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the impacts of factors affecting the medium - term inflation outlook have balanced each other out, and consequently there has not been a significant revision in the forecasts. i think comparison of the forecasts by the ones in the previous report period would help us to better understand the changes in forecasts. as i have mentioned earlier, considering a relatively stronger recovery in the domestic demand outlook and the second quarter gdp data, our output gap estimates have been revised upwards as of the second quarter of 2010 ( figure 29 ). the impact of the upward revision in the output gap was largely offset by the downward revision in the underlying inflation trend. consequently, there has not been a significant change in medium - term inflation forecasts and the monetary policy outlook compared to the previous report ( figure 30 ). in sum, assuming that policy rates would stay constant for sometime and remain at low levels for a long period, our revised forecasts suggest that aggregate demand conditions would continue to support disinflation for a while. under current conditions, inflation is expected to follow a marked downward trend over the next two quarters and decline to levels consistent with medium - term targets as of mid - 2011, as the adverse impact of the temporary price movements taper off. considering that the increases in unprocessed food and tobacco prices β which are beyond the control of monetary policy account for 5 percentage points of current annual inflation, it is clear that there is sizeable room for disinflation from this channel ( figure 31 ). factors that are beyond the control of monetary policy, such as fluctuations in unprocessed food prices and tax adjustments related to tobacco products, created significant forecast uncertainty by increasing the volatility of consumer inflation. this, in turn, has created a challenge for us to understand the underlying inflation correctly and to manage expectations. in this context, i believe that it would be useful in terms of transparency and predictability, to share with the public the assumptions we make relating to the said groups while making forecasts and our inflation expectations excluding these groups. accordingly, we assume that annual inflation in unprocessed food products will be 17 percent for end - 2010 and 9 percent for the following two years. meanwhile, the annual rate of increase in the tobacco and alcoholic beverages group index is expected to be 24 percent at end - 2010 and to hover around levels consistent with inflation targets in subsequent years. within this scope, we expect the inflation indicator excluding unprocessed food and tobacco and alcoholic beverages to follow | taking place. therefore, the restructuring program for the financial sector was launched with the goal of eliminating the distortions in the financial sector, improving its intermediary function and thus enhancing its competitiveness by international standards. banking regulation and supervision agency has become operational as a separate body to improve the banking supervision. the banks act was amended to bring the supervision standards in line with the eu directives and international best practices. moreover, the central bank law has been amended and instrumental independence of the central bank was provided and the primary goal of the bank was determined to be maintaining the price stability. to support this main goal, the bank was assigned with the duty of maintaining financial stability, and within this context, the central bank continued to assess the main risks and vulnerabilities of the financial system and to develop alternative policies against these risks by monitoring the financial system as a whole. in the last couple of years, turkey has shown a remarkable progress considering the soundness of the economy and the financial system. today, we have a stronger banking sector, which forms the basis of macroeconomic stability, as well. of course, considering the dynamic nature of the economies, the conditions do not always stay as what they are especially due to the increasingly interlinked global financial markets. in may - june 2006, international developments such as the deterioration in global liquidity conditions and the decrease in risk appetites of foreign investors towards developing countries, and the uncertainty occurring after it, adversely affected developing countries, including turkey. however, tight monetary and fiscal policies of the current economic program, on - going structural reforms and flexible exchange rate regime have increased the resilience of the system to shocks. additionally, the strengthened legal infrastructure and the improved risk culture in the banking sector have alleviated the adverse effects of may - june fluctuations. i believe nobody in this room would deny the fact that today almost all financial developments will have implications for all decision makers around the world - ranging from investors to policy makers. when a decision is made by the fed, ecb, bank of japan or china, it is a concern for most countries. i am sure you will all agree with me when i say, in today β s integrated markets when any country catches a cold there will be many others sneezing. in such an environment we are now increasingly aware of contagion risk. financial security and financial stability β¦ within this framework, i would like to emphasize the close linkage between financial security and financial stability. in my | 0.5 |
the bank of japan β s april report of recent economic and financial developments bank of japan communication, 13 / 4 / 98. japan β s economy remains stagnant reflecting weak domestic demand, such as household expenditures. in addition, corporate sentiment has been deteriorating across industries, indicating strong downward pressures on economic activities. with respect to final demand, growth in net exports, which had been underpinning the economy, has slowed and business fixed investment seems to have started declining. private consumption has continued to stagnate despite the implementation of the special tax - cut measures. housing investment has also continued to be weak and public - sector investment is on a decreasing trend. against the background of significant accumulation of inventories reflecting weak final demand, industrial production has continued to decline. consequently, negative impacts on corporate profits as well as on employment and income conditions have been intensifying, and are leading to a further deterioration of domestic demand. as regards the outlook for the economy, growth in net exports is unlikely to be strong enough to prevent the deterioration of the economy, partly reflecting further adjustments in other asian economies. business fixed investment will continue to decrease due mainly to the decline in corporate profits and is likely to enter an adjustment phase. with regard to private consumption, distinctive recovery can not be expected against the background of the weakening of income formation, although consumer confidence may cease to wane. downward pressures on economic activities, particularly on production, are likely to continue to be strong for the time being, because the level of inventories is high and a conspicuous recovery in domestic private demand is unlikely. however, following the implementation of measures to stabilize the financial system and the special tax - cut measures, additional economic stimulus package is now being discussed. the details of the package and their effects on corporate and household confidence should be carefully monitored. with regard to prices, wholesale prices have continued to decline reflecting weak supply and demand conditions of goods in domestic and overseas markets. the year - to - year increase in consumer prices ( excluding the effects of institutional changes such as the rise in the consumption tax rate ) has been declining close to zero. as for the future, prices overall are likely to soften reflecting the continuous expansion of the output gap in the domestic economy and the decline in overseas commodity prices. these price developments, which might have further negative impacts on corporate activities, may require close monitoring. financial markets have shown the following developments. in the money markets, interest rates on term instruments and the so - called β japan premium β | declined substantially from the end of february through the middle of march and have generally remained steady thereafter. this reflects the bank of japan β s ample provision of funds through contracts that mature after the fiscal year - end as well as the progress in implementing the financial - system stabilization measures. it should be noted, however, that the levels of the above rates and premium are still high compared with those prevailing before autumn 1997, which can be attributed to the continuing cautious attitudes of market participants toward credit risk. meanwhile, with the releases of weak economic indicators, long - term government bond yields have fluctuated in a historically low range and stock prices have been declining since the end of march. with respect to monetary aggregates, the growth in money stock continued to be rather high in february due to the substantial shift of funds away from investment trusts. meanwhile, private bank lending remains sluggish. however, with an increase in corporate financing via the capital market, a substantial fall in overall corporate fund - raising seems to have been avoided. banks remain cautious in extending loans with a view to improving their mediumterm profitability and financial soundness. fund - raising costs of firms continued to be high according to their credit standing. in such circumstances, some firms, especially small and medium - sized firms, have been facing difficult financing conditions and this effect on the economy continues to warrant a careful monitoring. | 1 |
banking innovations. in february this year, the bsp issued circular 1033 to streamline the licensing requirements of our supervised institutions intending to offer electronic payment and financial services ( efps ). these initiatives, together with the passage of the national payment systems act ( npsa, ra 11127 ) that grants the bsp with regulatory oversight over payment systems, will significantly advance our digitization agenda. but in order for these developments and initiatives to be relevant, there needs to be a systematic collection and dissemination of relevant data, one that would inform policymaking and lead to a better, deeper understanding of the msme market. with this in mind, we have embarked on two initiatives designed to bridge the information gap β the national demand side survey on msme finance and the strategic partnership with the department of trade and industry ( dti ), microfinance council of the philippines, inc. ( mcpi ), and alliance of philippine partners for enterprise development, inc. ( append ) to expand the negosyo center financing ecosystem. the national demand side survey on msme finance, which is currently under development, will enable us to address the need for comprehensive data on the msme sector and formulate responsive policies and programs. meanwhile, an essential component of the negosyo center partnership is the creation of an information database on negosyo centers and microfinance institutions ( mfis ) nationwide. this database will enable negosyo centers to refer clients to various financing options and help microfinance institutions design products and services appropriate to clients β needs. finally, let me say this again. financial inclusion is a necessary condition for a sustainable 4 / 5 bis central bankers'speeches economy. to realize this vision means pursuing change and reform however difficult they may be. the bsp β s enduring financial inclusion journey attests to this. we craft our policies not only for the present, but also with the future in mind. i am optimistic that the various financial inclusion initiatives of the bsp that i discussed this morning will help improve access of msme exporters to financial services, and consequently enhance our country β s export competitiveness. with these thoughts, let me say that the best for all of us is yet to come. maraming salamat po. 5 / 5 bis central bankers'speeches | system, robust external payments position, and a manageable fiscal deficit. the philippine economy has the essential elements to post a strong recovery this year. moving forward, the bsp β s actions and policy thrust will continue to be anchored on its core mandates of promoting price and financial stability. 1 / 2 bis central bankers'speeches the bsp will remain vigilant over the current inflation dynamics and operating environment with a forward - looking perspective to ensure that the monetary policy stance supports economic recovery and addresses any risks to our price stability mandate. it addition, bsp will intensify its monitoring and surveillance over its supervised institutions to ensure that they remain responsive to emerging risks and to promote the continued soundness, stability, resilience, and inclusivity of the banking system. lastly, the bsp will continue to adopt policies that will strengthen the economy β s resilience to external shocks. these will include maintaining a market - determined exchange rate, sustaining a comfortable level of reserves, and keeping the country β s external debt manageable. i said this before, and i β ll say it again : we should not let this unprecedented crisis go to waste. let us learn from it. let us all continue to discover and tap into our inner strengths. our shared fortitude as a nation will enable us to withstand all adversities and come out of this pandemic as economic champions. may our award - winning members never tire of leading the capital market in conceptualizing and implementing new and bold strategies for the industry and for our country. continue to reform, innovate, and transform. again, congratulations to our awardees and to the pds group. 2 / 2 bis central bankers'speeches | 0.5 |
was inspiring to hear the successes of financial institutions in digitizing the operations of smes. this has indeed accelerated during the pandemic as smes have pivoted their operations to adopt to covid - 19 containment measures. to address the cash flow constraints that smes have faced due to covid - 19 restrictions, banks have restructured their loans to see them through this turbulent times. equally inspiring is the move by financial institutions and technology players to build the skills of smes by automating and training them on financial management. it will take finance plus which is access to finance and upskilling smes to restore them to drive growth and resilience post covid - 19. a lot more remains to be done in restoring smes but the green shots are sprouting and we need to nurture them carefully. second, on partnerships and collaborations, the key message was the need for increased collaboration in building a sustainable financial ecosystem. this approach leverages on expertise, resources and innovations from various players. central to this is the building of the requisite infrastructure to connect our citizens to the digital realm. significant resources and input will be required both from the public and private sectors to put together the requisite hardware and software for sustainable digital ecosystems. it was inspiring to hear from mas on the global initiative to build foundational digital infrastructure drawing on the experience of singapore, india and other global leaders. collaborations such as these will enable countries learn from each other and fast track the development of foundational infrastructure in their countries without reinventing the wheel. third, on sustainable finance, the pandemic has brought home the inter - dependence of corporations and the communities they operate in. together corporations and communities have worked together to mitigate the adverse impact of the pandemic. illuminating experiences were pointed out where banks and other entities worked with their customers through this period through restructuring of loans and continued provision of services through digital platforms. more encouraging as we build back better were cases where banks and other entities worked with manufacturers and smes to pivot their operations to the new normal. this was particularly pertinent in the move towards domestic manufacture of personal protective equipment ( ppe ) which initially were sourced from overseas. as we build back better, sustainable finance will be imperative. in the long run, our vision at the cbk is that all finance will be green. we are working closely with the kenyan banking sector whose leaders shared their experiences in this area. green finance is particularly pertinent | . the central bank of kenya through its capacity building arm β the kenya school of monetary studies ( ksms ) intends to develop a certified agricultural finance program in collaboration with compete β usaid. this program will be suitable for agricultural officers as well as credit officers. this is important in developing the critical mass of human capital that fully understands agribusiness, such as agribusiness cycles, risk management practices, farm cash - flows and finance and insurance. this will support farmers and also develop a strong drive to lift the policy paradigm in this area. but the wider scope of monetary policy support is not in doubt. finally, distinguished guests, ladies and gentlemen, i would like to conclude my brief remarks by wishing all of you fruitful deliberations this morning. thank you very much for your kind attention. | 0.5 |
##m ) and the current facility construction shows their commitment to progress and confidence in the economy. in total, the company has invested over $ 128 million in various ventures to sustain its growth over the medium to long term. ladies and gentlemen, in addition to these investments, bsp life has invested a significant amount in private equity in the last 5 years. their pool of fixed - income investments which include investments in governments infrastructure bonds means they are investing in fiji β s future. bsp life also provides security and savings for our people and over the past 5 years, they have paid out close to $ 300 million in maturing life policies, claims and bonuses. adding up these achievements shows that bsp life is not only a leading corporate entity, but one that has contributed to and continues to support the growth of the nation. i understand that the chief investment officer will provide us with more details of this current development so i will not divulge any further details. conclusion i wish to conclude by once again thanking the bsp life team for inviting me to today β s ceremony and i congratulate the board, management and staff on this notable achievement. vinaka vakalevu. 3 / 3 bis central bankers'speeches | damage on the human, social and economic fronts. there are currently over 43 million active cases worldwide and around 1. 2 million deaths across the globe. despite hitting our economy hard, i am pleased to highlight that fiji has had no covid community transmissions for almost 200 days now. furthermore, while some countries are reimposing lockdown measures in response to the second wave of the virus, here in fiji we are blessed and privileged to be able to gather for functions like this, attend soccer and rugby matches in person with other fans as well as meet for religious functions. let us not take this for granted and we appreciate the good work done by our agencies. 1 / 3 bis central bankers'speeches economic updates the imf estimates the economic impact of the coronavirus to reach us $ 28 trillion by 2025. unemployment has spiked in all countries and the global economy is projected to contract by 4. 4 percent in 2020, with 90 million people falling back into extreme poverty. this is a crisis like no other and the outturn is expected to be worse than the global depression of the 1930s. unfortunately, the fijian economy has not been spared from the wrath of the pandemic. with international borders closed, tourism, the mainstay of our economy, has come to a standstill. given that tourism cuts across many sectors and accounts for 30 β 40 percent of fiji β s gross domestic product, the fijian economy is forecast to contract by 21. 7 percent this year β our largest contraction since the 6. 3 percent decline in 1987. we are currently reviewing our economic forecasts and it is encouraging to note some improvements in domestic economic activity since the onset of covid - related restrictions in the first quarter. mobility and consumption indicators have picked up in line with the easing of the restrictions domestically while cane, timber and some manufacturing outputs have recovered somewhat from their lows recorded in the first half of the year. in this regard, i am pleased to highlight that positive developments in the partial indicators that we monitor point towards a softening of the contraction that was projected earlier. our official forecast will be released later next month. monetary policy objectives despite losing close to a billion dollars in tourism related foreign exchange income over the past 6 months, our foreign reserves remain at comfortable levels of just above $ 2. 2 billion and sufficient to cover 8. 2 months of retained imports. rumours of a devaluation were rife on social media sometime back, and there are some who continue to speculate | 1 |
benoit cΕure : interview in gazeta wyborcza interview with mr benoit cΕure, member of the executive board of the european central bank, in gazeta wyborcza, conducted by mr leszek baj on 16 may 2014. * * * gazeta wyborcza : is there a recovery in europe? on the one hand, the growth of the german economy exceeds 2 %. on the other, in several countries gdp is contracting, and some of the larger economies, such as the french, spanish or italian economies, are still lagging behind. benoit cΕure : we are definitely looking at a recovery. this is good news. but the latest gdp figures have confirmed that this recovery is moderate and uneven. at the same time, inflation is low. is there a risk of deflation in the euro area? we consider the risk of deflation to be very low. but the rate of inflation β 0. 7 % in the euro area in april β is rather far from our inflation objective consistent with price stability, which is about 2 %. for us at the ecb, there are two key questions at the moment. first, what are the risks to economic growth and is there a risk that this growth won β t be sustainable? second, it will be important to know whether this period of low inflation won β t be excessively prolonged. these are the elements that we will consider when setting our monetary policy. can the ecb take action then? is it going to support the european economy and try to push inflation up a little? if the uneven pace of economic recovery in the euro area is confirmed and if we see a risk of inflation being too low for too long, we can take action in june. we can act in various ways, depending on the situation. at present, however, it is too early to say what exactly we β re going to do. a lot depends on the forthcoming economic data and on our staff growth and inflation projections, which are to be released in june. your room for manoeuvre is limited as interest rates are already very low : the key rate is only 0. 25 %. they are low but they can still go lower. are negative interest rates in the euro area possible? negative rates are one of the instruments available to us. they have been discussed extensively by the governing council. we are technically and legally prepared for such a possibility. and market participants are well aware that | staff macroeconomic projections indicate continued progress in reducing fiscal imbalances in the euro area. the aggregate euro area general government deficit is expected to have declined to 3. 2 % of gdp in 2013 and is projected to bis central bankers β speeches be reduced further to 2. 7 % of gdp this year. general government debt is projected to peak at 93. 5 % of gdp in 2014, before declining slightly in 2015. looking ahead, euro area countries should not unravel past consolidation efforts and should put high government debt ratios on a downward trajectory over the medium term. fiscal strategies should be in line with the stability and growth pact and should ensure a growth - friendly composition of consolidation which combines improving the quality and efficiency of public services with minimising distortionary effects of taxation. national authorities should also continue with the decisive implementation of structural reforms in all euro area countries. these reforms should aim, in particular, to make it easier to do business and to boost employment, thus enhancing the euro area β s growth potential and reducing unemployment in the euro area countries. to this end, the governing council welcomes the european commission β s communication of yesterday on the prevention and correction of macroeconomic imbalances and on the excessive deficit procedure. looking ahead, it is key that the macroeconomic surveillance framework in the euro area, which was significantly strengthened in the wake of the sovereign debt crisis, is implemented fully and in a consistent manner. we are now at your disposal for questions. bis central bankers β speeches | 0.5 |
, we are committed to playing our part and fulfilling our responsibilities, within our mandates, to support and contribute to a successful transition to net zero. with today β s announcement of the ngfs glasgow declaration β committed to action β our network of 100 central banks and supervisors is no longer just a coalition of the willing : we are a coalition of the committed. 1 ngfs ( 2019 ), a call for action : climate change as a source of financial risk, april. 2 reporting standards that are aligned with the recommendations issued by the task force on climate - related financial disclosures. 2 / 2 bis central bankers'speeches | masaaki shirakawa : overall review of the bank of japan β s conduct of monetary policy statement by mr masaaki shirakawa, governor of the bank of japan, concerning the bank β s semiannual report on currency and monetary control before the committee on financial affairs, house of councillors, tokyo, 22 may 2008. * * * introduction the bank of japan submitted its semiannual report on currency and monetary control for the first half of fiscal 2007 to the diet on december 11, 2007. i am pleased to have this opportunity to present an overall review of the bank's conduct of monetary policy. i. developments in japan's economy japan's economic growth is slowing, mainly due to the effects of high energy and materials prices. the deterioration in the terms of trade that results from rises in energy and materials prices leads to an outflow of real income, as japan depends heavily on imported resources. this exerts downward pressure on corporate profits and reduces households'purchasing power. although business fixed investment and private consumption remain firm, due attention should be paid to the possibility that the weakening of the economy's capacity to generate income will result in weaker domestic private demand. as for the outlook, japan's economy is likely to grow at a slower pace for the time being and follow a moderate growth path thereafter. exports are expected to continue rising β even though those to the united states have been falling for some time β as they have been increasing to a broader range of destinations, particularly emerging economies and countries that export natural resources. in the corporate sector, firms currently face no excess in production capacity, inventory, or employment, and corporate profits have been at historically high levels. as a result, it seems that japan's economy has become more resilient against negative shocks than in the past. the accommodative financial conditions are likely to continue to support private demand. the level of short - term interest rates has been very low relative to the potential growth rate and inflation. in addition, firms'liquidity positions and funding conditions have continued to be favorable on the whole. however, the liquidity positions of small firms and some nonmanufacturing firms are increasingly unfavorable, and therefore developments need to be closely monitored. global financial markets have been unstable due to continued disruptions stemming from the u. s. subprime mortgage problem. although overly pessimistic views about global financial markets have subsided compared with some time ago, | 0 |
can all sleep in peace knowing that the bank is on the job. on a recent occasion, i expressed my satisfaction at the profitability of our banks and the buoyant economic environment generally. i also expressed my concern about the excessive growth of credit which we were witnessing. i had at the back of my mind the truism that bad loans are made in good times. i was determined to ensure that we do not rediscover this through bitter experience. i am happy to report that the situation is firmly under control. so much so that we are actually envisaging repo operations, for the first time in more than a year, to inject liquidity in the system. the determination of the central bank to press ahead, in spite of criticism, has paid off. if we are happy with the profitability of our banks, we remain concerned about their efficiency and the affordability of their services. for instance, the average return on assets ( roa ) of banks in mauritius last year was 1. 8 per cent, 2 as compared to an roa of 1. 3 per cent in our neighbourhood giant, south africa. while strong earnings are important and the higher roa could point to greater operational efficiency, it could also reflect higher costs being levied on the customer. no doubt more competition leads to better price discovery. we have 19 banks operating in mauritius. although, there is a high degree of market concentration, we do not believe that there is any active collusion among them. to stimulate greater competition and enable customers to make informed choices, we are working with banks to devise a common template for displaying applicable fees, charges and commissions in a comparable manner on their respective web sites. a better - informed customer is the best guarantee of greater efficiency in financial intermediation and the sustainable profitability of our banks. it is a fact of life that some banking transactions will go sour, lead to recrimination, and result in costly and protracted lawsuits. if we are keen to reduce transaction costs, and the cost of doing business generally in mauritius, we must address these issues in a more efficient and timely manner. the provision relating to the ombudsperson for banks in the banking act of 2004 still remains to be implemented. you may reasonably ask why. and we owe an explanation on this score. it is my firm conviction that our jurisdiction is too small to have a multiplicity of source : annual report 2007 : bank supervision department, reserve bank of | target. in this new spring, we need our banks to be promoting fresh growth and enhanced customer services. the confidence of the customer has to be won, retained and constantly refreshed. quality of service is key, as are financial strength, good corporate governance, customer - friendly practices and trust. i am confident that this bank, now under a new name, new ownership and new management, will lead to a fresh flowering of innovation and quality in all these areas. as the banking sector literally explodes, driven by new players and relentless financial innovation, the central bank, which is here to oversee and regulate, cannot remain static in source : β the top one hundred companies β, business publications ltd 2007 edition, mauritius. the way it is organised and discharges its responsibilities. we at the bank of mauritius must rise to the challenge. my colleagues and i, we must be prepared to leave our comfort zone. we must question our rules, our regulations, our practices, our processes, indeed ourselves. that is the price to pay to achieve our ambition of graduating to the status of a well - regarded international financial centre. that is a price we are prepared to pay. the ambition drives our action. but, as always, some want the end but would deny us the means to achieve it. there are pockets of resistance which are building up steam in an overheated and misguided attempt to cling to the past and derail us from this shared national vision. i have also taken up the challenge of promoting mauritius as a friendly international financial centre. as we must, we are refreshing our core services to confront the new challenges and to tap the new opportunities that beckon. but change - management is never easy. change - management is post - doctoral studies, often conducted under withering and concentrated fire, by kamikaze supporters. doing good by doing better is what ultimately drives these supporters and myself, not any suicidal instinct to commit collective hara - kiri. mr bruno julie, whose feat in the boxing ring in beijing we now celebrate as a nation, well demonstrates the spirit of achievement and the determination which we need to galvanize us. with his bronze medal, bruno julie has got tiny mauritius a coveted place in the hall of fame among the giants of the global sports world. but his incomparable performance led me to a wry reflection which i would like to share with you. on a distinctly less celebratory note, the bank of mauritius and the south east asian | 1 |
60 ( series 14 ) itraxx main europe 5 yr 23. 04 * 206. 55 88. 00 ( apr 8, 2011 series 14 ) 186. 00 ( series 14 ) wti 61. 47 145. 29 ( on july 3, 08 ) 72. 66 ( sep 22, 2010 ) 88. 91 us treasury 10 yr 5. 29 2. 05 3. 74 ( feb 8, 2011 ) 1. 98 dow jones ( april 29, 2011 ) implied value of dow jones ( feb 8, 2011 ) dxy 80. 08 88. 19 72. 93 ( apr 29, 2011 ) 76. 83 since last one year as on sep 14, * data pertains to may 1, 2007. the data for the entire period ( april 1, 2007 to 1st week of aug, 2007 ) is not available. bis central bankers β speeches | that there is yet again a huge under - pricing of risks in the financial system and, therefore, it is not a question of if, but when, generic asset bubble caused by manifold increases in balance sheets of central banks will burst. specifically, currently the global liquidity has become a bigger concern than it was in pre - 2007 period what with ultralow and near - zero policy rates and major central banks β balance sheets 1. 50 to 3 times their pre - 2007 levels, adding about usd 4 trillion in incremental central bank liquidity. worse, us banks are reportedly keeping excess reserves of us $ 1. 5 trillion with the fed rather than lend to small businesses and households. alongside, non - financial corporations in the us are reportedly sitting on cash and liquid assets worth usd 2 trillion which they do not know what to do with it! in this background of huge deluge of global liquidity, there are unmistakable signs of asset bubble inflating again in almost a replay of the last global financial crisis. as the table i shows, as of 14 september 2011, the over - valuation of gold β what we can also call gold bubble β with reference to 7 competing asset classes varied from 84 % against highly correlated metal prices proxied by lmex, 90 % against wti crude, 123 % against us treasuries proxied by jp morgan index, and roughly 250 β 300 % against credit default swap index, dow jones, the us dollar index dxy and the us home price case - shiller index. ( to detect an asset bubble ( gold in the present case ), fair value / price of gold with reference to competing asset classes like us dollar, us stock market, crude oil, the us treasuries, credit risk, base metals, and us house prices, proxied, respectively, by the dxy ( euro, pound sterling, japanese yen, swiss franc, canadian dollar and swedish krona ), the dow jones industrial average ( djia ), wti spot, j. p. morgan bond index, cdx ig, a cds index for investment grade us bonds, london metal exchange ( lmex ) ( nickel, tin, aluminium, copper, zinc and lead ) and s & p case - shiller index, has been computed. the table i is self - explicit. this intuitively appealing methodology of computing fair value is reasonably robust and rigorous based as it is on the assumption that bis central bankers | 1 |
infrastructures for otc derivatives let me now turn to the need to strengthen the infrastructure for otc derivatives. otc derivative markets have been very dynamic with a veritable explosion in outstanding contract volumes primarily over the past decade. the basic problem, however, is that this very dynamic evolution of otc derivatives markets has outstripped development of the underlying clearing and settlement arrangements. indeed, as the post - trading of otc derivatives remained predominantly bilateral and non - standardised, the respective arrangements have become increasingly inadequate for coping with the growing volumes and complexity of otc derivatives trades. this was highlighted in particular during the financial market turmoil, when higher trading activity and market volatility further aggravated the existing tensions. [ the resulting processing backlogs and uncertainties about counterparty risk raised strong concerns among policymakers, as highlighted in the financial stability forum β s april 2008 report 1 on the lessons from the financial turmoil. ] the need to strengthen market infrastructures for credit default swaps ( cds ) stems from the importance of cds markets for overall financial stability, for three reasons. first, the systemic importance of cds markets comes from the high degree of interconnectivity between cds markets and credit and cash securities markets, the embedded financial leverage of cds, and the significant level of cds exposures in relation to the total assets and capital cushions of the banks involved. second, the associated financial risks, for example when compared to interest rate and foreign exchange derivatives, are more difficult to manage. this stems from the greater underlying complexity and the correlations between different cds exposures when market - wide strains occur. third, specific risks to financial stability stem from the high degree of market concentration where very sizable financial risks are held by a small group of major market players. therefore β as we have seen not only with the default of lehman brothers, but also the earlier near - defaults of bear stearns and aig β the default of one major cds counterparty can put these markets under very severe strain. a natural inference from our experiences during the current turmoil is, therefore, to improve the resilience of otc derivatives markets through a more widespread adoption of central counterparty clearing or exchange trading. central counterparties ( ccps ), by concentrating all outstanding derivatives positions of the participating buyers and sellers in one place, enable a significant reduction in counterparty risk : firstly, through the diversification and netting of risk exposures ; secondly, through the application of stringent risk - based margining | jean - claude trichet : state celebrations for the introduction of the euro in slovakia statement by mr jean - claude trichet, president of the european central bank, at the state celebrations for the introduction of the euro in slovakia, bratislava, 8 january 2009. * * * dear president, prime ministers, excellencies, dear governors, ladies and gentlemen, the introduction of a new currency is an historic moment for a country, and the introduction of the euro in a member state through the treaty - based convergence process is an historic moment for europe. robert schuman stated in his founding declaration that europe will be made through concrete achievements which create tangible solidarity among its people. european monetary union is a concrete achievement, and the euro is a tangible sign of solidarity among its people. the euro is also a tangible sign of increasing economic integration in europe, which is to the benefit of stability and prosperity for its citizens. today, with slovakia β s adoption of the euro, we therefore have every reason to celebrate. slovakia β s economic achievements on the way towards euro adoption slovakia has made remarkable progress in both nominal and real convergence. this has been reflected in a decline in inflation and a significant economic growth record. slovakia β s performance is based on the firm foundations of a bold economic reform programme implemented earlier this decade. cooperation between the ecb and narodna banka slovenska on the side of central banks, this historic moment has been prepared through a very close cooperation over the last couple of years between the european central bank and narodna banka slovenska under the leadership of governor sramko. this cooperation has laid the groundwork for the smooth and successful introduction of the euro in slovakia. the sustainability of convergence the introduction of the euro in slovakia will further enhance the benefits of the single market. the euro removes exchange rate uncertainty between slovakia and many of its most important trading partners, integrates the country into one of the world β s largest economies and helps to shield it from some of the effects of the international financial turbulence. it is also important to stress that the introduction of the euro must not give rise to complacency. in order to ensure that convergence is sustainable and that the slovak people can reap the full benefits of euro adoption, the slovak public authorities will need to pursue ambitious economic policies on all fronts. a rigorous and credible implementation of fiscal policy in line with the commitments of the stability and growth pact is particularly important. other policy measures would need to focus on slovakia | 0.5 |
. the sarb now projects headline inflation of 6. 5 % in 2022, and 5. 7 % in 2023. the monetary policy committee has therefore moved to normalise rates, raising the repo rate by a cumulative 200 basis points since november 2021. the committee will continue to monitor inflation developments closely and respond appropriately to ensure inflation expectations remain relatively anchored. this current conjuncture adds a new layer of risk to the non - life insurance sector through its impact on costs and growth prospects. however, looking ahead, large risks loom on the horizon, namely climate - related risks and cyber - risks. climate - related risks and opportunities over the past few years, there has been growing prominence of climate - related risks, including their effect on lives and livelihoods ; health ; economic, social and cultural assets ; infrastructure and services. these risks have an impact on the environment in which the non - life sector operates, the financial system at large and the economy. thus, understanding climate - related risks and opportunities will help us highlight the areas where the non - life insurance sector can play a crucial role in helping to protect livelihoods, and enhance the resilience of the financial system. the prudential authority has embarked on a journey to better understand the impact of climate - related risks, and to inform potential regulatory and supervisory action where necessary and appropriate. a working group was formed to coordinate climaterelated work and initiatives across the sarb. current initiatives include focusing on areas such as risk assessments and developing supervisory guidance, and support regarding disclosure requirements and taxonomies. the work will result in the promulgation of various types of regulatory instruments over the next five years that aim to enhance the resilience of supervised institutions and the financial system as a whole. internationally, the international association for insurance supervisors ( iais ), through its support of the sustainable insurance forum, has published, among others, an issues paper on the implementation of the recommendations of the task force on climate - related financial disclosures in 2020, as well as an application paper on the supervision of climate - related risks in the insurance sector in 2021. recognising the importance of the topic and the continuation of work in this space, the iais has also established the climate risk steering group ( crsg ), whose work includes the development of supporting material which will be consulted on next year. although the insurance core principles ( icps ) are sufficiently broad to capture climate - related risks, and while insurer | off with the award of two further banknote printing contracts from african countries. the training and development of staff continue to be important objectives of the bank. in this regard the south african reserve bank college again played a major role by offering a variety of learning programmes. the various departments also put considerable effort into on - the - job training of staff members. the bank is further committed to achieving its objectives for staff transformation by 2005, and reports annually on its progress to the department of labour in terms of the employment equity act, no 55 of 1998. in keeping with the decision of the shareholders on 25 april 2002 to terminate the listing of the bank on the jse securities exchange south africa, an over - the - counter share transfer facility for trading reserve bank shares was established. this facility has delivered the desired results and 87 registrations in respect of 240 237 shares were effected up to 31 march 2003. finally, the extensions to the head office building, which were started in 2001, were completed. the building now meets the bank β s requirements in respect of office space, parking and conference facilities. staff members who had to work in other buildings or who had to be relocated to other premises for the duration of the building alterations, have been moved back to the head office building. acknowledgements all these improvements in the functioning of the reserve bank could only be achieved with the help of other persons and institutions. in conclusion, i therefore want to thank everyone who assisted the bank to accomplish its objectives. in this regard i have to name the presidency, the government and parliament for their support of our work. i also wish to express my appreciation to the board of directors of the reserve bank, including the deputy governors, for their commitment to the bank. in particular, i want to thank dr m t de waal, who retired from the board, for his contributions over the past years. last but not least, i want to thank the management and staff of the bank for the outstanding way in which they performed their duties. they have responded with vigour to all the challenges we have encountered and have demonstrated commitment and high professionalism in performing their work. this is a truly remarkable institution to be associated with. thank you. | 0.5 |
heng swee keat : singapore β s commitment to the development of islamic finance opening remarks by mr heng swee keat, managing director of the monetary authority of singapore, at the singapore sukuk signing ceremony, singapore, 19 january 2009. * * * your excellency abdulla hasan saif, chairman, the islamic bank of asia, mr viswanathan shankar, group management committee member, standard chartered bank, mr lucien wong, managing partner of allen and gledhill, ladies and gentlemen, it is my pleasure to welcome you this afternoon to the mas and to our overseas guests, a warm welcome to singapore. singapore is committed to the development of islamic finance. the financial industry has encouraged us to develop shariah compliant financial services, by building on our existing strengths in banking, trade finance, capital markets and asset management. mas is an integrated regulator β we oversee all forms of financial services. in performing this role, we adopt a basic principle that financial products and activities with similar underlying risks are given similar regulatory treatment. however, there are distinctive features of islamic finance that put it at a disadvantage, if we were to just apply the conventional regulatory framework. we are committed to a level playing field, by ensuring that islamic financial activities with the same underlying economic essence are accorded the same regulatory treatment as those in conventional finance. in this regard, we have already implemented several measures, including removing the double - imposition of stamp duty for shariah - compliant financing structures, and refining our rules to allow banks to offer murabaha financing and deposits. as a further step, i am happy to announce that with effect from today, singapore - based banks may enter into murabaha interbank placements and offer ijara wa igtina financing. these changes will enable the financial institutions offering islamic finance a wider range of instruments in their management of liquidity and in their matching of assets and liabilities. these changes have been made after detailed consultation with the industry. mas will continue to work closely with the industry to ensure that our regulatory and tax framework, and other necessary infrastructure and conditions are in place to foster good risk management and the further growth of islamic finance in singapore. i announced at the world islamic banking conference in bahrain two months ago that we were in the final stages of setting up a facility to issue sukuk. today β s signing ceremony marks a further milestone in our developmental efforts. with the help of our financial and legal advisers | that using digital finance to enhance financial inclusion would boost gdp by between 9 - 14 % in large economies such as indonesia and the philippines, and up to as much as 32 % in cambodia. 3 / 5 bis central bankers'speeches global banks will continue to play an important role in the region, especially in wholesale banking and the intermediation of us dollar flows. but the onus largely falls on asian banks to expand financial inclusion, especially at the retail and small business level. using innovative fintech solutions, they can mobilise untapped savings and provide access to credit for under - banked individuals and businesses. asia is fertile ground for digital innovation in banking. in indonesia and vietnam, only around a third of the population is formally banked. yet, their mobile phone penetration rates are above 100 % β that β s more than one phone per person on average! coupled with a young and tech - savvy population, what we have is a ripe environment for mobile banking. and we are seeing interesting innovations across asia, bringing banking services to the broader population. in indonesia, the financial services authority ( ojk ) runs a branchless banking programme with participant banks. called laku pandai, or β smart man β, the programme offers banking and financial services to the under - banked, supported by mobile phones and it facilities. dbs bank is collaborating with peer - to - peer ( p2p ) lending platforms to cross - refer clients. dbs will refer to the p2p lenders some of the smaller businesses that it is unable to lend to. in return, the p2p lenders will refer borrowers who have completed two successful rounds of fund raising to dbs for larger commercial loans and other financial solutions such as cash management. the road to financial inclusion is neither short nor easy. but it is an important one. broadening access to financial services will offer asian banks β and fintechs β the opportunity to grow their business while serving a social purpose. financial inclusion will be a key priority in the economic co - operation agenda when singapore assumes the chairmanship of asean next year. conclusion you will be discussing many of these issues in the days ahead. i look forward to hearing your insights. it leaves me now to hand over to john williams for his keynote address. he will speak on us monetary policy β a subject of evergreen interest to the financial industry and central banks around the world. i look out for john β s speeches not so much | 0.5 |
consider four scenarios. consider first a bank making a single loan. in the first period, amortised cost and fair valuations of this loan will be equal. expected cashflows will in both cases be discounted at the prevailing market discount rate. to the extent emh is violated β for example, because the market discount rate is too low β both accounting concepts will result in asset over - valuation. both concepts will be equally imprudent. in other words, credit cycles that cause failures of emh contaminate bank asset valuations irrespective of the accounting convention. consider next a bank with a portfolio of two loans, one initiated when assets prices were priced correctly, the other when they were over - valued. in this situation, amortised cost and fair values will value the asset portfolio differently. because market prices are applied to the whole asset stock, fair value will tend to result in greater recorded overvaluation. in other words, marking to market is more susceptible to valuation cycles than amortised cost. third, consider a situation where, having been over - valued, the market price of the second loan corrects back to equilibrium. fair values now deliver the correct valuation of the entire asset portfolio. amortised cost measures, meanwhile, will continue to give a misleadingly bullish account of the second loan β s valuation, since this will be discounted at the artificiallylow discount rate used at initiation. in other words, in this set of circumstances the tables are turned, with fair values giving a more accurate and prudent measure of valuation. finally, if instead of correcting to equilibrium, assume market prices over - correct β say, because of an overshoot in illiquidity premia of the type witnessed during crisis. it is then no longer clear which valuation metric is preferable. both will be inaccurate to some degree but in opposite directions β the amortised cost measure suggesting valuations which are β too high β, while fair value will suggest valuations which are β too low β. the greater the initial misalignment in asset prices, and the smaller their subsequent overshoot, the greater the likelihood of fair values being preferred over amortised cost and vice - versa. ultimately, however, this is an empirical question. in general terms, however, the point is clear : efficient markets are not necessary but may be sufficient to justify the use of fair value principles. better accounting for expected losses what is clear from | ##agating banking failure during the great depression. 20 the evidence of such dynamics during this crisis is more mixed. some studies have claimed this effect was limited to banks with large trading portfolios ; 21 others that it has been significant and wide - ranging across the financial sector. 22 perhaps the truth lies somewhere in between, with some market and institutions affected and others immune. chart 8 plots commercial property values in the uk since 1920. there are five discernible boom and bust cycles in commercial property, signified by the dotted lines. chart 9 looks at the cumulative falls in value during the bust. in four of the cases, the bust was similarly timed and sized. the exception is the bust of 2007 β 08, where the fall in value has been both greater and faster. it is plausible that fire - sales, aggravated in part by marking to market, may have contributed to this dynamic. the fair value agenda so how do these considerations relate to the debate on international accounting standards? at present, these stand at a crossroads. in the us ( through the financial accounting standards board ( fasb ) ) and internationally ( through the international accounting standards board ( iasb ) ), standard - setters are reviewing their treatment of financial instruments. substantive decisions are planned during 2010. within the iasb, a review of ias39 is underway, with consultation on a new standard, ifrs9. the fair value debate is at the heart of the new proposals. one key dimension is valuation, where ifrs9 proposes a combination of amortised cost and fair values, with clear criteria to determine the suitability of assets for each category. in the us, fasb is expected to issue consultation proposals that would tend to reinforce the use of fair value among us banks. a second dimension is provisioning. the concern here is that the use of provisions based on incurred losses means that impairments are recognised too late, thereby contributing to pro - cyclicality of loan supply. 23 in response, the iasb has issued a consultation paper proposing that provisions be set on an expected loss basis. these proposals are currently being explored by regulators internationally. for example, see plantin, sapra and shin ( 2008 ) and allen and carletti ( 2007 ) for a theoretical exposition of these dynamics. β under such circumstances, any runs on banks for whatever reason became to some extent self - justifying, whatever the quality of assets held by banks. banks had to dump their assets on the market, which inevitably caused | 1 |
##f, a very different institution, and the ecb. β fast β? so you mean without necessarily waiting for a vote in the german bundestag to save, for example, an italian bank? in fact, it β s vital for the euro area to be able to take decisions fast. the ecb can do this. the 25 members of our governing council may have their differences, but we analyse, we debate, we try to build a consensus and, finally, we take a decision on which nobody has a veto. by contrast, the crisis management system in the euro area is essentially intergovernmental. this method carries a high economic cost because it β s a procrastination machine. look at the greek crisis, which is finally coming to an end after eight years! and it turns every decision into a zero - sum game. the challenge for the european council, at the end of this week, will be to move from a europe of horse - trading to a europe that builds its own future. europe has to show that it is taking its destiny into its own hands. last thursday you took part in the eurogroup meeting on greece. are you satisfied with the agreement? will the debt relief granted be enough? this is a turning point for greece and for europe. greece can now free itself from european stewardship. the sacrifices made by greek society, supported by european solidarity, have paid off. for those who have doubts about this solidarity, i would like to point out that europe provided greece with funding of β¬245 billion! i particularly admire the determination and courage of the greek finance minister, euclid tsakalotos. greece will also get a clear boost from the debt relief that was promised a long time ago by the european governments. the ecb was clearly in favour of this. the measures decided upon by the eurogroup go in the right direction, because in the medium term they will make greece β s debt more sustainable and in the long term the ministers declared their willingness to take additional measures should the need arise. but let β s not be naive : greece will move from a dialogue with the european institutions and the imf to a dialogue with the financial markets, which will be neither easier nor more pleasant. to maximise its chances, the country must continue with its reforms and stick to a prudent budgetary policy. greece failed to leave the euro area in 2015 and has been through a deep recession. if you could go back | benoit cΕure : interview in le figaro interview with mr benoit cΕure, member of the executive board of the european central bank, in le figaro, conducted by mr fabrice node - langlois and published on 25 june 2018. * * * at the summit on thursday france and germany are to present their joint roadmap for european reform. at a time when many citizens are calling europe into question, why should it be reinforced? we are living in a confusing, dangerous world which is evolving very fast and not always in the right direction. europe is once again in rough waters and it is its duty to protect its citizens. if a boat is caught in a storm, the crew needs to cooperate closely, not work at cross purposes. europe will not be able to establish a joint defence capability or improve border control unless it has a robust economy. that is why we urgently need to strengthen the euro area. we cannot afford to have another ten years of crisis. existential discussions on the single currency are a waste of time. surveys show that the vast majority of european citizens are in favour of the euro. emmanuel macron and angela merkel propose creating a budget for the euro area. what is that budget for? the meseberg agreement is an important contribution to the reform of the euro area. the euro area budget is a useful idea. in the first instance, the common budget can help to accelerate convergence among member states. at the time of the maastricht treaty, it was somewhat naively thought, in france especially, that monetary union was going to bring about convergence by and of itself. that was not the case. with time, it could help a country hit by a recession that it could not tackle alone, even if its public finances were in order. look at ireland, which in 2008 was hit by a severe financial crisis, followed by a recession, despite having a sound budget. it was not able to manage on its own. the budget is also a political symbol for the shared interest of euro area countries. the euro area should be about more than individual interests in a currency managed by the ecb. how can this convergence be improved in practice? we can invest in infrastructure or in facilitating reforms that strengthen the euro area. i am thinking for example of the greek land registry, which is still not in place and which could have been financed by this budgetary capacity if it had existed. the roadmap does not mention any figure for | 1 |
the basis for monetary policy transmission ; but, at the same time, the central bank cannot fulfil its mandate to maintain price stability if the fiscal authority does not fully honour its obligation to pay back its liabilities under all circumstances. to remove the influence of market expectations about future policy rates, it is useful to focus on the term structure in terms of spreads between sovereign bond yields of a given euro area country and benchmark yields β which can be represented by the ois curve or the term structure of german bunds. bis central bankers β speeches how to make these apparently conflicting instances compatible? and how to overcome the deadlock? the ecb policy response : outright monetary transactions guidance to answer these questions can be derived from the maastricht treaty and the conceptual apparatus developed in the context of the economic literature on monetary vs. fiscal dominance. these insights have made clear that, from an institutional design perspective, central bank independence and a clear focus on price stability 6 are necessary but not sufficient to ensure that the central bank can provide a regime of low and stable inflation under all circumstances β in the economic jargon, ensuring β monetary dominance β. maintaining price stability also requires appropriate fiscal policy. to borrow from leeper β s terminology, 7 this means that an β active β monetary policy β namely a monetary policy that actively engages in the setting of its policy interest rate instrument independently and in the exclusive pursuit of its objective of price stability β must be accompanied by β passive β fiscal policy. a passive fiscal policy means that the fiscal authority must be ready and willing to adjust its policy stance ( revenues and primary spending ) in such a way as to stabilise its debt at any level of the interest rate that the central bank may choose. or, to put it another way, borrowing from woodford β s terminology, 8 fiscal policy needs to be β ricardian β. 9 although the treaty shows an awareness of the need for consistency between monetary and fiscal policy, in the sense described above, to ensure lasting stability, it did not foresee that fiscal policy could go off track to an extent that requires dedicated institutions and policies able to provide financial assistance, against conditionality, in order to restore sustainability and preserve financial stability in the euro area. the creation of the efsf / esm in charge of providing support to euro area member states in difficulties and enforcing appropriate conditionality has filled this gap. it provides the euro area with a means to restore β ricardianess β, thereby | you think that this tool will really support the economy? because the programme comes at the right time. we are seeing the first signs of an improvement in financial conditions in the euro area, which suggests that qe will be able to bear fruit, particularly via the credit channel. the latest indicators of monetary growth show that we are definitely at a turning point and that outstanding credit should start to rise again. for its part, the most recent survey of banks conveyed more optimism as far as demand is concerned. there are also signs of an improvement in consumption as it benefits from conducive structural reforms. another positive development is that we have witnessed a reduction in lending rates to small and medium - sized enterprises, which has been especially noticeable in the most fragile countries ( greece, ireland, italy, portugal and spain ) since september. then there is the decline in the euro and the fact that the fiscal policies of the euro area are becoming more neutral overall. lastly, the fall in the oil price and, of course, our monetary policy decisions themselves will contribute to this positive demand shock. all of this is helpful. so, it could be argued that there was no urgent need to launch this programme? bis central bankers β speeches on the contrary, it was imperative to act to prevent inflation expectations from becoming unanchored. it was a distinct possibility, considering the fall in oil prices. by launching qe now, we aim to anchor inflation expectations. but the indicators announcements β¦ of expected inflation have not reacted to the ecb β s it β s normal for it to take a little time. it β s not an exact science, but the context should be favourable, and although i remain cautious, i am confident. everybody should make the most of this opportunity to give growth a further boost, each in his or her field of responsibility. will qe be good for banks? in terms of the lending conditions offered, banks are now lagging slightly behind demand. there are those that claim our financial asset purchase programme will further reduce their margins, while some financial institutions already lament the strong competitive pressure and complain of regulatory burdens. yet, the announcement on qe drove banking sector share prices higher. at the same time, we should be especially mindful that this sector will inevitably benefit from the economic recovery. is there a risk that financial institutions may resist and not sell the bonds they hold at the ecb? banks can realise a capital gain on the sale of their government bonds and, in doing | 0.5 |
july 2016 weo projections. source : imf. chart 3 current profits s. a., tril. yen all industries manufacturing - 5 cy05 nonmanufacturing note : figures for current profits exclude " finance and insurance. " source : ministry of finance. chart 4 employment and income situation unemployment rate and job openings - to - applicants ratio s. a., % s. a., times unemployment rate ( left scale ) active job openings - to - applicants ratio ( right scale ) employee income 1. 5 y / y % chg. 1. 2 0. 9 - 2 - 4 number of employees 0. 6 total cash earnings - 6 employee income cy 05 13 14 15 16 0. 3 - 8 cy 05 notes : 1. q1 = march - may, q2 = june - august, q3 = september - november, q4 = december - february. figures for 2016 / q3 are september - october averages. notes : 2. figures for " employee income " are calculated as the " number of employees " ( labour force survey ) times " total cash earnings " ( monthly labour survey ). sources : ministry of internal affairs and communications ; ministry of health, labour and welfare. chart 5 private consumption s. a., cy 2010 = 100 consumption activity index ( adjusting travel balance, real ) consumption of households excluding imputed rent ( sna, real ) cy 07 note : figures for the consumption activity index exclude inbound tourism consumption and include outbound tourism consumption. sources : cabinet office ; bank of japan ; ministry of economy, trade and industry ; ministry of internal affairs and communications, etc. chart 6 consumer prices y / y % chg. cpi ( all items less fresh food and energy ) cpi ( all items less fresh food ) - 1 - 2 - 3 cy 07 note : figures for the cpi ( all items less fresh food and energy ) are calculated by the research and statistics department, bank of japan. figures for the cpi are adjusted to exclude the estimated effects of changes in the consumption tax rate. source : ministry of internal affairs and communications. chart 7 inflation expectations and wages japan united states y / y % chg. base pay increase medium - to long - term inflation expectations y / y % chg. cpi ( all items ) - 1 - 1 base pay increase - 2 - 2 medium - to long - term inflation expectations - 3 cy 95 15 16 - 3 cy 95 cpi ( all items ) notes : 1 | masaaki shirakawa : great east japan earthquake β resilience of society and determination to rebuild remarks by mr masaaki shirakawa, governor of the bank of japan, at the council on foreign relations, new york, 14 april 2011. * i. * * introduction i am privileged to have the opportunity to speak before the council on foreign relations today. before beginning my speech, i would like to extend my heartfelt gratitude to the government and people of the united states for the support and encouragement concerning the tragic great east japan earthquake. the situation in the areas close to the earthquake epicenter, particularly coastal areas that were hit hard by the tsunami, is disastrous. the disaster claimed about 13 thousand lives and more than 15 thousand people are still missing. residents of areas near the fukushima daiichi nuclear power plant have been directed to evacuate, and are forced to spend restless days and nights in shelters. in this way, japan has faced a trying time since the earthquake struck. at the same time, however, japanese society has shown resilience. the work of rebuilding has started to get under way, gradually but steadily. in my remarks today, i will talk about the situation in japan in the month after the earthquake and the work being done to rebuild japan β s economy. ii. experience in the month after the earthquake a good place to start is what happened in the financial markets, the area i am familiar with. the earthquake struck at 2 : 46 p. m. on friday, march 11. at the time, i was being briefed by staff in preparation for the monetary policy meeting scheduled to be held at the beginning of the following week. even in tokyo, about 250 miles away from the earthquake epicenter, the shaking from the earthquake was the strongest that i had ever experienced and continued for more than two minutes. the earthquake β s magnitude at the epicenter was 9. 0, which makes it the largest on record in japan, and the energy released was enormous ( chart 1 ). based on previously formulated emergency procedure, the bank of japan immediately set up a disaster management team with me as head. this task was completed 14 minutes after the earthquake struck. the most important thing for a central bank during a crisis is to ensure the stability of settlement systems and financial markets. the bank of japan financial network system, or boj - net β japan β s core settlement system for funds and government securities β has been operating without any problems the entire time since the | 0.5 |
those smaller economies like new zealand and australia which are facing relatively strong inflation pressures at present, that would ordinarily make the monetary policy challenge harder. on the other hand, higher credit spreads are actually increasing the effective cost of funds for many of our financial institutions and businesses accessing funds through the global capital markets. so we actually face some quite difficult judgements in assessing how policy settings and global conditions will affect domestic economic activity and inflation in the months ahead. despite increased global risk aversion, it is not yet evident that the carry trade is dead. we have still seen a relatively strong issuance in the new zealand dollar in recent months via uridashi bonds for example. the new zealand dollar remains at relatively high levels and has recently been at a post - float high against the us dollar, albeit largely reflecting the weakness in the us dollar itself. however, as one might well expect, exchange rate volatility has been high of late and there is perhaps more than the usual uncertainty around the likely path of the exchange rate over the months ahead. with banks β funding costs on the rise, mortgage rates have been increasing in new zealand and australia and in some other small open economies recently. this occurs at a time when new zealand β s housing market is already slowing due to the effects of past policy tightening. whilst we are projecting the housing slowdown to be of the soft landing variety, there is obviously some risk of a more pronounced slowdown. history shows us that either scenario can happen. clearly, the path of global interest rates from here on will have some bearing, given their influence on bank funding costs. of course, monetary policy is not our only focus. global market developments also have important ramifications for financial system stability in smaller open economies. the banks in many of these countries are net borrowers in global markets, new zealand and australia being two examples. recent events have highlighted some risks and vulnerability that institutions and regulators need to ensure are properly managed. we always used to talk about these risks but they have come into sharper focus. our institutions need to be able to cope with sharp changes in the cost of funds in the global market place. but as we saw in july last year, we also need to confront the possibility that global funds may not always be as readily available as we perhaps used to think. financial market liquidity policies and the management of funding by financial institutions are two areas that are likely to receive considerable policy attention in many countries over the coming months. | the overall picture materially. and our relative position in those league tables looks much worse than it did a decade ago. it is worth highlighting a few numbers. financial assets and liabilities are easier than most to get a good fix on. new zealand households'net financial wealth ( deposits, shares, unit trusts, pension funds, etc less household debt ) is estimated to be only around 70 per cent of our annual disposable income. in the bigger developed countries, that ratio averages around 270 per cent - even after the fall in international share prices last year. even allowing for the inevitable problems in putting together such cross - country comparisons, and for the possibility that international share prices still have some further adjustment to do, that is a large - and sobering - difference. put another way, the debt of the household sector in new zealand is very much higher, relative to the sector's financial assets, than in many other developed countries. household net financial wealth to income ratios 1990 - 2001 change 1995 - 2001 change us 261. 8 304. 7 333. 0 71. 2 28. 3 japan 260. 3 283. 8 356. 9 96. 6 73. 1 germany 130. 8 140. 4 150. 0 19. 2 9. 6 france 130. 6 184. 7 264. 4 133. 8 79. 7 uk 211. 8 291. 2 333. 2 121. 4 42. 0 italy 196. 3 217. 1 250. 0 53. 7 32. 9 g6 198. 6 237. 0 281. 3 82. 7 44. 3 australia 253. 0 218. 4 266. 0 13. 0 47. 6 new zealand 102. 7 108. 6 70. 4 β 32. 3 β 38. 1 per cent source : oecd, national sources, and ubs warburg. 2001 data are forecast, except for nz, which are 2000 actuals. household debt to household financial assets ratios 1990 - 2001 change 1995 - 2001 change us 25. 0 23. 6 23. 8 β 1. 2 0. 2 japan 3. 4 32. 7 27. 1 β 6. 3 β 5. 6 germany 34. 9 42. 5 41. 1 6. 2 β 1. 4 france 40. 3 25. 8 17. 3 β 23. 0 β 8. 5 uk 35. 6 24. 9 24. 4 β 11. 2 β 0. 5 italy 12. 9 12. 9 12. 9 0. | 0.5 |
increase in credit - risk spreads in the bond market, a tightening of credit standards at banks, the equity correction, and the retrenchment in high - tech investment. the latter four developments were, in part, a response to monetary policy tightening and the associated prospects of slower growth, but the magnitude of the responses were in each case out of proportion to the degree of tightening. the outsized responses in equity prices and high - tech investment presumably reflected an abrupt unwinding of pre - existing imbalances. such a process is often an important contributor to the severity of cyclical slowdowns. let me elaborate on the roles of productivity, equity prices and high - tech investment. the fate of these variables is, of course, very interconnected, and they have collectively played a dominant role both during the period of exceptional growth and the slowdown. structural productivity growth appeared to rise year after year, from the end of 1992 through the beginning of 2000. it was the continuing rise in the growth rate of productivity that led to sustaining the temporary bonuses that took the form of higher demand and lower inflation. once productivity growth stabilized, these bonuses were destined to dissipate, so the apparent stabilization of structural productivity growth in 2000 may have contributed to both the slower demand and to some upward pressure on inflation. the period of accelerating productivity was accompanied by a surge in equity prices β especially for high - tech firms β and a frenzy of high - tech investment spending to take advantage of new profitable opportunities. in each case, it appears β no doubt, more clearly in retrospect β that there were speculative excesses that would, at some point, be corrected. in such a circumstance, monetary policy could turn out to be a blunt instrument. it would have been an extraordinary achievement to fine tune a slowdown to prevent or unwind an imbalance between aggregate demand and aggregate supply without a risk of triggering an abrupt unwinding of these sectoral or market imbalances. monetary policy, therefore, had to be alert to the possibility that the slowdown would be more severe than sought and that policy might, in such a circumstance, have to quickly reverse direction. this is precisely what we have done. once demand slowed so sharply, the normal inventory cycle came into play. the inventory correction may, in this case, be sharper and shorter than usual. production in the " new economy β can respond more quickly to signs of slower demand and emerging inventory building. but the slowdown has | financial institutions β profits. however, i think it is of notable significance that the longheld belief that nominal interest rates cannot be negative was overturned, and that the idea evolved into an actual policy option. the fourth approach is reducing real interest rates by influencing people β s inflation expectations, instead of by cutting nominal interest rates. in the case of japan in particular, where deflation has persisted and the deflationary mindset has become entrenched among people, it is necessary to re - anchor medium - to long - term inflation expectations by exerting influence on people β s expectations. this will require the central bank β s strong commitment to achieving the inflation target, clear and consistent communication to the public, and determined actions to realize the commitment. let me now explain the bank of japan β s monetary policy after the global financial crisis, while bearing in mind the four measures composing the evolution of monetary policy to overcome the zero lower bound that i just mentioned ( chart 4 ). in response to the collapse of lehman brothers in 2008, the bank immediately reduced short - term policy interest rates, as did other central banks. as the pace of economic improvement remained sluggish, the bank in october 2010 decided to introduce the comprehensive monetary easing policy. specifically, it reduced the target level of short - term interest rates to 0 to 0. 1 percent and committed itself to maintaining the virtually zero interest rate level β until it judges that price stability is in sight. β in addition, it established the asset purchase program, through which it provided longer - term funds at a fixed rate and purchased various financial assets such as japanese government bonds ( jgbs ), corporate bonds, and exchange - traded funds ( etfs ). as these measures show, in order to overcome the zero lower bound, the bank affected longer - term interest rates through jgb purchases and forward guidance, and started to compress risk premiums through purchases of corporate bonds and etfs. in terms of the four approaches that i explained earlier, the bank adopted the first two. 5 / 15 bis central bankers'speeches although the bank continued to provide accommodative financial conditions through measures such as an expansion of the asset purchase program and strengthening of forward guidance, this did not result in a significant improvement in economic activity and prices. thus, the bank newly introduced an extremely powerful policy package in april 2013 β namely, qqe. under this framework, the bank shifted the main operating target from interest rates to the monetary base, | 0 |
legal certainty and consumer protection ( and support financial stability ). at the moment, there is no regulatory protection for consumers in the world of crypto. conclusion the financial landscape is changing and central banks are adapting to the change. our work on a digital euro, the ongoing developments in the eu regulatory framework and wider international developments will help us to better understand the benefits and risks from introducing " real " digital currencies. more generally, as public policymakers, we have a responsibility to ensure that innovation serves the public interest, by providing clear rules to the innovators while at the same time engaging with a wide range of stakeholders β households, businesses, and the payments industry in particular β as we consider how the financial system of the future can operate in the best interests of the wider economy. gabriel makhlouf | β beyond the aggregates : the diverse effects of covid - 19 on employment, income & savings β deputy governor sharon donnery 30 march 2021 address by sharon donnery to the national university of ireland, galway, 30 march 2021. view slides used during the presentation good afternoon, it is a pleasure to join you ( virtually ) at the whitaker institute, national university of ireland, galway. 1 it is over a year now since covid - 19, epidemiology and zoom became staples of our conversations, our routines, our day to day. we have seen how the covid - 19 pandemic has had devastating effects on lives, livelihoods and lifestyles. in economic terms, we have seen the worst peacetime global contraction since the great depression. and while the world economy is expected to grow by 5. 6 % in 2021 according to the latest projections, 2 due to the partial nature of the rebound, over 150 economies are expected to have per - capita incomes below their 2019 levels in 2021. 3 in ireland, a striking feature of the pandemic had been that gross domestic product ( gdp ) actually grew by 3. 4 % in 2020, in stark contrast globally and to other european countries [ slide 2 ]. the gdp growth gures do point to a strong export performance in 2020 β due to multinational - dominated pharmaceuticals and computing services. 4 however, the issues of using gdp to measure economic activity in ireland are well known, and aggregate economic statistics can only provide a high - level overview of how an economy is performing. gdp growth masks a large fall off of 5. 4 % in domestic demand, re ecting the devastating impact of the pandemic on underlying domestic activity, and consumption in particular, which was down by 9 % in 2020 [ slide 2 ]. looking beyond the aggregate numbers, we saw last year how, while almost half of workers had their incomes directly supported by the state at one point, thousands of rms were shuttered for most of the year, and yet household savings increased by the largest amount ever. today, i will rstly discuss the effects the pandemic has had on employment, incomes and savings, and the importance of looking beyond the aggregate numbers to understand the full effects. secondly, i will discuss the role that employment and income support policies have played in mitigating the worst of the crisis, and the importance of understanding the differing effects of the pandemic as policymakers start shaping plans for the recovery. the worst | 0.5 |
andreas dombret : current challenges facing central banks β the bundesbank β s stance speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the ahk ( auslandsaussenkammer ) world conference, berlin, 11 may 2016. * 1. * * introduction dr wansleben, mr machnig, ladies and gentlemen, before i begin, i would like to thank you for inviting me to come here and speak with you today. in germany, foreign trade has traditionally been a cornerstone of its economic success. chambers of commerce abroad make a crucial contribution to the success of german enterprises in foreign markets. you could say that, today, i am visiting the power houses of the german economy, which is why i am so pleased to be here with you in berlin. the motto of this event is : β where is the global economy heading? β the answer to this question will be put together like the pieces of a jigsaw puzzle from the various reports of the speakers at your conference, who come from all over the world. within the space of the next 20 minutes, i will try to lay down the foundations for this jigsaw by giving you an overview of the global economic situation. i will also be elaborating on the consequences that this has for monetary policy and for banking supervision in the euro area. 2. economic activity the new year got off to a bumpy start for the global economy, with the economic slowdown in china dampening the new year β s spirit right at the very beginning of the year. this was compounded by the sharp decline in oil prices at the turn of the year, which was perceived as having an increasingly detrimental impact on the global economy. furthermore, some financial market players had doubts as to whether an ever more accommodative monetary policy stance can really solve the existing problems. this explains why sentiment on the financial markets was also very nervous at the beginning of the year. the situation has, by and large, calmed down since then, however. according to the international monetary fund, the global economy will continue to recover, albeit at a somewhat slower pace than at the beginning of the year. the major industrial countries remain on a moderate growth path, even though growth in the united states and japan slowed down somewhat in the in the final quarter of 2015 and the first quarter of 2016. nonetheless, the underlying trend is still pointing upwards and developments in the labour markets are not | connection with the international role of the euro : β 3 β how fast and to what extent will the euro become a major international investment and reserve currency? can the euro take over the d - mark β s role as the second most important investment and reserve currency? naturally, the euro will play a significant international role as an investment and reserve currency. if this does not turn out to be the case, it will be an enormous β and scarcely conceivable β surprise as well as a bitter disappointment. the fact that the euro area is already regarded as a safe haven confirms this assumption. it is simply a fact of life that major international currencies are used by investors from time to time as a safe haven. however, this can also be a problem in certain situations, especially for the exchange rate. but it is the future stability of the euro that will determine its actual role in the concert of world currencies. and two key criteria for this will be β’ sensible monetary policy decisions by the ecb governing council, and β’ stability - oriented behaviour in those aspects of economic policy which remain a national responsibility, especially fiscal and wage policies. given such a policy mix, the euro can assume a major international role β in line with the size and economic importance of euroland β and also make its contribution to global stability. iii and that brings me to the subject of this conference : β the euro as a stabiliser in the international economic system. β this title expresses great expectations of the future single currency. β’ in what sense β if at all β does the international economic system need a stabiliser? β’ and if it needs one, how can a currency help to meet such a need? let me begin with the second question : as a general principle, currencies cannot solve structural problems relating to the global real economy. and as far as the first question is concerned, it must be said that, while the world economic setting is difficult at the moment, there is certainly no cause to talk of a fundamental instability. in recent weeks the financial markets have at least calmed down a little. the world financial crisis which many people predicted looks unlikely to occur at the moment. it is true that a number of countries are currently suffering crises entailing considerable local growth losses : β’ in the south - east asian countries this is a direct consequence of the financial crisis. but at the moment there are some encouraging signs of an improvement in certain countries. β’ japan continues to suffer, in particular | 0.5 |
productivity that occurred in the recession of the late 1980s and early 1990s. figure 4 contributions to changes in gdp per capita percent contribution to annual change note : the chart was derived using 3 year averages of gdp per capita, hours worked, and population in order to show the underlying trends in labour utilisation and labour productivity. the importance of labour productivity growth to the long run economic outlook becomes very clear when we look at demographic trends. figure 5 shows labour force projections which are based on three population projections. all three projections assume medium fertility and medium mortality but each has a different assumption regarding migration. with zero net migration the size of the labour force begins to decline from 2018. higher levels of migration push the track up, but even with an annual net gain of 10, 000 from migration, the growth in the labour force slows, and the labour force eventually levels off. net gains from permanent and long term migration have averaged 13, 600 per annum over the last decade, compared with - 4, 700 per annum in the previous decade. figure 5 projected labour force people in the in labour force, millions these projections reflect the ageing of the population. birthrates underwent a long term decline from the 1890s through to the 1970s, although the post war baby boom provided a temporary interruption. around 2010, the number of people leaving the labour force - mainly baby boomers - is projected to rise sharply. even if these people were to put off retirement for a while, growth in labour utilisation is still likely to slow. any substantial growth in the labour force would have to come via high levels of migration. taking one of our labour force projections - the one based on annual net migration of 10, 000 - we can derive scenarios for future gdp per capita based on assumptions about labour productivity. let β s assume that labour productivity grows at 1. 5 % per annum, which as we have seen, is similar to the present growth rate. for each year of the projection we add this growth to the projected growth in the labour force to get gdp growth. ( in doing this, we are assuming that number employed will grow at the same rate as the labour force. that is, we are assuming that the unemployment rate will stay constant over the projection period. ) for each year of the projection, we can then calculate gdp per capita, using the projected population figure. the result is shown in figure 6, along with projections using alternative labour productivity assumptions. the lowest scenario assumes no growth in labour productivity, and | ? definitely not. there may be some topics which we have not yet addressed or which might need addressing because changes in the regulatory environment are always met with evasive manoeuvres. 1 / 3 bis central bankers'speeches one example is the shadow banking sector. when regulation is tightened in one area, incentives are put in place for other intermediaries to step in. when certain business activities are pushed out of the banking sector, it does not necessarily mean that the risks for financial stability increase, but nor does it mean that these activities will not pose risks if they are handled by other market participants. so developments in the shadow banking sector warrant our close attention. furthermore, we have to regularly assess whether the stated objectives have been fulfilled with the new set of rules. the financial stability board ( fsb ) is currently evaluating the recent reforms, so this will give us an indication as to whether there have been any unintended consequences and whether we need to adapt some of the rules β although i do not expect a need for huge amendments. as i mentioned, there is a second reason why i think that the reforms have made financial markets safer. the standards were set at the global level, by the fsb and the global standard - setting bodies. this addressed one of the lessons learnt from the last crisis β financial markets and financial institutions are much more closely interconnected than most people realised. there is no such thing as a national banking sector. the banking sector has become global. many banks operate not just in one country, but in dozens of countries. and almost all banks do at least some business with banks from outside their own country. such a global banking sector is a good thing. it facilitates global trade and investment ; it unlocks new sources of funding for the economy ; and it improves the way capital and risks are allocated across countries. and because the banking sector is global, the standards need to be global too, to contribute to financial stability in the major financial centres. so i hope that the latest package of global banking standards β basel iii β will be completed this year. and i am still confident that this will be the case. after finalising basel iii, we need to focus on implementing the standards. i worry that some financial centres might not implement significant parts of the agreed framework. and that would be a great mistake. without consistent implementation, the common standards will remain fragmented, leaving the door wide open to a race to the bottom in regulation, regulatory arbitrage, higher | 0 |
bank of japan β s november report of recent economic and financial developments1 bank of japan, 20 november 2002 * the bank β s view * * japan β s economy has stabilized as a whole, but there is greater uncertainty toward recovery. with regard to final demand, while the decline in business fixed investment has almost come to a halt, private consumption continues to be weak. moreover, housing investment remains sluggish and public investment is declining. while signs of recovery are still not observed in domestic demand, exports are losing their momentum. the completion of the cutbacks in inventory stocks still underpins the increase in industrial production, but the pace of increase has become slower as exports are not rising anymore. as for the employment situation, the overtime hours worked continue to increase and the number of employees, which widely covers various non - regular employees such as temporary workers, appears to have stopped declining. however, as firms are still maintaining their stance on reducing personnel expenses, household income continues to decrease noticeably due to, among other factors, an ongoing decline in wages. thus, the employment and income situation of households overall remains severe. turning to the economic outlook, a widely shared prospect for overseas economies throughout next year is that they will follow a gradual recovery path. however, an increasing number of economic indicators are softening in some countries, particularly in the united states. based on this development, the recovery in overseas economies is likely to be anemic at least for the time being. therefore, exports and industrial production are expected to be more or less unchanged for the immediate future. with respect to domestic demand, public investment is projected to follow a declining trend and private consumption is likely to remain weak for some time due to the severe employment and income situation. business fixed investment is expected to be supported by the improvement in corporate profits to date, but a distinct recovery is unlikely for the time being due to, among other things, greater uncertainty regarding overseas economies. overall, assuming that overseas economies will recover next year even at a moderate pace, the increase in exports and production will resume, making the foundations of japan β s economic recovery gradually firmer. however, the economy is unlikely to show clear signs of recovery for some time, since exports and production are expected to be virtually unchanged for the time being while restraining forces such as excessive labor input and debt persist. furthermore, the uncertainty regarding the outlook for the u. s. and other overseas economies, including geopolitical factors and their effects on the economies, is becoming | ##p by share of each economy according to weo ( imf ). sources : central bank of chile based on consensus forecasts and imf. figure 6 gross fixed capital formation ( annual change, percent ) - 20 - 20 - 40 - 40 total investment construction & other works machinery & equipment source : central bank of chile. bis central bankers β speeches table 1 international baseline scenario assumptions 2013 ( f ) gdp growth trading partners'gdp world gdp at ppp 3. 4 3. 1 3. 6 3. 3 3. 4 3. 0 3. 4 3. 0 united states eurozone japa china india rest of asia ( excl. japan, china and india ) latin america ( excl. chile ) 2. 8 - 0. 6 1. 9 7. 7 5. 1 3. 8 2. 7 1. 9 - 0. 4 1. 1 8. 1 6. 3 4. 3 3. 3 1. 7 - 0. 4 1. 8 7. 6 4. 1 3. 8 2. 6 1. 9 - 0. 4 1. 6 7. 7 4. 5 3. 9 2. 4 lme copper price ( us $ cent / lb ) brent oil price ( us $ / barrel ) terms of trade - 4. 1 - 0. 4 - 3. 9 - 3. 2 march'13 report dec.'13 report march'14 report 2014 ( f ) march'13 report dec.'13 report ipom mar. 14 ( annual change, percent ) 4. 2 3. 6 3. 9 3. 5 2. 5 2. 6 1. 3 1. 0 1. 3 1. 3 8. 2 7. 4 6. 4 5. 3 4. 7 4. 0 3. 7 2. 9 ( levels ) ( annual change, percent ) - 1. 6 0. 2 2015 ( f ) march'13 report march'14 report 3. 7 3. 5 3. 8 3. 7 3. 9 3. 8 2. 7 1. 2 1. 5 7. 3 5. 4 4. 1 2. 3 2. 7 1. 4 1. 0 7. 2 6. 3 4. 5 3. 4 2. 9 1. 5 1. 1 7. 2 6. 3 4. 5 3. 4 - 0. 9 - 1. 5 - 1. 1 ( f ) forecast sources : central bank of chile based on a sample of investment | 0 |
understanding of climate risk, seeking to address those risks through upskilling, identifying useable tools and frameworks, raising awareness, and taking leadership applies to all participants in the financial system β including regulators β and we are supportive of many of the recommendations. i am particularly drawn to the new industry narrative recommendation, which proposes to articulate a coherent story on what role the industry is playing in support of wider climate goals. in my view, the establishment of the climate forum and the publication of this report is a substantial first step in building that narrative. but there is no doubt that we are very much in the early days of this journey. and while we can expect the regulations and industry best practices for meeting those regulations to evolve β there is a need to further embed climate risk and sustainable finance within our organisations and that can only happen through building capacity. as i have said before while the path toward a net - zero economy is a difficult one, it is nevertheless one that we must all walk together. my thanks again to the working group for making a substantive contribution in that journey with this report and i look forward to the rest of the event this morning. 2 / 2 bis - central bankers'speeches | not been profitable. still, it is reasonable to ask whether, having under - priced lending so badly in the early years of the millennium, they could end up over - pricing it now. ireland is not the only country to have been experiencing widening spreads. in the uk too they have moved up since the crisis and, for mortgages, are about as high as here. spain and italy are other large countries where spreads on small loans, including business loans widened appreciably following the crisis, though with some reversal more recently ( figure 3 ). bis central bankers β speeches so, should there be a ceiling on interest spreads? control of retail interest rates by the central bank is not provided for in legislation, and i believe it should remain so. this will not come as a surprise to students of economics, accustomed to understanding the problems that can be caused by preventing the emergence of a market - clearing price. but i think that there is an important political economy dimension here. if the local banks are charging unnecessarily high interest rates, that will be an inducement for new entry into lending here, and that ( reversing the trend of the past few years ) would be very welcome and would have the effect of bringing both pricing and the quality of banking services to a much better place. in contrast, aggressive official interest rate spread control would be the clearest warning signal to would - be entrants that they might not be permitted to earn sufficient profits to justify the costs of entering. enforcement given that the ssm is overlaid on a tapestry of detailed national legislation, it follows that, when it comes to enforcing the banking regulations through ex post administrative actions such as fines β whether on banks ( or other financial firms ) as institutions, or on individuals responsible β this remains a national responsibility, and one which we approach with vigour. our enforcement effort not only focuses on banking, but also on insurance, markets and of course, the key area of consumer regulation. for the past four years we have operated a separate enforcement directorate at the central bank in order to ensure both that such work is given sufficient priority and that it is separate from ongoing supervision. this is an area that calls for painstaking and meticulous work to build cases that stand up to challenge. some administrative cases have been in preparation for years. the legal environment is such that the burden of proof is very much on us and it is incumbent on us to bring enforcement cases forward so that the credibility | 0.5 |
from the perspective of banks and non - banking financial institutions and requires close cooperation and coordination. but, allow me to announce some activities that cbk has undertaken in order to develop the payment system : participation in high - level meetings at the european central bank ( ecb ) in frankfurt, with the governors and deputy governors of the six countries of the western balkans, regarding the integration into the european system of central banks, namely the sepa payment scheme and the instant payment system tips, where the ecb, within the framework of supporting the eu project for the modernization of payment systems of the western balkan countries and the objectives of the g20, supports concrete initiatives such as the interconnection of payment systems and the inclusion of our region in the european union systems and is continuously in touch for further developments. it has changed the organizational structure where, in addition to the analysis and oversight of the payment systems division, the ip and ipe has been added to the mfis / nbfis supervision division, the it systems supervision division has been established, within the credit registry division was added the bank accounts registry, as well as the department of consumer protection was established where, in addition to the financial services consumers complaints division, the market conduct supervision division was also established. it has proceeded further with the draft law on banks, already in public consultation, which, together with other laws, will complete the financial ecosystem in a complementary way. the draft law on payment services is in the process of finalizition, in compliance with eu directives such as psd2 ( payment services directive 2 ), emd ( e - money directive ), pad ( payment account directive ), and interchange fees. it is in the process of building infrastructural capacity and human resources to ensure that systems, equipment, knowledge, skills and personnel tools remain relevant and effective in overseeing the risks of new technologies and innovative business models. also, financial institutions licensed by the cbk, in order to advance the payment system and increase the quality and efficiency of payment services for their customers, are encouraged to : invest in infrastructure and build human capacity ; advance risk management policies, procedures and processes ; address cyber risks through close cooperation with the cbk and state authorities responsible for cyber security at the state level. 3 / 4 bis - central bankers'speeches financial education will be the focus of the cbk, alongside the advancement of market practices and consumer protection. therefore, campaigns will be organized and supported for the financial | the guide is simple enough for everyone to understand. it is featured in, samoan, tongan and english and with this in mind, samoa has accepted the privilege to be the imperative starting point for launching this project. this guide was by you and for you. it was compiled using your perspective as a school student, as an elder of the village, as a hard working stay at home mother and as a danceloving - father when he gets his paycheck without his wife knowing ; or to put simply, as an everyday samoan citizen. moneypacific has produced the guide and made it easy to understand, and made it accessible to everyone so that you can plan, measure, prioritise or just to be aware of how bis central bankers β speeches much you are spending for everyday necessities. again the intension is not to dictate how much your wallet is crying but to ensure that your wallet is happy to deliver a well sought out purpose for you and your families. to round up my remarks, i would like to take this opportunity to thank the new zealand and australian governments for the support afforded to the moneypacific iniative as we have benefitted greatly from the work it carries out for the pacific communities. i would like to thank each and every one of you for making the time to attend today β s moneypacific money guide launch. but before i hand you over to the moneypacific team for their presentation i truly believe your goals and objectives in your respective designations can be greatly complemented with our agenda of financial literacy and that this latest resource will be of use to the pursuit of youth and women empowerment, assist the micro - entreprenuers, complement student learnings from the existing national education curricula, and overall greatly assist us in all our diverse capacities as financial consumers. manuia le tatou fa β amoemoe. thank you. bis central bankers β speeches | 0 |
speech an economic update philip lowe [ * ] governor address to the armidale business chamber armidale β 24 september 2019 i would like to thank the armidale business chamber for the invitation to speak this evening. i grew up in regional new south wales β in cootamundra and wagga wagga β so it is a treat for me to have been invited to speak in another great regional city. thank you. tonight, i would like to provide you with an economic update. i will focus first on the global situation and then talk about the australian economy. and finally, i will make some remarks about monetary policy. the main message on the global economy is that while it is still growing reasonably well, the risks are increasingly tilted to the downside. the main source of these downside risks are geopolitical developments in many parts of the world. these developments are creating considerable uncertainty and this uncertainty is causing businesses to reconsider their spending plans. this is making the international environment more challenging for us. on the australian economy, there are two main messages. the first is that after having been through a soft patch, a gentle turning point has been reached. while we are not expecting a return to strong economic growth in the near term, we are expecting growth to pick up. against this backdrop, the main source of domestic uncertainty continues to be the strength of household spending. the second message is a longer - term one. and that is the fundamental factors underpinning the longer - term outlook for the australian economy remain strong. one of the ongoing challenges we face as a country is to capitalise on those strong fundamentals. the global economy this first graph shows global economic growth and the international monetary fund's ( imf ) forecasts for the next few years ( graph 1 ). looking at this graph, one might ask why the concern : global growth has been stable and reasonable over recent times and the imf is forecasting this to continue over the next couple of years. if this forecast were to come to pass, that would make for 12 years of solid growth. graph 1 looking at labour markets, one might also ask why the concern. unemployment rates in most advanced economies are the lowest they have been in many decades, and businesses are finding it more difficult to fill jobs ( graph 2 ). these tighter labour markets are finally translating into stronger wages growth, with wages now increasing at close to the rates seen before the financial crisis in some countries. with inflation remaining | further assumed that a mechanical relationship between credit and gdp exists, which in turn results in big adverse impacts on gdp. to a fair extent these differences come down to a discussion about what economists would call elasticities : for the non - bank private sector to respond to a desire for banks to be funded differently, how big a change in the price is required β a little, or a lot? some of the industry estimates appear ( to me anyway ) to assume elasticity pessimism. official sector estimates are likely to be based on less pessimism. in truth, it is impossible to know for sure exactly how big these effects will be. that is a reason to proceed carefully, and to allow time for the new rules to be phased in. clearly, we wish the new rules to be constraining risk taking and leverage as the next boom approaches its peak, but that will probably be some years away, so we have time to implement strong standards and allow an appropriate period of transition. that said, there are three broad observations that i would like to offer. first, i think we ought to be wary of the assumption of a mechanical relationship between credit and gdp. of course a sudden serious impairment in lenders β ability to extend credit almost certainly amounts to a negative shock for growth in the short term. but did the steady rise in leverage over many years actually help growth by all that much? some would argue that its biggest effects were to help asset values rise, and to increase risk in the banking system, without doing all that much for growth and certainly not much for the sustainability of growth in major countries. some gradual decline in the ratio of credit to gdp over a number of years, relative to some ( unobservable ) baseline, without large scale losses in output may be difficult to achieve but i don β t think we should assume it is impossible. secondly, even accepting that there will probably be some effect of the reforms in lowering growth over some period of time, relative to baseline, we have to remember that there is a potential benefit on offer too : a global financial system that is more stable and therefore less likely to be a source of adverse shocks to the global economy in the future. so we have a cost - benefit calculation to make. quantifying all this is very difficult, but then that is often the case when deciding policies. thirdly, however, the reforms do need to be carefully calibrated with an eye to potential unintended consequences. one | 0.5 |
##interrupted service of critical functions and for insured depositors ; preservation of franchise value of the firm ; credibility of regime among financial institution counterparties, ex ante ; and, effective coordination and cooperation among jurisdictions in the event of a crossborder failure of an institution. one promising avenue is to embed contingent capital features into debt and preferred shares issued by financial institutions. contingent capital is a security that converts to capital when a financial institution is in serious trouble, thereby replenishing the capital of the institution without the use of taxpayer funds. contingent conversions could be embedded in all future new issues of senior unsecured debt and subordinated securities to create a broader bail - in approach. its presence would also serve as a useful disciplinary device on management since common shareholders would be incented to act prudently and avoid having their stake in the institution diluted away by the prospect of conversion. building resilient markets the third strategy to mitigate systemic risk is to enhance the resiliency of financial markets through initiatives to improve infrastructure and enhance transparency. continuously open financial markets are essential to a system that is robust to failure. keeping markets continuously open requires policies and infrastructure that reinforce the private generation of liquidity in normal times and allow for central bank support in times of crisis. the cornerstone is clearing and settlement processes with risk - reducing elements, particularly central clearing counterparties or β ccps. β properly risk - proofed ccps act as firewalls against the propagation of default shocks across major market participants. moreover, in the case of a single - participant default, a ccp β s standardized procedures can contribute to an orderly close out of that participant β s positions, eliminating the chance of a β fire sale β and reducing spillovers to other markets. for these reasons, the bank of canada has supported the development of a domestic ccp for canadian - dollar repos, which should be launched later this year. the bank is working with its domestic partners to develop similar infrastructure for over - the - counter ( otc ) derivatives markets. current g - 20 efforts to transfer trading of standardized otc derivatives to clearing houses have similar benefits. securities regulators and central banks have a shared interest in ensuring that the new infrastructure is properly risk - proofed. iosco recently provided helpful guidance for riskmanagement practices of central counterparties that clear otc derivatives products. 6 central banks look forward to the results of your consultations on this issue, which should serve to set robust standards to | , tail risk has been removed from the economic outlook. the very low policy interest rates and greater - than - usual clarity on policy paths are encouraging investors to return to the markets and to take on greater risk. direct support to the industry has been breathtaking, with some industrialized countries committing a remarkable 25 per cent of gdp to support their financial sectors. in effect, there was wartime spending on peacetime calamity. the g - 7 commitments of last october temporarily eliminated counterparty risk for major institutions. when this support was combined with an intense flight to quality, large financial institutions benefited disproportionately. even in canada, public funding has been considerable. the $ 65 billion in insured mortgage purchase program ( impp ) funding for banks represents 4. 3 per cent of gdp. bank of canada extraordinary liquidity facilities have been smaller than elsewhere but they still peaked at 3 per cent of gdp. while government guarantees have not been used, it is noteworthy that canadian bank term funding is running at less than 30 per cent of normal levels, largely as a result of the use of impp and the bank β s facilities. initially, the crisis has also had a major impact on the competitive environment for financial institutions. competition globally has been substantially reduced through the combination of the failure of institutions, a decline in cross - border banking and, most importantly, the collapse of most of the shadow banking system. the reduced competitive dynamics could persist for some time, allowing the core of the financial sector to build sufficient capital for the future. banks around the world would be well advised to take this opportunity to do so. the g - 20 reform agenda the fundamental objective of the g - 20 reforms is to create a resilient, global financial system that efficiently supports worldwide economic growth. the system must be robust to shocks, dampening rather than amplifying their impact on the real economy. the bank of canada strongly believes that our destination should be one where financial institutions and markets play critical β and complementary β roles to support long - term economic prosperity. the financial system will be more stable if market infrastructure is substantially improved, products are more standardized and transparent, and banks are adequately capitalized to fulfill their market - making and credit intermediation roles. market forces should be left to determine the relative sizes and boundaries of the banking and market sectors. in doing so, markets can discipline banks by furnishing necessary competition. there are two main approaches to reform : β’ first, protect the banks | 0.5 |
swifter and fairer way. banks directly supervised by the ecb have built up strong capital positions in recent years, with a common equity tier 1 ( cet1 ) ratio of 14. 3 % in the first quarter of 2019 compared with 11. 3 % at the end of 2014. they have also substantially reduced their non - performing loan ratio, which stood at 3. 7 % in the first quarter of 2019 compared to 7. 5 % in the second quarter of 2015. these are important steps forward as euro area firms rely heavily on bank credit to finance growth and investment. so what more should be done at the european level? first, the ability of the financial sector to contribute to economic stabilisation should be strengthened. during the crisis, financial integration in the euro area reversed and it has only gradually recovered over the past few years. the creditworthiness of banks remains linked to that of national governments. unlike in the united states, cross - border investment is not a significant buffer against economic shocks. the euro area still lacks genuinely integrated capital markets, which hinders the efficient allocation of european savings, private cross - border risk - sharing to smoothen consumption during idiosyncratic shocks and the use of the euro as an international currency. recent legislative steps are commendable but do not measure up to the initial ambition of the capital markets union project. brexit will further accentuate the need to develop and integrate the eu β s capital markets. a large number of banks and investment firms are in the process of establishing or expanding their euro area presence, possibly resulting in the development of a multi - centric european financial system. while the landscape may evolve further in the future, in a financial system with a number of increasingly important hubs, as opposed to one dominant hub in london, it will be more important than ever for these hubs to be able to efficiently interact with one another and to avoid differences across member states providing opportunities for regulatory arbitrage. second, the banking union needs to be completed. in particular, a fully fledged european deposit insurance scheme ( edis ) is a key missing element. in this context, the ecb has proposed that edis could be accompanied by risk - based contributions by banks linked to their sovereign holdings. third, further efforts are needed to deepen fiscal union in the euro area. european fiscal rules are complex, opaque and plagued with exceptions and exemptions which have accumulated over time. they rely excessively on measures of cyclical | vitas vasiliauskas : central banking in the age of financial innovation β what does it take? speech by mr vitas vasiliauskas, governor of the bank of lithuania, at the conference " living without globalization? ", session 8 " digital transformation and innovation ", organized by the hamburgisches weltwirtschaftsinstitut ( hwwi ) and the reinventing bretton woods committee, hamburg, 4 july 2017. * * * good afternoon, ladies and gentlemen, firstly let me thank the other panelists for their insights. i would like to add some thoughts on financial services and central banking β their new mission in the age of innovation. i guess, some of these thoughts may sound unusual or even controversial. especially for a representative of a central bank that also holds the role of financial system supervision. however, this is our goal for today β to have a productive discussion, frankly sharing our thoughts and offering outside - the - box views. needless to prove the obvious : financial markets are changing. and they are doing so swiftly and fundamentally. in this light, central banks β being the guardians of financial stability β must alter the way they operate. to respond to new challenges, they need to become more flexible. otherwise β you see the poor guy in the picture β central banks and supervisors will stand with their hands tied, while the financial sector is moving forward, fueled by technological advance. yet while saying β a β we must say β b β. despite a surge in innovations, there still exists a vast unused potential. in practice, private actors may be held back by unfavorable market structure and regulatory environment. what these actors often need is a gentle push β a supportive stance from the authorities. on the other hand, authorities β and consumers as well β also face challenges. firstly, fintech developments formulate the need to balance innovation on one side and β stability on the other. adding to this, certain sectors β such as payments β may be ready for innovation. but they are hampered by high entry barriers, preserving relatively inefficient and costly systems. what is more, technological advances β like automated trading and investment β alter market structures. this calls for upgrades in regulatory frameworks. conventional wisdom and tools are often insufficient. central bankers and supervisors are thus facing a choice. they must either opt for an unconventional path, which requires broader outlooks, or risk lagging behind the markets. now let us look past the | 0 |
first part of our fintech strategy is called β all banks go fintech β. in short, we want banks to go β all in β with fintech, and fully digitalise their operations, from front - end to back - end. 15. the future is full of uncertainties. this is something we have all witnessed first - hand over the past two years with the pandemic. challenges and interruptions to day - to - day activities, including banking activities, can happen unannounced. the only thing certain and that has been a constant throughout these ups and downs is digitalisation. 16. indeed, the banking industry also recognises the value of digitalisation. at least we like to think this is why banks have so positively embraced the hkma β s fintech drive so far - rather than due to any regulatory pressure! jokes aside, i trust the figures i quoted earlier are proof that the earlier smart banking initiatives have laid a strong foundation for our banks to take this next step in their fintech journey. 17. the hkma is keen to support banks during this process. under the fintech 2025 strategy, we will be rolling out a tech baseline assessment to help the hkma identify those areas that we may be able to offer support. as part of this exercise, we will be inviting banks to submit a three year plan for technology adoption within q4 2021. we will then assess and benchmark the results against overseas peers to identify whether there are firstly, any business areas β such as investech, wealthtech, insurtech and greentech - where technology is underused, or secondly, any specific technology types, including artificial intelligence and blockchain solutions β that are not receiving sufficient attention. based on the findings of this exercise, we will consider what support the hkma can offer to help the banking sector reach the next level of fintech sophistication. if everything goes according to plan, you can expect to see the results in the first half of 2022. 18. in parallel, we will continue to provide guidance on fintech areas that may present opportunities or risk management challenges to the banking industry. this will help banks adopt novel technologies with more confidence and less apprehension that regulators may come knocking! as an example, as part of our two - year regtech roadmap, we will soon be publishing a β regtech adoption practice guides β series to address how regtech solutions can be applied to cloud computing, blockchain | central bankers'speeches | 0.5 |
can never fully predict how bank failure will play out, a plan with no flexibility is not a good plan. here, crisis simulation exercises are a key tool for developing flexibility. conclusion summing up, my three main messages this morning are : first, cooperation. cooperation between resolution authorities, but also with other authorities like dgs β s, supervisory authorities and ministries, is key to promote an effective and consistent resolution regime. second, preparation. although practice will be different from planning, we can boost the chances of successful resolution action if we step up crisis preparation, while maintaining a flexible approach. this will also decrease the legal risk of resolution actions. finally, to establish a strong resolution regime : we need to persist in our endeavours. it takes time and perseverance to overcome hesitation or reluctance, which is still present at some banks and authorities. yet we also need to keep up our collective efforts if we really want to minimise the impact of bank failures on the real economy and society as a whole. it is fitting that the word β resolution β can also mean β will power β, or β determination β. because these are exactly the qualities we need to overcome doubts in the sector and get everyone on board. i am sure today will produce some valuable insights which will help us all gain a deeper understanding of how we approach resolution in our respective jurisdictions. and of course, this understanding will only serve to strengthen our collective approach. thank you! | basel ii has only been fully implemented in europe since the beginning of this year. the us is rolling it out more slowly. even so, there is already strong agreement that basel ii will improve incentives for risk management and market disclosure and enhance capital regulation and supervision. let me point out some key enhancements relevant to the current crisis. among other things, basel ii will deliver better risk differentiation. banks that enter upon more risky lending practices will need to strengthen their capital base accordingly. moreover, under the new capital regime all exposures will be subject to regulatory capital charges, whether on or off the balance sheet. basel ii will also create more neutral incentives between retaining exposures on the balance sheet and transferring them to the capital markets through securitisations. it will reinforce capital requirements for banks β trading books, which are rapidly growing. and last, basel ii will enhance disclosures of banks β risk profiles, notably with regard to structured credit and securitisation activities. given that basel ii is a risk - sensitive framework, there is some concern that it may turn out to be too procyclical. however, to achieve more risk sensitivity in minimum capital, there has to be some fluctuation in that requirement over the cycle. the basel committee has tried to balance the objectives of risk sensitivity and capital adequacy over the cycle. for instance, banks are required to perform forward - looking stress tests to make sure that they hold enough cushions above the minimum. basel ii will also require much stronger firm - wide aggregation and management of risk exposures. and banks that take on more risk will be required to hold more capital in the first place, helping to prevent the build - up and underpricing of risk. we will also be tracking the framework over time and make any necessary adjustments based on our findings. so, it is safe to say that the basel ii framework is a major improvement. but it is not the ultimate answer to the financial markets problems of today and tomorrow. in december 2006, the basel committee had already identified β pressure points β and weak spots in the regulatory and supervisory regime that should be addressed. fortunately, the framework is flexible enough to evolve over time. in light of recent developments, the basel committee has already begun to evaluate certain aspects of the framework. these include issues such as the securitisation of complex products, reputational risk and disclosure. but strong capital, though essential, is only one aspect of a stable banking and financial system. sound risk | 0.5 |
many open questions remain on the subject of treasury market liquidity. 2 at the same time, the agenda for this conference makes it clear that there are many other important questions beyond market liquidity worthy of consideration and debate. the breadth and expertise of the attendees at this conference make this forum an excellent opportunity to advance our collective thinking on this range of important subjects. while the recent joint staff report on the events of october 15 certainly revealed that much has changed, it is also important to recognize that both private and official sector efforts to ensure a healthy and efficient treasury market have been ongoing for some time. 3 one obvious example is the treasury market practices group, or the tmpg. set up in february 2007, the what i have to say today represents my own views and not necessarily those of the federal open market committee or the federal reserve system. see regulation and liquidity provision, remarks at the sifma liquidity forum, september 30, 2015. joint staff report : the u. s. treasury market on october 15, 2014. bis central bankers β speeches tmpg is a group of market professionals committed to supporting the integrity and efficiency of the treasury market. 4 a core purpose of the tmpg is to develop and update a set of best practices related to trading, settlement and risk management, thereby establishing a set of behavioral norms to which market participants are expected to adhere. most recently, the tmpg updated its best practice guidance to address automated trading, and published a companion white paper on the subject. and no discussion of the tmpg can go without mention of the β fails charge. β instituted in may 2009, this practice provides a standard procedure for market participants to assess β or pay β a fee for settlement failures, and this has proven to be a highly effective remedy for curbing the volume of fails in the treasury market. 5 i want to thank the entire tmpg for their leadership in supporting the efficiency and integrity of the treasury market. i β d like to single out tom wipf with a personal thank you. tom has served with distinction as the tmpg β s chair since its inception, providing credible, balanced and independent leadership to the group. i would be remiss if i did not also mention the ongoing work of the inter - agency working group on treasury market surveillance, or the iawg. after the salomon auction bidding scandal in january 1992, the official sector established the iawg. since that time, it has been a | useful forum for the official sector to coordinate and communicate on the various issues that have arisen in the treasury market. indeed, over the years there have been numerous examples of questionable behavior that has come to the attention of the iawg, and these have been channeled onwards to the appropriate authorities. the iawg continues to meet biweekly, as it has since its inception. as you all know, the joint staff report concluded that further work is necessary in light of the evolving structure of the treasury market, and it also highlighted a series of additional steps that the official sector will take to evaluate its approach to this market. i remain very supportive of these efforts. in fact, this conference is among the first of those next steps, and presents a perfect opportunity to have a rich debate on the market β s evolving structure and the actions that may be appropriate in response. thank you once again for coming here today. i look forward to our engagement and discussion. the tmpg has since expanded its mandate to include the agency debt and agency mortgage - backed securities ( mbs ) markets. a more recent and equally successful practice has also been instituted for the mbs market. bis central bankers β speeches | 1 |
for the recovery. 1 indeed, interest - rate and credit - sensitive sectors β business spending, home sales, auto sales, and other β big - ticket β items β have helped fuel that recovery. this spending was supported by our timely and forceful moves to cut the federal funds rate to its effective lower bound, restore market functioning, and provide emergency support to households and businesses through 13 ( 3 ) emergency lending facilities. which leads me to the banking industry. for monetary policy to fully support main street, we need a well - capitalized, stable banking system that is lending to creditworthy households and businesses. since the global financial crisis ( gfc ), the federal reserve has focused on building the resiliency of banks so that they would be a source of strength during the next downturn. thus far, that plan has borne a great deal of fruit. as the crisis intensified in early march, banks stepped into the breach and met the massive demands for cash from businesses that drew on their preexisting credit lines. banks also funded the bulk of the more than $ 500 billion in paycheck protection program ( ppp ) loans. according to our weekly bank credit data, commercial and industrial loans increased $ 715 billion between the 1 / 4 bis central bankers'speeches week of february 26th and their peak on may 13th. 2 for millions of struggling households, banks have agreed to forbear interest and principal payments on their loans. in addition, through september, banks absorbed more than $ 1. 2 trillion of central bank reserves and received about $ 2. 5 trillion of core deposits from investors who sought the safe haven of the u. s. dollar and insured bank accounts. as supervisors, we recognized that these actions strained the balance - sheet capacity of banks and so have taken a number of steps to allow them to continue to support their customers during this unprecedented time. a number of those steps β such as encouraging banks to work with their customers until the emergency subsides β are consistent with what we do whenever there is a natural disaster that disrupts normal commerce. but the covid event has affected the entire country at the same time, requiring a broad set of extraordinary actions. for instance, we have temporarily exempted reserves and treasury securities from the supplementary leverage ratio so that banks do not become constrained by growing treasury issuance and central bank reserves and can support businesses and households. 3 more broadly, we have reintroduced and added numerous funding facilities through our 13 ( 3 ) authority to | randal k quarles : the importance of transparency, accountability, and fairness in regulation speech ( via webcast ) by mr randal k quarles, vice chairman for supervision of the board of governors of the federal reserve system, at the hoover institution, stanford, 14 october 2020. * * * i want to thank john taylor and the hoover institution for inviting me to speak today. i will start with some brief remarks about the current economic situation and monetary policy and then turn to the actions that the federal reserve has taken this year to help ensure that the banking system remains a source of strength during the recovery from the covid event, the term i use for the complex set of responses in both the private and public sectors to the outbreak of covid19. i will close with some thoughts on nonbank financial institutions and international coordination. although the covid event put the u. s. economy in a deep hole, the recovery since the economy began reopening in may has been stronger than almost any forecaster predicted back in the spring. spurred in part by record fiscal stimulus, both business and household spending appear to have bounced back significantly through the third quarter, and we have regained about half of the jobs lost in march and april. i attribute a good portion of that strength to the inherent dynamism and flexibility of the american economy. although the covid event continues to stress businesses, many businesses adjusted their operations to remain open, and applications for new businesses surged over the summer. meanwhile, better treatments and more - targeted containment measures focused on protecting the most vulnerable have resulted in falling rates of hospitalization and mortality. therefore, i am optimistic that the recovery from the covid event will continue to be robust. of course, while we β re doing better than expected, we still have a ways to go. the labor market remains deeply depressed, and employment is far short of the federal reserve β s maximum employment goal. we are also keenly aware that the harm from higher unemployment has fallen even more than usual on those low - income households least able to bear it. some businesses, particularly those in high - contact and personal - service industries, largely have been left out of the recovery. inflation is well below our 2 percent longer - run goal, and some measures of inflation expectations have ticked down. therefore, at the september federal open market committee ( fomc ) meeting, i voted in favor of the new and clearer forward guidance for monetary policy because it will provide additional support | 1 |
and have sufficient levels of capital to operate through times of stress, as defined by the federal reserve β s supervisory stress scenario. the program enables us to make a quantitative and qualitative assessment of the resilience and capital planning abilities of the largest banking firms on an annual basis and to limit capital distributions for firms that exhibit weaknesses. with regard to liquidity resiliency, under the federal reserve β s comprehensive liquidity analysis and review ( clar ), liscc firms are subject to a comprehensive review of their liquidity positions and liquidity risk management, including internal stress - testing practices. firms with weak liquidity positions or practices are directed to improve those practices and augment their liquidity positions as needed. similar to ccar, clar is designed to ensure that liscc firms have rigorous, forward - looking liquidity stress testing and risk - management practices that account for unique risks, and that the liscc firms maintain sufficient liquidity to continue to operate through a period of acute stress. the program allows the federal reserve to compare the range of practices across firms and form a view on liquidity vulnerabilities and funding concentrations in the system as a whole. unlike ccar, which currently applies to all firms with $ 50 billion or more in total assets, only firms within the liscc portfolio are required to participate in clar. liscc firms are also subject to an annual review of their recovery and resolution preparedness. the program evaluates progress in implementing operational capabilities and legal entity rationalization that would facilitate recovery or resolution under a range of scenarios and provides the federal reserve with the ability to compare progress on recovery the foreign banking organizations whose u. s. operations are currently supervised as part of the liscc program are barclays plc, credit suisse group ag, deutsche bank ag, and ubs ag. the firms designated by the fsoc for supervision by the federal reserve are american international group, inc. ; general electric capital corporation, inc. ; metlife, inc. ; and prudential financial, inc. further information on the liscc, including a full list of the supervised firms, is available on the board β s website at www. federalreserve. gov / bankinforeg / large - institution - supervision. htm. bis central bankers β speeches and resolution planning across firms. we are working with the fdic to evaluate the gsibs β most recent resolution plans, which were submitted in | more likely to result in harm to consumers get more attention. and we continue to improve our examiner commissioning training program to ensure that it fully reflects the lessons of the recent crisis. with the congress β s support, we have also taken action to relieve small holding companies of certain requirements by raising the asset threshold for the board β s small bank holding company policy statement from $ 500 million to $ 1 billion, and by applying this statement to small savings and loan holding companies. the small bank holding company policy statement promotes local control of community banking organizations by acknowledging that smaller companies have less access to the capital markets and allowing them to fund acquisitions with a higher level of debt than would otherwise be allowed. we also relieved small holding companies of requirements to comply with consolidated capital requirements, recognizing that their bank subsidiaries make up most of their assets and are already subject to capital rules. in addition, in conjunction with this change, we eliminated quarterly and more detailed consolidated financial reporting requirements for holding companies with less than $ 1 billion in assets, and instead require parent - only financial statements on a semiannual basis. 6 consistent with the economic growth and regulatory paperwork reduction act ( egrpra ), the board is also working with the other federal banking agencies to identify banking regulations that are outdated, unnecessary, or unduly burdensome. as part of the egrpra review, the agencies have held several public outreach meetings with bankers, consumer groups, and other stakeholders. 7 several themes have emerged during the discussions. for example, community bankers in rural areas have noted that it can be difficult to find an appraiser with knowledge about the local housing market at a reasonable fee. bankers have asked the agencies to consider increasing the dollar threshold for requiring appraisals, which could allow them to use a less formal valuation of collateral for a larger number of mortgage loans. in addition, bankers have raised concerns about the extent of the financial reporting requirements established by the banking agencies. in response, the banking agencies have already taken steps under the auspices of the federal financial institutions examination see board of governors of the federal reserve system ( 2015 ), β federal reserve board issues final rule to expand applicability of small bank holding company policy statement and apply it to certain savings and loan holding companies, β press release, april 9. an additional egrpra outreach meeting is scheduled to be held in washington, d. c., on december 2, 2015. bis central bankers β speeches council to consider options to eliminate or | 1 |
the idea that the ecb is a place of confrontation between various national interests, represented by various nationalities and various national central bank governors. the maastricht treaty asks all of us to decide in the interest of the euro area as a whole and to forget about reasoning on the basis of a national vision. our present concept is fully in line with this very important treaty instruction. let us not forget that, from this standpoint, we are in a very different situation to that of the united states or the united kingdom. there is no central bank governor in the united states or the united kingdom equivalent to the governing council. the united states is not made up of twelve sovereign states sharing the same currency. third, we publish our diagnosis in real time and we provide a press conference so that all the arguments that have led us to our decision are known in full by the public. finally, empirical works - in particular by artus and wyplosz - have shown that we have been highly predictable in our decisions - even more than some other very influential central banks. this demonstrates that our present concept does not in any respect undermine predictability, which is one of the major ultimate goals of transparency. let me now focus on some elements of our monetary policy concept. to start with, i would like to stress something which is essential in order to understand all that we have done over the past five years : we were asked to deliver a new single currency that would be at least as good as each and every national currency. it was a solemn promise made to 306 million fellow citizens of europe. it was the necessary fundamental feature of a smooth transition to the euro. had this promise not been met, quite a number of people in europe would have seen their market interest rates rise at the moment of transition, and they would have rejected it. so it was undoubtedly necessary. but, at the same time, it was also extraordinarily demanding. it was extraordinarily demanding because it called for the euro, from day one, to be as credible, as confidence - inspiring and as good a store of value as the best national currencies were before the introduction of the euro. and this had to be attained, not only on a short - term basis, but also on a five - year, ten - year, thirty - year basis β¦ we succeeded in delivering, to the benefit both of the euro and of 306 million fellow citizens, the best yield curve available in the euro area before | academics began to study the interaction of house prices and collateralised household borrowing with business cycles or monetary policy. they chose to explore how housing β in its twin role as a consumption good and as a collateralisable asset β influences asset pricing, portfolio and consumption - saving choices. but let me now give you some concrete examples of stijn van nieuwerburgh β s timely and significant research. of the wide range of topics covered in his studies, i shall concentrate on housing markets and other sources of systemic risk, which are key inputs into macroprudential policy. let me begin by referring to one of stijn β s earliest research papers from 2005 on housing as a collateral good, published in the journal of finance. in this study, stijn, together with hanno lustig, describes how housing can affect asset returns and may thus spread to other markets. 4 the authors explore the role of housing as a collateral asset in a model of limited commitment. when housing collateral is scarce, i. e., the ratio of housing wealth to human capital wealth is low, their model predicts that households are less keen to take on financial risks, and therefore demand a higher return for bearing these risks. using us data, they show that a decrease in housing collateral is followed by higher future stock returns. stijn and co - author thus highlight an important channel through which housing affects stock returns, namely through its 1 / 3 bis central bankers'speeches role as a collateral asset. this result stresses the relevance of housing market surveillance because developments in these markets can have a broader impact on asset markets. with respect to the role of housing as a business cycle driver, a very significant piece of work is stijn β s most recent research, forthcoming in the journal of political economy and jointly written with jack favilukis and sydney ludvigson. 5 stijn and co - authors study the impact of changes in housing collateral constraints as well as foreign capital inflows in a general equilibrium model. housing provides utility to households but can be used as collateral in debt obligations. the authors find that financial market liberalisation, seen as an economy - wide relaxation of collateral constraints, such as lower down payments, can create a boom in house prices relative to housing fundamentals. this result has highly relevant policy implications. in fact, macroprudential policy aims to address excessive leverage through capital - based measures affecting banks β balance sheets, but also through borrower - | 0.5 |
. the desk tends to avoid conducting operations on days that coincide with fomc announcements and on days that are known to have lighter liquidity conditions. the desk has begun publishing additional information from its operations, including information about the prices paid for each security, on a monthly basis. in addition, under the dodd β frank wall street reform and consumer protection act, the federal reserve will publish additional information about its open market operations, including the individual securities purchased, the transaction prices and the counterparty, with a two - year lag for all transactions subsequent to the legislation. implementing the program over an eight - month period would not be expected to significantly reduce the speed or magnitude of its effects on financial conditions and, ultimately, on the real economy under the view that the program β s effects arise from the expected stock of our holdings rather than the flow of our purchases. under this view, financial conditions react immediately to the announcement of the program, bringing forward its effects on financial conditions. this view provides policymakers with some flexibility regarding the amount of time to implement the total amount of purchases. bis central bankers β speeches the flexibility of this procedure can be seen in the patterns of our purchases over time. earlier in the program, we ended up purchasing a large concentration of off - the - run securities, including bonds that were issued 15 to 25 years ago. given their age, these bonds are generally less liquid and less valuable to market participants, and hence dealers were willing to sell them to us at cheaper prices relative to other securities. at more recent operations, however, we have received a greater share of offers to sell more recently issued treasury securities, including on - the - run issues, and our purchases have shifted accordingly. this suggests that older, off - the - run securities may have become harder for dealers to obtain, and that they have increasingly found it appealing to offer more recent issues, which are available in greater supply and are generally more liquid. our procedure allows this shift to take place, as long as the more recent issues are offered to us on generally favorable terms. overall, the desk has endeavored to implement the fomc β s policy decisions in a manner that ensures competitive and appropriate prices for the securities obtained and that maintains the efficient functioning of financial markets. i believe that we have managed to accomplish these objectives with our operations to date. market developments during the purchase programs of course, the operational objectives discussed above do not speak to the broader policy objectives of the asset purchase programs. the policy | brian p sack : implementing the federal reserve β s asset purchase program remarks by mr brian p sack, executive vice president of the federal reserve bank of new york, at the global interdependence center central banking series event, philadelphia, 9 february 2011. * * * it is a pleasure to be back in my hometown of philadelphia and to be invited to speak tonight at this event hosted by the global interdependence center ( gic ) and the federal reserve bank of philadelphia. the gic has an impressive history of promoting public dialogue about monetary policy and other topics, and it is a privilege to be able to participate in that process. tonight i will focus my comments on the implementation of the recent monetary policy decisions of the federal reserve and the associated implications for its balance sheet. as always, the views i will express are my own and do not represent those of the federal open market committee ( fomc ) or the federal reserve system. unconventional policy decisions in the second half of 2010, the fomc made two important policy decisions about the size and composition of the federal reserve β s balance sheet. in august, it decided to begin reinvesting the principal payments from its holdings of agency debt and mortgage - backed securities into longer - term treasury securities, thereby keeping the amount of domestic assets held in the system open market account ( soma ) portfolio unchanged at about $ 2 trillion. in november, the fomc announced that it intended to expand the soma portfolio by purchasing an additional $ 600 billion of longer - term treasury securities through the end of the second quarter of 2011, bringing the intended level of domestic securities holdings to $ 2. 6 trillion. those decisions were aimed at providing more monetary policy stimulus to the economy. the fomc saw the additional stimulus as warranted because it viewed the progress toward its mandated objectives of full employment and price stability as disappointingly slow. 1 in effect, the committee was using the size and composition of its balance sheet as a policy instrument, given that it had already employed its traditional means of easing monetary policy β decreasing short - term interest rates β to the fullest extent possible. federal reserve chairman bernanke has noted that the intention of asset purchases is similar to that associated with changes in short - term interest rates, in that they are meant to affect economic activity by influencing broader financial conditions. 2 but while the intention of the recent policy decisions may be similar to traditional monetary policy adjustments, the implementation of them is not. | 1 |
of those entities do not diminish the relevance of the business model to the measurement principle. indeed, over time if the valuation model is not relevant to the business model, the business model itself is likely to change. rather, the lesson to be learned from such manipulation is that we β preparers, users and auditors of financial statements β need to be vigilant in evaluating actual business practice, and restrict the use of particular measurement principles to the relevant business models. to this end, safeguards should be implemented to eliminate a firm's ability to overstate gains or understate losses by switching back and forth between business models or by reclassifying assets from one business segment to another. for example, from a regulatory perspective, assets in a financial institution's liquidity reserve, by their nature, imply utility through sale and, therefore, should be valued at market price. in terms of reliability, the measurement principle should reflect the ability of all types of entities to calculate a value within a reasonable range of confidence throughout the economic cycle and the life of the financial instruments. there is a good deal of reliability when the fair value of a financial instrument is observable in an active market. you accountants refer to these observable inputs to fair value as level 1. as you leave the active markets and get into the so - called level 2 and level 3 inputs to fair value measurements, an entity's ability to reach a consistent fair value or an estimate of fair value within a reasonable range of values for a particular financial instrument significantly diminishes. as the recent financial crisis has shown us, a financial instrument's fair value can vary widely among entities in similar markets. and the existence of wide variability in valuation models makes comparisons between entities difficult if not suspect. the reliability of amortized cost is not as questionable. amortized cost simply is the amount paid to acquire a financial asset, adjusted for any unaccreted discount or unamortized premium. all entities calculate amortized cost using the same formula. of course, amortized cost is not a panacea. entities purchase assets at different times and the timing of expected cash flow changes can result in different measurements for the same financial instruments. if the receipt of future payments is in doubt, impairment must be estimated. the use of a reserve for credit losses helps distinguish between contractual amounts due and payment uncertainty created by economic or borrower - specific conditions. current accounting standards permit credit reserves only for losses likely | during the height of the cold war, stating a view that remains applicable today, β [ w ] e now stand in the vestibule of a vast new technological age - one that, despite its capacity for human destruction, has an equal capacity to make poverty and human misery obsolete. β | 0.5 |
##s have to make up 70 - 85 % of electricity production by 2050. it was only 23 % in 2015. this scenario is not far - fetched. technological advances and increases in production capacity have dramatically reduced the cost of renewable energy sources like wind and solar. if r & d on long duration energy storage technologies is successful, it will solve the problem 5 / 7 bis central bankers'speeches of intermittency that currently hinders the scope for renewable energy to supply electricity round the clock. changes in technology that make renewables economically viable could potentially leave many traditional energy assets stranded β and this has serious implications for investors. changes in government policy such as higher carbon taxes will also have profound investment implications by altering the structure of industries and businesses. this is not something happening far from home. a study by the carbon tracker initiative estimates that as much as us $ 60 billion of coal assets across southeast asia can no longer yield the expected economic return in the next decade due to tighter environmental policies and competition from cheaper renewable energy. conversely, as climate change mitigation efforts intensify globally, environmentally responsible companies can be expected to outperform their benchmarks. besides technological advances and policy changes, growing consumer awareness of environmental issues will also affect companies β bottom lines and thereby the risk - return calculations of investors in these companies. finally, as i mentioned earlier, beyond the cold calculation of climate - related risks and returns, many investors want to invest in a way that contributes to leaving behind for future generations a planet that is habitable, green, and pleasant. sustainable investing is becoming a live issue in asia. the story of asia β s huge infrastructure needs is well - known. the asian development bank has estimated that developing asia needs to spend us $ 1. 5 trillion annually on infrastructure up to 2030. what is less well known is that climate mitigation and adaptation costs will add another us $ 200 billion to the region β s annual investment needs. this is a significant load. it will require a radical change in the way public sector policies, private sector financing, and investment decisions are made. ensuring sustainability is very much a part of singapore's ethos. making the best use of limited resources has, for a long time, been a key part of our nation - building process. we must now make our financial sector, asset markets, and investment landscape conducive to sustainability. mas is working on a comprehensive, long - term strategy to make sustainable finance a defining | been good. singapore is now asean β s largest green finance market, accounting for close to 50 % of cumulative asean green bond and loan issuances. notably, sustainable financing and investment flows have held up well through the first half of this year, despite the pandemic and broad - based economic weakness. singapore is also steadily developing solutions such as insurance linked securities to address climate risks. mas β insurance linked securities grant scheme has seen strong take - up since its launch in 2018. within two years, we have seen nine catastrophe bond issuances in singapore. this includes the first asian sovereign and catastrophe bond covering earthquake and typhoon risks in the philippines. the strong expansion of wealth in asia will provide a boost to sustainable investments. personal wealth in asia excluding japan has seen an eight - fold increase over the past two decades. despite the economic disruption due to covid - 19, asia is projected to have the strongest wealth growth in the world over the next 5 years. this wealth is increasingly being allocated to esg causes and investments. https : / / www. mas. gov. sg / news / speeches / 2020 / harnessing - the - power - of - finance - for - a - sustainable - future 8 / 13 14 / 10 / 2020 β harnessing the power of finance for a sustainable future β - keynote speech by mr ravi menon, managing director, mas, at the finan β¦ a study by ubs estimates that close to 40 % of family [UNK] plan to allocate most of their portfolios sustainably in five years β time. this trend will be bolstered with the transfer of wealth to the millennial generation. an estimated us $ 15 trillion is expected to change hands to the next generation by 2030. several studies suggest that millennials desire to invest in companies with good esg track records. according to a survey by morgan stanley, 90 % of millennial high net worth investors want to tailor their investments to their personal values. as a leading wealth management hub in asia, singapore can play a strong role in wealth planning solutions that support sustainable development in asia. mas launched last year a green investments programme under which we will place us $ 2 billion of our funds with asset managers with a strong green focus. the aim is to grow the pool of asset managers that are committed to deepen green finance activities and capabilities in singapore. we have short - listed several asset managers with a view to appointing the successful applicants early next year. singapore has also begun anchoring | 0.5 |
costs, thereby encouraging household and business consumption and investment decisions. with interest rates at historically low levels, and some even in negative territory, and after deploying extraordinary credit - support programmes, central banks have set about managing the size and composition of their balance sheet as a monetary policy instrument, through the so - called quantitative easing programmes. under qe, the eurosystem purchases outright on the secondary market private and public debt instruments, the former encompassing covered bonds, securitisations and corporate debt, and the latter securities issued by governments, european agencies and, since december 2015, regional and local governments. cumulative asset purchases over the period of almost two years in which the purchase programme has been in place now stand at around β¬1. 5 trillion, with public debt securities accounting for over 80 %. the extension of the asset purchase programme until the end of 2017, at least, will mean that the volume of assets acquired by the eurosystem may exceed β¬2 trillion, tantamount to around 20 % of euro area gdp. european structural and governance reforms euro area governments have focused their reform efforts since 2010 on two fronts : i ) european union institutions and euro area governance arrangements ; and ii ) domestic structural reforms. in the area of governance, the reforms were initially geared to strengthening national budgetary policy surveillance mechanisms, extending the multilateral surveillance perimeter to macroeconomic imbalances and agreeing on the creation of the european systemic risk board, the new european body entrusted with macroprudential supervision. that said, it was the risk in 2011 - 12 of the single currency breaking up which prompted the decision to undertake the reform of eu governance, moving towards a new model that 5 / 7 would transfer to the area as a whole many of the responsibilities for supervising banks and managing bank crises, which we know as the banking union. following this initial momentum, which culminated in the launch of the single supervisory mechanism in late 2014 and the approval of new directives on capital requirements and resolution, political considerations are hampering further steps in financial union projects ; and progress on the reform agenda considered by national governments has been uneven. the reform agenda in spain in spain, from 2010 onwards, the reforms carried out have provided for a better adjustment of labour costs to firms β cyclical position, preventing employment from being the only adjustment factor. the reforms have also been conducive to a greater degree of flexibility in the organisation of work within firms. these factors have played a significant role in improving our economy β | of public finances that ensures their sustainability and provides for fiscal policy headroom to boost investment and growth. last but by no means least, the demographic developments our country will foreseeably face in the coming decades, like other eu members, place greater and more pressing demands on the economic policy responses to the foregoing challenges. this is because a progressively older population makes it more difficult to entrench budgetary sustainability and to ensure long - term economic growth. conclusion as we all know, the economic and political context in which we must face these challenges is not exactly going to be an easy one. the plans for european unity, in their various configurations prior to those we have today, have over the almost 60 years since the project was launched overcome highly diverse difficulties. but i believe that today the risks are high because political repudiation β attributable in part to the crisis, but not only to the crisis β is on the agenda, and this was non - existent or insubstantial only a decade ago. for the first time since the signing of the european union treaty in 1992, political currents and popular movements have arisen in the eu openly contrary to the integration so far achieved and, of course, to potential further steps towards greater integration ; contrary to european institutions and their current remits ; and contrary to the continuity of the single currency. the announced departure by the united kingdom, whatever its final form, is going to encourage these movements. in this situation, national governments, european union authorities and legislators all have a responsibility to come up with the appropriate response and to pursue the reforms that may first contain misgivings and then restore support, relatively seamlessly, for the grand european union project. to conclude, allow me to return to monetary policy and central bank action. as we approach the twentieth anniversary of the launching of the euro, we can have no doubts about the crucial importance of preserving and strengthening the monetary union and the single currency in order to sustain and give continuity to the european union project. many thanks, once more, to fomento de trabajo nacional for this celebratory event and to all of you for your attention.. 7 / 7 | 1 |
demand peaks out, but if exports remain sluggish, a virtuous circle may not take hold. for this reason, overseas economic developments warrant close attention. next, risks stemming from domestic factors include uncertainty with regard to reconstruction - related demand as well as both upside and downside risks in how medium - to long - term growth expectations will be affected by the supply and demand balance of electricity and by innovation in energy - related technology. another issue is the sustainability of japan β s public finances, concerns over which restrain consumer spending due to anxiety about the future and affect long - term interest rates. given that social security spending will continue to exert upward pressure on fiscal expenditure, it is necessary to push ahead with structural reform of public finances on both the expenditure and the revenue side and maintain the public β s confidence in fiscal discipline. efforts to restore japan β s public finances are underway and are something that i will keep a close eye on. both upside and downside risks persist also in import prices, particularly international commodity prices. ii. monetary policy next, i would like to turn to the bank β s conduct of monetary policy under the current economic situation. in order for japan β s economy to overcome deflation and return to a sustainable growth path with price stability, efforts to strengthen the economy β s growth potential and support from the financial side are of the utmost importance. based on this recognition, the bank is currently providing support to raise japan β s growth potential through its fund - provisioning measure to support strengthening the foundations for economic growth, while at the same time pursuing powerful monetary easing continuously by steadily providing funds through, for example, purchasing financial assets. moreover, the bank is doing its utmost also to ensure stability in financial markets. in what follows, i will explain the bank β s measures in greater detail. a. pursuit of powerful monetary easing i will begin with the bank β s pursuit of powerful monetary easing. in october 2010, the bank introduced the comprehensive monetary easing policy, and has been easing financial conditions continuously since then. the comprehensive monetary easing policy consists of three measures : the implementation of a virtually zero interest rate policy by setting the target for the policy rate, the uncollateralized overnight call rate, at around 0 to 0. 1 percent ; the purchase of financial assets and funds - supplying operation through the asset purchase program ( hereafter the program ) ; and the clarification of the policy time horizon, that is, the clarification that these measures will | ##s in overseas economies. thereafter, japan's economy is projected to continue growing at a pace above its potential growth rate as a virtuous cycle from income to spending advances on the back of the strengthened momentum for wage hikes and progress in the resumption of economic activity. meanwhile, the year - on - year rate of change in core cpi has been increasing. from the turn of 2023, the rate of increase is expected to decelerate with a smaller contribution to core cpi of rises in the price of such items as energy, food, and durable goods ( chart 3 ). b. risk factors for economic activity and prices the outlook just described is subject to a number of uncertainties ; specifically, i am particularly attentive to the following two factors. the first is developments in both overseas economic activity and prices and in global financial and capital markets. significantly high inflation continues due not only to a surge in global demand on the path to recovery from the pandemic, but also to the effects of supply - side constraints and russia's invasion of ukraine. in response, central banks have been raising policy rates sharply to contain high inflation, at the risk of economic slowdown. on the other hand, financial markets have been nervous due to some concern about consistency between monetary policy and fiscal policy, and also because of the difficulty in accurately measuring monetary tightening effects as there is a time lag between policy decisions and the materialization of their effects. in the united states and the euro area, policy rates have been raised substantially during 2022, by 3. 75 percentage points and 2. 0 percentage points, respectively. however, the latest rate of increase in consumer prices was 7. 7 percent in the united states and 10. 0 percent in the euro area, 1 both remaining well above target. this has led markets to expect further policy rate hikes. there is thus concern that it may become difficult to strike a balance between the containment of inflation and the sustainability of economic growth, depending on the degree of cumulative impact of substantial policy rate hikes. if this concern grows, there is a possibility that global financial and capital markets will tighten unexpectedly through adjustments in asset prices and foreign exchange rates and through capital outflows from emerging economies. this possibility must be borne in mind. the second factor is geopolitical risks and developments in the price of commodities, including grain. uncertainty remains very high regarding geopolitical factors such as the the u. s. figure is for october | 0.5 |
. our labour market is particularly interesting, and the way we make flexibility go hand in hand with social security. what we see now is the result of many years'development of the danish model. this is a never - ending process. good reforms require careful preparation and considerable time. ideas need to mature to ensure support for the reforms. the process is important to achieving a good result. the fixed - exchange - rate policy means that the level of danish interest rates is generally determined abroad. this also implies that it does not always match danish needs. in practice, this has not constituted a problem. fiscal policy has been designed so as to avoid both overheating and high unemployment. a forward - looking and reform - oriented policy usually means that only minor adjustments are required in connection with the annual finance act. therefore, it is important to keep sights on long - term objectives all the time. in this context, experience from other countries can be useful. the netherlands is currently struggling to get out of a recession that is self - inflicted. a favourable economic climate in the late 1990s led to large government surpluses. some of the surplus was used to finance e. g. tax cuts, and the economy overheated. however, the consequences were not evident until a late stage. wages soared, and so did unemployment, and suddenly government finances showed a large deficit. it was necessary to tighten policy in the throes of a recession that only now seems to be receding. the lesson is : do not spend the surplus when the economy is good β particularly if there is the slightest risk that competitiveness will suffer. the danish economy has developed favourably in recent years. this is naturally very satisfactory. unemployment has declined and is now at a low level, private consumption is increasing by leaps and bounds, and yet we have a current - account surplus and cash is flowing into the government coffers. it is almost too good to be true β and there is indeed reason to exert some caution. demand is still strong β and perhaps a little too strong. we do not know for certain. but the day, we do know that things are going too fast, we will have some unpleasant years ahead. at that point it will be too late to make adjustments without considerable costs. the challenge we face today is to ensure a balance that will enable us to reduce unemployment even further. we need to bring more of the weakest in society permanently into the labour market β and that will not be possible | nils bernstein : recent economic and financial developments in denmark speech by mr nils bernstein, governor of the national bank of denmark, at the annual meeting of the danish bankers association, copenhagen, 30 november 2005. * * * i appreciate the friendly welcome that i have been given by the banking industry and thank you for this invitation to speak today. let me start by stating that i intend to continue the line set by my predecessor in relation to monetary and foreign - exchange policy. this policy has served denmark well. i have been around for so long that i remember the time when we used exchange - rate adjustments actively to solve our structural problems. as we know, this led to double - digit inflation rates and interest rates exceeding 20 per cent. in the end, it became plain to all that this policy was not sustainable. today, there is only seldom focus on the fixed - exchange - rate policy. outside denmark, it is in a way viewed as outdated. nevertheless, this policy has been important for denmark. it has had broad political support and contributed to very low inflation ; in practice so low that ordinary people hardly think about it any longer. in the last 15 years annual price increases have been kept at around 2 per cent on average, and retail prices have remained completely stable in recent years. this safeguard of real wages is to everyone's benefit each and every day. for the corporate sector it is easier to plan ahead when the exchange rate vis - a - vis the euro is stable. the foundation for their investments does not suddenly change due to changes in the exchange rate. companies know that it is primarily up to them to meet future demands by developing products and human resources. the lower rate of inflation is not an isolated danish phenomenon β it is seen worldwide. the increasing integration of asian countries into the global economy dampens prices and wages in the rest of the world. this is also reflected in long - term yields. since the global propensity to invest is lower than is normally the case, and since both central banks and pension funds are currently buying large portfolios of long - term bonds, long - term yields are at the lowest level in the post - war era.. these effects will diminish at some point β we do not know when β but when that does happen, interest rates will rise. * * * denmark's economic policy has had broad political support for a number of years. in fact, the danish " model " is increasingly seen as a role model for other countries | 1 |
instability also has substantial externalities on the economy, and on social cohesion through unemployment. the recent financial crises have brought the failings of the financial system into focus, not forgetting the impact of new technologies, such as high frequency trading, fintechs, or crypto - assets. but rules have their limitations. an ethical approach is needed if we are to respect the spirit of the rules β and not just the letter of the law β and if we are to make informed decisions when clear rules are not available. in addition to financial institutions'in - house ethical practices, the financial sector must now also consider how society β ngos, the media, fellow citizens included β perceive its activities from an ethical standpoint. clearly, the 2007 β 09 crisis was partly created by an imbalance : too much trust had been placed in ethics, while the rules were insufficient. the weaknesses in the corporate culture of financial institutions were thrust into the spotlight ; incentives to take risks were too powerful and governance was inappropriate. 1 / 3 bis central bankers'speeches certain anglo - saxon expressions perfectly illustrate the period : " too big to fail " created a widespread moral hazard, " tick the box " encouraged overly lax self - regulation through a purely formal compliance with the rules... and in so doing, the " light touch " of the british fsa at the time clearly showed its limitations. since then, i am happy to say that we have significantly tightened up the rules. with the crd iv capital requirements directive and basel iii for banks and, at least in europe, solvency ii for insurers, quantitative requirements have been reinforced to ensure greater resilience, governance of financial institutions has been improved and compensation policies for bankers have been reined in a little. international regulation is our common good. it strengthens a sound financial system. but as we strengthen international regulation, we must not lower our guard in terms of ethics. ten years later, this would generate the opposite imbalance to that of 2007 β 08. in other words, there's a risk that the pendulum could swing back the other way. 2. ethics must permeate the day - to - day practices and culture of financial institutions. over and above the good intentions, declarations and codes of conduct, which did nothing to prevent the excesses that caused the 2008 crisis, the challenge now is for all actors from the bottom to the top of these organisations to adopt an ethical approach. as the " banking conduct and culture | . is it sad to leave at a time when central banks have become such important players? c. n. it is not good that we are seen as the only game in town. we cannot replace governments, simply because they are not seen to be acting quickly enough. we have created in the euro area many new institutions and new rules. they must now be used. it is up to the parliaments and governments to decide the reforms to be made, but they have to take their responsibilities. mr noyer, thank you for this interview. bis central bankers β speeches | 0.5 |
a reliable global financial safety net before the next crisis and co - ordinate its different layers. this should include an β imf standing liquidity facility β. the global financial safety net is the best insurance we can get against the risks created by economic divergence and it comes at a limited cost. * * let me conclude by quoting voltaire, who wrote in 1770 : β doubt is an uncomfortable condition, but certainty is a ridiculous one. β 4 in these times of doubt, we as central bankers should be predictable without being pre - committed β or, as voltaire would say, we should give clarity without pretending to certainty. this is precisely the objective of governing council of the ecb : we are committed to give as much clarity as possible ; clarity, not certainty, which is neither possible nor desirable. thank you for your attention. 1 brainard, w. ( 1967 ), Β« uncertainty and the effectiveness of policy Β» the american economic review, vol. 57, no. 2, papers and proceedings of the seventy - ninth annual meeting of the american economic association, may, pp. 411 β 425. 2 blinder, a. ( 1999 ), central banking in theory and practice, the lionel robbins lectures, mit press, cambridge massachusetts. 3 rey, h. ( 2013 ) β dilemma not trilemma : the global financial cycle and monetary policy independence β, jackson hole conference proceedings, kansas city fed. 3 / 4 bis central bankers'speeches 4 letter to frederick william, prince of prussia ( 28 november 1770 ). 4 / 4 bis central bankers'speeches | both sides of the atlantic, the monetary answer has its differences too. - and this brings a second frequent question : what about the destination of the journey? frankly, it β s too early to tell : we know the final rate of inflation, 2 % ; but we don β t know yet the Β« terminal interest rate Β», or the policy rates that will ensure a timely return of inflation to our target, while seeing no reasons for increased expectations on these. let me rather give some light on the first part of the journey, the normalisation till neutral rate ; for sure it β s unobservable, but this one can be estimated, in the euro area at below or close to 2 % according to me. i sometimes use a simple metaphor : as long as it is about lifting off the accelerator, we have to act for sure, in a determined but orderly way, and we should be there by the end of the year. afterwards, the question could come of pressing the brake, and tightening if needed : but this part of the journey remains today an open question, and will deserve further assessment and reflection, in due time. let me only stress one last and obvious point of yesterday β s decision : it marks the return of interest rates in positive territory. this historical step brings with it multiple dimensions that need to be revisited : on our operational framework, on our tltro operations, on our remuneration mechanisms of bank β s reserves. this is a matter that, as christine lagarde said yesterday, we will take up without delay. may i add that with a long view, monetary policy cannot be the only game in town? europe also needs to solve its supply constraints and challenges, and this refers to two structural policies : first, energy transition, starting with the revision of the too volatile pricing of electricity ; second, better training and employability of the labour force. we cannot remain in many european countries including france with so severe labour shortages while still being above 7 % unemployment. page 3 sur 3 * as a conclusion, let me quote a famous franco - czech writer, milan kundera : β the novelist teaches the reader to comprehend the world as a question. [ β¦ ] in a world built on sacrosanct certainties the novel is dead β. for us central bankers, only one thing is certain, but it is key : we will do everything in our power to fulfil our price stability mandate. and like in good novels, we | 0.5 |
elisabeta gjoni : role of money in wartime opening remarks by ms elisabeta gjoni, first deputy governor of the bank of albania, at the second conference of the museum of the bank of albania, tirana, 20 september 2018. * * * dear guests, participants, researchers, academics, numismatists, collectors, students, welcome to the bank of albania! it is a special pleasure for me to open the proceedings of the second conference of the museum of the bank of albania on β role of money in wartime β. the rich collection of coins and banknotes and other items exhibited in our museum becomes more meaningful when supported by the historic background of the period of the country of issue. the organisation of this conference, an annual one, contributes to the both the historic and educational role of the museum. this conference is also an excellent opportunity to share experiences with representatives of the main institutions of culture in albania and museums of central banks and other prominent foreign institutions in this field. i am happy to see in this room both old and new collaborators, whom we wish to be β permanent consultants β of the bank of albania. we aim to create and cultivate a solid and productive relationship with the best experts in numismatics, museology, cultural heritage and research. dear participants, today β s presentations will address the mutual, complicated and multi - dimensional relation between money and war. wars have had an impact on the economy and development of human kind from the birth of civilisations to modern times. meanwhile, in the words of the socrates, the greek philosopher, β all wars are fought for money β. we heard some good examples that illustrate this relation in last year β s conference. we heard from prof. picard about king monunius, who is known thanks to the respective coin. he had it minted for the sole purpose of raising a strong army, convinced that his might rested with the army. from prof. egro, we learned that mahmut pashe bushatlliu and ali pashe tepelena tried to introduce their coins and banknotes, independently from the ottoman empire, not for financial purposes but as a token of rebellion or an attempt to break away from the empire. later on, in ww1, we see the banknotes of the republic of korca, which are a rare phenomenon not only in terms of numismatics, but also a materialisation of the early issues as a result of the war | is low and expected to remain low and subject to limited variations over the medium term, the prices of financial assets incorporate lower inflation risk premia, by contrast with a situation of high or uncertain inflation. as the inflation risk premium becomes relatively less important as a determinant of financial prices, other factors such as credit risk can take on a larger role in the price formation mechanism. ultimately, this results in a more efficient allocation of financial resources. in the run - up to stage three of emu, the governments of the european union also, where necessary, made efforts to reduce their deficits and their debt so as to bring them into line with the requirements specified by the maastricht treaty. as was intended by the drafters of the treaty, this development contributed to achieving sounder fiscal policies, which would be more conducive to economic growth over the medium term and which would make it possible for automatic fiscal stabilisers to work more effectively when needed. a further effect of the reduction in public deficits and debt, all other things being equal, is the freeing of financial resources for use by the private sector. this reduces hindrances to the development of financial markets for private borrowers such as the corporate bond market. a final item in this short list of the broad economic trends shaping the future of financial markets in the euro area is the phenomenon of population ageing. taken together with the liberalisation of financial markets, over the coming years population ageing will lead to further demand for long - term investment instruments on the part of rapidly developing pension funds, along the lines, for instance, of what we are already beginning to see in the united kingdom. as borrowers strive to meet the increased demand for investment instruments, this is likely to provide a further impetus to the development of a wide range of suited financial instruments available to pension funds, and more generally to savers at the end of the intermediation chain. having identified broad economic trends, which all seem to point in the direction of a wider role for financial markets in the euro area over the coming years, i should like today to discuss what has actually happened so far and consider what challenges lie ahead. i shall first consider the degree of development of the various segments of financial markets in the euro area, so as to assess whether and, if so, why some segments are less developed than others, at area - wide level. i will then move on to consider, more generally, the progress made in the | 0 |
and exploited to the extent feasible ". furthermore the council task force of which erkki is a member has been mandated by the governing council " to prepare proposals for discussion and decision on issues related to the role, objectives, functions and operational modalities of the eurosystem ". in my view, it has a crucial role to play as an independent think thank. having said that i believe that if the time is not ripe for a top - down decision, there should be room for ncbs β and in particular for medium - sized ncbs β to initiate voluntary collaboration in the development of joint projects and the exploitation of synergies following a bottom up approach. i think also that the long term vision for the eurosystem calls for a shift from the pure centralisation and decentralisation models that have been applied in the past towards models of pooling and consolidation. in my view, the cash ssp partnership fits perfectly into this framework. the introduction of euro banknotes provided an excellent opportunity for the nbb to modernise and reengineer its it - application for cash handling. the goal was twofold : first of all, to manage cash flows more efficiently, both within the central bank and between the central bank and its main customers, financial institutions and cash transport firms ; and secondly, to improve the security of these cash transactions. the successful implementation of this new cash application inspired the bank's cash department to start thinking about the possibility of promoting it to international scale, starting with the neighbouring central banks. so in 2006 cash ssp was formally born and the first agreements were signed between the dutch central bank, the banque centrale du luxembourg and the nbb. today the partnership is extended to a fourth partner, which shows that the scope of the business case is larger. also on behalf of the dutch central bank and the banque centrale du luxembourg let me warmly welcome you as a full and equal partner in the group. we find it very important that standards are being developed, because this shows to the commercial banks active in several countries, that we exploit a number of synergies of the single currency for cash handling and maybe, dear friends, could you use your privileged relationship with the baltic countries to see whether other central banks would be interested in such type of collaboration. from our side, we will continue at the nbb to try to play a pro - active role in promoting collaboration between central banks within the eurosystem also in other fields like collateral | guy quaden : cashssp β the cash single shared platform remarks by mr guy quaden, governor of the national bank of belgium, on the occasion of signing the cash single shared platform contract between bank of finland and the central banks of belgium, luxembourg and the netherlands, bank of finland, helsinki, 16 march 2007. * * * dear governor, dear erkki, dear colleagues, first of all, let me thank you for your kind invitation and for organising this event. the eurosystem is an entity which has no equivalent anywhere in the world. for me, the creation of the ecb did not raise any doubts on the usefulness of the ncbs. in fact, the reverse is true. luxembourg, the only country which did not have its own central bank, had to create one just before the transition to the single monetary policy. nevertheless, our integration into the eurosystem has obviously influenced the life of our institutions. i think on two changes which are not necessarily apparent to the outside world. the first is due to the fundamental change in the actual role of our ncbs, which now participate in the management of the world's second most important currency. the decisions taken in frankfurt are taken on a collegiate basis by the governing council. this means that every governor of an ncb must be properly prepared to deal with all the issues considered at that level. they concern not only the single monetary policy but also the eurosystem's other spheres of activity, such as financial stability and payment systems. in recent years, our ncbs have therefore extended and strengthened their analysis capacity. a large proportion of our staff is nowadays involved at various levels in the preparation of these decisions " taken in frankfurt ". the investment in resources is substantial, and so is the resulting enrichment of the job content of our employees. the second change concerns operational aspects. one of the eurosystem's basic operating principles is a high degree of decentralisation. our ncbs remain the contact points between financial institutions or economic agents of our countries and the eurosystem. however, the concept of decentralisation has evolved since the eurosystem was first formed. to quote the words of the eurosystem's mission statement : " we are committed to good governance and to performing our tasks effectively and efficiently, in a spirit of cooperation and team work ". this is further elaborated in the organisational principles, which state " that potential synergies and economies of scale shall be identified | 1 |
be for holding the repo rate at a negative level in situations where this is necessary to avoid major costs for the economy. but there are limits as to how far the rate can be cut. and, as i said, my view is that it would be difficult to cut the rate so low that people were forced to pay to have money in the bank. do expectations affect the future repo rate? if one has cut the repo rate as far as one considers possible, one can also try to affect expectations of the future repo rate among economic agents in a way that 7 jansson ( 2016 ). 5 stimulates demand. what i have in mind here is a strategy that is usually termed β lower - for - longer β or β makeup strategy β and which has been advocated by the previous chairman of the federal reserve ( the us central bank ) janet yellen. 8 the idea is pretty straightforward. let us assume that the central bank in a recession has cut its policy rate as far as it considers to be possible. exactly how low the interest rate can be set is not obvious and the assessments vary from country to country. the federal reserve usually regards zero as the lower bound and talks about the β zero lower bound β, while in sweden and other countries, which have cut their policy rates below zero, we talk about the β effective lower bound β. for the sake of simplicity i will from now on refer to this simply as the β lower bound β for the policy rate. let us now assume that the central bank would actually have needed to cut the policy rate lower than the lower bound for monetary policy to become sufficiently expansionary. to compensate for not being able to do this, the central bank can instead hold the policy rate at the lower bound for a longer period of time ( see figure 4 ). 9 seen in a slightly longer perspective, for instance a ten - year period, this should give roughly the same average policy rate as if one had been able to cut the rate below the lower bound. if the economic agents are aware that the central bank applies this strategy when the interest rate is at its lower bound, and they regard it as credible, then long interest rates should adapt in roughly the same way as if the lower bound did not comprise any limit. 10 if one uses the reasonable assumption that demand in the economy is not solely dependent on the current level of the policy rate but also depends on interest rates with longer maturities, this should give the central bank the possibility | and banking 37, 2005, 789 - 811. increased. this is largely related to the fact that growth in productivity has been surprisingly weak for some time. the assessment made by the majority was that an increase was needed to prevent price rises for energy and food from spreading to other areas β to prevent the high level of inflation from becoming entrenched. the increase is expected to help bring inflation back to a level close to the target within a couple of years. resource utilisation is also expected to fall but to be roughly normal at the end of the forecast period. at the same time as the repo rate was increased, the repo rate path for the period ahead was adjusted downwards compared to the decision taken in july. this is partly because growth has slowed down more than expected in sweden and abroad and partly because the price of oil and the prices of other commodities have fallen. the increase may be a way of safeguarding the real economy in the long term a common reaction to the decision to increase the interest rate was that the riksbank pays too much attention to inflation and too little attention to the real economy. i would like to comment on this claim. one reason for increasing the interest rate was that an increase was needed to prevent the high level of inflation from becoming entrenched. this could happen if the price increases for energy and food begin to spread to other areas. this could ultimately lead to a risk of the riksbank's ability to hold inflation in check being called into question and of inflation expectations remaining at a consistently high level. this is what happened in the 1970s in many parts of the world, although inflation at that time became entrenched at much higher levels than would be the case today. but even though the levels are much lower today, it could still be relatively costly to get inflation back to the target. it cannot be ruled out that this could require quite a long period with high interest rates and restricted demand. there is thus a risk that conducting too expansionary a policy today would sooner or later give rise to costs in the real economy that, furthermore, could be quite considerable. i do not feel, therefore, that it is correct to say that the increase in the interest rate is an indication that the riksbank does not care about the real economy. it is rather the case that by focusing clearly on the inflation target we will be able to avoid considerable costs to the real economy in the slightly longer term. i should perhaps add that | 0.5 |
has become the money centre. consequently, as we proceed outwards on the term curve, we encounter india's missing markets β the segment between 3 days and three months. the reserve bank has stepped in by removing statutory pre - emptions on interbank liabilities and by conducting term repos / reverse repos of varying maturities but to no avail. vestiges of the cash credit system and unnotified premature withdrawal of deposits add to these frictions. undoubtedly, alternatives exist in the form of overnight indexed swap rates, yields on treasury bills of residual maturity and polled term mibors, but nothing can substitute for a term curve generated from actual transactions. another issue in the overnight segment is that of traded deals and reported deals, the latter involving cooperative banks lending in the later half of the day to scheduled commercial banks at rates lower than traded rates and artificially pulling down the aggregation. this drives a wedge between the policy rate and the weighted average call money rate, which is the operating target. 4 / 9 bis - central bankers'speeches thus, even before the monetary policy signal travels through the overnight and term segments of the money market to the next reference point on the yield curve β the 91day treasury bill ( t bill ) rate β some part is already lost in transmission. primary yields on 91 - day t bills are largely influenced by cut - offs, which price in the policy rate as well as expectations on its future course, as embedded in the stance of monetary policy. in the secondary market, trading is concentrated in the 91 - day t bills, with the 182 - day and 364 - day t bills being highly illiquid. given this discontinuity, the situation in india calls for active market making in each of them and perhaps issuances of t bills of other maturities as well so that a continuous risk - free yield curve emerges. in the commercial paper ( cp ) segment, which typically prices off the risk - free rate, issuances are concentrated in maturities of up to three months, with 95 per cent of all issuances in the highest rating category. cp rates on instruments of more than three months maturity are highly volatile and unduly influenced by idiosyncratic factors that may not be in sync with the prevailing monetary policy stance. furthermore, about 40 per cent of resources mobilised through cps is by non - banking financial companies or nbfcs ( including housing finance companies or hfcs ), which | . g., ferguson, 2009, sheng, 2009 ; chittenden, 2010 ; roubini & mihm, 2010 ; turner & others, 2010 ; pringle and jones, 2011 ; cafral - bis, 2011 ; blanchard & others, 2012 ; shiller, 2012 ). my reflections are moulded by not only a decade in central banking but also many years in macroeconomic management in federal government and the bretton woods twins, in addition to a much longer period at provincial and local levels of government dealing directly with the public. keeping in view the composition of today β s audience and the key role of central banks in finance, i will be exploring select themes of operational significance to central banks at the present juncture. society and finance an assessment of the impact of the recent global financial crisis on the trust and confidence of society in the financial sector is a useful starting point when considering ways of restoring the trust. a major reason for the erosion of trust may be a sense that there has been a comprehensive capture of regulation of the financial sector by the finance industry, particularly in the leading advanced economies. a demonstrable commitment to provide reasonable access to essential financial services to all segments of society would reinforce the assertion that finance serves the larger community. this approach, which may broadly be described as inclusive finance, goes beyond the current concerns with providing consumer protection and ensuring systemic stability. restoring trust it is true that the occupy wall street movement directed at the financial sector has petered out. this may signify a lack of popular support for the movement, or equally it may signify a lack of hope that things will change or that better alternatives are on the horizon. a society β s trust and confidence in finance, like in any other sector, is derived partly from formal laws, regulations and procedures, and partly on the manner in which they are implemented, through both formal and informal channels. trust is, therefore, difficult to measure, but on the basis of surveys conducted and anecdotes reported in the media, there appears to be an erosion of trust in the financial sector as a whole, and banking in particular, in advanced economies. the perceptions of such an erosion of trust, however, differ. what are the plausible reasons for the erosion of trust in some jurisdictions? we can only speculate. first, large sections of the population have been affected by the financial crisis, and they consider themselves innocent victims of the crisis in financial sector. in particular, they feel that | 0.5 |
downturns. that development, in turn, could make it more difficult during downturns for monetary policy to support spending and employment and to keep inflation from falling too far below the central bank β s objective β 2 percent in the case of the federal reserve. 4 another key development in recent decades is that price inflation appears less responsive to resource slack. that is, the short - run price phillips curve β if not the wage phillips curve β appears to have flattened, implying a change in the dynamic relationship between inflation and employment. 5 a flatter phillips curve permits the federal reserve to support employment more aggressively during downturns β as was the case during and after the great recession β because a sustained inflation breakout is less likely when the phillips curve is flatter. 6 however, a flatter phillips curve also increases the cost, in terms of lost economic output, of reversing unwelcome increases in longer - run inflation for evidence of a fall in neutral rates of interest in the united states and abroad, see, among several contributions, king and low ( 2014 ) ; holston, laubach, and williams ( 2017 ) ; rachel and smith ( 2017 ) ; and brand, bielecki, and penalver ( 2018 ). for assessments of the risks that u. s. monetary policy will be constrained by the elb and its implications for economic activity and inflation, see kiley and roberts ( 2017 ), erceg and others ( 2018 ), swanson ( 2018 ), and chung and others ( 2019 ). for evidence of a flattening of the slope of the phillips curve in the united states and abroad, see, among others, simon, matheson, and sandri ( 2013 ) ; blanchard, cerutti, and summers ( 2015 ) ; and bank for international settlements ( 2017 ). one potential contributor to the flattening of the phillips curve is a change in the conduct of monetary policy since the 1980s toward greater stabilization of inflation and economic activity ; for evidence of such a change, see clarida, gali, and gertler ( 2000 ) ; boivin and giannoni ( 2006 ) ; and boivin, kiley, and mishkin ( 2010 ). as discussed in roberts ( 2006 ) and bullard ( 2018 ), greater stabilization on the part of a central bank can lead to the estimation of flatter phillips curves in reduced - form regressions. similarly, the adoption of an explicit inflation | fast moving market. one of the basic tenets for the treasury unit in a bank is the strict segregation of duties and location between the front, middle and back office, the latter controlling confirmation and settlement transactions. you can trust neither your subordinates nor your superiors. errors can be expensive. correct your errors. if you do not do so, your errors become fatal mistakes in treasury management. the events of the past two years demonstrate how quickly a corporation β s reputation can be tainted by accusations of inappropriate activities or lack of attention to regulations. success in banking still is heavily dependent on winning and keeping the trust of customers, employees, and the public at large. when corporate reputations are tainted, it does take time to rebuild customer and community relationships. last year i met with one of the foreign exchange dealers at a reception. i told him that he was taking too much time to become a market maker in our money and foreign exchange markets. pat came the reply from your friend that rome was not built in a day. it took time to build rome. i listened and did not utter any single word. this is an appropriate time for me to respond to that statement. yes, it did take time to build rome because they did not have the technology. you have the technology. go ahead and develop skills in market making. it will serve all of us to have good market makers in our financial system. i am aware that the experts from the republic of south africa are competent persons and i trust they will do an excellent job. i wish all my good friends from the financial markets association of mauritius here the very best of success in their endeavours. thank you | 0 |
bodil nyboe andersen : recent economic developments in denmark speech by mrs bodil nyboe andersen, governor of the national bank of denmark, at the annual meeting of the association of danish mortgage banks, copenhagen, 29 april 2004. * * the danish economy has shown very positive trends in the last decades even though economic growth has been modest recently. various governments have implemented a number of structural reforms since the beginning of the 1980s. as a result, the danish economy is today extremely robust with strong economic fundamentals. the fixed - exchange - rate policy, which was introduced in 1982, has been a cornerstone of this development. however, a sustainable and credible fixed - exchange - rate policy requires that the rest of the economic policy and the structural conditions are in order. in denmark this called for a number of economic reforms that began in the 1980s. the cost - of - living adjustment was abolished and the central - government finances improved. the deductibility of interest payments was restricted and interest taxation reduced. all of these factors contributed to breaking expectations of a devaluation - inflation spiral. however, breaking these expectations took its toll and, as many people in the financial sector may still recall, the years around 1990 were lean years for denmark. on the other hand, these measures resolved some of the structural problems that had burdened the danish economy for many years. since the beginning of the 1990s denmark has seen stable growth with declining inflation, lower interest rates and the accumulation of solid surpluses on both public finances and the balance of payments, as well as gradual expansion of pension savings. in recent years denmark has seen strong growth in real wages, and at the same time danish companies have successfully carried out rationalisation measures. even though unemployment has been increasing for a period of time, unemployment has been low on a european scale in the last 5 - 10 years. this indicates that the structural reforms already implemented in the labour market have contributed to enhancing the flexibility of the danish economy. in international assessments and comparisons it is noted that denmark has successfully applied a long - term and medium - term orientation to its economic policy without resorting to short - term fiscal - policy measures. most recently, the imf delegation that visited denmark in march this year described this as follows in their conclusions : β at the same time, denmark has been well - served by focusing on medium term fiscal targets, and relying on large automatic stabilizers to support demand during downturns. discretionary counter - cyclical policy | ##er's ability to meet payments. however, the interest - rate risk still rests on the borrowers and bondholders, respectively, not on the mortgage - credit institute. this is different from the home - financing system in the usa, which is otherwise similar to the danish system in that the borrower may remortgage by redeeming the loan when interest rates decline. in the usa the conversion risk is to a large extent assumed by two privileged institutes with a large proportion of the housing loans on their balance sheets. these institutes have encountered significant risk - management problems as a consequence of interest - rate fluctuations. they have thus had to conduct very extensive hedging in the bond market, among other things, and this again has led to pronounced volatility in the bond market. denmark did not experience a similar increase in volatility. at international meetings we are sometimes asked why this increase did not happen in denmark. one explanation is our balance principle, which ensures that the conversion risk is spread out on a large number of investors rather than being concentrated on a few mortgage - credit institutes. the next question is then : why did denmark introduce the balance principle? this is not quite as easy to answer. when the mortgage - credit system was founded there were no clearly expressed considerations about the balance principle. what happened was that the borrowers joined forces - just like the cooperative movement in other areas of the economy - to be able to provide joint collateral and issue standardised bonds. the balance principle has been a cornerstone of the mortgage - credit system in denmark for more than 100 years. since then the authorities - including danmarks nationalbank - have come to appreciate it to such a degree that they have again and again resisted the request from the mortgage - credit institutes to relax the balance principle. | 1 |
meeting on 11 november to conduct monetary policy in a less expansive direction. the repo rate was therefore increased by 0. 35 percentage points to 3. 25 %. as has been said, the difficult balance to be struck in the present situation is to adjust the instrumental rate at a rate that does not interrupt the upswing in capacity utilisation but does it with sufficient foresight to avoid a drastic rise. we do not want to experience β stop - go β policies again. let us not forget the late 1980s and early 1990s. that period represents a tragic failure for economic policy, a failure that cost sweden destruction of both physical and human capital. earlier in my speech, i pointed to the imbalances in wage formation that could lead to inflation accelerating if they are handled incorrectly. this would make monetary policy tightening necessary that would risk interrupting growth and structural transformation, because the inflation target is mandatory and will not be given up. the riksbank has both the instrument and the political mandate to achieve the target of 2 % β s inflation. the issue then is not whether the inflation target will be met but the consequences that achieving the inflation target will have for the rate of growth and employment in the medium term. the riksbank is responsible for achieving the inflation target, but responsibility for the positive development that we can now see in front of us being sustained over a longer period, is shared by everyone in sweden. | lars heikensten : the riksbank and stabilisation policy speech by mr lars heikensten, governor of the sveriges riksbank, at a discussion seminar of lo ( the labour organisation ), stockholm, 24 may 2005. * * * let me begin by thanking you for the invitation to attend this seminar. i look forward to an interesting and rewarding discussion. the invitation to the seminar contained a list of questions for discussion. i intend to structure my contribution in terms of working my way down the list and giving my views on these questions. before i do so, however, i would like to take this opportunity to say that i appreciated the section on stabilisation policy β s possibilities and limitations in the lo economists latest β economic prospects β report. although i do not agree with everything β which will become clear later β i perceived the article to be serious and searching in a positive way. is stabilisation policy important? my answer to this question is ( of course ) : yes, stabilisation policy is important. one only needs to look at our experiences in the 1970s and 1980s to realise this. what happened then was that the policy conducted could not sustain an adequate balance in the economy. the policy conducted was often too expansionary, which created an environment where it was difficult to keep price and wage increases at a reasonable level. the rapid increases in wages and prices were repeatedly in collision with the fixed exchange rate. the result was that the krona was devalued several times from the mid - 1970s onwards. the economy underwent " boom - bust - cycles β with alternate sudden braking and strong stimulus for acceleration. this policy had devastating effects on many aspects of economic developments. sweden lost ground in terms of prosperity, while growth in real wages was largely non - existent. this situation finally become untenable and after the fixed exchange rate system was abandoned in november 1992 there was a clear shift in stabilisation policy regime. when one looks back over the period since then, i believe that most people will agree with me that the new regime has been successful. sweden is no longer afflicted with excessively high inflationary trends, recurring cost crises and high interest rates. the more stable environment has contributed to better growth in prosperity. the new regulations have also created other, better frameworks for wage formation, a point often emphasised by lo representatives. trade union organisation no longer need to play along in a destructive game where high nominal wage increases | 0.5 |
barry whiteside : regulation and supervision of non - bank microfinance institutions opening speech by mr barry whiteside, acting governor of the reserve bank of fiji, at the regional off - site & on - site technical workshop on non bank microfinance institutions, suva, 12 β 14 april 2011. * * * my fellow governors, mr. denton rarawa ( cbsi ) and mr. loi bakani ( bpng ) central bank representatives from the region mr. tillman bruett, regional financial inclusion advisor and project manager, pacific financial inclusion programme mr deva de silva, senior operations officer, international finance corporation workshop facilitators mr. mark flaming and dr. mohamed nasir fellow colleagues from the reserve bank of fiji ladies and gentlemen introductory remarks bula vinaka to you all. it is with great pleasure that i welcome you all to suva for the first regional technical workshop on regulation and supervision of non bank microfinance institutions. it is an honor to help host this very important workshop that brings together regulators from around the region who are interested in the microfinance and financial inclusion agenda. microfinance and financial inclusion have become very topical issues on the global agenda, and a priority in many developing countries. it has been acknowledged that inclusive financial systems, where people regardless of income level, have easy access to various financial services, are critical for a country β s sustainable long term economic growth. in the region and in our individual countries we can attest that there are still significant numbers of our people excluded from basic financial services. in this regard, our active role in financial systems regulation, reform and policy development is important to set the scene and successfully implant the microfinance and financial inclusion agenda in our countries. an important element of inclusive finance is the institutions directly involved in extending financial services to the financially excluded. most of these institutions may operate outside the boundaries of central banks β regulatory and supervisory scope. in this workshop you will get to learn and devise practical approaches and methods that can be designed and adopted to effectively regulate such institutions. i wish to acknowledge the support and funding of the alliance for financial inclusion ( afi ), the pacific financial inclusion programme ( pfip ) and the international finance corporation ( ifc ), whose kind assistance have made this regional workshop possible. regulation and supervision of fiji β s financial system in fiji, the reserve bank is responsible for regulating and supervising the local financial system. this consists of the banking, insurance, | superannuation and foreign exchange industries. in 2009, our role was extended to include the capital markets industry. the reserve bank of fiji β s main role in this area is to maintain a stable and sound financial system that is fundamental to the country β s wellbeing. our major objective in this regard is bis central bankers β speeches the protection of the interests of depositors, creditors, members and policyholders, as well as maintaining confidence in the financial system by promoting its strength and integrity. interests in microfinance in the last 2 years, after the global financial and economic crisis, our interest and focus on microfinance and financial inclusion has become more prominent and is now one of our main development priorities, in addition to our core central bank responsibilities. we have come to realize that around 40 percent of our population may be excluded from any sort of financial services. also from a growing body of international research on policy implications and successes, it is widely acknowledged that the contribution of microfinance and inclusive finance is important for the sustained economic well being of a country in the long term. i believe we central bankers have critical decisions to make in our own countries. our policy decisions should facilitate a pro - growth inclusive financial system. in fiji, a part of our wanting to have an inclusive financial system was to ensure that the under - served low income and poor people have reasonable and affordable access to finance from financial institutions. we took our first steps towards this objective in 2009 by encouraging regulated financial institutions to undertake and extend affordable microfinance services. a microfinance policy was subsequently issued to all banks to conduct microfinance activities. i am pleased to say that the banks have taken on these requirements really well and are in compliance in one form or another. in terms of the affordability of microfinance services and financial services in general, we view technology as one means to address this issue, away from the traditional β bricks and mortar β setups. specifically, electronic methods to conduct financial and payment services, such as point of sale ( pos ) devices using stored value cards, and mobile phones using communication networks, are innovations that were well adapted to microfinance. some banks in fiji have now introduced wireless point of sale devices with their agents, with both withdrawal and deposit capabilities, to be used with stored value cards. these initiatives are clearly suitable for clients in rural or remote locations. also, some non - regulated private sector players, such as mobile network operators ( mno ), | 1 |
for decision - making. one such step ahead of us is building a modern data warehouse. the need to adopt, integrate, process, and report large amounts of data to multiple users on a daily basis requires a modern business intelligence - based information system. adapting to such a technologically advanced system also requires data governance. currently, there are several decentralized statistical databases, registries created for specific purposes of statistics and bank activities. the symbiosis of all these sources opens up a new chapter in the central bank β setup of systematized data governance. this process should focus on the need to recognize data as a central bank asset that should be governed at a strategic level. learning from the experience of the european partners, the implementation requires a clear strategy, policy and guidance, as well as the need for standardization of data definitions, standards for data collection and management. in a word, there is a change in the organizational culture. the project of creating an integrated reporting system for statistical and supervisory purposes in the national bank is such an example. recognizing the need for unifying and replacing partial reporting systems by banks for statistical and supervisory purposes, we have worked diligently to set up a single multifunctional reporting system. the potential benefits for us and our partners β banks and savings houses, are immense β lower burden on the reporters, and a richer granular data set that can be used for multiple purposes, thus replacing the traditional way of submitting aggregates. as a reminder, one of the lessons learnt from the crisis is that aggregated data is not always sufficient to detect vulnerabilities in the system. the technological requirements, as well as the need for coordination and standardization are not processes that rest solely with the central bank. in the eve of meeting european statistical standards, communication and coordination among the statistical bodies is crucial. in our case, we are proud of the excellent coordination with our partners, the state statistical office and the ministry of finance, who are here with us today. a significant step forward will be the introduction of the so - called integrated coordination system for compiling government statistics, with real - time data available to all three institutions. this would ultimately mean more consistent fiscal, financial and macroeconomic statistics. 2 / 3 bis central bankers'speeches despite the gravity of the global crisis, the process of innovation and digitization continued post crisis, widely spread in the financial industry. such digitalization and innovation of financial services pose new challenges for their statistical monitoring and measurement. | ##pmg1 shows that fintech investment globally more than doubled during 2018, and reached $ 112 billion. in addition, while new startups sprouted across emerging fintech subsectors, highly mature areas like payments saw some consolidation through mergers and acquisitions of big developed players. reports also show that highest number of fintech service providers are in the payments, clearing and settlement category, thus, giving them the potential to gradually undertake a paradigm shift in the payment landscape. ernst and young adoption index for 2017 highlights the impressive and rapid growth in adoption of fintech services among mature and developing markets with highest adoption rate among younger generations ( 25 β 34 years ). on average, about 33 % of digitally active consumers have used at least two fintech services in the last six months ( compared to just 16 % two years ago ), with payments and money transfer being the most popular segments ( used by 50 % of digitally active consumers ). perhaps even more importantly, there is an increasing awareness : 84 % of customers are aware of fintech services compared with 62 %, two years ago. thus, rising investments in fintech segment, as well as growing awareness and adoption of fintech services 1 / 4 bis central bankers'speeches indicates that fintechs are embraced and will continue to gain momentum in the future. financial innovations change the environment not only for customers, but for traditional banking industry and policy makers, as well. customers may benefit from increased and cost effective access to financial services, although in some instances at the cost of privacy and consumer protection. as for traditional financial institutions, such as banks, they may face strong competition by new entrants, on the one hand, but may benefit from increased cost efficiency, competiveness and ability to offer new state - of - the - art services, on the other hand. the impact on policymakers and regulators is also large, as they have to first properly understand innovations / new services, foresee possible consequences for financial intermediation and stability, and react in a timely and proper manner. rising importance of this topic is clearly demonstrated by the adoption of the bali fintech agenda of the imf that provides guidance for national authorities on how to cope with new and evolving financial landscape, and underlines the need for stronger international cooperation as financial services are blurring boundaries, both institutionally and geographically. in what follows, i would like to briefly focus on the challenges of fintech developments for the banking industry and policy makers. we do have to | 0.5 |
in may 2010. tensions spilled over into market segments other than government bonds. not surprisingly, the credit risk of the eu banking system mounted to levels higher than those observed after the collapse of lehman brothers ( see chart 4 ). by the same token, the probability of a simultaneous default of two or more large and complex euro area banking groups, as measured by the indicator of systemic risk reported in chart 5, rose sharply on 7 may. money market volatility also surged ( see chart 6 ) : implied volatility on three - month interest rate futures went up in early may for contracts expiring six months ( second contract ) and 12 months ( fourth contract ) ahead. regarding the foreign exchange markets, between mid - february and 7 may, the euro depreciated by 7 % against the dollar, from usd 1. 36 to 1. 27 per euro. shorting the euro became the proxy speculative position for selling greek and other β peripheral β debt. in early may the net short speculative ( non - commercial ) position against the euro reached a record 114, 000 contracts, equivalent to about β¬14 billion ( see chart 7 ). the turmoil had an impact on equity markets as well : between mid - february and 7 may, the euro area stock market declined by more than 7 % ( and by 15. 5 % from april 15 to may 7! ). even more worrisome, in may equity indices decreased worldwide ( see chart 8 ). in may and june the average pair - wise realised correlation between s & p500 stocks went up more than it did after the lehman bankruptcy. loosely speaking, this indicates that concerns about macroeconomic developments had inhibited investors from differentiating between different stocks, and panic was mounting ( see chart 9 ). stock markets also became more volatile, as reflected by the increase in the implied volatility of the eurostoxx50 and s & p500 indices, albeit at levels lower than those observed towards the end of 2008 ( see chart 10 ). the longterm implied volatility of the us stock market also surged ( see chart 11 ). finally, indicators of investors β sentiment, as measured by the difference between equity put and call options implied volatilities, went up in may ( see charts 12, 13, and 14 ). all in all, on the eve of the first week - end of may the global financial system was on the verge of a meltdown similar to, if not worse than, the | 2015, following the full - 2014 trading volume of php4. 40 trillion. to where we need to go our numbers will be rather modest by global standards but it cannot be denied that we have indeed come far in the last 15 years. for that, allow me to congratulate all the stakeholders of the philippine capital market. with the applause, one can almost hear people murmur, so let me say it aloud. yes, ladies and gentlemen, there is a β but β. we have come this far but there is much that still lies ahead. our rapidly growing economy needs a deep and active domestic debt market more than ever, both to provide the more stable funding for infrastructure and other long - term needs as bis central bankers β speeches well as the investment outlets of a quality and variety that meet the diverse requirements of our savers. but it will not come about of its own without our active collaboration to build a market that inspires trust and confidence. it requires the cooperation and commitment of government as major issuer, of the financial regulators, of the tax authority, and you, the market players. together we must build a public good that advances the welfare of all. at the very core, we need to maintain transparency and adhere to strong standards of governance. we desire prices to be efficiently discovered. as a market, we have experienced the dangers of purely bilateral trades, uncontrolled leverage and inefficient settlement. we need a yield curve that reflects active trade across a broad range of activities to serve as the sensitive and critical reference point to properly price risk and guide the market through changing conditions. we need competent and responsible market intermediaries and reliable and robust infrastructure that can provide the desired efficient access to the markets from wherever they are in our archipelago. changing market incentives ladies and gentlemen, the issues i just raised comprise a long enough list, but as you know, they are not exactly new either. with all the challenges, we remain a bank - based financial market. i believe however that three developments are pushing the pace of real reforms in our capital market. first, banks today face a β new normal β - one that demands a β fresh perspective on risk β. necessarily, this means banks must define a new strategic path moving forward. although capital adequacy ratios have been kept above the regulatory minimum, capital is as much a scarce resource as any. in this sense, banks may be very liquid but they cannot and should not chase every credit option that | 0 |
with a segmented regime of bank supervision and resolution. after all, most of the money that people use daily is not a central bank liability, but rather deposits issued by commercial banks. in this setting, if financial markets fragment, it can lead to an asymmetric tightening of financing conditions and disrupt the transmission of monetary policy across the euro area. that is what we saw happening as the sovereign debt crisis progressed. but what allowed europe to react effectively was commitment and flexibility. the ecb β s response β announcing outright monetary transactions β underlined its commitment to its mandate by reacting flexibly to the circumstances. this aimed at ensuring the effective 1 / 4 bis central bankers'speeches transmission of the eurosystem β s monetary policy with a view to maintaining price stability. in parallel, the response from europe β s leaders underscored also their commitment to the euro β by launching the banking union plan including common supervision and resolution. this was the most significant transfer of powers to the european level since the creation of the euro. but the length and depth of the crisis left deep scars on the euro area economy β and set the stage for a long phase of too - low inflation to emerge in its wake. the double hit of the great financial crisis and the sovereign debt crisis left behind a persistent shortfall in demand and employment. from the onset of the great financial crisis, it took seven years for euro area gdp to return to its pre - crisis level and almost 12 years for unemployment to do the same. in slovenia, those figures were nine and 11 years, respectively. this environment dragged down inflation in three interlocking ways. first, it created a lingering negative demand shock which depressed inflation dynamics. second, interest rates began to approach their effective lower bound, reducing the space to counter that shock through further rate cuts. and third, inflation expectations began drifting downwards, leading to higher real interest rates at a time when the economy needed policy easing. in other words, there was a very real risk of becoming stuck in a low - inflation trap. and although the nature of the challenges had changed, it was again commitment and flexibility that mattered in tackling this risk. with signs that inflation expectations were starting to de - anchor, the ecb had to show that it was as committed to fighting deflationary forces as it was β and is β committed to fighting inflationary ones. added to which, as the lower bound neared and conventional policy became more restrained, it was key to show that monetary policy | near term, inflation and growth are moving in opposite directions. the ecb β s initial response was governed by our new monetary policy strategy, which calls for patience and persistence when exiting a long period of too - low inflation. but since december of last year, we have started moving down the path of gradual policy normalisation. why? to begin with, the medium - term inflation outlook is changing. measures of underlying inflation, including those that capture persistence, are nearly all above 2 %. inflation expectations are also at, or above, 2 %, according to a range of measures. and our inflation projections are increasingly pointing towards inflation being on target over the medium term. in parallel, the war is likely to accelerate two ongoing structural changes which, during the transition they entail, could lead to further negative supply shocks and cost pressures. first, as i argued recently, the war may prove to be a tipping point, causing geopolitics to become more important for the structure of global supply chains. 2 this will not necessarily imply deglobalisation β international firms will still face strong incentives to organise production where costs are lowest β but it might restrict the perimeter in which they can do so. second, the war is likely to speed up the green transition as a means of reducing dependence on hostile actors. indeed, the paths to achieving energy security and climate security now point firmly in the same direction. this is likely to keep up pressure not only on fossil fuel prices but also on demand for some of the metals and minerals that are already in short supply. in this context, it looks increasingly unlikely that the disinflationary dynamics of the past decade will return. as a result, it is appropriate for policy to return to more normal settings. 3 at the same time, we do not have excess aggregate demand in the euro area β consumption and investment are both still below their pre - crisis levels β and the war is creating a challenge for monetary policy by tempering growth rates and pushing up inflation further. in such an environment, commitment and flexibility will be key. with inflation likely to remain high for some time, actions that demonstrate our commitment to price stability will be critical to anchor inflation expectations and contain second - round effects. this will help ensure that inflation returns to 2 % once the various supply shocks have passed. in addition, the ecb has consistently emphasised the optionality in its monetary policy, which creates space for us to respond to inflation surprises in a timely and efficient way | 1 |
yves mersch : means of payments and smes β where are we heading? speech by mr yves mersch, member of the executive board of the european central bank, at the dinner debate, organised by the think tank etienne marcel, paris, 29 september 2015. * 1. * * introduction mr cohen - hadad, ( mr president ) ladies and gentlemen, no economy can prosper without healthy, competitive and flourishing small and mediumsized enterprises ( smes ). they are the foundation on which the european economy is built and constitute more than 99 % of all firms in the euro area. they employ more than two - thirds of the workforce and generate around 60 % of value added. according to recent research, smes accounted for around 85 % of total employment growth between 2002 and 2010 and have much higher employment growth rates than large enterprises. the financial crisis hit the financing of smes particularly hard. this explains why, in recent years, the ecb and the european commission have strongly emphasised measures that support both bank and non - bank financing of the european sme sector. these measures and policy initiatives include strengthening bank financing by facilitating longer - term financing and promoting healthier balance sheets. they also aim to diversify into non - bank financing via more efficient securitisation, better transparency and more efficient wholesale infrastructure. 1 this is why the ecb strongly supports the european commission β s initiative to establish a european capital markets union, which will allow businesses to enjoy a greater range of funding choices and help reduce the link between a firm β s location and its funding costs. however, there are other policies that have received less public attention in relation to the competitiveness of the european sme sector, one of the most important being integration and innovation in the retail payments market, particularly for payments in euro. this is what i will focus on tonight. 2. past achievements over the past years the public and private sectors have worked together to create the single euro payments area ( sepa ). regulatory measures and market developments have combined to remove the distinction between domestic and cross - border payments in euro. retail payments have become much faster, cheaper and more secure. instead of taking three to five days, euro credit transfers and direct debits are now executed within one business day, not only at the domestic level but also across borders. fees for cross - border euro transactions decreased to the same level as those for domestic transactions. last, but certainly not least, payments in general have become more | the state ( repayable advances ) and two schemes implemented by the hellenic development bank β a guarantee scheme and a co - financed interest subsidy scheme for new corporate loans. these are expected to reach an overall loan volume of about β¬13 billion, or 7. 7 % of gdp. they come on top of the broader fiscal package in response to the pandemic, including interest subsidies for existing performing loans, bonds and bank overdrafts, reductions and deferrals of tax and social contributions, and labour market support measures. so far, the ecb β s policy measures and the relevant greek policies have supported bank lending to corporates, which has increased substantially, while credit standards have remained broadly stable. a large net flow of loans β above β¬1 billion β was registered in july, supported in particular by the guarantee scheme of the hellenic development bank. at the same time, greek small and medium - sized enterprises continue to have serious concerns about their lack of access to financing. their financing gap remains high, despite the increased availability of bank loans and the decline in interest rates. in order to underpin the recovery, policy support remains necessary to safeguard the continued supply of credit. looking ahead, it is essential to complete the financial sector reforms needed to support the process of npl reduction and guarantee an adequate supply of credit during the recovery. these reforms include improving the e - auctions framework, revising the insolvency framework, reducing the backlog of pending personal insolvency cases before the courts, and clearing called state guarantees on bank loans. the funding provided by next generation eu is an opportunity for greece 2 / 3 bis central bankers'speeches the funding from next generation eu creates an extraordinary opportunity. for the first time in history, the european union will issue common debt to counter a common shock. this will bring fiscal policy more in tune with monetary policy at the european level, and may represent an important step for european integration : we borrow together to recover from the crisis and to invest in our future. all eu countries will benefit from this common response. but to be effective, european measures require careful planning and decisive action at the national level. in time, the need to buffer the immediate impact of the pandemic will be replaced by the need for investment and reform to support a sustainable recovery. as the national support measures are phased out, a well - planned and coordinated approach will be necessary if we want to avoid cliff effects. policies will have to find the right | 0.5 |
randall s kroszner : markets, financial institutions, and consumers aβ¬ β the roles of the federal reserve speech by mr randall s kroszner, member of the board of governors of the us federal reserve system, at the national bankers association 80th annual convention, durham, north carolina, 11 october 2007. * * * it is a pleasure to take part in this event. i commend our hosts for bringing together such a broad range of participants and for developing an agenda that addresses issues of great significance to the banking community. my goal today is to offer a broad perspective of the federal reserve's various responsibilities and complementary roles. the roles of the federal reserve may seem somewhat obscure and, to many, even disconnected. i would venture a guess that as bankers, you think first of examiners when you hear " federal reserve " - - and perhaps do so with a groan. but as you know, bank supervision is only one of the federal reserve's functions. in my remarks today, i will speak about some of the federal reserve's responsibilities and discuss how they relate to markets, financial institutions, and consumers. the central bank and monetary policy as the nation's central bank, the federal reserve has the unique power in the u. s. financial system to create money, giving it the ability to conduct monetary policy for the u. s. economy. that power also enables the federal reserve to provide liquidity - - a capability that is particularly important when the financial system is under stress. indeed, the federal reserve was established in 1913 as a means of addressing the periodic financial panics and accompanying economic downturns that had afflicted the nation at various times. the congress has given the federal reserve specific objectives for the conduct of monetary policy - - in particular, to conduct monetary policy in a way that promotes the long - run objectives of maximum sustainable employment and stable prices. monetary policy is implemented primarily through open market operations - - that is, the purchase and sale of securities in the open market - - which gives the federal reserve the ability to control shortterm interest rates. the federal open market committee ( fomc ) oversees the conduct of open market operations and formulates monetary policy by setting an operating target for the federal funds rate that is judged to be consistent with fostering the federal reserve's longrun objectives. as part and parcel of its pursuit of maximum sustainable employment and stable prices, the federal reserve has a broad responsibility to foster financial | and we are in the process of launching an important study on the effects of reforms aimed at ending too big to fail. this evaluation is being led by claudia buch, vice president of the deutsche bundesbank. conclusion this is an important time for the fsb. we are nearing completion of the post - crisis reform agenda, a major accomplishment. with that comes the opportunity to turn our focus to ways in which we can improve the fsb and prepare it for the next phase of its existence. we will work diligently to enhance our transparency and to expand our efforts to reach out to as many stakeholders as possible. we will prepare for the next crisis by making sure that our framework to assess vulnerabilities to financial stability is state of the art and remains so going forward. and, we will work hard to maintain the important reforms in place, ensure they are working as intended, and, where possible, improve them. 4 / 4 bis central bankers'speeches | 0.5 |
, sir leslie melville lecture, canberra, 29 october. committee on the global financial system ( 2019 ), β unconventional monetary policy tools : a cross - country analysis β, cgfs papers no 63, bank for international settlements. available at < https : / / www. bis. org / publ / cgfs63. htm >. https : / / www. rba. gov. au / speeches / 2019 / sp - gov - 2019 - 11 - 26. html 11 / 12 26 / 11 / 2019 unconventional monetary policy : some lessons from overseas | speeches | rba this risk has been reduced by the strengthening of liquidity regulation. it is also worth recalling that one role of the central bank is to support the liquidity of the system as a whole and that it is neither possible, nor desirable, for financial institutions individually to insure against system - wide shocks. debelle g ( 2018 ), β lessons and questions from the gfc β, address to the australian business economists annual dinner, sydney, 6 december. brunnermeier m and y koby ( 2019 ), β the reversal interest rate β. available at : < https : / / scholar. princeton. edu / markus / publications / reversal - interest - rate - effective - lower - bound - monetary - policy >. large - scale asset purchases would increase settlement balances, which would likely result in the cash rate moving below 0. 25 per cent. Β© reserve bank of australia, 2001 β 2019. all rights reserved. the reserve bank of australia acknowledges the aboriginal and torres strait islander peoples of australia as the traditional custodians of this land, and recognises their continuing connection to country. we pay our respects to their elders, past, present and emerging. https : / / www. rba. gov. au / speeches / 2019 / sp - gov - 2019 - 11 - 26. html 12 / 12 | am confident that here, in australia, we are still a fair way from it. conventional monetary policy is still working in australia and we see the evidence of this in the exchange rate, in asset prices and in the boost to aggregate household disposable income. my third observation is that we have no appetite to undertake outright purchases of private sector assets as part of a qe program. https : / / www. rba. gov. au / speeches / 2019 / sp - gov - 2019 - 11 - 26. html 8 / 12 26 / 11 / 2019 unconventional monetary policy : some lessons from overseas | speeches | rba there are two reasons for this. the first is that there is no sign of dysfunction in our capital markets that would warrant the reserve bank stepping in. the second is that the purchase of private assets by the central bank, financed through money creation, represents a significant intervention by a public sector entity into private markets. it comes with a whole range of complicated governance issues and would insert the reserve bank very directly into decisions about resource allocation in the economy. while there are some scenarios where such intervention might be considered, those scenarios are not on our radar screen. my fourth point is that if β and it is important to emphasise the word if β the reserve bank were to undertake a program of quantitative easing, we would purchase government bonds, and we would do so in the secondary market. an important advantage in buying government bonds over other assets is that the risk - free interest rate affects all asset prices and interest rates in the economy. so it gets into all the corners of the financial system, unlike interventions in just one specific private asset market. if we were to move in this direction, it would be with the intention of lowering risk - free interest rates along the yield curve. as with the international experience, this would work through two channels. the first is the direct price impact of buying government bonds, which lowers their yields. and the second is through market expectations or a signalling effect, with the bond purchases reinforcing the credibility of the reserve bank's commitment to keep the cash rate low for an extended period. currently, the government bond yield curve sits around 20 basis points above the overnight indexed swaps ( ois ) curve, which represents the market's average expectation of the future monetary policy rate ( graph 4 ). purchasing government securities could compress this differential and could also flatten the ois curve through the expectations effect i just mentioned. a lower | 1 |
which was already well above the 10 - year average2. we are hopefully all concerned about the delays in implementing the paris agreement. the banque de france has conducted simulations on the basis of macro - financial scenarios developed by the ngfs, the network for greening the financial system : a late and disorderly transition would have far more adverse effects, ranging between 10 % and 20 % of world gdp by the end of the century ( compared with up to 7 % of gdp for an orderly transition ). beyond cop26, globally coordinated governmental forward - looking guidance is therefore necessary to anchor concrete and credible commitments, such as the one taken by the european union in its fit for 55 programme. and yes, policies to fight climate change should imperatively include an appropriate carbon price. be assured that central banks will do everything they can do. the ecb monetary policy strategy review, concluded last summer under president lagarde β s leadership, sets out an ambitious action plan leading up to 2024. but central banks and, beyond, financial intermediaries cannot substitute for adequate β and sometimes difficult β public policies. the green transition does hold risks β including for inflation β, but it also offers economic and financial opportunities, as new technologies gradually reach scalability. the sooner we start, the more positive ( or the less negative ) the economic balance will be. 2 / let me now turn to the second major transformation underway : the digital transformation. here, europe is still lagging behind the united states and china. it is of the utmost importance to remain at the technological frontier in order to reap the benefits of innovation in terms of productivity and growth, as the winner often takes all. beyond the economic fallouts, it is also a matter of strategic autonomy. these disruptions are also reflected in the monetary, financial and payments spheres β which we scrutinize as central banks and supervisors β, where digitalisation is bringing about a triple revolution β and it is far from over : ( i ) first, the arrival of new players : new actors born from the tech world β fintechs and bigtechs β are challenging historical players with radically new approaches to financial services and at present much less regulation ; ( ii ) second, the emergence of new assets : crypto - assets from the blockchain universe in the form of tokens : they will not be credible as β crypto - currencies β, but could be used as settlement means β think of stablecoins for instance | mark carney : polymer banknotes remarks by mr mark carney, governor of the bank of england and chairman of the financial stability board, at the bank of england, london, 18 december 2013. * * * ensuring public trust and confidence in money is at the heart of what central banks do. money can only play its invaluable role in our economy if that trust and confidence is maintained. that motivates the bank of england β s core objectives of price stability, so that people can be confident of the value of their money over time, and financial stability so that they will be able to access and use money when they want to. it is also why we place such importance on maintaining confidence in our banknotes, the most tangible form of money. our job is to ensure that the banknotes people use are high quality and genuine. we also recognise that banknotes are an important national symbol and a source of national pride. our banknotes must therefore be secure from counterfeiting, resistant to damage, and designed in a way that inspires broad public support and fosters legitimacy. we are continually working to ensure that our notes meet those requirements. that is why i am pleased to announce today that the next bank of england notes will be printed on polymer, rather than cotton paper. the first polymer note will be the Β£5 note featuring sir winston churchill, and will be issued in 2016. it will be followed around a year later by a polymer Β£10 note featuring jane austen. the decision to move to polymer for these notes follows a three - year review and a broad public consultation exercise. our research has shown a compelling case for polymer notes. polymer notes bring three main benefits : β’ they stay cleaner than paper banknotes because they are resistant to dirt and moisture ; β’ they are more secure because they incorporate advanced security features that make them difficult to counterfeit ; β’ and they are more durable, lasting at least 2Β½ times as long as paper banknotes, ensuring that notes in circulation remain of high quality. because replacements are needed less often they are both cheaper over time, and more environmentally friendly. these advantages mean that a switch to polymer is a natural step in the evolution of banknote design. but you don β t have to take our word for it. nearly 13000 people have told us what they thought, in surveys and at over 40 events up and down the uk, and 87 % β the vast majority β were in favour of polymer notes, especially once they had a | 0 |
ahead. what has been the impact? these reform measures have had major impact on the overall efficiency and stability of the banking system in india. the present capital adequacy of indian banks is comparable to those at international level. there has been a marked improvement in the asset quality with the percentage of gross nonperforming assets ( npas ) to gross advances for the banking system reduced from 14. 4 per cent in 1998 to 7. 2 per cent in 2004. the reform measures have also resulted in an improvement in the profitability of banks. the return on assets ( roa ) of the banks rose from 0. 4 per cent in the year 1991 - 92 to 1. 2 per cent in 2003 - 04. considering that, globally, the roa has been in the range 0. 9 to 1. 5 per cent for 2004, indian banks are well placed. the banking sector reforms also emphasized the need to review the manpower resources and rationalize the requirements by drawing a realistic plan so as to reduce the operating cost and improve the profitability. during the last five years, the business per employee for public sector banks more than doubled to around rs. 25 million in 2004. continuity, change and context we lay considerable emphasis on appropriate mix between the elements of continuity and change in the process of reform, but the dynamic elements in the mix are determined by the context. while there is usually a consensus on the broad direction, relative emphasis on various elements of the process of reform keeps changing, depending on the evolving circumstances. perhaps it will be useful to illustrate this approach to contextualising the mix of continuity and change. the mid - term review in november 2003, reviewed the progress of implementation of various developmental as well as regulatory measures in the banking sector but emphasised facilitating the ease of transactions by the common person and strengthening the credit delivery systems, as a response to the pressing needs of the society and economy. the annual policy statement of may 2004 carried forward this focus but flagged major areas requiring urgent attention especially in the areas of ownership, governance, conflicts of interest and customer - protection. some extracts of the policy statement may be in order : " first, it is necessary to articulate in a comprehensive and transparent manner the policy in regard to ownership and governance of both public and private sector banks keeping in view the special nature of banks. this will also facilitate the ongoing shift from external regulation to internal systems of controls and risk assessments. second, from a systemic point of view, inter | hegemony of the dominant reserve currencies. there is a need for greater understanding on both sides. in the meantime, so far as the reserve bank of india is concerned, we will continue to play by the extant rules of the game. 9. central banks have to interact closely with financial markets for transmission of monetary policy impulses. in this context, ensuring a sound and efficient payment and settlement system is 2 / 3 bis central bankers'speeches a pre - requisite. taking cognisance of exponential growth of digitisation and online commerce in india, policy efforts have been directed in recent years to put in place a state of the art national payments infrastructure and technology platform. this has changed the retail payments scenario of the country. regulation and development of our payment system envisages the objectives of safety, security, convenience, accessibility, and leveraging technological solutions to enable faster processing. in order to ensure an orderly development of fintechs and streamline their influence into the financial system, we are now working on guidelines to introduce a β regulatory sandbox / innovation hub β within a well - defined space and duration to experiment with fintech solutions. 10. in this high flux and uncertain environment, emes could perhaps be better off by stepping up cooperation on all fronts, while recognising multi - polarity. one area of cooperation could be to put in place an institutional mechanism which balances the concerns of both oil exporting and importing countries to ensure stability in energy prices. emes also need to explore alternatives to reduce dependence on conventional energy sources, and give greater focus on renewables and energy efficiency. the international solar alliance, with its headquarters in new delhi, is a vivid example. it seeks to provide a dedicated platform for cooperation among financial and solar resource rich countries so that the global community benefits from the use of solar energy. 11. in closing, let me say a few words about india. real gdp growth is expected to clock 7. 2 per cent during 2019 β 20, the fastest among large economies of the world, growing by an average rate of around 7. 5 per cent in recent years. inflation has remained below target, averaging 3. 6 per cent for the period under the inflation targeting framework so far ( since october 2016 up to february 2019 ) ; the current account deficit is expected to be around 2. 5 per cent of gdp in 2018 β 19 ; and the gross fiscal deficit has adhered to budgetary targets. 12. looking ahead | 0.5 |
analysis by a central bank form the basis for the policy decision. the economy is constantly undergoing change, even at this moment, in a situation where economic globalization and development in information and communications technology are in progress. this is why i respect central bank culture, which attaches importance to being humble and always learning. in addition, it is indispensable for a central bank to explain clearly the reasons for its policy decisions β that is to say, it should ensure transparency. after all, a central bank's independence is based on years of experience in making policy decisions based on its accurate analysis, and on transparency with regard to its policy decisions. the second issue relates to the importance of banking operations carried out by central banks. i have spoken today mainly about monetary policy, but a central bank's various banking operations also make an essential contribution to the development of the economy. to cope with the disruptions in global financial markets since last summer, central banks have taken various measures to provide financial markets with ample liquidity, or even acted as an intermediary. their banking functions have played a crucial role in ensuring that those monetary policy actions take effect smoothly. despite the unstable functioning of the markets since the summer, payment and settlement systems have not undergone major disruption. when financial markets experience turmoil, foreign exchange transactions are generally prone to settlement risk because of the time difference, and this can jeopardize the markets further. however, such problems have not occurred, and this is partly due to efforts by central banks over many years to enhance the payment and settlement system for foreign exchange transactions. these efforts of major economies'central banks and private banks brought a new system into effect in 2002 that realized settlement on a payment - versuspayment basis of transactions involving a pair of different currencies β for example, the yen and the u. s. dollar or the euro and the dollar. if this system had not been introduced until some years later, turmoil in the markets would have been more extensive. moreover, preparations for unexpected events are just as important as the banking operations, and central banks have been enhancing business continuity planning for emergencies including earthquakes, terrorist attacks, and system failures. in recent years, monetary policy has been attracting greater attention, and this is indeed welcome. however, it is only one aspect of central banks, and i hope that banking operations performed by central banks as " the bank for banks, " their other aspect, will gain more recognition. through the conduct of the two | toshihiko fukui : bank of japan β s conduct of monetary policy - an overall review statement by mr toshihiko fukui, governor of the bank of japan, concerning the bank β s semiannual report on currency and monetary control, before the committee on financial affairs, house of representatives, tokyo, 9 june 2004. * * * introduction the bank of japan submitted its semiannual report on currency and monetary control for the second half of fiscal 2003 to the diet on june 4, 2004. i am pleased to have this opportunity to present an overall review of the bank β s conduct of monetary policy. i. developments in japan β s economy when i spoke to this committee in march 2004, i presented the assessment that japan β s economy was recovering gradually. since then, industrial production and corporate profits have continued to increase due to a substantial rise in exports, and against this background business fixed investment has continued to recover. the decline in household income is gradually coming to a halt, and private consumption is showing some positive movements. with a virtuous cycle in operation, the economy continues to recover gradually and domestic demand is becoming firmer. as for the outlook, japan β s economy is expected to continue its recovery as momentum increases gradually. overseas economies are likely to continue growing relatively fast, despite some negative factors such as geopolitical risks and the rise in crude oil prices. the u. s. economy continues to show balanced growth. private consumption and business fixed investment remain firm, and in the employment situation a recovery which had been delayed is becoming clearer. east asian economies, particularly china, are likely to continue high growth. reflecting such developments in overseas economies, japan β s exports and production are expected to continue on an increasing trend. furthermore, corporate profits are likely to remain on an uptrend as exports and production increase, given the progress in dealing with problems, such as excessive labor and debt, which were part of the background to the delay in japan β s economic recovery. business fixed investment is therefore likely to continue on an uptrend, particularly in the manufacturing sector. the increase in production and corporate profits is expected to exert positive effects gradually on the household sector through changes in employment and income as well as in asset prices. against this background, private consumption is expected to recover at a moderate pace. on the price front, domestic corporate goods prices have been rising recently, due to the strengthening of commodity prices at home and abroad and to the improvement in | 0.5 |
francois villeroy de galhau : banking turmoil - three blessings and a funeral speech by mr francois villeroy de galhau, governor of the bank of france, at the eurofi high - level seminar 2023, stockholm, 28 april 2023. * * * ladies and gentlemen, i am delighted to address you at this eurofi seminar in stockholm, and i would like to extend my warmest thanks to david wright and didier cahen. this speech, as the two previous ones, seems like a perfect opportunity to take a first look at the lessons to be learnt from the banking turmoil of 2023. as i have the privilege to speak after my friends pablo hernandez de cos and klaas knot, my task is made simpler : they have already covered a lot of ground, and hence i will be able to speak still more freely, and to call my speech " three blessings and a funeral ". let me start with the funeral, at least the one that we can welcome, but which, unfortunately, is not final. it should be the condemnation and the funeral of mismanagement. indeed, blatant mismanagement of the risks and of the business model in some banks explains first and foremost the recent turmoil. as pablo said in washington, " jumping straight to discussions about the regulatory and supervisory implications of recent events is akin to forgiving banks for not fulfilling their primary responsibilities ". 1 to put it even more bluntly, when some people act like reckless drivers on the road, they are the ones who are guilty, not the police. after the ( temporary, alas ) funeral, let me return to the three blessings. this word is a bit selfcentered, i confess, since i am referring to public policies, and each of them today raises questions : ( i ) regulation, ( ii ) supervision, ( iii ) resolution. therefore, how could we revisit each of them? i. regulation : a plea for an effective implementation allegedly, if regulation had been more effective, it could have prevented the banking turmoil. for its critics, basel iii was too focused on liquidity and counterparty risks, and not enough on interest rate risk. well - let me call into question those ideas. such criticism is ironic : didn't anyone notice that the first blast of turbulence came from a bank not subject to the full set of basel standards? while the basel framework applies in its entirety to every single european bank β several thousands of them | . the answer is clear : good regulation is necessary ; it's never sufficient. the risks generated by specific business models such as the asset - liability mismatch at svb or the weak profitability and weak internal controls that dogged credit suisse should typically have led to higher supervisory requirements. supervision should not be seen as a static business ; it must be active and tailored to banks characteristics. this is precisely the spirit of the " pillar 2 " in the basel framework, with the annual supervisory review process. i sometimes hear doubts about supervision, which some believe should be treated as a legal dialogue, cautious in its form, and slow in its effects. no : supervision can and must be intrusive β including on - site β, exercised by highly skilled practitioners, quick in its reaction, strong in its powers. this is not wishful thinking : it has been our experience for decades in the french acpr, and now for years in the european ssm. active supervision is indeed one of the great successes of our european banking union. in light of the recent reality test, i believe there are two lessons to be learnt from our model. first, the experience of the single supervisory mechanism shows the advantages of all the players being subject to one leading authority in an integrated banking space, with clearly defined responsibilities and coordination. this single supervision allows for comparisons across a vast sample of comparable institutions, and thematic campaigns of on - site missions. second, our active supervision features regular and comprehensive stress testing including on interest rate risks, which is also applied to less significant institutions. the 2 / 3 bis - central bankers'speeches european banking authority ( eba ) conducts an eu - wide banking stress test every two years, taking into account the latest macro - financial developments : in 2023, stress test scenarios are typically based on a sharp rise in short - term and long - term interest rates. moreover, following the eba guidelines on interest rate risk of the banking book ( irrbb ) β as part of the rigorous application of the pillar 2 process β, published in 2018 and enhanced in 2022, european banks are required to perform regular supervisory tests to measure the impact of interest rate movements on their interest margins and economic value of equity ; us regional banks such as svb are not. iii. resolution : how to make it work now for our last blessing. since the global financial crisis, banks and authorities have strengthened their ability to deal with crisis events by developing a resolution framework. however, | 1 |
york city in the 1970s, the fiscal adjustment will be 2 / 3 bis central bankers'speeches painful, and many important decisions will undoubtedly be unpopular. while the pain has been β and will continue to be β widely shared, it is also critical to seek ways to ensure that the benefits from the restoration of growth are shared broadly. how exactly to make this work is an open question that i am certain the oversight board and its stakeholders will consider carefully over the coming months. the new york fed will continue to help in the best ways we can β by providing independent research and analysis, and by leveraging our convening authority to bring together stakeholders to share expertise, explore opportunities, and provide information to those who need it most. we recently held two events on the island β one for small business owners impacted by the storm and another for credit unions. we plan to do more in the months and years ahead, and i look forward to gaining a better understanding of conditions on the ground and how we can help when i travel to puerto rico and the u. s. virgin islands next month. now, i β d like to turn it over to jason bram, who will talk more about what we are starting to see in terms of the economic impact of the storms. 1 jaison abel, jason bram, gerard dages, richard deitz, suzanne elio, jack gutt, and andrew haughwout assisted in preparing these remarks. 2 see, for example, our report on the competitiveness of puerto rico β s economy, june 2012, and an update on the competitiveness of puerto rico β s economy, july 2014. 3 / 3 bis central bankers'speeches | paul tucker : resolution of large and complex financial institutions β the big issues remarks by mr paul tucker, deputy governor for financial stability at the bank of england, at the european commission conference β building a crisis management framework for the internal market β, brussels, 19 march 2010. * * * many thanks for input to mark adams, andrew bailey, peter brierley, geoffrey davies and andrew hewitt, and to financial stability board colleagues for discussions on resolution issues. for background work to michael grady and for secretarial support to sandra bannister and cheryl feeney. i am delighted to be at today β s conference, the first major conference under commissioner barnier. as many colleagues here will know, i chair the financial stability board β s working group on cross - border crisis management. but my remarks today are offered in a personal capacity, albeit drawing on the international dialogue. the conference is very well timed given the commission β s work on a possible eu directive on resolution regimes. an increasing number of national authorities have already established or are prospectively establishing special resolution regimes for the resolution of commercial banks, enabling the transfer of deposits and good assets to another bank, with bad assets and other creditor claims going into an insolvency process. at a high level of generality, a distressed bank is split into a continuing good bank, typically acquired by a healthy bank ; and a gone - concern bad bank, which goes into administration. insured deposits travel with the β good bank β. all other creditors typically travel with the β bad bank β and become claimants in the insolvency. we can be confident that this will help to buttress stability. encouragement from the eu to all members states to establish such regimes would be really useful. but we also know that, of itself, this is insufficient. it cannot cope with distressed lcfis ( β large and complex financial institutions β ) without injections of public money. in the first place, every country having its own special resolution regime does not solve the problem of resolving cross - border banking groups. second, such regimes cannot cope with investment banking, whether national or global, if a buyer cannot be found. even for a ( hypothetical ) lcfi operating entirely within a single jurisdiction, with all of its counterparties, customers and contracts domiciled there, a standard resolution regime could not effect an orderly run down of, for example, a massive, complex derivatives portfolio. putting over - the - counter derivatives though central counterparties | 0 |
board or the federal open market committee. 2 / 2 bis - central bankers'speeches | alan greenspan : globalization remarks by mr alan greenspan, chairman of the board of governors of the us federal reserve system, at the institute for international economicsaβ¬β’ inauguration of the peter g peterson building, washington, 24 october 2001. * * * i am pleased to be with you tonight as the institute for international economics dedicates this extraordinary new building. i am also pleased to note that you are celebrating your twentieth year in the business of thinking critically about vital international economic issues. it hardly seems that long. before the tragic events of september 11, discussions of the international economy had increasingly come to be centered on issues related to the growing integration of our economies. the strife we had witnessed over economic globalization was the twenty - first century's version of debates over societal organization that go back at least to the dawn of the industrial revolution, and many of the intellectual roots of those debates go back far longer. there has been a simmering down of the more vociferous protests against globalization since september 11. but the debate surrounding the increasing cross - border integration of markets inevitably will be rejoined. the issue elicits such strong reaction because it centers on the important question of how economies are organized and, specifically, how individuals deal with one another. globalization as generally understood involves the increasing interaction of the world's peoples through their national economic systems. of necessity, these economic systems are reasonably compatible and, in at least some important respects, market oriented. during the past half - century, barriers to trade and to financial flows have generally come down, resulting in a significant broadening of world markets. expanding markets, in turn, have enhanced competition and nurtured what joseph schumpeter called " creative destruction, " the continuous scrapping of old technologies to make way for the new. standards of living rise because the depreciation and other cash flows of industries employing older, increasingly obsolescent, technologies are marshaled, along with new savings, to finance the production of capital assets that almost always embody cutting - edge technologies. this is the process by which wealth is created incremental step by incremental step. it presupposes a continuous churning of an economy in which the new displaces the old. the process is particularly evident among those nations that have opened their borders to increased competition. through its effect on economic growth, globalization has been a powerful force acting to raise standards of living. more open economies have recorded the best growth performance ; | 0.5 |
setting a minimum requirement for own funds and eligible liabilities ( mrel ) β, december 2020. see bank of england financial stability report, december 2019 and hm treasury / bank of england / pra / financial conduct authority, β regulatory initiatives grid β, september 2020. all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice returning now to the simpler regime and moving on to my second term, β strong β. here i want to repeat sam β s very clear message that we have absolutely no appetite to weaken standards. what that means is that we do not think that we have made any part of the banking system too safe. nor do we think that a simpler regime should lead to any change in the level of resilience of the firms we supervise. what we aim at is a simpler regime which delivers the same level of resilience for small firms in a more efficient way. which brings me to β simple β. i will have more to say about this term because β ironically β simplicity is not itself a simple idea. i will therefore explain what we mean by β simple β and how that gives rise to some important design choices for the simpler regime. we know that banking regulation doesn β t always seem simple. research by bank staff has documented a near - doubling in the length of uk banking regulation since the financial crisis of 2007 - 2008 to almost three quarters of a million words. 6 it won β t surprise you to hear that i β m firmly convinced that new rules were needed to address vulnerabilities which that crisis revealed. but i also recognize that we have a complexity problem when we have more rules than we need. that can happen when we apply all of our rules to all the firms we supervise. some of the rules we need for big, complex firms might not be needed for smaller firms. one problem with complexity is that it brings costs. firms must spend money interpreting rules and operationalising requirements and, as with other sorts of overheads, some of these costs are fixed costs which are the same for all firms regardless of their size. research, including the pra β s own analysis of survey responses from uk firms, suggests that the fixed costs of implementing new requirements can be proportionally higher for small firms than for large ones when measured as a fraction of a firm β s assets. 7 what this tells us is that there are economies of scale when it comes to compliance costs and | 6 july 2020. supervisory statement 3 / 21 - non - systemic uk banks : the prudential regulation authority β s approach to new and growing banks following consultation paper 9 / 20 β non - systemic uk banks : the prudential regulation authority β s approach to new and growing banks. all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice are likely to grow out of the simpler regime. and the discussion paper asks for comments on how that kind of optionality could be introduced. but that might not always be possible or appropriate for all firms, so we will need to design the simpler regime in a way which minimises barriers to growth as far as possible. to sum up our approach to the complexity problem : we are looking for ways to simplify requirements for small firms which, as a package, will reduce the costs of regulation without reducing firms β resilience. i will now move on to the question of how that can be done. streamlined or focused it β s possible to imagine two approaches to creating a simpler regime. one approach would see us sitting down with the current rule book and, working through it pen in hand, striking or simplifying out those parts which aren β t needed for non - systemic banks and building societies. the result would be a thinner version of the current rulebook with the same chapters but fewer words. that is what i will call a β streamlined β approach because it would deliver a streamlined version of current requirements. the other approach would have us starting with a blank page and identifying the minimum number of requirements needed to maintain small firms β resilience. in this case, the result would be a completely different rulebook with different chapters. i will call this the β focused β approach because it would be solely focused on the risks faced by eligible small firms. what are the implications of choosing one or other of these approaches? you may have noticed that i have spoken so far about the complexity of requirements, but not their calibration. that is because questions about the level at which requirements are set can only be properly addressed once an approach has been chosen. this is a natural consequence of our commitment to maintaining current levels of resilience. as i said earlier, this means that when we simplify some aspects of the regime we may need to tighten others. that tightening might take the form of increasing the calibration of remaining requirements. one might for example | 1 |
competitiveness. we need the remarkable force of corporate leaders to fuel the drive towards long - term growth and stability. we need dynamic leaders to push the frontiers of excellence β leaders who are constantly learning and possess the courage to take on new challenges. in this process, avenues for continuous learning must be actively sought. the establishment of iclif is part of our commitment towards providing such an avenue to enhance our leadership capability and develop world - class leaders in the financial services sector. towards this endeavour, the centre is currently in the process of developing a unique leadership competency model that will analyse and understand what makes for great corporate leaders in our regional context. at the same time, the centre is putting together a world - class global leadership development program ( gldp ) with leading consultants and drawing faculty from the best schools in the world. the global leadership development program represents ground - breaking design in terms of an executive education program. by drawing faculty from not just one or two, but up to five leading institutions, the centre will be able to combine the best ideas and thoughts in the world on the various key leadership issues and concerns. the centre β s role will not be to replicate the roles of institutions of higher learning, but rather to facilitate and provide specific, directed and targeted learning based on the requirements of our industry. in addition to its board of directors, the centre will also be governed by an international advisory panel comprising eminent personalties. in the process, participants will benefit from the best of all worlds in terms of the latest thinking on leadership issues. it is envisaged that the centre will also serve to complement and supplement the existing capacity building facilities in the financial and corporate sector to become a regional centre of excellence for leadership training in finance. the centre aims to reinforce the notion that investments in human capital, including the pursuit of leadership excellence, is a continuing process in this ever - changing environment so as to enhance the calibre of our human capital in the financial and corporate sector in meeting the challenges ahead as we advance forward in this new millennium. | zeti akhtar aziz : launch of amislamic bank berhad speech by dr zeti akhtar aziz, governor of the central bank of malaysia, at the official launch of amislamic bank berhad, kuala lumpur, 18 may 2006. * * * it is my pleasure to be here this morning on the occasion of the launch of amislamic bank berhad. this strategic move to establish the islamic banking subsidiary that will operate under the more universal islamic banking act will increase further the potential avenues for business expansion. it will also increase the potential to benefit from the rapid growth of islamic banking and finance both in the domestic and international environment. ladies and gentlemen, on the domestic front, all sectors within the islamic financial services industry, which includes islamic banking, takaful and the capital and money markets, continue to register strong performance. to date, the islamic banking assets amount to rm113. 5 billion and the takaful assets stand at rm5. 9 billion. the amount of approved islamic bonds in 2005 exceed rm40 billion, while the islamic money market has recorded sizeable monthly turnovers of rm135. 2 billion. similar progress has been achieved on the international front. there has been a significant increase in the number of islamic financial institutions that have been established in the global financial system, and the funds seeking for shariah - compliant investment avenues have also increased dramatically. ladies and gentlemen, for more than two decades, our efforts have been directed to put in place the pre - requisites for the development of an effective and competitive islamic financial system. with the strategic components and domestic financial infrastructure in place, steps have now been taken to liberalise our domestic islamic financial system - this has aimed to strengthen further our international financial and economic linkages. the liberalisation is evident on several fronts. this has diversified the players in our financial system with the issue of new licences to foreign players and the increase in the allowable foreign equity participation up to 49 % in both islamic banking and takaful industry. this initiative has also created a more competitive environment, thereby driving further progress in the development of the islamic financial system. in addition, it has promoted innovation, increasing the range of products and services being offered. efforts to develop the domestic bond market have been intensified to diversify the structure of the islamic financial system. this has allowed greater flexibility by investors in the management of their funds while the ability of foreign corporations to raise | 0.5 |
of short term debt ( i. e., debt obligations with an original maturity up to one year ) to foreign exchange reserves has substantially declined form 147 per cent as at end - march 1991 to 8 per cent as at end - march 2001. the proportion of volatile capital flows defined to include cumulative portfolio inflows and short term debt to reserves has lowered from 147 per cent in 1991 to 58. 5 per cent as at end - march 2001. as part of sustainable external debt position, the short term debt component has decreased from 10 per cent as at end - march 1991 to 3 per cent as at end - march 2001. similarly, the size of debt service payments relative to current receipts has decreased from 35 per cent in 1991 to 16 per cent in 2001. management of international reserves in the recent years, for several reasons, increasing attention is being paid to management of international reserves. first, advent of the euro as an alternate currency to us dollar ; second, movement of many central banks out of gold ; third, changes in exchange rate regimes ; fourth, changing views on reserve adequacy and its role in crisis prevention ; and fifth, operational use of β reserve targets β in calculating financing gaps by imf. the attention to the subject is evidenced by increasing emphasis on transparency, accountability in various fora, and more recently, the issue of imf guidelines on the subject. operationally, reserve management is a process that ensures that adequate official public sector foreign assets are readily available to and controlled by the authorities for meeting a defined range of objectives for a country. a reserve management entity is normally made responsible for the management of reserves and associated risks. invariably, the reserve management entity is the central bank and hence the objectives of reserve management tend to be critical as they would encompass the objectives of the monetary authority and the objectives of a portfolio manager or the custodian of reserves. as a monetary authority, a central bank β s primary objective is to ensure macroeconomic financial stability in general and external stability in particular. as a custodian, the central bank β s main objectives are to ensure liquidity, safety and yield on deployment of reserves. in considering management of reserves, the benefits and costs of holding reserves are constantly assessed. on the benefits, recent international financial crises have shown that holding and managing sufficient reserves and disclosing adequate information to markets helps a country to prevent external crises, especially those stemming from the capital account. the growing appreciation of the role of reserves in crises prevention | firms. slight year - on - year falls in consumer prices are expected to continue for the time being, partly due to such factors as the effects of the reduction in electricity and telephone charges accompanying deregulation. the money market remains stable overall against the background of the bank β s provision of ample liquidity. the full removal of blanket deposit insurance is scheduled for april 1, 2005. concerns about the financial system have decreased significantly as financial institutions have made progress in regaining financial health. financial institutions have been more confident in raising funds in the money market and their liquidity demand has decreased, as implied by the fact that, in the bank β s funds - supplying operations, there were cases where bids fell short of the bank β s offers. in the capital markets, stock prices have been firm on the whole. long - term interest rates have been generally stable, although there was a temporary rise. the environment for corporate finance is becoming more accommodative on the whole. the lending attitude of financial institutions is becoming more accommodative, and their lending attitude as perceived by firms has also been improving. under these circumstances, the rate of decline in lending by private banks has been diminishing at a moderate pace. moreover, the fund - raising environment for firms in the capital markets through cp and corporate bonds remains favorable. ii. conduct of monetary policy the bank has been conducting the quantitative easing policy with the outstanding balance of current accounts held at the bank as the operating target. the bank has been providing ample liquidity to the money market in accordance with the current target range for the outstanding balance of β around 30 to 35 trillion yen, β which is far above the amount financial institutions are obliged to hold at the bank by law or arrangements with the bank. this has contributed to maintaining the accommodative environment for corporate finance through maintenance of the stability of financial markets. the bank has made a commitment to maintain the quantitative easing policy until the year - on - year rate of change in the consumer price index ( cpi ; excluding fresh food, on a nationwide basis ) registers zero percent or higher on a sustainable basis. this commitment has contributed to stabilizing market interest rates, and thus firms have been able to raise funds at low interest rates. the commitment β s positive effects through interest rates on the economy will strengthen as corporate profits increase with economic recovery. iii. the bank β s measures regarding the financial system after the full removal of the blanket guarantee of deposits as i mentioned | 0 |
of banking supervision and regulation, and an institution that can act as lender of last resort. to come back to our basic question of whether the liquidity transformation function of banks and the associated instability remains β special, β i would say that there is simply no doubt about it. wherever banking panics have occurred, their effects on economic performance have been crippling. thus, developing institutions and mechanisms that can prevent or short - circuit bank panics remains an important and β special β goal for economic policymakers. having said this, however, recent experiences in the united states and elsewhere have underscored the importance of going about this task in a way that does not overextend the banking β safety net. β in the united states, this lesson was painfully conveyed during the 1980s and early 1990s by the hundreds and hundreds of bank and thrift failures that occurred in these years. while this phenomenon was extraordinarily complex, many have argued that underpriced deposit insurance and relatively lax supervision contributed to the problem by distorting the incentives banks and thrifts faced in assessing the risks of their business decisions. in response, u. s. federal banking agencies have implemented changes that trim the banking safety net somewhat - - for example, by requiring prompt closure of troubled institutions, by applying stricter rules governing the payoffs of depositors and other creditors in bank failures, and by curtailing the practice of allowing regulatory β goodwill. β in addition, new bank capital regulations such as the basle risk - based capital standards, which have been implemented in the g - 10 and have served as a blueprint for capital regulation in many other countries, have helped to provide better incentives for banks in their business decisions. to summarize, i would argue that banks remain quite special in their susceptibility to runs and in the severe consequences that a large - scale banking panic would involve today. balancing the need for a banking β safety net β to defuse potential bank runs with the need to create the right incentives for banks in assessing and assuming risk is one of the most difficult challenges we face as central bankers. a second way in which banks have been deemed to be β special β is in the provision of basic banking services such as credit extension, deposit - taking, and payments processing. there is little question that these functions are critically important throughout society. consumers turn to banks for safe investments such as time and savings deposits, for transactions deposits, for processing payments, and for | for financial institutions and banks in particular. in reviewing the past two decades in the united states, for example, one cannot help but notice that the most severe problems in our banking and thrift industries during the 1980s stemmed from serious macroeconomic imbalances - - including the accelerating inflation of the late 1970s and the costly but necessary steps to reverse that trend in the 1980s. by contrast, macroeconomic policies that encourage sustainable economic growth with low inflation - - like those in recent years - - have a strong positive influence on the overall health of the banking sector and other financial institutions as well. | 1 |
efficient. this type of facility represents an efficient tool from an operational and market - functioning standpoint as well. unlike desk operations conducted with fixed quantities, the desk wouldn β t need to estimate the appropriate amount of reverse repos to offer each day in order to absorb the quantity of reserve balances at the target rate. 16 with ioer and an overnight, fixed - rate, full - allotment reverse repo facility, counterparties would determine the level of participation based on daily demand for overnight investments at a fixed rate that β s judged consistent with the fomc β s overall policy stance. market forces will therefore determine how to allocate the federal reserve β s liabilities between depository institutions holding them as reserves and money market funds, gses, and other non - bank financial institutions holding them as reverse repos. the effectiveness of an overnight, fixed - rate, full - allotment facility in helping to control overnight money market rates will depend on a range of factors, including whether a sufficiently wide set of non - bank counterparties has access to the facility. following seven waves of counterparty expansions since 2009, the desk currently has 139 reverse repo counterparties, covering 94 of the largest 2a - 7 money market funds, 6 gses, 18 banks, and the 21 primary dealers. taken together, these institutions represent an estimated 25 percent of all overnight treasury tri - party repo volume. more counterparties could certainly be added, and we β re in the process of considering how best to proceed. the efficacy of the facility will also depend on factors such as the regulatory and balance sheet constraints of counterparties and the level of competition in the markets. however, the facility β s value in terms of monetary policy implementation wouldn β t necessarily be determined by the amount of usage. if the facility increases bargaining power for market participants, it could conceivably provide an effective floor for short - term rates, giving the desk tighter control of money market conditions even with usage of the facility that β s low on average. at its september 2013 meeting, the fomc unanimously approved a resolution that allowed the desk to start an operational test of fixed - rate, overnight reverse repos. 17 the exercise, which began on september 23 and is authorized to run until january 29, 2014, entails the conduct of a daily overnight, fixed - rate reverse repo auction in order to assess operational readiness to carry out such transactions. it therefore allows the desk, its wide | until the economy reaches conditions consistent with its assessments of maximum employment, and inflation has reached 2 percent and is on track to moderately exceed 2 percent for some time. there is still a long way to go before reaching maximum employment, and over time it should become clearer whether we have reached 2 percent inflation on a sustained basis. conclusion i began by saying that it β s nearly impossible to predict the future. the economy remains tied to the extraordinary and unpredictable nature of the pandemic. but with continued progress on the economic recovery and a reversal of some of the pandemic β s unusual dynamics, i anticipate that we will soon reach a time when business will be more like usual. i look forward to the q & a portion of today β s program, and very much look forward to seeing many 3 / 4 bis central bankers'speeches of you when we are able to be together again. 1 see hobijn, bart, and aysegul sahin ( 2021 ), β maximum employment and the participation cycle, β paper presented at the 2021 jackson hole economic policy symposium, august 27. 2 olivier armantier, fatima boumahdi, leo goldman, gizem kosar, jessica lu, giorgio topa, and wilbert van der klaauw, β have consumers β long - run inflation expectations become un - anchored?, β federal reserve bank of new york liberty street economics, september 24, 2021. board of governors of the federal reserve system, federal reserve issues fomc statement, december 16, 2020. 4 / 4 bis central bankers'speeches | 0.5 |
future, we have no other. β europe belongs to frankfurt like almost no other city, apart from brussels and strasbourg. the euro sculpture has taken its place alongside the ecb, the ssm, eiopa and also the bundesbank as an expression of this belonging. thanks to your support, the sculpture is now shining again in due splendour. i personally wish to thank all of you very sincerely β and i firmly believe that, in expressing my gratitude, i also speak for many of frankfurt β s residents as well as its innumerable international visitors. it remains to be hoped that europe, too, will shine in future with the same lustre as the restored euro sculpture. let us all do what we can to achieve this goal going forward. thank you very much. bis central bankers β speeches | andreas dombret : in the heart of europe β europe in our hearts welcoming address by dr andreas dombret, member of the executive board of the deutsche bundesbank, to mark the unveiling of the plaque listing patrons for the euro sign, frankfurt am main, 4 february 2016. * 1. * * introduction ladies and gentlemen i am extremely pleased that you are joining me in celebrating a very special occasion today β the unveiling of the plaque listing patrons of the euro sculpture. when you think of frankfurt, what comes to mind? perhaps the city β s famous historical landmarks, such as the romer ( city hall ) or st. paul β s? or the skyline, featuring its many skyscrapers? football fans may think of attila, the eagle, worn proudly on players β shirts of eintracht frankfurt. you might also think of goethe, the old opera house, the main river, germany β s largest airport, and so on. all this is frankfurt ; our city is veritably full of worldrenowned landmarks. however, i β m sure that quite a few of us also have in our mind β s eye the euro sculpture, which has graced the willy - brandt - platz square between the opera house and the eurotower since the euro was launched β and is thus located right in the heart this city. much as frankfurt itself is located in the geographic heart of europe. 2. in the heart of europe for nearly 15 years, the euro sculpture stood guard before the european central bank, making it clear to all visitors that they were standing at the heart of europe. the sculpture has certainly seen a great deal in that time. when its lights came on for the first time in 2001, the euro area comprised only 12 member states ; the number has now risen to a total of 19. the average forex trading volume that changed hands every day between traders round the world amounted to some β¬450 billion in 2001 ; it now stands at β¬1. 7 trillion according to the latest available figures. the euro is undoubtedly the world β s second most important currency after the us dollar. yet it has not always been smooth sailing. we all remember the sometimes dramatic events in connection with the recent financial crisis, which dealt a significant blow to the euro area and, in some cases, raised massive doubts about the continued existence of our single currency. it was not least these events which also led to the activists of the occupy movement, in 2011 | 1 |
) and the international association of insurance supervisors ( known as iais ). the purpose of the institute is to provide training to senior supervisors and other supervisory staff in the application of basic supervisory principles to their national supervisory systems. the job of senior supervisors in the emerging markets is an immensely challenging one, requiring negotiation, management and leadership skills, in addition to technical supervisory skills. the institute, by bringing together key policy - making officials in central banks and supervisory agencies through high - level seminars, serves the dual purpose of sharing expertise and developing and deepening the relationships among supervisors globally. the institute will hold courses not only in basle, but on a regional basis as well. the institute will act as a clearing house for the coordination and provision of technical assistance by central banks and supervisory bodies. we also must work closely with the imf and the world bank. these institutions put people in virtually all of the world β s countries to evaluate candidly the macroeconomic and financial climate and supervisory policies and practices. in an important development for the furtherance of the core principles, the imf and world bank are using the core principles as the benchmark for evaluating supervisory regimes around the world. this is an effort that the basle committee plans to support not only through continued work on the core principles and the compendium, but by providing expertise and supervisory resources to supplement and advise imf and world bank staff. the members of the basle committee in many cases have the staff with the deep expertise to help emerging markets supervisors with the application of the principles in their national context and in light of various obstacles. the imf and world bank have expressed their desire to bring more of that expertise to bear in their efforts, and we have begun discussions on how to accomplish that most effectively. in addition, we believe that first - hand observation of the practical issues in implementation will suggest what further elaboration and precision would be most useful to the core principles, and what additional research and papers, programs by the institute for financial stability or specific technical assistance could supplement them. our goal is to keep the core principles relevant, incisive and implemented by supervisors globally. in addition, we in the broader financial supervisory community must set thoughtful goals for ourselves as we manage our individual agendas. the problems that have beset many countries in asia, russia and other regions and countries are not confined to the banking sector, although that may be the largest part of the financial sector. together with iosco and the iais, | lags movements in market prices and recognition of credit issues. in trading agreements, for example, gaps between the amount owed by the customer and the amount of collateral pledged develop surprisingly quickly. one costly solution is to hold large amounts of excess collateral, but that is most often unacceptable to the counterparty. similarly, when the collateral is real estate, equities or high - yield securities, a gap can open up between the amount owed and the value of the collateral whenever the price of the collateral declines. we have seen both problems in the current turmoil. these questions of credit analysis and risk control are an integral part of the current work of the basle committee on credit risk management. the starting point for that work is a paper describing the framework for traditional credit risk management by banks. that framework can then be used to consider how changes in the financial markets affect the credit process. in addition to the issues i β ve described, this work will look at the impact of other developments such as credit risk models, credit derivatives and securitization. one goal of this work is to identify areas of risk management which are improving, and those which may need strengthening, especially potential problems in the internal controls that prevent and detect breakdowns in risk control. the second question, how the larger role of capital markets activities is affecting liquidity risk, also involves a reconsideration of the guidance the basle committee developed a decade ago. the recent market turmoil has been especially hard on emerging market banks which funded domestic currency assets with unhedged foreign currency liabilities. the liquidity risk of concentrations on the asset side of the balance sheet has a different significance when assets are sold not only to raise cash but also to conduct portfolio management, which assumes generally liquid markets. moreover, we are seeing new liquidity needs arising from the changed funding practices of customers. for example, we are seeing instances of customers who had funded themselves largely in the capital markets in recent years turning to the banking system for funding in the current, stressful environment. these observations and issues, which also have been made by others, most recently the willard group, have led us to add liquidity management to the near - term agenda of the basle committee. the third question involved the role that uncertainty as a result of structural change in the financial system may be playing in recent market developments. one lesson from this turmoil is how difficult it is to understand the linkages between markets and economies in light of the changing patterns of financial and | 1 |
, while seeking to understand the inherent risks so as to acquire clear approaches to containing these risks. in this regard, the bank of england ( boe ) has been in the vanguard of the evolution of digital currency. in march of this year, the boe launched its fintech accelerator programme which aims to share developments, trends and insights, to ensure that the boe is engaged with different fintech firms and to enable firms with an interest in fintech to network with a view to supporting the development of the sector. to this end, they recently tested 3 / 5 bis central bankers'speeches the use of distributed ledger technology, which aims to make cross - border payments and the movement of currencies more immediate. the boe has also collaborated to test an artificial intelligence system that allows for detecting abnormalities in financial transactions and for analysing the quality of regulatory data input, as well as recently disclosing its forthcoming version of a real - time gross settlement ( rtgs ) payment system that will be compatible with distributed ledger technology. this mode of experimentation by central banks is reflected across the globe. in china research and trial runs on the prospect of issuing its own digital currency have not only been conducted, but a digital currency institute has been established with a research focus on the use of distributed ledger technology and fintech. of note, a recently published bis study posited the view that whereas cash is the only means by which the public presently holds central bank money, in the future central banks will probably have to decide whether to issue retail or wholesale central bank cryptocurrencies. the cambridge centre for alternative finance indicated that 20 percent of central banks surveyed expect to be using blockchain technology by 2019. if central banks issue cryptocurrencies, it allows the public to hold these liabilities in digital form. this raises the concern of universal accessibility and whether central banks β settlement accounts should remain available for a limited set of entities, namely banks, or more widely accessed by individuals? beyond these types of decisions, the consensus by the major central banks that have tested these operations is that distributed ledger technology is not yet mature enough for current adoption. furthermore implications for monetary policy, payment execution and net clearing and settlement β are yet to be fully assessed. in reality, no one yet knows what the social and economic payoffs to these realities will be. it is conceptually interesting to fathom an alternative future, such as one in which there is complete disintermediation of | and economic growth, ensuring that future generations inherit a stable and thriving planet. 1 / 3 bis - central bankers'speeches i would like to express my gratitude to the distinguished experts who will be sharing their knowledge and insights on this critical topic. your expertise enriches our understanding and empowers us to make informed decisions for the benefit of our nation and the broader global community. our panellists and moderator for the keynote discussion are : jennifer doherty - bigara, senior climate change specialist, inter - american development bank ( idb ) leslie gittens, multi - country manager ( caribbean ), united nations global compact donna wellington, managing director, barbados and the eastern caribbean, cibc firstcaribbean international bank torsten elhers, senior financial expert, international monetary fund ( imf ) - he will be joining virtually derek gibbs, climate finance specialist, environmental sustainability unit of the caribbean development bank ( cdb ) aβ¬ β moderator the panel is just the start, but over the course of the next five days, this esteemed annual review seminar will take us on a captivating journey through an array of pivotal economic themes. our presentations will delve into innovative financing, the labour market, the housing market, climate change and debt sustainability, trade, the financial sector, the external sector, health, behavioural assessments, and monetary policy. each of these areas holds immense significance in shaping the economic landscape not only for our beloved barbados, but also for small open economies worldwide. innovative financing has become a beacon of hope for economic growth and development. as we explore new avenues to secure funding and investment, we empower our nations to overcome obstacles and capitalise on emerging opportunities. the labour market lies at the heart of our economic prosperity. understanding its dynamics and challenges is crucial in crafting policies that promote inclusive growth, protect workers'rights, and nurture a skilled and adaptable workforce. the housing market is a fundamental pillar of societal stability and individual well - being. examining its intricacies will enable us to ensure access to affordable housing for all citizens while safeguarding against potential risks. climate change and debt sustainability are intertwined challenges that call for urgent attention. by addressing these issues head - on, we pave the way for sustainable and resilient economies that can weather the storms of environmental and economic uncertainty. trade forms the backbone of global economic interconnectedness. our discussions on this topic will explore ways to foster international partnerships, facilitate exports, and unlock the full potential | 0.5 |
to get to grips with any additional challenges ahead! however, there are things that keep me awake at night : - first, the media β their unprofessional, sensational and incomplete reporting on the crisis has played a significant role in the withdrawal of household deposits. thus, in percentage terms, more money was withdrawn from banks in serbia than in countries that have three times lower capital adequacy ratios and which saw government rescue packages worth a dozen billion euros! it is as if the media were competing in the dissemination of bad economic news, trying to convince the public that everything β is the same as it was two decades ago β even though everybody knows it is not! - second area of concern is action taken outside serbia : measures taken by some governments within the eu, and by the brussels itself, have been only halfmeasures. they were not targeted enough and it will take quite a while before they kick in. hence, it is very difficult for us in serbia to take any measures that would complement those taken abroad! although everyone seems to be falling over themselves in making promises, substantive details are scarce and the money even scarcer : save in england! let me illustrate this by asking : will the interbank market in serbia revive or just liven up briefly if banks in frankfurt, vienna or athens continue to mistrust one another? somehow, i doubt it. - the third reason for concern are the financial systems of the neighbouring countries : a stable banking system in serbia is not sufficient in itself because if anything goes wrong in the region, it is bound to produce consequences for serbia as well. to foreign institutional investors looking for emerging market opportunities it is all one and the same thing, although we, of course, know it is not. - and finally, how much longer will this last and how much further will it go? i truly hope that the pessimists will be proved wrong and that the sums invested by central banks and governments of major world countries will manage to prevent the worstcase scenario. let us be clear β there are no magic bullets, just as there are no absolutely good or bad solutions. we should, however, keep our mind on the objectives of the national bank of serbia β the primary being price stability and the secondary, financial stability. for this very reason, the national bank of serbia β s monetary policy committee will, next monday at the latest, consider the enactment of the following measures : - to increase the share of foreign currency required | jorgovanka tabakovic : overview of recent monetary and macroeconomic trends in serbia introductory speech by dr jorgovanka tabakovic, governor of the national bank of serbia, at the presentation of the inflation report β may 2016, belgrade, 24 may 2016. * * * ladies and gentlemen, welcome to the presentation of the may inflation report. as always, we will give you an overview of recent monetary and macroeconomic trends and our expectations for the period ahead. let me start and conclude my speech by discussing the same topical news! we have revised our gdp growth projection for 2016 from 1. 8 % upwards. we now expect that the serbian economy will end this year with a growth between 2. 3 % and 2. 5 %. allow me to underline that, given the current movements, it is far more likely that the year - end gdp growth rate will be at the upper bound of the projection range, i. e. at 2. 5 %. and it is not that we are being overly optimistic ; this projection is based on models, mathematics and indicators. if we compare the latest macroeconomic data with those presented in the february report, it is evident that the economic recovery of the republic of serbia has continued, and more importantly, that the growth is based on long - term sustainable foundations. and that is why the macroeconomic outlook for the period ahead has been revised upwards relative to the previous report. in the first three months of the year, fiscal deficit contracted by a quarter from the same period last year and equalled 1. 7 % of the estimated gdp, as compared to 2. 4 % in the same period a year earlier. the current account deficit of the balance of payments has more than halved compared to the corresponding period in 2015 β it equals 3. 3 % of the estimated gdp and remains fully covered by foreign direct investments. our fiscal outlook has improved in response to a sustainable rise in tax revenue, while the narrowing of the current account deficit has been driven by more favourable trends in external trade. last time we met at the presentation of the february report, we expressed no doubts as to the continuation of growth in exports and economic activity in the coming years. indeed, the growth has continued up, and has done so at an even faster pace than expected. export growth, measured in euro terms, was exceptionally strong β it came at 13. 4 % yΠ΅Π°r - on - year in the first quarter, and is without any doubt | 0.5 |
both horses at once. this is doable but it is tricky. it also raises an interesting question about the relative costs of supervising smaller firms versus higher fscs levies to cover failures, which would merit further study. fourth, how is technology going to affect all this? this is obviously a huge topic in its own right, and others here will touch on it so i will make only two brief comments. one, in my view the jury is still out on whether open banking and / or psd2 are the gateway to a bigger change. two, it is notable that some digital banks are making material inroads into the current account market β is this the leading edge of a bigger change, or not? fifth, might brexit create opportunities to move further on proportionality for smaller firms? i β ve already talked about the way in which we make the regime tougher for larger firms. this is entirely appropriate, but is not the same as saying we should have a weak prudential regime for smaller firms β indeed, i think that is the last thing we need both from a safety and soundness and a competition perspective. however, there may be a reasonable case that a simpler ( simpler, not weaker ) regime for small firms would advance both our safety and soundness and competition objectives. we have often argued in europe for simpler approaches for small firms, but the differing legal traditions across the eu27 and the desire to harmonise regulation and supervision are powerful forces in the opposite direction. it is impossible to know at this stage, but under some brexit outcomes we might have room to revisit this question for small domestic firms. it is notable that both switzerland and the u. s. are taking quite radical steps in this area ; while i am cautious about the leverage - ratio - only capital regimes they are working on, and small british firms might be cautious about a 9 % leverage ratio requirement, we are taking a close interest. sixth, there is the debate β which came up most recently in the context of the treasury select committee β s inquiry into solvency ii β about whether our competition objective would be better cast as a primary objective. i have a number of reservations about this idea. one is purely practical : with the fca and cma already having primary competition objectives, do we really want a third regulator doing this for the financial services sector? it strikes me as a recipe for bureaucratic overlap. another is that the sort of referee role the | β ladder of participation β model, devised originally by sherry arnstein in the late 1960s. the rungs of the engagement ladder are, in ascending order : inform ; consult ; involve ; collaborate ; and empower. as we move up the ladder, we increase the degree of citizen engagement in decisions that affect them. the rsa stop short of recommending the top rung, but do propose various initiatives to increase citizen involvement and collaboration. armed with this framework, i have been thinking about how far the bank of england has so far climbed the citizen engagement ladder. truth be told, i suspect for the first 300 years of its life, the bank of england scarcely had its foot on the first rung. it saw little need even to inform the wider public about the economy and policy. trust among the public was anonymised, institutionalised and given. when tempted to step up a rung, the bank quickly contracted an acute form of vertigo. over the past 25 years the bank has taken significant steps up the engagement ladder, in part in response to the public β s trust shift, in part reflecting the bank β s wider policy responsibilities. these steps have transformed how the bank β informs β and β consults β the public on its views and policies. one simple diagnostic is the rise in the bank β s publication count. seventy years ago, the bank published precisely one speech a year. today, rarely a day passes without multiple publications. then, the bank uttered publically fewer than 5, 000 words per year. last year, it uttered in excess of 4 Β½ million. over the past two decades, it would not be an exaggeration to say there has been a genuine revolution in central bank communications. perhaps even more importantly, there has been a revolution in central bank attitudes towards public engagement. this revolution has, with luck, increased the public β s understanding of the economy and economic policy. but there is no question in my mind that it has also enhanced very significantly central banks β own understanding of the economy. having ascended some rungs of the engagement ladder, our panorama on the economy has been much enhanced. looking back over the past five years, and looking forward to the next five, the bank is taking further steps towards securing a foothold on the next rungs of the engagement ladder. this will increase the extent to which we β involve β and β collaborate β with a wider set of citizens, as well as β informing β and β consulting β them. from | 0.5 |
resources, making sound, timely and market responsive investment choices, winning and retaining customer β s loyalty through better service standards and lower product prices or user charges and contributing to the expansion of the economy through taxes, dividends etc. i would take the most debated example β that of the ptcl β as an illustration of the general point i am making about the economic rationale for privatizing profit making public sector enterprises. the most oft pronounced arguments against privatization of profit making enterprises are ( a ) why fix it when it ain β t broke? ( b ) protection of workers ( c ) a better and more professional management can bring about the same results as under privatization. the basic reason for privatizing these enterprises is that the government should not be in the business of running businesses but regulating businesses. the role of the government should be that of a neutral umpire, who lays down the ground rules for businesses to operate and compete, to monitor and enforce these rules, to penalize those found guilty of contraventions and to adjudicate disputes between the competing business firms. if the government owned firm itself is one of the players in the market, there is a strong conflict of interest and the other market players lose confidence in the neutrality of the umpire. under these circumstances, the market becomes chaotic, disorderly and unruly as there is no neutral β person β to monitor and enforce the rules. the economy thus pays a heavy price for this loss of the market mechanism in the production, sale and distribution of goods and services. the present controversy between the pia and private airlines is a manifestation of this tendency. if the β umpire β favours its owned enterprise i. e. pia and discriminates against the rival private airlines, the ultimate result would be the winding up of these airlines. the growth of aviation industry would suffer as the present competition is cutting down the prices and stimulating demand for air travel in the country. in absence of such competition, the pia would have the sole monopoly and the planes would fly with empty seats as the ticket prices would not be market based but arbitrarily high. the consumers of airline industry β existing and potential β will be the loser in this bargain. the same argument can be applied in case of ptcl. if the government had continued to own and manage ptcl, the private sector competing firms would have felt that they would always remain at a disadvantage in relation to the ptcl. the constant fear that the government β s coercive | of wealth. islam is deadly opposed to exploitation of an individual or institution by the other for selfaggrandizement. riba or usury is considered exploitative by its construct and is therefore prohibited. the equitable distribution dimension of islamic finance is therefore an add - on that is clearly absent from the conventional modes of financing. if we examine these properties of islamic finance, it becomes apparent that these will appeal to a large number of individuals and institutions whose set of beliefs and faith conform to these principles. it is not necessary that only the muslims can subscribe to this particular mode of financing but the fact that it is being widely accepted and adopted in different parts of the world including europe attests to its intrinsic value and strength. ladies and gentlemen, the islamic financial services industry is the fastest growing component of the financial services industry, with an annual rate of growth ranging between 15 to 20 per cent. at least 70 countries all over the world have some or other form of islamic financial services available in their territorial jurisdictions. it is instructive to note that almost all major multinational banks such as citigroup, hsbc, bnp paribas, ubs, credit agricole, standard chartered, etc. are offering these services. why are these services spreading so fast? i can think of several possible reasons. first, there are around 15 million muslims residing in non - islamic countries in europe, mostly in france, germany and the uk. islamic finance is effectively contributing towards penetration of financial services and inclusion of this particular target group which previously avoided using existing banking facilities due to their faith. the members of the islamic community in europe that was not benefiting from the conventional banking on religious grounds are now participating through this particular mode in conformity with their beliefs. this group naturally provides the scale for the financial services industry to build upon. second, there are investors who in their quest for diversifying their portfolios are looking for new asset classes, new instruments and new products with low correlation with the existing asset classes or products. islamic financial products cater to this particular need and have, therefore, become attractive to that investors group. third, there is a growing trend, particularly among the younger population to show unethical or socially irresponsible investment funds and businesses. many funds have emerged that are exclusively devoted to meet the specifications of investments in ethical products or socially responsible services. islamic finance conveniently fits into this food chain because of its natural affinity and congruence with its | 0.5 |
contribute towards the growth of the tourism and the retail sector in our economies. with extensions being sought to include debit and credit cards, money transfers and mobile banking services, businesses will be able to leverage on these services to reduce transaction costs and improve efficiency for such transaction. conclusion let me conclude my remarks. despite the distinct cultures, histories and languages that make each asean nation unique, there is a common thread that runs through the region that keeps us cohesive β a unanimous and unwavering commitment to empower our people together. this solidarity will however also require the asean business community to complement the efforts made by the regional authorities. malaysia looks forward to being the chair of asean in 2015 to build on the progress that has been achieved to further advance the regional financial and economic integration. this will also include the agenda of promoting asean as a destination for global investments. asean integration is a joint responsibility that has always been embraced. let us demonstrate that in the case of asean, the whole is greater than the sum of its parts. bis central bankers β speeches | particular, intra - regional trade and investment activity has increased significantly in this recent 15 years. since 1990, asean intra - regional trade has grown from 18 % to 24 % of total trade, and intra - regional investment has quadrupled since 2000, from 4 % to 17 % of total investment. while there has been a trend towards greater intra - regional trade and investment, financial integration in the region has lagged behind. this has raised questions on whether in fact regional financial integration is important, given that the lack of it has not been an inhibiting factor to economic integration. asean economies, however, have now reached that stage of development in this decade whereby greater regional financial integration will raise further our growth potential. an important key to unlocking our full potential is to accelerate this integration and cooperation within the asean region. main benefits of financial integration an intensification of financial integration in asean will not only serve to enhance growth at the national level, but also act as a catalyst to achieve a growth that is mutually reinforcing bis central bankers β speeches for the economies in the region. regional financial integration will bring about the more effective intermediation of funds and thus the efficient allocation of resources in the region. excess savings in one country can be channeled into productive investments in another country within the region, thereby promoting growth. the asean region has one of the highest savings rate in the world, at approximately 30 %, as well as international reserves amounting to usd800 billion. the bulk of asean β s surplus funds, however, are intermediated mainly through the international financial markets before being reinvested back into the region. in particular, more than 90 % of cross - border portfolio investment flows are channeled to the advanced economies. given the immense funding requirements that asean has, particularly for large investment projects and infrastructure development, greater financial integration will facilitate channeling part of the region β s surplus funds towards productive investment opportunities in the region. regional financial integration will also allow for more efficient risk diversification of assets to include foreign assets from within the region. this will not only reduce vulnerability to external developments but will contribute to achieving more stable conditions in the regional financial markets. additionally, this trend has been reinforced by greater coordination and cooperation among the regional central banks and regulatory authorities to safeguard financial stability. the collective actions that have been taken have enhanced the ability to manage and respond to risks confronting the region. greater financial integration has also created an enabling environment for businesses. it has facilitated improved access | 1 |
interbank market, through which banks lend to one another, typically on a short - term basis. in turn, this improves the overall allocation of financial resources, including real returns to depositors and investors, and the channelling of funds to productive use in diverse areas of economic activity. director of ceremonies, in this context, it is a matter of public policy concern that money and capital markets in botswana are in a rudimentary state of development. as a result, there is a limited range of instruments and relatively low turnover and activity in the various markets, more so in relation to instruments for risk - sharing, distribution and mitigation. this tends to result in volatility of both prices and volumes, and limits the choice of instruments necessary for efficient financial and business management. for the banks, in particular, a diverse source of funds that includes a large number of retail depositors and structured long - term funds represents stable funding. this facilitates maturity transformation and support for the range of financial resource requirements of businesses, including infrastructure and utilities projects, as well as households. regarding the short - term interbank market, it is important that banks, although competitors, operate in a collaborative spirit to address any structural impediments to this lack of development and low efficiency, with a view to improving the flow of liquidity and its management in the banking system. the central bank should only be required to provide or absorb liquidity in the market after mutually beneficial trading opportunities among banks are exhausted. the bank of botswana already facilitates such collaboration through industry - wide fora that address issues of mutual concern related to market development in order to foster enhanced and effective support for real economic activity. it is, therefore, important that banks strive for constructive engagement, in this regard, in order to achieve the best outcomes in terms of effective policy transmission and enhanced contribution by the financial system to economic performance. distinguished guests, ladies and gentlemen, as i conclude, let me thank the chief executive officer, mr bogatsu, the board, management and staff of fnbb, for inviting me to be part of this occasion. i wish the bank well and look forward to many more invitations for the opening of fnbb delivery channels or yet another β brick and mortar β branch, especially in major villages, such as mochudi and, of course, the rural areas. to bakgatla, dikgosi tsame, member of parliament for mochudi west, district commissioner, council chairman and | so - called international financial crisis, came about in a context in which the banking system was reasonably wellsupervised and focused on the traditional retail business. but, as was noted at the time, neither the economy nor its credit institutions would prove immune to its consequences, in particular to the global recession and to the seizing - up of the regularly used external funding mechanisms. the second crisis is a typically spanish crisis, associated with excesses in the real estate sector, private - sector debt and deteriorating competitiveness, a crisis which in principle seemed to be a familiar bugbear. however, this time the imbalances emerged within a monetary union, which has invalidated many of the instruments used in the past to overcome apparently similar crises. the third crisis is in the euro area, the clearest but not the only sign of which has been the sovereign debt crisis, which has affected spain with particular force. the upshot of the overall impact of these three crises is an extraordinarily complex scenario with multiple and unprecedented interactions, which means we must avoid intellectual laziness and seek innovative solutions to manage an exit from the situation. this is because many of the solutions used in the past are not only no longer available or useless, but β given the side - effects β may even prove harmful. i shall now try to draw your attention to the responses that crises prompt. as is well known, crises, which entail so many personal tragedies, may ultimately have beneficial effects in the countries they affect if the response to them is the correct one. my first observation is that any crisis usually generates not only one response but three types of response. the first bis central bankers β speeches reaction leads to the design and adoption of measures whose aim is to prevent a similar crisis recurring. the second response to the crisis drives us to equip ourselves with new tools that mitigate the effects of future crises, because experience tells us that, even assuming that all the preventive measures conceivable today are adopted, it will never be possible to do away once and for all with economic crises. the third response to a crisis does not involve preventing or adopting tools to manage future crises, but looking for the right way to manage the current crisis from which, need i remind you, we have not yet emerged. i make this distinction between the three types of response that an economic crisis always elicits so that my following remarks may be better understood. firstly, i think that most of | 0 |
. thank you not only for serving as a role model for your peers in high school but also for being exemplars for us all. now, because we are in the midst not only of baseball season but also of graduation season, i would like to touch briefly on the theme of education. the saddest aspect of josh gibson's story is that he had talent but was denied an opportunity. then as now, the principal path to opportunity is through education. as an economist, i am persuaded that a strong educational system β one that promotes lifetime learning and skill development β is a critical factor in our nation's prosperity. the economic importance of education will only increase as technology advances and as the global economy becomes increasingly integrated and complex. but education is important for non - economic reasons as well. by providing us with a broader view of the world, education helps each of us become the most complete person we can be. many β i hope all β of the young people here today will continue their education, and i hope it leads them to work that brings financial success. but i also hope it cultivates their creativity and appreciation for other cultures and leads them to work they find personally satisfying and meaningful. i know it will help them continue to demonstrate the kind of leadership that they have already shown. perhaps, as they acquire a deeper knowledge of places and times other than their own and a fuller understanding of people from backgrounds other than their own, it will also lead them to contribute positively at the national or international levels, as they already have done in their schools and local communities. but this evening, i don't think we should dwell entirely on the future. i hope each of the honorees will take pride in what he or she has already achieved and will celebrate that achievement with family and friends. congratulations to all of you. | mark w olson : regulatory relief testimony of mr mark w olson, member of the board of governors of the us federal reserve system, before the committee on banking, housing, and urban affairs, us senate, washington dc, 21 june 2005. * * * chairman shelby, senator sarbanes, and members of the committee, thank you for the opportunity to testify on issues related to regulatory relief. the board is aware of the current and growing regulatory burden that is imposed on this nation β s banking organizations. often this burden falls particularly hard on small institutions, which have fewer resources than their larger brethren. the board strongly supports the efforts of congress to review periodically the federal banking laws to determine whether they can be streamlined without compromising the safety and soundness of banking organizations, consumer protections, or other important objectives that congress has established for the financial system. in 2003, at chairman shelby β s request, the board provided the committee with a number of legislative proposals that we believe are consistent with this goal. since then, the board has continued to work with the other federal banking agencies and your staffs on regulatory relief matters and the board recently agreed to support several additional regulatory relief proposals. a summary of the proposals supported by the board is included in the appendix to my testimony. in my remarks, i will highlight the board β s three highest priority proposals. these three proposals would allow the federal reserve to pay interest on balances held by depository institutions at reserve banks, provide the board greater flexibility in setting reserve requirements, and permit depository institutions to pay interest on demand deposits. these amendments would improve efficiency in the financial sector, assist small banks and small businesses, and enhance the federal reserve β s toolkit for efficiently conducting monetary policy. i also will mention a few additional proposals that the board supports and that would provide meaningful regulatory relief to banking organizations. the board looks forward to working with congress, our fellow banking agencies and other interested parties in developing and analyzing other potential regulatory relief proposals as the legislative process moves forward. for its part, the board strives to review each of our regulations at least once every five years to identify those provisions that are out of date or otherwise unnecessary. the board also has been an active participant in the ongoing regulatory review process being conducted by the federal banking agencies pursuant to the economic growth and regulatory paperwork reduction act ( egrpra ). egrpra requires the federal banking agencies, at least once every ten years, to review and seek public comment on the burden | 0.5 |
the use of this unconventional monetary easing on the grounds that weak growth post - crisis is mainly the result of a lack of aggregate demand and thus the solution is to boost demand generally by reducing the cost of borrowing and inducing investors to shift from low - yielding government bonds to riskier assets in search of yields. 12. while there was general agreement on the need and efficacy of action taken by central banks during the crisis period to stabilise the markets, the same cannot be said for using the extremely accommodative monetary easing by the advanced economies to support economic growth and job creation. looking beyond mainstream thinking, there are some sound analyses by renowned economists, such as bill white of the oecd and dr rajan, the former imf chief economist and newly appointed governor of the reserve bank of india, that suggest these unconventional monetary policies are now in β uncharted waters β and may create unintended consequences and risks to the global financial system. at this point, i will mention three key costs or risks of these unconventional monetary policies. ( a ) first, these policies punish the savers and pensioners : the suppression of interest rates at close to zero is helpful to debtors, but i should hasten to add that only those debtors who can refinance themselves at the lower rates can benefit. so, most of the us home owners in negative equity or with low credit scores have not been able to benefit from the all - time - low mortgage rates ( which once dropped to as low as 3. 55 % ). at the same time, the low interest rates cause a great deal of harm to savers, whose deposits have been earning virtually no interest at all. there are millions of savers, including households, pensioners, corporates and investment funds that have remained prudent and have avoided falling into the excessive leverage trap. these prudent savers have been punished badly in the past four bis central bankers β speeches years under the β low - for - very - long β policies. with a sharp drop in recurrent interest income, the behaviour of this group may have changed by scaling down their consumption or investment. this offset, at least partially, the potency of low interest rates and qes. ( b ) secondly, these policies create moral hazard : the suppression of interest rates and the injection of huge amounts of liquidity through qes create considerable moral hazard in several ways. it delays the necessary adjustments in the debt overhang through del | community banks with the financial crisis? a foundation built on good risk management practices and intimate local knowledge helped the successful banks to thrive during one of this country β s most difficult financial periods. the banks that prosper in the future will likely have characteristics similar to those that outperformed during the financial crisis. it bears repeating that community banks are critical in keeping local economies vibrant and growing. strong community banks are essential to the provision of credit to small businesses in their localities. see united states government accountability office, financial institutions : causes and consequences of recent community bank failures, statement of lawrance l. evans, jr., director financial markets and community investment, june 13, 2013. also see gilbert et al. ( 2013 ). st. louis federal reserve study shows community bank model can thrive in good times and in bad. bis central bankers β speeches importance of small business lending it is often noted that small businesses contribute disproportionately to employment growth in their communities. when you dig a little deeper into this stylized fact, you discover that it is new small businesses that are responsible for this growth. upon reflection, this makes sense given that, by definition, old small businesses are not growing. if they had been growing fast, they would no longer be small. a related fact is that the failure rate is quite high for new small businesses. taken together, this implies that it is important to provide an environment that is conducive to new business formation. the more new businesses that are created, the more that have a chance of surviving and growing into larger, prosperous members of the local economy. on earlier visits in the district, i heard several small business owners voice their concern over their ability to access credit. based on these conversations, i asked my research staff to investigate the degree to which they could substantiate with data whether bronx small businesses seem credit - constrained relative to other boroughs or relative to other comparable counties across the country. they first looked at the share of small business loan amounts made in each borough relative to the share of small businesses located in each borough, using data for 2013 ( the latest available at the time ). if small business credit is equally available, then we would expect to see ratios of approximately one for each borough. what the data show is that the ratio is well below one for the bronx and staten island, with the bronx being the lowest. this is consistent with what i heard during my last visit. broadening the lens of the analysis, | 0 |
). government of canada securities provided the underlying collateral for almost 70 per cent of transactions. hence, the repo market supports the functioning of crucial cash markets. in sum, the repo market is considered a core funding market in canada, because it represents a major source of funds for financial institutions. in addition, there is no immediate substitute for this market, so if it were to cease operating, significant contagion would likely result. 1 this is why we must make every effort to ensure that it remains continuously open. risks brought to light by the crisis during the financial crisis of 2007 β 08, weakness in the infrastructures of some financial markets contributed to uncertainty and, although not the cause of the crisis, intensified the systemic risk. this was notably the case in repo markets. in fact, participants β uncertainty about the valuation of collateral and the network of bilateral exposures among financial institutions exacerbated their aversion to counterparty risk, to the point that many reduced the number of trades and, in some cases, even left the market. j. - s. fontaine, j. selody and c. wilkins, β improving the resilience of core funding markets, β bank of canada financial system review ( december 2009 ) : 41 β 46. bis central bankers β speeches recall that illiquidity in the repo market was an important contributor to the near - collapse of bear stearns in march of 2008. repo markets in canada suffered a severe liquidity crunch in the autumn of that year. following the bankruptcy of major financial institutions abroad, concerns about counterparties spread, and balance sheets were subject to severe strains. in the absence of a ccp that would allow its members to ease their balance sheets through balance - sheet netting, banks drastically curtailed their repo activity. the crisis clearly demonstrated the need for action to bolster the resilience of this market. in canada, the investment industry association of canada, with the support of the bank of canada, issued a request for proposal for the development of ccp services for repos. in december 2009, cdcc was selected to provide these services. the ccp for repo transactions and risk management how does this central counterparty work? put simply, a central counterparty functions as an intermediary in financial transactions. through a legal process called β novation, β it becomes the buyer for every seller and the seller for every buyer. 2 in other words, a very complex network | is not under the direct control of monetary policy, and it is not our objective. we target a 2 per cent inflation rate. that means that it is the outlook for overall inflationary pressure and related risks that matters most when we consider the appropriate stance for monetary policy. so even if only a few sectors were expanding enough to absorb the excess capacity in the aggregate economy, we would need to take the appropriate monetary policy action to meet our inflation target. so let us look at how the economy has been performing recently. signs that growth is broadening when we assess the extent to which the sources of growth are broadening, we look at the economy from a number of perspectives. these include the progress made in adjusting to lower oil prices, the range of industries that are growing and the evolution of the labour market. as i discuss each in turn, i will point to some signs that growth is broadening across regions and sectors, although not to the same extent. adjustment to lower oil prices let us start with the adjustment to lower oil prices. in 2015 and 2016, the starkest effects of the drop in oil prices on gdp were in business investment. firms in the oil and gas sector cut capital spending in half, shutting down oil rigs and cancelling investment plans. investment in the rest of the economy was also subdued, in part as a result of the weakness in non - commodity exports, especially last year. the economy kept growing, thanks to household spending, and activity was concentrated in regions where the energy sector was not as important. today, as we move past the adjustment to lower oil prices, we are seeing the economy pick up. a couple of weeks ago we got the national accounts data from statistics canada for the first quarter of this year. it was pretty impressive, with growth at 3. 7 per cent. and the figures show business investment growing again. this is in large part because capital expenditures in the oil and gas sector have bounced back. that is good news. that said, investment growth in this sector is likely to moderate if oil prices stay around where they are today. more generally, ongoing uncertainty about the policies of the us administration is weighing on investment plans. and, given how business investment has declined in the past two years, we flagged it as one of the downside risks to the outlook in our april monetary policy report. growth in the first quarter was also fuelled by the usual suspects β consumer spending and residential investment. however, growth in the housing sector is | 0.5 |
changed environment. some other industries are struggling with the high exchange rate. meanwhile certain service sectors are growing quite smartly. hence, while the economy overall has recorded β average β growth, few sectors are in fact experiencing β average β performance themselves β some are clearly quite weak relative to average, while some others are much stronger. the bank is quite aware of these differences and the pressures they bring to businesses and individuals. but we also know that monetary policy cannot remove the forces generating different paces of growth in our economy. we have to keep our eye on the overall performance of demand and prices. we are acutely conscious that history may offer limited bis central bankers β speeches guidance in assessing the net impact of the disparate and very powerful forces that are at work. nonetheless, that is the assessment we must try to make. our most recent assessment was that, with growth near trend, inflation consistent with the target, interest rates about average and an outlook suggesting more of the same, the setting of policy was about right for the moment. of course, we continue to reassess things each month. my colleagues and i are here to respond to your questions. bis central bankers β speeches | ##f to be over 4 per cent this year, not very different from last year. again, we do not, at this point, see the signs of the rapid collapse in global demand we saw three years ago. at home, most of the information coming in suggests the economy has grown at close to an average pace over the past year. this outcome was weaker than we had expected a year ago. it was partly due to the effects of flooding on resource production but also due to softer outcomes in the non - resource side of the economy. cpi inflation has come down, as expected, as the impact of last summer β s floods on food prices reverse. in underlying terms, inflation was about 2Β½ per cent over 2011, also a slightly lower outcome than we had, at one point, thought might occur. the labour market was generally softer in 2011 after a year of unusual strength in 2010 ( though the unemployment rate at its latest reading was virtually unchanged from a year earlier ). these changes to the macroeconomic picture, against a backdrop of a period of intensified international turmoil, saw the board lower the cash rate by 50 basis points in the closing months of 2011. perhaps surprisingly in the face of developments in wholesale funding costs, this was initially fully reflected in a reduction in most lending rates, though there has been a partial reversal of that recently. we have repeatedly made clear that the shifting relationship between the cash rate and other rates in the economy is a factor the board takes into consideration in setting the cash rate. that will remain the case. recent developments do not materially affect the capacity of monetary policy to achieve its goals. looking ahead, the bank β s central expectation is for growth to be close to trend, and inflation close to the target, over the coming one to two years. there are, naturally, risks surrounding this central view. those are spelled out in the latest statement on monetary policy. perhaps what is most noteworthy about the australian economy is the way in which the drivers of growth have changed in recent times. the bank has spoken at length before about the terms of trade, and the resulting resource investment boom, which is still building and which will take the share of business investment in gdp to its highest level for 50 years. we have spoken also about how, on the other side, household behaviour has changed β people are saving more and borrowing less. spending is growing in line with income, but people are spending their money differently. the retail sector is finding it has to adapt to this | 1 |
as to any other euro area country, and our decisions have followed exactly the same rules under this government as under the previous ones. the ecb is the central bank of greece, but we are also the central bank of 18 other countries and we cannot bend our rules to suit the occasion. the greek government can relieve funding constraints by pursuing policies which will open the way to disbursements by other member states under the programme and, ultimately, restore market access. let me add that the ecb β s monetary policy stance is currently very accommodative. greece also clearly benefits from this. bis central bankers β speeches | β speeches for the debt held by the ecb itself through the smp, the eu treaties do not allow us to cancel or extend that debt. while the rest of the euro area is already benefiting from quantitative easing, greece is totally isolated from this development. doesn β t this undermine the long - term growth prospects of greece and consequently the possibility of reducing unemployment faster? what can the ecb do about it? it is true that one consequence of the policy uncertainty currently prevailing in greece is that the economy is benefiting less than it could from the cyclical rise in demand in the euro area, which our monetary policy is facilitating with visible effects. this is unfortunate for growth and employment in the near term, and one more reason to wish that this period of uncertainty is brought to an end as soon as possible. as regards long - term growth, let me clarify, however, that our asset purchase programme can do little to lift long - term growth, in greece or in any other euro area country. our policy is aimed at bringing euro area inflation back to levels below but close to 2 %. it can engineer a cyclical recovery, not a long - lasting one. long - term growth is driven by the capacity to innovate and to efficiently allocate capital and labour, which hinges on reforms undertaken by governments. why aren β t we currently buying greek bonds? for their bonds to be eligible for the ecb β s asset purchase programme, euro area countries need to have a sufficiently high credit rating. this requirement can be waived only if an eu - imf programme has been implemented and successfully reviewed, which is not the case today in greece. greek government officials have said that the ecb is using liquidity as a means to blackmail greece. prime minister tsipras even said that the ecb has got a rope around greece β s neck. what is your comment on that? decisions by the ecb are guided by rules, not political considerations. following these rules, the ecb has fully played its role as the central bank of greece, continuously increasing its liquidity provision to greek banks to ensure that they can serve the real economy. what we cannot do is fund the government, for example by refinancing greek banks β purchases of tbills at a time when the hellenic republic does not have market access. this is due to the fact that, for very good reasons, the eu treaty prohibits any central bank from financing its government. this applies to greece | 1 |
, responsible, and customer - centric standards of business conduct. the passage of the fcp act will enable financial regulators to sanction business practices and entities that pose grave and irreparable injury to financial consumers. it will deter frauds and scams, and ensure that every juan and maria are provided with positive customer experiences. fcp act features overview 7. now, let me talk about the salient features of the fcp act. the act covers the full range of financial products and services offered by the banking, insurance, payments and fintech industries. even investment advisory services are covered. aligned with international standards, the act strengthens the oversight and enforcement powers of financial regulators to address current weaknesses of existing laws, rules, regulations. the act grants regulators with authority to determine the reasonableness of fees and charges ; suspend erring employees ; revoke licenses of erring financial institutions ; and impose sanctions to ensure compliance with the intent of its provisions. 8. most importantly, the act provides financial consumers with new, immediate, and efficient avenues for redress by granting financial regulators with adjudicatory authority to conduct hearings on consumer complaints. this proposed measure provides alternate, less cumbersome, legal recourse for financial consumers. consumer complaints can be escalated and resolved at the level of the financial regulators, ensuring quick resolutions, hence de - clogging court dockets. existing courts may then focus on more pressing matters. 9. the passage of the fcp act is not only a matter of necessity, it is an issue of urgency. as mentioned earlier, as financial products and services continue to rise, so do risks. and we, policymakers, cannot stand idly by while the juans and marias continue to suffer from the limitations of our existing laws. 2 / 3 bis central bankers'speeches 10. without doubt, if properly and swiftly implemented, the fcp act will reinforce the trust and confidence of the public in the financial system, and in the government β s ability to uphold consumer welfare. 11. we look forward to this committee β s β and the senate β s β full and continued support to the enactment of the financial consumer protection act as a priority measure. thank you very much. 3 / 3 bis central bankers'speeches | after the pandemic recession which was exacerbated by russia β s invasion of ukraine. turning to the 3 - month change ( the right panel ) energy prices have been declining sharply recently and we expect them to continue to decline this year, reflecting the path of crude oil futures prices and the expectation that unusually elevated gasoline margins will, on average, decline over the remainder of this year. so, what do i take away from all this? i think there are practical implications for getting a clear picture of the economy and setting appropriate monetary policy, and also a reminder for me about the trust i bear as a public official. most practically, if i had focused on core inflation over the last two years and tended to look past increases for food and energy, and especially for housing, i would have missed an alarming increase in inflation, and reacted more slowly than my federal reserve colleagues and i appropriately did to start bringing down inflation. the federal open market committee raised interest rates more quickly than it had in more than forty years, and i think the progress we have made on inflation shows how important it was to act so urgently. just as importantly, excluding those prices would have neglected how much hardship this high inflation has been for many people, especially lower - income individuals and families. high inflation is a very different experience when you are effectively paying a higher rate than others, when a higher share of your expenses and income are spent on necessities, and when you have little in savings to draw on, as lower - income people do. when i talk about how important it is to win this inflation fight, it is partly in recognition of this inescapable reality for many millions of people. - 11 fortunately, there are signs that food, energy, and shelter prices will moderate this year. an important factor has been the federal reserve β s ongoing fight to lower inflation through tighter monetary policy. we are seeing that effort begin to pay off, but we have farther to go. and, it might be a long fight, with interest rates higher for longer than some are currently expecting. but i will not hesitate to do what is needed to get my job done. the inflation rate for necessities : a look at food, energy, and shelter inflation christopher j. waller member board of governors of the federal reserve system remarks at the 2023 agribusiness conference arkansas state university february 8, 2023 the views expressed here are my own and do not reflect those of the board of governors | 0 |
- adequate capitalization and low exposure to bad debts, banks are able to help fund the growing investment requirements in the economy. credit growth, which has settled in the double - digit territory over the last few years, has benefited the productive sectors of the economy. this bodes well for sustained growth. robust lending growth has consistently come along maintenance of good quality of loans, reflecting observance of prudent lending standards. we expect lending growth to continue, especially with the bsp β s intention to continue slashing the reserve requirement ratio ( rrr ). should the inflation outlook continue to improve, we will further cut the rrr until it reaches single digit by the end of my term in 2023. as you know, we have room and reason to reduce the rrr as it is currently the highest among select peer countries. rrr is a friction cost, and lowering it is consistent with the aim of further enhancing financial intermediation. in the past, the high rrr had served as an important tool to mop up excess liquidity. but now that the bsp, under its amended charter, has the mandate to issue its own debt securities, we can rely less on the rrr for liquidity management. 2 / 5 bis central bankers'speeches with lower rrr, the banking sector can then lend more support to the economy β s growth prospects. it is also important to note that economic growth in the philippines is happening not only in the national capital region ( ncr ) but throughout the country. in fact, growth rates of other regions are outpacing that of the ncr. growth in the regions is expected to remain robust, driven in part by infrastructure development across regions. this pattern of growth is consistent with the aim to make economic growth more inclusive. nevertheless, the bsp will continue to adopt measures that will improve the regulatory and operational environment so that banks will be able to support robust and inclusive economic growth. the financial sector can help spur a more inclusive growth through financial inclusion. we have achieved milestones on financial inclusion as far as regulations are concerned. in fact, the philippines is recognized as having one of the best regulatory environments in the world for financial inclusion. however, many municipalities still do not have banks operating in their areas. a big part of the country β s adult population still do not use formal channels to save or borrow money. to enhance financial inclusion, the bsp has implemented several initiatives and are further strengthening its efforts. for instance | forecast of the future, it is nonetheless all about considering all reasonable likely outcomes. some of you may know of the mantra of hyman minsky who once argued that it is in good times when instabilities are developed. this explains in part why crises are often a surprise. sometimes, we see all the gains of better days, but we may be overlooking the underlying signs of vulnerabilities being built up. while it is virtually impossible to forecast the next crisis, its timing and its specific nature, this should not stop us from being prepared. this is the essence of the srcm and it includes technical aspects, some of which the secretariat may share in its presentation, as well as the critical element of communication. we have always believed that highly - aware stakeholders can make well - informed choices. as regulators, however, we also do recognize that system - level outcomes may turn out to be different from the sum of the behaviors of individual stakeholders. all these challenges simply mean that systemic risk crisis management, and invariably financial stability at large, is a collective effort. ladies and gentlemen, the ultimate objective is to improve the welfare of current and future generations. we do that through a well - functioning financial market, interlinked within its various components and collaborating with the rest of the real economy. this srcm that we launched today can be many things at many times to many people, but it will always be about accruing the gains of financial markets, products and services to the filipino people. this srcm is a start, not the terminal goal. thank you and good morning to everyone. | 0.5 |
6 per cent in the first and fourth quarters of next year, and just less than 6 per cent in 2017. this forecast faces sizeable risks, especially from currency depreciation as well as wage and price determination processes. with weak commodity prices and us monetary policy normalisation coming closer, we cannot be complacent about the exchange rate and its potential inflation consequences. furthermore, we confront medium - term inflation expectations bunched around the top of the target range. the risk of positive inflation shocks feeding into higher expectations and price setting remains very high. lael brainard, economic outlook and monetary policy ( http : / / www. federalreserve. gov / newsevents / speech / brainard20151012a. htm ), 12 october 2015 ; binyamin applebaum, β a 2nd fed governor opposes raising rates this year, breaking with yellen β, new york times ( http : / / www. nytimes. com / 2015 / 10 / 14 / business / economy / a - 2ndfed - governor - opposes - raising - rates - this - year - breaking - with - yellen. html? _ r = 0 ), 13 october 2015 bis central bankers β speeches were the forecast more favourable or were inflation expectations anchored firmly within the target range, monetary policy would enjoy greater freedom of action. if wage and price setting in the economy were more attuned to weak demand and the usefulness of lower inflation, we would have more policy space. but we do not have that space. it has been eroded trying to get growth back up to potential. now we have to contend with significant risks of a sustained breach of the inflation target range. for this reason, we entered a tightening cycle in january 2014, which has so far brought the repo rate 100 basis points higher, to 6 per cent. the real rate has been slightly negative and is now about zero, relative to an historical real rate averaging around 3 per cent. this gradual and limited rise, occurring over nearly two years, has shown due concern for growth while maintaining our attention on a rising inflation rate. some voices say that this is a mistake : that we should let inflation go and focus on the output gap. this advice is problematic on several levels. as economic literature has repeatedly demonstrated and as our experience has once again demonstrated, the output gap is an unreliable measure. 10 it is a poor guide for policy at the best of times. it is an even worse reason to | account the main risks to the economy as presented in the situational picture that was formulated, including in view of the continued decline in exports, the continued deviation of inflation from the target range, and the financial risks derived from the mortgage market. this policy has served, and continues to serve, in achieving policy targets, chiefly the return of inflation to within the target range, and support of economic activity and of employment. the macroeconomic picture that arises from the updated forecast, as well as the state of the labor market as shown by employment and wage figures, are positive, certainly when taking into account that the state of the global economy is far from one of high growth. the relatively good macroeconomic situation provides a fitting time to focus on solving fundamental problems in the israeli economy that may have an effect on its ability to achieve inclusive and sustainable growth. chief among those are increasing productivity, improving human capital, reducing bureaucracy, and dealing with the long - term implications of expected demographic developments. 4 / 4 bis central bankers'speeches | 0 |
. india β s reserves are the world β s seventh largest at over usd250 billion. while south africa β s are but a fraction of this, one needs to bear in mind that we have moved from a position of a negative net open forward position of almost usd26 billion at the end of 1998, to positive net reserves of us $ 28 billion, the result of which means that today the country boasts an investment grade rating. furthermore, central banks have shifted towards market - based instruments which enhance their ability to respond to shocks. india is one such example, with the increased use of repo and reverse repo operations since the early 2000s, increasing the role of interest rates in the transmission mechanism of monetary policy. in south africa β s case, we have come a long way in terms of the development of our own bond market, a process in which the south african reserve bank played a major role for a very long time. today, we have a very deep and liquid bond market, if not the most liquid bond market in the emerging market economies. the positive impact of these financial market and macroeconomic developments have been put to the test on numerous occasions since the 1997 / 1998 crisis. the most recent event has been that of the us sub - prime mortgage market. this episode has been well documented and i shall therefore not spend time on its detail. as you are aware, it was a liquidity and credit crisis, emanating from financial institutions having exposure to the sub - prime market and thereby incurring huge losses as delinquencies and foreclosures increased in the wake of tighter monetary policy. although the sub - prime mortgage market was an issue related to the us, the adverse developments were transmitted to other developed and emerging markets without much relation to domestic developments. at the height of the crisis, developed and emerging market equities were sold. foreign exchange markets witnessed a significant increase in volatility as carry trades were rapidly unwound and emerging market spreads rose significantly between late july and mid - august. however, the rise in emerging market debt spreads was not quite as pronounced as that of credit markets in developed economies. spread movements also reflected higher risk credits moving the market in either direction. although south african financial markets were affected by the events surrounding the subprime crisis, our money markets were relatively unaffected. our banking system had very little exposure to the sub - prime market and liquidity conditions domestically remained healthy. as such, there was no need for the | visible to external parties such as regulators and market participants. the new guideline on corporate governance has thus, attempted to circumvent these shortcomings and uphold the three principles underpinning good corporate governance, namely integrity, transparency and accountability. the guideline emphasizes the responsibility of boards, their accountability as well as that of the chairperson who leads the board. the quality of the people sitting on boards and comprising senior management of financial companies has a direct bearing on the way these institutions are managed. the guideline, therefore, whilst ensuring that directors meet the fit and proper person criteria, further prescribes for the leadership skills enhancement of board directors. poor leadership has undermined public confidence in financial institutions during the crisis and has provided many painful but precious leadership lessons to one and all. the orientation program for directors outlined in the guideline addresses the issue of leadership by ensuring that directors are fully conversant with the principles of leadership, and the leadership training programme has to be approved by the bank of mauritius. i am pleased to announce that this workshop has been duly approved by the bank. the crisis also brought to light the importance of inculcating a corporate culture which promotes ethical principles. culture has been described as β the way human beings behave together β what they value and what they celebrate. β the banking crisis revealed a breakdown of the values that promote trust and led to a crisis of confidence in banks. regulation can propel a change in culture when it is otherwise not feasible, as rightly expressed by the chief executive of the uk, financial services authority who stated that the regulator can influence culture by β influencing the composition of management, influencing incentives for good behaviour, influencing training and competence regime and deterring poor behaviour. β bis central bankers β speeches the guideline on corporate governance, thus imposes the responsibility on directors and senior management to lead by example in an environment that emphasizes trust, integrity, honesty, judgment, respect, responsibility and accountability. culture can only be effective when combined with strong leadership. for corporate governance principles to be really effective, the tone must be set from the very top of the organization in order that these principles trickle down to the lowest level of the organization to ensure compliance. the board should actively sustain an ethical corporate culture in the organization. further, strategic plans and procedures have to promote ethical balance, fair dealing practices must be applied, and a code of ethics must be laid down and communicated to all the members of the organisation. the guideline on corporate governance not | 0 |
financial system more generally in many economies ; second, through stimulatory fiscal policies ; and third, through supportive monetary policies β very low interest rates and direct injections of money to support demand in a low interest rate climate, such as the mpc β s policy of β quantitative easing β. however, the current level of stimulus from monetary and fiscal policy was designed to turn around economies in the wake of the traumas we experienced 12 β 18 months ago. as confidence builds and private spending recovers, it is likely to be appropriate to gradually withdraw at least some of this policy support for demand, without jeopardising growth prospects. the need to re - adjust economic policy is most obvious on the fiscal side, where deficits are very high by historical standards, particularly in the us, europe and japan β as chart 7 shows. these large deficits reflect the important role that public spending and tax policies have played worldwide in stabilising economic conditions during the recession. but to ensure sustainable public finances over the medium - term, these budget gaps will need to be closed over the recovery. in many countries, policy - makers are rightly concerned about the negative consequences for demand of tightening fiscal policy too quickly and abruptly while the recovery is still fragile. but a tightening of fiscal policy which is pursued as part of a longer - term, credible and well worked - out plan is much less likely to have such negative demand - side effects, and may have offsetting benefits for the supply - side performance of the economy. progress in putting public finances on a sounder footing can increase confidence and reduce uncertainty about future economic prospects, providing a much better climate for a recovery in private sector demand. it can also support the supply - side performance of the economy by helping firms and individuals plan for the longer term. the effects of deficit reduction on financial markets should also be positive for private sector demand. long - term interest rates are likely to be lower in a world in which government deficits are being reined in, and the risk of destabilising financial market movements is also reduced. again, this is likely to provide a much better climate for private sector investment and long - term spending and planning more generally. an additional mechanism through which the negative demand - side consequences of fiscal tightening can be offset is by maintaining a relatively loose or relaxed monetary policy. so the other arm of withdrawing policy stimulus β a tightening of monetary policy β needs to take into account the potential impact of deficit reductions on demand, | in the overnight money market. this need for adjustment also explains why at the bank we are sticking firmly to the plan to allow the special liquidity scheme to run - off on time a year from now. over the last twelve months, banks have taken the necessary steps to move towards that goal. it is all about getting the banking system into a position where it can demonstrate robust capital and liquidity buffers, and to do so by facing up to the discipline of the market rather than the support of the authorities. the edinburgh fund managers are an important part of that market discipline. in a market economy, you are in the front line of defence and discipline. now, i cannot say that the uk is insulated from the risks we observe in other parts of europe. as our most recent financial stability report, published just before christmas, made clear, β the united kingdom is only partially insulated given the interconnectedness of european financial systems and the importance of their stability to global capital markets β. as the report also made clear, there are other, probably more medium - term risks posed by evidence of low bond yields in many advanced countries and signs of an intensifying search for yield as capital flows into alternative assets, including into emerging markets. against this backdrop of risks, it is in the collective interest of banks to continue to build up progressively their capital and liquidity resilience so that they support not only themselves, but also the stability of the financial system as a whole. the basel iii agreement, and the reform programme of the g20 and the financial stability board set up under the g20, will provide the supporting framework by which the authorities will back up the discipline of the market to achieve and maintain financial stability. this brings me back to the reforms in the uk. at their heart lies the objective of putting the stability of the financial system at the centre of the regulatory mission. you may say, β surely that β s not new β. i would disagree β our overriding objective must be to create a consensus of public opinion which will enable financial stability to be embedded as a public policy objective in the same way that in the wake of the 1970s, low inflation came to be adopted as a necessary condition for stable economic growth. too often, i hear people say that achieving financial stability needs somehow to reflect a balance with other objectives, such as competition, consumer protection, and the like. i β m sorry, but while these objectives are of course very important, the best way | 0.5 |
is contributing to a sharp deterioration in our balance of payment and a fall in the net external component of aggregate demand. at the same time, the strong exchange rate, and the weakness of world commodity prices, is having a direct dampening impact on costs and prices in this country - particularly at the wholesale, producer, level but also affecting retail prices. meanwhile the domestic economy has been unsustainably strong. private consumption, in particular, was growing at an annualised rate of over 5 % last summer, and still growing at an annualised rate of 4 % by the first quarter of this year. this compares with a longer - term trend rate of some 2Β½ %. but for the dampening impact of the external influences on aggregate demand and on costs and prices, this could already have resulted in accelerating inflation. the complication for monetary policy, in this situation of external / domestic imbalance, has, of course, been that a tightening of monetary policy to slow the pace of the domestic economy would have been likely to aggravate the appreciation of the exchange rate, intensifying also the restraining external demand and price effects, and putting even more intense pressure on the internationally exposed sectors. now, there is no question but that the strength of the domestic economy must moderate further - as indeed we expect that it will. but the external influences - which we can anyway not do much about, but which will in time wear off - made this moderation of domestic demand growth less immediately urgent than it would otherwise have been. in these circumstances, with some evidence that growth in the domestic economy was in fact slowing, and given the evident pressures on the internationally exposed sectors, we needed, in my view, to be more than usually confident in our judgement as to the need to tighten policy further. the questions with which the mpc has been struggling this year then are : just how much shelter the external situation would in fact give us, and for how long ; and just how much time, therefore, we had to bring about a sufficient slow down in domestic demand to prevent inflation accelerating and the economy from overheating. now these are immensely difficult judgements. they depend in part upon one β s perception about the starting position - that is how close we are to full capacity utilisation to begin with. and they depend upon not just the direction, but the rate of change and the timing, of changes in the different components of aggregate demand. it is hardly surprising that the various members of | are indeed achieving their objectives. we are moving to a world in which g - sibs can be global in life and orderly in death. we think that we are getting closer to a solution to the problem framed by mervyn king. we have an internationally coordinated response grounded in national law. by pre - positioning loss - absorbing resources in life, and planning for an orderly resolution in the event of failure, we can provide the policymakers who come after us with more options than they had in the great financial crisis if they are faced with future systemic financial stress. 3 / 4 bis central bankers'speeches there is, of course, more to do. the benefits of reforms cannot be realized unless they are operationalized. all fsb jurisdictions need to implement resolution reforms and to improve their resolution capabilities so they are fully prepared to respond to a bank failure or a crisis. the fsb β s evaluation shows that systemically important banks remain very complex, highlighting the importance of resolution planning. the evaluation also highlights gaps in the information available to public authorities and to the fsb and standard setters, which reduces their ability to monitor and evaluate the effectiveness of resolution regimes. the fsb continues its work to ensure that banks, other financial institutions and market infrastructures can be effectively and safely resolved. these are issues on which we will need to reflect and work further. the financial landscape is also changing, and the fsb needs to be responsive. the fsb β s monitoring shows that the share of bank assets as a percentage of total financial assets has dropped from 46 percent in 2008 to 39 percent in 2018. as non - bank financial institutions increase their market share, risks have moved outside the banking system. the market turmoil in march underlines the need to better understand the risks in non - bank financial intermediation and reap the benefits of this dynamic part of the financial system without undermining financial stability. there may be lessons for us to learn about the framework that we need to apply to this sector, which is different from β and less developed than β the one used for banks. at the fsb, we established earlier this year a balanced working group of bank and nonbank authorities to look closely and concretely at these issues, and the covid event has given focus and vitality to this effort. separately, we have already announced that our next evaluation will examine the postcrisis reforms to money market funds, which were once again front and center in the covid event. finally, | 0 |
alberto g musalem : us macroeconomic and regulatory developments and emerging market economies remarks by mr alberto g musalem, executive vice president of the integrated policy analysis group of the federal reserve bank of new york, at the international financial conference annual meeting, cartagena, colombia, 9 march 2015. * * * thank you for the invitation to speak here today. it has been a pleasure to attend this conference, and to have the opportunity to exchange views with many of you. my remarks today will focus on the potential effects of the u. s. outlook and policy for emerging market economies. i will make three main points. β’ the u. s. economy appears likely to make further progress toward the federal open market committee β s ( fomc ) objectives of maximum sustainable employment and price stability. this actual and prospective improvement underlies market expectations that the fomc will begin raising the federal funds rate sometime later this year. β’ emerging market economies ( emes ) have generally performed well during u. s. tightening cycles, especially when such policy shifts are supported by effective communication in the context of u. s. growth. β’ there has been notable progress in improving the safety and soundness of the international and u. s. financial systems, to better support financial stability and economic growth. before i turn to the specifics, let me remind you that what i say today reflects my own views, and not necessarily those of the federal reserve bank of new york or the federal reserve system. since the end of the great recession almost six years ago, u. s. growth has averaged a somewhat disappointing 2. 3 percent. but growth has picked up recently, and the latest blue chip forecast is for growth to average slightly below 3 percent over the next year. there are good reasons to think that a period of stronger growth can be sustained. β’ household balance sheets are in much improved condition, with total household liabilities well below their 2008 peak, and debt service burdens at the lowest share of disposable income in more than 30 years. moreover, consumers are benefitting from the positive wealth effect of higher house and equity prices. β’ labor market improvement has picked up pace, with payrolls gains over the last several months the strongest since the mid - 1990s. workers are finally beginning to see at least modest real wage gains. and the u. s. unemployment rate has fallen to the lowest level since mid - 2008. β’ the recent drop in oil prices is providing a significant boost to | njuguna ndung β u : working towards an east african monetary union remarks by prof njuguna ndung β u, governor of the central bank of kenya, at the opening of the meetings of the economic affairs sub - committee of the monetary affairs committee mac, nairobi, 3 april 2012. * * * mf and igc officials present ; distinguished delegates from eac partner states central banks and eac secretariat ; ladies and gentlemen : the central bank of kenya is delighted and honoured to host you in this workshop aimed at reviewing the various studies under mac priority activities that will assist in understanding the policy terrain and the process of eamu protocol negotiation. the eac has a target of moving towards a monetary union and this meeting will improve and further consolidate our understanding of the eamu process and invigorate and guide our integration agenda. on behalf of the central bank of kenya, let me take this early opportunity to thank all those who have contributed to the organization of this workshop and all the participants and resource persons. i wish you an enjoyable stay in nairobi. ladies and gentlemen ; the monetary affairs committee ( mac ) of the eac central bank governors is working on various fronts to provide a knowledge base for exchange rate and monetary policy frameworks and how the policy designs can be applied in eac. this will support the east african monetary union ( eamu ) protocol negotiation, currently underway. in order to fast track this process, governors met in june 2010 and identified and apportioned the various priority study areas that would ensure that the decisions taken on eamu are informed and policy proposals are consistent with the aspirations of eac. the central banks of eac identified three levels of this process : analytical and design work, which entails immediate activities to improve the understanding of the entire eamu process, especially the pre - conditions for eamu establishment and the institutional set up ; harmonization of operating frameworks, which entails undertaking all the activities that will result in the harmonization of eac partner states β operating frameworks, thereby setting the stage for enhanced convergence in not only policies, but also the required structures ; and, the above blocks will deliver the input to the policy regimes block, which entail the tools for negotiating the eamu protocol. this block is being dealt with by the high level task force ( hltf ). distinguished delegates : the output from the first two blocks is meant to provide the technical input required to inform the hltf, a body | 0 |
rasheed mohammed al maraj : building a sound framework for the fund management industry keynote guest address by his excellency rasheed mohammed al maraj, governor of the central bank of bahrain, at the fundforum middle east 2008 : " building a sound framework for the fund management industry ", manama, 2 december 2008. * * * ladies and gentlemen : i would like to thank the organisers of this second annual fund forum middle east for their kind invitation to speak to you today. my topic is β building a sound framework for the fund management industry β, and a sound framework involves both macro - economic and microprudential elements. the macro - economic elements are obviously the uppermost in everyone β s thoughts at the moment. the global financial and economic system is currently experiencing what is generally accepted are the worst conditions for the last 50 years. until only a few months ago, many commentators and analysts believed that the economies of the gcc would be an oasis of calm in the on - going financial turmoil. we also tended to hear a great deal about the so - called β decoupling β thesis. this was the idea that the emerging economies would continue their recent strong growth despite the economic downturn in europe and the united states. following the collapse of lehman brothers in mid - september we now know that these scenarios were too optimistic. it has become clear that no part of the world will be immune to the current crisis, and the imf expects that this will be the first time in fifty years that all of the advanced economies will experience a synchronized recession. this cannot fail to have an impact on the rest of the global economy. although the gcc countries enjoy strong fundamentals, we have not been immune to the credit crisis. one consequence of the financial market disruption in the wake of the lehman collapse was a substantial outflow of dollar liquidity from all of the emerging markets, including the gcc. the liquidity impact of the crisis has also combined with a general risk aversion which has had an adverse impact on the supply of credit to many emerging economies, including to the gcc countries. as a result of these global financial market developments there have been significant stock market corrections in several gcc countries. some gcc members have needed to provide support for banking sectors, in the form of recapitalization funds, or by providing blanket guarantees of the deposits, or by a combination of both. there is plenty of anecdotal evidence that the credit | tiff macklem : release of the financial stability report opening statement by mr tiff macklem, governor of the bank of canada and ms carolyn rogers, senior deputy governor of the bank of canada, at the press conference following the release of the financial stability report, ottawa, ontario, 9 may 2024. * * * good morning. i am pleased to be here with senior deputy governor carolyn rogers to discuss the bank of canada's financial stability report ( fsr ). part of the bank's mandate is to preserve and promote the stability of the canadian financial system. a stable and resilient financial system means people can access credit and manage their assets safely and predictably in good times and in bad. it also reduces the need for authorities to intervene in periods of financial stress. in short, a stable financial system is critical to canada's economic well - being. every year the bank publishes this report to offer an assessment of the stability of canada's financial system and highlight risks that could threaten that stability. to make the purpose of the report clear, we've changed its name, from the financial system review to the financial stability report. the canadian financial system is highly interconnected. stress in one sector can spread to others. so, the emphasis in the fsr is on risks that could ultimately affect the broader financial system and threaten its stability. the report focuses in particular on risks that evolve with developments in the economy. we look at risks that could lead to system - wide stress, in four key sectors : households, businesses, banks and non - bank financial institutions - such as pension funds, insurance companies and fund managers. there are also important risks that are more operational or structural in nature, such as cyber attacks and risks related to climate change. we typically will discuss those on the bank's financial system hub. but when major developments arise, they may appear in the fsr as well. so, what are the key messages from today's fsr? the first message is that canada's financial system remains resilient. over the past year, households, businesses, banks and other financial institutions have taken proactive steps to adjust to higher interest rates and to weather economic shocks. the second message is that this adjustment still has some way to go and continues to present risks to financial stability. i'll offer some context around this assessment and then the senior deputy governor will touch on the risks in different sectors. 1 / 3 bis - central bankers ' | 0 |
mid - sized banks. the main problem, however, is that it would usually result in much higher capital requirements as compared to irb. there is much less fine tuning of the risk weights, and banks have to rely on external rating agencies. the banks adopting this approach would thus be at a disadvantage against their competitors. jurisdictions that will stick to the sa for too long may find that their domestic banks are losing ground to the foreign banks operating globally who are more likely to adopt irb. fifth, the irb approach is being preferred by large global banks, which already competitively price credit risk. the key parameters under irb approach are pd ( probability of default ), lgd ( loss given default ), m ( maturity ) and ead ( exposure at default ). under the firb, the banks calculate pd of their portfolio, while the other parameters i. e. lgd and ead are prescribed by the regulator. minimum pd is 0. 03 % for banks and corporates ; no floor has been prescribed for sovereigns. the lgd for senior exposure is 45 % and the subordinated exposure attracts a lower recovery of 75 %. these rates should be re - examined by the regulators taking into account the ground realities of their respective jurisdictions. 1 the advanced irb provides discretion to banks, and as such there is an incentive to move too quickly to airb without adequate preparation. the balancing act has to be performed by the regulator, on one hand it has to promote the efficiency of banking capital and pursue more fine tuned risk assessment, and on the other it has to ensure that banks have sufficient resources and expertise to undertake this complex task. the airb approach has very high sensitivity to the changes in lgd and m given the differences in pds. in a paper by ing bank 2, it is shown that at higher lgd levels e. g. 75 % there is a particularly strong impact on the risk weights of bonds of lower rated issuers. on a similar note the variations in maturity m, have greater impact on low rated borrowers as compared to high rated borrowers. it implies that in case of a bbb - rated borrower, the risk weights will be highest for subordinated loans ( lgd 75 % ) having long maturity ( e. g. 5 years ). at the same time for short term secured loans ( i. e. with low lgd ) the difference in risk weights will not vary a | funds. in parallel to these developments, if has progressed on capital market development. few significant development on this front are : ( i ) islamic benchmark has evolved to provide an alternate to libor by introducing islamic sovereign paper. some initiatives include ( a ) sudan government investment certificates based on pool of ijara, salam, and murabahah instruments to raise long term financing, one year maturity government musharakah certificates based on equity partnerships ; ( b ) bay al - dayn ( debt trading ) government investment issues ( gii ) by malaysia ; and ( c ) baharian al - salam sukuks whereby government agrees to sell forward to islamic banks a commodity ( typically aluminium ) against spot payment. islamic banks in turn designate the government their agent to sell the ijara sukuk are financial obligations, issued by lessor, and backed primarily by cash flows from lease receivables from a credit lessee. arsalan tariq : β managing financial risks of sukuk structures. β commodity to a third party on delivery and the price of sale determines the price of the sukuk. ( ii ) islamic investment indices. equity benchmark indices are designed to track the performance of leading publicly trading companies who are involved in activities consistent with islamic shariah law. examples of this are dow jones and ftse islamic indices which focus on limited range of companies excluding companies which are involved in products / businesses not permissible under islam. ( iii ) islamic equity funds include shariah - compliant equity and hedge funds, commodity, leasing and trade related funds. barring equity funds, other funds are low risk. in the case of leasing, the fund is a securitized pool of lease contracts dealing with collateralized assets generating a steady stream of cash flow. similarly, commodity funds have a short - term exposure in markets that are efficient and have developed forward markets, thus reducing the level of risk. in contrast, equity funds are similar to conventional mutual funds and are exposed to a higher degree of risks. such funds are designed to ensure that equity stocks included in the fund are not only well diversified but also fully compliant with the shariah β s guidelines. ( iv ) development of derivatives and its equivalents. there is a debate on whether if allows setting price at a future date with some scholars arguing it is not permissible and others with flexible interpretation that forward trades are permissible in islam, if structured to provide specific quantity, time, | 0.5 |
. ii. conduct of monetary policy next, let me explain the bank β s conduct of monetary policy. first, the bank has been pursuing powerful monetary easing through comprehensive monetary easing. under the comprehensive monetary easing framework, the bank encourages a decline in longer - term market interest rates and a reduction in various risk premiums through the asset purchase program. at the monetary policy meeting held last week, the bank, with a view to responding to the downside risks to the economy that i bis central bankers β speeches described earlier, decided to increase the total size of the program by about 10 trillion yen, to about 50 trillion yen. second, the bank has been making efforts to ensure financial market stability. third, in order to meet the biggest challenge for japan β s economy, which is the strengthening of the foundations for economic growth, the bank has been providing funds to private financial institutions that make lending and investment consistent with the policy goal. the funds are provided against collateral such as government securities, at a very low interest rate. with a view to making this framework more effective, in june 2011 the bank decided to establish a 500 billion yen new line of credit, through which it extends loans to financial institutions for their equity investments and the so - called asset - based lending ( abl ). the bank recognizes that japan β s economy faces the critical challenge of overcoming deflation and returning to a sustainable growth path with price stability. based on such strong recognition, the bank will continue to consistently make contributions as the central bank through the three - pronged approach that i have explained. bis central bankers β speeches | 2023. source : imf. chart 5 real gdp level annualized quarterly growth rate s. a., ann., tril. yen s. a., ann., q / q % chg. - 5 - 10 - 15 domestic demand - 20 net exports - 25 real gdp - 30 cy 08 - 35 source : cabinet office. cy 20 chart 6 consumer prices y / y % chg. 22 / q1 q2 q3 q4 23 / q1 q2 23 / july august cpi for all items 0. 9 2. 4 2. 9 3. 9 3. 6 3. 3 3. 3 3. 2 less fresh food 0. 6 2. 1 2. 7 3. 7 3. 5 3. 3 3. 1 3. 1 less fresh food and energy - 0. 9 0. 9 1. 5 2. 8 3. 5 4. 2 4. 3 4. 3 energy 1. 4 1. 3 1. 3 1. 2 0. 3 - 0. 6 - 0. 8 - 0. 9 food products 0. 3 0. 5 0. 7 1. 2 1. 3 1. 5 1. 6 1. 7 general services - 1. 3 - 0. 1 0. 1 0. 4 0. 6 0. 7 0. 9 0. 9 ( reference : contribution to the cpi for all items less fresh food ) source : ministry of internal affairs and communications. chart 7 forecasts of the majority of the policy board members ( as of july 2023 ) note : figures in brackets indicate the medians of the policy board members'forecasts ( point estimates ). source : bank of japan. chart 8 cpi for goods and services goods ( less petroleum products ) 3. 5 general services ( less mobile phone charges ) contribution to y / y chg. in consumer prices, % points 3. 5 daily necessities, etc. apparel durable goods food products agricultural, aquatic, and livestock products cpi for goods ( less petroleum products ) 3. 0 2. 5 2. 0 contribution to y / y chg. in consumer prices, % points 3. 0 other 2. 5 eating out 2. 0 1. 5 1. 5 1. 0 1. 0 0. 5 0. 5 0. 0 0. 0 housing rent culture and recreation services related to domestic duties cpi for general services ( less mobile phone charges ) - 0. 5 - 0. 5 cy 19 cy | 0.5 |
countries β, concerns about an absolute shortage of high - quality collateral assets appeared unjustified, given that the supply of collateral assets had risen significantly since the end of 2007. today, almost two years after the first joint central bank seminar, a new set of issues related to this relative scarcity of collateral is coming to the forefront. the regulatory framework is becoming clearer, but concerns are being raised about the impact of the new post - crisis regulatory regime on the financial system. eligible collateral first, i would like to focus on the aspects related to the eligibility of assets for use as collateral in central bank credit operations. as you well know, collateral eligibility criteria are defined by central banks first and foremost to protect central banks, and ultimately taxpayers, from the credit risk inherent in their credit operations with commercial banks. the eurosystem is very clear on this aspect and the bis central bankers β speeches β adequacy β of assets for use as collateral is stipulated as a condition for lending in article 18. 1 of the statute of the european system of central banks. the legal interpretation in this respect is clear and consistent. this concept of adequacy focuses on the β qualitative β aspect of assets that may be used as collateral with the eurosystem. the adequacy of collateral in this respect is ensured via the following pillars : ( i ) market valuation should be the rule whenever possible, ( ii ) proper legal due diligence both as regards the asset to be accepted as collateral and also as regards the collateralisation technique used ( iii ) there should be minimum credit quality requirements and stringent rules and performance monitoring for all systems used to assess the credit quality of eligible assets and ( iv ) risk control measures, normally in the form of haircuts. another point i would like to emphasise is that the eurosystem has been working to mitigate inherent pro - cyclicality in its collateral framework by extending it, by aiming at calibrating risk parameters over a medium - term horizon, avoiding strong reactions to temporary market movements, and eliminating cliff effects and broadening its acceptance of credit risk assessment systems. i would also highlight that the eurosystem β s collateral framework which should cater for a level playing field in the euro area through a single list of eligible assets, is an important factor in promoting the standardisation and harmonisation of relevant laws in europe. the eurosystem often has to face the fact that different aspects of securities laws in europe are not yet | ##ness? yes, we see progress in all programme countries. it β s visible in trade balances and real price adjustments. it vindicates economic theory. ireland will soon be able to raise money on its own. spain will probably not need more support for its banks. we will see in six months whether portugal needs a follow - up programme. although the decisions of the constitutional court there remain an unknown. bis central bankers β speeches what makes you so optimistic about spain? unemployment is no longer going up ; the current account is in surplus. we see at least a bottoming out, a turnaround. you don β t mention greece? the eurogroup currently discusses whether there is a financing gap and whether a third programme is needed. obviously, it does not help to ask for debt restructuring. but at the same time we are far away from the size of the first two support programmes. some mention a single digit figure. it is important that greece reaches a primary surplus in the first quarter next year, on an annual basis. what do you make of the netherlands? it set a good example. it got into a difficult situation and reached a national consensus on how to get out of it while sticking to the european rules. i am not happy it got into the bad situation in the first place. but it is important that it did not follow the example of some bigger neighbours in 2003 and 2004. but it is set to miss the 3 % - threshold again in 2015? the rules allow for some flexibility. that is ok in a crisis. the ecb will take up supervision from next year and will review the books beforehand. do you already know exactly which bank will fall under your remit? no bank will be completely absent from our radar. the most important ones with assets of at least β¬30 billion will be supervised directly. we will also look at the size in relation to gdp, but we will cover at least three banks from each euro area country. the final list will only be made up when the new supervisory board takes up its duties next year. in the sample of banks subject to the comprehensive assessment we built in some safety margin of 10 %, because balance sheet totals can fluctuate. so, not all the banks that are assessed will necessarily end up being directly supervised by us. other banks will remain under national supervision. not with the amount of national discretion we see at present, but according to harmonized standards and rules. a dutch bank will be scrutinized | 0.5 |
miguel fernandez ordonez : what should be done during the macroeconomic adjustment phase in spain? speech by mr miguel fernandez ordonez, governor of the bank of spain, at a lunchconference organised by el correo de andalucia, seville, 25 september 2008. * * * since august last year the world β s developed economies have been convulsed by two very severe shocks : the rise in oil and other commodity prices and the outbreak of financial turmoil that has reached dimensions that nobody could have imagined initially. the increase in commodity and oil prices seems to be easing, and yet the events of recent weeks suggest that, as regards the turmoil, we are probably experiencing the most significant financial crisis since 1929. there are already numerous reports by domestic and international agencies ( imf, oecd, bank for international settlements ) analysing the causes and consequences of the situation the industrialised economies are currently going through. at first it was thought that the repercussions of the financial crisis would be concentrated in the us economy. then it was considered that other industrialised economies in which debt, the external imbalance or the property boom may have been important, like the uk, spain, ireland and new zealand, might also be affected, while other countries would remain beyond the contagion. but this has not been the case. the effects have reached all countries. as we have just seen with the release of q2 european growth figures, countries with large external surpluses such as germany, have also posted a very weak economic performance. as a result, today, unlike a few months ago, nobody is defending the possibility of certain european economies decoupling from what is happening in the united states. as you can imagine, the spanish economy has not been able to remain unaffected by these processes. in fact, our country, which had been building up certain imbalances, in the form of rapid growth of household and corporate debt and, consequently, of a large external deficit, had already embarked upon a smooth correction from mid - 2006. however, global events have accelerated and intensified this adjustment, even though, from the viewpoint of the financial system, spanish banks have had absolutely nothing to do with the causes of the financial crisis. they have not generated doubtful assets like us banks have, nor have they invested in these assets like many european banks have. however, the financial crisis has not only affected the institutions that generated these toxic products or invested in them but, by | the services sector. turning to the international financial system, banks have gained in soundness and are now in a position to face a correction of the global imbalances, even if this were accompanied by some adjustment of financial conditions and a moderate increase in volatility. however, further headway must be made in improving the measurement of the risks implicit in the complex financial linkages present in some segments of the international financial system. although they provide for greater risk diversification, greater financial integration, new participants on the markets and the emergence of new financial instruments all make it more difficult to determine on which agents and sectors the risks finally fall. it is also more complicated to evaluate, where necessary, the risks of excessive concentration in segments where supervision by regulatory bodies is lighter. it is thus important to foster awareness in companies, and in households too, of the risks they assume, and for regulators to exercise effective surveillance of financial intermediaries and markets. all the more so given that the uncertainty over the effects arising from future bouts of turbulence on the markets will be exacerbated by the fact that this relatively new financial structure has not so far been tested in less favourable phases of the business cycle. in this respect, the volatility seen on international financial markets in recent weeks serves as a reminder of the need for prudent risk assessment and for the right resources to adapt to a broader and more demanding financial environment. but it is not only the conduct of national authorities that must rise to the challenges entailed by the ever - increasing complexity of our financial systems. at the international level, growing economic and financial integration requires reconsideration of the guiding principles of the multilateral financial institutions, which have hitherto remained perhaps too anchored in the bilateral supervision of national policies, without paying sufficient heed to the increasingly complex links globally. the strengthening of multilateral surveillance, especially in the financial realm, would thereby provide for a more effective contribution by these agencies to embedding international monetary and financial stability. the european environment in 2005 the euro area economy posted a modest average increase in gdp, and one lower than in 2004 and than in the other developed economic areas. nonetheless, year - on - year growth was on a rising profile throughout 2005, attaining a rate of increase in line with potential in 2006 q1. the economic performance differed, in fact, from the first to the second half of 2005. in the first six months output was markedly sluggish, the result among other | 0.5 |
hedgefund intelligence ) set the assets in global hedge funds at about 2. 0 trillion u. s. dollars by the end of 2006, of which nearly 1. 5 trillions in u. s. funds, roughly 450 billions in european funds and 150 billions in asian funds. fig. 4 - global hedge fund assets ( billions of u. s. dollars ) 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 sources : hedge fund research, world federation of exchanges ( fibv ), bank for international settlements ( bis ) and swiss re economic research & consulting. β’ an important dimension of the greater diversification of risk has been the increased international financial integration. in the last decade industrial countries β gross external financial assets and liabilities more than doubled in proportion to gdp, reaching 320 per cent ( fig. 5 ). fig. 5 - gross stocks of foreign financial assets and liabilities ( sum of financial assets and liabilities in percent of gdp ) industrial countries emerging countries source : imf ( lane β milesi - ferretti database ). ( 1 ) for each group, weighted average calculated using gdp weights. as a consequence, the range of financing and investment opportunities available to economic agents widened, as reflected in the composition of the balance sheets of firms and households. in particular : β’ the set of corporate finance instruments used by euro - area firms has broadened. in the first three years after the introduction of the single currency, the net issuance of corporate bonds accelerated dramatically ( fig. 6 ). the marked deceleration that has been observed in the most recent years reflects, on one side, the impact of corporate scandals, but also, on the other side, the greater availability of bank credit resulting from credit market innovations. fig. 6 - external financing of euro - area non - financial corporations ( net issuance ; annual growth rates ) total external financing bank loans quoted shares debt securities source : ecb. β’ the market has also broadened, not only in terms of the instruments available but also with respect to the increasing access of a larger number of firms, including those with lower ratings. this increased availability of funds has been extensively used to finance m & a activities. β’ between 1995 and 2006 the composition of euro - area households β financial assets has progressively shifted away from traditional instruments, such as banknotes and deposits, to more sophisticated financial assets whose prices are more sensitive to market movements and credit risk. the share of bonds, | point out that the canadian economy continues to adjust to global developments and to the associated changes in relative prices. as i said at the beginning, world economic growth will remain robust β around 4 per cent this year and next. against this backdrop, our assessment is that the canadian economy as a whole is currently operating at its production capacity. and we expect it to keep on growing roughly in line with its production potential through 2007. specifically, we project annual average growth of 3. 1 per cent this year and 2. 9 per cent in 2007. for new brunswick, we are looking for a slight pickup in growth in 2006 β 07 β to about 2 3 / 4 per cent from 2 1 / 2 per cent in 2005 β mainly boosted by investment projects such as the lng facility i mentioned earlier. total cpi inflation for all of canada, which was at 2. 3 per cent in the fourth quarter of 2005, will continue to reflect changes in the prices of crude oil and natural gas. but it should return to the 2 per cent target by the first half of 2007. so should core inflation which, in the closing months of 2005, was at 1. 6 per cent. as always, there are both upside and downside risks to our projections. for 2006, the risks relate to the world economic outlook and the adjustment of our economy to global developments. these risks appear to be balanced. but through 2007 and beyond, the risks are tilted to the downside as the unwinding of global imbalances could involve a slowdown in world economic activity. with our economy operating at capacity and expected to grow roughly at potential through the projection period, on 24 january we raised the policy interest rate by another 25 basis points to 3 1 / 2 per cent. and we indicated that, in line with our base - case projection and current assessment of risks, some modest further increase in the policy interest rate would be required to keep aggregate supply and demand in balance and inflation on target over the medium term. concluding thoughts let me conclude by summarizing my key points. first, because our economy is very open to world trade and finance, we need to recognize today's global economic realities and to have the flexibility to adjust accordingly. second, sound economic policies have a critical role to play in facilitating the necessary adjustments. such policies include, importantly, a monetary policy aimed at keeping inflation low, stable, and predictable β to which the bank of canada is fully committed. third, based on our history, | 0 |
stanley fischer : dollarization keynote address by professor stanley fischer, governor of the bank of israel, at the 75th anniversary conference of the central bank of the republic of turkey " dollarization : consequences and policy options ", istanbul, 13 - 15 december 2006. * * * it is both a pleasure and an honor for me to participate in this conference of the central bank of turkey. in the first place, it is a pleasure to be at a conference of the central bank at a time when it is evident that monetary policy in turkey is succeeding in gradually bringing inflation under control. inflation is now around the single digit range, and given the experience in other countries β including israel β that struggled to subdue inflation, it is reasonable to expect that with a sustained and consistent monetary policy, and the continuation of the supportive fiscal policy, turkey will join other inflation targeting countries in achieving low single digit inflation. all this is a far cry from the situation during one of my most memorable visits to your country, on february 19, 2001, the day of the spectacular foreign exchange crisis that led to the shift to a flexible exchange rate regime and the beginnings of the inflation targeting approach to monetary policy. the turkish economy has come a long way since then, and the credit for that belongs both to the central bank and to successive turkish governments β both the ministers and the senior civil servants β who have demonstrated the ability to maintain fiscal discipline and continue the reforms that are transforming the economy and bringing it closer to its potential. of course, the imf too has made an important contribution to the success of this process, and i am happy that as a member of the fund and the fund team, i had the opportunity to work closely with the turkish authorities. second, it is an honor for me as governor of the bank of israel to be taking part in a conference on the important topic of dollarization, a topic of interest not only to the central bank of turkey, but also to us in the bank of israel, and to many other central banks and economies around the world. i will start by discussing the issue of full dollarization of an economy, that is the replacement of the national currency by a foreign currency, a process that has taken place in recent years in both el salvador and ecuador. i will then go on to discuss what must be the main topic of this conference β partial dollarization, with respect both to the assets and liabilities in the economy, and with respect also to the medium of exchange and the | and behaviours, interlinked with technological advancement ; and deepening european integration. 1 / 4 bis - central bankers'speeches for the bank, the last decade has been one of new policy development and implementation, of changes in our frameworks, of harnessing deeper and more diverse expertise, and of a growth in staff numbers. it has been a period of responding to change in the external environment, with an enduring commitment to our important public service mission. so the leadership challenge for my colleagues and i in the central bank is to act in a way that is balanced and proportionate, effective and fair and delivers the right outcomes. we operate in a market based economy and the central bank wants to see that the people of ireland, europe and the customers served around the world from ireland are served by a well - functioning system. so when the central bank's board, the central bank commission, of which i am a member, set out the central bank's strategy, it did so in a complex environment. we did this with a commitment to build on what has been achieved to strengthen the resilience of the financial system, enhance protections for consumers and investors, and support economic policy development. the decade ahead will see continued rapid change in economies and in the financial system, driven by technology, by changing demographics, the imperative of responding to the climate and biodiversity emergencies, and a more uncertain world. this requires us then to accelerate our own pace of change to deliver on our mandate and to meet the public's expectations of us. and it requires us to do so in a considered and deliberate way. our strategy then has four connected themes, safeguarding, future - focused, open & engaged, and transforming. they represent a renewal and repositioning to ensure that our direction and ambitions are responsive and forward looking. i'll reflect upon them briefly. firstly, safeguarding. the stability of the financial system and the effective regulation of financial services and markets, while ensuring that the best interests of consumers of financial services are protected, is at the core of our mandate and our work. this word, " safeguarding ", sums up the public's expectations of the bank and its staff and so it takes a central role in our strategic execution. secondly, future - focused. a rapidly changing world, economy and financial system requires a shift in our focus, our analysis and our frameworks. a forward looking approach will mean anticipating and responding proactively to changes in the economy and | 0 |
their interconnections with the rest of the financial system remain. locally, financial market depth remains low from a historical perspective, which increases exposure to global developments, especially in the face of abrupt reversals in financial prices ( figure 13 ). in addition to the aforementioned set of risks, there are others that have increased in intensity in recent months. the most notable are the increased geopolitical tensions, both due to the evolution of armed conflicts and the emergence of measures that threaten the process of globalization. this set of events could have negative effects on financial stability. for example, because in the face of greater prospects for public spending on defense, an increase in uncertainty or risk aversion could deteriorate financial conditions. this would be especially complex for emerging economies, where capital outflows could be triggered. in addition, impacts could be observed through the real channel. this could occur if protectionist trade policies are implemented that increase trade restrictions or disruptions in the supply chain and the commodities market. scenarios like these would put pressure on inflation and interest rates at a global level, also with potential consequences for financial stability. stress tests regarding the impact that a severe stress scenario would have on the financial situation of households and businesses, the results of the tests are similar to those of the previous report. in the risk balance of companies, lower debt is combined with greater initial delinquency. in the stressed scenario, the main impact comes from the shock of higher long - term rates, eroding future repayment capacity. in the real estate sector, the weak activity that has been going on for several quarters could continue to weaken the repayment capacity of these firms. although a significant downward adjustment in asset values constitutes a risk factor, prudential regulation would help mitigate its effects on the financial system ( figure 14 ). for individuals, the balance of risks is slightly better than a few months ago, as short - term interest rates have been falling and consumer defaults have declined, offsetting the increase in mortgage arrears. the result of the stress test is similar to that in the previous ief, with the path of interest rates and indexation being the main determinants of future credit risk ( figure 15 ). in the banking system, as the basel iii implementation process has progressed, it has strengthened its capital bases. the tests show that the system still has adequate levels of liquidity, provisions and capital to remain solvent in the face of severe stress scenarios. all this | ##ebtedness of households, companies and governments, is still present. the fact that the higher the level of debt the more costly the solutions and greater the side - effects, poses a problem. we have been seeing this clearly during recent quarters. you may recall that just a year ago the main problem faced by emerging economies was how to deal with inflationary pressures, given the narrowing of domestic capacity gaps and the rise in prices of commodities in international markets. this happened at the same time as the two - speed recovery process i just mentioned was accompanied by an interest rate differential that redirected capital flows towards emerging markets, exerting strong pressures to appreciate our currencies. our concern then was the pace at which we would lower impulse to our economies, taking care that it did not intensify pressures on the exchange rate and cause new imbalances. only six months later our major concern had changed dramatically. the intensification of financial tensions in the developed economies drastically changed our perception of the future of the global economy. financial markets drastically picked up this change of mood bis central bankers β speeches and very quickly we saw, among other developments, drops in stock prices, hikes in risk premiums, and reductions in the prices of commodities. the tough discussions held in the united states on fiscal issues, together with the weakness of its economic data towards mid - year, fueled these negative perceptions. overall, emerging economies dramatically changed their perceptions and communication as to the future of monetary policy. between august and october, probably on the peak moments of the last financial turbulences in the developed world, many central banks stopped the process of interest rate raises, and many also changed the direction of changes in their monetary policies to more expansive ones. in chile, after raising mpr by 200 basis points during the first half of 2011 and stating that there were still some increases to be made, in august we moved towards a neutral stance. in october, considering the envisaged consequences of the deterioration of the international scenario, we announced that we would increase monetary impulse if we foresaw that this situation could have a negative impact on our economy. thus, in january of this year we lowered the mpr by 25 basis points. now we have announced that new monetary policy actions will depend both on our assessment of the effects of the international scenario on the domestic economy as well as on the evolution of the domestic economy itself. allow me to present you our vision of what is going on in the world and how | 0.5 |
jorgovanka tabakovic : overview of recent monetary and macroeconomic trends in serbia introductory speech by dr jorgovanka tabakovic, governor of the national bank of serbia, at the presentation of the inflation report β may 2016, belgrade, 24 may 2016. * * * ladies and gentlemen, welcome to the presentation of the may inflation report. as always, we will give you an overview of recent monetary and macroeconomic trends and our expectations for the period ahead. let me start and conclude my speech by discussing the same topical news! we have revised our gdp growth projection for 2016 from 1. 8 % upwards. we now expect that the serbian economy will end this year with a growth between 2. 3 % and 2. 5 %. allow me to underline that, given the current movements, it is far more likely that the year - end gdp growth rate will be at the upper bound of the projection range, i. e. at 2. 5 %. and it is not that we are being overly optimistic ; this projection is based on models, mathematics and indicators. if we compare the latest macroeconomic data with those presented in the february report, it is evident that the economic recovery of the republic of serbia has continued, and more importantly, that the growth is based on long - term sustainable foundations. and that is why the macroeconomic outlook for the period ahead has been revised upwards relative to the previous report. in the first three months of the year, fiscal deficit contracted by a quarter from the same period last year and equalled 1. 7 % of the estimated gdp, as compared to 2. 4 % in the same period a year earlier. the current account deficit of the balance of payments has more than halved compared to the corresponding period in 2015 β it equals 3. 3 % of the estimated gdp and remains fully covered by foreign direct investments. our fiscal outlook has improved in response to a sustainable rise in tax revenue, while the narrowing of the current account deficit has been driven by more favourable trends in external trade. last time we met at the presentation of the february report, we expressed no doubts as to the continuation of growth in exports and economic activity in the coming years. indeed, the growth has continued up, and has done so at an even faster pace than expected. export growth, measured in euro terms, was exceptionally strong β it came at 13. 4 % yΠ΅Π°r - on - year in the first quarter, and is without any doubt | as of the next year financial institutions will have to disclose earnings of all members of their management and executive boards in their annual reports, b ) when the nbs provides financial support to such institutions, this will not only result in cutting wages of members of management boards ( german example ), but will also set the scene for their dismissal, and c ) we have strengthened significantly the role of internal audit in all financial institutions within the remit of the nbs. all of the above topics, such as transparency, responsible operations, provision of information and education, can be grouped under one common heading β socially responsible behaviour β and will be of key importance for the recovery of financial markets both in the west and in serbia. banks and financial institutions will have to take full responsibility for their products and services because i feel quite certain that the generous financial packages now offered by governments and central banks will undeniably cease in the near future. and they ought to cease. otherwise, it will be clear that we have learnt nothing from the past few weeks and that we lack social responsibility. | 0.5 |
current account transactions, were settled in rmb. the use of rmb for direct investments has also seen an encouraging start, amounting to some rmb 90 billion yuan for inward direct investments and rmb 20 billion yuan for outward direct investments in 2011. as for portfolio investments, some 40 offshore institutions have been allowed to invest in the interbank bond market, within varying quotas. meanwhile, some rmb 20 billion yuan have been invested in the stock market through the rmb qualified foreign institutional investor ( qfii ) scheme. as of course you know, over this period of liberalisation, a rapidly growing offshore rmb market has also emerged, centred in hong kong. the rising level of rmb trade flows to and from the mainland has produced an expanding pool of rmb liquidity. and the growing liquidity in the offshore rmb market has led to the development of rmb financing and forex markets, with an estimated daily turnover of around 2 to 4 billion us dollars for spot and forward transactions. i will come back to the development of hong kong as the offshore rmb business centre later. so, we are seeing a trend that rmb is increasingly used in mainland china β s external trade, followed by direct investments and portfolio investments. the offshore rmb market is growing with increasing breath and depth, serving the useful function of the intermediation of rmb funds. and these developments are bringing tremendous business opportunities, which corporations and financial institutions cannot ignore. bis central bankers β speeches what next? now, it β s worth emphasising that this has all taken place only since 2009. so, they are very much just first steps and we should expect further developments in the future. if we look ahead a little, what might we see? well, given what we β ve seen in terms of economic growth and liberalisation of policy, it would not be at all surprising to see the proportion of trade being conducted in rmb continue to rise in years ahead. longer term, many ask about the possibility of the rmb playing a more equal role alongside the dollar and the euro. on this, i would point out that the more widespread use of rmb has been a progressive and market - driven process, and i expect this to continue. i believe that, whilst liberalisation is important, the rmb becoming an international currency to a large extent is not a matter of policy alone β it is also subject to market forces. in other words, it would come from non - | if they outweigh the positive effects of any financial regulations. when designing global financial regulation and supervision, the following four - step cycle must be repeated : first, designing systems from a forward - looking perspective ; second, steady implementation ; third, evaluation of the positive effects and negative side effects, taking into account new technologies and changes in financial environment ; and fourth, addressing any problems when necessary, such as when the negative side effects exceed the positive effects. ten years have passed since the review of global financial regulations and supervision began in earnest after the global financial crisis. in what follows, i will first assess the regulatory development work done during this period, particularly at the financial stability board ( fsb ) and the basel committee. then, among the work currently underway, i would like to highlight the importance of work on the evaluation of financial regulations. finally, i will mention climate - related risk as one of the challenges for future financial stability. 1 / 4 bis central bankers'speeches ii. past achievements : evaluation of discussions over the last 10 years after the global financial crisis, work on reforming financial regulations started with a review of past crises, including the causes of each crisis. it revealed that before each financial crisis, there had always been a build - up of debt at financial institutions and in the non - financial sectors β socalled leverage build - up. financial regulations were therefore strengthened in a forward - looking manner. for example, attention was focused on the credit - to - gdp ratio, which has implications as a leading indicator of potential problems. there has been much valuable progress in international financial regulation and supervision over the past 10 years, including basel iii. for example, an expansion of the basel iii framework was made in each of its three pillars : the first pillar being minimum requirement ; the second pillar, supervisory review process ; and the third pillar, market discipline through disclosure. in terms of content, policy tools such as liquidity regulations were expanded, in addition to the previous riskbased capital regulation. also important was the introduction of a macroprudential perspective at the international level. specifically, first, a countercyclical capital buffer ( ccyb ) was introduced in response to the issue of procyclicality over time ; and second, the structural issue of the β too - bigto - fail β problem has been addressed by the introduction of a new framework for identifying global systemically important banks ( g - sibs ) and a total loss - absorbing capacity ( t | 0 |
consumption β, macroeconomic review, vol. xx ( 1 ), pp. 61 - 65. [ 8 ] department of statistics ( 2020 ), β rebasing of the consumer price index for general households β, statistics newsletter singapore, issue 1. Β© 2021, government of singapore. | that it makes the aim of monetary policy much clearer, ie the achievement of an average annual increase of 3 to 6 % for cpix inflation in 2002. the government chose to set the 3 to 6 % target level. the setting of monetary policy instrument values ( like the level of the β repo rate β ) is entirely up to the reserve bank. therefore the inflation - targeting variable chosen provides for the instrument independence of the reserve bank, but not goal independence. by means of the mission statement and an explanatory memorandum about the adoption of an inflation - targeting monetary policy framework, the public has been informed about the objectives of monetary policy. on the basis of this information the public can therefore evaluate the actions of the reserve bank in attaining these objectives. 6. transparency of monetary policy the south african reserve bank also fulfils the second condition for independence, namely transparency. government and the public are provided with a stream of information on the monetary policy stance. some of my staff and i regularly appear before the parliamentary portfolio committee on finance. we also issue comprehensive statements following each meeting of the bank β s monetary policy committee. the reserve bank β s quarterly bulletin, annual economic report and governor β s address at the annual meeting of shareholders provide comprehensive analyses of macroeconomic events. a six - monthly monetary policy review will soon be introduced, describing in more detail the decisions taken by the reserve bank. policy is also explained by the governors of the bank and comments on policy are heard at the monetary policy forum meetings. these meetings are held twice a year in the main centres - at least one in each province - and involve organised business, labour, politicians, academics and the media. 7. institutional independence in south africa finally, the present institutional framework in south africa in the form of the south african reserve bank act, act no 90 of 1989, allows the reserve bank a great degree of autonomy in its operations. the reserve bank β s functional independence in monetary and related policies is clearly stated in sections 10 and 35 of the south african reserve bank act. section 35 empowers the board of the bank to make rules β for the good government of the bank and the conduct of its business β. in section 10 the powers and duties of the central bank are spelled out in great detail. most of the functions described in this section are the normal functions that one would expect a central bank to perform. section 10 ( 2 ) also clearly states that β the rates at which the bank will discount or redis | 0 |
rules are simply arbitraged away, for example using credit risk transfers to insurance subsidiaries, or asset securitisation sales to third party insurers, or credit insurance and derivatives sold by insurers. in the long run, both our financial stability and financial efficiency objectives could be undermined by this : financial stability if we find that these credit risk transfers are not robust, or that they result in potentially systemic strains in the insurance sector ; and financial efficiency through the extra costs of arbitrage processes. i emphasise that this is not a call for harmonisation of regulation or a blind assertion of the need for a completely level playing field, but simply a call to re - examine the rationale for differences in regulation. we may find that some differences are justified. for example, if we conclude that failures of insurance companies impose fewer systemic costs than bank failures, we might certainly choose to set our minimum insolvency tolerance at a different level. much of the detail of risk measurement and regulation must necessarily differ, for example because of the very different time horizons involved in life insurance compared with either banking or securities business or non - life insurance. but there is a body of common risks faced by banks and insurers on both their assets and liabilities β namely credit, market, and operational risks β as well as a body of distinct risks ( such as mortality risk for life insurance companies and on the banking side liquidity risk ) ; and to my mind this means that any very fundamental divergences in the basic frameworks do need careful consideration : for example, whether the trend toward risk based measures in banking needs to be mirrored in the non - life insurance regulation in europe. this is clearly not a small task but i would welcome it being scheduled for the future on the international agenda. the establishment in recent years of regulators like the fsa with responsibility in a single body for bank and insurance supervision will help to achieve progress in this area ; indeed the convergence of risks being taken by financial institutions of different origins is a central plank underlying the need, certainly in the uk, for an organisation like the fsa. conclusion i feel aware that throughout this address i seem to have repeatedly stressed the importance of advancing our analysis of systemic risk and at the same time the huge complexities involved in this task. having highlighted the difficulties, it is now conveniently time to hand over the podium to those who may have some of the answers! i'd like to end by referring back | measure and fluctuating factors such as correlations in risk profiles, and the mood and behaviour of the market once fragility at one institution becomes apparent. ( c ) consolidation the changing financial landscape complicates the task, and this brings me to the third point i wanted to highlight, namely consolidation. consolidation of financial institutions is a trend that is relevant to several different facets of systemic risk. first, does consolidation make banks more or less likely to fail? diversification is a solid protection against failure, but not all mergers and acquisitions are motivated by diversification β they may by contrast be designed to gain greater market share in an existing business and thereby do nothing to increase diversification. moreover, there is again the distinction between individual banks and the system β the system can be diversified by having lots of different specialised banks. this would not in all circumstances be a less robust system than one where individual banks have reasonably diversified portfolios which are all as a result vulnerable to common shocks, or one where a smaller number of large banks are all directly interconnected with each other. and finally, even if we were to conclude that consolidation makes banks safer in the long run, the short run effects could be very different as management tries to resolve inconsistencies in systems or clashes in cultures. secondly, there is the issue that consolidation is perhaps likely to make bank failure more damaging in its impact, although again this can only be judged case by case. and thirdly, since larger banks tend to be organisationally more complex, there is the question that resolving large bank failures can turn out to be an infinitely more complex task. i would stress that all this does not mean we think consolidation extends'too big to fail'status ; but it does mean that central banks and other authorities have to ensure that they are monitoring how consolidation is affecting risk and financial interlinkages. they should also think ahead and examine matters such as their own operational expertise, information flows with other bodies, legal processes and other procedures, in the event of a complex wind - down. ( d ) consistency the final point i want to highlight is the question of consistency of regulation between different types of financial intermediary. it makes no sense to introduce a rolls royce system of capital adequacy regulation for banks if we have not considered the ramifications for the financial system as a whole, in the light in particular of the very different capital frameworks which apply to insurance companies. we may find that our new | 1 |
, with computers and electronics, petroleum and coal products, and transportation equipment making up the largest share. gains for mexico have been seen in terms of competition and pressure for efficiency on domestic production lines, as well as greater variety and lower prices for consumers. 2 for an examination of the benefits of nafta for texas, see aguilar barajas, i. et al. ( 2014 ). β trade flows between the united states and mexico : nafta and the border region, β journal of urban resources, 10 / 2014. for details on texas exports to mexico, see wilson, c. e. ( 2011 ). working together : economic ties between the united states and mexico, woodrow wilson international center for scholars, p. 45. bis central bankers β speeches the role of texas in u. s. and mexican trade supersedes texan borders, as it is the state with the largest terrestrial ports of entry between the two countries. this is especially important given the fact that roughly four - fifths of u. s. trade with mexico is by land. 3 direct investment from texas has greatly helped mexico, which is on the receiving end of knowhow and advanced production technology. many mexican companies, for their part, do business in texas. furthermore, a great many trade - related jobs have emerged on both sides of the border. in fact, the lone - star state is that with the greatest number of exports - related jobs in the united states. 4 additionally, texas is the second most important state in terms of labor migration from mexico. for a long time, as we all know, our migrants have found opportunities to contribute to this vibrant economy with great dedication and efficiency. remittances, in turn, have allowed families in mexico to increase schooling and build better housing. during the last few years, net mexican migration to the united states has decreased significantly, to levels that recently became negative. this trend seems to reflect the slow rebound since 2009 of u. s. economic sectors such as construction, which have traditionally absorbed mexican labor. lower fertility rates in mexico since the 1980s might also be a part of the explanation. 5 finally, texas provides a rich supply of schools and universities such as your own, which many mexicans have chosen for all levels of education. mexican economic developments and outlook like other emerging economies during the last couple of years, mexico has been hit by turbulence in international financial markets. two sources of fear dominate on the world stage. the first is | of an escalating migrant crisis, the un declaration adopted two weeks ago in new york which calls for a more equitable sharing of the burden for hosting the world β s migrants and refugees becomes even more relevant. take, for instance, the recent eu deal with turkey, which has promised to accept migrants back to its territory in exchange for financial aid. that was based on a premise that turkey was a safe country for refugees. lots of international analysts cast doubts on this after the latest bout of political instability and the heavy crack - down on suspected dissidents in the military, the judiciary and even higher - education in our neighbouring country. point number 5 : the british reform benchmark to be followed by south - eastern europe despite brexit, the uk could be used as a reform benchmark by south - eastern european states to be emulated in a number of ways. according to the oecd, the uk has the least regulated labour market and is second to the netherlands as the least regulated product market in europe. the uk also has low taxation ( a corporate tax rate of 20 % and there is speculation that this will go down to 15 % as an incentive to foreign firms to stay in britain after brexit ). south european countries would stand to gain a lot by starting to resemble britain in a number of areas, including the attraction of fdi, public sector accounting, transparency, rule of law and strong institutions including an efficient public administration plus credible government financial management. this should be the agenda for the whole of south europe in the years to come, with or without adjustment programmes, namely using the uk as a benchmark, except one thing : brexit! 2. implications of brexit for central banks1 a. less (? ) monetary policy divergence the brexit vote triggered a broad - based reassessment of the future path of monetary policy globally. with improving headline growth still perceived as fragile in most advanced economies, and inflation still persistently low, the distinct response from major central banks to the brexit 3 / 5 bis central bankers'speeches uncertainty can be described as dovish : policy rates would stay β low for longer β. the bank of england cut the policy rate by 25 basis points ( it is now 0. 25 % ), and expanded the government bond purchase scheme by Β£60 billion, bringing the total to Β£435 billion. it also established a new corporate bond purchase program of Β£10 billion, and launched a new | 0 |
yi gang : green finance and climate policy opening remarks by mr yi gang, governor of the people's bank of china, at a high - level seminar on " green finance and climate policy ", co - hosted by the people's bank of china and the international monetary fund, 15 april 2021. * * * madame managing director, ladies and gentleman, good morning and good evening. it gives me great pleasure to co - host this high - level seminar on β green finance and climate policy β with the imf. i wish to begin by extending a warm welcome to all the participants on behalf of the pbc. the international community is forming a broad consensus on tackling climate change. china has announced the goal of peaking carbon emissions by 2030 and achieving carbon neutrality by 2060, also known as the 30 / 60 goal. this requires a comprehensive economic transition, and green finance can be an accelerator in this process. the pbc attaches great importance to green finance. in 2016, we led the effort in drafting the guidance on building a green financial system and developed a specific timetable and a roadmap for this purpose. by making sure that all the policies are implemented, we have put in place an initial policy framework for green finance. as a result, china β s green finance market has since enjoyed fast development. by the end of 2020, green loans and green bonds in china totalled 1. 8 trillion us dollars and 125 billion us dollars respectively, ranking as the world β s largest and second largest. more than 40 carbon neutral bonds have been issued, with a total volume of over 10 billion us dollars. the 30 / 60 goal has set a higher bar for the financial sector. to meet this goal, we need to overcome a host of challenges. first, on the society front, public awareness of emission reduction has to be raised. second, on the market front, the carbon market has to play a greater role in price discovery. only when carbon emission is priced in, can we achieve effective resources allocation. china β s carbon market is still in its initial stage, and its financial nature needs to be further clarified. third, on the institutional front, climate information disclosure needs to be improved. the disclosure should be expanded to cover listed companies, financial institutions and other market players, and move from a voluntary to a compulsory basis. fourth, on the risk management front, there needs to be greater attention to the fossil fuelrelated transition risks. fossil fuels, mainly coal | the first is the size of the base. china's total gdp has exceeded rmb120 trillion, and the growth of 5 percent is not a low rate against the backdrop of such a large base. the second is to 1 / 6 bis - central bankers'speeches strike a balance between economic growth and its quality and sustainability. a proper economic growth is necessary, but it is more important to achieve high - quality and sustainable development. in brief, transforming the mode of economic growth is more significant than pursuing a high growth rate. second, the pboc has continuously implemented the sound monetary policy to support the stable growth of the real economy. since the beginning of this year, we have strengthened the counter - cyclical adjustments, and used a mix of monetary policy instruments in terms of aggregates, structure, quantity and prices, providing vigorous and effective support for the development of the real economy. in march and september, the required reserve ratio ( rrr ) was lowered twice, injecting medium and long - term ( mlt ) funds exceeding rmb1 trillion. in june and august, the policy rate was cut twice, bringing down the market interest rates such as the loan prime rate ( lpr ) on a continuous basis. in august, we have launched the " policy package " for real estate finance, including lowering the ratio of down payment and the floor on second - home mortgage rates, and improving the standards for identifying whether a property is a " second home ". in addition, we have guided commercial banks to adjust interest rates on existing home loans, helping households save about rmb170 billion every year and benefiting about 50 million households or 150 million people. we have increased the quota for central bank lending to support rural development and micro and small businesses ( msbs ) as well as central bank discounts twice. we have extended the applicable term of six structural monetary policy instruments, including the inclusive msb loan facilities. at present, money and credit aggregates are growing at a proper pace, and the credit structure is continuously improving. the interest rate on corporate loans has maintained at a low level, providing strong and effective support for economic recovery and development. going forward, we will strengthen both inter - temporal and counter - cyclical adjustments for the monetary policies, and strike a balance between short - term and long - term goals, stable growth and risk prevention, as well as internal and external equilibria, thus creating a sound monetary and financial environment for stabili | 0.5 |
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