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increased market uncertainty in the euro area and worldwide continue to present challenges to accurate loan - loss forecasting. furthermore, the continuing dislocation β to date β in the transmission of monetary policy throughout the euro area presents banks in stressed countries like ireland with profitability challenges, especially in respect of tracker mortgages ( whose running yield is tied to the ecb policy rate ). since march 2011, economic conditions ( both in ireland and in ireland β s main international trading partners ) have generally been worse than the base case employed in pcar2011, but rather better than the stress case. of course in the coming years the implementation of basel 3 will also lead to higher capital ratios. the aim must be to have the banks return to sufficient profitability in a stable overall the deleveraging losses are the highest component. partly this reflects the unavoidable discount that would be incurred by a seller of opaque loan contracts ( even if β firesale β conditions do not prevail ), partly reflecting the informational disadvantage of likely purchasers. note, however, that this figure should be interpreted with caution inasmuch as prospective hold - to - maturity losses on the assets to be deleveraged were not separately evaluated. as such the loss shown on deleverage overstates the cost actually incurred by having to dispose of assets rather than holding to maturity. bis central bankers β speeches environment so that additional needed capital in future years can come from investors other than the state. instruments used just as with the previous capital increases, the going concern banks worked to reach the objectives as far as they could by liability management exercises and the sale of non - core assets. in the case of bank of ireland, some new cash was raised from issuance of equity. when a government recapitalises a bank, it generally provides an asset to the bank in return for the acquisition of a capital claim on the bank. as things have worked out, to a first approximation, the irish government β s practice has been to inject cash into going concern banks ( aib, bank of ireland, ilp ), and non - marketable promissory notes into the entities now being wound down ( ibrc, formed from the former anglo and inbs ). the cash was sourced either from the national pension reserve fund, a sovereign wealth fund established by the irish government in the late 1990s at a time of fiscal strength, or directly from the exchequer. the promissory notes represented a besp | need to create a culture that values difference. we need to think about people starting out in work, going for promotion, returning from maternity leave, changing career paths or future leaders. but of course, let β s never forget that behind all the numbers, the indexes, the data, are individual women and girls each with their own story. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ [ 1 ] i would like to thank caroline mehigan and micheal o β keeffe for their assistance in preparing my remarks. [ 2 ] see owen, a. l. and temesvary, j. 2018, β the performance effects of gender diversity on bank boards β, journal of banking and finance, vol 90, issue c, pp. 50 - 63. [ 3 ] see hoogendoorn, s., oosterbeek, h. and van praag, m. 2013, β the impact of gender diversity on the performance of business teams : evidence from a field experiment β. management science, 59, pp. 1514 β 1528. [ 4 ] see organization for economic cooperation and development ( 2012 ), β closing the gender gap : act now. β oecd, paris. also, see daily, c. m., dalton, d. r. and cannella, a. a. ( 2003 ) β corporate governance : decades of dialogue and data. β academy of management review, 28 ( 3 ), pp. 371 - 382. also, see robinson, g. and dechant, k. ( 1997 ) β building a business case for diversity. β academy of management executive, 11, pp. 164 β 177. [ 5 ] see mckinsey & company ( 2009 ) β women matter 3 : women leaders, a competitive edge in and after the crisis, β for results of a global survey of almost 800 business leaders conducted in september 2009. [ 6 ] see giuliano, l., levine, d. i, and leonard, j. ( 2006 ). β do race, age, and gender differences affect manager - employee relations? an analysis of quits, dismissals, and promotions at a large retail firm. β uc berkeley : institute for research on labor and employment. [ 7 ] see may, a m, d kucera and m g mcgarvey ( 2018 ), | 0.5 |
##r : these new bank notes are a 21st century achievement in which all canadians can take pride and place their confidence. we have heard how these new bank notes will explore the frontiers of canadian history and innovation, all while being at the frontier of bank note security. the product of leading - edge technology, these notes will be among the most secure in the world. these polymer bills will last at least two - and - a half times longer than the current cotton - paper bills now in circulation, thereby costing less to produce and leaving a smaller ecological footprint : in every way, this is better money. bis central bankers β speeches we will be phasing in these new bills, working closely with financial institutions and manufacturers of bank note equipment to ensure a smooth transition from cotton - paper to polymer. there are many important partners in this process. we will be working with law enforcement agencies, as well as retailers. today, we unveil the new $ 100 and $ 50 notes so that canadians can start to learn about the new features and appearances of each denomination. starting in november 2011, the $ 100 bill will be available and the $ 50 notes will follow in march 2012. the $ 20, $ 10, and $ 5 notes will be unveiled and issued by the end of 2013. so after telling you about the new money, the time has come to show it to you. bis central bankers β speeches | banks of selling u. s. - dollar assets is obvious. doing so would reduce the funding currency mismatch that has plagued them for the past several years. non - european creditors are seeing opportunities in structured products, trade and project finance, as well as conventional corporate lending facilities. this will displace new credit creation in the united states. one way european authorities could reduce these spillovers is to require european banks to meet at least part of their requirements by raising private capital, including high - trigger contingent capital. the latter would limit the dilution of existing shareholders, while providing a loss absorbing cushion. the current situation is ideally suited for this instrument since the capital is being raised for an extreme tail event ( losses on highly rated sovereign debt ) β the public nature of which would involve no risk of regulatory forbearance. the second line of defence involves co - operative measures to provide foreign currency liquidity. in recent years, central banks, led by the u. s. federal reserve, have instituted swap lines to redistribute u. s. - dollar official liquidity in order to address currency mismatches in the financial sector. 6 in their first round in 2008 β 09, u. s. - dollar swaps proved very effective in containing currency basis swap rates and ois funding spreads, before ultimately helping to end the period of liquidity destruction and stabilising global financial markets. since the intensification of the european crisis this past summer, the swap lines have been supplemented by the reintroduction of unlimited 3 - month u. s. - dollar liquidity operations at the ecb, the bank of japan, the bank of england and the swiss national bank. 7 given the close relationship between global and domestic liquidity, central banks also stand ready to activate domestic facilities, if required. 8 country - specific or regional liquidity shocks may also be addressed through imf facilities. the imf is already playing an important role in the peripheral country programs, which could be expanded through further conventional, conditional lending if the situation required. these facilities have been implemented flexibly with country coverage and the liquidity amounts adjusted on a timely basis, depending on the prevailing market conditions. importantly, they have also been designed to limit moral hazard, with access at a penalty rate to ensure that market participants return to private sources of liquidity as market conditions improve. these banks will offer unlimited u. s. - dollar liquidity at a fixed rate of ois plus | 0.5 |
. 7 leading change : why transformation efforts fail, john p. kotter, harvard business review, january 2007 and how to beat the transformation odds, mckinsey and company, survey, april 2015. 8 joint statement on innovative efforts to combat money laundering and terrorist financing, board of governors of the federal reserve system, sr 18 β 10, december 3, 2018. 4 / 4 bis central bankers'speeches | and households β net worth, which fell substantially as real estate and stock prices dipped, remains well below its previous peak compared with disposable income. so, households have been saving more. the personal saving rate, which rose to 5. 5 percent by the end of 2009 from a recent low of 1. 2 percent in the third quarter of 2005, seems headed even higher in the third quarter. households are β deleveraging β ; they are paying down their debts. of course, lenders have also reinforced this tendency as they have tightened underwriting standards for consumer credit, relative to their pre - recession standards. have households completed their deleveraging, so they will soon spend more? although we believe that substantial progress has been made, it is hard to tell how much further this process has to run. for example, the share of household after - tax income that families owe for servicing debts and paying for housing ( including property taxes, homeowners insurance and rents ) has declined sharply over the past two years and is now back to levels last seen in the late 1990s. households have cut the total amount of debt they owe. they are also refinancing outstanding debt to take advantage of the lowest mortgage interest rates since the mid 1950s. we expect the increased rate of mortgage refinancing now in place to continue over the near term. this represents another means by which households can free up income for other uses. now, let β s consider the slow housing recovery. housing market activity β both new construction and sales β remains depressed. on the construction side, total housing starts are running at just 600, 000 units per year ( seasonally - adjusted ) in recent months. this is up from 530, 000 units at the trough in the first quarter of 2009 but it is still extremely low by the standards of the last 50 years. in fact, the rate of new construction is so low that there is barely any net growth in the u. s. housing stock these days. one reason why so little housing is being built is that many existing homes stand vacant. we estimate that there are roughly 3 million vacant housing units more than usual. and more vacancies are added daily as the foreclosure process moves homes from families to mortgage lenders. this stock of vacant homes will shrink when fewer are foreclosed upon and more of these homes are sold or rented out. on the sales side, even though low mortgage interest rates and falling home prices have together boosted | 0.5 |
ineligible for credit, appears to have originated in 1935, when the federal home loan bank board asked the home owners'loan corporation to create " residential security maps " for 239 cities that would indicate the level of security for real estate investments in each surveyed city. 1 the resulting maps designated four categories of lending and investment risk, each with a letter and color designation. type " d " areas, those considered to be the riskiest for lending and which included many neighborhoods with predominantly african - american populations, were color - coded red on the maps - - hence the term " redlining " ( federal home loan bank board, 1937 ). private lenders reportedly constructed similar maps that were used to determine credit availability and terms. the 1961 report on housing by the u. s. commission on civil rights reported practices that included requiring high down payments and rapid amortization schedules for african - american borrowers as well as blanket refusals to lend in particular areas. the home owners'loan corporation ( holc ) was a new deal agency established in 1933 to help stabilize real estate that had depreciated during the depression and to refinance mortgage debt of economically distressed homeowners. it granted fifteen - year mortgage loans at 5 percent interest to some 1 million homeowners between august 1933 and june 1936, the period it was authorized to originate new loans ( hiller, 2003 ). besides discrimination a variety of economic and institutional factors help to explain the relative unavailability of credit in lower - income neighborhoods. 2 thirty years ago, the secondary market for mortgages was rudimentary at best, which limited local loan originators'access to capital and reduced their ability to diversify credit risks geographically. 3 informational problems also inhibited lending in some urban areas. for example, relative to higher - income neighborhoods, lower - income areas tend to have fewer home sales and more - diverse housing structures, making accurate appraisal more difficult 4. similarly, credit evaluations tend to be more costly for lower - income borrowers, who are relatively more likely to have short or irregular credit histories. 5 informational barriers to lending were heightened by the absence of uniform national depositories of information on the credit experiences of consumers ; at the time, the credit - reporting system consisted of hundreds of local credit bureaus, each of which maintained limited information on local residents. 6 the high costs of gathering information, together with the difficulty of keeping information proprietary, may have created a " first - mover | november 12, 2020 bank of japan economic activity, prices, and monetary policy in japan speech at a meeting with local leaders in nagano ( via webcast ) adachi seiji member of the policy board ( english translation based on the japanese original ) i. impact of the novel coronavirus ( covid - 19 ) and economic developments at home and abroad a. developments regarding covid - 19 i would like to begin my speech by talking about developments regarding covid - 19. the outbreak of covid - 19 was first identified in china in january 2020, spreading to europe from late february. the number of confirmed cases in europe and the united states peaked out temporarily in around april, but thereafter the disease spread rapidly to emerging economies other than china. developments regarding covid - 19 continue to warrant attention as a resurgence in confirmed cases has been observed recently in the united states and europe ( chart 1 ). meanwhile, in japan, the number of confirmed cases surged from late march, and the government declared a state of emergency in april. although the state of emergency was lifted in may, the number of cases started to increase again from around july and then turned to a decline ; thereafter, the number has been fluctuating ( chart 1 ). however, the pace of increase in the number of cases in japan has been moderate compared with other major economies, with severe cases and confirmed deaths remaining contained. b. overseas economies with a view to suppressing the spread of covid - 19, many countries have implemented measures to constrain economic activity by imposing restrictions on going outside and on people's movement. it is worth remembering that it is as a result of these measures that the real gdp growth rate of these countries registered a substantial decline for the first two quarters of 2020, particularly the april - june quarter ( chart 2 ). however, as economic activity resumed gradually thereafter, led mainly by advanced economies, the global economy seems to have bottomed out and have started to pick up generally since around summer. according to data from the purchasing managers'index ( pmi ), which show business sentiment, the indices have been above 50 - - the borderline between improvement and deterioration in business conditions as perceived by firms ( chart 3 ). in addition, the world economic outlook released in october by the international monetary fund ( imf ) shows that growth projections for 2020 have been revised upward for many countries and regions ( chart 4 ). c. japan's economy turning to japan, the economy seems | 0 |
effectively upgrade and appropriately expand china's economic output. second, we need to strike the right balance between internal and external concerns in achieving economic growth. in recent years, the chinese economy has seen effective improvements in its external equilibrium. china's current account surplus - to - gdp ratio, which fell from around 10 percent in 2007 to approximately 2 percent in 2011, has stayed within an internationally accepted range of 1 - 2 percent in recent years. currently, as international geopolitical tensions have led to economic deglobalization, international trade politicalization and instrumentalization, the world's sustainable economic growth and welfare growth are facing obstacles. upholding free trade and fair competition, we will remain committed to expanding two - way opening - up, and we will make better use of both domestic and international markets as well as their resources to further enhance the international competitiveness of chinese enterprises and to accelerate the establishment of a new development paradigm. third, we need to strike the right balance between investment and consumption. during past economic cycles in the history, we have confronted economic downward pressures mainly by boosting investment and maintaining supply - side productive capacity, which has played a significant and effective role. in pursuing high - quality development, we need to follow the direction of economic restructuring to adjust investments and channel more of them to areas such as sci - tech innovation and basic livelihoods. we will continue to apply a people - centered development philosophy, focus on raising household income, optimize the structure of fiscal expenditures, enhance the social security system, and promote consumption growth, thus giving rise to a virtuous cycle in which " government encourages consumption, consumption activates markets, markets lead businesses, and businesses expand investment ". to achieve the right balance in the economy, we need to deal with the following priorities. first, macro economic policies should pivot from over - emphasis on investment to both consumption and investment, with more focus on consumption. second, the relationship between government and market should be handled in a more appropriate manner, which calls for a scientific management and balance of the boundaries between government and market, and an enhanced 4 / 6 bis - central bankers'speeches pertinence as well as targetedness of policies regarding market concerns. third, reform and opening - up will be further deepened to foster a favorable economic environment based on the rule of law and to create a more equitable and vibrant market environment. iii. the positive role the pboc plays in serving high - quality development of the | xiang junbo : combatting money laundering and terrorist financing in china speech by mr xiang junbo, deputy governor of the people β s bank of china, at the high level seminar on aml and combatting terrorist financing, beijing, 22 september 2005. * * * money laundering is always accompanied by criminal activities generating economic gains and to our society, the damage is obvious. money laundering not only destroys the fairness and equality principle of market economy, disturbs orderly competition, damages reputations and normal operations of financial institutions, threatens the soundness and safety of financial systems, but also becomes the source of corruption and erodes the social fundamental institutions. to be more troublesome, money laundering and terrorist financing have interlaced with each other and threatened global security. a series of terrorist attacks in the last four years have already rung the alarm bell. money laundering and terrorist financing have already threatened and challenged seriously the human society, sustainable development in the 21st century. currently, international community has made considerable progress in combating money laundering and terrorist financing. for example, the united nation ( un ) has issued several legal documents in this regard, including the united nation convention against illicit traffic in narcotic drugs and psychotropic substances, the international convention for the suppression of the financing of terrorism, the united nation convention against transnational organized crime and the united nation convention against corruption etc. on july 29, 2005, the un security council issued the un security council resolution 1617, which β urges all member countries to implement the forty recommendations on money laundering and 9 special recommendations on terrorist financing of the financial action task force on money laundering ( fatf ) β. fatf and its regional organizations have been set up successively. many countries have already issued and implemented anti - money laundering and terrorist financing laws in succession. but, we have to note that, money laundering, terrorist financing and those serious criminal activities supported by them, such as drug trafficking, smuggling, population trafficking and corruption, and terrorist attacks are still rampant and threaten the safety, stability and prosperity of human society. according to the un report of the secretarygeneral β s high - level panel on threats, challenges and change, lack of international cooperation is one of the fundamental drawbacks that international communities cannot respond effectively to money laundering and terrorist financing. in recent years, china has made great efforts in preventing, cracking down and punishing of money laundering and terrorist financing activities and therefore achieved obvious progress. now, i would like to brief you the situation | 0.5 |
still sounded like an overly visionary project. with the most important wave of enlargement about to become reality, i believe that this is the opportune time to revisit. consequently, the topic of this year β s conference β the economic potential of a larger europe - keys to success β is meant to cover the most important topics of previous east - west conferences. today and tomorrow we will be discussing issues, such as human capital formation, financial stability, the specification of a suitable policy mix or structural reforms - topics that are key to a successful transition process and therefore also to the provision of a prosperous growth environment within a larger europe. on the eve of the upcoming eu enlargement, we will take a look at these increasingly relevant topics from two perspectives. on the one hand, we will investigate the importance of the above - mentioned factors for the success of the past integration process within the european union as well as for the ongoing transition process in the current group of acceding countries. on the other hand, we will also take a forward - oriented approach and address the challenges ahead. here, we will, however, not only focus on the south - eastern european countries that are already on the accession track, but also debate the role the european union and the eurosystem can play in fostering the cooperation with and in promoting reforms in the countries as summarized under the β wider europe β strategy of the european commission - russia, the ukraine, moldavia, belarus and the southern mediterranean region. today β s morning is dedicated completely to celebrating the opening of the new joint vienna institute and will revolve around the people and institutions that have played a major role in the success story of the jvi. you will be hearing about the importance of capacity building, human capital formation and central bank cooperation for the effectiveness of development programs as initiated by international institutions. even though all of these programs each have a special focus, they share the common characteristic that they can only be successful if training courses like the ones offered by the jvi provide the essential sound human capital base. deputy minister pyatnytskiy from the ukraine, a prominent graduate of a jvi training course will open the following panel discussion with an introductory statement, giving us a first - hand account of his jvi experience. during the panel discussion distinguished representatives of international training institutes will get the floor to relate their experience with technical cooperation programs : the bis financial stability institute, the world bank institute, the imf institute and the o | . the euro area economy is held back not only by current geopolitical tensions, but also by frictions in labor and product markets. structural reforms in these areas are of utmost importance to increase the flexibility of the economy, thereby improving its resilience against detrimental shocks and raising the euro area β s noninflationary growth potential. policymakers are well aware of this assessment. however, the lack of clear and decisive progress in implementing structural reforms weighs on confidence. it is high time to reassure business, investors and consumers by delivering overdue structural reforms. such measures must be geared towards more flexible labor markets and higher labor participation rates, the full implementation of the eu single market, free and sound competition along with further cutbacks in state aid, and consumer - friendly retail market regulations. this would enhance productivity, thereby making the euro area more attractive for domestic and international investment, it would promote economic activity and raise the noninflationary growth potential of the euro area, and it would enhance employment, thus boosting consumer confidence and private consumption. indeed, it is up to us to set in motion such a virtuous circle! the policy program of the newly elected austrian government includes several important measures to foster austriaΒ΄s attractiveness for business and investors. starting out from a small budget deficit of 0. 6 % in 2002, the governmentΒ΄s fiscal policy stance foresees some cyclically motivated widening of the deficit to 1. 3 % this year. looking ahead, the government intends to make significant tax cuts. the cutback of the share of government in the austrian economy is appropriate and in line with international endeavors to improve the quality of public finances. the tax cuts should be accompanied one for one by expenditure cuts so as to ensure that a balanced budget is achieved over the cycle. where do central and eastern european countries enter this picture? it is my conviction that this historic reunification of europe will mutually strengthen today β s accession countries and the eu. having said this, challenging tasks lie ahead. first and foremost, we will have to provide stability in a broad sense : political stability, macroeconomic stability, financial market stability and price stability. the framework which is in place provides for such broadly based stability. thus, enlargement will encourage growth and employment in a wider europe. economic and monetary integration of the accession countries will proceed in three stages : first, the acceding countries will join the eu in may 2004, second, the new member states will participate in erm ii, | 0.5 |
the g20 south africa has the potential to contribute significantly to the growth and development agenda of the g - 20, with a particular focus on low - income countries and sub - saharan africa. in 2010 the g - 20 leaders declared in toronto that β narrowing the development gap and reducing poverty are integral to our broader objective of achieving strong, sustainable and balanced growth and ensuring a more robust and resilient global economy for all. β 1 toronto declaration, june 26 β 27, 2010. bis central bankers β speeches at the toronto summit, the g - 20 leaders confirmed the inclusion of development as a key agenda topic at the seoul summit and agreed to establish a working group. in 2010 south africa, alongside korea, was nominated to co - chair the g - 20 β s working group on development, which sought to address issues of significant importance to the african continent, in particular infrastructure development. in 2011, south africa was included as the co - chair of this group together with korea and france. while development issues are not prominent on the g - 20 β s agenda, south africa together with korea, provided the necessary leadership when it was decided to include development issues on the g - 20 β s agenda. south africa could use this process to position itself strongly in the g - 20 discussions on growth and development, to focus on the underdevelopment of various regions in the global economy, including sub - saharan africa, and promote these discussions on the global policy agenda. as part of the g - 20 β s focus on financial inclusion, south africa and germany co - chaired the sme finance sub - group, with the focus to crowd - in the private sector by incentivising it to develop innovative ways of financing smes through a g - 20 sme challenge launched in toronto. in 2012, south africa remained actively involved in this area together with the united states. while south africa, together with other emerging - market countries, acknowledges that it still has a long way towards improving financial inclusion in the country, the fact that it is encouraged to play a leading role in this endeavour within the g - 20 could help it to expedite financial inclusion policies in the country. south africa has a strong financial sector, and has used this to its advantage to contribute to g20 discussions to highlight its experience. in this regard, south africa together with other emerging - market countries put in a concerted effort highlighting the potential unintended consequences of some of the basel iii proposals, without detracting | work in the g - 20 has since revolved around three key areas, namely : a. policy coordination between members in an effort to achieve global economic stability and sustainable growth ; b. promoting global financial regulation to reduce risks and prevent future crises ; and c. reform of the international financial architecture / international monetary system. other areas of focus are development issues, commodities, and climate finance. a number of working groups have been formed since 2008, and south africa has been nominated to co - chair some of these working groups, such as the reform of the imf, development, financial inclusion and the climate finance study groups. south africa also participates in all the working groups, contributing to the discussions and putting forward our country positions and views and to ensure that our positions are captured in meetings of the finance ministers and central bank governors, and at leaders β summits. although g - 20 documents have no legal status, they serve as binding statements for members, and are a basis for further work. i thought i would briefly give you a flavour of how the work of the g - 20 has evolved over the years, although much more detail is available on the g - 20 website. leaders β summits are the key agenda setting fora, and i will touch on some of the key milestones in this regard. the first g - 20 summit in 2008, held in washington d. c. during the very early stages of the global financial crisis, was primarily focused on g - 20 co - operation, strengthening economic growth, dealing with the financial and economic crisis, and laying the foundation for stricter financial regulation. there was also recognition of the need to reform the imf, world bank and other multilateral development banks ( mdb ) and the need to resist trade protectionism and work towards the conclusion of the doha round. during the london summit in april 2009, the focus turned towards co - ordinated fiscal and monetary stimulus measures to avert the threat of global depression. leaders also agreed on additional resources for the imf and mdbs to assist countries weather the financial crisis, and resources of up to us $ 1 trillion were provided to the imf. the fsb was established as a successor to the financial stability forum ( fsf ) at the bank for international settlements ( bis ), with key emerging - market economies represented on the board, which was a departure from the fsf which represented only advanced economies. in september that same year, at the pittsburgh summit, leaders agreed on the | 1 |
gertrude tumpel - gugerell : sepa for cards β more than a symbol of sepa β s success speech by ms gertrude tumpel - gugerell, member of the executive board of the european central bank ( ecb ), at the monnet symposium organised by the monnet project, madrid, 5 may 2010. * * * ladies and gentlemen, introduction 5 may is a historic date for european integration. 61 years ago today, the treaty of london on the establishment of the council of europe was signed. the council of europe in strasbourg is one of the oldest international organisations dedicated to facilitating european integration, with the focus on democracy and the rule of law. the council of europe created two symbols which were adopted by the european economic community in 1985 and are today used by the european union : the flag of europe and the european anthem. the flag of europe has become the principal symbol of the european union. the circle and the number twelve β which is the number of stars positioned in a circle on the flag β has numerous associations with unity, such as the 12 hours on a clock, 12 months in a year, 12 signs of the zodiac and 12 semitones in an octave. unity is also a crucial factor in the success of one of the biggest economic projects the european union has ever seen : the establishment of one single euro payments area β sepa. with the united efforts of the european banking community, the legislators and the central banking community, sepa made a successful start with the introduction of the sepa credit transfer more than two years ago and the sepa direct debit last year. of course, sepa is far from complete. the migration to sepa credit transfers and sepa direct debits will take some time. i am confident, however, that with the setting of a realistic but ambitious end date, the pace of the migration will increase considerably. for this reason, i have no concerns regarding the success of a sepa for credit transfers or direct debits. however, sepa is built on a third column too : sepa for cards. cards are the most commonly used payment instrument in the european union, accounting for almost four out of ten transactions in 2008. without the success of sepa for cards, the project will not be complete. very often sepa for cards is associated with the establishment of an additional european card scheme. but sepa for cards is about much more than that : it is about business rules and technical standards too | progress over the past decades. granular, high frequency data has become much more easily available ; new information is being collected, and new data sources have been tapped. this is a good starting point. however, as statistics providers, we also have to adapt to the new environment. providing relevant information supporting the climate transition requires new ways of gathering, compiling, and disseminating data. this calls for more agility so that we can make progress sufficiently fast. in the following, i will provide some historical examples of how structural change has paved the way for new data and information systems. i will then draw implications for sustainable finance data, including learning from experiences, incentivizing the private sector, regulating the market for information, and providing infrastructures for data sharing. structural change and measurement : historical examples addressing climate change would, ideally, require a global standard to measure and attribute greenhouse gas emissions. history can provide examples of how this can be achieved. the invention of double - entry bookkeeping, the invention of national accounts, and the measurement of time share similarities with today β s challenges. these examples provide three main lessons : β’ β’ β’ structural changes such as globalization and industrialization created the need for innovations in terms of measurement and data. solutions found in the past involved experimentation in the private sector and coordination through the public sector. governments have played an active role in incentivizing innovation and providing the necessary infrastructures. developing new measurement systems has taken time, and it involved continuous improvements. page 3 of 18 deutsche bundesbank, directorate general communications wilhelm - epstein - strasse 14, 60431 frankfurt am main, germany, tel. : + 49 ( 0 ) 69 9566 33511, fax : + 49 ( 0 ) 69 709097 9000 presse @ bundesbank. de, www. bundesbank. de reproduction permitted only if source is stated. 1. 1 the evolution of double - entry bookkeeping accounting for greenhouse gas emissions at the firm - level shares similarities with standard accounting objectives : β’ β’ corporate cost accounting links the costs of resources such as labour and capital to price setting and production decisions. climate accounting and taxonomies aim at measuring the use of carbon and β indirectly β the carbon contained in goods and services. double - entry bookkeeping is a comprehensive information system for commerce that looks at every transaction from two angles : credit ( the uses of funds ) and debit ( the sources of funds ). it developed in parallel | 0 |
yves mersch : translating a shared vision into a winning story closing remarks by mr yves mersch, member of the executive board of the european central bank, at the t2s launch celebration, milan, 2 july 2015. * * * we chose to call this t2s launch celebration β translating a shared vision into a winning story β. listening to the speakers for the past two hours i believe the name was just right. we have heard how the t2s community transformed the shared vision of an integrated securities settlement landscape into a winning story, culminating in the launch of t2s on 22 june. stimulating views have been shared tonight and i would like to thank the speakers for presenting their perspectives on the capital markets union. it is evident that t2s, post - trade harmonisation and the csd regulation are among the elements that will be pushing this agenda forward. looking around the room i am happy to see so many familiar faces. faces of people who have been part of the project since the idea of t2s was born in 2006. the journey over the past nine years has been an inspiring one. there have been some bumps in the road, some twists and turns, but with the launch of t2s we have achieved a monumental milestone. we made the vision of a single securities settlement platform for europe a reality. i want to thank you all for your support, trust and commitment, which has enabled us to reach this first step towards an integrated, more efficient, and harmonised post - trade market in europe. in particular, i would like to take this opportunity to thank the national communities, namely the national central banks, the securities depositories and their clients, for their involvement and cooperation. moreover, i would like to thank the 4cb ( composed of banque de france, deutsche bundesbank, banca d β italia and banco de espana ) for developing and now also running the t2s platform. let me also acknowledge the hard work and dedication of the people at the ecb who coordinated the implementation of the project. in particular, i thank jean - michel godeffroy, who steered the t2s ship through sometimes stormy waters for many years, and marc bayle, who brought the ship to a safe harbour on 22 june 2015. and a special thanks to ms tumpel - gugerell, who was the ecb board member in charge during the project β s inception. a popular saying is that β two heads are better | many cases weightier determining factors than solvency requirements themselves for financial institutions. it is thus necessary to harness the ongoing revision of european legislation and the subsequent re - definition of the policies to be pursued by the resolution authorities so as to fine - tune demands in a way that provides for the orderly adjustment of the industry to the new regime. as earlier discussed, adding flexibility to some requirements and setting transitional arrangements for others may be of help here, while also reinforcing the authorities β ability to manage crises in the short and medium term. all told, institutions should be mindful that the new resolution framework will require those banks that exceed a certain size and are liable to generate systemic risk to ensure that their balance sheet structure allows their resolution at the expense, essentially, of their shareholders and creditors. they should, therefore, ensure that their business model is compatible with the issuance of loss - absorbing instruments on the capital markets and that their income statements allow for the remuneration of the supplementary risk that the new resolution regime entails for holders of bank debt. it thus seems likely that several institutions will face objective difficulties adjusting to the recently established resolution framework. these new regulations, therefore, contribute to reinforcing the perception of excess capacity in the sector and, foreseeably, they will contribute to promoting a change in the industry structure that will correct such excess by means of consolidation processes giving rise to banks more capable of comfortably complying with the new demands. the supervisor β s role essentially consists of setting in 9 / 10 place the means needed for this seemingly inevitable adjustment process to unfold in as orderly a fashion as possible. 10 / 10 | 0 |
ben s bernanke : regulatory reform implementation testimony by mr ben s bernanke, chairman of the board of governors of the federal reserve system, before the committee on banking, housing, and urban affairs, us senate, washington dc, 30 september 2010. * * * chairman dodd, ranking member shelby, and other members of the committee, thank you for the opportunity to testify about the federal reserve β s implementation of the dodd - frank wall street reform and consumer protection act of 2010 ( dodd - frank act ). in the years leading up to the recent financial crisis, the global regulatory framework did not effectively keep pace with the profound changes in the financial system. the dodd - frank act addresses critical gaps and weaknesses of the u. s. regulatory framework, many of which were revealed by the crisis. the federal reserve is committed to working with the other financial regulatory agencies to effectively implement and execute the act, while also developing complementary improvements to the financial regulatory framework. the act gives the federal reserve several crucial new responsibilities. these responsibilities include being part of the new financial stability oversight council, supervision of nonbank financial firms that are designated as systemically important by the council, supervision of thrift holding companies, and the development of enhanced prudential standards for large bank holding companies and systemically important nonbank financial firms designated by the council ( including capital, liquidity, stress test, and living will requirements ). in addition, the federal reserve has or shares important rulemaking authority for implementing the so - called volcker rule restrictions on proprietary trading and private fund activities of banking firms, credit risk retention requirements for securitizations, and restrictions on interchange fees for debit cards, among other provisions. all told, the act requires the federal reserve to complete more than 50 rulemakings and sets of formal guidelines, as well as a number of studies and reports, many within a relatively short period. we have also been assigned formal responsibilities to consult and collaborate with other agencies on a substantial number of additional rules, provisions, and studies. overall, we have identified approximately 250 projects associated with implementing the act. to ensure that we meet our obligations in a timely manner, we are drawing on expertise and resources from across the federal reserve system in areas such as banking supervision, economic research, financial markets, consumer protection, payments, and legal analysis. we have created a senior staff position to coordinate our efforts and have developed projectreporting and tracking tools to facilitate management and oversight of all of our | implementation responsibilities. the federal reserve is committed to its long - standing practice of ensuring that all its rulemakings be conducted in a fair, open, and transparent manner. accordingly, we are disclosing on our public website summaries of all communications with members of the public β including banks, trade associations, consumer groups, and academics β regarding matters subject to a proposed or potential future rulemaking under the act. in addition to our own rulemakings and studies, we have been providing technical and policy advice to the treasury department as it works to establish the oversight council and the related office of financial research. we are working with the treasury to develop the council β s organizational documents and structure. we are also assisting the council with the construction of its framework for identifying systemically important nonbank financial firms and financial market utilities, as well as with its required studies on the proprietary trading and private fund activities of banking firms and on financial - sector concentration limits. additionally, work is well under way to transfer the federal reserve β s consumer protection responsibilities specified in the act to the new bureau of consumer financial protection. a transition team at the board, headed by governor duke, is working closely with treasury staff responsible for setting up the new agency. we have established the operating accounts and initial funding for the bureau, and we have provided the treasury detailed information about our programs and staffing in the areas of rulemaking, compliance examinations, policy analysis, complaint handling, and consumer education. we are also providing advice and information about supporting infrastructure that the bureau will need to carry out its responsibilities, such as human resource systems and information technology. well before the enactment of the dodd - frank act, the federal reserve was working with other regulatory agencies here and abroad to design and implement a stronger set of prudential requirements for internationally active banking firms. the governing body for the basel committee on banking supervision reached an agreement a few weeks ago on the major elements of a new financial regulatory architecture, commonly known as basel iii. by increasing the quantity and quality of capital that banking firms must hold and by strengthening liquidity requirements, basel iii aims to constrain bank risk - taking, reduce the incidence and severity of future financial crises, and produce a more resilient financial system. the key elements of this framework are due to be finalized by the end of this year. in concordance with the letter and the spirit of the act, the federal reserve is also continuing its work to strengthen its supervision of the largest, most | 1 |
. over a longer horizon, we remain concerned about the sustainability of global economic growth being undermined by persisting imbalances. this relates, in particular, to the sustainability of public finances and to external imbalances in some regions of the world. recent inflation rates, measured by the hicp, developed broadly as anticipated. the annual rate of inflation was 2. 1 % in october, according to eurostat β s flash estimate. it thus remained unchanged from august and september. when looking ahead over the shorter term, it appears that inflation rates may continue to hover around this level for several months to come and, hence, may not fall as quickly and strongly as had been expected up to the summer. three factors can be identified as contributing to this stickiness of inflation rates. first, in the remainder of 2003 and early 2004, unprocessed food prices could imply some limited upward pressure as a consequence of this summer β s heat wave. second, oil prices remain higher than expected, owing to political uncertainties in the middle east. last but not least, in the course of 2004, planned increases in indirect taxes and administered prices in some euro area countries will have an upward impact on inflation. however, when taking into account more lasting factors, we continue to expect inflation rates to moderate over the medium term and to develop in line with price stability. this expectation is based on the assumption that wage developments will not be affected by the current inertia of inflation rates, and will remain moderate in the context of a gradual economic recovery. moreover, the past appreciation of the euro should continue to dampen price pressures. these views are also reflected in recently released forecasts. at the same time, inflation expectations warrant close monitoring. turning to the monetary analysis, after an extended period of strong m3 growth, liquidity in the euro area remains ample, despite a certain slowdown in monetary expansion over recent months. this situation of persistently more liquidity than is needed to finance non - inflationary economic growth reflects past portfolio shifts, precautionary savings and the low level of interest rates. the low level of interest rates also supported the annual growth of loans to the private sector, which fluctuated between 4Β½ % and 5 % in recent months. at the current juncture, the accumulation of excess liquidity is not of concern for price stability, given the economic outlook. however, if it were to continue in conjunction with a significant strengthening of economic activity, it could lead to | scaling up green finance can be a driver for a carbon neutral economy, financial integration and stability in the euro area. strengthening the capital markets union ( cmu ). the strengthening of the cmu is necessary for the completion of european economic and monetary union because it will reduce market fragmentation and encourage diversification of financial resources. the development of a green cmu can support the move to a cmu by adding depth and diversification to the financial instruments available, also enhancing the risk sharing capacity of the eu financial system. green capital markets are dynamic and relatively well integrated in europe. they provide a rapidly growing market and are the location of choice for green bond issuance and esg investment. important elements of a green cmu include corporate sustainability disclosures, green financial products with official eu seals, such as the eu green bond standard, and harmonised regulation and supervision for sustainable finance. a green cmu would both make the eu economy more resilient and more environmentally sustainable. but what role can central banks play in tackling climate change? 1 / 3 bis central bankers'speeches climate - related risks are a source of instability and financial vulnerability. physical and transition risks, like more frequent and more extreme weather events or a late and abrupt transition to a low - carbon economy, could affect the transmission of monetary policy and pose risks to price, financial and economic stability. it is therefore within the mandate of central banks to prevent risks to price stability, and, along with bank and insurance companies β supervisors, to ensure that the financial system is resilient to these risks ; this urgently needs to be translated into concrete measures, both on monetary policy and supervisory fronts. although the main responsibilities remain with the governments, with their tax subsidies and investment policies, central banks can undertake an active role in tackling climate change. central banks have already started considering how the physical and transition impact of climate change can be included in macroeconomic forecasting and financial - stability monitoring. also, central banks have been undertaking work to integrate climate - related risks into prudential regulation and supervision, engaging with rating agencies and financial firms to ensure that climate - related risks are understood, disclosed and incorporated in risk assessment and in credit provision decisions. until recently, most central banks had focused mainly on raising awareness around climate change risks and considering the impact of these issues on their own operations. yet, central banks can and are committed to do more than that. at the governing council of the european central bank ( ecb ), we agreed | 0 |
could be aligned. but this would require a quantum leap in terms of ceding sovereignty to the european level, a leap neither the electorates nor the governments of the member states seem willing to take. if a true fiscal union that requires extensive changes to the european treaties is not on the cards, then we need to take the second avenue. that implies taking concrete steps towards restoring a balance of individual control and individual responsibility within the existing maastricht framework. a framework which is in line with what margaret thatcher once said in her famous speech at the college of europe β that improving the workings of the european union does not automatically require stronger centralisation. individual responsibility requires that sovereigns, banks and investors bear the consequences of their decisions. this means that it is primarily up to the respective government and its citizens to come up with the revenue needed to repay public debt. this holds, in particular, since high levels of public debt often go hand in hand with substantial private assets. but it also implies that the risk of non - repayment ultimately lies with the investors, since they are the ones who reap the return when things go well. and if the fiscal limit has been reached for real, public debt needs to be restructured without posing a systemic threat to financial stability. the introduction of collective action clauses into sovereign bonds was a first step in that direction. but more steps are needed. the bundesbank has put forward a proposal for sovereign bonds to include an automatic maturity extension of three years in case a sovereign accesses the european rescue mechanisms. this automatic maturity extension would allow the sovereign in question to tackle its fiscal challenges while preventing investors from bolting. the amount of official financial support would be reduced, and time could be bought to figure out if the problem is one of temporary illiquidity or insolvency. but ultimately, all these questions boil down to the quip of american economist allan meltzer : β capitalism without failure is like religion without sin. it doesn β t work. β for the above proposals to work, we need to make sure that sovereign insolvencies are possible without bringing down the financial system as a whole. bis central bankers β speeches to that end, doing away with the preferential treatment of sovereign debt in banks β balance sheets is of the essence. the current regulatory framework permits preferential treatment of sovereign exposures in various forms. while bank exposures to a single counterparty are limited, in principle, to a quarter of their eligible capital | automatised processes, solutions for complex financial issues, service tailored to customers β individual needs. a fundamental challenge that banks now face is that in some business fields, we may expect a sudden and rapid change of the game that is being played. one rather obvious case in point is that of payment services. service providers such as paypal or apple have implemented payment systems geared to consumers in a digital environment. once customers become used to a new way of paying, competitors offering similar products will certainly have difficulties trying to convince customers to switch providers. the pioneer may have a decisive advantage. now, in evolutionary terms, the question is whether banks can adapt quickly enough. banks have used it for decades, but these fast - moving times present wholly new possibilities for its use : p2p lending becomes feasible, internet and mobile applications are sprouting up and bis central bankers β speeches internet giants such as google or facebook are cultivating β big data β methods. these enterprises have grown up with β at times β entirely new perceptions of business, work and life. and they have the appropriate staff. that may be crucial. it is one thing to build new ideas, but quite another to incorporate them into the company dna. traditional banks, on the other hand, typically do not have a digital dna. theirs is an analogue world in which they have refined their knowledge about banking over decades and built up a customer relationship based on trust. think of areas like investment advice and corporate finance as well as banks β own business of generating synergies between business strands. the question now is : what part of their knowledge is still valuable and what part do banks need to reframe? however, we cannot predict how the financial sector will look in ten years β time. there are just too many β unknown unknowns β. still, there is a recurring fallacy that reduces evolution to a narrow one - way street. if there are new market entrants whose businesses are welladjusted to the digital environment, banks should be inclined to imitate their behaviour. but β to be clear β there is no one - size - fits - all strategy for digital banking. as in other industries, there will always be demand for more differentiated strategies, for example individual and personalised services as opposed to algorithm - based advice. also, we should not be surprised to see the focus return to a key component of the banking business : establishing safety and trust. furthermore, the digital age does not simply redistribu | 0.5 |
is that while the adjustment by deficit and surplus economies has to be symmetric, the incentives they face are asymmetric. managing currency tensions will require a shared understanding on keeping exchange rates aligned to economic fundamentals, and an agreement that currency interventions should be resorted to not as an instrument of trade policy but only to manage disruptions to macroeconomic stability. that takes me to the second facet of global imbalances β capital flows. the problem of capital flows came centre stage in the aftermath of the quantitative easing by advanced economy central banks when the excess liquidity in the global system found its way into faster growing emes. the most high profile problems thrown up by capital flows, in excess of a country β s absorptive capacity, are erosion of monetary policy effectiveness, currency appreciation and loss of competitiveness. speculative capital flows could also lead to asset and commodity bubbles potentially threatening both financial and economic stability. in the g 20 debate on capital flows, popularly but mistakenly referred to as β currency wars β, emes agitated mainly two points. first, that in as much as lumpy and volatile capital flows are a spillover from the quantitative easing of advanced economies, the burden of adjustment has to be shared. second, that capital controls should be understood as legitimate and acceptable defence against speculative capital flows. global imbalances and their correction were the main concern in the g20 framework and mutual assessment process ( map ) exercise. the map exercise is aimed at making countries commit to external sector policies that lead to strong, sustained and balanced growth at the global level. the understanding is that global imbalances, especially imbalances built on the strength of undervalued exchange rates accompanied by a build - up of reserves, threaten the stability of the global economy due to the possibility of disorderly unwinding. china β s exchange rate policies were at the centre of the debate in the g 20. as on date, china β s current account surplus ( in relation to its gdp ) has declined from the pre - crisis peak, and china β s real effective exchange rate has also appreciated since 2005, even though it is widely believed that it needs to appreciate further. in the meanwhile, however, the cumulative surpluses of oil producing countries ( mostly opec, russia and norway ) have increased and now account for the lion β s share of global current account surpluses. while global imbalances bis central bankers β speeches have declined in the post - crisis period, their nature and composition | to adapt to our rapidly changing societies. the central banking community therefore actively supports the ongoing revision of these standards, not least to develop adequate methodologies for measuring new phenomena that constantly emerge. lastly, it is also important to reflect on our past while we grapple with current and future problems. an important development in this context was the recent ifc decision to host the historical monetary and financial statistics ( hmfs ) central bank network. this network brings together statisticians and academic experts to exchange approaches to compile historic data and to facilitate learning from each other. noteworthy advancements have already been made in the dissemination of long - term statistics concerning credit, interest rates, housing prices and, more recently, central banks'balance sheets. i am confident that the insights shared and the discussions held during this conference will facilitate our understanding of how data governance, it advancements, and practical applications of data science are shaping modern statistical analyses and in turn supporting central banks'public mandates. it is through such gatherings that we can learn from one another, exchange ideas, and build bridges that transcend borders. i am confident that, by working together, we can better harness the power of data to strengthen the resilience and effectiveness of policy actions. i wish you all fruitful and engaging discussions. 3 / 3 bis - central bankers'speeches | 0 |
four - family mortgage loans were more subdued for community banks than they were for other banks. commercial real estate loans continued to grow smartly, however, and i β ll have a bit more to say about that in a minute. consolidation is continuing among community banks, and the data tell the story. there were 7, 146 community banks at the end of march 2005, about 140 fewer ( 2 percent ) than a year earlier and about 770 fewer ( 9. 7 percent ) than at year - end 2000. consolidation can also be seen at bank holding companies ( bhcs ), which own 97 percent of commercial banking assets. the number of bhcs has fallen slightly - about 4 percent - over the past decade, but this figure has increased a bit in three of the past four years. the number of multibank bhcs has decreased about one - third over the past decade, reflecting the tendency of banks to consolidate subsidiary charters in this era of nationwide banking. although bank consolidation largely reflects the search for efficiency and scope, it does not signal a threat to the banking charter or the community banking franchise. consolidation and the growth of large banking organizations do not alter the fundamental competitive advantages that banks enjoy, namely, deposit insurance, reputation and public confidence, branch networks and other delivery systems, and technology. the market for new bank charters makes this point clear. some 124 new commercial bank charters were issued in 2004, and another 32 in the first quarter of 2005. counting these charters, 718 charters have been issued since the beginning of 2000. over that same period, for every three banks that disappeared through consolidation, another two new charters were granted. in total, the new charters represent about $ 5. 4 billion in new equity capital invested in community bank charters. issues that bear watching as in the past, the continued vitality of the banking charter calls for strong and prudent management, something that can be a challenge in this dynamic environment. a key issue for management β s attention at this time is the sustained rapid growth in commercial real estate lending - that is, construction loans as well as loans secured by nonfarm nonresidential and multifamily properties. let me take a moment to put that growth in perspective. at community banks, growth in commercial real estate lending ( cre ) - nearly $ 32 billion in 2004 alone - has accounted for at least two - thirds of total asset growth every year since 2001 ; cre lending accounted essentially for all of the asset | mark w olson : the health of the banking industry remarks by mr mark w olson, member of the board of governors of the us federal reserve system, at the annual meeting of the conference of state banking supervisors, san antonio, texas, 3 june 2005. * * * let me congratulate the conference of state banking supervisors on another successful and informative annual meeting. the dual banking system is critical to the remarkable diversity and flexibility of our financial system. this system encourages innovation and responsiveness, while serving as a bulwark against regulatory excesses. it supports a dynamic and competitive financial services market that yields tangible benefits for consumers, businesses, and the economy as a whole. the dual banking system could not function without close cooperation and understanding between federal and state supervisors. as you know, the federal reserve has consistently been a strong supporter of the dual banking system, and i have every reason to believe that support will continue. we understand, as you do, the importance of a safe and sound banking system to the proper functioning of the economy. we also understand the role of effective supervision in ensuring that our banks are sound. at the conclusion of your three days here, let me offer some perspectives on the financial performance of the banking industry and share my thoughts on what that performance might imply for supervisors. performance of the banking industry the banking industry began this year with a lot of momentum : in 2004, bank profits exceeded $ 100 billion for the second consecutive year and indeed the second time ever. the industry delivered this excellent performance as it adapted to rising interest rates and more - rapid economic growth, including a gradual improvement in business loan demand. first - quarter earnings announcements by the major banks were generally quite positive, highlighting further acceleration in loan growth, continuing improvement in credit quality, and robust trading revenues. call report information tells the same story. insured commercial banks reported record earnings of $ 29 billion in the first quarter, an increase of 10. 7 percent from the fourth quarter of 2004. these earnings represent an attractive return on assets of 1. 38 percent. overall return on common equity came in at 13. 76 percent, damped a little by the significant increases in reported shareholders β equity associated with last year β s banking mergers. loan growth was solid at about 2 percent, including a pickup in the growth of commercial and industrial ( c & i ), construction, and mortgage loans. bankers have been pleased to report that c & i loans have shown greater strength, consistent with loan officer surveys and market | 1 |
was managed without any reschedulement of any contractual obligation, but with a recourse to stabilization measures and initiation of structural reforms. the current account convertibility in 1994 led to liberalization of gold imports and large capital inflows up to 1996. in 1997, the timely efforts to depreciate the currency warded off a possible crisis due to persistence of a relatively over valued rupee in the forex markets. this also enabled the implementation of a package of monetary and other prompt actions in resisting contagion effects of asian crisis in late 1997 and early 1998. the imposition of sanctions by u. s. government and others consequent upon nuclear tests required replacement of normal debt flows with a type of extra ordinary financing. there was also an occasion, as in may - august 2000 where inexplicable changes in expectations put pressure on the currency warranting yet another package to counter the market sentiment. in contrast the events of september 11, 2001 needed measures to reassure the markets with timely liquidity and stability in monetary measures. the reasonable success in managing these uncertainties while adding to forex reserves with marginal addition to total external debt but maintaining both reasonable overall macro - economic stability and pace of reform in financial sector has some tentative lessons to offer. first, stable and appropriate policies governing overall management of the external sector are important. as part of the reform process, a policy framework was developed to gradually liberalise the external sector, move towards total convertibility on current account, encourage non debt credit inflows while containing all external debt especially short term debt in capital account and make the exchange rate largely market determined. the policy reform in the external sector, accompanied by other changes was guided by the report of high level committee on balance of payments, april 1993 ( chairman dr. c. rangarajan ). second, the impression that a closed economy is less vulnerable to crisis is not borne out by facts. india was a closed economy on the eve of the gulf crisis but the impact was severe. though it is now a relatively more open economy, it could without serious disruptions withstand several uncertainties. third, as evident from experience, if the fundamentals are weak, the economy is more vulnerable in the face of uncertainties. fourth, in all instances of serious uncertainties, the existence and manifestation of harmonious relations between the government and the central bank become critical and appropriate coordination is extremely useful. fifth, while it is difficult to anticipate or assess the | between what a financial sector can contribute and what fiscal action can contribute to matters relating to poverty alleviation. in the interest of efficiency and stability of financial sector, intermediation may have to be progressively multi institutional rather than wholly bank - centred. social obligations may have to be distributed equitably among banks and other intermediaries but that would be difficult to achieve in the context of emerging capital markets and relatively open economy. in such a situation, banks which are special and backbone of payment systems, may face problems if they are subject to disproportionate burdens. hence, mechanisms have to be found to reconcile these dilemmas. furthermore, monetary policy is increasingly focused on efficient discharge of its objective including price stability, and this no doubt would help poverty alleviation, albeit indirectly, while the more direct attack on poverty alleviation would rightfully be the preserve of fiscal policy. monetary and financial sector policies in india should perhaps be focusing increasingly on what dreze and sen call β growth mediated security β while β support - led security β, mainly consisting of direct anti - poverty interventions are addressed mainly by fiscal and other governmental activities. | 1 |
tightening. considerable labour inflows following the enlargement of the eu and the eea in 2004 also contributed to increasing potential output. a substantial share of inward labour migration is accounted for by foreign companies with contracts in norway. labour inflows from the new eu member states still appear to be growing, with the construction industry absorbing a particularly large share. on the other hand, a rise in sickness absence and the number of persons on disability benefits are pushing down production capacity this year. in view of the tightening taking place in the swedish labour market, there may be reason to expect a reduction in the supply of labour from sweden. over the past six months, there have been steadily growing signs of labour shortages in the norwegian economy. unemployment has shown a marked decline and is now at a low level. employment is still on the rise, while the labour force as it has been registered in current statistics has remained virtually unchanged in recent months. seasonally adjusted, registered unemployment stood at 2. 4 per cent of the labour force in september. the number of registered unemployed adjusted for seasonal factors was close to 59 000. unemployment has declined for all occupational groups and has been most pronounced in manufacturing, the construction industry and in the engineering and ict sectors. there are probably limitations to how much the supply of norwegian labour can increase in the period ahead. labour participation rates are high, particularly when taking into account demographic developments. developments in the labour market are similar to the profile observed ahead of the period of accelerating wage and cost inflation that started in 1998, but wage growth has been fairly moderate since the upturn began. several factors may have contributed to this. an increase in inward labour migration and the opportunities provided by an international labour market may have prompted participants in local and centralised wage negotiations to place greater emphasis on the considerably higher wage level in norway relative to our trading partners and potential job vulnerability. at the same time, inward labour migration has reduced bottlenecks in some industries. however, despite increased labour market flexibility, the risk of higher growth in labour costs is now probably rising. the business sector in the southwestern part of norway includes a large number of petroleum - related activities and manufacturing companies. the number of public sector employees is clearly lower in rogaland than in the rest of the country. the industry structure in hordaland is very similar to the rest of the country. information from norges bank β s regional network confirms the impression that the cyclical upturn is continuing. region south - west | the coming years. unemployment is set to edge up to around pre - pandemic levels. 2 / 3 bis - central bankers'speeches wage growth is expected to slow from next year. but given a slower rise in prices, wages are expected to rise faster than prices in the years ahead. there is uncertainty about future developments in the norwegian economy. if business costs continue to accelerate rapidly or the krone turns out to be weaker than projected, price inflation may remain higher for longer than currently projected. in that case, the committee is prepared to raise the policy rate again. if there is a more pronounced slowdown in the norwegian economy or inflation declines more rapidly, the policy rate may be lowered earlier than currently envisaged. 3 / 3 bis - central bankers'speeches | 0.5 |
26th swift african regional conference welcome address dr. ernest addison governor, bank of ghana kempinski hotel, gold coast city in accra, june 18, 2019 your excellency, president nana addo dankwa akufoaddo, honourable ministers, directors and management of swift, ceos of financial institutions, distinguished guests, ladies and gentlemen, 1. it is an honour for me to officially welcome you all to accra and the 26th society for worldwide interbank financial telecommunication ( swift ) africa regional conference. before i proceed any further, let me first say that we are privileged to have h. e. president nana addo dankwa akufoaddo to grace the occasion. your excellency, we very much appreciate taking time off your busy schedule to join us today. 2. let me also thank the management of swift for choosing ghana to host this year β s session which has brought together more than 500 professionals from over 45 countries across africa and beyond, including policy makers, industry leaders and fintechs to meet and shape market practices in africa β s financial services sector. 3. your excellency, digital innovation is creating unprecedented opportunities for africa to grow its economy, create jobs and transform people β s lives. new technologies and business models are opening alternative pathways to economic growth in emerging markets, offering opportunities to reshape our lives and improve economic growth. in this regard, i believe the chosen theme ; β enabling the digital economy β is most appropriate and timely. 4. ladies and gentlemen, the government of ghana β s commitment to formalize the ghanaian economy through digitisation is laudable. digitisation is a key component of the β ghana beyond aid agenda β which is firmly anchored in leveraging technology to promote economic efficiency and inclusiveness for accelerated development and poverty reduction. indeed, the president has shown keen interest and remains committed to building an inclusive modern society. this drive has seen the roll - out of several digital initiatives such as, the digital property addressing system, the national biometric id cards which will be linked to government agencies to help ease identification processes and promote integrity and efficiency in business transactions. 5. also, to enhance the ease of doing business in ghana, the government has introduced several other digital initiatives such as the paperless port operations to ensure smooth operations at the ports, and the e - justice project or the paperless courts, which seeks to automate existing manual filing systems in the court β s registry and improve efficiency of the justice | an enabling environment for the on - going digitization processes in the economy. 12. by and large, the swift network provides data, reports and important information for regulators, banks and other financial institutions, as well as policy makers across the globe. for example, the 2018 swift report on β africa payments : insights into african transaction flows β indicated an increasing number of clearing payments are being routed through africa, instead of banks outside africa. the data showed that between 2013 and 2017, intra - african clearing payments increased from 10. 2 % to 12. 3 %. swift also highlighted an emerging trend of increasing use of some local african currencies for cross - border payments. this has the potential to moderate foreign exchange risks and lower transaction costs, which is a positive development for the continent. 13. to conclude my brief remarks ladies and gentlemen, let me say that leveraging on digital technology requires the commitment and collaboration of all stakeholders. and, i believe, the august gathering of policy makers, industry leaders and the broad financial community at this 26 th swift conference provides the unique forum for networking, broader consultations, education and discussions, all within a collaborative environment. i wish you a successful three - day conference and hope you will find time to visit some of our nearby tourist attractions. thank you. | 1 |
liu guoqiang : profit cutting by financial institutions in support of real economy speech by mr liu guoqiang, deputy governor of the people β s bank of china, at the state council policy briefing on β profit cutting by financial institutions in support of real economy β, 6 november 2020. * * * dear friends from the press, good morning! the cpc central committee and the state council have been attaching great importance to financial support for the real economy. general secretary xi jinping stressed that finance provides the lifeblood for the real economy, and that serving the real economy is the duty and purpose of the financial sector. premier li keqiang pointed out that, the financial sector should hold reasonable profit cutting as a key in facilitating survival and growth of enterprises and stabilizing economic fundamentals. the state council has convened multiple executive meetings to study and arrange the work of financial support for the real economy, and held policy briefings to keep the public informed of the implementation and progress of relevant policy measures. now, i will briefly introduce the implementation and outcomes of relevant policy measures introduced since the beginning of this year. working together with relevant departments to earnestly implement the decisions and arrangements made by the cpc central committee and the state council, the pbc and the cbirc have guided and urged financial institutions to enhance efforts to effectively support the development of the real economy since the beginning of 2020. first, the sound monetary policy has been pursued in a more flexible and appropriate manner. a mix of monetary policy tools, including required reserve ratio ( rrr ) cuts, medium - term lending facility ( mlf ), open market operations ( omos ), central bank lending and central bank discounts, have been applied to keep liquidity adequate at a reasonable level and keep overall market interest rates stable with a slight decline. second, the loan prime rate ( lpr ) reform has constantly delivered benefits. the pbc has guided the mlf rates and omo rates to move downward by 0. 3 percentage points, which drove down the lpr correspondingly and markedly pushed down lending rates for enterprises. the collective transition of the pricing benchmark of outstanding floating - rate loans was kicked off as scheduled and completed at end - august 2020, so as to reduce the interests paid by enterprises for outstanding loans. third, structural monetary policy tools have been implemented to provide liquidity in a well - targeted way. the rmb1. 8 trillion quotas of central bank lending and central bank discounts were | 2019. according to the estimates based on the statistics of the pbc and the cbirc, in the first 10 months this year, the financial system waive profits of around rmb1. 25 trillion in favor of the real economy, through channels including interest rate cuts, the two tools providing direct support for the real economy, fee reduction, and support for enterprises β restructuring and debt - for - equity swaps. it is expected that the annual target of profit cuts in the amount of rmb1. 5 trillion will be attained. next, the pbc will join hands with the cbirc and other relevant departments to resolutely implement the guidelines of the fifth plenary session of the 19th cpc central committee and the decisions and arrangements made by the cpc central committee and the state council, follow the people - centered approach, uphold the new philosophy of development, remain committed to deepening reform and opening - up, adhere to systemic views, keep unleashing the benefits of relevant policies, and continue to motivate the financial system to cut profits in favor of the real economy, so as to achieve the annual target and create favorable conditions for constructing a new development pattern and promoting high - quality development. thank you. 2 / 2 bis central bankers'speeches | 1 |
risk of default on mortgage loans and the so - called prepayment risk ( that is, the risk that homeowners will choose to pay off their mortgages early ). likewise, changes in treasury yields affect stock prices by affecting both the profit prospects of publicly traded companies as well as the rate at which expected future profits are discounted to the present. basic financial theory suggests that any long - term interest rate, such as a five - year or ten - year treasury rate, is the sum of two components : a weighted average of expected short - term interest rates and a term premium, which in turn depends on risk, liquidity, and other factors affecting the desirability of the financial instrument in question. monetary policy probably influences the term premium on treasury securities to some extent. 13 however, in all likelihood, the more important means by which monetary policy affects treasury yields is through the effect of policy on the expected future path of short - term interest rates, and i will focus on that channel. expected short - term interest rates influence long - term rates because any investor has the choice of holding either a long - term security or a series of short - term securities, re - investing his or her funds in a new short - term security as the old short - term security matures. all else being equal, the choice between the two strategies depends on the expected return. if, on the one hand, short - term rates are expected to be higher on average than the long - term rate that spans the same period, investors will choose the strategy of rolling over short - term securities. if, on the other hand, the long - term rate exceeds the average of expected future short - term rates, the long - term security will be the more attractive. since both short - term and long - term treasury securities are willingly held in the marketplace, investors must be roughly indifferent between short - term and long - term securities, implying that ( on average and abstracting from any term premiums ) expected future short - term rates must be similar to the current long - term yield. you may be beginning to understand at this point why making monetary policy is not a simple matter and, in particular, why the fed has only very indirect control over long - term yields and asset prices. the fed controls very short - term interest rates quite effectively, but the long - term rates that really matter for the economy depend not on the current short - term rate but on the whole trajectory of future short - | already discussed, the demand for reserve balances arises both because banks must hold required reserves and because reserve balances are useful for facilitating transactions. because of the scale of and volatility in daily payments flows, the demand for reserve balances can vary substantially from one day to the next. the supply of reserve balances is largely determined by the federal reserve - at the operational level, by the specialists at the federal reserve's open market desk, located in the federal reserve bank of new york in the new york financial district. for example, to increase the supply of reserves, the open market desk purchases securities ( usually government securities ) on the open market, crediting the seller with an increase in reserve balances on deposit at the fed in the amount of the purchase. 9 thus, a purchase of a billion dollars'worth of securities by the open market desk increases the supply of funds available to lend in the fed funds market by the same amount. similarly, sales of securities from the fed's financial portfolio result in debits against the accounts of commercial banks with the fed and thus serve to drain reserve balances from the system. 10 collectively, these transactions are called open - market operations. factors outside the control of the open market desk can also affect the supply of reserve balances. for example, when the federal reserve receives an order for currency from a bank, it debits the reserve account of the bank in payment when the currency is shipped, thereby reducing reserve supply. when deciding upon open market operations to control the supply of reserves, the open market desk must take account of these external factors. in practice, the open market desk uses several methods of performing open - market operations. in some cases it purchases securities outright, that is, with the intention of holding the securities in its portfolio indefinitely. outright purchases are used to offset long - lasting changes in factors affecting the demand for and supply of reserves. for example, long - term increases in the private sector's demand for currency have largely been met by outright purchases of securities. over the years, the fed has accumulated a portfolio of more than $ 700 billion of treasury securities, mostly as an offset to its issuance of currency. in contrast, in cases in which variations in the demand for reserves or in external factors affecting reserve supply appear likely to be temporary, the desk typically prefers to conduct open - market operations through short - term or long - term repurchase agreements, known as repos. under a repur | 1 |
christian noyer : presentation of the ecb convergence report 2000 introductory statement by mr christian noyer, vice - president of the european central bank, at the presentation of the ecb convergence report 2000 to the committee on economic and monetary affairs of the european parliament, brussels, on 3 may 2000. * * * it is a great pleasure for me to have the opportunity to present this year β s convergence report, prepared by the european central bank ( ecb ), to your committee. the report examines in - depth, with regard to greece and sweden, the achievement of a high degree of sustainable convergence, as well as compliance with the statutory requirements to be fulfilled by national central banks in order for them to become integral parts of the european system of central banks ( escb ). in producing this report, the ecb fulfilled the requirements of article 122 ( 2 ) in conjunction with article 121 ( 1 ) of the treaty to report to the council of the european union on the progress of member states with a derogation, with regard to their obligations concerning the achievement of economic and monetary union ( emu ). it will now be up to the council to decide, on the basis of the convergence reports prepared by the european commission and the ecb, and of the parliament β s opinion and a proposal from the european commission, whether or not the current derogation status of greece and sweden can be abrogated. in view of the comprehensive assessment provided in our report, it goes without saying that i can only touch upon its main conclusions. however, in the following discussion we should have an opportunity to consider in more depth one or other aspect in which you might be particularly interested. i should like, first, to refer to our assessment of economic convergence in greece and sweden and then to address the requirements of legal convergence. i. assessment of economic convergence in greece as far as economic convergence in greece is concerned, it is noted that greece achieved an average rate of hicp inflation of 2. 0 % during the reference period ( april 1999 to march 2000 ). this is below the reference value of 2. 4 %. looking back, a clear trend towards lower inflation is discernible in greece, with the cpi rate falling from 20. 4 % in 1990 to 2. 6 % in 1999. inflation in greece is now closer to a level which can generally be considered to be consistent with price stability. however, due attention needs to be paid to the fact that the recent reduction in inflation rates | the statutes of these two national central banks. with regard to greece it concludes that : β’ the statute of the bank of greece has been adapted and, on the basic assumption that the new statute will be ratified by parliament and will enter into force on time and that obsolete provisions of a law dating back to 1997 ( law 2548 / 1997 ) will be repealed, there will be no remaining imperfections in the statute of the bank of greece relating to the requirements of the treaty and the statute of the escb for the full legal integration of the bank of greece into the eurosystem. β’ the ecb also takes note that other legislation will be adapted by means of a law introducing the euro. with regard to sweden, the conclusions of the emi β s 1998 convergence report remain unchanged. swedish legislation, and in particular the statute of sveriges riksbank, does not provide for the bank β s legal integration into the eurosystem and is not, therefore, compatible with the treaty and the statute of the escb. as far as other legislation is concerned, the ecb notes that legislation on access to public documents and the law on secrecy need to be reviewed in the light of the confidentiality regime set out in article 38 of the statute of the escb. i should now be happy to answer any questions you may have with regard to the ecb β s convergence assessment of greece and sweden. | 1 |
which savings - investment imbalances, the growth of complex securitised credit intermediation, changing patterns of maturity transformation, rising embedded leverage, a burgeoning shadow banking sector, and rapid credit - fuelled growth, had created large systemic vulnerabilities. in the future, we need β at national and global level β to be in a much better position to understand and address trends in credit growth, in system - wide leverage and maturity transformation, and in the inter - linkages within the financial system, to identify and constrain emerging risks. for this we require additional system - wide prudential as well as other tools. creating the prudential tools, regulatory set - ups and policy tools required to better constrain system - wide risks, including generating the transparency needed for authorities and markets to be better informed about the risks to the system, is the focus of much of the reform agenda. these changes do of course need to be implemented at national levels. but there is work internationally to generate the tools and policies needed, to promote coherence in implementation and to conduct the monitoring that is required. let me speak to some of these. one central lesson of this crisis is that the system entered it with too little capital, far too small liquidity buffers, and a capital and valuation regime with significant pro - cyclical consequences. much work is underway on bank capital and liquidity that will address these issues. the basel committee proposed last year changes that by end 2010 will expand basel ii risk capture and very significantly increase trading book capital requirements. and the committee β s much strengthened liquidity guidelines are in the process of being implemented nationally. further work is underway to strengthen guidance for and monitoring of liquidity management at large cross - border banks. the fsf and its member bodies also produced a set of recommendations to mitigate procyclicality. these call for ( i ) regulatory capital requirements to increase the quality and level of capital in the financial system during strong economic conditions so that they can be drawn down during periods of economic and financial stress ; ( ii ) a revision of the market risk framework of basel ii to reduce the reliance on cyclical value - at - risk based capital estimates ; and ( iii ) to supplement risk - based capital requirements with a leverage ratio to contain the build up of leverage in the banking system. regarding provisioning, we β and now g20 leaders β called on the iasb and fasb to reconsider | 13 % - 5 % - - spending on pensions + 10. 2 % + 2. 2 % - - total ageing - related spending + 11. 5 % + 3. 4 % government debt / gdp : projection 346 % almost 200 % rise in public spending as % of gdp 2005 - 2050 source : economic policy committee and european commission projections. | 0 |
health system in israel is very good by any measure in international comparison. 8. another matter of concern, particularly when coming to approve the state budget, is that of examining a new approach to the budget process. this includes a multi - year approach to fixing budget aggregates, the involvement and responsibility of the different government ministries in the budget process, decentralizing budget responsibility through quality management of local governments, and increasing transparency of the budget process. most of these matters are in different stages of treatment by the government, and the bank of israel not only supports their progress but also assists as best it can. as i said earlier, this is only a very formative list, part of it already being dealt with and others only partly so, if at all. what is important is to start straight away on creating the necessary infrastructure that will propel the economy forward for many years. in other words, we must do everything possible to ensure this drive toward sustainable growth. this is vital not just for the future of the economy, but also for the future of the state of israel. | sensible approach to assessing the outlook for and the risks to price stability over all pertinent horizons, but especially over the more policy - relevant medium term, is to analyse and combine all available information in a conceptually appropriate and consistent manner. this conclusion is further supported by the nature and extent of the uncertainty faced by policy - makers : 1. uncertainty about the impact of ongoing processes, such as technological advances and financial innovations, on the economic structure ; 2. the associated uncertainty concerning the estimated values of key economic concepts, such as the economy β s potential growth rate, the neutral real rate of interest or the non - inflationary rate of unemployment ; 3. uncertainty about the way in which economic agents form expectations ; 4. uncertainty relating to the robustness and completeness of the estimated quantitative approximations of the theoretical paradigms that may be employed in policy analysis ; and 5. uncertainty about the accuracy of data, especially on a real - time basis. and needless to say, uncertainty was heightened β for the ecb β during the transition to the euro and the conduct of the single monetary policy. taking all of this into account, the choice of our policy strategy β employing both economic analysis and monetary analysis, and using the latter to crosscheck over the medium - and long - term the assessment resulting from the former β was the right one. it has served us well. my view on the assessment of the appropriateness and effectiveness of a monetary policy framework is summarised in the old saying that β the proof of the pudding is in the eating. β and i would contend that, over the past seven years, the pudding has been very satisfying. otmar issing, who played a central role in shaping this strategy, will elaborate on this tomorrow, and i should not say much more. i would, however, like to briefly make some points relating to the future. as shown in the paper presented earlier today by my ecb colleagues ( fischer, lenza, pill and reichlin ), the monetary analysis carried out at the ecb has evolved over time and is fairly comprehensive, going beyond the standard assessments based on the quantity theory of money and the stability of money demand. it employs a variety of tools in a manner that is not mechanical but combines judgement and analytical rigour in reaching a money - based assessment of the risks to price stability. the main conclusion from our experience with monetary analysis is that, on the whole, it helps us to extract useful information from monetary | 0 |
in larger numbers after sepa direct debit has also been launched in november 2009. will the migration process be quick enough by itself or does it require an extra push? research has shown that a long period of maintaining dual systems is costly for all. so what will make industry and / or customers stop using the old products and switch to sepa? you will remember that the sepa process was only taken seriously by industry in reaction to an ec regulation. 5 although supporters of a sepa migration end - date seem to be in the majority, opposition to the concept is not negligible. however, we have to realise that sepa is not just about making life easier for european citizens and companies by removing obstacles to cross - border payments. sepa is also about removing barriers to the single market, introducing more competition to the payments industry and speeding up innovation. the eurosystem will continue its efforts to foster a general understanding among stakeholders that setting a realistic but ambitious end - date for migration to sct and sdd is a necessary step in order to reap the benefits of sepa. ten years after the introduction of the euro as the single currency, it is high time to complete the introduction of the euro in the field of single payment instruments. sepa governance in connection with the migration challenge, the question arises as to the future governance of the sepa project. so let me talk about this now. in the sixth sepa progress report, we suggested that improvements may be needed to the overall governance of sepa. to be clear, i am not speaking about the governance of the epc itself. improvements in sepa governance may be needed to foster the process towards a truly integrated retail payments market in europe. these improvements are related, in particular, to stakeholder involvement, transparency and the sepa migration progress. is market self - regulation sufficient to find solutions for these issues? the eurosystem β together with the european commission β recognises that a new, overarching body, consisting of a broad range of stakeholders, could tackle and resolve issues that are slowing the realisation of sepa. but i want to repeat that this body would not replace the current arrangements. the epc would remain responsible for the design of payment services. the new body, by contrast, would focus entirely on identifying key issues of concern to public authorities and other stakeholders. moreover, it would define priorities and promote action. in addition, it would work on fostering a common understanding among users | individual and corporate β who have accounts in more than one country or do business with companies in other countries. there are therefore many benefits of a harmonised retail payments market with common instruments, i. e. sepa. as 50 % of the cross - border trade of euro area countries is with other euro area countries, small and medium - sized enterprises will benefit immensely from the harmonisation across national borders within the euro area. also, large companies that operate in almost every european country, such as mobile phone operators, energy suppliers and petrol station chains, will gain from sepa. for those companies, managing up to 27 bank accounts, 27 standards for electronic communication with the bank or 27 different sets of requirements for card payment terminals is a truly costly business. the eurosystem therefore continues to strongly support the creation of sepa, in which β individuals and companies are able to make cashless payments throughout the euro area sepa comprises the countries of the eu plus norway, iceland, liechtenstein, switzerland and monaco, as well as oversees territories of eu countries. from a single payment account anywhere in the euro area, using a single set of payment instruments as easily, efficiently and safely as they can make them today at the national level β. sepa is needed in order to move towards a more integrated, competitive and innovative payments market in europe, which will bring substantial economic benefits. celebrating the sdd launch today is indeed very reassuring for the whole sepa process, and for all the efforts that are going into this project, not least for us at the ecb, who wholeheartedly support the sepa project. i am often asked the question : β has the financial crisis made banks less likely to support the sepa projects? β my response is usually that, as a result of the crisis, banks are once again focusing on their core business, which is attracting savings, providing loans and offering payment services. in terms of offering payment services, sepa provides a competitive, efficient and innovative retail payments market in europe. less money is available for it projects, but the business case for sepa has not changed. i have noted that more than 2, 500 banks have already signed up for the sdd service, which is a outstanding achievement, and one that few people had dared to hope for just eight months ago. back then, the epc was deliberating whether to launch the sdd on time, because many obstacles were still seen to be in the way. it also means that i | 1 |
to our benefit. as financial institutions grow bigger and have greater international presence, the nature and extent of cyber risks will continue to expand. events like this summit help propel the cyber security agenda forward. it is my hope that the sharing of knowledge and experiences here will generate new ideas to stem threats to cyber security. with that, i wish you all a productive and fruitful experience for the next two days. thank you. bis central bankers β speeches | many idb member countries, studies have shown that economic development is constrained by the lack of access to finance, given that only about 30 percent of the adult population use formal financial intermediaries. greater outreach to small and medium enterprises ( smes ) and microenterprises can be achieved through the wider application of equity - based structures in financing for smes and islamic microfinance given their strong emphasis on promoting entrepreneurship and valuecreating activities. this contributes towards the overall objective of generating inclusive growth that enhances the prospects for job creation. integration with other financial products such as microtakaful and social welfare arrangements such as endowment ( waqf ) can also provide a total financial solution for the lower income groups and small businesses. risk - sharing in islamic finance also extends to the creation of a more equitable and just distribution of wealth. redistributive instruments such as obligatory alms giving ( zakat ), endowment ( waqf ) and charity ( sadaqah ) complement risk - sharing financing tools to form part of a comprehensive approach to address poverty and promote social justice within the community, aspects that are important in increasing the potential for a more balanced economic growth. another important dimension of risk - sharing that enhances financial inclusion lies in the potential for islamic finance to become a powerful tool that can enhance financial access for emerging economies, in particular the less developed countries that have been marginalised bis central bankers β speeches by modern finance. debt financing or risk - transfer activities are heavily dependent on conventional measures of financial and economic performance. in contrast, equity financing, with its risk - sharing elements, can provide the required financial solution that is not dependent on such conventional assessments. this will allow those countries which are less developed but have assets and resources to access finance. the strong emphasis on governance and risk management in risk - sharing contracts will also have an important role in catalysing broad - based improvements in standards of oversight and financial discipline in these countries as safeguards against irresponsible practices. taken together, these elements of islamic finance offer enormous potential for less developed countries, more so those that are rich in resources, to mobilise and channel economic resources to finance growth and development, and significantly raise standards of living for their communities. in the sukuk market, sukuk structured in profit and loss sharing partnerships ( musharakah ) represents one of the majority in global sukuk issuances and outstanding. the emergence of sukuk as an alternative | 0.5 |
jan frait : twenty years of financial stability at the czech national bank opening remarks by mr jan frait, deputy governor of the czech national bank, at the czech national bank workshop on financial stability and macroprudential policy, prague, 17 december 2024. * * * we meet here today β first of all β to celebrate 20 years of financial stability at the czech national bank ( cnb ). in may 2004, the cnb board endorsed the key features of our financial stability function : its mandate and objective, the definition of financial stability, the content of financial stability analyses and the meaning of macroprudential policy. it also announced the foundation of a financial stability team in the research department. it is not easy to find traces of the original decision in the public domain. we were a bit secretive about it at the time. this was because there wasn't full support in the board for this strange thing called " macroprudential ". there was also limited support for it in the regulation and microprudential supervision departments back then. as a matter of fact, i revealed that we had set up a financial stability function to a local audience in january 2005 at the earliest, in my presentation on the conclusions of the 2004 financial stability report. this presentation was only published in czech, as we did not think anyone would be interested β except for the bank for international settlements ( bis ), which had the same idea on its agenda. you may ask why the board decided to establish a financial stability function anyway. one reason was a severe banking crisis that had occurred between 1997 and 2000, which had its roots in macroeconomic mismanagement, among other things. the other β and potentially more important β factor was the influence of certain bis economists that some of us admired. the bis chief economist william white had given an impressive lecture in this congress centre in 2003. that may have been the lucky breaking point. just as a matter of interest, in may 2004 the cnb adopted the following definition of financial stability : a situation in which the financial system ( a ) fulfils its functions without disturbances and negative effects on the present and future development of the economy, and ( b ) at the same time shows a high degree of resilience to adverse shocks. this definition is still in place after 20 years. simply perfect right off the bat. one more important thing happened 20 years ago. in may 2004, the government approved a plan to integrate the then fragmented supervision of the | local financial market. at the time, the cnb was just the bank regulator and there were three other supervisory institutions. this government decision made us work hard to take over the others and bring them under the cnb's roof. this was actually not what the government had originally envisaged, but we were lucky and won the battle. some think it was a 1 / 2 bis - central bankers'speeches kind of hostile takeover. no matter what it was, it took some time to complete β parliament did not approve the integration plan until the end of 2005. the cnb became the sole supervisor in april 2006. there is one more important anniversary this year that no one speaks of. ten years ago, at the end of november 2014, the board decided to introduce a supervisory tool to address potential sovereign risk in the banking sector. as far as i know, we were the first and likely the last authority in europe to establish any kind of sovereign risk instrument. every year since 2015, the cnb has conducted a public finance stress test and informed banks whether sovereign exposures above a certain level could be subject to a pillar ii capital add - on. to begin with, we were silent about the introduction of this tool as well. the decision was revealed in june 2015. at the time, it was viewed as a temporary solution before eu - wide regulation kicked in. with the benefit of hindsight, we were lucky to act early, before the window of opportunity was closed by the failure of the high - level working group of the european economic and financial committee to agree on anything in this area. in summer 2015, the eu authorities recommended to " await the outcomes of the basel committee ". we are still waiting. to be honest, the window of opportunity created by the sovereign debt crisis in the euro area was wide open back then β we even managed to convince the ministry of finance to support the introduction of the tool. looking at the state of public finances across a number of advanced economies today, one slogan inevitably comes to my mind as to the future : never waste a good crisis! for now, enjoy the conference. 2 / 2 bis - central bankers'speeches | 1 |
and hours worked are well above pre - pandemic levels ( chart 6 ). our most recent business outlook survey showed that labour 2 / 5 bis central bankers'speeches shortages are widespread and that many firms are struggling to fill vacancies. this is particularly the case in quebec. in general, job creation has been strong since the autumn, and the unemployment rate is now at a historical low of 3. 9 % in the province. some of you will say that is all well and good, but couldn β t we see stagflation appear in the coming year or so? isn β t growth going to slow as the bank of canada raises policy rates? yes, growth will slow β the goal of higher rates is to reduce excess demand and bring it more in balance with supply. that should reduce inflation, undercutting the inflation part of stagflation. for example, there is a lot of excess demand for interest - sensitive goods and for housing, some of the key contributors to inflation pressures. supply and demand should come more into balance in these segments as policy rates rise, reducing inflationary pressures. more importantly, a slowdown in growth does not have to mean high unemployment, which was the hallmark of the stagflation period of the 1970s. right now, job vacancies are very high, which means employers are trying to hire still more workers from a declining pool of labour. by cooling overall demand, we can reduce the demand for labour and the degree of labour shortages in the economy. employers could stop looking for new workers but keep the ones they have β with little impact on the unemployment rate. that is a scenario that delivers a soft landing. while we β re thinking about the job market, there is another important point. wage - setting dynamics are different now than in the 1970s. fifty years ago, persistently high inflation played a more central role in the wage bargaining process. this is highlighted by the fact that the average contract length for collective agreements in canada has more than doubled from roughly 18 to 20 months in the early 1980s to 42 months by 2021. 1 this implies that unionized workers see less need now than they did in the 1970s or early 1980s to have their wage contracts frequently updated to catch up to rising consumer prices. the final, and more fundamental, difference between now and the period of high inflation in the 1970s is the inflation - targeting regime adopted by the bank of canada in 1991. from this first agreement with the government of canada, | jens weidmann : prospects for the economy speech by dr jens weidmann, president of the deutsche bundesbank and chairman of the board of directors of the bank for international settlements, at the jahresempfang der wirtschaft, mainz, 7 february 2017. * * * 1 welcome mr friese dr bennecker dr gunster ladies and gentlemen many thanks for your kind welcome. seeing as we are well into the fifth season of the year, as the carnival period is known here in this part of germany, and unmistakably so when i see the festive decorations festooning this venue, one or two of you might be expecting a traditional, witty carnival speech, or at least be hoping, deep down, to hear something equally entertaining. well, i β ll have to disappoint you on that score, i β m afraid. central bankers are widely regarded as somewhat dreary speakers, especially so because of the dry topics they drone on about. they ramble on about monetary policy transmission channels, financial pro - cyclicality and macroprudential instruments. worse still, they love to use acronyms like pspp, tltro or ssm β terms which, for the uninitiated, often mingle to produce an indigestible alphabet soup. and wasn β t it former bank of england governor mervyn king who once posited that " few are braver than those who choose to listen to a central banker "? it β s all the more cheering, then, to see that there are so many brave souls in and around mainz... perhaps that β s because central banks have been credited with a political role that extends far beyond the narrow field of monetary policy. after all, in the midst of the crisis, central banks were repeatedly described as the only institutions capable of taking action and had new tasks outside the remit of monetary policy thrust upon them. or maybe it β s also because the current monetary policy stance is directly affecting you, ladies and gentlemen, in one way or another. you will have felt the impact of the low - interest - rate policy at close quarters, no matter whether you are an entrepreneur, a taxpayer, a property buyer, or a saver or member of an occupational pension scheme whose concerns dr bennecker has already outlined. and the entrepreneurs among you, especially, will naturally also be wondering which way the economy will go in the foreseeable future and what | 0 |
ben s bernanke : swearing - in ceremony remarks speech by mr ben s bernanke, chairman of the board of governors of the federal reserve system, at the ceremonial swearing - in, washington dc, 3 february 2010. * * * it is with considerable gratitude and not a little humility that i begin a second term as chairman of the board of governors. i thank president obama for the confidence he has shown in me by renominating me and the members of the senate for confirming my nomination. the past four years have been an extraordinary time. in many respects, this period has shown this institution at its finest, as we moved rapidly, forcefully, and creatively to confront the deepest financial crisis since the great depression and help prevent a looming economic collapse. this swift and effective response would not have been possible without the remarkable dedication, professionalism, and personal sacrifices of the federal reserve staff. i would like to express my deep appreciation to all of you for your creativity and hard work. america and the world owe you a debt of gratitude. at the same time, this institution, like our country, faces enormous challenges, challenges that will demand continued commitment and professionalism from staff members in every division. on the economic front, the resumption of growth in the nation β s output of goods and services is encouraging. but far too many people remain unemployed, foreclosures continue at record rates, and bank credit continues to contract. we at the federal reserve cannot hope to solve all these problems on our own β other policymakers and those in the private sector must do their part β but we must continue to do all that we can to ensure that our policies are helping to guide the country β s return to prosperity in an environment of price stability. at the federal reserve and other agencies, the crisis revealed weaknesses and gaps in the regulation and supervision of financial institutions and financial markets. working together, the fed staff and the board have made considerable progress in identifying problems and improving how we carry out our oversight responsibilities. we are restructuring our supervisory framework, for example, to incorporate a more systemic, multidisciplinary perspective. we are engaging with international colleagues to develop tough, comprehensive regulations to promote the safety and soundness of financial institutions, and we have developed and implemented strong new protections for consumers. we will continue to work with the congress to develop an effective, comprehensive reform of financial regulation. as we move forward, we must continue to do all that can be done to ensure that | our economy is never again devastated by a financial collapse. the federal reserve has been granted, both in law and in political tradition, considerable independence and autonomy. that independence serves important public objectives. critically, it allows the federal open market committee to make monetary policy in the longer - term economic interests of the american people, rather than in the service of shortterm political imperatives. it also allows the federal reserve to make supervisory decisions based on the facts of each case and the need to preserve financial stability, not on the basis of political considerations. in the interest of maintaining public confidence and promoting economic and financial stability, we must continue to protect our independence. at the same time, in a democratic society like our own, institutional independence brings with it fundamental obligations of transparency, responsiveness, and accountability. the federal reserve is already one of the most transparent and accountable central banks in the world, providing voluminous information and explanation concerning all of its activities. however, i believe that we should be prepared to do even more, to become even more transparent. it is essential that the public have the information it needs to understand and be assured of the integrity of all our operations, including all aspects of our balance sheet and our financial controls. we will continue to work with the congress to ensure maximum transparency of america β s central bank, without compromising our ability to conduct policy in the public interest. these are just some of the challenges that we will all face in the coming months and years. i thank you for the many expressions of support i received during the confirmation process, for your hard work and dedication, and for your service to your country. i look forward to continuing to work with all of you to strengthen our economy and to make the federal reserve as effective as it can possibly be in advancing the economic wellbeing of all americans. thank you. | 1 |
actually use them. and the market would need to include both dealers and ptfs. i β d be interested in hearing the panelists β views on this and whether there are things that regulators could do to encourage a cooperative, industry - wide approach. treasury repo markets are also undergoing structural changes, which brings me to the third area of consensus at the conference. the repo panel i moderated included an asset manager, a broker dealer and one of the triparty clearing banks. there was agreement on the panel that expanded repo clearing would be positive for the market. that said, there was also a consensus that the current private sector initiatives in this area face demanding regulatory requirements related to capital and liquidity. we are carefully considering these proposals and are open to solutions that would satisfy regulatory requirements while bringing the benefits of central clearing. i β d welcome panelists β views on proposals for expanded repo clearing as well. i look forward to the conversations today, and i hope we β ll keep having them. treasury markets are important to all of us. the financial market participants represented here have special reasons to care. as one of the panelists at the conference put it, we β ve built our entire prudential regulatory framework, indeed our entire financial framework, around the ability to quickly and efficiently transform treasury securities in to cash liquidity. these markets need to keep functioning at a high level, and we all have a stake in making sure that they do. bis central bankers β speeches | jerome h powell : roundtable on β treasury markets and debt management : evolution of treasury market and its implications β β opening remarks opening remarks by mr jerome h powell, member of the board of governors of the federal reserve system, at the 2015 roundtable on β treasury markets and debt management : evolution of treasury market and its implications β, new york city, 20 november 2015. * * * it β s been a month since the new york fed hosted a very successful conference on treasury market structure, and i β m eager to continue the conversation started there. i thought i β d start by discussing some of the main points i took from the conference. there were certainly different points of view on a variety of issues between broker dealers, proprietary trading firms ( ptfs ), end users and others, but hearing a range of views was exactly the dynamic we were hoping for. there was broad understanding that electronic and automated trading are here to stay. indeed, a wide range of firms are engaged in these trading practices today. participants on the ptf panel viewed their relative speed and efficiency as allowing them to provide tighter spreads and greater liquidity. one expressed the belief that his firm needed to be faster and more sophisticated because, unlike broker - dealers, they have no direct view of customer order flows. for their part, dealers noted that they provide a key service in helping their customers execute larger trades, and defended their internal matching of customer trades as a natural search for trading efficiencies. there were differing views on the significance of what happened in treasury markets on october 15, 2014. many attendees voiced concern, but a number also expressed the view that the market worked as it was supposed to, and even that nothing extraordinary occurred that day. although buy - side participants tended to believe that they were not directly affected given the short duration of the price swings that day, some noted that more frequent episodes of high volatility could lead them to demand larger risk premiums. for my part, i do realize that a single 12 - minute roundtrip episode may not mean that much in the end. but it isn β t satisfying to me to say that the market worked as it was intended to. the events of october 15 were unusual both in the size and speed of the moves and in the absence of a fundamental driver. the real question is whether there are dynamics at play here that are likely to produce more episodes of sudden, outsized volatility without any obvious cause. further episodes of this nature could | 1 |
doon? the government will take over. but that will create more problems than it solves. therefore, all these things - counting minuses and pluses and adding them and making many problems disappear... just because, right now, there is no problem. and if these are not challenging enough, we heed the reminder of hyman minsky who argued that " it is in periods of stability that we sow seeds of instability. " what i just described earlier - good times, which we regulators cannot let go of so easily. in fact, when the good times are turning bad, we do our best to prolong it even longer. it can lull us into a wrong sense of complacency. this is the answer to the question i posed earlier : we work on systemic risks, report our analysis - thank god for our staff and for our colleagues - and engage the public because we avoid the expected shocks and better manage when the unexpected ones happen. this is a point of resilience. for instance, we in the central bank know that the policy rate affects [ market ] interest [ rates ]. but it does not affect the foreign borrowing costs of conglomerates from abroad. in a sense, the conglomerates live in a financial sector that is quite different from the financial sector that we all live in. the government is the same thing. this explains why the t - bill [ treasury - bill ] rate is lower than the policy rate. so, these are all the things we are asking. the extent to which these things that look like solutions to any problem that we do not like, eventually, unintentionally become the root of instability. so, our benchmark is not whether the risks do materialize but rather how prepared we are for them. 2 / 3 bis - central bankers'speeches it could be that none of them [ risks ] ever happen. but that does not mean we should do it. my analogy is always the typical fire extinguisher. it looks like a waste of money [ because ] it has never been used. but, clearly, it is a bad idea not to have them. in closing, let me invite everyone to download your copy of the 2022 financial stability report. tell us what you think, and we are more than happy to engage. in this way, we can manage the risks ahead and shape present and future outcomes - together. thank you very much at magandang hapon sa in | have been volatile against the backdrop of the further decline in crude oil prices and uncertainty such as over future developments in emerging and commodity - exporting economies, particularly the chinese economy. for these reasons, there is an increasing risk that an improvement in the business confidence of japanese firms and conversion of the deflationary mindset might be delayed and that the underlying trend in inflation might be negatively affected. in order to preempt the manifestation of this risk and to maintain momentum toward achieving the price stability target of 2 percent, the bank introduced β quantitative and qualitative monetary easing ( qqe ) with a negative interest rate β in january 2016. the bank will lower the short end of the yield curve by slashing its deposit rate on current accounts into negative territory and will exert further downward pressure on interest rates across the entire yield curve, in combination with continued large - scale purchases of japanese government bonds ( jgbs ). the jgb yield curve has declined after the introduction of β qqe with a negative interest rate, β bis central bankers β speeches and policy effects have been seen. going forward, these effects are likely to steadily spread to both the real economy and the price front. the bank will continue with β qqe with a negative interest rate, β aiming to achieve the price stability target of 2 percent, as long as it is necessary for maintaining that target in a stable manner. it will examine risks to economic activity and prices, and take additional easing measures in terms of three dimensions β quantity, quality, and interest rate β if it is judged necessary for achieving the price stability target. in global financial markets, risk aversion of investors has been spreading excessively around the globe recently. the bank will carefully monitor how the developments in global financial markets influence japan β s economy and prices. thank you. bis central bankers β speeches | 0 |
andreas dombret : twenty - five years of bundesbank β s representative office in tokyo welcoming remarks by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the opening of the enlarged office of the deutsche bundesbank in tokyo, tokyo, 6 september 2012. * 1. * * introduction governor shirakawa, vice minister nakao, ladies and gentlemen, this is my third visit to tokyo since i took over as the bundesbank β s β foreign minister β β that is the bundesbank β s board member responsible for international relations. the long - standing partnership between the bank of japan and the bundesbank singles out japan as one of our key partners in the international sphere. for this reason, my first bilateral visit at the bundesbank brought me to tokyo in 2010. it was my explicit wish back then to come to japan first. needless to say, that i am glad to be back again. and it is a great pleasure for my colleague joachim nagel and me to welcome such a distinguished gathering of central bankers, government officials, representatives of the financial community and friends. all of you have come despite a busy schedule. this reflects the reputation our representative office has gained in its 25 years of existence and the close and successful cooperation which exists between you, our japanese hosts, and the bundesbank. also on behalf of my colleague joachim nagel, our thanks therefore go to all those who have been supporting the bundesbank over so many years. you will appreciate me mentioning our colleagues from the bank of japan in particular. today, financial markets are awaiting the decision of the ecb governing council. in the following, i will focus on some important aspects from the viewpoint of the bundesbank. 2. the european sovereign debt crisis let me start with an important statement : the euro is a stable and successful currency, both politically and economically. it is the showpiece project of political integration in europe and has, since it was introduced, successfully safeguarded price stability. and still doubts are being voiced about the euro β s continued existence. european monetary union is facing the greatest challenge in its history. the founding fathers knew very well that in the european monetary union β with a single monetary policy but national fiscal policies β safeguards were needed to ensure sound fiscal policy. otherwise, the deficit bias would be reinforced. unsound fiscal policies in turn would make it more difficult for monetary policy to maintain price stability at low | interest rates and could lead to pressure on the central bank to β communitise β government debt through its balance sheet. the convergence of long - term interest rates to what for the countries at the euro area periphery were historically low levels had a number of implications. in some countries, private or government consumption grew faster than the economy β s potential output. in addition, in some countries, a significant real - estate bubble was the consequence. the international competitiveness in a number of countries deteriorated. necessary reforms to make labour, product and services markets more flexible were postponed. the global financial crisis revealed these unsustainable developments, which are reflected in the form of deteriorating public finances. bis central bankers β speeches greece was the first eurozone country which lost market access when investors questioned the sustainability of its public finances. in the absence of a joint assistance mechanism, the country initially obtained bilateral loans from other euro area countries. the imf, too, was involved in providing assistance. all support was tied to strict conditionality. this conditionality was meant to reinforce the policy measures taken to mend economic structures and government finances. strict conditionality must be the precondition for financial assistance so as to avoid disincentives and ensure the programme β s success. a temporary crisis resolution mechanism β the european financial stability facility β was set up between emu countries in 2010. it will be replaced by a permanent mechanism β the european stability mechanism β probably before the end of this year. as the crisis went on, both the efsf and esm were expanded and their firepower was increased. more specifically, they can now include not only loans to governments ; they can also comprise precautionary credit lines, interventions in the primary and secondary markets, and special - purpose loans to euro area states for the purpose of recapitalising financial institutions. since then, support programmes have also been set up for both ireland and portugal. for greece, a second rescue package has been approved, combined with extensive debt restructuring. more recently, spain has expressed its intention to apply for assistance to restructure its banking sector. it is the responsibility of the spanish government to act decisively now. generally speaking, these temporary support measures buy time until sustainable measures become effective. but a firewall cannot extinguish a fire. the fire has to be extinguished by fiscal consolidation and fiscal reforms. in this context, the eu member states demonstrated their ability to act collectively in crisis situations by agreeing on a | 1 |
the materialization of systemic risk and financial instabilities can lead to deep recessions with great economic costs, carrying risks for medium term price stability as well. does this mean that monetary policy should be used to preserve financial stability? not primarily! we should not violate the tinbergen principle : a separate policy instrument for every policy objective. the first best policy for preserving financial stability and specifically to prevent systemic risks from materializing is macroprudential supervision. of course, we cannot judge yet, the success and the effectiveness of the newly established macroprudential supervisors β here in europe and across the atlantic in the us. but, i am convinced that if we are wary on financial innovations, potential activities shifting to unregulated markets segments or entities and we are mastering the analytical challenge of measuring systemic risk, this undertaking will be a very successful one. i have started my central banking career in the 70ies when the fight against inflation and macroeconomic instability was a big challenge. from this period i have kept my conviction that you have to lean against the wind. so, i believe, that we as monetary policy makers should not shy away from our responsibility to contribute to preserving financial stability. having said that, i believe that we at the ecb are well prepared for this task. first, with our medium term orientation on price stability, we have the framework to take into account in a systematic way more medium term developments and potential imbalances occurring at that horizon. bis central bankers β speeches second, our two - pillar monetary policy strategy foresees that we not only take into account economic but also money and credit developments when setting interest rates. such money and credit development can help to identify financial market imbalances and unsustainable credit and asset price developments and can serve as early warning indicator for financial fragilities. and third, we have a framework to implement monetary policy in a flexible way, allowing that we can react swiftly when fragilities occur. still, we should be modest as well. it is true that before the crisis, we have seen signs of imbalances β imbalances at the global level and imbalances in local markets in the euro area and we have warned that correction could take place in an abrupt manner. but it is also true that nobody β also not at the ecb β has seen such a severe and deep crisis coming. therefore, we also learned our lessons : that the financial sector is absolutely crucial, for macroeconomic outcomes | bankers β speeches the mro rate will become more relevant again in the future, signalling our monetary policy stance. this implies that the overnight rate will be close to the mro rate. we already see that interbank markets are performing better, as shown for instance by the decreasing dependency of banks on ecb refinancing operations. recourse to these operations has declined significantly from close to β¬900 billion in june 2010 to around β¬430 billion today. 5. monetary policy and heterogeneity in public debates, viability of the euro has again been questioned on the ground that the financial crisis has deepened the economic divide across member states. but the ecb β s bis central bankers β speeches monetary policy continues to be geared towards price stability in the euro area as a whole. the single monetary policy of the ecb cannot address different economic growth or inflation across regions of the euro area. such macroeconomic heterogeneity is a normal feature within a monetary union. heterogeneity can even be a desirable feature when it reflects the necessary adjustments to macroeconomic imbalances that have built up. macroeconomic diversity is an issue that national policy - makers should deal with, not the ecb. their primary contribution of course would be to avoid building up unsustainable macroeconomic imbalances. indeed, the bulk of the current imbalances in some euro area countries reflect that countries have insufficiently internalised the participation in a monetary union into domestic policies. to fully realise the benefits of emu requires national policies to adapt to emu. this applies to the areas of fiscal policy ( including taxation ), structural reforms, regulation and banking supervision. without this, imbalances will inevitably reoccur, challenging the proper functioning of emu and thus of monetary policy. it is essential to put in place a european framework that is incentive - compatible and credibly enforceable, to avoid the re - emergence of significant imbalances. national policies should be fully guided by the framework. does this then imply that monetary policy completely ignores developments in individual euro area countries of the euro area? no, but specific national developments play a role for monetary policy only to the extent that they have an impact on the medium - term outlook and risks for price stability in the euro area as a whole. maintaining price stability for the entire euro area is the central contribution the ecb β s monetary policy makes with a view to supporting sustainable economic growth, job | 0.5 |
undertakings. ladies and gentlemen, with these few words, i thank you for your attention and i hope that you will find the event insightful. 2 / 3 bis - central bankers'speeches thank you. 3 / 3 bis - central bankers'speeches | could rise further to as much as usd2. 8 trillion 1. the events which have since unfolded underscore the fact that effectively managing risks associated with mortgage financing encompasses a much broader set of considerations β including the consequences of an adverse and broad downturn in the housing market. the crisis has reinforced the need for banks to consider the cyclical developments in the mortgage financing market more explicitly in their risk assessments. factors such as a sustained growth in house prices, low interest rates and modest equity commitment should inform banks of the risk outlook for the mortgage segment and corresponding risk mitigation actions that are needed to avert potential losses. changes observed in the market features of the business in other countries also foreshadow what may in time characterise the mortgage market in malaysia. in some markets, brokers of home loans are commonplace and a growing proportion of loans are protected by insurance. in an increasingly challenging environment, banks will need to demonstrate that they have sufficiently strong balance sheets, processes, and management plans in place to contain the risks, while providing continued support for portfolio expansion and product innovation in the mortgage financing segment. this will entail continuous assessments of the changing profile of risk and the appropriate consideration of new and alternative ways to manage risks. the board in particular is responsible to ensure that product innovation and the re - packaging of risks in the mortgage portfolio do not outstrip the bank β s capacity to manage the associated risks. today, we are pleased to have three distinguished speakers address some of these issues and developments in greater depth. they are dr. yeah kim leng from ram holdings berhad and dr. john lee from kpmg who will share an overview and their perspectives on risks in mortgage markets in malaysia, as well as their experiences with approaches to managing these risks in the light of the many changes taking place in this area. we are also especially honoured to welcome mr. peter pang, the deputy chief executive of the hong kong monetary authority, who will speak on hong kong β s experience in the area of mortgage financing. as you all know, hong kong has one of the most developed and healthiest mortgage markets in the region with a delinquency ratio reported at only 0. 04 % in october 2009 2. hong kong β s leadership in advancing innovations in sound mortgage risk imf global financial stability report, october 2009. hkma monthly statistical bulletin. management practices over the years, including through the role of the hong kong mortgage corporation ( hkmc ), provides many | 0 |
financial system. in june, the chancellor announced that the government would amend the bill to give the fpc a secondary objective so that, subject to being content on the first objective, it should support the economic policy of the government, including its objectives for growth and employment. currently, the fpc is acting in an interim capacity to undertake as far as possible the future statutory fpc β s macroprudential role. these two objectives contain the same β subject to that β language used in 1997 in the monetary policy committee β s objectives. it means that there is a hierarchy of objectives which the fpc must observe. but, two further points are relevant here. first, resilience and economic growth interact, so they are not fully independent. an economy that displays stable growth is more likely to have a stable financial system, and vice versa. second, policy is necessarily forward - looking, in that we are concerned with stability and growth in the future, since today β s outcomes are so to speak, β baked in β. this means that, in thinking about the hierarchy of objectives, in my view we have to take a forward - looking assessment of the probability of success, rather than saying we should complete one and then do the other. financial stability is more complicated than monetary policy in at least one respect, namely that it does not reduce to a single target expressed as a number. rather, it comes in the form of recommendations, in the plural, expressed as words. you would think that as central bankers and public officials we should love that, spending our time crafting language in a form that only we really understand. let β s not get carried away here β there is a danger that bis central bankers β speeches by doing so we create uncertainty about our intentions. this danger of creating uncertainty exists because we are finding our way in a new and difficult area of policy. i want to try to cast more light on the issues here. but, i would note that, in the history of monetary policy, regime changes have had to deal with the challenge of crafting communication that avoids creating more uncertainty. we have two, hierarchical, objectives : simply put, the resilience of the financial system, and the objective of encouraging growth ( the counter - cyclical objective ). these two can point in opposite directions, for instance in terms of banks β ratios of capital to assets. the fpc has recommended that banks should strengthen their buffers of capital. what is meant by this? | uk and foreign banks active in london and the key payment and settlement systems, clearing houses and exchanges that together are critical for delivery of the financial services that the wider economy depends on. the questionnaire provided for a detailed self - assessment by firms of how they organise their cyber defences. its purpose was to enable uk authorities to take stock of resilience across the sector and identify best practice across firms. part of this was to be able to play back to individual firms where they stood relative to best practice. but lying behind this is the objective of raising resilience in individual firms by ensuring that the network as a whole is resilient. and given the importance of these firms to the stability of the financial system, this implies a level of resilience that goes beyond basic cyber hygiene but aims instead to ensure that firms are in a position to manage advanced persistent threats ( apt ) that are the hallmark of some statesponsored attackers. we are currently discussing the results from these questionnaires directly with firms. you will appreciate that i cannot go into specifics. but overall the responses did not reveal any immediate critical shortcomings in the cyber resilience of the firms involved. but they did point to areas for improvement that we will be following up on with firms. let me list some common themes. 1. cyber has changed the rules : existing operational resilience arrangements are often geared to dealing with physical threats. these still matter. but cyber changes the game. cyber is a dynamic, intelligent and adaptive threat. in the cyber arms race, costs are stacked in favour of the attacker, not the defender. to meet the challenge, organisations need to have policies and processes that are dynamic, intelligent and adaptive too. this means investment in capability to identify threats and detect cyber attacks. without this situational awareness it is hard to determine and achieve appropriate maturity levels for cyber defence and to allocate resources effectively to meet the threat. 2. cyber is not a minority sport for technologists only : of course the first line of defence is critical and we still need it specialists who understand the technical challenges cyber presents. but good cyber resilience is about much more than technology. it is about culture too and this means people and processes. when morgan stanley reported recently its customer information had been breached, this wasn β t due to sophisticated hackers, rather an employee who stole data from over 350, 000 customer accounts. all parts of an organisation need to understand cyber risk and their responsibilities | 0.5 |
- year meeting with the media, a modest but very meaningful ceremony : the awards ceremony for the best diploma thesis. we value true scientific research in its highly beneficial capacity, from a long - term perspective, to enable the building of contemporary and sustainable research models. from this point of view, the bank of albania has endeavoured to boost its research capacities, something we consider to be essential, ultimately helping to perfect our entire decision - making process related to monetary policy and financial stability. for this very reason, the award ceremony for the best diploma thesis has become a consolidated activity of the bank of albania geared toward supporting promising students in the field of scientific research within the scope of central banking. this year, students also showed a high interest in presenting their diploma theses. we received 1 / 2 bis central bankers'speeches 27 studies on a wide range of economic, financial, and legal topics focused mostly on the albanian economy. it is a delight to see how these studies use contemporary research methodologies and valuable information intelligently to analyse economic phenomena, employing theoretical and empirical arguments. in spite of the challenge of choosing the most interesting studies, we now have our verdict on the β governor β s award for the best diploma thesis 2018 β. the selection has not been easy. each year, we receive increasingly more qualitative studies in terms of research methodology, topic originality and methods applied in research. i take this opportunity to congratulate all the contestants for the high quality of the presented studies. i hope and encourage you to further enrich your theoretical and empirical capacities as you advance in your careers, wherever that may lead, in academia or as experts in specific fields. i hope you will be unremittingly engaged in scientific research, in a relationship of which only the starting date is known. thank you and happy holidays! 2 / 2 bis central bankers'speeches | gent sejko : the importance of media in analysing albania β s monetary policy address by mr gent sejko, governor of the bank of albania, at the end - of - year meeting with the media, tirana, 20 december 2018. * * * dear ladies and gentlemen, welcome to our end - of - year meeting with the media. i would like to thank you for your readiness, objectivity, and seriousness in covering the activities of the bank of albania and informing the public about them, throughout 2018. thanks to you, our analyses and decision - making have been communicated in a thorough manner, mindfully tailored and styled in accordance with the age and profession of the targeted audience. i must note that, in addition to broad geographic coverage, your comments and analyses on the economic and financial developments in albania have been very professional. at the bank of albania, my colleagues and i maintain that the current media reality is an important part of our activity. our decision - making could not be considered complete without your contribution. communication is a vital and delicate process for a central bank. i must emphasize that, without your help and objectivity, realisation of bank of albania β s decision - making regarding monetary policy and financial stability would have been an impossible mission. figuratively, i would point out that you are the ones that enable the translation of our analyses and conclusions into an adequate and easy - to - understand message for the general public. you have informed the public on our actions and interventions related to monetary policy, as well as on our decisions related to financial stability, market efficiency, banking regulations and other more specific aspects. this leads us to the conclusion that the level of reporting has improved significantly, which, in turn, urges us to be more demanding of ourselves in all the arguments and analyses underpinning our decision - making. i would like to thank you for your constructive role in reporting news items related to developments in the economy, finances, money, the banking system, inflation, financial stability, as well as to the risks towards which our economy is exposed. i would also like to assure you that the bank of albania will continue to be an open and very loyal institution vis - a - vis the media. the bank of albania will be continuously open to communication with regard to the entire spectrum of economic, financial, contemporary, professional and unbiased news. dear ladies and gentlemen, it has become a tradition now for us to organise, during the end - of | 1 |
yannis stournaras : the greek economy - investment gap and the financing of investment needs opening remarks by mr yannis stournaras, governor of the bank of greece, at the presentation of the eib investment survey results 2023 for greece titled : " the greek economy : investment gap and the financing of investment needs ", athens, 30 may 2024. * * * ladies and gentlemen, i would like to welcome you to the ank of greece and to the presentation of the results of the 2023 eib investment survey for the greek economy. in my opening remarks, i will briefly refer to the growth prospects of the greek economy and to the particularly important role of investment. 1. the greek economy : current state and prospects the greek economy grew by 1. 2 % in the fourth quarter of 2023, after 2. 1 % in the previous quarter. this slowdown is attributed to declines in the growth rate of investment and of exports of goods. for 2023 as a whole, the economy continued to grow at a satisfactory rate ( 2 % ), but weaker relative to the exceptional growth in 2022 ( 5. 6 % ). yet, despite successive international crises and high uncertainty due to geopolitical tensions, the greek economy has grown faster than the euro area average since 2021. private consumption, exports of goods and services and gross fixed capital formation remained the main drivers of growth in 2023, although the slowdown in the economies of key trading partners and high inflation exerted a dampening effect on these gdp components. overall, in the coming years, the greek economy is projected to outperform the euro area. this development is particularly important, as it reinforces the process of convergence of greece's real gdp per capita with the average levels of the eu, which was interrupted during the sovereign debt crisis. the main driving forces of economic activity will continue to be investment spending, thanks to the contribution of the european funds, in particular of the rrf, as well as private consumption, due to a rise in real disposable income on account of higher employment and lower inflation. 2. the role of investment spending given the problems of population ageing, low birth rates and low labour force participation, the role of investment in physical and human capital becomes decisive for the future course of the economy in both the short and the long run. in the short run, investment spending boosts demand and growth. in the long run, it increases the capital | our respective responsibilities in relation to financial stability and provides a structure for the necessary close cooperation between us. in the terms of the mou the bank is responsible for the overall stability of the financial system as a whole. the mou implicitly recognises the inter - relationship between monetary and broader financial stability, which is fundamentally important : just as we could not hope to deliver monetary stability if the financial system was crashing around our ears, so, too, monetary stability is a very necessary though in itself still insufficient - condition for stability of the financial system. specifically the mou recognises the bank β s role - as the bankers β bank - at the heart of the payments system ; and it recognises our capacity, in exceptional situations and subject to override by the chancellor, to act as lender of last resort in order to limit systemic damage. the mou acknowledges more broadly the bank β s oversight role which enables us to advise on the financial stability implications of developments in domestic and international markets and payments systems ; and it acknowledges finally also our role in promoting the efficiency and effectiveness of the financial sector, with particular regard to international competitiveness, but which can also contribute to the robustness of the financial system. in the context of the uk β s highly developed and increasingly integrated financial services industry, in which distinctions between banks, building societies, investment intermediaries, insurance companies and so on have been becoming increasingly blurred, the argument for moving away from a fragmented supervisory and regulatory structure, in which banks were separately regulated, was compelling - and howard and his team have done a tremendous job in bringing all the different strands of financial services regulation together under the fsa umbrella seamlessly and in a relatively short space of time. a potential downside from the bank of england β s perspective was the possible loss of information from, or contact with, the banking sector which might reduce our capacity to exercise our responsibility for the stability of the financial system as a whole. now of course it is early days to begin to assess the new arrangements from this perspective. it is true that we have not had any serious threats to financial stability in this country over the past three years, but i suppose that putting that down to the new structure would be a bit like the man who claimed that the absence of pink elephants in hyde park was the direct result of his clicking his fingers there on his regular morning walks. we really haven β t been tested. all i can say is that i am encouraged by the close cooperation between | 0 |
2. 0 - 3. 0 2. 0 1. 9 2. 2 1. 5 1. 5 4. 4 2. 2 - 4. 0 18. 7 23. 0 1. 8 1. 9 2. 2 0. 5 - 4. 0 19. 2 23. 2 1. 8 1. 8 2. 5 0. 6 - 3. 9 19. 2 23. 2 ( annual change, percent ) gdp demanda interna domestic demand ( w / o inventory change ) gross fixed capital formation total consumption private consumption goods and services exports goods and services imports current account ( % of gdp ) gross national savings ( % of gdp ) nominal gfcf ( % of gdp ) ( f ) forecast. source : central bank of chile. figure 18 growth forecasts for selected economies ( annual change, percent ) 2013 - 2019 average 2023 ( f ) united states eurozone 2024 ( f ) 2025 ( f ) china trading partners ( * ) ( f ) forecast. ( * ) for definition, see glossary. source : central bank of chile. figure 19 commodity prices ( 1 ) ( dollars / lb ; dollars / barrel ; index ) copper oil 4. 5 foods ( fao ) 4. 0 3. 5 3. 0 2. 5 2. 0 21 23 ( f ) 25 ( f ) 21 23 ( f ) 25 ( f ) 21 23 ( f ) 25 ( f ) ( f ) forecast. ( 1 ) actual price / index refers to average of each year. ( 2 ) red diamonds correspond to forecasts in the central scenario of june 2023 mp report for each year in 2023 - 2025 period. ( 3 ) for oil : wti - brent average price per barrel. sources : central bank of chile, bloomberg, and fao. figure 20 mpr corridor ( * ) ( quarterly average, percent ) 25. ii 25. i 24. iv 24. iii 24. ii 24. i 23. iv 23. iii 23. ii 23. i 22. iv 22. iii 22. ii 22. i 21. iv 21. iii 21. i 21. ii jun. 23 corridor fts ees mar. 23 corridor mpr 13. 0 12. 0 11. 0 10. 0 9. 0 8. 0 7. 0 6. 0 5. 0 4. 0 3. 0 2. 0 1. 0 0. 0 ( * ) the corridor is built with the methodology | . yet it remains a necessary condition. and today in the euro area we face a situation where price stability is once more under threat β this time not through too high inflation, but through inflation remaining too low for too long. in that context, the ecb has been engaged in an unprecedented expansion of its monetary policy toolkit to bring inflation back to its objective. yet these measures have not been uncontroversial, and questions have been raised about their necessity. what i would like to talk about today, therefore, is not so much what the ecb has done, or how it works, but why the ecb has been so determined to raise inflation. that requires that we first take a closer look at the ecb β s objective. see romer, c. and d. romer ( 2013 ), β the most dangerous idea in federal reserve history : monetary policy doesn β t matter β, american economic review : papers & proceedings 2013, 103 ( 3 ) : 55 β 60. federal open market committee meeting, transcript, 21 march 1978. bis central bankers β speeches the ecb β s objective the treaty on the functioning of the european union establishes the ecb β s primary objective as maintaining price stability. but unlike some other central banks, we have not been given a specific numerical inflation target by a legislature or ministry. to enhance accountability, in 1998 the ecb governing council decided that price stability should be defined in quantitative terms, as a year - on - year increase in the harmonised index of consumer prices for the euro area of below 2 %, and that it should be maintained over the medium - term. following a thorough evaluation of its monetary policy strategy in 2003, the governing council further clarified that, within this definition of price stability, it aims to maintain inflation rates β below, but close to, 2 % over the medium - term β. in other words, since that clarification in 2003 the numerical range for the definition of price stability has been supplemented with a focal point at which the governing council aims, while the temporal horizon over which price stability has to be achieved has remained flexible. however, as inflation has consistently been ratcheting down to the bottom of the price stability range in the course of the past four years and our measures, as a consequence, have become more expansionary, how we interpret our objective and the relevant horizon for delivery have been called more into question. there have been two main issues raised. first, some have asked if | 0 |
both the united states and countries around the world continue to trend upwards. as a policymaker, solid growth, a strong labor market, and inflation near our target are all exactly what i want to see. paradoxically, it β s precisely this sense that things have gotten so much better that worries me most. although we have seen marked improvements in the critical areas of capital, liquidity, and resolution, we have not yet fully addressed the root causes of many of the problems that have plagued the financial sector. i am thinking of not only the excessive risk - taking and leverage in the run - up to the crisis, but also the repeated scandals related to libor, fx, money laundering, sales practices ; unfortunately, the list goes on and on. underlying these scandals is often an inadequate corporate culture, where accountability and ethical conduct have fallen by the 1 / 3 bis central bankers'speeches wayside. the good times we β re in can exacerbate these problems in three ways. first, there β s a risk of complacency setting in β an β if it ain β t broke, don β t fix it β mentality. second, in a strong economy, the hard numbers that we tend to focus on when examining profits, losses, capital, and liquidity can look like everything β s coming up roses, even when an uncomfortable reality lies beneath. and, finally, culture is a long - run investment that takes many years to develop and requires constant reinforcement to preserve. if you let it erode, you can β t go to the market and obtain a new β culture β overnight. as i mentioned, establishing a more robust regulatory framework was absolutely necessary for a healthier, more resilient financial system. but, it is far from sufficient. the danger we face today is that people may conclude that the hardened defenses are enough, and other supervisory activities around culture, conduct, and governance are superfluous. this feeling that we β ve built a strong fortress able to withstand any onslaught may create a mood of complacency and detract attention from the dangers that could be growing within the walls of financial institutions. this problem is aggravated by the fact that the hard numbers studied by regulators and supervisors should look great when the economy β s doing well. profits are high and loan losses low when the economy is humming along. but, strong numbers in a strong economy don β t give you the full picture. they can β t always tell you whether | efficient and more resilient. they should help make markets better able to allocate capital to its highest return and better able to absorb stress. broad, deep and well - functioning capital markets complemented by strong, well - capitalized banks, able to provide liquidity in times of strain, make for a more efficient financial system : one which contributes to better economic growth outcomes over time. there are therefore compelling arguments in favor of a generally positive assessment of the consequences of innovation. does experience provide support for these arguments, or are these changes too new for us to know? the recent changes in credit markets have been dramatic. we have seen rapid growth of structured credit products, credit default swaps and new types of collateralized debt and loan obligations. although these instruments are very new, they are the natural extension of earlier innovations in credit markets. over a long period we have seen innovations ranging from the syndication of bank loans and the direct provision of credit through the capital markets, to the spread of asset - backed securities and products that separate different parts of the payments stream and different dimensions of the risk in a credit obligation into different instruments. these changes have contributed to a substantial reduction in the share of total credit held by banks. they have produced a greater separation or distance between the entity that first arranges a loan and those who end up holding the risk, and more intermediaries in that chain. and they have contributed to a dramatic increase in the number and diversity of creditors to any individual borrower, and a greater capacity to actively trade credit risk. we are now well into the third decade of experience with the consequences of these earlier innovations, and this history offers some useful lessons for evaluating the probable impact of the latest changes in credit markets. the ease with which the u. s. financial system absorbed the substantial scale of corporate defaults that peaked in recent years in 2002 provides some support for the argument that broader and deeper capital markets make the system more resilient. in general, there does not seem to be strong empirical support for the proposition that derivatives increase volatility in financial markets. volatility is not higher where derivatives are most prevalent. credit market innovation does not appear to have resulted in a large increase in leverage in the corporate sector, as some had feared. indeed, nonfinancial corporate leverage in the united states is currently low by recent historical standards. the overall degree of balance sheet leverage by corporations, for example, is higher in some more traditional financial systems than | 0.5 |
integration and risk sharing in a monetary union β, financial integration in europe, may. 13 asdrubali et al. find that financial risk - sharing in the united states increased monotonically each decade from the 1960s to the 1990s. see asdrubali, p., sorensen, b. and yosha, o., β channels of interstate risk sharing : united states 1963 β 1990 β, the quarterly journal of economics, vol. 111, issue 4, 1 november 1996. 14 see hane, g. ( 1998 ), β the banking crises of the 1980s and early 1990s : summary and implications β, in fdic banking review, vol. 11, no 1. 15 ecb calculations based on fdic data. the term β institution β refers to a separately chartered commercial bank or savings institution. 16 see krozner, r. and strahan, p. ( 2014 ), β regulation and deregulation of the u. s. banking industry : causes, consequences, and implications for the future ", in economic regulation and its reform : what have we learned?, national bureau of economic research. 17 see morgan, p., rime, b. and strahan, p. ( 2004 ), β bank integration and state business cycles β, the quarterly journal of economics, vol. 119, issue 4, 18 european commission estimates. see nikolov, p. ( 2016 ), op. cit. 19 see milano, v. and reichlin, p. ( 2017 ), β risk - sharing across the us and emu : the role of public institutions β, policy brief, luiss school of political economy. 20 tier 1 capital to total assets. 21 ecb ( 2018 ), β box a : what could enhance private financial risk sharing in the euro area? β, financial integration in europe. 22 for a more detailed explanation, see ecb ( 2017 ), β special feature : cross - border bank consolidation in the euro area β, in financial integration in europe. 23 see carmassi, j. et al. ( 2018 ), β completing the banking union with a european deposit insurance scheme : who is afraid of cross - subsidisation? β, occasional paper series, no 208, ecb. 24 this includes guaranteeing the assets or the liabilities of the institution under resolution ; making loans to or purchasing assets from the institution under resolution ; and making contributions to a bridge institution | banks β costs which, to a certain extent, are passed on to customers in the form of an increased interest rate margin. this concept can be illustrated in the stylised equation for the lending rate by adding a variable ( ) which designates regulations affecting the interest rate margin : this equation is, of course, a simplification, but it is useful for illustrative purposes. it shows how some static macroprudential instruments, such as increased capital or reserve requirements, will affect the interest rate margin in a β one - off shift β when they are introduced, which will affect the transmission mechanism during the period of adjustment. however, there are also likely to be dynamic macroprudential instruments, such as time - varying countercyclical capital buffers, aimed at ensuring that macroprudential policy can influence the availability and pricing of credit throughout the cycle. these time - varying instruments will affect the transmission mechanism on an ongoing basis as they change over time. bis central bankers β speeches but the instruments are not perfect substitutes while the effects of monetary and macroprudential instruments may overlap, they are not perfect substitutes. 9 as stated earlier, the macroprudential policy toolkit is likely to include a diverse range of instruments that operate in different ways on different elements of the financial system. and the effect of these instruments on policy objectives other than macroprudential policy will also vary. for example, cross - sectional instruments are less likely to conflict with monetary policy than with the cyclical dimension of macroprudential policy. and instruments aimed at a narrow range of financial institutions or agents will be easier to focus on financial behaviour rather than macroeconomic factors. in general, it is desirable to use instruments with a narrower focus to address specific problems, as they can be better tailored to the problem and will have fewer unintended consequences on the real economy and on other policy objectives. however, there will be times when instruments with a broader scope will be desirable β for example, when there is a danger that developments in the financial system will enable agents to circumvent more narrowly focused instruments. the ability to circumvent instruments forms one of the challenges for macroprudential policy. the effectiveness of macroprudential policy could be strained when the build - up of risks ( for example, an asset price bubble ) in the financial system justifies significant policy intervention to contain the risks but the prevailing macroeconomic conditions do not justify a similarly aggressive monetary policy | 0 |
a result of these employment trends, and on the basis of consistent - across - countries assumptions on productivity growth, potential gdp growth is projected to decline in the decades to come. for the eu15, the annual average potential gdp growth rate will fall from 2. 2 % in the period 2004 - 2010 to 1. 3 % between 2031 and 2050. an even steeper decline is foreseen in the new member states ( eu10 ), because of both demographic developments and the underlying assumption that productivity growth rates in these countries will converge to those of the eu15. in greece, that convergence is also expected to lead to a fall in productivity growth, contributing to a decline in potential gdp growth from an annual average rate at 2. 2 % in the period 2004 - 2010 to below 1 % per year in the 2030s and 2040s. public spending projections population ageing is projected to lead to increases in public spending in most eu member states by 2050 on the basis of current policies although there is wide disparity in those increases across countries. in more than one third of the member states, the long - term budgetary impact of the projected increases will be at least 5 % of gdp. these countries have so far made only limited progress in reforming their pension systems or are experiencing maturing pension systems. for the new member states ( eu10 ) as a whole, the increase is projected to be much smaller, but this situation reflects mainly institutional changes. a switch to private pensions scheme in poland is expected to make a substantial contribution to a decline in public pension spending in the new member states. 4 excluding poland, age - related spending is subject to increase by more than 5 % of gdp. most of the projected increase in public spending will be on pensions, health care and long - term care. offsetting savings in areas as education and unemployment benefits are likely to be limited. with respect to greece, data on public spending projections are not available as such projections have not yet been submitted. however, according to projections prepared in 2002, pension expenditures will rise from 12. 4 % of gdp in 2005 to 22. 6 % of gdp in 2050. 5 the net increase in total old age - related expenditure ( excluding spending on long - term care, for which no official figures are available ) is projected to be 11. 5 percentage points of gdp, reaching 32. 7 % of gdp in 2050. this compares with rises in pension expenditures by slightly more than 2 percentage points | , despite an adverse global financial landscape and macroeconomic environment, their tier 1 car would be maintained at 8 - 10 % in 2009 and 2010, as already stated. within the euro area co - ordinated framework, the β¬28 billion banking support package arranged by the ministry of economy and finance in close co - operation with the bank of greece addresses both the issues of the capital base and liquidity of the banks, so as to minimize the risks from the global crisis on the real economy. the banks, in turn, will channel the available liquidity to the real economy, because this is also in their own interest, since their own profitability depends on giving loans. to restore medium - term liquidity, the guarantee of the greek state, will be provided to credit institutions for the issuance of new medium - term loans, as well as for notes that will be issued or refinanced up to the end of 2009 and for a maturity of up to 3 years. the total amount of this guarantee will not exceed β¬15 billion and it will be provided either against a commission and the provision of adequate collateral or without collateral, but against a higher commission. measures for strengthening the capital base : credit institutions may benefit, on a voluntary basis, from the purchase by the greek state of preference redeemable shares, up to an aggregate amount of β¬5 billion. these shares will pay a fixed annual return of 10 % and they will be eligible as tier i capital, allowing credit institutions to enhance their capital base. the state plan has now entered its implementation phase and most of the banks are preparing their participation, but the impact of the measures will be felt more in the 2nd quarter of 2009. despite popular belief, greek credit institutions are ready to make use of the measures. although specific criteria have been already set, a fair distribution of the total available amount of β¬28 billion remains an extremely delicate task. it is also difficult to estimate how much each bank will ultimately draw and which part of the whole amount must be retained to be used in a later stage. it should be noted that, in exchange of the government bonds and guarantees, the bank of greece will have to assess, process and monitor on a continuous base the volume and the variety of the collaterals given by the banks. this means that we will have to be constantly alert and the relevant mechanisms at the bank of greece must operate efficiently at full capacity for as long as it will be deemed necessary. basically, the aim of the | 0.5 |
to provide significant support to those seeking to disclose and has encouraged steadily increasing uptake. these initial steps greatly helped to define appropriate parameters, drive towards consistency, and give the public sector a running start in developing their own approaches. now it is time to build on that work. it will be useful to establish a globally consistent baseline standard for climate - related disclosures. globally consistent and comparable entity - level disclosures by non - financial companies, banks, insurers, and asset managers are increasingly important to market participants and financial authorities as a means of providing information needed to assess and manage risks. the g20 presidency, in developing its 2021 work program, asked the fsb to encourage more consistency in disclosure practices. as a start, the fsb surveyed what financial authorities across our membership were doing to promote disclosures. almost all our members have 1 / 3 bis central bankers'speeches already set requirements, guidance, or expectations or plan to do so. we found some heterogeneity in the approaches they were taking. some members prefer mandated disclosure while others would make it voluntary. there is also variation in the desired scope of disclosures. however, there is a trend towards an important baseline that focuses on one - way materiality β or the financial risk that climate change could have on a particular entity β based on the tcfd recommendations. the majority of our membership are already using the tcfd recommendations as a baseline for their own requirements or guidance. the international financial reporting standards foundation ( ifrs ), in consultation with other international organizations, will develop a set of standards, starting initially with climate and building upon these tcfd recommendations. as reflected in our december 2020 statement, the fsb supports ifrs's advancement of an international sustainability standards board to take this work quickly forward. 3 this work holds the promise of providing baseline standards that could inform or be built upon by national authorities as they develop their approaches to climate - related financial disclosure or broader sustainability disclosure. the initial focus of the ifrs will be on climate standards, while allowing for interoperability with individual jurisdictions'frameworks, that may go beyond climate - related impacts. consistency in one - way disclosures would provide a needed avenue for accurate and appropriate risk assessment and comparability to assess investment decisions. simultaneously, the ifrs standards are intended to provide flexibility for national authorities to build on the baseline. the " interoperability " feature will allow jurisdictions to address broader or jurisdiction - specific concerns in a | been talking about a much tougher world β out there β, with demanding shoppers on a ceaseless β search for value β using new technology to search out bargains as well as to make purchases, driving an endless round of discounting across a wide range of consumer goods. it β s a fact that in value terms, the growth in household spending has been slowing since the middle of 2000. much of the strength in the volume of consumption reflects lower prices which have boosted consumers β spending power, for given incomes. since 1998 the price of durables has fallen by 14 %, while the price of other goods and services has continued to rise. the falls have been spread across a range of categories, including cars, clothing and sports goods, though the fall has been particularly marked in it / audio visual goods. so it is not surprising that spending on durables accounts for virtually all the growth in the volume of consumption - an average of over 8 per cent a year compared with around 2 per cent on other goods and services. the interesting questions are why this has happened, how far it will go and how long it will last. we know that the uk β s terms of trade have improved substantially since the mid 1990s, as the price of our imports has fallen more than the price of our exports, boosting domestic spending power. but this seems to be partly an it story, much of it concentrated in capital rather than consumer goods ; and lower prices may be related to exchange rate changes, which could be temporary. clearly new technology is playing an increasing part in helping consumers to search out bargains as well as to make purchases. while the total value of on - line sales remains relatively small, it is clearly growing very rapidly. comprehensive data is still hard to come by, but one source suggests that on - line sales have risen more than ten fold over the last four years. several recent reports have pointed to a sharp acceleration in the second half of last year, as the habit of e - shopping spreads. structural changes within the retail sector are also part of the story. high street retailers are facing stiff competition from the major supermarket groups across a wider range of products. what is driving these changes? no doubt there are many factors at work, but i find the agents β picture of an increasingly demanding consumer quite thought provoking. we live in a consumer society, and shopping, in one form or another, is what many people do much of the time ; helped by technology, why wouldn β | 0 |
whether financial institutions would continue their war of attrition under their existing business models or would expand their business frontiers by unearthing new financing needs. just as in human beings, for whom chronic syndromes demand fundamental changes in lifestyles, financial institutions must be prepared to fundamentally change their business models in order to extricate themselves from a structural lack of profitability. schumpeter, joseph alois. 1926. theorie der wirtschaftlichen entwicklung : eine untersuchung uber unternehmergewinn, kapital, kredit, zins und den konjunkturzyklus, 2nd revised ed. leipzig : duncker & humblot. ( the theory of economic development, translated by redvers opie, transaction publishers : new brunswick, new jersey, 1983. ) laeven, luc & levine, ross & michalopoulos, stelios. 2015. β financial innovation and endogenous growth, β journal of financial intermediation, elsevier, vol. 24 ( 1 ), pages 1 β 24. oecd. 2011. β new sources of growth : intangible assets. β morikawa, masayuki. 2015. β financial constraints on intangible investments : evidence from japanese firms, β in ahmed bounfour and tsutomu miyagawa eds. intangibles, market failure and innovation performance, springer, ch. 6, pp. 139 β 155. bis central bankers β speeches the bank of japan has implemented a few measures that would encourage financial institutions to implement their essential reforms. one is to adjust the way in which the bank injects liquidity into the financial system β for example, the fund - provisioning measure to support strengthening the foundations for economic growth, and purchases of etfs composed of stocks issued by firms that are proactively investing in physical and human capital. these measures are expected to play catalytic roles in enhancing the financial intermediation functions of financial institutions and capital markets, which would foster productivity increases and ultimately lead to improvements in the potential rate of growth. another set of measures is designed to enhance the function of financial institutions to efficiently allocate resources. the bank of japan is actively providing financial institutions with information and know - how through seminars, etc., so that they can enhance the value of their financial intermediation through, for example, support for startup businesses, business matching, re | of financial stability and the policy implications of newly emerging challenges from three perspectives : unconventional monetary policy, macroprudence, and low profitability of financial institutions. financial crisis and growth inflection to begin with, let me go back to the 1990s and explain my experiences during the bursting of the bubble economy in japan. as i touched on at the beginning, both sweden and japan experienced financial bubbles. nevertheless, the subsequent paths of the two countries were quite different ( chart 1 ). in sweden after the crisis in the early 1990s, capital was quickly injected into the banking system and the stability of the financial system was restored. in addition, the swedish krona was floated, and the riksbank was able to ease monetary policy. with the tailwind of the depreciating krona contributing, the swedish economy began to recover as early as 1993. furthermore, following sweden β s accession to the european union in 1995, factors such as the growth of the it industry benefitting from the increases in inbound investment contributed bis central bankers β speeches to productivity growth. in fact, sweden β s potential growth actually increased after the bursting of the bubble. in contrast, japan only managed to inject capital into financial institutions on a meaningful scale after the β dark november β in 1997, when it experienced a series of failures of large financial institutions. 1 that was nearly eight years after the bubble had burst. during those years, financial institutions β behavior, such as evergreening their loans to practically failed businesses by extending additional loans, resulted in a further buildup of impaired assets, which made it all the more difficult to cleanse financial institutions β balance sheets of problem loans, and which distorted the allocation of resources. the layering of these multiple factors pushed the japanese economy into deflation, and concurrently, productivity growth declined. 2 furthermore, this period overlapped with rapid changes in demography, resulting from a declining working - age population against the backdrop of a low birth rate and aging. the confluence of the two currents β financial sector problems and demographic changes β significantly pulled down japan β s potential growth rate ( chart 2 ). that in turn exacerbated over - leveraging in the corporate sector and discouraged corporate investment. from a macroeconomic perspective, lower investment depressed productivity growth, which again negatively impacted potential growth. there was a vicious cycle : over - leveraging in the corporate sector led to the decline in the potential growth rate, which in turn exacerbated the difficulty of resolving non - | 1 |
since 2005. hourly wages for parttime workers have posted year - on - year increases since 2003, and the rate of increase rose gradually through 2006. looking forward, wages, including those for men, are expected to rise steadily as labor market conditions become increasingly tight. with the number of employees increasing steadily, household income has continued rising moderately and private consumption has been firm. a more distinct upward momentum in private consumption is likely to emerge as the adverse effects from temporary factors - - such as last year's weather conditions ( a long spell of rainy weather in early summer as well as the unseasonably warm winter weather ) and consumers'reluctance to buy before the introduction of new products - - fade and wages resume their upward trend reflecting improved labor market conditions. b. production and inventory adjustments production exhibited high quarter - on - quarter growth of 2. 6 percent in the october - december quarter of 2006, but a downward reaction to this high growth coupled with adjustments in the it - related sector will likely suppress growth in the january - march quarter of 2007. unlike inventory adjustments in itrelated goods during 2002 - 03 and 2004 - 05, adjustments this time seem largely due to weaker - thanexpected demand for cellular phones and new game consoles, although the impact of the introduction of a new personal computer operating system has still to be fully ascertained. c. developments in consumer prices the year - on - year rate of change in the cpi ( excluding fresh food ) was flat in january, and depending on developments in crude oil prices and foreign exchange rates, it may turn slightly negative in the short term. from a longer - term perspective, however, consumer prices are expected, over time, to display trend increases given that the economy has expanded at an annual rate of around 2 percent over the last four years and that the expansion is expected to be long - lasting. with the continuing economic expansion, the utilization rates of production capacity and of labor have been rising steadily, and they are expected to increase further. as the recent tankan ( short - term economic survey of enterprises in japan ) indicates, corporate managers are increasingly feeling shortages of production capacity and labor, while a positive output gap suggests that demand currently exceeds supply in the economy as a whole. since autumn last year, upward movement in the cpi has been subdued partly because of sluggish growth in private consumption and wages. however, the cpi is expected to resume a moderate upward trend as the effects of the drop in crude oil prices fade | the global financial crisis has led to a significant slowdown in economic activity in turkey as in other developing countries. a remarkable tightening in lending conditions and a surge in interest on loans were experienced during the worst period of the financial crisis. the easing of concerns over inflation has allowed the central bank of turkey to focus on curbing the potential destruction of the crisis on the turkish economy without conflicting with the primary goal of maintaining price stability. the majority of policy rate cuts to compensate the additional tightening in financial conditions was antedated. subsequent data releases on inflation and economic activity have bolstered the credibility of the central bank. i would like to underline the gradual decline in interest rates on commercial loans as a positive development in this period. the common denominator of the central bank β s policy preferences and the recent choices should also be emphasized. the primary objective of the central bank is to achieve and maintain price stability and this primary objective does not conflict with any other objective of the bank. the policy stance we have recently adopted clearly reflects this. although recent data releases indicate that the worst may be over, the recovery is expected to be protracted given credit market problems and rising unemployment rates. the tightness in financial conditions still persist to some extent, and uncertainties regarding the impact of the problems across financial markets on the real economy are ongoing, suggesting that downside risks still remain. although downside risks are still more significant, recent signs of partial recovery in economic activity should not be discarded. nonetheless, we are of the opinion that most of the recent increases in economic activity were attributable to the short - term effects of the global fiscal measures implemented. there needs to be a robust revival in consumer demand in order for the increases in the capacity utilization rate to be sustainable over the medium term. uncertainties regarding aggregate demand and lower capacity utilization continue to suppress fixed capital investments. the current trend in investment demand is far from signaling a robust economic recovery. subsequent to the recent rate cuts and fiscal measures, we anticipate that domestic demand in turkey might gain relative stability in the second quarter of 2009 and growth will post positive figures from the last quarter onwards. in other words, the recovery in the turkish economy might start earlier than that of the global economy. our expectation is underpinned by two main factors. the first of these is the sound and stable structure of our financial system. the restructuring plans along with regulatory and supervisory reforms, which were put into effect in the aftermath of the 2001 financial | 0 |
importance of house price cycles compared with other asset price cycles the potential risks of asset price bubbles tend to vary across asset classes. research by the imf has shown that housing busts are, on average, twice as costly in terms of output losses as equity price busts. this reflects the higher exposure of banks to mortgages than shares. a bis central bankers β speeches key conclusion of literature on historical financial crises is that they tend to have worse outcomes when banks are distressed. for example, in october 1987 stock markets around the world fell sharply, but this did not represent a threat to the banking system and so, its impact was contained. in contrast, many researchers trace the origins of the current financial crisis back to the bursting of the us house price bubble. the link between house prices, banking crises and recessions is not unique to the current situation : a number of studies examining crises in both advanced and emerging economies over time and across countries have shown that they tend to coincide with the bursting of house price bubbles. the securitisation of mortgage loans has not only tended to weaken the origination process but has tended to expose countries β financial systems to real estate excesses in other countries. by transferring the credit risk the originator can exacerbate the boom without fear of the consequences of a collapse. identifying house price bubbles : problems and potential indicators so, how do policymakers identify these costly house price collapses? most house price busts are preceded by lengthy booms, so perhaps policymakers should try to identify potentially costly booms. but, even identifying a house price boom ( costly or not ) in real time can be challenging due to data issues regarding house price indices. the quality of these indices can be quite poor, one country can have a variety of indices from which to choose ( each providing a different measure of growth ), the publication lag can be quite significant in some countries and, within the euro area, there is a lack of harmonisation across countries. even if one identifies a boom, how do you know that it β s a costly one? not all house price booms end in bust and not all busts are very costly in terms of output nor have implications for financial stability. a 2003 imf study of real house price cycles for 14 countries over 30 years found that only 40 per cent of house price booms ended in bust. an examination by the oecd of 17 countries over a similar period showed that two - thirds of real house price boom | lael brainard : transitions in the outlook and monetary policy speech by ms lael brainard, member of the board of governors of the federal reserve system, at the john f kennedy school of government, harvard university, cambridge, massachusetts, 1 march 2017 * * * these remarks represent my own views, which do not necessarily represent those of the federal reserve board or the federal open market committee. the economy appears to be at a transition. we are closing in on full employment, inflation is moving gradually toward our target, foreign growth is on more solid footing, and risks to the outlook are as close to balanced as they have been in some time. assuming continued progress, it will likely be appropriate soon to remove additional accommodation, continuing on a gradual path. as normalization of the federal funds rate gets further under way, monetary policy too is approaching a transition, prompting increased focus on the balance sheet. how the federal funds rate and the balance sheet should be adjusted individually and in combination depends on the degree to which they are substitutes, their relative precision, and the degree to which their effects on the economy are well understood. let me start with the outlook and then turn to policy. progress at home and abroad over the past several quarters, we have seen improvement in inflation and activity both at home and abroad following a period when the drag on domestic activity from abroad was considerable. between the middle of 2014 and 2016, a combination of notable fragilities and risks in large foreign economies, elevated sensitivity of the dollar to policy divergence, a sharp decline in oil prices, and financial markets β heightened sensitivity to these downside risks slowed progress in the u. s. economy and the adjustment of monetary policy to an extent few had anticipated. after being an important constraint in the past few years, the external environment currently appears more benign than it has been for some time, even though risks remain. near - term risks to the united states from abroad appear to have diminished. recoveries are gaining traction in china, europe, and japan in part reflecting greater confidence in their respective policy environments. the improvement in the global risk outlook was also helped by the continued economic progress and the gradual pace of monetary policy adjustment in the united states last year. in recent quarters, market participants appear more confident that china has the will and capacity to maintain its exchange rate regime, while achieving its growth targets, although there is a tension with high credit growth that will eventually need to be addressed. early last year, china β s gross domestic | 0 |
nbs has a limited impact on the real exchange rate in the longer run, and can have a significant influence only in the short run. adoption of alternative exchange rate regimes cannot resolve the problem of the real exchange rate. it is, of course, my intention to also tackle on this occasion the other aspect of macroeconomic policy β fiscal policy. it deals with tax revenue which the state can extract from the economy and the amount of money it must spend. i do not wish to debate here the optimum size of the public sector, though it is only natural that i should have an opinion on that matter. i wish to underline, however, that changes in fiscal policy have very important implications on monetary policy, real interest rate and the real exchange rate as specified by the government in both the budget and the memorandum on economic policy for 2008 - 2010. hence comes my fourth message that monetary policy can be applied to keep inflation under control at low and stable level, but how tight should such policy be to achieve its aim, depends to a large extent on fiscal policy, too. the increase in public spending that is not covered by an increase in regular public receipts, or a significant reduction in tax receipts without comparable reduction in public spending, shall have its implications on the level of interest rates and the exchange rate for the dinar. i think that many exporters are aware of the significance of this dependence. my fifth message is that an exporter - friendly macroeconomic environment assumes low rate of inflation, gradual decrease in real interest rates and implementation of responsible fiscal policy. however, these can provide only indirect help in view of the reality facing the ever increasing number of exporters. the fact is that, in the longer run, world prices are falling in real terms. it is a long - term trend, of course, and has nothing to do with macroeconomic policy. improvement in productivity, product quality adjustments to market requirements and better marketing are at least as important as macroeconomic policy. these are the real challenges facing the exports sector worldwide! my sixth and final message is that the role of the nbs is not to hermetically isolate serbia from exchange rate changes coming from abroad but to secure conditions that would protect the economy from such risks. the price of oil has been continually increasing since the beginning of the year, prices of metals are several times higher now than few years ago, electricity prices are three times higher now than on the onset of transition. β market is merciless place and carries | in recent months, expectations have remained far from the objective of price stability ; they increased slightly in the spring, but then turned down again. the governing council deemed it necessary to respond promptly to the worsening economic situation, in order to reiterate its intention to confront weakening aggregate demand and its effects on prices, to not fall behind the curve and to counter low inflation expectations with determination. the global financial crisis and the sovereign debt crisis have taught us that in these circumstances excessive prudence is counterproductive : by not responding swiftly to the risks of too low inflation for too long, a lengthier and more incisive measure, which carries greater risks of unintended side effects, is then needed to counter the risk of deflation. 3. there was extensive discussion in the governing council on the decisions and measures to introduce ; of course, opinions varied and some reservations were expressed regarding certain individual instruments and some of their characteristics. the package of measures adopted received the approval of a majority of the members of the governing council. the analyses conducted by the bank of italy indicate that there is no reason to doubt their overall effectiveness. in the current circumstances, uncertainty about the effects of the individual instruments is naturally widespread, but our analyses suggest that the purchase programme is, in the present conditions, the most effective instrument ( aside from being the most β conventional β one, given that open market operations have always featured in central bankers β β toolbox β ). our estimates suggest that the impact of the new purchases on economic activity and on inflation, through the contraction of term premia and the transmission to the yields of all financial assets, can be much bigger today than that of a cut in the official rates. from a conceptual and empirical perspective, there is no reason to rule out the possibility of further contractions in term premia, which in any event had already occurred with the consolidation of expectations of the new measures. as i have often observed, the effects of a reduction in official rates to negative values β the truly β unconventional β instrument among those introduced so far by the governing council β are surrounded by greater uncertainty. we estimate that so far, the cuts in the reference rates have had significant expansionary effects ; down the road, however, their effectiveness could prove more doubtful, especially in view of the downwards rigidity of interest rates on deposits. in any event, it should not be forgotten that the persistence of negative nominal interest rates across a broad spectrum of maturities for lengthy periods cannot be attributed solely | 0 |
maintaining credibility in times of change panel remarks delivered to the institute for monetary and economic studies ( bank of japan ) in tokyo on 30 may 2019 by christian hawkesby, assistant governor and general manager of economics, financial markets, and banking prepared with cameron haworth and omar aziz 2 the terrace, po box 2498, wellington 6140, new zealand telephone 64 4 472 2029 online at www. rbnz. govt. nz introduction tena koutou katoa thank you for the opportunity to talk about the reserve bank of new zealand and the changes we are making to maintain our credibility in times of change. i would like to focus on two building blocks of credibility : β’ renewing a social licence to operate by aligning our objectives with the needs of the public ; and β’ achieving those objectives through good decision making enabled by a framework of good governance. a common theme is the importance of transparency. the imperative for change : central banks in the 21st century the first building block of credibility is the renewal of a social licence to operate β by this i mean the legitimacy an institution earns by serving the public interest. it is granted by the public when an institution is seen to fulfil its social obligations. 1 new zealand was the first country to officially adopt inflation targeting in 1989, with a number of central banks around the world following the example. 2 under a single - decision - maker model, we brought inflation down from around twenty percent to two percent in five years. in doing so, we helped build our credibility during the high - inflation environment of the times. 3 fast - forward to 2019, and monetary policy in new zealand has undergone major change. firstly, we have adopted a dual mandate, focused on achieving price stability and supporting maximum sustainable employment. secondly, we have adopted a committee structure for decision making, and are delivering greater transparency in our decision making. why the change? the reform of our framework was not merely a simple choice based on technical performance. as you can see in figure 1, when it comes to inflation and growth, over the past 30 years inflation - targeting central banks ( e. g. new zealand and the united kingdom ) have a pretty similar track record to central banks with a dual mandate ( e. g. australia and the united states ). 4 the imperative for change comes from more than examining our history ; it comes from our expectations of the future, and the present we find ourselves in. our policy framework changed because times are changing. for the reserve | way, as is evidenced today by all the examples we β ve heard, by all the institutions present, and by all the inspiring speakers and participants. and once we have reached that goal of all finance being sustainable, we will have ensured a better horizon for our children and their children. a horizon - a future! - that to our children is not tragic, but positive and bright. we will have overcome the tragedy of the horizon. that β the last syllable of recorded time β be not the word β tragedy β. so let us together ensure that horizons from this day will no longer be associated with tragedy, but instead with a bright, green, sustainable future. let the future of finance be that of financing the future! thank you. | 0 |
. inflation expectations are an important driver of inflation, and we have seen a successive deterioration of these over the past year in particular. these expectations may feed through to further inflationary pressures. our hope is that inflation expectations will respond quickly to the expected reversal in the inflation trend. despite the deterioration however, there is still an expectation that inflation will decline significantly over the next two years. a major risk factor is the exchange rate market which has also been buffeted by global developments. the increased risk aversion in international financial markets has resulted in a reversal of capital flows to emerging market economies in particular. investors, fund managers and hedge funds are liquidating their positions in emerging markets and moving them to so - called safe havens. some even call this a flight to quality. this is somewhat ironical, given that capital is moving back to the source of the problems. during the year there has been a significant realignment of exchange rates : the dollar has appreciated against most currencies apart from the yen ; sterling has depreciated significantly and most emerging market currencies have also depreciated. since the end of last year for example, sterling has depreciated by around 23 per cent against the us dollar ; the australian dollar by about 26 per cent ; the brazilian real by 19 per cent ; and the turkish lira by 26 per cent. at the same time the rand has depreciated by about 31 per cent against the dollar and about 24 per cent on a trade - weighted basis. these are significant moves which clearly do not only reflect the underlying fundamentals of these economies. part of the reason for the poor performance of the rand is related to the decline in commodity prices. other factors include simple risk aversion, and the concern about the current account deficit on the balance of payments, which to date has been adequately financed through capital inflows. in recent weeks, following the latest round of financial market turbulence, particularly after the demise of lehman brothers, there have been significant sales of bonds and equities by non - residents. the zar and the domestic bond and equity markets were not the only casualties following the failed attempt by barclays to acquire lehman, subsequently resulting in the latter filing for bankruptcy on 15 september 2008. emerging markets in general came under heavy selling pressure as risk aversion escalated. on 15 september, romanian shares fell by more than 4 per cent to their lowest levels in over three years while czech and hungarian stocks dropped to | your excellencies esteemed ladies and gentlemen colleagues we are living through the most severe economic crisis in our living memory. in response, many governments and central banks have taken extraordinary measures to protect their banking systems and their economies. however the past few months have shown that increased global economic and financial integration has resulted in an increasingly interdependent world. over the last three years, the focus has increasingly been turned to the g - 20 to provide leadership on international financial issues, and this was even more so the case during the current financial turmoil. while the g - 20 is still a relatively small grouping, it nevertheless represents almost 90 percent of global trade and gdp respectively. on the other hand, the g - 7 has proven itself to be an increasingly necessary albeit insufficient forum in the changing economic environment of today. hence, the current financial global crisis provides us with a fresh and unique opportunity to review what the role of global institutions and other cooperative arrangements should be. it is clear that the need to act with the necessary resolve and in a cooperative fashion together with institutions such as the imf, the bis and the fsf and the g - 20 is imperative in order to come up with action plans which should be implemented urgently and comprehensively. new global governance structures that are inclusive of all stakeholders are needed. recently the g - 20 heads of states met in washington dc to discuss the global financial crisis. at this g - 20 economic crisis summit, the heads of states resolved that countries should work together to restore financial stability and economic growth. the key issues agreed to at the summit were : the reform of the international financial institutions such as the world bank and imf ; the conclusion of the global free trade agreement ; improvement in financial market transparency ; changing incentives so that excessive risk taking is no longer rewarded ; drawing up a list of financial institutions that could result in systematic failure ; and strengthening financial market regulation. in the meantime, strong and significant actions have been taken in both advanced and emerging market economies to stimulate economies, strengthen the financial sector, provide liquidity and working to ensure that international financial institutions can provide support for the global economy. in addition, the leaders endeavoured at this summit to provide further assistance and to support the global environment by stating the following and i quote : β against this background of deteriorating economic conditions worldwide, we agreed that a broader policy response is needed, based on closer macroeconomic cooperation, to restore growth, avoid negative spillovers and support emerging market economies and developing countries. as immediate | 1 |
struggle to understand and anticipate the results of supervisory stress tests and the accompanying stress capital buffer requirements. the simple solution here seems to be disclosure of more granular information about all of the models used in stress testing. in my view, disclosure of these models β and even subjecting the models to appropriate notice and comment processes and public feedback β would not undermine the goal of the stress tests of having a regulator - created model that is separate and distinct from the internal models used by firms. regulators would still control the contours and content of the models but would have the benefit of public feedback. if we believe in the validity and reasonableness of our model design choices, we should not shy away from public feedback. third, we should adjust the compliance framework for stress capital buffers. firms should not be forced to comply with higher capital requirements after only a few months β notice but should have a reasonable time frame for compliance. i would note that a longer compliance β stress testing policy statement, β 84 fed. reg. 6664 ( february 28, 2019 ), https : / / www. govinfo. gov / content / pkg / fr - 2019 - 02 - 28 / pdf / 2019 - 03503. pdf. board of governors of the federal reserve system, β federal reserve board finalizes set of changes that will increase the transparency of its stress testing program for nation's largest and most complex banks, β news release, february 5, 2019, https : / / www. federalreserve. gov / newsevents / pressreleases / bcreg20190205a. htm. - 14 runway is particularly important in a world in which testing is opaque and volatility continues to be excessive. to the extent that these more fundamental issues are addressed, this may mitigate the need for a shorter compliance window. finally, as we move forward with basel iii implementation, we need to take a careful look at whether market risk and operational risk requirements are overlapping and redundant with the β global market shock β and operational risk elements of stress testing and think about the calibration of these requirements in the aggregate. would these tests in tandem produce excessively calibrated capital requirements, and if so, what would the impact be on u. s. capital markets? in my view, there are strong indications that as currently formulated, the combination of these requirements would result in an excessive calibration of risk - weighted assets for market | traditional policy rules are backward looking in the sense that they use available data about inflation and output. but monetary policy needs to be forward looking, as i discussed, and there are rules that rely on forecasts of inflation and output. finally, many have advanced the view that, when times are particularly uncertain, monetary policy should react cautiously to incoming information. 21 that insight leads to rules that incorporate inertia, thereby slowing down the movement of rates over time. each of these insights has some validity, and each has important implications for the prescriptions of a policy rule. in general, the unemployment rate is more informative of the state of the business cycle than gdp because of the difficulties in estimating potential output. see charles a. fleischman and john m. roberts ( 2011 ), β from many series, one cycle : improved estimates of the business cycle from a multivariate unobserved components model, β finance and economics discussion series 2011 - 46 ( washington : board of governors of the federal reserve system, october ), https : / / www. federalreserve. gov / pubs / feds / 2011 / 201146 / 201146pap. pdf. see john b. taylor ( 1993 ), β discretion versus policy rules in practice, β carnegie - rochester conference series on public policy, vol. 39 ( december ), pp. 195 - 214. see william brainard ( 1967 ), β uncertainty and the effectiveness of policy, β american economic review, vol. 57 ( may ), pp. 411 - 25. in discussing the effects of uncertainty on monetary policy, blinder ( 1998, p. 11 ) notes that policymakers β should compute the direction and magnitude of their optimal policy move... and then do less. β see alan s. blinder ( 1998 ), central banking in theory and practice ( cambridge, mass. : mit press ). others have suggested that inertia may be a feature of making decisions by committee ; see clare lombardelli, james proudman, and james talbot ( 2005 ), β committees versus individuals : an experimental analysis of monetary policy decision making, β international journal of central banking, vol. 1 ( june ), pp. 181 - 205 ; and francisco ruge - murcia and alessandro riboni ( forthcoming ), β collective versus individual decision - making : a case study of the bank of israel law, β european economic review. - 12 figure 7 shows the prescriptions of three simple policy | 0.5 |
13 % for hungary ; in szapary, national bank of hungary, 2001 ]. given what i have just described, the financial sector in the accession countries is nowadays in remarkably good shape. the banking sector is sound and stable, the role of non - banking intermediation is growing, and clients have access to most of the products and services they have in the eu countries. following table illustrates the importance of the banking sector in three major accession countries [ czech republic, hungary and poland ] : structure of financial sector 100 % 90 % 80 % 70 % credit unions other pension funds ic & if insurance comp. banks 60 % 50 % 40 % 30 % 20 % 10 % 0 % cr hun pol it is evident that the financial sector in central european countries relies heavily on the banking sector, which represents approximately 80 % of total assets of the whole financial sector. it could be also seen that despite the dominance of banks in all mentioned countries, the structure of other financial institutions differs significantly. this is the result of varying approaches to building these institutions. for instance, in the czech republic, we can see the smaller size of the investment business as a result of the quality of the capital markets, the lax regulation at the beginning of the transformation, and the subsequent and rather frequent occurrence of frauds in the past. the delayed start of pension reform has also contributed to this situation. the largest banking sector in the new member states is the polish one, followed by the czech and the hungarian sectors. these three biggest countries account for more than 3 / 4 of the total new member states banking assets. the banking sector of all new member states is nevertheless very small in comparison with the eu market. the total banking sector assets in all new member states are only 345 usd billions at the end 2002 ( thus just 31, 5 % of citigroup, or 43, 4 % of deutsche bank, or 45, 5 % of hsbc ). structure of acs banking sector assets 3 % 2 % 2 % 1 % 1 % pol cz 7 % hun 38 % 7 % cypr svk slo lat lit 15 % est malta 24 % * as of 31st dec 2002, recalculated by market exchange rate a look at financial depth [ as measured by banking sector assets to gdp ] of individual markets in five accession countries [ czech republic, hungary, slovakia, poland and slovenia ] shows that there is still significant space for growth of financial intermediation. financial depth | decade prior to 2012, to a little above three over the past four years. however, over the same time, the supply has grown significantly, so that the absolute amount of turnover hasn β t changed all that much. the turnover ratio of corporate securities has declined to a little above one in the decade prior to 2012 to its current level of about a half. graph 1 looking at this another way, the share of the government bond market that used to turnover in an average month now takes a bit over six weeks, while the average share of the corporate securities market that used to turnover in one month now takes closer to two months. we also hear from market participants that it is, in general, a bit more difficult to transact in size. should we be concerned about this? not necessarily. the corporate bond market in australia has never had a highly liquid secondary market. it has always been predominantly a buy and bis central bankers β speeches hold market, and most participants are well aware of this. more generally, bond market activity in australia has been structurally declining over a long period. in the mid 1990s, the turnover ratio for government bonds was around 10, by the late nineties this had fallen to around 7. a decade later in the mid 2000s, it had fallen to around 5 and now it is 3. there are number of explanations for this decline in turnover which i will now turn to. derivatives market participants have been increasingly transacting in derivative instruments rather than the cash bonds. since the mid 1990s, activity in bond futures and interest rate swaps, relative to bonds outstanding, has increased sharply ( graph 2 ). in 2015, the value of turnover in bond markets was around $ a2Β½ trillion whereas the value of turnover in both the australian dollar interest rate swaps and bond futures markets was each around $ a9 trillion. 4 growth in activity in these markets in recent years has significantly outpaced growth in issuance of australian dollar bonds. overall, the increase in derivative activity has more than offset the decline in bond market activity. graph 2 these figures are sourced from the afma. i β m only referring to interest rate and tenor basis swaps turnover here. bis central bankers β speeches there is a clear preference for bond issuers and investors in australia to manage the risk associated with their bond issuance or bond holdings by transacting in the derivative instruments rather than in the physical instruments. 5 this has resulted in a further concentration of liquidity in the derivative instruments and a | 0 |
classify the investment portfolio based on intention and objective of holding the financial asset ( the business model ) and the contractual cash flow characteristics of such assets. further, the categorisation of an asset between banking book and trading book can have significant capital implications. these aspects shall require extensive use of management judgement. we expect the auditors to carefully understand the regulations and ensure that banks comply not only with regulations but also regulatory intent. the second example is that of expected credit loss ( ecl ) based provisioning norms. this is a work - in - progress at this point in time. we have issued a discussion paper ( dp ) and an external working group was also set up to get independent inputs on the significant transitions involved. an important aspect of the proposed ecl framework is that, within the broad framework prescribed by rbi, banks can use different methodologies and models for estimating loan loss provisions. this will present an unique challenge to both regulators and auditors. as statutory auditors, you would be required to satisfy yourself that the bank is accurately computing such provisions and the models employed by the regulated entities are robust. 2 / 5 bis - central bankers'speeches the principle based approach to regulations is founded on the belief that financial reporting reflects the economic reality of a transaction. however, application of principlebased standards requires significant use of management judgement. sometimes, management may choose accounting estimates which may lack neutrality or freedom from bias. it is in this context that building greater rigor and skepticism into the audit becomes necessary. doing that, however, may require special skills and it would be prudent to start working on building additional capacity to handle these changes and challenges. in this connection, let me also share our experience with implementation of such principle - based guidelines in nbfcs with respect to ind as implementation. our assessment shows that the flexibility offered by the principles - based standards, while valuable, has fallen short in some cases where their application is concerned. let me highlight certain issues and challenges which we have encountered and which could have been evaluated by auditors more carefully. while the standards allow sale from assets under amortised cost category, an entity needs to assess how such sales are consistent with the objective of collecting contractual cash flows. in practice, we have observed that there have been significant sales from amortised cost category by way of securitisation and direct transfers. it is not clear how such sales are consistent with business model whose objective is to hold assets in order to collect | marshall, β we might as reasonably dispute whether it is the upper or the lower blade of a pair of scissors that cuts a piece of paper, as whether value is governed by utility or cost of production. it is true that when one blade is held still, and the cutting is effected by moving the other, we may say with careless brevity that the cutting is done by the second ; but the statement is not strictly accurate, and is to be excused only so long as it claims to be merely a popular and not a strictly scientific account of what happens ( marshall [ 1890 ] 1997, 290 ). β 8. the exchange rate is a key macro - economic variable. it shapes a country β s balance of payments and engagement with the rest of the world. it affects a country β s export competiveness, of course in conjunction with other factors and its income and employment to bis central bankers β speeches the extent that export sector is important for the economy. it determines the cost of import and to the extent that import constitutes articles essential for investment and growth, can act as a retarding factor. it affects the price level through the linkages provided by the tradeable sector. 9. as we have seen earlier foreign currency behaves like a financial asset. the prices of all financial assets are forward looking and are based on the expectation of the future state of the world. as such a country can face large capital inflows or outflows depending on whether its future is perceived to be promising or discouraging. this in turn can affect the exchange rate which may not be in consonance with the fundamentals of the real economy for example the appreciation of the rupee in 2007 β 08 was caused by large capital inflows attracted by a buoyant and promising economy but affected the export sector adversely. the reverse was perhaps the case in the east asian crisis. the capital flows also pose challenge for the monetary policy setting. i allude to the much discussed mundell - fleming trilemma, i. e., it is impossible to have an open capital account independent monetary policy and fixed exchange rate. capital account openness and independent monetary policy framework could lead to flexible exchange rate which can be disorderly and volatile. 10. the reason i am discussing these issues in some detail is to emphasise the criticality of the exchange rate. the importance of exchange rate cannot be over emphasised for developing countries. for instance, it has got | 0.5 |
december 2017 β¦ β. second, an odyssean element of state contingency that clarifies the governing council β s reaction function should it not see β a sustained adjustment in the path of inflation consistent with its inflation aim. β and third, since last december an additional odyssean clarification that expresses our preparedness to increase the size and / or duration of the app under certain conditions, i. e. β if the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation β¦ β. taken together, the ecb β s current forward guidance encompasses a carefully expounded series of expectations involving both key policy rates and asset purchases. indeed, guidance on policy rates is linked to the app timeline, with the governing council β s expectation being that they will remain at present or lower levels β well past the horizon of our net asset purchases. β the logic behind this guidance, in very simple terms, is that it may be beneficial to retain full control over the expected path of future short - term policy rates, while allowing a gradual decompression of the term premium if and when we see solid progress towards a sustained adjustment in the path of inflation. at any rate, for our forward guidance, both on rates and the app, to be credible, we need to keep our policy expectations well aligned with our evolving assessment of the balance of risks and the outlook for inflation β this is the delphic part of our forward guidance. we would pay a high price in terms of our credibility if we failed to adapt our forward guidance once we had changed our views on the outlook. i will come back to this point later but let me note, for now, that a too gradual adjustment of our guidance could ultimately be quite costly. indeed, central banks and markets may have moved towards what jeremy stein and co - author have called a β gradualist β equilibrium. 8 this is a situation in which central banks make gradual changes to policy tools and communication in order not to upset the market. in such an environment, any change to the central bank β s policy inclination will have a major effect on asset prices. the reason is that markets have come to expect the initial central bank move β no matter how incremental β to be followed by many similar moves in the same direction. this effect is likely to be greater in conditions where there is an exceptionally large amount of monetary stimulus in place. it makes the expectations of | elizabeth mccaul : supervisory expectations on cloud outsourcing speech by ms elizabeth mccaul, member of the supervisory board of the european central bank, at the kpmg cloud conference 2024, frankfurt am main, 17 october 2024. * * * introduction it is my great pleasure to speak today at the kpmg cloud conference 2024. it is a pity that i cannot be with you in person, but i am sure that you are having a wonderful conference. there is no doubt that cloud outsourcing offers opportunities to scale operations efficiently, reduce costs and enhance flexibility by leveraging cloud providers'advanced infrastructure and services. indeed, using the cloud can be a viable strategy for banks to reduce the complexity of their it operations, which would be a welcome development. but it also introduces new risks and new challenges, including preparing it systems for use in a cloud environment. in particular, it presents risks related to it and data security and vendor lock - in which, if not properly managed, could lead to operational vulnerabilities and business disruptions. i would like to make three main points in my speech today. first, cloud outsourcing is rapidly transforming the banking sector, with a significant rise in adoption and expenditure. but it also increases banks'risk exposure, which demands heightened responsibility and robust governance frameworks. second, when adopting cloud strategies, banks should retain full accountability for outsourced services, ensuring clear roles, rigorous risk management and appropriate it security measures. third, our supervisory expectations should not be seen as regulatory hurdles, but as strategic enablers to enhance resilience, operational continuity and data protection in banks'cloud strategies. relevance of the cloud cloud services are transforming the economic landscape and reshaping traditional business models. according to a report by gartner, worldwide end - user spending on public cloud services is forecast to grow by 20. 4 % to total usd 675. 4 billion in 20241, driven largely by sectors like banking. in our own stocktake, we have found that essentially all significant institutions under our supervision use cloud services. cloud services account for approximately 15 % of all outsourcing contracts, with half of these contracts covering the outsourcing of critical or important functions. moreover, cloud expenses are among the fastest - rising outsourcing costs. but with this growth comes increased responsibility. 1 / 4 bis - central bankers'speeches third - party risk management, including cloud outsourcing, is high on the list | 0.5 |
. it is manifested in the extent of reserve accumulation, in part the consequence of resistance to exchange rate appreciation. and it is manifested in the remaining controls on capital movements and the occasional experimentation with the introduction of new controls. the search for durable insurance against future volatility is an understandable response to the searing experience of the crises of a decade ago. but there is risk in this as well. and the incomplete embrace of integration could contain the seeds of future vulnerability. in this sense, the policy agenda needs to move from a focus on creating stronger defenses against crisis to building a greater ability to adapt to change. this requires strong institutions for the management of macroeconomic policy so that the monetary and fiscal policies are able to respond to shocks in a credible manner. it requires strong financial institutions with a substantial capacity to absorb losses and cope with volatility. it requires regulatory policies that encourage competition and innovation, with strong protections for property rights, low barriers to entry and effective financial supervision. and it requires investments in a nation β s human capital, in education, healthcare and pension provision. this complement of policies improves the prospects for producing the mix of flexibility and resilience necessary for sustained growth in a more integrated world economy. in emerging asia, two key areas where there is the need and opportunity for further progress are in the financial system and in the monetary policy framework. the financial sector plays an important role in the flexibility and adaptability of economies to change, in the resilience of economies and in the capacity of the monetary authorities to respond to adverse shocks to asset prices or demand. although much has been achieved in asia over the past decade, as the damage inflicted by the crises has been repaired, further reform will be important to the capacity of these economies to innovate and grow and to live more comfortably with openness to capital flows. this requires stronger banks and more developed capital markets. thus far, we have seen more progress on the former than the latter, but both are important and there remains considerable scope for broadening and deepening capital markets in emerging asia. the extent of financial innovation in the industrial economies makes it possible for asian countries to take advantage of huge improvements in the efficiency of financial intermediation. embrace of these reforms will help ensure that high levels of domestic savings are deployed more efficiently, that companies and financial institutions are able to manage risks more effectively and that the financial system is more resilient in the face of future stress. monetary policy regimes in much of asia | selective liberalization of controls on capital flows and fixed exchange rate regimes. banking systems combined relatively weak supervision with broad government guarantees, some explicit, but more commonly implicit, reflecting a tradition of public sector intervention to protect troubled companies and banks from failure. tax and regulatory incentives promoted short - term borrowing in foreign currency through the banking system. capital inflows, largely through the banking system, helped finance a boom in investment and real estate. distortions in the financial system led to a misallocation of resources so that high rates of private investment did not generate substantial improvements in productivity. exchange rate regimes where the domestic currency was fixed to the dollar generated false expectations of stability, and the resulting increase in unhedged borrowing generated large exposures to changes in the exchange rate or interest rates. by 1997, the short - term external debt of the private sector had risen substantially, relative to gdp and to reserves, and this created conditions similar to a classic bank run, when the crises hit. the initial spark for the loss of confidence is still not fully clear, as is often the case in financial crises. and although the particular dynamics differed across the countries in the region, the basic pattern was common, with a rapid and sustained effort by domestic and foreign investors to reduce their exposure to further losses. the initial effects of this behavior made the exchange rate commitments untenable, and when those commitments were broken and currencies fell, the panic became self - reinforcing. uncertainty and lack of information fed the run. market participants were unable to judge whether deteriorating developments reflected temporary liquidity problems or deeper solvency issues. they reacted by assuming the worst. these shifts in market sentiment risked becoming self - validating, with liquidity problems transformed into solvency problems with broader risk of default. the capacity of policymakers to restore stability was constrained by the depth of the balance sheet problems. in some cases, where the scale of external borrowing was less acute, policymakers had more room to act. but in most cases, policy options were very limited. initially, governments were reluctant to let exchange rates move too far, because of fears that this would force banks and companies that had borrowed in dollars or yen into default on a scale that could further damage growth. at the same time, the authorities were reluctant to tighten monetary policy as a way to help stabilize the exchange rate because of concern it would hurt growth and perhaps exacerbate the flight from domestic assets. this dilemma made the initial policy response in the | 1 |
reliable conclusions to be drawn as to the risk distribution after the credit risk transfers. it can be concluded, though, that credit risks are borne by a larger number of market players than previously and that diversification possibilities are probably better utilised nowadays. in interbank business, too, more attention is being paid worldwide to default risks. a growing share of interbank business is hedged ; this is also the case in switzerland, where repo business has developed steadily. unhedged transactions still clearly account for the bulk of interbank business, but with an average volume of approximately sfr 20 billion, interbank repos, which were neglected for a long time, have grown to a respectable size. with respect to system stability, this development is favourable and should be further promoted. continuous linked settlement ( cls ) as regards credit risks in foreign exchange business, the launch of the cls system this autumn is a milestone achievement. cls bank, which has its headquarters in new york, serves as a platform to eliminate the so - called herstatt risk, i. e. the settlement risk inherent in foreign exchange deals. previously, the two legs of a foreign exchange transaction were settled at different times. if us dollars were bought against swiss francs, the franc amount was to be paid during european trading time. the corresponding amount in us dollars, however, was credited only a few hours later β during us trading time. in the few intervening hours, a credit risk existed. if a bank had been closed down during this time period, its counterparties might possibly have lost huge amounts of us dollar receivables. cls bank now makes it possible to settle foreign exchange transactions in the major currencies based on the Β« payment versus payment Β» principle, thereby eliminating the settlement risk for these transactions. currently, 42 financial institutions are directly linked to the system ( settlement members ) and settle their foreign exchange payments via cls in seven different currencies. one of these settlement currencies is the swiss franc. three swiss banks β ubs, cs and zurcher kantonalbank β participate in cls. apart from these three swiss banks, two other financial institutions β hsbc and bank of america β effect foreign exchange transactions in swiss francs via cls. every day, these five institutions together enter around 1, 400 payments in the amount of almost sfr 20 billion into cls. settlement takes place via a direct link between the swiss interbank clearing system ( sic ) | have contributed towards switzerland being able to avoid a credit crunch in the past few months. page 3 / 4 zurich, 17 december 2020 thomas jordan news conference it will take some time yet before the economy recovers, and uncertainty will remain high for the time being. we will therefore be seeking to do our utmost with our monetary policy to ensure price stability and to contribute to the economic recovery. climate change and the snb i would now like to talk about the significance of climate change for the snb. we have been working intensively on this topic for some time now. we want to properly assess possible consequences of climate change for the economy, for financial stability, and for the management of our foreign exchange reserves in order to ensure that we can fulfil our statutory mandate at all times. to this end, we also collaborate with other central banks, in particular in the network for greening the financial system ( ngfs ), and we work together closely with finma. as regards monetary policy, we are continuously deepening our analysis into how climate change could affect economic growth and inflation. the dialogue with other central banks is particularly important in this area. when it comes to financial stability, the snb focuses its efforts on determining the impact of climate risks on the stability of the swiss banking system. in a joint pilot project with finma, the snb is currently identifying the concentrations of risk of switzerland β s largest two banks in respect of sectors exposed to higher transition risks, i. e. possible implications of future amendments to laws. with regard to our investment policy, in connection with the issue of climate change, we have decided to make an adjustment to our exclusion criteria. since 2013, we have already been excluding investments in companies that cause severe environmental damage, violate human rights or produce condemned weapons. with these exclusion criteria, we ensure that our investment policy reflects the fundamental and broadly accepted values held in switzerland. we are now expanding the exclusion criterion pertaining to the environment by additionally taking climate - related issues into consideration. in switzerland, a broad consensus has formed in recent years in favour of phasing out coal. we have therefore decided that we will from now on exclude all companies primarily active in the mining of coal from our portfolios. ladies and gentlemen, thank you for your attention. it is now my pleasure to give the floor to fritz zurbrugg. page 4 / 4 | 0.5 |
( laughs ). the euro symbol is one of the most visible signs in europe. when i see it, i think of how much there is to do to make europe work, to ensure that people have jobs and that they can live a good life. that is why i am working hard at the ecb. it should be the purpose of everything that we do. bis central bankers β speeches | you set up investment programmes in the countries involved! cΕure : let me first answer mr ratz. the very narrowly defined primary objective of the ecb is to maintain price stability in the euro area. to achieve this goal, we have a great number of different instruments at our disposal, which we have used as the situation required. the ecb can choose its instruments, but it is not allowed to reinterpret the treaty. turning to the subject of capitalism, i respect your views, mr aschmoneit, but the issue is outside the ecb β s area of responsibility. we operate in an environment that is framed by treaties which have been approved by the citizens of europe and which provide for europe to be set up as a social market economy. it is within this market economy that the ecb operates. sz : what is your personal view on capitalism? cΕure : my view on capitalism is similar to what the former british prime minister winston churchill said about democracy : it is the worst of all the systems, except for all the others that have already been tried. capitalism can be extremely dangerous and cruel. the markets triggered the financial crisis, which is why we need strict rules. with those in place and being checked strictly, capitalism can function well. over the past 40 years, the market economy system has enabled hundreds of millions of people to climb out of poverty. in europe, we have political institutions that can regulate the market, while that is not the case at the global level : despite having a global market economy, there are no global institutions. it is europe β s biggest chance that we are able to control the market economy in this way, and we should make full use of it. ratz : that β s not true. you are not controlling capitalism. you are giving capitalism ever more free reign. for example, the memorandum for greece has interfered massively with the right to health care and the freedom of wage negotiations. i have never read any statement by the ecb in which it has said that europe needs to do more to control capitalism. however, i do accept that the ecb is in a difficult contractual situation. with the focus being on price stability, its mandate is too narrowly defined. the ecb should actually be able to finance governments. nevertheless, the ecb is independent and therefore not democratically accountable. the ecb itself might propose how its democratic accountability could be improved. cΕure : on monetary financing of governments, | 1 |
decade ago, were the result of a defensible but not ineluctable analysis, and have not been refined since then. we should explore ways to bring these criteria into better alignment with our objectives. a third area in which i will be working with my board colleagues is a meaningful simplification of our framework of loss absorbency requirements. there are different ways to count the number of loss absorbency constraints that our large banking firms face β which is perhaps in itself an indication of a surfeit of complexity if we can β t be perfectly sure of how to count them β but the number i come up with is 24 total requirements in the framework. while i do not know precisely the socially optimal number of loss absorbency requirements for large banking firms, i am reasonably certain that 24 is too many. candidates for simplification include : elimination of the advanced approaches risk - based capital requirements ; one or more ratios in stress testing ; and some simplification of our tlac rule. i am not the first federal reserve governor to mention some of these possibilities, and we should put them back on the table in the context of a more holistic discussion of streamlining these requirements. let me be clear, however, that while i am advocating a simplification of large bank loss absorbency requirements, i am not advocating an enervation of the regulatory capital regime applicable to large banking firms. although not a post - crisis regulation, the board β s complex and occasionally opaque framework for making determinations of control under the bank holding company act ( bhc act ) is another area that is ripe for re - examination through the lenses of efficiency, transparency, and simplicity. as you know, a determination of control under the bhc act is significant because even remote entities in a controlled group can be subject to the bhc act β s restrictions on activities and a host of other regulatory requirements. under the board β s control framework β built up piecemeal over many decades β the practical determinants of when one company is deemed to control another are now quite a bit more ornate than the basic standards set forth in the statute and in some cases cannot be discovered except through supplication to someone who has spent a long apprenticeship in the art of fed interpretation. the process can be burdensome and timeconsuming both for the requester and federal reserve staff. we are taking a serious look at rationalizing and recalibrating this framework. finally, as i mentioned earlier | own impressions of what is next for post - crisis 2 / 5 bis central bankers'speeches regulation. in my early days as the vice chairman for supervision, i asked our staff to conduct a comprehensive review of the regulations in the core areas of reform that i outlined earlier β capital, stress testing, liquidity, and resolution. the objective is to consider the effect of those regulatory frameworks on resiliency and resolvability of the financial system, on credit availability and economic growth, and more broadly to evaluate their costs and benefits. this is a comprehensive and serious process, and work is still underway. i should note, however, that i have already formed views on a few areas that warrant more focus, and that i will be working with my colleagues on the board to constructively consider. i will start with the issue of tailoring supervision and regulation to the size, systemic footprint, risk profile, and business model of banking firms. the federal reserve has devoted considerable energy in its post - crisis regulatory work to incorporate the tailoring concept in its regulation and supervision across the spectrum of small, medium, and large firms. a recent example of this approach is our late 2017 proposal to simplify capital requirements for small - and medium - sized banking firms. in my view, there is further work for the federal reserve and the other banking agencies to do on the tailoring front. i would emphasize that tailoring is not an objective limited in scope to a subset of the smallest firms. as my colleagues and i have said before, the character of our regulation should match the character of the risk at the institution. accordingly, we should also be looking at additional opportunities for more tailoring for larger, non - global systemically important banks, or non - gsibs. in this regard, i support congressional efforts regarding tailoring, whether by raising the current $ 50 billion statutory threshold for application of enhanced prudential standards or by articulating a so - called factors - based threshold. irrespective of where the legislative efforts land, i believe we at the federal reserve have the responsibility to ensure that we do further tailoring for the institutions that remain subject to our rules to ensure that regulation matches the risk of the firm. take for example large non - g - sibs whose failure would not individually pose a risk to u. s. financial stability. even without financial stability implications, the distress or failure of these firms still could harm the u. s. economy by, for example | 1 |
, the economy β s natural rate of interest, cannot be observed in reality, but only, in the best of cases, estimated indirectly. accordingly, the central bank needs to analyse a broad range of indicators in order to infer the state of the economy, so as to be able to determine the appropriate monetary policy stance. this conceptual framework worked satisfactorily during the 1990s and the early years of the current century, a period known as the β great moderation β, characterised by stable growth in the advanced economies and relatively low levels of inflation. however, the economic and financial crisis that began in 2007 - 2008 forced central banks to adopt innovative policies and, on occasion, to navigate β uncharted waters β. this is the subject i wish to talk about in the final part of my speech. the monetary policy challenges arising from the crisis the magnitude of the crisis that began in 2007 - 2008 led the central banks of the main developed economies to design and implement expansionary monetary policies of unprecedented magnitude and scope. the crisis had a significant effect on banks and other financial intermediaries, leading to a contraction in credit and, therefore, in economic activity. this led the main central banks to introduce various measures to provide liquidity to their banking systems at times of market malfunctioning. in addition, asset purchase and medium and long - term financing programmes were launched that avoided a systemic crisis which would have led to the failure of a large number of banks and, undoubtedly, to an enormous crisis in the real economy, as during the β great depression β in the 1930s. even so, the severity of the recession led to a very sharp contraction in demand, and ultimately to inflation rates that were too low and incompatible with the mandate of the central banks of the main advanced economies. this situation forced them to reduce the interest rates determined by monetary authorities to historic lows. some central banks, such as the ecb and those of japan, sweden, denmark and switzerland, reduced rates to negative levels. 5 / 7 in fact, one of the factors that has influenced the actions of central banks most in recent years has been the difficulty of reducing interest rates when they are already at very low levels. interest rates that are too low may mean that there is no incentive for financial intermediation, since, for example, it is more profitable to store money in cash than to deposit it in the banking system. what should we do then when rates are very low and the economy still requires | 16. 06. 2017 speech by the governor of the banco de espana at the 2017 cunef graduation ceremony luis m. linde governor it is an honour to be here with you today, to celebrate the cunef university 2017 graduation ceremony for graduates and postgraduates. allow me to congratulate all those who are graduating today, and to express my gratitude for the invitation to preside over this ceremony, which it has been a great pleasure to accept. since its foundation more than 40 years ago, cunef university has played a very important role in the education of banking and finance professionals in spain. cunef graduates occupy important positions not only in the private sector but also in the public sector, including in the institution that i represent. and i am sure that the students graduating today will maintain the tradition of professional excellence built by this university. i would like to focus today on what is, without a doubt, the key function of central banks : monetary policy. i will start with a brief historical outline of how the functions of central banks have changed from when they were first established up until the present day, and i will then describe the current framework for monetary policy implementation, concluding with some reflections on the main challenges we face following the economic and financial crisis that broke ten years ago this year. the evolving role of central banks central banks are offspring of the enlightenment. the first two central banks, the sveriges riksbank and the bank of england, were founded in the second half of the seventeenth century. the banco nacional de san carlos, the first forerunner of the banco de espana, was founded during the reign of charles iii, the enlightened, in 1782, and the banque de france opened its doors in the year 1800, shortly after the coup of 18 brumaire, which brought napoleon to power. central banks were initially set up to satisfy european states β demand for funds, to pay for their increasingly costly armies. the banknote issuance monopoly, which most central banks enjoyed from their foundation, was the main feature that distinguished them from commercial banks. until the first world war, the operations of central banks were linked to the gold standard. the interwar period was marked by a number of economic disasters, such as the hyperinflation in germany and the great depression in the united states, partly associated with the attempt to adapt the role of central banks to the new political realities. the post - war world was marked by the bretton woods agreements, | 1 |
the 100 richest men in the world, who committed suicide when his investments soured. what is clear is that having piles of money that would allow them to live in luxury was not enough. the chase for money became the end goal. this is where the value of good and ethical finance educators comes in. educators who will provide their students solid grounding on what financial success means and the ethical parameters for achieving it. helping your students develop the ethical compass and the moral fortitude to adhere to doing things the right way should help them find their way in a challenging world. for as we know, doing the right things is not necessarily the easiest path to follow. american civil rights leader martin luther king, jr. once said that β intelligence plus character β that is the goal of true education. β that is the challenge before our educators. as finance educators i hope you will always be mindful that sitting before you in your class are the future leaders of our banking and finance institutions. that you have the power to nurture leaders who can truly make a difference in improving the quality of life of our people. this is the same philosophy that underpins the economic and financial education program of the bangko sentral ng pilipinas : improving lives through literacy programs that will empower them to benefit from opportunities that development brings. as you and i know, there are millions of filipinos who still live in poverty. if we can harness the liberating effects of financial know - how, even at its most basic, then we would be able to help millions of filipinos help themselves. empowerment is the key. this is the reason why economic and financial education is at the heart of bangko sentral β s advocacies. it is a social good, whose value to society is considerably much more than the personal gains. financial learning empowers the citizenry as it helps the public acquire knowledge and develop skills in making well - informed economic and financial decisions necessary to ensure well - functioning markets that, in turn, support economic growth and development. and when consumers and producers understand financial issues, they are less vulnerable to fraudulent practices and scams. as they grow in their understanding of financial products, whose variety and complexity have grown in leaps and bounds, they will be able to prepare and chart their financial future based on their preferences for risks and rewards. just as financial learning helps to protect the public from unsafe financial practices, it also affords the public better opportunities for financial advancement and wealth creation | point is : what do we need to do in order to restore the principle of liability? the decisive point is that banks must be able to fail without dragging down the entire financial system with them. to this end, a new international standard on the recovery and resolution of systemically relevant banks has been developed. having this new standard is a major step forward. at the same time, a single resolution mechanism will be a central pillar of the european banking union. it will allow authorities to restructure or resolve banks without putting taxpayers β money at stake. the owners of the bank and the creditors will be the first in line when it comes to bearing the costs of a bank failure. due to its importance, let me stress how crucial it is that those involved in the negotiations reach an agreement on the european single resolution mechanism prior to the european elections in may. a european banking supervision cannot be effective without a european resolution mechanism. in the same context, the comprehensive assessment is crucial as a precondition for a successful banking union. the objective is to uncover any legacy assets in banks β balance sheets and to assess their resilience to stress scenarios. with that objective in mind, the asset quality review and the stress test have to be tough and thorough. this will ensure that european supervision and european resolution mechanisms do not have to deal with problems that arose under national supervision. banks and states aligning the banking sector with the principles of a market economy will take us a big step towards financial stability. but it won β t take us all the way. to safeguard the stability of the entire financial system, we have to look beyond the banks. one issue we definitely have to address is the connection between banks and the public sector. the banking system is closely linked with public finances. this link was a major driver bis central bankers β speeches of the crisis in the euro area. so, let us now take a closer look at the link between banks and states. when the financial crisis unfolded and banks everywhere ran into difficulties, governments had to step in to avoid a breakdown of the entire financial system. this experience is a real world example of the β too big to fail β problem which i discussed a moment ago. however, saving banks is a costly endeavour for governments. let β s take ireland as an example. in order to save its banking sector, ireland ran up a budget deficit amounting to 30 % of its economic output in 2010. in the same year, germany added almost β¬33 billion to its public | 0 |
unusual configurations of asset price movements is higher than normal. implications for risk management financial institutions and public policymakers have demonstrated an ability to respond flexibly to changing circumstances over the past several years. but what does this imply about their ability to adapt to the conditions that they may confront in the future? financial institutions one of the defining characteristics of financial institutions and markets of late has been a significant expansion in the tools available for managing risk. these tools are tested and refined over time. importantly, however, they rest on past experience and our understanding of events. thus, as firms look ahead, they must be cognizant of the challenges that activities or events outside our experience pose for their risk management. new products and new business lines, for example, are an ongoing challenge. historical data may be limited or not relevant for assessing risk in newly created products. such data limitations affect even standard risk - management tools such as value - at - risk analysis. recognizing the need to supplement standard risk - management tools, managers also routinely estimate their exposures under so - called tail events. tail events, that is, asset price movements that are much more extreme than our usual experience, often appear driven by unique and idiosyncratic circumstances, so their implications are open to question and a challenge to risk managers. should they be viewed as temporary deviations from a still - valid view of the usual distributions of possible outcomes, or are they a harbinger of a more permanent shift that suggests a need for re - assessment of risk - management models and practices? tail events, by their nature, also are likely to be accompanied by heightened uncertainties. during such periods, the reaction of other market participants may become more relevant in the assessment of one β s own risk. consider the management of market liquidity risk when asset prices are moving in unusual ways. a firm can no longer assume that it will be able to reduce its risk quickly by adjusting positions. trades may be possible mostly at smaller volumes, and large trades almost surely will have greater price effects than normally observed. other firms also may be trying to liquidate the same positions, creating further demands on diminished market liquidity. risk management must take into account the potential for the longer holding periods and more - severe asset price movements likely to be observed in such conditions and the possibility of concentrations of positions in some markets. the challenges posed by tail events are not limited to market liquidity risk. they have broader effects on the measurement and management of market and counterpart | procyclical effects without compromising the goals of disclosure and transparency. the federal reserve also helped lead the basel committee's development of enhanced principles of liquidity risk management, which were issued last year. 2 following up on that initiative, on june 30, 2009, the federal banking agencies requested public comment on new interagency guidance on funding and liquidity risk management, which is designed to incorporate the basel committee's principles and clearly articulate consistent supervisory expectations on liquidity risk management. 3 the guidance re - emphasizes the importance of cash flow forecasting, adequate buffers of contingent liquidity, rigorous stress testing, and robust contingent funding planning processes. it also highlights the need for institutions to better incorporate liquidity costs, benefits, and risks in their internal product pricing, performance measurement, and new product approval process for all material business lines, products, and activities. with respect to bank holding companies specifically, the supervisory program of the federal reserve has undergone some basic changes. as everyone is aware, many of the financial firms that lay at the center of the crisis were not bank holding companies ; some were not subject to mandatory prudential supervision of any sort. during the crisis a number of very large firms became bank holding companies β in part to reassure markets that they were subject to prudential oversight and, in some cases, to qualify for participation in various government liquidity support programs. the extension of holding company status to these firms, many of which are not primarily composed of a commercial bank, highlights the degree to which the traditional approach to holding company supervision must evolve. recent experience also reinforces the value of holding company supervision in addition to, and distinct from, bank supervision. large organizations increasingly operate and manage their businesses on an integrated basis with little regard for the corporate boundaries that typically define the jurisdictions of individual functional supervisors. indeed, the crisis has highlighted the financial, managerial, operational, and reputational linkages among the bank, securities, commodity, and other units of financial firms. the customary focus on protecting the bank within a holding company, while necessary, is clearly not sufficient in an era in which systemic risk can arise wholly outside of insured depository institutions. similarly, the premise of functional regulation that risks within a diversified organization can be evaluated and managed properly through supervision focused on individual subsidiaries within the firm has been undermined further ; the need for greater attention to the potential for damage to the bank, the organization within which it operates, and, in some cases, | 0.5 |
some cases defying the taboo of buying government debt in the primary market. such effective uses, however, might have been attributed to a common global shock. abundant global liquidity and the fact that advanced economies themselves were breaking taboos on a much larger scale might have helped emerging economies avoid being penalized by international capital markets for ultra - loose expansionary policies. it is therefore questionable whether the same results would be obtained if emerging markets alone were to face the risk of falling into secular stagnation and if they were to implement similar expansionary fiscal and monetary policies in response. constraints on ucmps in emes a more difficult question is whether emerging economies should use unconventional policies when facing secular stagnation, when global liquidity is not sufficient. the chance of returning to very low inflation and low growth is significant for korea and other asian emerging economies, such as thailand and china, considering their rapid aging and earlier experiences of low inflation. even so, unconventional forward guidance may not be a desirable toolkit for emerging markets with greater uncertainty, exacerbating the inflexibility of unconventional forward guidance to sudden economic changes and the exit problem. in addition, there are several structural factors to consider. for unconventional forward guidance to be successful, the central bank must be able to commit to the announced strategy and make a credible case that it is consistent with achieving the central bank β s objectives. otherwise, the central bank could be subject to aggressive speculative attacks. for example, unconventional policies trying to lower interest rates could lead to excessive depreciation of the local currency if the market perceives the policy as being inconsistent with the macroeconomic fundamentals of the country. concerns about fiscal dominance is another example. the experience of japan since the 1990s well - illustrates that the main driver of public debt explosion has been agingrelated spending, not fiscal spending to boost the economy as is commonly believed. this shows that it is not easy for emerging economies that are experiencing rapid aging, to credibly convince markets of a scenario that temporarily requires a large fiscal stimulus while promising to maintain fiscal sustainability in the long - term. an alternative conventional forward guidance so, if unconventional forward guidance is not desirable, then what are the alternatives? one option could be scenarios - based conventional forward guidance. for example, in summer last year, this framework could have been used to present different scenarios for the two clear narratives regarding inflation : persistent vs transitory. the first scenario would have assumed inflation was more persistent, requiring faster policy normalization | of little change to the near - term outlook for inflation and some improvements in investor confidence following the approval of the four - year eff by the imf β s executive board. during the quarter, the bank offered nine variable rate cds and two usdollar indexed notes to the market. these instruments shifted $ 21. 8 billion into longer - tenor securities ( that is, between six and 18 months ) and offset the bank β s purchase from the market of us $ 196. 3 million, equal to about $ 19. 3 billion. against the background of these developments, the weighted average selling rate of the us dollar depreciated by 2. 5 per cent for the review quarter. this adjustment followed a depreciation of 6. 0 per cent in the march 2013 quarter. the slower pace of depreciation in the june quarter also reflected the impact of lower demand for foreign currency to meet current account transactions. bis central bankers β speeches inflation it is encouraging to be able to report that headline inflation was 1. 2 per cent for the june 2013 quarter, below the outturn of 2. 7 per cent for the march 2013 quarter and well below the forecast range for the june quarter of 2. 0 to 3. 0 per cent that we announced when we last met in may. the inflation outturn for the review quarter was largely due to the lagged passthrough of the depreciation in the exchange rate and the impact of drought conditions on the prices of some agriculture items. however, the impact of these factors was lower than the bank had anticipated. the lower than projected inflation also reflected the impact of a sharp reduction in energy costs, which was not expected, and the effect of weaker than anticipated demand conditions. for the september quarter, the bank is projecting inflation to be in the range of 2. 0 per cent to 3. 0 per cent. the materialization of this forecast would be below the inflation outturn for the september quarters of the last five years. inflation in this quarter is expected to be driven by increases in the prices of domestic agricultural produce and processed foods. in addition, inflation in the period is expected to reflect the impact of higher prices for crude oil and the effect of the seasonal increase in demand related to the summer holidays and back - to - school preparations. however, the announced reduction in communication costs and persistent weak demand conditions are expected to moderate the impact of these factors on the overall price level. headline inflation for july, at 0. 5 per | 0 |
the same capital requirements, banking union does not mean that every banking system has the same level of capital requirements. thus, capital requirements are determined through decisions taken by microprudential supervisors with respect to pillar i and pillar ii requirements, but also through the polices implemented by macroprudential authorities with respect to the other systemically important institutions ( o - sii ) buffer and the countercyclical capital buffer ( ccyb ), for example. another aspect of banks β capital requirements that is relevant is the minimum requirement for own funds and eligible liabilities ( mrel ), which is decided upon by resolution authorities. supervisors must therefore cooperate and coordinate effectively with macroprudential authorities and resolution authorities β whilst respecting their differing mandates β to ensure the resilience and stability of the banking system. borrower based measures third, borrower based measures such as loan - to - income limits ( lti ) and loan - to - value limits ( ltv ) make both banks and borrowers more resilient. increased co - ordination 3 / 7 bis central bankers'speeches wider institutional fora are important when thinking about the joint responsibility β authorities β have for financial stability. these vary in composition and mandate at national level. 9 at european level, the esrb was established in 2010 to oversee the financial system of the european union ( eu ) and prevent and mitigate systemic risk. it is an important forum which brings together representatives of eu institutions, governors of national central banks, and high level representatives of the national competent authorities. 10 for the euro area, the macroprudential forum is composed of the governing council and the supervisory board of the ecb and it is a platform for regular, high - level discussions, bringing together microprudential and macroprudential perspectives from across europe. 11 the advent of macroprudential policy has therefore coincided with and reinforced an important change in thinking about microprudential supervision. this is embedded in our framework for supervision and our tools for stress testing. effective cooperation and coordination given the multi - level and joint responsibility is critical to preserve financial stability. resolution, financial stability and prudential supervision the establishment of national resolution authorities and the single resolution board has been an important institutional development since the crisis. however, the introduction of the bank recovery and resolution directive ( brrd ) and single resolution mechanism ( srm ) goes well beyond this, and has also had a wider impact on how we supervise banks. the brrd | ministers know what measures need to be taken but do not know how they can be subsequently re - elected. β it will not be enough to provide in the future for a greater involvement of the european parliament, however essential that may be. decisions on national budgets traditionally have been at the heart of member states β parliamentary democracies ; a stronger european dimension and mechanisms will have to be found by which national parliaments can be brought further into the european decision making process. the crisis, its resolution and the long term development of the emu have both a european and a domestic dimension. onto the national political system level falls the challenge of striking a new social contract, reorienting expenditure, modernising tax systems, promoting flexibility, strengthening competitiveness. in ireland we believe that if we are to stay on the path to a successful consolidation and adjustment continued efforts are needed at both national and european levels. other countries are facing or may face the same challenges. the coming years will test the ability of all our leaders to manage successfully in the interaction between the national and the european. bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches | 0.5 |
##ic ) β’ cooperative development authority ( cda ) and β’ bangko sentral ng pilipinas at the same time, we have invited multi - sectoral representatives here today because we believe that you can play a significant role in the successful implementation of our nsfi. ladies and gentlemen, we need your cooperation, collaboration and overall support to ensure that financial inclusion becomes a reality throughout the philippines. equally important, we hope that you will help us in measuring and monitoring the progress of our financial inclusion initiatives. moving forward, we need data to guide and inform us if we bis central bankers β speeches are on the right track ; to evaluate if we need to refine our tactical plans ; to help us prioritize our resources ; and to help us calibrate our policies and programs accordingly. indeed, the importance we ascribe to data and measurement is underscored by the simultaneous launch today of the result of our maiden national baseline survey on financial inclusion. the survey, completed this year, showed the following results : β’ 25 % of filipino adults have never saved, 32 % used to save, and only 43 % presently have savings. β’ of those with savings, only 32 % save in banks while 68 % keep their savings at home. β’ 65 % of unbanked adults cited lack of money as the main reason for not having a bank account. β’ about 47 % of adults have outstanding loans. the main source of borrowing is informal β 62 % borrow from family, relatives or friends while 10 % borrow from informal lenders. β’ in the past six months, about 44 % of adults sent or received money while 42 % made payments. β’ only 3. 2 percent of adults have microinsurance coverage. β’ clients rated themselves as only β somewhat satisfied β with how issues were resolved in most financial service access points. the survey results tell us we have a long way to go to achieve financial inclusion. the survey also tells us that there are plenty of opportunities for those looking to expand their business or to introduce game - changing innovations. clearly, we will need broad - based cooperation from local and international institutions to address these gaps. together, i believe we can make substantial gains on our financial inclusion targets. conclusion we look forward therefore to work with you in our journey to achieve inclusive finance that supports inclusive growth. we want to ensure that filipinos across the country are able to identify, gain and prosper from the fruits of economic progress. in particular, we want our people to be | structural sources β bop position yielded a surplus of us $ 4. 7 billion for january - november 2013. the current account surplus was mainly on account of increased net receipts of primary and secondary income and in other services accounts. our banking system is stable and strong with capital adequacy ratios well above international standards. as of end - june 2013, the capital adequacy ratio ( car ) of uk / bs stood at 18 percent on solo and 19. 3 percent on consolidated bases. external debt dynamics are favorable β external debt - to - gdp ratio decreased to 21. 9 percent in the third quarter ( 2013 ) from 25. 6 percent in september 2012 and 24. 1 in december 2012. moreover, more than four - fifths of our external debt has medium - to long - term maturities. 1 the philippines β strong economic performance has been validated internationally. 1 ) credit rating upgrades. the year 2013 saw the philippines achieve investment grade credit rating β not just from one, but from all the three major credit rating agencies. these rating agencies have cited the disciplined fiscal management with the declining reliance on foreign currency debt, strong external position, and low and stable inflation levels as bases for the score. in a recent report, moody β s maintained its positive outlook on the philippine banking system. in fact, in that report, moody β s stated that the philippines β banking sector is the only one in the asia - pacific region which they have given a β positive β outlook. average maturity : public sector : 20. 1 years private sector : 9. 8. bis central bankers β speeches 2 ) the imf. an imf mission report in september 2013 cited that the country β s strong fundamentals would enable it to deal with any capital outflows when the u. s. federal reserve cuts its stimulus program. 3 ) doing business 2014. in the latest world bank and international finance corporation report ( october 2013 ), the philippines was ranked among the top 10 countries that made the biggest improvement in business regulation. the report took note of the government β s regulatory reforms in three areas : introduction of a fully operational online tax filing and payment system, simplified occupancy clearances for construction, and new regulations that guarantee borrowers β right to access credit information. while most of the sources of risks have dissipated, in particular with clearer forward guidance from the us federal reserve ( fed ), resolution efforts in eurozone gaining broad agreement, and accommodative policies in japan | 0.5 |
of 3 to 6 per cent. in the twelve months from 1 april 2005 to 31 march 2006, the year - on - year cpix inflation rate averaged 4, 1 per cent, but changes ranged between 3, 5 and 4, 8 per cent over the period. from march to june 2006, cpix inflation accelerated from 3, 8 per cent to 4, 8 per cent. services price inflation continued to decline and had fallen below goods price inflation by the beginning of 2006. this was partly a reflection of the continued containment of increases in administered prices, other than petrol prices. the higher trend in goods prices was initially mainly due to petrol price increases, and more recently food price increases. during the first nine months of 2005, food price inflation averaged 1, 8 per cent and therefore contributed to the downward trend in inflation. following the strong increase in maize prices towards the end of 2005, food price inflation began to increase and had risen to 7, 2 per cent by june 2006. by contrast, the prices of a number of categories of goods fell, particularly clothing and footwear, and furniture. production price inflation increased over the past year and averaged around 5, 5 per cent in the first four months of 2006, compared to 2, 3 per cent in june 2005. however, a further acceleration occurred in may and june 2006, when producer inflation reached levels of 5, 9 per cent and 7, 5 per cent, respectively. changes in energy and food prices provided much of the impetus to higher production prices. for much of the reporting period the inflation outlook was fairly stable and favourable. this allowed for an unchanged repo rate of 7 per cent for a prolonged period following the reduction by 50 basis points in april 2005. in the past year, there were a number of developments that supported a favourable inflation outcome. lower inflation expectations appeared to have had an impact on wage settlements which have declined steadily. unit labour cost increases were also moderate, with an average rate of increase of 3, 4 per cent for 2005, significantly down from the rate of 6, 5 per cent recorded in 2004. these developments, combined with the increased credibility of monetary policy as indicated by improved inflation expectations, were expected to support sustainable low inflation. the inflation outlook was also supported by continued fiscal discipline, output growth in line with growth potential and low world inflation. the initial impact of the significant increase in international oil prices on world inflation, world growth and domestic inflation was minimal, confounding earlier fears of a repetition of | t t mboweni : overview of the south african economy address by mr t t mboweni, governor of the south african reserve bank, at the 86th ordinary general meeting of shareholders, pretoria, 23 august 2006. * * * we live in an ever - changing global environment, an environment that is characterised by opportunities and hope, but also fraught with risks. in this environment the south african reserve bank ( bank ) must implement its mandate and manage the associated risks to ensure that south africans benefit from opportunities emanating from a changing world. today, i am pleased to report on another successful year in the eighty - five - year history of the bank. the achievement and maintenance of price stability remains the primary objective of the bank. indeed, the most significant accomplishment of the bank has been the containment of inflation within the target range since september 2003. this does not imply that the other functions of the bank are neglected. on the contrary, these remain crucial in the operations of the bank. today we also release our annual economic report which covers the broader aspects of the domestic and international economy that impact on many of the activities of the bank. this address will highlight, where relevant, some of the salient economic developments which have affected our operations. the focus of this address is on the main operational areas of the bank including monetary policy, monetary operational procedures, gold and foreign exchange reserve management, the national payment system, banking regulation and supervision, international co - operation and internal administration. monetary policy monetary policy during the past year was conducted against the background of a strongly growing international economy and buoyant commodity prices. this strong growth, combined with rising geopolitical tensions and other supply constraints, placed upward pressure on international oil prices, which reached highs of almost us $ 80 per barrel in recent weeks. despite the high oil prices, world inflation initially remained subdued, but inflationary pressures have since begun to emerge in a number of countries. this has prompted the tightening of monetary policy by several central banks in the past few months. domestically, the economy grew by 4, 9 per cent in 2005. in the first two quarters of 2006, economic growth remained robust but showed some moderation compared to 2005. an annualised growth rate of 4, 2 per cent was recorded in the first quarter of 2006. inflation remained under control in the period under review, with changes in cpix ( that is the consumer price index for metropolitan and other urban areas excluding mortgage interest cost ) remaining within the target range | 1 |
christine lagarde : opening remarks at the eui β s state of the union event opening remarks by ms christine lagarde, president of the european central bank, at the online edition of the state of the union conference organised by the european university institute, 8 may 2020. * * * today marks the 75th anniversary of the end of the second world war in europe, while tomorrow marks the 70th anniversary of europe β s response to that cataclysm : the schuman declaration that set us on the path towards deeper european union. the declaration famously maintained that β europe will not be made all at once, or according to a single plan. it will be built through concrete achievements which first create a de facto solidarity. β schuman β s idea was that europe needed to become so deeply integrated β and so interdependent β that solidarity would become self - interest. and, thereafter, it would become natural to build stronger common institutions that reflected the depth of those ties. by and large, this is the path that integration has followed. when europeans saw that the common market was not delivering in the 1980s, we launched the single market. when we realised the single market was vulnerable to competitive devaluations, we launched the euro. and when the euro members recognised that the single currency was vulnerable to self - fulfilling crises, new institutions were established and new instruments were developed β such as the european stability mechanism ( esm ), the ecb β s outright monetary transactions programme ( omt ), and the banking union that still needs to be completed. whenever our β concrete achievements β were threatened, we did not backtrack : we made them stronger β because they had created the de facto solidarity that schuman promised. european integration paved the way for prosperity, stability and peace. the coronavirus pandemic today is both confirming and testing this thesis. we are seeing once more how interdependent we have become. if not all countries are cured from this crisis, the others will suffer β and not just in terms of health, but economically too. trade within the euro area accounts for 45 % of gdp. the success of the single market means that supply chain integration is three times tighter within the euro area than with the rest of the world. as a result, analysis by the ecb finds that a common shock is amplified by about 30 % β meaning all countries have to act together to mitigate large crises effectively. so the question we face today is | this : can we respond to the economic shock we are facing β which is unprecedented in peacetime β in a way that reflects our fundamental common interest, as those generations of europeans did in the past? we have seen some encouraging signs of european cooperation. state aid rules were quickly relaxed and fiscal rules suspended, empowering a strong fiscal response to underpin wages and incomes. about 16 % of employees in the four largest countries are now enrolling in short - time work schemes and government - supported temporary layoffs. in parallel, the actions of the ecb, european banking supervision and national governments have dovetailed to put the banking sector in a stronger position to plug the liquidity gap facing firms, preventing an even sharper loss of capacity and jobs. bank lending increased by almost β¬120 billion in march, the largest monthly flow on record. 1 / 2 bis central bankers'speeches however, when it is safe to do so, europe will have to move to the next phase of its crisis response. the focus will need to shift from providing backstop support to enabling the recovery. this will present a new set of challenges. the ecb will play its part in line with its mandate. we will do everything necessary within our mandate to support the recovery and we remain undeterred in delivering on our price stability objective. on the fiscal side, the measures adopted in the euro area so far have been quite diverse, ranging from around 2 % of gdp to more than 40 %. in about half of euro area countries, government guarantees make up the largest share of the fiscal support. but the costs of the crisis continue to rise and, as we move forward, the form of fiscal support will likely change : discretionary spending may increase, automatic stabilisers will kick in further and β in more severe scenarios β the loan guarantees supporting firms could be called. the ecb estimates that β in our medium scenario of a drop in gdp of around 8 % β the additional government financing needs in the euro area this year resulting from the recession and the required fiscal measures may exceed 10 % of euro area gdp. this would put the additional debt issuance due to the pandemic in the range of β¬1 trillion to β¬1. 5 trillion in 2020 alone. we need, as a union, to be prepared for this future. since no one is to blame for this crisis, we must ensure that there are no undue constraints on our policy responses. not all countries have to react in the | 1 |
blur the lines between banks and nonbanks. for example, we can expect mutual funds to refine their offerings to compete with bank checking and savings accounts, albeit without deposit insurance. banks will undoubtedly make further inroads in mutual fund management and investment banking through internal growth and through acquisitions of securities firms. investment banks may also supplement their services by making commercial loans and participating in loan syndications. with such things happening, why do we need a legislative solution? the answer is that a well thought out proposal addressing the appropriate structure for the industry would allow for a more rapid and efficient integration of financial services. moreover, by clearly defining the boundaries and structure of financial conglomerates, a well - considered supervisory program could adequately protect banks without undue intrusion to other parts of the conglomerate. because financial conglomerates generally operate as integrated entities and manage risks on a global basis across business lines, their true operating structure superimposes a risk management and internal control process that extends across legal - entity - based corporate structures. in this light, supervision by legal entity can create important supervisory gaps that may expose the insured depository institution to unnecessary risk. that is to say, someone should look at the risk management of the organization as an organic whole, rather than as separate pieces that are simply added together. in fact, comprehensive, consolidated supervision by the home country supervisor is a legal requirement for foreign banks operating in the u. s. some foreign supervisors are now beginning to question the consolidated supervision of u. s. firms operating in their countries. now, i suspect some nonbank firms may feel apprehension at having an umbrella supervisor evaluate their operations. but let me emphasize that such oversight need not be overly onerous or intrusive. in fact, regulators are probably better prepared than ever before to implement an umbrella supervisory approach as a result of the supervisory techniques and approaches i just discussed. by applying risk - focused supervision, and promoting sound practices, and improved market disclosures, an umbrella supervisor should be able to implement an effective, unintrusive oversight process for conglomerates. moreover, an umbrella supervisor may be able to provide assurances and information to other regulators and individual supervisors which may minimize their need to extend their reviews beyond the legal supervised entity and into the conglomerate β s other operations, creating duplication and burden. i believe that the umbrella supervisor, whether it is the central bank or another agency, should not attempt to duplicate efforts of other regulators. rather, the umbrella supervisor should evaluate the financial | lael brainard : modernising and strengthening cra regulations - a conversation with the chicago community trust speech by ms lael brainard, member of the board of governors of the federal reserve system, at the chicago community trust, chicago, 1 december 2020. * * * good morning. i want to thank dr. helene gayle for inviting me to join this conversation, along with the staff, grantees, and partners of the chicago community trust and president charlie evans of the federal reserve bank of chicago. i appreciate the opportunity to discuss economic inclusion and the community reinvestment act ( cra ) and learn more about the trust β s work with its partners in chicago. 1 the effect of covid - 19 has underscored the importance and urgency of your work. this year the chicago community covid - 19 response fund has helped many of the nonprofits and communities hardest hit by the pandemic, and i know you have been thinking critically about doing this work in a way that supports an equitable recovery for black and latinx communities. 2 i commend the trust for your leadership on these principles. the disproportionate effects of the pandemic on low - income and minority households and the importance of an equitable recovery are also a key focus of the federal reserve. while creating hardship for all, the pandemic has inflicted disproportionate economic pain on vulnerable businesses, sectors, and demographic groups, which risks entrenching a k - shaped recovery that is weaker overall. small businesses in consumer - facing sectors, along with many lowincome workers, women workers, and black and hispanic workers, are at a precarious stage of the pandemic. even as we are buoyed by news that effective vaccines may be widely available by next summer, covid case counts are resurgent, and many low - and moderate - income households are facing the exhaustion of unemployment benefits, the depletion of savings from cares act ( coronavirus aid, relief, and economic security act ) programs, and the fear that eviction moratoriums and forbearance for mortgages and student loans will soon end. while the paycheck protection program provided some relief to many small businesses earlier in the year, that sector remains under pressure, and many small businesses in sectors hit hard by virus restrictions are facing dwindling cash buffers. in addition, states and localities are confronting difficult choices as they respond to | 0.5 |
role regarding cross - border capital flows β, imf, november, 2010. bis central bankers β speeches intervention is now justified if there is major veering away of the currency from its fundamental value. the limitations of individual country - specific measures are being articulated. the imf policy note seeks to address the issue through development of rules of the game for global capital flows and in fostering multilateral, non - discriminatory, approaches that look to the interest of both the originators and recipients of capital. is such a framework possible? i am not sure but till then countries impacted by this would need to continue to find their answers. it is increasingly being recognised that it is gross flows that determine risk exposures and are therefore important for financial stability. netting of crosstemporal flows does not capture the real impact of gross capital flows on exchange rate as well as asset price impacts. capital control measures are being designed more innovatively for effectiveness. derivative transactions are increasingly being specifically targeted and many countries are resorting to enhanced supervision and data reporting to monitor the build up of currency positions in the books of banks. the issue of capital flows is getting factored in the macroprudential framework being envisaged for financial institutions globally. procyclicality of capital flows and of wholesale market funding can engender vulnerabilities. prudential measures to address asset market volatility such as risk weights, provisioning, ltv ratios, margin requirements and the build up of foreign currency liabilities in the financial system are also considered as legitimate instruments to respond to destabilising capital flows. there is greater recognition of the insurance needs of countries. while it was commonly argued before the crisis that many asian countries were incurring avoidable costs in accumulating large foreign currency reserves, it has been widely noted that countries with large reserves fared relatively well during the crisis. forex reserves have provided self - insurance during the global liquidity crisis. those countries that built up precautionary reserve holding were able to avoid large depreciation in the β panic of 2008 β ( obstfeld, shambaug, and taylor, 2009 ). the argument for compositional irrelevance of capital flows stands questioned. a recent imf paper 2 has concluded that the appreciation effect of private flows differs by type of flow. portfolio investments, which are more volatile, have the highest appreciation effect, followed by fdi and bank loans. since these flows are potentially | formulation of monetary policy, it is considered good housekeeping to evaluate the balance of risks. there are several positive energies that are helping to shape the vision of india's future over the next few decades. the playout of these forces will condition the setting of future monetary policy. 3 / 8 bis - central bankers'speeches first, there is a traditional advantage that is likely to continue working in favour of india's growth prospects. the development process has been predominantly driven by capital accumulation, which makes investment the main lever of growth. the investment rate peaked at close to 40 per cent of gdp in 2010 - 11 but moderated unevenly thereafter until 2020 - 21. during 2021 - 23, however, it has stabilised around 31. 2 per cent and is showing signs of acceleration. historically, india's investment has been financed by domestic savings, with households being the prime provider of resources to the rest of the economy. in the period 2021 - 23, the gross domestic saving rate has averaged 30. 7 per cent of gross national disposable income. thus, unlike many countries, india does not have to depend on foreign resources, which play a minor and supplemental role in the growth process. in fact, the mirror image of this phenomenon β the current account gap in the balance of payments β has remained modest at around 1 per cent of gdp in 2023 - 24. this provides insulation to the indian economy from external shocks and imparts viability and strength to the external sector. illustratively, india's gross external debt, which is the accumulation of current account deficits over time, is less than 20 per cent of gdp and almost entirely covered by the level of foreign exchange reserves. debt service, i. e., interest and principal repayments are together less than 7 per cent of current receipts. as regards the supersavers β households β there is evidence of switching from financial saving to physical saving, with the latter being financed by accretions to households'financial liabilities. second, the rising growth trajectory on which india is poised is entrenched by macroeconomic and financial stability. after a long and arduous battle with the upside pressures unleashed by the pandemic and geopolitical conflicts, and exacerbated by sporadic onslaughts of food supply shocks, inflation has fallen back into the tolerance band around the target of 4 per cent. this reflects the cumulative impact of steadfast monetary policy actions and supply management. in fact, | 0.5 |
mugur isarescu : integrated supervision opening speech by mr mugur isarescu, governor of the national bank of romania, at the seminar β integrated supervision β, jointly organised by the romanian financial supervisory authority and the national bank of romania, sinaia, 22 january 2014. * * * distinguished guests, ladies and gentlemen, it is a pleasure for me to warmly welcome you to this seminar on integrated supervision. the newly established romanian financial supervisory authority and the national bank of romania decided to jointly organize the conference on this challenging topic that has recently come into the spotlight. i particularly want to thank our guests from the national supervisory authorities of austria, the czech republic, germany, poland, united kingdom and ireland. i also welcome the experts from the world bank, the international monetary fund and the european commission who will generously impart their knowledge to all of us. i do wish all of you a pleasant stay here in sinaia. this three days long seminar is an excellent occasion to learn, to exchange views and to generate professional ties. allow me to say a few words about where you are. this is a premise of the national bank of romania β s training center, situated in cumpatu district, in this lovely resort, sinaia. the name sinaia is an eponym of mount sinai. by the end of the 17th century, a group of wallachian monks, led by mihail cantacuzino, a landlord of those times, went on a pilgrimage to palestine and the sinai peninsula. they were hosted at saint catherine monastery. once returned, they established a convent quite here, in the heavily forested area, at the bottom of the carpathians. the new monastery was called sinaia, in the memory of their journey to the sinai peninsula. a century later, the first king of romania, carol i fell in love with the place and built peles castle, his summer residence. following the establishment of the peles castle a railroad connecting the capital to the king β s new summer residence was built. little by little, sinaia became popular among the members of the high society : they started building summer residences as well as hotels, villas. you can visit the peles castle and the sinaia monastery on friday. and now about this seminar. the topic of this seminar is integrated supervision to ensure financial stability. it relies on several conceptual layers. first of all, to understand that the frontiers among financial activities have been blurred by financial innovation and the formation | committee for financial stability. the financial supervision authority itself has to develop its conceptual and operational arms in this regard. the very organizational map of the financial supervision authority shows the attention granted to integrated supervision. thus, a directorate for financial integration is a novelty and has a prominent role to play. it is commendable that its staffing has tried to bring in highly experienced individuals. but, however experienced these people are, there is a lot they need to understand better in order to fulfil their mission. for the sake of fairness, it should be said, that integrated supervision is at the beginning in many european union member states. and even where it has a longer history, its performance is not stellar. i do hope this seminar is going to offer you the opportunity for fruitful discussions and the experience and skills you gain from here will be beneficial to all of you. this is quite a special place for such a seminar since, for eight years in a raw, we organised along with the international monetary fund a regional conference on financial stability issues. thank you and enjoy your dinner. bis central bankers β speeches | 1 |
the correct monetary policy instrument. the snb will continue to enforce it with the utmost determination. bis central bankers β speeches | is seen in aggregate uncertainty for one - year - ahead inflation expectations. 15 armantier et al. ( october 2022 ). 16 armantier et al. ( october 2022 ). 17 mertens and williams ( 2021 ). 18 the equivalence of the uncertainty test about interest rates and inflation test breaks down if the natural rate of interest rate is subject to permanent shocks. by continuing to use our site, you agree to our terms of use and privacy statement. you can learn more about how we use cookies by reviewing our privacy statement. | 0 |
to make enquiries, obtain advice and raise their complaints with financial institutions. these mobile applications are customised for use in malaysia and can be downloaded by individuals at no cost. it is envisaged that wider use of these applications will contribute towards enhancing financial competence. the financial education initiatives in malaysia has been advanced through collaborative efforts by the public and private sectors. key agencies involved have included the credit counselling and debt management agency, the financial industry, consumer associations and the employees provident fund ( which has more than 14 million contributors ) to ensure that messages on financial management address all the key issues in savings, debt, bis central bankers β speeches investment and protection. these strategies are pursued together with the efforts to promote financial inclusion and to ensure fair treatment of financial consumers. it is important to recognise that the financial industry itself plays a pivotal role in helping consumers improve their financial well - being. the global financial crisis significantly undermined confidence in the financial system, and the discovery of ethical lapses that continue to be reported today has further eroded public trust in financial institutions. there is an urgent need to restore faith in the utility of financial services, firstly through the demonstration of fair and responsible practices and reinforced with the provision of valueadding products and services that are meeting the real needs of consumers and businesses. financial institutions with their extensive reach and customer relationships are in a unique position to have a more significant role in advancing the financial education agenda. in malaysia, this has included providing technical support and materials for teachers to improve their knowledge and increase confidence in teaching financial matters in schools. financial institutions have also adopted more than 10, 000 schools across the country under the school adoption programme with wide ranging activities in money management for the children. the financial institutions also work closely with the credit and debt management agency in the implementation of financial education programmes for adults. today, the focus on financial capability has become a global agenda. this has provided opportunities for policymakers to learn from their peers across countries and leverage on the international network of expertise in addressing common issues and challenges. this symposium is a great example of realising such opportunities. the possibilities for meaningful cooperation at the regional and global levels are tremendous. this has already included research, technical assistance and guidance for policymakers. leveraging on technology, financial education applications can be developed, tested and translated for adoption in different countries. international collaboration can not only be for training programmes, but also on the access to the network of international experts through online platforms and communication channels. i would | experience finance. in this highly digitalised era, stakeholders are becoming better at discerning the contribution of financial sector to the economy and society.'empathy'will ensure that financial institutions are closely attuned to the non - homogenous needs of different segments of society and the economy, and understand how to service them effectively. particularly when working with the vulnerable segments, financial institutions must consider how consumers can be empowered to make better decisions that improves their financial well - being and protect themselves against risks. as an example, the blended finance programme introduced by the bank, itekad, integrates mentoring and upskilling within the programme to help participants build knowledge and experience in managing finance. this helps improve sustainability of the participants'business as well as the programme itself. conclusion in conclusion, i would like to share this quote from erica dhawan, " i thought i had to do it all, but in fact, i only had to do what truly mattered and made a difference ". i trust that the deliberations from this programme will reinforce what is already crystal clear β that 2 / 3 bis - central bankers'speeches is for financial sector to embrace sustainability and value - based finance. what remains is for financial institutions to internalise the impact of the transition for businesses, customers, and stakeholders, and drive transformation in pragmatic and meaningful ways. with that, i wish all of you an insightful and productive programme. thank you. 3 / 3 bis - central bankers'speeches | 0.5 |
to balance interests involves different interest groups and produces a complex picture. so a widely accepted and objective benchmark is needed, and shibor can take this responsibility. i suggest that more products, from company - wide provident fund, public welfare fund, company - wide trust fund to wealth management products, housing provident fund and broker depository fund shall be linked to shibor. seventh, the authenticity and quality of shibor. in the previous year, shibor made big strides. delighted though, i also closely watch the quality and authenticity of shibor. the spread between shibor within 3 months and the actual trading rate is small, so market transactions are brisk. but the spread between long and medium - term shibor rates and the actual trading rates is relatively large. because shibor is a benchmark for the inter - bank market that has become a main force for the money market and bond market, some of the protracted problems are also reflected in shibor. for example, some trading rates include some factors beyond the market, including special arrangements and adjustments tailored to a specific counter - party. one rate that concludes a deal with one particular counter - party cannot apply to other counter - parties. similar situations still exist. we hope shibor is less distorted, but whether a deal can be sealed concerns credit approval. the most standard practice is to base risk premium on the credit standing of different counter - parties and add the risk premium to shibor. we don β t want to see complicated factors ( such as interest transfer ) intervening trading rates to make trading rate and quoted shibor rate further apart. the solution of this problem involves many aspects such as internal management, credit approval and delegation of power to branches. as far as transparency of trading price is concerned, there is such a belief that lack of transparency and extreme transparency shall both be avoided. in case of over transparency, after a transaction is made, all other counter parties know about the trading rate. but in fact, it is normal to add risk premium when trading with smaller banks. how to determine an appropriate level of transparency? we wish to provide a system as convenient as reuters where one can publicize transaction information to the whole market and deal with individual counter - parties through a small window. but as far as price - quoting banks are concerned, price quotation and internal management shall become more clearly defined to eliminate interest transfer and other β noises β other than risk premiums outside the system, while such β noises β shall be dealt | closing remarks for the 13th edition of the regional seminar on financial stability florin georgescu, first deputy governor of the national bank of romania bucharest, september 13, 2019 distinguished guests, ladies and gentlemen, we have reached the end of the 13th edition of the regional seminar on financial stability and it is my pleasure to provide some closing remarks. after two days of interesting presentations and intense debates, i will try to summarize some of the ideas presented here. in this year β s edition of the financial stability seminar, whose topics was β inclusion and financial stability β, we have discussed about : o financial inclusion and income inequality o correlation between macroprudential policy and financial inclusion o access to banking financing o climate - related risks all these were discussed in the context of financial stability. some of the subjects, like macroprudential policy and its effects, were discussed in - depth these days, but also in the previous editions of the seminar. and that β s how it should be. this policy represents a key element in ensuring financial stability. macroprudential policy, according to esrb recommendation, has β the ultimate objective to contribute to the safeguard of the stability of the financial system as a whole, including by strengthening the resilience of the financial system and decreasing the build - up of systemic risks, thereby ensuring a sustainable contribution of the financial sector to economic growth β. on the other hand, the focus of micro - prudential supervision is to safeguard individual financial institutions from idiosyncratic risks and prevent them from taking too much risk, while ensuring the consumer protection of both investors and depositors. in the past years, many of these issues have been addressed. in terms of macroprudential policy, we have seen in all the european countries measures implemented on the supply side, namely capital buffers, and in some member states even measures on the demand side. this is also the case for romania which introduced debt service - to - income and loan - to - value requirements. 1 / 4 some of the topics, like financial inclusion and inequality are just as important as macro and microprudential policies and i welcome the fact that some presentations addressed these aspects. financial inclusion and income inequality are more and more a subject of interest for central banks. it is a topic that was on the agenda of a previous financial stability seminar and today β s also, and in my opinion, it deserves a special attention. the papers discussed these days lead to the idea that higher financial inclusion | 0 |
index. asp >. bis central bankers β speeches conditions have also picked up in the kangaroo market. ten kangaroo issuers debuted in the market in 2012. the diversity of new issuers was also a notable feature, and included asian names and non - financial corporates. another positive development has been the reemergence of some non - ssa issuers not seen since the start of the global financial crisis, while more recently a number of european issuers have returned to the market after being absent for much of 2012. kangaroo issuance has been supported by the broad - based reduction in spreads, the attractive basis, and foreign investors looking beyond aaa instruments for australian dollar exposure. these foreign investors have been notably active and asian investor participation in particular continues to grow. some recent rba initiatives in australian debt markets i will now briefly discuss two recent rba initiatives concerning the local debt market. firstly, the reserve bank is in the process of signing two - way credit support annexes with all of its swap counterparties. a number of these agreements are already operational, including those with the bank β s largest counterparties, and we expect agreements to be in place with all counterparties in the coming weeks. this move is in line with best practices in risk management. as more market participants collateralise their exposures in both directions, this should also free collateral for the system ( in aggregate ), and enhance liquidity and the resilience of the australian derivatives markets. secondly, late last year, the reserve bank announced new data reporting requirements for repo - eligible rmbs. the information required by the bank includes loan - level and other transaction specific data that issuers must also make publicly available. these initiatives are designed to help the bank assess the quality of rmbs provided as collateral and will also improve the transparency of the market as a whole. for investors, the data will be easier to access and because the reporting templates are standardised, investors can better compare the underlying credit characteristics of different deals, and also use the data in their own analytics. the consultation period for the proposed reporting templates closed at the end of last year. the bank is currently reviewing the consultation findings and will finalise the reporting templates over the next month or so. a long - run perspective on australian corporate bond issuance i will now turn to the corporate bond market. non - financial corporate issuance has also been robust, and was particularly strong towards the end of last year, led by some large | began to shift towards a larger share of private issuance, in part to fund mining investment, and as corporations looked to source capital from outside the heavily regulated banking system ( graph 8 ). bis central bankers β speeches graph 8 graph 9 bis central bankers β speeches bond issuance trends changed significantly from the early 1980s onwards as the australian economy and financial system underwent large structural changes. financial deregulation and liberalisation in the late 1970s and early 1980s saw banks rely less on deposits and instead turn to the capital markets to fund balance sheet growth. as we know, bank bond issuance has since grown rapidly, and banks have become the largest issuers of australian bonds ( graph 9 ). some other notable trends since the early 1980s have included the large number of privatisations, which has resulted in the share of quasi - government bonds falling to close to zero, and the growth of the asset - backed market. on the investor side, compulsory super and increased offshore issuance caused a shift away from direct holdings by households towards indirect holdings through superannuation funds and non - resident investors. another important development was the abolition of capital controls and the floating of the australian dollar. prior to the 1980s, there were a range of constraints on capital flows that were intended to prevent or discourage firms from undertaking foreign borrowing. since these controls were relaxed, banks and other corporations have obtained a significant proportion of funding from offshore bond markets. since 1986, the stock of bonds issued offshore by australian residents has exceeded the size of the onshore market ( graph 10 ). graph 10 the liberalisation of the capital account also contributed to the development of the β kangaroo β bond market. kangaroo issuance was also encouraged by, and contributed to, the development of an active cross - currency interest rate swap market in australia. i will finish with a few thoughts on the current state of the domestic corporate bond market. there is a fair amount of discussion about the size, liquidity and functionality of the local market. let me raise three issues worth considering : β’ is the local corporate sector too banked? the us is often held up as the comparator here, but in some respects the us is the exception, with the size of the australian corporate bond market similar to that in europe and the uk for example. that doesn β t mean the local market shouldn β t be bigger, just that it β s not that unusual. β’ in many of the recent discussions about the state of the local market, i have been in | 1 |
in response to the financial shocks, which would have greatly complicated the response to the crisis. second, the existence of emu, by supplying a common currency, a common liquidity policy across europe, a forum in which the issue of coordinating economic policies can be more effectively discussed and solved, is also crucial. in the immediate aftermath of the crisis, the ecb was quick and flexible to respond to the challenge posed by the drying - up of market liquidity. the eurosystem β s operational framework has proved adequate to allow rapid and far - reaching decisions and a timely management of the initial stages of the crisis, and flexible enough to deal with the evolving situation, smoothly incorporating any required amendments. we have increased the amount of liquidity provided, lengthened the maturity of operations, set up a facility to offer liquidity in dollars in agreement with the fed. in the last weeks, we stepped up our effort to normalize the dislocated money market, by deciding some further, and more profound, changes to the operational system. we have narrowed the corridor of monetary policy, shifted to a fixed rate tender with full allotment and enlarged the collateral that can be used by participants. we do not have a counterfactual, but i would argue that some of the pre - emu national systems would have been put to a hard test by the recent events. the existence of a common liquidity policy proved effective in avoiding that uncoordinated national initiatives open the way to cross - border arbitrage and to undesired spillovers that could have further amplified the turbulence. more generally, in the presence of a systemic crisis and with closely integrated financial markets, the appropriate policy response needed to be coordinated, not only across european borders, but also beyond the euro area. the unprecedented policy move decided jointly by the main central banks of the world on 8 october is a case in point. coordination on such a scale may have been very hard in the old days. finally, the worsening of the turmoil since the beginning of september posed new challenges to policy makers of the euro area, calling for prompt action. at first, the severity of the crisis induced some national governments to take autonomous steps to restore confidence, but this proved insufficient, signaling very strongly the need for a coordinated action at the european level. the agreement of october 12 on a concerted european plan of action setting the guidelines for interventions aimed at restoring confidence in financial markets has been a fundamental step in the management of | levels and resorted to unconventional expansionary measures ; governments used their budgets to support the financial system and sustain demand and employment. these measures will have to be gradually phased out. as we emphasized at the last meeting of the governing council of the european central bank, the current level of official interest rates in the area is appropriate ; no medium - term risk of inflation has emerged. the eurosystem β s operations to support liquidity and banks β lending capacity are continuing. nevertheless, the unconventional measures that are no longer necessary thanks to improved financial market conditions are being gradually discontinued. in december, we announced that the main refinancing operations with twelve and six - month maturities would not be repeated beyond december and march, respectively. the exit from the current set of unconventional monetary policy measures should not be premature so as not to hinder recovery, but neither should it be tardy so as not to put price stability at risk and so as to avoid fuelling market distortions and speculative bubbles that would constitute the premises for new crises. at the beginning of march, we will take further decisions on the phasing out of the extraordinary operations, considering the prospects for price stability. the demand on the part of banks which may have difficulties raising funds can be satisfied without affecting monetary policy. as of now, it would appear necessary to normalize budget policies, at least by drawing up clear exit paths. the international monetary fund estimates that since 2007 in the leading advanced economies there has been a five - fold increase in the deficit, from 2 to 10 per cent of gdp. it also forecasts that budget deficits in the euro area will still be more than 3 per cent of gdp in 2014. in recent weeks, the state of the public finances in greece has alarmed the international financial markets. if the greek government adjusts its budget with determination, with careful monitoring by the european commission and the ecb, the markets will subscribe new securities as old issues fall due, as happened in italy at the beginning of the 1990s. it is nevertheless important that the euro - area countries have expressed their intention, should it prove necessary, to take decisive and coordinated action to ensure financial stability within the area. the public finances in many countries will be increasingly burdened in the coming years by costs associated with population ageing and climate change. a prompt and credible indication of the ways to correct the trend of the public debt is needed, among other things to reduce volatility in the financial markets and the issue | 0.5 |
jean - claude trichet : inauguration of the β euro exhibition β hosted by national bank slovakia speech by mr jean - claude trichet, president of the european central bank, at the inauguration of the β euro exhibition β, hosted by national bank slovakia ( narodna banka slovenska ), bratislava, 21 september 2008. * * * ladies and gentlemen, it is a great pleasure for me to welcome you here today. this is a historic moment for slovakia, which will become the 16th country to join the euro area on 1 january 2009, exactly ten years after the euro was set up. slovakia is the fourth country to join the euro area since the cash changeover in 2002 : we have so far seen the entry of slovenia in 2007, followed by malta and cyprus in 2008. when the euro banknotes and coins were first introduced on 1 january 2002, they became one of the most visible symbols of europe. they are now an important and natural part of our daily lives and will soon be so for slovak citizens. in preparation for this historic moment, the ecb has greatly appreciated its cooperation with the national bank of slovakia over the last couple of years. governor sramko has been a member of the general council of the ecb since january 2005 and from mid - july 2008 he has also participated as an observer to the governing council of the ecb. the good cooperation between the national bank of slovakia, the european central bank and the eurosystem will make the introduction of the euro in slovakia a success. 188 million banknotes from eurosystem stocks will be delivered to slovakia by the oesterreichische nationalbank in austria, given its close proximity. the pre - launch distribution of euro cash to banks β what we call β frontloading β β and its subsequent sub - frontloading to retailers and other businesses is essential to make banknotes and coins widely available within a short timeframe. in fact, the frontloading of the euro has just begun and i understand that an additional 1. 2 million coin mini - kits will be on sale to the public from 1 december 2008. the ecb has been providing support to the euro campaign in slovakia by helping slovak citizens to become acquainted with the visual aspects of the euro and how the changeover will work. as part of the joint euro campaign, many seminars and training sessions for bank staff and cashiers have been held and over seven million copies of different publications have been produced by the ecb. over two million public information leaflets | and four million conversion cards, which show prices converted into euro as well as the most important security features of the 20 euro banknote, will be sent to all slovak households in december. the national bank of slovakia will be able to ensure that everyone will be well prepared for the euro changeover. i am confident that all of these efforts and activities will make the euro introduction a success in slovakia. as i arrived in bratislava i was most impressed with the facade of the national bank of slovakia and its banner showing the euro banknotes and coins, which is clearly visible from all over the city. governor sramko, it now gives me great pleasure to invite you to symbolically unveil what i believe is the biggest banner ever displayed in slovakia! to mark this festive moment, i am also very happy to hand over the traditional euro star to governor sramko to symbolise narodna banka slovenska β s joining of the eurosystem. i feel most honoured to open the euro exhibition, which houses a presentation of the euro banknotes and coins and contains interesting information about the euro for people of all ages. there are also many interactive games for children. i now declare the euro exhibition open! we very much look forward to welcoming slovakia into the euro area. | 1 |
financial literacy. we also consider accessibility of financial services to be an important condition for proper functioning of the financial market. another field of our concern is the development of the national payment system. in less than a year after the decision was taken, a processing and clearing centre was created and interrussian transactions of international payment systems were transferred there. currently, we are actively developing our own payment card. in conclusion i would like to say that the integration of crimea into the russian financial and payment system became an important part of our job last year. we implemented accelerated transfer of settlements from hryvnias into rubles. initially, in compliance with the law, we had to complete this process by 1 january 2015, but it became evident that such a long period of circulation of two currencies is unreasonable. as a result the transition was implemented in two months. as many as 530 branches of russian banks have been opened on the territory of crimea and are ready to offer their customers a complete range of services. cash circulation has been arranged and the necessary amount of coins and banknotes has been delivered. a few words about internal changes in the bank of russia. in 2014, the organisational structure of the bank of russia underwent serious changes aimed at increasing our efficiency and optimising the workforce. the improvement of the bank of russia territorial structure initiated in 2014 was completed in january 2015. as many as 79 main branches and national banks were transformed into seven main branches with subordinated divisions. due to the accession of the republic of crimea and bis central bankers β speeches the federal city of sevastopol to the russian federation, in 2014 a division for the republic of crimea and a division for the city of sevastopol were established. resulting from the structural optimisation held in 2014, the bank of russia cut 3, 500 jobs or 5. 3 % and its workforce amounted to 61, 800 employees as of early 2015. i would like to note that the number of employees was reduced, while the bank of russia obtained vast powers as a megaregulator. however, we will continue reducing the workforce. in conclusion i would like to say that the bank of russia faces challenging tasks in a challenging period in the country β s history. we completely assume our responsibility. i am convinced that there are all the prerequisites to put the economy on the track of sustainable growth while ensuring the necessary macroeconomic and financial stability in joining our efforts. thank you very much for your attention. bis | and cash withdrawal through the banking system has declined. we make use of the powers conferred on us under the amendments to the law approved by the parliament. i would like to express special gratitude to you for that. we progressively stamp out suspicious transactions from the banking sector. our current objective is to introduce end - to - end supervision over both credit institutions and non - bank bis central bankers β speeches organisations through implementing our functions of a megaregulator in order to prevent the spillover of suspicious transactions from the banking to the non - banking sector. the last year was important as the first full year in our capacity of megaregulator. we completed the transition period nine months earlier than expected. along with internal restructuring at the bank of russia, we kept working on legislative initiatives. we continue developing financial market infrastructure by creating new and improving existing instruments. high - quality improvements in the system of financial market regulation and supervision are impossible without legislative amendments. non - governmental pension funds had to be incorporated and join the guarantee system. we inspected non - governmental pension funds before their accession to the guarantee system. as a result, 26 funds joined the system. the supervision obliged many funds to improve the quality of their assets and to make the ownership transparent, so that the guarantee system incorporated only resilient funds capable of ensuring safety of pension savings. we will further monitor and supervise these funds very closely. some words about insurance. we applied new laws on compulsory motor third party liability insurance ( osago ) and raised the tariffs. the decision is not very popular, but it is necessary to ensure the economic efficiency of osago. at the same time, we are looking for new growth areas together with the market. in particular, this is about developing life and medical insurance. we also had to take supervisory measures. as a recent example licence of a major market participant was restricted for two weeks. certainly, the licence restriction of such a large player was an outstanding event for the market. as a regulator we realised the importance of such a step, but we consider it necessary for the benefit of consumers to implement all the available measures to restore order and eliminate unlawful practices such as imposing services, non - applying bonus - malus ratio, etc. we have established a consumer right protection service, and we pay special attention to processing claims. we will try to make the process of lodging claims convenient for citizens and will try to respond to claims in an efficient manner. one of our important objectives is to work out a concept of | 1 |
. 2. we need to have policy buffers. having policy buffers to tackle covid - 19 type pandemics is difficult as they are rare events. the problem is that many countries had no monetary or fiscal space to tackle even small crisis. in south africa, we had the space to provide a sizable monetary policy stimulus unlike central banks in 1 / 2 bis - central bankers'speeches advanced economies which were stuck at the zero lower bound. but we had limited fiscal space due to the fiscal decisions in the post global financial crisis period. 3. inflation is bad. many governments, including ours, faced mass protests against high inflation ( and not high interest rates ) in the post crisis period. 4. borrowing in foreign currency during good times should trigger consideration regarding the ability to pay during bad times. in addition, the cyclicality of commodity revenues makes them an inappropriate source of continuous funding to meet short - term obligations ( interest payments on debt ). there are many other repeated lessons. the post crisis period poses many challenges for central banks from dealing with fiscal dominance effects to tackling climate change related risks. increasingly central banks are being asked to address problems that fall directly under the domain of government, without consideration under what conditions and how central banks are effective in achieving their goals. credibility and independence are critical in achieving our objectives. other critical elements include well defined and limited number of goals, effective tools to achieve these goals and finally, measurable success indicators and accountability. central bank credibility is directly linked to achieving the goals and being accountable. if you want for the south african reserve bank to address the unemployment crisis, then you need to give us the tools to address things such as high firing and hiring costs or the large number of unskilled workers. you would need to take them from other government departments. for us to be successful, we need to act independently without considering political issues. how many politicians would be happy with that? how would you hold us accountable if you give us multiple goals? another example is climate change. the three main drivers of the transition are relative price changes, technology developments and adoption, and infrastructure investment. the most effective tools to accelerate these drivers sit with government departments. people downplay the importance of financial and price stability for the effectiveness of structural policies. how much green investment do you think we will attract if our financial system is unstable, and we cannot guarantee real returns!? the focus of central banks should be to deliver on their core mandates and create the space for | stays near zero through late 2014 and then rises steadily back to the long - run value expected by most participants. while this path is consistent with the january and march statements, i hasten to add that both the assumed date of liftoff and the longer - run pace of tightening are merely illustrative and are not based on any internal fomc deliberations. 10 given this baseline, one can then employ the dynamics of one of the federal reserve β s economic models, the frb / us model, to solve for the optimal funds rate path subject to a particular loss function. 11 such a policy involves keeping the funds rate close to zero until late 2015. this highly accommodative policy path generates, according to the frb / us model, a notably faster reduction in unemployment than in the baseline outlook. in addition, the inflation rate runs close to the fomc β s longer - run goal of 2 percent over coming years. according to the specified loss function, and in my opinion, this economic outcome would be the assumption of perfect foresight or " certainty equivalence " is commonly used in practice but is not an intrinsic feature of optimal control techniques. indeed, the fully optimal policy under uncertainty involves the specification of a complete set of state - contingent policy paths. in these simulations, the federal reserve's balance sheet is assumed to evolve in accordance with the exit strategy principles that the fomc adopted at its june 2011 meeting. this procedure involves two steps. first, the frb / us model's projections of real activity, inflation, and interest rates are adjusted to replicate the baseline forecast values reported in figure 7. second, a search procedure is used to solve for the path of the federal funds rate that minimizes the value of a loss function. the loss function is equal to the cumulative sum from 2012 : q2 through 2025 : q4 of three factors β the ( discounted ) squared deviation of the unemployment rate from 5 β 1 / 2 percent, the squared deviation of overall pce inflation from 2 percent, and the squared quarterly change in the federal funds rate. the third term is added to damp quarter - to - quarter movements in interest rates. bis central bankers β speeches more desirable than the baseline. one reason this exercise generates a better outcome is because it assumes that the federal reserve β s inflation objective is fully credible β that is, all households and businesses fully understand the federal reserve β s goals and believe that policymakers will follow the optimal | 0 |
( euribor ) from the end of september 2008 until the end of march this year with changes in short - term bank lending rates, we find that financial institutions have passed on roughly 80 % of their refinancing advantage to borrowers from the corporate sector and around 60 % to house owners. moreover, up to now, this analysis gives no evidence that the interest rate pass - through since fall 2008 is happening more hesitantly than in the period before the crisis. 3. 2 long - run changes as concerns possible long - run changes to the transmission process, it is certainly much too early to draw firm conclusions. hence, please allow me to share some of my thoughts on this issue with you. most obviously, we might see a reversal of some of the changes in the transmission process that took place in the period before the financial crisis. for example, insofar as the importance of securitisation in banks β financing declines, changes in the transmission process triggered by securitisation will go partly into reverse. in addition to this, the financial crisis has drawn the attention of researchers and policymakers to a new aspect of the transmission process that might have been neglected in the past : that is the dealing with risk. deutsche bundesbank, monthly report, may 2009. in this context, a debate on a possibly new channel of monetary policy β known as the risktaking channel β has evolved, based on a paper by borio and zhu 5, published in 2008. 6 the risk - taking channel tries to capture the consequences of risk for the monetary policy transmission process by linking two possible perspectives in our financial system : the perspective of financial institutions ( finance perspective ), which emphasises the measurement and evaluation of risk. and the perspective of financial regulators and central banks ( economics perspective ), which focuses on the financing conditions in an economy. as the mechanisms through which monetary policy might influence market participants β risktaking are complex, at least three dimensions have been attributed to the risk - taking channel. the first dimension is closely connected to the balance sheet channel which i mentioned earlier. it takes into account the fact that monetary policy might influence the evaluation of collateral, asset prices and cash flows, thereby changing risk behaviour in an economy. according to the second dimension, risk - taking by market participants is influenced via their target returns. more specifically, in the case of rigid nominal target returns, a tight monetary policy can induce a wedge between nominal returns that are achievable in the financial markets | β, bis, working papers no 268. the existence of a risk - taking channel was first discussed several years ago by borio and lowe ( 2002 ), and rajan ( 2005 ). see for example, bis 77th annual report ( 2007 ). standards. as loan characteristics are typically not adjusted for increased risk, banks tend to have a lower risk aversion when low interest rates prevail for a long time. 8 two further research papers that are worth to be mentioned have found evidence of a risk - taking channel for spain and bolivia, using ex ante and ex post loan characteristics to model risk - taking. 9 10 longer - term lessons for monetary policy although, there is a strong need for further research at the risk - taking channel so that the right lessons for monetary policy can be drawn, there are some considerations that we can already take into account. in particular, the notion we obtain from the risk - taking channel about the way monetary policy can influence market participants β risk perception supports the call for a more symmetric monetary policy across asset price cycles. such a more symmetric approach would treat boom and bust episodes not as isolated events but would try to look through the financial cycle. to be more specific, a more symmetric policy would also realise implicit risks in times when money and credit growth is dynamic, asset prices go up and risk perceptions decline, possibly creating a need to act despite current inflation rates being sufficiently low. this, however, does not mean that monetary policy should downgrade the price stability objective for the sake of other objectives. rather, it means that central banks should take a longer - term perspective which takes due account of the future inflationary consequences of such unfavourable developments. here, the eurosystem β s monetary policy strategy already possesses such a stabilising element, in the shape of its monetary analysis, which is especially suited to analysing longterm developments. the recent financial turmoil has shown that the often - criticised monetary and credit analysis has a valuable role to play in monetary policy analysis. conclusion ladies and gentlemen, today, i have spoken about the challenges that the financial crisis is posing for monetary policy in terms of the transmission process. of course, this is not the only challenge which monetary policy is facing at present. it is, however, a very crucial one, as we should study the transmission process in order to learn from the current financial crisis. research in this field of monetary policy is still in its infancy. nevertheless, there are | 1 |
inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation, and the strength of monetary policy transmission. the governing council confirms that it will discontinue the reinvestments under the asset purchase programme as of july 2023. the decisions taken today are set out in a press release available on our website. i will now outline in more detail how we see the economy and inflation developing and will then explain our assessment of financial and monetary conditions. 1 / 10 bis - central bankers'speeches economic activity the euro area economy has stagnated in recent months. as in the fourth quarter of last year, it shrank by 0. 1 per cent in the first quarter of 2023, amid a drop in private and public consumption. economic growth is likely to remain weak in the short run but strengthen in the course of the year, as inflation comes down and supply disruptions continue to ease. conditions in different sectors of the economy are uneven : manufacturing continues to weaken, partly owing to lower global demand and tighter euro area financing conditions, while services remain resilient. the labour market remains a source of strength. almost a million new jobs were added in the first quarter of the year and the unemployment rate stood at its historical low of 6. 5 per cent in april. the average number of hours worked has also increased, although it is still somewhat below its pre - pandemic level. as the energy crisis fades, governments should roll back the related support measures promptly and in a concerted manner to avoid driving up medium - term inflationary pressures, which would call for a stronger monetary policy response. fiscal policies should be designed to make our economy more productive and gradually bring down high public debt. policies to enhance the euro area's supply capacity, especially in the energy sector, can also help reduce price pressures in the medium term. the reform of the eu's economic governance framework should be concluded soon. inflation inflation fell further to 6. 1 per cent in may, according to eurostat's flash estimate, from 7. 0 per cent in april. the decline was broad - based. energy price inflation, which had risen in april, resumed its downward trend and was negative in may. food price inflation fell again but remained high at 12. 5 per cent. inflation excluding energy and food declined in may for the second month in a row, to 5. 3 per cent from 5. 6 per cent in april. goods inflation decreased further, to | benoit cΕure : exchange of views on the ecb β s role in the troika remarks by mr benoit cΕure, member of the executive board of the ecb, before the economic and monetary affairs committee, brussels, 13 february 2014. * * * madam chair, honourable members, let me first of all thank you for your invitation to this exchange of views. the adjustment programmes implemented in recent years in several euro area member states were an unprecedented answer to an unprecedented crisis. this crisis has affected the lives of millions of eu citizens β hence it is only natural that you, as their directly elected representatives, assess what has happened. this crisis has revealed major shortcomings, mainly in domestic economic policies, but also in the architecture of emu β thus the european parliament as an institution with a truly european perspective is an appropriate forum to discuss what can be learnt from this experience. it is against this background that i am grateful for the opportunity today to explain the role of the ecb in the troika, to discuss our assessment of the adjustment process in the programme countries and to draw with you some key lessons from the last four years. the ecb β s role in the troika let me start by recalling the circumstances under which the troika was set up. when a sovereign debt crisis erupted in spring 2010 in the aftermath of an unprecedented global financial crisis, the euro area was caught unprepared. the maastricht architecture had failed to prevent the build - up of excessive imbalances and unsustainable fiscal positions by a number of countries. europe was then ill - equipped to handle a crisis of such magnitude stemming from these developments. there was no framework for dealing with member states losing market access. there was no governance foreseen for such cases. there was no instrument to provide funding. under these difficult circumstances, the member states decided to grant financial assistance subject to appropriate conditionality as part of an adjustment programme. the eurogroup sought to avail itself of the best available expertise to support it in designing and reviewing these programmes. the imf and the european commission in liaison with the ecb with their complementary experience in crisis management, country surveillance and financial stability were asked to take on this difficult task β this is what we know today as the troika. the particular expertise and euro area focus of the ecb, in other words, the views we have on the systemic consequences of the decisions under discussion, were compelling reasons for | 0 |
* * * * * * * * * once again, i want to express my sincere thanks to central banking publications and lombard street research for the honour of this most prestigious award. this is a proud moment for the members of our staff who have put in endless hours developing a prize - winning site. | . since then, canada has experimented with a number of monetary policy frameworks, including the gold standard, the bretton woods system of pegged exchange rates and monetary growth targeting. none of these frameworks was able to deliver low and stable inflation. 2 see, for example, t. macklem, β a measure of work β ( speech to the winnipeg chamber of commerce, winnipeg, october 4, 2012 ) ; a. cote, β inflation targeting in the post - crisis era β ( speech to the calgary cfa society, calgary, november 18, 2014 ) ; d. dodge, β canada β s monetary policy approach : it works for canadians β ( speech to the edmonton chamber of commerce, edmonton, june 26, 2001 ) ; and g. thiessen, β can a bank change? the evolution of monetary policy at the bank of canada 1935 β 2000 β ( lecture to the faculty of social science, university of western ontario, october 17, 2000 ). - 3it has also been tested by crisis. the covid - 19 pandemic has been an immense shock to our economy, and our framework has proven resilient. when the pandemic hit, economic activity plummeted and inflation fell sharply as many prices were discounted. the combination of exceptionally weak demand and negative inflation risked causing deflation and economic depression. at the outset of this crisis, the framework guided our policy response, including the use of forward guidance and quantitative easing. it also guided our decisions to taper and then end quantitative easing. our monetary policy was complemented by an exceptional fiscal policy response, and together they put a floor under the crisis and supported recovery. combined with effective vaccines, these policies have worked. our economic recovery is now well advanced. but as we are all aware, the global economic rebound has generated elevated inflation in canada and many countries. to a large extent, this reflects the unique circumstances of the pandemic. with global demand recovering faster than disrupted supply chains can respond, the prices for many goods have increased sharply. while we expect inflation to ease in the second half of 2022, we are closely watching inflation expectations and wage costs. and we will ensure that the forces pushing up prices do not become embedded in ongoing inflation. our framework enables us to do just that. reviewing our framework the review of our framework every five years is also a key feature of the canadian system. the joint nature of the agreement between the government and the bank of canada reinforces both | 0.5 |
lim hng kiang : singapore β pursuing broader and deeper economic integration with major economies opening keynote speech by mr lim hng kiang, minister for trade and industry and deputy chairman of the monetary authority of singapore, at deutsche bank access asia conference 2013, singapore, 20 may 2013. * * * distinguished guests, ladies and gentlemen, a very good morning to all of you. it is my pleasure to join you at deutsche bank β s access asia conference 2013. let me first thank deutsche bank for the invitation to speak at your conference. this is the largest event hosted by deutsche bank each year globally, and a huge turnout is a clear indicator of the strong corporate and investor interest in asia. in the last 10 years, the centre of gravity of the world economy has been moving away from the us and europe to asia. asia is expected to continue to prosper in the decades ahead as the middle class expands in line with strong economic growth. china is set to be the largest economy in the world by 2030 and is already creating megacities of over 10 million at an average rate of one per year. besides china, india β s middle class is expected to grow to almost 600 million people by 2025. in indonesia, almost 60 per cent of indonesian households, in a country of 240 million people, are expected to reach middle - class status by 2020. being a very small state, singapore has and will continue to maintain an open economy. we will participate actively to propagate free and open trading alliances as asia grows and becomes more economically integrated. in this way, we help to unlock the value, spin off new opportunities and create good jobs for singaporeans. asean and aec 2015 one key market for singapore is asean. asean is a growing region and has a combined population of 600 million people. asean also has a gdp that is the third largest in asia, after china and japan. in recent years, asean has embarked on an enterprise to integrate our economies into a regional bloc. asean today, through initiatives like the asean free trade area, has resulted in virtually no tariffs for flows of goods between our countries. going forward, asean is making good progress towards becoming the single market and product base envisioned in the asean economic community ( aec ). the realisation of the aec by 2015 will result in an even more tightly integrated region, and this has opened up more opportunities for corporates as well as investors. a key principle underpinning the aec 2015 is the | a few words about how i see the role of the sicc in singapore β s future development. given the diverse markets in which sicc members operate, your chamber can play an important role in helping our companies internationalise and seize global opportunities. the sicc can help your members move into new areas of growth like the middle east. i am glad to note that more links and collaboration are being forged between sicc and your counterparts in the middle east. we have just witnessed the signing of mous between the sicc and the riyadh and abu dhabi chambers β of commerce and industry. i also encourage sicc to collaborate with ie singapore and the singapore business federation to organise more networking platforms to forge partnerships between foreign and local companies. for instance, given our knowledge and connections, singapore can serve as a bridge for middle eastern investors interested in going into china. finally, let me once again congratulate the sicc on your 170th anniversary and wish the sicc and its members continued success. thank you. | 0.5 |
bank of japan β s april report of recent economic and financial developments1 bank of japan, 9 april 2003 * the bank β s view * * economic activity remains flat as a whole, despite some signs of improvement, with greater uncertainty about the economic outlook partly due to iraq - related developments. with regard to final demand, although business fixed investment is starting to recover, private consumption continues to be weak. moreover, housing investment remains sluggish and public investment is declining. while domestic demand has not shown clear signs of recovery, both exports and imports are increasing at a very modest pace with net exports remaining virtually level. industrial production continues to be basically level in response to these developments in final demand. corporate profits continue to recover, but the improvement in business sentiment as a whole has come to a halt due mainly to substantial uncertainty regarding the economic outlook. as for the employment situation, new job offers are on a gradual rising trend. in addition, the number of employees, which covers various types of employees including non - regular employees such as temporary workers, appears to be declining at a slower pace. however, firms are still maintaining their stance on reducing personnel expenses, and household income continues to decrease with an ongoing decline in wages. the employment and income situation of households overall remains severe. turning to the economic outlook, a widely shared view of the prospect for overseas economies in 2003 is that, partly due to the continued firmness in asian economies, they will follow a gradual recovery path. however, their recovery is likely to be anemic, at least for the time being, given the recent weakness shown in economic indicators of the u. s. and european economies amid greater uncertainty regarding iraq - related developments. in this situation, the increase in japan β s exports is expected to remain very modest, and industrial production is likely 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 likely to follow a clear uptrend if exports and production increase clearly again, but for the time being, the increase in business investment is expected to remain very modest. overall, assuming that overseas economies will recover in 2003, albeit only at a moderate pace, the increase in exports will accelerate and the uptrend in production will resume sooner or later, which in turn will initiate the momentum for a recovery. however, a self | centre aims to become a world financial cluster. the paris financial marketplace today offers to initiate closer cooperation and develop joint programs with the mumbai financial center. thank you very much for your attention. | 0 |
through the interest rate or liquidity channel. having in mind the state of the fiscal finances particularly vulnerable segment seems to be the government sector. the screening of the fiscal position of the countries in the region, shows that without doubts financial crisis took a toll on the fiscal positions of the countries. against the background of countercyclical fiscal policy headline balances deteriorated sharply and the public debt went on a rising track. the deterioration in the fiscal position and lack of fiscal space ( due to low initial space before the crises ) emphasized the need for consolidation. most of the countries of the region recognized it and embarked on the consolidation path. in the 2013 - 2015 period the budget deficit figures show that nine out of fourteen countries of the region have already reduced the deficit level compared to the 2008 - 2012 period. the other five countries ( macedonia, albania, serbia, bulgaria and slovenia ) increased the deficit reflecting idiosyncratic factors, countercyclical policy ( macedonia, bulgaria ), or recognition of implicit liabilities ( emergency recapitalization of the country's banks in slovenia ). the same dynamics is more or less mirrored by the government debt data. after the strong initial debt rise, the consolidation phase imposed slower borrowing pace, however in most of the countries the debt continued to rise. analyzing the countries, only 5 countries of them, czech republic, poland, hungary, latvia and estonia, managed to reduce the debt in the 2015 / 2013 period. these countries, with the exception of hungary are less vulnerable when it comes to the government debt as they belong to the so called " lower indebted countries ". on the other side, the debt rise in the latest period additionally inflated already high levels of debt and deepened the vulnerable positions of some of the countries in the region ( slovenia, croatia, serbia and albania ). chart 11 : fiscal indicators, developments in different periods of time budget balance, in % of gdp mkd alb cro bul srb bih slo czr est hun lat lit pol rom debt change, in p. p of gdp - 2 - 4 - 6 - 5 - 10 - 8 - 10 - 20 - 30 mkd alb cro bul srb bih slo czr est hun lat lit pol rom - 10 average 2002 - 2007 average 2008 - 2012 average 2013 - 2015 debt change 2013 / 2009 debt change 2015 / 2013 debt level 2015 ( left scale ) source : weo october 2016 | and even to a decline in liabilities across all sub β regions in the most recent period. when dissecting the structure of the international labilities, similar to the bop data, a decline in the debt component in the last three years is noticed. the strongest intensity has been recorded in the cee countries, but also in the other two regions as well, which was not the case to the bop data where a very mild increase in the other two sub - regions is observed. according to the iip data, deleverage refers to all three sectors, not only to the banking system, and it has been present in the last 3 years, with the exception of the banks where the deleveraging started since the emergence of the crisis. same conclusions on portfolio flows, derived from the bop data, can be also drawn from the iip position. they continued to grow in the postcrisis period, driven mostly by the debt component of the government. as for the foreign direct investments, their growth in the last period stalled, mainly due to the decline observed in the cee countries. in the other two sub - regions growth continued, but at a much slower pace especially during 2012 - 2015 period. overall, the data indicate that the ecb policy measures positively affected financial conditions in the region. first, loosening of the monetary stance through conventional instruments ( policy rate ) created a room for loosening of the monetary stance in the central and south eastern economies without negative implications for the balance of payments. reduced policy rates led to reduced lending rates thus decreasing the costs of borrowing of the private sector. second, the ecb asset purchase programs that resulted in unprecedented increase of liquidity most probably positively affected the liquidity conditions in the region, as well. although at a significantly decelerated pace, capital inflows continued in most of the countries of the region. exceptions are the outflows from the banks in the context of the process of deleveraging, although the outflows might have been bigger in absence of asset purchase policies. portfolio investments have been relatively solid, explained to a great extent by governments β borrowing on the international markets. although the capital inflows were not sizable leading to creation of imbalances in the economies, vigilance is warranted. the pre - crisis process of rapid worsening of the net international position was stalled, but with differences across countries. the improvement is visible for cee and baltic states, while see region registered | 1 |
the adaptation to a more demanding regulatory framework that involves higher requirements in respect of own funds and liquid assets, along with other additional demands derived from the new resolution regulations. these regulatory changes, which have been introduced globally, are the response by the economic authorities to the shortcomings highlighted by the international financial crisis. their essential aim is to increase banking systems β resilience in the face of adverse shocks and to prevent taxpayers from having to bear the cost of the resolution of ailing banks. the first raft of reforms, known as basel iii, which was designed between 2010 and 2011, focused on increasing the volume of bank capital and improving its quality, and on the introduction of new minimum liquidity requirements and counterparty exposure limits, and of macroprudential instruments, such as the so - called countercyclical capital buffer. all these requirements will be effective, practically in their entirety, in late 2019. spanish banks have already largely adapted to these new requirements, with their liquidity and capital ratios currently standing above the minimum levels stipulated. in any event, as 6 / 8 regards the cet 1 and tier 1 solvency ratios, their aggregate levels β albeit with significant dispersion across banks β are, as at march 2018, low compared with those of the euro area banking systems, according to data from the european banking authority. this once again highlights the need for spanish banks to adopt capital - strengthening strategies. with regard to the solvency regulatory measure, which does not take into account risk weightings, i. e. the leverage ratio, the spanish banking system as a whole shows, on the contrary, slightly higher levels than the euro area average. also, spanish banks evidence, overall, a sound liquidity position, with their lcr ratio above the european average. regarding the resolution of institutions, in recent years a number of regulations have been approved in europe establishing a common framework for the eu, and defining the circumstances in which banks with financial difficulties should enter wind - up or resolution processes. in this setting, a new category of senior non - preferred debt instruments has been created, which ranks below senior debt in the payment priority of insolvency proceedings, with a view to facilitating compliance with the minimum requirements for own funds and eligible loss - absorbing liabilities, known as mrel. the mrel requirements that the single resolution board has started to set for significant european institutions are an added reason for spanish banks to strengthen their capital in the present environment of recovering profitability and | 05. 10. 2018 the challenges to the spanish banking industry conference on banking, profitability and monetary normalisation / universidad de deusto, kpmg and el correo pablo hernandez de cos governor good morning. let me first thank the organisers for their kind invitation to me to participate in this deusto university event. it is a pleasure to be here with you today and to share some thoughts on the banco espana β s view of the main challenges currently facing the spanish banking industry. as is well known, credit institutions were greatly affected by the last crisis. this was manifest in a strong rise in impaired assets, including both non - performing loans and real estate foreclosures, and in a significant fall - off in profitability, which even turned negative in 2012. to address these problems it was necessary to undertake intense recapitalisation and restructuring in the industry. as a result, there has been a notable and generalised improvement in spanish banks β financial position. also contributing here have been the recent roll - out of an extensive package of regulatory measures and the favourable course since 2013 of the macroeconomic setting and financial conditions, assisted by the ecb β s monetary policy measures and by other actions at the european and domestic levels. the spanish banking industry β s improved financial position in recent years can clearly be seen both in terms of asset quality and in its profitability and solvency levels. thus, from december 2013, when the deterioration in bank balance sheets was at its worst, to june 2018 the volume of non - performing loans in transactions with the resident private sector has declined by 60 %. and the amount of foreclosures has done so by 40 % since its 2012 peak. the consolidated return on equity, which in 2012 stood at around - 25 %, has gradually picked up to levels of 7 % on data as at june 2018, and the overall capital ratio has risen from 11. 4 % in 2012 to 15. 1 %. despite this notable improvement in its financial position, the spanish banking industry continues to face significant challenges. these are largely shared by other banking systems in the euro area, and include i ) the reduction in assets impaired by the crisis, ii ) the recovery in profitability, such that spanish banks may draw closer to the solvency levels of other euro area banks, iii ) adaptation to the new regulatory framework and, iv ) the configuration of a new competitive setting characterised by the emergence of new technologies and competitors. i shall now | 1 |
needs must be crafted. through effective and sincere communication, customers can be convinced to participate in the formal financial system as we build a critical mass of users. the network effects will draw in even more participants. 4 / 5 bis central bankers'speeches it is through these sustained efforts that we can bring about a payment ecosystem that we can all be proud about... an ecosystem that is a symbol of digital ingenuity. in this regard, we are all disrupters and enablers. on the part of the bsp, we remain strongly committed to creating an enabling and supportive environment for our shared vision to come into full fruition. we look forward to working with all of you as we take our leap to bring about a safe, efficient, reliable, and affordable retail payment system supportive of inclusive growth. congratulations to all of us! mabuhay ang peso net! mabuhay ang nrps. mabuhay ang pilipinas. salamat po. 5 / 5 bis central bankers'speeches | be designed to ensure universal coverage, data integrity and security, and optimum utility. it will serve as an enabling platform for the efficient delivery of a whole range of government and private sector services for all filipinos β especially the currently unserved. establishing a readily - verifiable digital identity will enable our people to open accounts and use financial services more efficiently. closing thoughts this message obviously comes from a central bank governor wary of currencies that do not qualify as legal tender and which are not backed by any monetary authority. but it is a message that comes too from a central bank governor who has been labelled as a β disruptor β β one that leads an institution that is ready to embrace the challenges of a rapidly changing financial and economic landscape. this message is shared with this audience, a staunch advocate of investor rights and investors β need for information. it is a good match. as i close, to align this message better with your theme β¦ let me summarize the truths and myths of cryptocurrency from the bsp β s viewpoint : myth : privately - issued cryptocurrencies are legal tender and shall soon replace fiat currency. truth : cryptocurrencies, not backed by any central authority are not legal tender. moreover, until they fully demonstrate stability, wide acceptability and other economic attributes, they will not replace fiat currency any time soon. myth : cryptocurrencies are bad and are only used for illicit activities. truth : cryptocurrencies, like fiat currencies, are neither good nor bad. they are neutral. but, no doubt, bsp is mindful of their wide use in illicit activities because of the anonymity of its transactors and is taking action in this regard. myth : the bsp endorses the use of and / or investment in privately - issued cryptocurrencies. truth : the bsp allows the market to develop but it has also issued responsive regulations to uphold consumer protection and to maintain financial stability. the bsp does not endorse or promote privately - issued cryptocurrencies but aims to address its risks as it intersects with the financial system. rest assured, the bsp maintains a forward - looking approach to ensure that regulatory and supervisory frameworks are in tune with emerging trends and developments. through constant 4 / 5 bis central bankers'speeches surveillance and monitoring of the market environment, the bsp stands ready to adapt to future challenges and opportunities | 0.5 |
guillermo ortiz : opening remarks for the session on β implications of globalisation for the conduct of monetary policy β speech by mr guillermo ortiz, governor of the bank of mexico, at the international symposium on β globalisation, inflation and monetary policy β, organised by the bank of france, paris, 7 march 2008. * β’ * * in this last session we will focus on the implications of the different issues raised in the previous discussions for the design and conduct of monetary policy. o the main question is : what are, if any, the monetary policy implications of globalization? o in particular, we will ask ourselves whether globalization should lead or not to a reassessment of central banks β price - stability objectives, their economic and monetary analyses or their degree of reaction to diverse variables that become more important in global markets. β’ in this context, the main issues that will lead the discussion will precisely be whether globalization has altered the way monetary policy influences inflation and output ( the monetary transmission mechanism ) and, of most importance, whether we should change the degree to which monetary policy reacts to the output and inflation gaps or, furthermore, whether we need to redefine the set of variables to which it currently responds to. β’ many different arguments questioning whether we need to adjust the way monetary policy is conducted in a globalized world have been set forth. some relevant questions are : o should monetary policy react directly to exchange rate movements, or should it only focus on inflation and real gdp? o should the recent increases in the prices of diverse international commodities imply a reassessment of monetary policy actions, over and above the response to the effects these events may have on the traditional variables to which monetary policy typically reacts? o does the flattening of the phillips curve has any implications for the design and conduct of monetary policy? β’ most of these questions are related to the issue of considering whether the more information we include in monetary models, theories and policy rules, the better response we will have to different shocks, or if we should keep such models, theories and, especially, policy reaction functions, simple and limited in terms of the number of variables involved. β’ the different ways in which all these queries may be analyzed might trigger an interesting debate among us today. john taylor β s presentation, along with the discussion it will induce among the discussants, will help us to have a better understanding about some of these issues, as well as guiding on the right direction the research agenda related to the questions that are | t involve all their data being sold to interested parties. in this sense, cbdc ( central bank digital currency ) could be a core infrastructure for new convenient private payment solutions as well as a complement to pre - existing private payment solutions or those which might emerge in the future. 4 conclusion ladies and gentlemen, looking ahead to the year 2030, the question of cbdc ( central bank digital currency ) or private payment solutions is, in my view, not a binary one. i am sure that, all over the world, we will find pre - existing private payment solutions and some examples of cbdc ( central bank digital currency ) payment solutions building on good cooperation between central banks and private sector companies. regarding cbdc ( central bank digital currency ) payment solutions, i think both parties should make the most of their capabilities : central banks offering resilient and secure infrastructures, and taking care of financial stability, efficiency and innovation ; and private actors leveraging their experience of end - user - focused interfaces. let us combine the best of both worlds. nevertheless, we all know that this is a challenge which will call for some deep, time - consuming discussions among all the cbdc ( central bank digital currency ) stakeholders. and that brings me back to what i mentioned at the beginning of my speech. we might explore new avenues, we might implement new technologies β but we should also benefit from the wisdom of our ancestors. so let β s hear what aristotle has to say : β well begun is half done. β and that is still very true for our work on cbdc ( central bank digital currency ). many thanks for your attention. footnotes : 1. https : / / www. bis. org / publ / bppdf / bispap125. htm [ https : / / www. bis. org / publ / bppdf / bispap125. htm ] 2. https : / / www. ecb. europa. eu / ecb / pdf / orga / escbstatutes _ en. pdf [ https : / / www. ecb. europa. eu / ecb / pdf / orga / escbstatutes _ en. pdf ], article 2 | 0 |
building shanghai into an international financial center. thank you all. 4 / 4 bis central bankers'speeches | here and around the world, with a view to identifying the best ways to promote the goals the congress assigned to us. as such, we will be looking widely at our tools and strategies, assessing not just the various approaches that were undertaken, but also approaches that have been proposed but not tried. one of those is the idea that the federal reserve should explicitly promise to β make up β for the fact that interest rates can β t be cut as much as during past recessions. the federal reserve could hold interest rates lower after a recession is over, perhaps by promising not to raise interest rates until inflation or the unemployment rate have reached a particular level. a related idea is average inflation targeting, meaning the fed would aim to achieve its inflation objective on average over a longer period of time β perhaps over the business cycle. so if inflation fell short during a recession, the federal reserve would aim at inflation above target during the recovery and expansion. this approach would also have aspects of a make - up policy, as policy would likely be kept easier β that is, more accommodative β than otherwise during the period where inflation is above target. while such approaches sound quite appealing on their face, they have not yet been implemented in practice. there is some skepticism that a central bank would in fact prove able to support above - target inflation over a sustained period without becoming concerned that inflation might accelerate and inflation expectations might rise too high. another idea i would like to hear more about involves targeting the yield on specific securities so that once the short - term interest rates we traditionally target have hit zero, we might turn to targeting slightly longer - term interest rates β initially one - year interest rates, for example, and if more stimulus is needed, perhaps moving out the curve to two - year rates. under this policy, the federal reserve would stand ready to use its balance sheet to hit the targeted interest rate, but unlike the asset purchases that were undertaken in the recent recession, there would be no specific commitments with regard to purchases of treasury securities. similar to make - up policies, such an approach could help communicate publicly how long the federal reserve is planning to keep rates low. i should emphasize that these are just a few ideas ; there may be other good ideas, and part of 2 / 3 bis central bankers'speeches the process we are engaged in involves looking around for other ideas. most, if not all, of the ideas have both advantages and disadvantages, and we will have to consider them carefully as | 0 |
, while the existing exemptions from the general pension system provisions must be re - examined. increasing public sector efficiency. completing the national cadastre and eliminating the chronic obstacles to the efficient and speedy delivery of justice are fundamental prerequisites for a well - functioning state, as are the efficient deployment of human resources and a transparent staff appraisal framework that rewards productivity and work ethic. strengthening active labour market policies with particular emphasis on education and training, as a way to improve the job - finding chances of people on the sidelines of the labour market, such as the long - term unemployed and young people, who have borne the burden of unemployment. managing in an effective way non - performing loans ( npls ). greek banks must now adopt an active management of distressed loans, in a manner that not only eases the burden on cooperating borrowers facing temporary difficulties in servicing their debt, but also enables banks to unlock funds tied up in troubled loans that are unlikely to be repaid. the banking sector must be assisted in this effort through bis central bankers β speeches improvements in the legal framework that would lift restrictions on, for instance, ( pre - ) bankruptcy procedures, out - of - court settlements or, as already mentioned, a speeding up of the judicial procedure. c ) grexit is not an option after six years of severe recession and five years of fiscal adjustment, the economy has stabilized and is showing signs of improvement. if this momentum is maintained, the economy is likely to return to a steady growth path in the next few years. grexit is not an option to greece for the simple reason that the competitiveness of the greek economy has been restored over the past five years through internal devaluation and bold reforms in the labour market. hence, grexit would deliver no benefit but a lot of pain. in case of grexit, the greek economy would enter another deep recession characterized by extremely tight financing and liquidity conditions, on account of massive deposit outflows and a dramatic fall in confidence and living standards. these developments would lead to trade disruption, push unemployment further up and reduce government revenues, generating fiscal and financing gaps and concerns for the stability of the financial system. as a consequence, another round of fiscal consolidation would be required, while capital controls would be imposed and a deposit freeze could also be required. moreover, the rapid depreciation of the new currency would serve to improve greece β s international price competitiveness, but this would also | of the economy. had this collapse not been averted, losses would have been much greater. an exit from the euro area, as i had put in an interview, would have opened the gates of hell. bis central bankers β speeches 2. policy orientations to overcome the crisis against today β s more favourable background for the country, recovery appears to be ante portas. the year 2014 marks a halt to a deep and protracted recession. of course, the economy β s adjustment has not been completed. but as the first, difficult cycle seems to be coming to a positive end, it would be helpful to evaluate actions and omissions and, most importantly, draw lessons for the future. the bank β s positions concerning the exit from the crisis have been expressed based on a number of policy orientations, reflected in its publications and described in detail in the chronicle. these policy orientations can be summarised as follows : first, greece should make every effort to remain in the euro area and steer clear of default, which would have incalculable economic and social consequences. second, the adjustment programme and the agreements with our partners ensure the financing of the greek economy. without them, default would have been inevitable. this is why they must be implemented consistently. moreover, to a very large extent the programme β s terms relate to changes that should have been implemented long ago. third, in order to return to growth, securing its european perspective, the country should eliminate its fiscal imbalances, improve its competitiveness and enhance the export orientation of its economy, modernise the state, restore competitive conditions in markets and reduce the burden of public debt. greece also needs a new, outward - oriented growth model. fourth, fiscal adjustment should rely primarily on a rationalisation of expenditure. revenue must be increased by reducing tax evasion and broadening the tax base to make possible the necessary lowering of tax rates and the tax burden in the future. fifth, the historical challenge that the country is facing necessitates the greatest possible alignment of political and social forces, an understanding at the national level and the widest possible convergence of views. finally, the adjustment programmes are a necessary but not sufficient condition for exiting the crisis. a radical reorientation of the economy towards a new model requires a comprehensive national plan for growth, which will have far - reaching goals and will be implemented consistently. adhering to these policy orientations, the bank of greece has performed its institutional functions, informed | 0.5 |
of risks to price stability these measures will be unwound. accordingly, and finally, bearing also in mind that the health of the financial system cannot be made the ecb β s responsibility, one needs to be careful not to blur the responsibility of monetary and fiscal authorities in the euro area. of course, we will do whatever we judge to be necessary and appropriate to maintain price stability and contribute to the preservation of financial stability. but we will strictly adhere to these principles. in considering further easing measures, these principles have obvious implications. central banks can alleviate liquidity risks. but they cannot address the perceived solvency problems that impair the financial system. one could conceive measures to ease credit conditions by taking over some of the credit risk on commercial paper that banks currently hold. the ecb has already been accepting corporate loans as part of collateral in its regular liquidity operations. by operating through the banking sector, this has significantly contributed to providing funding to non - financial corporations β and thereby an easing of credit conditions. buying corporate debt outright would circumvent the banking sector. we have a responsibility to keep the eurosystem financially sound. this concern puts a break on how much further we can expand our balance sheet. how to solve the crisis? clearly, the challenges for resolving the current crisis remain tremendous. there is no panacea. we have made our contribution by making sure that longer - term inflation expectations have remained anchored in line with price stability and by preventing a liquidity crunch. it remains our responsibility to continue to do so. but one cannot rely solely on central bank policies to address all the consequences of the financial crisis and its fall - out on the economy. resolute action is needed to restructure, consolidate and recapitalise the banking system. specifically, action is needed to help banks support their balance sheet so as to sustain an adequate flow of credit to the non - financial sector. since last autumn, governments have provided or pledged a substantial amount in guarantees for new debt issuance by banks. in addition, they have recapitalised a number of financial institutions. the commitments to provide support are already substantial. but it will take time for the measures to be completely implemented and to show their full effects. in case these measures prove to be insufficient, they need to be complemented by further actions to address problems on the asset side of banks β balance sheets. to be successful in resolving the financial crisis the asset support schemes need to meet a | them. contributing to the functioning of the money market and preventing a liquidity crunch therefore has been crucial to forestall a breakdown of the transmission of monetary policy and a systemic crisis. as a consequence of our measures, the eurosystem β s consolidated balance sheet has grown by two thirds from summer 2007 until most recently, or by 6 % of euro area nominal gdp. to put these numbers into perspective, the size of our balance sheet has grown from 13 % of euro area nominal gdp in 2007 to over 20 % most recently. by providing unlimited funds in our refinancing operations we have ensured that banks facing difficulties raising funds in the market are always able to fulfil their liquidity needs. but we need to be realistic about what we, as a central bank, can achieve. in my view, we cannot expect to see the money market functioning the way it did before august 2007. what is certainly encouraging is that recently the volumes allotted in our refinancing operations have come down slightly. the same is true for the number of banks participating in these operations. spreads between secured and unsecured interest rates at term maturity have gone down somewhat. but they have remained high. the turnover in unsecured interbank lending, especially at longer maturities, still remains low. to be clear : the problem is not a lack of liquidity in the market. it is the lack of trust among the banks themselves. unless trust in the solvency of banks is re - established, there is hardly any chance that conditions in the money market will normalise. as already mentioned, financing conditions have not eased exactly in line with key ecb interest rates. so will key ecb interest rates have to be cut to even lower levels? in principle, even after last thursday β s decision the ecb could still contribute to easing credit conditions by cutting its key interest rates further. but this will not fundamentally solve the problems that have caused the financial crisis. the contrary could be the case. if maintained for an extended period of time, too low or very low interest rates might in fact aggravate them. they have the potential to weaken the incentives for banks to clean up their balance sheet of troubled assets and monitor their credit risk carefully. this in turn may reinforce the very problems that currently impair the functioning of the financial system. too low interest rates tend to foster lending to unprofitable business. this would harm the growth potential of the economy and thereby prepare the ground for ana | 1 |
to look back favourably on the economic peace and certainty of the past and contrast it with the perception of insecurity and instability that surrounds the present economy. why is this so? ( a ) those who know a little bit of history are aware of the fact that in about 1900 we were probably the richest country in the world in terms of income per head. now we are in the middle of the pack of developed oecd economies. so this gives the impression of a country in long run decline, but from a somewhat artificial starting point. we were the β kuwait of 1900 β : a country with a very small population and a large resource endowment producing commodities which were very highly priced at the time. but like any prosperity based on scarcity prices it could not last, as the decline in our terms of trade during the century showed. i will return to this theme when i discuss the future. there are three surveys which ask respondents to report their confidence in ( a ) their own personal economic situation and ( b ) the state of the economy ; these are the westpac - melbourne institute consumer sentiment index, the acci survey of investor confidence, and the yellow pages business index. all three surveys show that nearly always the majority of respondents show less confidence in the economy than in their own personal economic position. in 97 per cent of occasions this is true for the westpac - melbourne institute and yellow pages surveys, and on 94 per cent of occasions it is true for the acci survey. an extreme example of changing economic fortunes as a result of changing terms of trade comes from 18th century french history, and the contrasting attitude of france to defending its two main american colonial possessions β canada and haiti. canada was given up with relatively little resistance, but two costly wars were fought in a vain effort to retain haiti. the ranking of haiti as more valuable than canada was purely an economic one based on the high price of sugar two hundred years ago. a similar story involves the english and the dutch in the 17th century. under the treaty of breda of 1667, the dutch gave up their claims on manhattan to the english in order to retain the island of run ( in what is now indonesia ). the superior value they placed on run was due to it being the principal source of nutmeg. ( b ) for others, the nostalgia is directed at the 1950s and 60s. there is no doubt that around the world this period of post - war reconstruction was a β golden era β for economic growth | zeti akhtar aziz : opening of bank negara malaysia beijing representative office and initiatives to promote bilateral trade and investment remarks by dr zeti akhtar aziz, governor of the central bank of malaysia ( bank negara malaysia ), at the opening of the bnm beijing representative office, beijing, 18 november 2013. * * * it is my great pleasure to welcome you to this official opening of bank negara malaysia β s beijing representative office. the opening of this representative office today is an occasion of unprecedented significance for us. this beijing office is bank negara malaysia β s very first presence in asia. this is a reflection of the growing importance of china in the global economy and the international financial system and the very significant and longstanding financial and economic ties between malaysia and china. this momentous occasion also marks the dawn of a new chapter as our bilateral relations transitions and evolves reflecting the significant changes taking place in our respective economies and financial systems. for many decades now, the foundation underpinning the strength and dynamism of our relationship is our ability to continually harness the complementarities that exists between our economies. while bilateral trade has consistently been expanding at double digit growth rates over the recent two decades, the breadth and depth of our relations have also evolved and expanded into greater financial linkages. in parallel to our growing economic ties, our financial institutions have also ventured into each financial systems, further strengthening our financial and economic connectivity. currently, two of china β s biggest banks, namely bank of china and icbc have operations in malaysia while malaysia β s two largest banks, maybank and cimb have established their presence in china. our beijing representative office, being inaugurated today, also signifies an important milestone in the cooperation between the people β s bank of china and bank negara malaysia. our two central banks have long cooperated in many areas of common interest in particular in the area of financial cooperation. in july of 2005, our currencies transitioned into a more flexible exchange rate regime at the very same moment. this enabled malaysia to transition to this new regime effectively and efficiently. bank negara malaysia has for more than a decade also participated in the fixed income market in china. we were among the first central banks in the world to be awarded the qualified foreign institutional investor ( qfii ) license to invest in china β s fixed income onshore financial markets and to be granted access to the china interbank bond market. our close central bank cooperation is also reinforced through the | 0 |
mario draghi : participation of the president in the portuguese council of state introductory remarks by mr mario draghi, president of the european central bank, at the portuguese council of state, lisbon, 7 april 2016. * * * president of the republic, president of the assembly of the republic, prime minister, president of the constitutional court, honourable members of the council of state, i am grateful for the opportunity to discuss with you today the state of the euro area and the changes that still lie ahead of us and i would like to thank the president of the republic for inviting me. on my way here i passed by the tejo river and the tower of belem. the place where five centuries ago the first maritime explorers set sail for often uncharted waters, looking for new opportunities. portugal and its people have also been going through uncharted waters and facing important challenges in recent years, as has the rest of europe. during the past couple of years, economic headwinds have swept through portugal and the euro area at large. however, we are seeing signs of recovery. nevertheless, important challenges remain as the euro area continues to be weighed down by low potential growth and high structural unemployment. in my remarks today, i will consider the state of the euro area recovery, the role of monetary policy and finally the steps needed to strengthen the euro area and the eu. the state of the euro area the euro area recovery is currently proceeding at a moderate pace. it is supported by our monetary policy measures and their impact on financial market conditions, as well as by the low price of energy. yet, investment across the continent remains weak, as heightened uncertainties about the global economy and broader geopolitical risks are weighing on investor sentiment. the recovery is also taking hold in portugal : its economy is currently growing at the same pace as the euro area as a whole and unemployment is on a clear downward trend. yet, the signs of the euro area and portuguese economic recovery should not be an indication that we can rest on our laurels. the euro area as a whole only just managed last year to return to the levels of economic activity seen before the crisis and some countries, among them portugal, are still not there. and our economies are still marked by significant vulnerabilities which need to be swiftly addressed. one key issue in this respect is youth unemployment, as it prevents young people from playing a full and meaningful part in society. indeed, despite being the best - educated generation ever, today | entertainment, and tourism and travel. output losses and the expected recovery will be significantly more uneven across sectors than in previous crises, as a result. the pandemic has amplified existing vulnerabilities in the euro area financial system fiscal support has played a key role in mitigating the impact of the pandemic on the economy and preserving productive capacity. this is very welcome, notwithstanding the sizeable budget deficits anticipated for 2020 and 2021 and the rising levels of sovereign debt. while policy support will eventually need to be withdrawn, abrupt and premature termination of the ongoing schemes could give rise to cliff - edge effects and cool the already tepid economic recovery. loan guarantees, tax deferrals and direct transfers have alleviated immediate liquidity constraints for many firms, thus keeping a lid on insolvencies during the acute phase of the crisis. however, corporate bankruptcies are projected to increase in 2021. credit risk has risen for smes in particular, as they are more dependent on bank financing than large firms. a premature withdrawal of loan guarantee schemes may induce banks to tighten credit standards. 1 / 4 bis central bankers'speeches this would result in a credit crunch for non - financial corporations and translate into a sharp rise in company defaults. the pandemic has also weighed on the long - term profitability outlook for banks in the euro area, depressing their valuations. from around 6 % in february of this year, the euro area median banks β return on equity had declined to slightly above 2 % by june. the decline in profitability is being driven mainly by higher loan loss provisions and weaker income - generation capacity linked to the ongoing compression of interest margins. looking ahead, bank profitability is expected to remain weak and not to recover to pre - pandemic levels before 2022. this profitability outlook is reflected in rock - bottom bank valuations, with the stock prices of euro area banks recovering less than the overall market over the summer. non - performing loans ( npl ) are likely to present a further challenge to bank profitability. but there is typically a lag between a contraction in economic activity and the formation of new npls. the policy support provided to borrowers through moratoria and public guarantees may imply that this lag will be longer than in past downturns, and npls may start to materialise in the course of next year. banks have already anticipated some future credit losses by increasing their provisions. this is in response to a | 0.5 |
gordon thiessen : update on economic and monetary developments in canada opening statement by mr gordon thiessen, governor of the bank of canada, before the standing senate committee on banking, trade and commerce, ottawa, on 6 april 2000. * * * i very much appreciate the opportunity to appear regularly before your committee. i would like to use this particular occasion to update you on economic and monetary developments as well as to discuss any issues that you may want to raise. let me first give you an overview of the developments in the past year. when i appeared before you last april, there was still a high degree of uncertainty in the global economy related to the 1997 - 98 financial crisis in emerging markets and the associated fall in world commodity prices. and because of these difficulties, the pace of economic activity in canada had slowed. but by mid - 1999, our economy had regained its momentum, supported by buoyant us demand, a rebound in commodity prices, and a pickup in domestic spending. over the four quarters of 1999, output expanded by about 4ΒΎ % and 425, 000 new jobs were created, taking the national unemployment rate down to 6. 8 % by this february - its lowest level in 23 years. at the same time, the underlying rate of inflation remained low. why has canada rebounded so quickly from the external shocks of 1997 - 98? i believe it is because canada β s economic policy foundation is stronger today than it has been in several decades. this foundation has two cornerstones. one is the improved fiscal positions of governments that have led to a declining ratio of public sector debt relative to the size of our economy. the second is an environment of low and stable inflation that is expected to persist because it is anchored by the bank of canada β s target for inflation control. since the early - 1990s, canadian monetary policy has been based on a commitment to explicit targets for inflation control. this commitment has helped to moderate fears of a resurgence of inflation, has assisted the bank in taking timely action in response to changing economic and financial conditions, and has improved our public accountability. a crucial part of our monetary policy regime is our floating exchange rate. without that, we could not have canadian inflation targets. a good measure of the success of our monetary policy framework based on inflation targets and a flexible exchange rate is that canadian interest rates have remained lower than comparable us rates, apart from the period of turbulence in 1998. these lower rates reflect canada β s lower inflation rate, and the expectation | deal with their problems. some of the initial uncertainties involved in setting up and getting these imf adjustment programs going have been resolved. and there are now some encouraging signs of improved confidence and financial stability in the region. among the industrial countries, japan is the one most affected by the spillover effects from its asian trading partners. not only are its trade links with them important, but this external shock comes at a time when the japanese domestic economy is much less buoyant than was anticipated earlier. substantial loan exposure by japanese banks to the asian region has also weakened an already ailing financial sector in that country. but it is important to note that japan has the financial wherewithal to deal with its banking difficulties and that a series of measures to combat these problems and to strengthen the economic recovery have already been taken. additional financial sector and fiscal measures were announced recently. at this stage, the situation in asia is still evolving, and, while prospects have improved, we cannot be sure just how quickly and effectively the south - east asian, korean, and japanese economies will respond to the adjustment measures that have been taken. what about the potential effects of all this on canada? since our trade with asia, including japan, makes up less than 10 per cent of our total exports, the direct effects will be relatively modest. but we must also take into account the indirect effects that work through our other major trading partners and through the prices of some of the products we sell abroad. indeed, the implications of the asian crisis for global economic growth and for primary commodity prices on world markets will probably have a more important impact on canada than the reduction of our exports to asia. the fallout from asia will no doubt have a dampening effect on canadian output growth for the current year. but there are also other, more positive, developments that could well work to mitigate this effect. as i said before, economic performance in our major trading partners in the west, particularly the united states, has been somewhat stronger than anticipated. and even though our short - term interest rates have risen, canadian longer - term rates have been falling, along with their counterparts in the united states and europe, reflecting declining inflation and lower inflation - risk premiums. these longer - term rates are an important element in both business investment decisions and household spending on consumer durables and housing. the bank continues to monitor the situation carefully and to appraise the overall effect of these positive and negative influences on our economy. it is clear, however | 0.5 |
##s reaching us, at this far distance. this has whetted the appetite of many, and there is growing interest and curiosity about the possibilities for networking, exchanges, travel, culture, entertainment, sports, commerce, conferences and all the many ways our societies might interact. the barbados - china friendship association ( bcfa ) intends to provide a central node for a multifaceted network covering all areas that might be of interest to members and the general public. there is an opportunity for all those who might have an interest in the chinabarbados relationship to join the association and help us shape its agenda. the bcfa is a sponsor with the chinese embassy and the central bank of the fish and dragon festival, which we are introducing to the public today. the association will have a booth at the festival, with information on membership, the association β s actual and future activities, information on resources for mandarin language training, information on training and travel opportunities. if you already have an interest in interacting with china and the chinese we need to hear from you. and if you are merely curious there will be plenty to pique your interest and give ideas and inspiration for a deepening of your involvement with the bcfa and with china. we invite you to visit and like the festival β s facebook page entitled fish & dragon festival. we plan an exciting, entertaining and informational festival, which is sure to be enjoyed by all. and after the festival the bcfa will keep things going, with the assistance and engagement of all those who share our passion for an intensification of the china - barbados relationship. bis central bankers β speeches | the normal pattern seen in the years prior to 2013. barbados also has lessons to teach the world about how to grow the foreign exchangeconstrained economy. such economies depend on foreign exchange for their growth, so the growth strategy must focus on increasing the productivity of the merchandise exports and services in which the country has a demonstrated competitive advantage, enhancing the product and moving up the value chain, and investment in value added products. barbados has comparative advantages in tourism and related services, international business and financial services, and branded export products such as rum, and it has a potential comparative advantage in green energy. overall, the economy can grow only as fast as the growth of foreign exchange to finance the additional imports needed by the growing economy. a third lesson has to do with the sustainability of fiscal policy. government services do not produce any foreign exchange, and the expenditures associated with them create a demand for imports. the financing of government deficits may also add to expenditure and the demand for imports. if government β s expansion creates a demand for imports that is larger than the foreign currency inflows available, and that situation is allowed to persist, the fiscal stance becomes unsustainable. that is the situation the fiscal contraction of 2013 managed to avert. conversely, the fiscal stance may be sustained if it puts no pressure on the level of foreign exchange, even though fiscal adjustment may be desirable on other grounds. a fourth lesson is the limitations of monetary policy in the foreign exchange - constrained economy. in modern economies the central bank cannot actively manage financial flows across its borders, even if all flows are transacted within the formal financial sector. this is true whatever the nature of the country β s exchange rate arrangements, and irrespective of the rigour of stipulations and reporting requirements of the central bank. the central bank β s role is reduced to creating the right incentives to avoid speculative or precautionary financial outflows. the surest way to do this is to maintain a domestic interest rate policy which follows the us treasury bill rate, with allowance for a small risk premium, which will vary from country to country. all of these lessons about the management of the foreign exchange - constrained economy are drawn from economic analysis which is available through the central bank of barbados website, and in research papers i have worked on with many in the audience today. i want to suggest that this theme of the foreign exchange - constrained economy offers the central bank of barbados one way of branding our research, | 0 |
sabine lautenschlager : interview in wirtschaftswoche interview with ms sabine lautenschlager, member of the executive board of the european central bank, in wirtschaftswoche, conducted by mr mark fehr and mr malte fischer and published on 2 april 2015. * * * ms lautenschlager, you have a unique role in the european central bank : not only do you have a say in the key ecb interest rates but, as vice - chair of the new banking supervision, you also monitor the institutions. do you manage to avoid conflicts of interest between monetary policy and supervision? i am a purist in this regard, so i strictly separate both of my tasks in order to avoid conflicts of interest. before contributing to a discussion, i always clarify whether i am speaking as a supervisor or as a monetary policy - maker. besides, in past crises, a supervisory model with a separation between the central bank and supervision was not shown to be more successful than the model with monetary policy and supervision under one roof. on which issues do conflicts of interest arise? different interests could play a role in, say, the emergency loans for banks facing liquidity problems. from the banking supervisor β s perspective, this liquidity assistance is initially welcome, because it gives the bank time to resolve problems. the monetary policy - maker must ask what transactions the liquidity will be used for, or whether the bank concerned is solvent. do you ever feel schizophrenic in your double role? no, i believe that i manage to separate both tasks. in each of the two roles, i focus on the objective of the respective task, i. e. first for monetary stability and second for safe banks. everything that goes on between monetary policy and banking supervision passes over my desk. and i am aware that, in my role, i have to act as a bridge and have to broker between the two sidess. in the long run, however, i see a separation of both tasks as the better choice. are the banks in the euro area stable enough to issue sufficient credit to businesses? the vast majority of european banks have enough capital and liquidity to enable them to expand their lending activities. but that in itself does not suffice. if we want to see sustainable and sound credit growth, banks will have to take a positive view of their customers β creditworthiness and thereby of their future prospects. and, as a rule, that is | not gotten the attention they deserve. in fact, the economy has been trapped in a downward spiral of low economic growth, worsening public finances, and social decline. in 2017 the government recorded a current budget deficit of naf. 116. 8 million. for 2018, however, the government expects a surplus of naf. 42 million on its budget, even though tax income has been lower than initially projected. meanwhile, curacao β s debt - to - gdp ratio has been increasing since 2012. curacao entered its status of autonomous country with a debt - to - gdp ratio of 34, 6 % in 2010. as you can see, today, the debt - to - gdp ratio exceeds 50 %. the government of curacao started to borrow in 2014 for the construction of the new hospital, hospital nobo otrobanda ( hno ). therefore, the government issued two bonds, totaling naf. 492. 5 million. currently, the financing of the construction of the hospital represents 17. 5 % of the total outstanding public debt and 8. 8 % of our gdp. nevertheless, an additional naf. 200. 0 million is still needed to finalize this project. there are two possible options to obtain these additional funds. first, the government can issue a naf. 200. 0 million bond loan resulting in a higher debt - to - gdp ratio. the second option is that hno directly borrows the required funds from local and international institutional investors, in this case the public debt to gdp ratio will not increase. it seems that this last option is being considered as the most viable one at this moment. however, there will be still risks involved for the government. assuming that the social security bank, svb, will have to guarantee the loan to the private institutional investors, in case of a default by the hospital, the svb will have to repay these debts. hence, this could affect the sustainability of the social insurances and, indirectly, the public finances. it will be crucial that the hospital is able to comply with the financial obligations towards its lenders in the future. therefore, continuous supervision on the hospital β s operations will be very important. finally, i would like to present some policy recommendations to address these risks and achieve a higher and more inclusive growth path. the considerable negative effects that external shocks, such as the situation in venezuela, have on our economies underscore the importance of strengthening our resilience. one of | 0 |
the drought having abated, headline inflation has fallen by 2. 5 percentage points over the last five months to 4. 8 percent in october 2017, while annual core inflation was only 3. 5 percent in october 2017. the improving outlook for inflation allowed the bank of uganda to further lower the policy interest rate β the central bank rate β to 9. 5 percent in october. the current year is probably best characterised as a period of financial consolidation for the banking industry. at the end of 2016, one of the largest banks in uganda β crane bank β had been taken into the statutory management of the bou and the banking industry as a whole was struggling with high levels of non - performing loans and low profitability. we were able to resolve crane bank successfully, without any loss to its depositors, and without any contagion to the rest of the banking system. public confidence in the safety of depositors β funds has been maintained. i believe that this is testimony to both the underlying financial strength of the ugandan banking industry and the efficacy of our bank resolution framework. two aspects of this resolution framework are especially worthy of mention. first, the financial institutions act, 2004 mandates the bank regulator to undertake prompt regulatory interventions to stem the losses of failing banks before depositors β funds are eroded. second, the bou has successfully utilised purchase of assets and assumption of liabilities transactions to minimise the disruption to the depositors and other customers of failed banks. over the course of the first nine months of 2017, the financial soundness indicators of the banking system have improved. the non - performing loan to total loan ratio has fallen from 10. 5 percent in december 2016 to 7. 2 percent in september 2017 ; and in absolute terms, npls fell by 32 percent. over the same period, the total capital adequacy ratio of the banking system increased from 19. 8 percent to 23. 8 percent of its risk weighted assets. strong capital buffers are of particular importance in bolstering the resilience of banks to adverse shocks. as i noted earlier, 2017 has been a year of consolidation, especially in regard to bank lending, with gross loans and advances increasing by a mere 1. 8 percent in the year to september 2017. i hope that the downward trend in npls and the reduction in the policy interest rate will encourage banks to ease their lending policies and thereby enable an acceleration of credit growth in 2018. a crucial problem which needs to be addressed if banks are to | unfortunately that will also mean lower employment in the banking industry. page 11 of 14 as they adopt electronic banking technologies, key challenges for banks will be to ensure that these new technologies can deliver the same quality of, and access to, services for their customers as the more traditional technologies and that the risks entailed in electronic banking are fully understood and can be managed effectively. in particular, banks must ensure that their electronic systems can be safeguarded against cyber - attacks, both to protect the integrity of individual customer β s accounts and to prevent threats to the financial safety of the bank itself. the adoption of electronic banking has implications for bank regulation and supervision, which in uganda has traditionally focussed on banks β management of credit risk. page 12 of 14 in future, operational risks arising from electronic banking are likely to become of greater significance as potential threats to the financial soundness of banks and their ability to command the confidence of their customers. bank regulators need to strengthen their capacities for monitoring the security of banks β it systems. to conclude, i believe that the future of the banking industry in uganda is bright. in terms of productivity, the adoption of international best practises and its use of modern technology, banking is one of the leading industries in uganda. banking also operates in a macroeconomic and prudential regulatory environment, which provides scope for investment and innovation while, at the same time, safeguarding the interests of depositors and the safety and soundness of the financial system. page 13 of 14 consequently i am confident that banks will be able to meet successfully the challenges that they face, and in doing so, continue to contribute to the development of the ugandan economy. finally i would like to wish you all the best for the rest of this conference. thank you for listening to me. page 14 of 14 | 0.5 |
period of very low 1 / 7 bis - central bankers'speeches inflation, followed by the closing down of economies and the prospect of deflation, then the return of very high inflation from the disruption of supply chains and a war - induced energy shock and now a relatively rapid process of disinflation. i expect a fragmenting global economy undergoing significant transitions - in demography, in technology, in climate - to mean that volatility and uncertainty will reflect a new normal, posing challenges to all economic policy - maker. the changing landscape of the global financial system the reality of course is that the pace of change in our economy and financial system has been accelerating rapidly since the gfc. it has required central banks, regulators, firms and consumers to adapt, transform and evolve to meet the challenge that it poses. the singapore fintech festival showcases and highlights the sheer breadth and depth of the innovation that is happening in financial systems across the globe and give policymakers an insight into the future. since the latter stages of the 17th century, when the world's oldest central bank, sweden's riskbank was founded, price stability, mitigating crises and stabilising economies have represented a central bank's primary mandate. while change and challenge has been constant throughout the history of central banking, the challenges and changes that central banks face today are more complex, more connected and more multifaceted than ever before. we are living in a world of unprecedented innovation1, change, complexity and uncertainty. in the past five years, we have endured a global pandemic and witnessed russia's war on ukraine and its people, as well as an escalating conflict in the middle east and an increasingly uncertain geopolitical environment. the break - down of a rules - based world order, the risks posed by, at best, reduced interconnectedness and, at worst, a preference for autarky and the prioritisation of shortterm, national interests over the common good, all add to the sense that the changes we are seeing feel different, and not in a good way. at the same time as this changing geo - economic landscape, the financial system both in ireland and globally has been undergoing its own rapid change over the last number of years. in particular, technological innovation has had a profound impact across all aspects of our lives and the provision of financial services is no different. technology is a key part of the financial services landscape today. and while the change so far has | homes and businesses, is one. so are the fax and the cell phone. the newer biotech innovations are most especially of this type, particularly the remarkable breadth of medical and pharmacological product development. at the end of the day, however, the newer technologies obviously can increase outputs or reduce inputs and, hence, increase productivity only if they are embodied in capital investment. capital investment here is defined in the broadest sense as any outlay that enhances future productive capabilities and, consequently, capital asset values. but for capital investments to be made, the prospective rate of return on their implementation must exceed the cost of capital. gains in productivity and capacity per real dollar invested clearly rose materially in the 1990s, while the increase in equity values, reflecting that higher earnings potential, reduced the cost of capital. in particular, technological synergies appear to be engendering an ever - widening array of prospective new capital investments that offer profitable cost displacement. in a consolidated sense, reduced cost generally means reduced labor cost or, in productivity terms, fewer hours worked per unit of output. these increased real rates of return on investment and consequent improved productivity are clearly most evident among the relatively small segment of our economy that produces high - tech equipment. but the newer technologies are spreading to firms not conventionally thought of as high tech. 1 it would be an exaggeration to imply that whenever a cost increase emerges on the horizon, there is a capital investment that is available to quell it. yet the veritable explosion of high - tech equipment and software spending that has raised the growth of the capital stock dramatically over the past five years could hardly have occurred without a large increase in the pool of profitable projects becoming available to business planners. as rising productivity growth in the high - tech sector since 1995 has since the early 1990s, the annual growth rate in output per hour of non - financial corporate businesses outside high tech has risen by a full percentage point. resulted in an acceleration of price declines for equipment embodying the newer technologies, investment in this equipment by firms in a wide variety of industries has expanded sharply. had high prospective returns on these capital projects not materialized, the current capital equipment investment boom - there is no better word - would have petered out long ago. in the event, overall equipment and capitalized software outlays as a percentage of gdp in nominal dollars have reached their highest level in post - world war ii history. to be sure, there is also a | 0 |
can be addressed if all the relevant participants to the islamic financial sector - the industry, the regulators, the market participants and the academia are willing to forge their efforts together on a continuous basis to elevate the performance level of islamic finance. today, we are paving the way for closer collaboration between inceif and the institutions of higher learning in malaysia to realise our common objective of developing the pool of expertise in islamic finance. this collaborative move, would establish a network of mutual co - operation and collaboration that would strengthen the efforts between the institutions of higher learning in the areas of curriculum development, research, training, exchange of ideas and information, and resources in islamic finance. this partnership in connecting the knowledge communities in malaysia needs to be developed and maintained on a long - term basis. entering into strategic alliances with institutions of higher learning, islamic financial institutions and other organisations would create greater synergy, which may bring about new approaches, new technologies and new areas of specialization. collaborative efforts between inceif and institutions of higher learning in particular, would strengthen the ability to leverage on the respective institutions'expertise in research. the introduction of new research findings in islamic financial engineering could pave the way for increased innovation of new products. this would contribute towards broadening and deepening islamic financial markets and thus strengthen the overall development of the islamic financial industry. in addition, active collaboration between academic researchers and the practitioners will enable the practical application of research findings. one of the strategic steps that inceif has initiated is the forging into strategic alliances with the five takaful operators to collaborate in promoting and undertaking research, development, training and education in islamic finance. in the international arena, inceif has also established strategic alliances with the islamic research and training institute ( irti ) of the islamic development bank, lembaga pengembangan perbankan indonesia ( lppi ) of bank indonesia, national institute of banking and finance ( nibaf ) of state bank of pakistan and ceylinco sussex business school, sri lanka, among others. inceif is also in the midst of finalising its collaborative efforts with organisations in the united arab emirates, kuwait, bahrain and qatar. initiatives have also been taken to enhance the pool of talent is in the field of shariah. this has been done by awarding research grants and scholarships to deserving outstanding candidates. this initiative will be funded by the shariah endowment fund which was announced in august this year. the applications for the sharia | ranging from basic trade finance products to digitally enabled supply chain 1 / 4 bis - central bankers'speeches finance. second, in sustainable finance. islamic finance can help bridge funding gaps estimated at usd1. 5 trillion annually until 2030, to achieve sustainable development goals in asian countries, equivalent to approximately 4 % of the region's gdp3. closer to home, our aspiration to achieve net zero emissions by 2050 requires an estimated total funding of usd100 billion4. efforts in value - based intermediation ( vbi ) including implementation of the sector guides of vbi impact assessment framework can catalyse growth in sustainable finance. third, in widening the intermediation capacity of islamic finance, we can look at expanding the use of blended finance and accessing more diverse sources of funds. application of social finance instruments in banking and takaful, complemented by partnerships with community - based stakeholders can open up new opportunities and build greater resilience among underserved segments such as microentrepreneurs and smes. ladies and gentlemen, anchored by the financial sector blueprint 2022 - 2026 that envisions " finance for all, for sustainability and for transformation ", malaysia is refreshing our efforts to sharpen and strengthen our proposition and capabilities as an international gateway for islamic finance. our immediate focus is on asia and oic economies. this vision is underpinned by malaysia's ecosystem strengths in islamic finance and capabilities to provide innovative solutions that meet regional and global shariah - compliant finance needs. the malaysia international islamic financial centre ( mifc ) vision is not new. while the aspiration to be an international islamic financial hub remains much alive, there is a need to evolve in response to global business shifts. when we started out, the focus was on international business ; international banking and finance, sukuk origination, wealth, and fund management, retakaful and human capital development. much has been achieved in all these areas. today, the mifc aspiration is a confluence of four dimensions aβ¬ β sustaining this vibrant marketplace, tapping global opportunities, innovation - led solutions and anchoring upon expertise that can also serve regional and global needs. with this, we see malaysia as having a conducive ecosystem where players can pilot and scale new solutions in the region. much of the establishment work has been done. with the maturing islamic finance ecosystem, it became timely for the industry to take the lead on mifc. the islamic economy | 0.5 |
share with other countries, and is not the result of poor performance by our central bureau of statistics, but of the attempt to provide data that is as good as possible in real time. we can also see that the level of uncertainty is particularly high regarding estimates of the various components of gdp, such as exports, investments, and so forth, while it is lower for gdp itself. for instance, we can see that the updates in the quarterly gdp growth data in 2013 in israel are not unusual relative to the us or the uk, and the update that was made just a few days ago in the first quarter gdp data in the us was very significant. in view of this, we also need more β rapid β data, and we use a mix of data and indicators that help us in trying to understand developments in real time, or with a relatively small lag. i note that the fact that the labor force survey has become monthly is very helpful. in this context, it is worth mentioning the composite state of the economy index, the business tendency survey, the google search index, and internal models developed by the bank for nowcasting, which are intended to provide a clearer picture of the current situation when statistical data have not yet been published. monetary policy is intended to affect future developments : policy has channels of relatively rapid effect ( the exchange rate ), and some of the others have a slower effect ( for instance, the price of credit ). in any case, an important component in the formulation of policy is the forecast, since monetary policy is, of course, forward looking. it is therefore very important that the monetary policy decisions that are made each month rely on a forecast that is as upto - date as possible. such a forecast relies on the most up - to - date information regarding the state of the israeli economy β based on a broad set of indicators from the labor market, various indices of economic activity, consumer confidence indices and business tendency surveys β and on the most up - to - date forecast regarding the state of the global economy, and particularly global trade, which is an indicator of demand for israeli exports. we can see that in the forecasts and estimates regarding global trade and gdp, there are also regular updates, some of which are of considerable size. therefore, the forecast is updated on the basis of updated national accounts data and other recent data, and on the basis of the updated global picture. since the beginning of the monetary committee β s operation, the bank of israel | p nandalal weerasinghe : monetary and financial sector policies for 2024 and beyond annual policy statement by dr p nandalal weerasinghe, governor of the central bank of sri lanka, colombo, 10 january 2024. * * * 1. economic performance in 2023 the sri lankan economy started showing signs of gradual recovery during the latter part of 2023. positive economic growth was recorded by the sri lankan economy in the third quarter of 2023, following consecutive contractions since the first quarter of 2022. leading economic indicators signal the continuation of the strong pace of activity during the last quarter of 2023. inflation, which accelerated to unprecedented levels in 2022, was brought down to single - digit levels within a period of one year. despite the historically high level of inflation in september 2022, the price escalation was quickly reined in and entered an impressive disinflation path thereafter, eventually bringing inflation down to the targeted levels within a period of one year. sri lanka's swift disinflationary process was supported by an array of policy measures implemented by both the central bank and the government. meanwhile, core inflation, which reflects the underlying demand pressures in the economy, also recorded steady disinflation during 2023. inflation expectations have been anchored around the targeted levels. extensive policy measures aimed at restoring confidence and stability in the economy, though painful in the near term, have helped stabilise inflation expectations, which remained largely deanchored during 2022. the credible deceleration of inflation and well - anchored inflation expectations within the targeted range allowed the central bank to begin its monetary policy easing cycle in mid 2023. the central bank commenced the relaxing of its monetary policy stance in june 2023 in view of the deceleration of inflation, benign inflation expectations, stable inflation outlook, and improvements observed in the external sector. as a result of the monetary policy easing measures and administrative measures, market interest rates declined significantly, particularly deposit interest rates. market lending interest rates also declined, albeit at a slower pace, partly contributed by the rigidity in the yields on government securities amidst the high risk premia. 1 / 1 bis - central bankers'speeches | 0 |
very insightful article in the bundesbank β s staff magazine about β money in the second part of goethe β s faust β. in the mid - 1980s, while teaching in sankt gallen, professor hans christoph binswanger β who i am pleased to say is also here today β took a similar line and brought out a book entitled β money and magic : a critique of the modern economy in the light of goethe β s faust β. binswanger β s thesis is that goethe was portraying the modern economy with its creation of paper money as a continuation of alchemy by other means. while traditional alchemists attempted to turn lead into gold, in the modern economy, paper was made into money. indeed, the fact that central banks can create money out of thin air, so to speak, is something that many observers are likely to find surprising and strange, perhaps mystical and dreamlike, too β or even nightmarish. 4. the responsibilities of an independent central bank if central banks can potentially create an unlimited amount of money out of thin air, how can we ensure that money remains sufficiently scarce to preserve its value? does this ability to create money more or less at will not create the temptation to take advantage of this instrument to create additional leeway short term, even at the risk of highly probable long - term damage? yes, this temptation certainly does exist, and many in monetary history have succumbed to it. taking a look back in time, this was often the reason for establishing a central bank : to provide those in power with free access to seemingly unlimited financial resources. however, such government interference in central banking, combined with the government β s large demand for funding, often led to a strong expansion in the volume of money in circulation, causing it to lose value through inflation. in light of this experience, central banks were subsequently established as independent institutions, with the mandate to safeguard the value of money, in order to explicitly keep the government from co - opting monetary policy. bis central bankers β speeches the independence of central banks is an extraordinary privilege β it is, however, not an end in itself. instead, its primary purpose is to use its credibility to ensure that monetary policy can focus unhindered on preserving the value of money. independent monetary policy combined with policymakers with a well - functioning, stability - oriented compass are a necessary β but not a sufficient β condition for preserving the purchasing power of money as well as public confidence in it. of course | g20, the financial stability board ( fsb ) and various standard setting bodies β including but not limited to strengthening banks β capital and liquidity requirements, reducing moral hazard posed by systemically important financial institutions, and reforming the otc derivatives markets. recently, the fsb decided to set up regional consultative groups, including one for asia, to bring together central banks, finance ministries and regulators in different regions. these groups are expected to serve as a platform for us to discuss and cooperate on issues of interest to regional financial stability, and to reflect the region β s collective views to the fsb in the international standard setting process. 9. the second area is enhancing the global and regional financial safety nets. we welcome the recent significant augmentation of imf β s resources and lending facilities. these enhancements will allow the imf to respond more effectively and speedily to member countries in need. regionally, the establishment of the chiang mai initiative multilateralisation ( cmim ) further enhances the regional capacity to cope with capital flows and safeguard financial stability of the region. the hkma fully supports this important regional initiative, and indeed we have played an active role in its development and participated directly in the arrangement. 10. the third area is enhancing the capacity of regional capital markets to absorb capital inflows and channel them to productive uses. in this regard, the hkma took the lead in developing the asian bond funds ( abf ) under the aegis of the executives β meeting of east asia pacific central banks ( emeap ). the abf, as a pioneer product, aimed to provide a convenient low - cost local - currency instrument for investment, and at the same time help identify and remove the impediments to bond market development. in parallel, with the strong support from the adb, asean + 3 members have undertaken a range of projects under the asian bond markets initiative to promote the development of the local currency bond markets. notwithstanding these regional efforts, we still have a long way to go in developing a regional bond market that is broad and deep enough to channel the region β s abundant savings to meet its huge investment needs. continued national and regional efforts in this regard are much needed. emerging asia includes china, hong kong, india, indonesia, korea, malaysia, the philippines, singapore and thailand. bis central bankers β speeches 11. at the domestic level, there has been growing recognition that there is no one - sizefits - all approach to capital flows | 0 |
bank of japan β s september report of recent economic and financial developments1 bank of japan, communication, 13 september 1999. * * * the bank β s view2 japan β s economy has stopped deteriorating, and there are some activities improving such as exports and production. however, clear signs of a self - sustained recovery in private demand have not yet been observed. with regard to final demand, business fixed investment has been on a downward trend. recovery in private consumption continues to be weak on the whole. housing investment, which had been recovering, has recently peaked out. meanwhile, public works have been rising, and net exports ( exports minus imports ) have started growing due to an increase in exports. reflecting such developments in final demand and continued progress in inventory adjustment, industrial production is turning to an increase. against this background, corporate and consumer sentiment has seen an improvement. the improvement in corporate sentiment, however, has not necessarily stimulated business activities, because firms strongly feel that they have excess capacity and employees and their profits remain weak. meanwhile, the improvement in consumer sentiment is underpinning household expenditure even under the worsening employment and income conditions, but is not strong enough to push up overall private consumption. as for the outlook, improvements in the overall financial environment partly due to the monetary easing by the bank, along with a series of economic measures taken by the government, are expected to continue underpinning the economy. moreover, the positive impact on domestic production of the recovery of overseas economies, especially of asian economies, is likely to continue for some time. by contrast, leading indicators suggest a high probability of a moderate decrease in housing investment from this autumn. in addition, under cautious sales plans, firms are implementing further restructuring to improve their profitability. although such corporate restructuring is expected to improve productivity, it is likely, in the short run, to reduce fixed investment and discourage household expenditure through the resulting deterioration in employment and income conditions. moreover, it seems that the recent appreciation of the yen will have an adverse effect on corporate profits in the near term. under such circumstances, it is still difficult to expect an immediate self - sustained recovery in private demand. overall economic developments require careful monitoring in consideration of the above points. it is also important to promote structural reform in order to assure the economy β s sustained growth in the medium term. with regard to prices, import prices have recently fallen slightly due to the appreciation of the yen, despite the rise in international commodity prices such as crude oil prices. domestic | the economy, it is indispensable to realize a situation in which japan β s financial system performs the credit intermediary function fully. discussion on putting the financial system on a sounder basis often focuses attention on the disposal of npls. although this issue is very important, the disposal of npls is just one of the prerequisites for achieving the much broader task of reviving the financial system. the most vital necessity in the medium to long term is to construct a new financial infrastructure, which can play a key role in the economy in the 21st century. after world war ii, japanese financial institutions raised their profitability by maintaining a certain asset size, supported by high economic growth and private savings. in undertaking risk management, a basic function of commercial banks, most of the work associated with assessing the profitability and risk of each individual project was often substituted by monitoring the price of real estate that had been pledged as collateral. this system was based on the condition that real estate prices continued to rise. market participants are now keenly watching whether japanese financial institutions can generate a new business model and establish a sufficient foundation for profitability in the future, now that the external environment that supported their profitability in the postwar era has drastically changed. the value - added and the profit of financial institutions are ultimately generated from their activities of taking and controlling various risks such as credit risk, interest rate risk, and liquidity risk. for the japanese financial system and economy to revive, it is extremely important that japanese financial institutions create a new business model that ensures a foundation for profitability while supporting the japanese economy in the 21st century. i think it is essential for financial institutions to make further efforts in this respect. the bank of japan will make its best effort on various fronts, such as enhancing the transmission mechanism of monetary easing, promoting the permeation of the easing effects through the economy, as well as ensuring financial market stability. as other developed countries are keenly watching our monetary policy conduct, it is my sincere hope that japan realizes sustainable economic growth accompanying price stability, and succeeds in recording a victory over deflation. | 0.5 |
to rebalance the world economy. 3. policy options to reduce global imbalances in principle, current account surpluses or deficits are not a problem in themselves. however, the ones we have been observing at the global level are an expression of underlying barriers to sustainable growth and, at the same time, add an element of instability to the global economy. the us current account deficit, for example, has reflected a general decline in saving. despite an ageing population and foreseeable increases in health and age - related expenditures, public saving has deteriorated. at the same time household savings have declined due to increased borrowing against rising house values. the counterpart to the us current account deficits were surpluses in emerging markets such as china and some oilexporting countries. for the latter group of countries, the surpluses can partly be explained bis central bankers β speeches by an increase in oil prices. nevertheless, current account surpluses were also caused by exchange rate policies that some countries pursued to artificially support their export sectors. given the malign nature of these persistent differences in current account positions the term global imbalances is indeed justified, and it is necessary to address them. however, when designing relevant measures, it is imperative not to underestimate the complexity of the problem. a country β s current account position is driven by a very diverse set of underlying factors from within and outside its borders. consequently, any sensible approach to reducing current account imbalances should not aim at steering them directly. instead, the objective should be to create circumstances in which current account positions are determined by efficient and unbiased market decisions. in this context, the question of which countries have to act to correct the global imbalances can only be answered by taking into account their ultimate causes. in general, emerging economies with high current account surpluses as well as oil - exporting countries should remove structural distortions that limit the expansion of domestic demand. in countries with an undervalued currency, for example, more flexible exchange rates would strengthen purchasing power and thus help to redirect growth from exports to domestic demand. this, however, is not a panacea and should be supplemented by structural reforms. in china, for example, such reforms might include measures to improve social security, which would reduce precautionary household saving, strengthen domestic demand and ultimately lead to a more balanced current account. economies with persistently large current account deficits, on the other hand, should adopt measures | towards greater proportionality. should we look into specific adjustments, or should we go straight into creating a separate regulatory framework for small institutions? the first path has a clear practical advantage : it would be quick and relatively simple to implement, especially since european legislation on banking regulation is currently being revised anyway. it does have its disadvantages, however : realistically speaking, smaller institutions will not gain any substantial relief from their burdens on account of a few specific improvements to regulation. there is also the risk of ending up with a patchwork of exceptions that are difficult to interpret. the second path would be more radical. the creation of a separate regulatory framework for small institutions β also known as the β small banking box β β would mean more fundamental relief for these institutions. a clear and consistent definition would also prevent any difficulties in interpretation. though the implementation and maintenance of this would be somewhat more complicated, in future the regulations for small and large banks would be developed in parallel and in alignment with each other. depending on how the threshold values for the small banking box are set, there is also the risk of cliff effects. 4 / 13 bis central bankers'speeches we have carefully weighed up these and many other arguments in the specialist working group on proportionality. the group β s purpose was to facilitate the exchange of views between politicians, supervisors and the banking industry. the federal ministry of finance, bafin, the bundesbank and the five central associations of the german banking industry were all represented in this group. these members agreed that it would be expedient to bolster proportionality in regulation. the aim of the working group was therefore to work out specific proposals on how to alleviate the burden of regulation on small institutions with simple business models. and it delivered on that aim : the non - paper that i mentioned earlier, which was written with the group β s help, is now in brussels, where it is being used as the basis for further discussion at the european level. 5 / 13 bis central bankers'speeches 5. 1 the question of β who? " : a three - tier approach so what does the german proposal look like? first, let me address the β who? ", namely who are the relief measures intended for. the proposal takes a three - tier approach in this regard. at the very top are the systemically important and potentially systemically risky institutions β the smallest group in terms of numbers but extremely important in terms of risk. because of this, it is also the most intensely | 0.5 |
made the difference to the time scale and acceleration? innovations and structural changes over the last two decades have no doubt played an important role, namely globalization, advances in information communication technology, and financial innovations and sophistication. indeed, compared with japan in the 1990s, the current crisis is far more complex, interconnected and global. accordingly, the velocity of market dysfunction has been much faster and its contagion much more widespread than in japan β s case, and the damage inflicted on the global financial system and economy has been far more devastating than japan β s non - performing loan problem. 2. lesson two the second lesson we have learned from the crises is that once an adverse feedback loop has been started, it is extremely difficult and costly to stop it and to restore confidence. this was the essence of japan β s experience ; a series of fiscal stimulus packages and an accommodative monetary policy could not generate sustained economic growth, as the financial system was severely impaired and market confidence continued to be eroded. injections of public capital in 1998 and 1999 were also, in retrospect, not sufficient to convince the market to jump - start the economy. this is evident in chart 2. at the same time, it was clear that the japanese economy was suffering from a significant productivity slowdown from its peak in the 1980s. so when and how did japan β s adverse feedback loop stop? with hindsight, perhaps the turning point was october 2002, when the financial services agency urged major banks to halve their npl ratios by the end of march 2005, and pledged to monitor their efforts continuously and rigorously. the bank of japan also urged banks to carry out more rigorous evaluations of npls, and to dispose of them promptly based on those evaluations. in retrospect, the timing coincided with the reflection point at which the economy had just passed the trough of the 2001 recession, and began to recover, thanks to strong export demand due to the vigorous world economy. this was also the time when substantial progress was being made in corporate restructuring with respect to the so - called β three excesses β : debt, employment and production capacity. this restructuring helped the final pick up. in this way, the japanese economy was, in general, out of the woods around 2005, although some regional economies lagged behind, having benefited less from the global growth. 3. lesson three i will move on to the third lesson and ask the following question : β is it possible to solve | yukitoshi funo : economic activity and prices in japan, and monetary policy in japan speech by mr yukitoshi funo, member of the policy board of the bank of japan, at a meeting with business leaders, miyagi, 21 june 2018. * * * i. recent economic and price developments a. overseas developments i would like to begin my speech by talking about overseas economies. the business sentiment of manufacturing firms on a global basis has maintained its improving trend, and the world trade volume has continued to recover. in this situation, overseas economies have continued to grow firmly on the whole. in terms of the outlook, overseas economies are expected to continue growing firmly. according to the world economic outlook, released in april 2018 by the international monetary fund ( imf ), the global growth rate is projected to be 3. 9 percent in both 2018 and 2019. looking at developments by major region, the u. s. economy has been expanding and the european economy has continued to recover. the chinese economy has continued to see stable growth on the whole. other emerging economies and commodity - exporting economies have been recovering moderately on the whole, reflecting in particular an increase in exports and the effects of those economies β stimulus measures. as for the outlook, the u. s. economy is expected to keep expanding and the european economy is projected to continue recovering. the chinese economy is likely to broadly follow a stable growth path as authorities conduct fiscal and monetary policy in a timely manner. other emerging economies and commodity - exporting economies are likely to continue their moderate recovery on the whole. risk factors to the overseas economic outlook are wide ranging, as exemplified by ( 1 ) the u. s. economic policies and their impact on global financial markets, ( 2 ) developments in emerging and commodity - exporting economies, ( 3 ) negotiations on the united kingdom β s exit from the european union ( eu ) and their effects, and ( 4 ) geopolitical risks. in addition, uncertainty is high regarding future developments in trade policies worldwide, and therefore these developments warrant attention. i hold the view that it is important to stay vigilant regarding these risk factors, especially now that overseas economies are continuing to grow firmly. b. japan β s economy and prices 1. economic activity i will now discuss the economic situation in japan. japan β s economy is expanding moderately, with a virtuous cycle from income to spending operating. the real gdp growth rate continued to represent positive growth for eight consecutive quarters on | 0.5 |
ardian fullani : bank of albania β progress during 2006 speech by mr ardian fullani, governor of the bank of albania, at the β round table on target inflation 2 β, tirana, 8 december 2006. * * * ladies and gentlemen, i want to conclude this round table by thanking you all for your contributions. we are really happy that you came to tirana for discussing the monetary policy strategy of the bank of albania. this round table on inflation targeting was an excellent follow - up of the open forum. at the open forum last year in december we globally discussed the many preconditions for inflation targeting. during these two days of the round table, yesterday and today, we went far deeper on these complex issues. these issues need to be solved before the bank of albania can put a fully fletched inflation targeting regime into place. at this round table we have discussed the progress that the bank of albania has been making during 2006. one of the discussed topics was the econometric modeling and forecasting. the bank of albania uses now a reliable analytical framework that provides information useful to the monetary policy decision making. under inflation targeting more information would be needed about the expected inflation developments in the future. as laid down in the central bank law, the primary objective of the bank of albania is to achieve and maintain price stability in albania. for keeping prices stable we need to be able to forecast the development of prices in the future. our current econometric models provide us information about these future developments. our internal studies show now that the bank of albania is able to make reliable forecasts. we also discussed the consequences of situations where the consumer price index increases, let us say, more than 3 % at an annual basis. this may for instance happen due to higher electricity prices, or higher oil prices. these energy prices are a main share of our daily expenditures. therefore, they are a main share of the total basket of consumer prices for the β average β albanian household. however, the focus of our discussions was the analyses of the further impact on the albanian macro - economy. higher prices will lead to a lower purchasing power. households will buy less in case of a price increase, under the condition of unchanged household income. then, if many households in albania start consuming less, the albanian economic growth will suffer. the albanian production will slow down due to the overall lower demand for goods and services. this process can take some time. but, anyhow, each economist will agree that | ##d since 2008. currently, albanian citizens own 1, 433, 151 debit and credit cards of the prestigious visa and mastercard companies, which have implemented standards from the best at international level ; significant increase of poss in albanian businesses by around 6 times from 2008 ( about 300 poss ) to 2023 ( about 19 000 poss ) ; 2 / 4 bis - central bankers'speeches currently, there are around 230 businesses equipped with the necessary infrastructure for e - commerce, from a total of 3 in 2013, when it was introduced for the first time this service from the banking system ; the number of bank card payments has increased 83 times since 2008. in 2023, the albanian citizens have carried out an average of 11 payments per capita, from 0. 3 payments per capita in 2008 via bank cards. as we reflect on the past years, despite the various domestic and external challenges, we can say that - despite the shocks on inflation and monetary tightening over the last few years, both in albania and in the euro area - the bank of albania and aab have continued to work for : drafting and approving many legal and regulatory acts in accordance with the european directives and best practices in the field of regulation and micro - and macro - prudential supervision, resolution, payments, statistics, etc. ; continuously modernizing the payment system, establishing and developing payment schemes, such as direct debit, as well as the increase in the use of electronic payment instruments, etc ; building cooperation bridges and improving communication with domestic and international institutions to help the financial sector in albania ; organising many events and programs to educate the public, promoting financial inclusion and reducing the use of cash in the economy. * * * dear colleagues, banks play a key role in the economic structure of albania. we have a common mission : bolstering a strong financial and economic environment, which continues to remain challenging. forward - looking and due to global changes and developments taking place, the bank of albania : remains committed to fulfilling its legal objectives, always implementing policies aimed at safeguarding the monetary and financial stability of albania, as a prerequisite for the sustainable and long - term development ; encourages the further increase in lending to albanian businesses and households, always requiring for compliance with the prudential requirements, but at the same time insisting on increased attention to specific sectors or vulnerable groups of the society ; has encouraged and will encourage the drafting of policies and the adoption of instruments that expand financial inclusion for those segments of | 0.5 |
policy regimes β starting with the design of monetary policies, continuing with the way they are anchored and the building of due capacities for a greater effectiveness of monetary policy in the future. that is why we agreed to put in place today β s workshop, as part of a continuing process of reflection and reform. in our discussions here in tirana, we will begin with questions of policy design, which are fundamental to set the stage for the later topics we will come to. we have suggested in advance several questions that may help stimulate the discussion, covering some of the key questions that are certainly left in my mind, as a practitioner, after navigating through the crisis so far. the issues of policy design include the questions how much room for manoeuvre there has been to use discretionary macro policy measures ; how far fiscal policy in future should build up a buffer against macro - financial risks ; how far national monetary and prudential regimes have been able to shield us from turbulence ; and whether we now see a need to attract new kinds of capital flow β perhaps to change the growth model in the region. this discussion of policy design will bring us to our second issue. it concerns the role of external anchors for monetary policy. one point of consensus in our washington meeting was that we need to revisit some aspects of this anchoring process, and the way it interfaces with countries β efforts to build up their own internal anchors over time. there are several questions about the future role of external and internal anchors. they include some reflection whether there is a need for more co - ordination and synergy between our policy dialogues with the imf and the commission ; how the commission β s fiscal surveillance ( through economic and fiscal programmes, pre - accession economic programmes, convergence programmes ) can be deepened and serve more as a commitment device ; how far there are lessons to learn about monetary anchors and prudential coordination mechanisms for the eu accession of our region ; and how we β including the external actors β can foster stronger domestic anchors in various forms, ranging from medium - term fiscal frameworks to more effective policy co - ordination mechanisms. finally, we will turn to the issue of capacity - building. this is a question on which we agreed, at this workshop, to already provide some operational input to the cef as it develops its work programme in this area. there is a long lead - time in the effectiveness of capacitybuilding, although fortunately the cef had already taken the initiative a few years ago to ramp | has benefited from a positive demographic position as a result of its young and vibrant labour force, but has suffered from continuous net migration towards more developed countries. while emigration has provided a steady flow of remittances and has eased labour market pressures, it has also drained the country of its highly skilled labour force. the latter might have long - term repercussions on innovation and can have implications on the so - far convergence progress realised. with that being said, let me now conclude. 3. towards a steady convergence path see countries are at risk of falling into β a middle income trap β. as such the economic systems need to be transformed, through carefully - designed and well - targeted policies that promote domestic innovation, modernise institutions, and cushion the effects of adverse demographics. it is clear that the load of reforms remains with the see countries authorities β themselves. a domestic ownership of reforms is of utmost importance for the democratic process and the ultimate success of convergence. however, while these policies need to be carried out regardless of external factors, eu integration has a fundamental importance on economic convergence dynamics. after the economic and financial crisis, appetite for further eu enlargement declined, due to waning popular support and shifting policy priorities towards reform. as the eu β s mood drifted away from enlargement and from further integration, countries relaxed their drive for reform. these developments coincided, or let me rather say, induced a stall in the convergence process in several see countries. as a final thought, the eu institutions themselves can facilitate this process further through : 2 / 3 bis central bankers'speeches providing transparent and objective eu integration guidelines ; emphasising the need of institutional convergence throughout this process ; continued monitoring and reporting on the progress of individual countries. on one hand, this will enhance the positive leverage of the eu integration process on the development of our countries and societies. on the other, it will increase the cost of noncompliance and possibly induce positive compliance competition amongst the countries in the region. thank you! 3 / 3 bis central bankers'speeches | 0.5 |
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