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a major role as an issuing and trading centre on the bond market, too, not least for international bonds that were not issued in the borrower β s home market. the outstanding volume of securities issued in the united kingdom by non - resident borrowers, primarily financial institutions, stands at around us $ 3 trillion. that β s the highest value worldwide, and more than a quarter of that figure is euro - denominated. on the equity market, market capitalisation on the london stock exchange is around double that on the deutsche borse, the leading continental european exchange. comparing monthly exchange trading volumes, london outstrips frankfurt by over 60 percent. around 70 percent of euro - denominated otc interest rate derivatives trading takes place in london. and an even greater percentage β some 90 percent β of these instruments are cleared there. with total assets amounting to the equivalent of around β¬9. 3 trillion, the british banking system is the largest in the eu. one indication of its close ties with continental europe is the fact that around 20 percent of british banks β balance sheet assets are denominated in euro. it β s no coincidence that, of the 160 foreign bank branches operating in the united kingdom, 77 are from the european economic area. banks headquartered in continental europe contribute 17 percent to british banks β aggregate total assets, which is slightly more than the 16 percent attributable to us banks. only roughly half of british banks β total assets come from british institutions. other financial market segments in which london plays a prominent role are easy to find and include funds, insurance, commodities and private equity. 2 / 9 bis central bankers'speeches essentially, the city brings the demand and supply of capital together from all over the world. these days, its distinctive role as a connecting and distributing point is of paramount importance for europe β s investment and financial flows. but what will the relationship between the united kingdom, or london, and continental europe look like in future once brexit has been implemented? signs are pointing to a watershed moment. many observers suggest that it will not be possible for london to remain the eu β s financial centre once the united kingdom has left the single market. the wall street journal wrote recently : london β s position as europe β s financial centre is definitely under threat. a fairly logical and highly probable legal consequence of brexit is that the united kingdom will probably lose its eu financial services passport, meaning that banks domiciled there would no longer have access | contraction of financial market activity following the lehman shock in september 2008. at the same time, the bank is putting forward additional measures to dispel β chronic illness, β namely deflation. next, i will elaborate on the bank β s monetary policy measures implemented since the lehman shock. a. measures to address the acute symptoms, or the rapid financial contraction immediately after the failure of lehman brothers, financial market participants throughout the world became overly cautious about their counterparts β creditworthiness, and there were cases where even financially sound institutions found it difficult to acquire funds. during such a rapid financial contraction, which we have described as acute symptoms, a central bank is the sole provider of liquidity. thus, from the day after the failure of lehman brothers, the bank successively injected abundant liquidity into the money market by conducting sameday funds - supplying operations. subsequently, it implemented measures to provide ample liquidity to financial markets, such as increasing the amount of outright purchases of japanese government bonds and introducing u. s. dollar funds - supplying operations against pooled collateral. in japan, it was the cp market that faced a particularly serious shortage of liquidity as market participants withdrew their funds from the market, fearing the risk of corporate failures. firms that could no longer acquire funds through cp issuance flocked to banks for financing. as banks tried to respond to the increased demand for loans, they found themselves unable to afford to supply sufficient funds for small firms or firms with low credit ratings, or for repo transactions. in this way, the liquidity shortage spread to various markets. to address this situation, the bank, in addition to increasing the frequency and size of cp repo operations, introduced outright purchases of cp as a temporary measure. this was a highly exceptional step, in that a central bank took on the credit risks of individual private firms. the underlying objective was to facilitate corporate financing and resolve the liquidity shortage in the cp market by helping to restore confidence in cp underwriting among market participants. in addition, the bank introduced a series of temporary emergency measures to facilitate corporate financing, including : ( 1 ) the easing of the rating requirement for corporate debt to be accepted as eligible collateral ; ( 2 ) the special funds - supplying operation to facilitate corporate financing ( hereafter the special operation ), through which the bank provided longer - term funds for an unlimited amount against the value of corporate debt pledged as collateral at a very low fixed interest rate ; and ( 3 ) outright purchases of corporate bonds with | 0 |
by the banco de espana in 2013 that the cash dividends paid that year should not exceed 25 % of consolidated profit, would be relatively unusual in other countries. as you know, the recommendation made by the ssm supervisory board on this matter in january was only restrictive for those banks whose solvency ratios failed to comply with the minimum levels in line with regulatory requirements. the more formalistic approach to supervision to be found in other jurisdictions provides greater clarity regarding the scope of supervision. it also facilitates identification of the respective responsibilities of bank managers and supervisors. however, rigidly subjecting to strict rules and standards of conduct naturally reduces the supervisor β s ability to identify and correct in good time potentially destabilising developments for the bank. in the field of accounting, the experience of the asset quality review recently conducted by the ssm shows that there are appreciable discrepancies between the specific accounting criteria used in the different jurisdictions, although ifrs principles must be applied in all of them. in spain β s case, as i have already mentioned, the criteria followed are those established by the circular of the banco de espana on public and confidential financial reporting rules and formats ( known as the accounting circular ). in other countries the criteria applied have been established over time and, generally, with less involvement of the supervisor. the harmonisation of these criteria would be highly desirable, especially in relation to the classification of exposures ( an area in which the european banking authority has made notable progress in recent months ) and, in particular, provisioning policy. it should be noted that, although the supervisor may adjust the capital requirements, imposing higher levels of capital does not sufficiently make up for the lack of adequate provisions. that is because the level of provisions always has direct and transparent implications for the profit or loss of the bank, while an increase in the minimum capital requirements via pillar 2 is not usually transparent ( as the pillar 2 requirements are not public ) and, in most cases, does not have any practical effect, insofar as the bank has a capital buffer that enables it to cover the new requirements. accordingly, the supervisor should be concerned to promote the application of rigorous and uniform provisioning criteria involving the appropriate recognition on the balance sheet of the value of each exposure. clearly, the formal publication of binding accounting criteria by the ssm may be contested, insofar as accounting does not form part of its competencies according to the eu regulation under which it was set up. at the same | to the first decade of this century, but not as much as during the boom in apartment building in the second half of the 2010s. this is likely to still be enough to keep the housing stock growing faster than the population. solid rates of home - building have been encouraged by a range of public policy measures, including the low level of interest rates. also important has been the raft of subsidies and other incentives for home construction, as well as support for first home buyers during the pandemic. in combination, these subsidies have been quite sizeable in some cases ( graph 5 ). graph 5 maximum grants available * new home construction $ β 000 new south wales victoria % $ β 000 queensland western australia % h2 2020 homebuilder ( lhs ) first home owner grant ( lhs ) h2 2020 other * * ( lhs ) per cent of median housing price * * * ( rhs ) * subject to eligibility criteria including first - home - buyer status, income and property price caps. * * other includes regional bonuses in victoria and queensland, and the western australian building bonus grant. * * * median price of all new and established dwellings at the end of the reference period. sources : corelogic ; federal and state governments ; rba it is difficult to disentangle how much of the increase in demand for housing has reflected temporary subsidies and the current low level of mortgage rates versus the shift in preferences. however, it is clear that the time - limited nature of homebuilder and some other subsidies induced a temporary surge in building approvals for detached homes and renovations ( graph 6 ). we estimate that about one - quarter of building approvals during this period were supported by homebuilder, though many of these would have happened anyway. graph 6 private residential building approvals * monthly β 000 detached β 000 new dwellings higher - density $ b $ b alterations & additions 1. 0 1. 0 $ 25, 000 * * 0. 8 0. 8 0. 6 0. 4 0. 6 $ 15, 000 * * * * * 0. 4 smoothed lines are 13 - period henderson trends. grant value by phase of the homebuilder program. sources : abs ; rba even now, after eligibility for these subsidies has closed, these categories of building approvals have remained higher than immediately before the pandemic. this suggests that the extra demand induced by the subsidies wasn't entirely pulled forward from this year and next year, which would | 0 |
b. zafar, β measuring inflation expectations β, annual review of economics, vol. 5 ( 2013 ) : 273 β 301. bis central bankers β speeches manufactured by companies in central canada will decrease. together, these effects will outweigh the benefits derived from the decline in oil prices on the energy bills of households and businesses. the net impact of this shock is significant : assuming no monetary policy response to the shock, we have calculated that average household disposable income would be reduced by 3 per cent by the end of 2016. moreover, through its impact on the real economy, the decline of about 50 per cent in the price of oil since june would knock roughly one - half point off the underlying inflation rate during the same period. it is against this backdrop that the bank lowered its key policy rate by a quarter of a point in january. the bank β s policy action is intended to provide insurance against downside risks to the inflation profile and financial stability risks, support the sectoral adjustment needed to strengthen investment and growth, and bring the canadian economy back to full capacity and inflation to target around the end of 2016. by doing so, it should also keep inflation expectations well anchored to the target. the concept of insurance is important and should be explained in greater detail. policy insurance is a logical part of our risk management framework for monetary policy. there is nothing mechanical about it. the cut in policy rate is intended primarily to provide insurance against the downside risks to inflation. many of the negative effects of lower oil prices on growth happen swiftly. there will be some offsets, such as the stronger u. s. economy and a weaker canadian dollar, but there are risks with regard to the timing and magnitude of these compensating effects. on march 4 we will come to our next interest rate decision. that decision will be based on a careful examination of how the economy, and the risks, are evolving. conclusion allow me to conclude. inflation expectations are central to the conduct of monetary policy. the bank has recently developed a new indicator of inflation expectations to enhance its other indicators. we are therefore better equipped to closely monitor and analyze expectations. i hope that my remarks have given you a clearer idea of the bank β s work and the challenges it faces. it is possible that, some day, one of our regional representatives will contact you to request your participation in the business outlook survey. you might also be asked to participate, as a consumer, in our new online survey. | the us economy, the relatively weak canadian dollar and increasingly competitive canadian manufacturers are allowing us to sell into the united states very successfully. what we are expecting to see now, however, is an increase here at home in consumer and business spending. we believe that the improvement in business and consumer confidence that we have seen in the last few months, the better employment picture and recent reductions in interest rates will all help support domestic spending. to be more specific, compared with six months ago, we at the bank have raised our projection for growth in the economy in 1999 to between 2ΒΎ and 3ΒΎ per cent. we have such a wide range because of the international uncertainties that i mentioned a moment ago. the high end of this range is well above the latest consensus among private sector forecasters. if the economy does grow at the higher end of this range, it is likely to be because of stronger exports and more substitutions of canadian goods for imports due to canada β s good price and cost performance. our economy should continue to expand next year at a broadly similar pace. on the basis of these growth forecasts, we would expect the trend of inflation to rise modestly over the next 18 months but remain in the lower half of the bank β s 1 to 3 per cent target range for inflation. there is an increasing level of confidence, both at home and abroad, that canada β s inflation will remain stable. another source of uncertainty for the bank at the present time is in estimating the margin of unused capacity in the economy. if economic activity expands as forecast, the traditional way of measuring these things tells us that the current margin of economic slack should be taken up in the second half of next year. however, the economy seems to have undergone some significant changes during the 1990s, and the traditional estimates of slack may no longer be accurate. as a result, the bank will be placing increased weight on a range of indicators to assess the degree of pressure on the economy β s production capacity. what we have in mind are such things as movements in inflation relative to expectations, growth of money and credit, wage pressures, evidence of supply bottlenecks and the information provided to our regional representatives from their business contacts. we will not know just how much the canadian economy has changed until its capacity limits come under more pressure. while the confidence of canadians in ongoing low inflation allows monetary policy more room to accommodate demand pressures that test the limits of capacity, it will be very important for the bank to be vi | 0.5 |
jose manuel gonzalez - paramo : new investment fund statistics for the euro area introductory remarks by mr jose manuel gonzalez - paramo, member of the executive board of the european central bank, for the first statistical release, frankfurt am main, 11 december 2009. * * * ladies and gentlemen, welcome to the ecb. today it is my pleasure to introduce an important new set of statistics for the euro area as single economic entity. these statistics provide detailed harmonised information on the assets and liabilities of investment funds resident in the euro area. they are compiled by the ecb in close cooperation with the national central banks. fruitful work has also been conducted in liaison with the european fund and asset management association ( efama ), a business association represented in this room. since the inception of the ecb, major progress has been achieved in developing monetary and financial statistics for the euro area. this work, carried out in close cooperation with the member states, has resulted in a full range of timely and high quality euro area statistics, which the ecb constantly monitors in performing its policy functions. the first major steps were the implementation of euro area statistics for monetary financial institutions ( in particular to derive statistical information on monetary aggregates ), lending and interest rates, as well as on the balance of payments. in recent years, efforts have focused on the development of statistics for other financial sectors. this also reflects the increasing links between the banking sector and other financial institutions. moreover, our statistics have been integrated into the euro area accounts, which provide an overall picture of the euro area economy. the next milestone is the release of the new investment funds statistics, today. for some years, the ecb has already published un - harmonised and partly estimated euro area investment fund statistics, at a quarterly frequency. today we will present, for the first time, harmonised investment fund statistics that cover all investment funds resident in the euro area. this includes data for the main fund types such as bond, equity or mixed funds, but also other types of funds, including hedge funds. our new dataset contains much more detailed breakdowns both on the assets held and liabilities issued by investment funds. the data provide, for example, detailed information on the residency and sector of the issuers of securities and shares held by the funds. new information is available, as well, on the residency of the holders of the shares issued by euro area investment funds. in addition to the detailed quarterly information, the ecb now | ##eb, the npl ratio stood at 10. 8 %. by march it had increased to 11. 2 %. the real estate development and construction sector has the highest npl ratio ( 29 % ), while that of mortgages to individuals is contained ( 4 % ), although it is tending to rise. as a result of the major efforts made in terms of write - downs and provisioning in 2012 and the drastic decrease in real estate risk, we can affirm that our banks are able to meet the provisioning needs which may arise this year, in 2013, and also in 2014, if there are any. results in 2013 fifth, the profit and loss account. as we have indicated, in 2012 the large volume of provisioning led to heavy losses. that said, margins performed positively due to the influence of two factors : the fall in interest expenses and the efforts made by many banks to contain their operating costs. particularly strong efforts have been made by banks which have been restructured in accordance with the plans approved by the frob, the banco de espana and the european authorities, within the framework of the memorandum of understanding of july 2012. as for this year, the preliminary data for the first quarter allow us to be moderately optimistic, since an overall profit of more than β¬4 billion was reported. virtually all the banking groups have obtained profits. in short, as the eu institutions, the ecb and the imf have acknowledged, we are overcoming the banking crisis, although risks and uncertainties persist which mean that we certainly cannot consider the crisis resolved. that said, it needs to be reiterated that there is no better way of normalising credit flows than completing this task. bis central bankers β speeches regulatory changes sixth and finally, before discussing the progress made in the banking union project, i would like to refer, very briefly, to the most important changes in 2012 in financial regulation which are directly related to the handling of the banking crisis. the most significant legal change in the financial area was law 9 / 2012 of 14 november 2012 on the restructuring and resolution of credit institutions which strengthens the frob β s role and anticipates the future directive which will regulate these processes in europe. royal decree 1559 / 2012 subsequently regulated asset management companies and, in particular, the regime applicable to the sareb. finally, in the area of bank customer protection, mention should be made of royal decreelaw 6 / 2012 of 9 march 2012 which established various measures to protect those mortgage borrow | 0 |
for housing is not recovering yet. on the second half of last year, with the fiscal stimulus and monetary easing, the domestic demand will keep a pace and it will be so for demand for bank lending. we are seeing now increasing demand for lendings to government project related activities, but we will be seeing increasing demand for bank loans to other economic sectors as domestic economic growth becomes more broad based. final remarks i have shared my optimisms about positive indonesian economic outlook this year and the years ahead. economic growth will be higher, and macroeconomic and financial stability will be sound. there are some risks, of course, that we need to closely monitor and address, e. g. ffr increases, china factors, commodity price declines, and fiscal revenues. this is the time for indonesia to move forward, and we will. all the three policy mix at the national level, i. e. fiscal stimulus, monetary easing, and accelerated structural reforms, are reinforcing to support higher economic growth. we know it, and investors see it. that is why investors already make differentiation of their views and valuations among emerging countries, where indonesia as one of the promising economies. that will support for the better indonesia to the future. hope i bring more optimisms to you. i thank you. bis central bankers β speeches | products which truly confirms to sharia principles, complemented by appropriate legal framework, regulations and standards, insya allah, this creation of β genuine β islamic financial system would be able to reduce systemic risks and continue to become resilient to any financial shocks. as mentioned earlier that increasing portion of profit - loss sharing transaction will reduce the potential bubble in the economy and decoupling problem between financial sector and real sector. the fourth point is about β real rate of return β references. besides beneficial in creating and maintaining stability, we also believe that profit - loss sharing, the spirit of islamic finance, bis central bankers β speeches would give more fair return to all parties ( funds owner, financial institution, and borrower ). the return distributed to all parties should be a real result of business activities in the economy. however, at the moment, islamic financial institutions seemingly tend to refer their rate of return to conventional rate of return ( interest rates ). conceptually they should refer to the real rate of return in the economy. unfortunately, currently there is no valid reference available about the real rate of return. therefore, international islamic institutions and countries regulator need to collaborate to study about the real rate of return that will become a reference for islamic financial institutions in determining return, instead of referring to conventional interest rates. ladies and gentlemen, beside those four main issues, i would like also raise two additional challenges regarding liquidity and human resources. most of us aware that currently islamic financial markets have limited instruments and restricted access to short - term funding options in raising liquidity as compared to conventional markets. we should think of methods to enhance islamic liquidity market based on contracts consistent with sharia principles. a caveat for such initiative will be, to carefully identify and structure the instrument for the purpose of raising liquidity only and not for the tools for speculation. the emergence of global money market will reduce the reliant of islamic financial institutions in mirroring the techniques regularly use by conventional banks that are still within the grey area and debatable in terms of its sharia compliancy. hence, islamic finance can maintain its reputation as the sector linking financial intermediary and real sector and slowly close the door to a heavy use of leverage that once led to global financial crisis. related to human resources issues, we understand that the fast growth of islamic financial institutions so far isn β t followed by sufficient supply of human resources. in indonesia context, the tremendous acceleration of islamic finance industry has created human resources supply | 0.5 |
with asian economies would expand growth frontiers and thus bring about β win - win β relationships, which would be beneficial to both asia and the rest of the world. 3. economic development and financial stability in asia asia β s strength and challenges in terms of finance next, i would like to talk about the relationship between the economic development of asia, new linkages and the role of finance, which is indeed the main topic of this conference. as mentioned earlier, asian economies recovered relatively smoothly and swiftly after the global financial crisis and remain a driving force of the world economy. as one of the major factors behind the resilience of asia, i would like to point out the overall stability of asian financial systems. in my view, there are three major factors behind such financial stability in asia. first, asia β s economic fundamentals are relatively strong. most emerging asian countries have excess domestic savings and their fiscal conditions are also better than those of advanced economies. the external balances of these countries generally remain in surplus. regarding the issues associate with demographic changes, see shirakawa, β demographic changes and macroeconomic performance : japanese experiences β ( opening remark at 2012 boj - imes conference ) bis central bankers β speeches against this background, capital inflows to asia quickly rebounded after the sudden contraction during the initial stage of the crisis. second, the business models of asian financial institutions are different from those of european and u. s. institutions. in asia, traditional banking businesses play a major role in financial intermediation, and the β originate to distribute β business model, which was one of the major causes of the financial crisis, has never been popular. moreover, asian banks β exposures to structured products were limited. third, based on the asian experiences of financial crises in the 1990s, many asian countries including japan have already made various efforts to enhance the stability and resilience of their financial systems, such as strengthening banks β capital and building financial safety nets. now advanced economies are focusing on β macro - prudential β policies. in this regard, some asian economies, based on the experiences of financial crises in 1990, have already made use of various macro - prudential tools such as loan - to - value ratio to curb excessive real estate loans. as such, some asian economies have moved ahead of advanced economies in terms of implementing macro - prudential policies. in spite of their relative stability, asian financial systems also face challenges. one of the policy challenges is to foster | the global crisis was a stark reminder that economic stability and financial stability are inextricably linked, and that pursuing the first without due regard for the second risks publishing the policy rate forecast path corresponding to the central bank β s forecasts of growth and inflation helps to communicate both the central bank β s prevailing views on the economy and its policy reaction function, which in turn should help policy expectations evolve efficiently as new information arrives. 11. see, for example, m. andersson and b. hofmann, β gauging the effectiveness of quantitative forward guidance evidence from three inflation targeters, β european central bank, working paper no. 1098, october 2009 ; c. e. walsh, β optimal economic transparency, β international journal of central banking 3 no. 1 ( march 2007 ) : 5 β 36 ; and g. - a. detmers and d. nautz, β the information content of central bank interest rate projections : evidence from new zealand, β reserve bank of new zealand discussion paper no. 2012 / 03. level of the neutral rate itself is, of course, subject to some debate. for example, see d. laidler, β natural hazards : some pitfalls on the path to a neutral interest rate, β backgrounder no. 140, c. d. howe institute, july 2011. bis central bankers β speeches achieving neither. while the primary tools to deal with financial stability are micro - and macroprudential regulation and supervision, it may be appropriate in some circumstances for monetary policy to contribute to financial stability directly by complementing macroprudential policy. 13 more specifically, because the consequences of financial excesses may be felt over a longer horizon than other economic disturbances, the potential may exist for tension between price and financial stability considerations over the typical monetary policy horizon. in current circumstances, the bank may want to set interest rates higher than would otherwise be warranted to bring inflation back to target within the typical six - to eight - quarter time frame. but that flexibility does not exist in a vacuum, and should never be used by stealth. the most recent financial system review elaborates on risks related to household imbalances in canada. their evolution may be a factor affecting the timing and degree of any withdrawal of monetary stimulus. if the bank were to lean against such imbalances, we would clearly say we are doing so, and indicate how much longer we expect it would take for inflation to return to the 2 per cent target. our current guidance is | 0 |
cooperation to function, institutions must be efficient and accepted by all economic players. this means that they must have clear mandates, appropriate resources and governance that correctly reflects today β s multipolar and interdependent economic and financial world. in this area, the g20 also agreed on robust measures aiming in particular to adapt the resources and functioning of the bretton woods institutions. for instance, while we have observed an increasing number of bilateral initiatives, such as swaps offered by major currency issuers, such as the fed and eurosystem, as well as, in a very different context, by china, these mechanisms cannot alone constitute a coherent insurance system. this is why the g20 decided to triple imf resources to usd 750 billion, which is unprecedented. the intervention tools were also reformed. a multilateral instrument for the prevention and early management of crises was also created, the flexible credit line ( fcl ) ; mexico, poland and argentina have already signed up and this has without doubt reduced the risk of contagion. in addition, the poverty reduction and growth fund was established for the poorest countries. this clearly reflects the imf β s commitment to reforming its assistance and solidarity framework to help the most vulnerable countries. similarly, the adequacy of the resources of multilateral development banks was reviewed and, for example, the capital of the asian development bank was tripled. in order to enhance the legitimacy and efficiency of key players in the international financial architecture, the bolstering of resources must go hand in hand with a reform of their governance. as a european, i am perhaps not the best person to give my views on the governance of financial institutions, and of the imf in particular because, for emerging countries to be given a fair representation, it is most often the representation of european countries that is called into question. you may therefore be tempted to interpret my suggestions negatively. i would, however, first like to say that the representation of european countries should not be contested : europe is a diverse continent that encompasses small, new, and even emerging countries alongside large and established developed nations. overall, it is somewhat under - represented in a community that is still made up of sovereign states. and, above all, it seems to me that this is the wrong question or solution given our current challenges : while the issue at stake here is improving dialogue with a view to achieving concerted and operationally - applicable solutions, i do not believe that anyone really asserts that the optimal | . let me conclude by mentioning how much we have achieved in europe over the last fifty years. the eu has reached a diversified but, broadly speaking, very ambitious level of integration : it is complex because the degree of integration is largely dependent on which areas are at stake, it is ambitious since, in some areas precisely, the system is completely integrated and relies on one single policy. the euro, in that regard, is both the symbol of our achievements and our best hope for the future of european integration. thank you. | 0.5 |
, a passport is adequate documentation in itself for account opening. in the absence of the passport, a list of other government issued identity documents is acceptable. verification of address by proof of a utility bill has given way to establishing proof that the client can be contacted by electronic or other means. the central bank of the bahamas has also made it clear that high risk does not mean than an extra burden should be imposed to identify oneself β rather more due diligence should be exerted around the other dimensions of how a relationship is established and monitored. also, for low - risk retail prospects, the central bank has gone on record to state that the potential customer does not have to offer proof of employment in order to open a bank account. the central bank of the bahamas has already placed its support behind this acams training initiative. it will allow the bahamas to make more necessary, qualitative process in perfecting its national aml / cft regime. for all of the bahamian financial sector regulators, and the rest of the financial services industry, this provides more concentrated opportunities for in country training. 1 / 2 bis central bankers'speeches i congratulate the founding steering committee and the executive board of the acams bahamas chapter and assure you of the central bank β s sustained support. thank you. 2 / 2 bis central bankers'speeches | segments of our financial community. we are now attempting to reverse this through more proportionate risk - based systems. beyond banking, affordability of access is more constrained in property insurance markets, where financial vulnerability is heightened because of the increasing frequency and intensity of hurricanes, which can in a single season push households into ruin. finally, relevant to the themes of consumer empowerment, we recognise the scope for improved literacy and conduct regulations to improve financial welfare. 1 / 2 bis central bankers'speeches as it should be, political pressures to address financial inclusion deficits are mounting in the bahamas, and there has to be comprehensive constructive responses. in the strategies that the bahamian central bank is formulating, we understand that the private sector will not optimally achieve all of the outcomes that we desire. we recognise that an enabling environment that embraces the aspirations of the maya declaration, with a focus on fintech, to promote digital inclusion is critical. this is defining very critical elements of our approach. however, we also have to identify those elements of both the policy space and technology infrastructure that ought to be supplied by the public sector. for example, the central bank of the bahamas is engaged in the creation and promotion of a digital version of the national currency which is expected to close vital payments system gaps for the bahamas that many countries are able to leave up to the private sector to resolve. at the same time, the bank has volunteered to coordinate development of a national financial inclusion strategy that would enlist all relevant stakeholders, and focus on more than just payments and banking. we are already seeing the benefits of our membership in the afi, in bringing sharper focus to our financial inclusion initiatives. in that spirit, we look forward to a continued build out of this network of peers, capturing all of the accessible knowledge and experiences that you have to offer. coming into these working group meetings i expect that we have broadly similar goals, and expectations ; and that there will be mutual gains from our exchanges over the next four days. indeed, we have two very stimulating agendas. as we have received you as our guests, we hope too that you will find time to experience a sampling of our culture and the beauty of our people and country. welcome again and my best wishes for a productive week! 2 / 2 bis central bankers'speeches | 0.5 |
eastern caribbean central bank remarks by timothy n. j. antoine governor eastern caribbean central bank at the launch of the eccu public debt and market information web portal 23 july 2019 ( eccb headquarters, st kitts and nevis ) introduction allow me to join our master of ceremonies, mrs. teresa smith, director of statistics in welcoming all stakeholders to the launch of the eccu public debt and market information web portal. here assembled, are the builders of this platform together with the suppliers and consumers of public debt information. today β s launch marks another milestone in our ongoing enterprise to build out an eccu financial market infrastructure that is fit for purpose β a modern, strong and diversified financial system. our motivation the eastern caribbean central bank ( eccb ) recognises that information is a public good and that the dissemination of relevant and timely information, by both the public and private sectors, is an indispensable element in our quest to transform the eastern caribbean currency union ( eccu ). the launch of the eccu public debt and market information web portal is an important deliverable in the eccb β s strategic plan for this year. if you are not familiar with this plan, i urge to visit the eccb website, familiarise yourself with it and become an implementation partner. this initiative was born of a desire to ensure that the public has the best ( accurate and timely ) information available to make informed decisions. whether this is : 1. an investor considering the purchase of government security ; 2. a credit rating agency assessing the creditworthiness of a government ; 3. a financial institution requiring information to meet their ifrs 9 obligations ; 4. a licensed broker providing advice to clients ; 5. a regional or international financial institution undertaking surveillance ; 6. an academic or student undertaking research ; and of course, 7. the media, which is essential player in our liberal democracies. page 1 of 3 eastern caribbean central bank indeed, far too often our region is misrepresented because of a paucity of data and information for published reports. furthermore, our public discourse is often characterised by far more heat than light because of missing or misrepresented facts. one of the objectives of this particular effort is also to broaden the investor base for the regional government securities market ( rgsm ), a major component of the eastern caribbean securities market. the rgsm, now in its 18th year, has allowed governments to raise almost $ 14 billion, delivering significant fiscal savings in the | in pursuing this target, we understand that in some years, on account of natural disasters or major capital development projects, the ratio may temporarily rise. however, we continue to encourage our governments to enact fiscal resilience frameworks, thereby creating buffers and opportunities to pursue fiscal prudence with some enterprise. second, the council has agreed that the respective governments would lay, in their respective parliaments, their medium - term debt management strategies ( mtds ) and also publish them to strengthen and enhance the transparency and the credibility of the debt management process. conclusion in conclusion, i wish to thank all my colleagues across the bank and our several partners who have assisted with this project. i specifically recognise, teresa smith, our director of statistics, mrs. juletta edinborough, deputy director ( debt ), ms. rhina meade, project lead and mr. john venner, adviser. i also thank : our developers : ian mitchell and colleagues at emagine solutions inc. of saint lucia ; and our partners : diego rivetti while he was at the imf ( now at the world bank ) ; obert nyawata and thordur jonasson from the imf money and capital markets department. above all, i express gratitude to our member governments for your active participation and support for this project. we trust that you will find this debt information utility useful. i thank you all. page 3 of 3 | 1 |
the monetary policy stance and will re - calibrate its instruments accordingly, with a view to delivering the monetary policy impulse that is still necessary to secure a sustained adjustment in the path of inflation in a way that is consistent with our monetary policy aim. 1 for additional detail, see my remarks at the belgian financial forum colloquium on β the low interest rate 5 / 6 bis central bankers'speeches environment β, in brussels, on 4 may 2017. 2 for further detail on this mechanism, see my speeches at the ecb and its watchers xviii conference in frankfurt am main, on 6 april 2017 ; as well as my remarks at the fixed income market colloquium in rome on 4 july 2017. 6 / 6 bis central bankers'speeches | other hand, the further decline of capital and money market interest rates observed since january 2015 carries the risk of a renewed increase in imbalances on the swiss mortgage and residential real estate markets over the medium term. first, compared to alternative assets, investments in real estate appear to have become more attractive for banks, commercial investors and households. in the residential investment property segment in particular, additional demand from investors searching for yield might push prices up further. second, the unprecedented interest rate environment creates additional incentives for banks to incur higher interest rate and credit risks. they might be tempted to increase both maturity transformation and lending to compensate for the additional pressure on margins and to stabilise short - term profitability. such strategies would further increase banks β exposure to large interest rate shocks and to a correction on the mortgage and real estate markets. given these risks to financial stability, banks and authorities should remain alert and, if necessary, take measures to contain such risks. in particular, should momentum on the mortgage and residential real estate markets pick up again, additional measures might become necessary. in this regard, particular attention should be paid to the investment property segment. this segment is more likely to be materially affected by the additional demand from investors searching for yield in the current environment. furthermore, the measures taken so far have predominantly addressed the segment of owner - occupied residential real estate. for its part, the snb will continue to monitor developments on the mortgage and real estate markets closely, and will reassess the need for an adjustment to the countercyclical capital buffer on a regular basis. bis central bankers β speeches | 0 |
donald l kohn : dedication remarks speech by mr donald l kohn, vice chairman of the board of governors of the us federal reserve system, at the dedication of the new seattle branch building of the federal reserve bank of san francisco, renton, washington, 7 april 2008. * * * good afternoon. it is my honor and pleasure to be here today to help dedicate the new seattle branch building, and to speak about how this terrific new facility will assist the federal reserve system's efforts to help guide the national economy and serve the payment needs of the northwest. i would like to express my personal appreciation to the city of renton for its support and assistance in locating the seattle branch at its new home along naches avenue. as chairman of the committee on federal reserve bank affairs at the board of governors, i have followed this building project closely, and value the city's cooperation in helping ensure its future success. i especially appreciate the city's close cooperation with us in upgrading the utilities and streets serving the site and, essentially, making it a welcome new home for branch employees. the seattle branch, created in 1917, was housed in leased space until a downtown site was built in 1950. although that building served the seattle area's needs well for more than fifty years, service demands on the branch have evolved and outstripped the capabilities of the old building and site. the vault and cash processing areas were no longer adequate for efficient operations, and cash delivery facilities could not accommodate the type and number of delivery vehicles, which had resulted in armored trucks queued along spring street. furthermore, the building's general layout and construction did not meet the post - 9 / 11 security requirements necessary for protecting federal reserve system employees and operations. we considered several sites in the seattle metropolitan area for the new building, initially searching for a suitable site within the city limits. but our site and transportation requirements prompted us to consider options within the broader metropolitan area, and we found that this location's proximity to major roads and highways will improve vehicular access for employees, visitors, and delivery personnel. as you may have noticed, the new site is large β almost 10 acres β and its security is evident. clearly, the safety of our employees and operations is a high priority that has become a greater focus in the post - 9 / 11 era, but the building is more than just secure : its design supports our mission, which is to promote a stable and efficient financial system and to conduct | mr. greenspan β s testimony on the international economic and financial system testimony of the chairman of the board of governors of the us federal reserve system, mr. alan greenspan, before the committee on banking and financial services of the us house of representatives on 16 / 9 / 98. as i testified before this committee in the midst of the mexican financial crisis in early 1995, major advances in technology have engendered a highly efficient and increasingly sophisticated international financial system. the system has fostered impressive growth in world trade and in standards of living for the vast majority of nations who have chosen to participate in it. but that same efficient financial system, as i also pointed out in that earlier testimony, has the capability to rapidly transmit the consequences of errors of judgment in private investments and public policies to all corners of the world at historically unprecedented speed. thus, problems that appeared first in thailand more than a year ago quickly spread to other east asian economies that are relatively new participants in the international financial system, and subsequently to russia and to some degree to eastern europe and latin america. even long - time participants in the international financial community, such as australia, new zealand, and canada, have experienced the peripheral gusts of the financial turmoil. japan, still trying to come to grips with the bursting of its equity and real estate bubbles of the late 1980s, has experienced further setbacks as its major asian customers have been forced to retrench. reciprocally, its banking system problems and weakened economy have exacerbated the difficulties of its asian neighbors. the relative stability of china and india, countries whose restrictions on international financial flows have insulated them to some extent from the current maelstrom, has led some to conclude that the relatively free flow of capital is detrimental to economic growth and standards of living. such conclusions, in my judgment, are decidedly mistaken. the most affected emerging east asian economies, despite the sharp contraction in their economic output during the past year, have retraced, on average, only one - sixth of their per capita growth over the past ten years. even currently, their average per capita incomes are more than 2Β½ times the levels of india and china despite the unquestioned gains both have made in recent years as they too have moved partially to join the international financial community. moreover, outside of asia, several east european countries have made significant progress towards the adoption and implementation of market systems and have increasingly integrated their financial systems into the broader world context to the evident benefit of their | 0.5 |
a stable and efficient financial system. but how does monetary policy, which is what my colleagues and i most often talk about, relate to financial stability? there are several links, both operational and analytical ones. essential that the riksbank can use its tools flexibly in a crisis let me begin with the operational work β that is, the tools that we at the riksbank have at our disposal. they are mainly aimed at affecting the volume of liquidity in the financial system. the tools are used both to implement monetary policy and to contribute to a smoothly - functioning payment system and to manage liquidity 7 the riksbank committee β s work includes reviewing the riksbank's responsibility for the central emergency preparedness in the payment system. 7 shortages in an individual institution or in the financial system as a whole. in the current sveriges riksbank act, the different tools are categorised according to different purposes, such as monetary policy ( which applies to most of them ) and liquidity supporting tools, primarily emergency liquidity assistance. a clear lesson from the financial crisis, however, is that measures taken in a crisis situation often contribute both to promoting financial stability and to the impact of monetary policy, which makes it difficult to distinguish these purposes. the riksbank β like a large number of other central banks β implemented a number of different measures during the crisis. we supplied liquidity, for instance, by offering loans in sek at longer maturities than usual, by increasing access to credit, which involved among other things accepting other forms of collateral than previously and extending the circle of financial institutions allowed to borrow from the riksbank, as well as offering loans in other currencies than sek. the measures that got the financial markets to function in the acute situation then prevailing also affected the monetary policy transmission mechanism from the repo rate to the interest rates paid by households and companies. by maintaining a smoothly functioning payment system and an efficient credit market, the riksbank thus contributed to both general financial stability and to the narrower monetary policy targets of price stability and stable resource utilisation. in other words, it is seldom meaningful β particularly in a crisis or in times of financial unrest β to make a distinction between measures taken for reasons of financial stability and measures taken to improve the impact of monetary policy. the sveriges riksbank act is narrow with regard to the areas of use for different tools, but the preliminary works to the act make it possible | up the issue of the link between our interest rate decisions and inflation. why have we begun to conduct less expansionary monetary policy despite the fact that inflation is, and has been, low? to understand the most recent interest rate decisions, it is important to remember that we do not adjust the repo rate to affect the present inflation rate, but to influence inflation a couple of years ahead. it takes time for monetary policy to achieve its full impact on the economy. monetary policy must therefore be based on expectations of the future, i. e. we are dependent on forecasts. it is therefore necessary that we occasionally β lean against the wind β, that is, that we raise the repo rate despite the current inflation rate being below target level or that we lower the repo rate despite inflation being above the target level. if we were only to look at the present inflation rate, there is a risk that we would be forced to make more drastic adjustments further ahead and this type of roller - coaster interest policy would benefit no one. how do we assess future inflation prospects? the economic outlook is currently bright, both in sweden and abroad. international growth has been both high and stable in recent years ( diagram 1 ). strong growth in the united states and parts of asia has been a driving force for global economic activity. increased participation in global trade by, among others, several asian countries has contributed to this upswing and to stiffer international competition. so far, the increase in global demand has not had a visible impact on consumer prices. this is despite the oil price having almost doubled over the past two years and substantial price rises on other commodities. most indications are that international economic activity will continue to develop well over the coming years. we are assuming that economic activity in the euro area will improve more and more and that growth in the united states and asia will slow down somewhat. the swedish economy has also shown good growth in recent years. the upswing in world trade has contributed to strong growth in swedish exports. over the past year, domestic demand has also developed favourably, partly due to stimulation from expansionary monetary policy. the labour market situation has at long last begun to improve. our assessment is that growth in the swedish economy will remain high over the coming years. household consumption is expected to accelerate and employment to increase. we also envisage inflation rising as capacity utilisation increases ( diagram 2 ). over the past six months we have witnessed the beginning of a rise in the rate | 0.5 |
with the reforms of financial regulation and supervision already outlined by the financial stability board and the basel committee. the aim of these reforms is to correct the serious incentive distortions revealed by the crisis and, in this way, to make financial systems both more resilient and less pro - cyclical. important gains in the direction of addressing the twin objectives of price and financial stability not only with the instruments of monetary policy can probably be achieved by developing macroprudential policy tools. 2 3. 2 the international monetary system the us monetary expansion and china β s exchange rate pegging could be maintained for so long because they were mutually reinforcing. demand from us consumers helped sustain china β s ( and other countries β ) export growth. at the same time, an elastic supply of cheap imports from asia helped keep inflation low in the united states, encouraging the fed to maintain an easy monetary stance. and the investment of emerging economies β official reserves in us treasuries contributed to compress long - term yields both in the united states and globally. all this fed global liquidity and rising asset prices. the countries that pegged their currencies to the dollar effectively imported us monetary policy, regardless of whether it was appropriate for domestic conditions. this fuelled liquidity and credit expansion, also because of difficulties in sterilizing the effects of the accumulation of official reserves, and tended to feed booms in domestic asset prices and investment. other surplus countries also had a responsibility in allowing the imbalances to grow. in japan, long delays in facing up to the structural problems of the financial sector caused a prolonged stagnation of demand. in germany and other european countries the labour market reforms introduced in recent years, in the absence of equally forceful reforms in product markets, have largely translated into stagnating wages and weak domestic demand. even though the imbalances were not sustainable, there was no effective mechanism β market - based or activated by multilateral surveillance β to induce a correction. on the one hand, by pegging their currencies to the us dollar, surplus countries managed to avoid pressure to adjust. on the other hand, the role of the us dollar as the international reserve currency ( the β exorbitant privilege β ) implied that the united states could finance persistent current account deficits without coming under market pressure, as long as the surplus countries were willing to accumulate dollar assets. having us external liabilities denominated in dollars and international assets mostly in foreign cu | the first is our assessment of the inflation outlook in light of the incoming economic and financial data. this assessment will be informed primarily by our staff macroeconomic projections, on which all data are incorporated in a coherent manner. in this regard, the staff march forecast pointed to a weakening of activity in 2023, with real euro area gdp expected to grow by 1 % in 2023 ( compared with 3. 6 % in 2022 ). this scenario is somewhat more optimistic than that of the previous projections ( published in december ), reflecting better than expected recent economic data and the fall in the cost of energy, so that real income losses are lower. growth is expected to pick up, to 1. 6 %, see β an overview of the ecb β s monetary policy strategy β. in both 2024 and 2025, based on a robust labour market, improving confidence and the recovery of purchasing power. however, these growth rates are lower than projected in december owing to a stronger tightening of financial conditions, including a larger appreciation of the euro exchange rate. and, in any case, the accumulated growth path expected now for 2022 - 2024 is significantly lower β around 2. 5 % lower β than that projected in december 2021, before the war in ukraine, reflecting the material deterioration of euro area terms of trade. on inflation, the baseline scenario is one of gradual convergence of inflation to our 2 % target. after peaking at 10. 6 % in october last year, hicp declined to 6. 9 % in march this year, according to the flash estimate, on the back of lower energy prices and base effects. by contrast, food price inflation and underlying inflation ( excluding energy and food ) have continued to rise, surprising on the upside and posting high rates in march ( of 15. 4 % and 5. 7 %, respectively ). headline inflation is expected to remain high for the rest of 2023, albeit on a downward path that will take it to 2. 8 % in the last quarter of the year. this drop in inflation is mainly explained by the energy component, while underlying inflation is expected to remain elevated. specifically, the ecb projections point to inflation averaging 5. 3 % in 2023, before decreasing to 2. 9 % in 2024 and to 2. 1 % in 2025. this downward trend would be underpinned by the gradual disappearance of upward pressures from the reopening of the economy, previous supply - side shocks ( supply bottlenecks and | 0 |
for release on delivery 4 : 10 p. m. est ( 1 : 10 p. m. local time ) february 5, 2020 the digitalization of payments and currency : some issues for consideration remarks by lael brainard member board of governors of the federal reserve system at the symposium on the future of payments stanford graduate school of business stanford, california february 5, 2020 i want to thank darrell duffie for inviting me to discuss the future of payments. 1 digitalization is enabling consumers and businesses to transfer value instantaneously, technology platforms to scale up rapidly in payments, and new digital currencies to facilitate these payments. by transforming payments, digitalization has the potential to deliver greater value and convenience at lower cost. but there are risks. some of the new players are outside the financial system β s regulatory guardrails, and their new currencies could pose challenges in areas such as illicit finance, privacy, financial stability, and monetary policy transmission. given the stakes, the public sector must engage in order to ensure that the payments infrastructure is safe as well as efficient and fast, assess whether regulatory perimeters need to be redrawn or new approaches are needed in areas such as consumer data and identity authentication, and explore the role of central bank digital currencies in ensuring sovereign currencies stay at the center of each nation β s financial system. these issues are complicated and consequential. i will only touch on them today in the spirit of sketching out an agenda for the public sector along with the private sector and research community. digital players technology firms β from bigtechs to fintechs β are driving the digital transformation of payments. not only are the new players bringing innovation to the way payments are made between businesses and consumers and peer - to - peer, but they are bringing new business models that bundle payments with other activities in novel ways. payments have traditionally been a service provided by trusted intermediaries such as banks. the operations of banks and some related financial service providers, such as card i am grateful to paul wong and jacqueline cremos of the board of governors of the federal reserve system for their assistance in preparing this text. these remarks represent my own views, which do not necessarily represent those of the board of governors or the federal open market committee. companies, are subject to regulatory oversight for sound risk management. banks offer important consumer protections, including deposit insurance, error resolution, and fraud protection. in addition to providing payments services, banks generally provide | provide and facilitate the clearance of retail payments, such as cheques, bank drafts and off - line fund transfers. in 2002, the central bank authorized lankaclear ( pvt ) ltd to provide cheque clearing facilities as the agent of the central bank. in may 2006, the central bank and lankaclear jointly launched the cheque imaging and truncation ( cit ) system, which facilitates electronic presentment of cheque images, instead of the physical cheques being transported to colombo for clearing. the cit system introduced a uniform cheque clearing time schedule of t + 1 & t + 2 throughout the country, enabling commercial banks, in most instances to credit cheque proceeds to their customers'accounts on the following or next business day. the island - wide cit system has also changed the technology - related landscape of the retail segment of payments and clearing. these state - of - the - art systems have facilitated the banking industry to perform three major functions, i. e. access to and management of liquidity ; provision of speedy payment services ; and mitigation of risks relating to payments and clearing. these new technologies have not only reduced the use of manual processes, but also brought in a number of benefits to the banking industry in finalizing their settlements on an on - line and real time basis. 5. business continuity plans and operational risk mitigation 5. 1 it advancements call for operational risk mitigation by banks. more recently, the central bank has encouraged banks to draw up business continuity plans ( bcps ), focusing on their core banking solutions, back - up systems and disaster recovery sites ( drs ). the central bank, being the owner and operator of the core payment systems, is keen to ensure that the banks have put in place adequate processes and systems to deal with any disruption to core banking and payment services. it took a considerable length of time to convince banks of the importance of having bcps, back up systems and drss. evidently, the establishment of these systems has given confidence to the customers that banks are in a position to deal with emergencies that could occur at any time. 5. 2 with the advancement of it and customers becoming comfortable with new technology, they demand greater convenience, reduced transactions costs and higher quality banking products and services. the reliability of the products and services are assured to a large extent by the attention paid to bcps by banks. while these have increased productivity in the banking sector, banks have had to spend more | 0 |
who have no need for the improved computing power nevertheless may feel compelled to purchase the new technology because they need to remain compatible with the bulk of users who are at the frontier. even if our techniques allow us to accurately measure consumers β valuation of the increased speed and power of the new generation of computer, we may miss the negative influence on some consumers of this incompatibility. therefore, even in the case of personal computers, where we have made such great strides in measuring quality changes, i suspect that important phenomena still may not be adequately captured by our published price indexes. despite the advances in price measurement that have been made over the years, there remains considerable room for improvement. in the united states, a group of experts empanelled by the senate finance committee - - the boskin commission - - concluded that the consumer price index has overstated changes in the cost of living by roughly one percentage point per annum in recent years. about half of this bias owed to inadequate adjustment for quality improvement and the introduction of new goods, and about half reflected the manner in which the individual prices were aggregated. researchers at the federal reserve and elsewhere have come up with similar figures. although the estimates of bias owing to inadequate adjustment for quality improvements surely are the most uncertain aspect of this calculation, the preponderance of evidence is that, on average, such a bias in quality adjustment does exist. the boskin commission, along with most other estimates of bias in the u. s. cpi, have taken a micro - statistical approach, estimating separately the magnitude of each category of potential bias. recent work by staff economists at the federal reserve board has added corroborating evidence of price mis - measurement, using a macroeconomic approach that is essentially independent of the - 5micro - statistical exercises. specifically, employing disaggregated data from the national income and product accounts, this research finds that the measured growth of real output and productivity in the service sector is implausibly weak, given that the return to owners of businesses in that sector apparently has been well - maintained. indeed, the published data indicate that the level of output per hour in a number of service - producing industries has been falling for more than two decades. it is simply not credible that firms in these industries have been becoming less and less efficient for more than twenty years. much more reasonable is the view that prices have been mis - measured and that the true quality - adjusted prices have been rising more slowly than the | mr. greenspan β s remarks at the center for financial studies in frankfurt remarks by the chairman of the board of the us federal reserve system, mr. alan greenspan, at the center for financial studies in frankfurt - am - main, on 7 / 11 / 97. the remarkable progress that has been made by virtually all of the major industrial countries in achieving low rates of inflation in recent years has brought into sharper focus the issue of price measurement. as we move closer to price stability, the necessity of measuring prices accurately has become an especial challenge. biases of a few tenths in annual inflation rates do not matter when inflation is high. they do matter when, as now, a debate has emerged over whether our economies are moving toward price deflation. in today β s advanced economies, allocative decisions are primarily made not by governments but by markets, and the central guide to the efficient allocation of resources in a market economy is prices. prices are the signals through which tastes and technology affect the decisions of consumers and producers, directing resources toward their highest valued use. of course, this signaling process would work with or without government statistical agencies that measure individual and aggregate price levels, and in this sense, price measurement probably is not fundamental for the overall efficiency of the market economy. indeed, vibrant market economies existed long before government agencies were established to measure prices. nonetheless, in a modern monetary economy, accurate price measurement is of considerable importance, increasingly so for central banks whose mandate is to maintain financial stability. accurate price measures are necessary for understanding economic developments, not only involving inflation but also involving real output and productivity. if the general price level is estimated to be rising more rapidly than is in fact the case, then we are simultaneously understating growth in real output and productivity. real incomes and living standards are rising faster than our published data suggest. under these circumstances, policymakers must be cognizant of the shortcomings of our published price indexes to avoid misguided actions that will provoke unintended consequences. clearly, central bankers need to be conscious of the problems of price measurement as we gauge policies designed to promote price stability and maximum sustainable economic growth. moreover, many economic transactions, both private and public, are explicitly tied to movements in some published price index, most commonly a consumer price index ; and some transactions that are not explicitly tied to a published price index may nevertheless take such an index into account less formally. if the price index is not accurately | 1 |
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, 12 november 2015. * * * mr chairman, honourable members of the economic and monetary affairs committee, ladies and gentlemen, i am pleased to be back again with this committee for the last hearing of 2015. the ecb β s accountability to you, the european parliament, is a central counterpart to the ecb β s independence. and transparency is a precondition for your holding us to account. as you are aware, following a public access request, last week we released the diaries of all members of the ecb β s executive board β including my own β for the period from august 2014 to end - july 2015. but we will not stop there. starting next february, we will publish these diaries on a monthly basis. it is only natural that some of you will raise questions with regard to the meetings my colleagues and i have had ; after all, the whole point of publishing the diaries is to give the public and you a better understanding of with whom we are interacting. but let me be very clear : whatever the date, we have had and still have a clear rule β we do not discuss marketsensitive information in non - public meetings. for our monetary policy to be effective, however, it is important to meet market participants and to also hear their views. for the remainder of my remarks, i will mainly talk about two issues : first, our current economic outlook and the upcoming reassessment of it at our december meeting ; and second, as requested by econ coordinators, the macroeconomic adjustment programmes over the last half - decade and the ecb β s role in them. economic developments and monetary policy incoming data confirm that the recovery in the euro area is progressing moderately. so far, economic activity in the euro area has shown some degree of resilience in the face of external influences that tend to weaken demand. while external demand has receded, euro area exports market shares have increased. the lower cost of energy and our monetary policy measures are supporting consumption and, increasingly, new capital formation. however, downside risks stemming from global growth and trade are clearly visible. moreover, inflation dynamics have somewhat weakened, mainly due to lower oil prices and the delayed effects of the stronger euro exchange rate seen earlier in the year | and the commission for help, and they also asked the ecb to contribute its expertise at a time when europe needed it most. this setup was codified in the esm treaty and by the co - legislators in the two - pack ; the ecj confirmed its legality. in line with this, the ecb has since provided its advice in programmes in five member states. but we should not forget that the respective national governments are responsible for programme implementation, while the final responsibility for programme design and the disbursement of financial assistance lies with the eurogroup. since 2010, three countries have now successfully completed their programmes, and ireland is a particularly good example of how such programmes can deliver the necessary adjustment and restore financial stability, economic competitiveness and fiscal sustainability. it has shown that a country which takes strong ownership of its programme can come out of it with robust growth and a more stable financial system, and that eventually employment will also rebound. there is no doubt that the adjustment process was painful. but we should keep in mind that the adjustment would have caused significantly more hardship in the absence of financial assistance. the programmes had to address excessive macroeconomic imbalances which had accumulated over several years in the run - up to the crisis, often reflecting misguided national economic policies. as we have said before : don β t blame the fire damage on the fire brigade. throughout the programmes in ireland and elsewhere, the ecb has played the role assigned to it under the treaty β to be the central bank for the euro area and to provide liquidity to financial institutions, including those in programme countries, when warranted. at times, this meant that risk - management considerations made it necessary for us to consider the progress of programme implementation when deciding on provision of further liquidity if the soundness of the domestic financial sector was intimately linked to programme success. we did so in full accordance with our rules and legal framework and in full independence. this was the case for ireland. and this continues to be the case for greece and cyprus. please allow me to conclude. bis central bankers β speeches five years ago, the programme framework came to life. it is certainly part of our path toward a genuine economic and monetary union to integrate the european stability mechanism and the related programme work fully into the legal framework of the european union ; we again called for this most recently in the five presidents β report. but it is even more important that we take decisive steps to avoid a member state needing a programme in the | 1 |
do you understand the financial health needs of your customers? do you have products and services that meet their needs at the different stages of their life cycles? the needs of different customer segments vary given their income segment and stage of life. the risk appetite of high networth customers will indeed differ from a middle class family with children about to join university. a broad brush stroke approach to product development in an environment like this is redundant and the challenge is to customize products and services accordingly. second, is transparency and disclosure. customers are now faced with a myriad of financial services and products that they may not understand. the allure of anytime and anywhere financial services is increasingly leading consumers to partaking the services and products without adequate knowledge. this has led to challenges including overindebtness and addiction to betting and gaming. third, a holistic and collective approach to financial health is imperative. all players including regulators, financial service providers, customers must come to the table to strengthen the financial health of our populace. i am therefore pleased to note the participation in today's launch not just of commercial banks, but also of insurance companies, microfinance banks, saccos and payment services providers. we are all serving the same customers who require a variety of products for their financial wellbeing and ultimately enhanced lives and livelihoods. 3 / 4 bis - central bankers'speeches as i draw to a close, the campaign we are launching today should not just be about financial literacy. it should be about enhancing the financial health of kenyans. the words of queen maxima of netherlands, a global proponent of financial health are apt, " it is important to remember that financial inclusion on its own - is not enough - rather it is a means to an end. it remains critical to be deliberate in targeting positive development outcomes that strengthen the resilience of people and small businesses, and contribute to their improved financial health. " we have ways to go but i am confident we will get there. we must. and in the words of a famous proverb, if you want to go far, go together. thank you! 4 / 4 bis - central bankers'speeches | , will provide a framework through which we will jointly determine effective policy solutions to advance mfs across the african continent while recognising the unique circumstances, environments, conditions and needs of each country within the region. specifically, ampi will seek to launch new, or expand on existing mfs policy, regulatory initiatives and strategies with the objective of deepening the penetration of mfs across africa in line with our national agendas and policy priorities, including the maya declarations, where they apply. further, ampi will provide a platform for regional networking and cooperation. african afi members will be in a position to share experiences and address policy issues which are common in nature. this is expected to help us develop effective solutions, policy strategies and regulatory frameworks that will be beneficial not only to africa but also to the wider afi network. ladies and gentlemen, it is envisaged that ampi β s broad objectives will be achieved through tailored activities which include ; β’ tapping into the synergies and experiences of the afi african members ; bis central bankers β speeches β’ mapping of comparative case studies on policies and regulatory implications of new business models ; β’ advancement of research, studies and exchange of knowledge and experiences around mfs ; β’ supporting the implementation of the maya declaration commitments relating to mfs ; and β’ secondment / attachment of staff / members to different organisations of african afi member countries for further learning. to successfully operationalise the ampi initiative, we propose to establish an ampi help desk, but not necessarily a physical one, which will provide all technical coordination towards the implementation of ampi β s objectives and activities. the key mandates of this help desk will be focused on facilitating communication of the results and progress of ampi, enabling engagement among the afi members and external stakeholders and ensuring synchronization of the overall afi strategy towards enhancing mfs in africa. in addition, it will contribute to our fulfilment of the maya declaration commitments relating to mfs. we will discuss, sharpen and adopt this proposal over the next two days. ladies and gentlemen, it is my ardent belief that this initiative will go a long way in enhancing financial inclusion in africa. ampi will pave the way for us to create an enabling environment to support the delivery of financial services through mobile phone technology and other emerging technologies, leading to increased penetration of mfs in africa. in addition, through the interaction between members and the external stakeholders, ampi will serve as a peer learning and knowledge platform for afi | 0.5 |
claims to speak on behalf of all shareholders, and his consistent communication of all issues raised with the bank to a wide range of media, we feel it is necessary to put the record straight. mr michael duerr has been a shareholder in the bank since about march 2006. mr duerr is a shareholder who does not normally reside in south africa, and is therefore subject to the legal provisions applicable to shareholders who are not ordinarily resident in south africa. in the main, the legal implication is that mr duerr ( as is the case with all other non - resident shareholders ) cannot vote at any general meeting of shareholders of the bank. non - resident shareholders, of whatever nationality, even if south african nationals, have not been permitted to vote virtually since the inception of the bank, and this is clearly spelt out in the sarb act. mr duerr should have been aware of this and other limitations on shareholders at the time he bought the bank β s shares. however, mr duerr refuses to accept that the sarb act lawfully prohibits persons who do not ordinarily reside in south africa from voting, and he has raised issues with regard to the enforceability of this measure with the bank on numerous occasions. bis central bankers β speeches we have spent literally hundreds of management hours responding to often spurious, slanderous and sometimes downright bizarre interventions by mr duerr. the bank β s legal counsel and his team have spent some 385 hours since the middle of last year just responding to his queries. we have received more than 60 e - mails and other correspondence, running to more than 160 pages. apart from the tone, language, unfounded allegations and abuse contained in this correspondence, there have been no less than 61 demands, often stipulating responses expected within hours. by any standards, this is not in the interest of good governance or efficient or effective operations. we have reflected the hours spent by the legal counsel, but the interaction also takes up the time of the governors, the secretary of the bank and the head of strategy and communications. we can only conclude that harassment appears to be the actual intention, which is most unfortunate and hardly a good reflection on mr duerr, who claims that in these actions he is the β caretaker shareholder β acting for all shareholders. in this way he ostensibly abrogates to himself powers that can never be his, and seeks in the process to disempower the vast majority of shareholders by evidently suggesting that he speaks | set out in king iii, in more detail. as discussed at the 2010 ( ogm ), the bank has conducted a bankwide gap analysis, and steps are being taken to address those areas we regard as having room for improvement. it is necessary to emphasise that king iii is a voluntary code, and a tool for enhancing governance, which is the approach the bank has taken. question 8 β definition of corporate body a request has been made to set out clearly the definition and status of the bank with regard to profitability. the sarb act clearly stipulates that the bank is a juristic person, with its primary objective being to protect the value of the currency of the republic in the interest of balanced and sustainable economic growth. there should be no ambiguity about this matter. the bank does not perform its duties with a profit motive. on the contrary, in the exercise of its responsibilities, it may well take actions that are in the national interest but will result in the bank being loss - making. it is the obligation of the bank to act in the best interests of the country, and not in the narrow interests of the profitability of the bank or its shareholders. there are legal limits placed on the rights of the shareholders of the bank β for instance a limit of 10, 000 shares, a fixed dividend, the election of only some of the non - executive board members and no role in the appointment of the governor and deputy governors, among others. amendments to the sarb act the amendments to the sarb act were promulgated in september 2010. in terms of these amendments, membership of the board of the bank was expanded from 14 to 15. the board has also agreed to use as a guideline the nine - year rule contained in king iii for the service periods of board members. as a result, three new non - executive directors will be elected by shareholders at this ogm. there are currently four vacancies for non - executive directors appointed by government. once all these appointments have been made, the board will comprise a significant proportion of new members. while this may raise challenges for bis central bankers β speeches continuity, i am confident that the new - look board will continue to maintain effective corporate governance oversight of the bank. other changes to the board have come about as a result of the appointment of mr lesetja kganyago as deputy governor, who assumed office on 16 may 2011. i would like to take this opportunity to welcome him again to the bank | 1 |
he was only invited, but in the end even he did not attend. his friends advised him not to go. this story tells how far finland was from the european discussion at the time. so it was no surprise that finland was not among the founding members of the council of europe in may 1949. actually, finland did not join the council of europe before 1989. early in the 1950 β s, the european coal and steel union was founded at the initiative of robert schuman, former french prime minister and was followed by the eec, european economic community, created by the treaty of rome 60 years ago. finlandΒ΄s two biggest trading partners, uk and sweden decided to stay outside the eec at that time. those countries, which in 1957 had not taken part of the treaty of rome, founded instead the european free trade association ( efta ) in 1960, a trade bloc of seven countries centred around the uk, its biggest member. the founding of efta was a big challenge for finnish trade policy. the major part of the finnish exports went to western europe. the trade with soviet union was on the average around fifteen per cent during the post - war period. for this reason, a major objective for finland was again to secure the access to the markets in western europe and, at that time, especially the uk. the uk and the other participants agreed that the finnish government could follow the negotiations on the efta agreement. however, at the demand of the british, finland β s observers were not allowed to be present in the negotiation room but were to be kept informed, in the first place, through sweden. that was the solution for finland. we were there, but not allowed to sit at the tables where decisions were taken. 2 / 5 bis central bankers'speeches so, the uk being a founding member of efta, finland negotiated the so - called fin - efta agreement, which made us an associate member of efta in 1961 and gave us access to the markets of the area. as a political condition, finland gave the same trade concessions also to the soviet union. the associate membership of finland was a delicate operation due to the suspicions in moscow. but for finland it was important and beneficial. efta exposed finnish industries to more competition from abroad and opened new markets to our exports, especially in the uk and sweden. this diversified our economy and started structural changes, which made us more competitive in larger markets. in some sense you can | some good news. j. g. monnet had a new client, for in that same year the finnish state alcohol monopoly, alko, began buying cognac from the monnets. monnet switched continents to become an investment banker in shanghai, china, where he was involved in devising a way of financing the enormous railway network. although of limited professional interest, monnet's moscow contacts were altogether more rewarding from a personal point of view. in 1929 he had fallen in love with an italian lady at a dinner party in paris. but the lady also had a husband on the scene and it was not possible for catholics to get divorced. eventually after some rather intricate manoeuvring monnet traveled with his beloved silvia to moscow, where catholic marriages were not recognized. they got married there in 1934 with the assistance of the russian authorities. at the same time j. k. paasikivi retired from the post of chairman of the kansallis - osake pankki. it was not until six years later that he was sent to moscow to become ambassador together with his wife alli. in contrast robert schuman remained unmarried for his whole life. outsiders on the inside in 1936 monnet returned to washington, where his family lived until the end of the war. he developed an extensive network of contacts in the city. he was a friend of leading newspaperman walter lippman, and john foster dulles was the lawyer who worked on many of monnet's banking operations. monnet was an influential figure in president roosevelt's close circle. it would only be a slight exaggeration to say of him what max jakobson said of paasikivi's position during the war : that he was a sort of " outsider on the inside ". in any case, it was an exceptional position for a frenchman to be in. when war broke out, member of parliament, robert schuman was involved in the evacuation of his constituency of thionville. in 1940 he was appointed france's under - secretary of state for refugee affairs. he was the high - ranking government official first to be notified of the massive german offensive in may 1940. the french government was transferred to vichy and schuman with it. but when all constitutional powers were conferred on marshal petain by decision of the national assembly, schuman realized that he had been caught in a trap. schuman left vichy and returned to his constituency in august 1940 | 0.5 |
the federal reserve β s purchases of longer - term securities have not affected very short - term interest rates, which remain close to zero, but instead put downward pressure directly on longer - term interest rates. by easing conditions in credit and financial markets, these actions encourage spending by households and businesses through essentially the same channels as conventional monetary policy, thereby supporting the economic recovery. a wide range of market indicators supports the view that the federal reserve β s securities purchases have been effective at easing financial conditions. for example, since august, when we announced our policy of reinvesting maturing securities and signaled we were considering more purchases, equity prices have risen significantly, volatility in the equity market has fallen, corporate bond spreads have narrowed, and inflation compensation as measured in the market for inflation - indexed securities has risen from low to more normal levels. yields on 5 - to 10 - year treasury securities initially declined markedly as markets priced in prospective fed purchases ; these yields subsequently rose, however, as investors became more optimistic about economic growth and as traders scaled back their expectations of future securities purchases. all of these developments are what one would expect to see when monetary policy becomes more accommodative, whether through conventional or less conventional means. interestingly, these developments are also remarkably similar to those that occurred during the earlier episode of policy easing, notably in the months following our march 2009 announcement of a significant expansion in securities purchases. the fact that financial markets responded in very similar ways to each of these policy actions lends credence to the view that these actions had the expected effects on markets and are thereby providing significant support to job creation and the economy. my colleagues and i have said that we will review the asset purchase program regularly in light of incoming information and will adjust it as needed to promote maximum employment and stable prices. in particular, it bears emphasizing that we have the necessary tools to smoothly and effectively exit from the asset purchase program at the appropriate time. in particular, our ability to pay interest on reserve balances held at the federal reserve banks will allow us to put upward pressure on short - term market interest rates and thus to tighten monetary policy when required, even if bank reserves remain high. moreover, we have developed additional tools that will allow us to drain or immobilize bank reserves as required to facilitate the smooth withdrawal of policy accommodation when conditions warrant. if needed, we could also tighten policy by redeeming or selling securities. fiscal policy fiscal policymakers also face significant challenges. the | the citizens and advised the government. 3. safeguarding financial stability in addition, however, to its advisory role in economic policy making, the bank of greece also had decisive powers and responsibilities for shaping a strategy for the banking sector, constantly geared to safeguarding financial stability. although the crisis in greece started in the public sector, contagion to the banking system was inevitable. the banking system was hit by the successive downgrades of the greek government β s credit rating that led to corresponding downgrades of the banks β credit ratings. this fact, on the one hand decreased the value of collateral available to banks for borrowing from the eurosystem, and on the other hand made their access to the interbank market particularly hard and expensive, gradually leading to their exclusion. with the debt restructuring in 2012 the value of the bonds held by greek credit institutions was severely impaired. thus their capital position was eroded or even turned negative. at the same time, the recession was leading to a continuous increase in non - performing loans, while the surrounding uncertainty was encouraging deposit withdrawals. bis central bankers β speeches to safeguard financial stability, the bank of greece intervened by taking several targeted steps. i shall only briefly refer to the most important among them. first, the bank of greece ensured the uninterrupted supply of liquidity to the banking system, including by emergency assistance to the extent required. the provision of emergency liquidity assistance was reviewed every two weeks and the ecb governing council could put a stop to it for a variety of reasons ( lack of collateral, low capital adequacy ratios of the banks, incomplete implementation of the programme, etc. ). we therefore had to thoroughly prepare our positions and persistently intervene to prevent any negative developments. second, to avoid a further shaking of the confidence of depositors we constantly had to supply the banking network with banknotes, so as to prevent cash shortages at bank branches or atms. in chapter 8 of the book we release for the first time data on the increased demand for cash and the bank β s cash management during the crisis, which i believe you will find very interesting. third, we had to map out a strategy for the recapitalisation, restoration of soundness and restructuring of the banking system. the point of departure for this strategy was the first diagnostic assessment of greek banks conducted with the help of blackrock in 2011, and the viability study that followed in 2012. the bank of greece engaged foreign agencies to assist | 0 |
hires β earnings in ireland β, research technical paper, vol. 2016, no. 6, central bank of ireland. [ 28 ] for a review of these programmes, including evaluations of effectiveness, see β labour market policy thematic review 2017 : an in - depth analysis of the impact of reforms on inequality β and igees [ 29 ] card, d., kluve, j., & a. weber ( 2017 ) β what works? a meta analysis of recent active labor market program evaluations β journal of the european economic association, volume 16, issue 3, june 2018, pages 894 β 931. [ 30 ] according to the cso, between 25 and 31 % of pup recipients in q4 2020 were economically β inactive β β in other words, not working, but also not available or looking for work. [ 31 ] this is because, as the oecd ( 2020 ) has pointed out, the likelihood of re - employment, including through almps, is typically higher for individuals that remain in the labour force ( aside from periods of inactivity due to re - entering education or training ). [ 32 ] the pandemic is accelerating pre - existing employment trends. for example, labour - saving automation in customerfacing settings - to meet public health measures during the pandemic - are unlikely to be reversed, even where they are not necessarily productivity improving. there is some evidence this may affect women especially hard. a recent brookings paper considered historical patterns of workers moving across sectors suggest a limited switching between sectors or occupations in the us. this could mean that considerable upskilling and re - training is required to prevent this sort of mismatch, and a permanent increase in the unemployment rate. [ 33 ] see for example covid - 19 : a backward step for gender equality, work, care, and gender across uk lockdowns & the gender gap and covid - 19 : evidence from eight advanced economies. [ 34 ] lambert, d., mccann, f., mcquinn, j., myers, s. & f. yao ( 2020 ). β sme nances, the pandemic, and the design of enterprise support policies β, financial stability note, vol. 2020, no. 8, central bank of ireland. [ 35 ] see speech and q & a by the president of the eurogroup and minister for finance, paschal donohue, td at the dublin economics workshop on | the debt - overhang problem. to go forward we first need to unshackle ourselves. the crawling pace of debt resolution is tying down the economy. if we could not resolve the debt problem in a timely manner and adopt new work practices, it will be next to impossible to compete successfully in the world market. the bank of thailand and the government are alert to this challenge. and the government has already initiated the process of overhaul. one notable attempt at debt restructuring is the establishment of the thai asset management corporation ( tamc ). the entity was set up to reduce distressed assets in the banking system through centralization of npls'management. this should allow banks to resume their normal function and new lending. new lending is needed to provide the working capital to support corporate restructuring as well as business expansion. this way, our energy will be channeled toward more productive enterprises. and, with the authority to liquidate and rehabilitate businesses through swift legal procedures, the tamc is unique in its unprecedented power. next, given that a substantial share of distressed assets remains outside the purview of the tamc, i see the need to expedite the process of corporate debt restructuring which requires a speedy passage of the reformed bankruptcy law. this action will be testimony to the sincere effort that we in the authorities can make for the benefit of our future generations. insofar as the banking sector is concerned, the bank of thailand regards better enforcement of the banking and financial institution regulations as a priority. this is an area that the bank of thailand takes leadership role to strengthen the soundness and efficiency of the financial institutions. our leadership must lead to an outcome which makes practical sense, measures up to international best practices, and must be market - oriented. on this front, we have been actively involved in the consultation process for the new basel capital accord, which will provide a more comprehensive and sensitive approach to addressing risks through the use of minimum capital requirements, supervisory reviews and market discipline. the second agenda of the banking sector reform is enhancing our risk management capacity. toward this end, our supervision group has moved from regulation and transaction - testing toward risk - based supervision. we realize that good rules alone do not automatically translate into honorable practices. therefore, we consider an upright supervisory role as a sine qua non to ensure honest banking practices. the new supervisory practices can be considered a milestone in this area. our aim is to nudge thai banks to change their business practices. currently, they are working | 0 |
better : how big are green spending multipliers? β, imf working paper no 2021 / 087. 8 / 9 bis central bankers'speeches 9 see, for example, acemoglu, d. and autor, d. h. ( 2011 ), β skills, tasks and technologies : implications for employment and earnings β, in ashenfelter, o. and card, d., editors, handbook of labor economics, vol. 4, chapter 12, pp. 1043 β 1171, elsevier. 9 / 9 bis central bankers'speeches | concern, and should be addressed using the macro - prudential instruments available. what are the priorities to restore strong and sustainable growth? governments should not view the current period of low interest rates and favourable market sentiment as an invitation to abandon the path of fiscal prudence, but rather to accelerate reforms aimed at freeing up growth opportunities. first, the crisis has shown that fiscal credibility needs to be earned. delivering on past commitments under the eu framework is essential for this. this means that governments have to continue on their path towards resilient public finances. they should stick to the rules they have agreed under the new eu fiscal framework and not stretch them to the point where the credibility of this framework would be harmed. in the long term, there is no trade - off between growth and sound public finances. lower levels of public debt are needed to support a sustainable recovery. there is such a trade - off in the short term but, in order to mitigate negative growth effects, consolidation efforts should focus on those budget items that do not add to, or perhaps even stand in the way of, dynamic and inclusive growth. second, structural reforms should focus on those areas that may hinder productive potential. this means overturning excessive regulations that protect vested interests and harm the common good ; and creating a stable institutional landscape that enhances productivity and allows private operators to focus on innovation, growth and job creation. the euro area faces a major investment shortfall, with real capital expenditures being almost 20 % lower than their pre - crisis level, and as much as over 50 % lower in some euro area countries. bridging the investment gap is a priority to secure our economic future. contrary to what is sometimes argued, however, this should not imply spending more taxpayers β money, but prioritising material and immaterial investment in budgetary plans and creating an environment that unleashes entrepreneurship. bis central bankers β speeches third, the crisis has triggered institutional reforms at the european level that will ensure a more robust union. the banking union is a critical component in this enhanced institutional framework with its single supervisory and single resolution mechanisms and new rules for european banks, including bail - in rules that will shield taxpayers from the errors committed by banks. currently, we are in the middle of our comprehensive assessment of the most important banks in the euro area. even before we began this exercise, banks started cleaning up their balance sheets and building capital buffers. i am confident that these and further measures will result in a | 0.5 |
a β strong representation of fiscally conservative voters β. but how can we implement this? in principle, by building a wide consensus on the advantages of fiscal discipline we may actually induce voters to punish policy - makers who do not deliver it. asking voters to agree on fiscal consolidation packages without convincing them of their advantages is not straightforward. but well - designed, stable and easy to apply fiscal rules can contribute to the emergence of a public consensus in favour of policies aimed at fiscal sustainability. in the second part of his lecture leszek balcerowicz focuses on the problem of sovereign debt in the eu, analyzing three main aspects : ( i ) the management of the greek crisis ; ( ii ) the development of a debt resolution mechanism in europe on the heels of the greek experience ; and ( iii ) longer term solutions for the stability of the euro area. according to balcerowicz, a double standard emerged between euro - and non - euro countries in the eu. the vulnerable fiscal position of some euro - area countries led to the fear of contagion. after a lengthy debate and with a significant delay, the possibility of an imf intervention was finally accepted. for non - euro countries, where the risk of contagion was considered modest, the application for imf conditional loans was not controversial. in the case of euro - area countries, however, such as greece, a complete set of intervention options was never put on the table ; some options were not considered at all, basically due to motives of prestige. committee for the study of economic and monetary union ( 1989 ), p. 20. with reference to the second point, balcerowicz charges that the european financial stabilisation mechanism ( efsm ) is inconsistent with the letter of the article 122. 2 of the treaty. he also criticizes the ecb β s securities market programme as a possible threat to its reputation. finally, turning to the analysis of long - term solutions, he advocates a proper institutional setting able to avoid pro - cyclical policies. structural reforms should be implemented to spur long - run growth and to promote the adjustment of the economy to shocks. it is quite difficult to assess a single article of the treaty out of context. the consistency of the efsm with the letter of the article 122. 2 could be debated, but it is evident that the efsm complies with the spirit of the treaty, given the importance of the proper functioning of the eu and its very existence. | a country from brussels can be politically difficult when all seems to be going well. this is an area in which national independent authorities could have a role. a very important issue concerns the lessons we have learnt from the crisis for the design and the conduct of our monetary policy, as well as for its interactions with macro - prudential policies. if anything, the crisis has confirmed that we should firmly stick to our objective to deliver price stability in the medium term. indeed, the credibility of the eurosystem in pursuing this objective was crucial in allowing us to adopt exceptional measures without compromising the anchoring of inflation expectations. the crisis has also shown how important it is to interpret credit and money developments properly and take them into account in our decisions, in particular by β leaning against the wind β in case of credit booms and asset price imbalances. this is embodied in the eurosystem setup, insofar as the careful monitoring of monetary and credit aggregates helps to identify risks both to financial and price stability. a crucial issue is how to detect the accumulation of systemic risk in time. i am confident that the new framework based on the esrb will provide a fundamental contribution in this respect. enhanced interaction among macro - prudential bodies, between them and the micro - prudential authorities, and between macro - prudential and monetary policy authorities will be crucial. with reference to the ecb β s securities market programme, suffice it to say that developments in financial markets called for special interventions. the programme is in line with the shared principles of european monetary policy - making and does not represent a change in the monetary policy stance. the current financial crisis has been described as valuation crisis. in fact, bond spreads for several euro - area countries widened beyond any reasonable level, and severe tensions in the bond market hampered the monetary policy transmission mechanism, demanding action by the central bank. however, a very important and more immediate issue is the exit from the exceptional monetary policy measures that have been adopted. all the various non - conventional measures that central banks, including the ecb, have taken over the last years have been directed at avoiding a financial and economic collapse. that collapse has not materialized. the relevant issue now is the timing and speed of the exit from these measures. this will have to be guided, on the one hand, by the need to maintain support for the orderly functioning of the money and financial markets and to sustain credit flows to the economy, and, on the | 1 |
transformed demand and supply conditions across the globe : the integration of china, india and other emerging market economies into the world trading system. the first signpost shows that prices of labour - intensive manufactured goods have fallen. china, india and the former soviet union between them have massively increased the supply of labour available to industry around the world. as labour - intensive goods have become more abundant, they have also become cheaper. the signpost points us in a familiar direction : the need to change what we produce. were we still producing the same labour - intensive goods as before, with output concentrated in industries like agriculture ( including hops ), textiles, coal - mining and ship - building, we too would have seen the price of our own output fall, just as it did for hop growers a century ago. instead we allowed output and employment to expand in those industries where we could exploit a comparative advantage. in kent, the expanding sectors include financial services, transport ( with 18 million tons of freight passing through the channel tunnel each year ) the exploitation of life sciences, and higher education ( with five universities in the county ). as consumers, we have benefited from falling prices of goods made in china and elsewhere in asia. between 1995 and 2005, the prices of imported manufactured goods fell by a sixth and, relative to the price of domestically produced output, by no less than a third. so over the past decade we have been able to increase consumption by more than the increase in production. openness to the world economy has resulted in a higher standard of living. the second signpost marks the rise in oil and other commodity prices. rapid growth of production in china, india and other newly integrated economies has led to a substantial rise in the demand for oil and other raw materials. between 1995 and 2004, net imports of oil to china rose by a factor of seven. unlike earlier episodes of high oil prices, which were driven largely by temporary supply constraints, the recent increase in the demand for oil has been reflected in higher prices for future delivery as well as higher spot prices. similar rises are apparent in the market for gas. the signpost marked higher energy prices points us towards ways of using less energy, to alternative energy sources and to new sources of oil production such as the canadian tar sands. the first two signposts point us in the right direction. but the path has not been easy to follow. we have seen movements - in both directions - in inflation, consumer spending and output growth. interest | 90 - day interest rate projection, based on a range of assumptions, provides a guide of what monetary policy settings may be needed to return or keep inflation at target. we feel that this is a more informative approach than assuming a constant or market path for interest rates β which may present an interest rate path that is inconsistent with the bank β s price stability mandate. forward guidance β avoiding potential pitfalls this transparent approach comes with potential costs. first, research highlights that increased transparency, in some cases, can be detrimental to the economy. this is particularly the case if the public takes the bank β s information as definitive, despite it being noisy or imperfect. 8 we aim to minimise such instances by offering a full discussion of the assumptions and risks that underpin our projections, to clearly highlight the limitations in our knowledge. second, some research claims that when a central bank provides an endogenous interest rate projection, fears of credibility loss may lead it to stick to a previously published policy path, even when faced with new economic developments. 9 i can say, from my experience, that this has never been a problem at the bank. for further discussion, see woodford ( 1999 ), β optimal monetary policy inertia β, the manchester school supplement, vol. 67, issue s1, pp 1 β 35. see ford, kendall and richardson ( 2015 ), β evaluating monetary policy β, reserve bank of new zealand bulletin, november 2015. see kamber, mcdonald, sander and theodoridis ( 2015 ), β a structural model for policy analysis and forecasting : nzsim β, reserve bank of new zealand discussion paper, dp2015 / 05. these points are expanded on in : morris and shin ( 2002 ), β social value of public information β, the american economic review, vol. 92, no. 5, pp1521 β 1534 ; dale, orphanides and osterholm ( 2011 ), β imperfect central bank communication : information versus distraction β, international journal of central banking, vol. 7, no. 2, pp 3 β 39, june 2011. this issue is discussed in : mishkin ( 2004 ), β can central bank transparency go too far? β, nber working paper 10829 ; goodhart ( 2009 ), β the interest rate conditioning assumption β, international journal of central banking, vol. 5, no. 2, pp 85 β 108, june 2009. bis central bankers β speeches third, some | 0 |
next, i will discuss the need for public intervention to ensure an alignment of interests ( ii ). i / the financial sector and civil society are already mobilised. cf. moody β s, β impact of carbon reduction policies is rising globally β, march 2015. mark carney, β breaking the tragedy of the horizon β climate change and financial stability β, speech given at lloyd β s of london, 29 september 2015. bis central bankers β speeches this mobilisation, which has yielded progress, appears to have occurred in three main phases. first, the major public financial institutions were at the forefront of this movement. this is the case for the european bank for reconstruction and development or the caisse des depots, with its subsidiary cdc - climat. the european investment bank estimates that it currently grants 25 % of its loans β over eur 20 billion per year β to β green β projects. second, under the aegis of the united nations, projects were launched such as the unep finance initiative, a partnership between the united nations environment programme and 200 financial sector institutions, which make environmental sustainability a collective responsibility, share best practices and establish principles for green financing. thanks to the montreal climate change protocol, or to the portfolio decarbonization coalition, signatory investors commit to measuring and disclosing the carbon footprint of their portfolios. the objective is ambitious : reduce investment in carbon - intensive projects by several hundred billion dollars. lastly, financial institutions are now making more direct commitments. french banks and insurance companies have recently announced that they have withdrawn their support for the coal industry and increased their financing of renewable energies. paris europlace called for the creation of an energy transition fund, which would be invested in by french banks, insurers and asset management companies, and which could in turn invest eur 10 billion by 2020, with a view to financing projects to improve energy efficiency or promote renewable energies. this is a commendable initiative. ii / to best align these private initiatives with the fight against global warming, which is a public good, public intervention is nevertheless necessary. for central banks or prudential authorities, three questions arise : that of financing β and interaction with monetary policy β, that of information β and of disclosure β, and lastly that of time horizons β and stress tests β. 1. the question of financing : what interaction with monetary policy? climate change is likely to affect the price of goods and services. it has a direct impact on food prices | francois villeroy de galhau : climate change β the financial sector and pathways to 2Β°c speech by mr francois villeroy de galhau, governor of the bank of france, at the conference cop21, paris, 30 november 2015. * * * ladies and gentlemen, this conference organised by the 2Β°c initiative, the oxford martin school and france strategie for the opening of the cop21, is a major event in which i am delighted to participate. i would like to make some comments on a topic that has steadily gained ground in the climate change agenda, namely the way central banks and prudential authorities take account of climaterelated issues. this is in fact a relatively new question. we were already committed as both citizens and public policy - makers, but monetary and prudential authorities are today concerned by three broad categories of risk : β direct physical risks, related to the increase in both the frequency and the magnitude of extreme climatic events, which raise questions in terms of insurance costs. β liability risks, related to the financial impacts stemming from compensation requests from those who have suffered loss or damage due to climate change. β macroeconomic risks related to the transition between two production models, which can result in disorderly adjustments in sectors too heavily exposed to global warming or that become unviable due to the governments β climate change commitment. in practice, we already observe some financial imbalances in carbon - intensive industries facing rising costs, disruptive technologies, and regulatory uncertainties. 1 the market value of most carbon - intensive industries has already been impacted. and re - pricing may occur rapidly and abruptly. what is less clear at present is how we should react to such a development since the horizon at which climate change risks materialise largely exceeds the traditional horizon of most economic agents, and notably financial players. this is what mark carney famously referred to as the β tragedy of the horizon β. 2 we all agree that a higher carbon price would send the right economic signal. but we are aware of how difficult international decision - making is in this area. given my responsibility, and while awaiting such decisions, the following questions thus arise : how to ensure that investors and financial intermediaries are aware of their actual exposure to risks? and how to prevent a misallocation of capital to carbon - intensive sectors or stranded assets? to address these questions, i will start by stressing that, fortunately, the financial sector and civil society are already mobilised ( i ). | 1 |
reduced and monetary transmission has become much more homogeneous across member states than was the case during the crisis. third, the app has supported the strong economic expansion i talked about earlier. fourth, and perhaps most importantly, the tail risk of a 1930s type deflationary spiral has been averted. in doing so, the programme has achieved what could reasonably be expected from it. with deflation risk clearly off the radar, the main rationale for employing the app has therefore ceased to exist. fear of relapse owing to an alledgedly premature discontinuation of net purchases seems rather overdone. the programme has simply run its course. continuing the programme for the sake of fine - tuning inflation rates to precise values below, but close to, 2 % suggests a degree of control over the inflation process that is at least debatable. risks and side effects at the same time, continued monetary expansion is not a free lunch. unconventional policy measures can have unconventional consequences that even professional economists cannot always oversee. a prolonged period of low interest rates, ample liquidity and prominent central bank intervention in markets has given rise to potential misallocation of credit and wider resources toward zombie firms. 5 risk premia are compressed to a point where they no longer reflect the assets β inherent risk characteristics. the dynamics of preventing financial markets to adequately price risks for an extended period of time takes our economies into largely uncharted territory. these financial stability risks also need to be considered when assessing our monetary stance. while some would argue that prudential and not monetary policies should address financial stability risks, i tend to agree with former bank of england deputy governor charles bean that there are β important qualifications to this somewhat panglossian view of the ability to maintain both price stability and financial stability by assigning monetary policy to the former and macroprudential policy to the latter. β 6 after all, only monetary policy sets β the universal price of leverage β. 7 conversely, materialization of financial stability risks can also become detrimental to price stability. viral acharya, tim eisert, christian eufinger, and christian hirsch, β whatever it takes : the real effects of unconventional monetary policy β, safe working paper series, no. 152, 2017. charles bean, β the future of monetary policy β, speech at the london school of economics, london, 20 may 2014. claudio borio and mathias drehmann, β financial instability and macroeconomics : bridging the gulf β, september | factors are global in nature and largely outside the realm of individual central banks. they have altered domestic inflation processes and have thus complicated the life of central bankers around the world. 2 chart 2 : euro area gdp growth euro area real gdp growth quarter - on - quarter percent change 1, 0 0, 8 0, 6 0, 4 0, 2 0, 0 - 0, 2 - 0, 4 - 0, 6 the inflation outlook i would nonetheless argue that the current low inflation rates, despite falling short of our medium - term objective, do not constitute a threat to price stability. the current inflation outlook should be assessed against the background of a robust expansion of the eurozone economy. as chart 2 illustrates, the euro area is currently enjoying its fifth consecutive year of gdp growth. since mid - 2014 this growth can also be dubbed β reflationary β, in the sense that quarterly growth readings have consistently outpaced potential growth rates. claudio borio, β through the looking glass β, omfif city lecture, london, 22 september 2017. against the backdrop of a reflating economy, the inflation outlook is consistent with our aim of an inflation rate of below, but close to, 2 % over the medium term. it should be emphasized that from the ecb β s early days onward, the medium term has been defined as a flexible concept. it depends on the shocks hitting the economy and the efficacy of the monetary policy transmission that should bring inflation back on target. the global financial crisis was arguably much deeper than the average shock foreseen at the euro β s inception, and the financial fragmentation it created within the euro area severely impeded monetary transmission. in a context of such widespread financial imbalances, the ecb β s first chief economist, otmar issing, argued that β there is little sense in continuing to pursue an inflation forecast for consumer prices over a horizon of one to two years. in such circumstances it may instead be advisable to set interest rates with a view to a time frame extending well beyond conventional forecast horizons. β 3 concerns have been voiced that a prolonged period of low inflation could lead to a de - anchoring of inflation expectations. while the conceptual relevance of this argument is beyond dispute, there are some challenging issues in operationalising it in the monetary policy process. market - based and surveybased measures of inflation expectations exist, but they both come with a range of caveats and have often provided conflicting signals as to whether inflation expectations were anchored | 1 |
markets. i wish you continued success as we build together on our strong foundations. with this, i wish all participants at this conference a fruitful exchange of ideas and discussion. | is that this is an area which is deserving of greater discourse. evaluating the effects of the banking reforms will be a key exercise. one set of issues revolve around whether the reforms are having the intended outcomes or, on the other hand, whether there are unforeseen and undesirable effects. this will involve an assessment of banks β behavioural responses, whether there are new forms of arbitrage strategies, and the spillover effects on the broader economy. cross - border lending to developing economies one example relates to the impact on cross - border lending to developing economies. there are studies that indicate that some global banks have reduced their presence and activities in developing economies as part of their business review, and some have attributed this to the banking reforms. establishing a clear, causal link between the declining trend in crossborder bank loans to developing economies and the post - crisis reforms will be helpful, if possible. such investigations can support the basel committee β s work on a full, timely and consistent implementation of the reforms globally. the increasing role of market - based finance in credit provision the decline in bank inflows to developing economies has been partially offset by these 2 / 5 bis central bankers'speeches economies relying more on market - based finance, or non - bank financial intermediation. in my view, this is a positive development since a more diverse funding system comprising bank - based finance and market - based finance can possibly better meet the changing needs of the real economy. 17 but the increased prominence of market - based finance has also led to some concerns that large redemptions from open - ended funds can potentially pose liquidity risks and hence destabilise financial markets. international organisations and standard - setting bodies such as the financial stability board ( fsb ), international organisation of securities commissions ( iosco ) and basel committee have sought to assess the potential financial stability risks posed by market - based finance. the fsb, for example, developed a set of policy recommendations to address structural vulnerabilities of open - ended funds, and iosco is reviewing these recommendations. 19 there can be other related areas that merit further investigation, including from academia. for example, the interaction between market - based finance and traditional asset management activities, and the effect on underlying markets in which these are invested. evaluating the impact of macroprudential policies a key element of the basel iii reforms is its macroprudential framework to assess new system - wide risks and the use of a counter | 0.5 |
longer for inflation to approach the target and for resource utilisation to normalise than if we do not take such uncertainty into account. 3 this line of reasoning may therefore mean that a higher repo - rate path is better balanced than the example β s lower path, despite the fact that it will take longer for inflation to reach the target. put another way, if we are not absolutely certain about the outcome of monetary policy it is better to proceed gradually. moreover, the repo rate is already low at present at the same time as we are seeing more and more signs that economic activity is picking up and at the same time as there are risks associated with household indebtedness. i would like to begin by discussing why household indebtedness has affected my stance on monetary policy. risks and rewards must be weighed against each other asset managers think in terms of risks and rewards. a strategy is evaluated using a financial risk calculation that is based on how much an asset portfolio can increase in value in relation to the risk that it will fall in value. this approach can also be applied to the world of central banking, although instead of being about an asset portfolio it is then about monitoring risks relating to the development of the economy and to the central bank β s target variables, for example inflation. 4 as in the case of an asset manager, the time horizon on which the strategy is based is important. translated to the current situation in the swedish economy, this risk - reward approach could be expressed by saying that better target attainment in the short term must be weighed against increased risks in the longer term. in other words, using a more expansionary policy to boost a part of the economy that is already relatively strong, that is the households, to counteract weak demand in the export sector β which in the main is due to factors beyond the reach of swedish monetary policy β risks leading to imbalances in the long term in my opinion. of course it is true that a more expansionary monetary policy could weaken the exchange rate, which would benefit the export sector, but in the monetary policy trade - off i cannot ignore the risks associated with the high level of household debt. at the same time, there is also a risk that monetary policy itself can contribute to the build - up of imbalances in the economy, not only by affecting various players through the well - known transmission channels, that is the interest rate channel, the exchange rate channel and the if the repo rate is set | charles bean : central banking then and now speech by mr charles bean, deputy governor for monetary policy of the bank of england, at the sir leslie melville lecture, australian national university, canberra, 12 july 2011. * * * good evening! it is a great honour to be invited here to give the tenth annual lecture dedicated to the memory of sir leslie melville. as you will all know, sir leslie had a most distinguished career, both in academia and as a public servant. much of his working life was spent as chief economic adviser to the commonwealth bank, the ancestor of the reserve bank of australia, where he provided advice to the board on monetary and exchange rate policy, and also to prime ministers and treasurers on economic matters more generally. in passing, i should record that sir leslie β s appointment was in part the result of one of the directors of the bank of england, otto niemeyer, pressurising the commonwealth bank to break with tradition by recruiting a professional economist! sir leslie also played a key role in the founding of the post - war economic order, leading the australian delegation to the bretton woods conference, where he earned the fulsome praise of maynard keynes, followed by a stint as australia β s executive director at the new international institutions. and, of course, he spent almost a decade as the second vice - chancellor of this university. i think you can say that was a professional life lived to the full. sir leslie β s early years at the commonwealth bank were spent dealing with the great depression, one of the great pathologies of economic history. i joined the bank of england from academia a little over a decade ago. while my first seven years turned out to be an unusually tranquil period for the economy, the past four years have been anything but. so tonight, i thought i would discuss some of the lessons that i think central banks should draw from the global financial crisis of 2007 β 8 and the subsequent great recession. the distinctive feature of a central bank derives from its role as the monopoly supplier of outside money, comprising notes and coin and commercial banks β reserve deposits. these constitute the ultimate settlement asset for an economy and mean that a central bank has a unique ability to create or destroy liquidity through the use of its balance sheet. the primary objective is to ensure that the supply of that liquidity is consistent with the smooth functioning of the real economy. from this follows the two core tasks of a central bank : the maintenance of broad stability in the price | 0 |
sabine mauderer : the return of inflation - here to stay? speech ( virtual ) by dr sabine mauderer, member of the executive board of the deutsche bundesbank, at the derivatives forum frankfurt 2023, 22 march 2023. * * * 1. introduction ladies and gentlemen, it is a privilege for me to address such a distinguished audience here today. what do you expect when a board member of the bundesbank talks about inflation? you probably expect a firm view. we will see later if i can deliver on those expectations. but this is the easy part. when it comes to expected policy outcomes or the expected trajectory of prices for financial assets, things can get a lot more complicated. take a look at markets for derivatives like futures, swaps, or options. they indicate that the distribution of plausible outcomes in markets has widened substantially of late. implied volatility in bond markets has spiked higher. we call this uncertainty. 2. recent developments in the financial system you will probably agree that recent events are not making our jobs β either yours or mine β any easier. the collapse of silicon valley bank and worries about credit suisse have sent ripples through financial markets. government bonds and bank debt went on a rollercoaster ride, after stress in parts of the us banking system triggered bouts of safe haven flows. yes, volatility has been high. market liquidity has suffered. but, overall, financial markets have continued to function. first, intermediation in unsecured and secured money markets has continued to work quite well. second, in government bond markets, there have been no signs of fragmentation in the euro area. third, the euro has been rather robust in currency markets. what is more, bank equity and debt have recovered some ground over the course of this week. let me add a few remarks on the euro area banking sector. i think we can all agree that the industry is in a much better position than it was 10 or 15 years ago. banks'capitalisation is much higher and stronger. their liquidity position is also much stronger. it is fair to say that the euro area banking sector is resilient ; and its regulatory framework is sound. 1 / 5 bis - central bankers'speeches this also includes a solid resolution framework to deal with situations where shareholders and creditors of a troubled bank have to bear losses. on this matter, i would also like to reiterate what the ecb, the srb and eba | , however, mainly concentrated in a few benchmark securities, particularly the 10 - year benchmark, and sdls are relatively less liquid than the g - secs, yielding typically 5075 basis points more than the g - secs in terms of yield at the 10 - year tenor. the average bid - ask spread for liquid securities in the g - sec market has remained less than a basis point during the last few years ( chart 3 ). strikingly, bid - ask spread as well as the price impact of trade for the 10 year indian g - sec benchmark are comparable to or lower than those for most of the advanced economies of the world including the us, the uk, france and germany ( chart 4 ). chart 2 : secondary market liquidity in terms of average daily volume 12. 0 8. 0 6. 0 g - sec ( including sdls and t - bills ) corporate bonds 2018 - 19 2017 - 18 2016 - 17 2015 - 16 2014 - 15 0. 7 2013 - 14 0. 4 2012 - 13 - 2. 6 2011 - 12 2. 0 2. 7 2. 5 2010 - 11 4. 0 5. 6 2009 - 10 usd billion 10. 0 equity volumes source : clearing corporation of india limited ( ccil ), securities and exchange board of india ( sebi ) there are several proximate drivers of this liquidity of the indian g - sec market : ( i ) regular issuance of the 10 - year benchmark has concentrated trading interest in this segment of the yield curve. efforts are now being made to regularise issuance of benchmark securities at shorter maturities ( 2 and 5 years ). ( ii ) secondary market transactions are predominantly ( around 80 % ) conducted in an anonymous electronic order matching system ( nds - om ) which is unique in the world for debt trading. while the remaining transactions happen over - the - counter ( otc ) outside the nds - om 4, they are nevertheless reported to the nds - om platform. ( iii ) near real - time dissemination of trade information publicly accessible on the website of the clearing corporation of india ( ccil ) ensures price transparency. ( iv ) settlement is guaranteed by the ccil and takes place through delivery versus payment ( dvp ) mechanism on t + 1 basis. guaranteed settlement implies there is no risk to investors from each other of delivery failures. ( v ) finally, enabling of short - selling facilitates a two - way interest adding to activity | 0 |
with others, the issue of telecommunications circuit diversity is very important. i encourage firms to take this issue seriously and to discuss it with individual telecommunications providers, industry groups, and appropriate government officials. conclusion in taking the next steps to strengthen the foundations of our critical financial markets, we need to constantly remember how dependent we are on one another. we will not accomplish our task if one or two organizations strengthen their resilience and others do not. instead, we need to work hard to adopt consistent strategies to meet regional risks that together address prevention, management, and testing. the importance of creating and maintaining a highly resilient financial services sector is self - evident. similarly, the challenges to achieving that goal are numerous, involving, as i indicated, people, business, and technology. given the importance and complexity of this topic, senior management will need to become fully engaged. at the international level, the openness of our financial systems means that the business - continuity practices in one country can affect critical markets in another. we will therefore need to share information and sound practices that will help us address regional risks in various countries. at this stage, this does not necessarily mean traditional regulatory coordination. rather, private firms and the financial authorities will need to work together within their various communities and with each other to make our key business - continuity practices more robust and more consistent. we also need to recognize that new business - continuity strategies need to be practical. we are looking forward to receiving the views of market participants and other knowledgeable experts to help ensure that the final white paper ultimately sets out sound practices that are well grounded and practical. as we work through these new challenges, however, we must keep in mind that to do nothing would leave serious risks unaddressed. i would like to close by noting the importance of our financial centers. these cities are a source of work, play, and inspiration for millions of people. these cities need to be vibrant and resilient, even as new challenges arise for security and stability. our financial policies to address new regional challenges should be designed to strengthen the resilience of these great centers and their people, not to abandon them. the regional diversification of back offices and operational sites is intended as a prudent strategy that will enable financial centers and their markets to continue to serve as robust sources of economic progress. | roger w ferguson, jr : business continuity after september 11 remarks by mr roger w ferguson, jr, vice - chairman of the board of governors of the us federal reserve system, at the swift sibos world forum, geneva, 3 october 2002. * * * good afternoon ladies and gentlemen. i would like to thank the swift organization for inviting me to speak to you about disaster recovery and business continuity, one of the main topics you have been discussing this week. it has now been a little more than one year since the events of september 11. since then, bankers and the regulatory authorities in various financial centers have been intensively discussing new business - continuity challenges. this forum is very important for two reasons. first, swift itself is a critical service provider for the largest financial institutions and markets. swift β s efforts to provide leadership in strengthening business continuity are both welcome and important. second, the annual sibos meetings bring together financial industry leaders from around the world to discuss common issues affecting funds transfer, securities clearing, and other payment and settlement businesses. the people at this conference have both the responsibility and the experience to address serious common issues involving disaster recovery and business continuity. this afternoon i would like to share some thoughts with you about business - continuity challenges and to discuss a white paper on this topic that regulators in the united states have recently published for public consultation. i would also like to underscore the opportunities and responsibilities that financial firms and their financial utilities have in this new environment. lessons from september 11 about business continuity in financial markets one of the essential lessons of september 11 is that the human spirit is both noble and resilient in the face of tragedy. many acts of heroism have been recorded. i am sure that many more have not been recorded. unparalleled cooperation in the financial markets supported both assistance to those in need and resumption of day - to - day operations. in the end, although the financial markets quickly returned to normal operations, i hope that we have learned from our experiences and are able, in a continuing spirit of cooperation, to address the vulnerabilities of the financial industry that were revealed by those events. it is critical that we vigorously address the possibility of terrorist attacks in areas where major financial markets or operational centers are concentrated. in discussions with financial institutions, someone typically asks, what are the specific threats or scenarios that we need to guard against? the answer to this question is not easy because law - enforcement officials and knowledgeable experts discuss a wide range | 1 |
months. recent public discussions have centered on parity movements. the real exchange rate is, without any doubt, a key variable in resource allocation and in the balance between saving and investment. unlike conjunctures of past decades, in particular those of the mid - 1980s, the chilean economy has dealt with the complex global financial situation from a much sounder standpoint. the sudden global collapse of late last year found us with no big currentaccount or fiscal deficit, nor with a high external debt requiring strong fiscal adjustments with substantial real depreciation that would place the economy in a sustainable medium - term path. on the contrary, the significant contraction of domestic demand, in particular for imported durable goods and inventories, spontaneously and quickly undid the incipient external deficit of the second half of 2008 and interest rates in chile dropped. the chilean economy has continued to show a very solvent net external position. figure 2 cpi and selected inflation measures ( annual change, percent ) - 2 cpi - 2 mar - 03 mar - 04 mar - 05 mar - 06 mar - 07 mar - 08 mar - 09 cpix cpix1 cpi minus foods and energy sources : national statistics bureau ( ine ) and central bank of chile. as we have pointed out on earlier occasions, persistent movements of the exchange rate may have inflationary consequences that must be taken into account when deciding on the monetary impulse. anyway, our floating regime admits intervening in exceptional cases, whenever an overreaction of the exchange rate is detected that is giving misleading signals to the financial markets. in addition, although there is no obvious misalignment of the current real exchange rate from its long - term fundamentals, the present inflationary scenario may accommodate a nominal depreciation that does not compromise our price stability objective. in fact, imported inflationary pressures influence medium - term inflation, so if the recent appreciation of the peso persists, inflationary prospects will certainly moderate, which, as i just stated, has implications on the conduct of monetary policy. from the public finance standpoint, it is hardly obvious that the aforesaid situation could have been avoided with a different mix of credit sources for the necessary fiscal impulse. this, because the level and the structure of interest rates are also important when trying to affect gaps and inflation in the medium term. summing up, the changes we have seen in the macroeconomic scenario since last may lead us to think that, if anything, inflationary pressures are less than were | on the other hand, institutions have been able to raise capital according to needs ; the us treasury even authorized some of the bailed - out banks to repurchase the preemptive stocks they issued when receiving the governmental support under tarp. one key factor behind this set of elements pointing at stabilization is, without a doubt, the scale of the monetary and fiscal stimulus packages that have been implemented in large parts of the world, in both developed and emerging economies. this is a significant difference between this crisis and the great depression. although it has been claimed that the financial debacle we have experienced recently is similar in magnitude to the one that originated the great depression, the lessons learned from it have allowed policies to act much faster, with more effective and pragmatic responses. in those days, fiscal authorities tried to keep their budgets balanced, even when the economic depression had settled in, in 1937, thereby deepening the contraction of aggregate demand. in the case of monetary policy, the premature reduction of the monetary stimulus in 1936 contributed decisively to the recession of 1937 - 38. the current monetary policy has played its role in providing liquidity and generating an expansionary stimulus. the much more flexible monetary and fiscal policies of today have also avoided the intrusion of protectionist distorting measures that so prolonged the crisis of the 1930s, amplifying its costs and deeply hurting the later economic development in several regions of the world, including our country. still, it is likely that returning to domestic demand levels like the ones we had before the crisis takes a while, especially in the united states. active fiscal policy actions have taken up the room left by the shrinkage of private spending. however, it cannot be sustained for long. the natural, sustainable solution will come via net exports from the us and, to a lesser extent, from europe. how it will happen is an open question, because it is also yet to be seen which economies will, as counterparts, have to reduce their own net exports to create the necessary space for such an adjustment. furthermore, this may call for major parity adjustments in the main economic areas. beyond this last point, currently floating foreign exchange regimes have played a stabilizing role, providing every degree of freedom needed by monetary policy and by liquidity provision measures to tackle the cycle and the financial stability objective. this element was nowhere to be seen in the 1930s, when the main central banks struggled hard, but ineffectively, to defend the gold standard, severely mag | 1 |
some way below its crisis level of 160 %. it dropped sharply after the crisis and has hovered around its current level for the last few years. but though it is below its pre - crisis level, it is again high by historical standards ; average household debt to income between 1990 and 2006 was 110 %. it also remains high by international standards ; household debt to income is around 85 % in germany, 110 % in the united states and 120 % in spain. putting all of these high - level aggregate indicators together, the level of credit in the economy is beginning to grow again. it is not at pre - crisis levels and indeed looks below averages that include the long build - up of credit in the economy before the crisis. but if you look further back, it is high by historical standards. and it is high by international standards. bis central bankers β speeches the high - level picture, of course, can only tell you so much. it is clear that important though they are, these high - level indicators cannot be linked mechanically to the assessment of risk or to action to address it. to build a fuller picture of how credit is affecting the level of risk in the financial system, it is necessary to drill down into the sectoral components of credit and their counterparts in the economy. household credit the largest component of bank credit in the uk economy is of course lending to households and within that the great bulk, around 90 %, is secured on dwellings. mortgage lending is the single largest asset class on lenders β balance sheets and stock of lending secured on dwellings is around 70 % of gdp. net secured lending to households is rising at nearly 3 % β the highest rate since the end of 2009. mortgage rates in the uk are now at very low levels β average quoted rates on two - year ( 75 % ltv ) fixed - rate mortgages are below 2 %. some of this of course is because the bank of england β s official bank rate has been close to zero since 2009. but over the past three years, as banks β funding costs have reduced and as competition in the mortgage market has intensified, on average mortgage interest rates have fallen by 2 percentage points. unsecured lending to households is a much smaller proportion of credit ; it accounts for only 12 % of lending to households and around 10 % of gdp. and the stock of consumer credit remains Β£30 billion below its peak in 2008. but it is growing at around 8 % a year, much faster than secured lending. again | , β speech delivered at β prospects for growth : reassessing the fundamentals, β the 59th annual meeting of the national association for business economics, cleveland, ohio, september 26. 2 for october through december of this year, the decline in the federal reserve β s securities holdings will be capped at $ 6 billion per month for treasury securities and $ 4 billion per month for agency securities. these caps will gradually rise over the course of the following year to maximums of $ 30 billion per month for treasury securities and $ 20 billion per month for agency securities and will remain in place through the process of normalizing the size of our balance sheet. 3 / 3 bis central bankers'speeches | 0 |
element in creating that opportunity is the provision of rigorous education and ongoing training to all members of our society. this proposal is not novel ; it is, in fact, the strategy that we have followed successfully for most of the past century and a strategy that we now should embrace with renewed commitment. over the long sweep of american generations and waves of economic change, we simply have not experienced a net drain of jobs to advancing technology or to other nations. since the end of world war ii, for example, the unemployment rate in the united states has averaged less than 6 percent with no apparent trend ; and as recently as 2000, it dipped below 4 percent. moreover, real earnings of the average worker have continued to rise. over the past century, per capita real income has risen at an average rate of more than 2 percent per year, declining notably only during the great depression of the 1930s and immediately following world war ii. incomes trended higher whether we had a trade deficit or a trade surplus and whether international outsourcing was large or small. more fundamental economic forces have apparently been at work. research on wealth creation in both emerging and developed nations strongly suggests that it is the knowledge and the skill of our population interacting under our rule of law that determine our real incomes, irrespective of the specific jobs in which these incomes are earned and irrespective of the proportion of domestic consumption met by imports. these upward trends in the standard of living, however, mask the stress that significant parts of our workforce endure. joseph schumpeter, the renowned harvard professor, called the process of progress β creative destruction, β the continuous scrapping of old technologies to make way for the new. standards of living rise because the cash flows of industries employing older, increasingly obsolescent, technologies are marshaled, along with new savings, to finance the production of capital assets that almost always embody cutting - edge technologies. workers migrate with the capital. this is the process by which wealth is created, incremental step by incremental step. the process of creative destruction has been accompanied by an ever - growing conceptualization of economic output. ideas rather than materials or physical brawn have been by far the greatest contributors during the past half - century to our average annual increase of 3 - 1 / 4 percent in real gross domestic product. technological advance is continually altering the shape, nature, and complexity of our economic processes. to effectively manage this ever - increasing complexity, our labor force has had | richard h clarida : us economic outlook and monetary policy speech ( via prerecorded video ) by mr richard h clarida, vice chair of the board of governors of the federal reserve system, at the foreign policy association, new york city, 16 june 2020. * * * it is my pleasure to meet virtually this evening with the members and invited guests of the foreign policy association ( fpa ). 1 i am truly honored to receive the foreign policy association medal. past honorees have included sheila bair, anne - marie slaughter, paul volcker, jeanclaude trichet, and my federal open market committee ( fomc ) colleague john williams β and so with this award, i am indeed in select company. although i have been very much looking forward to receiving this award in person, that, of course, is not possible tonight, but i greatly look forward to attending a future dinner to convey in person my genuine appreciation to the members of the fpa for this special honor. since mid - march, i, along with my fomc colleagues, have been working from home. indeed, just last week, we held our scheduled june meeting via secure teleconference. and while i certainly miss the opportunities for face - to - face interactions along the corridors of the board β s eccles building, i am grateful to have the ability to work from home and want to convey my deep gratitude to all of those on the frontlines of the crisis, who are working outside the comfort of their homes in grocery stores, hospitals, and other businesses that provide essential services. current economic situation and outlook while the coronavirus ( covid - 19 ) pandemic has taken a tragic human toll measured in terms of lives lost and suffering inflicted, the pandemic has also inflicted a heavy toll on the levels of activity and employment in the u. s. economy, as a direct result of the necessary public health policies put in place to mitigate and control the spread of the virus. real gross domestic product ( gdp ) declined at a 5 percent annual rate in the first quarter of the year and will almost surely continue to contract at an unprecedented pace in the second quarter. the unemployment rate, which reached a 50 - year low of 3. 5 percent as recently as february of this year, surged to 14. 7 percent in april, an 80 - year high. in may, there was a notable rebound in employment and decline in unemployment, and these developments | 0.5 |
and deepened financial reforms to facilitate high - level opening - up. in fulfilling the duties of the fsdc office, we further strengthened the coordination of financial regulation, advanced the market - based reform of interest rates and rmb exchange rate, kept improving the framework of macroprudential regulation, enhanced the quality and efficiency of financial services and rolled out a series of measures to facilitate trade and investment. furthermore, we sped up the implementation of unveiled measures for financial opening - up and made remarkable achievements in international exchanges and cooperation. propelled by financial reform and opening - up, we forged ahead on the way to win the three critical battles. to be specific, we made efforts to forestall and defuse major financial risks and put up a robust financial safety net ; we provided financial support for targeted poverty alleviation to ensure that no one is left behind on the way towards a moderately prosperous society in all respects ; and we fostered a green finance system to act on the principle that β lucid waters and lush mountains are invaluable assets β. while making solid progress in our work, we also cared for the physical health and mental wellbeing of our staff members and the growth of young colleagues, as health is the foundation of everything. during the combat against the pandemic, we were not only concerned about the safety of those on the frontline, but also paid close attention to the health of all staff members. we required pbc branches, sub - branches and institutions at all levels to provide anti - pandemic supplies and put in place a mix of strict prevention and control measures, so as to defend all staff members against the pandemic. to our delight, in the face of the pandemic, our young colleagues have kept firmly in mind the instructions and expectations of general secretary xi jinping for them to take on heavy duties in the face of difficulties and meet the most urgent needs of the party and the people. you have lived up to our expectations. we have seen your potentials. we are proud of you! winter will eventually pass, and spring is sure to come. as the year of 2021 marks the commencement of the 14th five - year plan period, we will embark on a new course of building a modern socialist country in all respects. we will renew our efforts at a new starting point. we should unite around the cpc central committee with comrade xi jinping at the core, continuously enhance the β awareness of maintaining political integrity, thinking in big - | since 2001, foreign exchange supply and demand has improved, facilitating trade and investment, and making the holding and use of foreign currency more convenient. the role of supply and demand is becoming increasingly important in the foreign exchange market. 3. the foreign exchange market mechanism has improved. before 1994, the rmb exchange rate was determined both by the authority and the swap market. now it is determined in the interbank foreign exchange market through otc transactions and supported by market makers. as the foreign exchange market grows rapidly, the role of market participants in determining the exchange rate central parity has been increasing. in response to the diversified trade and investment structure, the exchange rate regime is with reference to a basket of currencies, rather than pegging to the us dollar. iii. a managed floating exchange rate regime is in china β s long - term and fundamental interests and we will continue to implement the regime adopting a managed floating exchange rate regime is an inevitable choice for china to deepen reform and opening - up, and adapt to the new pattern of development and openingup after china β s accession into the wto. in line with the scientific approach to development, this is a choice consistent with china β s economic development level, improvement in marketbased institutional arrangements and financial regulation and enhanced resilience of the corporate sector. continued efforts will be made to implement the regime. 1. the regime is essential for economic restructuring and the optimization of resource allocation. exchange rate represents the price relations between tradable and non - tradable goods and services. a fixed exchange rate may make accounting and risk management easier for market participants for some time, but if misaligned with the fundamentals of supply and demand for too long a time, such a regime will distort relative prices on domestic and foreign markets, undermine the efficiency of resource allocation and accumulate domestic and foreign economic imbalances. a managed floating exchange rate regime will enhance the efficiency of resource allocation, adjust the relation between domestic and foreign prices in a flexible manner, channel resources to the sectors that are driven by domestic demand such as the services sector, promote industrial upgrading, transform the pattern of economic development, reduce trade imbalances and over - reliance on export, enable domestic demand to play a more important role in economic development and thus promote sustainable and balanced economic growth. 2. we need such a regime to strengthen and improve macroeconomic policymaking. since the beginning of the reform and opening - up and especially since the entry into the | 0.5 |
silver standard independently of the rouble. as the russian rouble remained inconvertible to silver, finland β s monetary system was thus effectively separated from russia β s. in 1868, the bank of finland was transferred under the control and ownership of the parliament. until then, the bank had been subordinated to the imperial senate of finland. the system in which the central bank belongs to the parliament was adopted following the swedish example and has lasted to this day. most european countries moved to the gold standard in the 1870s, and finland followed suit in 1878. at that point, the gold content of the finnish markka was defined so that it was exactly equivalent to the french franc ( as well as the belgian and swiss francs, and the italian lira ). finland thus became, by a unilateral decision, an effective member of the european franc zone ( the latin monetary union ), even if not a signatory to the monetary union agreement. the bank of finland managed to keep the exchange rate of the markka vis - a - vis the french franc constant for 36 years, from the start in 1878 until the outbreak of the first world war. finland declared her independence in december 1917, following the october revolution in russia. the first world war and the finnish civil war of 1918 caused sharp inflation. in bis central bankers β speeches 1923 the bank of finland finally manages to stabilize the value of the currency, and the markka had lost almost 90 per cent of its prewar value in gold. at this lower parity, the markka was returned to gold as of the beginning of 1926, following the british pound sterling. in the interwar years, the bank of finland became the undisputed leader of finland β s economic policy. this was largely due to the very strong governor of the bank, risto ryti, who acquired considerable prestige in finland and also abroad. ever since ryti β s governorship, which lasted from 1924 until the outbreak of the second world war, the governor of the bank of finland has been one of the most central figures in finnish public life. this is illustrated by the fact that four members of the board of the bank of finland have become presidents of the republic : kyosti kallio, risto ryti, urho kekkonen, and mauno koivisto. two of these, mr ryti and dr koivisto, had been governors of the bank. the great depression forced the | . this symposium explores both common and diverse trends shaping the united states β and european economies. it is worth underlining that the impact of euro - atlantic cooperation since the second world war has been enormous and positive in all walks of life. current developments, described by the organizers as β growing together while growing apart ', could have equally far reaching consequences for us and european businesses and citizens, but to the reverse direction. it is essential to maintain our current global institutions, but at the same time to reform them to face new challenges. while the imf has been able to adapt itself successfully in the post - crisis era, it is the world trade organisation that is in the greatest need of reform today. as has been rightly said by eu commissioner cecilia malmstrom, we should make the wto reform a cornerstone of the next transatlantic project. i very much endorse this. international cooperation, and policy coordination, also played a critical role in firefighting the global financial crisis. from the start of the crisis, an intensive co - operation emerged between central banks to safeguard the functioning of the global financial system after the collapse of lehman. as global markets started to collapse, the demand for liquidity by the banks increased, not only in domestic currency, but also in foreign currency, most of all in us dollars. suddenly, the demand for dollars exceeded the supply on the wholesale market. subsequently, the swaps between the fed and the ecb began in december 2007. the ecb borrowed dollars from the fed, which took euros in exchange. by october 2008, the fed had decided on swaps with the ecb, bank of england and the swiss and japanese central banks to provide as many dollars as needed, thus fulfilling its role as the lender of last resort in dollars. importantly, the central banks had the necessary insight and determination to back words with deeds. ladies and gentlemen, after tough times and difficult decisions, europe was able to overcome the rock - bottom of the debt crisis by the end of 2012. during the euro area recovery since 2013, over 10 million net new jobs have been created. unemployment has fallen from its peak of over 12 per cent to below 8 per cent. the banking sector is now more resilient : capital buffers have been doubled, nonperforming loans reduced considerably, and lending to households and enterprises increased. the ecb β s accommodative monetary policy has been very important in supporting the recovery. during the first months of 2019 | 0.5 |
risks. in this context, i would like to highlight five key expectations from auditors to help ensure robust financial oversight and regulatory compliance. firstly, auditors must apply due rigor in their audit processes to mitigate any potential for divergence, under - provisioning, or non - compliance with statutory and regulatory requirements. further, a critical aspect of the auditor's role is the careful evaluation of internal financial controls over financial reporting. by maintaining meticulous standards and adherence to regulatory guidelines as well as auditing standards, auditors can minimise the need for supervisors to intervene. secondly, as regulatory frameworks and accounting standards increasingly shift towards principles - based approaches, the role of auditors'judgment becomes increasingly critical. in executing their responsibilities, auditors must exercise prudent judgment, prioritising substance over form. this implies that auditors must go beyond mere technical compliance. instead, they should discern the intent of the regulations and assess its application in practice so as to enhance the credibility of audit outcomes. thirdly, auditors can play a significant role in identifying and promptly reporting incipient vulnerabilities to both the bank management and the rbi. as you would be aware, a system of exception reporting has been implemented which requires reporting to rbi as soon as an issue of concern is observed. early detection of risks such as operational inefficiencies, liquidity concerns, or evolving irregular market trends enables proactive management strategies and mitigation measures. this not only safeguards the bank's interests but also reinforces systemic resilience and enhances overall financial stability. 3 / 4 bis - central bankers'speeches fourthly, auditors should deploy competent staff equipped with the necessary training, skills, and experience, particularly in critical areas such as information technology ( it ) and cyber security. in today's digital age, where cyber threats are increasingly sophisticated, auditors with specialized expertise are essential to assess and mitigate it risks effectively. by ensuring audit teams are well - versed in emerging technologies and security protocols, auditors can contribute significantly to safeguarding sensitive financial data and maintaining robust cybersecurity frameworks. finally, and most importantly, upholding the highest standards of integrity, auditors must ensure there are no conflicts of interest that could compromise the objectivity and independence of their audits. transparency and impartiality are of the utmost importance in fostering trust among stakeholders, including regulators, investors, and the public. auditors | were made for appropriate credit delivery to farmers to enable them to buy these inputs. the nationalization of banks, the creation of regional rural banks, and the creation of national bank for agriculture and rural development ( nabard ) to govern the rural cooperative banks were all directed towards this massive change in the delivery of credit to fuel the green revolution. most of these activities were done on a national basis with appropriate coordination with state governments and other public sector agencies. given the highest priority that was attached to this programme, it delivered. need for a second green revolution the need now is for a corresponding second agricultural revolution, but one that will have to be much more heterogeneous. with the increasing diversification of the indian diet, there is great potential for acceleration of growth in the production of all non cereal foods, though in varying degrees. there is need for a new agricultural revolution in all areas such as : dairying, horticulture ( covering both fruits and vegetables ), aquaculture and pisci - culture, poultry, meat, and even wineries. there is also similar potential for acceleration in growth in non - food agriculture. the potential in all these areas is massive for income and employment generation on a well distributed basis ; for generation of a host of new activities ; and for widespread innovation. how can this be achieved? a key common feature behind the success of the national programme related to both the green revolution and the white revolution ( milk production ) was the relatively homogeneous nature of cereal production and of milk. it was thus possible to design national programmes that were broadly applicable country wide with relatively easy regional variations. the difficulty in designing programmes for the new agricultural activities is that these products are very heterogeneous and which, moreover, exhibit great regional differences. even for each activity, say poultry production, it will be difficult to design the kind of national programmes that helped the green and white revolutions. the need is now for decentralized packages for the many different activities that will have to be regionally disaggregated. the broad approach can be similar. each package will need to make simultaneous provision for technology inputs, infrastructure, supply of inputs and associated credit delivery. whereas the packages will need to be diverse and decentralized, it is unlikely that they will be developed without the initiation of a nationwide coordinated programme on a mission basis. such a programme could form expert teams for each activity and location. it will be essential to bring together high level expertise, both domestic and international | 0.5 |
as the governor, am charged with managing the bank and i am also the accountable authority under the public governance, performance and accountability act 2013. as you know, there is great deal of public 1 / 3 bis - central bankers'speeches visibility of, and commentary about, our monetary policy decisions, but there is much less oversight of how i discharge my responsibilities to manage the rba. from a number of perspectives, current oversight arrangements fall short of contemporary standards. the proposed changes would address this and help the governor manage the bank and its many functions. the recommended changes could also strengthen the monetary policy process, by having a board whose sole focus is monetary policy. i very much welcome the conclusion that this board should include people with diverse perspectives and knowledge and who have experience in decision - making under uncertainty. it is also pleasing to see that the panel recommended that the treasury secretary remain on the board. the establishment of these two boards will require changes to the reserve bank act, which is a matter for the australian government and parliament. you would have already heard that the treasurer intends to proceed with these changes. we will work constructively with the government and parliament with the aim of ensuring that any changes to legislation are effective in achieving their objectives. the review also recommends that the statement on the conduct of monetary policy be updated. this is important because this statement sets out the common understanding between the government and the rba on monetary policy. the review sets out a number of issues that could be covered in this statement β the suggestions make sense and have our support. the board will work constructively with the treasurer to finalise a new statement. the review includes a number of recommendations for how the board works, including the frequency of meetings and the approach to communication. it recommends that the board receive and consider a richer set of briefing materials, including on economic modelling, research and monetary policy strategy. it also recommends closer interactions between board members and the bank's staff in the expectation that this will support a stronger culture of challenge and debate within the rba. the board will consider these issues over coming meetings. it will develop a holistic response, given that many of the recommendations in this area are interrelated and will have flow - on effects for how we do our work and how parts of the bank are structured. we will publish a detailed response later this year after the necessary work has been completed. the review also includes a number of recommendations to strengthen the rba's management, culture and operations. | these include : the appointment of a chief operating officer, enhancing the communications function, encouraging the culture of debate within the bank, strengthening the role of research, and continuing to invest in leadership and management capabilities. these recommendations make sense and have our support. we will now develop an implementation plan under the leadership of a small team of experienced people. to conclude, i would like to again thank the review panel for their work. it is not often that central banks are reviewed, so it is important the job is done well and thoughtfully, and that the process is constructive. this is exactly what has been done here. it also 2 / 3 bis - central bankers'speeches makes sense, as the panel recommends, for regular reviews to be conducted every five years. as the panel notes, the review has been about strengthening a well - functioning institution and ensuring the bank is in a good position to meet the challenges of the future. monetary policy has become more complex, as have the bank's operations in the banking and payments areas. the recommended changes in this review will help us do our job in this changing world and are consistent with our internal staff values, including serving the public interest and achieving excellence. i look forward to working with the government, the parliament, the board and the bank's staff on how we can best live up to those important values. i am happy to answer your questions. 3 / 3 bis - central bankers'speeches | 1 |
depreciation. finally, recently, the dollar has strengthened against the major currencies as a result of expectations that america will be the first among the industrialized countries to raise interest rates. financial sector the latest quarterly data available is for september 2014 and this indicates that the banking system is financially very sound and well capitalized. asset quality has improved. the nonperforming loan ratio has declined from 6. 2 percent of the loans in march 2014 to 5. 3 percent of the loans in september 2014. banks β profitability has reduced partly as a result of loan provisioning and a slight drop in the net interest margin. the banks β total regulatory capital position remains very strong at 22. 5 percent of risk weighted assets as at end of september 2014 which is almost double the statutory minimum of 12 percent. the banking systems β bis central bankers β speeches average return on assets and equity declined to 2. 2 percent and 13. 1 percent respectively in the year to september 2014 from 3. 1 percent and 18. 8 percent in the previous 12 months. private sector credit with regard to private sector credit growth, since the start of 2014, private sector credit has recovered with annual growth increasing to 13 percent as of end of september 2014. the building and construction sector, trade and household loans continued to account for the bulk of the ps credit. the three sectors together ( building and construction sector, trade and household ) accounted for over 55 % of banking systems β outstanding credit to the private sector since february 2014. annual growth of ps credit during 2014 / 15 is projected at 15 percent. bis central bankers β speeches | emmanuel tumusiime - mutebile : overview of uganda β s growth and stability in 2013 / 2014 statement by mr emmanuel tumusiime - mutebile, governor of the bank of uganda, at the ministry of finance planning and economic development press conference, kampala, 15 january 2015. * * * i would like to say something about the significance of fiscal discipline in the country β s growth and stability. prudent management of public financing is very critical to macroeconomic stability. the government has a medium term fiscal program which sets out clearly the path of revenues, expenditures and government borrowing for the next five years. the fiscal program is absolutely consistent with ensuring that public debt remains sustainable and that domestic borrowing will remain within levels which will not threaten to crowd out private sector borrowing. we will ensure that all government borrowing is fully funded from the market by issuance of government securities through primary auctions. therefore i want to state clearly that the bank of uganda fully endorses the government β s fiscal stance and absolutely has no problem with fiscal management. central bank rate as you all know the central bank raised its central bank rate ( cbr ) in september 2013 to 12 % to avert the second effects of food prices but also to counter any rise in inflation expectations. consequent upon the threat of high inflation being reduced, bou reduced cbr 11. 5 in december 2013 and further to 11 percent in june 2014. the annual core inflation rate has fallen in 2014 but is forecast to edge over 5 percent over the next 12 months due to exchange rate depreciation which has occurred in 2014 and early 2015 due to domestic demand. as a result of this, we have retained the cbr at 11 percent and we will watch carefully the next few weeks to see where things move. developments in the foreign exchange market the shilling has been depreciating against the us dollar over the last few weeks. since february 2014, the shilling has depreciated by about 14 percent against the us dollar. this followed sustained appreciation during 2013 and the first months of 2014. the depreciation of the exchange rate since february 2014 reflects several factors. first, there has been a correction of the exchange rate which had become over valued in 2013. secondly there has been strong demand for foreign exchange from the real sectors of the economy especially manufacturing and oil sectors. thirdly, there has been weakening of global sentiment towards emerging markets with the currencies of these markets coming under persistent | 1 |
without it, i see no reliable way of breaking the sovereign - banking nexus. bis central bankers β speeches | it with capital markets - based funding. and in europe above all places there is ample room to do so. the european stock market is only 60 % the size of the us stock market when measured in relation to gdp. adrian, t ; shin, h s ( 2010 ), liquidity and leverage. in : journal of financial intermediation, vol 19 ( 3 ), pp 418 β 437. leroy, a ( 2014 ), credit procyclicality and financial structure in the eu β. available at ssrn : http : / / ssrn. com / abstract = 2568112 or http : / / dx. doi. org / 10. 2139 / ssrn. 2568112. bis central bankers β speeches likewise, the european market for venture capital is 20 % the size of the us market, and for securitisation the percentage is even lower. 2 in the end, it comes down to the uncontested argument of diversification. increasing the share of capital markets will improve and broaden access to funding particularly for small and medium - sized enterprises. at the same time, it will improve the matching of investors to financial risk, thereby increasing the efficiency of the financial system. as a result, the financial system will be able to better support sustainable economic growth. 3. integration β forming a single capital market the second objective of the european capital markets union is to improve the integration of capital markets in the entire european union. what is it that integrated capital markets can deliver? one of the main arguments is that they can improve private risk sharing. the technical question is : to what degree does a shock to the economy affect consumption? empirical studies for the united states show that integrated capital markets cushion around 40 % of the cyclical fluctuations among the us federal states. a share of around 25 % is smoothed via the credit markets, while fiscal policy cushions 10 β 20 % of shocks. altogether, around 80 % of a given economic shock is absorbed before it can affect consumption 3 studies for canada yield similar results. 4 in europe, the picture looks different. here, it is mainly credit markets that cushion economic shocks β and they are not very effective in doing so. altogether, only around 40 % of a given shock is absorbed before it can affect consumption. 5 increasing the share of capital markets and integrating them across borders would therefore help improve risk sharing in europe and reduce the volatility of consumption. 4. how to get there | 0.5 |
nasdaq ) reached all - time highs around the middle of august. european stock exchanges have recouped the losses suffered as a result of the brexit vote ( figures 8, 9 ). however, recent developments surrounding the banking system, clearly add to uncertainties making equity markets outlook rather foggy! taking into account the recent deutsche bank β s troubles, i just wanted to mention that it is among the systemically most important banks in the world and the imf concluded in its june financial stability assessment that it made the largest net contribution to global systemic risk. however, there are some reassuring factors. the global financial system is now much better capitalised and able to withstand shocks than it was in 2008. even if the worse came to worst, it seems likely that the german government would provide a bailout. and the german government could easily afford a bail - out without raising concerns about its own finances. 6 / 15 bis central bankers'speeches β’ bonds finally, on fixed income, core bond yields continued to probe historical lows after brexit. more precisely, german 10 - year bond yields hover in the area of β 0. 07 % and the peripheral bonds have been the main beneficiaries of the hunt - for - yield environment along with the benign risk environment as reflected in declining volatilities across asset classes. also, the us government bond yields declined further near 1. 50 %, mainly due to the fed β s delay in raising rates ( figure 10 ). thus, markets went through the brexit vote with little or no disruption to functioning with ample liquidity. 7 / 15 bis central bankers'speeches 2. implications of brexit for central banks a. less monetary policy divergence the brexit vote triggered a broad - based reassessment of the future path of monetary policy globally. with improving headline growth still perceived as fragile in most advanced economies, and inflation still persistently low, the distinct response from major central banks to the brexit uncertainty can be described as dovish : policy rates would stay β low for longer β. bank of england the bank of england cut the policy rate by 25 basis points ( it is now 0. 25 % ), and expanded the government bond purchase scheme by Β£60 billion, bringing the total to Β£435 billion. it also established a new corporate bond purchase program of Β£10 billion, and launched a new term funding scheme that will provide funding for banks at rates close to the | - determined rate ( price ). it is true that the package of measures allows a lot of flexibility for the bank of japan to determine long - term rates ( in addition to short - term base rates ), but also raises many questions. for one thing, the bank of japan is now attempting to control both prices and quantities, which is simply not feasible! on the other hand, fixing 10 - year rates at 0 % may require to buy whatever quantity of bonds necessary to deliver rate stability, which may mean buying more or less than its target pace of Β₯80 trillion per year. in other words, the bank of japan could reduce the pace of qe purchases in the future if it thinks it can achieve its yield target with fewer bond purchases, for 9 / 15 bis central bankers'speeches example in a scenario where markets perceive the bank of japan β s yield target as credible or yields turn negative! any potential reduction in bond purchases would be equivalent to tapering. it is exactly this built - in tapering mechanism that explains the asterisk i mentioned above. in other words, it is conceivable in the future that the bank of japan could be forced to sell jgbs if markets challenge the central bank by pushing the 10 - year jgb yield well below its 0 % target. this selling would be equivalent to a reversal of qe, it could be self - defeating in the case where inflation is still too low. ecb at its latest gc meeting, the european central bank ( ecb ) announced that it will extend its qe programme beyond march 2017 if needed. looking forward, markets expect the eurozone economy to need more stimulus from the ecb as the gap between current headline inflation ( 0. 2 % year - to - date average ), the ecb β s inflation forecasts ( 1. 2 % in 2017, 1. 6 % in 2018 ) and its higher target justify further policy easing ( figure 12 ). so far, there is some encouraging evidence from the ecb β s ongoing qe programme. in more detail : banking credit channel loan growth continued to recover gradually as the annual growth rate of the monetary financial institutions ( mfis ) loans to the private sector ( adjusted for loan sales, securitisation and notional cash pooling ) is expected to increase further in the second quarter of 2016 and in july ( see figure 13 ), particularly for private companies ( non - financial corporations or nfcs in ecb jar | 1 |
viral v acharya : the unfinished ageda - restoring public sector bank health in india speech by dr viral v acharya, deputy governor of the reserve bank of india, at the 8th r k talwar memorial lecture, organised by the indian institute of banking and finance, mumbai, 7 september 2017. * * * i would like to thank vaibhav chaturvedi, b nethaji and vineet srivastava for valuable inputs, as well as my co - authors, tim eisert, christian eufinger and christian hirsch ( parts of the japanese and the european stories are based on joint work with them ). all errors remain my own. views expressed do not necessarily reflect those of the reserve bank of india. good evening, friends. i am grateful to the indian institute of banking and finance ( iibf ) for inviting me to deliver the 8th r k talwar memorial lecture. every institution must remember, venerate and celebrate the immense contributions of those who helped lay down and solidify its character for future generations to build upon. principles, careers and lives such as those of mr talwar inspire us, as in henry wadsworth longfellow β s the psalm of life : lives of great men all remind us we can make our lives sublime, and, departing, leave behind us footprints on the sands of time ; footprints, that perhaps another, sailing o β er life β s solemn main, a forlorn and shipwrecked brother, seeing, shall take heart again. i hope that i can do some justice today to the rich legacy left behind by mr talwar, considered as the state bank of india ( sbi ) β s greatest chairman, the father of small scale industries in india, a banker ahead of his times who put tremendous emphasis on a comprehensive credit appraisal culture at sbi, and someone who had the courage to stand up against political pressure on his bank to undertake targeted lending to undeserving borrowers ( an episode recollected in a booklet by another stalwart of indian banking, mr narayanan vaghul ). i was originally planning to speak on β monetary transmission in india : issues and possible remedies β, but i have since had a change of heart. the reserve bank β s internal committee on improving monetary policy transmission will be finishing its report by the last week of september. i should neither pre - judge nor pre - announce its findings. therefore, and | huge proportion of economy β s savings that they receive as deposits ; can we end the indian story differently from that of japan and europe? the government of india has been infusing capital on a regular basis into the public sector banks, to enable them to meet regulatory capital requirements and maintain the government stake in the psbs at a benchmark level ( set at 58 per cent in december 2010, but subsequently lowered to 52 per cent in december 2014 ). in 2015, the government announced the β indradhanush β plan to revamp the public sector banks. as part of that plan, a program of capitalization to ensure the public - sector banks remain basel β iii compliant was also announced. however, given the correctly recognized scale of npas in the books of public sector banks and the lower internal capital augmentation given their tepid, now almost moribund, credit growth, substantial additional capital infusion is almost surely required. this is necessary even after tapping into other avenues, including the sale of non - core assets, raising of public equity, 9 / 11 bis central bankers'speeches and divestments by the government. the cabinet committee on economic affairs has recently authorised an alternative mechanism to take decision on the divestment in respect of public sector banks through exchange - traded funds or other methods subject to the government retaining 52 % stake. synergistic mergers may also be part of the broader scheme of things. the union cabinet has also authorized an alternative mechanism for approving amalgamation of public sector banks. the framework envisages initiation of merger proposal by the bank boards based on commercial considerations, which will be considered for in - principle approval by the alternative mechanism. this could provide an opportunity to strengthen the balance sheets, management and boards of banks and enable capital raising by the amalgamated entity from the market at better valuations in case synergies eventually materialize. all of this is good in principle. there are several options on the table and they would have to work together to address various constraints. what worries me however is the glacial pace at which all this is happening. having embarked on the npa resolution process, indeed having catalysed the likely haircuts on banks, can we delay the bank resolution process any further? can we articulate a feasible plan to address the massive recapitalization need of banks and publicly announce this plan to provide clarity to investors and restore confidence in the markets about our banking system? why aren β t the bank board approvals of | 1 |
been slower than the growth in deposits for the first time the early 1990s ( graph 10 ). graph 10 as mentioned earlier, part of the explanation for the strong growth in deposits is the increased competition for deposits in the banking system. but another part of the explanation reflects the changed nature of the financial flows in the economy. while parts of the corporate sector may be less reliant on the domestic banking system for their funding, ultimately a large part of the funding they raise from other sources still finds its way into the domestic banking system in the form of corporate deposits. hence, if the economy evolves as forecast, it β s quite possible this pattern of deposit growth outstripping credit growth continues and deposits may continue to rise as a share of bank funding. bank funding and capital flows these changes in bank funding, as well as in the funding of the increase in capital expenditure, are apparent in the financial accounts side of the balance of payments. these are the capital inflows that are the counterpart of the current account deficit. the net capital inflow into australia masks very large gross capital flows both into and out of the country. for example, over the past five years, the average annual net capital inflow amounted to $ 55 billion. this net capital inflow comprised : foreign investment in australian equity of $ 54 billion ; australian investment in foreign equity of $ 51 billion ; foreign investment in australian debt of $ 95 billion ; and australian investment in foreign debt instruments of $ 43 billion. given the size of these gross flows, it can be somewhat misleading to analyse shifts in capital flows or how the current account deficit is funded by focusing on net flows only. for a number of years prior to 2007, australian banks were a steady source of capital inflow, representing around 4 per cent of gdp, or around 80 per cent of net private sector inflow ( graph 11 ). these capital inflows reflected the fact that australian banks found it cost effective to raise wholesale funds offshore to fund domestic asset growth. that these net flows into the banking sector were similar in size to the current account was as much coincidence as causation in my opinion. graph 11 given the changes to bank funding and the slowdown in the credit growth discussed above, financial inflows in the form of offshore debt raisings by australian financial institutions have declined. in the first three quarters of 2010, the net inflow of foreign funding to banks was only 1 per cent of gdp. all of this occurred in the | first quarter of the year, with the net amount of offshore funding by the banking sector amounting to zero in the two most recent quarters. at the same time, the current account deficit has fallen to around 2Β½ per cent of gdp. going forward, the forecast rise in the investment share of the economy is likely to see an increase in capital inflows. as discussed above, given that mining companies are likely to rely less on locally intermediated debt to fund their activities, there are likely to be further changes in the composition of net private capital inflows away from banks towards nonfinancial corporates. some of this might be in the form of increased direct debt raisings, some might be in the form of an increase in retained earnings. so the current account deficit may increase from its current level, but on the capital account side, there may not be a concomitant increase in banks β net offshore raisings. conclusion the financial crisis has had a marked impact on financial flows globally. in this speech i have described some of the effects it has had on financial flows in the australian economy. the funding of the australian banking system has changed quite markedly as has the cost of that funding. in addition, the forecast composition of growth in the australian economy and the funding of that growth may have implications for the asset side of the banking system β s balance sheet. it is quite possible that intermediated credit growth will be slower, and deposit growth relatively higher, than has been the case in recent years. these changes have been, and may continue to be, reflected in the changed composition of capital flows to the australian economy. | 1 |
return krone exchange rate economic perspectives 15 february 2018 nonβoil budget deficit 1 ) value of fund β 2000 β 2000 1 ) including discrepancies attributable to accounting differences between the central government accounts and norges bank β s financial statements. the cumulative discrepancy varies between nok 5 billion and nok 41 billion. sources : ministry of finance and norges bank during periods of substantial oil and gas revenues, large capital transfers have been made to the fund. the government β s total net cash flow from petroleum activities comes to around nok 5 000 billion. the return on the fund has been solid. the cumulative return amounts to more than nok 3 800 billion. 13 since 2014, the krone depreciation has also contributed to the considerable increase in the value of the fund in krone terms. this does not, however, affect the fund β s international purchasing power. the green bars in the chart show fund withdrawals used to finance the structural non - oil budget deficit. both returns and exchange rates vary over time. high equity prices have generated substantial gains for the fund in recent years. but this means we must also be prepared for losses when markets turn. looking back a few years to 2011, euro area financial markets were marked by the debt crisis. the return on the fund was negative. weak returns resulted in a decline in the value of the fund corresponding to 15 percent of mainland gdp ( chart 17 ). but the decline was not larger than what could be expected in one of six years based on historical experience. 12 at the end of 2017 q3, the value of the fund stood at nok 7 952 billion. 13 at the end of 2017 q3, the cumulative return was nok 3 814 billion. chart 17 illustration of declines in the value of the fund. decline in value as a percentage of mainland gdp given the same return as during 1 ) the euro area debt crisis 2011 β 2012 β 10 β 10 β 20 β 20 β 30 β 30 β 40 norges bank economic perspectives 15 february 2018 β 40 fund size and composition as in 2011 fund size and composition as in 2017 1 ) bond / equity allocation of 40 / 60 for 2011 and 30 / 70 for 2017. the return on the two asset classes is repreβ sented by the fund β s benchmark indexes, measured in foreign currency, for the period june 2011 to may 2012. sources : statistics norway and norges bank today, the fund | ##cial history and the new business cycle facts β in : m. eichenbaum and j. a. parker. nber macroeconomics annual 2016, volume 31. university of chicago press. demand set the stage for a downward spiral. businesses failed and unemployment soared. third, there were few signs of an unaided return to economic stability. without powerful economic policy measures, there was a risk of a self - reinforcing recession. monetary policy had to take on substantial responsibility. norges bank economic perspectives 15 february 2018 in the past few years, advanced - economy growth has steadily strengthened. unemployment has fallen back, in europe too. in parallel with this, longer - term structural developments have changed the economic landscape. a more closely integrated world economy and technological changes are transforming aspects of everyday life and also have consequences for economic policy. trade and technology trade and technology have been key driving forces of growth in norway over the past two hundred years. oil and gas resources have provided a substantial boost to our income level, but even more important is the efficient use of our labour and capital. technological advances, increased education and better capital equipment have made us more productive. contact with other countries has helped us get more out of our common resources. many innovations have come from abroad, where we have also found markets for our own products. over the past fifty years, global trade has more than doubled as a share of global gdp ( chart 2 ). the scaling back of trade barriers has been an important driving force. since 2011, trade has expanded at a slower pace, primarily reflecting lower growth in the world economy. private investment in particular has lagged, but growth has also slowed because trade barriers are being reduced more slowly than earlier. 1 ) chart 2 global trade as a share of gdp. percent 2 ) 1 ) trade is defined as the sum of exports and imports of goods and services. 2 ) projections for 2017 and 2018. sources : imf, world bank and norges bank global trade has generated substantial welfare gains. as consumers, we have gained access to cheaper and better products. more importantly, over one billion people have been lifted out of poverty. 3 many people would be negatively affected if the tendency is reversed towards higher trade barriers. 3 http : / / www. worldbank. org / en / topic / poverty / overview. for a long time, trade primarily consisted of finished goods. in recent decades, global value chains have grown rapidly. lower transport costs and new technological solutions | 1 |
avoided. the reason is simply that such features, which do not seem to matter in most states of the world, end up being treated how many β once - in - a - lifetime β events happen to us every year? bis central bankers β speeches as if they will never matter. in other words, market participants need to make sure that an exercise of an option is seen as just that, a normal exercise of an option. no more and no less. sophisticated market participants should not be genuinely surprised ( or feign surprise ) by another market participant trying to optimise its behaviour consistent with a contract. the implications of a contract should be clear and the structures should be as transparent as possible. as the debate about adequate capital levels for banks rages on, we feel that it is important to keep these lessons in mind. whatever is decided in terms of capital requirements, the numbers should be calculated with tail event analysis in mind. a new example : contingent capital securities one present issue is that, given banks will need to hold much more capital in future, how could that best be achieved? some have called for very high levels of equity capital in banks16 ; others have been focusing on requirements to raise new equity before it is too late, e. g. mandatory rights issues17. we find contingent capital securities β so - called β co - co β s β β to be a potentially attractive proposition for a number of reasons. one has to evaluate contingent capital on how it would perform in a crisis. first, the funding for extra capital is already in place. in other words, no one has to scramble to execute a contingency plan, or convince someone to come up with new cash in a difficult situation. obviously, conversion is consistent with a bank being under stress, but if conversion was always automatic, not discretionary, that could help to avoid signalling even wider problems. second, and related to the examples in this paper, because the contingent conversion feature is explicit, no investor should be able to say that β equity conversion β could never have been anticipated. as new mechanisms are being explored, we believe that it is crucial that investors correctly assess and price the probability of conversion into common equity. third, sufficient level of contingent capital should enable a well - run bank to still operate with significant leverage and thus earn a healthy return. in the more extreme suggestions for the amount of contingent capital, one would very substantially change the return profile of common equity for banks, perhaps creating an entirely new | urban backstrom : the monetary policy situation in sweden opening remarks by mr urban backstrom, governor of sveriges riksbank, to the riksdag's finance committee, stockholm, 19 march 2002. * * * first i want to express my thanks for this opportunity of discussing the swedish economy and monetary policy with members of the finance committee. the riksbank is required by law to present your committee with a written account of monetary policy at least twice a year. the first of this year β s accounts was handed over this morning. it contains a description of the riksbank β s view of economic developments and the prospects for inflation. in my opening remarks i shall summarise the report and then discuss the consequences the riksbank β s executive board draws as regards monetary policy. then i look forward to a discussion with members of the committee and shall do my best to answer your questions. brightening outlook for the world economy the discussion at our previous meeting last autumn was coloured to a high degree by the terrorist attacks in the united states on 11 september and their effects. at that time there was considerable uncertainty about the extent to which economic activity, which was already weak, would be affected. there was a risk of the attacks making households and firms even more uncertain and eroding their confidence in the future, with negative consequences for demand. as inflationary pressure varies with the state of demand and resource utilisation, the events influenced the formulation of monetary policy in many countries, including sweden. six months later, however, we are now seeing more and more signs of an imminent improvement in activity abroad. the attacks β impact on the global economy were fortunately limited, though certain sectors, such as air transport and insurance, have been heavily hit by the attacks and their repercussions. production last year was constrained by excessively large stocks but it now looks as though stock adjustments have come a long way, which is a good sign for output. a certain amount of optimism is beginning to spread. order books are becoming more stable and in some cases even improving. then there is the additional impetus that comes from the expansionary economic policy in many countries. a proper global recovery that becomes increasingly strong does, however, presuppose a broad and sustained increase in demand. an increase in production that is generated solely by an end to stock reductions is liable to be relatively brief. in this respect there may be some uncertainty. there are still large imbalances in the | 0 |
of the australian dollar. i do not want to make too much out of these arguments, other than to point out that some clouds do have silver linings. 5. the international economy when we think of the international economy, or its leading member β the us economy β we tend to remember that there has been a reasonably pronounced business cycle over recent decades. recessions occurred in the mid seventies, the early eighties and the early nineties. a lot of people think in terms of a relatively regular cycle, and hence think we are due for another us and world recession now. we cannot summarily dismiss this simple approach, and i find it hard to argue against the view that economies contain some unavoidable element of cyclicality in their path of development. the issues are : does a cycle necessarily involve a recession, and are there characteristics of the current cycle that make it different to its predecessors? i think these can be answered together. the current international cycle is different to its predecessors in one extremely important respect β the expansion phase did not culminate in an excessive rise in inflation. in fact, the rise in inflation was quite modest. this had two important consequences. first, because the rise in inflation was small, interest rates did not need to rise by very much during the relatively short period that they had to perform their anti - inflationary task. ( table 1 looks at the peak in inflation and interest rates at the end of various expansions. ) second, monetary policy could be eased much earlier in the slowing phase of the cycle than in the past. thus, to the extent that the cycle is the result of changes in monetary conditions and monetary policy, it should unambiguously be more muted on this occasion. similarly, to the extent that major downturns are the result of financial fragility, the situation should be better on this occasion as financial intermediaries in virtually all western countries are in much sounder shape than a decade ago. thus, in the areas dear to a central banker β s heart β monetary and financial stability β the situation is appreciably better on this occasion than earlier ones. table 1 : inflation and interest rates oecd inflation ( year - ended ) g3 nominal policy interest rate 1970s peak 14. 8 10. 6 1980s peak 13. 1 14. 1 early 1990s peak 5. 7 8. 4 3. 2 5. 8 2000 peak ( a ) ( a ) excluding japan it would be very reassuring if this | carl - ludwig thiele : rmb initiative β one year after start of clearing speech by mr carl - ludwig thiele, member of the executive board of the deutsche bundesbank, at the european - chinese banking day during the 18th euro finance week, frankfurt am main, 16 november 2015. * * * ladies and gentlemen i am delighted to be speaking about such an interesting topic at this year β s europeanchinese banking day. at last year β s china day, we celebrated the first rmb transactions processed by the rmb clearing bank in frankfurt. so how do things stand now, one year on, with regard to the development of the rmb and the clearing of rmb transactions? development of the rmb hub in frankfurt china has been experiencing an enormous economic upturn since the end of the 1970s, and has now become the second - largest economy in the world. in just one generation, therefore, china has made the quantum leap from donkey carts to high - speed transrapid trains. the importance of the chinese economy to the world economy is growing visibly. six years ago, its share in global gross domestic product was roughly 9 % ; this year, it looks set to hit 14 %. given the ever growing importance of the real economy, the chinese government has for some years now been pursuing a policy of cautiously opening up the financial market and is endeavouring to gradually internationalise the rmb. even though the us dollar is still the most widely used currency for trade with china, the use of the rmb as a currency of account has gained significant ground in the past few years. in trade finance, the chinese currency has surpassed the euro and now occupies second place, directly after the us dollar. measured in terms of transaction values, the rmb edged up to fourth place in august in the international payment transactions ranking. according to data from swift, more than 1, 700 banks worldwide ( from a total of just over 10, 000 participants in the swift network ) clear payments in rmb. in the past, the chinese government strengthened the rmb offshore markets, giving importers outside china a means of paying in rmb. for the political leaders, this was part of the long - term strategy to open up the markets with greater convertibility of rmb while retaining the ability to exercise control. this is because clearing in the rmb offshore markets requires the appointment of a ( chinese ) rmb clearing bank. as part of this strategy, the chinese central bank | 0 |
depend on developments in financial markets and the economy. the current situation of ample liquidity in euro area money markets guarantees a continued positive impact on financing conditions. as regards the monetary policy stance itself, it will be designed as always to deliver price stability, in the medium and long term, in line with our definition. crisis prevention governments and central banks have been focused on financial reform since october 2008. the new financial architecture will build on the assumption that a re - pricing of risk around its fundamental value is needed. price discovery within the market in pursuit of a fundamental equilibrium in risk pricing β one that can be sustained by long - term trends β is likely to take time and experience some further oscillations. a question that remains is : where will this process end? as aggregate β undiversifiable β risk diminishes, this will be reflected in lower premia that financial markets pay for risk - taking. we know that the commitment by central banks to keep inflation low and stable, communicate clearly about their price stability objectives, and then act on those objectives, has all contributed to a long - term reduction in macroeconomic risk. the fraction of the reduction in risk compensation related to having a stable macroeconomic framework is a steady acquisition of modern societies. instead, the complement to that fraction β that which is due to excessive financial sophistication, abnormal risk tolerance and shortcomings in risk management β should be gone for ever. that is why my conjecture is that risk premia in a number of markets will continue to be reduced β but they are unlikely to reach the compressed levels that we saw prior to the crisis. normalcy will probably be reached at a permanently higher level of risk compensation in a number of markets. in order to build an effective system of crisis prevention, we will all need to take on board this simple fact : compensation for risk will need to be appropriate. we shall prevent β pure β speculative activities from becoming the dominant force on the markets. and we shall build financial infrastructures with sufficient buffers to make them bulwarks against instability and resist shocks. let me mention some striking facts about the power of such buffers. there is a widespread perception that banking crises in times when money was convertible into gold had apocalyptic consequences for bank depositors. this is not true. the estimated average loss on assets born by depositors in banks that were closed down as a consequence of financial crises was minuscule. taking a yearly average between 1865 and 1920, | price stability, and so our strategy required us to respond β even though our central forecast at that time was for a low but positive rate of inflation in the years ahead. we responded in two main ways. first, we clarified our reaction function to the main risks we saw and the instruments we would use if each of those risks materialised. 5 this sent a clear signal to observers that we were ready to respond in the case of adverse contingencies. then, when those contingencies arose, we followed through with our forward guidance and introduced a set of policy measures that was designed to cover the full downside distribution of risks β that is, a very accommodative policy stance to combat disinflationary forces, and an option to be even more accommodative if the situation deteriorated into outright deflation. thanks to these policy interventions, the distribution of risks has narrowed considerably over time β as you can see from the yellow line β and we no longer see a meaningful probability of deflation. the balance of risks has also shifted upwards as the economic recovery has gathered steam. the current economic expansion in the euro area is stronger than it has been for a decade and broader than for two decades. this improving picture is the main reason for our recent decision to recalibrate our policy by reducing the pace of our monthly asset purchases from β¬60 billion to β¬30 billion, starting in january. of course, risks emanate not only from our own jurisdiction, the euro area, where we can respond with our monetary policy, but also from the rest of the world. indeed, while the ecb β s governing council currently sees the risks surrounding the euro area β s growth outlook as broadly balanced, it sees downside risks relating primarily to global factors. but here too we can manage risks effectively by cooperating closely with other central banks. 6 this does not mean that we decide jointly on policy actions. it rather means that through our regular bilateral contacts, and dialogues in multilateral fora such as the imf, the bis and the 2 / 7 bis central bankers'speeches g20, we can achieve a better understanding of global risks and their channels of propagation. and when risks do turn into shocks, this cooperation allows us to build up readiness and have the tools in place to react. perhaps most importantly, since 2011, the ecb has operated a permanent network of swap lines with the bank of england, the bank of japan, the federal reserve and others | 0.5 |
brian wynter : jamaica β s recent economic path and prospects β the view from the bank address by mr brian wynter, governor of the bank of jamaica, to montego bay chamber of commerce & industry, breakfast forum, montego bay, 21 april 2011. * * * ladies and gentlemen : thank you for inviting me to address your function this morning. it is interesting that this is taking place just one week before the minister of finance presents his plans to finance the government β s expenditures for fiscal year 2011 / 12. in addition to the obvious interest that we all have in the outcome of this annual national event, there is another reason to take special note of it and that is to see in action the early fruits of the focus on reforming the entire budget process that represents a major step in a series of policy initiatives aimed at reversing the trends in jamaica β s indebtedness, entrenching fiscal discipline and accountability and engineering sustainable gdp growth. this is an enormous challenge made more acute by, first, the severe negative impact of the global financial crisis of 2008 / 09 on our export markets and, more recently, by the large increases in international commodity prices over the last nine months or so. let me tell you what has happened so far in this series of initiatives. in january last year, the government negotiated the highly successful jamaica debt exchange with local investors. this, together with a large tax package, public sector wage restraint and aggressive commitments to off - loading loss - making public sector entities, paved the way for the signing of a stand - by agreement with the international monetary fund. this in turn unlocked access for the government to unprecedented levels of funding from the multilateral financial institutions for fiscal and balance of payments support. these developments induced a restoration of investor confidence that has permitted the central bank to ease monetary policy progressively thereby bringing interest rates on money market instruments and government bonds to levels not seen in jamaica in decades. the same dynamic, supported by monetary policy and fiscal policy initiatives, created conditions for inflation expectations, which research has shown is the most significant driver of inflation in jamaica, to fall dramatically. as the year ended, headline inflation for the fiscal year was 7. 8 per cent, close to the bottom of the target range of 7. 5 per cent to 9. 5 per cent. last week, statin released its inflation report for march, which saw consumer prices increasing by 1. 1 per cent for the month. this matched the central bank β s | projection exactly and reflected the impact of increased oil prices on electricity and transportation - related costs as well as the announced increase in minimum wages. more broadly, for the year, world prices for commodities increased. for example, oil prices rose by 18 per cent and the price of corn rose by 31 per cent. this is worth stressing so that we can appreciate that the success of the policies in reducing inflation from 13. 3 per cent the year before to 7. 8 per cent last year ( a reduction of 5. 5 percentage points ) was achieved in an environment of sharply higher world commodity prices. the success in bringing down inflation occurred, though, in a weaker economy than had originally been projected. adverse local and international weather conditions ( tropical storm nicole, ash clouds in europe ) and the temporary fall - out that the economy experienced, particularly in the tourism sector, from the disturbances in west kingston in may played a part. overall, however, the tourism sector remained the brighter star. stopover tourist arrivals for the full fiscal year are estimated to have grown in the region of 3. 5 per cent to 4. 0 per cent. cruise passenger arrivals, of which about a third come through the montego bay port, recorded growth of approximately 5. 0 per cent following three successive years of decline. bis central bankers β speeches the industry is now poised to grow substantially in the coming year because of the opening of the new port in falmouth. to round out the picture, the balance of payments left us with even stronger net international reserves. the nir ended the year at us $ 2. 5 billion, up us $ 800 million for the year. gross reserves ended at us $ 3. 4 billion, representing nearly 23 weeks of projected imports of goods and services. this performance was underpinned by heightened confidence about the prospects for the economy as the government demonstrated repeated success in meeting the quantitative targets under the agreement with the imf. we saw this confidence reflected in the strong preference for jamaica dollar assets which influenced the steady appreciation in the exchange rate that we experienced last year. what is our prognosis for the next fiscal year? we are expecting that the process of fiscal consolidation will continue, even while the government embarks on a path to induce growth. we are currently expecting inflation for the fiscal year to fall further even in the face of rising commodity prices. the fall will not be as pronounced as the 5. 5 percentage points fall that we saw in the 2010 / 11 fiscal year. | 1 |
kiyohiko g nishimura : financial regulations β asian perspectives remarks by mr kiyohiko g nishimura, deputy governor of the bank of japan, at the panel session β financial development and regulatory coordination under new circumstances β, at lujiazui forum annual meeting 2010, shanghai, 26 june 2010. * * * first of all, i would like to express my sincere gratitude to the hosts for inviting me to the lujiazui forum and especially to this panel on financial reforms. i am particularly delighted to be given the opportunity to discuss the pressing issue of financial reform, which will shape the future landscape of the global economy. in this short presentation, i would like to argue the following two points : firstly, the financial innovations of the past quarter century have blurred the dividing line between banks and non - banks. these developments have made it possible to shift risk back and forth between the banking system and capital markets. it has become difficult to locate exactly where ultimate risk lies, and the banking system has found itself so often vulnerable to the volatility of capital markets. the volcker rule and related financial reform proposals are designed to rectify these problems. secondly, however, we should recognize the significant regional differences in banks β business models along this bank / non - bank spectrum. financial reforms should thus follow a carefully - timed and well - balanced approach, taking explicit account of regional and functional heterogeneity. banks more like non - banks and non - banks more like banks : rationale for the volcker rule it may sound a bit farfetched, but the global financial crisis of the last few years might have been brought about partly by banks becoming more like non - banks and non - banks becoming more like banks. some banks are now non - bank - like, as exemplified in the current financial jargon used to describe these banks β business practices, such as β originate to distribute model β and β prop trading β, while some non - banks have become bank - like, as the phrase β shadow banking system β suggests. the financial innovations behind these changes are in essence welcome developments, helping to improve efficiency by shifting risk among economic agents. however, they have made it increasingly difficult to locate the whereabouts of ultimate risk. vital information regarding banks β risk exposures has been literally β lost in transformation β in the originate - todistribute model and various proprietary derivative trades. we have been unable to identify what risks a particular bank has been exposed to, and | july 4, 2018 bank of japan economic activity, prices, and monetary policy in japan speech at a meeting with business leaders in ishikawa yutaka harada member of the policy board ( english translation based on the japanese original ) introduction thank you for giving me this opportunity to exchange views with you and for having taken the time to be here despite your busy schedules. it is indeed a great honor to be here today. please allow me to express my gratitude for your great cooperation with the business operations of the bank of japan, particularly of the kanazawa branch. the bank introduced quantitative and qualitative monetary easing - - or qqe for short - - in april 2013 with the aim of achieving the inflation target of 2 percent, and since then, has strengthened the qqe framework. as a result of the bank's efforts, most economic indicators - - such as those of production, employment, investment, exports, and fiscal conditions - - have improved. today, i would like to provide my views on the achievements thus far of the bank's monetary policy measures as well as on some critical opinions regarding qqe, and then explain recent economic and financial developments as well as the path toward achieving the price stability target of 2 percent. i. the achievements of five years of the bank's monetary easing policy april 2018 marked five full years since the bank introduced bold monetary easing with its policy of qqe. for this reason, monetary policy over the past five years has been the subject of a large number of articles in newspapers and magazines assessing qqe from a variety of perspectives. 1 many of the assessments pointed out that the 2 percent price stability target had not been achieved and argued that the dangers associated with monetary easing had not been addressed. however, as i have highlighted repeatedly, monetary easing has led to a continued improvement in employment, to an increase in both real gdp growth and nominal gdp growth, and to a rise in the year - on - year inflation rate from negative into positive territory for example, such assessments were found in fujita tomoya, " daikibo kanwa gonen, fukuramu'fukusayo ', " the asahi shimbun, april 4, 2018 ; and the 3 - day series, sakai takayuki et al., " shiren no saishido, " the mainichi, february 17, 18, and 20, 2018 and the series focusing on monetary policy under the same title on april 10 | 0.5 |
are not ignored in the overdrive for financial stability. in india, the newly created fsdc has included financial bis central bankers β speeches literacy and inclusion in its mandate apart from those of macroprudential and financial stability responsibilities. against this backdrop, let me now introduce to you the format of the conference. we will cover the conference theme in two special talks and two technical sessions. we begin with the key note address by our governor dr. subbarao followed by presentation by two guest speakers, mr. jaime caruana, general manager, bank for international settlements and dr. y. v. reddy, former governor, reserve bank of india. then we move on to the presentation of papers and discussions where participants from fellow saarc member countries shall share their country experience on financial stability. it will be interesting to notice the differences / similarities in mandates, powers and accountability arrangements that are needed in different circumstances. for convenience, we have spread the discussions over two technical sessions, with a lunch break in between. this will be followed up with a panel discussion of governors, dealing with future challenges. the panel discussion will be moderated by mr. t. n. ninan, president of editors β guild of india. friends and colleagues, i trust we will have fruitful discussions during the day that will set the outline of our reaction function to the global developments in financial stability. with these words, i once again welcome you all to the conference. i wish you all a pleasant stay in kumarakom. this is one of the premier tourist locations in the country, combining aesthetic appeal with the pursuit of ecological sustainability, which is an apt metaphor for the issues and concerns that we will talk about during the rest of the day. bis central bankers β speeches | subir gokarn : financial stability welcome remarks by dr subir gokarn, deputy governor of the reserve bank of india, at the saarcfinance governors β symposium, kumarakom, kerala, 10 june 2011. * * * governor dr. subbarao, distinguished governors, dr. reddy, mr. caruana, mr. ninan, mrs. thorat, deputy governors, our guests from saarc central banks and friends. on behalf of the reserve bank of india, i extend a warm welcome to you all to the saarcfinance governor β s symposium 2011 on the theme of financial stability. just to refresh your memories, the last governors symposium organized by us under dr. reddy was in 2005 at mumbai which dealt with the theme of β communications policy of central banks β. financial stability is indeed a most appropriate theme for this meeting. the recent financial crisis also termed as β the great recession β clearly brought financial stability to the centrestage of public policymaking. the global financial crisis that swept the economic and financial systems across the world during the last three years has shaken our beliefs in some near truths. one, it has questioned the premise that price stability and financial stability are complementary. rather financial stability can be jeopardized even in an environment of price stability and macroeconomic stability. two, it is now impossible to imagine of sustained growth without financial stability. any disruption in the financial system anywhere in the world has the potential of affecting the real economy not only in that country but also elsewhere. we have seen that domestic and global financial stability are not mutually exclusive domains. with increasing financial globalization, there was a growing realisation about this, but the extent of transmission of disruptions during the recent financial turmoil through different channels, namely finance, trade and confidence channel was unthinkable before the crisis. it also came as an unpleasant revelation that even those countries which had not contributed to the immediate causes of the crisis had to bear the brunt of an unwholesome international financial climate. hence, domestic financial stability cannot become a realistic goal in the absence of a conducive global environment. three, the two - speed recovery, accompanied by a widening of global economic imbalances is at the centre of a new configuration of risks. these are visible on a variety of fronts β sovereign debt risks, financial fragility, the search for yield, and related stresses in emerging - market economies and foreign exchange markets. hence | 1 |
but also at twelve months. if economic developments should prove to be much worse than we are now predicting, there may be reason to proceed with more unconventional measures to support the economy. one possibility is to do as they have in a number of other countries and purchase government, mortgage and corporate bonds. we are currently examining the experiences of other countries and analysing the advantages and disadvantages of this type of measure. for instance, we need to consider to what extent it is the riksbank that is best suited to carry out this type of measure and whether it might instead be a task for a government agency. summary i would like to summarise my speech as follows : resource utilisation is falling rapidly and is at an unusually low level. all of the measures of resource utilisation that we have provide the same general picture. but it is difficult to ascertain how low it is and when it will turn around. different measures paint different pictures on this issue. the gdp gap implies that resource utilisation will fall to minus 4 - 5 per cent at the beginning of 2010 before it turns around, and the employment gap points to resource utilisation falling to minus 3 per cent in 2011 before the labour market begins to improve. however, in both of these cases the measures are based on very uncertain estimates of the available resources in the economy. it is also difficult to ascertain what consequences the low resource utilisation will have for inflation and monetary policy. the assessment we made at the most recent monetary policy meeting was that the policy rate ought to be cut to 0. 5 per cent. with this cut and the low level of the policy rate that we envisaged, resource utilisation would show an upturn and underlying inflation would be close to two per cent during the forecast period. if developments were to prove much more negative, there is a possibility to proceed with more unconventional measures. figure 1. gdp gap sek million and percentage deviation from hp - trend respectively, seasonally - adjusted data 1 000 000 gdp ( left scale ) hp trend ( left scale ) gdp gap ( right scale ) 900 000 800 000 700 000 600 000 500 000 400 000 - 1 300 000 - 2 200 000 - 3 100 000 - 4 - 5 note. trend calculated using the hodrick - prescott filter. broken lines refer to the riksbank's forecasts. sources : statistics sweden and the riksbank figure 2. flexprice gap percentage deviation from | . there are two explanations for this. firstly, the connection between resource utilisation and inflation is weaker now than before. i mentioned this in my introduction. and this is probably because a changeover to a credible monetary policy that is aimed at stabilising inflation will lead to the connection between resource utilisation and inflation weakening. stable inflation expectations close to the inflation target quite simply provide less scope for other variables to affect inflation. 4 but the connection is not negligible. the expansionary monetary policy in the world as a whole, the large gdp growth in the world during the years 2004 - 2007 and the increasingly high resource utilisation finally led to substantial rises in energy, food and other commodity prices in the world market, and thereby also to rising consumer prices. the forecasts now being made both by international organisations and by ourselves indicate that inflation in the world over the coming years will be positive, despite the low resource utilisation, but slightly lower than was normal a few years ago. the other explanation as to why inflation in sweden is remaining close to the target despite the low resource utilisation is that there are other factors than resource utilisation which exert upward pressure on prices. one such factor is that unit labour costs have been increasing by around 5 per cent a year during the period 2007 - 2009. slightly higher wage agreements, but above all falling productivity, have contributed to pushing up unit labour costs, something that will change in the future as companies reduce their workforces. another factor that is underpinning inflation is the weak krona. given this, the assessment i made at the most recent monetary policy meeting was, as i recently mentioned, that there was no reason to worry about either deflation or high inflation during the forecast period. resource utilisation is not so low that it could lead to deflation, but it is sufficiently low to prevent inflation from becoming too high. the second question i would like to take up is the limits for stabilisation policy. there are limits as to what stabilisation policy can achieve with regard to alleviating the consequences for the swedish economy of such a powerful and global economic recession as the one we are undergoing. for fiscal policy the limits are set by what is considered compatible with a long - term sustainable development in public sector finances. monetary policy is to some extent limited by the fact that there is a floor under which the repo rate cannot be cut. it is not possible to avoid an international economic | 1 |
this multidimensional environment. ebrd needsto be ready to share, when and if its help is required. together with the other institutions of european union, the european commission, the eib group, as well as the national development agencies of the member states, we all have a duty to help / assist the less fortunate. however, as expansion is a β hot topic β today in the ebrd, should it be considered by the shareholders in the future, it needs to be calibrated with a strong and decisive intervention in the current countries of operations, to remove as much as possible the transition gaps. this approach should be a consensual approach of the shareholders, a transparent one, where everybody, sponsors and countries of operations agree on the principles and objectives. ladies and gentlemen, 1 / 2 bis central bankers'speeches allow me to conclude by saying that the national bank of romania strongly supports the partnership with the european bank for reconstruction and development. we appreciate the assistance provided and its benefits and positive impact. we will remain your reliable partner, as always. i invite mr. eugen teodorovici, minister of finance and governor to the ebrd to give his keynote speech on β romanian government program and future presidency of the european union council β. i wish you fruitful and successful discussions. thank you. 2 / 2 bis central bankers'speeches | ##gilance and awareness of trends of serious crimes in the country and emerging threats impacting the system. it also calls for effective responses in the form of more robust, agile controls to address these identified trends and threat in a timely manner. from the national risk assessment 2020 undertaken by members of the national coordination committee to counter money laundering and to assess and facilitate the understanding of ml / tf risk exposures, it was found that the top five high - risks crimes that pose substantial ml / tf threats to the country are corruption, fraud, smuggling, illicit drug trafficking and organised crimes. corruption remains a systemic issue, and is particularly insidious, since it facilitates and sometimes enables others significant crimes such as fraud, drugs, human trafficking and environmental crimes. the assessment also indicated that the banking sector is exposed to high level of ml / tf risks. with banks as the nexus between all financial and non - financial sectors, the banking platform has become an ideal channel to be abused for criminal activities including corruption. 2 / 4 bis - central bankers'speeches in this regard, it is crucial that banks understand these key risk drivers to accurately assess whether their current systems are sufficiently adequate in the face of such risks and deploy their resources more strategically to focus on addressing specific, high - risk areas. some best practices for control measures include improving the ability to deter illegal fund flows within the system, conducting swift identifications of illegal transactions and prompt submissions of suspicious transaction reports ( str ). banks are also highly encouraged to make good use of technological advancements to develop more holistic monitoring and risks detection systems, allowing for more prompt alerts and sophisticated red flag systems and stronger compliance to anti - money laundering & counter financing of terrorism ( aml / cft ) requirements. it goes without saying that savvy systems alone are not the one - stop solution. this must be complemented by continuously maintaining and upgrading relevant competencies of aml / cft personnel through investments in training. ladies and gentlemen, i would like to take a moment here to commend the industry on the strides it has made in the aml / cft space over time. in particular, strs received from the banking sector has steadily improved in quality over the years. there is no doubt that these strs and the overall cooperation of banks with the relevant authorities have been useful in supporting enforcement activities by law enforcement agencies. this includes supporting macc's investigations through timely responses to orders, provisions of documents and witnesses. | 0 |
changing environment. transformational leadership allows dramatic improvements in management effectiveness. transformational leaders make subordinates bis central bankers β speeches aware of how important their jobs are by providing feedback to the worker ; enable subordinates become aware of their own need for personal growth and development ; and motivate subordinates to work for the good of the organization, not just themselves. transformational leaders are charismatic and have a vision of how good things can be. they are excited and clearly communicate this to subordinates. transformational leaders openly share information with workers. everyone is aware of problems and the need for change. transformational leaders engage in development of workers. these qualities make a transformational leader an effective change agent to transform the organization in response to the internal and external changes, both current and anticipated. given these aspects of transformational leadership, it can succeed only if people will follow a person who inspires them, who has the vision and passion to achieve great things and are willing to become enthusiastic and energetic. the typical aspects of a transformational leadership are : developing the vision, selling the vision, finding the way forward and leading the change. thus, the transformational leader seeks overtly to transform the organization, and promise the followers that they also will be transformed in some way, perhaps to be more like this amazing leader. in some respects, then, the followers are the product of the transformation. my dear students! before i conclude, let me suggest certain important steps to develop your leadership skills : β’ integrity : integrity means alignment of words and actions with inner values. it means sticking to these values even when an alternative path may be easier or more advantageous. a leader with integrity can be trusted and will be admired for sticking to strong values. they also act as a powerful model for people to copy, thus building an entire organization with powerful and effective cultural values. β’ dedication : spending whatever time and energy on a task is required to get the job done, rather than giving it whatever time you have available. β’ openness : openness means being able to listen to ideas that are outside one's current mental models, being able to suspend judgment until after one has heard someone else's ideas. β’ creativity : means thinking differently, being able to get outside the box and take a new and different viewpoint on things. creativity provides the ability to think differently and see things that others have not seen, and thus giving reason for followers to follow β’ magnanimity : crediting the people with success and | accepting personal responsibility for failures. β’ humility : humility is the opposite of arrogance and narcissism. it means recognizing that you are not inherently superior to others and, consequently, that they are not inferior to you. it does not mean diminishing yourself, nor does it mean exalting yourself. humble leaders do not debase themselves, neither falsely nor due to low self - esteem. they simply recognize all people as equal in value and know that their position does not make them a god. history books are filled with leaders who are soft - spoken, introverted and quiet. a quiet and simple gandhi or a soft - spoken peanut farmer named jimmy carter, who became the president of the united states and won a nobel peace prize, have been just as effective world leaders as a loud and flamboyant churchill, or the tough leadership style employed britain β s iron lady, margaret thatcher. bis central bankers β speeches β’ be a giver : leaders are givers. the more you give, the more you get. if you want more love, respect, support, and compassion then give love, give respect, give support, and give compassion. as sir winston churchill once said, " we make a living by what we get, we make a life by what we give. " in conclusion, let me leave you, with four types of knowledge that i feel are imperative for weaving together the ideas subsumed in the theme of today β s seminar : ( i ) self - knowledge or personal values and goals ; ( ii ) social network knowledge that involves those who surround you daily ; ( iii ) organizational knowledge that extends to knowing and understanding people at all levels at the work - place ; and ( iv ) contextual knowledge which engages myriad other stakeholders that your organization directly or indirectly works with. finally, you are the future captains of industry and i exhort you to be transformational leaders and be the catalysts who will lead your teams and organizations to greater heights. i wish the seminar all success and compliment the mfm students for choosing a theme which is so relevant today. thank you bis central bankers β speeches | 1 |
financial institution level, the development of new approaches and techniques for stress testing would be crucial for measuring the risk of climate change. however, if each entity chooses to keep their advancements proprietary, industry adoption will be slow. collaboration and knowledge sharing is needed to scale solutions and reduce costs. therefore, i am hoping that for the next few hours, we will all make a conscious choice to participate in these sessions with a generous heart and an open mind. i hope everyone will choose to collaborate rather than compete, to share rather than hoard. in this regard, i am encouraged by the collective efforts by the industry in undertaking capacity building initiatives to upskill the financial institutions and exploring potential solutions to bridge the data gaps. commendable efforts by the jc3 sub - committee 1 and 4 in leading training initiatives and sub - committee 5 in producing and refining the climate data catalogue exemplify this collaborative spirit. ladies and gentlemen, some of you have been asking, what's next after this stress test? i'd like to address this in some detail. 2 / 3 bis - central bankers'speeches important to note is that the climate stress test, or crst for short, is not an end in itself. it should not be viewed as merely a regulatory compliance exercise. although bnm does not intend for the results of the inaugural stress test to calibrate capital requirements, we do expect financial institutions to take this exercise seriously. i strongly advise financial institutions to already start planning for how the results of the stress test could be used to inform strategic planning and management decision making. crst results are more than just numbers. they provide important insights into how climate risks could impact the business and operations of an institution. hence, active engagement from senior management and the board throughout the crst journey β not just when the final results are available β will be crucial to the success of this first exercise. financial institutions need adequate internal support to address the challenges they face, and this requires buy - in from the top throughout the stress test exercise. additionally, as climate risks continue to evolve, we expect climate risk stress tests to be a recurring exercise moving forward. as such, it is imperative that financial institutions continuously invest in enhancing their stress test capabilities, particularly in areas such as data collection, methodology and model development. this ongoing refinement is essential to ensure that the crst remains relevant and responsive to the ever - evolving nature of climate risks. before i conclude, i want to emphasise the over | erkki liikanen : independent institutions and rule of law are essential for successful convergence speech by mr erkki liikanen, governor of the bank of finland, at the 7th ecb conference on central, eastern and south - eastern europen ( cesee ) countries " institutional quality and sustainable economic convergence ", frankfurt am main, 5 october 2017. * * * first a comment from the history of enlargements. the first post - cold war β enlargement negotiations started in march 1993. these were concluded in spring of 1994. austria, finland and sweden joined in january 1995. i was one of the negotiators then. in the middle of these negotiations, in june 1993, the danish presidency hosted copenhagen european council. the council wanted to show the path to 10 central and eastern european countries who desired to become a member of the eu. the summit defined three key pillars, preconditions for the membership : the membership requires : 1. the candidate country has achieved stability of institutions guaranteeing the rule of law, human rights and respect for and protection of minorities 2. the existence of a functioning market economy as well as the capacity to cope with competitive pressure and market forces within the union 3. the ability to take on the obligations of membership, including adherence to the aims of political, economic and monetary union. in the summit in essen in 1994 the pre - accession strategy was confirmed and it turned out to be very successful. four years later, in july 1997 the european commission assessed the candidate countries in her opinion. this opinion was a pre - condition for membership negotiations. i was a member of that european commission. the first chapter of the commission opinion analysed the political criteria with the title democracy and the rule of law. the judiciary, its structure and its functioning got a particular attention. it is no surprise to anyone that these issues remain a corner stone in the european union. when joining the eu, the countries took the commitment to respect these principle. it is also very important that european commission monitors the developments closely and takes also actions, when needed. the enlargement negotiations were launched in march 1998 in brussels. w e can all agree that economic convergence in the cesee countries has been a success. with the help of foreign investment and especially market access to the european union, countries in the region have been able to lift their incomes significantly. for example, during the past 25 years real per capita gross domestic product in hungary and the czech republic increased by | 0 |
2. it must have a price performance that is sustainable and an average inflation rate that does not exceed by more than one and a half percentage points that of the three best - performing eu countries in terms of price stability ; 3. it must have had an average nominal long - term interest rate that does not exceed by more than two percentage points that of the three best - performing eu countries in terms of price stability ; 4. its national currency must have participated in the exchange rate mechanism ii for at least two years and thus have respected the defined fluctuation margins of the currency towards the euro ; 5. it should ensure that it meets the requirements of legal convergence. bis central bankers β speeches in its regular convergence reports, the european central bank has emphasised that these criteria be met in a sustainable manner. with regard to romania, achieving an environment conducive to sustainable convergence requires, inter alia, a stability - oriented monetary policy and the strict implementation of its fiscal consolidation plans. let me now return to the euro exhibition itself. the euro exhibition has been on display at many locations throughout the eu, so far including bratislava, barcelona, rome, berlin, frankfurt, luxembourg, warsaw and tallinn. after bucharest, it will continue its journey across europe to paris, sofia and athens. the main objective of the euro exhibition is to give citizens of all ages the opportunity to familiarise themselves with the euro. visitors will have the chance to explore subjects ranging from the history of money to the production of euro banknotes. in addition, they will be able to learn how to check the security features of euro banknotes through the many interactive displays. as you walk around the exhibition, you will no doubt recognise the images of bridges that feature on the back of the euro banknotes. these bridges symbolise communication between the people of europe, and between europe and the rest of the world. they also represent the connection between the past and present, and symbolise a common european future. the diversity of europe is also reflected on the national sides of the euro coins, which depict national icons and symbols representing the national heritage and culture of each euro area country. the euro exhibition also takes the younger generations into consideration. in the kids β corner, children can play the educational computer games, learn more about the features of euro banknotes from the interactive displays or follow the story of anna and alex as they catch counterfeiters. for those of you here who have children, this is a good opportunity for them to | learn about the euro in an entertaining and enjoyable way. ladies and gentlemen, i sincerely hope that you will enjoy your visit to the euro exhibition. it is a pleasure for me, on behalf of the european central bank, to declare the exhibition open. bis central bankers β speeches | 1 |
after falling to 7 percent in the third quarter of 2001, rebounded to 12 percent in the first quarter of 2004, a pace of advance not experienced since 1983. half of this rise in the profit share occurred between the first quarter of 2003 and the first quarter of 2004, a period during which business costs were unusually subdued. in fact, consolidated unit costs for the nonfinancial corporate business sector actually declined during this period. the increase in output per hour in the nonfinancial corporate business sector of more than 6 percent accounted for much of the net decline in unit costs. the remainder was due to the effects of rising output in reducing nonlabor fixed costs per unit of output. hence, at least from an accounting perspective, between the first quarter of 2003 and the first quarter of 2004, all of the 1. 1 percent increase in the prices of final goods and services produced in the nonfinancial corporate sector can be attributed to a rise in profit margins rather than rising cost pressures. however, businesses are limited in the degree to which they can raise margins by raising prices. an increase in margins should affect mainly the level of prices associated with any given level of unit costs but, by itself, should not prompt a sustained pickup in the rate of inflation going forward. in a market economy, any tendency for profit margins to continue to rise is countered largely by the entry of new competitors willing to undercut prices and by increased labor costs as more firms attempt to exploit the opportunity for outsized profits by expanding employment and output. that increase in competitive pressure, as history has amply demonstrated, with time, returns markups to more normal levels. over the past three decades, the share of the profits of nonfinancial corporations in the total nominal income of that sector has fluctuated around a longer - run average of roughly 10 - 1 / 2 percent. the profit share in the first quarter of this year, at about 12 percent, was well above that level. the gap suggested that the growth of unit profits would eventually slow relative to increases in unit costs. this outlook had accorded with analysts β expectations for earnings growth over the next year, which are substantially below the realized growth of profits in recent quarters. indeed, some leveling or downward pressure on profit margins may already be in train, owing to a pickup in unit labor costs. although advances in productivity are continuing at a rate above the longterm average, they have slowed from the extraordinary pace of last summer and are | the euro area and secure price stability. during this period, paradoxically, the greatest danger that the governing council had to confront was not the one that the founders of the single currency had feared. the ecb is institutionally hard - wired to combat inflation. this was the key preoccupation of the architects of the euro, born out of the german experiences with hyperinflation, both during the inter - war years and in the aftermath of the second world war. from this preoccupation stem essential features of the set - up of the single currency area : a fiercely independent central bank, with a clear mandate to pursue price stability and robust safeguards to stop the ecb from monetising budget deficits, historically the root of runaway inflation. during the financial crisis, however, the nature of the problem the ecb faced was entirely the opposite. time and again, the ecb had to act to prevent an unduly sharp fall in economic activity and head off the risk of deflation. deflation, which is a widespread and ongoing fall in prices, may lead consumers to postpone spending and firms to slash investment. both factors lead to a reduction in aggregate demand, lower output, higher unemployment and further downward pressure on prices. this is arguably as dangerous a situation as spiralling inflation. in late 2008, the ecb faced a situation in which firms, households and governments were carrying excessive debt, at the same time as the banks had to reduce their own leverage. with the collapse of lehman brothers, the immediate problem was a shortage of liquidity and the breakdown of the money market. this threatened the health of the euro area economy as a whole, with declining output, rising unemployment and weaker inflationary pressures. in response, between october 2008 and may 2009, the governing council lowered key interest rates by 275 basis points, bringing the rate on the main refinancing operations down to 1. 0 %. many of these measures were taken in concert with the major central banks around the world. under normal economic conditions, such a reduction in short - term interest rates is quickly transmitted to bank lending and deposit rates. in turn, lower interest rates encourage households and firms to consume and invest more, supporting aggregate demand directly. moreover, lower interest rates on euro - denominated assets lead to a depreciation of the exchange rate of the euro, stimulating exports. this smooth transmission of the impulses from monetary policy to the real economy depends critically on the health | 0 |
partners will, among other things, contribute to the growth in international reserves to about usd 35 billion as of the end of this year. this will strengthen the nbu's capability to further maintain exchange rate sustainability and gradually ease fx restrictions. as before, the key assumption of the forecast is that high security risks will persist until early 2024. the war continues. the key risk to this forecast is that the war lasts longer and is fiercer than anticipated. they could have a significant adverse effect on economic activity, while also worsening inflation and exchange rate expectations. this will pose additional challenges to the country's macrofinancial sustainability. the war is also generating other risks. they include : the emergence of additional budgetary needs and substantial quasi - fiscal deficits in the energy sector difficulties with, or the halt in, the operation of the " grain corridor " and greater problems arising from the limitations imposed on imports of ukrainian food by some european countries further damage inflicted on energy infrastructure, which could again cause substantial power shortages a slower decline in global inflation than expected. conversely, the rapid implementation of ukraine's recovery project, together with european integration reforms, could significantly accelerate the pace of economic growth. the arrival of substantial financing for recovery could also provide ukraine with greater opportunities for easing fx restrictions. taking into account the risks outlined above, high uncertainty, and a significant amount of expected budget expenditures, maintaining exchange rate sustainability amid a pursuit of currency liberalization plans will require the nbu to continue to take a monetary policy approach that makes hryvnia - denominated savings highly attractive. with this in mind, the nbu board decided to keep the key policy rate at 25 %. keeping the key policy rate at 25 %, introducing additional instruments for preventing household savings from being eroded away by inflation, coupled with measures to increase competition among the banks for time deposits, contributed to greater exchange rate sustainability. these same instruments boosted demand for hryvnia instruments, while cutting demand for fx. at the same time, exchange rate sustainability is primarily being ensured by tight currency restrictions. their effectiveness wanes over time, while their restrictive effect on business activity grows in intensity. it is therefore becoming increasingly desirable to liberalize fx restrictions in the foreseeable future. 2 / 3 bis - central bankers'speeches to this end, the nbu is making policy efforts to establish appropriate preconditions for an easing of administrative controls. with uncertainty still being high and the risks of current account balances | yakiv smolii : financial inclusion forum - opening speech speech by mr yakiv smolii, governor of the national bank of ukraine, at the financial inclusion forum, kyiv, 12 june 2019. * * * dear ladies and gentlemen, participants of the second international financial inclusion forum. today, the slogan leaving no one behind unites us all. why this particular slogan, you may ask. first, as a un member country, ukraine shares and supports the global sustainable development goals. we apply the principle leaving no one behind. second, if we explain the meaning of the term β financial inclusion β in one word, this word would be accessibility. technical accessibility and price accessibility. at present, over one third of people all over the world still have no access to financial services. our mutual goal is to reduce the share of ukrainians in this huge number. i will not be mistaken if i confidently say that all present here are aware of the fact β financial inclusion offers broader opportunities for people. access to loans advances business and access to insurance creates a safety cushion. for the least secured social groups, an access to high quality financial services means safety today and social mobility tomorrow. numerous studies, particularly by such respected international institutions as the world bank and the international monetary fund, have proved a strong connection between financial inclusion and financial stability. at the macroeconomic level this translates into the country β s capacity to tackle crises. at a personal level, it gives ukrainians a chance to be prepared for rapid changes and unexpected developments that have permeated the life of our country for the past two decades. ladies and gentlemen, it should be noted that financial inclusion is not only about an increase in the number of consumers of financial services, or their sales, so to say. it is about social responsibility β transparency and clarity of products to their consumers. protection of consumers is important because it is the prerequisite for the safe use of loans. it is impossible for anybody to benefit from the full potential of financial services without financial literacy. this is where the nbu sees great opportunities for everybody gathered here. anyone has a purpose and anyone can play a role : commercial sector can develop new technologies and offer progressive solutions 1 / 2 bis central bankers'speeches nongovernmental organizations can ensure control and enhance communal capacity in an informal way while we at the public sector will continue creating conditions for the increased well - being of ukrainians. what are our plans? first. the nbu will improve the | 0.5 |
secured short - term money market rates, of which saron is the most important, are close to the snb policy rate. by contrast, we use the term β transmission β to describe the pass - through of the policy rate to other relevant market interest rates and, ultimately, to economic activity and inflation. the implementation of our monetary policy involves various instruments, including the remuneration of banks β sight deposits at the snb and the conduct of open market operations, such as repo transactions and the issuance of snb bills. these are the key instruments that the snb uses to implement its interest rate policy. the monetary policy stance is then transmitted to many market interest rates. the relatively moderate rate of inflation compared with our main trading partners ensured that swiss exporters remained internationally competitive, despite the nominal appreciation of the swiss franc. the real appreciation of the swiss franc β taking into account these inflation differentials β was much less pronounced. swiss average rate overnight. conditions in equity and corporate bond markets account for the remaining weights. page 4 / 9 the snb implements its interest rate policy in the secured short - term swiss franc money market the snb implements its interest rate policy by steering secured short - term swiss franc money market rates. it is important to note that the snb β s policy rate is not a market interest rate, but a means of communicating its monetary policy stance. in order to influence monetary conditions in switzerland, the snb sets the policy rate at the desired level and steers secured short - term money market rates close to the snb policy rate through tiered remuneration of sight deposits and liquidity - absorbing operations. saron is the most important secured short - term swiss franc money market rate. 9 during the recent tightening cycle, the snb raised its policy rate by a total of 2. 5 percentage points from β 0. 75 % to + 1. 75 %. chart 7 shows the policy rate ( blue line ) and saron ( red line ). as you can see, each increase in the policy rate was fully passed through to saron. the snb β s implementation framework helps to closely align all short - term swiss franc money market interest rates. some of these rates, such as unsecured short - term money market rates and implied rates from currency swaps, affect the funding costs of financial institutions, which in turn influence the pricing of financial products. most of the time, arbitrage ensures | implementation, a strong and broad transmission of the snb β s interest rate policy is crucial for ensuring appropriate monetary conditions. while some financial products, such as variable - rate mortgages, are priced directly on the basis of saron, the saron - based swap curve also plays an important role in facilitating a broad transmission. this is because most financial products, such as swiss franc - denominated mortgages, loans and bonds, are priced using the saron - based swap curve. thus, saron is not only the most important directly used reference rate in switzerland, but it also serves as an anchor for the swap curve and is therefore also relevant for other swiss franc interest rates. 10 adjustments to the snb β s interest rate policy are transmitted to the saron swap curve. while the snb directly controls saron, the short end of the swap curve, it also influences longer - term rates by shaping expectations, for example via the publication of its quarterly conditional inflation forecast. 11 chart 9 illustrates this by showing the saron swap curve at three different points in time. in may 2022, just before the first increase in the snb policy rate, the swap curve was upward sloping, as expectations of higher future interest rates were priced in at the longer end of the curve ( blue line ). a year later, the swap curve was almost flat, as short - term rates had risen significantly more than longer - term rates ( red line ). this picture was consistent with market participants β expectations that no further rate hikes were needed to prevent inflation from rising. today, the swap curve is inverted, which is consistent with market participants β expectations of moderate inflation and further cuts in the snb policy rate in the near future ( yellow line ). adjustments to the snb β s interest rate policy are also transmitted to other segments of the financial market. for transmission to be effective, the snb policy rate must influence not only interest rate swaps, but also all other relevant financial market segments. chart 10 shows the path of several 10 - year interest rates from 2021 onwards. as you can see, the interest rates on mortgages ( red line ), one of the main financial products offered by banks, have closely tracked swap rates since the beginning of 2022 ( blue line ). 12 yields on other financial market products, such as corporate bonds ( green line ) and covered bonds ( yellow for a broader discussion of how saron replaced libor as the main swiss fran | 1 |
5 % 3 % however, a hypothetical broad - based, always - on facility of this kind, available at terms no worse than those available to banks could remove the incentive for some types of nbfi to build stronger resilience, undermining the role of banks as liquidity providers in normal times, and putting public resources unnecessarily at risk potentially breaching the backstop goal ( b ). going to the other extreme and placing most weight on that goal might suggest having a facility that is triggered only in instances of clear dysfunction, after bank intermediation capacity is clearly exhausted. such a tool might be made available only to nbfis judged to have appropriate levels of self insurance, supplemented perhaps with a pricing and / or haircut schedule that varies according to the ex ante resilience of the nbfi and / or the intensity of attempts made to improve that resilience. current levels of resilience range widely across nbfis. in the uk, insurance companies are at the stronger end of the spectrum. 15 ldi funds are also now required to maintain strong levels of liquidity resilience consistent with their systemic role, under standards put in place following the autumn 2022 crisis. 16 these ldi standards have significantly bolstered the resilience of the wider defined benefit pension scheme sector and there is 14 the table captures only sales by individual nbfis that were net sellers over the relevant periods ( ie it does not include any gross sales by firms that were net buyers of gilts ) ; the table entries show the proportion of each sector's net sales as a proportion of overall nbfi net sales. 15 they are subject to prudential regulation covering liquidity risk ; the pra these regulations, and is considering how both regulation and supervision in this area might be further strengthened : see liquidity risk management for insurers | bank of england 16 bank staff paper : ldi minimum resilience - recommendation and explainer | bank of england bank of england a broader programme of work underway, in response to recommendations from the fpc and the work and pensions select committee, to ensure that the sector is able to take into account financial stability considerations on an enduring basis and be resilient to plausible future stresses. however, other firms captured by the data in figure 4 are subject to less demanding resilience standards. no final decisions have yet been made on these design choices but it is unlikely we will end up | also more effective. conclusion the first mais lectures launched the fight against inflation. with time and increased confidence policymakers would win that war only to lose the peace. as a consequence, george osborne β s 2010 lecture heralded the return of prudential supervision and the introduction of macroprudential policy to the bank of england. today β s challenge is to create a macroeconomic environment that provides the basis for strong, sustainable and balanced growth, the economist β s equivalent of a land fit for heroes. this evening i have sketched how the bank of england intends to makes its contribution. i am in no doubt that those who come after me will add to our collective knowledge of how best to coordinate the bank β s vast array of policy levers to achieve our fundamental mission. an open and confident bank will welcome such advice and criticism. why? because the need for broad macroeconomic management is not just an intellectual curiosity, but rather a reality that will persist for years to come. as the mpc has signalled, a low for long interest rate environment will likely be with us for some time. the mpc β s new guidance that any adjustments in rates, when they come, will be limited and gradual helps provide confidence to households and businesses that the mpc won β t take risks with the recovery. this in turn helps make the attainment of the inflation target more likely. at the same time, policymakers across the bank β s statutory committees are fully aware that an environment of relatively low and predictable interest rates could encourage excessive risk taking in financial markets and by households. 22 this puts a tremendous burden on both microprudential supervision and macroprudential management. moreover, the nature of a rapidly evolving global economy reinforces these pressures. sustained imbalances across countries, intense capital flow volatility and powerful disinflationary forces driven by the integration of the other half of humanity into the global economy will buffet our economy and financial sector for years to come. the bank can help turn those challenges into opportunities. through the coordinated use of the bank β s tools, risks to monetary and financial stability can be mitigated. through changes to the hard and soft infrastructure of markets fair, open and competitive markets can be re - built. through ideas and engagement, the global financial system can be reformed to secure an open, resilient system in which all countries have confidence and in which british businesses can thrive. to achieve this we are building a central bank for | 0.5 |
to authorise third - parties to access their personal data sitting across many different government agencies. with consent, third parties can use myinfo apis to access data that is government - verified to authenticate their customers and make business decisions relating to that customer. last year, mas and the government technology agency of singapore ( govtech ) started a pilot with four banks to enable individuals to open a bank account online using myinfo. today, we can open a bank account or apply for a credit card - online and instantly β when we give consent to the bank to access our data through myinfo. more than 20 fis are now using myinfo to provide more than 110 digital financial services. we have substantially solved the personal kyc problem. but corporate kyc is far more complex. last year, i shared with you that mas is working with local and foreign banks to explore a shared services utility for doing corporate kyc. this is potentially a transformative project. and we made good progress in harmonising various banks β kyc systems and integrating the proposed kyc utility with the banks β infrastructure. this is no mean feat given the diversity of banks β kyc processes and internal it systems but the economics did not work out : our proposed solution was going to cost more than the savings that banks will get out of it. so we have decided to take a pause on the project. the banks participating in the kyc project will publish a report this week on their learning experience. i hope this report will inspire new ideas to help solve corporate kyc problems in the most cost - efficient way because this is a problem that needs to be solved. we tried, we failed, we will learn, and we will do better next time. innovation is about experimenting and learning from setbacks. just as we showcase our successes, let us also be open about our setbacks. this is the spirit of enterprise we need in the financial sector and in singapore. and we will continue to explore other ways to alleviate kyc pain for fis and their customers. mas and the govtech are now working with the industry to facilitate fis β credit assessment of smes using trusted government data. 4 / 9 bis central bankers'speeches today, young smes that wish to obtain bank financing may face difficulties due to the lack of credit history. we will help pool trusted data from government sources on the business and key individuals associated with the smes to facilitate a more informed credit assessment. we will run a pilot | . over the years, this has evolved to a risk - based liquidity risk supervision framework. singapore banks are therefore well positioned to meet the new basel liquidity ratios. effective regulation is not just about setting high standards. it is also about creating market conditions that enable financial institutions to meet the standards. take for instance the higher liquidity requirements under basel iii. mas has taken steps to increase the availability of liquid assets in the market and collaborate with other central banks to expand eligible collateral in the mas standing facility. let me elaborate. bis central bankers β speeches we started issuing one - month mas bills in april this year. this has added about $ 6 billion of high quality liquid assets for financial institutions. we have seen good interest in the bills. we are looking to issue more and in longer tenor, in the future. as for the mas standing facility, we have, in the last two years, progressively expanded the range of eligible collateral. mas has signed cross - border collateral arrangements with other central banks. banks can now use as collateral, euro and sterling cash, as well as french, german and british government securities. we are now finalising similar arrangements with the us federal reserve, so that banks will be able to pledge us treasury bills and notes to obtain singapore dollar liquidity at the standing facility. these initiatives significantly enhance banks β flexibility to tap on global sources of liquid assets. let me now touch on the regulation of financial markets. a key focus of international regulatory reforms has been on the trading of otc derivative contracts. mas will meet objectives set by g20 leaders on regulation of otc derivatives as well as recommendations by the financial stability board ( fsb ). we are now reviewing our detailed policies and will conduct consultation by the end of this year on all aspects of fsb β s recommendations. mas aims to meet fsb target to implement the recommendations by end 2012. there are four key thrusts in fsb β s recommendations on otc derivatives trading. first, standardise derivative contracts. mas is working with singapore foreign exchange markets committee ( sfemc ) to encourage further standardisation of derivative products. the sfemc will formulate a code of conduct for financial institutions operating in the otc market. second, mandate central clearing of all standardised contracts. since 2006, the singapore exchange has operated a clearing facility for otc derivatives. it started with derivatives contracts for commodities, energy and freight ; and introduced interest rate swaps in november 2010. it will clear fx forwards by | 0.5 |
diversification and / or limited alternative funding sources, the market continues to force most banks to carry capital positions considerably in excess of regulatory minimums under basel i. for these reasons, u. s. supervisors do not believe the benefits would exceed the costs of requiring most banks to shift to basel ii. however, for the small number of large, complex, internationally active banking organizations, basel i has serious shortcomings, which are becoming more evident with time. developing a replacement to supply to these banking organizations is imperative. first, basel i is too simplistic to adequately address the activities of our most complex banking institutions. basel i categorizes each bank's assets into one of only four categories, each of which represents a certain risk class. each risk class has its own risk weight that is multiplied by 8 percent to get the minimum capital charge : zero for most sovereign debt, 20 percent of 8 percent for most intra - bank exposures and for agency securities, 50 percent of 8 percent for residential mortgages, and 100 percent of 8 percent for all other exposures. these " all other " credits include essentially all corporate and consumer loans, meaning that the whole spectrum of credit quality over which banks do much of their lending - from aaa to the most speculative credits - receives the same regulatory capital charge. the lack of differentiation among the degrees of risk means that the resultant capital ratios are too often uninformative and might well provide misleading information for banks with risky or problem credits or, for that matter, with portfolios dominated by very safe loans. moreover, the limited number of risk classes not only limits the value of the capital requirement but also creates a regulatory loophole that creates incentives for banks to game the system by capital arbitrage. capital arbitrage, in this case, is the avoidance of certain minimum capital charges through sale or securitization of those assets for which the capital requirement that the market would impose is less than the regulatory capital charge. clearly, the market believes that the 4 percent capital charge on most residential mortgages ( 50 percent of 8 percent ) and the 8 percent on most credit cards ( 100 percent of 8 percent ) is higher than the real risk, facilitating the securitization and sale of a large volume of such loans to other holders. this behavior is perfectly understandable, even desirable in an economic efficiency sense. but it means that banks that engage in such arbitrage retain the higher - risk assets for which the regulatory capital | system, which is the backbone of the financial system. 30 banca d β italia performs all these tasks, working with law enforcement and judicial authorities, as well as with other national and foreign supervisory and regulatory bodies. * * * banca d β italia reviewed 100, 000 complaints from bank customers over the decade 2014 - 23. the banking and financial ombudsman handled 210, 000 complaints, with the assistance of banca d β italia β s staff. as a result of the latter and of our supervisory activities, more than β¬1 billion were returned to customers. the insurance ombudsman service will be rolled out over the next few months. banca d β italia is responsible for anti - money laundering supervision of financial intermediaries, issues relevant regulations and is involved in setting national and international rules and standards. it carried out about 350 inspections and 1, 300 interventions over 2019 - 23. the financial intelligence unit for italy ( uif ), which works with staff and funding from banca d β italia, examines reports of alleged money laundering and terrorist financing ( more than 150, 000 suspicious transactions were reported in 2023 ) and carries out its financial analysis. at national level, banca d β italia fosters cooperation with various institutional players through its computer emergency response team ( cert - bi ). together with the italian banking association ( abi ), it chairs the computer emergency response team for the italian financial sector ( certfin ). at european level, banca d β italia is a member of the euro cyber resilience board for pan - european financial infrastructures ( ecrb ) and the cyber information and intelligence sharing initiative ( ciisi - eu ) for sharing information and cyber intelligence across systemic financial structures. at national and european level, banca d β italia monitors cyber risks in order to strengthen the security and business continuity safeguards of intermediaries. it identifies minimum requirements and measures for information system management. banca d β italia manages a large number of italian and european payment infrastructures. for example, at european level, the bank has been involved in the development and is responsible for the operational management of the eurosystem β s market infrastructures, consisting of : the t2 system for the real - time gross settlement of large - value transactions in central bank money between financial institutions and with the central bank ; the target2 - securites ( t2s ) platform, which enables securities transactions in central bank money to be settled simultaneously based | 0 |
. in addition to upholding past achievements, further reform efforts are needed across the euro area, as outlined in the 2015 countryspecific recommendations, which each year identify key objectives in tackling remaining vulnerabilities and rigidities. it is only through such reforms that we can avoid a build - up of new imbalances and bring growth rates back to levels that ensure prosperity and allow households and member states to grow out of their debt. improving the functioning of the labour market remains key in this respect, with a view to ensuring a rapid adaptation to shocks or structural change. this area remains an important challenge in portugal, as also mentioned in the 2015 country - specific recommendations. taking further action is all the more important, with high unemployment, according to the latest eurobarometer, being considered the main concern to the people of portugal. but we also need reforms that encourage firms to invest. investment raises both supply tomorrow and demand today. such reforms include measures that further improve the business environment. however, investment could also be helped by addressing the corporate debt overhang. for instance, increasing the efficiency of debt restructuring tools could disburden still viable companies and thereby facilitate their investment plans. the european semester, in which these country - specific recommendations have been issued, should be a good framework to push for such a new effort. however, the countryspecific reform recommendations, as just indicated by the commission, have so far hardly or not at all been acted upon by member states. stepping up the reform momentum is therefore essential. in this respect, i have noted with great interest that you will be discussing the national reform programme later today. indeed, greater ownership not only by national governments, but also by parliaments and bodies such as this one would be crucial for the european semester to gain more traction and yield better results. making economic and monetary union work in the long run these are efforts that should be undertaken by countries individually. but there is also work to be done collectively. most importantly, governments should work towards completing economic and monetary union ( emu ). emu remains an incomplete construction. and while steps have been taken to strengthen the economic governance framework and to make our financial markets safer, this incompleteness amplified the effects of policy mistakes in the run - up to the crisis and continues to leave emu fragile and its member states vulnerable to shocks. in principle, we know where the weak spots in our construction are. the five presidents β report provides a road map on how | mario draghi : participation of the president in the portuguese council of state introductory remarks by mr mario draghi, president of the european central bank, at the portuguese council of state, lisbon, 7 april 2016. * * * president of the republic, president of the assembly of the republic, prime minister, president of the constitutional court, honourable members of the council of state, i am grateful for the opportunity to discuss with you today the state of the euro area and the changes that still lie ahead of us and i would like to thank the president of the republic for inviting me. on my way here i passed by the tejo river and the tower of belem. the place where five centuries ago the first maritime explorers set sail for often uncharted waters, looking for new opportunities. portugal and its people have also been going through uncharted waters and facing important challenges in recent years, as has the rest of europe. during the past couple of years, economic headwinds have swept through portugal and the euro area at large. however, we are seeing signs of recovery. nevertheless, important challenges remain as the euro area continues to be weighed down by low potential growth and high structural unemployment. in my remarks today, i will consider the state of the euro area recovery, the role of monetary policy and finally the steps needed to strengthen the euro area and the eu. the state of the euro area the euro area recovery is currently proceeding at a moderate pace. it is supported by our monetary policy measures and their impact on financial market conditions, as well as by the low price of energy. yet, investment across the continent remains weak, as heightened uncertainties about the global economy and broader geopolitical risks are weighing on investor sentiment. the recovery is also taking hold in portugal : its economy is currently growing at the same pace as the euro area as a whole and unemployment is on a clear downward trend. yet, the signs of the euro area and portuguese economic recovery should not be an indication that we can rest on our laurels. the euro area as a whole only just managed last year to return to the levels of economic activity seen before the crisis and some countries, among them portugal, are still not there. and our economies are still marked by significant vulnerabilities which need to be swiftly addressed. one key issue in this respect is youth unemployment, as it prevents young people from playing a full and meaningful part in society. indeed, despite being the best - educated generation ever, today | 1 |
declines up to that point, the bank's balance sheet will still be at least twice as large as what it was just prior to the pandemic. it will decline gradually thereafter, with bond maturities of between $ 35 billion and $ 45 billion every year for some time. 7 / 11 23 / 05 / 2022, 13 : 03 from qe to qt β the next phase in the reserve bank's bond purchase program | speeches | rba graph 5 one of the consequences of the bank's bond purchase program, and other policy measures adopted in response to the pandemic, is the abundance of exchange settlement ( es ) balances. [ 5 ] these are held by commercial banks ( and other financial institutions ) at the reserve bank and are used to settle transactions between banks. banks can also lend them to others in the overnight cash market, with those transactions determining the cash rate. as expected, the abundance of es balances led to a noticeable decline in the demand to trade cash overnight. it has also been unsurprising that the cash rate has traded slightly below the cash rate target since late - march 2020 ( graph 6 ). while es balances will decline as the various monetary policy measures adopted during the pandemic unwind, as discussed, that process will take a number of years. 8 / 11 23 / 05 / 2022, 13 : 03 from qe to qt β the next phase in the reserve bank's bond purchase program | speeches | rba graph 6 recently, the board considered options to reduce es balances more quickly. [ 6 ] if we were to do that, banks would have more of an incentive to borrow funds overnight, since their es balances would once more become relatively scarce. hence, such a change would encourage more trading in the overnight cash market, with the cash rate trading closer to, and eventually around, the cash rate target. however, the benefits of reducing es balances quickly were judged to be modest compared with the risks, including the potential to create volatility in a range of financial markets. moreover, while the abundance of es balances affects the behaviour of the cash rate relative to the cash rate target, it does not impair the ability of the bank to achieve the desired stance of monetary policy via adjustments to the cash rate target and the rate paid on es balances. in particular, because es balances will remain abundant for some time, the cash rate will tend to be | new centres. it is possible that some of this might just be keeping pace with population growth. but there is also a risk that new and improved shopping centres simply cannibalise business from some other centres, eventually resulting in excess supply, particularly in light of weak household spending of late. this would weigh on rents and valuations. and, to the extent that owners of these centres hold debt, difficulties in servicing repayments could result in further sales and price declines. graph 5 ultimately, the implication for financial stability of these vulnerabilities depends on the exposures of the financial institutions to retail businesses and developers. so the third issue addressed by my colleagues was banks'exposures to retail commercial property development. given the increase in retail property development over the past decade, it is perhaps not surprising to see that banks'exposures have also risen ( graph 6 ). indeed, in terms of commercial property, banks are most exposed to office and retail, and exposures to both these sectors have increased sharply over the https : / / www. rba. gov. au / speeches / 2019 / sp - ag - 2019 - 08 - 08. html 8 / 13 08 / 08 / 2019 financial stability through the lens of business | speeches | rba past decade. nevertheless, at less than $ 60 billion, the exposure represents less than 3 per cent of major banks'assets. and despite the difficult conditions in this sector, this has not translated into a deterioration in loan performance with non - performing loans to the retail sector remaining unchanged at low levels. so, while there may be vulnerabilities in the retail sector, these do not currently seem to pose a significant risk to the financial sector. graph 6 the second sector i want to focus on is the mining sector. in contrast to the retail sector, mining firms in aggregate have experienced improved conditions recently, driven by increased commodity prices. accordingly, profitability has increased to be at its highest level in the past ten years ( graph 7 ). liquidity is also at a very high level. at the same time, debt and gearing ratios are at the lower end of the ranges seen over the past couple of decades. in fact, they are also relatively low when compared to firms outside of the resources sector. as a result, mining firms'balance sheets appear well placed to absorb shocks, perhaps more than has been the case for some time. so, while risks related to market conditions have abated somewhat, this has occurred alongside | 0.5 |
quality of education below the college level. to be sure, substantial reforms in math and science education have been under way for some time, and i am encouraged that policymakers, educators and the business community recognize the significant contribution that a stronger elementary and secondary education system will make in boosting the potential productivity of new generations of workers. i hope that we will see that the efforts to date have paid off in raising the achievement of us students when the results of the 1998 - 99 international comparisons for eighth graders are published. whatever the outcome, the pressures to advance our education system will continue to be intense. as the conceptual share of the value added in our economic processes expands further, the ability to think abstractly will be increasingly important across a broad range of professions. critical awareness and the abilities to hypothesize, to interpret and to communicate are essential elements of successful innovation in a conceptual - based economy. as with many skills, such learning is most effective when it is begun at an early age. and most educators believe that exposure to a wide range of subjects - including literature, music, art and languages - plays a considerable role in fostering the development of these skills. as you know, school districts are also being challenged to evaluate how new information technologies can be best employed in their curricula. unfortunately, this goal has too often been narrowly interpreted as teaching students how to type on the computer or permitting students to research projects over the internet. incorporating new technologies into the educational process is indeed likely to be an important element in improving our schools, but it must involve more than simply wiring the classroom. human capital - in the form of our teachers - and technology are complements in producing education output just as they are in other business activities. to achieve the most effective outcome from new technologies, we must provide teachers with the necessary training to use them effectively and to provide forums for teachers and education researchers to share ideas and approaches on how best to integrate technology into the curriculum. and we must create partnerships among the states, the school systems, labor and industry to develop appropriate standards and guidelines for the teaching of information technology in the classroom. a crucial concern today - and i know that the national governors β association is working hard to address this issue - is that the supply of qualified teachers will be insufficient to meet the demand. indeed, a substantial number of teachers are scheduled to retire over the next decade, and how to replace them and meet the additional demand from rising enrollments is certain to be a | turmoil would be on the real economy internationally and in sweden. economic activity in the united states had been weaker than expected and our forecast for us growth was revised sharply downwards in april. in the euro area too, economic activity appeared to be slightly weaker. we assumed therefore that growth in the world economy would be somewhat weaker in 2008 and 2009. in sweden on the other hand, economic activity was somewhat stronger than expected. nevertheless, it was assumed that the weaker prospects for economic activity internationally would lead to a slowing down of growth in sweden as well later this year and early next year. signs of this slowdown were already beginning to appear, for example in the data in the national institute of economic research β s economic tendency survey and in the statistics on retail sales and new job vacancies. our assessment, however, was that the slowdown in sweden would be relatively moderate. gdp growth remained good, and the potential for future growth was still relatively favourable. the level of saving among households and in the public sector was high. property prices were fairly stable and the direct effects of the financial turmoil were expected to be relatively slight. at the same time, inflation was high both in sweden and abroad. this related above all to higher energy and food prices on the world market. inflation expectations in sweden also remained high, and were also way above the inflation target even in the longer term. we thus had to take various counteracting factors into account. on the one hand, growth in the swedish economy was still good and both inflation and inflation expectations were high. on the other hand, the turmoil on the financial markets and weaker growth in the world economy were expected to curb growth and inflation in sweden. this led to our decision to hold the repo rate unchanged at 4. 25 per cent, a decision i voted in favour of. we also held to our forecast that the repo rate would remain at this level over the coming year in order to bring inflation back to the target over a period of a couple of years and to enable production and employment to develop in a balanced way. we also emphasised that there was still considerable uncertainty over future developments. personally, i saw an evident risk that the slowdown in the united states could become more prolonged than was assumed in the forecast. i also saw a risk that the rapid price increases in the world energy and food markets could subdue demand and thereby growth in the rest of the world, which could also further hold back swedish growth and inflation. there were | 0 |
expertise and created a stable and efficient banking system. today, banks in croatia are profitable and capital adequacy ratios are well above requirements. this is fostering the development of financial intermediation in the wider economy though, thankfully, credit growth has not reached the exceptionally high rates seen elsewhere in central and eastern europe. administrative measures undertaken by the central bank to dampen credit growth appear to have had some impact. but it has been our experience that that these are circumvented over time and should be seen as buying time for fiscal policy to play a greater role in macroeconomic adjustment. i hope that i have provided some food for thought on economic development. i would like to end by emphasising that ireland firmly supports croatia β s objective to become a member of the eu and were delighted to see the start of accession negotiations last year. croatia can also act as a positive example to other countries in the region in terms of the willingness of the eu to help countries develop towards participation in european integration. i look forward to the day when croatia becomes a member of the eu. | what they are paid for when corrosion of character is so pervasive? i come from a profession that has little to do with the practical aspects of human resource management. i am an economist, not a human resource professional. i have my own style of resolving human resource problems that is not necessarily the ideal one. it was 1998. i had just been appointed governor of the bank. the bank β s operations were partially computerized. there 1 / 3 bis central bankers'speeches were a few senior employees who, despite having had the benefit of many sessions of training, were still averse to the use of computer. i had seized the opportunity of a meeting with staff to drive home a key point. i vividly recall having said that people hate change. the world hates change. yet it is the only thing that has brought progress. the sophisticated quality of their cars they were driving, the electrical appliances that have greatly enhanced the quality of their lives, the advanced medical facilities that have reduced suffering were some examples of the products of β change β that successful organisations have adapted to. i had gone on to quote harold wilson, former british prime minister of the uk, β he who rejects change is the architect of decay. the only human institution which rejects progress is the cemetery. β my eyeballs rolled, on and on, on those who were aversive to the use of computer at the bank, while i stressed that we had to reinvent ourselves continually. it is not the strongest or the most intelligent that survives ; it is the one that is most adaptable to change. it was compelling for us to tool and re - tool, equip and reequip ourselves and keep on moving ahead if we had to keep earning a salary at the bank. the bad news was that re - engineering in any enterprise requires hard decisions. the hard decision was that those who are against change would have to head towards the exit door. guess what? samuel johnson said it beautifully : β when a man knows he is to be hanged in a fortnight, it concentrates his mind wonderfully. β the same day the senior guys unpacked themselves to learn the difference between business ignorance and business tragedy. not long after, the same guys became the champion for change. they are still employed somewhere in the private sector, even after the age of 65. they turned out to be winners. winners are often losers who have evaluated themselves. ceos, heads of departments / divisions and human resource | 0 |
, our policy tool must always be directed first at our inflation target. even in extreme conditions, when financial stability risks constrain monetary policy from achieving the inflation target over a reasonable time frame, a central bank would want to ensure that all macroprudential options were exhausted before trying to address those risks with monetary policy. let me give a real - life example to illustrate how we put our risk - management approach into practice. last year, before the oil price shock hit the canadian economy, our policy was in the zone i just described, with inflation on course to return to target in a reasonable time frame and vulnerabilities in the household sector looking as if they would evolve constructively. the oil price shock changed the outlook dramatically. it represented a potentially sizable reduction of our national income and threatened to drive inflation below target for an unacceptably long time. the expected sharp decline in economic activity and employment also represented a possible trigger for canadian financial stability risks related to elevated household debt. our monetary policy was knocked out of the zone, and the downside risk to future inflation was material. so, in january, we lowered our policy interest rate, and we did so again six months later as the impact of the shock became clearer. we knew that easing policy would have implications for financial stability. however, we also knew that those concerns had to remain subordinate to the primary mission of achieving our inflation target and getting our policy back in the zone where the risks are balanced. our riskmanagement approach implied that, in the absence of any additional macroprudential measures, our actions would affect the balance of risks in opposite directions. lowering interest rates could worsen vulnerabilities related to household debt at the margin, but it would also lessen the chances of the oil price shock triggering financial stability risks. in the current context, getting the economy back to full capacity with inflation on target is central to promoting financial stability over the longer term. conclusion it β s time to conclude. the dramatic events of the financial crisis required a dramatic reaction. new financial sector rules are being implemented to make the global economy safer. for financial institutions, this is a long and difficult path, but the stakes are too high to contemplate leaving the job incomplete. policy - makers are working hard to understand the impact of new regulations and to develop effective frameworks and best practices for implementing macroprudential policies. for central banks, we know that financial stability has now become a permanent preoccup | 2 per cent in the period prior to the crisis. the neutral rate serves as an anchor for our models and analysis, but it is not a fixed beacon because the structural factors that influence it can change over time. relative to this longer - term concept of neutral, the policy rate in canada is stimulative. 9 we need this stimulus to close the output gap and maintain inflation sustainably at target. but even with a closed output gap and inflation at target, the policy rate may not be at neutral. as long as the factors leaning on growth persist, a policy rate below neutral would be required to maintain inflation sustainably at target. in the absence of this policy stimulus, the output gap would reemerge and inflation would fall below target. 10 some of the headwinds appear to be dissipating, but there is considerable uncertainty about how long they will persist. let β s not forget that advanced economies β debt doubled from roughly 160 per cent of gdp to 320 per cent between 1980 and 2010, and will take a long time to unwind. in fact, the global savings rate is expected to increase over the next five years. a joint analysis by the financial stability board and the basel committee on banking supervision attempts to quantify this adjustment. it suggests that a 3 - percentage - point increase in banks β common equity tier 1 capital ratio would raise lending spreads by around 45 to 50 basis points. estimates for canada, prepared by the bank of canada, fall very close to this range. o. blanchard, d. furceri and a. pescatori, β a prolonged period of low real interest rates? β chapter 8, secular stagnation : facts, causes and cures, a voxeu. org book edited by c. teulings and r. baldwin ( london, uk : cepr press, 2014 ). also see : j. cruz lopez, r. mendes and h. vikstedt, β the market for collateral : the potential impact of financial regulation, β bank of canada financial system review ( june 2013 ) : 45 β 52. common global developments play a central role in determining longer - run neutral rates in all countries, but country - specific differences in structural factors do introduce some heterogeneity. shorter - run concepts of neutral can differ even more because they are influenced by cyclical factors that can vary substantially across countries ( for a discussion of alternative definitions of neutral rates, see box 1 in mendes, 2014 ) | 0.5 |
investment portfolios. one of the factors behind the recent extraordinary performance of the united states has been the flexibility and innovation of its financial system. we will need to ensure that in canada too, the financial sector responds to the challenges of today β s changing financing needs. concluding thoughts let me summarize my main points today. canada has made remarkable progress over the last decade in strengthening its economic foundation. starting from that firmer base, we are now in a position to move forward and reap some of the potential gains in employment and incomes from the technological revolution that is now sweeping the world. monetary policy can support this process by providing a low and stable inflation environment. this will minimize economic fluctuations and allow our economy to perform at its best. fiscal policy can help by keeping public finances under control and continuing to reduce canada β s debt burden. the right balance of taxes and government services is also important. a stable, innovative financial sector can also help, by ensuring that financing flows efficiently to where it is needed the most. all this will go a long way towards providing an environment in which canadian companies can go about their business confidently in a world of rapid change. it is the business community, however, that must take the innovative, and sometimes risky, decisions that are necessary to improve productivity and competitiveness, in order to meet the challenges and realize the gains of proliferating technologies and increasingly open world markets. there is no reason why we in canada cannot meet these challenges and build a better economic future for ourselves. | value. this shift from credit to debit makes sense from the perspective of the consumer. if credit is tight and consumption is contracting, consumers who are reluctant or unable to increase their debt levels can use debit cards to pay for current expenses out of current, rather than future, income. in addition, for individuals with existing credit card balances, interest must be paid on new purchases as well as on previous balances. those individuals might seek to avoid interest charges on new purchases by using debit cards. this incentive is even stronger in see the federal reserve board's report to the congress on the use of credit cards by small businesses and the credit card market for small businesses ( may 2010 ) at htttp : / / www. federalreserve. gov / pubs / reports _ other. htm. the presence of higher credit card interest rates. finally, some consumers might use debit cards to track their spending in real time when budgets are tight. regulatory changes in consumer credit and payments in addition to the economic recession and recovery, the regulations governing consumer payment and credit products changed significantly in the past few years. so it is especially difficult to separate the effects of economic conditions from regulatory effects on credit and debit card usage. in december 2008, the federal reserve issued rules that introduced new consumer protections and revised the disclosures that consumers receive in connection with their credit card accounts. then, in may 2009, the congress enacted the credit card accountability responsibility and disclosure ( credit card ) act, which contained additional provisions regarding credit cards and gift cards. collectively, these rules have comprehensively overhauled the regulatory regime that applies to credit cards. in large part, these reforms developed in response to concerns about the growing complexity of the products offered to consumers and concerns that consumers could not accurately assess the costs associated with their credit cards. to address these concerns, the federal reserve used extensive consumer testing to develop new disclosures to be provided with credit card solicitations and in periodic statements. these disclosures highlight key account terms and attempt to improve consumers β understanding of the costs associated with using their cards. the resulting disclosure requirements establish a new baseline for transparency in the credit card industry. in addition, the new rules ban certain practices that increase the cost of credit in ways that cannot easily be disclosed to consumers, such as double - cycle billing. the new rules also generally prohibit card issuers from increasing interest rates applied to existing balances and require issuers to provide adequate notice of higher rates | 0 |
- trade infrastructure of securities markets in asia. this would enhance the resilience of the financial system as asia β s financial markets continue to develop. as i mentioned earlier, japan β s payment and settlement systems were not disrupted by the great east japan earthquake, and have continued to function effectively, helping to ensure financial and social stability. the role of payment and settlement systems is to settle claims and obligations arising from transactions. while the infrastructure making financial contracts straightforward and smooth could be compared to arteries pumping out blood into the body of the economy, the payment and settlement system would then be the veins carrying the blood back to the heart ( slide 4 ). both of them are absolutely necessary for the proper functioning of the financial system, especially for cross - border transactions. the international financial system would stall if the veins, or the payment and settlement system, became choked with blood clots. in this respect, it is extremely important to ensure the safety and efficiency of the payment and settlement system, as well as its stable operation, even in times of crisis. from the cross - border perspective, however, i recognize at least two problems in the post - trade infrastructure for cross - border securities trading in the asian region. 6 the emeap was established in 1991, and consists of eleven central banks and monetary authorities in the asia and pacific region, namely australia, china, hong kong, indonesia, japan, korea, malaysia, new zealand, philippines, singapore, and thailand. under the abf initiatives, emeap member central banks invest a portion of their foreign reserves in sovereign and quasi - sovereign bonds of eight emeap jurisdictions. the abf initiatives have promoted the recognition of local currency - denominated bonds issued in asia, and acted as a catalyst to accelerate and harmonize legal, regulatory, and tax reforms related to bond investments in the region. the abmi has also made a variety of efforts and achievements, including providing technical assistances and credit guarantees, as well as enhancing information disclosure for investors, aiming at improving the issuance and investment environment on government and corporate bonds in the region. there have been relative improvements in domestic payment and settlement systems in asia. online securities payment and settlement systems have been constructed, and delivery - versus - payment settlement has been achieved. many jurisdictions have also already realized settlement cycles of t + 2 to t + 3. further improvements may still be needed in some jurisdictions to establish legislation on settlement finality. bis central bankers β speeches first, settlement risks associated | both the public and the private sectors. in attempting to strike a better balance in such trade - offs, we should follow three basic principles. the first is to respect the choices of market participants using the payment and settlement systems and ensure good governance. the second is to enhance the use of central bank money in payments and settlements as a means of reducing settlement risks. the third is to adopt a gradual approach that takes into account the differences in the degree of market liberalization among asian economies. the use of cross - border collateral arrangements by central banks could be one of the measures used to maintain market liquidity in times of crisis. if we have an infrastructure in which central banks can be flexible in providing their local currencies against highly liquid foreign assets as collateral, this would contribute to the smooth funding of locally active financial institutions, and thereby enhance the stability of domestic financial markets. in addition, a variety of identification codes and message formats are used in the payment and settlement systems, and they still fall short of the international standards. discussions have been held at the abmi of the asean + 3 process and other forums on ideas to build a cross - border payment and securities settlement system in the region. we should continue to make progress in these discussions and take measures to put the ideas into action in each field, ranging from removing transaction impediments to developing payment and settlement systems, and to test them in practice. bis central bankers β speeches japan has made substantial improvements in the post - trade infrastructure for japanese government bonds, which have the largest market volume in asia. improvements have been made, for example, in aspects of the payment and settlement system, the legislation governing securities settlement, and the tax system for non - residents. i believe that our experience will also be helpful in promoting the development and stability of financial markets across the asian region. working in close cooperation with the relevant institutions, the bank of japan hopes to be able to contribute to the development of financial infrastructures in both japan and the asian region by sharing the knowledge obtained from our experience. now, let me wrap up. motivated by the lessons of the asian currency crisis, asia is the most active region in terms of policy cooperation and coordination aimed at building robust financial markets and systems. however, to be honest, the policy goal has not yet been fully achieved, as the markets and systems are still under - developed. we asian policymakers need to make more cooperative and coordinated efforts to construct better systems ( both in terms of hard and soft | 1 |
we would even get an extra boost from pent - up demand. for instance, as showrooms reopen, car sales could bounce back, fuelled by a rebound in household income and low borrowing costs. we could see a similar rebound in home resales and home construction, as transactions and projects that were put on hold restart. - 4chart 2 : many paths for the economic recovery are possible real gross domestic product ( gdp ), chained 2012 dollars, quarterly data $ billions 2, 500 2, 250 2, 000 1, 750 1, 500 1, 250 range of scenarios note : the dark grey shaded area refers to the 2008 β 09 recession. sources : statistics canada and bank of canada calculations and projections gdp last observation : march 2020 how close we get to this kind of best - case scenario depends on many factors. there is a risk that the domestic and global recovery could occur in fits and starts, in line with the ebb and flow of the virus and repeated loosening and tightening of containment measures in the months to come. it is also unclear how long it will take for jobs to return after containment measures are lifted. many people have lost their jobs in the shutdown, and this is deeply concerning. there are some reasons for optimism. layoffs are concentrated in the services sector, where during normal times labour mobility is high. that is usually indicative of lower costs of hiring workers ( chart 3 ). once businesses reopen, rehiring for these jobs may be relatively fast if not hampered by high search costs and skills mismatches. the temporary nature of the layoffs coupled with supportive government programs should also make it easier for workers to find new jobs or return to the jobs they had. chart 3 : industries most affected by covid - 19 have higher job turnover 2019 share of employed by job tenure, annual data accommodation and food business and support wholesale and retail information, culture and recreation construction all industries 1 β 3 months professional, scientific and technical other services 4 β 6 months transportation 7 β 12 months forestry, fishing and mining, oil and gas manufacturing agriculture health care education finance, insurance, real estate, rental and leasing public administration utilities 40 % note : the shares represent the proportion of workers with a given job tenure as a share of employment in an industry. job tenure is measured in months. the larger the share of short tenures, the higher the expected turnover. last observation : 2019 sources : statistics canada and bank of canada calculations canada β s dependence on exports | , however, complicates the recovery. many canadian exporters are tied into complex global supply chains. when a factory in canada is ready to resume production, but there are still shutdowns in other parts of the world, there is a risk that customers may not yet be ready to take delivery, or that the factory may not be able to source parts in other regions. indeed, this is what we saw during the initial phase of the outbreak, as factories around the world struggled to source components in china. just as the effects of the pandemic have been highly asymmetric, the recovery process is expected to vary significantly across sectors and regions of the world economy. some industries may quickly resume their growth, while others could struggle for longer ( chart 4 ). how an industry fares will depend on its ability to source labour and capital and on business confidence that demand will rebound. the best - positioned firms are those that were least affected by containment measures or that could offer services remotely. industries deemed essential as well as those that offer substitute products saw high demand during the containment period. these include some health care services and social assistance, grocery stores, food manufacturers and deliveries. in contrast, industries relying on face - to - face contact with the public were hit hard. air transport, cruises, hotels and accommodations and restaurants, for example, are suffering. chart 4 : some sectors will be down for longer while others will suffer a substantial impact in production over time large potential decline of production hotels, food and recreation air and passenger travel retail and wholesale trade manufacturing energy construction small short estimated time to recovery long note : size of bubble corresponds to percentage share of canadian output. sources : statistics canada and bank of canada calculations for different reasons, as i mentioned earlier, the energy sector faces particular challenges. the collapse in demand for raw materials had begun even before the virus hit canada, as the crisis took hold in china β the world β s largest commodity importer. most commodity prices fell, but the oil market was most severely affected. while supply was relatively inflexible, demand collapsed and prices fell sharply. this was exacerbated by a price war involving russia and saudi arabia. even with a truce in that conflict, the drop in demand has meant storage capacity is nearly exhausted. for a few hours in april, one major benchmark of global oil prices turned deeply negative. these are the latest troubles for a canadian oil and gas industry already undermined by the drop in prices that occurred | 1 |
pressure on inflation from weakness in the economy, and weigh that against the upward pressure on inflation from higher input prices and supply chain disruptions. so let me tell you what we're doing in preparation. in recent years, we have invested in better information on supply chains, trade links and the connections between sectors. and this is helping us analyze the effects of supply disruptions including tariffs. we have begun assessing the possible consequences of different tariff scenarios, and present an example in this mpr. 2 / 3 bis - central bankers'speeches we are stepping up our outreach activities across the country to hear directly from those affected by trade uncertainty. this includes augmenting our surveys of businesses and consumers to better understand how trade uncertainty is affecting their decisions and how they would cope in the event of a trade conflict. we will update you on our analysis and assessments as developments unfold. having restored low inflation and reduced interest rates substantially, monetary policy is better positioned to help the economy adjust to new developments. as always, the bank will be guided by our monetary policy framework and our commitment to maintain price stability over time. with that, the senior deputy governor and i would be pleased to take your questions. 3 / 3 bis - central bankers'speeches | seongtae lee : the global financial crisis and the bank of korea's monetary policy keynote address by mr seongtae lee, governor of the bank of korea, at the euromoney conference, seoul, 28 may 2009. * * * greetings ladies and gentlemen, i am delighted to be here to speak at " the euromoney korean capital markets congress 2009 " with prominent institutional investors, financiers and academic experts from around the world. my remarks today will focus on the recent global financial crisis, the bank of korea's monetary policy response, and the tasks that remain in the future. development and impact of the global financial crisis ladies and gentlemen, as you know, this global financial crisis struck as the impact of the us sub - prime mortgage meltdown spread worldwide and it triggered a synchronized global economic downturn. the main reason that this financial crisis spread with such a wide range and at such unprecedented speed lies in the massive progress made in the integration of the world economy and financial markets over the last two decades. as this crisis progressed, korea and other emerging market countries were unable to avoid its impacts even though they did not have large sub - prime mortgage related exposures. rather they experienced deteriorating foreign currency supply and demand conditions and credit crunches, as funds flowed out due to deleveraging by overseas financial institutions in response to heightened concerns about credit risk. their real economies also slipped into recessions, as their exports shrank rapidly owing to the contraction of import demand in advanced countries. the bank of korea's policy response and its effects ladies and gentlemen, the bank of korea eased its monetary policy aggressively, to soothe the financial market unrest and ward off a sharp contraction of the real economy. it brought its base rate down by a total of 3. 25 percentage points, to its lowest level of 2 %, in six steps from last october until this february. along with this, it strove to expand provision of liquidity to sectors badly affected by the credit crunch through its open market operations and lending facilities. at the same time, it actively provided foreign - currency liquidity to domestic financial institutions through, for example, the swap market, in order to stabilize the foreign exchange market that was directly hit by the impact of the global financial crisis. it also entered into currency swap arrangements with the central banks of the united states, japan and china. the korean financial and foreign exchange markets have recently been showing a pattern of improved movements helped by these actions. | 0 |
three in isolation have their limitations and are effective differentially based on the overall systemic contexts such as the level of maturity of the economy, and hence the markets, the efficacy of the legal system and the resolution mechanisms in place, the prevalent business culture etc. market discipline may not be very effective till transparent disclosure requirements are put in place. even then the ability of the market to discipline the constituents would depend on its own structural strength as well as the economic setting in which it operates. therefore a significant level of reliance has to be placed on internal control effected through board oversight. an important factor, in this context, that defines the business culture is what has come to be termed as β corporate governance β. it is a nebulous concept whose essential elements were part of the business ethos in all societies but which has in recent times come under sharp focus and acquired a heightened significance partly due to the process of globalization and the increasingly overarching role of business on the society at large. from a banking industry perspective, corporate governance involves the manner in which the business and affairs of individual institutions are governed by their boards of directors and senior management, affecting how banks1 : β’ set corporate objectives ( including generating economic returns to owners ) ; β’ run the day - to - day operations of the business ; β’ consider the interests of recognised stakeholders ; β’ align corporate activities and behaviours with the expectation that banks will operate in a safe and sound manner, and in compliance with applicable laws and regulations ; β’ protect the interests of depositors. the two major concerns that arise in context of corporate governance in banks and need to be addressed are ( i ) the concentration of ownership and ( ii ) the type of people who control the bank. diversified ownership becomes a necessary postulate as it provides balancing stakes which may not be possible otherwise, even in the case of voting right limits. a related concern is the β quality β of control over the functioning of banks manifest in the credentials of the various stakeholders. basel committee on banking supervision, β enhancing corporate governance in banking organisations β, 1999. a survey of the regulatory regimes in major countries brings out that most of the regimes address these two concerns through a set of restrictions on the ownership of bank stock on the following parameters : β’ quantum of ownership by single person / associated persons β’ ownership restrictions for domestic entities based on nature of entity β’ non - bank financial firms β’ non - financial entities β’ other banks β’ ownership restrictions for foreign entities major inferences that can be drawn from the | the risk of failure. moreover, the economic metabolism is a process that is inevitably accompanied by pain for some sectors. therefore, it is essential to establish social safety nets that mitigate the pain for firms and individuals and allow them to tackle new business ventures with a sense of security. finally, the fourth area in which policy makers play a role is in the appropriate conduct of fiscal and monetary policies to reduce swings in economic activity and prices. less uncertainty over future economic conditions and inflation means that, to that extent, firms can pursue innovation without concern. however, while the provision of safety nets and the implementation of countercyclical policies are desirable and effective measures when the economy suffers a large temporary shock, if those measures go too far, they may impede the economic metabolism and even reduce productivity. for that reason, policy makers need to strike a delicate balance in their policy conduct. on this point, there have been various discussions regarding the current events in europe. since the lehman shock, aggressive fiscal policies implemented in many countries played a significant role in stemming the economic plunge. however, at the same time, fiscal policies are not a β cornucopia β and eventually nations have to repay their public debt through the value added generated by economic activity. therefore, confidence in fiscal sustainability is critical and once it is lost, economic activity can be severely hurt through rapid changes in financial markets. keeping this point in mind, policy makers should work to appropriately conduct policies so as to maintain sufficient market confidence. in this regard, current events seem to have served as a β wakeup call β to many countries. iv. the bank β s policy responses aggressive monetary easing finally, let me briefly touch on policy responses by the bank of japan given the economic and price developments discussed earlier. aware of the great importance of overcoming deflation and returning japan β s economy to a sustainable growth path with price stability, the bank has continued to implement a policy of strong monetary easing. the policy rate was lowered to 0. 1 percent, that is, effectively zero. moreover, 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 a fixed rate. as a result of these measures, market rates and bank lending rates have been declining. the bank will continue to maintain the extremely accommodative financial environment so as to help the economy achieve a self - sustaining recovery in | 0 |
from three models ( dynamic nelson - siegel, rotated dynamic nelson - siegel and dynamic svensson - soderlind ). the latest observations are for 21 october 2022 ( daily data ). in the euro area, an additional source of volatility is the risk of financial fragmentation along national lines, which can impair the homogenous transmission of monetary policy throughout the euro area. the current environment therefore requires us to be prudent in adjusting our monetary policy across all instruments. there are three key considerations here. first, our decisions and communication on the pace of normalisation should avoid amplifying market volatility. there is a case for frontloading our policy adjustment given the need to keep expectations anchored, especially in view of the very accommodative stance from which normalisation started. but such frontloading should remain commensurate to the benefits and risks it creates. when it comes to managing inflation expectations, ecb staff analysis finds that the benefits of surprising markets with bigger - than - expected rate increases is limited in the euro area. [ 25 ] and if these bigger - thanexpected increases are interpreted as signalling a higher terminal rate, rather than simply frontloading the normalisation, we could have a stronger impact on financing conditions β and ultimately on economic activity β than intended. additionally, a bigger - than - expected rate increase may heighten volatility and have a stronger impact in the current highly leveraged environment after a decade of very low rates and ample liquidity. so when calibrating our stance, we need to pay close attention to ensuring that we do not amplify the risk of a protracted recession or trigger market dislocation. second, we must be clear about the sequencing of the normalisation process. we should avoid β cliff effects β, continually monitor the market response to our measures and consider the feedback between our different instruments. currently, our policy rate remains a suitable marginal instrument of normalisation. it is the instrument we know best. we have a comparatively limited understanding of the effects of reducing the size of our balance sheet. the size of our balance sheet will be significantly reduced as targeted longer - term refinancing operations ( tltros ) mature and banks likely make early repayments after the decision we took last week to adapt the tltros β terms and conditions to the current monetary policy context. we should take the necessary time to assess the impact of our rate hikes and of phasing out the | next review by the caribbean financial action task force later this year. a sustainable financial sector is also a sector that can withstand setbacks. for instance by making sure that savings are protected in the event of a bank failure. we learned from the global financial crisis how important that is for ensuring and safeguarding trust in the financial system. we learned that without trust there is no 2 / 4 bis - central bankers'speeches financial system. so it is good news that your deposit guarantee system is almost in place. but to make real progress towards a sustainable economy, towards a sustainable future, we have to look at what entrepreneurs can do. " son'e, dese'e, logr'e ( dream it, wish it, achieve it ) " i am impressed by how quickly the tourism industry in sint maarten and curacao has recovered after the pandemic. for sint maarten this came in the wake of hurricanes irma and maria in 2017. the speed of the recovery from this devastation has exceeded expectations. the tourists are back in force. that is good news, but the success of the tourism sector also leads to new challenges, of course. challenges for the environment, because tourists not only use energy and produce waste, they can also be a threat to biodiversity. and naturally you want those beaches to stay pearly white and your flora and fauna breathtaking. not only because they are a source of revenue, but because they are your heritage and your home, and because they are too beautiful to neglect. a good reason to look for diversification. to look for other business opportunities outside the tourism sector. another reason, of course, is that diversification makes your economy less vulnerable. a vulnerability you experienced during the pandemic. and diversification can be found in investments in the energy transition, a double step towards a sustainable future. curacao is currently heavily dependent on fossil fuels, which produce high levels of greenhouse gas emissions. to reduce these emissions, it is necessary to switch to renewable energy sources such as solar and wind energy, and energy storage technologies. this transition takes time, money and manpower. it requires investments and efforts, it requires entrepreneurs with vision and courage. and the willingness to work together. because a lightly populated island like curacao cannot make this transition on its own. you need to attract foreign investments and engage in international collaboration. and that is what you are doing. a good example of such a collaboration is the memorandum | 0 |
ecb β cepr β banque de france conference β paris, 25 september 2023 monetary policy in the euro area : was it too late? or could it now be too much? speech by francois villeroy de galhau, governor of the banque de france press contact : mark deen ( mark. deen @ banque - france. fr ), deborah guedj ( deborah. guedj @ banquefrance. fr ) page 1 sur 13 ladies and gentlemen, it is my great pleasure to welcome you to the'monetary policy challenges for european macroeconomies'conference. as you know the conference is jointly organised with the european central bank, cepr and the journal of monetary economics. the programme features some of the most distinguished economists in the field of monetary economics, and i would like to welcome in particular my colleague philip lane, the chief economist of the ecb, who will give a speech tomorrow, and our two keynote speakers, helene rey and jordi gali. central bankers are always eager to learn from academics : we need high quality research to provide good policy. the conference aims to present recent studies with a focus on european questions. it is a welcome initiative as an overwhelming majority of applied macroeconomic research focuses on the us. this is for understandable reasons, given the size of the us economy, but i daresay that european questions are really worth exploring further. first, the euro area is the world β s third largest economy. second, and most importantly, the euro area constitutes a unique endeavour, in which 20 countries have freely and peacefully decided to unite their efforts and create a joint currency. this currency union will celebrate its 25th anniversary next january. it has resisted severe stress tests β most recently covid and war β and has garnered ever increasing popular support : today 78 % of citizens in the euro area support our single currency, up from 68 % in 1999. despite its remarkable success, the largest currency union in the world gives rise to specific economic challenges. in the remainder of my talk i will elaborate on the current situation in the euro area, looking back at the inflationary episode that started in 2021. to set the scene i would like to discuss two criticisms that have been directed at our monetary policy ( and other central banks β ) : ( i ) we allegedly reacted too late when inflation started to rise ; ( ii ) we could run the risk of doing too much today. page 2 sur 13 1. β too late | ##s. in october 2008 the samos system settled a record aggregate value of r8, 5 trillion. the bank continued its role as part of the cls system oversight group chaired by the federal reserve bank of new york. during the year the bank and other participating central banks signed a cls oversight protocol arrangement. cls oversight arrangements and processes were thoroughly and successfully tested during the financial market crisis in september and october 2008. financial stability financial stability is of vital interest to central banks and, with the evolution of the global financial crisis, renewed attention has been paid to financial stability policy responses. some central banks have responded by adopting more explicit and broader mandates for financial stability. the crisis also highlighted the need for macroprudential analysis of the financial system as a whole in order to identify and mitigate systemic risks. the bank continually seeks to identify inherent weaknesses in the financial system and monitors risks that may result in financial system disturbances. financial institutions and markets in south africa were spared the worst of the direct effects of the global financial crisis as they were largely shielded by their limited exposure to risky foreign assets and liabilities. developments in the domestic financial infrastructure and regulatory environment that are likely to strengthen the resilience of the financial system include new legislative developments to improve competition, consumer protection and corporate governance. bank regulation and supervision as part of its bank supervision function, the bank maintained its focus on promoting the soundness of the domestic banking system through the effective and efficient application of international regulatory and supervisory standards. the implementation of basel ii on 1 january 2008 and the application of the core principles for effective banking supervision issued by the basel committee on banking supervision remain the cornerstones of the bank β s regulatory and supervisory framework. the bank continued to refine its basel ii - revised regulatory and supervisory approach during 2008 and 2009 by attending, inter alia, to the internal capital adequacy assessment processes implemented by banks ; thematic reviews of credit, market and operational risk ; and the processing of applications by banks to use the advanced approaches to calculate their minimum capital requirements in respect of credit and operational risk. in line with international developments, the bank held discussions with the banking industry on the stress - testing frameworks it implemented. in addition, the bank continued to develop its own internal stresstesting expertise and methodology to facilitate the effective monitoring of the stress - testing frameworks of banks. the secondary effects of the international financial market turmoil, combined with cyclical economic developments in south africa, worsened the operating environment of the banking | 0 |
to highlight some of these major accomplishments : β’ the enhancement to its life product offering through the launch of the bula prime product in 2011. β’ the re - branding of dominion house to bsp life centre, which now accommodates all of bsp life β s operations. β’ the opening of a new customer services centre on the ground floor of bsp life centre. i am told that walk - in customers are averaging 2, 000 per week, double what they were before the office opened. β’ the opening of a lautoka office, to complement the nadi branch and to provide greater service to customers in the west. β’ the rollout of new medical products earlier this year, including the introduction of an india evacuation product at very affordable premiums. i understand that bsp life has partnered with the world renowned apollo chain in india which provides a broad range of specialist medical services. access to india is now seamless via hong kong or seoul and the quality of services at apollo, i am told, is world class. in 2012 apollo treated over 60, 000 international patients at their delhi facility alone. i think these numbers provide some indication of the acknowledgement of the quality of the treatment available. bis central bankers β speeches β’ in so far as investments go, the bsp life portfolio has grown to $ 323 million. most of this money is invested in fiji, helping to provide employment for our people and helping to grow our economy. β’ i also note the strong financial standing of the business as publicly declared in the company β s recent key disclosure statement for 2012. this augurs well for future growth and ongoing returns to bsp life policy holders. i am pleased to note a significant investment in marketing by the bsp group to create awareness of the need to invest and protect our financial future. with the take - up of life insurance at less than 15 percent of our population, bsp life has taken a lead role in creating awareness of the critical need for us to have insurance and protect our loved ones. bsp life and bsp bank have also been key partners, along with other stakeholders, in the reserve bank of fiji β s ongoing efforts to promote financial inclusion and financial literacy in fiji. launch of bula elite and concluding remarks ladies and gentlemen, it is clear that bsp life has strongly established itself in life and health insurance in the fiji market over such a short period of time. tonight is another special milestone in the company β s growth as a major player in fiji β | engine β. this, however, was clearly not the case in 2010 when the private sector contributed just 3. 5 percent to the overall 13. 5 percent investment - to - gdp number. i am pleased to say that we have seen a turnaround through 2012 and now into 2013. our indicators are showing high growth, led by greater lending by financial institutions for investment purposes as well as strength in building and construction activity. look around you when you are travelling through suva and other areas on viti levu and you will see the bis central bankers β speeches evidence. talk to business people and they exude more positive vibes. our own business expectations survey, where we survey 243 businesses on a semi - annual basis, is reflective of this. this year, the investment - to - gdp ratio will be around 25 percent, of which the private sector β s share is forecast at 13 percent. clearly this is a vote of confidence by the private sector in the fijian economy. through all this our foreign reserves have been holding steady and are currently at $ 1. 62 billion ( worth the equivalent of around 4. 7 months of imports ), while inflation was 1. 5 percent at the end of may. the challenge moving forward is to keep this positive momentum going β and, on government β s part, to ensure its reform programmes gain ground, and that the deadlines to parliamentary elections continue to be met. the bsp fiji group let me come back to why we are here this evening. it is evident that the bsp group has lifted the game in banking services, and i am assured it will continue to be at the forefront of product and technology innovation as it grows its presence in fiji. it is most pleasing to see that, so far, the profits it has made here are being ploughed back into the country in raising that presence. from a product innovation standpoint, bank south pacific has been a market leader in providing access points of financial services. i understand it now has the largest atm network and the second largest number of eftpos machines. it was also the first to introduce sms banking here. the bank β s website also provides 24 - hour on - line banking services, 7 days of the week. on the insurance business, bsp life, as a brand, has been in the market for just over two years, having taken over from colonial life. the company has, however, achieved significant success in a short period of time. i would like | 1 |
) : β formuespriser β konsekvenser for pengepolitikken? ( asset prices β consequences for monetary policy? ) β, penger og kreditt no 4. see for example imf ( 2009 ), [ october ] world economic outlook, chap. 3, and lars svensson ( 2009 ) : β flexible inflation targeting : lessons from the financial crisis β, speech at a conference arranged by de nederlandsche bank in amsterdam, 21 september 2009. we also cross - check using simple monetary policy rules, cf. norges bank β s monetary policy report. olivier blanchard, chief economist at the imf, refers to this phenomenon when he states that the most effective instrument in relation to credit growth that amplifies swings in the economy is better regulation. see imf ( 2009 ) : β lessons of the global crisis for macroeconomic policy β. see for example white ( 2009 ) : β should monetary policy β lean or clean? β, working paper nr. 34, federal reserve bank of dallas. should central banks also set explicit targets for asset prices? in our judgement, the answer is no, but we should probably apply a fairly long horizon for achieving the target so that we seek to take account of any imbalances that might disturb activity and inflation further ahead. the interest rate should be set so that developments in inflation and output become acceptable also under alternative, albeit not unrealistic, assumptions concerning economic developments and the functioning of the economy. norges bank β s mandate states that monetary policy shall be aimed at stability in the norwegian krone's internal and external value. the internal value of the krone is determined by inflation. our interpretation of the mandate is that the external value of the krone β the exchange rate β cannot be fine - tuned. however, low inflation also makes a contribution to exchange rate stability. the ministry of finance has not suggested, and norges bank has not requested, that house prices should be given particular weight. macroprudential supervision and systemic risk even though inflation targeting has served us well, it was not possible to shield norway β s small, open economy, in an environment of free capital markets, from the liquidity crisis in global financial markets last autumn. as we have observed abroad, when many banks encounter liquidity problems at the same time, triggered by a deterioration in some banks β financial strength, solvency problems can easily spread to other banks and to other countries. 11 this can | , we chose the theme for this year's conference based on events very much on the minds of central bankers : " the transmission of monetary policy in the postpandemic world. " many things changed both during covid and after. first, there was an unprecedented fiscal and monetary policy response to the pandemic. second, structural changes have occurred, including supply chain issues and shifts in the organization of work. finally, economies have been grappling with elevated inflation. this economic environment has raised several policy questions that the papers 1 / 2 bis - central bankers'speeches presented here attempt to answer. these are questions that policymakers, including those here today, must grapple with, even when the answers are far from apparent. academic research provides insights into these questions and possible answers, ways to analyze the data, and the foundations for testing theories with economic models. the papers presented here today and tomorrow are ideal examples of the kind of work that can help policymakers do their jobs better, and can facilitate the sharing of knowledge around the world. we have sessions on how firms'balance sheets, households'savings and borrowing decisions, as well as supply chains, influence monetary policy transmission. we also will look into financial market impacts and labor market considerations of the current policy environment. before we get to those presentations, and what i hope will be vigorous discussions, let me recognize several people who made this event possible. here at the cbi, stefano and enrico sette helped organize this conference. enrico is a co - editor of the ijcb. let me mention the other co - editors : ana babus, diana bonfim, huberto ennis, carlos garriga, refet gurkaynak, oscar jorda, robin lumsdaine, fernanda nechio, and steven ongena. this conference and the day - to - day smooth running of the journal couldn't be accomplished without the editorial team at the bis and the board of governors. a special thank you goes to kommaly dias and jessica flagg from my staff. and, finally, a big thank you to my adviser jane ihrig, who does so much for me and who worked to oversee the process at the ijcb this past year. and with that, i will step away from the microphone and put the spotlight where it should be, on the scholars presenting their work today. thank you, and i believe [ enrico ] has a few words to | 0 |
. for short - term funding in swedish kronor there is a market for bank certificates. however, this market has shrunk ( see figure 3 ). we may wonder why this market has declined so dramatically when it seems that there should be incentives to maintain it. a thriving domestic market for bank certificates in kronor would increase the banks'scope for diversification. their dependence on markets in foreign currencies and on the swap market would be reduced. although these markets usually work well and swedish banks currently have a good reputation among investors this does not always need to be the case, as we saw in 2008 and 2009. we should of course think about how to create a liquid market for bank certificates in kronor. one problem is that the benefits of such a market fall to the banks collectively while the costs in the form of higher borrowing costs fall to each bank individually. in this perspective it may be necessary to investigate whether the costs that each individual bank pays for its shortterm funding in foreign currencies reflects the true costs to the swedish financial system and swedish society. bis central bankers β speeches figure 3 outstanding certificates issued by banks in swedish kronor sek billion note. refers to certificates issued by banks, mortgage institutions and other credit institutions. source : statistics sweden swedish conditions require a complement to the reform agenda the swedish banking system is thus marked by a number of characteristics that make it somewhat special in an international perspective β characteristics that either increase the risk of problems or the economic costs to society if problems arise in the banking sector. there are therefore good reasons for establishing a safe margin β a respectable distance β to the minimum regulations in the basel iii accord. as you know, we have already taken several steps to strengthen the swedish banking system, over and above the commitments that basel iii entails. in november 2011, the riksbank, the ministry of finance and finansinspektionen announced that the four major swedish banks would meet the capital adequacy requirements of 10 per cent of the risk - weighted assets from 1 january this year and of 12 per cent from 1 january 2015. all of the four major banks now have cet 1 ratios that are higher than 10 per cent according to the definition in basel iii. three of the banks are also above 12 per cent. the swedish authorities have also said that the banks should meet the short - term liquidity measure in basel iii ( the lcr ) both in total and separately for the euro | iii and hopefully a complete regulatory framework will be available at the end of 2014. i also hope that the work that has begun on a number of other important frameworks in the wake of the financial crisis will be finalised this year. this will entail a change in the focus of the committee β s work. going forward, the committee will place more emphasis on monitoring and assessing the application of the frameworks to ensure that the regulations are effective. the international regulatory work is extensive and will affect us directly when the regulations are introduced here in sweden. having a global regulatory framework that increases the safety margins in the global financial system will benefit everyone and is therefore important. it is also important to remember that the international discussion on regulations and regulatory frameworks has a lot in common with the discussion underway here in sweden. in the main, the measures proposed in basel iii aim to reduce risks that also exist in our swedish banks and that we have been pointing out for a long time. the international regulatory work therefore serves swedish interests β in other words, it is not a question of introducing regulations that have mainly been drawn up to manage problems that only concern other countries. moreover, discussions are underway in international forums that are similar to those underway here in sweden on many other policy issues, but perhaps not as much progress has been made abroad as in sweden on considering what measures can be introduced. one example of this is the discussion of floors for risk weights. finally : as things look today there are, in my opinion, specific circumstances in sweden, especially structural vulnerabilities, that justify continuing to complement the internationallyagreed requirements with stricter requirements in certain areas. one of the greatest risks i see as far as sweden is concerned is the mortgage market. the measures needed to come to terms with this have not been in focus here today, but this is certainly an issue i will return to. today, i have instead talked about international regulations and about sweden β s need to go further in some respects. those i have mentioned today are higher capital requirements, lcrs per currency, risk - weight floors for mortgages and the countercyclical capital buffer. in the case of the leverage ratio and the nsfr, we need to examine more closely whether the riksbank should work for stricter requirements in sweden than the upcoming international minimum requirements. bis central bankers β speeches | 0.5 |
degree of monetary policy accommodation will likely still be needed to keep inflation on target. the bank will continue to monitor the economy β s sensitivity to interest rate movements and the evolution of economic capacity. in this context, governing council will remain cautious with respect to future policy adjustments, guided by incoming data. with that, mr. chairman, senior deputy governor wilkins and i would be happy to answer questions. 2 / 2 bis central bankers'speeches | growth across all canadian regions. canada is not the only economy that has coped better with recent shocks. to varying degrees, other countries have as well - which partly explains why world economic growth has held up better this time around. clearly, many national economies have been able to respond more flexibly than in the past to unexpected developments. and this has helped to mitigate the impact of shocks, advance the adjustment, and support continued strong economic performance. this increased flexibility has been the product of economic policies and structural reforms that many countries, including canada, have undertaken over the years to strengthen their economies and make them more resilient to shocks. but this does not mean that we have nothing to worry about as we look ahead. we live in an era of rapid change, and we operate in a global environment that is constantly shifting. uncertainty, risks, and shocks are a constant feature of the economic landscape. for canada, this is particularly relevant given how open our economy is to international trade and capital flows. at the bank of canada, we believe that world economic prospects remain favourable as we look out over the medium term. but while this reflects our central expectation of how the world will unfold, there are important upside and downside risks around this scenario. on the downside, persistent global imbalances immediately come to mind, as does the lack of success in the doha round of trade talks. these risks could result in significantly slower global economic growth. at the same time, we cannot rule out the possibility of stronger growth, especially in asia. of course, we know that events can turn out very differently from our expectations today. so we must plan accordingly. in terms of potential risks and sudden developments, the best approach is to constantly ask ourselves what steps we can take to make our economy and domestic markets more flexible and thus better able to adapt. and we need to recognize that the pursuit of such an approach is a shared responsibility among firms, workers, and policy - makers. firms and their workers need to be able to respond quickly to technological advances and to various shocks that require significant changes in the way they conduct business, the type of goods and services they produce, and the markets they choose to develop. a well - functioning market - based economy and clear relative price signals are critical in this context. at the same time, policy - makers need to be wary of barriers to adjustment, such as labour regulations that inhibit the movement of workers from one type of job, or from one sector | 0.5 |
the reputations of both the companies engaging in the transactions and their financial advisers - and, in turn, impaired public confidence in those institutions. these potential risks and the resulting damage are particularly severe when markets react through adverse changes in pricing for similarly structured transactions that are designed appropriately. assessments of the appropriateness of a transaction for a client traditionally have required financial firms and advisers to determine if the transaction is consistent with the market sophistication, financial condition, and investment policies of the customer. given recent events, it is appropriate to raise the bar for appropriateness assessments by taking into account the business purpose and economic substance of the transaction. when banking organizations provide advice on, arrange, or actively participate in complex structured finance transactions, they may assume legal and reputational risks if the end user enters into the transaction for improper purposes. legal counsel to financial firms can help manage legal and reputational risk by taking an active role in the review of the customer β s governance process for approving the transaction, of financial disclosures relating to the transaction, and of the customer β s objectives for entering into the transaction. on the regulatory side, the federal reserve has been working with the other federal banking agencies and the securities and exchange commission to develop interagency guidance on complex structured finance transactions. we believe it is important for all participants in complex structured finance transactions to understand the agencies β concerns and supervisory direction. our goal is to highlight the β lessons learned β from recent events as well as what we believe on the basis of supervisory reviews and experience, to be sound practices in this area. as in other operational areas, strong internal controls and risk - management procedures can help institutions effectively manage the risks associated with complex structured finance transactions. here are some of the steps that financial institutions, with the assistance of counsel and other advisers, should take to establish such controls and procedures : β’ ensure that the institution β s board of directors establishes the institution β s overall appetite for risk ( especially reputational and legal ) and effectively communicates the board β s risk tolerances throughout the organization. β’ implement firm - wide policies and procedures that provide for the consistent identification, evaluation, documentation, and management of all risks associated with complex structured finance transactions - in particular, the credit, reputational, and legal risks. β’ implement firm - wide policies and procedures that ensure that the financial institution obtains a thorough understanding of the business purposes and economic substance of those transactions identified as involving heightened legal or reputational risk and that those transactions are approved | such as its legal structure, each economy will achieve its maximum possible average living standard. indeed, the group of seven leaders, at their 1977 economic summit, identified inflation as a cause of unemployment. this had not always been the case. for example, wage and price controls were imposed in the united states in 1971 as a substitute for a tighter monetary policy and higher interest rates to address rising inflation. century, but a related measure - - the extent to which savers reach beyond their national borders to invest in foreign assets - - has also risen. through much of the post - world war ii years, domestic saving for each country was invested predominantly in its domestic capital assets, even when there existed the potential for superior riskadjusted returns from abroad. because a country's domestic saving less its domestic investment is essentially equal to its current account balance, such balances, positive or negative, were therefore generally modest, with the exception of the mid - 1980s. but in the early 1990s, " home bias " began to diminish appreciably, and, hence, the dispersion of current account balances among countries has increased markedly. the widening current account deficit in the united states has come to dominate the tail of the distribution of external balances across countries. nonetheless, the worldwide dispersion of current account balances has risen since the early 1990s, even excluding the united states. 4 thus, the decline in home bias, or its equivalent, expanding globalization, has apparently enabled the united states to finance and, hence, incur so large a current account deficit. as a result of these capital inflows, the ratio of foreign net claims against u. s. residents to our annual gdp has risen to approximately one - fourth. while some other countries are far more in debt to foreigners, at least relative to their gdps, they do not face the scale of international financing that we require. a u. s. current account deficit of 6 percent of gdp would probably not have been readily fundable a half - century ago or perhaps even a couple of decades ago. 5 the ability to move that much of world saving to the united states in response to relative rates of return almost surely would have been hindered by the far - lesser degree of both globalization and international financial flexibility that existed at the time. such large transfers would presumably have induced changes in the prices of assets that would have proved inhibiting. nonetheless, we have little evidence that the economic forces that are foster | 0 |
karolina ekholm : the interest rate, the exchange rate and inflation speech by ms karolina ekholm, deputy governor of the sveriges riksbank, at a meeting at danske markets, stockholm, 4 april 2011. * * * the views expressed here are my own and are not necessarily shared by the other members of the executive board of the riksbank or the riksbank β s staff. i would like to thank johanna jeansson and par osterholm for their great assistance in the writing of this speech. today, i will give an account of my stance at the latest monetary policy meeting in february. however, i will keep this relatively brief β the main part of my talk will focus on the significance of the exchange rate in the monetary policy process. there is no target level for the exchange rate, but, as it affects both inflation and resource utilisation, it is of fundamental interest to the riksbank β s analysis work. the fact that it is difficult to forecast does not mean that it can be ignored. the current situation and the monetary policy decision in february, the majority of the riksbank β s executive board decided to raise the repo rate to 1. 5 per cent and to revise the interest rate path upwards slightly. the justification for this decision was that the swedish economy remains strong. for example, gdp growth in 2010 was historically strong ( see figure 1 ). the development of the labour market is also continuing to be strong, and unemployment has fallen somewhat more steeply than was anticipated at the monetary policy meeting in december. furthermore, inflation has increased at a slightly faster rate due to higher energy and commodity prices. on the whole, growth abroad is also deemed to be strong. while it is true that developments in europe are still uncertain due to the fiscal problems in several european countries, prospects in the united states are judged to have brightened somewhat. bis central bankers β speeches as you are no doubt aware, on a number of occasions over the last year, i have entered reservations against monetary policy decisions, including the most recent one in february. one important argument for me has been that increased interest rate differentials in relation to other countries may have effects on the exchange rate. during the autumn in particular, my reservations have essentially been due to my scepticism of the assumption that foreign central banks will raise their policy rates at the rate specified by the riksbank β s main scenario. in my opinion, this has | journal of political economy 115, 665 β 703. hansson, b. and lindberg, h. ( 1994 ), β monetary conditions index β a monetary policy indicator β, economic review 1994 : 3, 13 β 19. krugman, p. ( 1989 ), exchange rate instability, mit press, cambridge. lagervall, b. and nessen m. ( 2009 ), β the long - term development of the krona β, economic commentaries no. 6, sveriges riksbank. lothian, j. r. and wu, l. ( 2011 ), β uncovered interest rate parity over the past two centuries β, journal of international money and finance 30, 448 β 473. bis central bankers β speeches marazzi, m., sheets, n. vigfusson, r., faust, j., gagnon, j., marquez, j., martin, r., reeve, t. and rogers, j. ( 2005 ), β exchange rate pass - through to u. s. import prices : some new evidence, β international finance discussion paper 833, board of governors of the federal reserve system. mark, n. c. ( 1995 ), β exchange rates and fundamentals : evidence on long - horizon predictability β, american economic review 85, 201 β 218. meese, r. a. and rogoff, k. ( 1983 ), β empirical exchange rate models of the seventies : do they fit out of sample? β, journal of international economics 14, 3 β 24. sellin, p. ( 2007 ), β using a new open economy macroeconomics model to make real nominal exchange rate forecasts β, working paper no. 213, sveriges riksbank. stevens, g. r. ( 1998 ), β pitfalls in the use of monetary conditions indexes β, reserve bank of australia bulletin august 1998, 34 β 43. svensson, l. e. o. ( 2001 ), β independent review of the operation of monetary policy in new zealand : report to the minister of finance β. sveriges riksbank ( 2001 ), inflation report 2001 : 3. sveriges riksbank ( 2004 ), inflation report 2004 : 2. bis central bankers β speeches | 1 |
so maintained and increased from year to year as to cover adequately not only imports but also the short - term liabilities, especially short - term debt and portfolio investment. further, the level of reserves also takes into account the operational need to enable the reserve bank to even out the mismatches between supply and demand in forex markets and thus ensure orderly conditions in a less developed market characterised by lumpy demands. on exchange rate, the possibility of persistent misalignments due to reasons other than domestic factors cannot be ruled out and correction cannot be left entirely to the market. the developing countries do need some armoury to address such issues. it appears almost certain that capital controls would be ineffective if, in popular perception, the exchange rate does not appear to be realistic. in other words, there is considerable merit in the argument that capital controls are not substitutes for an appropriate exchange rate regime even though capital controls facilitate avoidance of excess volatility in the exchange rate that may be caused by destabilising capital flows. finally, an integrated view of the state of development of and activities in financial markets is appropriate. the activities in forex markets and its linkages with other markets, especially money - market, debt market, especially government securities market, and equity markets, have to be identified and monitored while managing capital flows. recognition of linkages, monitoring the developments, and willingness to intervene credibly in any or all of these markets as appropriate may be essential. perhaps markets should be aware of the broad objectives of such intervention. as each of the financial markets develop and get integrated with others, measures to increasingly liberalised capital account could be considered. indeed, it is possible to argue that liberalisation of capital account would aid the process of development of financial markets, but this is valid only when some informed judgements are made in respect of each country on the interactions between the management of capital account and the financial markets. in any case, capital control or regulatory framework or liberalisation would be ineffective or unstable in the absence of proper appreciation of such linkages among financial markets. above all, irrespective of the extent of liberalisation, official monitoring and surveillance of large international transactions and players would be helpful in effective and credible management of capital account. in india, during periods of surges in capital inflows or pressures on outflows, operations in the external sector were coordinated with actions by the reserve bank in the money and government securities market to ensure stability. complementary policies there are | under the first purchase must be large ( i. e. a top - down staircase pattern of disbursement rather than the present bottom - up staircase pattern ) and the performance criteria must be relevant to deal with a capital account crisis ( implying less emphasis on conventional performance targets and complete avoidance of the saw - tooth problem ). since the imf would endorse the policy framework of a country before entering into a precautionary arrangement, repeated programme interruption and subsequent granting of waivers would need be avoided. overemphasis on β safeguarding fund resources β would reduce the effectiveness of a precautionary arrangement by subjecting the programme to performance criteria that would not be critical to deal with the capital account crisis. progress with crisis resolution initiatives efforts are also underway to develop collective action clauses ( cacs ) to augment a market - led process for restructuring of sovereign bonds. it is heartening to note that rapid progress has been made in promoting the inclusion of cacs in international sovereign bond issuances. we welcome the positive developments relating to the development of a voluntary code of conduct to deal with debt restructuring. we urge that the code should be developed in full and voluntary agreement of creditors and debtors and neither a mechanistic nor a prescriptive or standardized approach should be followed. in recent years, increasing attention has been accorded towards development and implementation of standards and codes to strengthen the international financial architecture. the imf and the world bank have taken the initiative to monitor and assess member countries β financial sectors as also their observance of standards and codes through reports on the observance of standards and codes ( roscs ). in future, roscs will help national authorities develop their own reform plans, assess compliance with international standards and codes, and serve, if published, as a signal of their policies β enhanced transparency. they will also provide helpful inputs for imf surveillance and technical assistance. accelerating poverty reduction and strengthening sustainable economic growth in low income countries millennium development goals, the monterrey consensus, and progress with the prsp approach : the role of the imf monterrey has generated consensus on the issues that need to be addressed to effectively alleviate poverty. this consensus needs to be transformed into concrete action urgently. a comprehensive and transparent system to monitor progress towards fulfilling the millennium development goals ( mdgs ) of poverty reduction, sustained economic growth, and promotion of sustainable development would need to be developed. the imf has attempted to achieve this through two programmes - the | 0.5 |
this implies that if only banks and other financial institutions could lower their lending rates and expand the volume of their lending, substantial numbers of businesses in the economy would be able to borrow money for investment in order to boost their output while servicing their debt and increasing their incomes. while i remain uncomfortable with the high lending rates and believe that they should be reduced sustainably over time, i dare say that access to credit is not the ultimate binding constraint on economic growth. we must think holistically about the challenges holding back the power of finance to transform our economy. proper diagnostics must reveal the problems that constrain agricultural finance before we devise durable solutions. we must examine the borrowing capacities of the businesses in our real sector. on one hand, financial institutions are challenged to rethink their views of bankable projects so as to design page 4 of 8 solutions for potential borrowers at their level. on the other hand, formal sector creditworthy businesses, which have been the main clients of commercial banks, comprise a small share of the economy. informal business and micro - enterprises abound and their capacity to utilize credit effectively is constrained, including by inadequate business and technical skills, the high costs of inputs, and unpredictable market conditions. fortunately, some financial institutions have started tackling these problems through business incubation programs. moreover, through automation and adoption of new technologies for delivering financial services, it is possible for banks to reduce their operating costs, and pass on the savings to borrowers through reduced lending rates. i am also optimistic that banks will exploit the potential of bancassurance to exploit synergies with insurance to design products for the riskier borrowers. indeed, i am anxious to learn from the speakers about uba β s plans to de - risk financing and investment in agriculture. i must applaud the uba for embracing the role that can be played by the financial sector in transforming our people into a non - agrarian workforce and urban - dwelling page 5 of 8 populace. but i must add that it will take a comprehensive approach by all sectors to bring about this transformation. indeed, the fruits of higher labour productivity in nonagriculture sectors, and higher living standards in urban areas enjoin the government to develop the manufacturing and service sectors in order to absorb the youths who are migrating from rural areas. research conducted by the international growth centre has shown that it is possible for uganda to industrialise through prioritization of high productivity services or non - traditional β industries | , well balanced to enable market participants make well informed investment decisions. the end goal for carrying out such training workshops and subsequent ones especially by quality trainers like the thomson reuters foundation is to build a pool of professional business journalists in uganda who will promote efficiency and development of financial markets in uganda. at this stage let me congratulate use ; the organizers of this workshop for bringing together a group of the most distinguished and experienced practitioners in the field of journalism to pass on their experience and skills as well as sharing best practices and initiatives in business journalism with their ugandan counterparts. i wish to encourage ugandan journalists to always strive for excellence and professionalism in their reporting. let me also thank the thomson reuters foundation ; a global leader in financial reporting, for playing its part and for partnering with ugandan institutions in having successfully produced at least 15 certified journalists from this training. the onus now remains with the ugandan journalists who have acquired the skills to put them to best use as they play their part in the development of financial markets in uganda. i wish to pledge bou β s continued support through the 5 - year fmdp project to uplift skills levels in our financial markets as we strive to improve efficiency and disclosure for the benefit of the investors. it is my belief that skills that you have acquired will improve on your business reporting and demystify financial markets operations for the good of ordinary ugandans. with those remarks, it is now my pleasure and privilege to declare this training workshop officially closed. thank you. | 0.5 |
and has continuously supported the initiatives for increasing the formalization of the economy. we have taken several measures to address informality, which have given their effects over the years. enhancing transparency and lowering the costs of bank transactions, without affecting the operational independence of banks and their decision - making, has brought households and enterprises closer to the financial institutions. the national plan for the reduction of non - performing loans established a regulatory criterion, as an important task for / to the bank of albania. starting from 2018, lending activity should take into account only tax declarations. this is one of the key elements for addressing informality, also for the significant share of the banking activity in the domestic economy. the bank of albania has previously dealt with this phenomenon from a regulatory point of view, but only with large 1 / 2 bis central bankers'speeches borrowers. the coordination of efforts with government bodies and appropriate actions taken in this regard have created the necessary space for taking this regulatory measure further to include a broader base of borrowers. the bank of albania is confident that this measure will bring long - term benefits for all parties involved in the process. - for the banking industry : crediting based on tax declarations facilitates significantly the lending process by putting banks on a common denominator in reading financial data. this eases the lending activity, providing banks with more clarity in the process of financial analysis and selection of borrowers, as well as exchanging information for common borrowers. - for albanian enterprises and households : this process promotes transparency, which will be translated into reduction of credit risk and, most importantly, lowering of financing cost. also, by providing a level playing field, this process fosters competition and efficiency, which, ultimately, contributes to the overall economic development of the country. - for the economy : this process increases the country β s economic and financial stability and creates premises for a simpler tax system and a fairer distribution of the tax burden. thank you! 2 / 2 bis central bankers'speeches | by side. while literacy may turn a poor man into a rich man, illiteracy, on the other hand, may conduct a rich man into misery. finances are dangerous when you are not financially literate enough. that is why i consider this conference as highly important. the bank of albania has devoted constant attention to financial education. our education agenda is integral and comprehensive both in terms of geography and age groups, full of interactive elements and modern communication methodology. furthermore, i would like to refer to some of the elements that constitute the philosophical grounds of our educational work. bis central bankers β speeches first, i would like to recall that financial welfare is inextricably related with the country β s economic progress. it has been already proven that individual β s welfare is proportionate to economic activity and prices of financial assets. the cause - effect relation is true on both directions. our economy and financial institutions are strong when revenues and wealth grow. financially healthy individuals are inclined to increase their consumption and, therefore, boost their spending, consequently pushing the economy forward. moreover, financially successful people boost lending potential by channelling their savings into deposits. therefore, they are in a position to have access in crediting by the banking system, giving life to new businesses which, in turn, provide higher employment and welfare. to most of the people, having a job and a salary or estate is essential to personal financial welfare. however, the fact that you may have a job, or a salary does not imply that you automatically have the capacity to make wise decisions on effective money utilisation. this is the point where our relation with financial education is subjected to the test of the truth. is this test passed? the sub - standard credit crisis in the us revealed that individuals in most cases did not manage to pass this test. consequently, the debt load on individuals grew even heavier, while access to crediting became tighter, resulting in a big risk for their financial future. a similar analogy may be drawn for lending in foreign currency in some eastern european countries. secondly, financial education should be seen as a public good that brings about positive externalities to the society. it not only increases individuals β financial welfare, but also affects directly economic policy efficiency undertaken by relevant authorities. the more - educated the public, the higher economic policy efficiency is. maintaining inflation and economic activity under control is almost impossible in a society ailing from financial illiteracy. macro - economic balances are achieved and maintained through monetary and fiscal | 0.5 |
benoit cΕure : euro interest rate benchmark reform : achievements and remaining challenges opening remarks by mr benoit cΕure, member of the executive board of the european central bank, at the annual dinner of the working group on euro risk - free rates, frankfurt am main, 26 february 2019. * * * good evening and welcome to the first annual dinner of the working group on euro risk - free rates. on this very day one year ago, the working group on euro risk - free rates held its first meeting in frankfurt, hosted by the ecb. looking back, your achievements have been impressive, almost on a par with the challenges that lie ahead. in its short existence, the working group has recorded two prominent achievements. the first is the choice in september 2018 of the ecb β s overnight rate as the new euro risk - free rate. this decision provided clarity to market participants and planning certainty for the transition towards more robust benchmarks in the euro area. it also brought the euro area closer in line with other currency areas in preparing for new benchmarks. the second achievement is that, at the roundtable on euro risk - free rates in november 2018, the working group took a major step in reaching out to stakeholders and raising awareness of its activities. sound communication and transparency are vital for spreading awareness about the transition to risk - free rates beyond a small circle of informed parties. by getting the message across to a more diverse audience, the working group lends more legitimacy to its recommendations and does as much as it can to promote market consensus. this first roundtable was a successful exercise in this regard. in time, i would expect such open communication to play a pivotal role in the transition to more robust interest rate benchmarks. besides these two very concrete achievements, i know that a great deal of work on building a consensus has been going on behind the scenes in the various sub - structures of the working group over the past year. reaching agreement on recommendations that reflect the views of such a wide variety of institutions is not an easy task. over the course of last year, the working group and subgroups members held no less than 80 teleconferences and seven working group meetings, which give some idea of the work that went into aligning views within such a tight time frame. i would like to thank all of you, including the team supporting the working group chair, for your contributions, as well as the secretariats of the ecb and the european securities and markets authority for | will be some takeaways that you will find helpful in your capacity as ineds of banks. 9. fellow ineds, i have talked long enough and now is the time for me to introduce to you our keynote speaker for this conference. we are honoured and highly privileged to have mr andrew bailey, chief executive officer of the uk financial conduct authority, to fly all the way from london to join us today. andrew needs no introduction. before he joined the fca last year, he was the deputy governor in the bank of england and chief executive officer of the prudential regulation authority from april 2013 until june last year. so andrew is truly exceptional in the sense that he has been in charge of both the prudential and conduct sides of banking supervision, and is very well - respected internationally. he is therefore uniquely well placed to share with us his experience and insights. mr bailey, please. 2 / 2 bis central bankers'speeches | 0 |
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 | committed to achieving our maximum - employment and averageinflation goals. it is too early to say how long it will take. the committee has stated clearly that it needs to see substantial further progress toward our goals before adjusting purchases. the economy is far away from our goals in terms of both employment and inflation, and even under an optimistic outlook, it will take time to achieve substantial further progress. given my baseline outlook, i expect that the current pace of purchases will remain appropriate for quite some time. of course, the outlook is highly uncertain, and forecasts are subject to revisions β a key reason why our forward guidance is outcome based and tied to realized progress on our goals. the recovery thus far has been uneven, and the path ahead is uncertain. we remain far from our goals, with core pce inflation only at 1. 4 percent and payroll employment nearly 10 million below its pre - pandemic level. the committee β s forward see the centers for disease control and prevention covid data tracker, available at https : / / covid. cdc. gov / covid - data - tracker / # vaccinations. - 12 guidance will help keep borrowing costs low along the yield curve for households and businesses, improve inflation outcomes, and enable the labor market to heal, leading to a broader - based and stronger recovery. the strong support from monetary policy, together with fiscal stimulus, should turn the k - shaped recovery into a broad - based and inclusive recovery that delivers full employment, as mike mccracken would have wished. thank you. | 0.5 |
##pranational institution. economic policy deals with the other economic objectives. responsibility for the various areas of economic policy has largely remained with the member states, since these policies are best carried out at the national level in order to ensure that they are appropriately tailored to the specific characteristics and needs of the individual countries. β’ more specifically : o structural policies in the member states are supposed to seek to create flexible and efficient structures in product and labour markets with a view to fostering the growth potential of euro area economies and improving the adjustment mechanisms in emu ; o fiscal policies are supposed to ensure the sustainability of public finances, effectively limiting government deficit and debt ratios, thereby also ensuring that automatic fiscal stabilisers work effectively as an adjustment mechanism in the currency union ; and o wage policies should be compatible with trend developments in productivity in order to foster full employment and should take into account the overriding importance of wage flexibility as an equilibrating adjustment mechanism in the emu. β’ within the lisbon strategy, as refocused and reaffirmed by the european council in 2005, member states aim to gear national policies towards micro - economic flexibility and macro - economic stability. this would strengthen the capability of the euro area economy to swiftly re - allocate economic resources in view of exogenous economic shocks and improve its long - term growth prospects. the lisbon strategy and the peer surveillance of its implementation at the national level have raised the awareness among governments in european countries that structural reforms are decisive for remaining competitive in an increasingly global economic environment and to fully realising the economic potential of the emu. β’ significant progress in reforming labour market policies β especially in the areas of pension schemes, early retirement and part - time work β has been achieved over the last ten years in some european countries, contributing to the significant rise in the euro area employment rate, accompanied by a decline in the aggregate unemployment rate from 10. 6 % in 1996 to 7. 2 % most recently. the latest number is the lowest on record since the early 1980s, but should not give rise to complacency. β’ these encouraging developments show that past labour market reforms, immigration and wage moderation have helped to overcome some of the constraints on growth stemming from rigid and over - regulated labour markets. despite this progress, we are still a long way from having exhausted the potential for further increases in participation rates and employment. the unemployment rate is still unacceptably high and the employment rates, especially among young, female and older workers, | jean - claude trichet : conclusions of the g20 in seoul β interview in le progres interview with mr jean - claude trichet, president of the european central bank, in le progres, france, conducted by mr vincent rocken and published on 13 november 2010. * * * are you satisfied with the conclusions of the g20 in seoul? let me first of all say how delighted i am to be here in lyon, breathing my native air and soaking up the beauty of the city and its way of life. with regard to the g20, i took note of the communique stating that risks remain for the global economy and that there is a need for extreme vigilance. i share this view entirely with the heads of state and government. four further conclusions are particularly important to my mind. first, a commitment to pursue macroeconomic policies aimed at ensuring sustainable growth, including rigorous fiscal measures in countries where these are necessary. second, the need to implement ambitious structural reforms to foster growth and employment. third, the approval of the banking supervision reforms prepared by the basel committee. and fourth, a commitment to enhance the flexibility of the exchange rates of certain currencies which are not sufficiently flexible. when france takes over the presidency of the g20 for a year, what guidelines and actions should it focus on at the financial level? the global governance of the g20 is a long - term undertaking. nothing is settled, and the french presidency will need to deepen and strengthen the main avenues that are currently the subject of global consensus. this is already a huge task. but the greatest responsibility that i see for the future presidency is the correction of large external imbalances at the global level ; such a correction is crucial if we are to avoid another major crisis in the future. and in seoul the g20 explicitly asked the french presidency to work on criteria for measuring these external deficits and surpluses. the financial crisis is over, but its effects can now be felt in terms of the economy. do you believe that all the necessary lessons have been learned in order to avoid a new global crisis when one sees measures here and there that are perceived as protectionist, in particular in the united states and china? we are in the midst of reflecting at the international level on the lessons to be learned from the crisis. this is a considerable task and it is being undertaken by the whole of the international community, including emerging market economies. it will take some time. for example | 0.5 |
particular, while a lot of attention is paid to the increased probability of a recession in the united states, the baseline scenario for growth above potential this year and not far from this level for 2020 is usually not attached the same importance. clearly, the disruptive impact of a surprise along these lines could be far greater under current expectations. a second aspect of today β s global economic landscape that is worth highlighting relates to the turn towards protectionism of recent. the costs, both in the short and the long terms, impinged on the world economy from increased tariffs and other barriers to trade have been extensively discussed, and the impact is already evident in international trade figures. in fact, the wto recently reduced projections for global trade growth for 2019 to the lowest level in three years, to a significant extent as a result of rising commercial tensions and tariffs. 5 the implications for trade in intermediate goods within the framework of global value chains ( gvcs ) is particularly worrisome for a number of reasons : world trade organization ( 2019 ) : β global trade growth loses momentum as trade tensions persist β, trade statistics and outlook, press release no. 837, 2 april. the proliferation of gvcs lost momentum since 2011, and this trend has probably been accentuated by the aforementioned protectionist actions. however, their importance at present remains significant : around 70 percent of international trade is for production under these arrangements, a figure that can be roughly translated as trade in intermediate goods and services being about twice as large as that serving final demand. 6 notwithstanding their prominence, gvcs are particularly at risk due to ongoing trade conflicts. this is mainly due to the cumulative effect that tariff increases have on the total production cost of final goods, given their multiple border crossings within these frameworks, a principle that applies to other trade barriers as well. 7 additionally, a deeper sense of caution may hinder further country integration ( both at the intensive and extensive margins ) into gvcs, in view of the magnification of spillovers from bilateral tariff increases that they bring about. 8 thus, it would be reasonable to expect a further, albeit probably protracted, retrenchment in gvcs as regional and global production arrangements adjust to environments characterized by higher barriers to international trade. gvcs are an important driver of productivity gains in the partaking economies through a number of channels. in addition to the innovation, carstens, a. ( 2018 ) : β global market structures and the high | remarks by mr. javier guzman calafell, deputy governor at the banco de mexico, at the panel of central bank governors on β new challenges for central banks in latin america β. seminar on financial volatility and foreign exchange intervention organized by the central reserve bank of peru and the interamerican development bank. cusco, peru, july 25, 2017. 1 the central banks from emerging market economies ( emes ) have faced a challenging external environment in recent years. the monetary policies implemented by the advanced economies after the global financial crisis, combined with episodes of turbulence in highly integrated international financial markets deriving from a combination of factors, have resulted in substantial volatility of capital flows. in addition, emes have confronted a world economic environment characterized by lower rates of global potential growth, a decline in commodity prices, a growing anti - globalization sentiment and events of a geopolitical nature. the combination of these factors has led to a situation of acute uncertainty. if this were not enough, the global financial crisis has eroded confidence on our understanding of the economics science and of the proper way to implement monetary policy under current circumstances. the mexican experience of the last couple of years provides an illustrative example of the nature and magnitude of the challenges that our central banks have faced. since mid - 2014, the country has been hit by a combination of external shocks. to a significant extent, the current evolution of the economy the opinions and views expressed in this document are the sole responsibility of the author and do not necessarily represent the institutional position of the banco de mexico or of its board of governors as a whole. has been determined by the impact of these shocks and the economic policy that has been implemented in response to them. let me refer briefly to the most important : 1. the price of the mexican crude oil basket fell from around 100 dollars per barrel in june 2014 to some 45 dollars per barrel at present. although the share of oil in exports and gdp is relatively modest, it accounts for a substantial share of public revenues. therefore, these developments have had significant implications for public finances. in fact, when the impact of the concurrent reduction in oil prices and output is taken into consideration, the result is a decline in annual public revenues from this source of approximately 5 percent of gdp since 2012. 2. after a prolonged period with near - zero interest rates, the us federal reserve began to increase the target for the federal funds rate in late 2015. while this shock affects emes in general, | 0.5 |
a level of resource utilisation that can be described as normal. thus, although such estimates are uncertain, the swedish economy appears to have been producing below, rather than above, its long - term capacity for several years following the financial crisis. 6 confidence in the inflation target unimportant or possible to maintain with a different policy? one thing that is rarely done, but i think is of utmost importance, is to spell out the practical consequences of this criticism. it is of course easy to agree that if the riksbank had not needed to defend confidence in the inflation target, then monetary policy would not have needed to be so expansionary and the repo rate would perhaps not have needed to be negative. one may therefore draw the conclusion that those who say that monetary policy is wrong are arguing one of the following : either that confidence in the inflation target is not so important, or at least less important than other things, or that the riksbank should have been able to conduct a less expansionary policy while still being able to safeguard confidence in the inflation target. the criticism is rarely clear with regard to which of the statements it is based on, but my interpretation is that most of it is based on the first claim β that it is not so important to maintain confidence in the inflation target. unfortunately, this rarely develops into any more detailed reasoning. typically, the criticism tends to stop at monetary policy having been inappropriate, while reflections on the merits of a credible inflation target β and in particular on why the advantages of the current target should no longer apply β are almost always lacking. essentially the criticism concerns whether or not to have an inflation target when thinking about it, this criticism is in fact quite remarkable. what it actually says is that even if confidence in the inflation target is beginning to fail quite clearly, the riksbank should not do what it can to maintain it. in this sense, one can argue that the discussion is essentially about whether or not to have an inflation target, and perhaps even about whether or not to pursue an inflation - targeting policy at all, although it is rarely expressed in this way. i can only think of one earlier parallel. it was as long ago as the second half of 1994, after the riksbank had decided to introduce an inflation target, but before it came into force in 1995. the reason for the delay between the decision in january 1993 and the target coming into force was to give the inflationary impulse that arose when the krona was | a case, customers would have to be referred to other banks. of course, at least major customers generally also have contact with us banks, which never encounter acute liquidity shortages, as they can turn directly to the federal reserve in the event of a crisis. so they have access to a lender of last resort which can create dollars. this is exactly what the swedish banks lack. now, naturally it hurts for a bank to refer good customers to a competitor, but if you don β t have any dollars, then you don β t have any dollars. it β s all a question of what risks the bank is willing to take. another way of minimising the risk is for the riksbank to maintain a foreign currency reserve that the banks can have access to in a crisis, as it does at present. the riksbank has several reasons for maintaining a reserve in foreign currency, but one important argument for its current size is precisely the need to be ready to lend to the banks6. the riksbank β s foreign exchange reserve is currently equivalent to about sek 300 billion. it is, of course, difficult to say exactly how large the foreign exchange reserve would have to be to assist the banks with liquidity in a crisis situation. the amount could be either larger or smaller, but let β s assume that two - thirds of the reserve, that is sek 200 billion, is available for this purpose. what does it cost to maintain a foreign currency reserve like this? and who should reasonably pay this β insurance premium β? let us examine the cost first. one way of looking at the matter is that sweden, as a nation, has borrowed sek 200 billion more than we otherwise would have needed, and the cost for this, quite simply, is the average interest rate on the government debt. but this would be to disregard the fact that the riksbank can actually invest the money we have borrowed via the swedish national debt office in interest - bearing assets, let alone that choices are limited as the assets must have extremely good liquidity, that is to say that cash must be available at very short notice. if we assume that the difference between the deposit rate and the lending rate is about forty basis points, the annual cost for borrowing sek 200 billion would thus be about sek 800 million. is this a lot or a little? this can be discussed, but, last year, the four major banks had a combined balance sheet total of sek 11 | 0.5 |
the years leading up to the start of the crisis there was a dearth of prudential supervision, but i am quite prepared to acknowledge that there have been periods where the opposite has been true. my point here is that i don β t think the system of integrated regulation demonstrated the ability to deliver a stable equilibrium of conduct and prudential supervision. third, there is something of an inbuilt tendency within integrated regulation to play down the active debate of issues where conduct and prudential regulators find themselves with potentially conflicting objectives. of course, it can be said that the β twin peaks β approach that we are introducing could lead to endless debate and no outcomes. my own view is that that is not correct, and that the benefits of clarity in defining the objectives of the pra and the new conduct authority, the fca, will dominate any other consequences. there are several important reasons why reform of financial regulation will, in my view, be an important step forward, starting with establishing very clear public policy objectives for financial regulation to which we, as the regulators, are fully committed. for both banks and insurance companies, the pra will have the objective of promoting the safety and soundness of firms. consistent with this objective, it will focus on the potential harm that firms can cause to the stability of the financial system in the uk. we define a stable financial system as one that is resilient in providing the critical financial services that the economy needs. and this supply of services is a necessary condition for a healthy and bis central bankers β speeches successful economy, as demonstrated by the costs imposed by the financial crisis on the public and society at large. for insurance companies, the pra will have the second objective of contributing to securing an appropriate degree of protection for those policyholders. why do we need a second objective for insurance? for me, it rightly emphasises that in taking out some forms of insurance policies, the public can become locked into very long - term contracts, much longer often than is the case in banking with deposit contracts. bearing this in mind, the public interest i think justifies a second objective for insurance, which is more directly targeted at the situation of individual policyholders. in contrast as bank deposits are redeemable on demand at par value, and as banks lend the deposits at longer maturities, so they are inherently fragile and vulnerable to contagion, so protecting the system protects depositors. there are a number of important points in this description | when the call came ; or if investment institutions were unwilling to enter into such commitments on a sufficient scale for the insurance to make a difference to the system β s resilience. another idea circulating currently 30 is that banks would be required by the authorities to issue hybrid - debt - capital instruments that could be converted when needed into loss - absorbing equity. in one variant, the option to require conversion would lie in the hands of regulators provided a systemic - severity test were passed. summary and conclusions during the current crisis, the normal functioning of the financial system broke down, with profound effects on credit conditions and on the appropriate monetary policy response. although i have ranged widely today, i have in fact deliberately not covered the operations employed in some countries to lend directly to firms, effectively by - passing the financial system ; or the actions by some central banks, including the bank of england, to expand the money supply in an environment of near - zero policy rates. instead, i have focused on the repertoire of instruments directed to supporting, and ideally reviving, the financial system itself : funding liquidity, market liquidity, and solvency. in terms of funding liquidity, following innovations over the past year the bank of england now offers six permanent facilities through which liquidity can pass between us and the banking system β intra - day repos to oil the wholesale payments system ; variations in banks β reserves balances, which comprise a prime liquid asset for banks ; open market operation ( omos ) against government securities ; use of overnight operational standing facilities to absorb day - to - day frictional payments shocks ; longer - term repos through which the bank for example, β an expedited resolution mechanism for distressed financial firms : regulatory hybrid securities β, squam lake working group on financial regulation, april 2009, council on foreign relations. lends cash against wider collateral ; and a discount window facility, through which banks without fundamental problems of solvency or viability can exchange a very wide range of collateral for uk government bonds. in designing those facilities the bank has been clear about its goals. on the financial stability front, we frame them as follows : β to reduce the cost of disruptions to the liquidity and payments services supplied by commercial banks. the bank does this by balancing the provision of liquidity insurance against the costs of creating incentives for banks to take greater risks, and subject to the need to avoid taking risk onto its balance sheet. β in that area, central banks are able to draw on | 0.5 |
##cuniary externalities, of inefficient fluctuations in credit standards, or of other types of financial frictions may lead to perverse situations where these inflows result in excessive credit growth, risk taking, or misallocation of capital. an important amount of recent research has been devoted to understanding how an economy may borrow in excess and miss β allocate credit. 3 of course, if we believe that these frictions are present and strong, first β best policy actions should aim to undo them. but this may not be feasible, either because we are unsure about the presence, type, or magnitude of the frictions involved, or because first best policies cannot be implemented in the timeframe required. in such a situation, policymakers may have to resort to second best policies. we will address some of the roles of financial frictions in the transmission of foreign shocks in the presentation by javier garcia β cicco this afternoon. on top of the difficulties with implementing first best policies, policymakers may feel compelled to act fast because past experience has led them to be wary of surges in capital inflows. history has taught us that these inflows have a tendency to end in sudden stops and sharp currency depreciations that for some countries may result in recessions and crises. in the session of tomorrow morning, the presentations by jaume ventura and sebnem kalemli β ozcan will address some of the potential consequences of the capital inflows to financially β integrated emerging economies : the appearance of asset price bubbles and the transmission of foreign shocks. these concerns have led several countries inside and outside latin america to implement interventions in the forex market, capital β account β management and macroprudential policies to reduce the financial vulnerabilities that may arise from real exchange rate misalignments, fast credit growth, maturity or currency mismatches, and housing price increases. these types of policies have been more prevalent among emerging markets. but they have also been implemented by developed countries. for instance, switzerland has actively intervened to maintain the value of the swiss franc relative to the euro, and south korea has for example, forbes and warnock ( 2012 ) indicate that global factors were the most important drivers of capital flows to emerging markets, especially debt flows. fratzscher ( 2012 ) uses an event study methodology to show that qe announcements had an effect on equity and debt flows to emerging economies. see bianchi ( 2011 ) | , it is likely that the impact of the removal of qe will not be the flipside image of its implementation. let me turn now to the last determinant of the impact of a reversal : what countries do in the meantime. recent events have shown us that even a gradual normalization of global monetary conditions may not be welcome news for all countries. for various reasons, these conditions have bred more vulnerability in some countries than in others. those countries that have been running large current β account deficits, where these deficits have been financed mainly with debt, where fiscal positions are weak, and where capital inflows have bred large expansions in credit, may have already become too dependent on abundant and cheap international funding. thus, we have ended up in a somewhat strange situation where countries that not long ago were complaining about receiving too much capital inflows are now complaining about a potential shortage of funding. countries in this situation should consider the temporary postponement of tapering as a welcome opportunity to reduce their vulnerability by strengthening their fiscal position and addressing potential risks in their financial systems. there is still time, but the clock is ticking. let me be clear : tapering will take place, global monetary conditions will and should eventually normalize, and the times of extremely cheap and abundant international financing will end. in chile, we are currently in a situation where we do not consider tapering as bad news. after declining for some quarters, our trade balance has gradually improved. gross inflows are still concentrated in fdi, and an important part of foreign expenditure goes to investment goods. furthermore, chilean residents, mainly through pension funds, have large gross foreign asset positions, which have lately acted as a buffer against fluctuations in gross inflows by non β residents, as mentioned in the latest world economic outlook. our fiscal position is solid. the on β shore peso rates have not moved in tandem with the latest global increase in long term rates, but instead they have actually fallen. and we have maintained a regime of fully flexible exchange rate that has helped us deal with external shocks in an economy with small degrees of dollarization. regarding financial markets, credit growth in chile has been robust, although it has decelerated recently, and house prices have increased at a steady rate, but we see no reason to be especially worried about these developments in the short term. nonetheless, as we have repeatedly mentioned in our financial stability reports, we closely monitor developments in financial markets to act in coordination | 1 |
need for new banks in the private sector 7. the indian financial system has made impressive strides in resource mobilization, geographical and functional reach, financial viability, profitability and competitiveness, since nationalization of banks in 1969 and liberalization of economic policies since early 1990s. with the penetration of banks into the nook and corner of the country, the average population per branch office ( appbo ) declined from about 64, 000 in 1969 ( as per 1961 census ) to about a fifth of that number β 12, 400 now as per 2001 census. 8. notwithstanding the vast network of branches, a sizeable segment of population, especially the underprivileged sections of the society, have no access to formal banking services. there still exists a gap between the ever increasing demands for financial services of a growing economy and the available banking network to cater to the needs of the vast areas, which are unbanked or under - banked even today. despite the progress made over the years since nationalization of banks in 1969, the problem of financial exclusion is staggering. according to the findings of world bank global findex survey ( 2012 ), only 35 per cent of indian adults had access to formal bank account and just 8 per cent borrowed formally in the last 12 months. only 2 per cent of adult population used bank accounts to receive money ( remittances ) from members of family living elsewhere and 4 per cent received payments from the government. 9. of the 600, 000 rural habitations in the country, only about 40, 000 had been covered by the presence of brick and mortar branches of banks. with regard to financial access and penetration, india ranks low compared with oecd countries. as of 2009, india had 6. 33 branches per 100, 000 persons whereas oecd countries provided 23 β 45 branches per 100, 000 persons. 10. presently, the share of public sector banks constitutes about 72 per cent of the total banking assets in india. with the implementation of basel iii capital norms, banks will need to raise more capital. as the government β s share in the capital of public sector banks is close to the minimum of 51 per cent, raising of any additional capital by the public sector banks would require the government to infuse matching capital so as to maintain its minimum shareholding at 51 per cent. therefore, expansion of public sector banks into new areas would depend on the ability and willingness of the government to infuse capital. 11. the private sector banks | the quality of statistics. the new cims is also facilitating research on the indian economy, minimising reporting burden, exploiting the technological advances and improving the experience of both data providers and users. in this endeavour, we have also benefitted from guidance by external experts. our aspirational goal is to position information as a public good. looking ahead, the year 2025 has a special significance for compilation of official statistics the world over. global efforts are expected to culminate in new global standards3 for compilation of macroeconomic statistics, especially for national accounts 1 / 3 bis - central bankers'speeches and balance of payments. our team in the reserve bank is closely tracking these developments. we are also making efforts to harness the availability of huge computing power and growing digital footprints to analyse measures of expectations, sentiment indicators and policy credibility measures from alternative data sources. let me add that the use of alternative and unconventional data sources proved to be invaluable during the most severe phases of the covid - 19 related lockdowns and restrictions. in fact, their utility extends beyond periods of crisis. data management systems need to keep pace with the use of unconventional data sources as policy inputs. while doing so, we have to be mindful of the importance of eliminating noise and capturing the signals from high frequency indicators. we are conscious that we are moving from an era of data scarcity to data abundance. the volume of digital data stored4 as well as the storage capacity5 are growing at an exponential pace, bringing forth new challenges along with new opportunities. the focus now is naturally on enhancing capacity in artificial intelligence ( ai ) and machine learning ( ml ) techniques and analysing unstructured textual data. while doing so, ethical considerations need to be addressed and biases in algorithms need to be eliminated. in the reserve bank, we have ventured into ai / ml analytics in multiple areas. under the reserve bank's aspirational goals for rbi @ 100, we aim to develop cutting edge systems for high frequency and real - time data monitoring and analysis. as professor c. r. rao, the legendary statistician, and close associate of professor mahalanobis had said : " statistics is the science of learning from data. today is the age of data revolution. " 6 i am sure that our statisticians in the reserve bank will continue to strive for excellence and meet the emerging information and research needs of our economy in its journey towards even higher levels of development. i | 0.5 |
quality of services is too attractive to ignore. 5. it is also felt that a larger bank may be less risky than a smaller bank as the larger bank will have a more diversified portfolio resulting in less volatility in its earnings. consequently, a large bank may command higher credit rating than a smaller bank. in a march 2016 report, fitch rating agency mentioned following : β more stable banking systems tend to be structured around a number of large'pillar'banking groups. these large banks in a consolidated banking system enjoy scale benefits leading to better diversification of risks and stronger overall profitability contributing to higher credit ratings. β 6. large banks do benefit from economies of scale in terms of risk diversification, although this benefit disappears when banks become excessively large beyond a certain threshold size. this threshold size has been subject of much debate in the discipline of finance. however, there is no clear research which may point towards an optimum size for a bank in a particular country. perhaps in future, research will throw light on the optimum size of banks. however, in the context of india, it is felt that there is ample room for consolidation in the bis central bankers β speeches banking sector, especially among psbs without creating issues of moral hazard or too big to fail concerns. it does appear that the banking system in india is too fragmented at present. there is evidence, as measured by herfindahl - hirschmann index ( hhi ) for indian banking sector using square of on - balance sheet market share of all banks in the system which works out to be 518. 53. this indicates that our banking system is highly fragmented and diffused. in fact there is evidence which shows that this index has been falling over the years in india. 7. there are 48 domestic banks ( excluding rrbs and labs ) out of which there are 27 psbs having a market share of around 70 % in terms of asset size. a comparison of performance of larger psbs with smaller psbs does indicate that larger psbs perform better. for example, among all psbs, larger psbs like sbi and bank of baroda are trading at higher price to book value ratio in comparison to other smaller psbs. sbi has been able to maintain relatively strong capital ratios and appears to be in a better position to withstand shocks to asset - quality. this indicates that under indian conditions, there is lot of scope for banks to grow in size to become efficient and diversify their risks. 8. | build - up of all types of buffers. in an overarching sense, this approach is reflected in the accumulation of foreign exchange reserves which, as our experience has shown, has become our national safety net in the absence of a truly global financial shield. besides providing the wherewithal to protect our financial markets and institutions from being overwhelmed by global spillovers, the reserves have helped to build bulwarks of external strength, as reflected in modest external debt servicing and debt to gdp ratios. we believe that this is strengthening our capability to manage new challenges such as climate change and cyber threats while maintaining public confidence and ensuring the financing requirements of india's development strategy. thank you. 1 this includes 12 small finance banks, 6 payment banks, 2 local area banks and 43 regional rural banks. 6 / 7 bis - central bankers'speeches 2 2. 9 lakh crore in indian rupees. 3 national electronic fund transfer and real time gross settlement. 7 / 7 bis - central bankers'speeches | 0.5 |
the last quarter of 2009, featuring lower trade deficit during this period. however, given its relatively small share of the gdp, the impact of this correction to the economic growth of 2010 is projected to be moderate. annual inflation marked 3. 6 percent in january while average annual inflation rate increased to 2. 4 percent. the annual increase in consumer prices was in line with the bank of albania β s target for inflation in january, standing at the upper limit of the tolerance band. the upward inflation trend in january owes mainly to the higher food prices following the latter β s rise in the global markets and the lagged effect of the exchange rate depreciation. the contribution of other consumer price basket items to inflation, albeit upward, was still low. the latest energy price rise effect on february β s inflation is expected to contribute by 0. 5 percentage points to the annual inflation rate. the bank of albania assesses that the performance of the albanian economy has yielded balanced inflationary pressures. this is also confirmed by the performance of core and non - traded inflation, whose rates marked 1. 4 and 1. 7 percent, respectively, in january. these trends suggest that the inflationary pressures exerted by domestic demand are weak, while the increase of inflation over the last months owes mainly to supply - side factors. the bank of albania considers that these factors will only affect temporarily and their pressures on inflation are expected to gradually dampen in 2010. the same performance seems to be also expected by the main economic agents, whose inflation expectations remain anchored close to the bank of albania β s target. the bank of albania has been pursuing a prudent monetary policy over this period. the increase of monetary stimulus in economy, without prejudice to macroeconomic stability and keeping the economic agents β expectations stable, was the major focus of our policy. our decisions have in particular aimed at providing adequate monetary conditions for the observance of the inflation target in the medium run and smoothing out the albanian economy β s way to more stable economic and financial balances. this philosophy will continue to guide our decision - making in the period to follow. the latest data on albania β s external position cover only foreign trade. the analysis attests to the annual narrowing of trade deficit by about 17 percent in december. in annual terms, exports of goods increased 27 percent, while imports declined 10 percent. the relative coverage ratio of imports with exports increased to 23 percent. despite this performance, the external position of the albanian economy remains a concern as | to broaden their reach. ( b ) on the flip side, fintech solutions present established financial institutions with opportunities to enhance their product offerings or to improve operational productivity. mckinsey estimated that enhancing digital capacity and adopting technologies could result in productivity gains worth roughly us $ 350 billion for the global banking industry by 20252. but the competition will remain intense. large internet - based firms with their massive customer base can be serious contenders for customer mind - share and wallets including in the area of financial services. there is another development that has gained traction. we see the emergence of fully digital banks that operate entirely online with no physical branches, but are able to provide similar services as the traditional brick - and - mortar banks. fidor bank, founded in germany, is one such example. webank in china is another. dbs β digibank, a mobile - only bank in india, is also completely branchless and in less than two years, have signed up more than 1. 5 million 2 / 5 bis central bankers'speeches customers. all three have different origins and operate very different business models. i am sure the panellists later will discuss these further when they talk about the future of banking. let me turn to this forum β s theme question on whether we will witness an evolution or revolution in banking. i believe it will be both. a lot of attention and excitement have been created by services going digital. this digitisation of services have transformed the customer experience say for on - boarding or transactional purposes ; but frankly, are not ground - breaking in themselves. as one commentary noted, this is no different from reading an actual newspaper or reading the news online. but a revolution is also happening when new digital services or business models emerge that employ say, artificial intelligence ( ai ) or blockchain technologies. these can fundamentally change how we borrow, save, pay, invest or insure. as an example, there is a uk bank babb that leverages totally on blockchain and biometrics to provide peer - topeer financial services with the slogan of β everyone is a bank β. time will determine the winners and losers as this cycle of technology disruption takes it course. open banking open banking broadly captures the concept that a consumer owns information about himself, and should be able to share that information with any third party if he chooses, for example through apis, and to transfer his money to any third party seamlessly. the effect is to give consumers ownership | 0 |
, and i look forward to hearing many insightful ideas that will help us all to cope with the challenges that we now face. before closing, i would like to express once again my very deep gratitude to all participants, who have taken time from their busy schedules to be here, and especially to all staff members from our bank and from snu, who have worked so hard to make this conference possible. thank you. 2 / 2 bis central bankers'speeches | strategies, the nps must consider not only micro - level aspects but also the macroeconomic impact on the foreign exchange market, ensuring an optimal portfolio strategy that accounts for these broader effects. the decision to hold the policy rate steady in august 2024 4 / 6 bis - central bankers'speeches next, i will explain the background behind the decision to hold the policy rate steady in august this year, as the second case of applying an ipf to monetary policy. looking at domestic and external conditions at the time, inflation was showing signs of stabilization in many countries, including in korea, creating sufficient conditions to adjust the degree of monetary tightening. in fact, some advanced economies had already started to reverse their policy stance, lowering interest rates ahead of korea. in particular, as expectations of a pivot at the federal reserve rose significantly, domestic market interest rates had already dropped faster and more substantially, even though the bok had not yet begun to reverse its monetary policy stance. this over - anticipation of interest rate cuts led to a preemptive easing of domestic financial conditions beyond what was intended. following this, from august onward, the previously subdued rise in household debt and real estate prices accelerated sharply, and financial imbalances began to expand. the monetary policy board assessed that, while conditions for an interest rate cut were developing in the real economy - such as inflation and private consumption - there were growing concerns that an interest rate cut would fuel rising real estate prices and exacerbate financial imbalances. therefore, it was deemed more prudent to recommend to the government that it strengthen macroprudential policies and to observe their effects before making any rate cuts, leading to the decision to keep the policy rate steady in august. another factor in the decision to hold the rate steady was that, despite sluggish domestic demand, economic growth was still projected to exceed the economy's potential growth at that time. the high level of household debt itself does not necessarily imply a risk to the financial system, as household debt is typically backed by collateral. more importantly, however, the economy's heavy reliance on real estate distorts resource allocation by expanding the credit supply to non - productive sectors like real estate, which could act as a constraint on consumption and growth in the medium to long term. korea's disproportionate focus on real estate within the household and financial sector balance sheets, compared to other countries, requires appropriate measures to mitigate this imbalance and credit misall | 0.5 |
. first, are we being overly optimistic in terms of our forecast? i would say, no, because our gdp growth forecast this year at 2. 6 % is the same as the bloomberg median consensus forecast. meanwhile the ministry of finance and the nesdc3 forecasts are 2. 4 % and 2. 5 %, respectively, which is not much different. hopefully i can bring a touch of optimism to tonight's dinner. the latest indicators for q2 that have been coming out on consumption, exports and manufacturing production are pretty much along with our expectations. so, the outlook path seems to be relatively intact. second, are we keeping interest rates too high? in comparison to policy rates in the recent past, yes, our current rate is higher than what it used to be but it is not too high. if we look globally, our current policy rate at 2. 5 % is among the lowest in the world. there are only three countries that have lower policy rates β japan, switzerland and china. finally, is the bot tightening liquidity and lending standards to reduce credit growth and making it more difficult for people to access credit? i would argue that this is false. the bot does not impose lending standards on banks nor specify a minimum credit score in which banks can lend. also, the idea about tightening liquidity potentially comes from a misunderstanding about liquidity β that this is like a bucket of water, which is limited, and the bot can shrink it so there is less liquidity floating around. that is a false image to take away. if you look at private credit and bilateral repo, there is not a relationship between the two. it means that the activities that the bot doing in terms of buying and selling does not affect liquidity as private credit out there. although, we do 4 / 5 bis - central bankers'speeches see that private credit is tapering off, but this is not because of something the bot does, it is because banks are slowing down their lending due to increase in credit risk. to conclude, a resilient future will not only require a robust policy mix in the short - term but also need policy measures to address longer - term structural issues. let me quickly highlight some of the bot's initiatives in this regard. first, sustainability. one big issue in thailand is that we have many brown sectors ; thus, we need to make sure that there is transition to less brown. what the bot has done is coming up with key building blocks | as good as they used to be, the answer would clearly be no. on top of that given the slow recovery in income, inflation also has resulted in higher prices and higher cost of living. third, household debt has been a big drag. high levels of household debt, at about 91 % of gdp in the first quarter of this year, has been a substantial problem that is likely to be with us for a while and not easy to be solved. the reason is that the nature of thailand's household debt is particularly problematic. the composition of household debt in thailand is different from other countries where the majority of household debt is 1 / 5 bis - central bankers'speeches attributed to housing loans, underpinned by an asset. in thailand, housing loans account for only about one - third of total debt while the other two - third consists of other personal loans and other loans1. one important takeaway is that if you really want to solve the household debt problem, we need to see incomes going up. taking an example of a household in thailand's northeastern region, where household debt is an especially onerous problem for farmers, on average, there has been a steady gap between expenditures and working income2 over the past 10 years. so even if you fix the existing stock of debt, given the substantial gap between spending and income, they are going to incur new debt again. in order to address and solve the household debt problem on a sustained basis, what is required is not just measures dealing with debt, but you need to try to close that gap. this means that, firstly, we need to keep inflation low and stable because it really affects the expenditures and, secondly, we need to try to raise the level of income. if you ask whether we have done such a good job of that in the past, the short answer would be not really. i understand that there is big emphasis on trying to boost gdp growth, but gdp is not an end in itself. what we really want to see from higher economic growth is that it translates into higher welfare for households. however, if you look at the track record of the increase in economic growth or national income for the past 10 years, it has not really gone so much into labor income - national income has grown by 37 % while labor income has grown 32 %. meanwhile, the government income is laggard, having grown about 5 %, so tax revenues do not grow as rapidly as the economy does. the striking figure | 1 |
sheku sambadeen sesay : issues relating to africa in the context of the global financial and economic crisis statement by mr sheku sambadeen sesay, governor of the bank of sierra leone, at the dinner in honour of the delegates for the african caucus meeting, hosted by the bank of sierra leone, freetown, 16 august 2010. * * * ministers of finance governors of central banks head of delegations distinguished ladies and gentlemen on behalf of the president of the republic of sierra leone, dr. ernest bai koroma and the board and directors of the bank of sierra leone, it is my profound pleasure to extend a warm welcome to all distinguished personalities assembled here this evening. i believe that since your arrival here in freetown you have had a taste of the typical african hospitality which is very true of the people of freetown. as you are aware this is my first meeting since my appointment as governor of the bank of sierra leone in june this year. our meeting is taking place at a critical period. our countries are experiencing the effects of the slow down in the world economy triggered by the global financial crisis. as we are all aware this recent challenge far exceeds the capabilities of any single country. these challenges require international coordinations and inter - governmental collaboration which makes it imperative for us to work together. as we meet today we welcome the various measures taken by the bretton woods institutions to reduce the impact of the devastating effects of the turbulences in the international monetary and financial markets and look forward to future reforms to help ease the burden on our economies. another issue i will like to mention is the aspect of voice and representation which is critical for us to be fully represented in these institutions and we are happy that these issues are being addressed. for the next two days we will discuss issues relating to africa in the context of global financial and economic crisis, lessons learnt and the way forward at the miatta conference hall. this dinner gives the opportunity to set the scene and get familiar with each other as there are a host of bank governors and finance ministers here coming from all over the continent, some, if not most, of us are meeting for the first time. i am certain it will not be hard for us to get to know each other because we share a lot in common, in terms of language, culture and socio - economic conditions. it is my belief that it is this common history and economic experience that brings us together and gives us a unique advantage in understanding our collective situations to help | mohamed s fofana : sierra leone stock exchange β developing the country β s financial sector opening remarks by mohamed s fofana, deputy governor of the bank of sierra leone and chairman of the stock exchange technical committee, at the inauguration ceremony of the sierra leone interim stock exchange, freetown, 27 july 2007. * * * your excellency, the president honourable vice president my lord chief justice your excellencies, members of the diplomatic corp hon minister of finance other cabinet ministers mr governor mr secretary to the president and other senior civil servants heads of financial institutions colleague setc members distinguished members of the private sector ladies and gentlemen it is my singular privilege and honour to chair this occasion. i must confess that i only agreed to perform this function under pressure from my colleagues of the stock exchange technical committee, who insisted that as chair of that committee, i am under obligation to chair this ceremony. my personal inclination was that some more distinguished personality than myself should assume this role. it is not common that such a galaxy of distinguished personalities would converge on the bank. when this happens, it is a clear indication that something out of the ordinary is in the offing, as is clearly the case today. your excellency, the inauguration of the sierra leone stock exchange, which you are about to perform, is a unique occasion in every sense. not only is this the first such institution to be established in this country, but it also constitutes the first major visible sign of the formal commencement of organised capital market operations in sierra leone. this is a landmark in our financial history as we take a crucial step towards the further extension and deepening of our financial sector, which up till now largely consists of a money market. while this occasion is significant in its own right, i would like to stress that it is part of a process, rather than an event. from this perspective, it is simply the outcome of all the planning that has taken place in the context of deliberations in the stock exchange technical committee, work done by the capital market unit of the bank, and the inputs of local and foreign consultants, especially for the preparation of legal documents for the establishment of the capital market in general, and the stock exchange in particular. sensitisation of various parties, including our parliament, the press, representatives of the business community and the university has been undertaken, and will continue on a wider scale. consultations have been held with some institutions in the public and private sectors to forge operational links in further | 0.5 |
thomas jordan : the swiss economy in a weakened world summary of a speech by mr thomas jordan, chairman of the governing board of the swiss national bank, at the general meeting of the federation of the swiss watch industry, lausanne, 25 june 2015. the complete speech can be found in french and german on the swiss national bank β s website ( www. snb. ch ). * * * since summer 2007, the global economy has been in a state of near - permanent crisis. what began as a subprime crisis triggered the banking and financial crisis, leading to a deep recession. this culminated in the european debt crisis. the current strength of the swiss franc is a reflection of this global crisis, and highlights the franc's status as a safe haven, which is especially pronounced in times of high global uncertainty. the swiss national bank ( snb ) has responded to the appreciation pressure by taking exceptional measures. in terms of switzerland's economic activity and the snb's balance sheet, no other country has seen its monetary policy so highly exposed. the decision to discontinue the minimum exchange rate was prompted by renewed changes in international conditions, particularly the growing divergence between the monetary policy stances of the world's main currency blocks. had the snb delayed its decision, it would have lost control of monetary policy and would have had to discontinue the minimum exchange rate at a later date under much less favourable conditions. the end of the minimum exchange rate has major repercussions for the swiss economy, and it was by no means an easy decision for the snb. yet this is not the first time that the swiss economy has had to react to shocks and changes in the international environment, and the experience was often painful. the example of the watch industry shows that even a severe crisis can be overcome. unfortunately, this example is not readily transferable to other export industries. many companies currently find themselves compelled to seek cost reductions and efficiency gains. the economic outlook depends to a great extent on global economic developments. in its latest monetary policy assessment, the snb is projecting that momentum in the global economy will pick up again. this should cushion the impact of the exchange rate shock somewhat, and allow switzerland to return to positive growth in the second half of the year. while inflation has dropped well into negative territory, as things currently stand, a sustained price decline - or, indeed, a deflationary spiral - is not to be expected. overall | jean - pierre roth : recent swiss experience in monetary policy strategy summary of a speech by mr jean - pierre roth, chairman of the governing board of the swiss national bank and chairman of the board of directors of the bank for international settlements, at a seminar on monetary theory and policy, university of fribourg, fribourg, 28 november 2007. the complete speech can be found in french on the swiss national bank β s website ( www. snb. ch ). * * * one continually recurring element in the history of the swiss national bank has been the application of a clear set of rules that we refer to nowadays as β² strategy β². the snb β² s monetary policy strategy consists of three elements : a definition of price stability, an inflation forecast and a fluctuation range assigned to a short - term interest rate. experiences with this strategy since its introduction in the year 2000 β judged in terms of both price stability and cyclical developments in the economy β have demonstrated its value. nevertheless, certain aspects of the strategy have been questioned by academics and by central bankers. these include inflation forecasting under the assumption of a fixed libor, the choice of the reference interest rate, the role of monetary aggregates and exchange rates in the snb β² s models, and the decision not to publish the minutes of governing board meetings. however, these deliberately selected elements in fact serve to reinforce the legitimacy of the snb β² s strategy. | 0.5 |
problems. crisis management by the eu has not been particularly effective in restoring market confidence. while swift and resolute action has been taken towards strengthening the eu β s financial architecture, the eu has clearly been running β behind the curve β in dealing with the sovereign debt crisis. as a result, the ecb has been confronted with the inevitability of playing a compensating role, testing the limits of its mandate. 3. what do we need to do? as mentioned, the root causes of the current crisis, both the global financial crisis and its ramifications in the euro area, are now well understood. the issue to consider now is what to do. measures have to be taken both at the national and at the eu level. to be successful, national and eu measures need to be consistent, both as regards their design and their timing. at the national level, it is clear that utmost priority must be placed in restoring public debt sustainability, increasing domestic savings and enhancing potential growth in the crisis - hit countries. these are necessary conditions to stabilise external debt and put it on a downward path. these objectives are at the core of the recently approved financial assistance programme to portugal. at the eu level, a new economic governance model is needed to deliver fiscal discipline, prevent sustained losses in competitiveness and promote financial stability. bis central bankers β speeches for this purpose, in october 2010, the european council endorsed the proposals put forward by a special task - force on economic governance led by president van rompuy. the new economic governance model will comprise : a reformed stability and growth pact, aimed at enhancing the surveillance of fiscal policies and applying enforcement measures more consistently and at an earlier stage ; new provisions aimed at strengthening national fiscal frameworks ; and a new surveillance mechanism of macroeconomic imbalances. the legislative package that will establish the new economic governance model is being negotiated between the council and the european parliament, and agreement is expected before end - june. the so - called euro pact +, agreed in march by the euro area member states, and joined by 6 other eu countries, aims at strengthening policy coordination even further. the pact focuses on those areas falling under national competence which are key to increasing competitiveness and avoiding potentially disruptive imbalances. it remains to be seen whether the new surveillance framework that will soon be adopted will prove sufficient to ensure a smooth functioning of the euro area. the ecb has highlighted the importance of ensuring greater automaticity in the surveillance and | ##nomia portuguesa, lisboa, publicacoes d. quixote. blanchard, olivier and francesco giavazzi ( 2002 ), β current account deficits in the euro area : the end of the feldstein - horiokka puzzle β, brookings papers on economic activity, 2 : 147 : 209. de larosiere et al ( 2009 ), report by the high - level group on financial supervision in the eu, http : / / ec. europa. eu / internal _ market / finances / docs / de _ larosiere _ report _ en. pdf european central bank, β opinion of the european central bank of 16 february 2011 on economic governance reform in the european union β ( con / 2011 / 13 ), official journal of the european union, 25 / 5 / 2011, http : / / www. ecb. europa. eu / ecb / legal / pdf / c _ 15020110520en00010041. pdf european council conclusions β 24 / 25 march 2011, http : / / www. consilium. europa. eu / uedocs / cms _ data / docs / pressdata / en / ec / 120296. pdf fagan, gabriel and vitor gaspar ( 2008 ), β adjusting to the euro β, chapter 4 of bulding the financial foundations of the euro β experiences and challenges, jonung, lars, walkner, christoph and max watson ( eds ), routledge, 2008 ( also available as ecb working paper n. 716, january 2007 ). von rompuy et al ( 2010 ), strengthening economic governance in the eu β report of the task - force to the european council, 21 october 2010, http : / / www. consilium. europa. eu / uedocs / cms _ data / docs / pressdata / en / ec / 117236. pdf bis central bankers β speeches | 1 |
this design worked incredibly well, as activity in most of the facilities gradually declined to near zero, allowing the fed to simply turn them off with no market disruption. the success of these facilities should be judged by the outcomes they produced for financial market functioning, and not by the financial returns they generated on the federal reserve β s books. however, there are several reasons why the fed might be expected to profit from this type of lending under most circumstances. first, the fed is providing funds in response to an extreme move in the price of liquidity β that is, it is in effect buying a cheap asset. second, the programs themselves, if successful at returning market functioning, would help the performance of the fed β s loans to be sound. and third, the lending under these facilities has to be adequately secured. asset holdings : a policy lever while the exit from the liquidity facilities has been successful, the exit from the accommodative stance of monetary policy involves a different set of challenges. many of these challenges arise from the federal reserve β s outright holdings of treasury debt, agency debt and agency mortgage - backed securities ( mbs ), which together represent the overwhelming share of the fed β s balance sheet today. indeed, as a result of our large - scale asset purchase programs, these asset holdings now account for $ 2. 0 trillion of the fed β s $ 2. 3 trillion balance sheet. the federal reserve is approaching the scheduled end of its large - scale asset purchases. we have bought $ 169 billion of agency debt to date, nearly fulfilling our plan to purchase β about $ 175 billion β. for mbs, we have only about $ 30 billion of purchases remaining to reach our $ 1. 25 trillion target. in addition, we completed $ 300 billion of purchases of treasury securities late last year. looking across these programs, we have now purchased $ 1. 69 trillion of assets, bringing us 98 percent of the way through our scheduled purchases. to get to this point, the trading desk at the new york fed has so far conducted 126 discrete operations to purchase treasury and agency debt, and has managed 292 trading days on which either it or its investment managers have acquired mbs. my view is that the purchase programs have helped to hold down longer - term interest rates, thereby supporting economic activity. with the conclusion of the programs approaching, the desk has been tapering the pace of its purchases of agency debt and mbs. however, even as the pace of our purchases has | premia from agents β expectations continues to be a top priority in the research agendas of central banks. for example, we constantly monitor inflation swaps and other inflation - linked instruments to check the anchoring of expectations to the ecb β s medium - term target. 21 but the prices of these instruments are significantly affected by timevarying risk premia, which need to be accurately estimated in order to draw policy conclusions. this kind of exercise is more important than ever in the current environment of elevated inflation pressures. i am confident that this workshop will yield new insights on several topics that are highly relevant for investments and for policy - making. i want to thank lti, the organizers, the keynote speaker, the panelists, presenters, discussants, and all of you in advance. i wish you a pleasant and constructive day of discussion. notes 1. ignazio visco ( 2021 ) β the g20 presidency programme on sustainable finance β. remarks by ignazio visco governor of the bank of italy, omfif sustainable policy institute symposium webinar, 30 september 2021. 2. during the italian presidency, the imf and the interagency group on economic and financial statistics were asked to consider climate - related data needs in preparing a new data gap initiative. the financial stability board was requested to make recommendations on how to improve climate - related financial risk disclosures and close data gaps. the g20 sustainable finance study group ( g20 sustainable finance working group, 2021 synthesis report ), co - chaired by china and the us, was re - established. the study group quickly gathered inputs provided by international organizations and delivered a synthesis report, which proposes a set of recommendations to make progress in three main areas : 1 ) improving the comparability and interoperability of approaches to align investments to sustainability goals ; 2 ) overcoming information challenges by improving sustainability reporting and disclosure ; 3 ) enhancing the role of international financial institutions in supporting the goals of the paris agreement. 3. our work covers the sustainability - related aspects of monetary policy, supervision, regulation, financial stability, financial education, market operations and payment systems. we also actively contribute to the analysis of these issues ongoing at the european and international level. 4. for a broader perspective see ignazio visco, op. cit. ; luigi federico signorini ( 2022 ), β sustainable investment choices : emergencies and transition β, speech by luigi federico signorini senior deputy governor of the bank of italy, | 0 |
into their operations. the central bank is also among the early investors in the bank for international settlements β green bond fund and the asian green bond fund. amid the pandemic, the government continued to pursue game - changing reforms that help make the philippines a preferred investment destination. for instance, it pursued the passage of the corporate recovery and tax incentives for enterprises or create, which cut corporate income taxes to make it more competitive with our asean neighbors and rationalized the fiscal incentives system. in addition, three new landmark laws further open the philippines to foreign investors : the amendments to the retail trade liberalization act, the foreign investments act, and the public services act. these game - changing reforms will help stimulate the economy, generate more jobs, and allow for the exchange of skills and technology with the country β s foreign partners. the duterte administration invested much more in infrastructure under the β build, build, build β program than what previous governments have invested - around double the percentage of gdp over the past few years compared to the past few decades from 2016 to 2020, infrastructure spending as a percent of gdp averaged 4. 6 percent. this increased to 5. 8 percent in 2021. these numbers tell the story of the government β s commitment to improve mobility and create a better investment climate. taking all these into consideration, we are optimistic about the philippine economy. we expect the economy to grow by 7. 0 to 8. 0 percent this year and by 6. 0 to 7. 0 percent next year and beyond. that said, like the rest of the world, the philippines faces risks to its growth outlook and these risks include the possible deterioration in the covid situation and a prolonged russia - ukraine conflict. while the imf has cut its global economic growth forecast in its april 2022 world economic outlook, it raised its gdp growth projection for the philippines from 6. 3 percent to 6. 5 percent this year. on covid - 19, the philippines is managing risks of potentially new variants emerging through sentinel surveillance and protecting the vulnerable population through accelerated vaccination. as of may 17, 68. 8 million out of the target 90 million filipinos have already been fully vaccinated. on the ukraine - russia conflict, there β s an impact to domestic prices, but we expect inflation to remain manageable. based on the most recent bsp forecasts, inflation this year could average 4. 6 percent. that is above our target range of 2. 0 to 4. 0 percent, but | banca and banca popolare di vicenza were wound up using public funds. is this a failure for banking union? no. quite the contrary, in fact. the ecb, in its role as banking supervisor, identified the problems ahead of time and put pressure on the banks to strengthen their capital, which they did on several occasions, and to find a buyer. once these options were exhausted, the ecb declared that these two banks were failing or likely to fail, in order to trigger the mechanism for winding them down. the decisions regarding their liquidation and the use of public funds do not fall under our remit, but everything was done in accordance with european rules. of course, there are lessons to be learnt, but let β s not lose sight of the bigger picture. from now on, it will be possible to close down banks when they are no longer viable. this is a massive cultural shift in europe β for a long time the assumption had been that all banks had to be kept afloat, including those that were no longer viable. this mindset contributed to the weakness of the european banking sector, which currently has too many institutions. it will have to consolidate. will the brexit negotiations harm investment in the euro area? brexit is bad news for everyone, but it was the british people β s choice, and its economic impact is far less significant for us than it is for them. political uncertainty is diminishing on the continent, which helps boost investment, but in the united kingdom the opposite seems to be the case. it is for the british people to choose their destiny outside of the european union, but one thing must be clear : this cannot call into question the coherence of the european project and the integrity of its single market β a legal space in which the common rules are respected and consumers and investors are protected. the purpose of the european institutions is to protect that integrity. and that holds true if the negotiations fail, which is sadly a possibility. with its economy battered by year after year of crisis, what could be the future drivers of growth in greece? that is the issue the greek government can now tackle. the agreement reached by the eurogroup in june isn β t perfect, because it doesn β t provide a clear answer to the issue of greek debt sustainability, but it will enable the economy to stabilise and investment to return. if political uncertainty and uncertainties around the implementation of the aid package disappear, i am sure | 0 |
companies. these responsibilities are separate from the tasks of overseeing the conduct - of - business and consumer protection aspects. among other things, this model honours the close links between the systemic stability interests of central banks and the prudential supervision of financial institutions. financial stability is always in the direct interest of central banks, because of its importance for the successful conduct of the basic central banking tasks in the fields of monetary policy and payment systems. although one should always be cautious in exporting national institutional structures to other countries, the dutch model might provide useful insights to others. the current supervisory landscape in other european union countries, as well as at the community level, is also far from being static. discussions of the appropriate institutional structures and mechanisms have intensified both at the national and european level. these debates are very healthy and demonstrate an active response by policy - makers to the development of cross - sectoral links in the financial industry, as well as to the changes brought about by the euro and financial integration. tonight, i would like to review briefly these national and european discussions. as the issues are manifold, i would like to concentrate on the role of the national central banks and the eurosystem in prudential supervision. the role of the eurosystem is rooted in the maastricht treaty, which gives it the task of contributing to prudential supervision and financial stability, while keeping the primary responsibilities in these areas at the national level. let me first turn to national developments. following the creation of the financial services authority in the united kingdom, proposals have been put forward in a number of european countries, for instance in austria, germany and ireland, to set up a single supervisory authority in charge of all financial institutions. in some cases β unlike here in the netherlands β the proposals have also included a reduced role for the central bank in prudential supervision, while increasing the responsibilities of the separate supervisory agency. in ten out of twelve euro area countries, the central bank is still either directly responsible or otherwise closely involved in the operational conduct of supervisory duties. only in luxembourg and belgium this is not the case, and in the latter a reform is being proposed that increases significantly the involvement of the central bank. as we have often said, the eurosystem strongly supports a continued involvement of national central banks in prudential supervision, although the institutional set - up of financial supervision needs to be tailored to the structure of the respective national financial system. any solution other than direct responsibility should be coupled with close | to strengthen cross - border and cross - sectoral co - operation between supervisors, to enhance convergence in supervisory practices and to reinforce collaboration between supervisory and central banking functions. the eurosystem supports these conclusions. there are clear benefits in keeping supervision close to the institutions being overseen at the national level, while financial integration requires co - operation between the relevant authorities to be stepped up. in my view, positive developments have already occurred in the implementation of these recommendations. for example, the banking supervision committee of the european system of central banks β chaired by deutsche bundesbank directorate member edgar meister β has enhanced and continues to develop its regular monitoring of the soundness of the european union banking system as a whole, as well as its analysis of structural banking and financial developments. these activities rely extensively on the close and constructive co - operation established within the committee between central banks and banking supervisory authorities. indeed, the eurosystem regards the promotion of co - operation between central banks and supervisory authorities as one of its main contributions in the field of prudential supervision. however, the full implementation of the β brouwer recommendations β requires additional work in order to establish an effective information exchange β both in times of calm and in times of crisis β and to achieve further convergence in supervisory practices. in addition to the financial stability considerations, the issue of supervisory co - operation also needs to be looked at from the angle of the efficiency of the financial system. indeed, increasing attention is being paid by policy - makers and market participants to the remaining inefficiencies in the financial sector and the residual obstacles to financial integration. for instance, the recent β gyllenhammar report β drew attention to the need for greater standardisation of supervisory compliance requirements and practices because of the cost burden on financial institutions developing cross - border businesses. these conclusions were further reinforced in the recent report by the economic and financial committee under the chairmanship of yet another compatriot of mine β kees van dijkhuizen, the dutch treasurer - general. in a similar quest for greater efficiency, considerable attention has also been paid to the community regulatory process, with emphasis on the need to achieve swift rule - making and consistent implementation in different member states. the recent institutional agreement achieved on the implementation of the β lamfalussy procedures β represents a major step forward in the field of securities regulation. it removes the burden of detailed and cumbersome regulation at the community level by delegating rule - making powers to a | 1 |
andrew bailey : banknotes in circulation β still rising. what does this mean for the future of cash? keynote address by mr andrew bailey, executive director for banking services and chief cashier of the bank of england, to the banknote 2009 conference, washington dc, 6 december 2009. * * * i am grateful to helen allen, nikki brownlie, victoria cleland, nick davey, andrew dent, iain de weymarn, lee dobney, andrew hauser, matthew hunt, orla may, sally reid and andrew wardlow for their comments and assistance. it is a great pleasure to be the keynote speaker at banknote 2009. i want to use my time today to consider the implications of developments in banknote circulation for the future of cash. in particular, i am going to examine what i regard as the apparent paradox of banknotes, namely that the value of notes in circulation continues to rise, while the evidence we have suggests that the use of banknotes as a payment mechanism is declining gently, not i should say dramatically. i am going to illustrate this using our experience of bank of england banknotes. there are three parts to my remarks. i am going to begin by describing trends in banknote circulation and use. then i will consider the paradox in these trends. finally, i will draw out some key challenges that we face in managing the circulation of bank of england notes. let me say at the outset that my very clear objective in terms of bank of england notes is to maintain the integrity of our banknotes, and an important part of that is meeting the public demand. i am not trying to promote or kill our notes. the trends in banknote circulation and use i am going to talk about trends in banknote circulation in the context of the roles of money, as a medium of exchange ( payments ) and a store of value. chart 1 illustrates the pattern of the total value of bank of england notes in circulation over the last forty years. the striking thing is the acceleration of growth over the last fifteen years. this may come as something of a surprise to the β cash is dead β lobby. this chart suggests that nothing could be further from the truth. the total value of our circulation was around Β£15bn in the mid 1990s, while today it is around Β£45bn. as the chart also shows, this increase can for the most part be attributed to one denomination, the Β£20 note. but it is important to put this increase in notes in | and the global financial stability report. these efforts must now be redoubled. from the standpoint of central banks, recent events have underscored not only their role in monetary policy, but also their important function in the stability of the financial system. in this context, research on issues related with financial stability has been dramatically intensified. clearly, there are varied degrees of consensus regarding how to characterize a good financial policy framework, how to measure it, achieve it and preserve it, as well as its possible tradeoffs with monetary policy. this conference seeks to contribute the study and analysis of these topics, as well as cooperating in our management, as policymakers, of financial stability and associated macrofinancial risk. today, our work will focus on defining the concepts of financial stability and systemic risk, and on understanding the conceptual frameworks that support their evaluation and the links with and feedback from monetary policy. garry schinasi will open the day, introducing what we must understand by financial stability and examining the implications and challenges of understanding systemic risk. claudio borio will explore the operational aspects and the precautions we must take regarding the methodologies we use to measure systemic risk. dale gray will handle the third presentation, integrating the idea of financial risk β by using options β with macroeconomic models focusing on monetary policy analysis, then applying the tools to the particular case of chile based on his joint research with leonardo luna and jorge restrepo. johan molin will share with us the experience of the sveriges riksbank, which has led financial stability analysis since the problems it endured in the early 1990s. this afternoon, francis diebold will analyze, for the financial markets of the united states and four latin american economies, stock returns and volatilities to look for evidence of contagion and its characteristics. charles goodhart, dimitrios tsomocos and alexandros vardoulakis will present us the study of a heterogeneous agent model with a real - estate sector and financial fragility. later on, ethan cohen - cole and enrique martinez - garcia will present their research on the interaction of financial intermediation and banking system regulations and its effect on the optimal monetary policy response. tomorrow will begin with the presentation of jaime ruiz tagle and marcelo fuenzalida, who will examine, for the case of chile, the systemic risk of household debt. miguel segoviano will follow, with a review of systemic risk and banking stability from a macro | 0 |
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