of the bank of albania, at the 2011 end - year reception, tirana, 21 december 2011. * * * honourable minister, your excellencies ambassadors, honourable members of parliament, dear representatives of the banking system and the media, dear participants, i would like to welcome and thank you for your participation. your presence today is a special pleasure for me personally and the bank of albania. my special thanks go to the former members of the supervisory council of the bank of albania, whose term in office has ended. i personally appreciate the seriousness and commitment they have dedicated to their work, a precious contribution to bank of albania β s institutional furtherance. thanking them once again for their professional work, allow me to welcome the newly appointed members of the supervisory council of the bank of albania, renowned public figures with an unquestionable professional career. they come from diverse fields of professional careers and will bring in added value to the bank of albania, contributing to a wider coverage of the institution β s functions. i am confident that the bank of albania, in its activity, will continue to incorporate best international standards as regards decision - making, independence, accountability, transparency and governance. i believe that a healthy economy that generates stable growth needs a developed financial sector in terms of its depth and width ; a flexible banking system, which manages public β s deposits cautiously and channels them efficiently to fund the economy. today, from this modest ceremony, i would like to assure you that we are fully responsible for this as useful as difficult mission. the bank of albania will be always attentive to ensure macroeconomic and financial stability for the country. in the spirit of end - year celebrations, i cannot help focusing on the albanian young generation, an inspiration to our work and a fruit of our investments for a better future. following its established tradition, the bank of albania has the pleasure to announce the governor β s award for the best diploma theses in 2011 β. this year, we decided to announce this award in this important activity, in the presence of friends and colleagues. this is an expression of our appreciation for research by these today β s students β tomorrow β s colleagues. the bank of albania pays particular attention to the young generation, especially to its education. when i look back and see how we started financial education five years ago, i recall what may be a naive but a significant comparison ; neil | action for achieving a series of concrete and measurable objectives. this means that upon conclusion of the project, having benefited from the technical assistance, the bank of albania will be able to discharge its institutional duties and responsibilities in the relevant fields more effectively and more efficiently. i believe the main factor of success for such technical cooperation programmes is closely related to having clear goals and objectives, set jointly with our european partners. twinning agreements are an important instrument for ensuring albania β s compliance with eu legislation. this agreement is reached in a convenient time, taking into account that only two bis central bankers β speeches months from now, a decision will be made by the council of the european union on the candidate status with regard to albania β s eu membership. the ultimate objective of this cooperation will go beyond the assistance ; it will contribute to achieving high levels of professionalism, independence and transparency. it will also contribute to promoting the monetary and financial stability in albania. moreover, the assistance will be an impetus to the country β s european integration, with special focus on compliance with criteria for legal and economic convergence with the european union. this underlines, once again, the role of european integration as a driver to economic and social modernisation in our countries. today β s agreement comes at a moment when the commitment of the european central bank to our region is focused not only on the field of technical cooperation, but also extends to the political one. in addition to the close monitoring of the economy of albania and other countries in our region, the european central bank plays an active role in the vienna initiative 2. 0, which aims at identifying and mitigating systemic risks in the countries where european banks operate. this initiative is experimenting a new coordinating mechanism between the european union and our region, bringing together representatives from parent banks, subsidiaries, home and host supervisory authorities, international financial institutions and the european commission. moreover, the european central bank is assuming a new supervisory role for 130 systemic banks in the euro area, some of which operate in albania or other countries of the region through their branches or subsidiaries. this role, which is expected to become functional in the field as of november this year, will be exercised in cooperation with national supervisory authorities and will have implications for albania and other countries of the region, given the presence of euro area - based banks in our banking sectors. with the establishment of the single supervisory mechanism, the european central bank will become the home supervisor for a number of banks operating in albania. in addition to improving the | 0.5 |
products in rural lending there is an imperative need for the marketing staff to be knowledgeable about agricultural practices and operations, besides being well acquainted with the features of the products and their suitability to the targeted category of customer. in a sense, providing financial services will also involve providing extension services as a risk mitigant. hence, banks will need proactive technical officers who can not only provide such services, but also train their field staff. another very important requirement is relationship management in terms of face - to - face familiarity and continuity of contact. surely, it is not without reason that the rural folk are comfortable with persons like the postmen and even the local moneylender, with whom they have occasion to regularly interact. banks would do well to address this need for building up a relationship and rapport with the rural clientele. o use of information technology ( it ) there are a variety of ways in which it can be used by banks. delivery of banking services through it based solutions, such as mobile phones and smart cards, while keeping costs low, is one huge opportunity for increasing outreach afforded by modern technology that is rapidly innovating. other uses of it are in credit risk management and pricing, which require maintaining a comprehensive computerised data base β this can be used for a variety of purposes, such as marketing, credit scoring, pricing, credit monitoring including rating migration and devising appropriate internal control systems, etc. there is clearly a need to have credit information companies across the entire country ; the huge externalities associated with having comprehensive credit records can be derived for more efficient financial intermediation. with appropriate it solutions in place and suitable field staff, banks can also provide market insurance and capital market products for increasing their non funded business. o developing and using risk mitigants the three important risks identified in agricultural lending are yield risk ( or input output risk ), calamity risk and price risk. banks will need to aim at minimising these risks if they have to deliver affordable credit to agriculture. extension work, including proper advice on use of fertiliser and pesticides, ensuring quality seeds and inputs are activities that minimise yield risk. enterprises providing such services would need to be supported by banks and actively encouraged. calamity risk minimisation involves insurance of crops and assets, including of livestock / cattle and fisheries. while restructuring of loans can provide more time for repayment, repeated rescheduling could lead to instalments ballooning beyond the repay | to restore the equilibrium between supply and demand for capital. monetary policy amid low interest rates what does the lower level of interest rates worldwide mean when it comes to conventional monetary policy? if interest rates are already low, monetary policy is less able to respond to shocks. if the economy and inflation weaken, a central bank will normally stimulate economic activity by lowering interest rates. this mitigates the slowdown and stabilises prices. if interest rates are already low, however, a central bank only has a few moves at its disposal before rates reach zero. and once that happens, conventional monetary policy ends. the restrictions on the latitude of conventional monetary policy are even more pronounced in the case of switzerland. indeed, our country has traditionally been known for its political and economic stability, and the swiss franc is thus viewed by investors as being particularly safe. in return for this security, they are prepared to hold investments in swiss francs at lower rates of interest than they would in other currencies. this has in the past led to interest rates in switzerland generally being lower than in other countries. therefore if monetary policy page 3 / 8 needed to be eased, the starting point for interest rate cuts was correspondingly lower here than elsewhere. monetary policy reaction to the major economic crisis ladies and gentlemen, the global financial and economic crisis broke out eleven years ago, and was followed by a marked decline in economic output and inflation. at that time, the snb had to switch to an expansionary monetary policy stance in order to fulfil its mandate. we initially responded with conventional measures, and quickly lowered interest rates to virtually zero. the global financial crisis was swiftly followed by the sovereign debt crisis in the euro area. the attendant uncertainty on the financial markets bolstered demand for the swiss franc as a safe haven, thus putting appreciation pressure on our currency. to counter these upward forces, we had no option but to resort to unconventional means. we intervened on the foreign exchange market, and in september 2011 introduced a minimum exchange rate against the euro. from mid - 2014 onwards, the international monetary policy environment began to change. on the one hand there were increasingly clearer signs that the us was about to adopt a tightening stance, whereas in the euro area a loosening of monetary policy was becoming more and more likely. the euro subsequently depreciated markedly against the major currencies. as a result, by the beginning of 2015 the minimum exchange rate was no longer sustainable. to retain control over our monetary | 0 |
that determine the trend change in prices. as a measure to prompt an improvement in the aggregate supply and demand balance, in terms of interest rates, the bank has kept the policy rate at the effectively zero level. to encourage a further decline in longer - term interest rates in the money market, the bank introduced in december 2009 a new funds - supplying operation, through which funds with a maturity of three months are provided at an extremely low interest rate of 0. 1 percent, and the total amount of loans to be provided through this operation was set at approximately 10 trillion yen. the total amount of loans was increased to 20 trillion yen in march 2010. in terms of funds provision, the bank has been providing ample funds through various fundssupplying operations, including the new operation. furthermore, the bank has made its stance clear that it will consistently maintain the extremely accommodative financial environment. as for inflation expectations, the other determinant of prices, the bank has, to prevent people β s expectations for prices from declining, clearly showed its stance, in the form of the β understanding of medium - to long - term price stability, β that it is critical to achieve a positive year - on - year rate of changes in the cpi. to overcome deflation and achieve a sustainable economic growth with price stability, the bank will continue to consistently make contributions as central bank. | although many small firms still see their financial positions as weak, the overall financial positions of firms, including small ones, have continued to show signs of easing. the cpi ( excluding fresh food ) is declining on a year - on - year basis due to the substantial slack in the economy as a whole, but the decline leveled out in august 2009 and the moderating trend of decline has continued. the outlook for the trend change in prices is determined by the aggregate supply and demand balance and the medium - to long - term inflation expectations. it should be noted that, statistically, the year - on - year rate of change in the cpi will decline for a year due to the introduction of subsidies for high school tuition and other policy measures in fiscal 2010, but in assessing the trend change in prices, it is necessary to exclude such one - off factors. in terms of the trend change in prices, with medium - to long - term inflation expectations likely to be stable, the year - on - year rate of decline in the cpi ( excluding fresh food ) is expected to continue to moderate as the aggregate supply and demand balance improves gradually. while i have thus far explained the baseline scenario for economic activity and prices, the bank is also fully aware of the risks concerning such scenario. upside risks to the scenario are developments in emerging and commodity - exporting economies. the robust growth of emerging and commodity - exporting economies has driven the pick - up of japan β s economy. if the growth in those economies further accelerates, it will pose an upside risk to economic activity in japan. meanwhile, downside risks, although somewhat diminished, include the possible consequences of balance - sheet adjustments in the united states and europe as well as potential changes in firms β medium - to long - term growth expectations. moreover, attention should continue to be paid to various recent international financial developments and their effects. with regard to prices, there is a risk that inflation will rise more than expected in the event of a rise in commodity prices due to higher growth rates in emerging and commodity - exporting economies. on the other hand, there is also a risk that the rate of inflation might decline due, for example, to a decline in medium - to long - term inflation expectations. ii. conduct of monetary policy the bank recognizes that japan β s economy is faced with a critical challenge of overcoming deflation and returning to a sustainable growth path with price stability. therefore, the bank has been implementing various measures, taking into account the two factors | 1 |
would agree that no monetary policy strategy should be set in stone. instead, it should adapt to changing circumstances, and circumstances have certainly changed over the past 18 years. in this sense, our current review should translate this strategy to the challenges of our time. 3 personal relationship otmar, with your firm commitment to monetary stability and central bank independence, based on your strong academic reasoning, you should serve as a role model for every central banker. and you have personally given me guidance and advice on numerous occasions as well. 1 / 2 bis central bankers'speeches even in my days as a student, i became well acquainted with your perspective by studying your textbooks. i preferred your books to others because they offered better explanations of the intricate interrelations of monetary policy and also introduced the reader to the challenges and issues of practical monetary policymaking. many years later, i had the privilege of working together with you personally. in the aftermath of the global financial crisis, you chaired the working group neue finanzmarktarchitektur. this working group was convened by chancellor angela merkel and was better known as the issingkommission. its task was to prepare the german agenda for dealing with the financial crisis for a packed series of g20 summits over the subsequent years. it was a very intensive and productive time that i remember vividly. today, i enjoy being able to exchange ideas about monetary policy and central banking with you β sometimes as a sparring partner. when we converse over the phone, i feel that we see many things from a very similar perspective, but what makes these exchanges so valuable and engaging is the sharpness of your intellect. and for this i offer my sincerest thanks. 4 conclusion although you already celebrated your 85th birthday a few weeks ago, i would nevertheless like to take this opportunity to wish you many happy returns as well as continued good health and vitality. your word carries weight beyond our country β s borders, even to this day. i hope that we will continue to hear your clear, credible, and authoritative voice in policy debate for many years to come. thank you and all the best! 2 / 2 bis central bankers'speeches | andreas dombret : long - term challenges facing banks in germany dinner speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the bundesbank β s autumn conference β achieving sustainable financial stability β, berlin, 1 october 2014. * 1. * * introduction ladies and gentlemen it is a pleasure for me to welcome you to this year β s bundesbank autumn conference. in my view, the topic of this conference is well chosen. the crisis and the great uncertainties it has brought on have made the pursuit of financial stability all the more urgent. for this reason i am delighted that so many of you have been able to accept the bundesbank β s invitation to discuss this sensitive issue. this evening i would like to take a closer look, with you, at the long - term challenges facing german credit institutions. with more than 1, 800 institutions, the german financial system is the largest β in terms of sheer numbers β in the euro area. this large number reflects a special feature of the german banking system, namely that it is built on three pillars. alongside the private banks, many regional savings banks and credit cooperatives are in operation. in the crisis, these locally important institutions played a major part in stabilising the german economy, because they were less strongly affected by the financial crisis thanks to their traditional business model. nonetheless, all banks have felt the effects of a great loss of confidence since the financial crisis erupted in 2008 β they have lost the confidence of the general public, of trade and industry and of the interbank community. there are two major reasons for this loss of confidence. the first is uncertainty about how sound individual institutions actually are. the second relates to wrong investment advice in connection with securitisation products and certificates. more recently, confidence suffered again as information about banks β misconduct came to light β for example, the manipulation of reference rates such as euribor and libor or the legal violations that have often garnered so much attention from the media. the financial crisis and the subsequent loss of confidence have given rise to a major reform of financial regulation. basel iii is certainly the best known and most important of the measures designed to make banks more resilient by strengthening their capital and liquidity position. and many banks have indeed strengthened their capital position significantly over the past years. this elevated robustness is indispensable, as it was never possible at any point in the past to identify the specific causes | 0.5 |
benoit cΕure : interview in der tagesspiegel interview with mr benoit cΕure, member of the executive board of the european central bank, in der tagesspiegel, conducted by ms carla neuhaus on 19 september 2018 and published on 1 october 2018. * * * mr cΕure, the financial crisis erupted 10 years ago. is the eurozone now better prepared for a crisis? as central bankers we always need to be prepared for the next crisis. it is our job to make the financial system as resilient as possible. and a lot has been done on that front. the financial system is now much safer than it was 10 years ago. we have better regulation and higher capital and liquidity buffers in banks. good progress has been made, but we are not there yet. why not? there are still parts of the financial system that are not nearly as well regulated as we would like them to be. i β m thinking of the shadow banking sector, for example, meaning financial institutions that conduct activities similar to those of banks but don β t have a banking licence. regulators still don β t have proper instruments to adequately monitor and control risks in these institutions. it would be up to politicians to change that. but are they still ready to do so, 10 years after the start of the crisis? there is indeed a risk of complacency. after all, the economy is doing well, memories of the crisis are fading, and bankers have been trying again and again to soften regulation. we have to continue to defend the rules that have made the financial system less crisis - prone. how well prepared are we then? the next crisis might not necessarily start in the financial system. it might come from another quarter instead. at the ecb, we are currently looking closely at cybersecurity, for example. we don β t want the next crisis to be triggered by a hacker. continued investment is needed to protect the financial system from cyberattacks. what is the ecb doing in this respect? for example, we have set up a euro cyber resilience board, which is a forum for regular discussion and cooperation between central bankers, supervisors and providers of critical financial infrastructures. we have designed a european framework for red - team testing in the financial sector, tiber - eu. and cybersecurity is also becoming more important for ecb banking supervision. credit institutions have to report any attacks on their systems. | jean - claude trichet : the transformation of the international financial architecture to meet the challenges of globalisation arthur burns memorial lecture by mr jean - claude trichet, president of the european central bank, organised by the atlantik - brucke e. v., frankfurt, 20 september 2004. * * * it is with great pleasure that i have accepted the invitation of the atlantik - brucke to give this year β s arthur burns memorial lecture. this lecture series is not only dedicated to an outstanding central banker but it has also had a history of eminent speakers in past years. therefore, i would like to thank the atlantik - brucke for inviting me, and i also greatly appreciate the hospitality of the bundesbank. tonight, i would like to offer some thoughts on transforming the international financial architecture to meet the challenges of globalisation. i will focus on developments over the last three decades, a period during which the international community has been confronted with tremendous and continual challenges arising from important structural changes in the global economic and financial system. during this period the international community has also learnt key lessons and has launched profound adjustments to what has been termed the international financial architecture, i. e. the policy framework of the global financial system. let me first explain what i mean by structural changes in the global economic and financial system. the steady opening - up of goods and capital markets has led to growing integration of different countries around the globe, and we are still witnessing this process today with the opening - up of india and china. on average, trade has grown much more rapidly than gdp over the past decades. especially from the mid - 1980s onwards and during the 1990s, world trade expanded substantially more than world output growth in every year, with the difference reaching as much as 7 percentage points in some years. these different growth rates imply that over the last two decades, real gdp has doubled whereas the volume of world trade has more than tripled. moreover, trade has increasingly expanded, and now includes the full spectrum of tradable goods from primary commodities to finished products, meaning that many production processes, such as automobiles or computers, today span not only several economies, but also several continents. financial integration has also increased due to capital market liberalisation, rapid technological change and financial innovation, and we see its strength both in good times and in bad. this economic and financial globalisation has enormous benefits, but it also poses challenges and entails risks. one of | 0.5 |
gfxc β s working groups, which were instrumental in developing the new material. the recommendations of the working groups were reviewed by the gfxc β s member committees and published for public feedback. after careful consideration of the feedback, the gfxc released the updated code last month. some key changes to the code in total, 11 of the code β s 55 principles have been amended. i won β t go through all of the changes today. there is a summary on the gfxc β s website that steps through these. 2 what i would emphasise is that the driver for many of the changes is the need for greater disclosure and transparency in an increasingly complex market. 1 / 4 bis central bankers'speeches one area where the market has grown more complex is the methods of execution. use of execution algorithms by fx market participants has increased significantly. the gfxc β s view is that the market would benefit from more detailed disclosures about these algos, as well as greater uniformity in the disclosures. this echoes recent findings by the bank of international settlements ( bis ) markets committee that high - level and non - standard disclosures were making it difficult for algo users to compare different providers and make informed decisions. 3 some sophisticated clients may be able to overcome this problem, but it has not been conducive to market efficiency. consequently, the code has been updated to provide more guidance on the minimum set of information that algo providers should be disclosing. in addition, the gfxc is encouraging providers to make their disclosures in a standardised format. accordingly, the gfxc has developed an algo due diligence template that market participants may use, as appropriate. this is available on the gfxc β s website. as the use of algos increases, it is important that market participants are able to evaluate their performance. but the barriers to conducting meaningful analysis on algos can be high. for this reason, the gfxc believes that transaction cost analysis ( tca ) would benefit from greater harmonisation of data reporting. at the session on tca later this morning, i β m sure there will be some discussion of those challenges and how they might be overcome. the gfxc β s view is that standardised information could be particularly helpful for less sophisticated clients or those with limited resources. recognising this, the gfxc has also published a | guy debelle : the financial situation three years on speech by mr guy debelle, assistant governor ( financial markets ) of the reserve bank of australia, at the westpac macro strategy forum, sydney, 9 september 2010. * * * thanks to patrick d β arcy, megan garner, crystal ossolinski and andrew zurawski for their help. it is now a little over three years since the onset of the financial crisis in august 2007. since that time, financial markets have varied substantially in terms of pricing, volumes and functioning. conditions in global markets now are markedly improved from their dire position in the last quarter of 2008. markets have not returned to their pre - 2007 state, but that is generally a good thing as those conditions were not sustainable ( as indeed they proved not to be ). notwithstanding this, conditions in some markets remain somewhat fragile, reflected in still elevated volatility. in part, i think this is because the events of 2008 are a recent memory and practitioners now know how to retreat rapidly, instead of this process taking over a year as occurred between august 2007 and september 2008. we saw some evidence of this back in may this year. what i intend to do today is talk about the state of play in financial markets, focussing primarily on the foreign exchange market and the domestic bond market. i will focus on structure and functioning and how these have changed over the past three years. throughout the period, australian financial markets have generally operated with less dislocation than those in other parts of the world and that remains true today. foreign exchange the foreign exchange market has been amongst the most resilient of markets throughout the financial crisis. indeed, its resilience and the increasing attractiveness of foreign exchange as an asset class have seen many financial institutions expand their staffing in this area, even while they have been shrinking elsewhere. the most recent data published by the foreign exchange committees in the major markets confirm this view. turnover in these markets has increased by 30 per cent from the lows of early 2009, to be above its pre - crisis levels ( graph 1 ). the same picture can be gleaned from the just - released bis triennial survey which shows global turnover averaged us $ 4 trillion a day in april 2010, 20 per cent higher than in april 2007. by market, this growth has been broad - based. the uk, which is the largest market, experienced slightly above - average growth while market share declined in the rest of europe. the australian | 0.5 |
yves mersch : comments at financial services summit comments by mr yves mersch, member of the executive board of the european central bank, at cumberland lodge financial services summit, windsor, 10 november 2016. * * * introduction sustainable economic growth in the real economy depends on the soundness of financial services and their providers ; this simple truth has been amply evidenced by the collapse of credit during the financial crisis and the subsequent recession. one important type of financial intermediary are central counterparties ( ccps ) ; second, the financial ecosystem is β like the rest of the world β experiencing rapid change due to technical innovation ; i would like to give a clear signal that innovation should be embraced as the improvement of financial services can boost the real economy ; but i also would like to give a warning that a certain level of caution is needed when technological innovations are applied to financial markets in order to avoid any negative consequences. ( i ) central counterparties ccps are systemically relevant. they have been in the focus of regulators and central banks since the financial crisis. the growth in central clearing makes ccps nodes for risk in the system. this is why we have carried out considerable work at international level to promote that they operate in a safe and resilient manner. in 2012 global standard setting bodies ( cpmi - iosco ) adopted key risk mitigation requirements β the principles for financial market infrastructures β which raised the bar worldwide for ccp supervision. a global ccp work plan has recently been launched to further strengthen the resilience, recovery planning and resolution of ccps, which will lead to further guidance being released in the near future. under eu law, each ccp is overseen by a college of supervisors, involving all authorities that have a relevant interest in its prudent risk management. the colleges act as forums for information - sharing, ensuring a high level of transparency in the way ccps operate, which can prove especially valuable in the event of a crisis. brexit creates uncertainty, and raises doubts as to the future of this framework the prospect of the uk β s exit from the eu creates uncertainty regarding the future of the supervision of non - euro area ccps that clear significant amounts of euro currency. we do not know what the future relationship between the eu and the uk will be, and i do not wish to speculate on this matter. we cannot be complacent with regard to the regulatory, supervisory and oversight framework for financial market infrastructures. while it | address potential banking crises. fourth and finally, there should be a single deposit guarantee scheme in order to harmonise and centralise deposit insurance. iv. 3. assessing the project obviously, each pillar has its own pros and cons. let me mention the most important ones. as concerns the single rulebook, the financial crisis highlighted the danger of divergent national rules. the current context justifies the adoption of a common legal framework for banking regulation. the european banking authority would play the central role in elaborating the rulebook. the result will be ( i ) less regulatory arbitrage ; ( ii ) a reinforcement of the competitive neutrality principle : same business, same risk, same rules ; and ( iii ) a higher level of transparency, contributing to a robust and uniform regulatory framework in the single market. on the other hand, there are some risks : ( i ) implementing the same rulebook across over 8, 000 banks in 17 or more countries may not prove flexible enough ; ( ii ) the tougher regulations currently in place at national level might be undermined in those non - euro area member states which decide not to join the banking union. local subsidiaries may choose to bypass the more prohibitive banking legislation by turning into branches. the single supervisory mechanism could be created through the transfer of prudential supervision attributes from national authorities to the ecb. in this context, a number of tasks such as consumer protection, fight against money laundering and supervision of banks based in non - eu countries remain at the national level. meanwhile, the ecb takes the actual responsibility for supervising the banking system, being in charge of licensing credit institutions, ensuring compliance with capital, leverage and liquidity requirements and also supervising financial conglomerates on a consolidated basis. a gradual timetable was designed to smooth the transition to the new mechanism. starting from 1 january 2013, the ecb may choose to take over the supervision of any credit institution in the banking union. a particular focus will be on the entities which have received or requested public funding. by 1 january 2014, all other banks should be under central supervision, with an earlier cut - off date ( 1 july 2013 ) for banks of major systemic importance. the successful implementation of the mechanism would hold considerable weight in restoring confidence and increasing transparency in banking supervision. however, a couple of downsides are worth mentioning : ( i ) voluntary participation of non - euro states in the banking union may result in the fragmentation of the eu single market into participating and non - | 0 |
me to highlight a number of thailand β s fundamental strengths that underpin this positive outlook. first, our corporate sector remains competitive with accumulated robust savings and profitability. this fact is well evidenced by their healthy balance sheets and their ability to explore investment opportunities overseas. net profit of most listed companies in the second quarter 2012 turned out be positive despite damages inflicted by the floods. with strong financial positions and more trade liberalization, an increasing number of firms have gone overseas, as indicated by a marked increase in thai direct investment from $ 3 billion in 2007 to $. 10. 6 billion in 2011. second, supportive fiscal and monetary policy has helped enhance growth while continuously strengthened stability in the thai economy. this achievement has been attributable to responsive fiscal and monetary policy, together with market - friendly regulations aimed at keeping the economy operating close to its potential. the rapid recovery from the great floods last year amid global economic uncertainty has revealed the importance of fiscal stimulus and government efforts in restoring public confidence. at the bis central bankers β speeches same time, the expansionary monetary policy stance has helped accommodate business restoration process. third, thailand has a strategically well placed - location for international investors to benefit from rising asian integration. the rise of china and the asean economic community ( aec ) evidently provide enormous opportunities for businesses operating in thailand to expand and prosper from enlarging market size and integrated regional supply chain. automotive and electronics industries are prominent examples that have long gained competitiveness after establishing complex supply chain - hub in thailand and obtaining a critical foothold in the region. finally, the thai financial system has been resilient to the global financial crisis. and the key reason for the banking sector β s resiliency is that our financial system remains relatively non - complex. the financial transactions are derived from real economic activities, and hence risks are understandable and manageable, with lending to domestic companies accounting for 70 percent of loan portfolio and the rest is mainly mortgage loan. the direct exposure of thai banks to european countries is also very small. investments and loans made by thai banks to europe are only 0. 3 percent of total assets, while claims on thai banks by european countries are even smaller at 0. 03 percent of total liabilities. nevertheless, we will be watchful of the second round impact of the eu crisis, particularly via impact on exports that could impact asset quality. apart from the existing solid fundamentals outlined above, thailand is currently striving to develop a more efficient financial system to | from the second quarter of 2023 onwards. the overall weakness in economic activity would reflect both that of consumption, which would decrease as a result of the decline in households'purchasing power, and that of investment in machinery and equipment, which would slow down owing to the uncertainty and the increase in financing costs. worsening international trade would also play a role. 1 / 9 bis - central bankers'speeches the second, more adverse scenario assumes a complete halt in russian gas flows to europe starting from the current quarter and significantly higher energy commodity prices. at the same time, international trade would slow down more markedly. in this case, gdp would contract by 1. 5 per cent in 2023 and inflation would exceed 9 per cent, about 2. 5 percentage points higher than in the first scenario. in light of the current challenging environment, the point estimates of these two scenarios are purely indicative and strongly dependant on the assumptions made on commodity prices and availability, which largely depend on developments in the conflict in ukraine. in any case, the risks to growth are tilted to the downside and, not only for italy, depend on geopolitical tensions and the economic outlook in the united states, where, also owing to the strong tightening of monetary conditions, many indicators anticipate a possible gdp contraction in the coming months. further negative repercussions could arise from a possible abrupt slowdown in the chinese economy, mainly in connection with the fragility of the construction sector, and from inflation remaining persistently high for longer than currently expected. inflation in the euro area came close to 10 per cent in september, mainly driven by the exceptional rise in energy prices ( over 40 per cent year - on - year ). inflation reached 4. 8 per cent net of the most volatile components β energy and food β which are the most affected by the conflict in ukraine. almost two thirds of the overall increase in consumer prices over the past twelve months appear to have been caused by the increases in energy prices, both directly and through the impact on production costs. this share rises to around four fifths if we factor in the impact of food prices which, although not energy - related, have also been affected by the conflict in ukraine. according to the european central bank ( ecb ) staff projections published in september, consumer prices in the euro area will grow by over 8 per cent on average in 2022 before gradually decreasing to below 6 per cent in 2023 and converging to levels close to the 2 per | 0 |
strategies, business plans and significant policies that embed the dei principles and goals. regular and transparent reviews and monitoring of dei progress and challenges should be put in place, with clear key performance indicators established to measure progress. bod should ensure the operations are conducted in alignment with the approved strategies and business plans. secondly, bod should establish clear corporate values and lines of responsibility that promote a culture of diversity, equity, and inclusivity. there should be clear lines of responsibility and accountability that are communicated throughout the organisation. thirdly, bod should ensure management is well - versed, competent, and a strong proponent of dei. this is important to build employee's trust and assures them that they are employed by an organisation that supports and respects dei agenda. finally, bod should ensure that comprehensive risk management policies, processes and infrastructures are established to manage dei - related risk events such as discrimination and harassment claims, unconscious bias, failure to create an inclusive work environment, legal compliance, or failure to comply with diversity and equal opportunity laws. this way, the organisation is protected from the reputational damage that could affect the business and its stakeholders. distinguished members of the board, ladies, and gentlemen 3 / 4 bis - central bankers'speeches i urge bod members who are present here today, to deepen your understanding of this subject, and advocate for the benefits dei can create for the organisation. empowering change through diversity, equity, and inclusion is a strategic business imperative. let us together embrace this opportunity to lead with courage, empathy, and determination as we build a future where diversity is celebrated, equity is ensured, and inclusion is the norm to unlock the full potential of our organisations. with that, i thank you for your attention and wish everyone a fruitful and productive day ahead. 4 / 4 bis - central bankers'speeches | s links with the western balkans, the mediterranean countries and the countries of the commonwealth of independent states, notably russia, have strengthened as well. in line with this, we have also observed significant use of the euro by public authorities and private agents in these countries. let me now turn to the ten new eu member states. for the moment, any use of the euro by authorities and private agents in these countries - as in denmark, sweden and the united kingdom continues to be an β international β one, as the euro is still being used there by non - euro area residents. however, unlike denmark and the united kingdom, the ten new member states have not asked to opt out of the single currency. thus, they will adopt the euro once they have fulfilled the requirements as laid down in the treaty establishing the european community. this entails that, on their road to the euro, they will, at some point, join the exchange rate mechanism ii. erm ii is a multilateral arrangement of fixed, but adjustable, exchange rates with a central rate and a standard fluctuation band of ( 15 % against the euro. thus, under erm ii, the official use of the euro in its role as an anchor currency by some non - euro area eu member states will no longer represent a unilateral decision by the respective authorities. rather, it will be based on a multilateral agreement between the member state concerned, the euro area member countries, the ecb and the other member states participating in the mechanism. this is most evident with regard to the decisions on central rates, as they are taken by mutual agreement of the various parties to erm ii. moreover, several exchange rate regimes are incompatible with erm ii participation, including pegs against anchors other than the euro. the new member states differ greatly in terms of their economic structures, current exchange rates and monetary regimes, and in the degree of nominal and real convergence already achieved. thus, no single path towards erm ii and the adoption of the euro can be identified and recommended. rather, a case - by - case approach - based on the principle of equal treatment - will be followed, in line with the stipulations laid down in the treaty. this includes the criteria concerning the sustainability of nominal convergence, better known as the β maastricht criteria β. there will be no additional criteria but there will be no relaxation of the criteria either. we are aware that the road to the euro will be demanding, | 0 |
service businesses. it would be informative to examine how these new players could influence the structure of financial service provision, financial markets, and risk - sharing among various entities. from a central bank viewpoint, we need to closely monitor the impact of these new entrants so that new technologies will enhance the efficiency of payments, settlements, and financial services, while ensuring their safety and stability. second, new styles of systemic importance may emerge under the development of fintech. since the global financial crisis, efforts have been made to classify big banks as systemically important financial institutions, or sifis, based on factors such as the size of the balance sheet. based on these efforts, various financial regulatory measures have been taken so that their systemic importance would not threaten financial stability. recently, however, entities that provide global it platforms to many entities and accumulate huge volumes of big data have become increasingly powerful and influential in wide - ranging businesses including financial services. in addition, high - speed, high - frequency transactions in financial markets are expanding, and if many market participants come to use similar algorithms in conducting such transactions, this might involve the risk of amplifying one - way market developments. based on these changes in environment, rather than the size of balance sheets of banks, factors such as global it platforms, the huge volumes of big data, and widely used algorithms might become more systemically important from the viewpoint of financial stability. third, as the utilization of big data is becoming more important in the provision of financial services, data security, privacy, and the consensus of stakeholders on data utilization will become even more critical. thus, financial service providers and stakeholders are required to pay due attention to data protection and privacy, in order to maintain public confidence in innovative financial services utilizing new technologies. finally, as application of ai to financial operations is becoming widespread, ensuring governance in ai's decision - making and accountability to customers using ai - related services may also become critically important. if customers are concerned that ai's decision - making might turn into a " black box " and poses risks to them, such customers'anxieties would hinder the application of ai to create innovative financial services. in this regard, efforts to ensure the governance and accountability of ai are meaningful to " wipe out " people's concern about new technologies. iv. closing remarks in promoting fintech, france and japan seem to have common challenges as developed countries. in the case of emerging and developing countries, basic financial services are underdev | to maintain financial system stability. using the metaphor, the economy after the burst of a bubble can be divided into two phases : the phase of β acute pains β arising from the malfunctioning interbank money markets and the phase of β chronic illnesses β from balance - sheet adjustments after such acute pains recede. it is very important to stave off the acute pains, which are likely to trigger a sharp contraction of economic activity and potentially produce devastating effects on the economy. in may 2010, major central banks reintroduced dollar - fund supplying operations when dollar - funding markets showed signs of tension, again reflecting increased concern over sovereign debts problems in peripheral european countries. such measure was implemented with consideration of the importance of maintaining the stability in interbank funding markets. second, we need to continue with the unprecedented easy monetary policy, given the current economic conditions. in fact, many advanced countries have maintained very accommodative monetary policy. the bank of japan ( boj ) also decided recently to implement a comprehensive monetary easing policy in order to further enhance monetary easing. that included three measures : ( i ) clarification of maintaining virtually zero interest rates ; ( ii ) clarification of the time horizon to maintain the virtually zero interest rate policy ; and ( iii ) establishment of an asset purchase program to purchase various financial assets, such as government securities, commercial paper ( cp ), corporate bonds, exchange - traded funds, and real estate investment trusts and to conduct the fixed - rate funds - supplying operation against the pooled collateral. third, we need to accept the fact that, once a country experienced a bubble, it will take fairly long to rise up from the bottom in the aftermath of the burst of a bubble, and restore the fullfledged recovery path, despite various unprecedented policy efforts. as japan β s experience shows, it is the hard fact that the economy will be unable to achieve a strong recovery without resolving β excesses β accumulated during a bubble period. the form of β excesses β varies from country to country. in japan, they were β three excesses β in the business sector : employment, production capacity, and debt ( chart 9 ). in that context, we sometimes hear an argument that β the delayed monetary policy responses caused the economic stagnation β. it is true that the boj failed to fully recognize the significant magnitude of adverse effects soon after the burst of the bubble, like other central banks. but it is also true that the boj carried out | 0.5 |
90s. however, history has shown that fear of contagion is a strong deterrent when it comes to actually resolving an important bank. and whether bailing in creditors would lead to contagion naturally depends on who those creditors are β if they are other financial institutions, the chances are that regulators will shy away from resolution. this is why two weeks ago, the financial stability board ( fsb ) proposed minimum standards for the 30 global systemically important banks concerning both the quality and quantity of bail - in debt. in particular, it was agreed that if a bank were to hold bail - in debt issued by another systemically important bank, this would detract from its own bail - in buffer, in order to discourage banks from holding critical amounts of bail - in debt issued by other banks. the euro area already has a minimum requirement for such eligible liabilities. but so far, these liabilities can be held by other institutions without restriction. in the interests of both financial stability and growth, we should adapt the standard proposed by the fsb as soon as possible. channelling credit into the most innovative and efficient companies is a crucial prerequisite for growth. but in their infancy, companies are usually not looking for credit, but for equity investors. when it comes to providing capital to innovative firms, the eu has much room for improvement. in the us, for instance, finding investors is not much of a problem for innovative companies. an innovative american firm is able on average to attract twice as much capital as an innovative firm in spain, france, or germany. investment in a new, innovative firm often takes the form of venture capital. the business model of a venture capital fund is based on developing expertise in a certain area and using this expertise to make informed bets on a number of promising firms in the industry in question. a high number of new firms fail, but the rewards to be reaped if they succeed are also high β on average, venture capital investments in the us have delivered a return of around 13 % since 1990, according calculations by the economist. for the venture capital model to work there has to be a minimum market size in order to be able to spread out investments among a large enough number of start - ups. but in europe, the markets for venture capital have been segmented along national borders. this may go some way to explaining why in europe, investments by venture capital funds in technology companies are only one - fifth the size of investments in the us. | ##nt to compete on it. and more intense competition spurs innovation. in the long term, innovation due to increased competition is the main reason why market integration raises welfare. 5, 6 but for newcomers to be able to challenge incumbents, they must not trip over red tape. unfortunately, bureaucratic barriers to setting up a business are still high in many european countries β not least in germany, which ranks 114th in the world bank β s doing business report in this regard. spain does comparatively better, ranking 74th. but this still implies a considerable distance to the frontier of best practice. how large is the impact of barriers to entry on the overall economy? research suggests : quite large indeed. increasing entry costs from very low levels such as those observed in denmark, for example, to moderate ones like those in spain can reduce per capita gdp and total factor productivity by up to 10 % 7. and the small differences in the administrative cost of copenhagen economics ( 2010 ), the economic impact of a european digital single market, final report. badinger, h ( 2005 ), β growth effects of economic integration : evidence from the eu member states β, review of world economics 141, 50 β 78. boltho, andrea and eichengreen, barry ( 2008 ), β the economic impact of european integration β, cepr discussion paper no 6820. barseghyan, l ( 2008 ), β entry costs and cross - country differences in productivity and output β, journal of economic growth, 13 ( 2 ) : 145 β 167. bis central bankers β speeches entry between europe and the us seem to explain 10 to 20 % of europe β s lag vis - a - vis the us with regard to total factor productivity and the capital - output ratio. 8 removing barriers to entry therefore holds the promise of substantial gains in productivity and welfare. but these barriers can be tackled not only at the national level, but on the european level as well. the single market has been very successful in facilitating trade in goods. hence, competition in this area is intense. the mark - ups that firms are able to charge in addition to their costs due to market power are low and are comparable to those in the us, for example. when it comes to services, however, the picture looks different. mark - ups are higher, on average, than in the us. it is probably safe to say that the services directive has fallen short of expectations. this could be changed by finally establishing the β country | 1 |
delisle worrell : the frontier of practice in international criminal law opening remarks by dr delisle worrell, governor of the central bank of barbados, at the university of the west indies β ( uwi ) course in international crime, bridgetown, 17 january 2011. * * * this course is an example of what barbados needs to do in order to keep up with the evolving challenges of globalisation. globalisation is not new to us : the barbados we know today was born of the global outreach of an expansionist english nation, and its economy grew through international commerce in sugar, slaves and consumption goods. what is new is the nature of barbados β economic interface with the rest of the world. very little now remains of the sugar economy of the last three centuries. what we have today is an economy driven by international commerce in services, principally tourism services, with international business and financial services ( ibfs ) in second place. the international business and financial services sector is barbados β most recent foreign currency diversification initiative. our success in this activity is a result of an emphasis on quality β of regulation, of legislation, and of official administration. in order to maintain internationally acceptable quality we must constantly upgrade our performance in all these aspects β improving the adequacy of regulation, the appropriateness of legislation, and the processes and skills which enable government and private firms to provide an efficient professional service. the anti - money laundering ( aml ) framework, and the way we execute that framework, are crucial aspects of our quality control. we must constantly upgrade that framework to keep abreast of best international standards ; we must take measures to equip official entities with the knowledge and skills to execute their responsibilities in a transparent, even - handed and expeditious fashion. practitioners must fully understand and implement measures and procedures, which will ensure that their operations satisfy a demanding international standard, all the while offering their clients a service that is competitive in price and quality. this course put on by uwi will help all participants to remain current on the latest developments in international criminal law, so that we can enhance our standing among our competitors in the market for international business and financial services. the uwi is fortunate to have the benefit, as lecturer for this course, of one who has been writer, teacher and service provider in this field from its inception, in the person of bruce zagaris. bruce β s cv speaks for itself : he has a b. a., j. | to be, of invaluable assistance to us in that capacity. beyond this, he is a friend of barbados, one of a distinguished list of international luminaries whose informal support and advice has done much to assist this small nation in making its way in a changing world. with bruce zagaris as lecturer, this week β s course takes us to the frontier of practice in international criminal law, which is where we need to be, in order to be most competitive. our heartfelt thanks to bruce ; we really do appreciate his willingness to put his expertise at our disposal, and the committed support he has given us, over the years. we look forward to a rewarding week with him. bis central bankers β speeches | 1 |
in payment and settlement related activities who will attend to the preliminary work, such as stocktaking and identification of gaps in the national payment systems. there should be task forces on ( a ) policy and operational matters ; ( b ) legal and regulatory aspects ; ( c ) technical and institutional infrastructure ; and ( d ) communication and exchange of information. the task forces should make their recommendations to the spc, which will take considered decisions. in nominating members to the task forces, where possible, countries should select officers from their respective npcs, as such councils are expected to have representatives of all stakeholders with the necessary skills and expertise to handle work relating to the above areas. sri lanka has already established an npc with a clear mandate to take forward payment reforms across the nation. the npc has prepared a well - focused action plan after detailed deliberations with all stakeholders and is the apex body for payment system development policies and operations. i understand that india and some other countries too have npcs. it may also be important to set up a secretariat in one of the countries to lead the regional payment initiative. the spc, as well as the task forces, should establish close links with international organizations such as the wb, imf, bis and also with other regional payment groups and developed country central banks for guidance and technical assistance. as i mentioned before, the acu is the only regional clearing mechanism that exists today among saarc member countries. it needs a clear reform agenda to mitigate risks involved in that system and ensure safe payment flows among the member countries. already, a technical committee has been appointed under the chairmanship of sri lanka to look into some elements of modernizing the acu. the whole of yesterday we debated on some of the short - term measures that need to be introduced to the acu clearing arrangements in order to avoid any disruptions to cross border flows. that committee too could report its recommendations to the spc. there may be many other modifications, modernizations and reforms that need to be introduced at national and regional levels which will shape the annual work program of the saarc regional payment initiative. it is in that con text the topic β working towards a saarc regional payments group β was chosen as the theme for this conference. 8. conclusion we need not wait till the saarc region β s trade and investment flows rise significantly to modernize our payment systems. the saarc member central banks need to decide early to establish a regional payments | and overall economic development interests. central banks, therefore, monitor developments in the payment systems to assess their impact on the demand for money, monetary policy and financial system stability. in many of the saarc countries and elsewhere, the central banks have been playing multifaceted roles like operators, owners, facilitators, regulators, overseers, users and service providers of their national payment systems. through these roles, central banks have acquired expertise, skills and in - depth knowledge on the role of the payment mechanisms in the financial system and the economy. we need to make use of this expertise and share it with others in the region and elsewhere. a regional payment initiative would be a vehicle which would help to achieve this objective. central banks can advise on payment related financial policy and act as effective catalysts, together with private sector organizations, in initiating, promoting and contributing to payment system reforms. by and large, payment reforms, be it national or regional, have been promoted and led by central banks, except in few countries like canada where the private sector initiative has been significant. the central banks in the saarc region also have the ability to play the leadership or catalyst role by providing policy directions, preparing roadmaps in consultation with other stakeholders and guiding national and regional payment system reforms and taking the responsibility to develop a common payment policy framework acceptable to all countries in the region. we need to pay attention to the existing regional clearing mechanisms as well. as in the case of the asian clearing union ( acu ), if there are delays in processing payment instruments, combined with official accounting practices for payments that give rise to a float on the balance sheets of the central banks, that will contribute to inefficiency and uncertainty in the payment process. it is significant to note that such inefficiencies can extend to the central bank β s monetary operations and liquidity estimates as floating acu balances cannot be treated as part of the international reserves of member central banks. lack of clarity about rights and responsibilities regarding funds on the move is another shortcoming, especially where processing systems and accounting procedures result in long delays between the time a payment instruction is issued and the time it is cleared and settled. both at national and regional level, supervision and oversight of payment systems have always received less attention compared to the supervision of banks and financial institutions. when there are cross border payments and common clearing and settlement mechanisms, it is important to ensure that there is a well - designed supervisory system. the supervisors | 1 |
treatment, we need to understand the broader structural trends shaping our economies and societies to supervise with the highest degree of effectiveness. while we may not be medical doctors saving people's lives, our mission as banking supervisors β protecting people's life savings β is also important. so, i think it is useful to draw from the medical field, in particular from the discipline of optometry, for some lessons about how we can save people's economic lives most effectively. after all, in today's complicated world, reducing opacity helps us discern risk in a more clearsighted manner. opticians distinguish between central vision, fringe vision and peripheral vision. peripheral vision is the ability to detect what occurs outside our direct line of sight, beyond 60 degrees. it encompasses everything that can be seen on the sidelines and provides spatial awareness, helping with navigation and balance. improving peripheral vision is crucial for athletes as it enhances reaction times, improves anticipation and 3 / 6 bis - central bankers'speeches reduces the risk of injury. in banking, the periphery of our gaze captures the structural transformations of our societies and economies. think of the acceleration of technological progress, including the emergence of generative artificial intelligence and the impact of social media on depositor behaviour ; the reconfiguration of the financial value chain ; and the new competitors in the market or the growing share of non - bank financial institutions. while non - banks may help in financing the significant costs of the twin green and digital transition, they also need to be adequately regulated and closely monitored. growth in the nbfi sector, globally and in the euro area, is staggering. the global sector expanded from β¬87 trillion in 2008 to β¬200 trillion in 2022, an even larger increase than in the euro area sector which has more than doubled in size, from β¬15 trillion in 2008 to β¬32 trillion in 2024. the private credit market is a particular concern. it accounts for β¬1. 6 trillion of the global market and has also seen significant growth recently. growth in the european private credit market has accelerated by 29 % over the past three years, but the market in europe is still much smaller than it is in the united states, which is where investors and asset managers are often based. why is this a concern? certainly, growth of the market alone is not the main worry. first, the end investors are pension funds, sovereign wealth funds and insurance firms, but banks play a significant role in lever | started : since 2007 global banks have already sold off more than us $ 700 billion in assets and operations, of which foreign operations account for almost half. furthermore, in response to the new resolution requirements, some large banks may simplify their organizational structures. i β m not suggesting that large universal banks will disappear. they will likely persist, at least because of the significant economies of scale associated with payments and foreign exchange. large banks will also remain because there will be an ongoing need to serve global clients. for their part, smaller and less - complex banks will probably increase their focus on traditional banking. we can β t be definitive about these predictions, for we simply do not know how competitive forces will operate in this new environment. but it would be surprising if the net effect were not to reduce the availability of credit. if financial markets had imperfections before, some of those imperfections are likely to be even more evident under the new regulatory environment. this is straight out of your first economics textbook. it goes without saying that reduced availability of credit would be a headwind to economic growth. and, if there are funding gaps in our system at the best of times, and they turn out to be a little bigger under our new regulatory umbrella, those funding gaps will probably be found in all the usual places : lending for young businesses, small - and medium - sized companies, trade finance and infrastructure, to name a few. these areas of retreat by banks could look like good opportunities for other financial intermediaries. we can imagine several different channels where the forces of competition might emerge, all of which could occur simultaneously. bis central bankers β speeches first, there is market - based finance. as banks rein in their risk - taking, we can expect that market - based finance will play a larger role than it currently does. we can see this happening already. for starters, in some markets companies increasingly fund themselves by issuing bonds on the market. in the u. s., while bank dealers have significantly reduced their inventories of corporate bonds, non - bank lenders have increased their holdings of corporate bonds. whether they are structured as asset managers, insurers, non - bank financial firms or retail investors, these groups are opportunistically filling the void that traditional bankers have created. securitization is another market - based channel that could really expand in this new world. although the very word securitization has been tainted by the crisis, i can imagine that a new class | 0 |
ishrat husain : the asian clearing union welcome address by mr ishrat husain, governor of the state bank of pakistan, at the inaugural ceremony of the 34th annual meeting of the board of directors of the asian clearing union ( acu ), lahore, 16 may 2005. * * * it is a great honour for the state bank of pakistan to host the 34th annual meeting of the board of directors of the asian clearing union. i welcome you all to pakistan and wish you a pleasant and productive stay in our country. it is also indeed a pleasure for me to welcome the guests from afghanistan and the maldives monetary authority, who are attending this conference as observers. we all are familiar with the purpose and background of the asian clearing union. we have also reviewed each year the progress that was made and problems that our members had faced in international trade and payments and tried to modify the coverage, mechanism and procedure of the asian clearing union. what i wish to emphasize today is that major changes have taken place in the international scene during the last one year which necessitates our taking a closer look at the record and relevance of the asian clearing union in relation to fast changing global environment. in the rapidly changing environment, in which regional grouping is becoming a vehicle for trade promotion and economic co - operation, the asian clearing union should revisit its charter, examine its relevance and find ways to expand the intra - regional trade and economic co - operation in a multilateral context. we have to be outward looking and our objective should be to bring about coherence and consistency in our macroeconomic policies that attract direct foreign investment. the annual report of acu for the current year ( 2004 ) indicates that even though intra - regional trade is growing, the operations through the asian clearing union are limited. our efforts to expand its membership have not as yet succeeded. however, i may add here that the acu has not experienced a default. although there have been persistent debtors in the acu system, their negative net balances have not been large. there has not been a " structural creditor problem " in the acu. i would like the governors to give some thought as to how we can make asian clearing union an important vehicle for the expansion of intra - regional trade and further economic coordination, and how our banking and financial markets could be made complementary for the maximization of economic welfare of the member states. asian countries have demonstrated during the last several decades that it is possible | to make great strides in uplifting the living standard of the majority of the people within a short span of time. i am extremely encouraged by the impressive progress that is being made by member countries of the asian clearing union. each and every country is working hard to bring about reduction in the incidence of poverty and improve the human development indicators. there is no doubt that the challenges ahead of us are quite formidable but giving the political will, national determinations and collective action i am sure we will be able to march ahead on the road to progress and prosperity. the last five years have been extremely critical for our own country, pakistan. the strategy of economic revival that was initiated in december, 1999 has been successfully implemented and its main pillars were achieving macro - economic stability, improve the governance, introduce structural reforms and resume the path to accelerated growth. the results of the implementation of this strategy are quite well known and i will not get into the details as pakistan delegation will dwell on them in their presentation. let me briefly add here that the banking sector reforms undertaken by the state bank during the last five years have helped us provide stability and strength to pakistan β s financial sector. independence of monetary policy has been a major factor in inculcating financial discipline in the public finances, while autonomy of the state bank in regulating the financial system has been the main strength of reviving the financial institutions of the country. by contributing to financial discipline and financial stability, we have managed to turn a poorly managed financial system into a strong and sound one. the state bank would be glad to share the details of the legal, structural, prudential and administrative changes that pakistan has undertaken in the last five years to reach this stage of stability in the banking and the financial sector of the country. i would like to briefly mention here that country β s economy has been continuously growing for the past two years. the gdp for the current fiscal year is likely to be over 7Β½ per cent which will be the highest growth witnessed in the country during the past 13 years. before concluding, i would once again like to welcome the participants and wish them a pleasant stay in pakistan. | 1 |
qualitative measures, but broadly speaking they can be divided into the ladder of intervention, and requirements for good risk management, including the prudent person principle. these are both intimately connected to how we define capital adequacy. the ladder of intervention is critical to preventing gambling for resurrection : it formalizes and defines the power to intervene before the interests of shareholders and policyholders diverge, in the same way that debt covenants protect creditors by giving them the ability to intervene in clearly defined circumstances under which their interests will diverge from those of the providers of equity capital. the role of regulatory capital in relation to the ladder is to buy time for that intervention. it needs to be enough to withstand extreme but plausible events for long enough to allow an assessment of whether the firm can be rescued as a going concern β or whether changes in the external world have holed the business model below the water line : no amount of capital can keep a broken business model afloat for ever. rather, capital is like the bulkheads in the sinking ship : they don β t necessarily need to hold back the water forever, but must slow down its ingress for long enough to get the passengers and crew safely into the lifeboats. how long the defences are needed depends on the design of the ship β where are the lifeboats, are they clearly signposted, how many stairwells are there from the lower decks, and so on. so ease of exit is a crucial factor in capital adequacy too : how confident are we that policyholders can be protected in a worst case scenario, i. e. that if the firm is closed to new business the run off will be a solvent one. do existing concentrations get worse or new ones arise during run off? do new liabilities or exposures appear e. g. through higher collateral requirements or even forced close out by derivatives counterparties? the less confident we are that the firm can exit in an orderly way, the more remote we need to make the prospect of failure and the larger the cushion of financial resources we will need to see at the point of intervention. uncertainty and capital adequacy ease of exit is a consequence of the good risk management that pillar 2 requires of firms : risk management that is forward looking and prepares for unpalatable scenarios by structuring the balance sheet and business model appropriately. good risk management is also about organising the firm in a way that allows the adequacy of the goldilocks | zeti akhtar aziz : central banking in the 21st century β implications of economic and financial globalisation opening remarks by dr zeti akhtar aziz, governor of the central bank of malaysia, at central bank of malaysia β s high level conference 2009 β central banking in the 21st century : implications of economic and financial globalisation β, kuala lumpur, 10 february 2009. * * * honourable governors, distinguished guests, ladies and gentlemen, it is my pleasure to welcome you to the bank negara malaysia conference on " central banking in the 21st century : implications of economic and financial globalisation " that is being held in conjunction with the 50th anniversary of bank negara malaysia. indeed, the conference takes place at a time when we need to reflect on the many issues that are emerging from the current global financial and economic crisis and the new challenges and lessons it brings to central banks. we are most honoured by the presence of central banks from more than 50 countries who have come to be with us on the occasion of our 50th anniversary. this gathering has also brought together distinguished speakers not only from the central banking community but also outstanding scholars and senior practitioners from the financial services industry. it is hoped that this conference will contribute to a greater understanding to the issues confronting central banks in the 21st century. indeed, we are now in a world that is fundamentally different, a world that calls for a greater appreciation of the changes that need to be made to the systems and structures, to the institutional arrangements and mechanisms, and to the manner in which we operate in this new environment. the international dimension of these changes calls for an outcome in which the international financial system is less prone to disruptions and failures and in which economic progress is a shared prosperity among nations. globalisation has had a deep impact on the way modern economies function. the benefits of globalisation have accrued to diverse communities and regions but it has also brought with it significant risks. while the asian crisis showed the effects of globalisation, it also showed that asia was able to rapidly rebound and continue to benefit from increased international trade and financial flows. the rapid restoration of stability and resumption of growth had confined the crisis to asia. as the current financial crisis is translated into an economic crisis, its repercussions are now being felt on a global scale. while the turmoil had its origins in the developed economies, its continued escalation has extended the effects of the crisis to the rest of the world. economic and financial globalisation thus not only | 0 |
and the real economy has improved substantially, partly due to the effects of large - scale macroeconomic policies. despite these improvements in the real economy, prices and wages have remained sluggish. this phenomenon has recently been labeled the " missing inflation " or " missing wage inflation " puzzle. looking back on the discussions at our conference last year, adaptive elements in inflation expectations formation were highlighted as a possible factor behind the missing inflation. it is urgent that we explore the mechanism behind the changes in price and wage dynamics especially in advanced economies. turning to the financial system, after ten years since the outbreak of the global financial crisis, the robustness of the global financial system has been enhanced through the efforts of financial authorities, which include the finalization of basel iii, and those of financial institutions to strengthen their risk management practice. however, it is necessary to pay attention to developments in the so - called shadow banking sector, which is not sufficiently covered by conventional supervision and regulations. moreover, in recent years, the low profitability of financial institutions, especially in advanced economies, has come to pose a new challenge for global financial stability. as such, central banks are faced with new challenges in terms of financial stability as well. from a longer perspective, central banks are faced with an important challenge posed by innovations in information and communication technology. we see remarkable progress in a wide range of technologies, such as artificial intelligence, big data analysis, and distributed ledger technology. we also see the rapid development of smartphones, social network services, and e - commerce. the application of these technologies in the field of financial business, typically dubbed " fintech, " has already brought about drastic changes in the way payments are made in many countries. these developments are expected to continue in the future, promoting further changes in business models at financial institutions. of course, over the past several decades, central banks - - in their role as the " bank of banks " - - have made various efforts to improve the safety and efficiency of payment and settlement systems, for example by introducing real - time gross settlement, simultaneous settlement of funds and securities, and simultaneous foreign exchange settlement. furthermore, with regard to currency issuance, a fundamental role of central banks, some central banks are now exploring the possibility of issuing central bank digital currency. thus, in the long - run, an era of major transformation may lie ahead even in the core operations of central banking, such as the " issuer of banknotes " and the " bank of banks. | may 30, 2018 bank of japan opening remarks at the 2018 boj - imes conference hosted by the institute for monetary and economic studies, bank of japan haruhiko kuroda governor of the bank of japan i. introduction good morning. i am honored to welcome distinguished guests from academia and central banks to the 24th international conference hosted by the institute for monetary and economic studies. on behalf of conference organizers, i thank all of you here who have kindly taken time out of your busy schedules to participate in this one - and - a - half - day conference in tokyo. the topic of this year's conference is " central banking in a changing world. " over the past few years, our conferences focused on monetary policy issues, yielding important insights and suggestions for the conduct of monetary policy after the global financial crisis. this year's conference expands its scope from monetary policy to " central banking, " that is to say, central bank policies and operations on the whole. behind this is the fact that global structural changes in recent years influence not only central bank policies such as monetary and prudential policies, but also central bank operations such as the issuance of currency and the operation of payment and settlement systems, which provide basis for the conduct of central bank policies. as these changes span a wide range of areas, i think it is helpful to briefly outline recent changes in the global economic and financial environment, especially which are deemed important for central banks. ii. a changing world and central banks in recent years, the global economic and financial environment surrounding central banks has changed significantly. global trade activity has gathered strength again following years of lackluster growth in the wake of the global financial crisis. against the backdrop of the favorable global economic environment, investment activity by financial institutions and other investors around the world has become increasingly active. along with these developments, economic and financial linkages between countries have been strengthening. this increased interconnectedness is, of course, desirable for the global economy, as it reflects ongoing globalization. but at the same time, partly due to the recent dynamics of political economy and geopolitics, the size of global shocks has been increasing, and the spread of global economic shocks has been presenting a great challenge for central banks. regarding the conduct of monetary policy, changes in price and wage dynamics have attracted keen attention in both academia and central banks, especially those in advanced economies. as the adverse effects from the global financial crisis subside, the unemployment rate has dropped in many countries | 1 |
push prices upward. the more rapid gdp growth seen in q2 2019 ( to 4. 6 % yoy ) was mainly driven 1 / 2 bis central bankers'speeches by a pick - up in domestic consumption amid a faster improvement in consumer sentiment. the preliminary estimates of july economic activity showed that sustained domestic demand had persisted. internal political risks to reducing inflation to its target decreased after the new convocation parliament started to operate and a new government was formed. this makes it possible to intensify negotiations on a new cooperation program with the international monetary fund. at the same time, there are still threats to financial stability arising from current court proceedings related to the decisions taken by the state to improve the health of the banking sector. external risks are also important. these include : a suspension of russian gas transit through ukraine starting in 2020 increased trade tensions and more turbulent global financial markets an escalation of the military conflict and new trade restrictions introduced by russia. what is the nbu β s current view of the future monetary policy stance? the nbu will continue the cycle of monetary policy easing, provided inflation is steadily declining to its 5 % target. how quickly the key policy rate is reduced to its neutral level of 8 % will depend on both internal and external risks. if structural reforms speed up, the nbu could cut the key policy rate more quickly. another important condition is inflation decreasing steadily to its target. conversely, if inflation risks materialize, in particular through persistent demand pressure, the easing of monetary policy will be more gradual. a summary of the discussion by monetary policy committee members that preceded this decision will be published on 16 september 2019. the next meeting of the nbu board on monetary policy issues will be held on 24 october 2019. thank you for listening! 2 / 2 bis central bankers'speeches | andriy pyshnyy : national bank of ukraine press briefing - monetary policy decisions speech by mr andriy pyshnyy, governor of the national bank of ukraine, at a press briefing on monetary policy decisions, kyiv, 15 june 2023. * * * dear colleagues, the board of the national bank of ukraine has decided to keep its key policy rate at 25 % per annum. this will help maintain the attractiveness of hryvnia - denominated instruments, preserve the sustainability of the fx market, and reduce inflation. combined, these results will pave the way for the further easing of fx restrictions. the pace of consumer price growth continued to decline faster than expected. inflation eased to 15. 3 % yoy in may. apart from the base effect, the pullback in inflation was driven by an ample supply of food and fuel, a stronger hryvnia cash exchange rate, and improved exchange - rate and inflation expectations. among other things, the nbu's efforts to keep the key policy rate high and make hryvnia instruments more attractive made it possible to stabilize the fx market and improve expectations. although headline inflation has decelerated, underlying inflationary pressures remain rather high. thanks to the removal of supply chain disruptions, the reduction of prices in the global commodity markets, and the nbu's consistent monetary policy, the central bank expects that inflation in ukraine will continue to decelerate. however, this process will not be as rapid as in previous months. first, the base effect, which contributed to a significant drop in inflation in h1 2023, will gradually fade. second, price dynamics will be affected by increases in certain utility tariffs and the announced return of pre - war taxes on fuels. in addition, the destruction of the kakhovka hpp dam will have an adverse impact on prices. 1 / 3 bis - central bankers'speeches by the nbu's early estimates, this will contribute about 0. 3 pp to this year's inflation rate because of how it has complicated the operation of multiple enterprises, and due to the partial loss of crops, primarily vegetables, that it has led to. the war is taking an increasingly large toll, but steady inflows of international aid and the revival of the domestic debt market have made it possible to cover the significant budget deficit without resorting to monetary financing. since the beginning of the year, international partners have granted ukraine about usd 20 billion | 0.5 |
willem f duisenberg : the path towards a single currency reply by dr willem f duisenberg, president of the european central bank, on the occasion of receiving the grand cross 1st class of the order of merit of the federal republic of germany, frankfurt am main, 24 july 2002 * * * first, i should like to sincerely thank the president of the federal republic of germany, represented here today by the finance minister, mr. eichel, for awarding me the grand cross 1st class of the order of merit of the federal republic of germany. i feel deeply honoured. i would also like to thank the finance minister for his kind words. and i am grateful to all of you here for sharing this special moment with me. to be mentioned in the same distinguished company as karl otto pohl, helmut schlesinger and hans tietmeyer is a great honour for a former president of the dutch central bank. in the early 1970s, de nederlandsche bank and, in particular, my predecessor there, jelle zijlstra, realised that the netherlands, as a relatively small and open economy, had no other option than to orient its monetary policy towards its main trading partner and neighbour, germany. moreover, by doing so, we thought we could β import β the credibility of german monetary policy and transfer the internal stability of the deutsche mark to the dutch guilder. this policy was contentious and de nederlandsche bank rather cautiously adopted an exchange rate target policy. indeed, in my early years as president of the dutch central bank, i was confronted - in 1983 - with the decision of the dutch government not to revalue the dutch guilder in the european exchange rate mechanism to the same extent as the german currency ; a decision taken against the explicit advice of the dutch central bank. this decision resulted in a divergence between dutch and german interest rates, which, unfortunately, came to haunt the netherlands for almost eight years. the most important lesson of this event - for me and also for the government - was that to gain credibility in financial markets was very difficult, but to lose credibility was very easy. after 1983, the exchange rate of the guilder was more or less pegged to the exchange rate of the deutsche mark. and as was expected in the 1970s, price developments in the netherlands very much mirrored those in germany. the success of dutch monetary policy became very obvious during the upheaval in the european monetary system in july 1993, when it was decided to widen | decoration. | 1 |
to south african investors and companies. the hesitant recovery in the global economy, and particularly in europe, is negatively affecting south africa β s growth performance. the south african economy grew by just 1. 9 per cent in 2013, far below potential of around 3. 5 per cent. although the reserve bank projects an improved growth rate of 2. 8 percent growth for this year, it is still too low to make a meaningful dent in our unemployment rate. demand for our main exports is growing slowly and trading conditions for most firms remain difficult. in addition to global factors, south africa β s economic growth is also being adversely affected by a number of domestic factors including electricity supply constraints, strike action in key export sectors and infrastructure bottlenecks. in addition, the economy is constrained by persistent shortages of skilled labour that lowers our growth potential. for monetary policy, the present environment presents a dilemma of slowing growth on the one hand, but rising inflation on the other. given the fragile growth environment, the reserve bank has been more tolerant of inflation at the upper end of the target range for some time. however, the recent marked deterioration of our inflation forecast led the monetary policy committee to raise interest rates for the first time in six years. notwithstanding this increase, monetary policy remains accommodative, and the mpc will continue to focus on its core mandate of price stability, but with due regard to the impact of its actions on economic activity. economic growth needs to be driven by real investment, and currently growth in private sector investment has been relatively subdued. government β s massive infrastructure programme is essential to eliminate bottlenecks and shortages, thereby contributing to raising long term growth and productivity in the economy. the implementation of the national development plan will also support growth and investment as it is focused on raising our capabilities as a country and investing in our human resources. over the next two decades, south africa needs to raise its productivity levels, boost exports and ensure that not only do we significantly raise the rate of economic growth, but that it is also more inclusive. there are three core challenges that today β s world faces : food, water and energy. to briefly expand on just one aspect : by 2050, the world will need to produce about 80 percent more food than today to satisfy growing populations and rising food consumption. africa contains the largest proportion of underutilised arable land on the planet. this provides a huge opportunity for investment, not just in agriculture but in agroprocessing, | unconventional as it seems β, peter sinclair and colin ellis, oxford review of economic policy, vo. 28 no. 4 specifically, in the bank of england charter 1694, the bank of england act 1998 and the banking act 2009. all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice stability, defined as the resilience of the uk financial system as a whole so that it can serve uk households and businesses in bad times as well as good. what makes the bank of england the right institution to deliver those objectives? the answer is that our balance sheet is what makes us special and gives us the economic policy tools we need to be able to do that. our liabilities serve unique functions at the heart of the financial system : central bank money, whether in the form of bank notes or central bank β reserves β β the deposits held with us by financial institutions β provide the ultimate means of settlement for all sterling payments in the economy. and we are the sole institution with the power to create sterling central bank money. that power provides us with a wide range of tools that we can deploy in pursuit of our monetary and financial stability objectives ( as summarised in figure 1 ). the importance of reserves to the financial system means that bank rate, the interest rate that we pay on firms β reserve accounts, is the single most important interest rate in the uk. changes in bank rate influence interest rates across the economy including those charged by commercial banks and those in financial markets. that in turn affects aggregate economic demand and ultimately inflation. so having reserves on our balance sheet gives us a powerful tool that we can use in support of monetary stability. indeed in the years running up to the great financial crisis in 2007 - 08 this was the main monetary policy tool used by central banks β in peter β s terminology, the β old normal β for policy. a second way we can use the balance sheet in support of monetary stability is by using reserves to buy or sell other financial assets in the open market ; that lets us directly influence market interest rates. if we buy government bonds, for instance, the price of those bonds goes up which makes their yield β the effective interest rate earned by holders of bonds β come down. like reserves, government bonds play an important role as safe assets in the financial system, and so changes in their yields also affect broader financial conditions, aggregate demand and inflation. it is this process of using reserves | 0 |
anselmo l s teng : overview of recent financial and economic developments in macao speech by mr anselmo l s teng, chairman of the monetary authority of macao, at the spring cocktail reception, macao, 15 march 2007. * * * the honorable secretary for economy and finance, mr. francis tam ; the honorable director of the economic affairs department of the liaison office of the central people β s government in the msar, mr. zhou zhikui ; the honorable chairman of the audit committee of amcm, mr. leonel alberto alves ; the honorable chairman of the macau association of banks, mr. ye yixin ; the honorable president of the macau insurers β association, mr. si chi hok ; the honorable president of the macau insurance agents and brokers association, mr. tou kam seng ; the honorable president of the federation of macau professional insurance intermediaries, mr. frank ip ; the honorable president of the macau financial markets association, mr. chan kam chun ; the honorable president of the association of macau financial employees, mr. ng chi peng ; the honorable president of the macau money changers association, ho hao chio ; distinguished guests, friends of media, dear colleagues ; spring is around although chill is occasionally being felt. on the occasion of this reception held in the melody of spring, we farewell the past and embrace the future. here, i take the liberty of representing the board of the monetary authority of macao ( amcm ) to extend our warmest welcome to mr. francis tam, the secretary for economy and finance ; mr. zhou zhikui, the director of the economic affairs department of the liaison office of the central people β s government in msar ; our distinguished guests and friends of media. moreover, i would like to express my sincere gratitude to mr. francis tam for his unremitting support and guidance ; to the government departments, all sectors of the society and the business communities for their support and co - operation. under the auspices of the central government and the visionary leadership of the msar government, macao manages to sustain its past growth momentum with favourable development noted in consumption, investment and trade. basked in a buoyant market, unemployment rate continues to spiral downwards, gdp regains its double digit growth while surplus is noted in international balance of payment and fiscal account. the credit rating of macao has also been raised from β stable β to β positive | anselmo l s teng : update of the economic development in macao opening remarks by mr anselmo l s teng, chairman of the monetary authority of macao, at the bis β advanced reserve management workshop, macao, 22 - 25 may 2007. * * * honoured guests, dear delegates, ladies and gentlemen, good morning, first of all, i would like to thank the bis for choosing the macao special administrative region ( msar ) as the venue for this workshop, and for inviting me to deliver this opening remark. i would also like to wish the participants a great stay in this enclave which is a combination of nostalgia and excitement, as well as a good blend of eastern and western culture. let me also take this opportunity to provide you an update of the economic development of macao. as you are aware, macao is a highly open economy. in 2006, macao registered another year of two - digit economic growth, at 16. 6 %. its gdp per capita reached usd28. 4 thousand, representing one of the highest among asian economies. tourism - dominated service exports, investment and private consumption all witnessed strong growth. as the leading industry, tourism showed splendid performance, with visitor arrivals reaching an all - time high of 22 million last year. the economy continued to fare well in the first few months of 2007 as the growth of the tourism sector hardly showed any moderating signs. visitor arrivals increased by 21. 4 % in the first quarter. after years of strong growth, however, the resource constraint and inflationary pressure have become apparent. while unemployment rate further shrank to 3. 2 % in the first quarter of this year from 3. 5 % in the last quarter of 2006, inflation was 4. 57 % in the first quarter after easing from 5. 15 % last year. in the past few years, the economic prosperity has been largely built on the thriving tourism services sector. specialising in a few economic activities, however, is widely believed to be risk prone and unfavorable to macroeconomic stability. diversifying the structure of our economy is therefore closely related to the sustainability of macao β s development, employment environment and the stability of the community. for a very small economy like macao that easily faces tight resource constraints and possesses a competitive tourism services sector, any diversification initiative naturally opts for a gradual approach with a long - term perspective in order not to incur a high cost of disrupting the development of the leading | 0.5 |
among the steps that have been taken by the reserve bank over the years towards this end. financial innovation is an essential feature in the history of development of financial markets. innovations that are motivated by the need to match the needs of the investor and the issuer or made possible by advancement in technology or knowledge are essential for evolution of financial markets. incentives play a significant role in shaping the development, stability and functioning of the financial markets. reserve bank has been trying to align incentives by regulation and supervision though regulation itself may have created unintended incentives / disincentives as in the case of requirement regarding held to maturity ( htm ) dispensation. in the process of development of new instruments, reserve bank β s endeavour has been to ensure calibrated and orderly development of the markets with emphasis on prudent risk management and promotion of financial stability. within the limited scope of its engagement with the corporate debt segment as the securities and exchange board of india ( sebi ) being the main regulator of this segment, reserve bank has taken steps, such as, introducing credit default swaps ( cds ) to manage credit risk, repo in corporate bonds to enable funding of positions, limited market making role for the primary dealers, providing a pooling account facilities to the clearing corporations of the exchanges to settle the trades in the books of the reserve bank of india, etc. there has been a demand for increased direct or indirect support from the banking sector for expanding the corporate debt market. reserve bank views such proposals with caution because of the prudential concern for the health of the banking sector as well as the fact that the intention is to generate incremental resources and not redistribute the existing ones. as we know banks are already substantially exposed to the infrastructure sector. hence, demand for credit bis central bankers β speeches enhancement by banks has to be seen in the context of the fact that it would only increase their exposure. further, credit enhancement by banks will not lead to development of a real β corporate β bond market. credit enhancements by way of partial guarantees by multilateral institutions, such as, the asian development bank is likely to attract investments from insurance and pension funds in the infrastructure sector and lower the cost of funds for companies. such credit enhancement measures outside the banking system could be the way out. foreign exchange market current account deficit & capital flows in the context of foreign exchange market, one of the most talked about issue is the rising current account deficit ( cad ). | bank of france reports industrial output continued to increase in all sectors in february 1997 bank of france, monthly business survey, 17 / 3 / 97. in february, according to the business leaders surveyed by the banque de france, industrial output continued to increase in all sectors. the capacity utilization rate rose slightly. overall demand grew at a moderate pace. there was strong demand from foreign markets, particularly from northern europe, including germany and the united kingdom, and from the united states and asia. the rise in the dollar and in sterling reinforced the competitiveness of french products. growth in demand on the domestic market was much more moderate. order books are deemed to be satisfactory in all sectors, with the exception of the food - processing industry, where they declined slightly and appear to be insufficient. inventories of finished products are still somewhat above normal levels. in particular, they are considered to be above desired levels in the food - processing, intermediate goods and automobile sectors. in the coming months activity should continue to increase in all sectors, with the exception of the automobile sector. commodity prices were stable overall. however, price rises were recorded in certain parts of the intermediate goods industry, such as the rubber and plastics, metal - working, and wood - processing sectors, and in the food processing industry owing to the appreciation of the dollar. intense competition prevented these increases from being passed on to sales prices, which scarcely changed, except in the automobile sector, where they declined. the business leaders surveyed continued to be cautious in their investment plans. there were few plans for large - scale investment, and they mainly concerned the renewal of modernization of existing equipment. retail sales contracted in february, after posting a substantial rise in january. employment levels remained stable in industry, except in the automobile sector, where they declined. the retail and market services sectors showed little change, but employment fell in the building industry. increasing use was made of flexi - time, annualized working time and part - time working to respond to variations in demand. | 0 |
, it comes as a reflection of the seasonality which is typical of balance of payments figures. second, we look to normalisation in the accumulation of foreign assets, which has quickened considerably since the middle of the past year in the context of strengthened external, including geopolitical risks. our medium - term economic growth outlook is essentially the same. 1 - 1. 5 % gdp growth in the current year is expected to accelerate gradually to 2 - 3 % in 2021. having said that, our forecast will largely depend on the timeframes and successful implementation of the national projects along with other fiscal policy decisions. discussions are currently underway about possible options of spending the liquid part of the national wealth fund in excess of the 7 % of gdp cap. as we look into such options, it is imperative that we remember the key objective of the fiscal rule, which is to reduce the reliance of the economy, of the real exchange rate and of public finances on a volatile energy price environment so that they all become stabilised in a state equivalent to the oil price cut - off. we have largely delivered on this objective, with the impact of oil price fluctuations on the russian economy having considerably weakened. current suggestions are essentially focused on changes to the rule. they could result in either direct or indirect change in the cut - off price, entailing a strengthening of the real ruble exchange rate and undermining competitiveness of our products. alternatively, the stabilising mechanism of the fiscal rule could be undermined, yet again adding to the vulnerability of the russian economy to fluctuations in external environment. more so, the 7 % of gdp cap was set a long time ago ; yet another review is needed to establish whether this volume of liquid assets is adequate to resist to sharp and lengthy change in external conditions. as we review these and similar suggestions, we urge to fully consider the benefit and loss balance driven by change in macroeconomic conditions which may be tangible enough. approaches to fiscal and structural policies will have a significant impact on both our forecast and estimates of the balance of risks for inflation. this will in turn determine the monetary policy path. 3 / 3 bis central bankers'speeches | 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 | 1 |
programs now help educate a broad spectrum of the population including teachers, migrant workers, and farmers. we have made substantial progress, but there is still work to do. as highlighted in the bsp activities during the visit of the united nations secretary general's special advocate for inclusive finance for development, queen maxima of the netherlands, we are focusing on making digital payments more affordable. so affordable in fact, that people will make it a habit to use digital payments. as you can see, we are trying to go digital when it comes to financial inclusion. open finance we are advocating open finance, particularly in the area of financial health. open finance facilitates consent - driven sharing of customer data among financial institutions and third - party providers. it also gives customers more access and more choices when it comes to financial services. we believe that open finance holds significant potential to extend the reach of financial inclusion. it will do by fostering innovations in financial services. at the center of open finance is the customer who must be served and protected at all times. this is why we, at the bsp, are implementing our financial consumer protection framework. this would ensure that the rights and needs of consumers always comes first and that their trust and confidence in the financial system is preserved. so, thank you, our partners, for making this event possible and for advancing financial inclusion in markets like ours. i hope you find your time in manila rewarding. magandang umaga po at mabuhay tayong lahat. 2 / 2 bis - central bankers'speeches | option - implied volatility gbp / usd 3m option volatility gbp / usd 2y option volatility 3m s & p variance swap rate 2y s & p variance swap rate 3m10y normalised imlied vol on usd ir ( lhs ) 2y10y normalised imlied vol on usd ir ( lhs ) basis points per cent jan 10 jul 10 jan 11 jul 11 jan 12 jul 12 jan 13 jul 13 jan 14 jul 14 jan 15 sources : barclays live, bloomberg. implied volatilities are β normalised β by the level of interest rates, so the data show the volatility of absolute ( rather than percentage ) changes in swap rates. bis central bankers β speeches chart 3 impact of asset price news on volatility in uk equity and debt markets conditional daily volatility ( % ) pre - crisis credit ( jan 2001 - jun 2007 ) post - crisis credit ( april 2009 - jan 2015 ) 1. 8 pre - crisis equity ( jan 2001 - jun 2007 ) 1. 6 post - crisis equity ( april 2009 - jan 2015 ) 1. 4 1. 2 1. 0 0. 8 0. 6 0. 4 0. 2 - 3 % - 2 % - 1 % 0 % 1 % unexpected daily change in price ( per cent ) 2 % 0. 0 sources : bank of american merrill lynch, thomson reuters datastream and bank calculations. bis central bankers β speeches chart 4 negative rates in european government bond markets positive negative switzerland - 0. 89 - 0. 99 - 0. 81 maturity ( years ) - 0. 61 - 0. 47 - 0. 38 germany - 0. 27 - 0. 25 - 0. 24 - 0. 21 - 0. 16 - 0. 09 - 0. 02 0. 05 0. 13 0. 20 finland - 0. 20 - 0. 18 - 0. 15 - 0. 11 - 0. 08 - 0. 06 - 0. 03 0. 09 0. 14 0. 22 - 0. 18 - 0. 15 - 0. 13 - 0. 07 - 0. 05 0. 00 0. 07 0. 17 0. 26 - 0. 31 - 0. 04 netherlands - 0. 32 - 0. 29 - 0. 24 - 0. 11 denmark - 0. 80 - 0. 62 austria - 0. 16 - 0. 17 - 0. 17 - 0. 12 - 0. 06 - | 0 |
strengthening the cra : a conversation with representatives of native communities remarks by lael brainard vice chair board of governors of the federal reserve system at national native coalition virtual series on the community reinvestment act notice of proposed rulemaking ( via webcast ) july 19, 2022 good afternoon. 1 i am happy to join you today for the national native coalition listening session to discuss the community reinvestment act ( cra ). i want to thank the national congress of american indians and its many tribal partners, as well as casey lozar and his team at the center for indian country development at the federal reserve bank of minneapolis. i am pleased to be joined by acting comptroller of the currency michael hsu of the office of the comptroller of the currency ( occ ) and acting chairman martin gruenberg of the federal deposit insurance corporation ( fdic ). in may, the federal reserve, the occ, and the fdic issued a unified proposal to modernize the cra regulations. this is a once - in - a - generation opportunity to strengthen the cra to bring greater credit, investment, and banking services to the communities that have faced the greatest challenges. for the first time, the cra will provide powerful incentives for banks to make investments in communities that do not have access to branches, such as in native lands. as representatives of native communities, you know all too well the challenges faced by native communities in getting access to financial services β challenges that were made worse by the pandemic. i have visited with native communities in south dakota and oklahoma and seen firsthand the resiliency and innovation of these communities in the face of numerous challenges. 2 even with the implementation of the cra and other complementary laws, tribal economic inclusion is hindered by a lack of banking and credit access. as of the most recent 2019 data, over 16 percent of native i am grateful to amanda roberts and matthew lambert of the federal reserve board for their assistance in preparing this text. the views expressed here are my own and do not necessarily reflect those of the federal reserve board or the federal open market committee. see lael brainard, β financial inclusion and economic challenges in the shadow of the pandemic : a conversation with tribal leaders β ( speech at fed listens : roundtable with oklahoma tribal leaders, oklahoma city, oklahoma, october 13, 2021 ), https : / / www. federalreserve. gov / newsevents / speech / brain | depicted in the figure show no obvious signs of a current problem with market liquidity. in 2006, investors traded an average of $ 12 billion a day. during the height of the financial crisis, trading volume decreased to $ 8 billion a day, but, by 2009, volumes appeared to have fully recovered. today trading volumes are at about $ 19 billion a day. on balance, the evidence presented in these two figures seems to suggest that market liquidity has not deteriorated in recent years - - subject, of course, to the caveat i just discussed about the possibility that our measures of bid - ask spreads could be distorted by the increasing role of investors as suppliers rather than demanders of liquidity. 11 as an aside, the market liquidity figures shown are only for the corporate bond market, but we see similar patterns in the equity and treasury markets. 12 that is, we do not find convincing evidence that liquidity has markedly declined in those markets. policy issues related to market liquidity while the evidence for changes in market liquidity does not point clearly to a reduction, i have highlighted some recent research that indicates the possibility that market liquidity has fallen. to date, observed changes in liquidity do not suggest that trebbi and xiao ( 2015 ) analyze multiple corporate bond liquidity measures and conclude that there is no evidence of deterioration in liquidity due to regulation. secured funding spreads have increased, suggesting higher intermediation costs in the repo ( repurchase agreement ) market. - 7shifts in liquidity are having a notable effect on the cost of trading. nonetheless, the potential for liquidity to evaporate in times of stress deserves careful scrutiny - - along with broader risks to financial stability associated with changes in markets. one area where policy concerns have arisen is related to the potential for fire sales in bond markets, which could compound the risks associated with leverage in the financial sector. bond markets have grown considerably, and market - based finance has intensified over the past years, making market liquidity even more important. 13 in addition, mutual funds that offer daily redemption rights hold a greater share of bonds than investors who buy and hold. as shown in figure 5, the share of investment - grade and high - yield corporate bonds held at mutual funds ( the solid blue area ) has hovered around 25 to 30 percent in recent years, up from about 15 percent before the crisis. reduced market liquidity might exacerbate fire sale risks from leverage at financial institutions or | 0.5 |
rbi in the developments in the indian economy? my submission is that the rbi has, as part of public policy, made some contributions to overall price stability and financial stability while enabling respectable growth in the recent period. further, it is generally recognised that the financial sector and the external sector in india display considerable strength and resilience, though there are some areas that need attention. in india, most of the literature on public administration concentrates on organisation and functioning of central and state governments, statutory corporations, public enterprises, and constitutional bodies. perhaps there is merit in devoting the rest of the address to filling up this gap and discussing organisation and functioning of the rbi, in some detail. on the rbi β s mandate i requested my friend shri kale β our friendship is a little over thirty years old β to advise me on the focus of today β s address. he said that i could shed some light on what rbi does. in particular, he suggested that i may narrate the process of decision making in the rbi and the extent to which the ministry of finance comes into the picture. i believe that shri kale was being not merely inquisitive but also mischievous by posing some complex, if not controversial, issues in a somewhat innocuous fashion. yet, i will take the bait. the rbi was established under the reserve bank of india act, 1934 on april 1, 1935 as a private shareholders'bank, but is fully owned by the government of india, since its nationalisation in 1949. the preamble to the rbi act describes the basic objective of the constitution of the rbi as β to regulate the issue of bank notes and keeping of reserves with a view to securing monetary stability in india and generally, to operate the currency and credit system of the country to its advantage β. thus, there is no explicit mandate for price - stability or formal inflation targeting. over the years, the twin - objectives of monetary policy in india have evolved as : maintaining price stability and ensuring adequate flow of credit to facilitate the growth process. the relative emphasis between the twin - objectives is modulated as per the prevailing circumstances and is articulated in the policy statements. consideration of macroeconomic and financial stability is also subsumed in the articulation of policy. the rbi is also entrusted with the management of foreign exchange reserves, which are reflected in its balance sheet. while the rbi is essentially a monetary authority, its founding statute mandates it to be the manager of public debt of the government of | india and the banker to the government. while the rbi is the monetary authority of the country, as per its founding statute, the rbi has also been entrusted with the work relating to banking regulation and supervision by a separate enactment in 1949, viz. the banking regulation act. the rbi exercised a tight regime of exchange control particularly under the foreign exchange regulation act ( fera ), 1973 ; but, a qualitative change was brought about in the legal framework to enable liberalisation by the enactment of the foreign exchange management act ( fema ) in june 2000 which replaced the fera. with this, the objectives of foreign exchange regulation have been redefined as the facilitating of external trade and payments as well as the orderly development and functioning of the foreign exchange market in india. it is significant to note that the rbi act precludes the rbi from performing certain business such as trading ; taking any direct interest in any commercial, industrial or other undertaking ; purchasing of shares or giving of loans against shares of any company ; advancing of money on the security of immovable property, and the drawing or accepting of bills payable otherwise than on demand. these prohibitions are meant to protect the integrity of the institution. governance arrangements the " general superintendence and direction of the affairs and business " of the rbi are " entrusted to the central board of directors ". the central board nominated by the government, consists of fourteen eminent persons 1 drawn from different walks of life, who are the non - official directors. the secretary dealing with economic affairs in the ministry of finance is also a director on the central board and has voice but not vote. further, the governor, and the deputy governors, are also appointed by the government, as the chairman and non - voting directors of the board, respectively. the central board meets at least six times in a year and at least once a quarter. the rbi general regulations, 1949, mandate a committee of the central board ( ccb ), which is in the nature of an executive board and meets once a week. the ccb quorum demands the presence of at least one non - official director. currently, the normal attendance for the weekly meetings is three or four of the five non - official directors who are residing in mumbai. the weekly meetings review the economy and the financial market developments, and approve the weekly accounts of the rbi ( which are placed on rbi website every week soon after their approval ) and all other matters relating to the general conduct of rbi β s business | 1 |
than reality at this point. but under all of the cash product consultations put out to date, the first preferred fallback is to that kind of term rate, if such a rate were to be created that was up to iosco standards and endorsed by the arrc. another difference between sofr and libor is that sofr is a β near risk - free rate β because 6 / 8 bis central bankers'speeches the underlying repo transactions are secured by treasuries. libor, on the other hand, was based on unsecured transactions and was intended to include the price of bank funding risk. although most of the current uses of libor have no actual need to reflect bank funding risk, that difference does still affect the level of the index, and so will need to be adjusted for in contracts that start out referencing libor and then switch to sofr. there are various technical ways to adjust for both the term difference and the credit difference between sofr and libor. the goal is to create a value - neutral adjustment mechanism that doesn β t create winners and losers as libor contracts reset. ideally, the adjustments would also be easily understood, transparent, and based on objective factors, not on discretion. that β s a very tall order. this is another area where the ongoing consultations are very important. conclusion change is hard. it β s hard to say goodbye to libor when it β s been around for so long and is embedded in so many operations and processes that have been in place for decades. for the last several years, change has clearly been coming to the use of libor, but there was a fog of uncertainty about what that change was going to look like, and so the reaction of many firms seemed to be to do nothing except wait and see what happens. now the time has come β i would argue it came a while ago, but in any case it β s here now β the time has come for every firm with libor exposure to actively grapple with the risks that are coming your way whether you like it or not. the way forward for the vast majority of libor - based instruments is rapidly becoming clear. it β s easy and tempting to justify inaction by criticizing the available solutions as imperfect or as just too hard to do. but inaction at this point in the libor transition is short - sighted and futile and only extends the uncertainty. we need decisive action by everyone in the market to avoid damage to individual | to certain members of the litigation bar, this is not good news for those interested in maintaining financial stability. for example, many contracts state that if a calculation agent cannot find a libor quote for a given day on the usual reuters screen, it will call three large london banks and ask them what their borrowing rate is for that day β basically try to privately replicate libor. imagine if every calculation agent for every transaction tried to do this every time they had to set libor. there would be chaos, especially when those london banks had already decided to get out of the libor - estimating business. why would they even respond? for some types of transactions β floating - rate notes, for example β there is a further fallback : to fix the interest rate at whatever the last libor quote was. this is not a very satisfactory solution to either the issuers or the borrowers who thought they had an instrument that protected them against interest rate risk. other transactions like syndicated loans may revert to prime rate loans β again, not what borrowers may want. and, for derivatives, there simply may be no further fallback. you can imagine the litigation risk when the reference rate for a 20 - year contract disappears and there β s no clear path to replace it. now imagine 190 trillion dollars β worth of those contracts. this is a defcon 1 litigation event if i β ve ever seen one. where are we now? those are the issues that the arrc, the other ibor working groups, and central banks in general have confronted over the last few years. let me turn now to the work at hand. there are two urgent tasks for every market participant with libor exposure. first, if you find yourself in a hole, stop digging. what market participants must do right now is stop writing new contracts on libor and start using sofr or at least another robust alternative. and, especially if you need to keep using libor, make sure your new contracts have strong and workable fallback language. that was one of the original recommendations the various official sector groups made as far back as 2013, but the people writing the contracts don β t seem to have been paying attention. as i β ll describe in a moment, very soon there will be specific fallback language that represents the consensus best practice to use in each type of u. s. dollar libor - linked 3 / 8 bis central bankers'speeches financial product going forward. the second urgent task is to | 1 |
denied entrepreneurship opportunities that might provide them with a chance to earn an income, poverty becomes entrenched. in the recent past, it is gratifying to note that financial sector in zambia has begum to demonstrate that it is reasonably efficient, sound and profitable. since the many bank closures of the mid - to late - 1990s following stiff competition and the tightening of regulation and oversight through the promulgation of the banking and financial services act ( bfsa ) in 1994 we have not experienced any serious banking crisis. that be as it may, like in many other developing countries the financial sector in zambia still faces a number of challenges. the financial sector assessment programme ( fsap ) report of 2002 highlighted a number of these including limited access to financial services by the rural and peri - urban population and doubtful sustainability of financial services in zambia. in light of these findings, and in recognition of the strategic importance of the development of the financial sector in contributing to sustainable economic growth and poverty reduction, the government of the republic of zambia developed and launched the financial sector development plan ( fsdp ) in 2004. the fsdp is a comprehensive five year strategy to build and strengthen the financial sector infrastructure to enable it to support economic diversification and sustainable growth. in addition, and in furtherance of the objectives of the fsdp, the boz strategic plan for 2008 β 2011 has made financial inclusion as one of its key strategic objectives. under the fsdp two important studies, the finscopeβ’ surveys of 2005 and 2007, on the demand for and supply of financial services in zambia have been completed. these studies have augmented the earlier findings of the fsap with respect to the key developmental challenges for the financial sector in zambia. 3 the key findings of the finscope survey on the demand for financial services included the following : β’ only 34 % of the population were β financially served β, i. e., used formal and / or informal financial products, whilst 66 % had no access to financial services ; β’ 77. 5 % of zambians report to have never had a bank product or service ; β’ 40 % of salaried staff reported not having bank accounts, signifying that they received money in cash rather than through the financial system ; β’ the barriers to accessing financial services include cost, distance, time and transport to reach the bank or financial service provider ; β’ rather than purchase treasury bills, buy life insurance or stocks on the stock exchange, most of the respondents | african trade insurance agency β s workshop for bankers officially opened and i wish you fruitful deliberations. i thank you for your attention. bis central bankers β speeches | 0.5 |
it is my pleasure to note that the national bank is an institution whose credibility and integrity are being permanently reaffirmed. maintaining price stability is the ultimate objective of the national bank β s monetary policy. despite the series of shocks from the foreign and domestic environment which the macedonian economy has faced in recent years, we maintain the average inflation rate at the level of 1. 5 %, which is very close to the average inflation of the euro area countries and confirms the adequacy of the monetary setup in this period. the nominal exchange rate of the denar against the euro has been maintained at a stable level, contributing to stable expectations and maintaining the confidence of economic agents. we have maintained the foreign reserves at a comfortable level by guarantying currency stability and dealing with shocks. the banking system is set on a completely market basis, with the presence of renowned international banking groups β stable, liquid and capitalized. our permanent investment in observing the international standards in the banking regulation and the modern supervisory standards has made a great contribution. 1 / 2 bis central bankers'speeches no central banking institution can be set on firm grounds without dedicated and responsible people who have a vision, follow the direction of the modern central banks and at the same time work very hard to follow that path. in recent years, we have been continuously investing in the human capital. the support that we receive from international financial institutions, along with our dedication enables us to have a high quality core of professionals. without it, we cannot imagine to successfully cope with the challenges ahead of us, especially now, when the european integration is becoming more realistic, which means intensive preparations for the future monetary integration. all of this requires an unconditional consistency in the price stability and the exchange rate of the domestic currency, a supervisory setup that is close to the european one, as well as institutional capacity for a quality dialogue with the european monetary authority. in the end, on behalf of the central bank team and on my behalf, i would like to thank and pay a tribute to the previous governors and managements and to all those who have been part of the central bank in the years behind, the ones that selflessly dedicated themselves and managed to build an institution that is independent, transparent, highly professional and respected in the international community. i would also like to thank the professionals who are a part of our team today β they are the foundation of the values that we constantly build, following the only path to our european future. even today, 28 | certain proportion of those involved will succumb to the urge to subordinate ethics to the desire for personal gain, however fleeting. i believe that most of you will live up to the highest ethical standards. some of you will be able to profoundly influence your communities and businesses for the good. i will celebrate that kind of outcome, but my more modest hope is that as a group you will enter the business world as energetic advocates for the careful management of reputation risk and that throughout your careers you will use the lessons of our current experience. my final thought on managing the challenges ahead is one that will be familiar to you. as a person who was privileged, as you are, to attend some of the world's finest educational institutions, and as someone who currently serves in an institution that is heavily dependent on analysis, i know that knowledge matters. knowing a business plan or an issue or an analytical technique is an absolute requirement. recognizing that knowledge is fleeting is the beginning of deeper understanding. thus, my hope for you is a continuing commitment to working through difficult problems, a professional life characterized by the highest commitment to ethical behavior, a lifelong love of learning, and a few moments - days like today - for celebration of your success. congratulations and good luck. we are rooting for you. | 0 |
adjust policies if events prove us wrong. but for now, i believe the balance of the evidence points to the conclusion that the recent rise in inflation probably does not signal that the economy has been producing beyond its in the view of some observers, the argument that the federal reserve β s capacity measures overstate available slack has been lent some credibility recently by the much higher capacity utilization numbers published by the institute of supply management ( ism ). the differences between the ism and federal reserve β s estimates of operating rates likely lie in the definitions of capacity. the federal reserve β s measure assumes the availability of additional labor, if needed. the ism measures the capacity of plants to produce with their current labor force. in the wake of a significant cyclical contraction in manufacturing employment, such as we have experienced in recent years, a definition of capacity that relies on workers in place will indicate much less slack than a definition that does not include current labor as a limiting factor. since labor can be added relatively quickly, the federal reserve β s definition of capacity utilization seems more relevant for assessing effective slack in the manufacturing sector. sustainable potential, but rather that other causes have been at work. i now turn to these other causes. price shocks. quite a few prices have been pushed higher in recent quarters by special influences on the supply and demand for the specific products involved. such increases are probably contributing to the broad pickup in inflation that we have seen this year, but most likely they are not going to be a source of continuing upward pressure on prices. it is not surprising that the substantial strengthening of aggregate demand here and abroad has boosted prices for inputs into the production process, with the most noticeable effects on products for which the short - run supply is relatively price - inelastic. increases in commodity prices are typical as an expansion gathers momentum, but they have been unusually large in the current episode because of the synchronous strengthening here and overseas, especially in asia. petroleum prices have been under particular pressure, reflecting not only stronger demand but also risks that supplies could be constrained by terrorism or political disruption. the decline in the foreign exchange value of the dollar over the past year or so has contributed to the rise in the price of imports in the united states. the prices of core non - energy imports began to increase more rapidly than the general level of core consumer prices in 2003, and the difference widened in the first quarter of this year, adding to general price increases. in addition, the dollar β s decline has | deleveraging needs and better labour market conditions. furthermore, the recovery in business investment is supported by improvements in corporate profitability and the very favourable financing conditions. at the same time, euro area exporters are benefiting from the ongoing global economic expansion. these figures give some comfort as to the eu β s economic future. and i personally am confident that this trend can and will continue. however, challenges are looming : two particularly serious ones are brexit and euro area reform. the current, upbeat trajectory has to be harnessed as we set about mastering these historical challenges. 4. brexit looming the first challenge, brexit, began in june 2016, when the majority of uk voters decided to leave the eu. where are we now? brexit is definitely happening, and it is more and more likely to be a hard brexit β by which i mean that there will be a complete exit rather than a partial one. the uk and the eu will go their separate ways. since december of last year, there is a better chance of reaching a sensible agreement before the deadline of march 2019. the eucouncil agreed in december on the brexit divorce issues : basic compromises were reached on three fundamental questions, namely the rights of eu citizens in the uk after brexit ( and vice versa ), the border between ireland and northern ireland, and the uk β s financial contributions to the eu budget over the coming years. this compromise allows us to move forward to negotiate the terms of our future partnership. but let β s keep in mind that substantial progress has yet to be made on the details of the three 2 / 5 bis central bankers'speeches separation issues i just mentioned. now, since negotiations have been going rather slowly, there may be a transition period of two years from 2019 to 2021 β during which the old rules would still apply and the terms of the new partnership could be implemented. what kind of economic partnership this will be has yet to be determined. if no solution is found, the eu and the uk will trade under rules set by the world trade organization β which is in nobody β s interest, but is likely to be particularly harmful to the uk economy, while the economic impact on europe will be limited by comparison. take germany for instance. the uk is an important export market, accounting for ca. 7 % of german exports. but this implies only 2 % of value added to the german economy. my hope is that all the | 0 |
then do you think it is working? ladies and gentlemen, we are partners and stakeholders in this transformation and therefore we must be careful of the messages we send. we need to have frank and open dialogue on where we are going, how we get there, the remaining challenges we face and how to address them. the central bank remains committed to consultation with you and on that note, i want to thank your president for the way he has engaged the bank as a key contributor to the foreign exchange market development committee. he has been leveraging the wealth of information and expertise freely available at the bank and we in turn have learned a great deal from him, which has helped to improve the service we deliver. thank you. 4 / 4 bis - central bankers'speeches | in march 2008 to around us $ 712 in november, but is currently trading above us920 per ounce. however other commodities have not fared as well. from a high of us $ 2250 per ounce in march 2008, platinum prices declined to us $ 771 per ounce, before recovering to current levels of around us $ 1130 per ounce. aluminium prices reached levels in excess of us $ 3300 per ton in july 2008, but by february 2009 the price had declined to below us $ 1300 per ton and currently around levels of us $ 1540 per ton. similar trends are evident in the behaviour of other commodity prices. of course, oil price developments have benefited us. having reached levels of almost us $ 150 per barrel in july last year, international oil prices declined to below us $ 35 per barrel, and are now at levels around us $ 57 per barrel. commodity prices in general are likely to remain subdued in line with global growth 2. 6 the turmoil on the international financial markets has also impacted on the destination and size of capital flows. not surprisingly, capital flows to the developing and emerging market economies have declined, with the international institute of finance expecting flows to emerging markets to decline from over us $ 900 billion in 2007 to around us $ 165 billion in 2009. this has implications for exchange rates and the financing of current account deficits in these countries, at a time when export markets are under pressure. capital is in fact flowing back to the us, the source of the current crisis. we are told that this is a β flight to quality β or β risk aversion β. an irony indeed. 3. the implications for the south african economy 3. 1 given south africa β s close trade and financial links with the global economy, it is not surprising that the south african economy would be affected by these adverse developments. after 4 years of gdp growth around or in excess of 5 per cent, the growth rate declined to 3, 1 per cent in 2008, with a contraction of 1, 8 per cent in the fourth quarter. current indications are that the negative trend continued in the first quarter of this year. the high frequency data indicate that the manufacturing sector in particular remains under pressure : recent data from statistics south africa show that manufacturing output in the first quarter of 2009 declined by 6, 8 per cent relative to the previous quarter, while mining production declined by 12, 8 per cent over the same period. the utilisation of manufacturing productive capacity declined to its lowest level | 0 |
randal k quarles : the federal reserve β s regulatory agenda for foreign banking organizations β what lies ahead for enhanced prudential standards and the volcker rule speech by mr randal k quarles, vice chairman for supervision of the board of governors of the federal reserve system, at the institute of international bankers annual washington conference, washington dc, 5 march 2018. * * * thank you very much to the institute of international bankers for inviting me to speak here today. among my first areas of focus when i was a very young lawyer starting out in my career well over 30 years ago was providing advice to foreign banks and financial firms operating in the united states, and i learned then just how integral, essential, and welcome a part your firms play in our domestic financial sector. non - u. s. firms serve as an important source of credit to u. s. households and businesses and contribute materially to the strength and liquidity of u. s. financial markets, so it is critical β not just as a matter of fairness but as a matter of our domestic interest β that we as regulators ensure that they operate in a fair and open financial services sector. i view that as an important part of my job. so today i want to share my perspective on the appropriate regulatory environment for foreign banks operating in the united states, as well as some thoughts on specific elements of that regime. before doing that though, we should take stock of the pre - crisis history of foreign firms operating in the united states. first, the financial crisis revealed that in times of stress, international banking firms with large and complex local operations can contribute to instability in those local markets and can require extraordinary support from local authorities. second, a number of foreign financial institutions expanded the size and complexity of their u. s. operations at a rousing pace and scale prior to the crisis, and we did not adjust our local regulatory and supervisory approaches to address the increased risk associated with this expansion. as a result, the difficulties faced by the u. s. operations of non - u. s. banks during the crisis mirrored that of their similarly sized domestic counterparts, underscoring a need for increased resiliency of both domestic firms and the u. s. operations of foreign banks. to bolster that resiliency, the environment for foreign banks operating in the united states underwent a number of changes. while there are important differences, those changes for foreign firms broadly parallel many of the changes instituted for domestic firms. | christian noyer : inflation, europe β s response to the debt crisis, emerging - market economies and priorities for the g - 20 β interview in the wall street journal interview with mr christian noyer, governor of the bank of france and chairman of the board of directors of the bank for international settlements, in the wall street journal, paris, conducted by mr brian blackstone and ms nathalie boschat on 24 january 2011 and published on 26 january 2011. * * * wsj : the european central bank recently toughened its stance on inflation. how concerned are you about the risks of inflation taking hold in the euro zone? noyer : the uptick in inflation is mostly due to the rise in oil and commodity prices. core inflation has remained relatively subdued. by nature, that [ the rise in inflation ] should be temporary. our projections show that the inflation rate should come back to a zone perfectly in line with our definition of price stability during the course of 2011. as a central bank, we are very attentive to the only risks that exist in such a situation, which is that there might be second - round effects β an acceleration of inflation due to other causes β wages and other dynamics of internal costs. this is why we are vigilant about all those evolutions. i am quite confident that we will be able to keep inflation at bay. that includes sending the message that we will never tolerate that inflation could become entrenched. we are determined not to let inflation become entrenched through second - round effects. it is this determination that would permit us to keep expectations where they are. wsj : since the current rise in inflation is due in large part to the buoyancy of emerging countries, are you worried that controlling inflation is to some extent out of your control? noyer : it β s true that there are factors beyond our direct control. but there are also structural answers to these factors, such as development of production, in order to limit the rise in agricultural prices. there are possibilities, and the level of prices helps a lot to develop production and alleviate the pressure. when we look at the global picture of economy, there are emerging countries which have suffered less from the economic crisis and advanced economies which had to recover from a much lower growth and even recession. that in turn creates problems for emerging economies, including the fact that some of them have hesitated to run the fiscal and monetary policy that would have been absolutely appropriate given the state of their | 0 |
captain were to preserve his ship, he would keep it in port forever. β under the capable leadership of our past governors, we have travelled far and have reached new points of opportunity. as captain now of our navigating team, i am confident in the course we have charted under β continuity plus plus. β i put my trust in the bsp crew, which has proven itself time and time again to be capable and skilled. we may be going through some strong headwinds today. but we stand undaunted. for bsp, it β s a matter of careful navigation and timely action. the economic ship itself is fundamentally solid and sturdy. we β ll get to better weather soon enough and sail on to destination. as i close, i recall my mission as head of team bsp. it is not only to deliver on our mandates today. rather, it is to build capabilities to address challenges and develop skills needed to conduct our mission given likely scenarios β¦. ready to respond where it matters β¦ when it matters. this is the rationale for the bold organizational changes we have embraced thus far. these changes are meant to make the institution and its key officers more agile and resilient, 3 / 4 bis central bankers'speeches ready too β as individuals and as an organization β to navigate the future. let me recognize the crew : dg diwa guinigundo and the monetary and economics sector ( mes ) dg chuchi fonacier and the financial supervision sector ( fss ) dg cyd amador and the corporate services sector ( css ) ag dahlia luna and the currency management sector ( cms ) not to forget the offices directly working with me and of course the monetary board : carlos g. dominguez iii felipe m. medalla juan de zuniga, jr. peter b. favila antonio s. abacan, jr. v. bruce j. tolentino today, as always, we ready ourselves for more challenges ahead, taking stock of two - and - a - half decades β worth of lessons and experiences. maraming salamat team bsp. happy 25th anniversary to us all! mabuhay ang bsp! mabuhay ang bansang pilipinas! 4 / 4 bis central bankers'speeches | was a product of lessons learned the hard way. perhaps this audience may not remember why there was a need to establish and organize what is now known as the bangko sentral ng pilipinas. bsp. of our 5, 322 work - force today, it is a fact that 84 % have been here less than 25 years. many of you are likely unfamiliar with the central bank of the philippines ( cbp ), an entity separate and distinct from the bsp, and the events that led to its dissolution. the dissolution of the cbp and the establishment of the bsp and a separate legal entity called the cb β board of liquidators ( cb - bol ) were premised on the urgent need for an independent central monetary authority β¦ financially strong, enjoying fiscal autonomy, and free from political influence. this independence is constitutionally enshrined. for the last 25 years, we, the bsp, have proudly anchored ourselves on this independence. we protect and uphold its demand for responsibility and accountability. let me recall some key accomplishments β¦ 1 / 4 bis central bankers'speeches in response to the asian financial crisis of the late 1990s, the bsp pursued structural reforms that changed and improved the conduct of monetary policy and financial supervision. in 2002, to better attain price stability objectives, the bsp formally adopted the inflation - targeting ( it ) framework. since then, we have established a solid track record for hitting our inflation targets and for being transparent on how we conduct monetary policy. in 2016, we established the interest rate corridor ( irc ) system to enhance monetary policy transmission and reinforce the development of the domestic financial market. this year, we have commenced the gradual phase - down of ultra - high reserve requirements to promote the efficiency of monetary policy. amid changes in financial market conditions and increasing sophistication of financial services, we recognized a growing need for financial regulations to adapt, or else risk irrelevance. this is just one of the lessons from going through two episodes of financial crises over the past two decades β financial supervision must be proactive instead of reactive. we have thus shifted to a more comprehensive, risk - based approach to banking supervision. this has significantly improved the safety and soundness of individual banks and promoted early identification and effective mitigation of system - wide financial risks. in december 2002, the bsp shifted to a real - time gross settlement ( rtgs ) system. this made payments and settlements more efficient. today, we have phil | 1 |
, because of the difficulty in getting employment. though over time, considerable employment opportunities have come up across various sectors, especially the services sector, finding a fulfilling job remains as big a challenge as ever. however, i am confident that this venerable institution has prepared you to face and surmount all challenges that life throws at you. i am privileged to share this special day with a bright set of youngsters, who, i hope, would turn out to be the highly successful financial and social entrepreneurs of the future. 3. this convocation ceremony marks a major milestone in your career. it not only indicates the culmination of the hard work you have put in over the years, but also marks your transition from students to professionals. i know only too well the time, effort and dedication that are needed to acquire such important academic qualifications. i would also like to take this opportunity to congratulate members of your families who are present here on this very important day in your lives. i am sure they have contributed greatly to your success and fully share your moment of glory. you should always remember that, but for the support and love of your parents and families and the dedication and commitment of your faculty members here, it would not have been possible for you to reach this milestone in your lives. 4. in a country like ours, education is not only the key to a brighter future ; it is, often, also a key to survival. using education as a primary strategy, our visionaries and pioneers have aimed to harness, particularly the potential of girls and women, to learn, lead and act on their vision of change for themselves, their families, their communities and the nation. pandit nehru famously remarked, β you can tell the condition of a nation by looking at the status of bis central bankers β speeches its women β. the beijing declaration at the fourth world conference on women ( 1995 ) noted that, β women β s empowerment and their full participation on the basis of equality in all spheres of society, including participation in the decision - making process and access to power, are fundamental for the achievement of equality, development and peace β. in india, there has been a perceptible increase in literacy rate amongst women from 53. 67 per cent ( census 2001 ) to 65. 46 per cent ( census 2011 ). however, there is still a large gender gap in literacy at 16. 68 per cent which needs to be bridged. in this context, it is extremely gratifying to | balance sheets. they were too thin on equity and the balance sheet was too precariously placed to withstand write - down on their investments in complex derivate instruments. the situation was somewhat better in the developing world, but even the banks in these markets got impacted as the pains of the real economy slowly started to inflict the financial economy. it was in this background that the regulatory reform process was set in motion by the multilateral standard setting bodies to undo the excesses of the pre - crisis era. the major elements of the reform process that have been implemented / currently under negotiation are as under : β’ basel - iii capital prescriptions including capital conservation and countercyclical buffers β’ liquidity coverage ratio ( lcr ) and net stable funding ratio ( nsfr ) β’ leverage ratio β’ total loss absorbing capacity ( tlac ), a work - in - progress, which aims at a higherloss absorbency requirements and resolution framework for g - sibs / g - siiis / gnbnis β’ regulation of the shadow banking sector β’ reforms of the otc derivatives market and resolution of ccps β’ a standardized, non - modeled approach for calculating regulatory capital to resolve the problem of excessive variability in banks β regulatory capital ratios ( a thought ) bis central bankers β speeches β’ compensation β alignment with prudent risk taking, claw back provisions β’ transparency in benchmark setting 15. the underlying objective of these reform measures is to avoid the dependence on taxpayers β money to bailout financial institutions in the event of stress. indian position 16. being a bank dominated economy, a healthy banking sector is imperative for india β s economic growth. rbi has been proactively working towards development of a strong and efficient banking system through its regulations. as member of the international standard setting bodies, we are not only implementing the globally agreed regulatory reforms now, but have also been proactive in introducing macro - prudential measures like higher risk weights for real estate exposures of banks, measures for dealing with risks emanating from derivatives and securitization transactions and spiraling unhedged forex exposure of corporates, much before the global attention was drawn to such risks. at rbi, we have always been conscious of the need for the regulation to evolve quickly for addressing incipient risks and it is in this spirit that many of the recent reform measures have been set in motion. recent measures taken by rbi 17. an important pre - condition for banks to be able to meet their lending | 0.5 |
globalisation is already pushing inflation down. i would say cheaper imports would normally affect inflation favourably, though the scale and persistence of this type of effect is uncertain. but globalisation is not just about greater trade flows or about the effect of worldwide competition on goods and services markets. as far as wages and prices are concerned, the effects of internationalisation on the labour market are probably more important. if workers fear that their companies will move abroad, this can affect their wage demands, which can in turn temper the growth of production costs and consumer prices. immigration acts in a similar way, easing demand pressure in the labour market and thus containing wage increases. as i see it, labour market globalisation has already had a visible effect on wages in europe and in other industrialised areas. wage restraint has helped subdue inflationary pressure in the euro zone, despite recurrent supply shocks. the result has been an accommodative policy stance for much of the life of the monetary union, as at present. as you can imagine, on the ecb governing council we closely track labour negotiations in several countries, as the outcomes can directly affect the prospects for price stability. immigration in several euro zone economies, and notably in spain, it is immigration that has had the biggest economic impact. immigration to europe has surged and taken several forms. sometimes you will see workers move permanently from one country to another. in other cases, they move back and forth. what is happened is that immigrants have not only increased the labour force in the euro area ; they have also brought more flexibility and dynamism to our labour markets. since the turn of the century, spain β s immigration rate has been the highest in europe. once an emigration country, spain β s foreign resident population rose from just over 900, 000 in the year 2000 to 4. 2 million in 2006. as a result, spain β s population has increased by a number roughly equivalent to the total population of ireland in just six years, as a result of immigration. the proportion of immigrants in other western european countries may be bigger yet, but it is hard to find examples in recent times of such a large influx of immigration in such a small period of time. clearly, what has attracted the immigrants to spain rather than to other euro - zone countries has been the long economic upturn that has already lasted thirteen years. to give you another idea of what immigration has meant for the spanish economy, let me tell you that foreign residents accounted for nearly the | miguel fernandez ordonez : immigration and the inflation moderation debate speech by mr miguel fernandez ordonez, governor of the bank of spain, at the symposium β the phillips curve and the natural rate hypothesis β, kiel institute for the world economy, kiel, 3 june 2007. * * * introduction it is a pleasure to be here today at this symposium in such distinguished company. the organisers have put together an impressive programme on a key topic for policymakers and central bankers in particular. as you know, the relationship between inflation and economic activity has always been at the heart of the macroeconomics discipline. and theoretical developments in this field have had a significant and direct influence on actual monetary policymaking. we are currently in a unique situation. for an unusually long period, in the context of high global growth, inflation has remained low and stable. many commentators β and not only central bankers β would agree that better - managed monetary policy has had a lot to do with this favourable inflation performance. and there is a lively debate about which specific aspects of monetary policymaking have been responsible for it. let β s look at three questions this debate has raised. first, do central bankers now have better knowledge of the economy and of monetary policy transmission and, consequently, are adopting more effective decisions? second, have monetary policy regimes shifted towards making price stability a more prominent target? and third, have structural changes in the world economy, such as the globalisation of capital, production and labour, made the job of central banks easier? i will deal with all three questions today, but particularly with the effects of globalisation. i will focus mainly on labour market aspects, taking the immigration we have seen in spain in recent years as an example of the positive effects that globalisation can have on inflation. what is behind the recent success of central banks β in combating inflation? recent studies have given the credit for reducing the high inflation of the'70s and early'80s to the central banks β better knowledge of the economy. in my view, these studies have got it right. we have to admit that, at least in some countries, monetary policy didn β t do all it could in the'70s to contain the oil shock - induced inflation of that time. perhaps at that time, central banks lacked understanding of how supply shocks affect the output gap, as well as of the role of inflation expectations, and how these relate to monetary policy actions. but i don β t think that insufficient knowledge of the economy | 1 |
the adoption of crypto - assets and related technologies could improve the speed and efficiency of financial intermediaries and infrastructures but, on the other hand, it can worsen their carbon footprint because of the energy consumption of some of the underlying processes ( such as mining ). the answer, however, is not to block the development of these new technologies but, conversely, to trust even more scientists and innovators and support them in improving the environmental and sustainability profiles of their solutions. in order to support the development of efficient technological solutions combining innovation in finance and sustainability, new policy instruments such as innovation facilitators could play an important role. in fact, innovation hubs may allow the identification of use cases where innovative technologies can help to channel investments into sustainable objectives and to assist the transition to a greener economy. innovation facilitators also help supervisors and regulators in getting to know innovation from up - close and may ease the design of rules that provide the right incentives for the development and diffusion of β climate - friendly β technologies. 1 / 2 bis central bankers'speeches in this respect, it is worth saying that, at bank of italy β in addition to our β fintech channel β ( a web window through which operators can communicate with the central bank on any financial innovation issue ) β we have recently launched in milan a new innovation facilitator ( called milano hub ) aimed at fostering collaboration and knowledge sharing between public sector authorities and different stakeholders ( market operators, academics, etc. ) and facilitating, among others, the development and spread of safe and sustainable fintech solutions. that said, i am convinced that this g20 2021 techsprint, the projects and the technological solutions it will attract, will help in making this year a turning point in the transition towards a greener and more sustainable finance. i expect a successful global hackathon that will attract a wide variety of participants from every country of the planet. since in italy this year we are celebrating the 700th anniversary of dante, let me say that i hope that this competition will attract modern ulysses that, as dante recalls in the 26th canto of the inferno, are craving for β worth and knowledge β and are eager to discover new lands. at this moment of our history, we need more than ever that the brightest and most ambitious minds will set to work on the challenges that our society and institutions are facing. it is a great pleasure for me to wish you a fair competition. might all of | you bring their best. may the best team win! 2 / 2 bis central bankers'speeches | 1 |
inflation, let me take a step back to look at the larger, international picture. as i mentioned a moment ago, canadians have become increasingly aware of price pressures, but this is, in fact, a global phenomenon. indeed, sharp increases in inflation have been reported in both advanced and emerging - market economies in recent months. it is true that world prices of oil, natural gas, many minerals, and food products have eased in the past few weeks. nevertheless, earlier dramatic increases in the prices of these same commodities accounted for sharp increases in inflation. in many cases, these have been some of the highest rates of inflation observed in the past 10 to 15 years. it is important to note that inflation performance varies widely across countries. in some cases, excessively loose monetary policies, implemented in an attempt to push economic growth higher than the sustainable limits of a country's production capacity, have also been an important contributing factor. in many countries, the recent surge in inflation has been coupled with a dramatic slowing in real economic growth, rekindling memories of the 1970s and concerns over stagflation β the uncomfortable combination of high inflation and slow or negative growth. most observers believe it would be too great a stretch to draw parallels between the current experience and that of the 1970s. still, recent developments do pose a serious policy challenge for central bankers, especially when combined with the dislocation and difficulties evident in global financial markets. conventional monetary policy reactions might not be appropriate in circumstances where we see a combination of rising inflation, slowing gdp growth, and concerns about financial instability. rising inflation, for example, often leads to calls for tighter monetary policy. yet, would that be wise if a slowing economy and other developments were expected to reverse these inflation pressures in the future? slower economic activity often leads to calls for easier monetary policy. but would that reaction be wise if inflation pressures were believed to be rising rather than receding? around the world, monetary authorities are determined not to repeat the policy errors of the 1970s, when overly stimulative measures led to double - digit inflation and rising inflation expectations. we all seek reliable indicators with which to gauge how serious and longlasting the current inflation pressures might be. this kind of information can materially affect the stance of monetary policy. this illustrates why monetary policy - makers must gather and weigh as much information as possible in their decision making β and why inflation research is so important. defining and measuring total and core cpi inflation before i describe some of our | cpix because of its demonstrated superiority on both empirical and theoretical grounds. its advantage was confirmed by additional research when our inflation targets were renewed again in 2006, and it has recently been retested as part of a more comprehensive international study looking at a range of measures of total and core inflation. clearly, this process of refinement and retesting never ends. this is because it is crucial that we be able to determine the most effective indicators of underlying inflation and how these might be further refined and improved upon over time. so the next question becomes : how can we distinguish between good and bad measures? an effective core measure must have four key properties. first, and most obviously, a core measure should be less volatile than total inflation. second, it must be unbiased. by this we mean that the core inflation measure must track long - run movements in the total cpi very closely. third, a good core measure must also be a reliable predictor of future trend movements in the total cpi. fourth, a good core measure must be easy to understand and to explain to the public. when all four requirements are considered together, cpix has been shown to be as good as, or better than, all of the alternative measures that the bank might use. other measures may outperform cpix when they are judged on just one or two of these four criteria. cpiw, for example, which is calculated using the reweighting method, can give slightly better predictions of the total cpi and bears a somewhat tighter relationship to the long - run trends in the total cpi. these differences are very minor, however, and are offset by other considerations such as ease of understanding. for this reason, cpix is still the bank's preferred core measure. nevertheless, given the demonstrated strengths of cpiw and one or two other trend measures, the bank continues to monitor a set of indicators rather than relying on any single one. popular misconceptions about core inflation our choice of cpix as an operational guide for monetary policy has, at times, been a source of controversy and has led to several popular misconceptions. journalists and other interested observers frequently question the use of cpix and other measures of trend inflation as operational guides. they argue that such measures give an overly sanguine picture of true inflation, especially during episodes of sharply rising food and energy prices. critics say that cpix inflation is frequently lower than total cpi inflation because, they claim, the bank has stripped | 1 |
that monetary stability actively promotes efficiency and growth. ( hence friedman β s suggestion that the long - run phillips curve, rather than vertical, might be positively sloped. ) also implicit in friedman β s focus on nominal stability is the view that central banks should avoid excessively ambitious attempts to manage the real economy, which in practice may exacerbate both nominal and real volatility. in friedman β s classic 1960 work, a program for monetary stability, he suggested that monetary stability might be attained by literally keeping money stable : that is, by fixing the rate of growth of a specific monetary aggregate and forswearing the use of monetary policy to β fine - tune β the economy. do contemporary monetary policymakers provide the nominal stability recommended by friedman? the answer to this question is not entirely straightforward. as i discussed earlier, for reasons of financial innovation and institutional change, the rate of money growth does not seem to be an adequate measure of the stance of monetary policy, and hence a stable monetary background for the economy cannot necessarily be identified with stable money growth. nor are there other instruments of monetary policy whose behavior can be used unambiguously to judge this issue, as i have already noted. in particular, the fact that the federal reserve and other central banks actively manipulate their instrument interest rates is not necessarily inconsistent with their providing a stable monetary background, as that manipulation might be necessary to offset shocks that would otherwise endanger nominal stability. ultimately, it appears, one can check to see if an economy has a stable monetary background only by looking at macroeconomic indicators such as nominal gdp growth and inflation. on this criterion it appears that modern central bankers have taken milton friedman β s advice to heart. over the past two decades, inflation has fallen sharply and stabilized around the world, not only in the industrialized nations but in emerging - market economies and in even the poorest developing nations. some central banks, so - called inflation targeters, have set explicit, quantitative targets for inflation ; but all central banks, certainly including the federal reserve, have emphasized the importance of achieving and maintaining price stability. on the issue of inflation control, friedman may be judged to have been a bit too pessimistic ; his concerns that central banks would have neither the technical ability nor the correct incentives to control inflation led him to recommend his money - growth rule, for which a central bank could certainly be held accountable. evidently, however, determined central banks can stabilize inflation directly, at least they have been able | base model indicate a lower impact of rate hikes on inflation than displayed in the related ecb working paper. the lower elasticity is mainly due to a more tempered response of short - term inflation expectations spurring from the re - estimation of vars that are used to model inflation expectations. 13. the chart also includes results from a large scale bvar including both macro and financial variables as in rostagno, m., altavilla, c., carboni, g., lemke, w., motto, r. and saint guilhem, a. ( 2021 ), β combining negative rates, forward guidance and asset purchases : identification and impacts of ecb β s unconventional monetary policy β working paper series, no 2564, ecb, june. monetary policy rate surprises are identified in the bvar by using the instrumental variable approach as in stock and watson ( 2012 ) and the target monetary policy shocks of altavilla et. al ( 2019 ). see, altavilla, c., brugnolini, l., gurkaynak, r., motto, r. and ragusa, g. ( 2019 ), β measuring euro area monetary policy β, journal of monetary economics, vol. 108, pp. 162 - 179 ; stock, j. h., and watson, m. w. ( 2012 ), β disentangling the channels of the 20072009 recession β, nber working paper, no 18094. 14. it is well established that the forward - looking behaviour of agents in the mawm - ii and mmr also tends to give rise to an expectations puzzle, in which policy decisions far out into the future can have very large impacts today. such policy commitments are unlikely to be credible however, and so these dsge models ( nawm - ii and mmr ) are typically adjusted to allow for discounting in the expectations formation process. 15. the long - term yield impacts of the change in balance sheet assumptions are computed using eser, f., lemke, w., nyholm, k., radde, s. and vladu, a. ( 2019 ), β tracing the impact of the ecb β s asset purchase programme on the yield curve β, international journal of central banking, forthcoming. the estimates for the yield impact of the balance sheet reduction use the balance sheet expectations in the weeks prior to the december 2021 governing council meeting | 0 |
israel β s education system is not efficient. various reasons may be put forward to explain this : a. israel does not have one education system, but several, including among others hebrew state education, arab state education, state religious, and a number of ultraorthodox streams, and some of them do not include basics such as mathematics, sciences and english in their curricula. b. these education systems do not have enough management flexibility, certainly at the school level. c. between 1995 and 2005 expenditure per student on elementary, secondary and tertiary education rose more slowly in israel than in the oecd countries. it is clear that a fresh approach is needed also in the field of higher education. in this context israel β s brain drain gives particular cause for concern. we need only look at the number of israelis in the faculties of the leading universities in the us and other countries. we must not sit back as passive observers of this trend, but should take steps aimed at changing this situation. promoting education should be high on israel β s list of priorities. if not, we will find our relative position deteriorating, and indeed, there are signs that this has started. this is one of the few subjects on which there is a consensus ; but the fact there is a consensus does not itself solve the problem. two committees have examined the issue and formulated comprehensive proposals β the dovrat committee in 2005, and the shochat committee in 2007. the implementation of their recommendations β including the introduction of differential pay for lecturers based on their achievements β should be advanced. investment in education is vital in the long term, economically, socially and culturally, and even from the security aspect : a. economically β education provides the infrastructure for rapid and sustained economic growth ; b. socially and culturally β formal and informal education is the key to the realization of individuals β potential, and also contributes to social mobility ; c. security β without good education to help boost and sustain growth, and without maintaining our technological edge, we will be unable to preserve our advantage in the field of security. it is because of the immense importance of education to israel β s long - term future that now is the time to push ahead with the implementation of the recommendations of the dovrat and shochat committees. nothing is more important for israel and its citizens, and that includes you and the coming generations. i congratulate you on your achievements and wish you every success in the future. | glenn stevens : risk and the macroeconomy address by mr glenn stevens, deputy governor of the reserve bank of australia, to the 2006 securities & derivatives industry association conference, melbourne, 27 may 2006. * * * i am pleased to be here in melbourne to take part in your conference. there seems no better issue to discuss with a group of securities and derivatives professionals than risk and its pricing. this is quite topical since, as you would be well aware, the extent of additional return paid to investors to take on risk seems to have been unusually low in recent years. there are several questions that naturally arise, and which i would like to address. first, how does the recent period compare historically? compensation for risk is low compared with the 1980s and 1990s, but what can we learn from a longer - run comparison? second, to what extent can it be claimed that the underlying economic outcomes, which presumably have a major bearing on investors β perceptions of risk, are less β risky β or volatile than they used to be? third, what are the odds that this apparently benign environment will persist? what factors might prompt a change? what is risk? to begin, it is perhaps important to be clear what we mean by β risk β, and how it differs from β uncertainty β, a distinction first made by frank knight 1 in 1921. he wrote : β the practical difference between the two categories, risk and uncertainty, is that in the former the distribution of the outcome in a group of instances is known ( either through calculation a priori or from statistics of past experience ), while in the case of uncertainty this is not true, the reason being in general that it is impossible to form a group of instances, because the situation dealt with is in a high degree unique. β risk can be priced, on the assumption that the probabilities in the future will be those inferred from the past. in peter bernstein β s 2 excellent book against the gods, the early development of thinking about risk is presented as arising from the study of games of pure chance β where the odds are precisely calculable. the classic response to the chance - like characteristics of life is insurance. actuaries draw up tables of life expectancy for a population based on historical experience, and insurance companies, with reasonable confidence, price policies. the probability and likely cost of certain other events β fires, car accidents, etc. β is sufficiently calculable that, over time, risk can be priced. in | 0 |
more likely to result in harm to consumers get more attention. and we continue to improve our examiner commissioning training program to ensure that it fully reflects the lessons of the recent crisis. with the congress β s support, we have also taken action to relieve small holding companies of certain requirements by raising the asset threshold for the board β s small bank holding company policy statement from $ 500 million to $ 1 billion, and by applying this statement to small savings and loan holding companies. the small bank holding company policy statement promotes local control of community banking organizations by acknowledging that smaller companies have less access to the capital markets and allowing them to fund acquisitions with a higher level of debt than would otherwise be allowed. we also relieved small holding companies of requirements to comply with consolidated capital requirements, recognizing that their bank subsidiaries make up most of their assets and are already subject to capital rules. in addition, in conjunction with this change, we eliminated quarterly and more detailed consolidated financial reporting requirements for holding companies with less than $ 1 billion in assets, and instead require parent - only financial statements on a semiannual basis. 6 consistent with the economic growth and regulatory paperwork reduction act ( egrpra ), the board is also working with the other federal banking agencies to identify banking regulations that are outdated, unnecessary, or unduly burdensome. as part of the egrpra review, the agencies have held several public outreach meetings with bankers, consumer groups, and other stakeholders. 7 several themes have emerged during the discussions. for example, community bankers in rural areas have noted that it can be difficult to find an appraiser with knowledge about the local housing market at a reasonable fee. bankers have asked the agencies to consider increasing the dollar threshold for requiring appraisals, which could allow them to use a less formal valuation of collateral for a larger number of mortgage loans. in addition, bankers have raised concerns about the extent of the financial reporting requirements established by the banking agencies. in response, the banking agencies have already taken steps under the auspices of the federal financial institutions examination see board of governors of the federal reserve system ( 2015 ), β federal reserve board issues final rule to expand applicability of small bank holding company policy statement and apply it to certain savings and loan holding companies, β press release, april 9. an additional egrpra outreach meeting is scheduled to be held in washington, d. c., on december 2, 2015. bis central bankers β speeches council to consider options to eliminate or | , too, affects both the community of neighbouring countries as well as the country causing the problem. the architects of monetary union were well aware of the problem of incentives. which is exactly why they took precautions. it was, therefore, laid down from the start in the treaty of maastricht that a country is forbidden from assuming the debt of another country or the community of states. in other words, this laid down the foundation for a general no bail - out principle. the maastricht treaty is, thus, guided by the principle of individual responsibility, or the balance of liability and control. in the concise words of german economist walter eucken : β whoever reaps the benefits must also bear the liability. β or, in very down - to - earth terms : whoever orders, pays. an additional security threshold for monetary union as a stability union is the prohibition of monetary financing of governments. the central banks of the eurosystem, that is the european central bank and the 19 national central banks, are forbidden from directly financing euro - area countries. in order for this ban on monetary financing of governments to be implemented in practice, the independence of the eurosystem from political instructions was enshrined at the same time. bis central bankers β speeches political decision - makers cannot, therefore, force the central banks of the eurosystem to grant member states loans or directly purchase their sovereign paper. ultimately, these measures could contravene the mandate of ensuring price stability, causing lasting harm to the eurosystem β s credibility and thus to the very foundations of a successful monetary policy. germany has, in the past, had bad experiences with central banks which were not free of political lobbying. for example, expenditure on arms in the first world war was financed directly by the central bank, which essentially catered to the needs of the government. the consequence was a complete devaluation of the reichsmark. by contrast, the independence of the eurosystem was firmly anchored. first, institutionally, by prohibiting national and supranational institutions from issuing the ecb or the national central banks with instructions. and second, functionally, by awarding the sole prerogative regarding strategies and measures to ensure price stability to the eurosystem. the independence of the central banks is further safeguarded by specific debt ceilings, which are intended to prevent member states from accumulating excessive debt. a country β s public deficit is not supposed to exceed a maximum of | 0 |
global stablecoins β ( i. e., those operating across multiple jurisdictions and in widespread use ). flexible and proportionate to the risks, this approach seeks to minimise the possibility of arbitration while adhering to the β same business, same risk, same rules β principle. the fsb recommends using the existing international rules and standards, albeit adapted in practice to the services provided and the features and risks of global stablecoins. it highlights the importance of ensuring suitable governance and proper transparency around these products for users and the market, including, in particular, whether or not users enjoy redemption rights against the issuer or the reserve assets. it also stresses that the authorities should not allow such arrangements to be launched before confirming that all of the relevant requirements have been met. c. conesa. ( 2019 ), β bitcoin : a solution for payment systems or a solution in search of a problem? β, occasional paper no 1901, banco de espana. chainalysis ( 2022 ), β 2022 crypto crime report β, april, available at : https : / / go. chainalysis. com / 2022 - crypto - crimereport. html. see, for example, statista ( 2021 ), β number of identity - verified cryptoasset users from 2016 to 2021 β, available at : https : / / www. statista. com / statistics / 1202503 / global - cryptocurrency - user - base /. https : / / www. fsb. org / 2020 / 10 / regulation - supervision - and - oversight - of - global - stablecoin - arrangements / currently, the fsb continues to work both on identifying and resolving possible regulatory gaps relating to global stablecoins and on regulatory approaches relating to unbacked crypto - assets, such as bitcoin. also at the global level, the basel committee on banking supervision has adopted a proactive and forward - looking approach when it comes to the prudential regulation of banks β exposures to crypto - assets. work is being guided by its mandate to strengthen the regulation, supervision and practices of banks worldwide with the purpose of enhancing financial stability. in this regard, even though crypto assets represent only 1 % of total global financial assets and banks β direct exposures are relatively limited to date, we know that these markets have the potential to scale up rapidly and pose risks to individual banks and financial stability. the approach pursued | and the attendant business plans must be appropriately assessed. 10 / 15 we have seen a 30 % reduction in the number of institutions there were in 2009. more recently we have seen how, in the absence of a context of acute crisis, many of the corporate operations announced do not reach fruition. meantime, in some of the operations that are finalised, integration problems continue to be seen for years. our task in a setting such as the present one is to ensure that any merger process should lead to the creation of a new, more solvent institution, with a sound business model, enabling structural costs to be cut and, in short, value to be generated. we must of course assess these same aspects with a view to potential cross - border mergers in europe. the absence of such mergers may be seen as a sign that the banking union is not working as it should. true, several elements of the banking union are still not in place, including most notably the european deposit insurance scheme ( edis ). it is likewise true that the regulations affecting the sector are still too heterogeneous across the different member states. yet it seems that the very excess capacity of the banking sector is acting as an entry barrier to banks from other jurisdictions, given that the potential gain in costs and synergies arising from the elimination of duplicated networks and services occurs chiefly in national mergers. lastly, another means of improvement would stem from cost - cutting and the subsequent enhanced efficiency. admittedly, i did say our banks made notable efforts to shed the excess capacity in place pre - crisis ; but there still remains room for improvement. in any event, further gains in efficiency appear to be closely linked to technological transformation. technological change we are all aware that technological change is one of the main transformations banking must pursue. if we look at what has happened in recent years in other sectors, there is clearly a need for the banking business model to adapt. technological change is a complex matter, but one that is fundamental for tackling the future. it should be part and parcel of deeper reflections relating to the banking business model and its sustainability in the long term. naturally, technological adaptation calls in many cases for significant investment in systems to be made. however, such investment today will be key to future income. 11 / 15 clearly, the gains in efficiency will be very closely linked to technological change. most banking transactions in spain continue to be made through atms and bank windows. however, the proportion of online users is growing every | 0.5 |
european economy. the single currency put an end to these serious disruptions. it also considerably simplifies day - to - day life : there are no longer any conversion fees for individuals, or any more uncertainties relating to exchange rate volatility for companies. for many firms, including italian imprenditori, their market naturally expanded from their domestic market to the whole of the euro area. according to empirical studies, the euro has thus led to a 5 to 15 % increase in trade between member states. an internationally recognised currency the economic size of the euro area and the stability of its currency allow the euro to play an international role. before the euro, in 1995, only the deutsche mark was an international reserve 2 / 6 bis central bankers'speeches currency, with a share of 15 % of global reserves. today, our shared currency accounts for 20 % of international reserves, in second place behind the dollar. an internationally recognised currency generates economic gains : the financial markets are more attractive for foreign investors, more liquid, and therefore more efficient. but it also carries a political weight : i know that when mario draghi speaks at the g7 or at the g20, the whole world listens to europe attentively. in the global financial arena, which has become turbulent, this union is our greatest chance ; none of our countries would have such clout in insolation. our sovereignty relies necessarily on european sovereignty. * * * the euro makes us more robust, and gives us more confidence in our currency : this is a considerable asset amidst so much uncertainty. the euro has naturally also provided us with a strong symbol of unity among european nations. moreover, from 12 at the start, the number of participating countries has risen to 19 today : 7 countries decided democratically to join the euro, and none has wanted to leave it. these are the concrete economic benefits that make the 340 million citizens of the euro area attached to their currency, to our currency. this attachment, which has been measured since the outset, has remained strong throughout the crisis. 70 % support the euro today, i. e. the highest level since 2008 ; a large majority of french citizens support the euro ( 68 % ). support remains strong in italy, albeit at a lower level ( 53 % ). the euro is not a technocratic utopia : it is a political and democratic decision, supported 25 years on β with hindsight β by a clear majority of citizens. ii. however, there are four | us : on both sides of the atlantic, inflation is too high. but it doesn't have the same nature : the energy component is higher in europe ; the demand one higher in the us, where the labour market is also tighter. hence we don't need to raise rates at the same pace, nor to the same level. that said, signs of peaking inflation β headline and core β in the us last thursday are good news for everyone, as the us has been ahead of the global inflation cycle, and the us monetary tightening has had strong spill overs on the rest of the world through the high level of the dollar. central banks are thus playing their part in the fight against inflation, but let us not forget structural economic measures. " beefing up " our productive capacity also has the potential to help reduce inflation in the longer term, in addition to increasing potential growth. this holds especially true when it comes to our ecological transformation, in order to decrease our dependency on fossil fuels. beyond the significant adaptations that are needed in our productive systems, this major transformation will require massive investments, both public and private. and this is where sustainable finance has a key global role to play. ii. sustainable finance in france, in europe and in japan 2 / 4 bis - central bankers'speeches a. sustainable finance, especially green finance, remains dynamic despite difficult conditions in bond markets while issuance of bonds have slightly decreased in 2022, due to an uncertain economic and financial environment, it is striking that most segments of sustainable finance have resisted well. in particular, green bonds have even continued to expand by 15 % in the first half of 2022, reaching eur 260 billion. ( iii ) among those, sovereigns represent almost half of total issuance volumes. the french state, which was the first sovereign issuer of green bonds in 2017, now has the greatest outstanding, amounting to eur 45 billion. and the european commission, with its ongoing ngeu programme, is gaining momentum and will become the biggest issuer within the next few years, as it is set to issue 30 % of this programme, or eur 250 billion, in green bonds. ( iv ) japan is also gaining momentum, notably through its green growth strategy laid out in december 2020 to facilitate private investment β through green finance among others. b. central banks'and supervisors'actions regarding climate change central banks and supervisors are delivering what they promised, in their catalytic role within the financial system. let me stress | 0.5 |
##ity needs, such as debt moratoriums and temporary lay - off assistance, and to facilitate their access to new financing, such as loan guarantee programmes. central banks deployed a wide array of emergency liquidity facilities and new asset purchase programmes, as well as funding facilities to support the essential role of banks in financing the real economy. with this objective in mind, bank supervisors used the flexibilities embedded in regulation and accounting standards so as to increase banks β headroom to absorb losses. these actions have achieved their short - term objectives, setting the stage for the subsequent recovery. the multi - front policy response to the covid - 19 crisis has prevented the drying - up of liquidity and avoided an immediate credit crunch that could have led to a large wave of defaults, warding off a deflationary spiral with probable profound economic and financial stability consequences. unlike other crisis episodes, in which credit crunches have been a problem, the policy mix has contributed to banks acting as part of the solution to the crisis, rather than as amplifiers of the initial shock. interventions have been devised in the spirit of close and constructive cooperation. g20 finance ministers and central bank governors, together with the major international organisations, worked in close contact, participated in several scheduled and unscheduled ( virtual ) meetings and exchanged information on a continuous basis. as mandated by leaders in march, a list of key principles and commitments for a coordinated response to the crisis was laid down under the saudi presidency. the action plan was endorsed in april and updated in october, coherent with the idea that β as a β living document β β it must regularly take into account ongoing developments and our progressive understanding of health and economic challenges. a vital part of the plan is the support provided to low income countries in the form of free resources for addressing the health crisis. through the debt service suspension initiative ( dssi ), by mid - october official creditors suspended debt - service payments of about 5 billion dollars from 46 countries who requested it. multilateral development banks committed additional resources to the value of 75 billion dollars to eligible countries. a common framework was endorsed last week to facilitate an orderly debt treatment of dssi - eligible countries, and is now being submitted for the approval of leaders. these initiatives will remain under the lens of the italian presidency, as part of a broader effort to deal with debt - related issues, enhance global financial safety nets, and improve mechanisms for financing development. * * * the policy response to the global economic jolt | 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 | 1 |
integration. what i have in mind instead is β genuine β integration, whereby financial resources are allocated with reference to the risk - return relationship and not to location β a process which would improve economic diversification in that it would cushion both entrepreneurs and households against local shocks. 16 this should naturally reduce the negative impact of an overextended financial sector by decreasing the probability of inefficient booms and severe busts. how can a single market for capital be realised? in addition to the better integration of governance that i have just talked about, the process rests on the improved integration of retail banking and capital markets. as regards retail banking, even before the crisis, we at the ecb acknowledged that this is one of the least integrated markets in the euro area. 17 the crisis undermined the process of integration by prompting a further retrenching of retail banking services within national borders. the new regulatory and supervisory framework has the potential to steer us towards deeper cross - border integration, and, in the process, to address europe β s over - reliance on large banks. evidence before the crisis suggested that the integration of retail lending markets may be a more efficient mechanism for cross - border risksharing than secured or unsecured interbank markets. it is important that the banking union is europe overbanked? report of the advisory scientific committee of the european systemic risk board, no 4 / june 2014. please refer to the financial stability board data gaps initiative and the consultation paper of the aggregation feasibility study group on approaches to aggregate otc derivatives data, february 2014. it should be noted, however, that financial integration can foster the specialisation of production across countries because financial intermediaries having a comparative advantage in lending to local industries can β reinsure β across borders. this can be more profitable but increases the exposure of domestic intermediaries to local shocks as well as cross - border contagion risk. the overall effect is ambiguous and can be positive under some assumptions. see fecht, gruner, h. p., and p. hartmann, 2012. financial integration, specialization and systemic risk, journal of international economics. european central bank β financial integration in europe β, april 2008. bis central bankers β speeches and the regulation against the β too big to fail β problem effectively encourage banks to reach an optimal size relative to the european market β that is, large enough to operate across borders and diversify risks, but small enough to be resolved with the resources of | 2023. for visibility reasons, the maximum of the yaxis for chart 2, panel b is set to 5. nevertheless, on 30 and 31 january 2021 the price volatility of doge exceeded 28. oil data refer to the european brent spot price. the altcoins β names are abbreviated as follows : bitcoin ( btc ), ether ( eth ), polkadot ( dot ), ripple ( xrp ), cardano ( ada ), litecoin ( ltc ), chainlink ( link ), dogecoin ( doge ), binance coin ( bnb ), bitcoin cash ( bch ), uniswap ( uni ), solana ( sol ). such high volatility also means that households cannot rely on crypto - assets as a store of value to smooth their consumption over time. similarly, firms cannot rely on crypto - assets as a unit of account for the calculation of prices or for their balance sheet. moreover, unbacked cryptos do not improve our capacity to hedge against inflation. indeed, their price developments exhibit an increasing correlation with stock markets ( chart 3 ). and empirical analysis finds that momentum in the crypto - asset market and global financial market volatility do have an impact on bitcoin trading against fiat currencies. chart 3 returns correlations of bitcoin vis - a - vis selected financial assets ( yearly rolling correlation ) sources : bloomberg, s & p global iboxx, cryptocompare and ecb calculations. notes : the data are for the period from 1 january 2016 to 16 june 2023. cryptos as a means of gambling and circumvention but the very instability of unbacked cryptos does make them appealing as a means of gambling. and their use as such has been facilitated by the establishment of a centralised market structure that supports the broader use of crypto - assets. crypto exchanges have become gateways into the crypto ecosystem, often providing user access to crypto markets in conjunction with other services like wallets, custody, staking [ 20 ] or lending. off - chain grids or third - party platforms have offered users easy and cost - effective ways to engage in trading and speculation, while stablecoins are being used to bridge the gap between fiat and crypto by promising a stable value relative to fiat currency. besides gambling, crypto assets are also being used for bypass | 0.5 |
##ifies their high pay. the fact that hong kong appears to be, overall, a rather expensive place, relative to the majority of neighbouring economies, is a consequence and symptom of its success. as anyone can see by just looking around, this doesn't mean that we can no longer win any business. but we can only afford to pay ourselves what we are worth. if costs go too high and hong kong suffers an absolute loss of competitiveness ( as opposed to there merely being shifts in relativities between sectors ), then an adjustment process kicks in to restore competitiveness. since we have a fixed exchange rate, this adjustment occurs through downward pressure on domestic costs and prices. we have seen this process very clearly and effectively at work over the past three years or so ; for instance, the loss of competitiveness inflicted on hong kong by the currency depreciations elsewhere in the region in 1997 was made good largely through internal deflation within the space of about 18 months. at risk of my labouring the point, look at cities such as london, paris, zurich, tokyo and new york. in absolute terms they are expensive places, but they all generally thrive. the citizens don't hang their heads in shame at being in a high cost and high earning environment. indeed, many relish it. but none of the businesses there can afford not to search continuously for greater control of costs, for higher productivity, for new products and markets, and so on. competitive pressure may be intensified by globalisation and by the emergence of significant competition even from third world cities, where basic costs are hugely lower, but the very survival of the wealthy cities has not been seen to be seriously threatened on that score. over a period of time there may be marked shifts in relative income levels between different locations β hopefully as the living conditions of the poor advance more rapidly than those of the rich, although sadly there has been less evidence of that than one might have wished for β but there is no reason to expect the great cities of the world to sink out of sight. and if you add hong kong to that list, you will see the point i am trying to make. i'm not sure whether anyone a quarter of a century ago accurately predicted how important a contribution the financial and business services sectors would now be making to the hong kong economy. looking ahead, i am definitely reluctant myself to make any prediction about the mix of activity twenty - five years from now. ask anyone involved in | ##pate a dynamic job market, diverse career paths, and the opportunity to work on groundbreaking projects that will shape the future of finance. i've highlighted the opportunities arising from the growing demand for fintech talent, and the market potential stemming from the gba area. the next question is, how can our younger generation, including the students here today, seize these opportunities? the fintech ecosystem has undergone remarkable growth and development in the last few years. as the financial services industry embarks on the next phase of digital transformation and innovation, there is a pressing need to unlock the full potential of fintech. 2 / 3 bis - central bankers'speeches at this critical juncture in our fintech journey, the younger generation will be a vital source of fresh ideas, driving further breakthroughs and advancing more innovation. here, i would like to offer three pieces of advice for you. first, you need to stay curious, keep learning and remain adaptable. things are changing fast, and you need to ensure that you stay up - to - date with the latest trends and developments. secondly, you need an entrepreneurial mind - set to think creatively about applications and explore innovative business models that can bring benefits to the real economy. it is essential to remember that innovation is not an end in itself, but it is really about using technology to make our life better, to make financial services either faster, more efficient, or more accessible. my third advice is that you need to stay open - minded about new, or even radical ideas, and to stay global on fintech trends, so that you can find inspiration to turn them into new ideas for local applications. in closing, i would like to extend my best wishes for the success of this summit, and my appreciation for the dedication of every partner and participant in this initiative. let's continue to grow our fintech talent together for a sustainable ecosystem. thank you. 3 / 3 bis - central bankers'speeches | 0.5 |
on crossborder payments. first, i will outline some general points about the potential impact and benefits of the introduction of cbdc for processing cross - border transactions. second, i will aim to highlight this topic in the context of the eurosystem's work on a digital euro β the envisaged european retail cbdc. 2 cbdcs and cross - border payments given that there are correspondent banks and fintechs working on digital innovations as well, let me begin with a question. what would be the additional benefits of cbdcs in the area of digital payments? the introduction of cbdcs would facilitate a setup of new infrastructures for digital payments. on the one hand, this makes high initial investment necessary. on the other hand, once a cbdc is established with its new infrastructure, it could catalyse broad improvements in payment systems, including cross - border transactions β by introducing new message standards and shorter process chains, for example. 4 starting on a green field may be one major advantage of cbdcs. experience shows that, in particular, implementing common standards is not an easy task. take iso 20022, for example. 5 the international organisation for standardisation proposed this common standard for financial messages in cross - border payments in 2004. it will be probably more widely used in payment systems on a global level next year β 21 years after the initial proposal. this period feels even longer when you think of all the innovations that have taken place in the meantime β the first iphone was presented in 2007, the concept of a decentralised blockchain in 2008. however, to be able to reap the benefits for cross - border payment, interoperability between cbdcs must be ensured early on. to this end, central banks should already begin to consider the best ways for interaction in the planning phase. in my view, we have a historic opportunity to vastly improve cross - border transactions by making different cbdcs interoperable from the very beginning. indeed, a number of projects are already researching the best ways of making cbdcs interoperable. for instance, the bank for international settlement ( bis ) innovation hub in singapore and a number of national central banks in the indo - pacific region set up project dunbar to explore how a common platform for cbdcs could enable cheaper, faster and safer cross - border payments. 6 i am strongly in favour of a multilateral approach in this area, because this best serves the interests of all participants. | countries house price growth is coupled with strong mortgage growth. indeed, the strong price increases are making urban housing affordability a pressing issue everywhere in the world. for central bankers, responsible for financial stability, affordability may not always be their most important concern. however, extreme examples such as the san francisco bay area, silicon valley, where the average house costs β¬1. 5 million, show this can become a problem for broader economic wellbeing. as these areas are booming, many workers cannot afford to live there anymore. recently, we see books, research papers and newspaper articles documenting these consequences of decreasing affordability, social as well as economic. urban demographics are changing as a result. young, well - educated people are drawn to cities, often chasing a limited supply of housing. due to the housing shortage, middle - income households are at a disadvantage : too rich to qualify for social housing, not rich enough to buy a house. they need to rely on the rental market. however, if this market does not function well, as is the case in many cities, middle income families are forced to move away. moreover, the rise of major cities also leads to increasing divergence between these cities and more peripheral regions. at the same time, spillover effects cause prices to rise in areas directly bordering major cities. this ultimately affects the structure of economic development, which increasingly shifts to urban areas and away from the periphery. housing supply the lack of suitable housing plays a major role here. supply shortages in cities, and to a lesser extent in other parts of the country, are a main driver of current price rises. and as we know from past experience, strong house price rises can lead to overshooting. which is often followed by a correction. this price volatility does not remain confined to the housing market. in countries like the netherlands, with a high rate of home ownership and dependence on mortgage lending, house price volatility feeds into the real economy. the link between house prices and private consumption is very strong here. this symbiotic relationship causes booms to grow larger and busts to be deeper. a more balanced and suitable supply of housing is thus needed. this does not only mean owner - occupied housing, but also private rental, especially for middle - income households. as a dnb study pinpointed last year, they are put in a tight spot on the housing market. in our view, a larger mid - market private rental segment is the key to | 0 |
##litation. to increase the profitability of our foreign exchange earning sectors we must improve the productivity of labour and the efficiency of capital, make our products and services superior in every market category, enrich our products ( sports, heritage and cultural tourism, for example ), do targeted marketing and develop new markets. it is critical that we improve service quality and set our standards at the very highest level. there are many success stories in each of these areas and we should always keep them in mind. we should celebrate these achievements, and use them as inspiration for what still needs to be done. bis central bankers β speeches the fiscal adjustment : the fiscal adjustment is designed to stabilize the economy by matching foreign exchange outflows to inflows, and to slow and eventually eliminate the drain on foreign exchange over the next several months. reserves are held for the purpose of financing imports in the interim, while the measures take effect. we expect reserves to fall during that period, but we expect that once inflows and outflows are brought into balance, our foreign exchange reserves will return to levels that have been sustained since 2008. barbados has no problem in servicing government debt. service costs on the external debt are less than 10 % for the foreseeable future, and the net public sector ratio to gdp is a moderate 62 %. barbadians have every reason to be confident of our future : barbadians have bested the caribbean through strength of character, sound decisionmaking, and investing in ourselves. the quality of our lives reflects our achievement. we have beaten the odds before, and we can do it again ; experience has taught us that it is not as difficult as it seems, once you buckle down to the task. patience, persistence, determination and commitment to excellence will win the day. there is something that each and every barbadian can contribute to growth : for entrepreneurs it is the development and promotion of projects to prospective foreign investment partners ; for government it is the upgrade of business facilitation ; and for workers, the improvement of productivity and the development of the barbadian reputation for excellence. finally, the narrative matters. we must together build our self - confidence, by celebrating our successes, to give us energy for tackling the challenges ahead. bis central bankers β speeches | it means using our skills and talents to make a positive difference in the world. to stay true to this value, it's essential to practice empathy and understanding. try to put yourself in other people's shoes and consider their perspectives. volunteer your time and resources to help those in need, and be a positive influence on those around you. remember that small acts of kindness can have a big impact on someone's life. how can we practise compassion in our daily lives? one way is to cultivate a growth mindset. instead of judging others or labelling them, try to see them as individuals with unique experiences and challenges. by approaching others with an open mind and heart, we can build empathy and understanding and make a positive impact on the world around us. 2 / 3 bis - central bankers'speeches building community lastly, this school has taught us the value of community. former south african president nelson mandela said, " no one is born hating another person because of the colour of his skin, or his background, or his religion. people must learn to hate, and if they can learn to hate, they can be taught to love, for love comes more naturally to the human heart than its opposite. " building community means reaching out to those around us, regardless of their background or beliefs. it means finding common ground and working towards a common goal. to stay true to this value, it's essential to stay connected with others and build strong relationships. find ways to support and encourage your peers, whether it's offering help, attending events, or simply being present. join clubs or organisations that align with your interests and passions, and get involved in community service projects that make a difference in the lives of others. building community also means being open to diverse perspectives and ideas. don't be afraid to engage in civil discourse with those who hold different views than your own. seek to understand their perspectives and find common ground where you can. by building bridges and connections with those around us, we can create a more inclusive and harmonious society. so, how can we stay connected to our community and build strong relationships? one way is to be present and engaged. attend events and activities, and participate in group discussions or projects. listen actively and ask questions, and be willing to share your own experiences and perspectives. another way to build community is to be vulnerable and authentic. don't be afraid to share your struggles and challenges with others, as it can help | 0.5 |
household credit was the main driver of bank credit, growing by 11. 8 per cent in september 2023 relative to 12. 2 per cent in july 2023. housing loan growth decelerated, rising at an annual rate of 12. 8 per cent in september 2023 from 18. 4 per cent in june 2023. corporate credit rose by 2. 8 per cent in september 2023, compared to 4. 4 per cent in july 2023, suggesting that growing earnings was supporting the funding requirements of the corporate sector. the credit portfolio of the banking sector remained sound. the npl ratio of the banking sector was estimated at 4. 7 per cent in september 2023, up from 4. 6 per cent in june 2023. the npl coverage ratio stood at 53. 2 per cent in september 2023. banks maintained ample capital and liquidity buffers. the aggregate capital adequacy ratio ( car ) was at 20. 3 per cent in september 2023, well above the minimum regulatory requirement. the liquidity coverage ratio ( lcr ) of the banking sector also stood above the regulatory floor of 100 per cent, with aggregated lcr at 278. 9 per cent in september 2023 while the lcr for material foreign currencies was 213. 1 per cent. 6 / 9 bis - central bankers'speeches the bank's stress test results showed continued resilience of the banking sector, based on its upgraded framework. the new stress testing framework includes forward - looking elements and new modules to cater for evolving macrofinancial conditions. as the domestic economy expands further, banks are expected to consolidate their buffers to absorb potential shocks. the bank continues to monitor risks to the stability of the financial system, while focussing on its price stability mandate. mauritius investment corporation ( mic ) before i come to the mpc decision, let me quickly underscore the pivotal role played so far by the mauritius investment corporation ( mic ) in our economy. as you may be aware, the mic has played a key role in assisting systemic corporates in their recovery process post - covid, thereby safeguarding the safety, soundness and stability of the financial system of mauritius. it has also played an important part in the bank's investment strategy and in diversifying the bank's portfolio. i am pleased to enlighten you that the entity has performed well during the financial year 2022 - 2023. from inception to 30 june 2023, mic | rundheersing bheenick : the role of international trade and trade finance address by mr rundheersing bheenick, governor of the bank of mauritius, at the presentation on afreximbank to the mauritian business community, port louis, 16 june 2009. * * * good morning ladies and gentlemen it is with great pleasure that i welcome you all today to this presentation of the afreximbank. i extend a particularly warm welcome to dr oramah and mr chafa. this is a critical element in what might be called our frontier expansion policy, creating extended links between the core role of a central bank and the wider pastures of trade and the real economy. last month at about the same date, the bank was co - hosting the first seminar of the islamic financial services board in mauritius. today β s event is the fruit of the collaboration of our two institutions, afreximbank and bank of mauritius. on the occasion of a board meeting of afreximbank held in mauritius in december last, i had drawn the attention of the president and chairman of the board of afreximbank, mr jeanlouis ekra, on the lack of awareness about afreximbank β s programmes and facilities by the business community and i had expressed my views on how a knowledge of afreximbank β s products could represent a useful tool in the promotion of market and product diversification of our trade. i am extremely delighted that the president of afreximbank has responded positively to my request and i convey my heartfelt thanks to him. today β s event gives me the opportunity to share with you a few thoughts on the role of international trade and trade finance, especially in the context of the current economic turmoil, and as paul krugman has put it in his seminal book β the return to depression economics β ; that β malign neglect β of the β shadow banking system β that has led to the β loss of traction β of the central banks in steadying the real economy in the storm. international trade over many years, we have seen that most countries have progressively opened their economies to international trade, either through the multilateral trading system, increased regional cooperation or as part of outward - oriented domestic reform programs. we have gone beyond the system with the third world being merely the exporter of raw materials and the importer of manufactures. international trade nowadays backed by the internet has created the efficiency for raising standards | 0.5 |
increased funding costs, were observable. in view of the developments in financial markets and specific events in some international banking institutions, the bank deemed it important to embark on a process to evaluate the appropriateness of south african banks β incentive schemes during 2008. a major change to the south african banking regulatory and supervisory framework occurred as a result of the implementation of basel ii on 1 january 2008. the process followed in implementing basel ii was characterised by its broad consultative approach ; several quantitative impact studies and field tests ; amendments to the regulatory and supervisory frameworks ; and regular interaction with all south african banking institutions. the amended banks act, 1990 and regulations relating to banks, as well as the revised supervisory process were implemented at the same time. the bank, in close co - operation with the financial intelligence centre, continued to monitor the compliance of banking institutions with legislation relating to anti - money laundering and combating the financing of terrorism. furthermore, in august 2008 the bank participated in the financial action task force β s mutual evaluation of south africa β s anti - money laundering and counter - terrorism financing system. international co - operation the african continent and the southern african development community ( sadc ) region remain the focal points of the bank β s international relations efforts as programmes to achieve regional integration gain momentum. the bank currently hosts the secretariat of the committee of central bank governors ( ccbg ) in sadc and continues to support the implementation of ccbg projects. significant progress has been made in the committees dealing with payment systems, information technology, macroeconomics, banking supervision and legal issues. this progress has been shared with the finance committees in parliament where the ratification of the finance and investment protocol, a key instrument to advance regional economic integration in sadc, has been sought. in our relations with multilateral institutions our efforts have been concentrated on increased participation in key forums such as the g - 20. the chair of the g - 20 passed on to brazil from south africa at the beginning of this year. south africa remains an active participant in this forum of systemically important advanced and emerging - market economies. the focus of the forum this year includes competition in the financial sector, fiscal space for social inclusion and clean energy. in addition, with the active involvement of the forum, progress was made this year with the reform of the bretton woods institutions, particularly in relation to quota reform and the finances of the international monetary fund ( imf ). the bank, through the sarb college ( the college ) continued | rand against a basket of currencies depreciated by 21. 4 per cent from 22 may 1998 to 31 august 1998, to bring the cumulative decline in the external value of the rand from the end of last year to 24. 6 per cent. the depreciation of the exchange rate encouraged further capital outflows in the form of negative β leads and lags β, and also led to speculative positions taken against a further depreciation of the rand. in the end, a net outflow of more than r13 billion in the form of private sector short - term capital exerted additional pressure in the foreign exchange market. β’ β’ β’ β’ the outflow of capital reduced liquidity in the banking sector and forced the banks to borrow more from the reserve bank on a day - to - day basis. the estimated daily liquidity needs of the banks increased from about r2 billion at the beginning of may to more than r13 billion in early june 1998. other interest rates followed the yield on long - term government bonds on its strong upward surge. the rate for repurchase transactions from the reserve bank increased from 14. 78 per cent on 12 may 1998 to 24 per cent on 22 june 1998, before it settled early in july at a level just above 21 per cent. banking institutions raised their prime overdraft rate from 18. 25 per cent at the end of april 1998 to 25. 5 per cent on 28 august 1998. in order to provide liquidity to the drained foreign exchange market, the reserve bank drew about r8 billion on foreign loan facilities and increased its outstanding hedge facilities in respect of future international balance of payments commitments from us $ 17. 5 billion at the end of april 1998 to us $ 25. 3 billion at the end of june 1998. having risen by 32. 3 per cent from december 1997 to an all - time high in may 1998, the average monthly level of share prices listed on the johannesburg stock exchange declined by 38. 7 per cent between may to september 1998. although the financial conditions started to stabilise again in early july 1998, the situation remained extremely sensitive throughout the next three months, up to september 1998. exchange rates, yields and interest rates and share prices reacted to rumours, speculative transactions and adverse international developments, and most of the financial aggregates showed great volatility. 3. adverse financial conditions brought negative developments in real economic activity the adverse developments in the financial markets had a negative effect on an already fragile real domestic | 0.5 |
dealing with the situation of developing countries. our compatriots are concerned about the solidity of european banks in general and that of french banks in particular. many readers are wondering if their savings are safe? are they safe? european banks are much stronger than they were in 2008. their capital ratios have practically doubled. their regulatory framework has been strengthened and their supervisors are far more vigilant and scrupulous than they were back then. the banking sector is as strong as one could wish for. savers can rest assured. 3 / 3 bis central bankers'speeches | guy quaden : efficiency and stability in an evolving financial system opening address by mr guy quaden, governor of the national bank of belgium, at the national bank of belgium conference on efficiency and stability in an evolving financial system, brussels, 17 and 18 may 2004. * * * ladies and gentlemen, i am pleased to welcome you at the third biannual international conference organised by the national bank of belgium. this year's subject is β efficiency and stability in an evolving financial system β. the topic is of the utmost importance not only to central banks but also to all economic agents. indeed, the efficiency and stability of the financial system is a prerequisite for the optimal allocation of capital over different sectors, for adequate risk - sharing across agents and ultimately for economic growth and stability. central banks have a particular interest in the maintenance of an efficient and resilient financial system, because it ensures the effective implementation of monetary policy and thus contributes to meeting the final objective of price stability, and to promoting high sustainable growth. over the past decade our financial systems have been going through major changes. those developments raise new questions and face central banks and other bodies having supervisory and regulatory powers with new challenges. in order to provide an appropriate response to these new and changing circumstances, policymakers should have a detailed knowledge of the ongoing processes and apply adequate theoretical models and insights to support their decisions. this conference combines keynote lectures by internationally distinguished researchers with the research effort of 6 belgian teams, 4 academic teams and 2 teams from within the bank. a selected group of international experts, with a broad research experience in financial issues, will act as discussants of these research papers. their comments will be the start of a discussion i would like all of you to participate in. we hope that this conference, offering central bankers, academic researchers and financial experts the opportunity to exchange ideas, will contribute to our understanding of the ongoing changes. major changes having taken place in our financial environment over the last five to ten years have been the introduction of the euro and european financial integration, the global financial liberalisation and the rapid development of new financial products, the consolidation in the banking industry and new technologies for producing financial services. the introduction of the euro has removed one of the main factors of financial segmentation across eurozone countries, namely the multiplicity of currencies. thereby, it has reduced the vulnerability of the financial and real sectors to exchange rate shocks. the resulting financial integration has proved to be impressive in the securities markets. | 0 |
instead giving the bank a warning. the riksbank β s liquidity assistance has been repaid. the riksbank has also participated in the international cooperation to strengthen financial stability in sweden's neighbouring countries. in may 2008, the riksbank and the central banks in denmark and norway entered into a euro / icelandic kronor swap agreement with the central bank of iceland. the aim of this swap agreement is to support the icelandic central bank in its efforts to safeguard macroeconomic and financial stability. sweden's part of the swap agreement amounts to eur 500 million. the agreement was extended in december after the imf had drawn up a programme for financial assistance for iceland. latvia has negotiated a support package with the imf and the eu which will make it possible for the country to retain its fixed exchange rate against the euro. in december, the riksbank and the danish central bank entered into a swap agreement with the latvian central bank. under this agreement, latvia may borrow up to eur 500 million in exchange for latvian lats. the intention was that this agreement would act as temporary funding in order to strengthen financial stability in latvia until the imf decided on its support package. the support package was approved by the imf just before christmas. it is not only the riksbank that has taken action to counter the effects of the financial crisis. the swedish national debt office, finansinspektionen and the government have also acted to safeguard the functioning of the swedish financial system and to mitigate the effects of the crisis on the real economy. the national debt office has acted to meet the dramatic increase in demand for treasury bills. extra auctions have been held in order to issue larger volumes of short - term treasury bills than normal. by the turn of the year, the national debt office had issued more than sek 190 billion in treasury bills over and above the regular loan programme. during the autumn, finansinspektionen decided to change the regulations for calculating the discount rate for life insurance companies. the aim was to arrive at a more reasonable calculation of the companies β debts and to mitigate disruptions on the bond markets. finansinspektionen has also altered the capital adequacy rules for credit institutions and securities companies. the aim of this change is to make it possible for the financial companies to strengthen their capital situation by being able to have a greater proportion of financial instruments other than shares in their capital base. at the | sold. 17 another argument sometimes put forward in favour of large bond holdings is that the central bank β s purchases would increase the supply of safe assets in the economy, and that there is otherwise a shortage of such assets. 18 the riksbank β s bond purchases result in that government bonds with a specific maturity disappear from the market and are replaced by riksbank certificates with a maturity of one week. 19 the riksbank then takes over some of the maturity transformation that the market otherwise tries to achieve on its own, and helps to reduce the interest rate risk in the outstanding portfolio of government securities. this argument isn β t particularly convincing either. if it is considered important to have short maturity on the national debt in normal times, this should be dealt with when the government bonds are issued, and it is then a question for the national debt office. furthermore, the conversion from government securities to riksbank assets does not seem to increase the supply of safe assets in sweden ; the interest rate on ( short - term ) government securities is lower than the repo rate which means that the market price of government bonds is higher than the price of riksbank certificates with the same maturity. this pricing indicates, if anything, that the market prefers to hold government bonds rather than central bank reserves and hence that the riksbank β s bond purchases are reducing the supply of the safest assets. another indication of this is that the term premiums on government bonds have been very low, and probably negative, in recent years. 20 this suggests that government bonds with long maturities are not being priced with risk premiums in relation to riksbank certificates or government securities with short maturities. 7 i have now discussed arguments that could indicate that the riksbank should continue to maintain a large portfolio even in the future, and i don β t consider these arguments to be particularly strong. but does this mean that the size of the balance sheet has no significance or are there strong arguments indicating that the riksbank β s balance sheet should be small? arguments against substantial bond holdings in normal times maintaining a large balance sheet can be associated with risks, but the nature of these risks depends both on the assets held by the central banks and how these are funded on the liability side. the risks may relate to the central bank β s financial position and ability to conduct monetary policy and simultaneously fund its own operations, as well as to its reputation and possibility to safeguard its independence in monetary policy issues. plosser | 0.5 |
tukiya kankasa - mabula : technological developments in zambia and the surrounding region official opening speech by dr tukiya kankasa - mabula, deputy governor β administration, bank of zambia, at the sadc central banks it forum 2008 annual conference, livingstone, 3 - 7 march 2008. * * * protocol β’ the chairman of the sadc ict forum, mr paulo maculuve β’ the ict directors from the sadc central banks β’ mrs. esselina macome ( dr ), general manager and board member, banco de mocambique β’ the ict members of staff from sadc central banks represented here β’ other members of staff from sadc central bank represented here β’ representatives of hardware and software suppliers β’ members of the press β’ distinguished ladies and gentlemen on behalf of the bank of zambia governor, i would like to extend a very warm welcome to you all to the β sadc central banks it forum 2008 annual conference β. to our colleagues from outside zambia, i wish to extend a special welcome to you to zambia, and in particular to livingstone, our tourist capital especially at this time of the year. like the rest of zambia, livingstone is a city of tranquility with an easy - going african charm. apart from the famous victoria falls, other tourist spots include the mukuni cultural village a well stocked curio market, among the many other attractions. i therefore urge you to find time or indeed stay an extra day or more to sample this special menu that livingstone can offer. mr chairman, it is pleasing to note that the sadc information and communications technology ( ict ) forum will this year be hosting its 13th annual conference in livingstone, zambia. bank of zambia, is therefore pleased to join other sister central banks who have previously hosted this annual conference. distinguished delegates, as you are all aware, information and communications technology ( ict ) plays a strategic role in the day to day operations in all our central banks. the rapid evolution of ict, which is generally called the β ict revolution β, has been exerting a profound impact on the world β s economies. as we all can acknowledge, technological innovation has brought about the speedy processing and transmission of information, resulting in substantial reduction in costs, wider networking, and globalization on an unprecedented scale and scope. distinguished delegates, the central banks within the sadc region have registered significant developments and advances in the areas of payment systems, website development, and banking supervision application, just to mention a few projects em | the root causes of the crisis and to build a genuine economic and monetary union have been set in motion. the ecb β s monetary policy will continue to make its contribution to this endeavour, in line with its mandate. the heavy task of implementing the important decisions already taken lies ahead. all parties involved in this comprehensive reform agenda must persevere. and we must all work with conviction and determination towards our shared vision. if we do so, i am confident that restoring stability and ensuring prosperity in the euro area are within our reach. bis central bankers β speeches | 0 |
talk about china. you may ask, shouldn β t we also devalue the peso, after all a currency war seems to be in play? bis central bankers β speeches textbooks describe competitive devaluation as a β beggar thy neighbor policy β. but that said, we know that policy makers will always do what they believe would be best for their own specific needs, sometimes without much concern for the impact of their actions on other jurisdictions. this brings to mind a higher policy consideration β the principle of β enlightened self - interest β as espoused by the bank for international settlements. bis general manager jaime caruana said that while it may seem that β keeping one β s house in order β is good defense, having a policy mindset of also taking into account spillovers of one β s actions may lead to improved overall welfare. after all, we share the same space, so to speak, and the same spillovers may β spill back β to one β s economy. my own appreciation of this principle is that seeking only one β s own goals may lead us to sub - optimal results. given the size of our domestic market, we don β t think there is compelling reason to deviate from our current fx policy of allowing the markets to broadly determine the exchange rate. just as we did during the period of strong capital inflows in earlier years, we will allow the exchange rate to adjust to market conditions also during this period when the potential for capital outflows may increase. the bsp will not go against the fundamental trend in the fx market, but we reserve scope for official action to smoothen volatilities that could disrupt business planning and dislodge inflation expectations. this policy is both efficient and equitable because the exchange rate affects different sectors of the economy, differently. depreciation benefits exporters and other dollar earners, while it weighs on the debt burden of borrowers in foreign currency and increases the input cost of importers. i hear some murmurs, even see some quizzical looks. well, let me borrow a phrase from stan fischer when he spoke at jackson hole over the weekend. i don β t wish to β disappoint your rational expectations β that i won β t tell you whether a breach of a certain exchange rate level would worry the bsp or not. actually, the bsp has no β magical β exchange rate. as i have repeatedly said, the bsp doesn β t target specific | to have at least 70 percent of adult filipinos owning a transaction account by 2023. the thrift banking industry has to embrace and be ready for the opportunities and realities under the new economic arrangements. allow me also to commend the 12 thrift banks that are offering pesonet payment transactions and the eight thrift banks offering the instapay platform for sending and receiving payment services and the four thrift banks that provide receiving payment services. you are among the movers under the digital payments transformation roadmap. nevertheless, we are also mindful of the attendant risks and the unintended consequences of these developments. in this area, we rely on our long - standing partnership with the chamber of thrift banks to help us 2 / 3 bis central bankers'speeches in mitigating the effects of technology - related risks, in promoting financial integrity and transparency in financial transactions while working towards sustaining the resiliency and stability of the banking system. ladies and gentlemen, disruptive technology and the covid - 19 pandemic are drastically changing the future of financial services industry. there are rough seas and strong headwinds coming from these two realities. but we must not lose track of our collective goal of keeping the banking system on even keel so it remains supportive of economic recovery and growth over the long - term. together, we can work towards developing a safer, more dynamic, more digital, and more inclusive banking system for the banking public. mabuhay ang chamber of thirft banks and i wish you all a meaningful convention ahead! thank you all! 3 / 3 bis central bankers'speeches | 0.5 |
may improve more than expected, and both the global economy and foreign trade may recover more strongly than projected. furthermore, there may be stronger than anticipated effects stemming from the extensive macroeconomic stimulus being provided and from other policy measures taken. on the downside, concerns remain relating to a stronger or more protracted than expected negative feedback loop between the real economy and the financial sector, renewed increases in oil and other commodity prices, the intensification of protectionist pressures and the possibility of a disorderly correction of global imbalances. with regard to price developments, euro area annual hicp inflation increased further in january 2010 to stand at 1. 0 %, according to eurostat β s flash estimate, after 0. 9 % in december 2009. inflation is expected to be around 1 % in the near term and to remain moderate over the policy - relevant horizon. in line with a slow recovery in demand in the euro area and elsewhere, overall price, cost and wage developments are expected to stay subdued. in this context, it is important to emphasise that inflation expectations over the medium to longer term remain firmly anchored in line with the governing council β s aim of keeping inflation rates below, but close to, 2 % over the medium term. risks to this outlook remain broadly balanced. they relate, in particular, to the further development of economic activity and the evolution of commodity prices. furthermore, increases in indirect taxation and administered prices may be stronger than currently expected, owing to the need for fiscal consolidation in the coming years. turning to the monetary analysis, the annual growth rate of m3 remained negative in december 2009, standing at β 0. 2 %. in the same period, annual growth in loans to the private sector was zero. these data continue to support our assessment of a moderate underlying pace of monetary expansion and low inflationary pressures over the medium term. actual monetary developments are likely to be weaker than the underlying pace of monetary expansion, owing to the downward impact of the rather steep yield curve. looking ahead, m3 and credit growth is likely to remain weak for some time to come. the prevailing interest rate constellation continues to have a strong influence on both the level and composition of annual m3 growth. on the one hand, the low rates of remuneration on short - term bank deposits foster the allocation of funds away from m3 and into longer - term deposits and securities. on the other hand, the narrow spreads between the interest rates paid on different short - term deposits imply a low opportunity cost of holding | - term inflation expectations remain firmly anchored in line with the governing council β s aim of keeping inflation rates below, but close to, 2 % over the medium term. we will continue our enhanced credit support to the banking system, while taking into account the ongoing improvement in financial market conditions and avoiding distortions associated with maintaining non - standard measures for too long. the governing council will, in early march, take decisions on the continued implementation of the gradual phasing - out of the extraordinary liquidity measures that are not needed to the same extent as in the past. in order to counter effectively any threat to price stability over the medium to longer term, the liquidity provided will be absorbed when necessary. accordingly, we will continue to monitor very closely all developments over the period ahead. as regards fiscal policies, many euro area countries are faced with large, sharply rising fiscal imbalances, leading to less favourable medium and long - term interest rates and lower levels of private investment. moreover, high levels of public deficit and debt place an additional burden on monetary policy and undermine the stability and growth pact as a key pillar of economic and monetary union. against this background, it is of paramount importance that the stability programme of each euro area country clearly defines the fiscal exit and consolidation strategies for the period ahead. countries will be required to meet their commitments under the excessive deficit procedures. consolidation of public finances should start in 2011 at the latest and will have to exceed substantially the annual adjustment of 0. 5 % of gdp set as a minimum requirement by the stability and growth pact. a strong focus on expenditure reforms is needed. the key challenge in order to reinforce sustainable growth and job creation is to accelerate structural reforms, as the financial crisis has negatively affected the productive capacity of our economies. in the case of product markets, policies that enhance competition and innovation are urgently needed to speed up restructuring and investment and to create new business opportunities. in labour markets, moderate wage - setting, effective incentives to work and sufficient labour market flexibility are required in order to avoid significantly higher structural unemployment over the coming years. finally, an appropriate restructuring of the banking sector should play an important role. sound balance sheets, effective risk management and transparent, robust business models are key to strengthening banks β resilience to shocks, thereby laying the foundations for sustainable growth and financial stability. we are now at your disposal for questions. | 1 |
william c dudley : some lessons from the crisis remarks by mr william c dudley, president and chief executive officer of the federal reserve bank of new york, at the institute of international bankers membership luncheon, new york, 13 october 2009. * * * thank you for having me here to speak today. it is a real pleasure to have this opportunity to discuss the challenges ahead in making our banking and financial system more resilient and robust. we have learned a great deal over the past two years about our financial system and its vulnerabilities. the challenge ahead is to put these lessons to good use. regulators and market participants failed to fully appreciate the degree to which the various aspects of our financial system are interconnected, and to foresee what those tight linkages would mean for market function when even one reasonably large institution β let alone many β became distressed. we also did not fully appreciate the strength of the amplifying mechanisms that were built into our financial system ; the consequence of which was to exacerbate the boom on the way up and worsen the bust on the way down. contributing to these pro - cyclical dynamics were inadequate incentives for firms to curb their risk - taking and to more effectively manage the risks they did face. the inadequate level of transparency and disclosure, particularly in the market for structured products, were also important in making the financial system more fragile and vulnerable to crisis and in increasing the degree of uncertainty and contagion once the crisis was underway. only by fully understanding these shortcomings can we construct solutions that will strengthen our financial system and make it more robust. the initiatives underway to strengthen our financial system span a wide range of supervisory and regulatory policy areas, including ongoing efforts to improve standards for both the capital and liquidity held by financial institutions, efforts to improve the risk management practices at financial institutions and efforts to strengthen the resiliency of market infrastructures. today, i am going to focus mainly on the need to improve the capital standards for large, systemically important financial institutions. for initiatives in this area to be effective, we need to make progress on three distinct, but related fronts : β’ a more thorough and complete risk capture so that the capital adequacy rules more effectively encompass a broader set of risk exposures than before, β’ rules that encourage the conservation of capital in adverse economic and financial circumstances, and β’ tougher regulatory requirements, including the use of a contingent capital instrument that would automatically replenish equity capital in times of | concern if these firms β compensation practices are contrary to the text or spirit of the international agreements on compensation practices that are in the process of being hammered out. for example, multi - year guaranteed bonus payments would raise a red flag for us as not likely being consistent with the evolving consensus on sound compensation practices. thank you for your kind attention. i would be happy to take a few questions. | 1 |
to strike a balance between two outcomes : it seeks to preserve the incentives for banks to pass through the stimulus generated by the negative interest rate on their reserves, while mitigating the adverse effects that these negative rates might have on banks β lending behaviour by affecting their profitability. the euro area needs financial intermediaries to remain engaged and active in 3 / 5 bis central bankers'speeches monetary transmission, and the new two - tier system will make sure that the ability of banks to extend loans to their customers at favourable terms remains unimpaired. the different elements of this comprehensive package will be mutually reinforcing in supporting favourable financing conditions for businesses and households, which will sustain investment and consumption. greater business and household expenditure, in turn, will support inflation dynamics and make sure that they durably converge to our aim. overall, in view of the outlook and uncertainties we are facing, monetary policy needs to remain highly accommodative for a prolonged period of time. the measures we took at our last meeting underscore our determination and readiness to provide the necessary monetary stimulus in pursuit of our price stability objective. we continue to stand ready to adjust all of our instruments if warranted by the inflation outlook. looking back, looking forwards : achievements and future direction of economic and monetary union the conventional and unconventional measures the ecb has taken over the past decade have been successful in addressing the deflationary risks, restoring the functioning of the monetary policy transmission mechanism and providing vital support to the euro area economy. but the ecb does not operate in a vacuum and other economic policies matter too. allow me to recall my first appearance before this committee in 2011. at that time, half of my introductory remarks were about the functioning of economic and monetary union ( emu ) and the need for other european policymakers to act. so i will conclude my final statement to you by highlighting some lessons that have emerged from these eight years, which i hope can help in addressing the challenges ahead. when comparing the crisis response of the euro area with that of other advanced economies, it is evident that the latter were able to achieve a better macroeconomic policy mix at the time, thanks to more decisive actions in both the fiscal and financial domains. the governing council has reiterated that we are determined to ensure that inflation moves towards our aim in a sustained manner, and that we continue to stand ready to adjust all of our instruments. at the same time, a better policy mix, including fiscal policy, structural | mario draghi : hearing at the committee on economic and monetary affairs of the european parliament introductory statement by mr mario draghi, president of the european central bank, before the hearing at the committee on economic and monetary affairs of the european parliament, brussels, 23 february 2019. * * * introduction madam chair, honourable members of the economic and monetary affairs committee, ladies and gentlemen, i would like to start by congratulating all of you on your election, and you, madam chair, on your recent appointment as chair of this committee. it is a pleasure to appear before this committee in this new legislative term and before my term as ecb president comes to an end. the legitimacy of the ecb β s independence, as enshrined in the eu treaties, crucially relies on our accountability. and the treaties have conferred this parliament with a central role in holding the ecb accountable. hearings before this committee play an essential role here. in my time as president, i have found them to be extremely beneficial. when i appeared before the econ committee for the first time, in december 2011, the euro area was rife with financial instability ; it was falling into a second recession, which eventually led to sustained disinflation and, at times, heightened risks of outright deflation. 1 the euro area has come a long way since the crisis, in part thanks to the support provided by the ecb β s monetary policy. the unemployment rate in the euro area was 7. 5 % in july this year, the lowest level since july 2008. over the past years, the ecb has repeatedly and clearly shown its readiness and determination to fulfil the primary objective of achieving price stability, as laid down in the treaties. this readiness and determination has been critical in addressing the economic crisis and the downside risks to our objective. it was with this same determination that, two weeks ago, the ecb β s governing council decided to act in response to the continued shortfall of inflation with respect to its aim. i am happy to be able to discuss these decisions with you today. i will first review the main developments in the euro area economy since my last appearance before this committee. i will then present the monetary policy decisions that were taken by the governing council in the light of the economic outlook. as requested by this committee, i will conclude by drawing some lessons from the past eight years that could be relevant when discussing the policy responses to the challenges that lie ahead of us. | 1 |
##ity standards, and the usefulness of creating capital cushions to help moderate credit cycles. specifically with regard to the aim of dampening the tendency of markets to amplify economic cycles, headway is being made in the design of provisioning systems which, in essence, are similar to those in place in spain since mid - 2000 ( the dynamic or countercyclical provision ). international accounting regulators, particularly the iasb, also seem to be converging towards these systems. also with the aim of mitigating excessively procyclical behaviour of financial markets, management compensation guidelines have been drawn up to discourage excessively risky strategies. also in the pipeline are major regulatory changes to mitigate the moral hazard problems posed by institutions which in various ways ultimately acquire what has come to be known as systemic significance. naturally, this regulatory adjustment will have a significant impact on financial institutions. that means that, irrespective of how long a transition period is deemed appropriate, financial intermediaries should now set in motion the adjustment process, to ensure the least possible upheaval. spain β s financial institutions have understood this and are notably strengthening both the level and quality of their capital. the restructuring process of the spanish banking system runs alongside the reform of the global financial system. as part of this essential restructuring, all institutions, according to their individual characteristics and circumstances, must strengthen their solvency, resizing and improving their efficiency in the medium term. in short, the challenge consists in adapting to the new reality in which the financial sector will have to operate in the future. the spanish banking system is generally in a sound position from which to approach this restructuring process. but the present situation is complicated. on the one hand, the need for loan loss provisions will continue to dent profit and loss accounts, as defaults persist against a continuing weak economic backdrop. and on the other, the competition to secure retail funding pushes up the cost of borrowing and drives down margins. strains in the wholesale funding markets add further pressure. they also entail higher risk premia and, if they persist and intensify, could make access to the wholesale markets more difficult. moreover, the sector must absorb the internal imbalances that built up in the years of strong growth in the economy and in banking activity. these imbalances, which are greater in some spanish deposit institutions than in others, are essentially threefold. the first imbalance derives from their over - reliance on wholesale market funding. although the | michael gondwe : facilitating trade and building economies on the african continent opening remarks by dr michael gondwe, governor of the bank of zambia, at the african trade insurance agency workshop for bankers, lusaka, 10 september 2013. * * * the secretary general of comesa, h. e sindiso ngwenya ; the director general of zambia development agency, mr andrew chipwende ; the ati chief investor relations manager, mr cyprien sakubu ; the representative for zambia, mr pizzaro lukhanda ; resource persons ; distinguished invited guests ; members of the press ; ladies and gentlemen. it is my honour and privilege to be amongst you all this morning. i wish to express my appreciation to the african trade insurance agency for extending an invitation to me to deliver a keynote address on this important workshop. let me begin by commending the african trade and insurance agency ( ati ) for the important role they continue to play in facilitating trade not only in this country but in the entire region and indeed the continent at large. i am no stranger to the role that ati plays in helping to build economies in the countries that it operates as i have been a client and a supporter of ati β s products and services in particular in my previous life as head of the pta bank. i have seen first - hand, the impact that ati has had in many countries, including in zambia, where ati has facilitated trade and investments worth more than $ 925 million since its inception. i am further informed that ati has so far this year supported zambian companies and businesses by offering insurance cover to some very large and essential projects primarily in the energy, mining, manufacturing and agriculture sectors valued at over $ 726 million. the agency has also continued to assist many african countries by facilitating foreign direct investments with its political risk insurance that protects investors. ladies and gentlemen, the role that trade plays in the economic growth and development of a country cannot be emphasised. there are many regions and countries of the world that have been able to lift their peoples from poverty to prosperity through trade. however, although africa in general and zambia in particular has an economy which is characterized by a relatively high degree of openness, trade has not been utilized to an extent of achieving rapid and sustainable economic development necessary to eliminate poverty. this failure for trade to serve as a catalyst for sustainable economic development could be attributed in part to the nature of africa β s export trade which is heavily | 0 |
, which is used in the majority of cross - country comparison of cbm and capital controls usage. high - level policy seminar on integration or fragmentation? international capital flows in the post - crisis world, september 2019 central bank of chile currency - based measures with the exception of china, only countries suffering from original sin used and tightened cbms on banks β fx liabilities tightening no tightening no original sin original sin source : de crescenzio, golini, and ott ( 2015 ), β currency - based measures targeting banks - balancing national regulation of risk and financial openness, β oecd working papers on international investment 2015 / 03. recent evidence on the evolution of capital controls shows that chile has taken more liberalization actions than tightening actions on both inflows and outflows ( pasricha et al., 2018 ). the following figure shows the cumulated weighted net inflow easing actions and weighted net outflow easing measures in chile and in a group of emes ( excluding chile ). pasricha ( 2017 ) shows that policymakers use capital inflows tightening for macroprudential concerns, while use capital outflows easing for competitive purposes. in chile, the dynamic of outflows easing reflect mainly that pension funds β limits on investing overseas have loosen. nonetheless, chile is among those emes that are less active when it comes to capital control actions over the past decades. the challenge, however, still remains in terms of addressing the actual level of capital account openness rather than it β s tighten / loosen evolution. page 4 of 12 central bank of chile september 2019 high - level policy seminar on integration or fragmentation? international capital flows in the post - crisis world, september 2019 central bank of chile pasricha et al. indices of capital controls policy for chile and other emes pasricha et al. ( 2015 ) indices of capital controls policy for chile and other emes ( net easing ) inflows outflows 4. 0 4. 0 3. 5 3. 5 3. 0 3. 0 2. 5 2. 5 2. 0 2. 0 1. 5 1. 5 1. 0 1. 0 0. 5 - 2 0. 5 - 4 0. 0 total number of policy actions : 1 jan 2001 - 31 dec 2015 ( * ) baseline models include the 11 most active countries 01 03 05 07 09 11 13 15 - 5 01 03 05 07 09 11 13 15 egy cze mex | allocate risk efficiently, relies on complex products, liquid markets and a multitude of operators. but products may be opaque, market liquidity may dry up, and some operators may have strong incentives and be accordingly ready to place big bets. so although it is market - based, at least for now the otd model lacks the main feature of well - functioning financial markets : frequent and abundant trading, which at once requires and produces information and liquidity. as a result, while systemic events may have become less likely thanks to diversification and risk dispersion, their costs may have increased, with the overall increase in leverage and interdependence ( more on this later ). this suggests that β tail β risk might be larger than is commonly thought ; or, in other words, that the probability of extreme events is underestimated. shocks that would otherwise have been otherwise easy to manage may now become a threat to financial stability if they trigger a chain reaction, as could be the case of a shock to investors with large unbalanced positions or if many investors have similar models and strategies that lead them all to be on the same side of the market. 3. 2. greater interdependence the ongoing process of financial consolidation and the otd model have produced intermediaries that are closely intertwined with the capital markets. the large, complex financial institutions resulting from consolidation offer a broad range of products β from asset management to corporate finance and prime brokerage services β that rely on wellfunctioning capital markets. therefore, the otd model has increased banks β dependence on capital markets. today β s global financial system is also far more interconnected than in the past. this has some important consequences for financial stability : β’ since banks now sell their loans and offer a range of financial services, an illiquid market would generate substantial risks, such as warehouse risk ( i. e. the risk of being unable to find buyers and being stuck with products the bank might not want in the first place ) and additional market risks ( when assets sold in thin markets would send prices spiralling down, forcing additional sales by leveraged investors and sharply reducing liquidity β something we have seen in recent weeks ). to avoid this, at times banks may end up acting as a sort of β lender of last resort to markets β, with all the implicit effects on the availability of credit to other sectors of the economy and on financial stability. β’ since the intermediation model increasingly | 0 |
vitor constancio : common european values and monetary policy to reinforce the euro area speech by mr vitor constancio, governor of the bank of portugal, at the dinner in honour of the governing council of the european central bank, lisbon, 5 may 2010. * * * prime minister, minister of state and finance, president of the european central bank, colleagues, ladies and gentlemen, it gives me great pleasure to welcome you all in this place full of history on the occasion of a meeting of the governing council of the european central bank. look around. we are in a place that highlights two portuguese adventures. firstly, this monastery of jeronimos was built in the xvith century to celebrate our maritime discoveries and secondly, here, in this very cloister, was signed our accession treaty into the european union in 1985. a few yards from here is the shore from where set sail the ships to launch the discoveries. for almost a century portugal kept a monopoly of the spice maritime trade with india and the far east, where our ships arrived in 1498. in 1500 the fleet of alvares cabral arrived in brazil with all its riches. in 1501 the construction of this monastery began and was completed after several decades. as all major buildings of the time it was built to celebrate spiritual and earthly endeavours. on the northern side of this cloister we find symbols of the passion of christ. on the southern side we have the symbols of kingdom and kings. the concept was that the history of portugal and our monarchic dynasty interconnected with the history of christianity. appropriately, the king was called manuel, from emmanuel ( meaning god with us ) announced by isaiah as the saviour, and the king β s wife was named maria like the mother of christ. the armillary sphere is an instrument of navigation with the celestial orbits, used by the king as his symbol and combined with the christian cross it appears in different places. empire, earthly power and religion come together. politics also enters. the monastery was given to the hermit order of st. hieronymus, a spanish order of monks devoted to the perpetual service of the dynasty reigning in castille. this is explained by the aim of our king of becoming the heir to the castillian crown thus unifying the two kingdoms. he had after all just celebrated his second marriage to maria of castille, the sister of the great queen isabel. you see then how european history and politics are present | that has to be significantly reduced, namely through the mechanisms i have already described. we have lived beyond our means and, as kenneth rogoff recently said, β financial regulation has been appropriate, otherwise the situation would be much worse β. the point is, that we needed time to continue the adjustment and in principle, monetary union was supposed to give us that time for a gradual process of rebalancing. the international financial crisis that started in 2007 interrupted the process and the more recent market attacks on euro area countries vulnerable in terms of sovereign debt implies that time became a luxury : we have now to make a more abrupt, quicker and more severe adjustment. as i warned already in 2001 : β conceived for an infinite or very long horizon, the technical definition of external sustainability ends up not being truly operational because it only refers to the capacity of the economy to pay its debt within that time horizon. operationally, what counts is the assessment made by investors about that capacity of repayment, which means that the possibility of financing depends on many factors, sometimes not fundamental ones β. that is what we face now and so, we may need to ponder whether the recently approved stability programme should be reinforced by adopting upfront measures foreseen for later years. we must be resolute and clear - headed in recognizing the reality of how markets operate and, as captains of an embattled ship, we should not complain too much about the sea where we have to navigate. we have to take comfort from the fact that we are not alone in this. a monetary union is not a sort of multilateral currency board. all member countries have a common interest in the well being of our union and its currency. we all share the guilt related to the failure of governance in the preventive arm of the stability pact. we ourselves, have never tried to hamper the functioning of the pact and, when caught at fault, we have abided by the rules. the recent events revealed indecisions and surprising misinterpretations of self - interest, but the system worked and deserves our trust. the need for reforms in surveillance and crisis management became nevertheless apparent, including the creation of an european monetary fund that had been foreseen in very early discussions about monetary union, and i am sure this episode will have consequences for future institutional arrangements. everything must in fact be done to reinforce the euro area. we can all see how it was important to face the international financial crisis. from the | 1 |
advanced and emerging countries. in this context, a resurgence of capital inflows to emerging economies is a possibility. domestically, one risk that cannot be ruled out are stronger effects from the higher external uncertainty, hitting harder the local financial markets, confidence, and consumption and investment decisions. notwithstanding the capacity of economic policies to mitigate the effects of a more adverse external environment, it is important for the private sector to properly administer financial risks. worth noting are the favorable financial indicators of the corporate sector ( figure 10 ). in addition, currency mismatches continue to be stable and bounded, despite the increasing role of external debt as a source of funding. still, it must be pointed out that financial intermediaries would be wise to keep a watchful eye on credit risk, considering its negative effects on external demand implied in the risk scenarios. bis central bankers β speeches as for households, on average the financial situation has not deteriorated. the recent increase in private consumption has evolved hand in hand with labor income. the evidence suggests that, so far, borrowing has not risen above its long - term trend, and the average debt - to - income and debt - to - financial burden ratios are stable. along the same line, households β past - due portfolio indicators have tended to stabilize in relatively low levels during the past year ( figure 11 ). in the present scenario, however, we need to continue to closely monitor the evolution of household debt. if it continues to grow at the current pace, it is possible that households β debt and financial burden will increase significantly in the face of a more severe risk scenario. finally, and considering the deterioration of the financial indicators of the lowerincome households in the period 2007 β 2009, they could find themselves in a situation of greater financial vulnerability. although the volume of debt of these households is fairly limited, it could prove substantial for some credit providers focusing on lower - income segments. problems in international financial markets have caused a widespread rise in the banks β external financial cost. meanwhile, no reduction in volume or maturity of external credit for this sector is observed. ( figure 12 ). the banking system has maintained a looser liquidity position since late 2008 β thanks to increases in longer - term liabilities and greater liquid assets. as stated in our financial stability report, our banking system has the capital levels needed to absorb the materialization of a severe risk scenario. the stress tests show that the current levels of capitalization of the banking industry would permit it to absorb | bonds with over 9 - year duration, except for bbb bonds, which considers more than 8 - year duration. sources : central bank of chile and lva indices. figure 4 stock - index volatility ( * ) ( annualized percentage ) hungary july - december 2011 france germany spain russia brazil s. korea chile turkey mexico australia hong kong u. k. u. s. a. taiwan india colombia n. zealand philippines china peru january - june 2011 ( * ) calculated with daily return of stock indexes, base 100 = 2010. data at 16 december. fuentes : banco central de chile a base de informacion de bloomberg. bis central bankers β speeches figure 5 retail sales and new car sales emploment and unemployment rate ( index, centered on mean of period ( 1 ) ( index, 2003 = 100 ) 1990 - 2010 ) 300 20 150 - 10 - 20 - 30 - 40 90 93 96 99 02 05 08 11 06 07 08 09 10 11 non - durables new cars employment unemployment durables ( 1 ) sold in moving quarter. ( 2 ) seasonally - adjusted series. sources : chile's national automobile association, central bank of chile, chile's national chamber of commerce, and ricaurte, m ( 2011 ), β indicadores de mercado laboral para la comparacion de las crisis asiatica y financiera internacional, β preliminary document, central bank of chile, june. figure 6 inflation indicators incidences on monthly inflation ( * ) ( annual change, percent ) ( percentage points ) 0. 8 0. 8 0. 6 0. 6 0. 4 0. 4 0. 2 0. 2 0. 0 0. 0 - 0. 2 - 0. 2 - 2 - 2 - 0. 4 - 0. 4 - 4 - 4 06 07 cpi cpi minus foodstuffs and energy apr. jul. oct. fresh fruits & vegetables ( 2. 90 % ) fuels ( 5. 70 % ) foodstuffs x1 ( 17. 77 % ) cpi meats ( 3. 55 % ) ( * ) in parentheses, shares in cpi basket. sources : central bank of chile and national statistics institute ( ine ). bis central bankers β speeches table 1 international baseline scenario assumptions 2010 ( e ) 2011 ( f ) 2012 ( f ) 2013 ( f ) sep. dec. sep. dec. sep. dec. 2011 2011 2011 2011 2011 2011 report report report report report report | 1 |
of local currency bond market effectively mobilize long - term capital and mitigate currency mismatch risk. increased use of local currency helps reduce exchange rate and currency mismatch risks. fifth, the green development philosophy will be practiced. we welcome the endorsement and signing of bri green investment principles by enterprises and financial institutions and hope to see more green projects that are ecologically, environmentally and climate friendly and the development and increased use of green financial instruments. at the same time, it is necessary to enhance transparency and information disclosure of data on carbon emission, emission reduction, and etc. financial connectivity supports the smooth and sustainable development of bri, and quality development of the bri requires an open and market based investment and financing system. i invite you to contribute your proposals and wisdom, participate in and promote investment and financing cooperation for the belt and road. i wish the forum a success. thank you. 2 / 2 bis central bankers'speeches | economic growth would have been considerably slower, inflation would have been lower and unemployment higher. the one - sided, negative presentation of the consequences of the ecb β s policies is misleading. all in all, germany has benefited from the ecb β s monetary policy. you are saying that savers are not being expropriated at all. but the ecb β s negative interest rate policy effectively means that we can forget about traditional forms of investment such as savings accounts or life insurance policies. at the same time, people are being advised to provide for their retirement. how are they supposed to do that? if the ecb were to increase interest rates in the current environment, it would be harmful for everyone β not least for savers. i can β t give people any investment tips. but there β s no doubt that, in today β s interest rate environment, it is not especially advisable to put all your funds in savings or time deposit accounts. politicians also have a duty to inform citizens about the alternatives to 1 / 4 bis central bankers'speeches interest rate products. what do you think of german finance minister olaf scholz β plans to introduce a tax on share transactions? this measure is mainly politically motivated. from a economic point of view, i see it rather critically. however, the plan is on such a small scale that it will not really change the financial world. another major criticism is that the ecb β s policy has created a situation in which weak firms are being kept alive like zombies thanks to low interest rates. do you feel that you are unjustly coming under attack on this point too? the share of unprofitable firms has actually declined over the past few years. that runs counter to the theory of β zombification β. all the same, concerns about this issue highlight the need to aspire to sound regulation of the banking sector. weak banks are more likely to extend loans to weak firms. thanks to pressure from ecb banking supervision, the share of non - performing loans on banks β balance sheets has fallen sharply. that is an important step in the right direction. you have spoken in favour of tighter regulations governing sovereign bonds held on banks β balance sheets. the initiative appears to have foundered on italy. the fact that banks hold sovereign bonds is not the problem, it β s rather the concentration of their domestic sovereign bonds. italian banks primarily hold italian government bonds, german banks hold german bonds. one lesson from the euro debt crisis | 0 |
/ 4 bis central bankers'speeches to conclude, macroprudential policy is β so to say β approaching its adolescence, and countries will continue to fine - tune their frameworks and instruments. however, experience with applying these tools is growing. i am confident that through knowledge - sharing and international cooperation, macroprudential policy will play an increasingly important role in safeguarding financial stability β in all parts of the world. 1 imf ( 2018 ), the imf β s annual macroprudential policy survey β objectives, design, and country responses. 2 milton friedman β s famous line ran : β we are all keynesians now ". 3 net foreign exchange position is defined as the difference between assets and liabilities in a foreign currency. 4 all member states but one ( italy ) now have a dedicated macroprudential authority in place. in italy, the role of setting macroprudential measures ( available in the common eu regulation ) is currently carried out by the bank of italy. 5 the crr / crd iv rules provide for the common regulatory framework for macroprudential supervision. 4 / 4 bis central bankers'speeches | , and issues recommendations or warnings β for all eu member states and eu institutions. dear colleagues, we have talked about international and european perspectives. but final decisions on macroprudential policy are taken at the national level. this is where instruments are calibrated and adopted to country - specific circumstances. macroprudential policy - making is still a rather novel exercise : one can say that every country engages in a sort of experiment to find the right medicine. in lithuania, the central bank became the macroprudential authority in 2014. indeed, it is a very important mandate. lithuania does not have domestically orientated monetary policy as we have been part of the eurosystem since 2015. for that reason, proactive use of macroprudential measures has become the main roadblock against the build - up of cyclical systemic risks in the country β s financial system. unfortunately, we did not have such safeguards 10 years ago, when we were hit particularly hard by the boom - and - bust cycle. house prices dropped sharply β by 30 % in 2009, which was the second - worst drop in the whole eu. i think this taught us a lesson. in the post - crisis years, lithuania has been eager to find an 2 / 4 bis central bankers'speeches effective combination of macroprudential policy measures. in 2011, we were among the first in the eu to establish restrictions on loan - to - value, debt - service - to - income, and loan maturity. i have to say that, in introducing those measures in 2011, we did so without having a clear legal mandate. we introduced them by using secondary legislation, based on general provisions under the law governing the functioning of the bank of lithuania. as i mentioned, we only received a clear legal mandate for implementing macroprudential policy three years later. from a legal point of view, the step we took in 2011 was a risky one, but nobody challenged it β perhaps due to the still - recent memories of the 2008 β 2009 crisis. going further, in 2015, to promote responsible lending in a low interest rate environment, we introduced a limit on debt - service - to - income, while also introducing an interest rate shock element. at the same time, loan maturity limit was reduced. taken together, this is one of the largest sets of borrower - based measures in the eu. it has created a reliable backstop against the deterioration of lending standards. combining different instruments helps prevent evasion, targets | 1 |
tharman shanmugaratnam : regulating the capital markets : making market discipline work speech by tharman shanmugaratnam, deputy managing director of the monetary authority of singapore at the stanchart - reuters - business times investment awards ceremony, singapore, 16 feb 2001 * * * the capital markets are undergoing a sea change. technology and the internet have opened new channels for investors to access a wide range of investment information and to transact in securities, often without advice or assistance from market intermediaries. market intermediaries themselves are consolidating, and exploring new business models to capture clients and add value to their decisions. it is a more competitive environment all round, and the margins from traditional financial intermediation have thinned. regulators are having to rethink their approaches towards the oversight of the markets in this new and rapidly changing environment. the objectives have not changed to preserve confidence by maintaining fair, transparent and efficient markets, and to minimise the risk of disruptions that threaten the stability of the system. but the methods of achieving these objectives are being refashioned. it is no longer possible for the regulator to root out all that is evil, dangerous or vaguely suspicious before they get to the market. greater emphasis is therefore being placed on discipline being exercised within the market, and by the market. making market discipline work we have embarked over the last three years on a shift in our approach to regulating the markets from what is loosely called a merit - based regime, under which the regulator judged the appropriateness of securities being made available to the public, toward to a market - driven, disclosure - based regime of regulation. it is aimed at allowing market participants greater choice and the free play to take calculated risks. we have made it clear that the shift in approach will not compromise our reputation internationally as one of the most open, transparent and well - regulated markets in asia. market - based regulation will indeed raise standards of business conduct, as is necessary for a more open, competitive and innovative market environment. market discipline will not simply be a matter of'caveat emptor '. the buyer cannot be expected to beware if he is not provided with accurate and accessible information so as to make a reasonable judgement of prospective risks and returns. neither can he do so if the market is rigged without his knowledge. it follows that market discipline requires a system of laws, rules and standards to discriminate in favour of companies with high standards of corporate governance and disclosure, | this integrated world, we perish β simple as that. how do we raise the productivity in our export sector? clearly, business as usual is not the answer. we must change how we do things. productivity in the cane fields and the sugar mills are critical to the sugar reform. we must change how we work our agricultural sector. the existing model is clearly not working. our land is fertile. we have the best pawpaw in the world, the tastiest bananas and the sweetest pineapples. but alas we are not even supplying enough of these to our hotels and supermarkets. our oceans are large yet the price of local fish keeps rising. our mahogany forests are mature, yet we are not exporting high valued timber products. obviously, something is seriously wrong and we need to correct that urgently. we talk a lot about the potential of small businesses to raise growth and provide incomes and employment. again, while we continue to talk, we see very little progress in this important area. are we following the right model? where is the bottle neck? lessons are there if you look in the right places and be prepared to accept them. benchmarking is a powerful tool to use. there are lessons abound from our asian neighbours. i am pleased that we have several international speakers with us today and we look forward to the lessons that they will leave with us. ladies and gentlemen, the point that i want to make is this : we should acknowledge and accept the significant role that productivity and competitiveness can play in overcoming many of our economic challenges that we face particularly that of lifting economic growth, attracting investment and supporting exports. more importantly, we need to do something about this now at all levels, micro as well as macro. measurement we know what we want to achieve and that is to raise productivity. we must now measure it. when i pose the question of productivity data, the usual answer i get is that we are working at it. i know that productivity is a complex indicator to measure but we should be taking some indicative measurement now. keep it simple. the crude measure that we use at the bank is calculating the total output per worker. this is obviously a very high level indicator of productivity and has many shortcomings. but for this morning β s purpose the broad message is what we want. using this measure, we calculate productivity growth in fiji to average 1 percent over the ten year period from 1996 to 2006. when compared to other countries, we are somewhere | 0 |
finally, at previous hearings members of the committee asked about the number of women at senior levels of the reserve bank. i am pleased to be able to report that we have made further progress here. of the three assistant governors responsible for monetary and financial policies at the reserve bank, two are women. and women run over a third of the departments in the bank, including those responsible for the bank β s economic analysis function and for the implementation of monetary policy. so it β s quite a big change from days gone by when almost all of these important positions were held by men. i want to highlight these changes in the hope that they might provide some inspiration to women who are thinking of studying economics, finance and business. there are fantastic career opportunities out there and it would be great to see more women studying these disciplines, and perhaps considering a career at australia β s central bank. we are currently working on some initiatives to encourage this, at both the school and university level. thank you. my colleagues and i are here to answer your questions. 4 / 4 bis central bankers'speeches | too. but our infrastructure and our big towns are much younger than their belgian counterparts. let me now turn to the survey of the finnish economy. [ slide 2 ] finland is a small open economy, where trade has shaped the key trends of our economy. even if the exports have been falling recently, they still represent about 40 % of gdp. finland β s trade with euro area economies has been increasing since the global financial crisis, germany being currently the largest trading partner. russia β s share of our exports has fallen to 6 %, notably because of weak growth performance in russia since 2013, after the drop in oil prices. 1 / 3 bis central bankers'speeches finland β s goods exports consist mainly of paper and wood products, metal and engineering products, and electronics equipment. in recent years, the structure of the finnish economy has undergone radical changes in the wake of difficulties encountered by the forest and electronics industries. export earnings from the mobile phone business, which had long supported our economy, have disappeared, the significance of russia has diminished, while importance of countries such as germany have increased. despite the difficulties of the recent past, the forest industry is still one of the pillars of finnish exports alongside the heavy engineering metal industry, and high tech electronics. software industry, like online games, creates a lot of revenue, but employ relatively few people. [ slide 3 ] finland β s growth performance was exceptional between 1995 and 2007. it was fueled by finland β s long tradition of investing heavily on human capital and education. the focus on engineering helped too. finland was in the good position to ride on the global trend of ict and mobile phones after the exceptionally deep recession in the early 1990s. finnish export firms managed to create products enjoying widespread demand and capable of capturing new geographical market areas. by the turn of the millennium, the electrical engineering and electronics industry had outstripped the forest industry as the largest export sector, its products accounting for about a third of total export value. eu accession also helped to set up the credible fiscal framework and push through important structural reforms at the time. [ slide 4 ] unfortunately, the tide changed rapidly around the global financial crises. finland suffered from the decline in foreign markets during the global financial crises. initially, the recovery was fast, but it lasted only until about 2011. after that finland entered a period of low growth ( or even no growth ) and increasing unemployment. this period of low growth was due to a unique mix of asymmetric shocks. they all contributed to falling | 0 |
of the main jurisdictions which first implemented basel ii and basel ii. 5, and remains committed to promptly implementing basel iii, which i consider as a cornerstone of the g20 reform agenda. timely and consistent implementation of the new regulatory standards as well as uniform assessment of the implementation process based on common evaluation standards around the globe are crucial for strengthening the resilience of financial systems and restoring confidence in markets. delayed implementation of basel ii. 5 and basel iii by any major jurisdiction would weaken the incentives for financial institutions to comply and also cast serious doubt on the overall reform effort. finally, an area where, in my view, enhanced coordination is required concerns the structural measures being proposed in different jurisdictions. since recent initiatives in the us ( volcker rule ), the uk ( vickers report ) and the eu ( liikanen report, on which the european commission will now follow up ) will mainly target internationally active banks, coordination at global level in this policy area is important to ensure a level playing field and to avoid regulatory arbitrage by banks with significant cross - border activities. clearly, regulators, supervisors as well as financial institutions are facing several challenges in the years ahead both as regards policy design and implementation. there is a risk that weak economic growth and an increasing focus on domestic policy priorities can weaken the incentives and appetite for coordinated reform efforts. but well - integrated and well - regulated financial markets are needed more than ever for sustainable and stable growth, both at global and at regional level. but i β m confident that a successful accomplishment of the reform agenda and a consistent implementation of the policy measures will help to achieve this goal. i thank you for your attention. cpss and iosco : principles for financial market infrastructures. april 2012. bis central bankers β speeches | the strongest tools for boosting investment activity and achieving sustainable growth, but also for supporting fiscal adjustment, insofar as they serve to reduce public debt. 3rd. tackling the high stock of non - performing loans, which is the greatest challenge facing the banking system. addressing this problem will not only alleviate the burden on cooperating borrowers, but will also enable banks to free up funds for channelling into more dynamic and extrovert businesses. this would contribute to a comprehensive restructuring of the economy in favour of tradable goods and services, leading to a rise in productivity and potential output, even in the short run. the actions described above, together with an exit from recession and a gradual recovery of the economy, will bring about stabilisation and, subsequently, a decline in the npl ratio, with beneficial effects on the economy as a whole. 4th. gradual lifting of the capital controls. the relaxation of the capital controls described earlier, along with improvements in confidence and liquidity, are expected to contribute to the normalisation of economic conditions by facilitating both enterprises and individuals in their transactions. 5th. reforms to support extroversion. the implementation of reforms in the markets for products and services and in the functioning of the public sector will lead to an increase in investment and employment, while it is also expected to encourage innovation and the introduction of new technologies by increasing competition. in turn, these developments will improve the quality of greek exports and expand the export base and overall competitiveness of the greek economy. this will ensure that the decrease in the current account deficit is sustainable, while also increasing potential output in the medium - to - long term. these actions will attract foreign direct investment and set in motion a virtuous circle signalling the definitive exit from the crisis and a sustainable increase in total productivity of the greek economy over the medium - to - long term. 6. conclusions the completion of the first review creates positive prospects for the recovery of the greek economy in the second half of 2016. at the same time, the commitment of our european partners to take action in order to ensure the sustainability of public debt in the short and medium - to - long term is a positive step forward. bis central bankers β speeches the bank of greece is of the view that the envisaged public debt management measures need to be specified, quantified and frontloaded. this would enhance the credibility and acceptance of the policies pursued, thereby helping to further consolidate the climate of confidence and strengthen economic recovery. moreover | 0 |
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