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variety of new fees makes it difficult for customers to compare the different offers. the fee structure needs to be drastically simplified. new legislation to resolve the ambiguities of its predecessor would appear necessary. within days we will submit to the government a comprehensive regulatory proposal that can lead to clearly stated charges, so that all customers can compare different banks and competition can operate freely, without the impediment of opacity. for a month, new rules on transparency in banking and financial services and on the β basic current account β have been in effect. a major contribution to improving relations between intermediaries and customers comes from the institution of the banking and financial arbiter, which has been in operation since 15 october. customer appeals have come in steadily, and the panels have already handed down their first decisions. in a number of cases disputes were settled in the customer β s favour even before the arbiter β s ruling. the initial signs are therefore very encouraging. the overall outcomes of customer complaints will be made public in april, providing useful information for supervisory action. http : / / www. bancaditalia. it / vigilanza / banche / questio / comm _ banche. pdf ( only in italian ). supervisory action the action of the bank of italy in supervising banks and financial intermediaries is governed by a consistent logic. on - site inspections, off - site controls, measures on capital and liquidity, provisions on banks β by - laws and managers β compensation, and rules and controls for transparency and correctness in dealings with customers are all shaped by the assessment of the risks to which intermediaries are subject. following the coordinated exercises conducted last year by the european supervisory authorities, a new round of stress testing of the major eu banks has begun in recent weeks. the results will be released by the end of june. stress tests are by now an ordinary supervisory tool ; the bank of italy, with the active participation of the banks, has promoted the corrective actions needed to refine and reinforce them. in 2009 we intervened repeatedly to remind banks of the need for full compliance with the rules on corporate organization and governance. for the cooperative banks, the aim has been to strike a balance between ensuring the stability of the governance structures approved by membership meetings and avoiding the risk of overly self - referential management. to this end we have recommended the amendment of by - laws to guarantee sufficient representation of minorities within the banks β governing bodies and to facilitate membership | news conference berne, 16 june 2022 fritz zurbrugg introductory remarks by fritz zurbrugg in my remarks today, i will present the key findings from the new financial stability report, published this morning by the swiss national bank. economic environment in the period between the publication of the last financial stability report and the end of 2021, economic and financial conditions for the swiss banking system remained favourable. gdp has returned to, or even exceeded, pre - crisis levels in most countries and unemployment rates have receded globally. corporate ratings have improved and credit quality has remained high. however, these conditions have recently become more challenging, due to both the war in ukraine and rising inflation around the world. as my colleague thomas jordan has explained, the snb β s baseline scenario assumes that the impact of the war in ukraine on domestic economic activity and inflation will be temporary and moderate. however, the economic outlook is subject to very high uncertainty regarding the development of financial and monetary conditions as well as economic activity. this environment presents various risks for financial stability. first, the deviation between market prices for residential real estate and the price level that can be explained by fundamental factors, such as income and rents, has continued to increase in many countries, including switzerland. second, stock valuations in some markets remain high despite recent corrections. third, sovereign and corporate debt levels rose significantly during the coronavirus pandemic. these vulnerabilities increase the sensitivity of the economy and of financial and real estate markets to adverse shocks. i would now like to outline the position of the two globally active banks, credit suisse and ubs. i will then present our assessment of the situation at the domestically focused banks. page 1 / 3 berne, 16 june 2022 fritz zurbrugg news conference globally active banks the two globally active banks developed differently in terms of profitability. ubs β s profitability increased and was high by historical comparison. at credit suisse, however, profitability was negative. this is on the one hand due to extraordinary items, such as large provisions for litigation, and on the other to relatively low operating performance during the period under review. the differing profitability is also reflected in market indicators such as cds premia and stock prices. after the archegos losses, the market drew a stronger distinction between the two banks and it continues to have a more positive assessment of ubs than credit suisse. with the outbreak of the war in ukraine, the market β s assessment | 0 |
may ). bis central bankers β speeches that such demand may signal that larger firms are becoming more willing to provide trade credit to smaller firms that are their suppliers or customers. in the most recent sloos, the net percentage of respondents reporting higher loan demand by large and medium - sized firms rose above 20 percent for the first time since 2005 ( figure 10 ). that said, banks report that loan demand from smaller firms remains fairly weak. only a small net percentage of banks reported stronger demand from such firms. conclusion to sum up, the financial conditions that would be necessary for small businesses to start up and thrive would include positive conditions for personal wealth building and a full range of consumer and business credit availability. in the wake of the financial crisis, small business owners and potential small business owners likely experienced a substantial reduction in the personal resources necessary to start or sustain a business. at the same time, small business loans became harder to get, and when they were available, both price and nonprice credit terms were likely quite restrictive. many small business owners were so convinced that their requests would be denied that they did not even apply for credit. despite this restricted credit availability, small business owners, by a large margin, still considered their most significant problem to be weak sales. although no definitive data source exists, the combination of a variety of recent survey results paints a picture of increasing optimism about future sales and business conditions and a corresponding easing of credit availability for small businesses. bis central bankers β speeches bis central bankers β speeches figure 4. outlook for general business conditions 6 months from now ( net ) * ( monthly data, 1990 - 2011 ) figure 5. change in standards for commercial and industrial loans to small firms ( quarterly data, 1990 - 2011 ) bis central bankers β speeches figure 6. change in spreads of loan rates over cost of funds to small firms ( quarterly data, 1990 - 2011 ) bis central bankers β speeches figure 8. paynet / thomson reuters sbli percent change vs. year prior ( monthly data, 2006 - 11 ) sbli small business lending index. source : paynet / thomson reuters. figure 9. paynet / thomson reuters small business lending index ( monthly data, 2005 - 11 ) bis central bankers β speeches bis central bankers β speeches | public comment on proposed principles providing a high - level framework for the safe and sound management of exposures to climate - related financial risks for large banking organizations, β press release, december 2, https : / / www. federalreserve. gov / newsevents / pressreleases / other20221202b. htm. crowe, christopher, and ellen e. meade ( 2008 ). β central bank independence and transparency : evolution and effectiveness, β european journal of political economy, vol. 24 ( december ), pp. 763 β 77. debelle, guy, and stanley fischer ( 1994 ). β how independent should a central bank be? β in goals, guidelines, and constraints facing monetary policymakers, proceedings of a conference held in north falmouth, massachusetts, in june 1994. boston : federal reserve bank of boston, pp. 195β221, www. bostonfed. org / economic / conf / conf38 / conf38f. pdf. rogoff, kenneth ( 1985 ). β the optimal degree of commitment to an intermediate monetary target, β quarterly journal of economics, vol. 100 ( november ), pp. 1169β89. tucker, paul ( 2018 ). unelected power : the quest for legitimacy in central banking and the regulatory state. princeton, n. j. : princeton university press. | 0.5 |
incentives. protocols and best practices for such eias may have to be drawn up taking into account the work done in the area of ascribing monetary values to the costs of threats to ecosystem and biodiversity and the benefits from such ecosystem services and biodiversity. i would like to take this opportunity to draw attention to hon β ble union finance minister β s budget speech for 2010 β 11, in which he announced a number of measures for addressing environment / climate change issues and preserving biodiversity. i am sure all concerned will take advantage of these announcements, actively support and involve in the initiatives for protecting ecosystems and preserving biodiversity. finally, i would like to close with a quote from the speech that hon β ble prime minister dr. manmohan singh delivered on june 30, 2008 while formally launching india β s national action plan on climate change : β india has a civilizational legacy which treats nature as a source of nurture and not as a dark force to be conquered and harnessed to human endeavour. there is a high value placed in our culture to the concept of living in harmony with nature, recognizing the delicate threads of common destiny that hold our universe together. the time has come for us to draw deep from this tradition and launch india and its billion people on a path of ecologically sustainable development β. it gives me great pleasure to inaugurate this teeb d2 workshop and wish it all success. thank you. | these concepts into decision - making on investment projects and use of natural resources β whether in the public or private sectors? what should be the policy framework, and consequently the regulatory framework, to implement these policies? i find that the national biodiversity action plan published by government of india, ministry of environment and forests in 2008 highlights as an action point the valuation of goods and services provided by biodiversity and use of economic instruments in decision making processes. more specifically, the action plan states to assign appropriate market value to the goods and services provided by various ecosystems and strive to incorporate these costs into decision making, management and sustainable utilization of biological diversity resources. to factor - in natural resource accounting ( nra ) in the national economic planning processes and encourage financial institutions to adopt appropriate nra appraisal practices so that risks to biological diversity are adequately considered in the financing of projects. this clearly puts in perspective the significance of assigning value to natural resources, biodiversity and ecosystem services in economic policy. so, what are biodiversity and ecosystem services and why and how do we measure their value? wikipedia defines biodiversity as the variation of life forms within a given ecosystem, biome or on the entire earth. biodiversity is often used as a measure of the health of biological systems. the biodiversity found on earth today consists of many millions of distinct biological species. many biologists now believe that ecosystems rich in diversity gain greater resilience and are, therefore, able to recover more readily from stresses such as drought or human - induced habitat degradation. possibly, the greatest value of the variety of life may be the opportunities it gives us for adapting to change. the unknown potential of genes, species and ecosystems is of inestimable. but certainly of high value. genetic diversity will enable breeders to tailor crops to new climatic conditions. the earth β s biota is likely to hold still undiscovered cures for known and emerging diseases. a multiplicity of genes, species, and ecosystems is a resource that can be tapped as human needs change. almost all scientists acknowledge that the rate of species loss is greater now than at any time in human history, with extinction occurring at rates hundreds of times higher than background extinction rates. the factors that threaten biodiversity have been variously categorized. jared diamond describes an β evil quartet β of habitat destruction, overkill, introduced species, and secondary extensions. the iucn has a detailed list of direct threats to biodiversity. humankind benefits from a multitude of resources and processes that are supplied by natural ecosystems. collectively, | 1 |
philip lowe : low inflation in a world of monetary stimulus speech by mr philip lowe, deputy governor of the reserve bank of australia, to the goldman sachs annual global macro economic conference, sydney, 5 march 2015. * * * i would like to thank marion kohler for excellent assistance in the preparation of these remarks. accompanying charts can be found at the end of the speech. i would like to thank goldman sachs for the invitation to speak today. it is a pleasure to be here and be part of your annual macro economic conference. it is perhaps stating the obvious to say that an important part of the macroeconomic environment is monetary policy. the actions of central banks have material effects on financial markets and can shape macroeconomic outcomes. indeed, over recent decades it became widely accepted that monetary policy was the primary macroeconomic stabilisation tool and that monetary policy could effectively manage the business cycle. from today β s perspective, the picture looks a little different. in many ways, the current global monetary environment is quite extraordinary. there has been unprecedented money creation by the world β s major central banks. policy interest rates are negative across much of europe. long - term government bonds yields in most advanced economies are the lowest in recorded history. lending rates for many private sector borrowers are the lowest ever. and some banks in europe are now charging customers to accept deposits. in earlier eras, one could have predicted with some confidence that this type of monetary stimulus would have created a boom in economic activity and subsequently a substantial lift in inflation. yet, today, many parts of the world continue to operate with considerable spare capacity, inflation rates are low almost everywhere and inflation expectations have generally declined, not increased. so this afternoon, i would like to talk a little about these very unusual times. i will begin by showing a few graphs that summarise the current global monetary environment. i would then like to explore some of the possible reasons why we are in this environment before addressing some of the implications of all this for australia. the current global monetary environment so first, to the facts. since the global financial crisis, we have seen an extraordinary increase in the size of central bank balance sheets. this first graph shows the size of the combined balance sheet of the us federal reserve, the bank of japan and the european central bank ( graph 1 ). this combined balance sheet has increased from the equivalent of us $ 3Β½ trillion in early 2007 to almost us $ 10 trillion today, and a further substantial rise is in prospect. | to 1973 / 74 average 1974 / 75 to 1995 / 96 65 / 66 70 / 71 75 / 76 80 / 81 85 / 86 90 / 91 95 / 96 another measure of fiscal activism is the size of government expenditure relative to the economy. it will come as no surprise to see that general government outlays relative to gdp were much lower in the 1960s than they are now ( diagram 2 ) ; in the earlier period they accounted for about 25 per cent of gdp, but over the last two decades they have averaged 34 per cent of gdp. the stance of monetary policy is more difficult to analyse because interest rates cannot be used as the measure of comparison. this is because before the early 1980s the financial system was heavily regulated, with the government imposing interest rate ceilings on most forms of lending. tightenings and easings in monetary policy showed up largely through credit rationing - the ease or difficulty in obtaining a loan at a given interest rate. this would be familiar to people who can remember the difficulty of obtaining a housing mortgage at that time. the best way of judging whether monetary policy was tight or loose in such a system was to see how fast it allowed money and credit to grow. the growth of the money supply is shown in diagram 3, and again we see relatively low and stable expansion during the 1950s and 1960s ( except for the korean war boom ), before the turmoil starts in the 1970s ( in this case, the very early 1970s ). i referred earlier to the fact that monetary and fiscal policy had to operate under an important constraint during the 1950s and 1960s. the constraint to which i am referring is the gold exchange standard, whereby virtually all oecd countries fixed their exchange rate to the us dollar, which in turn fixed to gold. in australia β s case, our exchange rate to the us dollar did not change between 1949 and 1971. this was in a way the centrepiece of our economic policy. monetary policy and fiscal policy could not get too expansionary without either inflation or the balance of payments threatening the exchange rate. this mechanism effectively meant that our macro - economic policies ( and those of most oecd economies ) could not get too far out of line with the policies pursued by the us government. a recognition of this link means that if we wish to fully understand what happened in the 1950s, 1960s and early 1970s, we have to look more closely at the trends in us economic policy. this also means that we will have to stop looking at the 1950s, 1960s | 0.5 |
but it's hardest on those who can least afford essentials like food, housing, and transportation. persistently high inflation also undermines the ability of our economy to reach its full potential. the federal reserve has a dual 1 / 5 bis - central bankers'speeches mandate, set by congress, to promote price stability and maximum employment. and price stability is essential for the achievement of maximum employment on a sustained basis. over the past year, the fomc has taken strong actions to bring inflation down. although we have seen some moderation in recent months, the inflation rate remains far too high at 5 percent. in addition, measures of underlying inflation also remain elevated and well above our 2 percent longer - run goal. for example, after declining earlier in 2022, the new york fed's multivariate core trend has been hovering around 3 - 3 / 4 percent for the past few months. 1 similarly, both the dallas fed's trimmed - mean pce inflation rate and core inflation that excludes food and energy prices averaged around 3 - 3 / 4 percent over the past six months. so, our work is not yet done. inflation is still well above our 2 percent target, and it is critically important that we reach that goal. supply and demand misalignment to help illustrate how tighter monetary policy is working to reduce inflation, i like to use an analogy inspired by a mechanism that consists of different gears. 2 in this case, i'll hearken back to a time before rechargeable batteries, and even before quartz, to the age of the mechanical watch. our watch represents the economy, and its gears are different sectors. some gears spin quickly ; others turn slowly. they need to turn at the right speed to keep time accurately - or, in this example, to maintain balance in the economy. the gears are propelled by supply and demand, which act as the mainspring of our watch. but they have been misaligned since the onset of the pandemic. at first, when people were home and factories were shuttered, demand shifted strongly from services to goods, which were scarce due to supply - chain bottlenecks. then, once people got out of their homes and businesses reopened, we saw a rotation in demand away from goods and back to services. but even with this rebalancing and the contributions of tighter policy, overall demand still exceeds supply. similar imbalances exist in the labor market. after the pan | ##demic forced mass shutdowns, unemployment surged. but as businesses reopened and the demand for workers rebounded, suddenly there weren't enough people to fill jobs. today, the labor market remains extremely tight. job gains are robust. job openings are near all - time highs. quit rates and wage gains remain elevated. and the unemployment rate, at 3. 4 percent, is the lowest since 1969. as some of you may recall, that was the year " in - agadda - da - vida " was the best - selling album. and the title track is, of course, another great valentine's day song. turning the inflation gears 2 / 5 bis - central bankers'speeches inflation has its own set of gears, and some are spinning faster than others. the one that's turning quickest relates to globally traded commodities - such as lumber, steel, and grains - that are sensitive to international economic and financial conditions. thanks in part to tighter policy in the united states and around the world, those prices are below the levels we saw following russia's invasion of ukraine. the gear that represents many other goods - such as cars, appliances, and furniture - has also started to turn. higher interest rates, both here and abroad, are damping global demand for goods. in addition, the severe supply - chain bottlenecks that initially affected this category began to improve last year, which likely contributed to the easing of prices for some durable goods in recent months. however, there are factors that may throw sand in this gear going forward. the economic resiliency of europe and a rebound in growth in china following the end of covid restrictions will likely increase global demand for goods. and further improvement in global supply - chain disruptions has stalled over the past few months. for example, the new york fed's global supply chain pressure index remains elevated relative to pre - pandemic levels. the slowest gear to turn is the one that represents non - energy services. it's influenced by the balance of overall supply and demand, and it will take the longest to rotate at the right pace for low and stable inflation. one area where we are seeing signs of this gear turning is in shelter costs. after a sharp rise, we have seen a steep decline in the rate of increase in new lease rents. assuming this trend continues, we should see a slowing of overall rent inflation during this year. that said, we have yet to see the gears turn for | 1 |
jurgen stark : structural reforms in europe bullet points by mr jurgen stark, member of the executive board of the european central bank, for a speech delivered at the oecd - imf conference on structural reforms in europe, paris, 17 march 2008. * * * β’ it is well established that the lack of structural reforms is the main factor behind the relatively disappointing economic performance of some euro area countries over the last few decades. despite the acceleration in economic growth of the last three years, the gap in gdp per capita between the euro area and the united states remains substantial, reflecting lower levels of both productivity and labour utilisation. overcoming these constraints to growth is essential in the current environment, where the european economy is facing a number of important challenges, including rapid technological change, accelerating globalisation and ageing populations. β’ the emu is a catalyst for structural reforms in europe. within the monetary union, regional monetary and exchange rate policies are no longer viable options. flexible and integrated labour and product markets are therefore a prerequisite for the smooth functioning of the euro area, including countries β ability to absorb shocks and fully benefit from emu. this is why a price - stability orientated monetary environment in principle provides more, not fewer, incentives for national governments to implement structural reforms. β’ the performance of the euro area policy framework, however, has been mixed. on the one hand, the first nine years of emu have been characterised by low and stable inflation and firmly anchored inflation expectations, vindicating the monetary policy framework laid down in the maastricht treaty. on the other hand, the overall achievements of economic policies over the last nine years have been rather disappointing. progress with structural reforms still falls short of expectations, fiscal policies in some countries conflicted with the rules of the fiscal framework, eventually leading to an adjustment of the rules rather than of policies, and also wage policies have often not taken sufficient account of the requirements of the new situation of a single currency. β’ the institutional framework of the emu provides european policy - makers with the tools to successfully address the challenges ahead. the maastricht treaty established a clear allocation of responsibilities to different policy areas, reflecting the fact that assigning policy instruments primarily to one single policy objective and making individual policymakers responsible for one single policy instrument ensures a high level of effectiveness and accountability. β’ the single monetary policy was given the task of maintaining price stability in the euro area and was assigned to the ecb as an independent, su | which are closer to the single monetary policy. while the euro area banking markets for wholesale and capital market - related activities show clear signs of increasing integration since the introduction of the euro, the retail banking segment has remained more fragmented, leaving european consumers unable to take full advantage of the benefits of the emu and the single market. 4 β’ while there has been progress in the implementation of structural reforms in europe, the catalyst role of emu in improving europe β s growth potential has not yet been fully exhausted. the lacklustre performance in many euro area countries is rooted not in deficiencies in the current institutional framework, but rather in some national governments β lack of willingness to implement structural reforms. the reasons why politically motivated governments tend not to implement sufficient structural reforms are by now well known. structural reforms typically have positive, long - term effects, which can be difficult to ascertain in advance, but often negative short - term effects that are relatively more visible to voters. β’ it has sometimes been argued that some macroeconomic stimulus from aggregate demand policies might help foster the implementation of structural reform packages by offsetting potential short - term costs of reforms. this idea that there could be a trade - off between structural reforms and macroeconomic accommodation is disputable, notably in the emu. such accommodation could be provided either by monetary policy or fiscal policy, which i will now discuss in turn. β’ in the emu monetary policy is not the appropriate tool for mitigating the potential shortterm costs of structural reforms or for providing incentives for reforms at the national levels. first, reform needs differ across euro area countries and the single monetary policy is by its very nature unable to mitigate the potentially different short - term countryspecific costs of reforms. second, there are well - known and overwhelming implementation problems of ex ante coordination between policy makers with different objectives. this typically gives rise to incentive distortions for the policy actors involved. an immediate consequence of any attempt to seek closer coordination with the ecb would be a blurring of responsibilities, which would lead to every institution being made responsible for everything, which in the end would mean that, amid confusion, no institution was responsible for anything, and no successful reform implemented. β’ price stability is the best contribution monetary policy can make to structural reforms in europe. by improving the quality of relative price signals, our price stability - orientated monetary policy makes it easier for policy makers and european citizens to identify the areas in which structural reforms are most needed | 1 |
encik adnan zaylani mohamad zahid : prevention of corruption in project management opening remarks by mr encik adnan zaylani mohamad zahid, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the malaysian anti - corruption commission ( macc ) talk entitled " prevention of corruption in project management ", kuala lumpur, 3 april 2017. * * * it is my great honour and pleasure to welcome officers from the malaysian anti - corruption commission ( macc ), particularly the speaker for today, assistant commissioner mr mohan munusamy. a warm welcome is also extended to the project teams comprising the steering committees, contractors and consultants. my appreciation also goes to all my fellow bank staff who are here today. in more recent times, the bank and macc have collaborated on a number of fronts. the recent strategic cooperation between the bank and macc, together with lhdn to combat financial crime, particularly corruption, signifies our commitment to work together in this area. from the bank β s perspective, this demonstrates our effort to instil integrity for and beyond our regulatees in the financial market. integrity is taken very seriously at the bank where we continually and consciously maintain the highest standards, given that we enforce these standards on our regulatees in our supervisory capacity. we proactively manage integrity hazards and corruption risks and tackle those risks pre - emptively. corruption is not simply a crime on its own. its consequences can be far - reaching in terms of economic losses and irreparable reputation damage. thus, we must actively keep abreast of the management of integrity risks. as an institution, we have been blessed to have had pioneers who upheld the highest standards of excellence in our corporate conduct. the late tun ismail ali, the first malaysian governor from 1962 to 1980 was well known as a person of the highest integrity. i can recall his younger brother relating an episode in this regard. an aspiring architect at that time, he was told by the late tun ismail, not to ever set foot in the bank while he was the governor. uncompromising and unyielding, we certainly should strive to assimilate tun β s values and standards. indeed, we are fortunate that his successors have continued his trademark standard of integrity, to the extent that it is deeply ingrained in our corporate dna today. the bank does not tolerate any wrongdoing which may tarnish its reputation, given that our solid | luis de guindos : interview in corriere della sera interview with mr luis de guindos, vice - president of the european central bank, in corriere della sera, conducted by mr federico fubini on 13 june 2019. * * * the 5y5y forward inflation rate is at an all - time low and clearly below where it was when mario draghi first hinted at quantitative easing ( qe ) in 2014. the ecb has already done some more easing and president draghi himself mentioned that there was an interesting discussion at the latest governing council meeting on different tools to do some more easing β the asset purchase programme ( app ) and others. what do you need to see in order to decide to do more? what we need to see is a de - anchoring of inflation expectations. this has not yet happened, despite the fact that there has been a drop in market - based inflation expectations. if you look at the survey of professional forecasters, the situation is a little bit different β expectations have remained stable. then we need to see if there is a significant additional drop in economic activity β a crystallisation of the downside risks that we have indicated. we can always try to look forwards to get an idea of what might happen, but ultimately the reality is the reality. and, well, let β s see what happens. but i think the important part of our stance is that we are totally ready to react. we will have time enough to know the future when it arrives. does that imply that the current stance is appropriate, if your staff forecasts are confirmed? yes. and if there is a further deterioration, then we will react. but for now, our monetary policy stance is fully compatible with both inflation and real activity. the important element is that we are totally ready to react. and i would add another element, if i may : risks are tilted to the downside. do you mean, in terms of real activity? both in terms of real activity and in terms of inflation. so if those risks materialise, then we will react. can you think about different monetary policy tools to address different problems? if the issue is with the exchange rate, official rates are probably the answer ; if it β s real activity, then qe ; if it β s monetary transmission, then it β s targeted longer - term refinancing operations ( tltro ) β¦ we do not allocate our instruments to different objectives | 0 |
joachim nagel : ensuring the supply of cash β including in times of crisis welcome message by dr joachim nagel, president of the deutsche bundesbank, at the 2023 symposium " ensuring the supply of cash β including in times of crisis ", berlin, 15 june 2023. * * * check against delivery 1 welcome ladies and gentlemen, a very warm welcome to our symposium on ensuring the supply of cash β including in times of crisis. i'm glad you could make it! as the world around us becomes increasingly digital, it's often the case that payment instruments other than cash, like cards, smartphones and online payments, grab all the attention. that's why some regard cash as outdated β just as bicycles were considered old - fashioned when cars and motorcycles became more widespread, or printed books in the era of e - books. but the truth of the matter is that cash continues to be fairly popular here in germany. in terms of transaction numbers, cash remains the most widely used means of payment at the point of sale, as our latest payment behaviour study shows. 2 payment behaviour in germany will things stay that way? that depends on whether the trend decline in cash use will continue and what shape it takes. even before the coronavirus pandemic struck, the share of transactions settled in cash was in slow but steady decline. that downturn then gained traction as the pandemic played out. recent analyses indicate that the trend towards cashless payments will continue, but not at the same pace as during the pandemic. it is interesting to note that although the take - up of cash is shrinking, the volume of cash in circulation has increased by an average of 6 % each year over the past ten years. that's because cash isn't used just for payments. it also serves as a store of value β and increasingly so. this bears testament to the high level of public confidence in the euro itself and in euro cash in particular. but precautionary demand for money is a factor, too. and judging by the nationwide disruptions experienced by certain card terminals in may and june last year, that sense of caution is not entirely without reason. by the way, those disruptions were caused by a software bug. 1 / 3 bis - central bankers'speeches roughly one - quarter of the people affected by these outages had to either pause their purchases or even abandon them altogether because they did not have enough cash with them. most people were able to | carry on shopping without experiencing any problems, meanwhile. according to our payment behaviour study, people carry an average of β¬100 in cash in their wallets β which really paid off in this case. we can see from this episode that cash performs a key role in keeping the economic cycle resilient. but it's not just when electronic payment instruments are temporarily out of action that people turn increasingly to cash β they do the same in times of heightened uncertainty, like during the covid - 19 pandemic. what role does cash play, especially in times of turmoil? and how can the supply of cash to the economy be ensured at all times? these are questions that today's symposium intends to explore. ladies and gentlemen, even if the use of cash looks set to decline further in future, we are still a long way off becoming a cashless society. cash is deeply embedded in our everyday lives. if you ask me, that's mainly due to the characteristics that are unique to cash. 3 characteristics of cash cash boasts a combination of characteristics that set it apart from other means of payment. one is that cash is the only way so far for private individuals to hold central bank money. all other types of money are issued by the private sector. another is that cash is inclusive β it enables every one of us to participate in the money cycle and economic life. that's a hugely important feature for more socially disadvantaged sections of society, in particular. a third characteristic is that people can use cash no matter whether they bank online or have an account. this last point concerns children, especially, because cash makes it easier for them to learn how to handle money responsibly. but adults, too, value cash for giving them a better overview of their spending behaviour. having to β quite literally β handle banknotes and coins when paying is a great help for some people. other people, meanwhile, mainly appreciate the level of privacy guaranteed by cash. some of you might remember the advertising slogan once used by a credit card provider here in germany, which read simply pay with your good name. but perhaps you would rather keep your name for yourself and not leave behind a trail of digital information. all in all, then, cash boasts a unique combination of characteristics. and that means it chimes with what consumers want, in many respects. the bundesbank and the eurosystem are therefore committed to ensuring that euro cash will remain available in the future as a means of payment and | 1 |
wider acceptance and legitimacy to make sure that the basis for strong multilateral cooperation and collective action is also in place when policies for reform and prevention are implemented. truly global challenges call for truly global solutions anchored in a multilateral and statutory - based system of representation like the bretton wood institutions. all countries, large and small, rich and poor, should be represented, even if only indirectly through constituencies. general government fiscal balances as a percentage of nominal gdp, 2000 β 2011 projections from oecd for 2010 β 2011 these are some lessons learned from the crisis. still, several unresolved questions remain. the chart shows general government fiscal balances as a percentage of gdp in selected countries. many countries had negative fiscal balances through the last decade despite moderate to high economic growth. spain seemed to be in a different position with a positive fiscal balance, though this was mainly due to unsustainable high growth in the construction sector. this illustrates the first question, which is how to solve time inconsistency in fiscal policy. it is easier to follow the prescriptions of keynes in bad times than in good times. this asymmetry may lead to an increase in budget deficits and sovereign debt over time, also referred to as the fiscal bias. as a result, many countries ( piigs, uk, ) have to tighten policy in a period when the real economy would certainly benefit from further stimulus. the crisis caused fiscal balances to deteriorate by 8 β 10 percentage points. there is an immense difference between encountering a shock of this magnitude from a positive fiscal balance of 4 per cent and encountering it from a negative fiscal balance of 4 per cent. from a negative balance of 4 per cent, fiscal balances end up at a 12 per cent deficit! then it is imperative to tighten policy. a similar time inconsistency problem, the inflation bias, has been a much debated issue in monetary policy. the solution has been central bank independence. so the question is, is there something to be learnt from monetary policy? ragnar frisch the fiscal bias is not a new phenomenon. and a number of possible solutions have been tried. as far back as in the early 1930s, the norwegian economist and nobel prize winner ragnar frisch had the following suggestion : β it might be an idea to establish a cyclical council to make such decisions, a council that could operate with an independent status similar to that of the supreme court. the council should comprise members | jan f qvigstad : lessons from the crisis for monetary policy and financial stability speech by mr jan f qvigstad, deputy governor of norges bank ( central bank of norway ), at the annual money, macro and finance conference, limassol, 3 september 2010. * * * first i would like to thank you for inviting me and giving me this opportunity to comment on lessons from the crisis. i will concentrate my talk around three lessons and two questions. what i am going to highlight is by no means revolutionary, rather it reflects a growing consensus on experiences from the crisis. 20 minutes only allows me to briefly touch on the different subjects. for a more in depth analysis and discussion of similar issues that i raise here today, i can recommend the jackson hole paper by charles bean et. al. transmission mechanism was affected by the financial crisis the first lesson is that monetary policy is more than setting the key policy rate. we also need to monitor the transmission mechanism closely. the transmission mechanism was affected by the financial crisis. constraints on banks β access to funding and a heightened level of perceived risk led to higher lending margins and higher bond spreads. the chart shows developments in our key policy rate and banks mortgage lending rates from august 2007 to november 2008. the widening spread between these two interest rates was not unique to norway, but occurred in several countries. banks also tightened their credit standards in response to the crisis. in norway, as in most other countries, this was particularly distinct for credit to enterprises. both higher spreads and tighter credit standards can have potentially strong contractionary effects on the economy and needed to be counteracted. liquidity and capital support was necessary to restore credit flows the contractionary forces from the financial sector were addressed by providing liquidity and capital to banks, through both regular and unconventional instruments in many countries. government actions enabled banks to continue to provide credit to households and enterprises. the crisis demonstrated that the transmission mechanism is important for the effectiveness of monetary policy. it also demonstrated that the relationship between price stability and financial stability must be given due attention. in norges bank there is close integration between the two areas norges bank monetary policy and norges bank financial stability. norges bank financial stability participates at all meetings in the monetary policy process. this ensures that sufficient attention is given to developments in the financial system. it also provided the necessary insight to make wellinformed assessments of the transmission mechanism during the crisis. considerable revision of the interest rate forecast during the crisis the | 1 |
were at the heart of the sovereign debt crisis. it would be unfair to only look at germany for this situation, as many serious policy mistakes were made in southern countries. first, several countries failed to implement the structural reforms that were needed to function smoothly in a monetary union. rigidities in product and labor markets contributed to severe losses of price competitiveness. second, several countries experienced booms in domestic demand on the back of unsustainable growth of credit and house prices. third, several countries failed to use the windfall of lower interest rates due to emu - membership for a lasting improvement of public finances. between the mid - nineties and the financial crisis, interest rate expenditure on public debt in the periphery decreased by 4. 5 % of gdp on average. only spain used this fully to reduce budget deficits. unfortunately, in the other countries, on average almost half of this percentage did not translate into lower deficits. these policy mistakes suggest that the burden of adjustment mainly lies in southern europe. but it would also be unfair to turn the crisis into a moral caricature between the virtuous and the profligate, between ants and grasshoppers. as jens mentioned in one of his recent speeches, several so - called core countries are not in great shape either. think of low bis central bankers β speeches competitiveness and high public debt in france. think of low productivity growth in the german service sector. and think of the painful correction of house prices here in the netherlands. this clearly illustrates that all emu member states need to carry out reforms to improve their economic growth potential. moreover, policymakers in all european countries made misjudgments regarding the functioning of emu. most didn β t see these flaws when we celebrated 10 years of emu, only months before the collapse of lehman brothers. at the time, we all failed to see how the growing importance of financial factors had fundamentally changed the monetary union. it wasn β t recognized that the euro area was experiencing asymmetric financial cycles rather than asymmetric business cycles. this is serious omission as recent research shows that these financial cycles are much larger and longer - lasting than normal business cycles. they created divergences that emu was not designed to deal with. in addition, we thought that the strong increase of financial integration after the introduction of the euro would enhance risksharing. but we didn β t realize that it also spurred contagion and pro - cyclical capital | flows. for example, the financing of southern credit booms also came from banks in france, germany and the netherlands. from this perspective, europeans are in this together, and can only get out together. situation has improved the good news is that the eurozone indeed seems to be emerging from the crisis, if slowly. the situation has improved significantly since the height of the crisis in the summer of 2012. at that time, financial fragmentation in the euro area reached alarming levels and several countries were suffering from a strong outflow of capital. financial markets probably responded too pessimistically at times, fuelled in part by fears of the break - up of the euro area. but less than two years later, markets have calmed down and the crisis entered a new phase. this change is not only due to the ecb β s long - term refinancing operations and its outright monetary transactions program, actions that will always to some extent remain controversial. after all, monetary policy cannot solve the problems of emu. it can only buy time that should be used effectively. no, the situation also improved because european policymakers took measures that seemed unthinkable until recently. and because they did so in a relatively short time span. this holds to individual countries in the first place. many vulnerable member states have reduced their current account deficits and improved their competitiveness. they have also made progress with reducing budget deficits and implementing structural reforms. countries like ireland and spain have therefore successfully ended their financial assistance program. but it also holds for the european level, where governance has been strengthened. european policymakers established common supervisory and resolution mechanisms for banks. this banking union will help to reduce the toxic feedback loops between banks and sovereigns. many countries have also introduced macro - prudential policies, with the ability to co - ordinate these at european level. these recent measures come on top of the enhanced stability and growth pact and the introduction of the macroeconomic imbalances procedure. challenge for the coming years one crucial challenge is to continue on this course, even now financial markets have calmed down. much remains to be done, and the calm will only be sustainable if vulnerabilities decrease further. for individual countries, this means more structural reforms. countries with a support program implemented reforms, but some of the larger founding fathers are lagging behind. moreover, reforms mainly focused on labour markets so far, while much less progress is made on product and service markets. the gains of | 1 |
benjamin e diokno : 2022 philippine economic outlook - broadbased economic recovery and risks speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the young presidents β organization ( ypo ) philippines inc. event, manila, 2 march 2022. * * * good day, everyone. i would like to thank ypo philippines for inviting me to this event to share updates on the philippine economy. i will cover the following topics in my presentation : first, i will start with a discussion on the year that has been. next, i will discuss the bsp β s outlook on domestic output and inflation, as well as our assessment of the risks and challenges for the year ahead. i will conclude with some key takeaways and the bsp β s way forward. with the spread of more virulent covid - 19 variants, cases of covid - 19 continued to surge worldwide. accordingly, governments had to reimpose border restrictions and lockdown measures to protect people from contracting covid - related illnesses. expectations of a faster - than - expected recovery gradually abated as prolonged lockdown measures and stringent quarantine restrictions weighed on the growth prospects of select economies. private economists surveyed by bloomberg repeatedly downgraded their 2021 gdp growth forecasts for most emerging markets and developing economies, as covid - related uncertainties moderated optimism for a swift global recovery. despite expectations of a slowdown in global economic growth, the philippines showed signs of improved economic activity in 2021. during the fourth quarter of 2021, the economy grew 7. 7 percent, bringing the full - year growth to 5. 6 percent. the economy β s growth trajectory may further improve due to the projected expansion of exports in 2022. goods exports grew by 16. 0 percent in the first three quarters of 2021. the share of electronic products to total exports continued to increase in 2021 as global digitalization efforts increased the demand for semiconductors and other electronic components in 2021. the bsp projects goods exports to have grown by 16. 0 percent in 2021 amid rising global demand for tech products, such as semiconductors and other electronics. for 2022, exports are expected to grow by 6. 0 percent and imports by 10. 0 percent. this reflects the expected continued rebound in world trade and improvement in domestic consumer demand. employment indicators likewise improved in the third quarter of 2021. the unemployment rate dropped | ##er of last resort. it gave banks unlimited access to liquidity at longer terms and against a wider set of collateral. and it began to buy covered bonds, which were a prime source of funding for banks. the ecb β s goal was to keep otherwise healthy banks alive. stabilising the banks was crucial to safeguarding price stability. however, as a lender of last resort, the ecb can only do one thing β provide liquidity to banks. it cannot and should not solve banks β underlying problems. in 2008, many banks were still bloated with bad debt. their problems went far beyond a mere shortage of liquidity. they were about to fail. that was the moment when governments stepped in to save the banks and to prevent a systemic crisis. this added to the pile of public debt that many governments had built up over the preceding years. and then the pile became too big for some countries. the stage had been set for the second phase of the crisis. in 2010, concerns started to grow in the markets that the greek state might default on its debt. the sovereign debt crisis had begun. similar fears spread to other countries. portugal, ireland, spain and italy faced rising borrowing costs, although the reasons for this were not always the same. this added to doubts about their public finances. once again, the banks were at risk ; this time because they had many government bonds on their balance sheets. on top of that, government bonds are a key benchmark for borrowing costs in the private sector. when markets arrive at a critical assessment of a country β s public debt, they put a risk premium on the private sector of that country. in this case, greek companies were suddenly faced with much higher interest rates than otherwise identical german companies. a financial market that had grown together over years broke apart ; it became much more fragmented. and that made it much more difficult to implement a single monetary policy. so once again the ecb had to step in to ensure that monetary policy remained effective. it began to buy government bonds through its securities markets programme, smp for short. for a while the smp helped to rein in uncontrolled surges in government bond yields. this ensured that monetary policy remained effective. however, in 2012 it became clear that more was needed as markets had gone one step further. they had begun to price in a break - up of the 2 / 6 bis central bankers'speeches euro area. the borrowing costs of governments surged, | 0 |
be argued, solves the uk β s productivity problem at source and at a stroke. for economic historians, this could be thought of as an act of schumpeterian creative destruction. for horror film - watchers, it could be thought of as an act of systematic zombie - slaying. i believe such an approach is probably wrong - headed. most tail companies are not zombies, overburdened by an insurmountable mountain of debt or a broken business model. rather they are companies surviving, but not yet thriving. and they account for fully 80 - 90 % of all jobs. they are not the tail ; they are the dog. if you restricted creative destruction to true zombie β those whose productivity was negative β this would make little arithmetic difference to average productivity, raising it by perhaps 1 %. a more creative solution to the long tail problem would be to build a stronger diffusion infrastructure β that is to say, creating some stronger and longer diffusion spokes to attach to the uk β s strong innovation hub. let schumpeter ( 1942 ). assumes workers with negative productivity flow into firms with zero productivity. all speeches are available online at www. bankofengland. co. uk / speeches me discuss three approaches for creating those institutional spokes. all three are already underway, to some extent. once in place, they could speed - up the process of technological trickle - down to the long tail. ( a ) supporting supply chains recent years have seen a lengthening and deepening of supply chains, nationally and internationally. the largest uk companies have direct supply chain links with several thousand other companies, large and small, national and international. as well as benefitting efficiency and lowering costs, these supply chains provide a natural infrastructure that could be harnessed to spread good practice across companies. some companies already actively support firms in their supply chain to help improve their productivity, the fruits of which can then be shared. a set of structured projects are underway nationally, co - ordinated by be the business, which aim to use the supply chain infrastructure to disseminate knowledge and best practice across companies in the long tail. as another example, i recently visited a company which had invested in a new technology centre. this enabled them to simulate all of the processes and products in their complex business. they had created, in effect, a β digital twin β of their business. this technology allowed them to evaluate the impact of potentially productivity - improving changes to their business model, | and accounting for over half of all private business turnover. 16 and yet smes face a Β£22bn funding gap. 17 almost half of all smes don β t plan to use external finance, citing the hassle or time associated with applying. of those that have approached their bank, two fifths have been rejected. 18 part of the problem is that the assets that smes are seeking to borrow against are increasingly intangible β the value of a brand or user base β rather than physical assets, like building or machinery. smes that have not borrowed lack the historic data required for credit scoring. and legal requirements to prevent money see : https : / / libra. org / en - us /. federation of small business : https : / / www. fsb. org. uk / media - centre / small - business - statistics. nao report β improving access to finance for smes ( nov 2013 ). report by british business bank : small business finance markets ( 2019 ). all speeches are available online at www. bankofengland. co. uk / news / speeches laundering and β know your customer β make the process especially burdensome for a small business with limited resources. this should not be the case in a data - rich world. lenders should be able to access a broader set of information on which to base credit decisions. already, search and social media data are supplementing traditional metrics to unlock finance for smaller enterprises whose assets are increasingly intangible. in the uk, iwoca has made over Β£900mn worth of loans based on trading data, such as sales and customer reviews, to over 25, 000 small businesses over the past five years. even the big banks are getting in on the action. earlier this month, santander announced that it was partnering with ebay to offer small business loans, based on sales, cash flow and customer review data to sellers on the ebay platform. these initiatives are welcome but are still too small to plug the sme funding gap in the uk. to make real inroads, smes must be able to identify the data relevant to their businesses, incorporate it into their individual credit files, and easily share these files with potential providers of finance through a national sme financing platform. this would put into practice the recommendations from professor jason furman β s digital competition panel report on how to extract value from data and promote competition. one of the most important recommendations in this regard is | 0.5 |
sectors like smes. the ecb has supported the eib and european commission in examining the constraints hindering the development of securitisation instruments for sme loans and the revival of the abs market. bis central bankers β speeches we welcome the on - going work by the commission and the eib on joint risk - sharing instruments to support sme lending, which would combine the eu budget resources with the eib and the eif lending capacity4. the european council has supported this initiative and called for these instruments to begin operating in january 2014. in parallel, a more balanced regulatory treatment for abs, acknowledging the past credit performance of these instruments, would ensure a level playing field with other securities regarding risk, rating and maturity. the ecb can support the revival of the abs market, provided that the risk to the eurosystem is controllable, and the underlying instruments are simple and transparent. but it cannot be a substitute for market mechanism, nor can it subsidise risk taking of market participants. concluding remarks let me now conclude. reviving credit growth is one of the most pressing challenges for the euro area today, but it can only be achieved by all actors playing their part. the role of banks has been reduced after the crisis, and the euro area will probably move towards a more balanced financing mix, with a greater role for arms β length finance based on capital markets. being more balanced, this model would be more resilient. but the euro area is and will remain a bank based economy. in fact, there are essential constituencies, namely smes and households that still obtain credit almost exclusively from banks. accordingly, there can be no sustained recovery without a healthy, competitive and prudent banking system. cleaning up the banks, as was done at an early stage in the us, is not merely desirable, it is a condition to finally emerge from the crisis and move on. the ecb can help reduce divergences in bank funding. but governments have to ensure that banks are properly capitalised and that their balance sheets are cleaned up. similarly, the ecb can help support the economy and improve the macroeconomic outlook. but governments have to introduce the structural reforms that are essential to open up investment opportunities, and without which banks will not sustainably alter their risk assessments. low interest rates and improved financial market conditions may give a sense that reforms can be deployed over extended periods of time. but reforms are a matter of urgency. deleveraging, fragmentation | jean - claude trichet : economic and monetary issues and euro area enlargement testimony by jean - claude trichet, president of the european central bank, before the committee on economic and monetary affairs of the european parliament, brussels, 20 february 2006. * * * economic and monetary issues at the time of my last appearance before the european parliament in november, i described how the latest available data at that time confirmed our working assumption of a gradual normalisation in the real side of the economy, including a strengthening and broadening in the expansion of economic activity in the euro area. i also noted that, over the past year, the euro area economy has exhibited a notable degree of resilience to marked increases in oil prices. let me now update you on our assessment of how the data have evolved over the past quarter, starting with price developments. in december 2005, the eurosystem staff inflation projections were again revised upwards, on account of further upside surprises in oil prices and the announcement of increases in administered prices and indirect taxes in some countries. as a result, upside risks to medium - term price stability were assessed to have increased, according to our economic analysis. this assessment was confirmed by the monetary analysis in a context of strong monetary growth, ample liquidity and robust expansion of credit. by the end of 2005, the regular cross - checking of the economic and monetary analyses indicated that an adjustment of the very accommodative stance of the ecb β s monetary policy was warranted to address these risks. therefore, on 1 december 2005 the governing council decided to increase the key ecb interest rate by 25 basis points, after two and a half years of maintaining this rate at the same historically very low level of 2 %. the information which has become available since our decision to moderately raise interest rates supports the assessment that an adjustment of our very accommodative monetary policy stance was indeed warranted. starting with economic activity, according to eurostat β s flash estimate, real gdp growth in the euro area in the fourth quarter of 2005 was 0. 3 % quarter on quarter. although this is significantly lower than the 0. 6 % recorded in the previous quarter, this figure however mainly reflects the significant volatility in real gdp growth rates on a quarter - on - quarter basis. looking through the short - term volatility to medium - term trends, our assessment continues to reflect a progressive strengthening of economic activity, supported in particular, by stronger investment, which should be followed | 0.5 |
##inancing operations or by setting up a discount window that ensures that banks with unexpected temporary requirements can refinance themselves. while markets listen to central banks, central banks also listen to markets since the price formation in markets reflects agents β expectations, in particular concerning inflation, and their assessment of risks ; central banks require such information to make their analyses and take their monetary policy decisions. the smooth functioning of markets and financial stability are therefore essential for the effective transmission of monetary policy. if the shape of the yield curve is evolving regardless of monetary policy decisions, if risk premia are uncorrelated with fundamentals, if market liquidity dries up, then the interest rate channel ceases to function. when this affects banks β funding, in particular via a freezing of the interbank market, the bank lending channel seizes up. in such circumstances, central banks must turn to non - standard measures such as direct aggressive interventions to ensure that their monetary policy decisions are effectively transmitted and that markets keep ticking over. needless to say, the recent period has seen many such incidents as well as the implementation of many non - standard measures. among the measures currently in place, some are based on β quantitative easing β, which involves the purchasing of securities primarily with a view to generating excess liquidity that in turn moves into all market segments and fosters a better refinancing of the economy ; others are based on β credit easing β and aim to restore the functioning of certain particularly disrupted market segments. seen from another angle, certain policies aim to restore the smooth functioning of the interest rate channel by directly impacting the yield curve, others aim to restore the bank lending channel by ensuring that banks can obtain funding beyond the very short - term maturities to which central banks usually confine themselves. in all events, central banks stand in for failing market participants or markets. since 2008, we have seen the fed come to the rescue of the us commercial paper market and the mortgage backed securities market ; we have seen the bank of england purchase in the space of a few months gbp 200 billion in government securities, representing around 15 % of the united kingdom β s gdp ; the eurosystem, for its part, has conducted massive oneyear refinancing operations with euro area banks and has kick started the covered bond market, via its eur 60 billion purchase programme. next may, it also start intervening in the government securities market. this calls for further clarification in the light of my earlier | his remarks at the literaturhaus on october 20th claudio magris, rightly considered the β most european β of contemporary italian writers, described the european identity not as a set of roots delving down into the earth but as the branches of a tree reaching outward and intertwining with the branches of other trees. to me, this image is most evocative. each of the individual national identities that contribute to our european identity is exactly like a tree, with its own deep roots in history and centuries β worth of fruit, but above all horizontally outstretched towards transparent, vital enlacement with its equally fruit - laden neighbours. in closing, let me offer my best wishes to governor noyer β and to the european central bank β for the preparation of next year β s cultural days. i am curious to learn the programme of events devoted to french culture. i am certain that frankfurt will be treated to the best of france β s immense cultural heritage, in its profoundly european dimension yet also bearing the signs and the fruits of its contact with the other great civilizations of the world. bis central bankers β speeches | 0 |
a better understanding of culture and conduct issues in the institutions they supervise. let me conclude. financial institutions have restored their capital, but not public trust. they have repaired their balance sheets, but not their compact with society. they have reformed their systems, but not their culture. only with trust can the financial industry earn the β social license β it needs to thrive and grow. to strengthen this trust, we must : ensure that finance is not abused for illicit purposes ; that it places its customers first and deals with them fairly ; and that it fosters a culture of good conduct grounded in strong values and ethics. it is my pleasure now to invite mary to share her views on fostering stronger culture and conduct at financial institutions. 5 / 5 bis central bankers'speeches | as a commonly observed feature, households in japan and the euro area tend to perceive that the present price level represents an increase β except for a short period immediately after the global financial crisis β and they tend to expect higher price levels about one year ahead ( charts 9 and 10 ). moreover, those households commonly tend to expect to spend less in the near future. from these features, it may be said that households plan to reduce their spending about one year ahead because they expect a tighter budget as a result of expected higher prices. a different feature is evident with regard to the relationship between actual price performance and households β present price perception ( as well as their one - year - ahead price expectation ). in the euro area, households β present price perception and price expectation dis are roughly in line with actual price performance. by contrast, japanese households β present price perception ( except for a short period immediately after the global financial crisis ) and price expectation dis remained positive even when mild deflation prevailed from 2009 to mid - 2013. more recently, despite the rate of change in the core cpi having dropped to around 0 percent, the rising trend in the present price perception di has been firm and the relatively high level of price expectation di has been sustained. thus, japanese households β price perceptions and expectations constantly differ from the movements of official price statistics. on this front, it is known that japanese households β price perceptions and expectations are heavily affected by the price movements of daily necessities and gasoline, resulting in an upward bias. this could be interpreted as a sign of a strong defensive action against the anticipated tighter budget. if so, households may perceive a rate of actual inflation of much higher than 2 percent in the process of approaching the 2 percent target, and regard such price rises as unacceptable. thus, it is important for the boj to promote public understanding that its objective is to achieve a moderate price rise and a sustainable increase in household spending. additionally, households β tolerance for price rises needs to improve in accordance with a sustainable income rise. d. euro area firms β price expectations becoming comparable with those of japan with respect to firms β price expectations, the sales price expectation di for three months ahead is available from the boj β s tankan ( short - term economic survey of enterprises in japan ) and the european commission β s surveys ( chart 11 ). one interesting finding is that in japan, firms β sales price expectation di has fluctuated in negative territory since the first half of the 1990s, when | 0 |
and access. the bank of england is an active advocate of this work : helping to develop the building blocks and actions ; contributing to several workstreams ; monitoring progress including through the fsb cross - border delivery group which i chair ; and very importantly making changes to our rtgs. conclusion working together to realise the benefits of the three key phases of rtgs renewal benefits will lead to a step change in payments. it can catalyse innovation and promote resilience for financial institutions, which would ultimately make domestic and crossborder payments faster, cheaper and safer for customers. but we need your help to achieve that. in the short term, we need to focus collectively on transitioning to the new core settlement engine next summer. and we want your inputs in : shaping the future rtgs roadmap and cross - border payments work ; assessing business cases for innovative rtgs features ; responding to our upcoming consultations on rtgs operating hours and rtgs access, and considering further use cases for iso 20022. to quote sir winston churchill, whose image on the Β£5 note maybe in the change in your wallet, " to improve is to change : to be perfect is to change often ". our vision is to change often, and to do so in partnership with industry. i would like to thank dovile naktinyte, karin oldham, elizabeth leather, james southgate, and mark streather for their help in preparing these remarks. 4 / 5 bis - central bankers'speeches 1 uk finance are hosting a digital innovation summit in october 2023. ahead of the summit, uk finance will be running an'ideathon': a hackathon of ideas where industry teams will be invited to develop ideas on how the implementation of iso 20022 could provide tangible benefits to their customers when they make and receive payments. the winner will be announced in october at the summit. 2 as part of our work to enhance the liquidity saving mechanism in chaps, we have finalised a new set of matching algorithms for implementation in the renewed rtgs service. the enhanced matching algorithms will more efficiently match incoming and outgoing chaps payments β this will ultimately reduce the value of intraday liquidity required to settle payment obligations in chaps. 3 targets for addressing the four challenges of cross - border payments : final report - financial stability board ( fsb. org ) opens in a new window 5 / 5 bis - central bankers'speeches | in or out were we to see faster progress towards greater labour market flexibility elsewhere in europe. it may be argued that emu itself will act as a stimulus to reforms needed in fiscal policy, and in labour markets ; indeed that the prospect of emu is already doing so. we cautious, pragmatic, non - visionary people that we are - would like to see the needed reforms implemented first. these preparations, both in the financial and the real economies, are the preparations which prospective β ins β need to make, in particular. but there are of course preparations in financial markets which apply to everyone. we are in no doubt that the introduction of the euro in 1999, if the current timetable is maintained, will have profound consequences for financial markets, initially for wholesale markets, and later for the retail financial sector too. it is incumbent on all central banks to seek to ensure that the financial markets in which they sit are as well prepared as they can be for this momentous change. we must also ensure that the central banks themselves are well prepared. at the bank of england we now have a steering group, which i chair, focused on preparing the bank itself. we have made a clear decision that the bank will be ready for uk membership of emu in january 1999, if a future government decides that that is the right course for the country. but our more important work in the short term is focused on preparing the city of london and on preparing the financial infrastructure which the city will need to maintain its position as the most innovative and dynamic financial market in europe. i should emphasise that we see the city as a financial market for the whole of europe, not just for the united kingdom. that explains why we are always ready to welcome overseas financial institutions to london, why we rigorously avoid discrimination on grounds of nationality in our financial market dealings, and why we have greatly welcomed the decisions by german, french and swiss banks in particular to concentrate many of their wholesale market activities in london in recent years. europe needs a broad and deep market like london to rival those in tokyo and new york. i would not wish, today, to talk at length about the preparations being made in the city for emu. partly because this afternoon, in london, we shall be releasing our latest quarterly report on practical issues arising from the introduction of the euro, which sets out in some detail the progress that has been made over the last three months, and how we propose to take things forward. in short, we | 0.5 |
us reach consensus on all of the issues on the table for discussion. we have a long history of working together and reaching remarkable useful consensus on critical issues when it matters most, this time will be no different. honourable ministers and governors i am sure we have all had a very hectic day on discussing all these issues and look forward to a very relaxed evening. for those that have not had time to look around this beautiful and historic city i implore you to find time to explore our beautiful beaches and various historic sites. i wish you fruitful deliberations and hope that freetown would forever be remembered as the venue where key decisions affecting the african continent would be made. i thank you. | able to increase their tier 1 capital by an annual average of nearly 30 per cent while their risk weighted assets increased over this period by more than 26 per cent, of which about one fourth has been from internal generation, small amount from government and most of it from the capital markets. assuming the same growth in risk weight assets going forward, and given the average return on capital for the indian banks, raising capital from the markets may not be a problem. given the requirement of basel iii to have common equity as the dominant part of tier i capital, and tier i to be the major part of regulatory capital, and given that indian banks are already well placed in this respect, it would be advisable to retain the advantage even though the new norms will kick in only in a phased manner. forward looking provisioning 7. in a growing economy facing global and domestic shocks, it is likely that npas will increase and the npa ratio could go up and down. the issue, however, is whether the margins on earning assets are sufficient to make adequate provisions for expected losses, apart from generating internal accruals to support growth in the risk weighted assets. in this context, making forward looking provisions as is being considered at the basel level is extremely important for a country like india. while we have asked banks to achieve at least a pcr of 70 per cent for npas, we are also working on a scheme based on the spanish dynamic provisioning model for evolving norms for provisioning for standard assets in different sectors based on time series and cross sectional data. such provisions envisage setting aside profits in good times which can be used in down turn and provide greater comfort from financial stability perspective when the economy is pushing forward for higher growth. lending to infrastructure 8. aspiration for higher growth implies much more investment in infrastructure. needless to say, the headroom available in government finances either at the state or central level for funding or for guarantees ( explicit or implicit ) is limited. this calls for funding from both financial institutions and capital markets, both domestic and external. the single borrower and group borrower exposure limits of banks have already been relaxed to allow for more funding for infrastructure by indian banks. taking into account the concentration risk and asset - liability mismatches, any further relaxation would be imprudent. from regulatory point of view, interest rate derivatives β both otc and exchange traded β have been allowed and these provide the opportunity to hedge the interest rate risk. liquidity requirements on | 0 |
funds, but it is carried out through intentionally providing false financial information in order to obtain loans from banks for the benefit of the enterprise. in such frauds, the agent β s statement of the purpose of the loans is true, i. e. the agent does not have the purpose of taking the money for himself, but it intentionally provides the banks with false financial information of the enterprise to misguide banks in decision - making. at present most of the financial frauds are of the second kind. at present, article 193 of the criminal law of china has explicit stipulations against frauds with intended illegal possession of funds. however, as for the second kind of frauds, they are not regarded as financial frauds by law since the purpose of providing false information is not illegal possession of funds but rather to obtain bank loans. criminal charges will only be filed when illegal possession of loans has happened. otherwise, only civil charges can be brought up against the agent under contract law. the lack of legal deterrence will have significant impact on setting up strict financial disciplines and whether banks will accumulate large amounts of npls. according the international comparison done by kpmg, frauds stemmed from false financial information has come to the center of attention in many countries. germany, u. s. and u. k. have made it very clear that financial frauds using falsified financial information is subject to punishment under criminal law rather than civil law. for example, in german criminal code, article 265 b stipulates that using untrue or incomplete documents, submitting untrue or incomplete written statement or giving no references about the true financial situation that is of significance for lending decisions of a bank are financial frauds. the us criminal law also contains similar stipulations with emphasis on the agent β s intent rather than whether a purpose was fulfilled. and the credit or loans include all kinds of loans, loan commitments and guarantees and cover not only the application stage but also the credit renewal and rollover stage. the truthfulness requirements of the british law are similar to those in german and us laws, and treat reckless forecast as one of the conditions for criminal charges. 3. accounting standards frauds using falsified financial information have direct connection with accounting standards. false information is either made - up information with no support from actual projects or relates to accounting standards and codes. since the beginning of reform, china has made progress in improving accounting codes. apparently, the designing and implementation of | accounting codes can influence information truthfulness and give rise to the opportunities to produce false information. accounting codes is a very technical issue. many think the accounting codes as a β steel ruler β that allows no vagueness. however, the complexity of modern economy has put some areas of accounting subject to discretion and interpretation or even personal preference which result in a ruler with flexibility. the issue of accounting codes did not attract much attention at the beginning of the reform. it was not until 1993 that reforms were witnessed in corporate accounting and regulations. during the asian financial crisis we made more concrete progress in improving the account rules, which we should recognize and value. at the same time, we should also be mindful that more should be done to bring our accounting rules up to the international standards. some people still think in china we have too complicated an accounting system including a corporate accounting system and also distinctive accounting systems for different industries. for instance, some corporate accounting rules require enterprises to build value - loss reserves based on the recoverability of assets. although accounting rules of different industries have similar requirements, they are all inadequate in terms of soundness comparing to corporate accounting rules. another issue is that, since we did not have the luxury of a strong accounting industry and external auditing facilities, when banks assessed the reliability of enterprises β financial information, they did not require borrowers to provide external auditing results. in the future, banks may consider require financial information audited by accounting firms and assessment on enterprises β compliance and borrowing conditions made by law firms, and valuation of collaterals made by evaluation firms and bond classes given by rating firms. however, it may take years for the above intermediate services to develop, and the expertise, reputation, brand - name, service quality also take tens of years to build. are the audited statements trustworthy? it really depends and relates to the expertise and internal control of the firms. the development of intermediate financial service providers is affected by market liberalization as well. if all of these issues cannot be dealt with effectively, probability of enterprises β providing false information and engaging in financial frauds will continue to be high. i would very much like to hear the comments on what i have said from experts and researchers present today. your opinions will be instrumental to our work. iii. impact of legal environment on financial ecology legal environment has a direct impact on financial ecology. to some extent, in the transition from a planned economy to a market economy, one fundamental issue is β soft financial constraint β | 1 |
moved to ensure adequate liquidity in the financial system to support credit activities. the bsp extended provisional advances to the national government worth 10. 3 billion us dollars in 2020 and 2021, which was reduced to 5. 7 billion us dollars in january 2022. the national government has fully paid these advances ahead of the maturity schedule on june 11, 2022. the bsp also provided big banks extra leg room to extend credit via a 200 - basis points reduction in their reserve requirement ratio to just 12 percent. in total, the bsp infused to the financial system an amount equivalent to 11. 3 percent of the gdp. we have also started the normalization process for our policy rate through a 25 - basis point hike to 2. 25 percent last may 19. also, as part of the policy normalization process, the bsp reconfigured its government securities purchasing window into a regular intraday facility. the timing and conditions of our exit strategy continue to be data driven. it is a balancing act guided by several factors, such as inflation and growth outlook. a well - planned, well - calibrated, and well - communicated exit plan will prevent substantial market volatility, reduce potential spillovers, and sustain our recovery momentum. the philippines is also determined to maintain fiscal discipline. after posting a higher debt - to - gdp ratio as a result of massive spending for covid response, we are keen to return to our fiscal consolidation path. based on the fiscal program, the national government β s debt should go down to 60. 4 percent in 2024. it is worth emphasizing that our current level of debt - to - gdp ratio is well below the figure for other economies, some of which have debts over 100 percent or even 200 percent of their gdp. our external accounts are also healthy. our gross international reserves as of end - april this year stood at 106. 8 billion us dollars, equivalent to 9. 4 months β worth of imports. the received doctrine is that three months of import cover is sufficient. in line with the movement of other emerging market currencies, the philippine peso depreciated by 2. 62 percent to p52. 37 as of may 31 from its end - 2021 level. the bsp keeps its market - determined exchange rate policy and intervenes only to ensure orderly market conditions and prevent excessive short - term volatility in the exchange rate. moving on to the banking sector, banks continue to serve as a pillar of strength | media and research - speeches ph economy 2. 0 : reinforcing growth and continuity date : june 13, 2022 occasion : bloomberg philippines next summit β deciphering new horizon speaker : bsp governor benjamin e. diokno good afternoon. it is an honor and a pleasure to share the latest developments in the philippine economy. the economy has grown by at least 6 percent annually until the pandemic stalled the momentum. now, we have bounced back and returned to our robust growth path. expansion in the first three months was broad - based. agriculture, forestry, and fishing grew by 0. 2 percent, industry rose by 10. 4 percent, and services improved by 8. 6 percent. in addition, household consumption increased by 10. 1 percent, while government consumption grew by 3. 6 percent. exports and imports also improved with 10. 3 percent and 15. 6 percent expansion, respectively. with more relaxed restrictions, mobility indices improved from the levels seen at the height of the pandemic. as of may 30, mobility trends for restaurants, cafes, shopping centers, theme parks, museums, libraries, and movie theaters continued to show improvement. similarly, visits to transit stations likewise increased. against this backdrop, the philippine economy outperforms peers. its 8. 3 percent growth in the first quarter exceeded malaysia, indonesia, vietnam, singapore, and thailand. the employment picture has also significantly improved. from february to march 2022, 1. 5 million jobs were created, bringing down the unemployment rate from the peak of 17. 6 percent in april 2020. foreign direct investments are soaring. after hitting a record high of 10. 5 billion us dollars in 2021, net inflow of fdis jumped by 8. 0 percent to 1. 71 billion us dollars in the first two months of this year. manufacturing conditions have likewise improved. the s & p global philippines manufacturing purchasing managers β index reached 54. 1 in may this year, highest in over four years. consumer confidence is on an uptrend. consumer sentiment is less pessimistic in q1 2022 and more optimistic for the next 12 months at 30. 4 percent. similarly, the business confidence index rose to 59. 7 percent for the second quarter of the year and to 69. 8 percent for the next 12 months. the economic rebound may be credited in part to the crisis - response measures of the bsp. we deployed regulatory relief measures and extraordinary liquidity assistance to the national government. we also | 1 |
facilitate financing flows for the transition to a net - zero world. i encourage you to participate actively in today's workshop, so that we can collectively advance our understanding of the issues we need to tackle. i wish you fruitful and productive discussions. 5 / 5 bis - central bankers'speeches | excess liquidity in the banking system stood at rs9. 9 billion on friday 9 december. as part of the new monetary policy framework, the bank continued to issue the 7 - day bom bills to all banks, with a weekly average issuance of around rs8. 5 billion. the level of outstanding bom instruments, which stood at rs113. 1 billion on 28 september 2022, increased to rs118. 3 billion as at 9 december 2022. securities totalling rs129. 2 billion were issued against maturing securities to the tune of rs124. 0 billion, resulting in a net issuance of rs5. 2 billion. concurrently, sale of fx by the bank absorbed rupee excess liquidity equivalent to around rs18. 1 billion over the period 28 september 2022 to 13 december 2022. foreign exchange market the month of november was marked by the significant intervention amount of usd300 million, representing the highest amount sold by the bank in any given month. in the month of december, the bank has intervened for an amount of usd50 million. from january to 06 december 2022, the bank injected a total amount of usd1. 0 billion in the domestic market. activity on the fx market remained buoyant, with total turnover for the last eleven months hovering around usd8. 6 billion, a significant improvement of 21 per cent compared to the corresponding period of last year. fx turnover in november itself amounted to usd1. 2 billion. the evolution of the exchange rate continues to reflect domestic economic fundamentals as well as international exchange rate movements. since 28 september 2022, the rupee has appreciated by 3. 3 per cent against the us dollar. 3 / 6 bis - central bankers'speeches the gross official international reserves ( goir ) remains at a level sufficient to provide a buffer against adverse external conditions. the goir stood at us $ 6. 7 billion as at end - november 2022, representing 13. 9 months of imports. financial stability the banking sector continues to be resilient, sound and thriving. the normalisation of interest rates is not expected to undermine the soundness and stability of the banking sector. the capital buffer of the banking sector remained well above minimum regulatory limit, with the capital adequacy ratio at 19. 0 per cent as at end - september 2022. the banking system also held robust liquidity buffers. the aggregate liquidity coverage ratio ( lcr ) was 231 per | 0 |
, and the impact of monetary policy on investment and consumption is blunted by high private debt. the positive impact of higher demand on jobs is constrained by the partially structural nature of unemployment, such as the skill mismatch between job seekers and vacancies, low mobility of workers and the priority given to insiders. moreover, it is also constrained by capital market fragmentation, i. e. the inability to channel savings where investment is needed to create jobs. and absent other policies, stimulating demand may in fact only delay the necessary restructuring of the economy towards higher productivity sectors. this is where supply - side policies β by which i mean structural reforms β can help empower demand. by raising potential growth and hence future income, structural reforms create more space for governments, firms and households to spend today. by reactivating and reskilling the workforce, they allow employment respond faster to that higher demand. and by helping the economy to restructure, they ensure that higher demand is channelled towards the right sectors, and thus accelerates rather than retards the creative destruction process. the seminal paper on this issue began is blanchard, o., and l. summers ( 1986 ), β hysteresis and the european unemployment problem β, nber macroeconomics annual 1986, volume 1. for more details see speech by draghi, m. ( 2014 ), β unemployment in the euro area β, annual central bank symposium in jackson hole, 22 august 2014. for details on pre - crisis productivity developments see european commission ( 2013 ), β catching - up processes in the euro area β, in quarterly report on the euro area, vol. 12, issue 1, march 2013. bis central bankers β speeches what type of supply? this relationship between supply and demand, however, rests on the assumption that structural reforms will have mainly positive short - term effects. but this needs some more qualification. though the long - term benefits of structural reforms are by and large undisputed6, there are different views about the short - term effects in the academic literature. reforms can be shown to produce two, opposing sets of forces in the short - term. one is contractionary, as reforms lead to lower prices and higher real interest rates. if monetary policy is at the zero lower bound and unable to respond and fiscal space has been exhausted, higher real rates cause the private sector to postpone consumption and investment decisions and gdp to contract. 7 the other set of forces is expansionary. as | 1939 concept of β secular stagnation β with interest rates staying permanently at lower levels and economic activity remaining subdued. there are many such examples. for instance, our imperfect understanding of the current slope of the phillips curve and the trends in productivity is one of the reasons why the ecb has been reluctant to complement its forward guidance with numerical triggers. i do not share this pessimism but i think it is of great importance to understand to what extent this development is driven by long - term forces, such as demographic changes or lower potential growth, and to what extent it is driven by medium - term forces, such as changes in risk aversion and the perceptions of macroeconomic risks in the wake of the recent crisis. frictions and rationality institutional details and frictions, both on the side of market participants and regulatory institutions, have an impact which is difficult to detect in normal periods. interbank markets, for instance, used to be seen by academics as a somewhat dull topic before the crisis, so that little was known about their functioning. both in europe and in the united states, they have been at the centre of recent policy debates, generating a welcome crop of new research, to which mars has been contributing. the dominant β rational expectations β modelling paradigm in economic research postulates strong assumptions about human decision - making, implying, for instance, that economic agents are always able to assign sensible probabilities to alternative outcomes. clearly, this characterisation of human decision - making stands in stark contrast to our own recent experience. we need to understand how panics and bubbles can emerge from psychological biases. the nobel prize co - awarded to robert shiller last year will certainly encourage more research in this direction. while much progress has been made on studying notions such as knightian uncertainty, sentiment, confidence or sunspots, more work is probably needed before they can be part of our standard modelling toolbox. a challenge is of course to come up with tested and robust behavioural theories. another important departure from rationality that is of key practical concern is how simple behavioural rules adopted by market participants in normal times can lead to entirely different outcomes or even to market meltdowns in crisis periods. agent - based models are a promising way to look at these problems, but they need to be developed in close cooperation with practitioners and policy - makers to take the proper behavioural rules as inputs. on both issues, what policy - makers need above all is more work integrating these approaches into richer | 0 |
- long consequences for economic developments. all that said, however, the challenges facing banks today require a broader set of instruments than those used by the nordic authorities 20 years ago, for two main reasons : first, the situation for banks is more complex. the authorities have to distinguish more clearly between insolvent banks and banks that are solvent but in need of more capital in order to increase lending. the lessons from the nordic banking crisis can be drawn on for the insolvent banks. for the solvent banks, the challenge is to maintain their lending capacity. this is particularly important given that other credit markets are not functioning normally, so that it is difficult, or impossible, for businesses to acquire funding directly from bond markets. but without more capital, the banks are not willing to accept new loans on their balance sheets. the main challenge facing the authorities today therefore is to ensure that solvent banks increase their financial strength and thereby their lending capacity. at the same time, it is important to have an exit strategy so that capital injections today do not translate into an increase in state ownership when the crisis is over. second, cross - border banking has been increasing. twenty years ago, all the main nordic banks were national banks. today, for example, four of the five largest banks in norway are foreign - owned ( three branches and one subsidiary ). a national authority cannot be expected to bolster the financial strength of branches of foreign banks : indeed, it could be complicated to do this even for foreign - owned subsidiaries. while we were able to choose national solutions to the banking crisis 20 years ago, any effective solution to today β s situation will require an internationally harmonised approach. as today β s financial crisis progressively gets resolved, it will be necessary to start the process of preventing future crises. this will require substantial reform of the regulatory framework. banks will have to strengthen their capital and their liquidity buffers. and financial regulation must have a less pro - cyclical effect. the objective must be to enable the banks to curb the impact of shocks on the economy, rather than to amplify them, as is the case now, where negative spirals are generated between the financial system and the real economy. because of the global character of today β s financial crisis, the authorities must work in concert to find solutions, both in terms of recapitalisation of the banks and regulation of the financial sector. | unemployment is low. at the same time, there are signs that the labour market is less tight than earlier. employment growth has declined, and unemployment increased a little through last year. unemployment has evolved as we projected in december, while employment appears to be slightly higher than projected. chart : inflation broadly in line with projections price inflation has declined since last summer but remains markedly above the inflation target. energy prices increased through autumn so that overall consumer price inflation has moved back up somewhat. excluding energy prices and indirect tax changes, inflation moved down to 5. 5 percent in december broadly as projected, with a fall in both imported goods inflation and the rate of increase in domestic goods and services prices. chart : policy rate will likely remain at the current level for some time the committee assesses that the policy rate is now sufficiently high to return inflation to target within a reasonable time horizon. monetary policy is having a tightening effect, and the economy is cooling down. it will take time before we see the full effects of the past rate hikes. at the same time, business costs have risen considerably in recent years. continued high wage growth and the krone depreciation through last year will likely restrain disinflation. we therefore believe a continued tight monetary policy stance will be needed for some time ahead. further out, when inflation comes down and economic conditions so warrant, the committee can start lowering the policy rate. there is uncertainty about future developments in the norwegian economy. if input cost inflation remains elevated or the krone depreciates again, price inflation may remain high longer than projected. in that case, the committee is prepared to raise the policy rate again. if there is a more pronounced slowdown in the norwegian economy or inflation declines more rapidly, the policy rate may be lowered earlier than envisaged in december. 2 / 2 bis - central bankers'speeches | 0.5 |
the rupee in 1966, bank nationalisation in 1969, the balance of payments crisis of the early 1990s and the follow on path - breaking economic reforms that marked a paradigm shift in our economic policy. the reserve bank is proud of the role it has played in addressing these developments, responding to them with sensitivity, professionalism and integrity. 5. the high esteem in which the reserve bank is held today owes much to the intellectual leadership and vision of successive governors. the speeches in this compendium are a testimony to that. the speeches also mark a journey through time and provide a glimpse into the ideas, issues and concerns that engaged the reserve bank over the years. 6. the wide - ranging themes covered by the speeches β monetary policy, external sector management, issues in the financial sector and the real economy, economic development and poverty reduction, regulation of banks and financial markets and challenges of managing economic policy in a globalizing environment β are a reflection of the broad mandate of the reserve bank and its enduring concern for the larger public good. 7. for a public policy institution like the reserve bank, there is no final destination ; the goal posts keep moving with new challenges and tasks replacing current ones. the learning too never stops. from each development and crisis, lessons are drawn and applied to policy and institutional reform. 8. this compendium of speeches is a reminder to us in the reserve bank of the need to be constantly pushing the envelope to remain useful and relevant. in this pursuit, the bank needs to be at the frontiers of domain knowledge while also remaining sensitive to the core concerns of an emerging market economy, one which is still home to hundreds of millions of poor people. 9. we hope this book will provide an appreciation of the reserve bank β s eventful history and its contribution to nation building. 10. in conclusion, our very warm thanks to the prime minister and all the former governors for making this book release a flagship event in the reserve bank β s platinum jubilee celebrations. | to exchange rate and sterilized operations to offset the effect of unusual cross border capital flows. impact of qfas is difficult to quantify. first, the impact of qfas is merged with the impact of other operations and thereby is reflected in the consolidated picture in the balance sheet of the central bank. it has not been possible to separate in the balance sheets the impact emerging exclusively from the qfas from other operations. secondly, market clearing rates cannot be accurately predicted in an administered interest rate regime and therefore, it would be difficult to estimate the element of subsidy / tax involved in such operations. thirdly, the qfas are performed on an ongoing basis covering innumerable transactions and, therefore, their measurement is virtually impossible. fourthly, the impact of certain qfas like credit ceiling and exchange related measures are not certain. on a very general plane it can be argued that sterilised intervention by the central bank to contain the liquidity impact of capital flows often involve a trade - off between low return assets and high return assets as far as the central bank is concerned. earning from the deployment of foreign exchange is understandably lower than the interest loss on account of open market sale of government securities essentially due to interest rate differentials. communications policies issues in transparency and disclosure constitute an important aspect of reserve management, within the broader framework of monetary, fiscal and financial polices. thus, the policy as well as all relevant information are articulated through a variety of means from time to time, the most significant being the monetary and credit policy statements by governor, rbi. the speeches of governor and deputy governors are important sources of policy analysis, actions and intentions. the annual reports of rbi provide authentic version of rbi β s perspective as approved by its board. the report on currency and finance provides research output from the professionals in rbi. the periodical publications, press releases and discussion papers are also important sources of information. the rbi has been providing, on a regular basis, appropriate data directly relating to foreign exchange market operations. the rbi publishes daily data on exchange rates, forward premium, foreign exchange turnover etc. in the weekly statistical supplement ( wss ) of the rbi bulletin with a time lag of one week, the movement in foreign exchange reserves of the rbi on a weekly basis are also published. the rbi publishes data on nominal effective exchange rate ( neer ) and real effective exchange rate ( reer ), rbi's purchases and sales in the foreign exchange market along with outstanding | 0.5 |
philip r lane : the brexit discontinuity speech by mr philip r lane, governor of the central bank of ireland, to the 2019 european financial forum, dublin, 13 february 2019. * * * introduction i am pleased to address the 2019 edition of the european financial forum. currently, both policy officials and private - sector participants in the global financial system are confronted with a combination of cyclical and structural concerns. at the cyclical level, the recent revision in global growth projections and the downside shift in the risk distribution require a careful assessment of the likely duration of adverse shocks and the potential offsetting impact of some mitigating stabilising factors : this exercise will be aided by the arrival of the incoming hard data on macroeconomic outcomes in the first months of 2019. at the structural level, longer - term prospects depend on the traditional determinants of global productivity ( such as investment and innovation rates ), the steady - state cross - country distribution of national income levels relative to the frontier and demographic trends. in addition, climate change ( together with the international policy response ) will exert an increasing influence on the path for global output. 1 however, both short - term and long - term prospects are currently also subject to an unusually high level of uncertainty about the paradigms governing policymaking. at the global level, the primary focus is on the future of the multilateral policy framework underpinning international trade. within europe, brexit constitutes another paradigmatic shift : the departure of the united kingdom from the european union represents a disruptive event across many dimensions, including the operation of the single market. a full analysis of such paradigmatic events requires a multi - field integrated approach that draws upon history, political science, international relations as well as economics and finance. i will not attempt such a comprehensive approach in this speech : rather, i will focus on some of the implications of brexit for the irish economy and the irish financial system. the central bank of ireland has been focused on brexit risks since the announcement of the 2016 uk referendum. our work has focused on ensuring that : ( i ) the risks to the irish economy and consumers are understood ; ( ii ) regulated firms prepare appropriately for all scenarios, in order to protect consumers ; ( iii ) where necessary, the required policy and legal adjustments are prepared to counteract the cliff - edge risks of a hard brexit to the delivery of vital financial services ; and ( iv ) we perform our gatekeeper | of the national consumer price index. focused on its constitutionally mandated primary objective of price stability, the bank of mexico has set its policy interest rate taking into account, among other factors, how the cyclical phase of the economy may affect future inflation. hence, in the midst of the big contraction of 2009, the central bank lowered its policy interest rate from 8. 25 to 4. 50 percent, and in 2013 it has further reduced it to 3. 75 percent. in the last ten years, annual inflation has remained much lower than historical levels. this has been possible thanks to the support of a prudent fiscal stance, a prerequisite for the credibility of monetary policy in any country and, hence, something which should continue to be safeguarded in the future. in 2013, after a spike resulting from agricultural price shocks, annual inflation has recently fallen, reaching 3. 4 percent in september. as in previous years, medium - and long - term inflation expectations have remained relatively stable, though above the permanent target. in the future, several risks need to be assessed for maintaining inflation under control, including possible pressures from renewed financial volatility and new shocks from non - core price components. in any case, the governing board of the bank of mexico has repeatedly see, for example, oecd ( 2010 ), pisa 2009 at a glance, oecd publishing. bis central bankers β speeches stated that it will continue to be vigilant, acting in a timely way if shocks to relative prices could potentially contaminate inflation expectations and put convergence to the permanent inflation target at risk. concluding remarks to conclude, after a year of economic slowing, the 2013 third quarter has seen encouraging signs of improvement. the outlook for the mexican economy includes a recovery next year, although downside risks prevail, including an adverse external scenario and protracted difficulties for construction - sector restructuring. although domestic financial markets have operated in an orderly way in the face of changing international sentiment toward emerging economies, further bouts of volatility may pose some challenges to both inflation control and the strengthening of a recovery in the short term. finally, mexico β s current momentum in structural reform is highly promising, as both the changes approved and those under discussion seek to enhance productivity growth, a key element for underpinning greater long - term economic expansion. bis central bankers β speeches | 0 |
mar guΓ°mundsson : financial integration and central bank policies in small, open economies β what are the key lessons from the crisis? remarks by mr mar guΓ°mundsson, governor of the central bank of iceland, in a plenary session on monetary policy and policies of central banks at the singapore economic review conference, singapore, 5 august 2015. * * * a revised and extended version of this talk will be published in a forthcoming singapore economic review. chairman and participants, i would like to thank the organisers for inviting me to speak at your conference here in singapore, a country that i have long respected for its economic management. my remarks today bear the title financial integration and central bank policies in small, open economies : what are the key lessons from the crisis? they are motivated by my experience as a policy - maker from a very small, open, and what used to be financially integrated economy, and my tenure at the bank for international settlements. 1 there is a widespread sense that global financial integration can be problematic for the conduct of monetary policy in small, open economies. why is that? it is well known that the transmission mechanism of domestic monetary policy evolves as domestic financial markets develop, and that this in turn affects the relative effectiveness of different monetary instruments. the same applies to external liberalisation of domestic financial systems and the cross - border financial integration it gives rise to. initially, it can give a boost to domestic financial market development. but as it progresses and we at the global level get closer to the limiting case of free and frictionless capital movements, then real risk adjusted asset returns increasingly become equalised across countries. as that happens, less and less of the transmission of monetary policy goes through what i call the interest rate channel. there would still be an interest rate channel at the global level, but that would be determined by the big countries. the small, open economies that have adopted a floating exchange rate could still achieve their inflation targets through the exchange rate channel. the scope for short run output stabilisation would be more limited, however. is this necessarily a problem? if the exchange rate channel were relatively well behaved β i. e., if it provided smooth adjustment based on fundamentals and uncovered interest rate parity broadly held over relevant horizons β then the answer might be no. the problem is, however, that experience has shown that uncovered interest parity does not hold except perhaps over long horizons. interest rate differentials give rise to widespread carry trading, which is by | so on. although it is perhaps most natural to think of this mothballing behaviour in the context of manufacturing, it was also apparent within the services sector. it was relatively commonplace for professional services companies to encourage staff to take sabbaticals at much reduced pay. aircraft were taken out of service. shops were left empty. this type of adjustment has helped uk industry to withstand the effect of the recession. it reduces companies β average costs and so protects their profitability during the period of weak demand. a by - product of this adjustment, however, is that the marginal cost of producing additional output is higher. although the mothballed capacity can be reinstated, it is likely to be more costly to do so, especially in the short - run, than if the resources were simply standing idle. assembly lines need to be serviced before being restarted ; staff need to be brought back from sabbaticals. as a result, the downward pressure on costs and prices stemming from the latent spare capacity within companies, at least in the near term, is likely to be less. 6 developments in margins consider next the mark - up over and above costs that companies include in their selling price. in the past, margins in the uk have tended to fall back during periods of weak demand and vice versa. 7 one possible reason for this is if companies reduce their prices relative to their costs when demand is weak in order to gain market share which they hope to hold onto as demand increases, ie they hope to be able to exploit some degree of pricing power. if successful, the lower profits in the downturn are outweighed by the gains during the upswing. this pro - cyclicality of margins is another reason why inflation in the uk has tended to moderate during periods of weak demand. but margins appear to have fallen by less during the recent recession than expected given the marked contraction in demand. simple measures of margins, such as the profit share, have been relatively resilient. and a recent survey by the bank β s agents suggested that margins on average were only a little below normal, despite the marked contraction in demand. 8 why so? in part, aggregate margins may have been boosted by the sharp rise in sterling export prices following the depreciation of sterling. the increase in exporters β margins may well have masked a decline in margins earned by domestic producers. that is consistent with some surveys of companies β capacity utilisation, which do not seem to have fallen by as much as the | 0 |
##berger, which were published in the 1970s, or, even further back, to the business cycle theories dominant in england in the 1920s, and hayek β s work from the 1930s. the third element relates to the high levels of debt that can result from a prolonged period of strong credit growth, and which make the economy vulnerable to negative shocks. in my view, the importance of the stock of debt is a manifestation of a more general phenomenon, whereby in a context of disequilibrium β such as the accumulation of financial imbalances β stocks dominate flows as determinants of macroeconomic dynamics. when critical stock - flow ratios become very large, financial market players may at first become suspicious and then very rapidly flee into holdings of liquid assets, thus triggering a financial turbulence. the fourth ingredient is sharply rising asset prices β typically in equity or real estate markets. while an asset price bubble is notoriously difficult to identify, here again deviations from some form of historical trend can give some guidance. in an international dimension, sizeable current account deficits and high levels of international debt can point to imbalances that can have disruptive effects. while we all know how this can play out in emerging market economies, such episodes also occurred in industrial economies β just think for example about the nordic banking crises in the late 1980s β early 1990s. in the current context of global imbalances, it has been argued that the large current account deficit and rising international debt in the united states reflects the large decline in savings by us households during the housing credit bubble. but how can we quantitatively verify the existence and magnitude of financial imbalances along these five dimensions? this is a challenge for policy makers, academics and market participants alike. there is an empirical literature that suggests that financial imbalances might be detected but its findings are far from undisputed. in my view, there is definitely a need for more in - depth research that helps us understand the dynamics of the accumulation of imbalances, even if this research comes up with interval estimates rather than point estimates. these margins ( or bands ) might be large but exceeding them would definitely be a sign that something is going wrong. but even if imbalances might not be accurately assessed by empirical research, based on my personal experience as a policy maker there is clearly a sense in which they can be detected. β if it looks like a duck and quacks like a duck, chances are it is a duck β. to illustrate | ##w played a key role in post - war reconstruction efforts. it must have been a daunting challenge β getting the german economy back on its feet after the devastation of war. but that is exactly what it achieved. and more. through a spirit of cooperation, through a willingness to take on massive responsibility and through ensuring funds were channeled to where they needed to go, ultimately, paving the way for the country to recover and emerge as one of the world β s leading industrial states. today another wind of change is blowing. and though the challenges we face today are equally daunting, i am certain that once more we can overcome them. and that once again we will show to the world that the financial sector can be a force for good. we β ve come a long way. in 1992, the leaders of the world took a first step by signing the un convention on climate change. that is over a quarter of a century ago. 25 years in which many more steps have been taken, leading up to the paris agreement of 2015. the good news is that momentum is building. and not a moment too soon. in 1992, there was little consensus on the catastrophic effects of rising temperatures. we did not yet know that in 2017, air pollution would cause the deaths of almost 5 million people. we did not yet know that in 2018, 62 million people would be affected by extreme weather events and over 2 million would be displaced because of it. and we did not know that by now, we would be risking our homes, our jobs and eventually even our lives if we don β t drastically change how we live. world leaders took the first step in acknowledging climate - related risks. and it seems that investors and financial institutions are now on the same page. in 1992, the words β climate change β popped up in only 69 bloomberg articles. by comparison : last year, it appeared in over 22, 000 bloomberg articles. also, in 1992, seminars like this didn β t cover climate - related issues. this is of course not only true for climate change : β low interest rates β weren β t really a hot topic then either : with the german bund yield at 8 %. but the difference between these two subjects is that interest rates go up and down over time, while the temperature keeps rising. the world has already warmed by about 1 degree celsius since pre - industrial times, due to human activity. drastic efforts are needed to reduce carbon emissions now. otherwise, it | 0.5 |
the broader interests of management or shareholders. this can lead to excessive risk - taking, underinvestment in risk - reduction and risk - control mechanisms, and a focus on short - term returns at the cost of long - run viability. think about the trader who is compensated on short - term p & l and not long - term value creation. these issues can be amplified by the opacity intrinsic to many financial activities that allows misconduct to persist and erodes the cultural capital of the firm. 3 / 5 bis central bankers'speeches adverse selection adverse selection occurs when those particularly ill - suited for something are the most likely to participate. this could be a complicating factor in this context if conduct - related events change the composition of a firm β s workforce. firms with relatively low cultural capital ( and a relatively high tolerance of misconduct risk ) may attract and retain employees and clients more inclined to take inappropriate risks and push beyond internal limits and controls. further, high - quality directors, executives, and employees might leave such firms or decline to join them, depleting the firm β s human capital and contributing to the deterioration of cultural capital. role of the official sector these are some of the types of market failures that may explain why a firm might not invest enough in its cultural capital to mitigate risks, including misconduct risk. and they suggest a role for the official sector to encourage resiliency, including investment in cultural capital, beyond what the firm would choose to do on its own. that is, if firms don β t have sufficient incentives to overcome these forces, then the official sector should push toward a better outcome. in the case of misconduct risk, supervision seems like a particularly appropriate approach because the hard - to - define and evolving nature of behavior likely prevents easy regulatory solutions. 9 though some rule - writing could help re - align incentives, misconduct risk can take many different forms and, by its nature, seek to circumvent the rules. essential drivers of culture and of misconduct risk, for example, relate to leadership and β tone from above, β areas that are inherently behavioral and qualitative in nature. supervisors can assess behaviors in an ongoing manner and help to identify potential risks. 10 i β ll note that the need for a supervisory focus on employee misconduct and its underlying drivers dates back one and a half centuries to the origins of bank supervision. then, in the u. s., the emphasis was on the β responsibility and integrity β of bank managers | it serves as a primary benchmark for pricing in other financial markets, both domestic and global. last, but definitely not least, it β s vitally important for the effective transmission of monetary policy to the broader financial system and to the economy. thankfully, most days β most years β the treasury and related markets function incredibly well. but in the past decade, these markets have experienced three abrupt and notable disruptions, each of increasing severity. first was the so - called flash rally of october 2014 ; then, the repo market distress in september 2019 ; and third, the extraordinary dislocations at the onset of the covid - 19 pandemic in march of 2020. general george patton once said, β prepare for the unknown by studying how others in the past have coped with the unforeseeable and unpredictable. β it β s a good piece of advice β and one that 1 / 4 bis central bankers'speeches should guide our work on treasury market reform. the iawg report i mentioned earlier reviews these events, so i won β t repeat them here. however, two lessons are clear. first, the unforeseeable and unpredictable will happen, and can result in significant stresses in the treasury and related markets that may spread to broader financial conditions. second, when disruptions have been sufficiently severe and persistent, the market has not been able to quickly self - correct without official - sector intervention. the severe disruptions to the treasury and funding markets in march of last year illustrate these points. the incipient breakdown in market functioning quickly spread to other segments of the u. s. and global financial markets, risking a broad - based pullback in the availability of credit that is essential for our economy. the speed and extent of the market disruption necessitated immediate and dramatic action, the scale of which was truly unprecedented. at the new york fed, we are used to talking in very large sums, but even for us, the figures were staggering. we were offering overnight repos of up to $ 1 trillion, as well as substantial amounts of term repos of longer maturities. 2 the sizeable offerings were designed to meet the markets β needs and provide confidence that liquidity would be available. at their peak in mid - march of 2020, our repo operations reached nearly $ 500 billion. but repos alone were not enough to restore smooth market functioning. the fomc also directed the open market trading desk at the new york fed to engage in large | 0.5 |
benjamin e diokno : the role of real estate practitioners in advancing sustainable growth in the new normal speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the 43rd annual convention of the real estate brokers association of the philippines, 11 november 2021. * * * officials of the real estate brokers association of the philippines ( rebap ), ladies and gentlemen, a pleasant afternoon to all of you. thank you for inviting me to your 43rd annual convention. the theme of the convention, β spirited rebap : thriving and working together in shaping the future β, reminds us of the need to dream big and to take bold action. thus, i welcome this opportunity to share the bsp β s thoughts on the critical role of real estate practitioners in advancing our common objective of achieving sustainable growth in the postcovid - 19 economy. i will start by discussing the economic landscape, including developments in the real estate market. this will be followed by highlights on the performance of the philippine banking system. next, i will focus my discussion on the bsp β s initiatives relevant to real estate practitioners and share how these initiatives have affected financing to the real estate sector. i will conclude with a few thoughts on how the bsp and the industry can further strengthen our partnership for purposes of supporting the recovery of the philippine economy. while the real estate industry is not under the direct regulatory purview of the bsp, it is viewed as an important sector in the bsp β s conduct of monetary policy and financial supervision for the following reasons : first, asset prices affect volatility in general price levels and economic output. also, volatility in asset prices, which could result from undue speculation or bubbles, may give rise to widespread financial instability. in the past, a real estate boom is primarily financed by bank lending. real estate is a creditintensive good, but one of the most illiquid assets of financial institutions. moreover, the bsp β s policy actions affect the movements and behavior in the property market. for example, a hike in policy rate lowers the value of asset holdings of individuals and financial institutions and could potentially make credit financing more costly for both buyers and property suppliers. in 2020, like most of the industries, the real estate and construction sectors contracted in q1 2020 and throughout the pandemic year 2020. in the second quarter of 2021, | however, the real estate and construction subsectors have started to recover as restrictions on mobility and economic activity were gradually relaxed. we also saw real estate demand slip due to pandemic - related uncertainties. the capital values for office and residential units in the country β s major commercial and business 1 / 6 bis central bankers'speeches districts decreased in 2020 due to lesser demand amid the pandemic. a higher vacancy rate was also recorded during the period due mainly to slowdown in leasing activities, weak demand and a cautious market. based on the latest residential real estate price index, the residential real estate prices of various types of new housing units declined further in q2 2021. the nationwide house prices contracted by 9. 4 percent year - on - year in q2 2021, from β 4. 2 percent in q1 2021 as the pandemic hit demand. however, high base effects may also have contributed to the significant decline during the period as the index peaked in q2 2020 while posting a 4. 8 percent increase quarter - on - quarter. meanwhile, the national commercial property price index, which measures the average changes in appraised values of commercial properties, shows a deceleration in growth in the second half of 2020. the bsp anticipates that activity in the real estate market will recover in line with rebound in overall economic growth in 2022. meanwhile, the philippine banking system remained on solid footing as shown by continued growth in assets, deposits and capital, as well as positive net profit, stable capital and liquidity buffers, ample loan loss reserves and manageable loan quality. overall, the banking system β s financial condition remains supportive of the country β s financing needs. at the height of the pandemic in 2020, the bsp implemented liquidity - enhancing measures to support financing requirements of the economy. for instance, the bsp lowered the bsp β s policy rate by 200 basis points. this rate has since been maintained at 2. 0 percent, the lowest rate since the beginning of the pandemic. the bsp also reduced reserve requirements of universal banks to 12 percent from 14 percent. this policy stance has contributed to a general decline in lending rates across all loan product categories. for instance, the weighted average interest rate of housing loans dropped to 6. 6 percent as of end - june 2021 from 8 percent in end - march 2020. similarly, the weighted average interest rate of loans to corporations fell to 4. 9 percent as of | 1 |
04. 12. 2023 16th cinco dias business innovation awards ceremony, 2023 * madrid pablo hernandez de cos go verno r * english translatio n fro m the o riginal in spanish good morning everyone. it is an honour to take part in the cinco dias business innovation awards ceremony and to be able to congratulate all the award winners for their contribution to business innovation. as leading economists such as paul romer, robert lucas, philippe aghion and peter howitt underlined in their pioneering work, innovation is the main driver of economic growth. in a standard macroeconomic model, growth is often limited by diminishing returns on productive capital accumulation, but innovation, which faces no such constraints, is an inexhaustible source of growth. spain β s negative investment gap in research and development and innovation ( r & d & i ) relative to the euro area as a whole has adversely affected the dynamics of our productivity and gdp per capita. in particular, between 2000 and 2021, the ratio of r & d & i expenditure to gdp stood at 1. 2 % in spain, 0. 8 percentage points ( pp ) below the figure for the euro area overall. 1 both public and, especially, private sector r & d & i investment contributed to this gap. at the same time, productivity ( measured by gdp per hour worked ) and gdp per capita in spain in 2022 stood at 14 % and 17 %, respectively, below the euro area average. this lack of innovative dynamism points to structural weaknesses in d ifferent aspects, especially including the corporate funding structure, business demographics, the level of competition, human capital and the role of general government. i would like to briefly address each of these now. 1 funding structure in terms of funding, despite significant improvements in recent years, 2 spanish firms β in comparison with others in the euro area β continue to be heavily reliant on bank loans and have relatively limited access to venture capital. this funding structure has a negative impact on their ability to implement innovation projects, which by their very nature have a relatively high risk profile. 3 this structure can also contribute to a misallocation of resources between firms, reducing aggregate productivity. this o utco me also holds true if measured by investment in intangibles, which, in addition to r & d & i investment, also includes so ftware, databases, design, advertising and o rganisational | of a common euro - based safe asset would be particularly important in times of stress, as it could mitigate the possibility of monetary policy transmission being hampered in a context of fragmented bond markets. the effectiveness of monetary policy should be independent of the existence of country risk in the euro area. similarly, a sufficient supply of safe assets would also facilitate the transmission of non - conventional monetary policy, by expanding the assets available in the event of a large asset purchase programme. it would allow monetary policy to expand the ecb β s balance sheet without squeezing liquidity in national sovereign markets. more generally, the literature has shown that a shortage of safe assets leads to a lower economic growth environment when monetary policy is constrained by the effective lower bound on interest rates. this is so because the scarcity of safe assets pushes the natural rate downwards. if central banks are constrained in their ability to lower nominal rates, a disequilibrium emerges in asset markets, giving rise to a β safety trap β. in this case, households, faced with deflationary pressures and ( relatively ) high real rates, have an incentive to save and postpone consumption, and firms, faced with low demand and high risk premia, to postpone investment. the result is a recession or a period of sluggish growth, which, in turn, reduces the wealth of savers and their demand for safe assets. 7 do we have alternative ways of escaping this trap? we require, following my earlier metaphor, an update to our electricity grid. on first thoughts, two ways to expand the set of safe euro - denominated assets spring to mind. on the one hand, euro area countries with a sovereign bond that is not considered sufficiently safe should focus on reducing their idiosyncratic sovereign risk, in particular by implementing credible medium - term fiscal caballero, farhi and gourinchas ( 2017 ), β the safe asset shortage conundrum β, journal of economic perspectives, 31 ( 3 ). 6 / 8 plans, in order to jump on the safety bandwagon. on the other hand, increases in the amount of current safe instruments could mitigate the safety trap. however, this strategy may not be enough to ensure a sufficiently stable and ample supply of safe assets. first, its success depends on the capacity of the less safe countries to become safe. the sovereign debt crisis has shown that it is not sufficient to start from a low level of debt and a budget surplus, as was the | 0.5 |
represents a solid foundation for macroeconomic stability. despite all the risks, i remain optimistic that we shall be successful in overcoming all of the above challenges. | should focus on issues which are exclusively under our control. pleasant words, β stunts β from the past or delaying price increases cannot do the trick, not in the medium run, and even less in the long run. though we in the nbs are satisfied with the core inflation result achieved in the course of the current year despite the untimely elections and the related fiscal expansion, doubling of the price of oil, and the drought, on the eve of 2008 we are more than concerned and put a question to ourselves : should the prevailing tendencies persist, can the nbs reach its objectives with the instruments at its disposal or must there be new ones added? one thing is for sure, to achieve our objectives, we shall use all the instruments at our disposal, both old and new, but that shall not make us popular. that much i can tell in advance. β’ high exposure to foreign currency risk creates additional risks to the financial sector as confirmed by the developments during last two weeks. if arguments extended by the nbs on the need to borrow in dinars do not seem plausible enough, i sincerely hope that recent developments in the market shall force many to reconsider which currency they should borrow in, namely, how to minimize their exposure to the foreign currency risk. the role of banks is of the highest importance in terms of warning against foreign currency risk exposure, if not for the sake of their clients than for the sake of their own balance sheet results! β’ in the absence of adequate market competition, price signals are transferred slowly and inaccurately. this is most evident in the case of prolonged and high appreciation of the dinar which is transferred to retail prices with a significant delay. world practice points to the rigidity of prices, but it seems that they are practically β cemented β in serbia today. i sincerely hope that something shall be done in that respect, and done exclusively for economic reasons. all in all, from the macroeconomic point of view, both internal and external challenges require that banks, unless they have already done so, reassess which way and how to proceed. in his biography, alan greenspan says that market produces constant stress as in order for someone to gain, someone else has to lose. i fear that many are not yet aware that the market is not a guarantee, but a chance to make money! and finally, allow me to go back to where i started from. strong and stable banking sector, primarily in terms of high quality and reliable ownership structure, | 1 |
and monetary policy β surely one of the most widely - accepted principles in modern macroeconomic thinking β the only feasible objective for monetary see tinbergen ( 1952 ) and theil ( 1961 ). policy is to control the price level, since ultimately it is impotent with respect to the level of real income or employment. 2 second, the central bank must be credible in its commitment to deliver this objective. private longer - term inflation expectations must be securely anchored at levels consistent with price stability. 3 to achieve this, the central bank must always be ready β and be seen to be ready β to take whatever action is necessary to deliver price stability. making this commitment credible requires, in turn, that the central bank operates under the appropriate institutional set - up and that it develops, over time, a track record demonstrating its willingness and capacity to act so as to maintain price stability. third, the central bank must be independent of political influence. a large body of theoretical and empirical literature has established that central bank independence is conducive to maintaining price stability. 4 given the many short - term pressures they face to deviate from the objective of price stability, the involvement of politicians in monetary policy only serves to undermine its credibility and thereby its effectiveness. fourth, so as to maintain its legitimacy, an institution endowed with independence to pursue a specific public objective must act in a transparent manner. transparency and accountability also buttress the credibility of the central bank β s commitment to price stability, by ensuring that the public understand that the motivation behind monetary policy decisions is the achievement of the primary objective. fifth, monetary policy must maintain a medium - term orientation. the long and variable lags that characterise the monetary policy transmission process make it impossible for monetary policy to offset the inevitable unanticipated shocks that buffet the economy and the price level in the short - run. attempts to β fine tune β inflation developments on a month - to - month basis are doomed to fail and would only introduce additional unnecessary volatility into the economy. sixth, monetary policy must be underpinned by a comprehensive analytical framework, which ensures that all information needed to take monetary policy decisions is available to policy makers in a form that supports efficient and timely decision - making. given the importance to maintaining credibility and a medium - term orientation, such a framework must include a thorough analysis of monetary and credit developments, reflecting the necessarily monetary nature of inflation over the longer term. finally, a clear distinction must be maintained between : on the | to steer interest rates at maturities beyond that horizon, it has to do so by directly targeting the term premium through private or public asset purchases. as our short - term rates have fallen towards the lower bound, and hence the signalling power of rate movements has decreased, the ecb has progressively resorted to both these instruments. we have provided and then reinforced our forward guidance and, when rates reached the effective lower bound in september last year, we moved to asset purchases as the main tool of monetary policy, starting with two programmes of purchasing private assets and then expanding them to include public sector bonds last january. we buy public sector assets with remaining maturities of two to 30 years, and the weighted average maturity of our portfolio is eight years. this is an unprecedented lengthening of the horizon at which we influence interest rates. 4 both these instruments have been effective in overcoming the lower bound constraint. forward guidance has led to a decline in the uncertainty about future monetary policy, and the sensitivity of money market forward rates at various horizons to news and data surprises in the former case, see e. g. c. l., eichenbaum, m., and s. rebelo, 2011. β when is the government spending multiplier large? β, journal of political economy, vol. 119, no. 1, pp. 78 β 121. in the latter case, see a. ferrero g. eggetson and a. raffo, 2014, β can structural reforms help europe? β, journal of monetary economics, 61, january 2014, pp. 2 β 22. our three - month liquidity tenders are still called β long - term refinancing operations β. bis central bankers β speeches has diminished. it is also clear from the data we have so far that some of the expected transmission mechanisms of large - scale assets purchases are already at work. for example, following the announcement of the expanded asset purchase programme on 22 january, we saw a decline in the forward interest rates across all maturities on sovereign and, with a lag, on corporate bonds, showing that the portfolio rebalancing channel was in play. some investors appear to have been taking profit on corporate bonds and reallocating investments towards equity and foreign markets, as the upside potential in the euro area corporate bond market is judged to be relatively limited. this suggests that the portfolio rebalancing channel of our public sector purchase programme is playing out in a very different way than | 0.5 |
does all this, as many economists are doing these days, one sees effects of about one - third of 1 percent on unemployment and slightly more for core inflation rates for a permanent shock in the price of oil of $ 10 a barrel. 3 with appropriate transformations, these structural effects appear to be a good bit smaller than the implications of the reduced - form correlations. why the difference? many sources of discrepancy between the reduced form effects and the structural effects are possible. one involves consumers - perhaps a serious oil price shock could affect consumersaβ¬β’ confidence or spending plans in a way that would not be captured by working out the effect of normal income and price elasticities. capital investment may also be affected if the oil price shock encourages producers to substitute less - energy - intensive capital for more - energy - intensive capital. of course, such a substitution will not necessarily lower aggregate demand if it requires more investment demand for new energy - saving equipment. oil is a pervasive commodity, and other types of non - model effects are possible, but these consumption and investment effects seem the most obvious. how should monetary policy respond to oil price shocks? monetary policy makers in this country have a dual mandate, to stabilize prices and to maximize sustainable employment in the long run. their response to oil price increases should focus on these two objectives. at one extreme, monetary policy makers might focus exclusively on the demand - reducing effect of oil shocks and try to stabilize unemployment rates. the risk from this approach is that prices would rise the full amount implied by the shock and would more likely be passed through into further wage and price increases. continuing inflation rates could bump up the full amount of the initial boost in inflation. the continuing inflationary potential from the oil price shock would, in effect, be maximized. at the other extreme, monetary policy makers could focus exclusively on neutralizing the initial impact of the shock on inflation. given the initial oil price shock, this approach would entail reducing demand enough to stabilize overall, or core, inflation rates. if prices were at all sluggish in their response to changes in unemployment, this approach could entail large increases in unemployment from the shock. most observers would choose a policymaking approach somewhere between these two extremes. if, for example, monetary policy makers tried to keep overall nominal income on a steady path, the direct rise in nominal income from the oil price shock would be met by a fall in real income from somewhat higher unemployment. the result would be a | economic event of the 1970s, oil price shocks forced monetary policy makers to rethink all their rules and added new chapters to macroeconomic textbooks. today the question of how to respond to oil price spikes is better understood, but the outcomes are no more pleasant. it is virtually inevitable that shocks will result in some combination of higher inflation and higher unemployment for a time. but i must stress that the worst possible outcome is not these temporary increases in inflation and unemployment. the worst possible outcome is for monetary policy makers to let inflation come loose from its moorings. | 1 |
analyses on this subject, but concrete actions. how prepared is the bnb to join the euro area? the bnb is in a unique situation. it is the first, and until now the only, bulgarian institution which, since 1 october 2020, has been a full member of a key institution of the euro area, as is the eu's banking union with its two operating mechanisms : the single supervisory mechanism and the single resolution mechanism. therefore, the bnb is the institution which, not based on theoretical analyses but from first - hand experience, can tell the difference between being outside and being inside the euro area, i. e. we are speaking not about anticipated but about real implications. most recently, it's been two years since bulgaria became a full member, and our assessments are unequivocally positive. now we have information and a database which would have been inaccessible to us before our membership, even if we had invested huge resources. we participate in the process of making the most important decisions regarding the banking sector in the euro area, i. e. not only the bulgarian banks but the european banks. in making all these decisions, our vote matters as much 2 / 5 bis - central bankers'speeches as the vote of germany, france, italy, spain, or any one of the other euro area member states. so, instead of waiting for the relevant decisions to be sent to us for implementation, we actively take part in the process of making these decisions. i must assure you that there is a big difference. financial implications are another important aspect of our membership. you can probably recall some observers'concerns as to how our membership in the banking union would burden the bulgarian banks with unbearable fees. indeed, the bulgarian banks pay fees related to banking union membership, but the financial benefits are considerably greater. the single resolution mechanism alone saves the bulgarian banks not less than bgn 160 million a year which, in turn, improves their financial result. or, if we use the terminology of insurance, the bulgarian banks get a much greater protection for a much lower premium. as regards the bnb which, as i said, is already a part of the euro area in terms of its key activities, at this stage the preparedness for full accession is related most of all with technical and logistic issues. organisation has been set up for monthly reporting on the progress and the outstanding challenges. so far six such reports have been drawn up and submitted to the coordination council for preparation of the | republic of bulgaria for euro area membership, headed by the finance minister and me. each of the bnb deputy governors is in charge of the relevant area of activity within the bnb's mandate. contact groups have been formed, with individually named members of the bnb and of the european central bank working on specific matters. the absence of a regular government and a clear political commitment to the euro area accession process are a serious obstacle to its progress. this is the reason why we are missing, one by one, important indicative time - frames. this time last year croatia was well ahead on its way to the euro area. i will give you only one example. on 10 september 2021 the european commission and the euro area member states signed a memorandum of understanding with croatia on the production of national euro coins. this memorandum sets out the actions required for a future euro area member state to begin producing euro coins. the signing of the memorandum makes it possible to detail the schedule for the future euro coins of the country, allowing that country to start selecting its euro coin national side designs and to carry out the technical preparations for minting and producing a test series of national euro coins. the memorandum is a precondition for that country to receive the technical specifications documentation needed for production of national euro coins. we are about a month and a half behind schedule only on this issue. the consultations that the minister of finance and i had last week show that the signing of such a memorandum is still possible but this will urgently require at least two things : firm political support and a clear mandate of the central bank governor. the political decision on this issue comes with a price. over the last months, and especially the last weeks, markets have been giving us very clear and warning signals. the price of bulgaria's newly issued debt has been rising at an unprecedentedly high rate. this implies an enormous additional financial weight in the medium term, which 3 / 5 bis - central bankers'speeches more acutely than before poses the question about the terms of funding bulgaria's budget and economy. what is the connection with the topic under discussion? the connection is direct. if you read credit rating agencies'announcements, you will see that the key factor for bulgaria to get a rating upgrade, i. e. for improved terms of its funding, is the successful implementation of the euro area accession process. as a reference point, after the decision on croatia's accession was made, two credit rating agencies upgraded its credit rating by | 1 |
2. developments in the household sector the positive influence of the strength in the corporate sector has been feeding through into the household sector at a moderate pace. the number of employees continues to increase steadily. a closer look reveals that not only the number of part - time workers but also that of full - time employees is rising. a survey conducted by a private institute earlier this year indicated that more new graduates would be hired by firms in fiscal 2007 than in the previous year. despite the strength in the corporate sector, however, it is often said that households are not getting a real sense that the economy is expanding, and this seems to be related to the wage situation. to be more specific, the increase in nominal wages per worker, which had been only moderate, has recently appeared to stagnate. regular payments are particularly weak, remaining somewhat beneath the level recorded last year. the sluggish growth in wages despite continued high corporate profits seems attributable to persistent labor cost restraint by firms, which feel the need to be more profit - conscious amid intensifying global competition and greater exposure to the discipline of the capital market. moreover, employees'preference for stable employment over a wage increase after their past experiences of a severe employment situation, as well as the retirement of baby - boomers whose wage levels are relatively high, are also thought to share responsibility for the recent weak growth in nominal wages per worker. meanwhile, firms are increasingly feeling shortages of labor as shown in the march tankan. if the number of employees keeps increasing while growth in the population of those aged 15 and over peaks out, upward pressure on wages should be expected to increase over time. although the focus of attention tends to be the weak growth in regular payments, the positive influence of the strength in the corporate sector should not be overlooked, as this is now feeding into the household sector via various channels, such as increases in the number of employees, the wages of part - time and temporary workers, and dividends. although the pace at which the positive influence of the corporate sector has been filtering through into the household sector has been somewhat subdued, the gradual increase in household income is expected to continue, supported, for example, by growth in the number of employees on the back of continued high corporate profits. with household income increasing gradually, private consumption has been firm recently. in summer 2006, private consumption declined temporarily due to unfavorable weather conditions and consumers'reluctance to buy before the introduction of new products ; then from the | solidly in place, you cannot expect foreign investment to return to italy. if you look at the last β doing business β index of competitiveness, italy is again extremely badly placed β. so β easiness to do business β comes from labour legislation and, more in general, from laws and bureaucracy. but what else should be changed? β also, unit labour costs are too high. this does not mean, of course, that salaries are too high in absolute terms, in fact the take - home pay is low in italy on average in international comparison. unit labour costs are high because productivity growth has been too low in italy. but salaries cannot increase unless productivity increases, and productivity cannot increase unless the overall level of competitiveness of the country improves dramatically. among the countries where sovereign bonds have been under pressure, italy is the only one where labour cost competitiveness is not improving relative to the best performers in the euro area. this is a concern, also for growth perspective. you see, italy is a country with a fantastic human capital, some of the best universities, a lot of creativity and cultural richness. but more worrisome is the difficulty of society to work together, to come to agreed long - term solutions, to redress its governance. it seems to me that this is really the biggest issue β. how is the situation in public finances, in your opinion? β while still increasing, the public debt level is on a better medium term trajectory thanks to reduced annual fiscal deficits. to keep public debt on a sustainable path, it is essential that the government sticks to its fiscal commitments. this means that fiscal efforts cannot be relaxed. for example : to have a debt / gdp ratio of 100 % in 2025, you would need, from 2016 on, a primary surplus of about 4, 5 % of gdp. it is possible, and other countries have kept their primary balances at those levels in the past, but it requires efforts and commitment. in this respect a major achievement is to have put the fiscal compact into the italian constitution. i would also like to stress that the adoption and implementation of structural reforms leading to a path of higher economic growth would make possible a stronger reduction of debt for a given fiscal effort. β β bis central bankers β speeches but austerity has been questioned, also by the imf : in some countries it even worsened the recession. β the impact of fiscal consolidation greatly depends on how you do your consolidation, on whether you increase | 0 |
majority, provisions β which includes dynamic provisions β, and countercyclical capital buffers have a statistically significant impact on the aforementioned variables. finally, reserve requirements and caps on credit ( or its growth ) do not have the same empirical support as the other policies in attaining their intended goals. 3. monetary policy and macroprudencial policy again, there is enough consensus that macroprudential policy is distinct from monetary policy, in the sense that they have different targets, methods and tools. despite all the advances made, there is still valid debate ongoing about the connection between these two policies, focusing on whether monetary policy should be used for macroprudential purposes, and how the monetary authority should be involved in the implementation of macroprudential policy. with regard to the first question, at the central bank of chile we are rather skeptical about using the monetary policy rate as a financial stability tool, for several reasons. firstly, it is not clear that the interest rate is an effective tool for dealing with the overexpansion of the financial system during booms, nor for containing systemic events during busts. the interest rate is too broad an instrument to play this role, as it affects not only the financial system, but real businesses and households as well. economic history is full of episodes in which a preemptive rise in rates had a negative economic effect on the real economy, but was not effective in controlling financial speculation and asset price inflation ( the great depression being perhaps the most salient ). nor is it clear that raising interest rates will necessary work in containing the expansion of the financial system : after all, a larger interest rate differential also attracts foreign capital. this force can be of particular importance in emes, often subject to carry - trade strategies which can lead to strong currency appreciations in countries that raise rates and create additional problems. secondly, credibility and transparency are key assets in the design and implementation of an inflation targeting regime. it is hard enough to communicate the logic behind mp decisions that seek solely to stabilize inflation around our stated target, given the complex interrelations between shocks, transmission mechanisms, and model uncertainty that central banks have to deal with. however, after long years of sticking to our framework and showing consistency between our actions and our inflation objective, we have built a reputation which is essential for isolating longer - term inflation expectations from transitory shocks ( both external and internal ), which as we all know facilitates the job of central banks enormously. | population of firms and consumers to 1, the equilibrium will occur when the demand equals the supply ( y = d ). in equilibrium under rational expectations, product must be equal to expected product, or : y = d ( y, Ο ) now, with a couple more assumptions we can find the equilibrium ( figure 2 ). the equilibrium is unique in a. for this, the demand is assumed to be concave, that is, any additional demand for goods is smaller as income increases. to ensure a unique equilibrium we assume that, for ey = 0, the demand for the good is positive. this can be understood as the individual having another source of income and expenses, and always wanting to devote part of the other income to consume this good. another simple way of seeing it is to think that the individual will want to borrow to acquire this good, even if her income is very low, presumably because she always expects to have the funds available in the future to repay. as we will see, however, it is possible that multiple equilibria exist, with low and high output, as a result of coordination failures. uncertainty and the value of waiting decision making under uncertainty has always been a complex thing to study. often to simplify, we turn to quadratic specifications in order to use certainty equivalence. surely this this exercise is based on an mit class exercise which, despite having saved my notes and after a number of inquiries with friends, i have been unable to find. the original model was somewhat more complex because it assumed strategic interactions among firms, and here the demand is only taken as given. more formal models were developed in cooper and john ( 1988 ). for a thorough review of this literature, see cooper ( 1999 ). note that because this is only an illustration, many aspects were left out of the analysis. in this case we are assuming that there is some friction in the price - setting mechanism that prevents firms from selling all they want at a given price. this friction may come from firms deciding how much to produce before they know the demand, which would lead us to incorporate the producers β decisions to this story. analytically, however, it would not change much. falls short of describing the much more complex reality ; for example, when the analysis considers decisions to invest or consume ( durables ) in the presence of irreversibilities. 3 when a decision is irreversible, there is no chance to back out ; for example, an investment | 0.5 |
##security. today the focus is on financial market infrastructure. one of the questions being asked in this section of the conference is, β what challenges are likely to emerge with new operating models and new actors in the financial sector? β as i said before, the fintech snowstorm is already here. the newest challenge with respect to cybersecurity is the emergence of new players offering financial services, some of whom have not provided financial services before. the question therefore becomes : what technology are they using? is it established, or is it new and unknown technology? we also know that attitudes towards security and operational risk are important. but with tech firms rushing to offer new products to the market, there is the risk of insufficient emphasis on security. this is a risk that must be monitored β not only for new products or for new players, but also for incumbent businesses. tech giants like google, apple, and alibaba look set to become dominant players. their advantage comes from providing cross - border services and having already gathered significant information about users. they are already present in the nordic marketplace. this development may lean towards monopolies, as it can create entry barriers for new and smaller players in the market. if that proves to be the case, it could have a negative impact on competition and go against the aims of the psd2 ( the recent eu directive on payment services in the internal market ( 2015 / 2366 ). this risk is greater when the payment mechanisms are outside the jurisdiction of the relevant state. then there is the question of supervision. will the new solutions be supervised, and if so, how? the challenge here is that many new solutions are global, and thus outside the european economic area or the european single market. such supervision thus requires crossborder cooperation among supervisors. the challenge for the supervisor is also to maintain a comprehensive overview of the market. for the legislator, it is a challenge to stay on top of rapid technological developments, as rules tend to lag behind technological changes. financial market participants must commit fully to guarding the system. cybersecurity needs to be promoted at all levels. with respect to this fast - changing technology, keeping one step ahead of antisocial elements is a constant challenge. as i see it, cooperation is the only way forward. it is vital that all financial system entities work together on all fronts β within and between countries β to identify and address vulnerabilities. we need to share both our successes and our | the main motive force behind it, particularly in the 1990s when we moved from foreignexchange control to free capital flows, from a fixed exchange rate to an exchange rate determined by market forces, and from inflation at a level of 15 percent to 20 percent a year to price stability. for these achievements we owe thanks to the previous governors, professor jacob frenkel and dr david klein. the government operates within a framework of long - term fiscal discipline the purpose of which is to reduce the burden on the economy of debt, taxation and government expenditure. the public in israelhouseholds and the business sector - benefit from complete freedom in regard to foreign currency ; the economy is an open one in the areas of trade and capital movements ; the capital market is developing constantly, and the government has severely curtailed its involvement in it and in the economy in general ; and the bank of israel pursues an independent monetary policy - mainly due to the nonmoney - printing law of 1985 which simply forbade the bank to print money for the government's budgetary requirements. it is important to observe at this early point that the main target of that long - term strategy is the achievement of sustained growth which we all wish for. it is the basis for improved welfare of the whole population and for welfare policy that will deal with its weaker strata. and indeed, israel's economy achieved a growth rate of over 4 percent in 2004, and although the data relating to real activity in 2005 are not unequivocal, it seems to us that growth for the year as a whole will be between 3. 5 percent and 4 percent. employment data so far show an impressive improvement, at least in the first four months of the year. are these accomplishments enough, and can we now take it easy? obviously that is a rhetorical question, the answer to which is a resounding " no! " many important challenges still confront us : the main challenge is to continue to maintain the achievements that have been attained. much work has been put into reaching this situation and much energy invested in it over many years. relinquishing the accomplishments would soon take us back to where we were and make us start the whole procedure over again. that is too dangerous a game to play, and we should not consider playing it. one of the lessons i learned while at the imf was that one can destroy in less than a year an economic achievement for which one worked for more than a decade - a lesson applicable not | 0 |
rate policy when there are downside risks, but it is equally important to react quickly to upside risks. as can be seen in the minutes of the executive board meeting on 7 february 2002, i entered a reservation against the decision to leave the interest rate unchanged. i would rather have seen an increase in the interest rate of 0. 25 percentage points, which is not any severe tightening of policy, but should rather be seen as not stepping so hard on the gas. | expansionary, that is, if the repo rate is too low to ensure macroeconomic balance, in time the economy will be liable to overheat. demand then grows more rapidly than production capacity and this generates inflationary pressures. if, instead, the riksbank β s monetary stance is unduly restrictive, that is, if the repo rate is set too high, the result may be declining demand, a weaker price trend and unsatisfactory growth. the full effect of an interest rate adjustment takes between twelve and twenty - four months to materialise. this means that the interest rate has to be set on the basis of the riksbank β s assessment of the macroeconomic trend and inflation prospects in that period. however, the inflation assessments are subject to uncertainty and this risk spectrum has to be considered too. since december 1997 the riksbank β s inflation forecast includes what is known as an uncertainty interval. this interval represents the riksbank β s assessment of the uncertainties in the forecast. targeting cpi inflation, however, has certain drawbacks. at the beginning of this year the executive board of the riksbank therefore clarified the inflation target in some respects, stating that, under certain specific circumstances, the riksbank may have grounds for interpreting the cpi target more flexibly. price formation in the past three years, for example, has been affected by some clearly identifiable price movements that monetary policy neither can nor shall aim to counter in full. this applies mainly to decreased indirect taxes and the direct effects that the riksbank β s own interest rate adjustments exert on interest expenditure and thereby on cpi inflation. the economic situation in sweden labour market as i mentioned earlier, monetary policy β s primary contribution to the development of employment lies in creating conditions for a stable economic trend. a predictable monetary policy, focused on a clearly defined inflation target, provides good guidance for wage negotiations. one of the main reasons why wage formation did not function satisfactorily during most of the 1980s was probably that stabilisation policy did not work. inflation exceeded the official target on several occasions in that period and the labour market organisations had difficulty in discerning the rules of the game. one example of this is the government ambition of bringing inflation down in the mid - 1980s : a crisis package was presented in 1983, aimed at inflation rates of 4 % in 1994 and 3 % in 1995 ; when inflation exceeded these targets, the employee organisations considered that a 5 % ceiling on | 0.5 |
place for longer than usual, while also wishing to stimulate the economy. an important issue for consideration is thus how the reserve bank might choose to implement macro - prudential policy in the future. the process would begin by establishing that asset market imbalances had become exceptional and unsustainable β as reflected in asset prices and / or excessive credit. then we would determine whether this was likely to contribute to macro imbalances in the future, which warranted policy action to bolster financial sector resilience and / or moderate the credit cycle. we are continuing to work on developing a set of indicators to help identify the build - up of financial imbalances, but, in practice, there will need to be a degree of judgment in assessing whether a macro - prudential overlay is warranted based on the bank β s financial stability objective. next, we would assess whether a macro - prudential overlay would support monetary policy, or at least not work against it. the nature of the imbalances would then guide the selection of the appropriate tool. generalised credit growth and broadly - based accumulation of banking system risk would prompt consideration of tools that are broad - brush in effect, such as the core funding ratio, or an aggregate capital buffer. pressures emanating specifically from housing or other sectors could suggest more targeted tools such as loan - to - value restrictions or adjustments to risk weights for the implicated sectors. turning to governance structures, there is no consensus in the literature whether monetary policy and prudential regulation and supervision should be combined in a central bank, or undertaken by separate institutions. a strong case can be made that central banks are best placed to be macro - prudential regulators and that centralising responsibilities within the central bank helps to avoid problems of coordination. certainly, this appears to be the trend internationally following the crisis. our own experience is that dealing with these policy overlaps is assisted by having a small β full - service β central bank managing monetary policy and prudential policy across all its dimensions. nevertheless, the coordination of these functions can still pose challenges and good internal process is important. see spencer, g ( 2010 ) for further discussion of the reserve bank β s macro - financial stability role. bis central bankers β speeches we established a macro - financial committee in 2009 for the internal consideration of macrofinancial issues and policies. this complements the reserve bank β s monetary policy and financial system oversight committees, which consider monetary policy and micro | ##prudential policies respectively. the macro - financial committee currently reviews indicators of financial stability, oversees production of the bank β s financial stability reports, and analyses potential new macro - prudential policy tools. if and when new macro - prudential policies are implemented, these will be reviewed and recommended to the governor by the macro - financial committee. the implications of such recommendations for micro - prudential policy and for monetary policy will be considered by the governor and potentially referred to the other policy committees. we also regularly consult with the treasury and minister of finance to keep them abreast of prudential policy developments and to glean their views. the financial stability report, which is a legal requirement under our act, requires us to explain and justify the prudential policies we adopt. conclusion micro - prudential and macro - prudential policies are both important. good micro - prudential regulation should contribute to financial system stability and we need to remain focused on improving the regulation of individual financial institutions. however, we have learned that this might not be enough to contain system - wide risks. macro - prudential instruments that focus on system - wide imbalances can also bolster financial system resilience and possibly help to moderate credit cycles. we need to be realistic about what can be achieved. even if credit cycles can be moderated, they will not be eliminated. like other countries, new zealand has already taken steps to promote a more resilient financial system with our liquidity policy helping to shift the banking system on to a more stable funding base. in terms of using macro - prudential instruments to better manage the credit cycle, there has not been a pressing need for the use of such tools given recent weakness in the credit cycle. however, we do need to keep preparing for how we might deal with credit and asset price booms when they recur in the future. our work so far on macroprudential instruments suggests that we should keep our expectations modest, but we have identified several tools that we would contemplate using in the right circumstances. the world has little practical experience with some of the macro - prudential tools currently under consideration. there will be an important learning period ahead as countries start to use these instruments and develop their implementation frameworks. we can expect our understanding of this broad area to have evolved significantly in five or ten years β time. references blanchard, o, g dell β ariccia and p mauro ( | 1 |
ardo hansson : availability of banking services in estonia answer by mr ardo hansson, governor of the bank of estonia ( eesti pank ), before the riigikogu ( the unicameral parliament of estonia ), tallinn, 22 september 2014. * * * interpellations raised by members of the riigikogu concerning the accessibility of banking services 1. why has eesti pank not set minimum requirements for the provision of cash and payment services in a decree alongside the technical requirements, in the context of the emergency act? 2. what solutions has eesti pank discussed for ensuring the equal accessibility of cash and payment services across estonia? the principal position of eesti pank banking services are important and they need to be accessible to people and companies across estonia. it is reasonable for services to be provided efficiently and flexibly. i understand that people are worried about the accessibility of banking services across estonia. eesti pank does not prefer any one means of payment over any other. cash is an official means of payment and so eesti pank believes that it should be available through flexible solutions everywhere in estonia. eesti pank works every day to supply estonian companies and people with cash. we provide a flexible cash service to the commercial banks, giving cash out and taking it in every working day, and in exceptional circumstances we can be even more flexible. our aim in this is to make sure that cash can circulate smoothly and without interruption and we also manage the state β s cash reserves and test the quality of the cash in estonia every day. tomorrow eesti pank will release ten - euro notes of the second series into circulation, and these are more secure and longer - lasting than the notes of the first series, with better security features. as governor of eesti pank i can confirm that cash is not going anywhere. i personally like to use cash and i am proud of the quality of the euro cash used in estonia. access to cash is important, and it is a complicated issue that doesn β t have a quick and easy solution. this is why it needs to be discussed, and eesti pank is very pleased that we could be part of the working group set up by minister of economic affairs and infrastructure urve palo to look for solutions. eesti pank believes that the issue of access to banking services across estonia should not be handled under the emergency act, but this does not mean that it should be ignored. i will | now answer questions about the emergency act first, and then questions about access to banking services. coming to the first question of the interpellation, as governor of eesti pank i have set minimum requirements for the provision of cash and payment services in case of emergency. the decree requires that the four largest banks in estonia restore their normal services to 70 % of their normal operational level within 12 hours in the event of an emergency. how the banks restore their services is up to them, but they must describe their recovery plan to eesti pank, who then passes the information on to the ministry of the interior. as i understand it, the purpose of the emergency act is to see that vital services are restored in the event of an emergency. it is not intended to cover cases where some bis central bankers β speeches people do not have day to day access to some important services. neither is it intended for the purpose of guiding trends in urbanisation and marginalisation. that is an issue for regional policy, not one that requires solving under emergency powers. regional policy lies within the domain of the riigikogu, the government and local authorities. that said, cash circulation is an issue of importance for eesti pank, and we wish to be fully engaged in setting policy for cash circulation. this brings me on to the second question in the interpellation, and the position of eesti pank on the accessibility of cash and payment services across estonia. eesti pank β s goals for cash are to supply the commercial banks with sufficient cash resources and to ensure the quality of the cash. the commercial banks distribute the cash among the people and companies of estonia, in the same way that it is done around the world. eesti pank is not aware of any country anywhere where the central bank is responsible for operating the cash network serving people and companies directly. it would require massive investment and fixed costs for eesti pank and the outcome would most likely be unwieldy and unclear for the public in their use of money. the commercial banks are much better able to do this and do it more efficiently. however, eesti pank is responsible for managing cash circulation, and we consider it important to engage in looking for ways of making sure services can be accessed across estonia. access to banking services is a problem globally, this is not an issue that is unique to estonia. a parliamentary commission in australia looked into the matter ten years ago, and similar questions have been discussed in canada | 1 |
the moment essentially focused on larger firms with smaller ones probably suffering from restricted access to credit, in the swiss case, any diverging trend between big and small firms is not of major importance. rather, the difference is more accentuated for firms that are predominantly export - oriented as opposed to those oriented towards the internal market. on the export side, the ability of swiss exporters to continue redirecting their efforts towards the more dynamic regions of the world economy, in particular emerging asia may be a crucial test. this region is leading the world in terms of economic recovery from the crisis. it is clear here that the proponents of a reasonable version of the decoupling hypothesis are on the winning side of the intellectual debate. on a global level, inflation pressures are expected to remain subdued in most economies. in advanced economies, headline inflation is expected to pick up from near neutral levels in 2009, but remain low in 2010. for switzerland, the path of inflation in the short term will be largely dictated by recent movements in oil prices and associated base effects. inflation will nevertheless remain positive throughout 2010. this follows a negative rate of 0. 5 % in 2009. assuming that monetary policy remains unchanged, the snb β s forecast show that inflation will reach 0. 7 % this year. the snb β s forecasts also show that inflation will begin to increase again from the beginning of 2011, to reach 2 % in the first half of 2012. iii. policy challenges for the future 1. exit strategies for the snb, the return to normality does not pose any difficult conceptual problem. the unconventional measures developed to combat the current crisis have in part modified the nature of the liquidity created. liquidity resulting from repos and currency swaps is temporary : it flows back automatically when transactions are not renewed. liquidity created by acquiring foreign exchange and swiss franc bonds is more permanent. the issuance of snb bills routinely practiced since october 2008 has given the snb a tool that can play a central role in liquidity absorption. the next speaker, my colleague dewet moser, will concentrate on the more technical aspects of the exit strategy. suffice it to say that the toolbox is available. it is not a question of how, only of when. on the timing issue, because of the long and variable lags between monetary policy decisions and their impact on inflation, the decision to start tightening is a difficult one. it is necessary to balance the risk of moving too soon | times are good, while the public sector has to come to the rescue when times are bad. in an ideal world, it should now be the responsibility of the financial sector β rather than regulators β to come up with credible proposals for change. these proposals must inevitably imply that all the main players, in particular managers and creditors, have much more at stake than in the past. depending on how creative we are in finding solutions, financial institutions will have to be smaller and less prone to risk taking. for managers, at the very least, this must mean bonuses being tied to the long - run performance of their firm. logically, one could envisage going further. the first real source of asymmetry is the very principle of limited liability. beyond a certain level of remuneration and risk taking, one should ideally envisage a system which mimics that of partnerships or full personal liability. the fact that this is probably too ambitious justifies more ad - hoc complementary forms of regulation. shareholders have by and large paid their dues in the crisis, but creditors typically have not. this is the level at which there is most to gain in both correcting the incentives ( ultra - high leverage should worry creditors first, and regulators only afterwards ) and protecting tax payers. by definition banks rely a great deal on credit ; it is conceptually clear that creditors should come into play before taxpayers when something goes wrong. this would naturally be the case via bankruptcy proceedings. if we cannot go that far because of the crucial role of banks and certain financial institutions, we must find other ways for creditors to step in before taxpayers are involved. this can be achieved through ways of anticipating part of bankruptcy outcomes ( living wills ) or / and through some form of automatic conversion of a significant proportion of bank debt into equity. secondly, these considerations address the financial stability issue only through the lens of individual institutions. we now know that this is not enough. microprudence must be supplemented by macroprudence, i. e., a system design that encourages well - managed individual institutions to act, in particular at times of crisis, in ways that do not make life harder for other institutions under stress. the issue is clear, the perfect solution less obvious. at the moment, regulators are talking about dynamic provisioning or capital requirements conditional on the cycle phase. the key idea is that regulators may want to be more lenient in bad times so that individual institutions have more breathing room. if this is the case | 1 |
good and loan quality remains satisfactory. the bsp β s stress test exercises and simulations point to favorable banking system prospects even with risks to the outlook. moving forward, we expect non - performing loans to remain manageable, cars to stay above the 10 - percent requirement, liquidity to be sufficient, and profitability to stay intact. we are confident that the worst is over. we have started to open up the economy as lockdown measures have resulted in flattening the curve and allowed the government in building the necessary health capacity. the bsp will continue to monitor developments as they unfold. further policy responses will be dependent on how the data evolves. going forward, the bsp is prepared to use the full range of its monetary instruments and to deploy additional measures, as needed, in fulfilment of its price and financial stability objectives. even as the bsp maintains its independence, we will continue to work hand - in - hand with the national government to ensure that the coronavirus pandemic will leave little permanent scar on the philippine economy and its people. 2 / 2 bis central bankers'speeches | every bit counts. it is in this spirit of collective action that mas is publishing a sustainability report, to account for what we are doing together with the financial industry, and in our own right, to help remake a greener world and secure a more sustainable future. 8 / 9 bis central bankers'speeches we want to be the change we want to see. 9 / 9 bis central bankers'speeches | 0 |
duvvuri subbarao : the global economy and framework intervention by dr duvvuri subbarao, governor of the reserve bank of india, at the g20 ministerial meeting, washington dc, 15 april 2011. * * * chairperson, finance ministers and colleague governors, 1. after its very successful efforts at a coordinated response to the challenges emerging out of the recent unprecedented global financial crisis and safeguarding the process of economic recovery, the g - 20 is now turning to the more challenging task of addressing structural imbalances in the global economy. india has had the privilege of cochairing, together with canada, the g - 20 collective effort towards drawing up a framework for strong, sustainable and balanced growth. the success of this initiative is critical for a durable global economic recovery and for better global economic and financial governance. importantly, the success of this initiative is also critical for the credibility of the g - 20 and its ability to forge a consensus in non - crisis situations. 2. at the seoul summit last november, the leaders of g - 20 tasked us to formulate indicative guidelines for the identification of persistently large imbalances requiring corrective action, including their root causes and impediments to adjustment. earlier this year at paris, we decided to break up the exercise into an integrated two step process. for the first step, while agreeing on a set of indicators, we resolved to firm up indicative guidelines against which each of these indicators will be assessed to identify persistently large imbalances by our next meeting in april. we now need to finalize these guidelines and move on to the second step of the exercise. presumably, this would focus on root causes, impediments to adjustment and corrective policies and actions. 3. having set the context, i would now like to make four comments. 4. first, the imf is doing a commendable job in providing timely technical inputs for our exercise. developing the indicative guidelines requires selection of reference values or norms for each indicator, as well as rules to guide the assessment of the indicators against the norms or reference value to determine if imbalances are large. this has been done using two different methodologies β structural and statistical. while the imf β s preference is for the structural approach because of its theoretical consistency, given the inherent fragility and contestability of econometric estimates that can deviate sharply from the observed data, the framework working group has designed a method that combines these two | clear the need for more fiscal integration β a challenge for the future, to which we will return. what about the present crisis of the euro area? two or three years ago, there was widespread skepticism on the western shores of the atlantic and the english channel about the viability of the monetary union, and there was much discussion of what would happen after the breakup of the present euro area β whether there would be one or two euro areas, one for the stronger countries, one for the weaker, and if so, how well each of the two blocs would fare. with one sentence β the sentence that included the words β whatever it takes β β that skepticism was largely, though not totally, erased. with one decision β the decision to implement qe β it became clear that the ecb has the capacity both to decide to implement monetary policy at the zero lower bound β indeed below the zero lower bound β and to succeed in implementing that policy. there can be no one whose bayesian priors have not moved in favor of the survival of essentially the present euro area, even though we still await the outcome of the greek crisis, and even though we know that the present crisis is not yet over. is this an example of the success of the monnet approach? absolutely. european monetary policy in the earlier part of the great financial crisis was innovative, particularly in the invention of full - allotment outright monetary transactions. that policy was inspired by crisis, as were the innovative policies undertaken by the fed in the united states. more important than that : it is hard to believe that a european banking union would have been put in place by 2014 if it had not been for the crisis. and it is no less difficult to believe that a single supervisory mechanism would have been set up absent the crisis. of course, one may say that the ability to make these difficult decisions depended on the skills of the leadership of the ecb β and that is true, and will always be true. but the fact is that, when needed, europe produced the monetary policy leadership it needed. what of the future? what crises, what extremely difficult decisions, await the eu? some are already visible. the decision to use the single currency to drive the european project forward was a risky one, and at some stage or probably in several stages, it will be necessary to put the missing fiscal framework into place. and that, if it happens, will be another example of a crisis β the present crisis, one hopes β | 0 |
is defined by the achievement of positive inflation rates. market participants, who once appeared to be skeptical of our scenario of registering a 0. 3 percent rise in the core cpi in fiscal 2006, now seem to anticipate the likely end of the current policy regime within one year, as observed in euroyen futures market interest rates. this has led to a pickup in interest rates over a wide range of maturities. in this sense the market informs us when the exit is coming. president of the san francisco federal reserve janet yellen once asked me why deflation has subsided despite the existence of the output gap. my answer was, " it is because of the speed limit effect. " the narrowing output gap was brought about by the lengthy and sustained recovery phase in and after 2002. it may be noteworthy that the effect of the speed limit ( narrowing the output gap ) dominated the effect of the level of the output gap on the deceleration of deflation. 5 now we have reached the stage where it can be said that a long time is not needed to satisfy the conditions to end the quantitative easing policy. dynamic price stability target policy to the extent that the combination of the provision of the price stability anchor with the monetary easing policy based on our clear commitment has succeeded in bringing japan's economy to a virtually zero inflation rate, compared with deflation of the core cpi of about 1 percent in 2001, it seems reasonable to maintain the key elements underlying the quantitative easing policy framework at succeeding stages. about two years ago, i described the step - by - step approach to attain ultimate price stability as a " dynamic price stability target policy " for extricating japan from deflation, in contrast to the " timeless perspective " price level target policy. i identified the three phases of the dynamic adjustment process moving out from the deflationary equilibrium to the normal equilibrium, thereby avoiding the over - and undershooting of the inflation rate and the longterm interest rate, notably during the transition period. recently, former federal reserve governor laurence meyer ( 2005 ) has presented a threestep strategy for the future of japan's monetary policy. he identifies three phases : namely, the quantitative easing policy, the zero interest rate policy, and the interest rate policy. in between, there are two transitional phases : one is dismantling the bank reserve target to the required reserve level ( about 6 trillion yen ), or the shrinkage of zero interest rates to the uncollateralized overnight call rate. | consolidation will continue. the government has shown its commitment to this process by continuing to adjust expenditure where the revenues fall below budget. additionally, the government has demonstrated its commitment to fiscal transformation with the commencement of the phased implementation of the central treasury management system, which will result in more efficient management of public sector finances. the process to divest the government of public bodies that are a drag on the budget has achieved major milestones and is continuing. with these developments, there is going to be a continuing decline in the fiscal deficit and the debt ratios. lower demand for financing from the domestic market by the government will continue to result in more and more resources being available for private sector credit. repeated success in meeting the quantitative targets under the imf - sba has led to increasing confidence about the prospects for the economy. we saw this in the strong preference for jamaica dollar assets during the fiscal year and the steady appreciation in the exchange rate. the bank ended 2010 with strong net international reserves ( β nir β ) of bis central bankers β speeches us $ 2. 17 billion, an increase of us $ 442. 1 million for the year. gross international reserves, at us $ 2. 98 billion, represented 23. 7 weeks of projected goods and services imports. in the context of the relatively stable market conditions during the year, the bank lowered the interest rate on its 30 - day certificate of deposit by 375 basis points to 6. 75 per cent by endfebruary 2011. in addition, the bank increased the pool of loanable funds in the system by reducing the cash reserve requirement for both jamaica dollar and foreign currency deposits. market - determined interest rates also trended down during the year at a faster pace than the central bank β s policy rate. despite emerging challenges from rising international commodity prices, headline inflation continued its progress towards the achievement of the target for the fiscal year of 7. 5 to 9. 5 per cent. statin released its inflation report for february ten days ago although this may come as a surprise to you as the news media appear to have concluded that the results in the report are not sufficiently newsworthy to be reported in a timely manner. interestingly, i read a statement in one of today β s newspapers that food prices rose by 25 per cent last year in an environment where the minimum wage is j $ 4, 500 per week. well, not exactly. in the same inflation report for february that was released by statin ten days ago, prices in the food category | 0 |
of different dictatorial regimes, finland stuck to its democracy, looking to its scandinavian neighbours for models for social development. the continuity of national institutions was remarkable also during the second world war and its aftermath. in 1939 - 1944, finland lost two wars to the soviet union and had to make heavy territorial concessions in two peace treaties. however, helsinki was the only capital of a european belligerent country, apart from moscow and london, which was not occupied by a foreign army during the war. also, the finnish parliament continued to work uninterrupted throughout the war. despite of losing the war in the end, finland retained its independence, even though its room for manoeuvre in foreign policy was severely limited, especially in the years immediately after the war. the development of the finnish society in post - was decades was characterised above all by two challenges, the building of a modern, industrialized welfare state, and developing a modus vivendi with the powerful soviet neighbour. these policy goals were not independent. the building of a modern welfare state required economic growth, which had to be based on exports and integration with the other western market economies. however, the country could hardly risk getting into conflict with the communist superpower, which might, it was feared, put an end to finland's policy of economic integration with the west. finnish policy was a delicate balancing act, as if walking on a tightrope. in the end, however, finland was the only western neighbours of the soviet union to retain its democratic constitution, its multi - party democracy, the rule of law and a free market economy. these national institutions stayed intact. in a way, the miracles of the 1910 β s and the 1930 β s, the survival of the rule of law and democracy, were repeated in the late 1940 β s as finland managed to hold on to its democratic course, despite difficult circumstances. the value of this stability for economic development and growth cannot easily be overestimated. free trade and internationalisation another success factor for finland has been a proactive attitude towards the internationalisation of the economy. as a small country, with not very many natural resources, finland has always been dependent on foreign trade for its economic development and welfare. this fact is so obvious that it was understood quite early, and as a consequence the economic policy of the country has traditionally been export - oriented, and very eager to develop economic linkages with international markets, to the extent political realities have allowed. finland ' | bank of botswana 2020 media economic briefing - welcome remarks by moses d pelaelo governor july 14, 2020 at 09 : 00 hrs good morning. distinguished, ladies and gentlemen of the media, once again, it is my pleasure, on behalf of the board, management and staff of the bank of botswana, to welcome you to this economic briefing marking the launch and dissemination of the 2019 bank of botswana annual report, in fulfilment of the bank β s accountability to its key stakeholders, in this instance, members of the fourth estate, media practitioners. i also want to take this opportunity to recognise and appreciate your continuing coverage of the bank β s events, including joining us this morning for this economic briefing, notwithstanding the covid - 19 pandemic constraints and related challenges. communication is increasingly becoming key in our policy β tool - kit β, being a means to meet public expectations of a transparent and accountable central bank as well as anchoring policy credibility. the bank continues to explore ways and means to increase channels for sharing information with the public, on various aspects of its operations. therefore, in addition to the revamping of the bank β s website in 2019, other platforms, such as social media, are under consideration. to recap, distinguished members of the media, the annual report is published in compliance with the bank of botswana act and, as a statutory requirement, contains a report on the bank β s operations and audited financial statements ; therefore, the annual report is the primary vehicle for accountability to the nation on the operations and financial performance of the bank. also, as a statutory requirement, the bank publishes a monthly statement of financial position in the government gazette and submits an annual banking supervision report to the minster of finance and economic development by june 30, each year. i am happy to confirm that these statutory requirements have been consistently adhered to throughout the existence of the bank. the economic briefing this morning has three parts. first, chief financial officer, mr daniel loeto, will provide highlights of the bank β s financial performance and operations in 2019 and updates, where relevant. second, it is a tradition that the annual report also includes a review of economic developments and outlook. the review provides an analytical context and explanations for economic developments and prospects, as well as background to policy conduct and operations by the bank. tshokologo alex this will be presented by dr kganetsano, director, research and financial stability department. dr kganetsano | 0 |
, i. ( 2016 ), β advanced economy inflation : the role of global factors β, working paper series, no 1948, ecb, august. 11. forbes, k. j. ( 2019 ), β inflation dynamics : dead, dormant, or determined abroad? β, nber working paper series, no 26496, november. 12. the chart shows the sum of hicp weights of β cyclical β and β non - cyclical β series in core inflation. this is calculated by running regressions of each component of core inflation at coicop 4 level across various specifications containing the output gap. if any of those beats an ar ( 1 ) model in terms of mean square forecast error on average over the next four quarters, then that component is classified as β cyclical β. 13. a recent study finds that a 1 percentage point higher trade balance - to - gdp ratio in the euro area is associated with price inflation that is 16 to 40 basis points lower. see galstyan, v. ( 2019 ), β inflation and the current account in the euro area β, economic letter, vol. 2019, no 4, central bank of ireland. 14. β underlying inflation β, or β core inflation β, is inflation excluding food and energy. 15. for a comparison of growth in real domestic demand between the united states and the euro area, see panetta, f. ( 2021 ), β mind the gap ( s ) : monetary policy and the way out of the pandemic β, speech at an online event organised by bocconi university, milan, 2 march. 16. this is true especially in emerging markets, which have less developed financial markets. see caballero, r. j., farhi, e. and gourinchas, p. - o. ( 2016 ), β safe asset scarcity and aggregate demand β, american economic review, vol. 106, no 5, pp. 513 - 518 ; del negro, m., giannone, d., giannoni, m. p. and tambalotti, a. ( 2017 ), β safety, liquidity, and the natural rate of interest β, brookings papers on economic activity, vol. 48, no 1, pp. 235 - 316 ; glick, r. ( 2020 ), β r * and the global economy β, journal of international money and finance, vol. 102 ( c ) ; ferreira | rate of unemployment ) benefits less advantaged groups more. specifically, a 1 percentage point narrowing of the unemployment gap reduces the unemployment rate of β low - skilled β workers by 1. 3 percentage points more than the unemployment rate of β high - skilled β workers, and it reduces the unemployment rate of young workers by 0. 7 percentages points more than the unemployment rate of old workers. 31. dieppe, a. ( ed. ) ( 2020 ), β global productivity : trends, drivers, and policies β, world bank. 32. the magnitude of such effects after the pandemic is unclear ( see imf ( 2021 ), β after - effects of the covid - 19 pandemic : prospects for medium - term economic damage β, world economic outlook β managing divergent recoveries, april ). however, the recovery from the global financial crisis should serve as a cautionary tale. ecb research finds that demand shocks accounted for around one - third of the longer - term productivity decline after the crisis ( see dieppe, a., francis, n. and kindberg - hanlon, g. ( 2021 ), β technology and demand drivers of productivity dynamics in developed and emerging market economies β, working paper series, no 2533, ecb, april ). this research also finds that economies can limit such scarring effects if fiscal policy acts strongly to offset demand weakness. 33. beyond both the measures already factored into the ecb β s baseline for our march projections and measures recently announced by national governments. 34. this is an ex ante calculation based on an increase in public investment by 0. 5 % of gdp in 2021 and 2. 3 % in 2022. ex post, i. e. factoring in the growth - enhancing impact of the extra investment spending, budgetary costs compared with the baseline are 1. 6 % in total for 2021 and 2022. copyright 2021, european central bank | 1 |
models and prices as well as develop operational safeguards internally. an insurer wishing to expand into any new business area needs to demonstrate to the pra that new risk exposures are well understood and that the required capital for an altered risk profile has been fully considered. as stated previously, business model analysis forms an important part of the pra β s supervisory approach and a focus for its supervisory activity. insurers will need to deal with the pra in an open, co - operative and constructive manner to allow us to understand whether the business model is sustainable and to identify key vulnerabilities. this will ensure a more informed, focussed and proportionate supervisory approach. into the unknown over the past 25 years we have seen : the introduction of the euro ; break - up of the soviet union ; a shift from west to east ; the introduction of the world wide web to ordinary life ; and smart technology β so what will happen over the next 25 years? as an ex - forecaster i can tell you confidently that the only thing we can be certain of is that there will be changes that no one will predict. i did not think, some six years ago, when sat at the table of the monetary policy committee for my first meeting, that bank rate would continue to be 0. 5 % this far down the line. one can never be sure what tomorrow will bring and interest rates is a case in point. the low level of real interest rates today is, in large part, a product of spare capacity in the real economy and low levels of growth and productivity across the developed world. this presents a number of issues for insurers who rely on interest income from their assets as part of their basic business model, especially where these returns back contractual guarantees. without making any implied comment about monetary policy, just looking at today β s yield curve, it is not plausible for insurers to expect high nominal or real rates of return in the near future from low - risk assets. firms relying on high income streams from their assets may find themselves taking ever greater risks to their balance sheets. earlier on i mentioned the importance of governance in the work of the pra. it is one thing that can help generate robustness in the face of these uncertain developments. good governance should lie at the heart of every organisation. it is not just about the role of the board but includes management, controls, oversight and management information. good governance encourages better business practices and outcomes. of course, well | institute for international economics, january. board of governors of the federal reserve system ( 2017 ). β fomc issues addendum to the policy normalization principles and plans, β press release, june 14. β β β β ( 2018a ). β federal open market committee reaffirms its β statement on longer - run goals and monetary policy strategy, β press release, january 31. β β β β ( 2018b ). monetary policy report ( pdf ). washington : board of governors, february 23. brainard, lael ( 2015 ). β normalizing monetary policy when the neutral interest rate is low, β speech delivered at the stanford institute for economic policy research, stanford, california, december 1. β β β β ( 2016 ). β the β new normal β and what it means for monetary policy, β speech delivered at the chicago council on global affairs, chicago, september 12. β β β β ( 2017 ). β understanding the disconnect between employment and inflation with a low neutral rate, β speech delivered at the economic club of new york, new york, september 5. congressional budget office ( 2018 ). bipartisan budget act of 2018 : cost estimate. 3 / 4 bis central bankers'speeches ( pdf ) washington : cbo, february 8. kiley, michael t. ( 2015 ). β low inflation in the united states : a summary of recent research, β feds notes. washington : board of governors of the federal reserve system, november 23. kiley, michael t., and john m. roberts ( 2017 ). β monetary policy in a low interest rate world ( pdf ), " brookings papers on economic activity, spring, pp. 317 β 396. nakata, taisuke, and sebastian schmidt ( 2016 ). β the risk - adjusted monetary policy rule, β finance and economics discussion series 2016 β 061. washington : board of governors of the federal reserve system, august. simon, john, troy matheson, and damiano sandri ( 2013 ). β the dog that didn β t bark : has inflation been muzzled or was it just sleeping? ( pdf ) β chapter 3 in world economic outlook : hopes, realities, risks. washington : international monetary fund, april. 1 see various issues of the international monetary fund ( imf ) world economic outlook and world economic outlook ( weo ) updates. 2 see board of governors ( 2018b ). 3 the national financial conditions | 0 |
ardian fullani : overview of albania β s latest economic and financial developments speech by mr ardian fullani, governor of the bank of albania, on the monetary policy decision - making of the bank of albania β s supervisory council, tirana, 27 march 2013. * * * today, on 27 march 2013, the supervisory council of the bank of albania reviewed and approved the monthly monetary policy report. based on the most recent monetary and economic developments in albania, and following the discussions on their outlook, the supervisory council of the bank of albania decided to keep the key interest rate unchanged, at 3. 75 %. the council notes that there are appropriate monetary conditions to ensure the achievement of the inflation target in the medium - term period, providing, at the same time, the required monetary stimulus to boost economic activity. let me now proceed with an overview of the economic developments and key issues discussed at today β s meeting. * * * annual inflation was 2. 5 % in february, down by 0. 2 percentage points from january. the lower inflation was primarily driven by the falling oil price, due to the base effect of the environmental tax rise in 2012 and the falling global prices. overall, inflation continues to be determined by the rise in food prices. their inflation accounted for about 90 % of february β s headline inflation. other basket prices have generally been stable and making low contribution to headline inflation. in the macroeconomic aspect, the general economic and monetary conditions have contributed to keeping inflation low. aggregate demand, in particular, remains sluggish and insufficient to generate full utilisation of production capacities, hence exerting no pressures on producer prices, profit margins and, consequently, the final prices of goods and services. as we have constantly pointed out, below - potential economic growth is and will remain a key factor driving the low inflation. in parallel, global prices, liquidity situation in the albanian economy and financial markets, and economic agents β inflation expectations have not and are not expected to generate strong inflation pressures in the medium - term period. indirect information on the performance of the albanian economic activity in the last quarter of 2012 suggests sluggish growth. aggregate demand was primarily driven by the higher exports, while the private domestic demand provided positive, albeit low, contribution. on the other hand, public sector expenditure shrank, hence making a negative contribution to the growth of aggregate demand. there is scarce information on economic developments during the first quarter of 2013. however, the analysis of available indirect data | responding to leaps in payments : from unbundling to stablecoins christina segal - knowles1 executive director financial market infrastructure directorate westminster business forum thursday 22 january 2020 i would like to thank holly snaith, michaela costello, rachel james and josh sadler for their assistance with preparing this speech. all speeches are available online at www. bankofengland. co. uk / news / speeches good morning. i would like to thank the westminster business forum for inviting me to speak at today β s seminar on β payments policy and regulation - infrastructure, innovation and end - user priorities β. i β d like to start today by telling two short ( and seemingly unrelated ) stories. the first is the story of perhaps the first giant leap forward in payments β the introduction of paper money. paper money was invented in china as early as the tenth century. merchants seeking to avoid carrying around heavy iron coins began issuing ious written on mulberry bark. the state eventually took over β outlawing private ious and banning counterfeit β and the first state - backed currency was born. when marco polo arrived in the mid thirteenth century, he was so amazed by this invention that he devoted an entire chapter of the marvels of the world to kublai khan β s tree bark money. but, the first big leap forward in payments ultimately ended in a leap backwards. by the mid - fifteenth century, china had eliminated paper money entirely. the state had issued too much money and counterfeit was rife. ultimately, mismanagement of the new invention resulted in what was perhaps the world β s first hyperinflation. china didn β t adopt paper money again for several hundred years. although paper money eventually made a comeback, it took generations. the second story i would like to tell is a bit more mundane : the story of my breakfast. on the way to this conference, i stopped to get a coffee and paid for it by tapping my phone against an ipad. of the other people in line in the busy coffee shop, not a single one paid in cash β everyone was tapping cards or phones. the story of my breakfast won β t be a surprise to most of you β indeed card payments have become the norm in many parts of the uk. the proportion of uk payments made with cash has fallen from 60 % in 2008 to 28 % just ten years later. this of course has implications for financial inclusion, which i won β t cover today as i don β t have time to | 0 |
jerome h powell : semiannual monetary policy report to the congress testimony by mr jerome h powell, chair of the board of governors of the federal reserve system, before the committee on banking, housing, and urban affairs, us senate, washington dc, 7 march 2023. * * * chairman brown, ranking member scott, and other members of the committee, i appreciate the opportunity to present the federal reserve's semiannual monetary policy report. my colleagues and i are acutely aware that high inflation is causing significant hardship, and we are strongly committed to returning inflation to our 2 percent goal. over the past year, we have taken forceful actions to tighten the stance of monetary policy. we have covered a lot of ground, and the full effects of our tightening so far are yet to be felt. even so, we have more work to do. our policy actions are guided by our dual mandate to promote maximum employment and stable prices. without price stability, the economy does not work for anyone. in particular, without price stability, we will not achieve a sustained period of labor market conditions that benefit all. i will review the current economic situation before turning to monetary policy. current economic situation and outlook the data from january on employment, consumer spending, manufacturing production, and inflation have partly reversed the softening trends that we had seen in the data just a month ago. some of this reversal likely reflects the unseasonably warm weather in january in much of the country. still, the breadth of the reversal along with revisions to the previous quarter suggests that inflationary pressures are running higher than expected at the time of our previous federal open market committee ( fomc ) meeting. from a broader perspective, inflation has moderated somewhat since the middle of last year but remains well above the fomc's longer - run objective of 2 percent. the 12month change in total personal consumption expenditures ( pce ) prices has slowed from its peak of 7 percent in june to 5. 4 percent in january as energy prices have declined and supply chain bottlenecks have eased. over the past 12 months, core pce inflation, which excludes the volatile food and energy prices, was 4. 7 percent. as supply chain bottlenecks have eased and tighter policy has restrained demand, inflation in the core goods sector has fallen. and while housing services inflation remains too high, the flattening out in rents evident in recently signed leases points to a deceleration in this component of inflation over | Β£50 note character selection announcement speech given by mark carney governor of the bank of england science and industry museum, manchester 15 july 2019 i am grateful to clare macallan for her assistance in preparing these remarks, and to matthew corder, toby davies, sarah john, elizabeth levett, debbie marriott and james oxley for their help with background research and analysis. all speeches are available online at www. bankofengland. co. uk / news / speeches it β s a pleasure to be at the science and industry museum in manchester. these galleries testify to the uk β s rich history of discovery in science, technology and industry. a little more than eight months ago, the bank sought to recognise the uk β s extraordinary scientific heritage by asking people across the country to β think science β in order to help us choose the character to feature on the new Β£50 note. we were overwhelmed by the response. in six weeks, almost a quarter of a million nominations were submitted, from which we distilled a very long list of nearly 1, 000 unique characters. 1 the hard work of narrowing down these names to a shortlist of twelve options required the incomparable knowledge and tireless work of the banknote character advisory committee. 2 on behalf of the bank, i would like to thank the external members of the advisory committee β dr maggie aderin - pocock, dr emily grossman, professor simon schaffer, dr simon singh, professor sir david cannadine, sandy nairne and baroness lola young β for their invaluable expert advice and unbridled enthusiasm. the characters that made it through to the final shortlist were : mary anning charles babbage and ada lovelace paul dirac rosalind franklin stephen hawking caroline herschel and william herschel dorothy hodgkin james clerk maxwell srinivasa ramanujan ernest rutherford frederick sanger alan turing the shortlist epitomises the breadth and depth of scientific achievement in the uk. their work covers both the theoretical and the practical, and spans from the smallest building blocks of the universe to the nature of life itself. characters must be non - fictional and deceased. we also need to ensure that a suitable, easy to recognise, portrait of the person is available. https : / / www. bankofengland. co. uk / about / people / banknote - character - advisory - committee. all speeches are available online at www. bankofengland. co | 0 |
also the potential risks to financial stability. and when it comes to broadening access to ccps ( central counterparties ) in the market, there are still some obstacles, which need to be eliminated beforehand. although the fee models for ccps ( central counterparties ) have been improved upon, central clearing still seems to be uneconomical for smaller market participants, as ccps β participants have to meet very strict risk management requirements. therefore, we should do more to improve the attractiveness of the access models in general. talking about new risks that ccps ( central counterparties ) need to consider going forward, climate change risks have become increasingly important. while climate effects are becoming more and more visible, global efforts to tackle climate change risks are also on the rise. commodity ccps ( central counterparties ) have been primarily affected by recent developments like the spikes in energy prices and market volatility in the context of current tensions between russia and ukraine, which challenged ccps ( central counterparties ) β stress test models significantly. despite the high levels of market turmoil, ccps β risk models appear to have performed well on the whole. while this is welcome news, ccps ( central counterparties ) need to continuously review their model performance. given the potential impact of climate risks on financial markets and consequently on ccps ( central counterparties ), all ccps need to evaluate how to integrate climate change - related risk adequately into their risk models. by taking climate risks more into account, ccps ( central counterparties ) β in their capacity as intermediaries β could play a role in adequately mitigating the transfer of climate risks to financial markets. the journey has just begun : although a lot has been achieved, there is still a lack of uniform standards applicable worldwide. since climate change is a global issue, local standards and measurements need to be aligned around the world. it is up to governments and regulators to make sure that an assessment of climate risks takes place in an organised manner, and to provide the necessary framework. in order to do so, i see also ample scope for further analytical work. much remains to be done, but i am sure that together, we can shape the future of tomorrow. 3 farewell ladies and gentlemen, colleagues, thank you again for taking part in today β s conference and making it such a success. i am convinced that today β s conference has delivered what it set out to achieve. | is characterised by, what may be termed as, political system stability, despite the coalition cabinets and periodic elections both at the centre and in several states. india will remain one of the youngest countries in the world in the next few decades. this β demographic dividend β is seen as an inevitable advantage provided pre - requisites such as skill - upgradation and sound governance to realize it are put in place. in terms of business environment, the impressive growth coupled with market orientation of the economy has been a bottom - up exercise with a very broad - based and growing entrepreneurial class. these tendencies are perhaps reflective of a penchant for innovation among already large and growing entrepreneurial class in india, imbued with professionalism and seeking to be globally competitive. in brief, the medium term challenges are many, but all indications point to a sense of overall optimism for some acceleration in the already high rate of growth, with reasonable stability. perhaps we should track not only the addition to the number of billionaires in india but also the depletion in the number of millions of poor and unemployed. for some, indian economic progress signifies the beginnings of a major economic powerhouse in the world. but for many of us, the optimism over the medium - term is only the beginning of an arduous journey to ensure basic nutrition, clean water, safer sanitation, minimal housing, personal security and individual dignity for millions in india. the prospects for growth and stability in india are great, but greater are the challenges in fulfilling the very basic objectives of public policy. conclusion let me conclude by choosing some quotes from minister mentor, lee kuan yew β s jawaharlal nehru memorial lecture on november 21, 2005, in new delhi. referring to the unforgettable opening of nehru β s broadcast on the eve of independence, minister mentor lee kuan yew said, β the destiny nehru envisaged was of a modern, industrialized, democratic, and secular india that would take its place in the larger historic flows of the second half of the twentieth century. β β nehru β s view of india β s place in the world and of india as a global player is within india β s grasp. β β at stake is the future of one billion indians. india must make up for much time lost. β β the time has come for india β s next tryst with destiny. β thank you. | 0 |
choongsoo kim : central banks and financial stability β lessons and challenges from the crisis opening address by mr choongsoo kim, governor of the bank of korea, at the 18th central banking seminar, seoul, 23 november 2010. * * * opening remarks ladies and gentlemen, let me extend a hearty welcome to all central bankers from around the world taking part in the bank of korea β s β central banking seminar β. i would also like to thank dr. dosoung choi of the bank β s monetary policy committee for being here to deliver the keynote address shortly. this seminar, now in its 18th year, has contributed greatly to the sharing of diverse experiences and ideas among central banks in various countries. it has also provided an opportunity for broadening the networks linking the staff of central banks. since the outbreak of the global financial crisis, countries around the world, with the g20 to the fore, have been preparing frameworks that can underpin sustainable and balanced growth. in this context, the role of central banks, in securing financial stability needs to be heightened further to prevent any recurrence of the crisis. the theme of this seminar, β central banks and financial stability : lessons and challenges from the crisis β, is accordingly one that deserves our particular attention. central bank tasks after the global financial crisis the recent crisis is regarded as the severest since the great depression of the 1930s. the crisis has shown us how massive are the imbalances accumulated in the global economy during the period called as the time of β great moderation β, and how vulnerable it is to systemic risk. we have also come to realize that the development of financial engineering, once believed to disperse risks, has in fact worked to weaken economic agents β vigilance toward them. the g20, along with international financial institutions including the imf, the fsb and the bcbs, have devoted much effort to tackling these problems. for their part central banks, in conducting monetary policy, need to consider these problems so as to prevent crises. first of all, we should seek to find the desirable role of the central bank within a macroprudential policy framework that ensures overall economic and financial stability. the crisis has taught us that, even under low and stable inflation, financial sector imbalances can accumulate through a rapid expansion of credit and sharp run - ups in asset prices, and that these can trigger crises. it is also never simple for us, as the lender of last resort | . in a cross section dimension, macroprudential tools aim to reduce contagion risks by improving resilience of systemic institutions for example, via additional capital surcharge and loss absorbency requirements. other prudential tools in the cross section dimension include increasing risk weights and large exposure limits. 19. overtime, bank indonesia has implemented a broad range of macroprudential instruments including capital - related tools as required by basel iii such as counter cyclical capital buffer as well as asset - side tools and liquidity - related tools. asset - side tools include certain loan restrictions, such as ltv caps and to boost credit have put in place incentives and disincentives in the form of reserve requirements linked to loan to funding ratios. to strengthen corporates resilience to exchange rate shocks, bank indonesia also introduced requirements for hedging ratio and forex liquidity ratio. macroprudential policy interaction with others policies 20. in the areas where macroprudential policy interacts with microprudential policy, bank indonesia and ojk work hand in hand in formulating the optimum policies. for instance, bank indonesia has contributed work and research to the formulation of lcr requirements with ojk and in the identification of systemically important bank as mandated by the law on financial system crisis prevention and resolution. bank indonesia and ojk have also established a bilateral coordination framework to facilitate and to optimize cooperation and coordination in carrying out the function, duties, and authorities of bank indonesia and ojk. 21. recognising the potential interaction of macroprudential policy with other policies that also have a bearing on systemic risk, requires strengthening of inter - agency coordination. such interaction between macroprudential policy not only applies with microprudential policy but also with monetary and fiscal policies. as mentioned by the imf in their recent stock taking paper, bis central bankers β speeches boundaries and interactions between policies are complex and can give raise to both complementarities and tensions that may need to be resolved. for example, via suitable institutional arrangements which we effectively already have in place. closing remarks 22. to conclude, it is my greatest hope that this book can serve as a gateway for the public to better understand macroprudential terms and concepts as well as its main objective in mitigating systemic risk. with better understanding of the systemic risk transmission, we as individuals can help contribute in preserving financial system stability by limiting exuberance risk taking behaviour. hopefully | 0 |
last year we released a paper for consultation, setting out the rbnz's proposed outsourcing policy. we had already established principles for our proposed outsourcing policy and applied those to anz national bank upon approval of its merger. the consultation paper formalised these principles and set out a policy framework for application to all systemic banks and some other categories of banks. submissions on the discussion paper closed at the end of february and bank staff are currently working their way through those submissions. the outsourcing policy is very much outcomes - focussed, so individual banks can tailor a solution that best suits their situation and needs, while meeting our requirements. in this way costs can be minimised and a level playing field maintained. we intend to work closely with banks as they go about implementing the policy. there is no doubt that banks will incur some operational costs due to the outsourcing policy. however, we think these costs will be small and manageable, especially relative to australian banks'annual gross revenue, profits, and the potential costs of a bank failure, despite the claims in the media to the contrary. much of the public debate around the outsourcing policy has focussed on direct operational costs and thus the relatively small loss in productive efficiency that may occur. however, there are other aspects to efficiency to consider also, including allocative and dynamic responses. for example, our outsourcing policy could lead to better capital allocation due to more local decision making capacity, as well as systems that are more flexible and responsive to local needs. these aspects are especially important for the growth of small to medium size enterprises that dominate the new zealand business landscape. such benefits could accrue to bank shareholders and customers, as well as the wider new zealand economy. at the heart of the reserve bank's crisis management work is the development of a crisis management toolkit that will provide tools, policies and procedures to guide the high - stakes decisions supervisors would have to make under very tight time frames. crisis management can be thought of as having two phases. phase one is the very short period, perhaps a day or two, immediately following the discovery that a bank is in severe distress. it involves decisions around whether and how to get the bank solvent and operating again. phase two is the potentially lengthy subsequent period, during which it must be decided what to do with the bank over standard and poor's ratings direct, " robust local operations and strong parents fortify credit quality of new zealand banks | a strong sense that anything impacts the medium - term scenario and moves our medium - term inflation expectation further away from 2 percent, then there would have to be a monetary policy reaction. if it β s a pure short - term development, then there may be targeted instruments, such as ways to provide more liquidity, to cope with specific temporary situations, that doesn β t have to be standard monetary policy. it can be within the universe of non - standard measures. β β it β s our duty to prepare for all possibilities. it β s normal preparation for governing council meetings and monetary policy discussion that we go through the scenarios and see what we can do. β on financial - market fragmentation : β fragmentation in european markets will subside only very gradually. that β s because economic convergence itself is slow. it β s taking place but it takes time for reforms to feed into the economic fabric of each country. and then it takes time for structural changes in the economy to be acknowledged by financial market participants, particularly in terms of credit supply. there β s not much that we can do about that time dimension. β on interplay between government reforms and monetary policy : β the priority is for governments to deliver on what they have committed to in terms of growth and structural reforms. we have positive news that the situation is improving in several countries and we have strong commitments to reforms, such as the announcements made last tuesday by the french president, which i take as an important statement of intent. we also need strong actions to strengthen confidence in the banking sector and complete the whole banking union project. the role of the ecb is to support these processes. we have a clear treaty mandate to support the policies of the community. the best way to do this is to deliver on our inflation mandate. the ecb will deliver on its mandate. but that β s not a sufficient condition to deliver growth in europe. it β s a necessary condition but not a sufficient condition. β β coming to monetary policy, we have the scenario of a slowly developing growth, inflation slowly coming back to the 2 percent number over the medium term, but there are risks around this baseline scenario. we would have different answers to different risks. that β s why we need a range of instruments. but it doesn β t serve a purpose if the public discussion of monetary policy starts with the instruments. the instruments are the tail that wags the dog. β on the economy : β what we β ve seen lately is a series of positive | 0 |
with the right tools and technology, the right level of commitment, and the right people at the table, we can build cultural capital and mitigate misconduct risk. we all have a role to play in mobilizing our organizations to advance this critical work. thank you for your attention. 5 / 6 bis central bankers'speeches 1 i would like to thank stephanie chaly, robert fitchette, jim hennessy, and jackie mccormack for help preparing these remarks. 2 federal reserve bank of new york, reforming culture and behavior in the financial services industry : progress, challenges, and the next generation of leaders, june 18, 2018 and workshop on culture measurement and assessment, june 21, 2017. 3 see sr 16 β 11 : supervisory guidance for assessing risk management at supervised institutions with total consolidated assets less than $ 50 billion, june 8, 2016 and sr 12 β 17 / ca 12 β 14 : consolidated supervision framework for large financial institutions, december 17, 2012 for details for small and large banks, respectively. board of governors of the federal reserve system, federal reserve board requests comment on proposed guidance that would clarify board β s supervisory expectations related to risk management for large financial institutions, january 4, 2018. 4 stephanie chaly, james hennessy, lev menand, kevin stiroh, and joseph tracy, misconduct risk, culture, and supervision, federal reserve bank of new york, december 2017. 5 stiroh, kevin j., the complexity of culture reform in finance, october 4, 2018. 6 board of governors of the federal reserve system, federal reserve board invites public comment on two proposals ; corporate governance and rating system for large financial institutions, august 3, 2017. 7 see banking standards board. 8 board of governors of the federal reserve system, federal reserve board requests comment on proposed guidance that would clarify board β s supervisory expectations related to risk management for large financial institutions, january 4, 2018. 9 dudley, william c., strengthening culture for the long - term, june 18, 2018. 10 lois v. brown, psychology of motivation, 2007. coon d, mitterer jo. introduction to psychology : gateways to mind and behavior with concept maps. belmont, ca : wadsworth ; 2010. oudeyer, p. and kaplan, f. what is intrinsic motivation? a typology of computational approaches. front neurorobotics, 2007. 11 see banking standards board, annual review 2017 / 2018. 12 department of finance, minister don | , overseeing business lines and risk management, and ensuring compliance with internal policy, procedures, regulations and laws. 8 development of a firm β s cultural capital links directly to these core responsibilities and is evidenced by behavior throughout the firm. to address these concerns and build cultural capital, some firms have established culture and conduct committees or groups that meet regularly to review cultural indicators and assessment efforts. providing these groups with sufficient stature, developing the proper infrastructure to support them, and defining clear roles and responsibilities are essential for success. it is critical that there is alignment between the board, senior management, and middle and lower management on issues of conduct and culture, as employees take cues from their direct managers even more than the tone from the top. the performance management framework established by senior management sets powerful incentives to influence conduct and culture within a firm. 9 financial incentives, however, are not the only drivers of culture and conduct. employees alter their behavior based on a variety of formal and informal, intrinsic and extrinsic motivations. intrinsic motivations could include growth opportunities, independence, power, and social factors, while extrinsic motivations could include pay, benefits, profit sharing, or other forms of awards. 10 with this range of motivating factors and the impact they have on the culture in mind, a number of firms have integrated β how β factors into an employee β s performance evaluations by assessing the methods used to achieve a performance goal alongside the β what β components such as contributing to their group β s financial performance. industry benchmarking another perspective is from the industry as a whole. i think we can gain important insights by looking across the financial industry, identifying best practices, and understanding what approaches are most effective in positively influencing conduct and culture. conferences and workshops like those hosted regularly by the new york fed and others can help. in addition, standardized metrics and indicators can provide insights when assessing changes over time and across firms. the bsb, for example, provides one lens on assessing culture change for a broad cross - section of financial services firms operating in the u. k. 11 each firm participating in the survey has the ability to see its outcomes relative to others and the industry average. this type of industry - wide assessment gives firms insight into areas they can individually focus on, as well as areas they may want to address as an industry. the u. k. is not alone in this approach. in december 2017, the chief executives of the five main retail banks in ireland informed | 1 |
globalised nature of markets. the discussion will also need to pay due regard to the potential for other consequences of changes to practice in this area, including the possibility that private entities become so confident that liquidity risk has effectively been removed that they end up taking more risk of other types. that could leave both themselves and their central banks in an awkward position at some point down the track. so in parallel with ongoing development of liquidity arrangements by central banks, there will need to be a focus in the supervisory community and the banks themselves on liquidity management. conclusion international financial events over the past nine months have been a source of considerable instability. risk that was always in the economic environment has belatedly been recognised. the ensuing process of assessing and disclosing losses, finding new capital and de leveraging has been very difficult. matters have not been helped by the opacity and complexity of some of the financial instruments involved, and the associated problems in valuing them. for market participants and policy makers alike, this environment has been challenging indeed. those of you in the markets are dealing with heightened volatility and uncertainty. policy makers, meanwhile, are working hard to stabilise the present international situation. in some countries, especially the us, that involves being prepared to take measures quite aggressively, in an effort to avert a cumulative spiral of declining asset values and deteriorating creditworthiness feeding back on itself and doing great damage to the economy. in other countries, where financial strains are also occurring though not always to the same extent, it has thus far involved significant changes to liquidity management, while balancing the financial risks against other macroeconomic risks in an effort to foster long run stability. in all countries, though, policy makers are also keeping an eye out for the potential low probability, but high cost, downside events that could emerge. it looks as though the environment will remain quite challenging for us all for a while but the strength of the australian financial system is, for australia, a good basis for meeting the challenge. | specialised in one or some lending activities ( financial leasing, credits, micro credit, factoring, etc. ). 3. savings and loan associations - ( 16 ) which collect deposits from their members and supply credits only to the members of the association. 1 / 6 bis - central bankers'speeches these financial entities ( banks and non - banks ) have continuously supported the economy of albania and households through lending activity. currently, the entire granted credit portfolio is assessed at all 805 billion. lending is the main activity carried out by non - bank financial institutions. the latter through this activity help a specific category of consumers and small enterprises, who do not manage to access the banking system. currently, 26 non - bank financial institutions operate in albania carrying out the lending activity, though they account for only 6 % of the system's credit portfolio, totalling all 53. 6 billion. the practice of selling and purchasing non - performing loans appeared in the albanian financial market, after the global financial crisis of 2008 - 2010. in this period, some of credits granted by banks over the years were not repaid by citizens. in 2015, these credits exceeded 25 % of total credits, directly affecting the soundness and safety of banks and turning into a serious threat to citizens'savings. the ability of banking sector to support the economy with new credits reduces significantly due to the overloading of balance sheets with non - performing loans. against this backdrop, the albanian government and the bank of albania adopted " the national plan on the reduction of non - performing loans " in september 2015. among other things, the plan charged the bank of albania with the task of regulating and licensing entities engaged in the purchase of non - performing loans. this practice, recognized internationally, is strongly recommended by the experts of the imf and the world bank. in that period, some financial institutions, in addition to lending for which they were licensed by the bank of albania, had also purchased non - performing loan portfolios from banks. this activity is based on the provisions laid down in the civil code on the transfer of credit ( articles 499 β 507 and 705, respectively ). pursuant to the amendments taking place in march 2016, credit purchase is considered a form of lending. through licensing, credit purchase and sale, based on the aforementioned articles of the civil code, is regulated and controlled by the bank of albania, being a subject to all supervisory obligations, including : reporting to the credit registry, providing periodic reports, risk management through | 0 |
: the crisis has led the g20 leaders to commit to changing the rules for over - the - counter derivatives markets, with a view to strengthening their security and transparency. first, strengthening security : all sufficiently standardized derivatives should be subject to mandatory clearing through a central counterparty in order to reduce counterparty risk and foster market liquidity. second, on transparency, the aim is a registration of all transactions with trade repositories to provide authorities with a consolidated overview of derivatives trading. the contributions to the fsr show that most commitments have been materialized in a regulatory framework that is currently being finalized : in particular, at the international level, in april 2012 the cpss ( committee on payment and settlement systems ) and the iosco ( international organization of securities commissions ) published the β principles for financial market infrastructures β that update, strengthen and broaden the former standards applicable in the different jurisdictions. bis central bankers β speeches i will pay a particular tribute to the leadership of the us lawmakers in this field of regulation and the personal action and involvement of senator dodd, with the law named after him and his colleague senator frank. european union legislation with emir ( european market infrastructures regulation ) has also marked a decisive step to address the need for further security and transparency on otc derivatives markets. but the contributions to the financial stability review, also show that reforms must be pursued. before we get to the discussion, let me briefly give you some personal thoughts on this. efforts in the reforms should tend to establish a comprehensive, adequately calibrated and consistent regulatory framework. 1. there is a need for a comprehensive framework. this means that we have to extend and complete security and transparency. β’ first, pay a close attention to the regulation of otc derivatives that will remain noncleared. β’ second, pay a close attention to the implementation of pfmis and different regulations to ensure that ccps maintain state of the art risk management practices ( margining, collateral, default funds ) and adequate governance both for the sake of both their own soundness and the resiliency of the markets they serve. β’ third, define appropriate principles for resolution and recovery of financial market infrastructures, and particularly ccps which now concentrate a high level of risks. β’ last, bring transparency in the area of secured and unsecured interbank lending, which are the underlying reference for interest rate derivatives. monetary policy considerations also call further transparency in that regard as it requires detailed knowledge of the organization of money market | central bank policy. each inflation forecast is projected two years ahead, quarter by quarter. as in all countries, changes in the central bank interest rate are transmitted to the economy with a considerable lag. monetary policy therefore needs to be forward - looking and the inflation forecast based on the best available methodologies. if the scenario is that inflation will head beyond the bank β s target, the bank will raise its interest rates, while it will reduce them if inflation is tending below the target. let us first look at the macroeconomic forecast, which of course is a major consideration for future inflation. the main assumptions are that the central bank β s policy interest rate, currently 5. 3 %, will remain unchanged for the forecast period, which is a standard forecasting assumption, and that the exchange rate will be 3 % weaker than in the february forecast, with a reference value of 124. however the exchange rate index has continued to rise [ i. e. the krona weakens ] and currently stands at 128. another assumption is that fiscal policy will not deliver a stronger demand impulse than has already been decided. in other words, the fiscal stance will be relatively neutral, apart from a considerable increase in public sector investment this year and a contraction next year. this implies that the treasury balance will not be disrupted by discretionary measures on the expenditure and revenue side. public consumption is expected to be below the historical average. on the basis of current assumptions for the development of external conditions this year and in 2004, prices of marine products are now expected to fall by 4 % this year and to remain unchanged between 2003 and 2004. exports of marine products are expected to grow by 3 % this year due to increased quotas for the fishing year [ beginning september 1 ] and a larger blue whiting harvest this summer. the assumed increase in catch volume for 2004 is 5 %. aluminium prices are expected to rise by 4 % this year, based on futures prices and the pricing assumptions of the two aluminium companies, norΓ°ural and alcan iceland. import prices in foreign currency are expected to decrease by Β½ %. fuel prices are based on futures. these have been on an upward trend in recent weeks and are now expected to rise by 9 % this year but fall by 14 % in 2004. the terms of trade for goods and services are expected to deteriorate by 1Β½ percentage points this year. in 2004 they are expected to improve by three - quarters of a percentage point. assumptions for short - term | 0 |
our " fintech 2025 " strategy, we have been expanding the fintech - savvy workforce through a series of internship and industry programmes such as the fintech career accelerator scheme ( fcas ) and the industry project masters network ( ipmn ) scheme. these programmes have nurtured more than 1, 500 young talents so far, and we are pleased to see that the 1 / 3 bis - central bankers'speeches majority of them have continued their careers in the finance and fintech industries upon graduation. the hkma recognises the tremendous potential of collaborative efforts between the industry and academia to develop a sustainable local talent pipeline. to this end, the hkma has cooperated with various strategic partners, including bloomberg, to grow allround talent, through a series of initiatives, including the gba fintech talent initiative. when it comes to fintech and talent development, we should definitely leverage our inherent strengths and opportunities, including our connection with mainland china, especially the gba, which has been recognised as an emerging economic, financial and technology powerhouse. by capitalising on the connection with other gba cities, hong kong can tap into new opportunities by importing technology expertise, market experience and entrepreneurial flair, while enriching our own talent pool. this gba integration allows for seamless collaboration, facilitating knowledge transfer and the sharing of best practices across the boundary. in recent years, cross - boundary collaboration has become a key driver of fintech development. our flagship project, the multi - cbdc platform mbridge is a very good example. launched in partnership with the digital currency institute of the people's bank of china ( pboc ) and two other central banking institutions, mbridge aims to deploy blockchain technology to address key pain points in cross - border payments to make them cheaper, faster and more transparent. the hkma is also working closely with the pboc to establish a cross - boundary linkage between hong kong's faster payment system ( fps ) and the mainland's internet banking payment system ( ibps ) to facilitate instant small - value cross - boundary remittances around - the - clock. beyond public sector partnerships, the private sector is increasingly engaged in crossboundary collaboration, with fintech firms and financial institutions playing important roles in innovative product development, cross - boundary payments, digital banking, trade financing, and more. with the gba positioned as a hub for fintech, professionals in this field can antici | eddie yue : keynote speech - greater bay area fintech talent summit keynote speech by mr eddie yue, chief executive of the hong kong monetary authority, at the greater bay area fintech talent summit, hong kong, 27 november 2024. * * * distinguished guests, ladies and gentlemen, good afternoon. first of all, i would like to thank bloomberg for inviting me to the gba fintech talent summit and for their very strong commitment to equip our local students with fintech knowledge and opportunities in the greater bay area ( gba ). the hkma is very pleased to have been partnering with bloomberg and the hong kong united youth association ( hkuya ) on this landmark initiative for the last two years. this initiative aims at cultivating fintech talent to meet local demand, and this year it has successfully placed 300 students with more than 20 leading financial institutions in hong kong. i would like to extend my congratulations to all students for completing this programme successfully. i hope you have taken the opportunity to deepen your understanding of the industry and create useful connections with fintech professionals. the financial industry has always placed great importance on developing a sustainable supply of talent to support its long - term growth and success. with the vibrant development of the fintech ecosystem in hong kong, the banking sector has seen growing demand for skilled fintech professionals. in light of this, we will continue to work with the industry to identify the potential skills gap in future, and to enable the industry to adjust its talent development strategy in a timely way. in this dynamic and rapidly evolving market landscape, it is important to cultivate a sustainable pool of talent that can drive fintech development in hong kong, thereby maintaining our city's status as an international financial centre. the hkma has taken a two - pronged approach in our talent development strategy : the first is to enhance the skills of existing banking professionals and the second is to attract fresh talent, including yourselves, to the industry. on our initiatives to train and upskill existing practitioners, first, we have introduced the enhanced competency framework on fintech ( ecf - fintech ), and second, we have supported the government in launching the pilot scheme on training subsidy for fintech practitioners, and thirdly we have developed a broader range of fintech - related training courses with various training institutions. apart from training and upskilling our existing practitioners, we have also made concerted efforts to attract and nurture future - ready new talent. as part of | 1 |
##s and accelerating inflation. and in february 2022, russia launched its illegal war in ukraine. the energy crisis caused by the war hit the european economy hard. the euro area's imported energy bill increased in 2022 by β¬400 billion, i. e. by around 3 β 4 % of gdp. this meant a substantial and possibly longlasting cut in the average european's standard of living. 2 / 5 bis - central bankers'speeches at that point, the combination of stagnant growth and accelerating inflation was a completely credible prospect. on the one hand, the sharp rise in energy prices accelerated inflation. and on the other, the substantial increase in geopolitical uncertainty and the ending of energy imports and trade with russia seemed destined to undermine europe's economic recovery. monetary policy was thus facing a major dilemma. after a period of deliberation from march until june, the ecb began, in july 2022, a series of policy rate increases that was exceptionally rapid and consistent β due to the exceptionally high inflation rate. in line with our revised strategy, our goal was to tame inflation over the medium term by preventing a wage - price spiral and thus keeping inflation expectations anchored. in my view, this goal has been, by and large, achieved ( see graph ). our symmetric 2 % inflation target and the medium - term orientation of monetary policy have made a soft landing possible : economic growth has been somewhat subdued as a result of the rise in interest rates, but the risk of a persistent economic crisis has been avoided, and inflation has been stabilized over a period of 2 β 3 years ( knock on wood ). some have argued that we did not hit the brakes early enough. let me say that many of us policymakers would in fact have been ready to raise rates already in march 2022 in the face of soaring inflation, but russia's invasion of ukraine brought a return to the era of brutal geopolitics and created a massive cloud of uncertainty over europe's economy. my initial feeling β even in retrospect, a completely rational one β was that it would probably have serious stagflationary consequences, hitting growth and generating inflation, a kind of " back to the 70s ". in that context, it made complete sense to pause for a minute and wait for the clouds to clear before choosing the policy stance. this is something worth remembering in all post - mortems of the recent polycrisis years. this links very much | jean - pierre roth : more growth a must summary of a speech by mr jean - pierre roth, chairman of the governing board of the swiss national bank, at the swiss economic forum, thun, 27 may 2005. the complete speech can be found in german on the swiss national bank β s website ( www. snb. ch ). * * * since the mid - 1970s now, economic growth in switzerland has been significantly lower than that of other industrialised nations. in terms of per capita gdp among oecd countries, switzerland lost its leading position during this time, falling back into the main field. economic growth is vital, however, for the sustainability of our social security institutions. demographic shifts will cause the ratio of pensioners to contributors to double in the next 30 years, with the result that tomorrow β s generation will be faced with a heavy burden β one that could be considerably lightened by higher growth rates. the soft growth in switzerland is primarily attributable to the lack of competition in the domestic market. there are numerous known ways to boost growth which have proven successful in many other countries. so far, however, switzerland unfortunately has neither grasped the importance of implementing these measures, nor does it have the political will to do so. stronger economic growth can only be achieved by opening our domestic market to competition, contributing to the attractiveness of switzerland as a business centre and strengthening our human capital. the necessary reforms will call for short - term sacrifices from all walks of life, such as the relinquishment of protection and privileges. however, the long - term gains in wealth for the country at large will more than compensate for these short - term difficulties. | 0 |
limited. in the aftermath of the terrorist attack on 11 september last year, the aviation and travel industries reported job cuts. cutbacks have also been announced in the process industry. the guidelines for fiscal policy will stimulate activity because petroleum revenues will now be phased into the economy. according to the government β s estimate, the guidelines imply an average increase in the use of petroleum revenues in the central government budget of about 0. 4 per cent of mainland gdp each year from 2002 to 2010. the government budget that was approved for 2002 implies that the use of petroleum revenues will increase by 0. 6 per cent of mainland gdp from 2001 to 2002. the guidelines for fiscal policy imply a substantial stimulus each year. the expansionary impetus varies considerably, and is greatest in the first few years. however, an unpredictable and more expansionary fiscal policy than that implied by the guidelines would have resulted in greater uncertainty. the guidelines provide a stable framework that contributes to reducing some of the uncertainty. over time, the size of the internationally exposed sector will be affected by the portion of petroleum revenues that is absorbed by the norwegian economy but will be unaffected by monetary policy. any appreciation of the krone may, nevertheless, affect the speed at which changes occur in the business sector. to maintain a balance in the norwegian economy, the phasing in of petroleum revenues must be countered by a monetary policy stance that is tighter than it would otherwise have been. this may be accomplished through a higher interest rate, an appreciation of the krone, or both. on balance, we expect moderate growth in the mainland economy in the next two years. the projections for gdp growth that were presented in the october 2001 inflation report were approximately on a par with the growth potential of the economy. household consumption and public spending are the main forces underpinning growth. fixed investment and exports are restraining growth. brisk growth in consumption is resulting in high demand for labour in public and private services. low international growth and lower petroleum investment are curbing employment growth. a tight labour market is generating continued high growth in labour costs. an expansionary fiscal policy, growth in private consumption and a continued high rise in labour costs contribute to a high rise in prices for domestically produced goods and services. at the same time, we expect a temporary decline in prices for imported consumer goods. this reflects lower international commodity and producer prices, a slower increase in global consumer prices and a stronger krone exchange rate. as these effects wane, and if global economic growth picks up in | actions taken in one country in response to a crisis can have effects on banks in other countries that do not choose to introduce the same resolution actions. for instance, issuance of government guarantees in one country can weaken banks in neighboring countries without such guarantees ( since government guarantees provide an incentive to move deposits to banks in these countries ). this shows the importance of international coordination also when it comes to crisis resolution. thank you for your attention. | 0.5 |
lawrence williams : an evolving financial services landscape in the caribbean welcome remarks by mr lawrence williams, governor of the bank of guyana, at the 30th annual conference of the caribbean group of banking supervisors, hosted by the bank of guyana, georgetown, 24 may 2012. * * * chairman, caribbean group of banking supervisors, mr. ramnarine lal hon. minister of finance, dr. ashni singh, m. p. hon. minister within the ministry of finance, bishop juan edghill, m. p. deputy governor bank of guyana, dr. gobind ganga banking manager, mr. leslie glen conference delegates special invitees members of the media it is indeed an honour for the bank of guyana to host the 30th annual conference of the caribbean group of banking supervisors under the theme β regional supervisory imperatives in an evolving financial services landscape β. i wish to welcome all of the visiting delegates to our shores. i acknowledge the presence of the delegates from thirteen of the sixteen cgbs membership. though our region is small, we are geographically dispersed and travelling to some territories can be a bit of a challenge. i am therefore pleased at the representation and sincerely hope that your stay will be pleasant and memorable. i am also delighted to welcome to our shores and the conference the secretary general of asba, mr. rudy araujo, the chief representative of the bis office of the americas, mr. gregor heinrick, the senior international adviser of the comptroller of the currency, mr. lester miller and advisor on economic crimes in the us treasury department, mr. thomas noller. i have no doubt that your considerable experiences will add value to this conference. it is also fitting that i welcome the hon. minister of finance, dr. ashni singh and the hon. minister within the ministry of finance, bishop juan edghill. the importance of this conference is underscored by the fact that both ministers enthusiastically agreed to adjust their work schedules to be present at this opening ceremony with dr. singh consenting to deliver the feature address. delegates and invitees can expect a very insightful presentation by the minister. ladies and gentlemen, the theme of the conference refers to the evolving financial landscape which is quite evident in many tangible forms though not always easily manageable. as a matter of fact, the changing financial landscape has brought challenges almost every step of the way. it is a testimony to the quality of our regional banking supervisors and the support and nurturing provided by the caribbean group | transaction - oriented approach to supervision and as we move further away, cooperation among the regulatory bodies will become even more important given the home / host relationship and the magnitude of the risk that is inherent in such relationships. i have noted that over the last thirty years, the cgbs has endeavoured to strengthen its supervisory and regulatory framework of the regional central banks and monetary authorities. it has established technical working groups to address inter alia consolidated supervision, crisis management and basle requirements and has put in place the requisite instrument to facilitate information sharing and cooperation with foreign regulatory bodies. your members are also active participants in supervisory colleges where banks span several countries and i am aware that yesterday three supervisory colleges were held. much emphasis has been placed on ensuring that the banking sector remains safe and sound, however, there are non - bank institutions that could severely threaten such safety and soundness and consequently the same level of attention / emphasis should also be directed to those institutions. perhaps, cgbs could consider expanding its conference scope in the future to include regional non - bank regulators with whom your constituents interface. both banks and non - bank financial institutions are integral to the safety and soundness of the financial system. ladies and gentlemen, let me conclude by saying that our approaches to supervision and the depth of our regulation would continue to require proactivity and enhancement as the financial landscape continues to change. the central bank governors of the region will continue to rely on the cgbs to provide the advice and guidance needed to keep our region safe. success in this regards depend on the thoroughness and robustness of your work and bis central bankers β speeches the reliability and efficacy of the methods you employ. you must continue to organize and support the necessary training and mentoring of supervisors so that a pool of capable and technically sound personnel is always available and that greater reliability may be placed on their output. during today and tomorrow several papers will be presented on a variety of sub themes and i anticipate that at the end of this conference some critical imperatives would have been identified to steer us through the current challenges and others looming on the horizon. our confidence in the role of the cgbs has never been misplaced. i wish you all successful deliberations and trust that your stay here will afford you the opportunity to discover for yourself the beauty of our country and the warmth of the guyanese people. welcome once again to all. bis central bankers β speeches | 1 |
have put in all the points of substance that i wanted to make, and i hope and believe that they will stand the test of time. β they certainly did. and so did your suggestion that it might be desirable for the exchange fund in time to adopt β more of a feature of a central bank β : hence the hkma, which was formed ten years after the advice you gave. of course, we also had the privilege of your involvement over the period from 1990 to 1997 as a member of our board, the exchange fund advisory committee, and in your occasional trips to hong kong. so, ladies and gentlemen, it is with great pleasure that i now invite charles to speak in our first session of this hkimr first summer workshop. | peter pang : the 10th anniversary of the bis representative office for asia and the pacific remarks by mr peter pang, deputy chief executive of the hong kong monetary authority, to a reception for the 10th anniversary of the bis representative office for asia and the pacific, hong kong, 7 july 2008. * * * mr hannoun, distinguished guests, ladies and gentlemen, it gives me great pleasure to celebrate with you this evening the 10th anniversary of the bis representative office for asia and the pacific. ten years is a long time. long enough for us to see the robust recovery of the asian economies following the 1997 financial crisis. long enough to see china catapult onto the world stage and its emergence as a global economic powerhouse. long enough for oil prices to rise 11 - fold from us $ 13 a barrel in 1998 to us $ 145 a barrel now. and it is long enough for terms like google, ebay, facebook and myspace to move from being the preserve of computer geeks to the mainstream. i am sure you all have your own stories to tell about these past ten years. it was also 10 years ago that the bis made the important decision to set up its first overseas office in the asia - pacific region, and to strategically locate it in hong kong. this put the bis at the right place, and at the right time, to meet the growing needs of asia. to this end, the functions of the asian office have evolved and expanded over time β from organisation of meetings and seminars to conducting research, to providing dealing and banking services. and the office has grown from a start - up staff of six to its current 33. we are celebrating this occasion in this lovely restaurant above the star ferry β which is an icon in hong kong and a symbol of quality and value - for - money service. the bis asian office is also a " star " entity. the word " star " has been chosen carefully and with good reason β each letter of the word symbolises and embodies the excellence of bis'activities : s : surveillance β the asian office is clearly a star performer in its surveillance work on regional economic and financial developments. this is self - evident from reading the background notes prepared on the region for various bis and regional central bank meetings. t : topical studies and research β the asian office, with its pool of economists and financial experts, is well placed to conduct research. under the auspices of the asian research programme initiated in 2006, many topics that are of interest and relevance to | 0.5 |
pick - up in underlying inflation is expected to be more gradual. 2 / 4 bis central bankers'speeches since we appeared before this committee last september, the reserve bank board has kept the cash rate unchanged at 1. 5 per cent. at its recent meetings the board has been paying close attention to the outlook for inflation as well as two other issues : trends in household borrowing and in the labour market. one of the ways in which monetary policy works is to make it easier for people to borrow and spend. but there is a balance to be struck. too much borrowing today can create problems for tomorrow, because debt does have to be repaid. at the moment, most households with borrowings do seem to be coping pretty well. but the current high level of debt, combined with low nominal income growth, is affecting the appetite of households to spend, and we are seeing some evidence of this in the consumption figures. the balance that is required is to support spending in the economy today while avoiding creating fragilities in household balance sheets that could cause problems for the economy later on. this is also something we need to watch carefully. trends in the labour market are also important. as in the housing market, the picture in the labour market varies significantly around the country. overall, the unemployment rate has been steady now for a little over a year at around 5ΒΎ per cent. in a historical context this would have been considered a good outcome, although, today, a sustainably lower unemployment rate should be possible in australia. the other aspect of the labour market that is worth noting is the continuing trend towards part - time employment. over the past year, all the growth in employment is accounted for by part - time jobs. there is a structural element to this, but it is also partly cyclical. we expect that the unemployment rate will remain around its current level for a while yet. the reserve bank board continues to balance these various issues within the framework of our flexible medium - term inflation target, which aims to achieve an average rate of inflation over time of 2 point something. our judgement is that the current setting of the cash rate is consistent with both this and achieving sustainable growth in our economy. we will continue to review that judgement at future meetings. i would like to turn to some other aspects of the work we do at the reserve bank. in the area of payments, the reserve bank is continuing to work with industry on the development of the new payments infrastructure that will allow us all to move money | around and make electronic payments more easily. the bank is building part of the infrastructure that stands at the centre of this new system that will allow funds to be exchanged instantaneously so that customers can have very quick access to their funds. our work is on schedule and is now being used in industry testing. financial institutions are also working hard on their internal systems so that customers can take advantage of the new system. developments look to be on track to allow the first payments to be made through this new system towards the end of the year. a related focus of the payments system board is the important role that new technologies can play in promoting efficiency and competition. in recent meetings the board has discussed the opportunities that distributed ledger technology could offer in the payments system and in financial market infrastructures. and it is also interested in the potential for fintech to deliver improved customer experiences. the board is therefore taking a keen interest in the work being done by the australian payments council on digital identity and customers β access to their banking and payments data. i hope that you have all come across the new $ 5 banknote, which was issued by the bank from early september last year. the note was well received by the community. you might also have noticed that last friday we released the design for the new $ 10 banknote. like the new $ 5, the new $ 10 will have world - leading security features, including the clear top - to - bottom window and a rolling colour effect that changes as the banknote is tilted. it will also have two raised bumps to assist people with vision impairment. just like the current $ 10 note, the new note will feature two 3 / 4 bis central bankers'speeches of australia β s most famous writers, dame mary gilmore and banjo paterson. the printing presses are busy printing the new notes and they will be issued from september this year. we are also finalising the design of the new $ 50 banknote, which we plan to issue next year. one other matter that i would like to bring to your attention is that we are in the process of commissioning an external review of the efficiency of our operations. we want to make sure that we are continuously improving as an organisation and we are seeking outside assistance to identify opportunities for improvement. the review will be focused primarily on operational and administrative matters and not on our policy frameworks. it will commence within the next month and i will be in a position to share the key conclusions with the committee when we meet later in the year. | 1 |
is nothing wrong with greed. in fact, our capitalist system can be interpreted as being based on the concept of greed. it β s only when you are far removed from the domain of wisdom that greed takes a strong and pre - dominant foothold in your profession. greed, the predator β s gene, has to be tempered by fear of losses. unfortunately, we do not have the philosophical capacity to issue a guideline on greed but we have, years ago, issued a guideline on corporate governance. i urge you all to pay special attention to governance while conducting audits. i am particularly happy to note that there are increasingly more interactions between the accountants in the auditing profession and the bank of mauritius, not only on matters relating to governance but on many aspects of the auditing profession. the bank of mauritius gladly welcomes the interactions. and, finally, a few words on ethical behaviour in the auditing profession. remain loyal to your profession and always guide your clients to the best practices. yours is an honourable profession. maintain the standard required of you. some high profile corporate failures in the past have been caused by creative accounting and concealing the true risks of the companies which were, in certain cases, moved off balance sheet. in some cases, accountants working for these companies devised such financial shenanigans which were facilitated by compliant or complacent auditors. these short term gains often result in long term pains, both for the individuals and the economy, too. never condone such practices. we cannot compromise our reputation by resorting to such questionable practices. a strong and stable banking system is vital to the robustness of an economy. you, as auditors, must refrain, at all cost, from producing audit reports that, instead, contribute to a weakening of the banking system. i am pretty well aware that the bank of mauritius is said to have been very tough and often quite rude with some of you as with others. as i have always said, the bank of mauritius is β cruel only to be kind β to you and our jurisdiction. i urge the accountants to reflect on emerging challenges that the profession is facing and request the mipa to collectively take steps to meet those challenges. you must be aware that a lack of skills in certain areas of auditing is now being palpably felt. your association is having a formidable agenda for action. may i wish you all very fruitful deliberations during the forum. i thank you for your attention and wish | turn to the second pillar for financial sector development, namely markets. markets the development of the financial sector cannot be envisaged without the promotion of strong, well - functioning and deep financial markets. significant progress has been achieved in positioning the domestic stock market on the international financial arena. the stock exchange of mauritius ( sem ) is endowed with a state - of - the - art trading infrastructure and, as a result of its good performance, was the second african exchange after the johannesburg securities exchange ( jse ) to attain membership status of the world federation of exchanges ( wfe ) in november 2005. moreover, in about a month, on 1 october 2008, the mauritius stock exchange is scheduled to join the dow jones wilshire global index. in 2007, market capitalisation in us dollars on the sem increased by 70 per cent year - onyear, with non - residents β gross inward investment in the equity market registering a record high. the remarkable track record of the sem should induce the private sector to take better advantage in securing long - term funding. the amendments brought in 2007 to the securities act 2005 could give a boost to securities trading on the stock exchange. there is significant room for improvement with regard to development of fixed income markets, which have remained rather shallow and illiquid despite recent interest from foreign investors. traditionally, fixed income markets are important channels through which public and private institutions avail of financial resources for medium - and long - term projects. bond markets also constitute good investment opportunities for long - term investors such as pension funds and insurance companies. there have been a few bond issues lately β including one launched by the european investment bank β and this should be encouraged for the benefit of all stakeholders. in the light of limited success experienced with the secondary trading of treasury bills on the stock exchange of mauritius, the bank of mauritius is currently undertaking a review of the primary dealer system. the central bank is also working on the issue of benchmark bonds in collaboration with bankers. a commodity exchange, named global board of trade ( gbot ), is scheduled for launch in mauritius in january 2009 with the collaboration of financial technologies india ( fti ) ltd. this commodity exchange, which intends to trade commodities and derivative products in metals, oil and agriculture, shall take the mauritian financial system a step further by enabling better enterprise risk management and financial planning. mauritius will also seriously need to contemplate the development of full - fledged currency futures in the near future β that would assist in formation and | 0.5 |
reporting market. in 2003, with the approval of the state council the pbc established the credit reporting bureau, responsible for planning, management and publicity of the national credit reporting industry for loans. the pbc is now making great efforts in upgrading and standardizing china β s credit reporting industry. the pbc has been well aware of the importance of construction of modern credit culture. in 1997, the pbc began preparation for setting up the credit registration and consulting system and formed the unified national credit registration and consulting system at end - 2002. by end - june 2004, the system has had entries of 4. 2 million borrowing entities with rmb loans close to rmb14 trillion and accounting for 82. 3 percent of total rmb loans by financial institutions in the same period. the system covers all existing lending institutions in china. in recent years, this system has become an instrumental tool for lending institutions in preventing financial risks, lowering credit costs and enhancing loan efficiency. on july 1, 2000, under the active involvement and support of the pbc, shanghai municipality took the lead in the pilot implementation of united personal credit reporting system. more than one million residents in shanghai had their personal credit reporting recorded in the system, the first of similar events in china. recently, the pbc has sped up construction of the central basic credit reporting system. the system will form a national enquiry network of basic credit reporting based on the experience of the pilot implementation in shanghai and β the credit registration and consulting system by banks β that has been put into operation. the system will first and foremost provide service for banks in enquiry of credit reporting, and will gradually open according to laws to other qualified credit reporting agencies and other institutions with legal purpose of access. to meet the requirements of development of china β s market economy, china β s system of credit reporting agencies shall, in general, be composed of a small number of big and basic credit reporting agencies possessing national basic credit reporting and a number of regional and specialized credit reporting agencies providing value - added services and with distinct features. the system will integrate resources, share information and arouse proper competition in the link of credit data gathering. it will also turn on distinct characteristics and bring about equitable competition in terms of credit rating and survey and consultancy etc. there will thus form a multi - level and multi - directional system of credit reporting agencies that not only makes full use of various resources and brings into play the economy of scale but also satisfies different needs for | credit reporting. the healthy development of credit reporting market is impossible without effective supervision by the government. supervision by the government is the important guarantee for enforcement of credit reporting laws and rules, for protecting personal benefits of consumers, for promoting healthy development of credit reporting industry and for safeguarding national economic information security and social stability. in the preliminary stage of the credit reporting industry, supervision by the government might be quite strong. with improvement of credit reporting laws and rules and the credit reporting market, the industry will be oriented toward combining supervision by the government with self - discipline of the industry itself. the publicity and education of credit culture is also important means of cultivating credit reporting market. the extensive publicity of modern credit culture calls for the concerted efforts of the government, units and individuals. the purpose of publicity and education is that enterprises and individuals will understand the importance of credit reporting, use credit reporting in a correct manner and participate actively in credit culture. in the course of cultivating china β s modern credit culture, the pbc has been fully aware of the import of strengthening publicity and education among the public including lending institutions and is now strengthening its works on this aspect. finally, i β d like to emphasize the importance of legislation for the credit reporting industry. the modern credit culture should be based on the legal safeguard. legislation of the credit reporting industry lays the foundation for construction of the social credit system as well as the modern credit culture. only through legal rules will it be possible to ensure healthy and sustained development of the credit reporting industry, and will china β s long - lived traditional credit culture develop and evolve into modern credit culture. while we are speeding up construction of the social credit system, china has the honor to be the host country for β the fourth global conference of personal credit reporting β and the international conference of β public policy for the credit reporting system : strengthening public - private dialogue and partnership β. we believe that the convening of the two meetings will sure promote construction of china β s credit system, and also contribute to the development of credit reporting industry in the world. wish a complete success of this conference! wish all participants a pleasant stay in beijing! thank you! | 1 |
economics taught at that time was of a wholly keynesian stamp. it was a mature and systematic keynesianism, which had of course lost something of the brilliant, clever, daring, eclectic and iconoclastic imprint of the founder of this school and was conscious of its orthodox academic status. i think that the atmosphere of that time is neatly summarised by this extract from a book by eric roll, 9 not only in honour of this occasion but also because it is a textbook that i studied at university back then : for those who have learnt their economics since the end of world war ii and to whom the currently used terms and the concepts to which they relate are commonplace, it is almost impossible to imagine the sense of emancipation bordering on revelation with which the generations that preceded them greeted the emergence of what became known as the β new economics β. β¦ β [ i ] t is now easier to see the β great divide β that separates the economics of the period up to the thirties from what came after. β ( p. 481 ) [ f ] or at least over thirty years after the appearance of keynes β s general theory, the status of economics, largely of the kind associated with his name and general approach, increased steadily until it reached a position of authority, both as a branch of social science and as a perceived tool for the better ordering of human affairs, unparalleled in its history and unequalled by any of the other of the non - physical sciences. ( p. 560 ). in practice, a construction that seemed to rest on such solid foundations was already wobbling ( perhaps in this case, too, these movements hit italy β s academic world with a certain delay ). i quote roll once again : yet in the latter phase of this period, the authority of the views of economists begins to be doubted, to the point that uncertainty starts to creep into the pronouncements of economists themselves, both about practical matters and about the limits of understanding of their whole intellectual apparatus ( p. 560 ). some doubts had in fact emerged as early as the 1960s, when fine - tuning the economy had turned out to be more difficult in practice than expected, creating a tendency on the one hand for frequent β stop & gos β and on the other hand for a β creeping β increase the most illustrious representative of this group was perhaps federico caffe. his lezioni di politica economica ( lectures on economic policy ), which shaped generations of italian economists | and credit markets. the primary objective of the common monetary policy is price stability. the mandate, clear and unequivocal, given to the european system of central banks is based on two tenets held by the drafters of the treaty : that the stability of the value of money is a public good which does not hinder, but rather fosters, sustainable growth of the real economy ; and that maintaining stability depends crucially on the operation of monetary policy. the european system of central banks will enjoy complete autonomy ; it will regularly provide information on its activities and report on them to the other community institutions. in particular, the european central bank will be required, pursuant to article 109b of the treaty and article 15 of the statute of the european system of central banks, to publish periodic reports on the activities of the escb, with a description of the current and future stance of monetary policy. the european parliament will be able to debate these matters and invite the president and the other members of the executive board of the european central bank to be heard by its competent committees. in particular, the need for a β single β monetary policy will have to be reconciled with the principle of β subsidiarity β, which has also been embodied in the statute of the escb and is intended to permit the highest possible degree of decentralization in operational terms. more specifically, provision is made for a division of tasks along the following lines : - - the decision - making powers in monetary policy matters, especially with regard to interest rates and compulsory reserves, will be centralized in the european central bank. the ecb will exercise these powers through the governing council, comprising the governors of the national central banks and the executive board, composed of the president, the vice - president and four other members. the executive board will be responsible for implementing the decisions of the governing council on a continuous basis ; the operational implementation of monetary policy will be entrusted to the national central banks. each national central bank will thus have two tasks : it will contribute, through its governor, to the decisions of the governing council ; and it will implement these decisions in its own country. operations in the money and foreign exchange markets will normally be carried out by the national central banks. within this framework, the bank of italy will continue to carry out all the operational functions that it currently performs. the procedures for conducting monetary control operations will be different in part from those used today ; the draft legislative decree currently under discussion in parliament is designed to permit | 0.5 |
cyrillic as well as in the latin and greek alphabets. today, 332 million people in 17 countries use euro banknotes every day. and worldwide, the value of euro banknotes circulating is roughly the same as that of us dollar bills. last month that value was almost 913 billion euro, with around one - quarter of that value circulating outside the euro area, notably in its neighbouring regions. the euro is in fact being increasingly used as a global currency and its banknotes have been circulating inside and outside europe with ease. with 15. 7 billion of them in circulation, euro banknotes are a success story. however, we do not rest on our laurels. the ecb strives to ensure that the banknotes are steadily developed and enhanced, and are β state of the art β in terms of security and technology. the europa series will be β smarter β and even more secure than the current series. the new 5 euro banknote will be issued throughout the euro area as of 2 may this year. for the next two months it will be on display here as part of the β new face of the euro β exhibition. the exhibition also includes the vase from which the portrait of europa was taken. i would like to thank very much the louvre museum in paris for the loan of this ancient artefact, which is over 2, 000 years old. bis central bankers β speeches let me also express on this occasion our thanks to mr gerstetter, the designer of the europa series, who is with us today. without further ado, let me now sign the first 5 euro note of the europa series. bis central bankers β speeches | but we should not forget that some divergence is quite normal. for instance, with countries still in a process of catching - up in terms of productivity and living standards, there will be some natural and even warranted divergence in growth and inflation in the course of this process. while the single monetary policy is determined by developments in the euro area as a whole, looking also at the performance in the individual member states is necessary to gain a better understanding of area - wide developments.... and the outlook for the french economy with this in mind, let me now say something about the outlook for the french economy - and to point out that it is indeed favourable. the cyclical developments in france combine moderate inflation, below the euro area average, and strong economic growth, above the euro area average. towards the end of the decade, france has thus contributed to a great extent to stabilising the prospects of the euro area economy. in particular last year, and in contrast with other large economies of the area, the french economy has proved resilient in terms of activity and stable in terms of prices. looking at the headline figures for 1999, an estimated 3. 2 % real gdp growth for the fourth quarter and a 0. 6 % annual average increase in consumer prices, the conclusion can be drawn that economic agents in france have so far successfully adapted to the new euro - wide macroeconomic context associated with the single monetary policy. with a view to the near future, available indicators and forecasts suggest similarly favourable prospects for france as for the euro area as a whole. according to recent results from industrial and consumer surveys, both entrepreneurs and households remain confident about their short - term prospects. the optimism of the latter is best reflected in the historically high level of consumer confidence and stems partly from the on - going improvement of the situation on the labour market. household consumption, which has been resilient in 1999 despite the temporary economic slowdown, is therefore expected to continue to grow rapidly this year. as far as enterprises are concerned, business confidence is in line with the historically high levels reached in 1998 and entrepreneurs have kept on signalling well - filled order books. with capacity utilisation rates some 2 percentage points above their long - term average, the overall positive environment can be expected to contribute to dynamic investment expenditure. this would be reinforced by other major determinants for investment. irrespective of the positive influence of monetary policy on financing conditions, companies β financial positions can indeed be expected | 0.5 |
pursuing policies which lead to sustainable non - inflationary growth in the euro area. given the size of the economy of the euro area, a stability - oriented policy will help to create a favourable environment conductive to non - inflationary growth at the global level. | stability for the international financial system. emu represents new opportunities and challenges for financial institutions and markets. up to now, one can distinguish essentially between four types of stability effects which the euro's arrival has brought : exchange rate stability, price stability, financial stability and fiscal stability. to these four, let me add a fifth stability aspect given that emu and the euro provide and will provide an anchor of stability for central and eastern european accession countries. exchange rate stability first, exchange rate stability is directly related to the single market for goods and services, as well as development of financial markets in the european union. the single currency has completely removed exchange rate risks for exporters and importers, debtors and creditors across the 12 countries of the euro area. cross - border trade, investment and financial transactions are fostered and, in particular, small and medium - sized companies are encouraged to enter the euro area - wide markets. these developments increase competition, improve resource allocation and the investment climate and thus contribute to higher long - term potential growth in the euro area. this - if i may say so - internal " exchange rate " stability aspect has often been overshadowed by the disproportionate interest in us dollar / euro exchange rate. the dollar / euro exchange rate movements have, in fact, been fully in line with the dollar's historical fluctuations vis - a - vis the european currencies prior to the introduction of the euro. more importantly, the weight of the fluctuating part in exchange rate " baskets " is, in all member states, now much smaller than in the past. for example, for austria as a small open economy the external stability of the currency was of prime concern. with the introduction of the euro this has changed significantly because external trade is much less important for the euro area than it was for austria. other than austria which prior to the introduction of the euro followed a policy of tying its currency to the dem, the eurosystem does not have an exchange rate target. while austria β s stability oriented currency policy made sense for a small open economy, it would not be wise to try to maintain a fixed exchange rate between the international currencies in an era of globalisation of financial markets and full liberalisation of capital transfers. the euro area economy is far less open than the economies of the individual euro area countries. this tends to limit the impact of external economic developments and in particular of exchange rates and external prices on domestic euro area prices. thus, | 1 |
control targets and a flexible exchange rate have worked well and continue to make sense for canada in the foreseeable future. openness, transparency, and public communications so far, i have explained why i consider an ongoing commitment by the bank to low and predictable inflation to be of paramount importance to sustained strong economic performance in canada. i have also outlined why i think that the bank should continue to pursue the objective of low inflation within the current framework of inflation targets supported by a floating exchange rate. all this is fine, you may say, but how will the bank ensure that it continues to deliver a credible, effective monetary policy? in a world subject to all kinds of shocks, and with financial markets increasingly more open and globalized, there are no guarantees that monetary policy will be successful at all times and under all circumstances. still, it helps if those who are affected by policy decisions β the financial markets and the general public β understand what their central bank is doing, and why. put another way, central bank actions will likely be more successful if they are better understood and more predictable. financial markets will then likely respond more effectively, and indeed anticipate, monetary policy actions. and the general public will be better able to take monetary policy into account when making plans for the future. transparency actually leads to better policy outcomes. in canada, the move towards greater openness, transparency, and accountability in monetary policy received a big boost with the adoption of the inflation targets in 1991. the targets established a clear objective for monetary policy. and they set a precise yardstick for measuring the bank of canada's success in meeting that objective. the bank's explicit inflation target and our commitment to achieving it, have provided strong incentives for us to be as candid as possible about the external and domestic developments that are likely to influence inflation and the ability of monetary policy to respond to them. under the stewardship of my predecessor, governor thiessen, who placed particular emphasis on encouraging greater openness and more effective two - way communications, the bank made important strides in this area. today, we provide large amounts of data and commentary on monetary policy in our regular publications and on our web site. we also discuss the outlook for the economy, inflation, and monetary policy in the monetary policy report, the updates to the monetary policy report, and in speeches by bank officials. our latest initiative to improve public understanding of the bank's actions is the adoption of a system of fixed dates for the announcement of | decisions on the bank rate. the press release that we issue on each of these dates gives our latest assessment of the economy and the rationale for changing or not changing the bank rate. communication, however, goes both ways. the bank also needs to understand what is happening in the markets and in all key sectors of the economy and across the regions. we need your input, your information, and your views. we can only formulate good policy if we are good listeners. so i encourage you to talk to us. the phone lines and doors at our regional offices, here in toronto and across the country, are open. recent economic developments constructive two - way communication is particularly critical in times of increased uncertainty about the future. so let me now say a few words about how the bank views the current economic situation. the canadian economy began 2001 from a strong base β expanding by an estimated 5 per cent, on average, in 2000 and with solid growth continuing right through the second half of last year despite the slowdown of the u. s. economy. in our last update to the monetary policy report, which was prepared on 23 january and released on 6 february, we revised down our projection for economic growth in canada this year to about 3 per cent, primarily because of the more abrupt weakening of u. s. economic activity. that projection assumed that the u. s. economy would expand by 2 to 2. 5 per cent, on average, in 2001, with a weak first half followed by a relatively strong rebound in the second half. when we released the update on 6 february, we pointed out that, on the basis of accumulating evidence, it appeared that u. s. economic activity in the first half of the year would be weaker than we had projected on 23 january, even though we still expected a reasonable rebound in the second half of the year. we noted that this posed some near - term risks for the canadian economic outlook. but, as we also pointed out then, despite the near - term uncertainties, the bank remains generally positive about canada's economic prospects for the year, given productivity increases and rising disposable incomes aided by tax cuts that are working to sustain domestic demand growth. of course, there are some sectors and regions of the country that will feel the effects of the u. s. slowdown more than others, for example, those with heavier concentration in the production of cars and equipment, notably equipment related to communications and information technology. offset | 1 |
improve efficiency of operations of the cooperatives. lack of member participation 21. the cooperative structure should be member - driven. however, members having a voting right do not take active part or show interest in the affairs of the cooperatives since the control and management is vested in a few members. besides, depositors, whose money is intermediated by the cooperatives, have no voting right or any say in the management. not keeping pace with changes 22. cooperatives have been unable to adapt themselves to the rapid pace of changes in the financial sector. cooperatives have lagged behind in designing of new products and services and in adoption of technology and advanced management practices that have changed the face of financial sector in the post economic - liberalization era. as a result, they are unable to cope with the stiff competition posed by other banks in rural finance and retain their market share. duality of control 23. under the constitution, β cooperation β is a state subject governed by the respective state cooperative societies acts. registration, incorporation, management, election, and audit are governed by the state acts. some aspects relating to banking activities are regulated and supervised by the reserve bank of india / nabard under the banking regulation act, 1949 ( as applicable to cooperative societies ). there is an urgent need to remove the overlapping controls and endowing functional autonomy and operational freedom to cooperatives. banking functions should be brought completely under the banking regulation act. the provisions of the banking regulation act should override the provisions of the state acts / bye - laws / rules which run counter to it. this will lead to clear demarcation of the areas of activities of cooperative banks. need for revival of the cooperative credit institutions 24. it is pertinent to mention that in the first place, india is a country with a population of more than 110 crore, of which around 70 crore reside in a little over 6 lakh villages. as there are a little over ninety two thousand pacs in the country, every 8th village, on an average, has an existing cooperative credit outlet. it is in this context that the role of cooperatives assumes importance. a number of committees were set up to suggest reforms in the sector. based on the recommendations of the vaidyanathan committee, the government of india rolled out in january 2006, a package for revival of the short - term rural co - operative credit structure. the task force also suggested wide - ranging reforms in the governance and management of stccs including crucial amendments to | yandraduth googoolye : the role of central banks in encouraging investment in housing address by mr yandraduth googoolye, first deputy governor of the bank of mauritius, at the annual conference of the african union for housing finance, flic en flac, 11 september 2013. * * * ladies and gentlemen a very good morning to you all. it gives me great pleasure to participate this morning in this annual conference of the african union for housing finance ( auhf ), being organised in collaboration with the mauritius housing company ltd ( mhc ). home ownership is one of the major aspirations of an individual. today, owning a house not only means having a shelter for the family. the house is a real asset that probably represents the largest investment undertaken by an individual during his lifetime. such a large sum of money may not initially be readily available for the average individual. it is primarily in this context that housing finance has been linked to the grant of credit facilities by banks and other mortgage institutions. investment in housing can be seen from different viewpoints. for a government interested in fulfilling its social mandate of facilitating access to decent housing for low - to middle - income families, the problem is finding the necessary resources to carry out public housing programs. let me set an aside here to dwell for a minute on the experience of mauritius where the government set up as early as 1963 an organism geared towards the provision of social housing. this organism evolved into the mauritius housing corporation ( mhc ), which is today the only finance institution β both in mauritius and rodrigues β that caters exclusively for the promotion of home ownership and the provision of housing finance. since july 2001, the mhc has been authorised to conduct deposit - taking business to finance its activities and is accordingly under the regulatory purview of the bank of mauritius. over the years, the mhc has been innovative. in addition to credit granted for housing projects, the company also provides architectural, technical, legal, insurance services, and accept deposits primarily for the purpose engaging the general public in savings for homeownership. more of this will be provided by the managing director of mhc. coming back to my main point, investment in housing, from the perspective of the household, is very often linked to the possibility of obtaining a loan at affordable terms. for the bank manager considering whether to grant a loan, the problem is how to expand the scope of financial services while managing risks appropriately. finally, from the | 0 |
point of the corridor system. second, the marginal lending rate is the interest charged on overnight lending from the eurosystem to banks. it constitutes the ceiling of the corridor system. third, the deposit facility rate governs the remuneration for excess reserves that our counterparties hold with the eurosystem as overnight deposits. it constitutes the floor to the corridor system. moreover, it also provides the floor on interbank market rates as banks have no incentive to lend funds below this rate in the market. setting the deposit rate to a value below zero would imply that the remuneration for excess reserves in the euro area is negative. in other words, banks are charged for making overnight deposits with the ecb. from a technical point of view, we are ready to implement a negative deposit facility rate. and, in general, there are constellations conceivable where the eurosystem could deploy such a negative rate, if it is deemed required by our mandate to safeguard price stability. so what are the pros and cons? theoretically, a negative deposit rate may provide additional accommodation. in the current environment of excess liquidity, the relevant overnight interest rates have shifted close to the deposit rate. in this situation, reductions in the deposit rate could push down overnight interest rates further. at the same time, possible caveats and unintended side effects of this move have to be kept in mind. in particular, crossing the zero line can set off actions in the market that may run counter to the central bank β s policy easing intentions. for example, there can be a substitution by private actors towards cash which becomes the highest yielding short - term asset. similarly, the money - holding sector may promote financial innovations that could emulate currency and allow tax avoidance. these actions may undermine the underlying purpose of the move towards negative deposit rates. overall, the consequences are subject to considerable margins of uncertainty as such a move has never been observed in the eurosystem or in any other major currency area in the world. how do these considerations differ from those underlying the move by denmark β s or the swiss central bank? both countries apply a fixed exchange rate policy vis - a - vis the euro area. in contrast, the ecb does not consider the euro exchange rate as a policy target. this adds an additional complexity to the monetary policy objective function. what could be the effects of introducing a negative deposit facility rate on the euro exchange rate? one can in principle single out three factors that would | in addition, real incomes are supported by lower energy price inflation. economic activity is also expected to benefit from a gradual strengthening of demand for euro area exports. at the same time, although unemployment in the euro area is stabilising, it remains high, and the necessary balance sheet adjustments in the public and the private sector will continue to weigh on the pace of the economic recovery. the risks surrounding the economic outlook for the euro area continue to be on the downside. developments in global money and financial market conditions and related uncertainties, notably in emerging market economies, may have the potential to negatively affect economic conditions. other downside risks include weaker than expected domestic demand and export growth and slow or insufficient implementation of structural reforms in euro area countries. according to eurostat β s flash estimate, euro area annual hicp inflation was 0. 7 % in january 2014, after 0. 8 % in december. this decline was mainly due to energy price developments. at the same time, the inflation rate in january 2014 was lower than generally expected. on the basis of current information and prevailing futures prices for energy, annual hicp inflation rates are expected to remain at around current levels in the coming months. over bis central bankers β speeches the medium term, underlying price pressures in the euro area are expected to remain subdued. inflation expectations for the euro area over the medium to long term continue to be firmly anchored in line with our aim of maintaining inflation rates below, but close to, 2 %. both upside and downside risks to the outlook for price developments remain limited, and they continue to be broadly balanced over the medium term. turning to the monetary analysis, data for december 2013 confirm the assessment of subdued underlying growth in broad money ( m3 ) and credit. annual growth in m3 moderated to 1. 0 % in december, from 1. 5 % in november. deposit outflows in december mirrored the strong sales of government and private sector securities by euro area mfis, which, in part, could be related to adjustments by banks in anticipation of the ecb β s comprehensive assessment of banks β balance sheets. these developments also affected annual growth in m1, which moderated to 5. 8 % in december but remained strong. as in previous months, the main factor supporting annual m3 growth was an increase in the mfi net external asset position, which continued to reflect the increased interest of international investors in euro area assets. the annual rate of change of loans to the private sector continued to contract. | 0.5 |
the matching of job seekers with job vacancies has functioned better than expected and to date this year the wage statistics show increases that, if anything, are slightly lower than expected. during the past year, however, there have been certain signs of incipient tensions between demand and supply. firms are already having difficulties in recruiting some categories of labour. shortages have not yet reached alarmingly high levels in general but each measurement is higher than the previous one. moreover, the situation is more strained in some parts of the country than in others. it also seems to be considered that those in work have increased their negotiating strength. how else is one to explain that, according to the negotiating parties, wage demands in the coming round are higher than on the previous occasion? that at least is the picture which has emerged in recent weeks. could this be a sign that the swedish economy is approaching the point at which the increase in wage costs begins to accelerate, albeit from moderate levels? if that is the case, it can be concluded that, if the present rate were to continue, the swedish economy is moving towards a situation where resource utilisation will be unduly strained. a gradual adjustment of demand to the long - term growth trend can result from a spontaneous slowdown in the economy, for instance because external demand slackens. it could also come from more subdued household demand for durable goods after the extensive purchases in recent years. another possibility is a damper on demand from a diminishing effect of the positive supply shocks that have depressed prices and thereby benefited real wages. to some extent there have been a number of signs of more subdued growth in the rest of the world, above all in the united states. moreover, new statistics suggest that swedish households are not quite as optimistic as before. somewhat weaker car sales may be an indication of more subdued demand for durables. asset prices also seem to be in a calmer phase. all of this may point to some slowdown in the development of demand. but is it enough? it is still a matter of forward indicators and we have not yet seen any clear outcome in the statistics. neither does there seem to be any notable fall - off in labour demand. the number of new job vacancies continues to be comparatively high, at least to date. in the absence of a sufficient slowdown in demand, an adjustment to the long - term growth path will need to be achieved with interest rate increases by the riksbank. it seems to me | i. e. more people choosing to start up companies and companies growing. the entrepreneurs'share of the work force in sweden is low. compared with other oecd countries, sweden was ranked no. 19 in 2000. secondly, we should invest more in knowledge and education, at all levels and for everyone. research belongs here too, as does the link between research and new products - innovations. education promotes both economic growth and individual welfare. the third area can be called the renewal of working life. a good, rich society must make use of the productive force that all people have. to make this possible probably requires new thinking in many areas. so, how about access to capital, this is surely decisive for growth? certainly, but capital seeks to go where it will obtain the best return. attractiveness, an ability to attract and retain investments, is created by entrepreneurs, research & development and competence. in an increasingly globalised market, regions and places compete with one another for investments. the most important factor in attracting investments is tied to people's capacity. the key to growth is human capacity and will. this reasoning can be applied to small places such as trosa municipality, but also to regions and countries such as europe or sweden. the eu competes with the usa ; recently the usa has often been superior with regard to productivity, growth and inflow of capital. an important question for europe is whether the common market, single currency and co - operation can achieve the same degree of dynamism as in the usa. and how to pursue a european welfare policy without losing competitiveness. excessively deep social chasms, extensive crime and social maladjustment could become an internal threat to growth. source : the national social insurance board analyses 2002 : 3 " older people's exit from the labour force - now and in the future. " oecd, dsti / ind ( 2002 ) 11 : " benchmarking : fostering firm creation and entrepreneurship ". even with good microeconomic conditions and a well - tended macropolicy, we will not be able to avoid fluctuations in economic activity ; this is built into the way the economy functions. however, we can subdue the fluctuations through stability and predictability and above all, we can have a different development in welfare than we have had since the 1970s. thank you for listening! | 0.5 |
expectations. going forward, there are risks, on both the upside and the downside, to this outlook for the canadian personal savings rate. canadian households could remain more cautious, chastened by the recent financial and economic trauma, leading to more durably elevated savings. some of the issues brought to the fore by the crisis, such as retirement funding, could also alter household savings behaviour over the nearer term. over the next few days, the federal, provincial, and territorial finance ministers will meet to discuss these issues, in recognition of their importance to canadians. finally, more protracted u. s. and global recoveries could restrain canadian households, by affecting both the confidence and economic prospects of canadians. on the other hand, there is a risk that, as growth returns, the resilience of canadian households through the crisis could lead to declines in the savings rate that are sharper, and increases in household borrowing that are larger, than the bank has projected. whatever happens, the bank β s monetary policy reaction to consumer behaviour will always be driven by its implications β taken in conjunction with all other relevant factors β for inflation over the medium - term horizon. households and financial stability in canada household finances are also important for financial system stability. as was painfully learned from the u. s. experience, a stable financial system is fundamental for the effective functioning of the economy and the financial welfare of citizens. in this regard, there are two important considerations. first, financial and price stability share common determinants but have different time horizons. inflation continuously reflects real shocks and / or policy responses, while financial vulnerabilities are much less predictable. they develop over time and can persist for longer than expected. simply put, behaviour consistent with price stability over the medium term could simultaneously build financial stresses over a longer horizon. second, when evaluating the financial condition of canadians, we need to look beyond the aggregate for possible changes in distribution of debt among households. the financial system review ( fsr ) is a semi - annual bank publication that examines developments in the financial system and provides an analysis of policy directions in the sector. in our most recent fsr, we judge that most of the risks to the stability of the canadian financial system have ebbed in recent months. at the same time, our assessment of the risks related to household balance sheets is that they have increased further. as noted in the fsr, the vulnerability of canadian households to adverse wealth and income shocks has grown in recent years. | . household wealth. 5 this sustained, higher savings rate will produce a historically weak recovery in u. s. consumer spending and accounts for the bank β s relatively subdued forecast for overall u. s. economic growth ( chart 4 ). canada β s household sector canadian household finances were in better shape going into the crisis than those of americans. the canadian personal savings rate was higher and household debt was lower ( chart 5 ). the ratio of consumer spending to gdp, at 55 per cent, was below the longer - term average in canada. as a consequence, when the crisis struck, canadian households were less vulnerable. moreover, throughout the downturn, canadian labour and housing markets held up better ( charts 6 and 7 ), meaning that the incomes and net worth of canadians were not as hard hit as those of americans ( chart 3 ). so, while there is no doubt the financial crisis and accompanying recession have been painful here, canadians have had less need to increase savings to restore their balance sheets. still, canadians have saved more. the personal savings rate in this country rose to an eightyear high of 5. 5 per cent in the second quarter. the bank projects that this rate will moderate only slightly over the medium term. we view the sharp increases in household savings as residential investment accounted for roughly 14 per cent of gdp growth from 2003 to 2005, inclusive. subprime mortgages accounted for 20 per cent of new mortgage originations in 2005 and more than 22 per cent in 2006. it is worth noting that in an environment of rising unemployment, the savings rate of u. s. households that are working has risen even more sharply than the aggregate numbers suggest. for example, ricardian equivalence predicts that households would save more in response to higher government deficits, anticipating the future tax liabilities required to address the rising public debt. to the 2002 β 04 average over the next five years. largely precautionary, that is, reflecting uncertainty about the economic outlook and financial conditions. as the economy begins to grow again and confidence is gradually restored, we expect that some of these precautionary savings will be unwound, and that some consumers will take further advantage of unusually low borrowing rates. indeed, our current stimulative monetary policy is meant, in part, to encourage such behaviour. stronger growth in domestic consumption will be necessary to offset weak external demand in order to restore the canadian economy to balance and inflation to target. recent data have been consistent with these | 1 |
reading of classical texts on economic liberalism, was no secret to anyone inside the bank of italy. to understand the central bank β s modus operandi in those years we must consider the powerful influence exerted by the predominant economic culture. it was not a market culture. its influence, combined with vested interests, often directed economic policy towards solutions that did not follow the market. in italy, keynesianism only acquired a foothold in academia towards the middle of the 1960s and the version that gained credence among policy - makers had a distinctly more dirigiste flavour than that prevailing internationally : not only did economic policies to support demand earn plaudits from politicians and economists, but more generally, above and beyond the actual keynesian propositions, they saw broad government intervention in economic activity, especially investment, as the means of perpetuating the growth of the 1950s. development, industrialization and social and distributive conflict were the issues that attracted the best minds and the vision of political leaders. what was asked of monetary policy was to produce growth, capital formation, the narrowing of the gap between italy and its european partners, and balance - of - payments equilibrium. price stability was a secondary concern. the autonomy of the central bank was not viewed as essential to stability. in italy, interest focused on the real economy ; the role of money, the causes and effects of inflation were not common subjects of inquiry. baffi β s studies on money thus constitute a notable exception. the discussions that franco modigliani had in 1967 with the top management of the bank of italy during the development of the econometric model exemplify the difficulty of describing the problems of monetary policy at that time using today β s language and criteria. in those meetings governor carli defined the bank β s main objective as that of fostering a sufficient level of income to allow investment that would close the distance between italy and the other members of the european economic community. 4 the governor mentioned price stability only as a subordinate aim, and it was interpreted, moreover, solely as alignment with the level of international prices, that is to say an objective for the defence of competitiveness. the pre - eminence of the objective of price stability did not have formal sanction ; it was not shared by public opinion, nor was it comprehended in academic and political circles. monetary management was increasingly entrusted to administrative controls on credit, namely the ceiling on the growth in bank lending ( introduced in 1973 ) and | nationalism transformed into anti - semitism. what interests us here, however, is the fact that baffi attributed his sound judgement at the time to a β diet of classical texts of economic liberalism β. 1 this left an enduring mark on his training as an economist that was reflected in his subsequent theoretical output, less so in his policies, which were influenced by the formidable constraints existing during his time as governor. economic liberalism, according to luigi einaudi, was not so much an economic doctrine as a way of reasoning, which takes an apparently simple rule and, through systematic use of theory, derives indirect and distant effects that are often the opposite of their proponents β intentions. undoubtedly, one of the main characteristics of baffi β s thinking was his focus on indirect effects, on the links between the various elements of the economic system. his concern to make plain the relation between real and financial phenomena was at the root of the β national monetary balance sheet β developed in the aftermath of the war, the embryo of today β s financial accounts. in 1953 baffi was a member of the committee appointed to pronounce on the reform of iri β s bylaws and its future role. while the majority of the committee favoured the creation of a ministry for state holding companies and an increased role for iri in promoting economic growth, baffi and a few others held that the solution lay above all in sound regulation of the market. 2 p. baffi, β giorgio mortara e la banca d β italia β, in id., nuovi studi sulla moneta ( milan : giuffre, 1973 ). ministero dell β industria e del commercio, l β istituto per la ricostruzione industriale ( turin : utet, 1955 ), vol. ii, pp. 575 - 85. the 1960s and 1970s were, by admission of baffi β s predecessor, governor carli, the period when political power was most closely interwoven with monetary, financial and supervisory policy ; it was also the most dangerous time for the repercussions on the performance of the economy, both then and later. 3 in the first half of the 1970s, and particularly between 1973 and 1976, a dense web of constraints and rules developed regarding banks β portfolios, subsidized credit, interest rates, and capital movements. baffi never came out openly against this, but his scepticism, rooted in his | 1 |
would note that as we consider the types of financial services technology that may be useful to the banks we supervise, our rules and guidance need to keep pace. the federal reserve is also considering whether the rise of artificial intelligence and machine learning in banking might require an adjustment in regulation and supervision. ai is becoming more prevalent in customer service and machine learning can offer real opportunities to assess risk and find new customers. community banks face limits on the resources they can dedicate to researching and evaluating third party providers of these new services. regulators and supervisors should consider ways to encourage innovation by simplifying the process of third party selection, due diligence and monitoring. 4 to that end, staff from the federal reserve and other agencies have been jointly conducting significant outreach to industry and other stakeholders over the past several months. we want to hear from you. in addition to this outreach, a conference planned for january, 2021 will include views from academic researchers on the potential benefits and risks posed by artificial intelligence for banks of all sizes. technological innovation holds great promise to help community banks compete and succeed in the evolving financial services landscape. i look forward to continuing to engage on these issues in 2021 and to work with the icba and other stakeholders to foster an environment where communities and the banks that serve them continue to thrive. 3 / 4 bis central bankers'speeches 1 mckinsey & company, β telehealth : a quarter - trillion - dollar post - covid - 19 reality? β may 29, 2020, www. mckinsey. com / industries / healthcare - systems - and - services / our - insights / telehealth - a - quarter - trillion - dollarpost - covid - 19 - reality. return to text 2 cnbc, β coronavirus crisis mobile banking surge is a shift that β s likely to stick, β may 27, 2020, www. cnbc. com / 2020 / 05 / 27 / coronavirus - crisis - mobile - banking - surge - is - a - shift - likely - to - stick. html. return to text 3 american banker, β consumers are relying more on finance apps, survey finds, β september 15, 2020, www. americanbanker. com / news / consumer - reliance - on - finance - apps - spiked - because - of - coronavirus. return to text 4 michelle w. bowman, β empowering community banks, β speech at the conference for community bankers sponsored by the american bankers association, orlando, florida, february | use horizontal, or cross - firm, reviews to monitor industry practices, common investment or funding strategies, changes in the degree or form of financial interconnectedness, or other developments with implications for systemic risk. supplementing its individual and horizontal reviews, the liscc has also made increasing use of improved quantitative methods for evaluating the health and performance of supervised firms as well as the risks they may pose to the broader financial system. a similar committee structure within the federal reserve is being developed to help us meet our obligations to supervise systemically important financial market utilities. to improve our monitoring of the financial system and to coordinate work bearing on financial stability, we have also created a new office within the board, called the office of financial stability policy and research. this office brings together staff with a range of backgrounds and skills and works closely with other groups at the federal reserve. the office helps monitor global financial risks and analyze the implications of those risks for financial stability ; works with our bank supervisory committees, for example, on the development of quantitative loss models and alternative scenarios to serve as the basis for stress tests ; serves as a liaison to the financial stability oversight council and its various working groups ; and helps develop and evaluate alternative approaches to implementing macroprudential regulations. the recent comprehensive capital analysis and review, in which the federal reserve evaluated the internal capital planning processes and shareholder distribution requests of the 19 largest bank holding companies, is an example of a horizontal assessment with a macroprudential approach. in the wake of the crisis, banks β capital payouts had been kept to a minimum. as banks β earnings and capital positions continued to improve in 2010, however, some firms sought approval to increase dividends or restart share repurchase programs. the simultaneous assessment of the payout requests in the capital review allowed the federal reserve, working through the liscc, to evaluate not only the conditions of individual banks but also the potential implications of capital payouts for aggregate credit extension and the sustainability of the economic recovery. thus, the program had both microprudential and macroprudential goals. from a traditional safety - and - soundness perspective, we wanted each firm to demonstrate that it had robust risk - management systems as well as a capital plan that would allow it to manage potential losses in stress scenarios while comfortably meeting basel iii capital requirements as they are phased in. but, with the help of macroeconomic and capital market analysts, we also considered the implications of the requests for the capital available to the banking | 0.5 |
marion williams : financial sector developments in barbados address by dr marion williams, governor of the central bank of barbados, at the opening ceremony of the firstcaribbean international bank business centre, warrens, st. michael, 29 june 2007. * * * thank you, madam master of ceremonies, for your kind words of introduction. mr. charles pink ; other members of the board ; members of management and staff ; specially invited guests ; distinguished ladies and gentlemen. let me first offer my congratulations to firstcaribbean on the construction of this impressive facility at warrens. in so doing, you are confirming your long - term commitment to the development of the barbadian economy. it has now been acknowledged that warrens is the fastest growing urban centre in barbados. by establishing its head office here, firstcaribbean has become part of the growth and the expansion of the area and demonstrates today its confidence that this location has the potential to be a major financial hub. mr. chairman, i am naturally pleased by any activity which seeks to improve the level of financial intermediation in barbados. financial intermediaries agglomerate capital from many small savers and allocate it to eligible users. in so doing, they also transfer, pool and reduce risk, increase liquidity and convey information, thus contributing to an environment for growth. a well - functioning financial system can make an important contribution to the growth of gross domestic product. there is no doubt that over time barbados has enjoyed a very high standard of financial intermediation. the commercial banking sector has led the way in this regard and has so conducted itself that there is tremendous confidence in our banking system. the confidence which the public at large has reposed in the banking sector is exemplified by the continued increase in commercial bank assets. during the two decades ending in 2006, for example, commercial bank assets grew six - fold. firstcaribbean international bank, whose roots in barbados run very deep, has made a major contribution to the growth of the domestic financial sector and, by extension, to the economic well - being of barbados. this has been demonstrated in many tangible ways over the years, including the provision of credit and foreign exchange, the issue of financial instruments and the management of assets. the construction of this facility must be seen as yet another example of the continuing effort by this organisation to be among the leaders in the financial services sector. over the last two decades or so in barbados, it was investment | delisle worrell : reviewing economic research in barbados and the caribbean address by dr delisle worrell, governor of the central bank of barbados, to the central bank of barbados β research review seminar, bridgetown, 26 july 2010. * * * this seminar had its origins as a development tool for economists in the central bank of barbados β research department, many years ago, when i was director of the department. we came up with the idea of a forum to be held each year when all our economists would share their research, at whatever stage it had reached, so that we could help each other with ideas and suggestions, and benefit as well from the comments of the wider community of economists in barbados and the caribbean. the idea worked spectacularly well, and the seminar quickly grew into a leading incubator for academic research in the eastern caribbean. over the years, we have built up a loyal following of attendees, whose research has benefitted from their participation in the seminar. the seminar has maintained its character as a catalyst in the professional development of central bank economists, while at the same time facilitating research and debate on caribbean economic performance and policy among the wider community of economists. the research department of the central bank has sustained an enviable record of research and publication, much of it reflected in some form in the presentations made at the annual review seminar. for many years we published these working papers once a year in a volume of collected papers, for the convenience of our colleagues. nowadays they are published online, in electronic form. the breadth and depth of its research and published work, much of it in regional and international journals, is a foundation on which the central bank β s reputation for authoritative economic opinion is formed. the insights gained have enabled the bank to make persuasive arguments for its policy recommendations, and to defend its views in discussions with the imf, world bank and other international bodies. there can be no doubt that this has helped us to implement better policies, over the years. building on the foundation of this proud record of achievement, the central bank β s policy research and publication are on the cusp of fundamental change, occasioned by remarkable innovations in the professional environment of economics, finance and accounting, as well as new challenges facing the discipline of economics itself. the changes in the professional environment include : β the evolution of the internet, now the principal research tool of economists ; β electronic publication, which has become the main channel of discussion, debate and sharing | 0.5 |
big rock theory " have realized that their warnings will not convince the public. " exit " here refers to the bank's termination of monetary easing followed by an increase in interest rates and a reduction of the monetary base because achieving 2 percent inflation is in sight as a result of monetary easing. actually, if you think about it, the " big rock theory, " which focuses on dangers related to the exit, assumes that, as a result of monetary easing, a situation arises in which prices increase and monetary policy must be tightened. therefore, the proponents of the theory do not hold the view that nothing will happen no matter how much monetary easing is pursued ; rather, they recognize the effectiveness of qqe. from see harada yutaka, kataoka goushi, and yoshimatsu takashi, eds., abenomikusu wa shinkasuru : kin'yu ganseki riron wo tou [ abenomics strides ahead : questioning the financial big rock theory ] ( tokyo : chuokeizai - sha, inc., 2017 ). my perspective, this is a welcome argument, since it recognizes the effectiveness of monetary easing. at the exit, the bank will have to raise interest rates. there are two possible ways to do so : by abandoning the negative interest rate policy currently carried out by the bank and raising the interest rate applied to excess reserves ; or by selling japanese government bonds ( jgbs ) held by the bank. while the bank at the moment has not decided anything with regard to the exit, what i would like to explain is easier to understand by focusing on an increase in the interest rate applied to excess reserves, so let me do so here. according to proponents of the " big rock theory, " the bank will make large losses when it raises the interest rate on excess reserves because of the low interest rates on jgbs purchased by the bank in the past. it is of course possible that the bank may register losses because it will receive low interest rates while paying high interest rates. proponents of the " big rock theory " argue that if the bank does indeed make losses, confidence in the currency would be undermined, there would be hyperinflation, the yen would collapse, and interest rates would surge. however, please think about it carefully. essentially, does anyone use money paying attention to whether the central bank makes a profit or a loss? moreover, the central bank, in return for purchasing government bonds in the market, | amando m tetangco, jr : working together towards a stronger economy speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the security bank economic forum β economic & business forecast 2015 β, makati city, 30 january 2015. * * * the presentation this afternoon will start with a discussion on the global economic and financial developments and their possible implications for the philippine economy. then we will look at the growth experience of the philippine economy and the underlying factors that form the bases for the economy β s resilience. a look back to 2014 i was looking at the new logo of security bank. it shows two halves β just like the yin and the yang. two parts working and coming together. it β s an interesting depiction although of course, on the β hard - court β ( as in the basketball, or even in volleyball courts ), it would be a stretch to say that the greens would be above the blues for long periods. i must have a conversation with abet about his choice of corporate colors. the old security bank color was already the perfect one β blue! but seriously, two things coming together and being integral parts of each other. these are very similar to the themes that pervaded our global operating environment in 2014. in 2014, there were two themes that dominated the global operating environment β 1 ) uneven global growth and 2 ) divergent monetary policies in advanced economies. as the us economic growth continued to gain traction and the us fed subsequently ended its asset purchase program in october last year, markets began to interpret the fed β s statements to mean that it would begin β lift off β ( or raise the fed funds target rate ) sometime this year. in contrast, eu and japan remained barely able to eke out growth. by the ecb β s and the boj β s own pronouncements, they were willing to further expand easy monetary conditions to stimulate growth in their jurisdictions. ecb president mario draghi even pledged to do β whatever it takes β. so, in one part of the globe, you had the fed poised to tighten monetary conditions, and in another, you had the ecb and boj committing to provide more liquidity as needed. this combination ushered the shift in market sentiment β capital flowed out of eme assets ( the long - standing darling of investors ) toward us financial assets. this resulted in a | 0 |
there are as many, if not more occasions in the non - financial corporate sector where audit reports do not reflect the true reality. i would like to raise one other challenge that internal auditors are likely to face, particularly in smaller institutions, where there is not sufficient talent to go around. this challenge has to do with maintaining the independence of the internal auditor. internal auditors are in a unique position to obtain an informed perspective of the organizations for which they work. as such, they are in the best position to assist and advise management on developing the broad principles that should govern the risk management and internal control environment. on the other hand, to be effective, internal auditors need to be independent and cannot assume a line - management role for control activities, including those they helped to design. accordingly, internal auditors need to be continually alert to conflicts of interest. it is a situation that calls for delicate professional judgment to promote a win - win situation. let me close by again emphasizing that by and large our internal audit profession has served the country well. i am sure that your dedication and quality efforts have contributed to strengthening our corporate sector and to avoiding some of the pitfalls other countries have faced. but you must ensure adherence to the highest professional standards. perhaps one way of doing that is for the institute of internal auditors, as the governing body of the auditing profession to take a more aggressive leadership role, by implementing some form of structured oversight of the auditing profession. this oversight would be in keeping with what now exists in several parts of the world β in both developed and developing countries. i am sure you know that the continued absence of appropriate oversight carries potential legal and reputational risks, especially for financial institutions which operate in a fiduciary capacity. and my final suggestion to you, individually and as a group, is to continue upgrading your skills. improvements in technology, the quick pace of financial innovation and evolving riskmanagement techniques will ensure that businesses will use increasingly complicated configurations of products and financial structures. the internal auditor needs to stay abreast if you are to add value and help your organization accomplish its objectives while bringing a systematic and disciplined approach to risk management, control and governance. and the answer is training, and learning new technical skills. i thank you once again. | moved to streamline the examination process to make it more focused on risk - management. our financial regulation strategy now emphasizes : β’ active oversight by management and the board of directors ; β’ clearly defined policies, procedures and authority ; β’ comprehensive risk measurement and risk mitigation ; and β’ adequate systems of internal controls. unlike in the past when the focus was mainly on capital and operating results, the new regulatory strategy requires the central bank to take a far greater interest in the corporate governance of financial institutions. understanding how institutions are managed is now the key. the hallmark of our regulatory approach is to identify problems early β well before they manifest themselves in the financial statements when it is usually too late to act effectively. early intervention allows us to work with management and boards to effect remedial actions. early identification of problems essentially involves a qualitative assessment of an institution β s risk management processes and methodology, its internal control environment and its compliance mechanisms. as regulators we cannot do this alone. this is where you, as internal auditors, have a critical role to play. this is where the work of the internal audit and the supervisory function are closely aligned, specifically in the identification, management and mitigation of risk, and ensuring that the institution β s operations are conducted effectively, efficiently and in compliance with applicable laws and regulations. increasingly over the last decade operations risk has taken on greater prominence within the context of enterprise risk management systems. as you know, operations risk arises from inadequate or failed internal processes, people or systems or from external events. operations risk has always been a part of banking but it has become a greater threat to the safety of financial institutions in the contemporary financial environment. this is because the institutions themselves have become more complex and their products and services have become more numerous and varied. in addition, advances in information technology have greatly increased the speed at which vulnerabilities in one institution can escalate into serious problems in other institutions. consequently, there has been an increasing incidence of failure linked to operations risk. in 2003, the basel committee on banking supervision, the main international standardssetting body for bank supervision, identified as a cardinal principle the responsibility of the board of directors β to ensure that the bank β s operational and risk management framework is subject to effective and comprehensive internal audit by operationally independent, appropriately trained and competent staff β. that β s the mandate that all banks face and that β s the challenge for all of you internal auditors. what this implies is that internal | 1 |
up to 8 %, according to the bank of england. this would naturally affect the euro area economy. i hope we will avoid such a scenario. do the tensions over the populist italian government β s budget risk sparking a new crisis in the euro area? following the agreement in december between the italian government and the european commission on the italian budget, the country β s borrowing costs fell. this confirms that, when a country follows the common rules, its efforts go down well with the markets. italy β s main challenge at the moment is its weak growth ; this has been the case for several years now. rome must urgently implement structural reforms in order to increase its growth potential 1 / 3 bis central bankers'speeches by resolving its productivity issues, regaining competitiveness and targeting internal weaknesses. how much have the political uncertainties already cost the euro area in terms of growth? it is very hard to measure this precisely, as it is very difficult to incorporate certain variables, like confidence and business sentiment, into macroeconomic models. nonetheless, for the past six to nine months protectionism has been the main risk at the international level, and one of the major sources of market volatility. it is essential that the united states and china, as well as the eu, find common ground so that these tensions don β t devolve into a trade war that would be harmful to everyone. why is inflation still struggling to recover in the euro area? the situation in the job market has improved considerably in the euro area. nine million jobs have been created since the crisis and the unemployment rate has fallen below 8 %. compensation per employee is also recovering. what matters is knowing when this increase will translate into a pickup in underlying inflation, which excludes the most volatile product prices, like energy prices. we are confident that it will pick up within a few months or quarters. even if energy prices were to fall a little in the coming months, we are confident that inflation will, over the medium term, converge towards our aim of below, but close to, 2 %. for several months now, political leaders β criticisms of central bank independence have been growing, in europe and, above all, in the united states. does that worry you? in recent decades, the independence of central banks has proven extremely effective in maintaining price stability. political and economic agendas are very different. when monetary institutions act under the influence of political leaders, they run the risk of making serious mistakes that harm economic activity. | willem f duisenberg : testimony before the committee on economic and monetary affairs of the european parliament introductory statement by dr willem f duisenberg, president of the european central bank, brussels, 17 february 2003. * * * it is my pleasure to appear before your committee today. as usual, i will begin my introductory remarks by reporting to you on the ecb's assessment of economic and monetary developments, before turning to the ecb recommendation on the adjustment of voting modalities in the governing council, which the ecb adopted following the entry into force of the treaty of nice and on which the european parliament and the european commission have been invited to give their opinion. 1. economic and monetary developments in its first meeting of december 2002, the governing council of the ecb decided to lower the key ecb rates by 50 basis points. the basis for this decision was the assessment that the prospect for inflation to fall below 2 % in the course of 2003, against the background of subdued economic growth, and for it to remain in line with price stability thereafter, had strengthened. with this move, the key ecb interest rates reached a very low level by historical standards. before turning to our assessment of the current economic outlook for the euro area, i would like to report that on 5 december 2002 we also reviewed the reference value for monetary growth, which plays an important role under the first pillar of the ecb's monetary policy strategy. the governing council decided to leave the current value unchanged at an annual growth rate of 4Β½ % for the broad aggregate m3, as the evidence continues to support the assumptions which have formed the basis of the derivation of the reference value since 1999, namely a trend potential output growth of 2 - 2Β½ % per annum and a trend decline in m3 income velocity of Β½ - 1 % per annum in the euro area. when comparing current developments with the reference value, it is important to bear in mind that the assessment of monetary developments is essential for long - term trends in inflation and that the reference value is therefore to be seen as a medium - term concept. short - term movements of m3 do not necessarily have implications for future price developments. moreover, deviations of m3 from the reference value must be analysed in conjunction with other real and financial indicators in order to understand their implications for price stability. turning to our current assessment on the outlook for price stability in the euro area, and starting with the first pillar, m3 growth remained high in the last quarter of | 0.5 |
using skills that's important. provinces must ensure that they don't set up road blocks that impede the mobility of workers. in this respect, i really do commend the provinces of alberta and british columbia for their recent pact allowing a free flow of labour and investment across the rockies. labour markets are not the only things that must be able to adjust β flexibility is important in all of our policies. we need legal and regulatory frameworks in place that encourage competition and allow market incentives to flow through. we really must eliminate barriers to interprovincial trade. as you know, these can take the form of a wide range of regulatory obstacles in areas as diverse as transportation, packaging, or financial services. capitalizing on alberta β s strengths policies that encourage flexibility are crucial for alberta if the economy here is to capitalize on its current strengths and build a solid base for the future. the important and growing knowledge base in alberta is creating opportunities to develop industries that complement the oil and gas sector. it also provides a platform, built on skilled professionals and financial resources, for expanding the vital education and health sectors. a challenge, as well as an opportunity, for alberta relates to the production and use of hydrocarbons in a time of increasing global concern about climate change. around the world, there is a growing demand for products and technologies that limit or reduce the emission of greenhouse gases. and what better place than alberta for the development of these types of technologies? as i've mentioned, the dramatic growth in the province's oil and gas sector has made alberta a magnet for workers, many of whom have the specialized knowledge and spirit of innovation needed to develop such new products. the province's knowledge base and rising prosperity also give calgary a great opportunity to build a solid financial services sector. this industry could be very important for calgary's future. financial services is a sector that attracts highly skilled workers who add a great deal of value. and calgary has some natural advantages. it is situated in the heart of the oil patch and is already home to the venture exchange and to a fledging commodity exchange. but calgary is unlikely to be able to fully exploit these advantages until canada, as a whole, develops a more efficient framework for its securities market. from the analysis that we have done at the bank of canada, it's clearly in the interests of all canadians, but particularly in the interests of calgarians, to establish a uniform canadian regulatory framework. this must be based | not appear to have spread more broadly. there is evidence that a significant portion of the adjustment in the automotive sector has already taken place, while the adjustment in the housing sector continues. overall, we judge that the risks to our inflation outlook in canada are roughly balanced. however, there remains a possibility of a disorderly resolution of global imbalances. on 6 march, we left our key policy interest rate unchanged at 4 1 / 4 per cent. in line with our outlook, the current level of the target for the overnight rate is judged, at this time, to be consistent with achieving the inflation target over the medium term. conclusion i've discussed some of what i see as the major challenges that we all face. i've also emphasized the crucial need for flexibility on all of our parts : government, labour, and business. this flexibility is vitally important. it will enable all of us to successfully capitalize on the opportunities presented by an expanding global economy. i'd now be happy to answer your questions. | 1 |
regulation of private pension funds is based on quantitative investment limits β the so - called draconian regulation. regulators in emerging markets consider investment limits to protect pensioners β rights better than regulations based on the β prudent person β rule. the latter rule requires managers to follow high fiduciary standards in investing the funds. it allows fund managers to set their own investment guidelines, encourages financial innovation and avoids the pitfalls of government direction of funds and interference with market processes. prescribing quantitative investment limits is generally defended on the basis that the underdevelopment and lack of transparency of local security markets make them susceptible to manipulation and excess volatility ; and that the general public, pension fund trustees, and fund managers lack financial sophistication. investment limits can also be prescribed with a view of obliging pension funds to make a greater contribution to national development in both the real economy and the local financial market. the downside of draconian regulation is that in some parts of the world they have created distortions in asset management, limited opportunities for diversification and, as a consequence, have hampered the performance of retirement funds. ladies and gentlemen, for the regulators, especially in developing countries, it is important to strike a suitable balance between draconian regulation, on the one hand, and absolute liberty in the way funds are managed and invested, on the other. draconian regulation is more appropriate for mandatory systems that are newly created in countries with shallow and dysfunctional financial systems and little tradition of private retirement funds. today, there are numerous means through which governments regulate pension funds and these are not limited to developing countries, but could be found in many developed and emerging market economies. they include prohibiting or limiting investments in assets considered to be risky, volatile or complex, restricting investments in foreign securities and even going as far as prescribing minimum returns. the modern trend is to move away from quantitative investment restrictions and to rather empower the trustees with fiduciary powers to take sensible, prudent, strategic, tactical and socially responsible investment decisions. the regulator β s responsibilities are reduced to ensuring high corporate governance standards and reasonable returns on investments. given these trends, one may ask whether the namibian retirement fund industry is ready to assume greater responsibility to manage retirement funds without prescriptive investment regulations. there are, in my view, two compelling reasons why i have to answer this question with a qualified no. it is my considered opinion that we are | michael mambo mukete : role of the bank of namibia in consumer protection issues speech by mr michael mambo mukete, assistant governor of the bank of namibia, at the launch of namibia consumer trust, windhoek, 15 march 2011. * * * director of ceremonies, and the executive director of namibia trust β mr michael gawaseb, the chairperson of namibia consumer trust β mr sandi tjarondo, the board of trustees of consumer rights trust, distinguished invited guests, members of the media, ladies and gentlemen, it is my great pleasure to be here today to witness the launch of namibia consumer trust. my research indicates that this trust is the first of its kind set up to advocate for the rights of consumers in namibia. the launch comes at the most opportune time when many namibians are finding themselves without appropriate avenues to find redress when their rights are infringed and often feel powerless to stand up against giants in the business and the financial sector. it is with this view in mind that the bank of namibia regards this initiative as a welcomed development at a time when concerted efforts are made to assess the regulatory landscape for consumer protection measures. this is because there are dozens pieces of laws developed many decades ago, and most of them surely have outlived their usefulness. it will therefore take much determined effort and coordination not only from the audience in this room, but also across sectoral regulators and government institutions to address the inefficacies in our existing laws. it is worth noting that the law reform and development commission has already issued public invitation to this effect and i wish to urge you all to participate in this indispensable exercise. director of ceremonies, ladies and gentlemen allow me to ask a very rhetoric question, why should financial regulators be concerned about the right of consumers of financial services? lack of information β or β information asymmetry β between consumers and financial services providers places customers at a disadvantage. consumer protection therefore seeks to level the playing field between suppliers and consumers of financial services. financial services are in fact often complicated, while often involving large amounts of money for individuals. it is true that the need for consumer protection is not unique to the financial area. nevertheless, there is a considerable difference in degree compared with most other areas, partly because it is often difficult even with hindsight to assess the quality of the financial services. in the namibian case, the challenge we are facing is not only to protect the existing customers | 0.5 |
around 3 % of their assets to unlisted equity. the collective investment funds, in which they and others invest, allocate only 2 %. [ see slide 6 of accompanying deck ] there seem to be biases in the system. even investors who should have the longest horizons seem to have a fetish for liquidity and an aversion to really illiquid growth capital assets. getting to the bottom of this should be the focus of our efforts. consider the Β£1. 4 trillion of assets in uk investment funds. the mass of these β just over 85 % by assets β are open ended14, offering investors the opportunity to redeem their holding for cash each day by selling a slice of the funds β assets. because they offer this, these funds aren β t suited to investing in highly illiquid growth capital. the alternative closed end fund structures issue a fixed number of shares, which can be listed on a stock exchange. because investors β redeem β by selling their share to another in the secondary market ( and typically at a discount ), the assets held in the fund do not need to be traded. these funds are therefore more able to invest in truly illiquid growth capital. so it is no surprise that a bigger proportion of their assets is allocated to assets like unlisted equity [ see slide 6 of accompanying deck ] but these funds are much smaller. see letter from the chancellor of the exchequer to the governor of the bank of england : financial policy committee remit : budget source : association of investment companies, the investment association, and bank calculations all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice an investor bias towards open - ended funds arises in part because some seem to offer the irresistible, but inconsistent, combination of a return from holding less liquid assets β like property and corporate credit β and at the same time the opportunity to redeem daily at little cost. a liquid investment with illiquid returns : what β s not to like? [ see slide 7 of accompanying deck ] closed ended funds ( and open ended funds with long notice periods ) might be able to invest in truly illiquid growth capital and offer an even higher return. but not enough to compensate for the appropriate lack of a quick redemption offering. the inconsistency in some open ended funds makes them look unduly attractive. until of course the inconsistency is exposed, when investors | have been volatile against the backdrop of the further decline in crude oil prices and uncertainty such as over future developments in emerging and commodity - exporting economies, particularly the chinese economy. for these reasons, there is an increasing risk that an improvement in the business confidence of japanese firms and conversion of the deflationary mindset might be delayed and that the underlying trend in inflation might be negatively affected. in order to preempt the manifestation of this risk and to maintain momentum toward achieving the price stability target of 2 percent, the bank introduced β quantitative and qualitative monetary easing ( qqe ) with a negative interest rate β in january 2016. the bank will lower the short end of the yield curve by slashing its deposit rate on current accounts into negative territory and will exert further downward pressure on interest rates across the entire yield curve, in combination with continued large - scale purchases of japanese government bonds ( jgbs ). the jgb yield curve has declined after the introduction of β qqe with a negative interest rate, β bis central bankers β speeches and policy effects have been seen. going forward, these effects are likely to steadily spread to both the real economy and the price front. the bank will continue with β qqe with a negative interest rate, β aiming to achieve the price stability target of 2 percent, as long as it is necessary for maintaining that target in a stable manner. it will examine risks to economic activity and prices, and take additional easing measures in terms of three dimensions β quantity, quality, and interest rate β if it is judged necessary for achieving the price stability target. in global financial markets, risk aversion of investors has been spreading excessively around the globe recently. the bank will carefully monitor how the developments in global financial markets influence japan β s economy and prices. thank you. bis central bankers β speeches | 0 |
conduct sound economic policies and accumulate adequate reserves. this leads to the paradoxical situation that unconventional measures applied in a crisis might lower the incentive to maintain preventive measures during normal times. in turn this increases the likelihood that unconventional measures will be needed again in the future, i. e. crisis resolution might tradeoff with crisis prevention. these moral hazard considerations are a well - known problem whenever insurance is provided in a context of asymmetric information. their negative effects can be mitigated to a certain extent. for instance, appropriate pricing of foreign currency liquidity provision can limit its function to that of an emergency backstop facility which is costly for banks to use. additionally, the framework has to be in line with global economic objectives, such as price stability, balanced growth and efficient international allocation of resources. β’ policies that preserve price stability in the long term should also ensure stability of the financial system. however, in short term these two objectives might appear to conflict. even when liquidity in domestic currency is provided to another country, it might find its way back to the domestic economy and contribute to inflationary pressure, if not sterilised. β’ a buildup of national reserves might itself contribute to systemic instability. a reserve framework requires stability of the reserve currency in order to act as a global store of value and an anchor for price stability. however, the triffin - dilemma notes that the accumulation of reserves implies persistent current account deficits of the reserve - issuing country. this potentially creates instability and fuels global imbalances. moreover, such a reserve system aggravates interdependence between the reserve accumulating countries and the reserve - issuing country. for instance, the us treasury market relies largely on demand from emerging market central banks. this dependence is likely to increase as the federal reserve phases out its asset purchase program, reducing us demand. β’ this is connected to potential negative side effects of reserve accumulation or intervention in foreign exchange markets. in consequence, it can distort exchange rates and prices of other assets and might be difficult if not impossible to disentangle from its benefits. β’ finally, an acceptable solution from the country perspective might not appear desirable from the global perspective. for instance, excessive accumulation of foreign exchange reserves might distort international capital allocation. this leads me to the general conclusion that there are many practical obstacles to a first - best solution for foreign exchange reserve provisioning. ultimately, i will conclude with some considerations on the challenges facing the global framework for | adherence to international best practices. with this dialogue, we look forward to enhancing our repertoire of sustainable solutions. ladies and gentlemen, thinking of the continent, we cannot run away from the fact that illegal wildlife trade is one of today β s most lucrative forms of organised crime that has not spared the esaamlg region. and similar to many countries in the region, seychelles, which boasts a unique biodiversity ranging from the legendary coco - de - mer, the giant aldabra tortoise, the sea turtles, a variety of insects, bird and fish species, among others, has also been witnessing an increase in poaching and crimes related to the illegal trade of endemic flora and fauna, including some of the endangered species. the seychelles β ministry of environment, energy and climate change notes that as recently as 2017 and earlier this year, several reports of people smuggling giant land tortoises and even reptiles out of the country, have been recorded. this includes the seychelles'giant bronze gecko, as rightly mentioned by the minister in his opening address, which is believed to be sold for thousands of usd on the international market. it is evident that if left unchecked, such practices pose the risk of establishing very perverse activities locally just to feed such markets. and although complex we need to combat illegal wildlife trade because besides generating significant losses in assets and revenues, illegal wildlife trade is also a threat to the livelihood of our communities, our ecosystems, and even food security. as we speak the value of illegal funds being derived from illegal trade in wildlife in seychelles is not specifically known, although we are well aware of existence of such trade. nevertheless, the fact that this phenomenon has emerged and is affecting our jurisdiction and wider region, is reason enough for us to try and find mechanisms that will allow us to better understand the financial aspect of this illicit activity, and have a concrete understanding of the money flows linked to this lucrative trade. i cannot end, without addressing what is a well - known fact - that we are experiencing a constantly evolving financial sector, among which is the growing use of innovative financial products and services that have undoubtedly changed our financial landscape. however, while the use of financial technology has helped to enhance efficiency, allowing access to finance for the broader community, this has also brought about its fair share of risks and challenges. aside of the wellknown cyber - security risks, we also have challenges relating to the implementation of aml / cft requirements, relating to new technological | 0 |
constantinos herodotou : fintech evolution in the banking system and managing consequent risks address by mr constantinos herodotou, governor of the central bank of cyprus, at the annual general meeting of the association of cyprus international financial firms ( aciff ), nicosia, 8 december 2021. * * * the pandemic has highlighted the importance that technology plays in allowing the financial system to continue, as smoothly as possible with its operations. global fintech investment continued its remarkable growth, rising from $ 87 billion in h2'20 to $ 98 billion in h1'21. global fintech deal volume also hit a new record of 2, 456 during h1'21. data also shows that consumers worldwide are adopting fintech services much more quickly than anticipated. in 2017 it was predicted that 52 % of consumers worldwide would have adopted fintech services by 2019, but the estimate proved to be too conservative as the actual figure overshot it by 12 points. this overshooting happened before the pandemic. although data is not yet available, the recent health crisis must have accelerated further this figure. the growth in the fintech market is also obvious from the number of fintech startups. as of november 2021, there were 10, 755 fintech startups in the americas, making it the region with the most fintech startups globally. in comparison, there were 9, 323 such startups in europe, the middle east, and africa and 6, 268 in the asia pacific region. cyprus is no exception to this global trend. there are currently 14 authorised electronic money institutions and 10 authorised payment institutions while there are 43 pending applications ( 32 emis and 11 pis ). compare this with the 12 local and foreign authorised banks and subsidiaries in our country. however, as with all revolutions, these global developments come with costs and risks. the number of cyber incidents reported to the ecb banking supervision in 2020 increased by 54 % compared to 2019. banks are specifically targeted. banks underwent almost 26 % of cybercrimes in 2019. these included compromised credit cards, leaked credentials and malicious banking applications. banking landscape and future change the euro area banking sector is undergoing a transformation, with higher competition from non - bank financial intermediaries and fintech institutions. the euro area's financial structure has seen a movement from strong bank dominance towards a more balanced composition1. the development of non - bank lending diversifies the sources of finance available to businesses, | constantinos herodotou : the financial ecosystem from a regulator's perspective speech by mr constantinos herodotou, governor of the central bank of cyprus, at the techisland summit, limassol, 20 september 2023. * * * ladies and gentlemen. it is a pleasure to have the opportunity to speak to you here today at the techisland summit. in this speech i will focus on the modernization and digitalisation of the financial sector and the relevant policies and regulations. introduction digitalization has spread to every corner of our lives. to accommodate our needs, the world we are living has become more interconnected and the financial landscape is witnessing a relentless transformation. the integration of technology into banking processes has unlocked opportunities, streamlined operations, enhanced customer experiences and redefined how financial institutions interact with their customers. to navigate this evolving landscape successfully, safely and efficiently, profound collaboration and solid synergies are needed between technology and the banking sector, delivering to the public a more transparent and efficient financial ecosystem. the ease of use, the speed and cost of executing transactions, are all factors that businesses and individuals take into account when deciding with whom to cooperate. the financial soundness and resilience of the cyprus banking sector the cyprus banking sector has enhanced its strength and resilience through 2023, despite the turmoil of the recent economic and geopolitical events. in particular, it has maintained a high liquidity level, with its liquidity coverage ratio standing at 318 % in march 2023, compared with the european union average of 162, 8 % ( march 2023 ). the common equity tier 1 ratio ( cet1 ) stands at 18, 9 % at the end of the second quarter of 2023, a rate which is a strong indication of the cyprus banking sector's ability to absorb future shocks. furthermore, the non performing loans in the banking sector have been reduced drastically, with the ratio declining from 44 % in 2017 to 8, 7 % in june 2023. although, with the help of regulatory measures, the cyprus banking sector has successfully weathered recent shocks, the uncertain economic environment leaves no room for complacency. banks should continue improving their balance sheets and adapting to the changing environment in which they operate. digital advancement sits at the core of this adaptation process. the new digital era, and the adoption of the convenience it provides to both businesses and personal customers, has created an unofficial mandate for banks to invest in 1 / 5 bis - central bankers ' | 0.5 |
- term liquidity. much digging and research remains to answer the question of how norges bank dealt with the challenges during the 19th century. so far, scholars have not found that the bank took emergency action when a financial crisis affected norway in 1847. but when the crisis hit again ten years later, the bank sent silver abroad to hamburg, which was the financial centre of the norwegian merchants. this support was important to enable norwegian industry to carry out international payments and have their bills of exchange discounted. in 1892 a new act was passed whereby norges bank became the bankers β bank. as the governor mentioned in his speech yesterday, this made norges bank a modern central bank in a legal sense. in 1899, kristiania ( as oslo was called at the time ) experienced dramatic fall in house prices. the financial bubble contained all the classical elements, such as a surging credit growth and house price inflation. norges bank had to carry out several rescue operations to save banks that were in trouble. 1899 was probably the first year the bank functioned as β lender of last resort β. if you take a walk around the neighbourhood, you will see the physical aftermath of this bubble. you will find buildings from the 1890s and from the 1920s onward, but virtually nothing built in the intervening period. the past years we have again been in troubled waters. in september 2008 the turbulence in financial markets developed into a full - blown global crisis. money markets seized up. confidence between banks vanished. liquidity dried up, interest rates rose sharply and equity prices fell. the long - term lending market dried up. international developments were also felt in norway. up until then we could almost take a well - functioning money market for granted in this country. but in the autumn of 2008 the money market stopped functioning and medium - term funding for banks was problematic. just as in 1816, norges bank acted as β market maker of last resort β. and so, the history of my own central bank, expanding the window from 25 years to 200 years, does not provide an unambiguous answer to the question of what defines a central bank. but even if we look at central banks in other countries, there are no clear answers. the way the financial crisis was handled varied across countries. in many places, for instance, substantial portions of the crisis measures remain on the central bank β s balance sheet. here in norway, the crisis measures relating to banks β medium - term funding are on the balance sheet of | factor that may hold back r & d in the european digital sector. for instance, intangible investment is difficult to collateralise and therefore harder to finance in a conventional bank - centred financial system like the one prevailing in continental europe. a deeper venture capital market ( together with progress in developing a single pan - european market for digital products ) could support the development of the tech ecosystem in the euro area, underlining the importance of capital markets union and the single market for goods and services. in relation to labour market dynamics, the structural changes associated with digitalisation imply the contraction, or elimination, of some occupations but also the emergence of new types of jobs. since the first industrial revolution, technology has always created more jobs than it has destroyed. similarly, most advanced economies are currently enjoying the highest employment rates of the past three decades. 6 in addition, digital automation can spur productivity, as i will discuss shortly, and itself tends to create new employment opportunities. furthermore, digitalisation offers the possibility of reducing search costs in the labour market and making the search and matching process more efficient. indeed, in tracking labour market conditions, central banks can also benefit from the high - frequency data generated by online job searches7. above all, the ongoing digital transformation holds the promise of large productivity gains. for 1 / 3 bis central bankers'speeches instance, a recent ecb survey of large euro area companies highlighted that firms see the potential for digital technologies to increase productivity growth, in particular by promoting knowledge sharing and enabling more efficient production processes. 8 productivity growth plays an important role in the conduct of monetary policy. in principle, higher productivity growth spurs investment, and expectations of higher future income encourage consumers to spend more today. moreover, higher productivity growth increases the equilibrium real rate of interest, which is a central factor in calibrating monetary policy. in practice, however, despite the promise of increased efficiencies thanks to digital technologies, the productivity growth that we have seen in europe, and indeed most advanced economies, has been lacklustre for more than two decades. this weakness of productivity growth despite the substantial digital innovations remains a puzzle. how this puzzle will be resolved remains to be seen. what appears fairly clear, however, is that in the light of the overall disappointing productivity growth we have seen in recent years, the contribution that digitalisation is making to productivity appears, for the time being, relatively limited. there may also be interactions between technology and trade. digital technologies, together with trade liberalisation | 0 |
financial system more stable without cutting into sustainable growth. but the constant evolution of the financial system and the emergence of new instruments and players also imply that the regulatory framework will never be finalised once and for all. 4. unresolved questions prudent regulation and supervision crucially depend on a sound understanding of the financial system. research efforts of institutions around the globe, including central banks which also have a keen interest in these issues, have been remarkable. however, a deeper understanding is still required of those trends in financial markets that led to financial instability β and monetary policy measures that sometimes took central banks to the limits of their mandate. i do not want to offer a research agenda, but let me pick out some areas that are particularly interesting for central banks : securitisation, for example, is not a new technique, but it has experienced an enormous upswing in recent decades. it is intended to disperse credit risk to those who are better able to assume such risks and absorb the corresponding losses, and as such it increases welfare. we know by now that securitisation can also increase risk - taking and thus the fragility of the financial system as a whole. some elements of regulatory reform already address this problem. but the question remains whether we have done enough to reduce the drawbacks without sacrificing the benefits. another important reason for financial instability with potentially serious macroeconomic costs continues to be overextension in balance sheets in boom periods, which is often an indication of excessive risk - taking. we have learned that this can be masked by a vigorous economy. it is therefore vital that we extend our knowledge of how to make disguised risks more transparent. turning from the prevention of exaggerations to more direct countermeasures, we still do not know enough about the desirability of different forms of policy interventions. the search for the optimal mix of measures of ex - post and ex - ante interventions is still ongoing. further work needs to be done in order to establish whether macro - prudential regulation can solve the time consistency problems associated with ex - post interventions. this is a particularly relevant issue for central banks. since the crisis began, functions have been added, especially in the field of macro - prudential policy. as you are well aware, the bundesbank, too, stands ready and looks forward to assuming more responsibilities in this field. the challenge will then be to integrate these new tasks seamlessly with the functions central banks already perform. | economy. the second β and quite popular β explanation argues that the increase in financial activity has merely been an exaggeration, as a consequence of which the financial system has, to a certain degree, uncoupled itself from the real economy and turned to unproductive activities. each line of argument obviously has important policy implications β for the scope and intensity of regulation and supervision, but also for other policy areas, including central banks. drawing the right lessons from the crisis requires first of all a clear understanding of the role the financial system plays for the real economy. in my short remarks i will therefore take a bis central bankers β speeches somewhat more general approach that goes beyond monetary policy issues. i will argue that, firstly, a highly developed and innovative financial system is indispensable for economic growth, but that there is also an inherent risk of exaggerations. secondly, regulatory efforts therefore have to strike a delicate balance between constraining such exaggerations without stifling innovation and thereby hampering economic growth. and finally, given that the crisis has laid bare serious gaps in our understanding of the financial system, i will conclude by outlining some fields of research that, at least from a central bank β s viewpoint, are of particular interest. 2. the role of the financial system the fundamental role of the financial system is to act as intermediary between borrowers and lenders. services such as the transformation of maturity, denomination and liquidity allow for efficient capital allocation, thereby promoting innovation and growth. furthermore, the financial system solves adverse selection and moral hazard problems between lenders and borrowers. this is of crucial importance for financing innovations and therefore for tfp - intensive growth which we depend on in aging highly developed economies. throughout history, this role of the financial system has never been static, but has become more and more complex in step with economic progress. in the process, the contemporary structure of the financial system has gradually evolved over the centuries. banks perform the tasks associated with money and credit, the bond market provides financing for governments and large corporations, the stock market provides equity financing of joint stock companies, venture capital the funding of nascent businesses β and a myriad of financial instruments allow us to trade and redistribute all kinds of risks. and it is a well - known fact that this process has, through history, been accompanied by the build - up and bursting of bubbles β usually at large, sometimes very large costs. prominent examples include | 1 |
doors to support the public health response to the pandemic. policymakers have acted to support vulnerable businesses and, thankfully, the pandemic has not yet been characterised by widespread company failures, owing to the unprecedented level of direct fiscal support and creditor forbearance that is in the system. given that smes account for two thirds of private sector employment, this support has been critical to avoid widespread β scarring β in the irish economy. the viability and survival prospects of many affected firms remains highly uncertain and is likely to depend on a range of future policy choices. these choices will be difficult, and will have profound implications for our economy. looking back to 2020 looking back to 2020 in more detail, the shock to sme revenues from the pandemic was severe. the research we are publishing today, with colleagues at the esri, shows that, while the 1 / 2 bis central bankers'speeches hospitality sector has experienced the most severe crisis β which is to be expected given the nature of public health restrictions β the revenue shock has also been significant across all other sectors, with smes in manufacturing, construction, wholesale / retail, business services and a group of miscellaneous sectors all having average revenue declines of between 20 and 25 per cent. this suggests that the covid - 19 pandemic has had an effect in all pockets of the sme sector. the research also sheds some new light on how effectively smes can reduce their costs in the face of falls in revenue showing that that for every euro lost, smes have on average reduced costs by 37 cents. for the hotels and restaurants sectors, where take - up of policy supports and the need to negotiate and scale back on all items has of course been greatest, this averaged 56 cents. these figures suggest that, while companies have indeed managed to adjust to the realities of the pandemic, this adjustment for many reasons has not been enough to avoid companies experiencing losses. indeed, the majority of smes in every industrial sector in ireland were loss - making in 2020, according to the survey data that you will see presented today. a key question for policymakers and firms is to identify businesses that are viable and can operate into the future, and those which will not be able to. while policy choices have led to an avoidance of widespread insolvency up to now, it is an unfortunate reality that the effects of the pandemic on sme balance sheets, combined with structural changes that have either been created or | exacerbated by it, mean that some smes will be unviable. it would be a mistake to continue with protection and forbearance in perpetuity, just as it would be wrong to allow all companies making losses currently to fail. the complex challenge for all of us involves the timing and identification of the withdrawal of support and normalisation of the functioning of the insolvency criteria. an assessment of viability for firms will ultimately depend on a range of firm and sector specific features and each case will of course be specific to each firm. however, one piece of information that can guide the discussions relates to the performance of smes before the pandemic and our research has highlighted two groups that may struggle. first, 5per cent of smes made a loss in 2019 and were struggling in 2020 ( making a loss or breaking even ), and second, 19 per cent of firms were struggling in 2020 and just breaking even in 2019. all other things equal, such firms may be more vulnerable to liquidation as the pandemic evolves and insolvency criteria begin to normalise. by contrast, a much larger group of smes have been struggling in 2020 but were profitable prepandemic, suggesting that their longer - term survival prospects are stronger and that restructuring and forbearance efforts would be better focused on them. conclusion the past year has been particularly challenging for smes across the country, and how policymakers can support viable firms to recover and thrive as our economy recovers is a key issue. i look forward to hearing your views on how smes can respond to the most pressing challenge of the pandemic, as well as the longer - term issues of digitalisation and climate change. i hope you all enjoy the conference. 2 / 2 bis central bankers'speeches | 1 |
and domestic institutional capacity. these professions contribute to both the moral and legal frameworks that maintain and uphold ethics and standards, while forming an important line of defence in upholding good governance in both the public and private sector. the auditing profession contributes to a credible and thriving business environment, while acting as the custodians of international standards for professional conduct. lastly, the comfort that investors get from the auditing professions, promotes investment and thus ultimately economic growth and therefor makes a difference to people β s standards of living and hence their quality of life. i wish to conclude my talk this morning, by quoting former president, nelson mandela, when he said β there is no passion to be found playing small - in settling for a life that is less than the one you are capable of living β. i hope we all would continuously strive towards a life that is nothing less than the one we are capable of. more importantly, i hope that we would all take hands and work tirelessly to create a future for our country that is reflective, not only of the rich endowments we enjoy as a country, but a future that is reflective of our true and full potential as a nation. thank you. bis central bankers β speeches | , although protectionism appears to be an attractive policy response against a backdrop of low growth and a structural current account deficit, it should be approached with a degree of circumspection as an important lesson to be taken from economic history is that the period that followed the great depression was marked by an outbreak of protectionist trade policies. these policies led to a sharp contraction in global trade in the 1930 β s, beyond the economic collapse itself, and a lacklustre rebound in trade despite the eventual worldwide economic recovery. 2 it is also worth acknowledging that trade protectionism often fails to adequately address the underlying challenges of competitiveness, or the lack thereof, within an economy and it may even lead to a decline in the degree of competiveness as its could lead to higher input costs and hence contribute to price inflation. lastly, it is unlikely to restore external balance if external demand is weak. the international monetary fund ( imf ) has developed sustainable growth indicators which focus on policy, democracy, and governance as the drivers of growth. the policy component encapsulates economic policies, while the governance component relates to accountability. this approach by the imf enables a link between economic growth and the role of the south african reserve bank ( the bank ) and bodies, such as the institute of internal auditors, in fulfilling their respective mandates. the contribution by the bank enhances institutional capacity in the economy as it serves the south african society through maintaining price and financial stability in the interest of eichengreen, b and irving, d. a ( 2009 ) β the slide to protectionism in the great depression : who succumbed and why? β nber working paper no. 15142. bis central bankers β speeches balanced and sustainable growth. in the policy sphere, it conducts monetary policy to contain price inflation. in doing this, the bank assists in maintaining and improving competitiveness, protecting the purchasing power of the currency and, thus the living standards of all south africans. furthermore, this provides a favourable environment for employment creation through balanced growth. in addition, the bank also has the mandate to oversee and maintain financial stability which is a distinct and separate policy objective from price stability. we can feel very proud that south africa was ranked first out of 144 countries ranked in the global competitive index report for our strength of our auditing standards and reporting, second for accountability and third for the efficacy of our corporate boards. this is meaningful as the internal and external auditing profession forms an integral part of the international | 1 |
and the size of financial markets are also useful. information vendors are planning to provide information relevant to the secondary markets for npls. bank loans have been the dominant means of corporate financing in japan. under the main bank system, borrower information has been shared only between the borrower and its main bank, and neither party has been especially averse to this arrangement. it is always difficult to change such established practices. for this reason, persistent efforts will be required not only to establish an infrastructure to facilitate the use of information, but also to convince market participants to change their thinking on this matter. second, the revitalization of credit markets using cutting - edge financial engineering techniques is indispensable. we see technological innovation in many industries but it is particularly rapid in the financial sector. a variety of statistical methods have been introduced which use information such as accounting data and bankruptcy ratios to obtain quantitative estimates of credit risk and also to evaluate the overall risk inherent in particular portfolios. these techniques have facilitated the rapid development of markets for syndicated loans, abss, and small - value business loans based on scoring models, as well as markets for non - recourse loans and credit derivatives. when arranging abss, these techniques enable the classification of cash flows from pooled assets into tranches, such as senior, mezzanine, and equity, reflecting different degrees of risks, enabling investors to select the tranche best suited to their individual risk preferences. v. expectations for syndicated loan market next, i would like to focus on syndicated loans in the context of reforming corporate finance in japan. syndicated loans are considered sophisticated because they incorporate devices for both producing and managing information efficiently. i believe that the development of this market will play a leading role in the reform of corporate finance in japan, and is likely to accelerate the establishment of a β credit culture. β there are two features of this market that are worth specific mention. first, contracts make clear stipulations regarding the relationships between borrowers and banks, and between agent banks and participating banks. they also stipulate precisely the obligations of contracting parties and the compensation to which they will be entitled. for example, the contract between a borrower and its bank includes covenants that establish certain conditions on profitability and asset quality to which the borrower agrees to be subject. such covenants allow borrowers more operational freedom, since they can prevent unnecessary intervention of banks. on the other hand, they also allow lenders to take necessary measures quickly | when the borrower becomes unable to fulfill its obligations under the covenant. in the united states, where the syndicated loan market is firmly established, covenants are seen performing a triggering role : when borrowers experience difficulties in honoring the terms of their covenants, this prompts discussions with their banks and the implementation of recovery measures. a separate set of contracts for syndicated loans is also signed between agent banks and participating banks. under these contracts, agent banks are responsible for disclosing information on the borrower and monitoring its observance of the covenant, a service for which they receive a compensatory commission. this gives agent banks incentives to monitor borrowers'financial situations accurately. second, syndicated loan assets are designed specifically with the secondary market in mind. if borrowers allow lenders to transfer loans to a third party, this will dramatically change the landscape of japan's financial markets. in the past, there were close and exclusive relationships between borrowers and lender banks, especially the main bank, and borrowers were extremely resistant to the idea of having their loans transferred to a third party. indeed, they were reluctant even to see changes in the share of their total borrowing that came from banks. this explains the existence of contracts for syndicated loans in japan that explicitly limit the scope for transferring loans to third parties. for transactions in the secondary market to take off, syndicated loan assets should be priced in such a way that banks other than the existing lenders, or institutional investors, may purchase them in the market. if this happens, it will allow borrowers and agent banks to consider current market prices for loan assets when fixing the terms governing lending in the primary market. a positive growth cycle in secondary markets can be envisioned with more institutional investors entering the credit market. of course, expansion of syndicated loan market alone does not complete the reform of corporate financing in japan. however, if the transfer of loan assets becomes more widely accepted through the development of a secondary market for syndicated loans, the market liquidity of new vehicles such as abss will improve. moreover, if covenants allow borrowers and agent banks to respond more promptly when firms become financially distressed, the amount of lending and investment that goes to finance low - return projects will gradually decrease, and this should accelerate the shift of economic resources to highly - profitable businesses and industries. i look forward to seeing the jsla continue to contribute actively in this area. vi. the bank of japan's initiatives a. three pillars of the | 1 |
the β why " : greater stability, to counter the risk of a new crisis befalling an unprotected euro area ; and greater growth, to catch up our past lag on the united states and finally treat the fatal disease of mass unemployment in europe. but how can we achieve this shared objective? we should trigger four accelerators : a macro accelerator, which would consist of a collective economic strategy shared by all euro area member states ; a micro accelerator, which would take the form of a financing union for investment and innovation, going beyond the cmu ( capital markets union ) ; a fiscal accelerator, which would draw on a euro area budget. the fourth is not an accelerator in substance, but rather a β facilitator β for the first three : on institutions, a euro area finance minister and parliament. these accelerators would contribute to the functions of economic policy, as described by musgrave : 2 allocation, stabilisation and distribution. the allocation function aims at making sure that resources are used in an efficient way. this would obviously be the role of the micro accelerator, but also of the fiscal one β through the financing of european common goods. the stabilisation function consists in the smoothing of the cycle and cushioning of the impact of crises, and this could be ensured mainly by the macro accelerator, but also by the micro one, thanks to enhanced private risk sharing, and possibly by the fiscal one. finally, the distribution function is to foster an equitable sharing of income. this role could possibly fall to the fiscal accelerator but its implementation would require increased trust and greater economic convergence between euro area member states in order to avoid a β transfer union β which would 1 / 4 bis central bankers'speeches be a one - way budget : in that case, i would understand german fears. so these four accelerators are needed, but this does not mean they all have to be implemented at the same time. the latter two accelerators, fiscal and institutional, would indeed require treaty changes, unless they were to be very limited. however, this must not stop us from taking steps straight away on the first two accelerators, macro and micro, on which i will insist today. i would like to share with you some personal reflections β useful for the proposals that the european commission will make in december and for our debate today. to be more specific, i will focus on one part of each of these two accelerators, where progress can be made quickly : i will | of central bankers and supervisors β achievements towards tackling climate change, which are significant and ( ii ) discuss four important tasks that still lie ahead. i. central banks and supervisors are promptly moving ahead regarding the snapshot of risks in its first progress report, released in bali in october 2018, the ngfs unanimously concluded that β climate - related risks are a source of financial risks. it is therefore within the mandates of central banks and supervisors to ensure the financial system is resilient to these risks. β so what do we do? a. integrating climate - related risks into micro - supervision this is an ambitious but complex task, on which progress has been made in many countries. looking at the potential courses of action for supervisors, i believe that our main priority should be the disclosure of existing exposures in the financial sector, what i usually call β the snapshot of risks β. a number of supervisors have paved the way, including the dnb, the bank of england / pra and the french supervisory authority ( acpr ). the acpr published last week a second report on the exposures of french banks and insurers to climate risks. this report gives a clearer view on climate risks and opportunities : asset exposures of financial firms to physical risks remains non - material in france thanks to investments in very low risk zones ; banks β exposures to transitionrelated risks were slightly reduced between 2015 and 2017 and now represent roughly 12 % of credit risk β s exposures at default. our supervisor also has a clearer view on the blind spots in the risk management framework, which must be addressed : executive bodies are committed to embracing further climate risks at the highest level of decision - making but the degree of implication across the french financial sector is still heterogeneous ; the granularity of the analysis provided by banks and insurance companies is not sufficient. this step should be widely promoted among ngfs members, who, i believe, need to leverage best practices throughout its membership. i therefore very much welcome the supervisory handbook that will be prepared as a ngfs technical deliverable for 2019 - 20. b. integrating sustainability factors into own - portfolio management central banks must send the right signal and lead by example in their investment and disclosure policies. the dnb has signed up to the un principles for responsible investment. norges bank, which manages the norwegian sovereign wealth fund, has advocated a diversification of the portfolio and is implementing a divestment strategy dedicated to selling off some oil and gas | 0.5 |
reinforced by academic research, that enlargement will not only bring additional dynamism and growth to the ten newcomers, in speeding up their catching - up exercise, but will also contribute β positively and significantly to growth in the previous fifteen members. the pessimism that we observe in some sectors of the public opinion are not founded. let us all together take advantage of the additional dynamism that poland and the nine other new members are bringing to the european union. let us not forget that before the entry of spain and portugal we had the same gloomy sentiment in the public of the then previous β 10 β. after the β 10 β had become β 12 β that sentiment dissipated progressively in the face of all what spain and portugal had contributed to the β 12 β thank very much for your attention. m. przybyla and m. roma, β does product market competition reduce inflation? evidence from eu countries and sectors β, ecb working paper, no. 453. | , bringing the total number of takaful operators to nine ( 9 ). the new takaful licences are offered to joint ventures or consortiums of sound financial institutions with experience in islamic banking, takaful or insurance business. such joint ventures or consortiums that include foreign partners would enable the new takaful operators to leverage on the expertise, experience and infrastructure of their partner financial institutions. these are strong institutions from the middle east, the united kingdom and japan that agreed to combine efforts and share expertise and resources with malaysian institutions in these new ventures. in line with the liberalisation in the islamic banking industry, foreign equity interest of up to 49 % is allowed in the takaful entity to secure commitment of strong shareholders, and foster meaningful strategic alliances. for islamic banking, the bank has further liberalized our islamic financial industry by allowing the establishment of three new fully foreign - owned islamic banking institutions as part of the strategy to enhance integration with the international financial system and to strengthen inter - linkages with other economies. these foreign partners will provide strategic linkage for the expansion of the takaful and islamic banking businesses overseas. going forward, our aspirations are for malaysia to be the centre for efficient, progressive and robust islamic banking and takaful sectors which are internationally integrated. in realizing this vision, the industry has to play its role in giving unwavering commitments and collaborative efforts towards elevating the industry to new levels of dynamism. 26. let me conclude by saying that the future success of islamic finance will depend on the combined collaborative efforts of all stakeholders, namely the regulators, the scholars, the industry and market participants. in this regard, all parties should put in relentless efforts to continuously promote the development of islamic finance into one which is progressive, dynamic, responsive and sustainable. i sincerely believe that for all our sincere efforts towards realizing this objective, insyaallah, the almighty will shower us with his blessings, guidance and assistance. this reminds me of the essence of verse 69 of surah al ankabut : " and those who strive in our ( cause ), - we will certainly guide them to our paths. for verily allah is with those who do right. " on this note, i wish you a successful and productive seminar and wabillah hitaufik walhidayah. thank you. | 0 |
inherent in the islamic financial transactions. the risk management infrastructure in islamic financial institutions needs to identify, unbundle, measure, control and monitor all the specific risks in the islamic financial transactions and instruments. this is to ensure that the systems and controls will be effective in the quantification and management of the risks arising from the operations. new innovations in technology would be particularly important to enhance the potential to manage risks. in addition, as the returns in islamic banking are uncertain and can only be ascertained on an ex - post basis, well - developed it systems would be necessary to enable islamic banking institutions to make projections on future returns so as to reduce the degree of uncertainty in the returns to be paid to the depositors. this would also strengthen the potential competitiveness of the islamic financial services industry. another facet to risk management is the need for the islamic banking industry to develop a derivatives market. in the current increasingly uncertain global financial environment, investors need to be in a position to mitigate and manage these emerging new risks. islamic banking institutions, in particular, have to a large extent long - term assets which include long - term islamic housing mortgages and islamic financial instruments, that are funded by short - term deposits, thus giving rise to a maturity mismatch between the assets and liabilities. there is therefore a need for the development of a broader range of islamic financial market instruments to provide the industry with effective risk mitigating instruments. in addition to the derivatives market, the islamic financial system also needs deeper and more efficient money and capital markets to facilitate sound asset and liability, and liquidity management by islamic financial institutions. in this regard, bank negara malaysia will issue sukuk al - ijarah, to meet the requirements of participants in the islamic money market. at the core of a strong islamic financial system in any jurisdiction, there needs to be a strong regulatory framework which enforces the standards for capital adequacy, ensures effective risk management practices, financial disclosure and governance, reinforced by a strong shariah and legal framework. shariah principles serve as a self - regulating mechanism that protects islamic financial institutions from unproductive, speculative and unethical activities, given the prohibition of interest or usury in banking business, and the requirement that all financial transactions are to be accompanied by genuine trade and business - related transactions and the prohibition from the involvement in illegal and unethical activities. the regulatory framework in which islamic banking operates is thus able to draw | evolved the islamic financial system to increasingly become an integral component of the international financial system. the malaysian experience has been to evolve a comprehensive domestic islamic financial system that is diversified in terms of its institutions, markets and players. the strategy has been to institute the entire financial system chain to ensure the efficient functioning of the system. the initiatives include establishing the required financial institutions including, the islamic banking institutions, takaful companies, the non - banking institutions and developing the islamic money and capital markets. these respective components have recently been progressively liberalized in terms of allowing for the entry of new foreign players and in terms of increasing the potential for foreign participation in the domestic financial markets. in addition, both these domestic and foreign operations have been encouraged to tap on regional and international business opportunities. as a result, this has strengthened the crossborder financial inter - linkages, prompting greater international integration. to ensure the robust functioning of the system, these developments are supported by a strong regulatory and supervisory framework reinforced by the legal and shariah framework and the payment and settlement systems. while the positive growth and developments in the islamic financial system have brought about expanded opportunities, the financial liberalization and technological advancement have brought about increased competition and greater innovation in the development of products and services, operational processes and delivery channels. these developments have contributed to increasing the risk profile of the institutions. these new risks are generally more complex and have more profound systemic implications to the financial system. this has increased the need for strengthened risk management capabilities by the industry and for greater attention to this aspect by regulators and supervisors in promoting the stability and integrity of the financial system. of importance is to ensure an understanding and awareness of the risks inherent in islamic banking activities. the challenge is to ensure that each component that supports the risk mitigation requirements, comprising the framework and institutional infrastructures, legal, regulatory, supervisory as well as the shariah infrastructures are in place. my remarks this morning will focus on the challenges of risk management in islamic financial institutions, and the roles of effective regulation and supervision in this context as part of the efforts to promote the development of a robust and sound islamic financial system. in islamic banking, the management of risks becomes more challenging due to its peculiar risk characteristics and the requirement for compliance to shariah principles. while the basel ii initiatives on the identification of credit, market and operational risks can be assimilated into islamic banking, the initiatives have to be complemented with consideration of the other dimensions of risks that are | 1 |
strike a balance. full disclosure is neither possible nor desirable. sensitive information must remain confidential, as it could endanger financial stability if revealed. the third pillar is to ensure the legality of supervisory action. there are two elements to this. the first is that there are concerns that tensions could arise from having monetary policy and supervision under one roof. in my view, the clear delineation of mandates in the legal framework and the functional separation of the policy areas mitigate such risks, and i pledge to ensure that the separation principle is fully respected. it β s worth 1 / 2 bis central bankers'speeches remembering that a system - wide perspective is the key advantage of european banking supervision, as it allows us to identify and react to euro area - wide linkages and spillovers. applying national laws, on the other hand, can lead to a fragmented implementation of supervisory rules. the second element is that we have to act within the boundaries of our mandate and respect the law at all times. any supervisory action must remain bank - specific and be taken within the limits of relevant european legislation, which is defined by the co - legislators, i. e. the european parliament and the council, with further specifications from the european banking authority. i look forward to answering your questions. 2 / 2 bis central bankers'speeches | yves mersch : appointment hearing as vice - chair of the ecb supervisory board appointment hearing of mr yves mersch, member of the executive board of the european central bank, at the committee on economic and monetary affairs of the european parliament, brussels, 4 september 2019. * * * following my nomination by the ecb β s governing council as candidate for the position of vicechair of the ecb β s supervisory board, i am grateful for this opportunity to outline the key principles that i intend to bring to the role. i have spent more than 20 years of my career dealing with microprudential supervision in various roles, first at luxembourg β s monetary institute and finance ministry, and then as governor of its central bank. during that time i helped to develop the template for modern banking supervision in my country β but i also witnessed the challenges national supervisors can face in a monetary union. this perspective proved vital when i co - led the internal preparations within the ecb for the creation of european banking supervision. today, the single supervisory mechanism ( ssm ) is well established as the single banking supervisor in the euro area. if confirmed as vice - chair of the ecb β s supervisory board, i am determined to uphold and strengthen this achievement. in doing so, my approach to supervision will be based on three main pillars. the first pillar is to transition to a more forward - looking supervision. european banking supervision has been instrumental in tackling the legacies of the crisis : since 2014 stocks of non - performing loans, or npls, have declined by almost 50 % and bank capital has increased significantly. but we also have to look to the future. in an environment of weak growth, banks cannot afford large inflows of new npls while clinging to outdated business models. supervision must ensure that sound underwriting standards and adequate provisions are in place, that changing business models are sustainable and that upcoming risks are addressed. the second pillar is to further increase the transparency of supervision. prudential supervision requires a high level of democratic accountability because its measures might have an impact on ( national ) taxpayers β money. so the way banks are supervised should be clear and predictable. increased transparency also supports consistency when comparing banks β compliance with applicable supervisory principles and practices. it thereby ensures a level playing field and that all supervised institutions are treated equally. moreover, transparent supervisory requirements help to understand banks β risks, and anticipate supervisory actions. this in turn would strengthen market discipline. but we need to | 1 |
high - skilled labour. this allows the gms to continually expand the production capacity and speed up innovations that would foster the long - term regional economic growth going forward. ladies and gentlemen : 10. this journey of transformation is not a bed of roses and it could take some times to bear fruits. yet, there are opportunities to be seized in pursuit of long - term sustainable development. with promising prospects await, what i expect to see in a very fast - approaching future is the interplay between different facets of development to strengthen the health of the economy and keep it well in balance. these recipes may sound familiar, if not already overheard. the key enablers that i view important to warrant the gms β s smooth transformation towards strong growth foundation mentioned above include ( 1 ) infrastructure ( 2 ) in - house technological advancement and ( 3 ) sound financial system. 11. firstly, in order to unlock the long - run potential growth, well - established infrastructure will be one of the crucial pillars that will sow a seed of a healthy investment climate conducive for growth. such that, infrastructure upgrade requires time, yet necessary. investment in logistic areas including increasing road density, better railway system, modernized airports and seaports will all lead to the enhancement of both production and distribution processes whereby strengthening connectivity among members. preeminently, concrete long - term plans on infrastructure projects are vital in order to attract large pool of regional savings to meet investment needs. a set - up of asian infrastructure investment bank or aiib comes at a right juncture to raise potential for infrastructure financing for the whole region. also, governments β clear focus on infrastructure upgrading will facilitate the growing cross - border trading activities. i am glad to see the continued cooperation between thailand and other gms members in linking our rail networks and roads in order to foster trade and investment interconnectedness among us. 12. secondly, despite physical infrastructures in place, lack of innovative ideas to leverage on existing knowledge and technology could undermine the potential of the region. with this bottleneck, the economies may face limitation in sustaining their competitive advantage, which currently rely heavily on the exploitation of natural bis central bankers β speeches endowments and support from the government. in this regard, private sector β s improvement in technology and innovations, in tandem with other infrastructure development, can become a tailwind to support the gms to overcome technology stagnation and provide a competitive edge to the private sector. this should also enhance the intra - regional trade | - number - of - facebook - users / 4 according to international federation of robotics, thailand β s robot sales increased by over 30 percent between 2015 and 2017 and are expected to grow at an annual average of more than 20 percent over the next three years. international federation of robotics. world robotics 2018. 8 / 9 promoting adoption of interoperable e - payment infrastructures within thailand as well as among regional partners in summary, the ability to adapt to new environment along with having macroeconomic stability and diversified growth engines have enabled the thai economy to have the resilience to endure adverse incidents and will safeguard us from impacts from future uncertainties and disruptions. ladies and gentlemen, i have now come to the end of my talk. let me give you a brief summary of what i have said today. the thai economy is expected to continue to expand, though at a slightly slower pace, with domestic demand being the main drivers of growth. the risks and concerns going forward include prolonged trade disputes, slowdown of the chinese economy, geopolitical risks, and transition of the thai political landscape. nevertheless, with the economy possessing three important qualities of resilience, namely macroeconomic stability, diversified growth engines, and ability to adapt, i am confident that the thai economy can withstand various challenges in the years to come. again, it is my great honor to be here this evening with our longtime friends who have supported thailand β s economic and financial development. let me assure you that the bank of thailand will continue to strengthen our economic resilience and stay firmly committed to our principal mandate to support sustainable economic growth while maintaining price and financial stability. thank you. 9 / 9 | 0.5 |
reinforced, further supporting long - term investors. the patience gene thrives, the impatience gene dies. natural selection results in a self - improving cycle, as with dieting, happiness and exercise. but there is a second equilibrium where this cycle operates in reverse gear. with a large fraction of momentum traders, prices deviate persistently from fundamentals. among untested investors, momentum strategies now flourish while long - term fundamentalists fail. the speculative balance of investors rises, increasing the degree of misalignment in prices. the patience gene falls into terminal decline. natural selection results in a self - destructive cycle, as with drug, alcohol and food addiction. for example, mcnamara ( 2004 ). christakis and fowler ( op. cit. ). these self - destructive dynamics would have been familiar to economist, and some - time investor, john maynard keynes. he quipped : β markets can remain irrational for longer than you or i can remain solvent β. in the sketch model, a keynesian dynamic selection process is at work. myopic finance bankrupts the long - sighted. this echoes an earlier evolutionary game in finance β gresham β s law. named after english financier sir thomas gresham in the 16th century, this refers to the tendency for bad money to drive out good. the first paper money example of gresham β s law pre - dated gresham. it came from china during the yuan ( 1271 β 1368 ) period. then, paper money drove out silver coinage. 22 this bad money dynamic has since been replicated across many monetary economies. china also provided the world with its first example of the reverse phenomenon β a selfimproving cycle of good money driving out bad. during the ming ( 1368 β 1644 ) dynasty, paper money was swept away by commodity money. 23 this dynamic has also since been replicated across a number of monetary economies, including dollarizing emerging market economies over recent decades. today, finance faces its own gresham β s dilemma β the patient or impatient path. innovation has, of course, transformed finance over the intervening years. liberalisation has resulted in far greater information and liquidity in financial markets. perhaps these developments have helped good finance drive out bad, nudging money towards the patience path? not necessarily. take information. in an evolutionary game, information is a double - edged sword. it supports the cause of the long - term investor, by allowing them more | economy ; 9 % of wages and salaries in the year to march compared to 4 % of employment. and within london its share is even greater. the average earnings of someone working in london β s financial intermediation sector in 2006 were around Β£90, 000. on that basis, the financial sector might account for around 20 % of remuneration in london. however it is still far from the only game in town. for example the work foundation β s fascinating new report on the creative industries suggests that their growth has contributed at least as much as the city to london β s overall performance. moreover, while the trend is upwards, there is a marked cycle in the financial sector. over the last 10 years, for example there has been a striking swing in employment with rapid growth during the dotcom boom followed by a sharp fall and subsequent recovery ( chart 5 ). the uk is a net exporter of financial services, running a surplus in 2006 of Β£26 billion ( or 2 % of gdp ) on financial services and insurance. north sea oil production peaked in 1999, and in 2006 was nearly 40 % below this peak. that reflects a strong cycle in financial sector profits ( chart 6 ) which is an international phenomenon β indeed, in the last 10 years major european financial firms and us securities dealers saw an even bigger cycle in their profitability than major uk financial firms ( chart 7 ). the same is true for earnings ( chart 8 ). this reflects the importance of bonuses which account for around 20 % of remuneration in the financial sector compared with around 5 % across the economy as a whole. the figures in the city itself can be considerably higher. a figure of 50 % is common in investment banking, in which a rough rule of thumb is that firms distribute about half their pre bonus profits to staff. it is estimated that 4200 workers in the city received bonuses worth more than Β£1million in 2006 / 07. of course the growth in those bonuses is contributing to the widening inequality of incomes at the top of the earnings distribution. chart 9 compares the 90th, 95th, and 99th percentile with the median and shows that the main change is at the top. if we break that top percentile down further, we see a more dramatic widening. this is not just true of the city or of the uk. the average ceo in the uk earns around 100 times more than the average worker but there is an even wider gap in the us, with the average pay | 0.5 |
the reduction of exposure, i will bring an example from albania. last year, the largest eu - based bank operating in our country decided to contribute to meeting the group β s required capitalization levels through reducing its exposure to the albanian government securities by almost 3 % of the gdp, within a very short period of time. apparently, a more coordinated approach to implementing these requirements, implying the presence of non - eu host countries at an early stage of macroprudential decision making at the eu level, would contribute to a less painful absorption of the subsequent effects in our countries β financial systems. to address the pressing issues facing home and host country relations in this context, the vienna initiative was relaunched as β the vienna initiative ii β. it focuses on fostering homehost authority coordination to support stable cross - border banking, and help protect the economy from disorderly deleveraging. as a member of the steering committee of the vienna initiative ii, i have underlined the need for a more effective home - host coordination, promoting albania β s position as a host country. given the geographical proximity and high exposure to recent developments in the eu bis central bankers β speeches financial markets, i am confident that our countries would significantly benefit from developing a regional perspective on risks and opportunities arising from such developments, and major supervisory reforms at the regional level. in this context, albania β s membership in the steering committee of the vienna initiative, and the working group on banking union and emerging europe is a solid foundation to build upon and synthesize the common concerns of our countries vis - a - vis eu authorities. allow me now to summarize the insofar position of the bank of albania, articulated in the framework of the vienna initiative ii, and propose a number of discussion topics, which i am confident will lead to a fruitful exchange of views today. the bank of albania has called for effective mechanisms to restore healthy lending to the economies of non - eu countries, where systemic subsidiaries of eu banking groups operate. in this context, eu authorities and eu banking groups should provide their active contribution. this is not merely a short - term objective, but rather an important anchor for the region β s economic recovery with significant effects on both the economies of the region and the banking groups, which have declared their commitment to our region. we are currently witnessing a period of massive reforms in the eu supervisory architecture, with the establishment of the banking union. these reforms correspond to the reactivation of the vienna initiative ii, hence | ##80bn in notes and coins β effectively claims on the bank of england ( banknotes ) and the crown ( coins ). there is another Β£470bn of state issued money, but it is not in general circulation ; it comprises the deposits that private banks hold in their ( electronic ) accounts at the bank of england β the claims on the bank of england that banks exchange to settle transactions with each other. for instance, before the arrival of the spanish colonist, the incan economy functioned without a formal form of money. instead, incans were required to work a number of days per year on public projects and in return the state provided them with all they required in terms of food and materials, leading to little to no trade within the domestic economy. ancient mesopotamia did not have a circulating currency as its means of payment - coinage only appeared around 2000 years later. instead these civilisations had a system of ledgerbased accounts of mutual debits and credits, typically denominated in terms of agricultural commodities. only the bank of england issues banknotes in england and wales, but seven commercial banks in scotland and northern ireland can also issue banknotes, the total value of these notes in circulation is Β£7bn. the seven banks must, by law, set aside assets that are worth at least the value of all of the banknotes they have in circulation. this ensures that people with genuine banknotes issued by the seven banks receive a level of protection similar to people who have genuine bank of england banknotes. all speeches are available online at www. bankofengland. co. uk / speeches the remaining 97 % of the money held and used by the public takes the form not of notes and coin but of claims on the private banks in which we all store our money in payment accounts. when we use a plastic card, a cheque, a bank transfer β as we do for over 95 % of the Β£7Β½tn of transactions by value every year in the economy β we are exchanging our claims on our banks. this is sometimes called β private β money as opposed to β public β or state issued money. that is in my view a rather misleading description, for two reasons. the first is that these claims are denominated in sterling, the β unit of account β in the uk, the common measuring stick of economic value that we all accept, that is governed by the bank of england under the authority of parliament. the bank β s monetary policy committee is | 0 |
jon cunliffe : financial stability, the single market and capital markets union speech by sir jon cunliffe, deputy governor for financial stability of the bank of england, at the city of london corporation and open europe conference, london, 20 january 2015. * * * the treaty of rome, signed in 1957, established the basic four freedoms of what has now become the european union β freedom of goods, services, people and capital. i want to talk a little today about the last of these and about the development of the single market in financial services β its history, how it has dealt with the twin objectives of stability and openness and its future development, particularly the capital markets union. the freedom of capital movement agreed in 1957 was for many years only an aspiration. in that post war world, free movement of capital must have seemed a dream. to many, with not so distant memories of the inter war years, of the collapse of an earlier period of financial globalisation and with continuous strain on the balance of payments, it might have seemed a bad dream. the risks to economic and financial stability may well have seemed too great to allow open capital markets. open capital markets have, through history tossed and turned between being seen as an opportunity for additional trade and growth, and a potentially destabilising force. the path to open capital markets in europe was slow β as it was in the rest of the world. it was not fully completed until the maastricht treaty of 1992 when free movement of capital became a directly applicable treaty right. and throughout this process, in recognition of the potentially destablising effect, safeguards were included to allow member states to defend their stability, including in relation to prudential supervision. the real push for free movement of capital came in the mid 80 β s when european growth was sluggish, especially compared to the us and japan. there was a search for policies to generate economic dynamism, which led to the birth of the single market. but, of course, until capital could flow freely between member states it was not really possible to have a single market in financial services or, in the financial sector, to give effect to that other founding freedom β the freedom to provide services across the eu. the liberalisation of capital markets in the eu was rooted in two beliefs. first and foremost that open capital markets, cross border investment and cross border financial services would create a more efficient allocation of capital through better intermediation | five in prudential regulation authority ( 2020 ), consultation paper 9 / 20 : non - systemic uk banks : the prudential regulation authority β s approach to new and growing banks β https : / / www. bankofengland. co. uk / prudential - regulation / publication / 2020 / new - and - growing - banks see https : / / www. gov. uk / government / publications / ring - fencing - information / ring - fencing - information under the financial services and markets act 2000 ( as amended ), the pra has two primary objectives : i ) a general objective, to promote the safety and soundness of the firms we regulate ; and ii ) an objective specific to our regulation of insurers, to contribute to the securing of an appropriate degree of protection for those who are or may become policyholders. the pra β s secondary objective is to act, so far as is reasonably possible, in a way that facilitates effective competition in the markets for services provided by the firms we regulate when they carry on regulated activities. see prudential regulation authority ( 2018 ), the pra β s approach to banking supervision, ( october ) see https : / / www. bankofengland. co. uk / prudential - regulation / new - bank - start - up - unit. the approach to setting up a new bank has been broken down into different stages to help lower the barriers to entry. this includes early engagement with the regulator in the β preapplication stage β and a β mobilisation β stage where a bank authorised with restrictions is subject to less onerous requirements than a mature bank, allowing it time to secure further investment and build its capabilities before it becomes a fully functioning bank. all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice the year to end march 2020 alone. 5 there remains healthy interest in becoming a bank too, including more than 20 potential uk start up banks in the pipeline. and last year 10 % of new lending by banks to businesses was attributable to the non β big six banks, compared to just 4 % on average in the period 2012 - 2018. that β s quite a shift in a relatively short space of time. but as our deputy governor for prudential regulation sam woods set out last year, although we have been pretty successful in encouraging new entrants, it is so far | 0.5 |
the price of safe assets at a time when the supply of those assets has been shrinking, thereby compressing real yields. factors such as a decline in the relative price of capital goods have also led to a fall in desired investment. and this has been exacerbated by the third factor : the debt overhang in the public and private sectors bequeathed by the financial crisis. this has further raised saving β as all sectors deleverage β and depressed investment and consumption. as a consequence, the natural rate of interest β which is the real interest rate that balances desired saving and planned investment, at a level consistent with output being at potential and stable prices β has fallen over time, to very low or even negative levels. and whatever the drivers behind this, central banks have to take it into account and cut their policy rates to commensurately lower levels. indeed, the way standard monetary policy works is to steer real short - term interest rates so that they β shadow β the natural rate, which keeps the economy in balance and prices stable. when inflation is below our objective and there is a negative output gap, monetary policy has to bring real rates below the natural rate to provide enough demand support. and when inflation is above our objective and the output gap is positive, the reverse is true. if central banks did not act in this way β that is, if they did not lower short - term rates in tandem with the natural rate β market rates would be too high relative to the real returns in the economy, and investing would become unattractive. the economy would therefore be pushed away from full capacity and price stability. by contrast, by holding market rates below the real rate of return, we encourage the investment and consumption that is needed to bring the economy back to potential. there are of course limits to how far central banks can shadow a falling natural rate with policy interest rates, since there is a lower bound for interest rates set by the existence of cash. but even when monetary policy approaches this point, central banks can still stimulate the economy through the same mechanism. this is because we can still influence the whole constellation of market interest rates and asset prices in the economy that determine real investment and consumption decisions. through forward guidance we can flatten the risk - free curve. through asset purchases we can compress additional risk premia, both directly in the markets where we intervene and indirectly through portfolio rebalancing. and through long - term loans to banks we can bring down bank lending rates | have to step up its level of support. a policy of preserving favourable financing conditions includes a second element. to ultimately empower fiscal policy as a transmission channel of monetary policy, the ecb needs to provide liquidity when risks of self - fulfilling price spirals threaten to undermine stability in the euro area as a whole. as was the case during the pandemic, this may require temporary flexibility in the use of instruments. being clear about this upfront reduces the emergence of destabilising dynamics in the first place and minimises the extent of interventions when they are needed. in such situations, risks of moral hazard should not condemn the central bank to a course of inaction. these risks should be governed by other institutions outside crisis times. the lesson for fiscal policy is that, in lower bound episodes, it has to become more responsive to downturns. this requires fiscal tools that are specifically designed to provide macroeconomic stabilisation, ideally at the euro area level, but at least at the national level. put simply, unconventional monetary policy needs to be complemented by unconventional fiscal policy. the concept of unconventional fiscal policy is not yet well established. [ 12 ] a simple google search, for example, returns more than 700, 000 results for unconventional monetary policy but only about 8, 000 entries for unconventional fiscal policy. in essence, unconventional fiscal policy comprises measures that go beyond traditional automatic stabilisers, which tend to be too small to offset the effects of an adverse demand shock at the lower bound. these unconventional measures are only activated when the economy heads into a deep recession. in the united states, for example, the length of unemployment benefits automatically increases as soon as the unemployment rate exceeds a certain threshold. the use of job furlough schemes in large parts of the euro area in response to the pandemic is another powerful example of how unconventional fiscal policies can stabilise household incomes to avoid risks of long - term scarring. similarly, theoretical and empirical evidence suggests that budget - neutral policies that work through the revenue side β for example, by engineering a specific path for consumption and labour taxes over time β can effectively support the efforts by central banks to boost inflation expectations and consumer spending at the lower bound. creating a framework for effective stabilisation in the euro area refocusing stabilisation along these lines requires an institutional framework that reliably creates space for fiscal policy in good times and allows this space to be used in bad times to provide a policy mix that | 0.5 |
. this exercise will include three components. the first is a supervisory risk assessment addressing key risks in the banks β balance sheets, including liquidity, leverage and funding. the second is the asset quality review that will assess credit exposures, on - and off - balance sheet positions and domestic / non - domestic exposures. the third component is the stress test that will build on and complement the asset quality review by providing a forward - looking view of banks β shock - absorption capacity under stress. this process has already started. after a pilot phase during which the ecb called for β and subsequently integrated β feedback from the banks, the ecb recently sent out the templates for data collection. in this context, let me also touch upon the treatment of sovereign credit risk in the comprehensive assessment. in line with the current legal situation in crdiv / crr the pointin - time balance sheet assessment will apply a β zero risk β weighting for banks β sovereign debt holdings. however, in the medium term it makes sense from a prudential point of view that assets are being weighted according to their riskiness and not according to conventions which might not reflect reality. this should however be done in a coordinated fashion at international level by the relevant competent forum, the basel committee for banking supervision, which has acknowledged this common sense principle but allowed for exceptions at the local level, which were exercised in the eu. the second issue that i wanted to bring up in the context of the establishment of the ssm is the separation of monetary policy and supervision. starting next autumn, both monetary policy and banking supervision in the euro area will fall within the remit of the ecb. this situation brings several possible conflicts of interest between supervision and monetary policy. the discussion on these possible conflicts is sometimes somewhat blurred. therefore, let me be clear on what these possible conflicts may entail : first, a banking supervisor may have an incentive to delay or avert an interest rate decision of the central bank in order to disguise interest rate risks on banks β balance sheets or to prevent those risks from materialising. second, the banking supervisor may want to send an unviable bank into resolution which has large amounts of outstanding central bank borrowings. in this situation, the central bank may have an incentive to delay or object to the resolution of this bank to avoid a default on the outstanding monetary policy operations. of course, all eurosystem credit operations are collateralised but the resolution of collateral can be a lengthy process and | contain the virus become available. two alternative scenarios serve as an illustration of the wide range around the baseline scenario. the mild scenario assumes that the virus is successfully contained in the post - lockdown transition period and there is no resurgence in infections. thus, the economy recovers gradually towards normal levels of activity. in contrast, the virus makes a strong resurgence under the severe scenario and strict lockdown measures are therefore extended. these are assumed to be more damaging to economic activity than under the baseline scenario with lower real gdp growth and more subdued inflation. it is worth noting that the effect of the pandemic on inflation 1 / 6 bis central bankers'speeches dynamics is ambiguous due to competing effects, which could cause inflation to increase or decrease. the downturn in the economy will result in substantial economic slack, which would tend to weaken inflation dynamics. but the pandemic has also caused supply chains to be constrained and this may continue, which would tend to drive prices up. overall, it is likely that that the substantial economic slack will dominate and result in weak inflation dynamics over the medium - term. ( figure 4 : eurosystem staff macroeconomic projections β scenarios ) in general, the eurosystem baseline projections for growth are below those of other forecasters2 with the exception of the oecd forecasts that were published on wednesday. all forecasters acknowledge the prevailing very high levels of uncertainty. the oecd produces two scenarios. in their β single - hit β scenario, the current containment measures are assumed to be largely successful in containing the outbreak allowing a gradual recovery in growth and employment over the remainder of this year and in 2021. in the β double - hit β scenario, there is a second peak of infections in the autumn. the level of gdp in 2021 in the ecb baseline scenario is roughly the same as the oecd β s β single - hit β scenario. * * * the june monetary policy decision this provided the context to last week β s meeting where i joined my colleagues on the governing council of the ecb for one of our regular meetings where we set monetary policy for the euro area. we took a number of decisions to ensure that the stance is appropriate to achieve our price stability objective over the medium - term. these decisions reflect the unprecedented downturn in the economy and the deterioration in the outlook for growth and inflation. the monetary policy stance must maintain favourable financing conditions for all sectors of the economy and across countries. firm demand for credit is particularly strong now given | 0 |
will be slightly more unutilised resources in the swedish economy in the coming years than we had previously assumed. our forecast of resource utilisation in sweden has also been affected by the revisions statistics sweden recently made to the national accounts. these indicate that productivity growth in the economy was higher than estimated during the greater part of the 1990s. this in turn indicates that the economy's long - term potential growth rate may be slightly higher. to summarise, i can conclude that the pictures of economic activity in sweden and in the rest of the world are similar to the extent that there appear to be some unutilised resources and that growth will not exceed its long - term potential over the coming years. developments are currently being restrained by the unease over iraq. there is also still great uncertainty regarding the size of the adaptations that remain after the earlier rises in share prices and other asset prices. some figures indicate that most of the adjustments have now been made, but the picture is not unambiguous. nevertheless, a recovery is under way, after what must be regarded in many areas, and particularly in sweden, as a fairly mild slowdown. our forecasts indicate an average gdp growth over the coming years in line with the economy's long - term sustainable rate and resource utilisation is expected to remain largely unchanged over this period. this means that economic activity and the labour market are not expected to put any great pressure on prices and wages at present or in the coming years. there is, of course, a risk that developments will follow completely different paths than those we anticipate in our main scenario. this could in turn entail both upside and downside risks for inflation. the downside risk that concerns us most is connected to international developments. there are problems in the euro area in particular that could lead to a weaker development. the upside risks are mainly linked to domestic price - setting and wage formation. the rise in energy prices pushes up costs in other parts of the economy and can spread. it could also affect expectations and wage demands. we are facing collective wage bargaining rounds in the autumn, which will play a decisive role for the future of the economy. all in all, we have come to the assessment that the risk spectrum is neutral ; we see equally large risks for a lower inflation path than in our main scenario as for a higher path. repo rate lowered 0. 25 percentage points the riksbank's total assessment is that inflation measured at the rate | ##cies and corporate scandals in the usa. gradually, unease increased because of security policy developments. the financial unease gradually infected the real economy ; confidence among companies and consumers began to fall in several countries over the summer and it became increasingly clear that total demand had been negatively affected. this contributed to enabling the riksbank to lower the repo rate twice during the autumn, measures that were in my assessment quite fitting under the circumstances. what we can observe today, compared with one year ago, is that the questions baffling forecasters are roughly the same and that they are dominated by the question of how far the adaptation process following from the stock market bubble has come. today an additional factor making assessments more difficult is the threat of war in the middle east. we do not know whether there will be a war or how it will all end. the crisis also creates uncertainty that makes it difficult to correctly interpret economic signals. in addition, the more prolonged the crisis is, the greater the risk that the actual uncertainty will have a negative effect on the real economy. i shall now turn towards the future and discuss developments over the coming 1 - 2 years. right conditions for a recovery in the usa β¦ one difference now compared with the situation one year ago is that the adaptation of the imbalances in the us economy has probably progressed further. consolidation of balance sheets has continued, productivity is strong and normal business activity patterns indicate that the conditions should be relatively favourable for an increase in industrial production during the spring. low stocks levels in relation to sales and an investment ratio that is below the long - term trend would indicate this is the case. an expansionary economic policy provides further support for the optimism. however, the question most people are asking themselves now, as they were in 2002, is whether the adaptation to the imbalances has reached a sufficient stage to enable a broad, lasting increase in demand that can take over as the driving force behind a production increase. it is much too early to be able to give a clear answer here. if we look at households in the usa, we can see that they have become more passive since the december inflation report was published. the explanation could be the security policy unease and the still weak stock markets. continuing high oil prices will also cut into disposable incomes. however, the expansionary economic policy should partly counteract these effects. all in all, i believe that the picture of a relatively prolonged recovery in the usa, where growth gradually increases over the year and | 0.5 |
, crunches and busts? β, economic policy, vol. 24, 2009 ; a. abiad, g. dell β ariccia and b. li, β creditless recoveries β, imf working paper 11 / 58, 2011. the current situation in credit markets is well documented in economic analysis, whereby the high risk of default and the difficulty of assessing the solidity of borrowers leads to adverse selection and increases intermediaries β risk aversion, giving rise to credit rationing. see j. stiglitz, and a. weiss, β credit rationing in markets with imperfect information β ( 1981 ), the american economic review. oecd, financing smes and entrepreneurs : an oecd scoreboard, oecd publishing ( 2013 ). conducted on a sample of manufacturing firms that benefited from the fund β s intervention between 2005 and 2010. bis central bankers β speeches over the coming months the fund β s activities may benefit from the changes introduced under law 98 / 2013 and the 2014 stability law. however, these must be implemented rapidly : some of the changes, in particular those designed to facilitate the granting of guarantees to firms whose balance sheets have been weakened by the recession, are still awaiting implementing decrees. moreover, the prospect that a portion of the funds assigned by the stability law could be channelled to other areas of activity and for purposes other than supporting firms, risks dissipating the fund β s resources and eroding its effectiveness. finally, to stimulate the supply of loans there is a need to introduce mechanisms that reward banks with the highest rates of increase in total lending. further interventions to support credit have been made by the public sector through the cassa depositi e prestiti. 14 in the private sector, the moratoriums agreed between the italian banking association and firms β associations have enabled many smes to weather difficult times. but to get the credit channel working again, banks must first and foremost commit to taking full account of their customers β growth potential. the pressure on banks to deleverage and, in the years leading up to the crisis, the growing importance of types of financing that can be sold on the market may have impaired the ability and incentives for banks to analyze the prospects of the various business sectors and carefully assess borrowers β creditworthiness. this negative trend must be halted, by intensifying efforts to examine the characteristics of firms, and of smaller firms in particular. banks must be aware of | payments, and demand from rental car companies. at the same time, the supply of vehicles has been held back by earlier production cutbacks and shortages of semiconductor chips. this imbalance in supply and demand has caused used car prices to soar. looking forward, supply will slowly come back online, and i therefore expect car prices to stabilize and then decline over time to more normal levels. 2 / 3 bis central bankers'speeches we have already seen this type of dynamic play out in some sectors. the latest data show growth in wholesale used car prices slowing in the first half of june. 4 and lumber prices, which soared during the pandemic as housing demand surged and supply struggled to keep up, have declined sharply in recent weeks. i expect that as price reversals and short - run imbalances from the economy reopening play out, inflation will come down from around 3 percent this year to close to 2 percent next year and in 2023. it goes without saying that there is a great deal of uncertainty about the inflation outlook, and i will be watching the data closely. the fed β s policy response it β s clear that the economy is improving at a rapid rate, and the medium - term outlook is very good. but the data and conditions have not progressed enough for the fomc to shift its monetary policy stance of strong support for the economic recovery. specifically, the fomc decided last week to maintain the target range for the federal funds rate at zero to ΒΌ percent and made no changes to its program of asset purchases. in thinking about adjusting its stance in the future, the fomc has defined conditions and measures that will inform its decision - making. in terms of the federal funds rate, the fomc said it expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the fomc β s assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time. the fomc also said it will maintain its current asset purchase pace until substantial further progress has been made toward its employment and inflation goals. 5 conclusion i hope you remember the β things we said today, β but if not, here β s my final message. the sun is shining, both literally and figuratively. progress on vaccinations and the economy is very welcome news, and i look forward to a full and complete recovery, accompanied by inflation that averages 2 percent over time. | 0 |
percentage points ( ppts ) above the high end of the inflation target range of 2. 0 percent to 4. 0 percent for the year. nonetheless, as projected, inflation has gone down significantly, falling toward the midpoint ( at 3. 0 percent in april 2019 ) of the target band in the latest inflation print. this is not surprising given that the price pressures in 2018 were driven by cost - push factors. with the abatement of supplyside pressures, inflation has also started falling within target. the contribution of food inflation ( represented by the yellow bar ) to overall inflation has dropped markedly especially with rice prices easing in recent months brought about by the continued arrival of imports and the onset of the summer harvest season. looking ahead, we expect inflation to remain on a target - consistent path for 2019 and 2020. the latest baseline forecasts ( as of 9 may 2019 mb policy meeting ) indicate that inflation is projected to average at 2. 9 percent for 2019 while inflation forecast for 2020 is slightly higher at 3. 1 percent 1 / 4 bis central bankers'speeches due largely to the rebound in crude oil prices. meanwhile, risks to the inflation outlook remain broadly balanced for 2019 amid risks of a prolonged el nino episode and higher - than - expected increases in global oil prices. for 2020, the risks continue to lean toward the downside as weaker global economic activity could temper commodity price pressures. similarly, forecasts of other institutions generally convey the same expectations. results of the bsp β s april 2019 survey of private sector economists showed lower mean inflation forecast for 2019 at 3. 1 percent from 3. 3 percent in the previous survey round. the mean inflation forecasts for 2020 and 2021 both declined to 3. 3 percent from 3. 4 percent. meanwhile, projections from other institutions also show inflation within target for this year and the next. analysts expect inflation to continue easing and settle within the government β s target range. however, possible upward pressures are seen to keep inflation from further decelerating. ( upside risks to inflation ) : potential rebound in global crude oil prices, adverse weather conditions such as el nino, higher electricity rates, reduction in the bsp β s policy interest rate, and higher domestic demand due to the upcoming midterm elections and school enrollment ( downside risks to inflation ) : the lower inflation prints, implementation of non - monetary policy actions to increase domestic food supply and stabilize prices such as the rice tariffication law and the mitigating measures put in place by the | the view that the prospects for domestic demand remain firm, to be supported by a projected recovery in household spending and the continued implementation of the government β s infrastructure program. in addition, the mb observed that the global economic growth momentum has slowed down in 2019. meanwhile, indications of slower growth in domestic liquidity and credit require careful monitoring. at the same time, the mb also noted that the risks to the inflation outlook remain broadly balanced for 2019 amid risks of a prolonged el nino episode and higher - than - expected increases in global oil prices. for 2020, the risks continue to lean toward the downside as weaker global economic activity could temper commodity price pressures. looking ahead, the bsp will continue to monitor developments affecting the inflation outlook to ensure that the monetary policy stance remains consistent with its price stability objective. on the other hand, the passage of republic act no. 11211, or an act amending republic act no. 7653, known as the β new central bank act β ( signed on 14 february 2019 ) is a significant milestone for the bsp. our three pillars of central banking, that of price stability, financial stability, and an efficient payments and settlements system, were further strengthened with the expansion of the bsp β s policy toolkit. the law restored the central bank β s authority to issue its own debt papers as part of its regular monetary operations, establishes a stronger prudential regulatory framework to promote a safe and sound financial system through the expansion of supervisory coverage, and authority to prescribe metrics attuned to international standards and practices. the amendment likewise empowers further the bsp to oversee the country β s payment and settlement systems ( pss ), including critical financial market infrastructures that are vital components of the pss. additional notes : the amended bsp charter restores the central bank β s authority to obtain data from any person or entity from the private and public sectors for statistical and policy development purposes in line with the pursuit of our triad mandates. the law authorizes the increase in the capitalization of the bsp from php 50 billion to php 200 billion, which shall be sourced from dividends declared by the bsp in favor of the national government. under the amended charter, the bsp is also exempt from paying taxes on income derived from its governmental functions. these reforms place the bsp on a stronger position to pursue its mandate amidst a growing economy and the increasing sophistication of the financial system. looking ahead, we will continue | 1 |
reducing the industry's dependency on conventional reinsurance support. more importantly, the licensing of new retakaful operators in malaysia will also ensure that the technical knowledge is made more readily available and enhanced in the market, particularly in takaful and retakaful underwriting, as well as in promoting product development and innovation. under this initiative, qualified applicants will be allowed to conduct in both the malaysia ringgit and international currencies retakaful business under the takaful act 1984. flexibility is accorded to the retakaful operators to conduct its retakaful business in malaysia by way of an incorporated entity or a branch. foreign applicant is also welcome d to conduct retakaful business in malaysia through a joint - venture with malaysian companies, subject to the merits of each case. it is anticipated that this measure would serve as a catalyst in our efforts for malaysia to become the centre for takaful and retakaful business through the establishment of a significant number of strong and reputable retakaful operators. ladies and gentlemen, let me conclude by saying that the future prospects of the takaful industry will be very much depend on the combined efforts of all the relevant parties ; the regulators, market participants and the international community at large, to chart the strategic direction for the industry. collective effort is crucial in order to maximize the potential for the industry. sharing common vision and goal will be an important first step. i believe that our sincere efforts in realizing this noble objective would insyaallah, god almighty will shower us with his blessings, guidance and assistance. on that note, i wish you a successful and productive convention. wabillahi taufik walhidayah. assalamualaikum warah matullah hi wabarakatuh. | financial institutions. this was extended to include non - financial institutions between 2003 and 2010, to more effectively address money laundering risks that fall outside of the financial sector. the malaysian aml / cft regime is characterised by four pillars : a comprehensive legal framework, implementation of preventive measures, effective enforcement of laws and regulations and close cooperation between agencies, both domestically and internationally. in 2015, the third report on malaysia β s aml / cft framework was published by the financial action task force ( or the fatf ), arising from an independent assessment of malaysia β s compliance with the international standards on combating money laundering and the financing of terrorism and proliferation. the report acknowledged malaysia β s β high degree β of technical compliance and a β substantial to moderate β level of effectiveness in the implementation of international standards. as a result, malaysia was accorded full fatf membership status in 2016, which not only demonstrates a strong commitment to combat money laundering and financing of terrorism, but also reflects a safe business environment in malaysia. 1 / 3 bis central bankers'speeches importantly, this recognition enables malaysia to better participate in the international financial system without qualifications and sanctions, enabling our business and economy to transact and exchange freely with the rest of the world. such a recognition is priceless for an open and trading economy like ours. maintaining the integrity of the financial system and safeguarding legitimate business activities is thus paramount in ensuring that this recognition is preserved and that we have a thriving and conducive business environment. preventing and combating financial crime is a shared responsibility of all stakeholders. hence, it is imperative that all dnfbp sectors including legal professionals play an important complementary role to financial institutions in safeguarding this by preventing the proceeds from unlawful activities and funding of terrorism from penetrating into our financial system, while facilitating investigations and prosecution of these financial crimes. the legal fraternity also plays a crucial role in the public sphere as an instrumental component in the administration of justice as well as in upholding the rule of law. in many financial transactions or exchanges, the legal fraternity also acts as a gatekeeper, or intermediary arising from their position of trust. in doing so, the legal professionals are thus well positioned to detect or identify and prevent the conduct of illegal activities, which involve such financial transactions that the profession is mediating. the resultant impact of a lawyer β s inappropriate conduct when dealing with a client, if left unchecked, may pose reputational risks and loss of confidence, not only to | 0.5 |
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