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central bank of barbados tom adams financial centre, spry street, bridgetown p. o. box 1016 telephone : ( 246 ) 436 - 6870 : fax. ( 246 ) 436 - 7836 e - mail address : info @ centralbank. org. bb website : www. centralbank. org. bb remarks by mr. cleviston haynes governor, central bank of barbados at β debt exchange β risks and opportunities : leveraging the jamaican experience β courtney blackman grande salle thursday, november 15, 2018 on behalf of the management and staff of the central bank, i welcome everyone to this workshop, which is geared towards sharing insights on the functioning of the money and capital markets in the aftermath of the restructuring of barbados β domestic debt. i take this opportunity to thank ncb capital markets barbados limited for its willingness to share with us their experience and knowledge gained from the jamaica debt restructuring exercise in 2013. on june 1, 2018, the newly - elected administration announced the unprecedented decision that barbados had decided to suspend the servicing of commercial foreign debt payments and restructure both domestic and external debt. the purpose was to limit foreign reserves outflows, while securing meaningful and gradual debt reduction, thereby reducing financing needs and restoring debt sustainability. the subsequent launch of a comprehensive domestic debt restructuring exercise on september 7 2018, as a critical component of the barbados economic recovery transformation ( bert ) programme, achieved near unanimous acceptance of the debt exchange proposals, with 97 % participation by creditors. the terms of the new instruments involve some sacrifice by all bondholders, as government seeks to balance the fiscal imperatives, including anchoring the bert programme through a reduction in the debt - to - gdp ratio to 60 % by 2033, against the need to preserve financial stability and protect the long - term interests of small bondholders. the restructuring comes in the intermediate aftermath of the adoption of the new accounting standard ifrs9. this will have implications for how financial institutions, regulators and auditors assess balance sheets going forward. from a capital market perspective, the fundamental question is how will the domestic capital market behave? will activity decline and, if so, for how long? will investors be predisposed to some instruments over others? these questions are relevant given the size and comprehensive nature of the restructuring and the limited availability of alternative investment instruments. at the same time, new instruments and institutional arrangements are likely to influence the functioning of the market. the new debt instruments are markedly different from those that existed before | rapid changes in behavior, which implies monetary policy lags will be shorter when changes to the policy rate are large and rapid. as a second example, consider the frequency at which firms change their prices. data show that firms typically adjust their prices once a year, which is usually interpreted to mean that prices are β sticky. β however, recent evidence shows that because of the big inflation shock that occurred over the past two years, prices have changed more frequently as firms tried to keep their relative prices in line with rapidly changing market conditions. this fact has important implications for the phillips curve model that economists use to link unemployment and inflation. the shift in frequency of price setting will affect the slope ( the coefficient ), which indicates how sensitive inflation is to a change in unemployment. i addressed this issue in a speech earlier this year. 7 using historical data, where the frequency of price adjustment was about once a year, this had the effect of pinning down the slope of the phillips curve. the phillips curve was estimated to be very flat. see christopher j. waller ( 2023 ), β the unstable phillips curve, β speech delivered at macroeconomics and monetary policy, a conference sponsored by the federal reserve bank of san francisco, san francisco, calif., march 31, https : / / www. federalreserve. gov / newsevents / speech / waller20230331a. htm. - 9the implication is that unemployment has to increase a lot to bring inflation down by a small amount. but, with the more frequent price changes lately, the phillips curve has steepened. this steepening implies that monetary policy will affect inflation faster and with less effect on the unemployment rate than would occur if price changes were slower. so once again, the lags between changes in monetary policy and inflation should be shorter than historical experience tells us, and as is reflected in models. what is the implication of this economic research? the effects of policy tightening last year are feeding through to market interest rates faster than typically thought because of announcement effects, and on top of this we have had policy rate changes that have been more dramatic and faster than in the past which most likely has led to a more rapid adjustment in the behavior of households and firms. these two points suggest that the effects of the large policy changes that we undertook last year should hit economic activity and inflation much faster than is typically predicted. if one believes the bulk of the effects from last year β s tightening have passed through the | 0 |
based on the objectives of the facility. the current repo operations are conducted with only primary dealers and are designed to ensure a consistently ample supply of reserves to the banking system and support better interest rate control. as designed, these repos may have little effect on bank demand for reserves because the repo operations do not provide liquidity against hqla to a wide range of bank counterparties. a facility intended to affect reserve demand may therefore require different design features. - 13 exacerbating the issues i have discussed today. preliminary analysis suggests that changing those inputs to averages may be helpful. if we were to propose that change, it would not alter the stringency of the surcharge. as such, this option is something that we are actively considering. in summary, there are great benefits to safety and soundness and to financial stability for firms holding sufficient buffers of hqla to meet potential outflows in stress. i am not proposing any changes to this basic framework. what i am proposing is that we can potentially improve the efficiency of monetary policy implementation by improving the substitutability of reserves and treasury securities through adjusting our expectations for firms in stress - planning scenarios. there are a variety of approaches we could take, but i think the fed has a role to play. - 14 references bernanke, ben s. ( 2020 ). β the new tools of monetary policy, β presidential address to the american economic association, san diego, calif., january 4, https : / / www. brookings. edu / wpcontent / uploads / 2019 / 12 / bernanke _ assa _ lecture. pdf. board of governors of the federal reserve system ( 2019a ). β minutes of the federal open market committee, june 18 β 19, 2019, β press release, july 10, https : / / www. federalreserve. gov / newsevents / pressreleases / monetary20190710a. htm. β β β ( 2019b ). quarterly report on federal reserve balance sheet developments. washington : board of governors, november, https : / / www. federalreserve. gov / monetarypolicy / files / quarterly _ balance _ sheet _ deve lopments _ report _ 201911. pdf. β β β ( 2020 ). β minutes of the federal open market committee, december 10 β 11, 2019, β press release, january 3, https | daniel k tarullo : advancing macroprudential policy objectives speech by mr daniel k tarullo, member of the board of governors of the federal reserve system, at the office of financial research and financial stability oversight council β s 4th annual conference on β evaluating macroprudential tools : complementarities and conflicts β, arlington, virginia, 30 january 2015. * * * standing in front of this audience i feel secure in observing that we are all macroprudentialists now. the imperative of fashioning a regulatory regime that focuses on the financial system as a whole, and not just the well - being of individual firms, is now quite broadly accepted. indeed, the two entities co - sponsoring this conference were themselves created by the dodd - frank wall street reform and consumer protection act, which reoriented financial regulation toward safeguarding financial stability by containing systemic risk β an aim that may not define all of macroprudential policy, but surely rests at its center. but beneath the high - level consensus for a macroprudential orientation lies a broad range of substantive views, as well as a host of analytic and practical questions, which form the subject of this conference and many like it. experience with macroprudential policy measures in various countries is not extensive and may, in any case, have only limited applicability elsewhere because of differences in economic conditions, the relative importance of capital market and traditional bank intermediation, and many other factors. and there is sometimes a tendency to overlook the significance of institutional and legal considerations in fashioning and comparing macroprudential policies. if macroprudential policy is to be more than a catchphrase, policymakers must confront these considerations in specifying how a macroprudential perspective will inform financial regulation. today i would like to suggest some specific macroprudential objectives that i regard as both realistic and important to incorporate into a near - to medium - term policy agenda : first, continuing the task of ensuring that very large, complex financial institutions do not threaten financial stability ; second, developing policies to deal with leverage risks and susceptibility to runs in financial markets that are not fully contained within the universe of prudentially regulated firms ; and third, dealing with the vulnerabilities associated with the growing importance of central counterparties. before discussing these specifics, i will begin with some brief observations on macroprudential tools and, in particular, the special difficulties associated with time - varying macro | 0.5 |
stanley fischer : supervisory stress testing of large systemic financial institutions speech by mr stanley fischer, vice chair of the board of governors of the federal reserve system, at the sveriges riksbank macroprudential conference, stockholm, sweden, 24 june 2015. * * * it β s a pleasure to take part in the riksbank macroprudential conference and i thank the organizers for inviting me to participate in the conference, and particularly in this panel on stress testing. stress testing has become a cornerstone of a new approach to regulation and supervision of the largest financial institutions in the united states. the federal reserve β s first supervisory stress test was the supervisory capital assessment program, known as the scap. conducted in 2009 during the depths of the financial crisis, the scap marked the first time the u. s. bank regulatory agencies had conducted a supervisory stress test simultaneously across the largest banking firms. the results clearly demonstrated the value of simultaneous, forward - looking supervisory assessments of capital adequacy under stressed conditions. the scap was also a key contributor to the relatively rapid restoration of the financial health of the u. s. banking system. the fed β s approach to stress testing of the largest and most systemic financial institutions has evolved since the scap, but several key elements persist to this day. 1 these elements include, first, supervisory stress scenarios applicable to all firms ; second, defined consequences for firms deemed to be insufficiently capitalized ; and third, public disclosure of the results. the fed has subsequently conducted five stress test exercises that built on the success of scap, while making some important improvements to the stress test processes. the first key innovation was the development of supervisory models and processes that allow the fed to evaluate independently whether banks are sufficiently resilient to continue to lend to consumers and to businesses under adverse economic and financial conditions. this innovation took place over the course of several exercises and was made possible by the extensive collection of data from the banks. these data have allowed supervisors to build models that are more sensitive to stress scenarios and better define the riskiness of the firms β different businesses and exposures. the second innovation since the scap was the use of the supervisory stress test as a key input into the annual supervisory evaluation of capital adequacy at the largest bank holding companies. the crisis demonstrated the importance of forward - looking supervision that accounted for the possibility of negative outcomes. by focusing on forward - looking poststress capital ratios, stress testing provides an assessment | capital standard that implies the need for reasonable comparability across banks and across boundaries to ensure the competitive balance to which i referred earlier. nonetheless, looking beyond the current proposals, i believe that over time the regulatory capital functions we have hard - wired into basel ii, along with their embedded correlation assumptions, will give way to individual bank - developed models that are verifiable by supervisors. that development will probably be a central part of the evergreen process. but the time for individual bank models is not now, and i see no reason to hold up improving the regulatory capital regime until the state of the art permits that innovation. until then, i think we have developed a workable balance between flexibility and comparability. as the old saying goes, the perfect should not be the enemy of the good. level playing fields : treating comparable banks comparably basel ii, as i noted, tries to develop a standard so that banks β risk exposures can be treated comparably. such a standard is central to the required level playing field. but comparability requires not that all banks be treated the same but rather that comparable banks be treated comparably, raising practical issues of definition, of unintended consequences in competitive markets, and of unavoidable differences in national regimes. general issues. as you know, basel ii proposes three options from which banks in national jurisdictions may choose - the standardized, the foundation, and the advanced internal risk - based ( a - irb ) approaches. the increasing risk sensitivity of the three options has the potential for the application of different capital charges across banks for the same exposures and implies that banks with a more or less average mix of corporate and retail exposures may have reductions in their overall minimum regulatory capital requirements as they move across the three options. any differences in regulatory capital charges have the potential to distort both national competitive positions, an issue for domestic authorities, and international competition, an issue for both national authorities and the basel committee. in considering all of these issues, one must, of course, make a distinction among minimum regulatory capital based on regulatory rules ; economic capital based on the bank β s own assessment of risk and capital needs ; and actual capital held, which includes buffers above both the other capital measures for reasons varying from reduced cost of funding to counterparty demands and to desired contingency flexibility. minimum regulatory capital is the lowest of the three capital β requirements, β and thus the degree to which it may or may | 0.5 |
' ve concluded today : financial inclusion is both urgent and important. we are working together to make progress on this issue. and if we set out a good timetable we will get there. i have every confidence that together we will prevail. and to that end, i have one last piece of eisenhower wisdom for you : " neither a wise man nor a brave man lies down on the tracks of history to wait for the train of the future to run over him. " what i see here is a room full of wise and brave men and women, not passively waiting to be overrun, but actively wanting to jump on that train to shape that future. a future for all. especially the most vulnerable, an inclusive future! * * * | . but it is not so easy on a national level. there is an obvious need to collect more data on productivity in fiji. let me turn to development. how does one measure development? development can be defined as an improvement in the standard of living. how does one measure living standards? remember that only human beings enjoy a living standard and not corporations and government. every person β s living standards is of course different and that is capitalism for you. one crude way of gauging an average standard of living is to look at the country β s per capita income. how do we fare on this measurement? this chart shows fiji β s gdp per head and as you can see it has been growing very slowly and in some years it has been stagnant or even declined. the average growth rate since 1996 is only 1. 6 percent. how do we fare against other developing countries? this international comparison shows that in 1978 fiji β s gdp per capita was higher than mauritius but lower than trinidad and tobago. however, inside eight years, mauritius had smartly zipped passed fiji and continues and it is now nearly four times higher than us. the growth in gdp per capita for trinidad is also impressive. in the pacific, fiji had a gdp per capita higher than western samoa β s and most other countries in the region. at a national level, the country β s economic growth rate can be used as another indicator of development. looking at our economic performance, in this chart, fiji β s gdp growth since 1996 has generally been positive with the exception of 1997 and 2000. however, our average growth rate since 1996 is only 2. 4 percent. this next slide compares fiji β s growth rates with some selected countries. as you can see, fiji β s growth trend has generally been stable, although it fell below the growth rates of mauritius, samoa and trinidad & tobago in 2001. let me show you another indicator of development - the un β s human development index. the higher you are on this ladder the better. you will note that fiji was ranked at the 81st position of all the countries on the world in 2002. this is about half way against all countries in the world. we are doing better than the average of all the developing countries and some neighbours like png, vanuatu and the solomon islands. samoa is however higher than us. but we also have lost grounds under this ranking over the years. for instance, in 1996 we were ranked 66th so we have slid down 15 positions | 0 |
changes are a second structural shift to which banks need to adjust. recent reforms have increased capital and liquidity buffers ; the new resolution and liquidation regime requires a large volume of liabilities with high loss absorption capacity. furthermore, banks must also comply with additional requirements, such as those on anti - money laundering and consumer protection. the new markets in financial instrument directive ( mifid2 ) will enhance consumer protection, but at the same time it will increase the burden of compliance. the benefits of these regulatory changes are clear : banks are safer than in the past. at the same time, achieving pre - crisis profitability levels has become extremely challenging. indeed, an industry with much lower risk levels should entail lower returns and cost of equity. to face these challenges banks need to take firm action to reduce costs and achieve efficiency gains. 18 massive investments in information technologies and in human capital are necessary. progress is ongoing on this front. 19 against this background, a key avenue to improve efficiency and profitability is bank consolidation. indeed, some of the factors of change are having an impact on scale economies and the optimal bank size. setting up the technological infrastructure needed to do banking business today requires conspicuous investment ; in the face of negligible marginal costs, this is a factor increasing scale economies. fixed compliance costs have also risen considerably in recent years, due to stricter and more pervasive regulation. in countries where a widespread adoption of new technologies has been coupled with large it investments by banks, intermediaries tend to exhibit a higher roe than elsewhere, sustained by a low cost - income ratio. italian banks are reducing their branch network and are increasingly relying on digital resources. the number of branches at the end of 2017 was 20 per cent lower than in 2008. ambitious programs of staff reduction and internal restructuring have been announced ( and in many cases are being implemented ) by all the largest banking groups. past experience suggests that mergers and acquisitions, if properly designed and based on sound industrial projects, can yield material efficiency gains. 20 many italian banks can obtain remarkable benefits from consolidation. they must explore this possibility in order to obtain the efficiency gains, the technological skills, the product and geographical diversification that are necessary to compete successfully in the domestic and international market and to finance the real economy. 3. 3 firms β financial structure the last issue i wish to address is firms β financial structure. the regulatory changes introduced in the aftermath of the global financial crisis are inducing banks in many countries to deleverage | . this brings me to another risk that needs to be addressed : greenwashing. this requires a detailed and shared definition of global and european standards, which we are focusing on and working towards. public debt as i mentioned earlier, italian households entrust a not insignificant share of their wealth to the state by buying public debt securities. like any good debtor, a sovereign issuer also has a duty to make good use of this money and to return it as and when agreed. however, unlike private borrowers, a government must not only repay its loans. the protection and efficient use of consumer savings require economic policies that ensure balanced financial conditions, smooth out cyclical fluctuations in the economy and improve its growth potential. for highly indebted countries, reducing the debt - to - gdp ratio is a priority : excessive debt relative to growth potential reduces the scope for countercyclical policies, exposes the economy to market stress and raises costs for the government, and ultimately for households and firms. in 2022, the debt - to - gdp ratio in italy was 141. 7 per cent, the highest in the european union after greece, although we cannot overlook the significant reduction following a sharp increase during the pandemic : almost 15 of the more than 20 points of increase recorded in 2020 β over half of which due to the mechanical effect of the denominator β will have been absorbed by the end of 2023. however, the government only expects a marginal decline over the next three years, with debt projected to amount to just under 140 per cent of gdp in 2026. subsequently, if no action is taken, the ratio risks increasing. looking ahead, the average cost of debt is set to return to higher levels than the economy β s nominal growth rate and the impact of population ageing on social spending will become more significant. in the 20 years preceding the pandemic, the gap between the average cost of debt and the growth rate was constantly unfavourable, averaging almost two percentage points. the deep recession that hit italy in 2020 led to it reaching a value close to ten points. on the other hand, the subsequent two years saw exceptionally favourable values for this indicator, as a result of the post - pandemic recovery and, in part, of the strong growth in the gdp deflator : nominal gdp growth was on average more than five percentage points higher than the average cost of debt per year. according to the update to the economic and financial document published at the | 0.5 |
and inclusive. indeed, asean financial integration does not treat integration as a matter of liberalisation, but provides focus on stability and inclusion as its equally important pillars. the three pillars of financial integration, financial inclusion and financial stability ensure that the strength, resilience and inclusiveness of the benefits of regional integration in the financial sector are pursued and subsequently achieved. 17. a number of financial integration initiatives in the form of endorsed strategic action plans are put forward. these include the asean banking integration framework, the safeguard measures of capital flows, and the build - up of financial inclusion infrastructure. a more recent initiative on local currency settlement is another clear contribution from central banks to advance inter - asean trade and investment. 18. under the asean + 3 financial cooperation, asean has reached significant progress in strengthening the regional self - help mechanism, especially compared to the time of asian financial crisis. the continuously improved chiang mai initiative multilateralisation as a reginal financial safety net arrangement with the support of amro has made the region more ready to any risks, vulnerabilities and spillovers from the external sector. 19. moving forward, asean will consistently maintain and improve its framework as a unique economy group with strong visions. asean is ready to move to the next level, that is to become a highly integrated and cohesive economy ; a competitive, innovative and dynamic region ; with enhanced connectivity and sectoral cooperation ; as well as a resilient, inclusive, people - oriented and people - centered orientation ; and at the same time being truly a global player. [ key takeaways ] distinguished guests, ladies, and gentlemen, 20. global economy has been far more integrated than 20 years ago, and yet the challenges are also increasingly multifaceted. although in the near term the outlook is promising, some downside risks remain, requiring us to live with prudence. protectionism and anti - multilateralism are taking shape, but i believe that asean have enough experiences since the 199798 crisis to stay strong and vigilant. 21. first, asean is an agile and adaptive region and it has entered once again into a group of emerging market economies with strong macroeconomic performance, good policy formulation as well as high external confidence. in this regard, central banks are playing a crucial role in managing the stability of the economy by facilitating the recovery from the crisis, ensuring price and financial stability along the way, and preparing for the rainy days with multiple layers of defence and solid track - record of policy making | 3. 6 macroeconomic conditions and external shocks, still demands vigilance in order to maintain the resilience of the banking system. these risks include credit risk with continued loan at risk ( lar ) in several economic sectors, such as construction and accommodation, due to the scarring effect of the covid - 19 pandemic, liquidity risk due to faster credit growth than deposits, as well as market risk due to the rupiah depreciation and rising sbn yields. meanwhile, bank indonesia β s simulations confirmed that bank resilience has been maintained. this is also in line with the results of the systemic risk survey conducted by bank indonesia based on a sample of 120 respondents from financial institutions, corporations, economist, and academics in october 2022, showing that most respondents confident and strongly confident that financial system stability would be maintained up to or beyond the next 6 ( six ) months ( graph 10. b ). 66. 9 68. 0 up until 6 months ahead 29. 8 27. 2 22. 5 3. 3 strongly conο¬dent conο¬dent index 73. 3 76. 0 4. 8 2. 5 unsure 0. 0 0. 0 1. 7 very unsure 72. 0 71. 7 over the next 6 months 21. 5 22. 4 25. 8 2. 5 strongly conο¬dent semester ii 2021 conο¬dent 5. 6 1. 7 unsure semester i 2022 0. 0 0. 0 0. 8 very unsure semester ii 2022 source : bank indonesia expansion and convenience of the digital payment system and accelerating digital banking. the value of electronic money transactions is projected to increase by 32. 2 % ( yoy ) in 2022 to reach rp404 trillion before increasing another 25. 7 % to a value of rp508 trillion in 2023 ( table 6 ). in addition, the value of digital banking transactions is projected to increase by 30. 2 % ( yoy ) in 2022 to reach rp53, 144 trillion, before gaining another 27. 2 % in 2023 to reach rp67, 600 trillion. the acceleration of payment system digitalization also prompted strong e - commerce transactions growth, which are estimated to increase by 21. 9 % to reach rp489 trillion in 2022 and then increase by 17. 0 % to rp572 trillion in 2023. to support payment system acceleration and innovation, bank indonesia cooperation in terms of cross - border payment systems | 0.5 |
athanasios orphanides : the role of central banks β lessons from the crisis panel remarks by mr athanasios orphanides, governor of the central bank of cyprus, at the vith international symposium of the banque de france on β which regulation for global imbalances? β, paris, 4 march 2011. * * * the topic of this session is lessons from the crisis, specifically regarding the role of central banks. let me start with a question : how do we learn in our profession? the answer, i believe, is that our main guide is history. indeed, one of the many differences between central banking and the natural sciences is that in central banking, unlike the natural sciences, we cannot run controlled experiments to improve our knowledge. as a result of the crisis, we are experiencing a unique natural experiment to draw lessons from. i fully expect this episode, which unfortunately is still mutating and evolving in some areas, to provide material for myriads of phd theses and other studies for decades to come. what do we mean by β lessons β for the role of central banks? lessons in the sense of learning things we did not know? or in the sense of reaffirming things we knew? in my view, we have some of each but, in addition, we have seen an evolution in the consensus views on familiar questions. let me focus on just a few1. * * * the crisis has reaffirmed the benefits of an independent central bank focused on maintaining price stability and safeguarding well - anchored inflation expectations in line with price stability. the focus on price stability yields gains in credibility and allows central bank flexibility as well as the ability to act decisively when needed on other issues. as an example, let me remind you of the decisive provision of liquidity in august 2007 and later in september 2008. another example is the decisive policy easing in response to the crisis. the risks of deflation were greatly reduced because inflation expectations over the medium term remained wellanchored, in line with our definition of price stability2. the new spike in energy prices, that reminds us of the spectre of stagflation risks, once again reaffirms how important it is to act decisively to ensure that inflation expectations remain well - anchored to preserve stability. * * * another lesson reaffirmed is that monetary policy is not just about setting policy rates. even though the academic consensus was converging to this view before the crisis, | the existence of spare capacities in the economy even during 2011 suggests that the albanian economy will continue to operate below its potential, generating weak inflationary pressures by the internal demand. on the supply side, increasing productivity during 2010 q4 and a slower rise in unit labour cost, generate lower inflationary pressures from the labour factor. inflationary pressures over the level of domestic prices, which come as a result of fluctuations in the prices of oil and food items in international conjunctures, are estimated to be present during the current year, but with a continuous downward trend. due to the aggravated geo - political situation in the world, the uncertainty that surrounds these expectations remains high. the absorbing capacity of the domestic economy to these shocks and avoidance of steady pressures on inflation will be a function of the albanian economy performance and the control of agents β inflationary expectations. monetary indicators performance has reflected a slowdown of the money supply over the first two months of the current year, confirming contained monetary inflation pressures. the m3 aggregate marked an annual average increase by 11. 2 %. the currency component of the money supply provided a downward contribution to the broad money expansion ; however, the use of foreign currency at high levels in the banking system and the economy remains one of the weaknesses of the albanian economy. as an expression of its interest in addressing this issue, in today β s meeting, the supervisory council of the bank of albania decided to waive the remuneration of the mandatory foreign reserve. this measure will encourage commercial banks effectively to reduce their funds collection costs and will favour intermediation in the national currency. the level of the demand for money by private and bis central bankers β speeches public economic agents has increased. our assessments indicate that monetary expansion is in conformity with the private sector demand for real money. the performance of loans to the private sector has been in line with its seasonal behaviour at this period of the year, increasing on average by 10. 1 % in annual terms. although insofar credit developments have been slow, there are encouraging signs for a better performance of lending in the future. private sector β s demand for loans, whose low levels have been a primary obstacle for the revitalisation of lending, increased during the first quarter of the year and is expected to grow in the next quarter as well. the banking system enjoys good health and liquidity conditions for supporting a growing demand for loans, with even better lending conditions. the bank of albania supports the banks β initiative to clean up their balance | 0 |
stability by bringing demand into line with still - constrained supply. over the past year, we have raised the federal funds rate nearly 5 percentage points and have begun to reduce the size of our balance sheet. 1 / 5 bis - central bankers'speeches as a result, financial conditions have tightened significantly. borrowing costs have risen, equity prices have declined, and the dollar has appreciated on net. interest - sensitive sectors of the economy have slowed. residential investment subtracted nearly 1 percentage point from gross domestic product growth last year, as housing demand was curtailed by higher mortgage rates. business fixed investment held up last year but appears to have slowed more recently. manufacturing activity has slowed in response to tighter financing conditions, the stronger dollar, and some retracement of the pandemic - related shift from services to goods. as energy prices have moderated and supply disruptions have eased, inflation has started to abate. however, the process of returning inflation to 2 percent has a long way to go and is likely to be uneven and bumpy. indeed, the inflation picture is less favorable than it appeared earlier this year. part of the encouraging disinflation initially observed in the fourth quarter of last year was revised away, while inflation over the first two months of this year came in high. the inflation data show some persistence. the 3 -, 6 -, and 12 - month changes in february prices for the core pce index - excluding food and energy - are all around 4 - 1 / 2 to 5 percent. housing services inflation continues at a rapid monthly clip, contributing much more to inflation than it did before the pandemic. inflation in non - housing core services remains sticky at elevated levels. even core goods prices rose in january and february, after three months of declines, highlighting the uneven nature of the disinflationary process. even so, several factors are likely to contribute to disinflation. long - term inflation expectations remain well anchored, and shorter - term expectations have retraced much of last year's rise. 2 rent increases on new leases have slowed sharply over the past six months, which should begin to pull down measured housing - services inflation over the course of this year. moreover, significant supply of multifamily housing is coming online, which should take further pressure off the rental market. core goods inflation should continue converging toward its pre - pandemic trend of slightly negative numbers, as supply chains continue to heal and demand for goods | deregulation of key industries have removed bottlenecks and increased the competitive supply response of many economies, especially ours, and these developments have been influential in suppressing price increases. it would be an exaggeration to imply that, whenever a potential cost increase emerges on the horizon, a capital investment is available to quell it. yet the veritable explosion of spending on high - tech equipment and software, which 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 available to business planners. as our experience over the past century and more attests, such surges in prospective investment profitability carry with them consequences for interest rates, which ultimately are part of the process that balances saving and investment in a non - inflationary economy. in these circumstances, rising credit demand is almost always reflected in an increase in corporate borrowing costs and that has, indeed, been our recent experience, especially in longer - dated debt issues. real interest rates on corporate bonds have risen more than a percentage point in the past couple of years. home mortgage rates have risen comparably. the federal reserve has responded in a similar manner, by gradually raising the federal funds rate over the past year. certainly, to have done otherwise - to have held the federal funds rate at last year β s level even as credit demands and market interest rates rose - would have required an inappropriately inflationary expansion of liquidity. it is difficult to imagine product price levels remaining tame over the longer haul had there been such an expansion of liquidity. in the event, of course, inflation has remained largely contained. to be sure, the tripling of crude oil prices has left its mark on β headline β inflation rates and inflicted considerable pain on some sectors of our economy. however, there is little evidence, at least to date, to suggest that oil price increases have started to embed themselves more broadly in the underlying cost structure of american business - that is, beyond the direct effects of the higher energy costs themselves. nevertheless, despite the very recent declines in the price of oil, there are risks here that need to be monitored closely. given the persistent strength of private credit demands, market interest rates would have risen even more were it not for the emergence of a sizable unified budget surplus following a long period of chronic deficits. more recently, the administration and the congress have wisely chosen to wall off the surplus in the social security | 0.5 |
negative productivity growth, high wage growth kept unit labour cost growth elevated, though profit margins are absorbing part of their impact on inflation. the disinflation process is expected to continue, especially once a recovery in productivity growth starts reinforcing downward pressure on labour cost growth. inflation is expected to decline to 2. 3 % in 2024 and reach 2. 0 % around mid - 2025. risks to the inflation outlook are two - sided. upside risks include heightened geopolitical tensions, as well as higher wage growth and more resilient profit margins than anticipated. downside risks include monetary policy dampening demand more than expected, and an unexpected deterioration in the economic environment in the rest of the world. financial stability, euro area banking sector and non - bank financial intermediation 2 / 4 bis - central bankers'speeches the euro area financial system has remained strong, aided by declining inflation. nonfinancial corporations and households have shown resilience and are poised to gain from a forthcoming easing of financing conditions. the outlook remains fragile, however, marked by elevated vulnerabilities stemming from weakening growth prospects, still tight financial conditions and the materialisation of geopolitical risks. as higher financing costs, a move towards hybrid working practices as well as environmental, social and governance requirements are likely to continue posing cyclical and structural challenges, we are closely monitoring developments in euro area real estate markets. euro area banking sector profitability reached its highest level since the global financial crisis but is likely to have peaked, as net interest margins started to decline in the last quarter of 2023. banks are maintaining sizeable liquidity and capital buffers despite considerable reductions in central bank funding and substantial shareholder payouts. specifically, significant banks reported an average liquidity coverage ratio of around 164 % and an aggregate common equity tier 1 ratio of 15. 7 % at the end of 2023. nonperforming loan ratios remain close to historically low levels, although mild signs of deterioration are visible in loans to small and medium - sized enterprises and to the commercial real estate sector. banks'exposures to commercial real estate are contained, at around 5 % of their total assets. the euro area banking sector has proven resilient to tensions in other parts of the world so far, and confidence in it has been supported by strong rules and supervision. looking ahead, it is crucial that all jurisdictions finalise their implementation of basel iii. risks in the non - bank financial intermediation ( nbf | ##i ) sector remain elevated, despite some portfolio rebalancing towards higher - quality assets. the sector is vulnerable to asset price corrections, macroeconomic uncertainty and market volatility. these factors could contribute to rising outflows from open - ended investment funds, which can exhibit significant mismatches between asset liquidity and redemption terms, or to potential margin calls for investment funds, insurance companies and pension funds. additionally, parts of the nbfi sector also display significant financial and synthetic leverage, which can propagate liquidity shocks to the wider financial system and amplify stress. recent market episodes including the turmoil in march 2020, commodity market tension in 2022 and uk government bond market stress in september 2022 underline the need for international coordination to strengthen the nbfi policy framework, also from a macroprudential perspective. international cooperation we welcome the imf's continued support for ukraine, in particular its recent approval of the third review of the extended fund facility arrangement, marked by ukraine's strong performance under very challenging conditions. timely disbursement of external support by all donors will be critical for the future of ukraine's programme. we also welcome the conclusion of the 16th general review of quotas in december 2023, which strengthens the quota - based nature of the imf at the centre of the global financial safety net. the priority now is to implement the review by mid - november 2024. we look forward to the upcoming evaluation by the fund's independent evaluation office on the evolving application of the imf's mandate. focusing on the imf's mandate and its cooperation with the world bank will be important, also in their implementation of the resilience and stability trust. 3 / 4 bis - central bankers'speeches geopolitical tensions are increasingly giving rise to economic and financial fragmentation and pose a significant risk to global prosperity. a world divided along geopolitical lines would be more prone to adverse supply shocks and reduced trade, possibly leading to higher inflation and lower welfare. we also see a greater deployment of trade - restrictive measures targeted at sectors considered strategically important for technological progress and the green transition. however, legitimate concerns about security and supply chain resilience should not lead to a spiral of protectionism. if we are to preserve the unparalleled achievements in global growth and poverty reduction made in the past decades, multilateral cooperation is more important than ever. the cop28 global stocktake has clearly shown that the world | 1 |
geoff bascand : brighter money β enhancing innovation and embracing heritage speech by mr geoff bascand, deputy governor and head of operations of the reserve bank of new zealand, at the launch of brighter money, wellington, 20 november 2014. * * * seeing people β s initial reactions to the new banknote designs is a heartening reminder of what an important role currency plays in our lives, and what a sense of pride and heritage our notes evoke. three years ago, when we launched the project to upgrade new zealand β s banknotes, we decided to retain representation of well - known new zealanders and flora and fauna on our notes. our research showed that new zealanders were satisfied with the themes of the existing notes and the denominations available. looking at the designs in print, we β re very proud of the way new zealand β s rich cultural diversity, world - class achievements and unique heritage have been brought to life as part of the new designs. from our world famous mountaineer and explorer sir edmund hillary, through to our nobel prize winning scientist lord rutherford, the stories that we β ve celebrated as new zealanders will continue to live on through future generations. some new ones may even emerge as the sharper and more colourful pictures on the notes bring flora, fauna, landscapes and history alive. but our brighter money doesn β t just celebrate innovation and the pioneering new zealand spirit through the images depicted on the banknotes β the notes themselves are at the forefront of banknote technology. it β s been 15 years since the current new zealand banknotes were last upgraded, and printing and design techniques have advanced significantly. in 1999, new zealand was one of the few countries to be printing banknotes on polymer β now, it β s increasingly common as central banks around the world work to produce durable, secure currency. security features have also advanced considerably in the last 15 years, and our new notes contain more sophisticated security elements that greatly enhance the overall design. the transparent windows are larger, and striking holographic features will help to make the notes very easy to verify, but hard to counterfeit. more details about these features will be made available closer to the time the notes are released. new zealand is very fortunate, in that we have low rates of counterfeiting by international standards. but since the last banknote upgrade in 1999, there have been significant advances in copying, scanning, and printing technologies and the cost of this technology has reduced. as a result, the economics of counter | and ourselves foresee that the official cash rate will not need to rise as far in this cycle as it did in the last one. there are a number of reasons for this, none of them individually definitive, but all pointing in the same direction : in brief the financial markets have already effectively tightened conditions as a result of more costly funding ; the new zealand private sector is reducing debt and cautious about new borrowing ; most borrowers are on shorter duration mortgages and the steeper yield curve does not much encourage lengthening this ; increasing policy rates in the shadow of australia should be easier than being a world leader ; and, finally, we believe there may be alternative ways of influencing over - exuberant bank lending through macrofinancial policies. our economic recovery is out of its first stage of intense fragility, and into a new phase of rebalancing growth. but a final caution : recovery so far has been full of surprises. there will be more to come! | 0.5 |
economy over the next decade could generate enough saving and investment to make that increased future workforce productivity feasible. slower growth and repeated recessions could make the burden of an aging population far heavier and policy choices more contentious. what policies are needed? these three challenges to the american economy simply reinforce the need to keep the economy on the highest sustainable growth track attainable and to keep recessions as shallow and infrequent as possible. the biggest problem for monetary policy at the moment is that no one knows what growth rate is sustainable. it may be true that the structure of the economy has changed in ways that make a higher growth rate sustainable without inflation than we thought possible a few years ago - - or it may not be true. the question turns on whether productivity growth has shifted up out of the doldrums of the last couple of decades. it's possible that it has, but by no means certain. this leaves monetary policymakers with the difficult job of watching all the signs, weighing the risks and making a new judgment call every few weeks. at the moment, there seems to be little risk of the economy slowing down too much in the near term and sliding into recession. growth has already slowed from its clearly unsustainable pace in the first quarter, but all the current signs point to continued economic expansion for the rest of this year and into the next. the risks seem higher on the other side - - that many of the factors holding down inflationary pressures will prove temporary, that the rebound of productivity necessary for higher sustainable growth will not occur or not prove robust and durable. the federal open market committee has to weigh the risk of slowing the economy unnecessarily against the risk of waiting too long and having to put the brakes on harder later. waiting longer may increase the possibility of overheating followed by recession. it's a tough call. i can't promise we will make the right decisions, but i can promise we will try. it is important not to overestimate the role of monetary policy and the federal reserve. monetary policy can help keep the economy from falling off the sustainable growth track in either direction - - either by overheating and generating enough inflation to unbalance the economy and threaten growth or by chugging along too slowly with excessive unemployment. but monetary policy cannot do much to determine how high the sustainable growth rate is. how fast the economy can grow is determined by how rapidly the employed labor force is increasing and how fast the productivity of | closely with the government accountability office ( gao ), the office of the special inspector general for the troubled asset relief program, the congress, and privatesector auditors on a range of matters relating to these facilities. while the emergency credit and liquidity facilities were important tools for implementing monetary policy during the crisis, we understand that the unusual nature of those facilities creates a special obligation to assure the congress and the public of the integrity of their operation. accordingly, we would welcome a review by the gao of the federal reserve β s management of all facilities created under emergency authorities. 6 in particular, we would support legislation authorizing the gao to audit the operational integrity, collateral policies, use of third - party contractors, accounting, financial reporting, and internal controls of these special credit and liquidity facilities. the federal reserve will, of course, cooperate fully and actively in all reviews. we are also prepared to support legislation that would require the release of the identities of the firms that participated in each special facility after an appropriate delay. it is important that the release occur after a lag that is sufficiently long that investors will not view an institution β s use of one of the facilities as a possible indication of ongoing financial problems, thereby undermining market confidence in the institution or discouraging use of any future facility that might become necessary to protect the u. s. economy. an appropriate delay would also allow firms adequate time to inform investors through annual reports and other public documents of their use of federal reserve facilities. looking ahead, we will continue to work with the congress in identifying approaches for enhancing the federal reserve β s transparency that are consistent with our statutory objectives of fostering maximum employment and price stability. in particular, it is vital that the conduct of monetary policy continue to be insulated from short - term political pressures so that the fomc can make policy decisions in the longer - term economic interests of the american people. moreover, the confidentiality of discount window lending to individual depository institutions must be maintained so that the federal reserve continues to have effective ways to provide liquidity to depository institutions under circumstances where other received. a revised proposal will be reviewed by the federal reserve board, and test transactions could commence during the second quarter. see bernanke, " federal reserve β s exit strategy, " in note 2. last month the federal reserve said that it would welcome a full review by the gao of all aspects of the federal reserve β s involvement in the extension of credit to the american international | 0.5 |
region. besides the high foreign capital in the banking system, cross border effects have remained contained, mainly due to the simple framework of banking operations and strict banking regulations. last but not least, sound economic recovery also transmits positive spillovers to the financial sector developments. regarding the economic cycle upward movements, we should underline the strong fundamentals of the macedonian economy that have been obviously fighting off challenges from the trembling global environment as well as domestic political instability since the beginning of the previous year. the main reasons behind these economic performances were the structural changes in the economy in recent years, which supported export diversification and reduction of unemployment. improved country β s economic fundamentals are expected to continue providing support to the financial cycle picking up, although both domestic and external risks are still being present. regarding policy implementation, besides monetary policy measures, we have also used non - standard monetary policy measures that are still in place, and additionally in several occasions we have modified some of the prudential measures for further strengthening of financial stability. managing economic and financial cycle spillovers and putting them on the right track, go beyond monetary policy scope of operation and refer to the overall macroeconomic policy mix. additionally, international developments and regulation could also affect domestic cyclical movements. nowadays, we live in a world of ongoing recovery of the advanced economies from the long - lasting crisis, rising vulnerabilities of emerging economies, increasing and unpredictable volatility of the international financial markets and, on top of that, quite persisting geo - political risks. in this complex environment, we need to continue with internal policy coordination and international cooperation. therefore, we have been discussing here today quite comprehensive economic phenomena that require multiple angles of observation and profound analysis. although i believe that the research papers that are going to be presented today will shed light on some of the issues that i have mentioned, this will definitely be a challenge for the researchers in the period ahead, too. as policy makers, speaking today, many years after the onset of the global crisis, we can probably say that many policy challenges are already behind us, but still there are more to come. therefore, we need to keep on building our institutional capacity and research skills and i believe that today β s conference, as a continuation of our previous conferences, will additionally contribute to this goal, not only for us, but also for the participating central banks and other institutions. i look forward to yet another successful conference, interesting discussions and useful policy messages! thank you for the | pentti hakkarainen : the common banking supervision β what it is about? keynote speech by mr pentti hakkarainen, deputy governor of the bank of finland, at the nordic capital markets forum β s 2014 annual general meeting, helsinki, 13 may 2014. * * * accompanying slides ( pdf ) can be found on the bank of finland β s website. we had our own severe crises in early 1990s, but this time our financial sector has survived pretty well, keeping itself in a rather good shape. however, our financial markets are highly interconnected with international financial markets, and thus adverse effects were felt here as well. the crises have made it very clear at least that international, highly interconnected financial markets require a stronger institutional framework than what we have had in recent years. the authorities need proper tools to deal with ailing banks operating in integrated crossborder markets. the creation of these tools has taken major steps forward since. a mismatch all in all, the mismatch between the scope of international bank operations and the national supervisory framework made the situation extremely challenging. what to do? in principle, we can envisage three solutions. first of all, we could re - nationalize the financial markets. in such a solution, the single market would be lost. we would turn the clock back, lose benefits of integrated markets. second, we could just accept the risk of financial instability and periodically pay the price. or, finally, we could work to create a banking union, with better suited institutions and systems for single supervision and resolution. only the last one of these is acceptable. institutional arrangements for supervision and resolution need to match the integrated structures of banking business in the real world. let me emphasise that this is not an issues of the currency union but more of the integration and the single markets, i would like to recall ideas that stefan ingves raised in 2006 1. β i propose the establishment of a new pan - european body, a european organization for financial supervision ( eofs ). the idea is to create a separate agency to follow the major cross - border banking groups in europe β. β the eofs should only focus on the presently about 40 truly cross - border banking groups and not deal with the about eight thousand european banks with a predominately national character. β β the eofs should have three tasks : it should gather information about the banking groups and their activities in different countries. importantly, it should also create | 0 |
##cy requirements. see for instance kent c ( 2021 ), β small business finance in the pandemic β, speech at the australian finance industry association, sydney, 17 march. [ 21 ] see zaman and tanewski, n 4. [ 22 ] some of this compression likely reflects that since the tightening in monetary policy in 2022, rates on new loans for large firms increased by more than for small firms, as the three - month bbsw rate ( the reference for most business lending ) increased by more than the cash rate ( a key reference for small business loans ). [ 23 ] see connolly e and j bank ( 2018 ), β access to small business finance β, rba bulletin, september ; mccowage and nunn, n 19. blade disclaimer notice r e s e r v e b a n k o f au s t r a l i a | a return to the boom. many people say that we need more β confidence β in the economy among both households and businesses. we do, but it has to be the right sort of confidence. the kind of confidence based on nothing more than expectations of ever - increasing housing prices, with the associated willingness to continue increasing leverage, on the assumption that this is a sure way to wealth, would not be the right kind. unfortunately, we have been rather too prone to that misplaced optimism on occasion. you don β t have to be a believer in bubbles to think that a return to sizeable price increases and higher household gearing from still reasonably high current levels would be a risky approach. it would surely be a false basis for confidence. the intended effect of recent policy actions is certainly not to pump up speculative demand for assets. 6 as it happens, our judgement is that the risk of re - igniting a boom in borrowing and prices is not very high, and this was a key consideration in decisions to lower interest rates over the past eight months. hence, i do not think we should set monetary policy to foster a renewed gearing up by households. we can help, at the margin, the process of borrowers getting their balance sheets into better shape. to the extent that softer demand conditions have resulted from as in 2009, the challenge is β how to ensure that the ready availability and low cost of housing finance is translated into more dwellings, not just higher prices β. see stevens, g, β challenges for economic policy β, address to the anika foundation luncheon, sydney, 28 july 2009. bis central bankers β speeches households or some businesses restraining spending in an effort to get debt down, and this leads to lower inflation, our inflation targeting framework tells us to ease monetary policy. that is what we have been doing. the reduction in interest rates over the past eight months or so β 125 basis points on the cash rate and something less than that, but still quite a significant fall, in the structure of intermediaries β lending rates β will speed up, at the margin, the process of deleveraging for those who need or want to undertake it. in saying that, of course, we cannot neglect the interests of those who live off the return from their savings and who rightly expect us to preserve the real value of those savings. popular discussion of interest rates routinely ignores this element, focusing almost exclusively on the minority of the population β just over one - third β who | 0.5 |
% compared with the previous quarter. these developments broadly confirm the pattern observed earlier in industrial confidence, which was on a declining trend in the second half of 1998. the latest data on industrial confidence in the euro area, i. e. those released by the european commission today, indicate that industrial confidence has weakened further. some recent wage developments in the euro area might have contributed to that. the level of unemployment has remained more or less unchanged over the past four months. finally, consumer confidence in the euro area has remained unchanged from the high levels seen at the beginning of the year. with regard to capacity utilisation in the manufacturing sector, which fell further in the fourth quarter of 1998, and retail sales, which up to november 1998 pointed towards broadly sustained growth, no new data are yet available. overall, with regard to the cyclical situation, recent data confirm our earlier expectations that there are still downside risks for output growth. the governing council will continue its thorough analysis and very close monitoring of underlying trends and review its broad outlook for the euro area accordingly on an ongoing basis, taking into account in a forward - looking manner the impact of both domestic and external developments. with regard to the latest data on the harmonised index of consumer prices ( hicp ), the annual increase for january 1999 was 0. 8 %, which is unchanged compared with the previous two months ( taking account of the most recent revisions ). looking at a breakdown of the hicp, a slight decline in the rate of increase in service prices ( from 1. 9 % in december 1998 to 1. 8 % in january 1999 ) was offset by a slight increase in goods prices ( from 0. 1 % to 0. 2 % ). the fall in the rate of change in services prices was mainly due to lower price increases for transport and communications ; this may have been a reflection of increased competition in these sectors. on the other hand, downward pressure from energy prices on goods prices diminished somewhat. on balance, the current data continue to suggest that there are no significant upward or downward pressures on prices in the short term. the pattern of risks to price stability has also remained broadly unchanged on balance. on the upward side, wage developments are a matter of concern, as would be any loosening of fiscal policies and the implications of this for achieving the objectives laid down in the stability and growth pact. in addition, recent exchange rate trends need to be monitored closely also in terms of their impact on prices. concerning downward risks | governed by the european market infrastructure regulation ( emir ), entered into force at the beginning of the year, and from 1 march 2017, all in - scope counterparties are obliged to post variation margins with a phased - in implementation for initial margins from 1 september 2017 through to 1 september 2020. collateralising financial transactions that weren β t collateralised before will naturally create additional demand for safe and liquid government bonds. central counterparty ( ccp ) data, for example, suggest that a significant share of assets pledged as collateral for meeting initial margins consists of government bonds. however, as yields on bonds have fallen relative to the remuneration on cash, more cash is used for initial margins than used to be the case. this elasticity of bond collateral is important to bear in mind when trying to assess the impact of central clearing or bilateral margining of derivatives transactions on collateral demand. taken together, regulatory factors can to some extent explain why some investors seem relatively price - insensitive with regard to their demand for safe short - term government bonds. this can best be seen by those who do have an economic alternative : euro area banks with access to the deposit facility. recall that german three - month and six - month bills currently trade around β 1 %, well below the rate on the deposit facility. the fact that banks still hold sovereign bills strongly points to a non - pecuniary motive. flight to safety let me now turn to the second factor : flight to safety. i showed you earlier that it is typical for spreads between swaps and quasi - credit risk free sovereign bonds to widen on account of risk aversion. as for the summer 2011 case, one would normally expect such flight to quality to be temporary, with the spread eventually returning to its pre - crisis level after some time. so flight to quality would tend to amplify, at times, the more secular trends arising from regulation. this, however, is not what we have observed recently at the short end of the curve. for example, after the uk referendum on eu membership in june 2016, the two - year german sovereign bondois widened as investors sought safety in short - term german sovereign bonds or equivalent safe assets. by the way, swap rates also fell in this instance as markets expected the ecb to ease its monetary policy stance further. but while ois rates cheapened again as investors understood that policy rates would remain unchanged, german sovereign bond yields never really recovered from the brexit - induced fall. you | 0.5 |
rock β which did not prove to be resilient to some shocks arising from some distant markets that he is having a such tough time. what i want to say, is that your business model is your business and the business of your directors, your chief executive and your shareholders. it's up to you to ensure that you are profitable. β bank different β, yes, but bank prudent as well. β bank prudent, always! β is what i say. we, at the central bank, have put rules and guidelines in the interest of the wider jurisdiction. we have to protect the consumer, the borrower and the lender as well. we want to have an efficient financial sector that can be benchmarked internationally. we want a clean jurisdiction. we are too small a jurisdiction to be able to afford a crisis like northern rock. banking is about risks. you must take risks but you must be aware of the risks that you are taking. the central bank may not know the risks, but you as bankers know your clients. we look at systemic risk but the risks of your bank, the threats to your business model, that's your business. we intend to allow the market to operate fully, whether it's the interbank market or the foreign exchange market. may, i draw your attention to the fact that we have not been intervening on the foreign exchange market lately inspite of pressures to do so. our policy at the bank is to intervene only if we are faced with excessive volatility. we cannot go against economic fundamentals. we are certainly not averse to market - supporting interventions. but we have no other specific targets to achieve. may i conclude my remarks with the hope that afrasia bank will build on the competence of all its partners including loita capital partners, whom we welcome to our shores and to our financial jurisdiction. i hope that it will build on the long and rich history of groupe mon loisir, within this historic setting which served as head office for one of our old colonial trading houses. this building has a very special cachet and its own atmospherics and with it, afrasia bank acquires an instant history! may it serve it well. i wish afrasia bank the very best of success. thank you for your attention. | . β’ we continue to require that examiners rotate to another institution after three to five years. this tenure allows enough time to gain an understanding of a firm without sacrificing examiner independence. β’ we have taken concrete steps to encourage examiners to speak up, which we view as a core competency. for example, we evaluate examiners on their level of engagement with colleagues and their willingness to share insights. β’ we created programs to encourage peer recognition of good ideas, including funding for new supervision ideas proposed and voted on by supervisory staff. β’ we increased the opportunities for feedback to senior managers, including the head of supervision, in addition to other channels already provided by the new york fed. among other improvements, we conduct regular town halls and provide a standing, on - line forum as a device to funnel questions to group leaders. in both settings, questions and answers are offered in an open, transparent manner. β’ and we require examination teams to spend more time at new york fed headquarters and less time β in the field. β additional time at headquarters promotes cross - firm discussion and direct communication between senior managers and examiners. for example, we offer a seminar series at which group leaders discuss key issues in supervision with our supervision staff. each and together, these improvements to the substance and process of supervision contribute to financial stability by providing greater insight into bank resiliency and risk. but these enhancements are not self - executing. they depend on the hundreds of examiners who are dedicated professionals working in the public interest. our examiners fulfill their obligations with considerable care, mindful of the stakes to main street when something goes wrong on wall street. i am grateful for their efforts. iv. reasonable expectations before concluding, let me offer a broader view of what we at the federal reserve expect from prudential supervision. very briefly, i submit that supervision should be fair, conscientious, and effective. fair supervision means that the rules are applied consistently across the firms we supervise. we all need to know the rules and follow the same rule book. it also entails a commitment to independence from business or political influence, as envisioned by the federal reserve act one hundred years ago. conscientious supervision means we must be committed to sustained and, if necessary, radical self - improvement. the beim report is an example of our willingness to commission and accept self - critical analysis and our commitment to improve. but we cannot stop there. to this end, we will be working with | 0 |
focused on the role, composition and responsibilities of the board. more broadly, there has been equal emphasis on how we account to the wider public. both processes throw up a peculiar, and quite perplexing challenge : how to present our work and achievements in terms that are comprehensible and acceptable to the many non - specialists on our boards, and to the multitude of non - specialists among the general public. because of the business background of many board members, and because of the natural human desire for clarity and simplicity, this increasingly boils down to a quest for setting down specific, quantifiable targets by which our performance can be measured. this presents enormous difficulties, even in policy areas that might seem easily amenable to quantification. and the challenges become still more complex when performance is linked to pay. the same problems of clarity and simplicity arise in the operation of transparency, an issue closely linked to accountability, and something which has, i believe, suffused all of the discussions these last few days. there has been a shift in the approach to this subject in recent years, from a broad assumption of confidentiality, except where exceptions can be justified, to something approaching the opposite : transparency and openness in all things except where market or commercial sensitivity, personal privacy or the public interest require otherwise. this is a healthy development. but it is also something that has been forced on many of us by financial or political crisis - through the sudden and often painful realisation that our actions have been inadequately explained, misrepresented and misunderstood. central banks have been quick to learn from these episodes. communications strategies are now seen as a crucial part of central bank activity, and no just as icing on the cake. the emphasis now is increasingly on forging links, building bridges and storing up political capital and public goodwill that will help us deal better with the next crisis. similar observations might be made on the subject of the effectiveness of central banks - surely the result that we all strive for. radical changes in our functions, progress in technology, and the process of accountability have all dictated cuts in staffing and resources, and various forms of streamlining and re - engineering. much of this can be healthy and refreshing. but we should also be mindful of the need for flexibility, for some reserve capacity to deal with sudden and unexpected events. this is why the increasing focus on strategic planning and risk management, reflected in your discussions this week, is welcome. there is | , of course, much still to be done on these subjects. i understand that the discussions over the past few days have been lively and, at times, quite passionate. there is, i think, one main reason for this - and it is the same reason why this meeting has attracted such an excellent attendance. central bank governance is a field in which great change is taking place. a number of drivers are forcing this change. they include the quest for efficiency and greater effectiveness ; the lessons learned from crises ; political pressure - and its converse political opportunity ; and what has from time to time been referred to as β fashion β but which i think can be more generously described as best practice. we have heard many times these last few days the familiar disclaimer that there is no β one model that fits all β. many of you have stressed the uniqueness of your governance arrangements only to be reminded subsequently that these are arrangements familiar to one, two or even several other central banks. the modesty and diffidence with which experiences have been described is, of course, to be expected among central bankers. but there is, i think, a very pleasing mismatch between this and the enthusiasm with which all of us have been drinking up information about each other. this demonstrates that the bis network is far more than an academic exercise. it also reflects an important truth : that, although our economic and political environments may differ widely, although we may pursue different policies and follow different legal structures, we all face a number of constants. finance, money and banking behave in very similar ways no matter where we find ourselves, the more so with globalisation and liberalisation of markets. politicians and the media the world over have the same qualities and the same vices. and so for that matter do central bankers. the human factor, which is at the root of all of our discussion on governance, is universal. for this reason, while we must continue to work on the principle that β no single model fits all β, there is much that we can learn from each other, and this process of fruitful exchange will, i am sure, continue long into the future. i congratulate all of you on the excellent discussions you have had, and the bis for organising such a productive meeting. and i wish you all a very pleasant time in your well - earned relaxation this afternoon. | 1 |
##arty collateral management services, as many of you well know, allow institutions to manage their assets via a triparty agent and are ultimately targeted towards optimising the use of clients β assets. with the incorporation of these services into the eurosystem framework on a cross - border basis, they will become operationally accessible to all eurosystem counterparties, regardless of the location of the counterparty or the respective triparty service. this has raised a set of issues, primarily related to legal implementation, which also needed to be addressed. once live, this enhancement will offer eurosystem counterparties the ability to manage their overall collateral holdings in a more flexible and efficient manner and to flexibly switch their collateral between central bank refinancing and interbank market financing. central banks of course have not been alone in taking initiatives over the last few years. on the market, we have seen huge progress in the range and sophistication of services on offer to clients. a new report from basel covers developments in collateral management services see, for example, β velocity of pledged collateral : analysis and implications β, working paper no 11 / 256, imf, november 2011. bis central bankers β speeches across g20 countries and takes stock of the existing and upcoming services in this field. 2 the many benefits gained from the innovation of service providers and the collaboration among them can be welcomed by central banks, as they allow for better information on collateral, better access to collateral and better mobility of available securities. indeed, it is doubtful whether market participants would cope with temporary shortages of collateral arising from the regulatory reforms without the innovation that helps in the distribution of collateral. on the other hand, the increased sophistication of such services also implies increased complexity, increased operational and legal risks and, most notably, increased interdependencies stemming from new linkages between service - providing firms. a shortage of collateral or an inability to transfer collateral promptly can in some cases be an early indicator of liquidity problems or an even deeper set of issues. close cooperation with competent supervisory and oversight authorities is therefore warranted, as the legal heterogeneity still impedes a fully functioning internal market. conclusion let me conclude. as i mentioned at the outset, we have already observed a significant change in the collateral landscape over the last few years and it is a landscape that is continuing to evolve. in particular, key regulatory reforms have yet to make a real impact in the market and innovation in post - trade arrangements | will be further pursued by the public and private sectors alike. although the overall global supply of high - quality assets appears substantial, existing regional imbalances mean that we cannot become complacent. we must also continue to be vigilant regarding issues affecting availability and mobility, and take actions that address the factors that hamper the fluid transfer of assets, without mistaking liquidity and solvency issues for market inefficiencies. in europe, the t2s project has made significant progress and, when implemented, it will be a significant step forward. t2s allows for more efficient cross - border collateral flows so that collateral in one country will be easily accessible in other countries. this also offers possibilities for establishing linkages between t2s central securities depositories ( csds ) and those from other geographical areas, which could ultimately lead to the creation of a more global network for the mobilisation of collateral assets. this type of global reach will make it more attractive to connect to europe. in view of the planned discussion on bringing the right collateral to the right place at the right time, i will leave you with these suggestions for further reflection and i look forward to receiving feedback on your deliberations in due course. i would like to end by wishing you an enjoyable second day of the seminar, with lively and fruitful discussions and i look forward to further cooperation among central bankers on the topic of collateral in all its forms in the months and years ahead. see the cpmi report on collateral management services published on 8 september 2014. bis central bankers β speeches | 1 |
, concerned with systemic risk issues. β’ in the field of legal convergence, the strict implementation of eu treaty obligations, in particular those concerning the independent status of central banks, will be of fundamental importance. institutional, personal and financial independence are constitutive elements of central bank independence which are not an end in themselves but are instrumental in attaining functional independence. moreover, great importance should be attached to responsibility, accountability and transparency as a counterpart of independence. β’ as i already mentioned before, the euro has become the anchor or key reference currency in most accession countries. however, there is no general guideline for monetary policy strategies and exchange rate policies before eu accession. different regimes are feasible, as long as they support the nominal and real convergence process. upon accession to the european union, new member states shall treat their exchange rate policy as a matter of common interest. after accession, although not necessarily immediately, accession countries are expected to join erm ii. the key features of erm ii are that it has stable, but adjustable central rates to the euro for the participating currency, with fluctuation bands of + / - 15 % around the central rate, and that it uses a common procedure for major decisions regarding the conditions of ( voluntary ) participation in the mechanism. erm ii is flexible enough to accommodate the features of a number of existing exchange rate strategies. the clear incompatibilities with erm ii that can be identified already at this stage are the cases of free floating, crawling pegs and pegs against anchors other than the euro. β’ entry into the euro area will be based on fulfillment of the maastricht convergence criteria. the treaty establishing the european community requires strict and sustainable fulfillment of these criteria, which will be applied to future euro area entrants in the same way as they have been in the past. β’ the ongoing dialogue between the eurosystem and accession countriesΒ΄ central banks will be further expanded. in particular, the eurosystem - and, of course the oesterreichische nationalbank - stand ready to enhance its cooperation activities in all relevant areas, including economic and monetary policy analysis, payment systems, statistics, legal issues and other areas. ladies and gentlemen! let me conclude by saying that i welcome the conclusions of the european council meeting in nice stating that it is time to give new momentum to the enlargement process. the institutional reform work within the european union has now reached a stage which makes the union ready for enlargement, and | of national strategies that promote financial inclusion are critical to enhancing access to a diverse range of financial products to the unbanked in kenya, the mandate of the government to enhance the deepening of financial markets by fostering access, efficiency and stability is captured under kenya β s vision 2030. the central bank β s approach to achieving its role under vision 2030, is centered on the promotion of an enabling legal and regulatory framework that fosters the development of a diverse range of financial service providers, while guaranteeing its dual mandate of financial stability and financial integrity. central to this objective has been the licensing and regulation of microfinance banks. the first microfinance bank in kenya was licensed in may, 2009. this paved the way for 11 other microfinance banks which have been licenced to date. the 12 licenced microfinance banks have made a significant contribution to financial inclusion in kenya. this is evidenced by the number of active deposit and loan accounts as at december 2015 which was 931, 585 and 342, 481 respectively. in value terms, this represented bis central bankers β speeches ksh. 40. 5 billion in deposits and ksh. 46. 9 billion in advances. further, microfinance banks had a footprint of 109 branches and 1, 154 agents as at december 2015. while commendable achievements have been made in the past 6 years, the microfinance sector in kenya still has considerable opportunities and challenges that institutions need to tackle in order to realize their full potential. key amongst these challenges include the high cost of credit, inadequate products and services, and weak consumer protection frameworks. microfinance institutions must be willing to make a difference if the full benefits of microfinance and financial inclusion are to be realized. microfinance institutions must be prepared to employ innovative delivery channels to reduce their operational costs, and thereby enhance their reach and efficiency. an essential element in this process is recognizing the characteristics of the customers of these institutions and tailoring lending mechanisms to meet their situations. policymakers, on their part, should support the development of appropriate support infrastructure to facilitate the last mile delivery of suitable financial services. therefore, the development of proportionate, risk - based, regulations by policymakers is critical to guaranteeing the development of a dynamic, robust and sustainable microfinance framework for a country. the starting point towards this collaborative structure is a consultative process to developing a forward - looking framework for regulation and supervision of microfinance institutions. developing | 0 |
to prevent incidents of fraud in areas of mobile / net banking and electronic fund transfer. treating customers fairly, β tcf β, also must ensure that there is a clear specification of liability, if things go wrong. simplicity of the product sold must be ensured and there is a duty to inform the customer about the features of the product. mis - selling will invite consequences. banks must help customers fully understand the features, benefits, risks and costs of the financial products they buy, minimize sale of unsuitable products by encouraging best practice before, during and after the sale the sense of protection which consumers expect and experience while dealing with banks is the benchmark against which we need to evaluate our customer care and customer service policulture of customer - centricity and sensitivity to the needs of the customers especially those belonging to the vulnerable sections of the society. the market forces, competition, technology will continue to help banks achieve better penetration and extend their reach, but these attributes must also result in better, affordable and easy access to banks and banking. as dr. rajan puts it, we need a frugal model. we all need to enshrine basic rights for all financial services consumers by way of a charter of bank customers β rights. fslrc has expressed that all financial laws and regulations must protect the interests of the consumers. it recommends a framework for customer protection against mis - selling and defrauding through the fine print stealth banking etc. we must protect customers against unfair contract terms, unjust conduct and protection of personal information through fair disclosure and redress of consumer complaints by financial services providers. annual policy statement released on april 1, 2014 by dr rajan, governor rbi has clearly spelt out that consumer protection is an integral aspect of financial inclusion. the reserve bank proposes to frame comprehensive consumer protection regulations based on domestic experience and global best practices. the banks that have internalized the codes enunciated by the bcsbi may not have much difficulty in adapting to the new statutory framework. the statutory framework also comes with explicit rights, the customers enjoy and the implicit duties that are cast on the banker. the nachiket mor committee on comprehensive financial services for small businesses and low income households has pointed out and i quote β when the fact is considered that imbalances in information, expertise and power between the buyer and seller of financial products will only be exacerbated in the future then it becomes clear that, existing approaches to customer protection have severe limitations. the β | lesson from these episodes and do not wait for others to move first. the ecb β s actions reflect this learning. many observers expected that the eu environment of diffuse macroeconomic authority would lead to strategic paralysis. instead, the ecb has bis central bankers β speeches risen to its responsibility of ensuring control over inflation in the medium term, and has responded vigorously to any risks of inflation expectations becoming unanchored. as a result, our expanded asset purchase programme has had three tangible effects. it has prompted a reassessment of inflation prospects as priced in inflation protection contracts : the steady decline of breakeven and inflation swap forwards which occurred in the recent past have not only halted, but have reversed at all horizons. the implemented measures have also flattened the nominal term structure for safe as well as riskier fixed income securities at the longest maturities. and as a consequence of this, they have led to a drop in real rates across the entire spectrum of term contracts. v. the importance of other stakeholders nonetheless, it is clear that all stakeholders must also play their part in ensuring a swift and sustained recovery. the current environment where the real interest rate is below the real gdp growth rate is one that is, as i already intimated, very supportive and ripe for undertaking investment. but it is also not without risks. chart 4 contrasts estimates of the long - term real gdp growth rate with long - term real forward rates for the euro area. we see that since may last year the real forward curve has been declining consistently. it is now below a range of estimates for real potential growth rates and, in fact, below the zero line throughout the maturities. this chart admits two stylised interpretations. in the first interpretation, the movements of the forward real curve are just a mirror image of the compression in term premia achieved via our expanded asset purchase programme. the fact that the forward real curve has continued its descent observed since 2014 may be the result of the term premium compression, given the anticipation ( first ) and actual execution ( then ) of central bank purchases of securities held in price - inelastic portfolios. indeed, the term premium is part of the real remuneration that investors demand in order to hold on to their investments. in the second interpretation, long - term forward real rates are a measure of an equilibrium β norm β, rather than a reflection of a monetary - policy induced compression of term premia. another way to look at the outer maturities along the real forward | 0 |
- term net - zero goal with the european green deal as well as medium - term targets with its " fit for 55 " package. our second economy - wide climate stress test has recently shown that a delayed or late - push transition would negatively affect banks'credit risk, which would rise by more than 100 % by 2030 compared with 2022. in an accelerated transition, on the other hand, this increase would be 40 % lower. 4 / 4 bis - central bankers'speeches | ##ence of the financial system, we are still failing to measure the goal or define an operational target. moreover, there remains a need to clarify the range of available tools, calibrate the balance between rules and discretion, and clarify governance arrangements, both nationally and internationally, as well as the potential interaction with other policy areas. many believe that central banks are best equipped to do this job. in pursuing their goal of preserving price stability, central banks are attentive to the evolution of real and financial markets, they are familiar with the credit and banking channel and their institutional independence shields them from political interference. however, as central bankers we have to perform our tasks with the utmost responsibility. before adjusting the conceptual framework underpinning possible policy action, we need tested, robust analyses. in macroprudential policy we still lack this certainty that would allow for a macroprudential stance that is similar but different to monetary policy. we have no consensus on the definition and measurement of the objective. so how can we identify clear and well - defined policy goals linked to metrics and potential target levels? in the absence of a proper understanding of the transmission channels of different instruments and their potential interactions and spillovers, how can we credibly discharge our accountability requirements? 4 / 6 bis central bankers'speeches at this stage, the conceptual foundations lack the robustness to pursue a standalone or nonquantified objective with instruments that have unknown consequences based on assumptions and models full of unobservable factors and multidimensional equilibria. another open question in the european context addresses the level of governance and decisionmaking. since we cannot measure risk or define resilience, how are we to distribute competence between the national level and the currency area level, or even the eu as a whole? currently, country - specific features of financial cycles certainly exist due to national financial systems and institutional, legal and fiscal frameworks. financial booms and asset price bubbles indeed often occur within national borders, in spite of a union - wide single monetary policy stance. but is deeper integration and banking union not around the corner? at the national level, the institutional architectures are a patchwork, the use of instruments a β tower of babel β. i doubt that adding an additional european layer without a clear view of who is in charge with what instruments and for what objective will advance the issue. while modesty is advisable in the context of macroprudential ambitions, monetary policy has the | 0 |
stephen s poloz : riding the commodity cycle β resources and the canadian economy remarks by mr stephen s poloz, governor of the bank of canada, to calgary economic development, calgary, alberta, 21 september 2015. * * * i would like to thank bahattin buyuksahin, brigitte desroches, kun mo and konrad zmitrowicz for their help in preparing this speech. introduction this isn β t the first time that a governor of the bank of canada has come to calgary to talk about commodities. i suspect it won β t be the last. it β s an obvious discussion topic here in alberta, where resources make up more than a quarter of the economy. of course, such riches aren β t unique to alberta. natural resources have been a big economic story for this country since the time of european contact. today, canada is the only major exporter of natural resources among the g - 7 nations. oil is just one part of the story β we are also a major producer and exporter of coal and natural gas, base and precious metals, minerals such as potash, and agricultural and forest products. because canada has been endowed with such a wide variety of resources, we β ve had to learn how to deal with large swings in their prices. i don β t just mean the usual high degree of volatility common among many raw materials. i β m also referring to the long - term swings in prices that are often called β super cycles. β what β s important to remember is that these longterm swings are driven by the fundamental economic laws of supply and demand, as well as the continuous technological progress that can affect both output and consumption. the pattern is familiar. a large and persistent increase in demand leads to sustained upward pressure on resource prices over a number of years. the higher prices act as an incentive to boost supply, and companies act by, for example, investing in new capacity and finding methods to increase efficiency. while high prices can certainly spur research and development, technological progress has been a constant theme in natural resource industries. such advances uncover ways to raise output and lower production costs. and it β s because of this progress that inflation - adjusted commodity prices have generally been trending lower for 200 years. the investments that lead to increased output can take years, if not decades, to complete. but, over time, the higher output generated by those investments combines with stabilizing demand to bring about a period of downward pressure on prices | , and identify questions that will guide future work. it is important that we learn from our own actions, but it is also important to get other perspectives. therefore, this review will be assessed by external experts. we expect the final report to be published early next year. while this review is a significant step, it is not the final word. questions will continue to be asked that may shape if and how we use our exceptional tools in the future. these questions are particularly valuable in a world where the next crisis may look different from those in the past. conclusion to wrap up, the pandemic was a period defined by the unknowable. uncertainty was particularly high. so, the bank took a risk management approach to decision - making. we considered alternative futures and thought about the consequences of making policy errors. governing council then chose a policy course that accounted for those risks. our research into our use of exceptional tools during the pandemic suggests those policies helped lower longer - term interest rates by increasing monetary policy stimulus even after the policy rate was brought as low as possible. the unwinding of qe through qt has gone smoothly. however, it is worth remembering that we faced an unprecedented shock when we decided to use qe. the bar for us to use qe again is very high. - 11 last week, we cut the policy rate to 4. 75 %. if inflation continues to ease β and our confidence that inflation is headed sustainably to the 2 % target continues to increase β it is reasonable to expect further cuts. but we are taking our interest rate decisions one meeting at a time. it is comforting to see inflation come down. but it is alarming that it rose as much as it did. our focus now is on the lessons we can take from our pandemic experience and how those lessons will guide the future application of monetary policy. thank you for your time. i β m happy to take any questions. | 0.5 |
jean - claude trichet : economic diversity on both sides of the atlantic speech by mr jean - claude trichet, president of the european central bank, at the us sciences po foundation annual benefit, new york, 16 june 2011. * * * ladies and gentlemen, it is a great pleasure for me to speak to you here tonight. the past few years have been a testing time for the economies of both the united states and europe. we were faced with the worst financial and economic crisis since the second world war. still today β on both sides of the atlantic β we are dealing with the consequences of the crisis β for economic growth, for employment and for government finances. the crisis has also exposed the united states and europe to a number of asymmetric shocks β in which different parts of our economies have had a wide diversity of experience. some countries within the euro area are the particular focus of market attention at the moment as a result of their sovereign debt issues. some observers have been wondering how diversity can be dealt with in europe β s economic and monetary union ( emu ), what it means for monetary policy and whether the variations in economic conditions are aggravated by product and labour market rigidities. it has often been argued that economic diversity or heterogeneity is very significantly larger in europe than in the united states. we at the european central bank ( ecb ) have been looking closely at the degree of diversity in the two large, continental advanced economies on either side of the atlantic. and some of the findings from this comparison are quite interesting. because they show that economic diversity within the two currency areas is very similar in many ways. the analysis also shows that, in fact, in a large number of respects the two economies are similarly diverse. i would like to share some of the key insights of this analysis with you tonight. i. economic diversity in the euro area and the united states the united states and europe are often compared. this is quite natural. americans and europeans share a common cultural legacy. but our two economies, and i am speaking here of the economy of the euro area on our side, are also similar. both are of similar size, in terms of population and in terms of economic output. both have closely integrated financial and product markets. and both have a single currency. let me begin my comparison with an economic indicator that is particularly close to a central banker β s heart : inflation. in historical terms, overall inflation has been low and stable in both the united | states and the euro area since the late 1990s. the ecb aims at an inflation rate of below, but close to, 2 % over the medium term. since the inception of the euro, the ecb has achieved that objective. annual inflation in the euro area has been 1. 97 % on average over the first 12 years. importantly, the standard deviation in inflation across the members of the euro area has been around 1 %. and it has remained broadly stable at similar levels to those observed in the us metropolitan statistical areas. from that standpoint prices in the euro area are broadly homogenous and similar to those in the united states. my second point of comparison is how diverse the united states and the euro area are in terms of economic growth. the results here are similar to that for inflation. first of all, the overall growth rates over the first twelve years of the euro were actually quite similar in the bis central bankers β speeches euro area to those in the us, once you adjust for differences in population growth. in both the euro area and the us, per capita growth was about 1 % during 1999 β 2010. as concerns dispersion within the economies, before the crisis, the standard deviation of growth rates was around 2 % in both the euro area and the united states. dispersion rose somewhat during the crisis in both currency areas but remained broadly in line with pre - crisis patterns. 1 allow me to go one step further and compare the sources of this growth dispersion in the united states and the euro area. both currency areas include regions that experienced a significant boom - and - bust cycle over the past decade. both also contain regions that are facing significant structural challenges of a more long - term nature. let me start off with the united states. here, several states experienced increases in house prices that outpaced the national average by a wide margin. the steep house price increases probably contributed to above average growth in these states, owing to strong positive contributions from real estate, construction and financial services. nevada, arizona, florida and california are good examples, where average growth between 1998 and 2006 exceeded that of most other states. the sharp fall in house prices in recent years turned boom into bust. these states experienced the harshest recession among the us states. at the same time, some other us states have seen a long period of below average growth, particularly the former manufacturing powerhouses in the β great lakes β region. structural shifts in the us economy towards services have gradually | 1 |
area countries towards structural reforms. these reforms are necessary to maintain and strengthen the euro area β s growth potential over the long term and to increase the flexibility of the euro area economy to adjust smoothly to external shocks. while progress has been made, substantial further efforts are needed. i therefore warmly welcome the presidency conclusions of the brussels european council held on 26 march 2004, which underline that the pace of reform needs to be stepped up significantly. the evaluation of the ecb β s monetary policy strategy turning to specific issues raised in the ecb β s annual report 2003, let me briefly summarise the governing council β s comprehensive evaluation of the ecb β s monetary policy strategy, which was carried out in the first half of 2003. since 1999, the ecb β s monetary policy strategy, with its clear focus on the maintenance of price stability, has served to anchor long - term inflation expectations in the euro area at low levels. it has also provided both a solid basis for internal decision - making and a consistent framework for the presentation of policy decisions to the public. the strategy has been an indispensable tool in organising the analysis prepared for the governing council and in structuring the discussion within the council. the strategy has also provided a sound framework for the ecb β s overall accountability. following the detailed evaluation, the governing council confirmed the main elements of the strategy originally announced in 1998, namely its quantitative definition of price stability and the two - pillar structure underlying the overall assessment of risks to price stability. we continue to define price stability as a year - on - year increase of below 2 % in the harmonised index of consumer prices ( hicp ) for the euro area. at the same time, we clarified that in the pursuit of price stability the ecb aims to keep inflation rates below, but close to 2 % over the medium term. in addition, the governing council also confirmed that its monetary policy decisions would continue to be based on a comprehensive analysis of the risks to price stability, comprising an economic analysis and a monetary analysis. the economic analysis seeks to identify short to medium - term risks to price stability. the monetary analysis assesses medium to long - term trends in inflation, given the close relationship between money and prices over extended horizons. the governing council emphasised that the monetary analysis would serve mainly as a means of cross - checking, from a medium to longer - term perspective, the short to medium - term indications coming from the economic analysis. given the medium to long | , thread, etc. any failure of the vendors in this regard could result in total loss of business with individual countries making efforts to indigenize. 20. let me now focus your attention on some expectations that we have from the various vendors present in the banknote conference here. we all agree that the integrity of bis central bankers β speeches banknotes is the most important factor. in this context, it is also actually quite ironical that for the circulation of forged notes the blame is put on the central bank when, in fact, the blame should go to the manufacturer of the forged notes as in the case of spurious drugs, where the manufacturers are prosecuted. however, it is my considered opinion that the integrity of the banknotes is not a technology issue but more of a law and order issue. when i say this i feel i would be echoing the sentiments of all consumers of various products that the industry produces, especially the representatives of the emerging market countries, who rely heavily on imports for currency production in their respective jurisdictions. i firmly believe that upgrading the security and design features of the banknotes every few years to outsmart the counterfeiters is not a long - term solution but only adds to the cost of producing the banknotes. 21. let me elaborate what i mean. if the counterfeiters are able to do a good job of producing duplicate currency, they are obviously having access to good quality currency paper, printing ink and other components that are necessary for production of banknotes. so, the question is, what is the source of supply for the fraudsters and what is the role of vendors in perpetration of these unlawful activities. the commercial banks the world over follow stringent kyc procedures on their customers. as counterfeiting is a global issue, what i would like the vendors present here is to similarly do a proper customer identification / due diligence on all their customers. the vendors must join hands to find out who has supplied ink, paper, machinery, etc. to the counterfeiters which would enable the regulators to take appropriate action. in a manner the banks close accounts of customers doing any doubtful transactions ; the suppliers should be able to cut off their links with their doubtful customers. in fact, the need of the hour is that counterfeiting should be tackled as a criminal activity with active co - ordination and collective might of all stakeholders - the vendors, central banks, law enforcement agencies, etc. finding a long - term solution to this menace may | 0 |
simple measure of real estate valuation, lies above its long - term average in many countries. 12 this has been accompanied by higher mortgage lending and, in some countries, by an increase in lending risks. 13 overall, these developments have made real estate and mortgage markets more vulnerable to shocks, such as a sudden increase in interest rates or a deterioration in economic prospects. there are several reasons behind this marked increase in real estate prices. they include tight housing supply, a probable increase in housing demand due to the pandemic itself, and the historically low interest rates that have prevailed in recent years. in particular, low interest rates push up housing demand but also incentivise risk - taking behaviour by banks, by reducing the cost of leverage and weighing on bank margins and profitability. a global normalisation of monetary policy rates seems to be underway, most notably in the uk and in the us, against the background of a sharp rise in inflation. this could help slow down the increase in vulnerabilities, if the normalisation takes place gradually and does not trigger an excessive tightening of financial conditions. however, the global level of interest rates is likely to remain low in the medium term, dampened by structural factors such as demographics, inequality and a strong demand for safe assets internationally. monetary policy has no influence over these factors. even more importantly, the focus of monetary policy is price stability and economic developments, and not curbing financial system vulnerabilities. the most suitable way to address these vulnerabilities is therefore through macroprudential policy. many authorities have in fact already responded to these developments by tightening macroprudential policy. some countries have tightened borrower - based instruments in an attempt to curb rising vulnerabilities ( e. g. finland, france and iceland ). others have opted to increase banking sector resilience to ensure that banks have enough capital to withstand a correction. jurisdictions that released or reduced the ccyb in the acute phase of the pandemic to support bank lending are reactivating or increasing it again, in some cases to a higher level ( e. g. denmark, germany, iceland, norway, sweden, uk ). in switzerland too, vulnerabilities in the residential real estate and mortgage markets have increased since the onset of the pandemic. first of all, numerous indicators point towards increasing overvaluations in the residential real estate market. slide 3 shows, for apartment prices, the simple price - to - | speech embargo 29 march 2022, 6. 30 pm macroprudential policy beyond the pandemic : taking stock and looking ahead international center for monetary and banking studies fritz zurbrugg vice chairman of the governing board * swiss national bank geneva, 29 march 2022 β the speaker would like to thank angela abbate for her support in preparing this speech. he also thanks toni beutler, robert bichsel, maja ganarin, jacqueline thomet and martin straub, as well as the snb language services. dear professor panizza, ladies and gentleman thank you, professor panizza, for inviting me to participate in the public lecture series organised by the international center for monetary and banking studies ( icmb ) in geneva. it is a pleasure to be here again, particularly since this is the first lecture after a two - year pandemic - related break. while the effects of the pandemic appear to have subsided, we are currently experiencing another tragic development. i am deeply troubled by russia β s war on ukraine and want to express my heartfelt sympathy to the ukrainian people. in my remarks this evening, i will be talking about macroprudential policy and rising challenges to financial stability, two topics that remain very relevant today. in recent months, policymakers in switzerland and abroad have left the phase of accommodative macroprudential policy behind. many jurisdictions have rolled back the easing of bank capital requirements that took place during the pandemic. furthermore, several countries have actually taken steps to tighten macroprudential policy. what is behind this shift? the simple answer is : the economy is in a very different place today than when the pandemic started about two years ago. back then, the shock to the global economy was unprecedented, and the uncertainty about its economic ramifications was enormous. governments and central banks responded to this shock with an unparalleled amount of fiscal and monetary stimulus. this policy support, together with vaccine rollout, was instrumental in setting the global economy on the path to recovery. looking back from a financial stability perspective, banks β ability to fulfil their role as credit providers to the real economy without interruption was an additional factor that contributed to the recovery. this was mainly possible thanks to substantial capital buffers built up since the global financial crisis ( gfc ), which increased banking sector resilience, and to policy support, which helped borrowers bridge their | 1 |
be. this explains why almost no one is conducting a euro debate in sweden, even though it does not have a derogation and many would like to see it in the eurozone. canonically, the same goes for us : either we can continue to stabilise ourselves, in which case we don β t need the euro, or we will destabilise ourselves, but in that case we will potentially harm others in the euro club and eurozone membership will be a hindrance in bad times. 5. there β s no story in our case : the baltic states took the euro as a geopolitical and security safeguard and paid a huge economic price for permanently fixing their currencies to it. slovenia wanted to cut itself off from the western balkans. slovakia wanted to seal the reforms of former prime minister mikulas dzurinda. germany gained unification in exchange for the euro. the southern countries ( italy, france and spain ) gained the stability of the german mark because they were unable to create such a currency at home. and those who were tied to the german mark long before the euro was created ( austria and the netherlands ) simply remained bound to frankfurt after the eurozone was established, only the bundesbank building was replaced all of a sudden by the ecb building. there β s no basic euro story like this in the czech republic. why should we try to create one artificially? our story is one of maintaining monetary stability across regimes and governments and of keeping the koruna as the name of our currency continuously since the time of emperor franz joseph ( his monetary reform established a new currency β the crown, or koruna β throughout the austro - hungarian monarchy in 1892 ) regardless of totalitarianism and the horrors of the 20th century. neither the nazis, nor the communists had any tendency to rename the currency and kept this old monarchist name despite otherwise changing basically everything, and for the worse. our country β unlike the rest of the central europe β has never experienced hyperinflation in its modern history, and this monetary stability has always served the entrenched mentality of small czech savers well. domestic scepticism about the euro β that β s our authentic czech story. 6. the slovak economic miracle : it is, of course, impossible not to make comparisons with our eastern neighbour slovakia, the only member of the visegrad club to have adopted the euro, which it did in 2009. unfortunately, here more than anywhere | wonder whether the czech sitting - on - the - fence approach is heading towards the danish model. it wouldn β t be my choice, but it β s good to be prepared. 8. macro costs and micro benefits : the eurozone has so far failed to make its member states wealthier quicker ( the non - euro eu states are constantly growing faster on average ) or to make them converge structurally. rather, one could argue that the opposite is true. a truly strong measurable result of the euro is lower and less volatile inflation. this is hard to see as a bonus for our country, where we are consistently achieving the same objective with our own currency. the oft - mentioned bonus of lower interest rates due to the euro does not apply to us either. we have long known what it β s like to live with rates below the eurozone level. likewise, it β s hard to believe that the euro will deepen our trade relations with the euro countries given that we are one of the few countries enjoying not only growing trade, but also a constantly rising trade surplus with germany. the euro has micro benefits at firm level, but unfortunately they come with the aforementioned macro costs. the latter are constantly rising and their final size and structure are impossible to quantify. besides the known contribution to the stability funds, they include mandatory participation in the banking union, which is another unfinished structure. for a country of our type, currency arrangement and monetary history, joining the eurozone is generally an extremely tough question. it was ever thus, but it is currently all the more so. adopting the euro today would be like being the last to arrive at a party, one where all the food and drink has gone and the other guests are looking for someone to help pay the bill. the british journalist david marsh, one of the foremost experts on the anatomy of the establishment of the 3 / 4 bis central bankers'speeches single currency, summed it up brilliantly : β the eurozone doesn β t need new members, it needs new creditors β. 1 and when such a consistent defender of mainstream economic thinking as the american kenneth rogoff announces that it is β fairly obvious that the euro was not necessary to the success of the eu, and instead has proved a massive impediment β 2, even staunch supporters of the euro in our country probably took notice. the pragmatic anglo - saxon approach of β if it ain β t broke, don β t fix it β suits the czech republic | 1 |
william c dudley : impact of the great recession on public schools in the region remarks by mr william c dudley, president and chief executive officer of the federal reserve bank of new york, at the quarterly regional economic press briefing, new york city, 27 january 2012. * * * good morning and welcome once again to the new york fed β s quarterly regional economic press briefing. i am pleased to have this opportunity to talk with the journalists covering our region β and through you, to the people in our district. this morning i will focus on regional economic conditions, with particular attention to how the recession has affected public school spending in new york and new jersey β states that dominate the second federal reserve district. following my remarks, my colleagues will provide more details. as always, what i have to say reflects my own views and not necessarily those of the federal open market committee ( fomc ) or the federal reserve system. national economic conditions i will begin with a review of overall economic conditions. recent data suggest that the u. s. economy ended 2011 on a somewhat stronger note β the best performance since the first half of 2010. nonetheless, the amount of slack in the economy remains substantial. moreover, i think it is unlikely that the pace of growth we saw in the fourth quarter will carry through to the first half of 2012. growth of consumer spending strengthened in the fourth quarter, adding a needed boost to the economy. much of this stronger spending was for durable goods, particularly motor vehicles. in the fourth quarter of 2011, sales of light - weight motor vehicles reached the highest quarterly rate since the first half of 2008. this increase is encouraging because it suggests that consumers are now more able to borrow money to finance their purchases of cars and trucks. however, i must note that this boost is likely due in part to temporary factors. first, vehicle sales in the middle of 2011 were depressed due to supply chain disruptions stemming from the tragic earthquake and tsunami in japan. in addition, a stimulus - related tax provision that allowed businesses to immediately expense some investments expired at the end of 2011. so, some purchases were no doubt timed to occur before that expiration. moreover, for goods and services other than durable goods, the rate of growth of consumer spending has been rather tepid. the picture that emerges β up to now β is of a consumer who continues to be cautious. in addition to stronger growth of consumer spending, manufacturing output has firmed over the past several months. for example, the widely followed | that inflation, over time, is at levels consistent with the dual mandate. the committee said it now anticipates that economic conditions are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014. the committee also released a statement of longer - run goals and monetary policy strategy within the context of the dual mandate, and published information on individual participants β expectations of the appropriate future interest rate path. as chairman bernanke explained in his press conference on wednesday, the strategy statement β should not be interpreted as indicating any change in how the federal reserve conducts monetary policy. rather, its purpose is to increase the transparency and predictability of policy. β further details on the discussion at the meeting will be available when the minutes are published in three weeks. i will not comment on monetary policy any further today beyond stating that monetary policy has done and will continue to do its part in supporting the recovery β but it is not all - powerful. other complementary policy actions in housing, fiscal policy and structural adjustment or rebalancing of the economy will be essential if we are to achieve the best available recovery. regional economic conditions turning now to the regional economy, growth slowed in late 2011 in new york city and new york state, whereas new jersey has seen a modest pickup. as attendees at previous regional press briefings may recall, the new york fed produces economic activity indexes to help monitor the performance of the regional economy. 2 based on these measures, economic activity has leveled off in both new york state and new york city since the summer, following above - average growth in the first half of 2011. in contrast, new jersey β s economy, which was sluggish throughout 2010 and into the first half of 2011, has picked up noticeably in recent months. we monitor puerto rico using an index produced by the government development bank for puerto rico. this index suggests that the island β s recession, which started back in 2005, may finally be ending. after bottoming out last august, activity has risen fairly sharply β reaching a one - year high in november. still, puerto rico β s recovery has had a number of β false starts β before and this measure is noisy. thus, the recent improvements will need to be sustained for longer before we can confidently declare that the island β s recession is over. turning to the employment situation, our region finished 2011 on a mixed note. in new jersey, private - sector job growth was quite robust in the fourth quarter, despite a small dip | 1 |
purchasers who meet the eligibility requirements will be able to apply for mortgage loans of up to 90 % ltv ratio under the mortgage insurance arrangements. according to figures provided by the hong kong mortgage corporation limited, the value of properties involving mortgage loans with a 90 % ltv ratio averages at around hk $ 3. 2 million. therefore, i believe that the measures of the hkma will have minimal impact on first - time homebuyers. 10. changes in the property market cycle are affected by a host of internal and external factors, including land supply, interest rate movements, changes in household income as well as economic and financial market developments in europe and the us. in view of the highly uncertain internal and external environments, the hkma will continue to monitor the market situation closely and introduce appropriate measures in response to changes in the property market cycle to safeguard banking stability. bis central bankers β speeches | behind our white paper as well as to provide a quick overview of its contents. 16. despite the covid - 19 disruptions, we have been working very hard in the past few months on a plan to better promote the adoption of regtech in hong kong. the first phase of the plan has now led to the formulation of this white paper. 17. conceptually, we can think of the white paper as a useful map for users : map meaning three key elements β m for monitor, a for assess, and p for plan. 18. what exactly do we mean by that? again, β m β is for monitor β it involves understanding the current and evolving regtech landscape. β a β stands for assess β it involves analysing existing practices and risks associated with regtech. and β p β is for plan β it involves putting our insights into practice by developing practical steps for the future. 19. and our white paper map breaks down this process into five key areas β under β m β, the white paper lays out new developments in regtech, and explores their importance to hong kong β s banking industry under β a β, the white paper assesses prevailing practice, and attempts to define and evaluate existing barriers to regtech adoption as for β p β, there are three elements involved. the first element is about laying out a common practice framework for implementing regtech in hong kong ; the second element involves making practical recommendations for initiatives that can contribute towards the wider adoption of regtech ; and the third element is about delivering a practical roadmap of the hkma β s plans for promoting regtech adoption. 20. the white paper is actually based on findings from a survey of banks and regtech providers, interviews with industry stakeholders, benchmarking against other jurisdictions, and an analysis of hong kong β s regtech progress so far. some of you may have offered your valuable contributions to it. so, taking this opportunity, i thank those of you who have done so for your generous help and support. 21. the white paper will be available for public download through our official website later today. here, let me give you a quick snapshot of some of its key contents. 2 / 6 bis central bankers'speeches regtech adoption barriers 22. first and foremost, about regtech adoption barriers. 23. we note that regtech adoption in hong kong has made significant progress in recent years. in fact, 32 % of our survey respondents said that they have fully implemented at | 0.5 |
caroline abel : opening remarks - central bank of seychelles'board retreat opening remarks by ms caroline abel, governor of central bank of seychelles, at the central bank of seychelles'board retreat, mahaΒ©, 12 october 2024. * * * fellow board directors, consultant from'it's a learning curve'cbs colleagues, good morning. it gives me great pleasure to welcome you all to this year's cbs board retreat. before i proceed further, i would like us to acknowledge one of our own, who unfortunately left us unexpectedly yesterday. graham adeline was a vibrant young man with a promising future in the research and statistics division. he will surely leave a void in the lives of all of us who have known and interacted with him. my heart is heavy, and i would like us to observe a minute of silence to honour his memory. since our last retreat held in november of last year, we have seen some changes in the composition of our board. we bade farewell to three board directors - two having arrived at the end of their tenure, and one following amendments to the cbs act ; i was re - appointed in the post of governor and chairperson of the board ; and we welcomed two new members amongst our ranks, notably second deputy governor mike tirant and board director jean - paul barbier, both formerly members of the cbs team. our deliberations over the next two days will provide a unique opportunity for us to step back from our routine responsibilities, reflect on our strategic direction, and engage in thoughtful discussions that will shape the future of our institution. we find ourselves in a world where uncertainty is not just a phase but a constant. being a forward - looking institution, it is essential that the central bank adopts a long - term view in navigating this evolving environment with a sense of purpose and resilience. managing through uncertainty requires us to anticipate changes, both seen and unforeseen, and prepare to respond swiftly and effectively. our people, our human capital, remain our most valuable asset. we acknowledge the key role that our employees play in upholding the vision and achieving the mission of cbs, ensuring that, as an institution, we maintain a leading role in the economy and the country as a whole. with the move towards implementing a'people function'approach, we're putting each and every individual at the core of what we do and ensuring that we have policies in place that recognise the value that they bring to the organisation | by government debt instrument. the development of indonesian financial market actually took place from the post 1997 / 98 period. the sun market begun in 2002 when banks were started to be allowed to gradually trade their recap bond holding. the development in government bond market then triggered the development of corporate bonds as government bond serve as a risk free benchmark in debt market. however, the transaction in sun market is, so far, dominated by outright transaction. the repo market is not yet active, partly for the reasons as i have previously described, which lead to a perception of bank that undertake repo is in a desperate liquidity need situation, hence will be punished with higher interest rate. the relatively less liquid domestic financial market can be seen from the sun turnover. recently, the daily outright trading volume of sun is just around rp 6. 5 trillion and 300 transaction within the last two years. thus, just around 1 % of sun outstanding. while the repo transaction is much lower, below rp. 1 trillion daily, but not always occurring every day. why we need to further develop indonesia β s financial market? from the above description, basically, i have just explained the main reasons, the need to further develop the indonesian financial market. first, to increase the resiliency of domestic financial market, including the banking sector, from possible liquidity shock. second, to increase the efficiency of financial portfolio management and to strengthen liquidity risk management, which in turn it will increase the effectiveness of monetary policy from bank indonesia β s perspective. and third, given the increasingly importance of financial market in the economy, it is crucial to have a strong, efficient and healthy financial market to avoid any possible distortion, including from inefficient practice that will add more cost in economic financing. however, the development should be undertaken in gradual manner, and again, should always be linked closely with the need of the real economy. i will now highlight some issues that i believe should be firstly considered as a starting point to develop our domestic financial market. the development of repo market can be considered as a starting point to increase financial market liquidity. this will increase efficient banking liquidity and portfolio management, as well as government financing. in this regard, as financial transaction is mostly in essence a legal contract, thus having a commonly accepted standard repo agreement is a key. in this area, bank indonesia and the government debt management office, has again encouraged market participants to establish a standardized repo agreement | 0 |
ensuring stability in turbulent times1 your excellencies, distinguished guests, sabah - al - khair and a very good morning. i am very delighted to be here today and i am grateful to h. e. dr. abdulrahman a. al hamidy for inviting me to speak before this august gathering. thanks to the active collaboration of the basel committee on banking supervision, financial stability institute, and the arab monetary fund, these high - level meetings provide a valuable forum for exchange of views for the regulators and supervisors in the region. the agenda of this conference adequately captures key developments, issues, and challenges that we need to focus our attention on. today, i would like to touch upon two major forces that have swept across the financial world. first is the tech - driven revolution, which has brought its own set of risks and rewards. second is the wide range of measures that have been introduced to strengthen the resilience of our banking systems. let me start with innovations first. innovation ; opportunities and risks tech - driven innovations have unleashed drastic changes in the way we conduct business, interact with each other, or consume various products and services. financial sector, essentially an β information industry β, is experiencing a major transformation, fueled by advances in technology. though the imprint of modern technologies is now ubiquitous, let me briefly highlight a few areas of finance where the developments are particularly significant. 1 keynote speech delivered by his excellency dr. mohammad y. al - hashel, governor, central bank of kuwait in the 12th high level meeting for the middle east & north africa region, jointly organized by the basel committee on banking supervision, the financial stability institute and the arab monetary fund, held on december 7, 2016 in abu dhabi, uae. to start with, technology is supporting the outreach of formal financial services to the millions of otherwise unbanked customers. according to the world bank, the poorest 20 % of the world population is more likely to have access to a mobile phone than to clean water and sanitation. capitalizing on this opportunity, a number of countries have managed to swiftly expand access to finance in recent years. globally, number of adults who were previously out of formal financial system has dropped by 20 % during 201114 alone. as these encouraging trends suggest, digitalization offers an unprecedented opportunity to improve access to finance to the millions of people who have remained financially excluded so far. likewise, programing breakthroughs like blockchain are potentially transforming the way we verify transactions and enforce | contracts. by allowing parties to transact without central intermediaries, blockchain can strip off costs, reduce inefficiencies, and enhance customer services. host of other innovations are reshaping the way we transfer money or obtain credit. for instance, mobile wallets are enabling payments by smart phones, peer - to - peer lending is providing new sources of financing, and roboadvisors are offering financial advice. while undoubtedly exciting, these developments bring in their own unique risks and challenges. i would like to flag a few of them, particularly from the standpoint of financial stability. first, cyber security risk is becoming an increasingly major part of banks β operational risk landscape. as various hacking episodes illustrate, now fraud can be perpetrated swiftly, remotely, and on a massive scale. though such occurrences are still uncommon, the impact is substantial, given the high degree of interconnectivity of our systems and markets. second, fintechs are unbundling parts of the finance value chain, offering financial services directly to customers. apart from increasing competition, and squeezing banks β profits, fintechs are moving part of the banking business to shadow banking which remains lightly regulated, if at all. likewise, tech - enabled peer - to - peer lending and crowdfunding can further expand the scale of shadow banking, and may also exacerbate procyclicality. as this discussion indicates, innovations are by nature a disruptive force, causing a considerable degree of instability. therefore, regulators face a daunting task of keeping financial systems safe and stable while continuing to ensure the convenience and efficiency that modern technologies offer. to ensure that, we must strengthen our own capacity to identify, monitor, and mitigate the risks from technological innovations. this would require closer cooperation with the banking industry as well as among regulators, both within a country and across the borders. yet that is not enough ; we also need to leave our comfort zone and engage with other stakeholders, primarily the tech firms themselves. ultimately, as regulators, we wish neither to stifle innovation nor to undermine financial stability β and it is indeed a very delicate balance to achieve. similar to when navigating unfamiliar domains, we need to remain agile, adaptive, and proactive β this will ensure reaping the enormous benefits of financial innovations, yet limiting their downside. let me now turn to the second part of my speech. regulatory reforms ; costly but essential banking regulation has been | 1 |
fixed rate infrastructure loans, the stock refrain is that this will create asset liability mismatch in banks β balance sheets as their liabilities are mostly short - term. even then banks have a combined infrastructure loan portfolio of about rs. 6 trillion ( us $ 110 bn ), representing about 9 % of the total bank assets in india of rs. 71 trillion ( us $ 1. 35 trillion ). as against this, corporate bond market is around rs. 9 trillion ( us $ 170 bn ). but this common and popular, but again uninformed and counter - intuitive, refrain that banks cannot fund long - term fixed rate infrastructure assets is untenable in that banks have not thought of using a very β vibrant β interest rate swap ( irs ) market, where outstanding notional principal amounts aggregate rs 60 trillion ( us $ 1. 14 trillion ) ( almost 82 % of total banking assets in india as also of the nation β s gdp )! for banks can easily transform their short term liability into a long - term fixed rate one and thus create a synthetic long - term financing solution for long gestation infrastructure projects by doing the following : ( i ) receive fixed rate for one year and pay floating overnight rate in the irs market. ( assuming banks β average liability is about one year ). bis central bankers β speeches ( ii ) receive floating overnight rate and pay 5 / 10 - year in irs market. this effectively synthetically transforms a one - year floating rate liability of bank into a synthetic 5 / 10year fixed rate liability. by loading margin over this rate, banks can make a 5 / 10year fixed rate loan to an infrastructure company. and, significantly, considering that irs trades about 140 to 150 basis points below sovereign yield, it is win - win for both banks and infrastructure companies who, even after bankers β spreads / margins, will be able to borrow at around 5 / 10 year govt. bond yield ( currently 8. 40 % ). that is as simple as it can get in terms of creating two - in - one fixed - rate long - term marketbased financing solutions for infrastructure. incidentally, another uninformed and untenable, refrain against use of irs market is that this strategy entails β basis β risk and β liquidity β risk. it has been established that there is a statistically significant and positive correlation between one year irs rate and one year bank deposit rate of 0. 75 which will improve further to near perfect level of 0. 90 | of 53 per cent at the national level. table 1 share of employment by broad industry group ( usual principal status ) ( per cent ) source : labour bureau, government of india. apart from the greater concentration of labour force in agriculture, the demographic structure of odisha with a higher share of working age population is also favourably disposed towards growth ( chart 6 ). hence, the major challenge for the state is to generate employment in industry and services so that labour force can be released from low productivity agriculture activity. this will require improvement in the quality of labour force with higher expenditure in education and health. in this regard, the private sector can play a major role in supplementing the government β s efforts in provision of higher education and health services. bis central bankers β speeches social indicators notwithstanding the rapid economic growth in the recent years, odisha remains low in human development. with low urbanisation, lower per capita income, high incidence of poverty, high infant mortality and lower life expectancy rate as compared with the national average, odisha was ranked 22 among the 23 states1 in terms of human development index 2007 β 08 ( chart 7 ). table 2 standards of life indicators ( as percentage of households ) source : census 2011, government of india. north eastern states excluding assam was taken together as one entity and therefore only 23 states were compared hdi ranking in the india human development report 2011, government of india. bis central bankers β speeches the share of households having access to basic civic amenities such as safe drinking water and electricity remains relatively low compared to the national average, though there has been substantial gains in the decade between 2001 and 2011. similarly ownership of household assets such as television, telephone and mechanised personal transport remains lower than the national average. the population of households having banking facility, though improving, still remains lower than the national average ( table 2 ). state finances there was substantial improvement in state finances as odisha achieved the targets set out in the fiscal responsibility legislation ( frl ) well ahead of the stipulated time - frame. the revenue account turned surplus in 2005 β 06 followed by fiscal surplus in 2006 β 07. although the fiscal position of odisha had shown some deterioration in 2008 β 09 reflecting the combined impact of macroeconomic slowdown and sixth pay commission award, it has since reverted to the path of consolidation. with revenue surplus and moderate fiscal deficit, the need for market borrowings was low. in fact since 2006 β 07 the state has refrained from market borrowings. this has had a favourable | 0.5 |
to further integration. fortunately, the right initiatives are underway. it already started in 2001, with the regulation on cross border payments in euro. better known as the bolkestein regulation. this regulation paved the way for the single euro payments area. an ambitious initiative, where european citizens should by 2010 be able to make payments throughout the euro area from their bank account as easily and safely as in their own country today. by creating a pan - european infrastructure and identical payment tools, all payments in the euro area essentially become domestic payments. 15 years ago this goal was beyond imagination. now it appears within reach. concluding remarks to conclude, the euro has seen a number of successes : the introduction of a new currency for more than 310 million people, price stability, low interest rates and progress in the integration of the goods and financial markets. these achievements are remarkable, as they have been realised in a short period of time and in a unique political context. indeed, europe is the world β s laboratory : we created the first supranational entity based on a sense of solidarity rather than coercion. of course it is not all plain sailing. in the fields of public finances and the internal market work remains to be done to reap the full benefits of the euro. it is therefore important to remain ambitious in the near future. not ambitious to be, but ambitious to do. how monetary union will evolve in the future is hard to predict. but if the past 8 years offer a compass for the future, i am optimistic we find the right answers to our current challenges. g. tumpel - gugerell ( 2007 ), the competitiveness of european financial markets : an economic framework for effective policy making, speech at washington economic policy conference, 12 march 2007. | the banking system is stable despite challenges expected in implementing basel iii, especially over the longer term. however, we vigilantly monitor global developments and the possibility of contagion to our economy. bis central bankers β speeches it is important that, in extending the mandates of central banks, there should be a clear understanding of what central banks can and cannot do, and an appreciation of the possible conflicts between the different objectives. central banks, in normal times, function in an uncertain environment. in the prevailing difficult global conditions uncertainty is at an even higher level, and many of the actions taken have no precedence. it is therefore incumbent upon central banks to share information and together learn from our collective experiences. as the lines between the various mandates become increasingly blurred, there is a danger that the burden of expectations could be excessive, and ultimately undermine confidence and credibility in central banks themselves. these challenges are being considered by central banks and others, and require that all of us better understand the immediate challenges of the mutating, extremely severe global financial crisis. at the same time we need to appreciate that measures required to deal with the crisis may well have unintended consequences for central banks, their mandates, independence, capacity and role in society. thank you again for the opportunity to speak to you. bis central bankers β speeches | 0 |
at international level can be improved through a clear assignment of representatives. part ii how the bcl envisions and implements liquidity surveillance the 2008 bcl mandate to monitor the liquidity of markets and market operators recognizes central banks β unique role in the surveillance of systemic liquidity risk. the crisis demonstrated that liquidity risk can emerge quickly. the manner in which liquidity risk materializes and is transmitted is determined by the nature of funding instruments and linkages among financial institutions, the degree of leverage of market operators, as well as their reactions to emerging stresses. policy responses to the crisis must, at a minimum, enhance institutions β liquidity risk management and information available to measure and track systemic liquidity risk. the task is complicated because the assessment of liquidity risk at the systemic level is often susceptible of a fallacy of composition given that the viability of banks β individual approaches to liquidity risk will depend upon the strategies being pursued by other market operators. for instance, if banks have a great deal of interconnectedness via the interbank market, a liquidity shock impact will be relatively larger than if their interconnectedness was lower. in addition, if banks β business models were diverse, the impact of a liquidity shock would be relatively smaller than if banks β activities were concentrated on just one business line. the 2008 law, in giving to the bcl the mandate to monitor markets and market operators β liquidity, acknowledged the necessity of liquidity surveillance in luxembourg. on this capacity, the bcl has issued regulations, such as the bis central bankers β speeches bcl regulation 2009 / 4 requesting banks to apply the bcbs β principles for sound liquidity risk management and supervision β. the bank actively participates in the shaping of the basel iii framework for liquidity risk measurement, standards and monitoring. taking due account of current regulatory developments, the bcl intends to publish further instructions to market participants on liquidity management before the end of this year. in the same way the bcl changed its architecture to comply with its liquidity surveillance mandate, it will also adapt to its unavoidable role in macroprudential policymaking in luxembourg. following the 2008 new mandate on liquidity surveillance, the bcl adapted its internal structure and resources so as to ensure that the luxembourg market and its financial actors are constantly subject to analytical and quantitative scrutiny so as minimize systemic liquidity risk in the luxembourg financial industry. the bcl has increased technical cooperation with regulators at the national and international level and | treasury to issue luxembourg sukuk, but the volume would be symbolic in international comparison. on the operational side, clearstream banking, the luxembourg international central securities depository ( icsd ) holds under custody and offers the clearing and settlement of a range of islamic securities. it has slightly adapted its technical processes to sukuk β s requirements as regards the distribution of payments. earlier this year, deutsche bank announced the launch of a new platform " al mi'yar " whose aim is to facilitate the issuance of shariah compliant securities. this platform is domiciled in luxembourg. it is also worth mentioning that several local market practitioners and support entities ( mainly law firms and investment funds service providers ) are expanding to the gulf region. competition for the global lead in the investment fund industry has attracted expertise in domiciliation, administration and distribution of investment funds to luxembourg, including shariah compliant investment funds. working groups encompassing authorities and market players were set up to find out how to remove barriers to the development of islamic finance products. our national agency for the development of the financial centre β luxembourg for finance β has issued a leaflet which is used during promotional trips to explain the islamic finance opportunities in luxembourg. a 2 - day conference is planned for early may to disseminate awareness and knowledge within the banking and funds industry 35. the bcl participates together with other public authorities in a working group, chaired by the ministry of finance, on the promotion of islamic finance in luxembourg. the luxembourg school of finance and the university of luxembourg offer modules of islamic finance in their master programmes. see, bataineh sufian & carole, la finance islamique : opportunites et challenges pour le grand - duche de luxembourg, to be published in a forthcoming bulletin of the association luxembourgeoise des juristes de droit bancaire. see, islamic finance awareness days, agenda 2009, http : / / www. alfi. lu /. in reality, practitioners in luxembourg consider that our current legal framework is compatible with islamic insurance products and islamic finance products. it already allows the issuance of such products β differences between conventional investment funds and islamic funds are considered minimal. however, full islamic banking would request adjustments 36. the most appropriate structural category for islamic funds is the β specialized investment fund β ( fonds d β investissement specialise β sif ) which is targeted at well - informed investors. in addition, this structure is legally easier to establish and it | 0.5 |
ahead. as i said earlier, to ensure a proper operation of the policy mix in the euro area a number of reforms are needed in several areas. first, a meaningful revision of the european fiscal framework entailing a paradigm shift that incorporates supranational elements of fiscal burden - sharing, while at the same time guaranteeing full national responsibility. second, a european, medium - term, economic growth - enhancing agenda promoting the development of a flexible, thriving economy, while pursuing deep reforms in all corners of the euro area, and the eu in general. third, the completion of the banking and capital markets unions, to cement a framework that genuinely cushions macro - financial shocks and provide an optimal environment to channel private investment for the climate and digital transitions. | of equity markets and the sizeable home bias in portfolios have significant negative consequences for the smooth functioning of the monetary union. indeed, they set a limit on the capacity of risk - sharing mechanisms in the euro area. moreover, an enhanced capital markets union could improve the channelling of the abundant aggregate savings to satisfy investment needs in the areas of infrastructure, energy and innovation, in which private investment is crucial. for example, according to european commission estimates, the energy transition will require additional investment of over β¬400 billion each year over the next decade. public investment, and supranational investment coming from the ngeu funds, can only account for a small portion of this amount. moreover, a fundamental, game - changing feature for a more integrated capital market would be the existence of significant pan - european safe assets. a common safe asset would most likely become a common benchmark, allowing the prices of equities and bonds across the euro area to reflect fundamental risk more clearly. it would facilitate the development and integration of capital and financial markets in the euro area, as flight - to - quality movements would no longer imply flight - to - core - countries movements. this would be particularly relevant in times of stress, when it would help mitigate the possibility of monetary policy transmission being hampered in a context of fragmented bond markets. in this sense, the experience with the issuances to finance the sure and ngeu programmes can serve as the prototype for this safe asset. although relatively small in size, they have been a success in terms of market appetite and have helped most member states reduce costs because of the pooled financing ( see slide 9 ). final reflections as i mentioned at the beginning of my address, the fiscal - monetary policy mix has passed the demanding test posed by the covid - 19 crisis, so far, with good marks. the ad hoc decisions taken by policymakers were adequate, and compensated for the lack of a complete euro area institutional architecture, enabling monetary and fiscal policies to do their job, without overburdening each other. incidentally, the immediate tests we face are normalising fiscal policies once the recent improvement in the economic outlook proves to be sufficiently sustainable and adjusting the extraordinary monetary policy measures we introduced once the ecb β s medium - term inflation target is considered to be sustainably achieved. going forward, the challenge is how to enshrine this success story in a stable and predictable framework, while also taking into account a number of additional challenges that lay | 1 |
fail without destabilising the entire financial system. the possibility of failure is fundamental to any market economy and it must apply to banks. as the economist allen meltzer said : β capitalism without failure is like religion without sin β it doesn β t work β. only if banks see a realistic threat of failure they will have an incentive to manage risks in a prudent manner. in europe, we have recently taken some steps in the right direction. from 2016 onwards, we will have a european resolution mechanism that allows us to resolve failing banks without destabilising the financial system and without burdening the taxpayers. in my view, this single resolution mechanism has the potential to restore the balance between liability and control. thus, it will have a fundamental and positive effect on banks β risk culture. at the global level, the g20 recently agreed upon a proposal that requires global systemically important banks to improve their capital structure. in particular, these banks will need to ensure a minimum amount of total loss - absorbing capacity, which may be as much as 20 %, including the minimum capital requirements. this will ensure that, in case of a bank failure, it is the owner and the creditors that will have to bear the costs, not the taxpayers. this will also strengthen the incentives of banks to engage in prudent risk management. however, we have to look beyond incentives for banks. we also have to look at incentives for those who work in banks. according to the financial stability board, a crucial element of a sound risk culture is the alignment of compensation with prudent risk - taking. in the past, compensation schemes were often skewed toward rewarding short - term success without taking into account related risks. consequently, the european union has taken action and implemented new rules. according to these rules, the variable components of bank managers β remuneration are restricted to hellmann, t f ; murdock, k c ; stiglitz, j e ( 2000 ), liberalization, moral hazard in banking, and prudential regulation : are capital requirements enough? in the american economic review, vol 90, no 1, pp 147 β 165. bis central bankers β speeches 100 % of the fixed components. if shareholders agree, this can be increased to 200 %. furthermore, banks have to establish a remuneration committee and meet several new disclosure requirements on remuneration. nevertheless, we certainly have to be wary of regulatory arbitrage and unintended consequences | backdrop, one question comes to mind. if people are naturally risk - averse, then what was wrong with the banks in the run - up to the financial crisis? well, in the experiments i mentioned, it was always the people β s own money at stake. as soon as it is other people β s money at stake, things change. tversky, a ; kahneman, d ( 1992 ), advances in prospect theory : cumulative representation of uncertainty. in journal of risk and uncertainty, vol 5, no 4, pp 297 β 323. bis central bankers β speeches joseph stiglitz and his co - authors, for instance, find that financial crises have become more frequent since deposit insurance systems were introduced and central banks were established as the lenders of last resort. 2 from this, we can conclude that moral hazard plays an important role in the way banks deal with risk. the crisis has shown that we are faced with a situation in which β heads, the bank wins ; tails, the taxpayers lose β. liability and control are off - kilter and this reduces banks β incentives to manage risks prudently β hence their will to see in the dark is diminished. thus, if we want to make banks care about risks, we have to restore the balance between liability and control. here, the most prominent example is the β too big to fail β problem. a fundamental lesson learned from the financial crisis is that the failure of very large or interconnected banks can destabilise the entire financial system. just think of 15 september 2008, when the collapse of lehman brothers triggered the global financial crisis. banks that are too big to fail are in a situation that is comfortable for them, but uncomfortable for society. why is that? these banks benefit from an implicit insurance policy at no cost to themselves. they know that whenever they get into trouble, the government is likely to step in and bail them out in order to prevent a systemic meltdown. there is no doubt that this implicit insurance policy creates all the wrong incentives. if a bank can rely on state support when it gets into difficulties, it will no longer see risk and return as two sides of the same coin. profits from risky business remain with the bank, while the taxpayer is left to bear any potential losses. thus, to promote a sound risk culture within banks, we have to mitigate the β too big to fail β problem. in order to achieve this objective, we need mechanisms that allow even large banks to | 1 |
resources for other sectors with greater potential for economic development. during the 1980s, spain faced a most severe banking crisis that affected a significant proportion of the banks operating in that decade. that crisis, in conjunction with subsequent action, was a sufficiently valuable lesson on how to manage bank crises at the institution i preside over. such experience should be harnessed for the restructuring still to be done. moreover, economic agents are aware that the decisions the banco de espana takes are, as our tradition demands, based solely on expert criteria geared to safeguarding banks'creditors, preserving the stability of the financial system and upholding free - market principles. using the deposit guarantee funds, without prejudice to any additional instruments set in place, will secure the participation of the financial sector in this process. finally, i should not conclude without stressing that the degree of consensus social agents and political forces may reach will be the linchpin to ensuring the success of the restructuring process. it will be a difficult and complex process, and we should all ideally pull together for the benefit of the whole of the spanish economy. thank you. | of its unique function as the issuer of the national currency, the bank of albania continued to fulfil the needs of the economy for banknotes and coins, in accordance with contemporary standards for their quality and security features. compared to 2014, the structure of the currency in circulation has changed. thus, the number of higher denominations, all 2000 and all 5000 increased. also the use of coins increased, as their value rose by 8. 2 %. iii. foreign - exchange reserve management the reserve management continued to be conducted in accordance with the regulatory framework in force. the primary objective of the reserve management is the principle of liquidity and security. in line with our policy and international standards on adequacy, we continued in this year to ensure that the reserves are at adequate levels and in conformity with our goal. year 2015 was characterised by a further decline in negative territory of interest rates for treasury issues in the euro area. thus, for the euro portfolio, the possibilities of investment with a positive rate of return, compared to the previous year, are reduced significantly. regardless of this fact, the result created by the management of the reserve portfolio for 2015 was positive. iv. legal service the improvement of the legal and regulatory framework has been a constant priority for the bank of albania. during the year, the law β on savings and loans associations β was drafted, consulted and submitted to the assembly of the republic of albania for review. the law regulates the slas licencing, supervision and activity in accordance with the best standards. in close cooperation with the albanian deposit insurance agency, amendments have been drafted to the law β on deposit insurance β, which improve the implementation of the law on slas and include certain categories of legal persons in the deposit insurance scheme. the law on the treatment of banks facing financial difficulties, also known as the resolution law is another important project we have been working on during 2015 and are still working in cooperation with the world bank. significant work has been carried out also with regard to the regulatory framework. v. monetary and financial statistics last year was a successful one for the bank of albania in its role as one of the three national agencies producing statistics. expanding statistical information, and perfecting some of the methodologies underlying the statistical product of the bank of albania have been evaluated positively by international institutions, making thus significant progress towards the approximation with eurostat and imf standards. in 2015, the bank of albania published, for the first time, the annual information on | 0 |
ignazio visco : overview of economic and financial developments in italy concluding remarks by mr ignazio visco, governor of the bank of italy, at the ordinary meeting of shareholders 2012 β 119th financial year, bank of italy, rome, 31 may 2013. * * * ladies and gentlemen, in these remarks i will give an account of a difficult year and speak about the severe test that we have all had to face. i will recall you of what has been done, describing the role of the bank of italy. i will speak about the progress made, even if it is insufficient ; about the results achieved, although these are still fragile ; about the need not to waste but to defend and consolidate these achievements in order to set the recovery process in motion ; and lastly about the conditions for a return to balanced growth. allow me to start with a farewell, in fact with more than one. on 28 april, in this delicate moment in the life of the country, our director general fabrizio saccomanni was called to join the government as minister for the economy and finance. endowed with outstanding personal and professional qualities, he has worked in almost all of the bank β s institutional and administrative fields of action. his experience, his thorough knowledge of the european and international organizations in which he has held prominent positions and performed important tasks for italy, the competence and balance he has demonstrated in his many years of service to the bank, for which we owe him a debt of gratitude, will be even more essential in the test that awaits him. we extend our warm best wishes to him. he is succeeded by salvatore rossi, our former deputy director general, who has for many years combined broad managerial responsibilities with economic analysis attentive in particular to innovation and development. as director general, he is also chairman of the insurance supervisory authority, which at the beginning of the year was placed by law under the direction of the governing board of the bank of italy, assisted by two outside directors. in july 2012 anna maria tarantola, the first woman on our governing board, left the bank to become president of the state broadcasting corporation rai, a challenging assignment that recognizes her management skills and professional rigour. in december, at the end of a career that was exemplary for commitment, dedication and analytical and institutional contributions, deputy director general giovanni carosio concluded his mandate. i would like to thank both of them warmly for their contribution of ideas and activity on behalf of the bank. between october | be substantially reduced if a smaller share of the multi - hundred - trillion - dollar derivatives market was referencing it. some possible alternatives include rates based on the u. s. treasury market or rates based on the secured funding markets that have replaced much of the borrowing banks used to do in the unsecured interbank market. the federal reserve is not seeking to dictate the particular rate that financial markets adopt. instead, we will encourage key market participants to further the work done by the fsb β s mpg by narrowing down the list of alternatives and developing them into robust reference rates that meet agreed - upon international standards and best practices. 12 there are enough suggestions on the mpg β s list to inspire confidence that we should be able to find common ground. any alternative would, of course, need to be in accord with the iosco principles mentioned earlier, and some potential alternatives would take time to fully develop. but the establishment of alternative reference rates for certain products is in our shared interests and would substantially strengthen the financial system. we are strongly committed that at least one such rate be developed and actively used as soon as practicable. and we look forward to working with financial institutions and other market participants to achieve this end. in the near term, the federal reserve, along with other government agencies, intends to meet with a wide range of market participants, including end users, to hear their views as to how change can be effected and to begin the work of developing alternatives to libor. later this year, we will convene a group of the largest global dealers to discuss these issues, following a model that was successfully used to promote derivatives reform. searching for potential alternative rates and encouraging their use will be a key point of that discussion. of course, end users will be affected by these changes as well, and we will also consult closely with key participants outside of the dealer community to make sure that reform meets their needs and is not disruptive to them. in particular, end users who want to continue to use libor will certainly be able to do so, and we will work toward the goal of ensuring that any changes to libor will not require borrowers or lenders to amend their existing contracts. and the markets that reference dollar libor are so enormous that there will surely be more than enough liquidity to support both a new risk free rate as well as libor itself. one of the lessons that i take from our study of libor is that these existing legacy | 0 |
cpi and core inflations will be convergent and under controlled. exchange rate passthrough has been benign, because of the weak domestic demand, commodity price declines, and very well anchored inflation expectation. on current account deficit. our macroeconomic adjustments in the past have succeded in lowering the cad from the peak 4. 4 % of gdp in q2 - 2013 to about 2 % for the whole year 2015. for indonesia, a cad of 2. 5 β 3 % is still sustainable, because we still need to grow and for that we need sustainable financing from fdi and other long - term financing. that is why, with 2 % cad in 2015, we have room for monetary easing without worrying to external sector stability. this year, with the economic recovery gains momentum, cad will be expected to widened but still within our long term sustainable cad norm of 2. 5 β 3 % of gdp. we expect more than enough external financing for these deficits, with fdi constitutes the majority of the capital inflows and to a lesser extent long - term private external borrowing and portfolio investments. on financial system stability. overall banking industry is sound, with car relatively high at about 21 %. lending growth is slowing, only about 10 % in january 2016. but with economic stimulus from both fiscal and monetary, as well as liquidity injection with 1 % reduction of reserve requirement that bank indonesia decided recently, we expect lending growth to increase to about 12 β 14 % this year. overall npl is low at 2. 7 % ( gross ) or 1. 4 % ( net ), although a bit increasing for some banks especially for the mining sectors. we have done bis central bankers β speeches analysis on the corporate risks as well as household risk. last year we record corporate earnings were declining as economy was slowing down. but overall corporates are adjusting quite well, as they are doing a lot of efficiency and early repayments of their debts, both local and external debts. with economy is rebounding, overall corporate performances will also improving this year. bank indonesia policy mix bank indonesia mandate is to achieve price stability ( inflation ) and maintain exchange rate stability to support economic growth. we also support financial system stability. for our policy making, we analyze and forecast macroeconomic condition two years ahead : inflation, economic growth, exchange rate, current account balance, and bank lending, taking into account the latest assessment on fiscal and financial system conditions as well as on global economic growth, interest rates, | to extend bank branches in remote and rural areas, directives on consumer protection, and directives on branchless banking and mobile banking services, among others. let me elaborate on some of these recent policies. first of all, the government through the budget for 2016 / 17 outlined some policy directions related to expansion of banking and financial services in the rural areas, promotion of mobile banking and branchless banking, continuation of government led programs such as rural self reliance fund ( rsrf ), poverty alleviation fund ( paf ), youth and small entrepreneur self - employment fund, and the implementation of subsidized agricultural lending program. secondly, the nrb has been providing direct financial support to the banks and financial institutions that set up branches in remote areas where the number of banking units is minimal. three, in its monetary policy of 2015 / 16, the nrb made an arrangement of special refinance facility at 1 percent interest with the objective of encouraging bfis ( a, b, and c class ) to extend loans to agriculture and small business - based income generating activities in poverty - stricken areas of the country. four, as per monetary policy of 2016 / 17, necessary provisions would be made to support the movement of opening β at least one bank account for each household β and the arrangement of distributing social security allowances through the bank account. five, the final drafts of the national financial literacy policy and the financial sector development strategy ( 2015 - 2020 ) have been submitted to the government for approval. finally, the nepal financial inclusion roadmap ( 2017 β 2022 ), released on july 2016, is expected to guide future initiatives around the immediate priorities for financial inclusion. ladies and gentlemen, let me conclude. financial inclusion can empower even the poorest person and bring about a dramatic change in his fate. financial inclusion is not a one - time effort ; it is an ongoing process that demands concerted and team efforts from all the stakeholders including the government, financial institutions, the regulators, the private sector and the community at large. there is growing urgency in both the public as well as the private sector to promote financial inclusion. though country reforms are starting to bear fruit and should enable countries to move many steps closer to greater financial inclusion, much still needs to be done. finally, by providing a platform for high - level dialogue on financial inclusion, this forum, i expect, would review the current trends, recent achievements, ongoing challenges and opportunities within the region relative to financial inclusion and | 0 |
maintain it and to withdraw any excess liquidity in case of upward risks to price stability. conclusion let me conclude these opening remarks. bis central bankers β speeches three elements are essential for understanding the policies of the ecb : immutable focus on price stability ; acting within our mandate ; and being fully independent. the ecb β s new measures help to ensure price stability across the euro area. they also contribute to improving the economic environment. but completing that task of economic renewal demands continuing action by the governments of the euro area. it is governments that must set right their public finances. it is governments that must reform their economies. and it is governments that must work together effectively to establish an institutional architecture for the euro area that best serves its citizens. we are already moving in the right direction. across the euro area, deficits are being cut. competitiveness is being improved. imbalances are closing. and governments are working seriously to complete economic and monetary union. it is important that europe β s leaders stay on course. in doing so, they will be able to unlock fully the enormous potential of the euro to improve living standards and carry forward the project of european integration. thank you for your attention β and i look forward to our discussion. bis central bankers β speeches | for a wellfunctioning monetary union. in four years, europe will be in a much healthier state than today. bis central bankers β speeches | 0.5 |
tests be met, a decision to join a successful single currency can be made early in the next parliament. to help with the essential preparations, the chancellor has invited the governor of the bank of england and the heads of the two main bodies representing industry and commerce, and two other ministers, to join him on a standing committee to lead the preparations for emu. 12. in the uk wholesale financial markets, practical preparations are accordingly proceeding apace. 13. we at the bank of england have been taking an active role in helping the uk financial markets to prepare for the euro. we do this because, even though the uk will not be in at the start, it is plain that banks and financial institutions in the uk, in their wholesale business for their corporate and institutional customers, in the uk and overseas, will want to be able to offer the full range of financial facilities in the euro from the outset. they will want to be able to offer their customers deposits and foreign exchange facilities in the euro, lending and borrowing in the euro, hedging and collateral in the euro and financing and settlement facilities. the london markets will need to be able to operate in euro from the outset across the full range of their wholesale activities, and practical preparations are now well advanced to achieve that by january 1999. 14. the bank of england β s part in this extensive process of market - wide preparation, besides equipping ourselves internally for operations in the euro, is a co - ordinating one, in three main ways : β’ first, our job is to ensure that the necessary infrastructure is developed in the uk to allow anyone who wishes to do so to use the euro in wholesale payments and across the financial markets from the first day of emu. β’ second, we aim to promote discussion between the emi, national central banks and market participants across europe about practical issues on which the market is seeking a degree of coordination. β’ and third, we provide information : for example, through a quarterly publication on practical issues arising from the introduction of the euro, which is distributed to around 32, 000 recipients, including 4, 000 directly overseas. the next edition will appear shortly, neatly timed for people β s christmas reading, and i confidently expect it to be on the best sellers β list for the festive season. and following the successful symposium we held early this year, we are planning to hold a further symposium, next january at the bank, on london as the international financial centre for the euro. 15. | risk on the largest payments flows β the ones most likely to threaten financial stability by bringing down the system if they failed. but that is not the only innovation that rtgs has delivered over the years. as the financial system has evolved, rtgs has been regularly updated, introducing a raft of new functions and risk mitigants to respond to changing demands. today, we are announcing that the bank has completed, or agreed steps that will complete, all the actions in response to the deloitte report 4 published in march last year following the rtgs outage in october 2014. looking forward, as we celebrate rtgs β twentieth birthday during 2016, it is again time to ask fundamental questions about the shape of the bank β s settlement operations. the way payments are made has changed dramatically in recent years, reflecting changes in the needs of households and companies, changes in technology, and an evolving regulatory landscape. the range of payment providers is growing rapidly. given the implications of these changes for the bank β s mission and for users, businesses and regulators, it is important that the bank consider how rtgs will need to evolve to meet and shape payments trends in the coming decades. that is why we are today announcing our plan to design a blueprint for a new heart that can support the future demands placed on the uk β s high - value sterling settlement system. in my remaining remarks tonight i want to do three things. first, set out some of the key drivers of change. second, explain some of the strategic questions we want to ask on the future role of rtgs. and, third, set out how we will go about developing a blueprint for a new high value payments system. either directly in the case of high - value payments made via chaps, or indirectly after netting in the case of retail payments made via the various private sector schemes. the deloitte report on the october 2014 rtgs outage can be found here : http : / / www. bankofengland. co. uk / publications / documents / news / 2015 / rtgsdeloitte. pdf. an update on the completion of the recommendations of the deloitte report can be found here : http : / / www. bankofengland. co. uk / markets / documents / paymentsystems / deliotteactions. pdf. bis central bankers β speeches evolution in the payments landscape much has changed in the uk payments landscape in the past twenty years. in particular, i want | 0.5 |
when they make a loan or a trade. based on obr forecasts and ons data. financial crises often lead to a long run reduction in gdp, with a persistent decline in output relative to pre - crisis trends. bank estimates based on the impact of historical financial crises in a sample of advanced economies, reported in brooke et al ( 2015 ), suggest that the average cost of a financial crisis has been 73 % of gdp, which translates to a cost of roughly Β£20, 000 per capita if a financial crisis had taken place in 2016. the bank of england β s financial policy committee identifies, monitors and takes action to remove or reduce systemic risks with a view to protecting and enhancing the resilience of the uk financial system. the fpc is not authorised to take action that is β likely to have a significant adverse effect on the capacity of the financial sector to contribute to the growth of the uk economy in the medium or long term β. see figure 1 of my article β an evolving financial system : don β t leave it too late, simulate β. peak amount of cash support in the form of loans and purchase of share capital. source : national audit office. all speeches are available online at www. bankofengland. co. uk / news / speeches losses that would have wiped out the entire british banking system in 2007 can now be absorbed in buffers of capital. stress tests show major banks at the core of the system can now not just withstand recessions in the uk and world economies that are deeper than the financial crisis, they have the capacity to keep lending to households and businesses. 6 this will serve the uk well in the next economic downturn, whatever causes it and whenever it comes. that β s the point of financial stability. it β s not for the benefit of finance. it β s for the benefit of the wider economy. regulation of finance is a means, not an end. that β s why it would have been a mistake to pursue the β stability of the graveyard β. easy though that may have been when the memory of the crisis was raw, and though it would have been beneficial in the bad times, it would have brought too great a cost at all other times. our mandate means everything we do must cost the economy no more than the benefit it brings in the bad times. that explains why, for example, we haven β t gone as far as some would argue for in making banks bulletproof to all possible shocks, however extreme and | previously thought. let me expand on these themes and say a few words about the key points of the governing council β s deliberations. of course, we discussed the evolution of covid - 19. while vaccination rates are generally very high in canada and the number of cases in most regions has declined, the pandemic continues to disrupt our lives. some of the disruptions were expected β we β ve never closed and reopened the economy before, so it was bound to be bumpy. but others, including labour - market frictions and supply disruptions, are more pronounced than anticipated. let me talk about each of these in turn. we β ve seen strong job growth in recent months. many sectors that were hardest hit by lockdowns earlier in the pandemic rebounded strongly as canadians resumed more normal activities. strong job growth has reduced the very uneven impacts of the pandemic, particularly for youth and women. however, the recovery of low - wage jobs continues to lag, many people are not working as many hours as they would like, and the large number of people who have been unemployed for more than six months remains a concern. 1 / 3 bis central bankers'speeches slack remains in the labour market. but even as the unemployment rate remains well above prepandemic levels, job vacancies have risen sharply. this is unusual. our recent business outlook survey indicates that labour shortages have intensified in two areas. the first is shortages of skilled trades and digital workers. this is a challenge that existed before the pandemic as well. the second is more pandemic - specific. as service businesses like restaurants and stores reopened this summer, many had trouble hiring workers quickly enough to meet the surge in demand. part of this reflects the reality that it simply takes time for companies to find workers with the right skills, and for workers to find the right jobs. repeated closures in some sectors and the challenges of working in high - contact jobs during a pandemic may also be affecting the workforce. about half of the unemployed workers who responded to the recent canadian survey of consumer expectations said they β re considering a move to a different industry. with lots of canadians still looking for work, and many employers hiring, we expect employment growth to continue in the months ahead. but the process of matching workers and jobs is more difficult than in a typical recovery, and it could take some time to work through these issues. governing council also spent time discussing supply chain | 0 |
with the domestic and foreign demand outlook. consumer inflation undershot the forecasts in the last quarter of 2012 and stood within the uncertainty band ( 3 β 7 percent ) with 6. 2 percent at the year - end ( chart 15 ). this lower - thanenvisaged inflation rate was mainly driven by the developments in unprocessed food prices, which were stated to pose downside risk on inflation in the october inflation report. meanwhile, core inflation indicators were broadly consistent with expectations. chart 15. october 2012 inflation forecasts and realizations ( percent ) * shaded region indicates the 70 percent confidence interval for the forecast. source : turkstat, cbrt. bis central bankers β speeches cumulative effects of the previous year β s exchange rate and import price movements gradually waned. coupled with the ongoing slowdown in domestic demand, this led to a sustained fall in the annual rate of increase in core goods prices. meanwhile, prices of services remained on a mild track ( chart 16 ). against this backdrop, core inflation indicators maintained a downward trend ( chart 17 ). chart 16. chart 17. prices of core goods and services core inflation indicators sca - h and sca - i ( annual percent change ) ( annual percent change ) source : turkstat. source : turkstat. now, i will touch upon the developments in economic activity on which the inflation forecasts are based besides the short term outlook. third - quarter national income data point that domestic demand conditions remained weak due to private investment demand. private consumption, which displayed an increase for the first time in a protracted period, limited the slowdown in final domestic demand. nevertheless, demand conditions followed a slightly weaker course compared to the projections in the october inflation report ( chart 18 ). last - quarter data indicate a mild pick - up in consumption and investment demand as envisaged. accordingly, output gap forecasts regarding the second half of 2012 are slightly revised downwards compared to the previous report. chart 18. 2012q3 final domestic demand : forecast and realizations ( seasonally adjusted, 2008q1 = 100 ) source : turkstat, cbrt. meanwhile, we estimate that easing financial conditions due to the recent rise in capital inflows may result in a higher - than - expected growth in final domestic demand in the first half of 2013. indicators for orders, loans and other leading indices also support this outlook. bis central bankers β speeches accordingly, we based the projections on a stronger domestic demand outlook for the first half | to the permanence of recovery. the ever - growing budget deficits and swelling public debt stocks driven by the expansionary fiscal policies adopted especially in developed countries became an important risk factor as they push long - term interest rates up and affect private demand adversely. meanwhile, sharp rises are observed recently in the risk premia of greece, spain, portugal and italy with high debt stocks as concerns over the sustainability of their current budget deficit are elevated. after summarizing the stages that the crisis has gone through since mid - 2007, i would like to talk about the reasons for the emergence of the crisis from the viewpoint of the main theme of this conference ; i. e. β the issue of governance β. there is a consensus over the fact that in the pre - crisis period, markets developed, deepened and grew more complex at an astounding pace but the institutions responsible for inspection and supervision failed to keep up with this change. moreover, basel ii regulations made credit rating institutions a part of the regulation process ; and complex derivative products and risk assessment methods spurred over - borrowing. in the pre - crisis period, the accommodating monetary policies adopted by central banks of developed countries in the form of the low interest rate - high liquidity led to moral hazards in financial markets. within this framework, assuming that financial markets always operate efficiently, we can list the reasons for the crisis as deregulation, financial innovations, problematic accounting standards and global instabilities. the liberty brought by deregulation led to shortsightedness driven by over - confidence and short - term profits were preferred at the cost of risking the financial system in the long run. financial innovations generated complex derivative products, where who owes how much to whom is not clear and, which actually lead to multiplying of risk instead of distribution of it. meanwhile, the accounting standards based on β fair value β principle made cyclical effects and fuelled the destructive power of the crisis. having mentioned the stages and reasons for the crisis, now i would like to share with you the monetary policy implemented by the central bank of turkey during the crisis and my evaluations on the recent developments in the turkish economy. projecting that inflation would decrease sharply as of the last quarter of 2008, the central bank of turkey implemented a monetary policy focusing on restraining the potentially harsh impact of the global financial crisis on financial activity without conflicting with the primary objective of maintaining price stability. during this process, the cbt has delivered sizeable cuts in policy | 0.5 |
f. and wouters, r. ( 2007 ), β shocks and frictions in us business cycles : a bayesian dsge approach, β, american economic review, 97, 586 - 606 ; altig, d., christiano, l. j., eichenbaum, m. and linde, j. ( 2011 ), β firm - specific capital, nominal rigidities and the business cycle β, review of economic dynamics, vol. 14, no 2, pp. 225 - 247. 4. bils, m. and klenow, p. j. ( 2004 ), β some evidence on the importance of sticky prices β, journal of political economy, vol. 112, no 5, pp. 947 - 985 ; klenow, p. j. and kryvtsov, o. ( 2008 ), β statedependent or time - dependent pricing : does it matter for recent u. s. inflation? β, the quarterly journal of economics, vol. 123, no 3, pp. 863 - 904 ; nakamura, e. and steinsson, j. ( 2008 ), β five facts about prices : a re - evaluation of menu cost models β, the quarterly journal of economics, vol. 123, no 4, pp. 1415 - 1464. 5. golosov, m. and lucas, r. e. ( 2007 ), β menu costs and phillips curves β, journal of political economy, vol. 115, no 2, pp. 171 - 199. 6. karadi, p., schoenle, r. and wursten, j. ( 2021 ), β measuring price selection in microdata : it β s not there β, working paper series, no 2566, ecb, frankfurt am main, june. while this paper uses data from the united states, its findings are consistent with the results based on euro area data ( see gautier, e. et al. ( 2022 ), β new facts on consumer price rigidity in the euro area β, working paper series, no 2669, ecb, frankfurt am main, june ). 7. dotsey, m., king, r. g. and wolman, a. l. ( 1999 ), β state - dependent pricing and the general equilibrium dynamics of money and output β, the quarterly journal of economics, vol. | of 2019. among others, see k. coombs, a. dube, c. jahnke, r. klunder, s. naidu and m. stepner, early withdrawal of pandemic unemployment insurance : effects on earnings, employment and consumption, american economic review, papers and proceeding, 2022 ; a. dube, early withdrawal of pandemic ui : impact on job finding in july using current population survey, blog post ; n. petrosky - nadeau and r. valletta, ui generosity and job acceptance : effects of the 2020 cares act, frb sf working paper, 2021 ; e. forsythe, l. kahn, f. lange, and d. wiczer, where have all the workers gone? recalls versus reallocation in the covid recovery, nber working paper, 30387, 2022. l. coraggio, m. pagano, a. scognamiglio and j. tag, jaq of all trades : job mismatch, firm productivity and managerial quality. once it starts, such a spiral is difficult to stop. having said that, right now policymakers must act promptly and forcefully to counter inflation so that, looking ahead, workers β purchasing power is effectively and durably protected. otherwise, this arrangement will be difficult to sustain. the eurosystem has clearly indicated its determination to do what is needed. structural issues ageing and migration in the euro area, labour force participation increased considerably in the past few decades. various factors contributed to this development, including higher statutory retirement ages and the inflow of migrants, which typically have high participation rates. 6 going forward, longer life expectancy calls for longer working lives. given the current and projected age structure of the population, however, it seems rather unlikely that increased labour supply among the elderly will fully offset the impact of ageing on the labour force in the next decades. from an economic standpoint, sustained migration can balance the effect of demographics on the labour force and ease the pressure on the labour market. this is already apparent in certain segments of employment, where migrant labour predominates. the issue of migration is highly politically charged in many countries, and it is not appropriate for me to take a stand on the broader political issue. what i think i can say here is that, whatever one β s political preferences, the structure of migration policies can, in practice, make a significant difference in terms of | 0 |
particularly resources ) and services. a depreciation of the australian dollar in response to negative developments in external conditions could be expected to act as a buffer in the way that it has in the past. while i have focused today on a number of the downside risks, we should not lose sight of the fact that the central scenario over the next few years is for a gradual moderation of growth in china. and over the longer term, there is a lot of room for further development of the chinese economy, which will provide australia with many economic opportunities. while the value of non - rural exports to china have declined with the fall in commodity prices, the value of other exports to china have been rising strongly of late ( graph 11 ). we are likely to continue to benefit from rising incomes and the associated demand for high - quality food, goods and a wide array of household and business services from china and the region more broadly. graph 11 bis central bankers β speeches | glenn stevens : economic conditions and prospects β creating the upside address by mr glenn stevens, governor of the reserve bank of australia, to the economic society of australia luncheon, brisbane, 10 june 2015. * * * i thank elliott james for research assistance. thank you for the invitation to speak in brisbane once again. the last time i spoke with this group, in july 2013, the economy was estimated to be growing at about 2Β½ per cent. 1 underlying inflation was 2ΒΌ β 2Β½ per cent, consistent with the target of 2 β 3 per cent. two years on, the economy is growing at just shy of 2Β½ per cent and underlying inflation is around 2ΒΌ β 2Β½ per cent, consistent with the target. in some respects, then, it might seem that not much has changed. in fact a number of important developments have occurred during that period, some as anticipated and some not. overall, the fact that not much has changed is disappointing : the economy has not picked up speed as we had hoped. in this talk, i will make some observations about the global and domestic economies, and try to give some sense of what we have learned in the past couple of years. the global economy two years ago, we judged australia β s trading partner group to be growing at about its average pace of around 4 per cent. it was expected that during 2014 and 2015 growth in this group would pick up a bit, to a pace a little above average. in fact, growth for our trading partners has remained at about 4 per cent and is expected to stay there over the next couple of years. to be sure, 4 per cent growth is faster than growth for the world economy as a whole, which is more like 3ΒΌ per cent. it has been to australia β s advantage that we have a high exposure, for an advanced country, to the faster - growing asian region. as an example, while the euro area is a significant trading partner for australia, we were probably less affected than many countries in 2012 and 2013 when europe lapsed back into recession. two years ago, i noted that the economy of the euro area was still smaller than it was before the financial crisis. regrettably, that remains true today. europe is back on a growth path now, but it is still a fairly modest one, and it seems to require extraordinary settings of monetary policy to achieve even that. growth has recently resumed in japan after a dip in activity following the enactment of a tax increase | 0.5 |
##ized and resolved within an institution? in fact, many possible mechanisms exist to help ensure full accountability for each role, thereby minimizing potential conflicts while getting synergies from having the two roles under one roof. the arrangement we use in thailand, as i alluded to earlier, is the establishment of two separate policy boards that include outside experts. the linking pin is membership in both policy boards by central bank β s senior management, which makes it possible for information and knowledge in one area to be usefully employed in performing the other, without compromising the mandate of each policy board. for example, detailed supervisory information about banks β changing risk appetite and exposure to different economic sectors and markets β as well as how these risks are being managed β can provide useful early warnings about the health of the economy and potential systemic problems down the road. this can be a very important input for monetary policy board. on the other hand, central bank β s oversight of monetary policy and economic stability can strengthen and provide context to its supervisory responsibilities, for example, in identifying potential macro factors that may affect the health of financial institutions. decisions about the stance and timing of prudential and supervisory policies in general can also be more appropriately made with the full knowledge of macroeconomic conditions and monetary policy. as can be seen, the two policies are essential to each other and hence it is useful or even desirable, in my opinion, for central banks to supervise at least the core financial sector, whether under a separate or integrated supervision model. this is most evident in times of systemic crisis where central banks β last - resort lending is likely to be called upon and prompt decision is vital. central banks that also supervise core financial institutions would have the clear benefits of immediate access to vital information and expert assessment from supervisory staff about the health of individual institutions and their systemic implications. this could greatly help reduce the likelihood of any unnecessary delay or even misinformed decision that might hamper efforts to stem a financial crisis. for emerging market economies, the case for central banks to supervise the core financial institutions may be even stronger. this is because, financial markets in these countries are typically not well developed enough to serve as an efficient channel for the transmission of monetary policy. market interest rates and even commercial banks β prime rates react only sluggishly to changes in central bank β s policy rate, and often with a long time lag. in these circumstances, the traditional tool of monetary policy alone is unlikely to be enough to maintain economic and financial | stability. since in most emerging market economies, commercial banks are by far the most dominant players in the financial system, central banks with supervisory responsibilities could and should make use of targeted prudential policy to tackle financial imbalances and excessive asset price movements, both of which lie at the heart of all financial crises. this was what we did in 2003 to successfully contain incipient speculative bubbles in the property sector by imposing a ceiling on banks β loan - to - value ratio of high - end housing loans. in the same vein, in order to contain household debt at prudent levels to prevent financial imbalances, a maximum credit - to - income ratio was imposed on credit card and personal loans. let me now turn to the current financial crisis and discuss some lessons that are relevant to the issue of supervisory arrangement. if we look at the wide range of counties afflicted by the current turmoil, we immediately notice that financial sector problems happened in countries with either supervisory model. notably, the us is well - known for its multiple agencies, whereas the uk has an integrated one. yet both countries are currently faced with similar financial sector problems. one cannot help but think that there must be certain common supervisory weaknesses that led to the crisis, regardless of the supervisory arrangements. so perhaps the key question is not about the institutional form but rather about how to strength the regulatory framework to ensure financial stability. of course, this is not an easy task, given the scale and the complexity of the problems that we are in right now. several committees and working groups of various organizations, including the bis, are working on a number of issues that have been identified as contributing to the crisis, such as the procyclical nature of supervisory and accounting rules and the inadequate focus on liquidity risk. i do not know whether there are efforts to try to identify common weaknesses of different institutional setup of supervision. but no doubt this is an area that more work will be needed. to me, both types of institutional setup may have one important common weakness, that is, there does not seem to be the notion of a lead supervisor in either model. allow me to elaborate on this point. in the case of separate authorities, it would be normal for each authority to assume that every authority is doing its job according to its mandate. therefore, one would tend to focus only on its own mandate. this can be a problem if some authorities fail to do a proper job, others may not be able to take note. | 1 |
governance and conduct prudential regulation and conduct regulation denote what is commonly known as twin peaks model for the regulations. in rbi, we are looking at these two aspects through the prism of governance with equal emphasis on conduct of business through prudence. it's no doubt essential for the management to deliver good performance but more importantly this should be achieved by adhering to acceptable customer and market conduct and best corporate governance practices. we often see that the matters of conduct do not get the priority or attention of the board which they should be getting. customer service, customer conduct, ethical employee behaviour, data privacy, cyber security are critical and important issues which assume even greater relevance in times of innovation, change and business disruptions. good or rather best practices in these areas are the key soft pillars which build the edifice of a successful financial institution, more so in these challenging times. therefore, there is a need to reflect on the role and expectations from the governance architecture viz., the board and its committees, the independent directors and the assurance functions in banks and other financial institutions on these issues. in fact, the board should drive a culture where the expectation would be to go beyond baseline compliance to regulatory and legal requirements and aim for higher, best - inindustry standards. to this end, the board must ensure a suitable policy framework for its own assessment regarding effectiveness and composition, in accordance with their strategies and risk profiles, both at the aggregated and dis - aggregated levels. concluding remarks 4 / 5 bis - central bankers'speeches as we strive to become a developed country by 2047, financial institutions will need extraordinary amounts of financial resources to support growth to realise our visions for a brighter tomorrow. raising these resources would not be a constraint for financial intermediaries with robust governance frameworks as they can command a governance premium. it is important in this context to gain and retain the trust of other stakeholders such as depositors and various providers of financial resources. this is best ensured by strong governance, control, and assurance functions in financial institutions. also, while we collectively aspire for an efficient financial intermediation with positive spill over to the real sectors, these aspirations are set in an increasingly competitive, diverse, and interconnected world. as the saying goes, the time to fix the roof is while the sun is shining. the banking sector in india at this juncture is sound, resilient, and financially healthy. so, the time is perhaps right to improve the plumbing by | y v reddy : a central bankeraβ¬β’s perspective of the world economy statement by mr y v reddy, governor of the reserve bank of india and alternate governor of the fund for india, at the joint annual discussion of the boards of governors, on the occasion of the 2003 imf / world bank annual meeting, dubai, 23 - 24 september 2003. * * * world bank group international bank for reconstruction and development international finance corporation international development association international centre for settlement of investment disputes multilateral investment guarantee agency international monetary fund mr. chairman : since we met last in april 2003, there have been some signs of improvement in the global environment. recent economic data of some countries as well as some forward looking market indicators, particularly those relating to financial markets indicate that we may be seeing some signs of global economic recovery. while we share the view that this could indicate the beginning of a stronger recovery, we recognize that considerable risks still persist, though the upside risks appear to outweigh the downside risks. the outlook for the united states, euro area and japan presents a mixed picture. if current trends are any indication, global recovery in the near - term would be led by the united states. however, the widened and historically high twin deficits, in fiscal and current accounts, of the united states pose the threat of possible disruptive adjustment of the us dollar against other major currencies. we recognize this as a necessary short term trade - off for realizing medium - term gains. we, therefore, urge all the major currency areas to coordinate their policies and to carefully monitor currency market behavior to minimize potential adverse repercussions on financial markets and on sustainability of global economic recovery. the recent depreciation of dollar has, to some extent, minimized the possibility of such disruptive adjustment. further, continuing robust productivity trends support the strong prospect for recovery in the united states. in this regard, there is considerable merit in the u. s. evolving a medium - term fiscal framework to bring its fiscal position on to a sustainable path. the outlook for the euro area seems rather flat. as in the us, there is a comparable element of trade - off. while the monetary stimulus provided by the european central bank is encouraging, scope exists for using fiscal stimulus in a more countercyclical manner. in our view, the stability and growth pact should be applied in a flexible manner to allow the automatic stabilizers to run their courses in the short - term, even if that results in marginal | 0.5 |
the continued weakness in the international economy. however, the consensus forecast is that the prospects for global growth for 2010 have not changed for the worse. growth in this year is largely expected to come from the emerging market economies, such as china and india, as the advanced economies are projected to experience low to moderate growth. in light of the outlook for the global economy and recent adverse weather conditions, the bank has revised its projection of the performance of the domestic economy for this fiscal year. the domestic economy is currently being forecasted to contract marginally in the range of 0. 0 per cent to 1. 0 per cent for fiscal year 2010 / 11. this is in contrast to our earlier forecast of marginal growth for the fiscal year. the change in projection is largely due to the extent of the fall - out in the june quarter and the impact of tropical storm nicole in the december quarter. the forecast for a marginal decline in the fiscal year as a whole therefore depends on there being growth in the march 2011 quarter. domestic inflation for fy2010 / 11 is expected to be at the upper end of the revised forecast range of 6. 0 per cent to 8. 0 per cent and within the original target range of 7. 5 per cent to 9. 5 per cent. this projection is underpinned by continued low consumer demand, a stable exchange rate and continued moderation in inflation expectations. the risks to the inflation projection are balanced. the downside risks continue to be a greater than anticipated contraction in demand due to sharper than expected reductions in real incomes. the upside risks include adverse weather conditions and higher than anticipated increases in international commodity prices. given the above factors, the central bank will remain vigilant in monitoring developments in the international and domestic economy. in addition, despite the projected uptick for inflation in the december quarter, the medium - term outlook indicates a resumption of the downward path. against this background, the bank will continue to be cautious in easing its monetary policy stance. conclusion ladies and gentlemen, the successes we have had to date in the macroeconomic indicators have been assisted by the on - going consolidation of the fiscal accounts. the fiscal authorities have been meeting their targets under the imf stand - by arrangement and from all indications the quantitative targets under the september review have also been met. both local and foreign investors continue to monitor the country β s progress carefully. they have so far indicated their approval by the preference shown for jamaican financial assets. this must not be taken | the impact of the lower energy prices, however, were increases in the prices of some agricultural products, particularly in july. this mainly reflected the lagged impact on food prices of drought conditions from late - 2009 to mid - 2010. we are projecting that there will be an up - tick in inflation in the december quarter with headline inflation expected to be within the range of 2. 0 per cent to 3. 0 per cent. the projected acceleration in inflation in the december quarter is largely influenced by the above average rainfall experienced by the island at the end of september caused by the passage of tropical storm nicole, which led to severe damage to local crops and the road network. in this context, there is expected to be some increase in the prices of select agricultural commodities, particularly in november and december. however, the government has announced plans to import certain food items, which could partly mitigate some of these increases. in addition, the recent increases in the prices of oil, corn and wheat on the international market are expected to continue in this quarter. real sector economic activity is estimated to have remained weak during the september quarter, with real gdp contracting in the range of 0. 0 per cent to 1. 0 per cent relative to the sharp decline in the june 2010 quarter. in fact, real gdp contracted by 2. 0 per cent in the june quarter relative to the bank β s estimate of a decline in the range 0. 0 per cent to 1. 0 per cent. the decline in the june quarter followed three consecutive quarters of deceleration in the pace of decline. the areas in which the declines were sharper than we had estimated were agriculture, forestry & fishing, manufacture, transport storage & communication and financing & insurance services. the estimated out - turn in the review quarter reflected continued contraction in the nontradable industries as the tradable industries are estimated to have recorded marginal growth. in particular, construction, manufacture, finance & insurance and electricity & water supplies are estimated to have been the major industries to decline in the quarter. mining & quarrying was the major influence on growth in some tradable industries. in the context of the excessive rainfall at the end of september, the bank β s projections indicate that real gdp will marginally contract or expand in the december quarter in the range β 0. 5 per cent to 0. 5 per cent. most industries are projected to contract, with the exceptions being mining & quarrying and hotels & restaurant. outlook looking ahead, there are concerns about | 1 |
reaches full employment. we can think of a decline in inflation expectations as a downward shift in the philipps curve, leading to a lower intercept. clearly, this downward shift in the phillips curve counteracts the reflationary impact that the accommodative monetary policy intends to achieve via the absorption of economic slack ; and the downward impact may, in fact, dominate in certain conditions. in particular, if the relationship between inflation and slack is relatively weak β implying a flat slope of the phillips curve β a given degree of monetary accommodation is less likely to trigger the upward momentum in prices necessary to compensate for falling inflation expectations. as a consequence, actual inflation may decline, even in situations where monetary policy has been successful in reducing slack. the economy may then enter on a self - sustaining spiral : declining inflation expectations shift down the phillips curve, which puts downward pressure on actual inflation, which in turn translates into a further decline in inflation expectations. conclusion let me conclude. decades of experience have confirmed the importance of price stability for macroeconomic stability and sustained economic growth. that is true both when inflation is too high and eggertsson, g. and b. pugsley ( 2006 ), β the mistake of 1937 : a general equilibrium analysis, β monetary and economic studies, institute for monetary and economic studies, bank of japan, vol. 24 ( s1 ), pages 151 β 190, december. orphanides, a. and j. williams ( 2004 ), β imperfect knowledge, inflation expectations, and monetary policy, β nber chapters, in : the inflation - targeting debate, pages 201 β 246 national bureau of economic research, inc. bis central bankers β speeches when it is too low. the prolonged period of low inflation we are in today has increased the risks that inflation misses might become persistent, which would be deeply damaging for the economy. this is why we have reacted so forcefully to secure our objective β and will continue to do so in the future if necessary. to be sure, the crisis has proven that ensuring price stability is not sufficient for sustainable growth. it is only an enabling condition and other policies must also play their part. still, the need for a superior policy mix is no excuse for central banks to be passive when their mandates are under threat. the ecb has demonstrated through its actions that it does not wait for others to move first. bis central bankers β speeches | benoit cΕure : exchange of views with members of the high council of public finance introductory remarks by mr benoit cΕure, member of the executive board of the european central bank, prior to an informal exchange of views with the high council of public finance, paris, 17 july 2019. * * * thank you for inviting me to the high council of public finance. it is a pleasure to engage in an informal exchange of views with you on the monetary policy of the european central bank ( ecb ) and more broadly on economic and monetary union ( emu ), with a specific focus on issues of relevance to fiscal policy. allow me to start by briefly discussing the economic situation of the euro area. the euro area economic outlook the euro area economy grew by 0. 4 %, quarter on quarter, in the first quarter of 2019, following an increase of 0. 2 % in the fourth quarter of 2018. however, incoming economic data and survey information point to somewhat weaker growth in the second and third quarters of this year. this reflects the ongoing weakness in international trade in an environment of prolonged global uncertainties, which are weighing in particular on the manufacturing sector. looking ahead, the euro area expansion will continue to be supported by favourable financing conditions, the mildly expansionary euro area fiscal stance, further employment gains and rising wages, and the ongoing β albeit somewhat slower β growth in global activity. this assessment is broadly reflected in the june 2019 eurosystem staff macroeconomic projections for the euro area, which foresee annual real gdp increasing by 1. 2 % in 2019, 1. 4 % in 2020 and 1. 4 % in 2021. the risks surrounding the euro area growth outlook continue to be tilted to the downside, on account of the prolonged presence of uncertainties related to geopolitical factors, the rising threat of protectionism and vulnerabilities in emerging markets. according to eurostat β s flash estimate, euro area annual hicp inflation was 1. 2 % in june 2019, unchanged from may 2019. based on current futures prices for oil, annual hicp inflation is likely to decline over the coming months. adjusting for the temporary factors behind the recent volatility, measures of underlying inflation remain generally muted. looking further ahead, underlying inflation is expected to increase over the medium term, supported by our monetary policy measures, the ongoing economic expansion and stronger wage growth. this assessment is broadly reflected in the june 2019 eurosystem staff macroeconomic projections for the euro area, which | 0.5 |
price. all in all, the focus on our core activities has enabled us to cut the number of employees, which at present is about 450. this can be compared with a figure between 15, 000 and 16, 000 for the bundesbank or the banque de france. in relation to the population, the corresponding number for the riksbank would be almost 2, 500. bear in mind, too, that many of our functions have little or nothing to do with the size of the population. strength and security as a newcomer i found that in certain respects the riksbank resembled a traditional swedish industrial estate. those establishments were stable and often highly professional in their field, which might be high - grade steel or paper ; but they also tended to be run autocratically and resist change. central banks have also lived a closed existence, with a corporate spirit that was both good and bad. this is something that has to be renounced to enable us to perform our tasks properly and both attract and retain the best university graduates. an open internal dialogue with management is needed to promote an informal exchange of ideas. taking responsibility and meeting deadlines must also be rewarded. it is easy to say that some mistakes are acceptable provided things get done but that attitude is by no means customary in a central bank. last but not least, we must have an open attitude to the outside world, accept impulses and explain what we are doing. so what have we done in recent years to make the riksbank a more modern place to work in? here are some examples : Β· we have aimed for a better organisation by making it flatter and delegating more to heads of department and division. that in turn means that general objectives and tasks must be formulated clearly for all concerned so that everyone is aware they are not just piling stones on top of each other but actually helping to build a cathedral. Β· we have accentuated the analytical and academic profile. our advisers are world - class academics and members of the staff have access to further education in sweden as well as abroad. we have also made the basic operations more efficient. Β· another aim has been to give staff a more flexible working life. working from home should be simple and everything should function properly even when a senior official is at home looking after children. staffing therefore has to be arranged with this in mind. we are also having a drive for more women in managerial posts. last year we started a mentor programme for female administrators with a view | william c dudley : title ii resolution, a useful tool but not a panacea remarks by mr william c dudley, president and chief executive officer of the federal reserve bank of new york, at the 2013 resolution conference β planning for the orderly resolution of a global systemically important bank β, washington dc, 18 october 2013. * * * the topic of how systemically important financial institutions ( sifis ) will be resolved is a very important subject. as we saw during the financial crisis, the failure of lehman brothers generated huge shocks across the global financial system that led to a deep global downturn. that is not an acceptable regime and i am very glad we are working hard to change it. i thank the organizers for giving me the opportunity to make some short remarks. today, i β m going to take a somewhat broader view than some of the other speakers, focusing on two issues : β’ some outstanding questions about how the β single point of entry β strategy under the title ii resolution regime would work in practice. β’ how the resolution regime fits within the broader supervisory agenda of ending β too big to fail β and making the financial system more resilient and robust. as always, what i have to say today reflects my own views and not necessarily those of the federal reserve system. the first point i β d make is that i very much endorse the single point of entry framework for resolution as proposed by the federal deposit insurance corporation ( fdic ). i think it is the best plan for implementing title ii given the complexity and scope of large, global financial institutions and i also think it is well - suited to the u. s. bank holding company framework. by assigning losses to shareholders and unsecured creditors of the holding company and transferring sound operating subsidiaries to a new solvent entity, such a β top - down β resolution strategy will facilitate continuity for the critical services performed by the firm β s subsidiaries. this will reduce the costs associated with the failure of the parent company and reduce the degree of disruption to financial markets and financial stability. while the title ii single point of entry strategy holds tremendous promise, i think it is important not to declare victory prematurely. first, there are still significant issues about how the resolution of a large systemically complex firm would work in practice. second, even assuming that our efforts to overcome these challenges are ultimately fully successful, resolution is still likely to represent a β second best β outcome compared to preventing a systemically important financial institution from failing in the | 0 |
markets can strengthen financial stability by increasing private risk sharing, thereby facilitating the absorption of shocks throughout the eu. at the same time, well - functioning capital markets facilitate the transmission of our monetary policy. financial integration therefore features prominently in the eurosystem β s mission statement. cmu is also an agenda for an increase in the diversity and size of capital markets through the further development of certain market segments. deeper and more diverse capital markets provide alternative sources of funding. for example, financing tools could be developed to better account for the specific needs of small and medium - sized enterprises, infrastructure projects or long - term financing. moreover, the reduction of the economy β s dependence on bank financing would widen the set of tools available for the conduct of monetary policy. however, there is a real danger of failing to explicitly identify the necessary conditions for the cmu to achieve its objectives. let β s be clear : a genuine cmu means achieving a high level of financial integration in completing the single market in this area. in a genuine cmu, all market participants with the same relevant characteristics should face a single set of rules, have equal access to a set of financial instruments or services, and be treated equally when they are active in the market. the eu β s capital markets union therefore needs to be underpinned by a single legal and regulatory framework that provides a level playing field and allows markets to integrate and develop. this has a number of implications. first, the goal of having such a capital markets union is in itself very ambitious. hoping that cmu will bring the expected benefits without accepting the prospect of full regulatory harmonisation is wishful thinking. getting halfway there will not be enough. in fact, half a capital markets union is still no capital markets union. this was one of the lessons of the crisis, in particular regarding the interplay between the single market and an incomplete regulatory and supervisory framework for banks. there is no reason to doubt that what holds for banking also applies to capital markets. second, developing a genuine single rulebook for capital markets would also mean addressing barriers in policy areas that are relevant beyond capital. these include politically sensitive areas such as insolvency and corporate laws as well as taxation of financial products. where legislative progress is for the moment not possible at the eu level, we need determined and concerted action at the national level to lower cross - border barriers. third, the single rulebook would also need to be complemented over time by the common implementation and enforcement of | rules as the deeper interconnectedness generated by cmu increases risks of contagion and consequently requires enhanced oversight and supervision of markets and institutions. the european parliament as co - legislator has a pivotal role to play in this process, and i trust that it will be a key contributor to the creation of a genuine cmu. bis central bankers β speeches conclusion let me conclude. the major efforts undertaken since the beginning of 2014 as regards both monetary policy and the banking union demonstrate that europe can deliver when determined action is needed. nevertheless, we need to go further. sound fiscal and structural policies at the national level and further steps to reinforce the institutional underpinning of economic and monetary union would allow the euro area economy to become more resilient. moreover, decisive actions and reforms are needed to support the creation of a genuine capital markets union with a view to unleashing the full benefits of more robust financial integration. these developments will play a key role in paving the way to a sustained recovery and a stronger monetary union, resilient to shocks and a guarantee of stability and prosperity. bis central bankers β speeches | 1 |
and platforms. they can choose digital or physical, niche or universal. 9. not surprisingly, competition is bringing down costs and improving customer experience. for example, traditional banks have been phasing out fees for maintaining low account balances. many are proactively improving their digital platforms to improve the user experience. 10. we owe this progress to the innovators, entrepreneurs, and bankers in today β s audience. it has been driven by your hard work and determination. 11. as a regulator, we help to facilitate this progress. we ensure a level playing field for all types of financial institutions. and we uphold the integrity of the banking system. 12. 160 - plus incumbent banks and new virtual banks β including banks built by tech giants β operate in our ecosystem. they may have different fintech strategies. they may try and grow their digital banking businesses in different ways. but it β s precisely this diversity that 1 / 4 bis central bankers'speeches makes the hong kong banking market so dynamic and well - positioned to drive innovation. this diversity is crucial to our vision of shaping hong kong into a global fintech hub. 13. so hong kong has embraced a new era for smart banking. but what will thenext era look like? how will we bring our vision to life? i think we β re all here today with those questions in mind. 14. at the hkma, we know data will be vital to the future of banking. data analytics is pivotal in customer authentication, credit assessment, and compliance monitoring. indeed, data is key to almost every banking function. it is perhaps the most powerful tool for delivering the timeless banking principles i mentioned. as we head into the next era, data will enable better service, greater trust, and more efficient capital management. 15. going back to my dining analogy, you could say data is banking β s β secret sauce β. it makes every meal better β no matter how you serve it. and that is why the hkma is adopting a data - centric strategy to support the future of banking in hong kong. 16. i have been talking a lot about our efforts to promote diversity and innovation through a level playing field. that reflects our supervisory role. equally important is our role in fintech market development. this market development mandate is the context for our new data strategy. let me give you some background. data and the next era 17. hong kong businesses and people are embracing technology. they β re ready for the future | measurement of output and price. as member of the technical advisory committee of national accounts statistics ( nas ), statistics on prices and cost of living ( spcl ), revision of wpi and cpi series, etc., rbi has been playing a critical role. let me highlight a few recent initiatives. the procedure of converting current price estimate into constant price followed earlier, especially for estimating the output of financial sector, resulted in some kind of anomalies. in some cases, while estimate at current price was negative, constant price estimate was positive and increasing. however, in the last gdp revision ( 1999 - 00 series ), this problem was corrected after a series academic discussion with cso. similarly, treatment of some of the financial intermediaries like mutual funds was not defined clearly in sna 1993. and treating mutual funds similar to banks was conceptually not correct. recently, cso set up a committee in rbi to look into this matter and the recommendations of the committee has been accepted by tac of nas. besides, rbi is also working in close collaboration with cso for implementing the ensuing changes of sna revision due this year. let me cite an example of rbi β s recent involvement in price measurement issues. the need for integration cpis is nothing new. the national statistical commission ( 2001 ) recommended, inter alia, that the current cpis do not provide changes in the prices for the entire rural and urban population since they are designed to measure the changes in the prices of goods and services consumed by specific segments of the population and hence there is a need to compile the cpi separately for the entire rural and urban population. in this context, a sub - group set - up in rbi, recommended the compilation of separate cpis for whole rural and urban population and provided a roadmap for compilation. i happy to note that tac on spcl has finally accepted this and shortly we shall have cpi ( u ) and cpi ( r ). needless to mention that these price indices will be very useful for monetary policy purposes. application of statistical methods in rbi : need for further work before i conclude, let me outline a few areas of work in rbi where statisticians can contribute significantly. first, as monetary policy formulation largely depends on the forward - looking behaviour of the economy, the use of forecasting techniques automatically comes in the forefront. while traditional time series techniques are useful, we need to build up expertise on forecasting using calibrated models. such models | 0 |
continue benefiting from favourable financing conditions, corporate balance sheet restructuring, and improvements in earnings and business efficiency. consumption growth should continue to strengthen gradually over time, in line with developments in employment growth and hence real disposable income. this generally favourable outlook for economic activity in the euro area is also reflected in forecasts by international organisations and private sector institutions. risks to the outlook for economic growth are broadly balanced over the shorter term, although recent geopolitical tensions and their impact on markets are a timely reminder of the uncertainties that we face. medium to longer - term risks lie on the downside and relate in particular to the potential for further oil price rises, a disorderly unwinding of global imbalances and protectionist pressures, especially after the suspension of the doha round of trade talks. turning to price developments, according to eurostat β s flash estimate, annual hicp inflation was 2. 5 % in july 2006, unchanged from june and may. in the second half of 2006 and on average in 2007, inflation rates are likely to remain above 2 %, the precise levels depending very much on future energy price developments. while the moderate evolution of labour costs in the euro area is expected to continue in 2007 β also reflecting ongoing global competitive pressures, particularly in the manufacturing sector β indirect effects of past oil price increases and already announced changes in indirect taxes are expected to exert a significant upward effect on inflation in the course of next year. against this background, it is crucial that the social partners continue to meet their responsibilities. risks to the outlook for price developments have augmented and include further increases in oil prices, a stronger pass - through of past oil price rises into consumer prices than currently anticipated, additional increases in administered prices and indirect taxes, and β more fundamentally β stronger than expected wage and price developments owing to second - round effects of past oil price increases at a time of gradually improving labour markets. regarding prospects for inflation over medium to longer horizons, our assessment that upside risks to price stability prevail is confirmed by the monetary analysis. while the data for june 2006 show some moderation in the annual growth rate of m3, these latest developments remain consistent with a persistent upward trend in the underlying rate of monetary expansion since mid - 2004. the stimulative impact of the low level of interest rates in the euro area has been an important factor behind the tendency for money and credit growth to strengthen over recent quarters. looking at the counterparts of m3, the expansion of credit to | as regards structural reforms, it is essential, for europe β s future, to ensure that it has a fully operational internal market, allowing a free flow of labour and capital and free trade in goods and services. removing the remaining barriers within the eu will be a powerful means to promote the efficient allocation of factors of production as well as deeper economic and financial integration. this in turn would allow the eu to realise its substantial potential for stronger output and employment growth and to increase its resilience to shocks. exploiting the opportunities of the single market will help to safeguard the prosperity of the citizens of europe. for those member states which have fulfilled the convergence criteria laid down by the treaty and participate in the euro area, the considerable benefits of the internal market are further enhanced by the single currency, which offers them a credible framework for monetary policy and price stability in an environment characterised by the absence of exchange rate uncertainty within the euro area, low long - term interest rates, price and cost transparency, reduced transaction and information costs and stronger insurance against economic and financial instability. in this respect, the further enlargement of the euro area on 1 january 2007 with the entry of slovenia will be a new historical landmark. in order to fully reap the advantages of the euro and to allow adjustment mechanisms to operate efficiently within the enlarged currency area, it will be necessary to fully integrate slovenia into economic and monetary union, which calls for all remaining barriers to be removed, including those related to labour mobility. indeed, open, competitive and flexible markets are of particular importance for the functioning of the euro area economy and the smooth conduct of the single monetary policy. for its part, the governing council has undertaken all the necessary preparations to make banka slovenije an integral part of the eurosystem. we are now at your disposal for questions. | 1 |
8 percent from the previous quarter ( chart 2 ). covid - 19 has exerted considerable downward pressure on aggregate demand in japan's economy through the following three major channels : ( 1 ) goods exports ; ( 2 ) inbound tourism demand ; and ( 3 ) domestic private consumption. the output gap - - which represents the balance between the aggregate demand and average supply capacity - - narrowed within positive territory for the january - march quarter, reaching almost 0 percent. given the deterioration in the diffusion indices ( dis ) related to employment and business fixed investment in the bank of japan's june 2020 tankan ( short - term economic survey of enterprises in japan ), it is quite likely that the gap will become negative for the april - june quarter ( chart 3 ). in what follows, i will outline each of the three channels through which covid - 19 has exerted downward pressure on aggregate demand in japan's economy. the first is exports. exports, mainly of automobile - related goods to the united states and europe, declined substantially in the april - may period, when each country imposed strict limits on movement in order to contain the spread of covid - 19, and the recovery thereafter has been sluggish. meanwhile, exports to china, where economic activity resumed first, have continued to pick up. the second channel through which covid - 19 has exerted downward pressure is inbound tourism demand. inbound demand centered on tourism had been one of the major driving forces in japan's economy, as indicated by the fact that the number of visitors to japan exceeded 30 million in 2019. unfortunately, however, this demand has almost evaporated due to the global spread of covid - 19. the outlook for inbound tourism demand is extremely severe as it is expected to remain subdued for as long as entry restrictions continue. the last channel is domestic private consumption. this marked a large decline particularly in the april - may period, when the state of emergency was in place. since then, it has been gradually heading toward a pick - up, along with the resumption of economic activity. nevertheless, the pace of the pick - up will likely be quite moderate, mainly for dining - out and services for individuals, due to vigilance against covid - 19 and the need to ensure social distancing. in addition, the propensity to consume will likely remain at a somewhat low level compared with the past average, mainly due to a rise in concern over future | of exchange controls the existing exchange controls in the region were analysed by a sub - committee of the governors β committee with a view to gradual harmonisation. participating countries are being encouraged to remove remaining exchange controls for transactions within the region as quickly as possible. arrangements were made for the repatriation of banknotes amongst participating countries, and for an easing of private sector investments across borders in the region. three countries, i. e. botswana, mauritius and zambia, have removed all exchange controls and some others are making steady progress in the implementation of this programme. a vision for the future as already mentioned, the sadc organisation is a political association that covers a much wider objective than just financial cooperation within the region. this wider objective, however, has more potential for disputes and friction, and will also at times be constrained by the red - tape of a long drawn - out inter - governmental decision - making process. i believe that the committee of governors of the central banks of sadc provides a unique body that should be able to proceed with a programme of financial cooperation in the region, without being unduly constrained by the more complex political decision - making processes. at this stage, i believe work should continue to proceed on the accepted road of focusing on identified projects that can be developed on a regional basis without full economic integration of the 14 countries now forming part of sadc. most of these programmes will also not require any formal inter - governmental agreements. in the process, we shall provide a basis for gradual but effective cooperation and integration of the financial systems and markets of southern africa. in the longer term, the vision should be : β’ to make it possible for residents of the whole sadc region to move funds around within the region without formal exchange control restrictions or border controls ; β’ to make it possible for residents of the region to invest in the shares of companies in every country of the region without restriction, to buy and sell on any one of a series of closely - linked stock exchanges, and to arrange for settlement anywhere in the region ; and β’ to make it possible for business people to do their business, whatever kind of business it might be, anywhere in the region without any undue financial restriction. to reach these objectives, however, i believe that the central banks of the region should, for the time being, continue to work on an almost informal way to establish a sound basis for the more ambitious plan of eventual full economic integration of the region. the momentum built up over the past | 0 |
moreover, we also have the task " without neglecting the price stability objective, of supporting the objectives for general economic policy with the aim of attaining sustainable growth and a high level of employment. " this is expressed in the proposal for the sveriges riksbank act from 1999. however, even more importantly, there is no opposition between good growth and price stability, quite the reverse. if we look at developments during the 1990s, growth since 1992 has shown an average rate of 3 per cent a year, despite the fact that inflation was under the target level for several years. at the same time, unemployment has fallen from 9 per cent to approximately 4 per cent. this can be compared with the 1970s and 1980s, when inflation was at around 8 per cent and growth an average of 2 per cent. price stability and the importance of achieving it are also well established among the general public in sweden. this is important, as understanding and acceptance of monetary policy is important for inflation expectations and thereby for behaviour on the labour and goods markets. it is you particularly those of you with your own businesses - who set the prices and who must be able to trust that it will turn out as we say ; that inflation will not rise above or fall below the target of 2 per cent for a longer period. this is also the reason why we members of the executive board often travel around holding speeches. communication with the swedish public and the operators on the various markets is important for monetary policy. as monetary policy operates impact with a certain time lag, the instrumental rate is adjusted so that the total assessment of future inflation, taking into account the risk scenarios, 1 to 2 years ahead is in line with the target. interest rate decisions are based on forecasts of future prices. there will be deviations from these forecasts, even if they are well founded, partly because the economy is hit by unforeseen shocks from time to time. if fruit - growers'crops are attacked by insects, the price of apples will rise, if the dams are not filled with water, electricity prices may rise, and if cows in europe suffer various diseases, the price of meat and certain other foodstuffs rises. if the riksbank tried to make corrections for this type of temporary price disturbance, it would probably lead to large swings in monetary policy and unnecessary fluctuations in demand. it would therefore be wrong to give the impression that inflation will always lie at 2 per cent. on the other hand, it is important | ##bs needed to be abjured and a multilayered regulatory and supervisory approach be adopted keeping in view the heterogeneity of the sector. accordingly, it was decided that banks with deposits less than rs. 1 billion ( equivalent to us $ 20 million ), and whose branches are limited to a small area i. e. tier - i banks which more closely epitomized the cooperative spirit, be placed under simplified prudential regulation for some time in order to enable them to gradually gain in strength so that over a period of 3 years they could be brought at par with all other banks for the purposes of regulation. accordingly, the tier - i banks have been placed under the 180 - day delinquency norm while tier ii banks are under the 90 - day norm as applicable to commercial banks. the tier - i banks are, however, required to make adequate provisions in the intervening period to enable them to migrate to the 90 - day norm in future. further, lower provisioning requirements were stipulated for tier - i compared to tier - ii banks which is also intended to provide a measure of relief to the small ucbs, as lower provisioning would translate into higher profits that could, in turn, be used, during the transition period, to shore up the capital base of the banks. b ) consultative approach to supervision β tafcub in order to address the problem of dual control, reserve bank in 2001 - 2002, suggested that a new apex supervisory body be constituted for the ucb sector, comprising representatives of central / state governments, rbi and experts from the field. however, since it did not materialize, reserve bank proposed the amendment of banking regulation act for providing powers to rbi over the ucbs similar to those that are available in respect of commercial banks. when even the 2nd suggestion did not materialise, the reserve bank in the vision document for ucbs proposed the adoption of a coordinated approach to deciding the future set up of weak and sick banks in each state. to this end, memorandum of understanding ( mou ) was signed between rbi and respective state governments and central government, in the case of multi - state urban cooperative banks, to achieve greater convergence of approach of the two agencies tasked with the regulation and supervision of ucbs. as part of the mou, it was decided to set up of state level task force for urban co - operative banks ( tafcubs ) comprising representatives of rbi, state government and national and state level federation / association | 0 |
of using those concepts for the month - to - month implementation of monetary policy. the natural rate, although clearly relevant to the dynamics of inflation, is not sufficient to explain changes in the inflation rate. the nairu, which is defined to be a measure related to short - run inflationary pressures, requires knowledge of the reduced form of the transmission mechanism and the history of shocks to the economy. but that knowledge is required also for a forecast for inflation, and so the nairu itself provides no additional information over that contained in the forecast. indeed, estimates of the nairu could be described as a by - product of the process of forecasting inflation. as an example, consider the impact of the appreciation of sterling from mid - 1996 until late 1997. retail price inflation can be thought of as a weighted average of domestic and imported inflation. the substantial real appreciation of sterling since mid - 1996 has for a while reduced the imported component of uk inflation and so, in turn, retail price inflation, below the level that it would otherwise have reached. in essence the nairu fell relative to the natural rate. that restraining effect on inflation will gradually wear off and begin to be reversed if sterling continues to fall. the issue of whether the domestic inflation component would fall to a level consistent with the inflation target by the time this temporarily depressing effect wore off was central to the monetary policy debate during the summer. the example of sterling β s appreciation shows how a macroeconomic shock, entirely independent of the labour market, can affect the relationship between the rate of unemployment and the rate of inflation. the rise in sterling is likely to have reduced the nairu via two separate channels. first, in the short run, the relationship between domestically generated inflation β of which wage inflation is a substantial element β and retail price inflation shifts because of lower imported inflation. second, the temporary improvement in the terms of trade that followed the rise in sterling in 1996 reduced the wedge between the real consumption wage β which is of relevance to employees and which reflects a mix of both domestic and imported inflation components β and the real product wage β which is of relevance to employers and which reflects the prices only of domestically produced goods. that reduction in the wedge is likely to have reduced the pressure on nominal wage growth for any given level of unemployment. so it is quite possible to believe that the nairu has fallen even if the natural rate has not. but this is likely to be temporary. as the impact of sterling β s appreciation on wages and prices | wears off, the nairu will, other things being equal, rise towards the natural rate. but other more β 5 β lasting changes may reduce the natural rate ( and hence the nairu ). for example, a range of government policies, including changes to the jobseekers allowance, the new deal and the new working families tax credit, have increased incentives to work. the national minimum wage works in the opposite direction. assessing the impact of these structural factors on the natural rate is no easier than calculating the effect of macroeconomic shocks on the nairu. but it is useful to distinguish the two concepts, not least because they can move quite differently in the short run. enough of this theory, some of which may appear largely semantic. none of it is, of course, either new or original. but understanding the language of unemployment matters. richard rogerson, in the journal of economic perspectives last year, posed the question : β have the language and concepts developed by economists in their study of unemployment served their role of fostering clear communication of findings and allowing issues to be sharply defined? β professor rogerson β s conclusion, you will perhaps not be surprised to hear, was a resounding no. neither the natural rate nor the nairu are terms well chosen to win friends and influence people. after all, there is nothing natural about the natural rate. whatever we call them, it is crucial to recognise that there is considerable uncertainty about the location of both the natural rate of unemployment and the nairu. even in the united states, where there appears to be no obvious trend in the natural rate, estimates of the 95 % confidence interval for the nairu are typically from 5 % to 7. 5 %. in the uk where both structural reforms and macroeconomic shocks have had a larger impact than in the us, the range of uncertainty is even greater. perhaps the most honest answer to the question of what is the natural rate was that given by milton friedman to the wall street journal in january 1995 : β i don β t know what the natural rate is, neither do you, and neither does anyone else. β the labour market and monetary policy in practice? how do these concepts affect monetary policy in practice? and what role does analysis of the labour market play in the monetary policy committee β s decisions on interest rates? using the language of unemployment developed earlier, the mpc has to assess whether the current level of unemployment differs significantly from the nairu and, as importantly, whether it is | 1 |
cft ) regulations apply to fintech companies. we may argue that the eu has expanded the scope of its rules to include services that eu fintech companies offer to consumers. moreover, the european banking authority ( eba ) recognises the benefit in protecting consumers when they use financial services offered by firms outside the conventional financial services sector. it recommends defining consumers'rights in the fintech space, creating effective procedures for processing consumer complaints, improving the quality of disclosures to consumers in a digital environment, and increasing consumer financial literacy. in light of the potentially inconsistent regulatory regimes to which eu fintech companies are subject, the european commission published last year an action plan for the implementation of an eu - wide framework dedicated to fintech companies aimed at β a more competitive and innovative european financial sector β. the commission's action plan proposes 23 steps to enable innovative business models to scale up and support the uptake of new technologies, and to enhance cybersecurity and the integrity of the financial system, including an eu fintech laboratory where european and national authorities will engage with technology providers and an eu blockchain observatory and forum, which will report on the challenges and opportunities of crypto - assets. 5. 3 filling in the regulatory gap from the aforementioned regulatory frameworks, we all agree that risks related to regulation and compliance arise from fintech β s rapid growth and it is reasonable to expect that new or evolving risks will emerge for the system and for individual institutions. it appears that the main challenge is to implement legislation governing fintech companies in order to protect users and markets, while offering an environment favourable to growth. in the context of financial regulation, it is of utmost importance to strike a balance between the following three fundamental elements : 1. manage the trade - off between efficiency gains associated with technological innovation and the protection of stakeholders in the financial industry. on the one hand, regulation must not be too stringent to the point it preempts the creation and development of new technologies that generate efficiency and savings in transaction costs ; on the other hand, regulation must not be too lax, so as to make sure that investors and users of financial services are adequately protected and that regulatory frameworks are continuously adapting to technological advances, rather than falling behind the curve. 2. ensure an adequate regulatory level playing field for banks and fintechs, fundamental to achieve appropriate competition. first, activities involving the same risks in terms of financial stability, consumer protection and the integrity of the financial system should receive the same | if need be. insurance undertakings according to the new framework of solvency ii for insurance undertakings and with a view to increased transparency and consumer protection, as from 2017 greek insurance undertakings publish an annual report on their solvency and financial condition. the industry β s key financial indicators for 2017 remained stable, whereas solvency ratios are expected to improve. with a view, however, to mitigating the risks stemming from the low interest rate environment and the resulting search for yield, insurance undertakings have adjusted their investment strategies and modified their traditional life products by offering reduced interest rate guarantees and by focusing on promoting mostly unit - linked products. risks and sources of uncertainty despite the progress made so far, as reflected in key economic indicators, domestic and external risks remain, which could jeopardise the course of the greek economy. in the short term, the main risks relate to a delayed implementation of the measures agreed in 5 / 7 bis central bankers'speeches the third review, which would in turn delay the completion of the fourth and last review of the current programme, as well as to an underachievement of the fiscal targets. in addition, the absence of a timely specification of the debt relief measures could rekindle uncertainties. equally significant is the risk of a reversal of the so far downward trend of greek government bond yields. the recent upgrading of the country β s credit rating is a positive development towards a restoration of investment grade ratings for greek bonds ; also, 2017 saw a significant decline in the high yields of greek government bonds. the fact, however, that greece still has the lowest credit rating in the euro area, five notches below investment grade, means that, as soon as greece exits the programme, greek bonds will no longer be eligible as collateral for access to low - cost refinancing from the ecb. considering that the yield on the 10 - year greek government bond currently exceeds 4 %, compared with 2 % for the portuguese and italian counterparts, the risk to the debt dynamics is all too clear. this problem could be further exacerbated, as the factors behind the favourable conditions of 2017 appear to be reversing. there are also external risks, which give rise to concerns about the preservation of the very favourable global economic conjuncture and global stability. more specifically, some of the matters pending at the eu level that could hinder the smooth development of the eu economy are : the brexit preparations after the agreement of 15 december 2017 for | 0.5 |
country to another in a world of ever deeper and swifter linkages. the relationship between national and international financial stability is obviously all the more important for countries, such as spain, whose banking system has a significant presence abroad. the expansion of spanish banks into latin america explains why the banco de espana has, in recent years, promoted the monitoring and analysis of financial stability problems in this region in particular, and in the emerging market economies in general, an area in which the role of the international monetary fund has become increasingly important. key lessons may be drawn from the recent crises that have affected emerging economies - though not only them - which should be borne in mind when designing mechanisms to reduce their frequency and cost. they include most notably : the need for a sound and well - designed institutional framework that protects property rights, prevents excessive public - or private - sector debt from accumulating and ensures economic stability ; the importance of ensuring consistency between the exchange rate regime and the domestic economic policies and institutional framework ; the risks entailed by the vulnerability associated with exchange rate instability processes for the balance sheets of different sectors in the economy, especially when there is a high degree of dollarisation ; the marked sensitivity of emerging market economies to potentially very volatile capital flows, the direction of which can change suddenly due, at times, to factors that may even be exogenous to the country experiencing them ; the importance of an appropriate regulatory and macro - prudential supervisory system to prevent crises generated in the financial system and to alleviate the ensuing costs if such crises finally occur, and to cushion the effects of shocks stemming from the real sector of the economy ; and, finally, the importance of distinguishing, as far as possible, between liquidity and solvency crises in countries β external debt and in governments β public debt, as a first step towards applying suitable remedies for resolving each type of crisis. as a result of these crises, and in collaboration with other international agencies and with national authorities, the fund conducted a far - reaching review of the so - called β international financial architecture β. numerous initiatives were adopted over recent years with the aim of lessening the frequency and cost of crises and of improving the stability of the international monetary system. accordingly, there has been a notable effort to increase the transparency of member countries β economic policies and to improve the information at the disposal of economic agents and, in particular, international financial markets so that the latter may exert market discipline more effectively. specific measures have been adopted to reinforce | financial systems. and it has also been sought to improve the crisis prevention and crisis resolution mechanisms available to the international financial community, including those particularly difficult cases in which sovereign debt restructuring proves inevitable. moreover, instead of relying on exhaustive international regulations which, as experience has shown, are difficult to approve and even harder to implement, all these reforms have relied on voluntarily mechanisms, based frequently on the adoption of codes of best practices, international standards and systems that offer incentives for their application. over the next two days the conference will address these and other matters of interest to us all, among them the risks associated with the persistent imbalances between the current account positions of the main economic areas ; the consequences of adopting different exchange rate regimes in the current environment of free capital flows ; the problems that arise from excessive public debt levels both in the emerging and industrialised countries ; and the role of the fund in the face of the challenges of economic and financial globalisation. all these issues have interested authorities, the private sector and the academic community for many years, although the way to deal with them has evolved in step with changes in the international economy. in what is an exceedingly dynamic environment, then, it is crucial to identify the root of the problems and possible solutions for them, which is precisely the chief aim of conferences such as this. we have an intense and fascinating agenda for discussion. it highlights, once more, the need for national authorities, international financial institutions and the academic community to work together in areas of common interest, taking advantage of their experience and comparative advantages and with the degree of technical excellence these matters require. i trust that these sessions will shed light on how to improve the functioning of the global economy and, in particular, the international monetary system. thank you. | 1 |
the unemployment rate moving close to its pre - crisis low, with participation rates being higher than ever. at the same time, assessing the tightness in labour markets is not straightforward, for several reasons. first, these aggregate statistics hide substantial cross - country heterogeneity. second, and more fundamentally, the natural rate of unemployment is unobservable. furthermore, tightness in the labour market provides only a partial picture of slack in the economy, as slack can vary across different parts of the economy. it is therefore risky to infer it from just a few economic variables. and for each measure of slack the same issue applies as for slack in the labour market : it cannot be observed directly, because the potential ( or β trend β ) levels of economic variables are unobservable and time - varying. accordingly, there are various 1 / 3 bis central bankers'speeches estimates of the aggregate slack and these estimates differ from one another. 1 some of them are also subject to substantial ex post revisions. for all of these reasons, we need to be cautious when assessing economic slack and look at many economic indicators to achieve a robust assessment. the wage - inflation pass - through let us turn to the wage - inflation pass - through. given the recent growth of wages, it is crucial to understand how this will pass through to inflation. but coming to a robust assessment is not straightforward. both economic theory and the empirical evidence tell us that this pass - through depends on many different factors. one consideration is that the structure of the economy is not constant over time. over the past few decades, we have been witnessing gradual changes in the economic environment, many of which can be traced back to the ongoing it revolution. these changes have important implications for inflation and pass - through, too. one such change is the growth of e - commerce, or, as some call it, the β amazon effect β. many commentators argue that increased price transparency when shopping online has contributed to keeping inflation low in advanced economies. 2 whether the growth of e - commerce makes prices less responsive to wages is more debatable. research suggests that the algorithmic pricing technologies of online retailers make retail prices more sensitive to aggregate, economy - wide shocks β which would imply that pass - through should eventually occur. 3 however, while the optimistic view is that e - commerce, and the it revolution more generally, contributes to more competition and economic dynamism, there are also concerns about its more pernicious longer - | tensions in financial markets, the transmission mechanism of monetary policy is not significantly hampered in the euro area. still, more data and analysis are needed to firmly assess the outlook for credit in the period ahead. to sum up, inflation rates have decreased significantly and are now expected to remain well below 2 % over 2009 and 2010. recent economic data releases and survey information add further evidence to our assessment that both global and euro area demand are likely to be very weak in 2009. over the course of 2010, the economy is expected to gradually recover. at the same time, available indicators of inflation expectations over the medium to longer term remain firmly anchored in line with the governing council β s aim of keeping inflation at rates of below, but close to, 2 % over the medium term. a cross - check with the outcome of the monetary analysis confirms that inflationary pressure has been diminishing. after today β s decision we expect price stability to be maintained over the medium term, supporting the purchasing power of euro area households. the governing council will continue to ensure a firm anchoring of medium - term inflation expectations, which supports sustainable growth and employment and contributes to financial stability. accordingly, we will monitor very closely all developments over the period ahead. regarding the fiscal policy responses to the economic downturn, the euro area countries β updated stability programmes and recent addenda confirm the prospect of a sharp and broad - based deterioration in euro area public finances. a credible commitment to a path of consolidation in order to return to sound fiscal positions, respecting fully the provisions of the stability and growth pact, is necessary to maintain the public β s trust in the sustainability of public finances, which is important both for the economy to recover and for supporting longterm growth. in this respect, we support the commission β s intention to initiate excessive deficit procedures for several countries. this is crucial to preserve the credibility of the eu fiscal surveillance framework. it is important that clear deadlines are set for correction of the excessive deficits and that consolidation plans are based on firm and well - specified structural measures. as regards structural policies, it remains important to pursue economic policies in line with the principle of an open market economy with free competition. in this respect, it is essential that government support measures do not distort competition and delay necessary structural adjustment, and it is of the utmost importance to avoid protectionist measures. refraining from protectionism will be key to allowing the global economy to overcome the current crisis more rapidly. the successful completion of | 0.5 |
do not decline to the same extent. however, with the bank β s introduction of the negative interest rate, a large part of the yield curve has declined by about 0. 2 percentage points, which is close to the decline in short - term yields, or more ( chart 4 ). this means that the extent of the decline in interest rates brought about by the negative interest rate policy is quite substantial. going forward, the bank will assess how the effects of the decline in interest rates permeate and spread through the real economy. doubt over firms β willingness to invest even with a decline in interest rates some argue that a decline in real interest rates will not produce the intended effects if firms are unwilling to borrow and invest. this is possible in the short term, while people are pessimistic. over a longer period of time, however, the decline in real interest rates will surely boost economic activity and inflation through the impact on financial institutions β behavior and financial markets. in fact, bank lending, which had been declining, has increased over the past three years at an annual rate of about 2 percent ( chart 5 ). stock prices have risen as well, and the excessive appreciation of the yen has been corrected. against the backdrop of such improvement in capital markets, economic growth and the underlying trend in inflation have increased. a decline in real interest rates will have no effect only when the expected growth rate, or natural rate of interest, is at such a low level that the central bank cannot produce a real interest rate that is lower than that. while this extreme case cannot be ruled out as a theoretical possibility, i am convinced it does not apply to japan. let me point out a couple of reasons. first, in the past three years, the decline in real interest rates has, as i just mentioned, produced actual effects. and second, looking at japan β s economy and japanese firms, i do not think the situation is as dire as that, given japan β s economic strengths such as its technological prowess and the skill - level of the labor force. it is implausible that the natural interest rate is so low that monetary policy would be ineffective. does volatility in global financial markets render monetary policy ineffective? the volatility recently observed in global financial markets certainly makes it more difficult to clearly see the effects of the negative interest rate policy. immediately after the introduction of the negative interest rate policy, stock prices rose, with the nikkei index adding 800 points in two days, | if we take an optimistic look at the future, our steady efforts may result in the formation of an open, flexible and surprisingly well - organized regional economic zone within the context of β future globalization of complexity β. | 0.5 |
roots : how do people view the euro, relative to national currencies, and how have their views been affected by recent crises? here, the periodic oenb euro survey offers valuable insights. since 2007, we have been surveying individuals in cesee countries that have not adopted the euro. the survey shows that in these countries, on average, trust in the euro is higher than trust in the national currencies. in several cesee countries, including some eu member states, this trust gap is surprisingly wide : trust in the euro is sometimes more than twice as strong as trust in the local currency. this relatively solid trust in the euro is one of the factors shaping the extent of unofficial euroization. trust in the euro tends to strengthen even further, compared to trust in national currencies, during crises such as the recent energy and inflation crises. in recent survey rounds, respondents were also asked whether they believed the euro has had a positive or negative impact on euro area economies. 25 years after the introduction of the euro, it is only in bosnia and herzegovina, hungary and romania that a majority of respondents think the euro has had a positive effect. in czechia, by contrast, less than 40 % of people interviewed share that view, while around one - third of them believe the euro has had a negative impact. this microdata evidence clearly shows that the euro remains a hotly debated topic, capable of dividing opinions not only among experts but also among the public. ultimately, however, and in economic terms at least, the question of whether and when to adopt the euro boils down to the critical issue of convergence : should countries first achieve a high level of economic alignment with the euro area before joining or can adopting the euro itself help accelerate the convergence process? while the maastricht criteria remain the key legal benchmark for assessing a country's readiness for euro adoption, recent experience suggests that economic convergence is not a one - size - fitsall process. some countries may benefit from adopting the euro earlier during their convergence journey, while others may need more time to align their economies more closely with the broader euro area. completing the single market : the next chapter such considerations might be perfectly valid from the perspective of individual countries. however, from the euro area's standpoint, achieving and maintaining a high level of economic convergence among its members is essential to move closer to the economic ideal of an optimal currency area. although the euro has shown remarkable resilience and strength over | , 133 β 147. imf ( 2010 ) regional economic outlook : europe, building confidence. imf, washington, http : / / www. imf. org / external / pubs / ft / reo / 2010 / eur / eng / ereo1010. pdf. nowotny, e. ( 2010 ) : β the euro β s contribution to economic stability in cesee. β in : nowotny, e., mooslechner, p., ritzberger - grunwald, d. ( eds. ), the euro and economic stability, focus on central, eastern and south - eastern europe, edward elgar, cheltenham : edward elgar, forthcoming. ritzberger - grunwald, d., worz, j. ( 2010 ) wechselkurse und osterreichischer auΓenhandel. fiw policy brief nr. 5, research center international economics, vienna. schreiner, j. et al. ( 2010 ) developments in selected cesee countries. focus on european economic integration no. 4, forthcoming. | 0.5 |
significant risks to the macroeconomy. then i will explain how the science of monetary policy can help provide a conceptual framework for a systematic approach to managing these risks, and i will briefly discuss how that framework can be useful for understanding the course of federal reserve policy over the past few months. financial disruptions and macroeconomic risk before considering the appropriate policy response to strains in financial markets, it is essential to consider the sources of these strains and the potential consequences for the macroeconomy. in general, the u. s. financial system is an efficient mechanism for channeling funds to individuals or corporations with worthy investment opportunities, because the financial markets are highly competitive and provide strong incentives for collecting and processing information. i appreciate the comments and assistance of william english, andrew levin, brian madigan, roberto perli, david reifschneider, and david wilcox. although financial markets and institutions deal with large volumes of information, some of this information is by nature asymmetric ; that is, one party to a financial contract ( typically the lender ) has less accurate information about the likely distribution of outcomes than does the other party ( typically the borrower ). 2 historically, banks and other financial intermediaries have played a major role in reducing the asymmetry of information, partly because these firms tend to have long - term relationships with their clients. recent years have witnessed the development of new types of financial institutions and of new markets for trading financial products, and these innovations have had the potential ( not always realized ) to contribute to the efficient flow of information. the continuity of this information flow is crucial to the process of price discovery β that is, the ability of market participants to assess the fundamental worth of each financial asset. during periods of financial distress, however, information flows may be disrupted and price discovery may be impaired. as a result, such episodes tend to generate greater uncertainty, which contributes to higher credit spreads and greater reluctance to engage in market transactions. as i noted in another recent speech, financial disruptions are associated with two distinct types of risk : valuation risk and macroeconomic risk ( mishkin, 2007d ). valuation risk refers to the extent that market participants become more uncertain about the returns on a specific asset, especially in cases where the security is highly complex and its underlying creditworthiness is relatively opaque. in recent months, for example, this type of risk has been central to the repricing of many structured credit products, as investors have struggled to | it is hard to quantify precisely the various ways in which the structure of the economy has changed. the appropriate data are not always available and it may be a long time until the effects are discernible in aggregate economic statistics. importantly, the significance of some of these structural reforms may not be fully apparent until the economy is subjected to a substantial shock. for example, one consequence of globalisation is that supply chains around the world are far more integrated. this is likely to have played an important role in the speed and synchronisation of the world downturn, as the effects of falling demand in a few countries were translated into lower orders and production in many in a matter of weeks. that increased integration is also likely to affect the speed and nature of the recovery. similarly, the technology used to control and manage inventories has changed substantially over the past twenty or thirty years. this may have enabled companies to run down their stocks earlier in this recession than in previous downturns. and indeed there is evidence that firms have already cut back aggressively on their stock levels. a corollary of this sharp correction is that the stock cycle may be shorter lived than in previous recessions. the behaviour of the labour market may also have changed. i have been struck by the number of business people who tell me about the array of measures they have already taken since their orders starting falling sharply last autumn. wages have been frozen or even cut, hours have been reduced, working practices have been adjusted. to the extent that wages and hours are now more flexible, the adjustment in employment may be less. but if it is easier for companies to vary their labour force than in the past, much of this adjustment may come through more quickly than in previous downturns. it is hard to know at this stage how significant these structural changes will be in determining the depth of the recession and the speed of the recovery. but the possibility that there has been a material structural change in our economy highlights a further danger of viewing the current recession through the prism of previous ones. the latest economic data on world trade, output and unemployment are unmistakeably grim, but we must continually challenge ourselves about how to interpret these and the economic data to come. they could be telling us something about the causes and size of the downturn, the impact of the policy measures taken so far, or how changes in economic structure are affecting the response of output and employment. let me now say a little about the role the monetary policy | 0 |
, household financial vulnerabilities remain elevated, although we will be analyzing the positive implications of a higher household savings rate for those vulnerabilities. all things considered, then, it was governing council β s view that the balance of risks does not warrant lower interest rates at this time. in forming this view, we weighed the risk that inflation could fall short of target against the risk that a lower interest rate path would lead to higher financial vulnerabilities, which could make it even more difficult to attain the inflation target further down the road. clearly, this balance can change over time as the data evolve. in this regard, governing council will be watching closely to see if the recent slowdown in growth is more persistent than forecast. in assessing incoming data, the bank will be paying particular attention to developments in consumer spending, the housing market and business investment. with that, senior deputy governor wilkins and i will now be happy to take your questions. 2 / 2 bis central bankers'speeches | stephen s poloz : release of the monetary policy report opening statement by mr stephen s poloz, governor of the bank of canada, at the press conference following the release of the monetary policy report, ottawa, ontario, 22 january 2020. * * * good morning. senior deputy governor wilkins and i are glad to be here to answer your questions about today β s interest rate announcement and our monetary policy report ( mpr ). before turning to your questions, let me briefly summarize the substance of governing council β s deliberations. you will recall that in october we were most occupied with the deteriorating global outlook. we could see clearly that this was affecting canada β s economy too β not only through exports and the manufacturing sector, but also through the effects of heightened uncertainty on firms β investment decisions. however, primarily because of a strong recovery in the housing sector and a healthy labour market, the canadian economy was demonstrating good resilience overall. quite a lot has happened during the past three months. global economic growth appears to have bottomed, as shown by an upturn in trade and manufacturing indicators. uncertainty remains elevated, of course, and in some ways has worsened, given rising geopolitical tensions in the middle east that had tragic consequences. but the phase one china - us trade deal and the pending ratification of cusma are positive developments that should lead to lower business uncertainty over time everywhere, including in canada. at the same time, however, indicators of the canadian economy have turned decidedly mixed. the national accounts data for the third quarter of 2019 showed a significant slowdown, as we expected, and monthly gdp data have extended that slowdown into the fourth quarter. we also received a string of disappointing readings related to the canadian consumer. vehicle sales, retail sales more generally, consumer confidence and job growth all softened. we are now monitoring fourth - quarter growth of only 0. 3 percent. at the same time, third - quarter investment spending was surprisingly strong. statistics canada β s historical revisions showed more growth, more investment from government infrastructure spending and a higher household saving rate than previously thought. in short, the canadian economy last year was in a stronger position than we previously believed β operating close to capacity with inflation near target. much of governing council β s deliberations focused on how persistent this recent slowdown in the domestic economy might be. the bank β s outlook is for a rebound in growth to about 1. 3 percent in the first quarter and a pickup to about 2 | 1 |
indicates there is only a small increase, on average, in consumer price inflation when the exchange rate depreciates is that it is unconditional in nature : it does not tell how the relationship may vary depending on which shocks hit the economy. one reason that structural models are useful is that they allow us to assess the relationship between exchange rate depreciation and consumer price inflation for a wide array of specific shocks, some of which may be regarded as potential risks to the outlook for inflation and real activity. structural models β especially modern dsge models β are also helpful from a heuristic standpoint insofar as they highlight the economic channels through which shocks affect the economy, which is important in assessing the transmission from exchange rates to inflation and real activity. the implications of a structural model for exchange rate pass - through clearly are sensitive to underlying features of the modeling environment. in formulating the sigma model, it was regarded as crucial that the model account for the empirical regularity of low pass - through of exchange rate changes to import prices. as i will illustrate, modeling assumptions that affect pass - through to import prices can have a major influence on the implied link between consumer price inflation and the exchange rate for any given shock. most open - economy dsge models in the literature β including the first generation of the federal reserve board's sigma model described in erceg, guerrieri, and gust ( 2006 ) β have embedded dixit - stiglitz preferences, implying that the desired markup of price over marginal cost is a constant. in such a framework, there is complete pass - through of exchange rate changes to import prices, at least after short - lived nominal price rigidities wear off. because import prices respond one - to - one to the exchange rate after a few quarters, shocks that cause the exchange rate to depreciate can put substantial upward pressure on consumer prices through the imported price component as well as through stimulating real activity by encouraging higher real net exports. it is instructive to contrast the implications of this " full pass - through " ( to import prices ) setting with the one that is embedded in the new version of sigma, which allows for variable desired markups. as noted previously, this feature tends to markedly damp pass - through from exchange rates to consumer prices in line with the empirical evidence i have discussed β both directly, because import prices respond by less to the exchange rate, and indirectly, because exchange rate changes tend to have smaller | . however, it is also clear that the globalisation of financial markets and increased merger activity exert pressure on those markets to adapt, to become more and more integrated, and similar. firstly, in terms of the kind of financial transactions which are considered β state of the art β and, secondly - this will take more time - also in terms of market structures. therefore, harmonisation as well as close cooperation between supervisors around the world are highly desirable. this is well understood and already common practice, as is demonstrated by the multilateral cooperation in international forums. iii let me now turn to the three specific areas, addressed in the question. in the area of accounting, the g7 assigned the international accounting standards committee ( iasc ) the task of establishing a worldwide harmonised set of core accounting principles. i strongly support this initiative and very much hope that we move towards a true world standard on this basis. ias ( international accounting standards ) should in my opinion be the requirement for a listing on all major stock exchanges of the globe. german legislation already allows banks to set up their consolidated accounts on the basis of the ias. the ias are currently reviewed by the basel committee, the iosco ( regulators for securities firms ) and the iais ( regulators for insurance firms ). some differences of opinion still exist, especially on the issue of β fair value β accounting. the iasc obviously prefers β fair values β ( which means market values ) for all financial instruments including the loan portfolio. the majority of regulators ( including germany ) favour such accounting only for instruments traded on financial markets. for traded instruments we can easily calculate β fair values β whereas this is much more difficult for assets and liabilities of the banking book. the european commission has taken up this issue with the aim of arriving at a common standard for ias and the european accounting legislation. iv with regard to the regulatory framework for e - money the us and europe take a different approach. in europe, the issuance of e - money will probably be regulated ( although the relevant eu directive has not yet passed the european legislative process ). most european countries perceive a need for such regulation in order to ensure sound market practices, to protect those who use e - money, and to take adequate account of both systemic and monetary policy concerns. the envisaged rules will allow for enough freedom for the e - money business to evolve, and technological progress will not be hindered. the united states is taking more of a β wait and | 0 |
canada's history in developing our local - currency bond and money markets, because it has parallels with the situation in which many emerging market economies now find themselves. in the 1950s, canada was a relatively small, but very open economy that relied heavily on foreign trade, was dramatically influenced by fluctuations in commodity prices, and had a long history of foreign capital inflows to finance major projects. the bank of canada's primary emphasis at that time was on the development of a government treasury bill market, to assist in the more effective implementation and transmission of monetary policy. in addition, the finance department, with the central bank as its fiscal agent, wanted to promote the development of a well - functioning government bond market. this would help to provide the government with low - cost and stable financing. moreover, canada had also moved to a floating exchange rate, and so it was even more important that our debt be issued in the domestic currency. but the authorities also saw the financial system efficiency benefits that could flow from the development of a well - functioning government bond market. in particular, it would support development of, and access to, market - based credit for firms. the broader goal was to develop the foundation for an efficient domestic fixed - income market for private issuers. of course, our markets have been continually evolving, and so we have had frequent consultations with market participants. these consultations have led to the development of a well - functioning and liquid market for government debt right across the yield curve. this market provides the pricing benchmarks for all other fixed - income instruments and their derivatives, thus facilitating market access for firms seeking debt financing. so what have we learned over the years? well, experience has shown that in order to maintain an efficient, well - functioning local - currency debt market, it's helpful to focus on the key aspects of liquidity, transparency, regularity, and integrity in the structure of government bond and money markets. as such, our efficient government debt market contributes to overall capital market efficiency by providing key benchmark and hedging tools. now, in terms of financial system stability, the development of our domestic bond and money markets has led to stronger and sounder financial institutions. stronger institutions and more complete markets facilitate better allocation of domestic savings. this increases domestic investment, and thus, encourages stronger economic growth. creating local - currency bond and money markets can insulate an economy from global economic shocks in two ways. first, by providing more stable and secure sources of | to some elements that remain a work in progress. i hope that our experience might be of some use to authorities in many emerging market economies, which are now developing their own local - currency markets. and their efforts are bearing fruit β the outstanding stock in these emerging economies'local bond markets now exceed $ 4 trillion us β a four - fold increase in value over roughly the past decade. i'll also consider how these domestic markets can fit into, and do their part in stabilizing, the global financial structure. now, these are my personal observations which are based on 40 years experience in public finance, and as seen from two perspectives : both as a central banker, and before that, as a federal finance department official. over the years, i've come to appreciate that a sound local - currency government bond market helps on three distinct policy fronts. first is the discipline that it can impose in terms of macroeconomic policies. second, it supports economic and financial efficiency. and third, it helps in the development of a stable financial system. let me now deal with each of these points in turn. in terms of macroeconomic policy, a government must build credibility with its own citizens first of all. citizens need comfort that the government bonds that they hold will keep their value ; that governments won't default on their obligations, or resort to large tax increases or inflation to ease the real burden of repayment. this initial hurdle of building credibility can be difficult to get over, as many emerging markets can attest to today. but once this hurdle has been cleared, a well - functioning, localcurrency government bond market brings with it the incentives for authorities to keep in place the sound policies that i mentioned in my introduction. those policies should include monetary policy aimed at maintaining low, stable, and predictable inflation, which leads to an environment of lower interest rates β both nominal and real β and lower debt servicing costs in the future. they also include prudent fiscal policies, which then reinforce public confidence in the government and, in turn, in the domestic markets. of course, none of this suggests that all government borrowing must be denominated in the local currency. there will be times when a government will borrow in foreign currency, perhaps for projects that will support a future flow of foreign currency that can, in turn, help repay this borrowing. the real risk here comes when governments find themselves repeatedly borrowing in foreign currencies, to finance current domestic spending. let me now mention | 1 |
jean - pierre roth : economic prospects for 2005 in a subdued european environment summary of a speech by mr jean - pierre roth, chairman of the governing board of the swiss national bank, at the β les rencontres au chateau β meeting, sierre, 22 february 2005. the complete speech can be found in french on the swiss national bank β s website ( www. snb. ch ). * * * although the swiss economy expanded by almost 2 % in 2004, this was not sufficient to reduce unemployment significantly. hopes for an improvement in this respect are thus focused on this year. however, they might unfortunately remain unfulfilled once again. at the end of 2004, there were already signs of a slowdown in growth caused by the weak dollar and persistently high oil prices. these factors also played a key role in the national bank's decision to leave interest rates unchanged. overall, the international economy developed in line with expectations during the first two months of 2005 : the us and asia saw further growth, while europe was confronted with increased difficulties. the us economy is burdened with high budget deficits and the current account deficit. in asia, the chinese economy is booming, whereas japan is still struggling to find its way back to the growth path. the monetary situation in asia, too, appears less than stable. in europe, the economic environment presents a rather dim picture. germany, italy and the netherlands are expected to see rather modest growth, while the outlook for france is more upbeat. the uk is the exception : since the mid - 1990s, the country has emerged as the growth model for europe. for switzerland, the sluggish development in europe is especially regrettable, as the swiss export sector usually serves as the engine for economic recovery. all in all, switzerland's export industry is well positioned to benefit from higher demand from abroad. switzerland has been able to reduce its production costs per unit in the past few years, and the swiss franc even depreciated slightly versus the euro since the launch of the single currency. as regards domestic demand, consumer sentiment remains satisfactory overall, but this should not be expected to stimulate growth decisively. while construction activity is robust, it has lost some of its momentum. investment in equipment is still brisk, and the recent modest slowdown should not last too long. on the whole, the swiss economy is still on its growth trajectory, but it lacks stimuli from abroad. this situation is the same as the one underlying the | prospects contributed to a further rise in business confidence. these factors generally strengthen the willingness to invest. the gradual recovery on the labour market has also continued. the unemployment rate declined again slightly through to november. the demand for labour among companies has gradually picked up. due to continued pressure on prices and costs, however, businesses are only cautiously increasing their headcounts. employment growth is therefore likely to remain moderate. given the supportive global environment and favourable monetary conditions, the recovery in the swiss economy looks set to continue in the coming months. for 2018, we expect gdp growth of around 2 %, following 1 % in 2017. compared to the current year, 2018 should be characterised by stronger growth stimuli mainly from exports and corporate investment. inflation expectations, interest rates and exchange rates i will now review changes in inflation expectations and monetary conditions. inflation expectations for switzerland have remained practically unchanged over the past half year. households and companies still expect low inflation of around 0. 5 % in the short term. in the longer term, expectations lie at approximately 1 %. a similar view emerges from the talks conducted every quarter with over 200 companies by the snb β s delegates for regional economic relations. inflation expectations are thus within the range that is consistent with the snb β s definition of price stability. like inflation expectations, short and long - term interest rates in switzerland have hardly changed since summer. short - term money market rates have remained close to β 0. 75 %, and the yield on ten - year confederation bonds has fluctuated between 0 % and β 0. 2 %. the interest rate differential with the euro area has been largely stable. by contrast, the interest rate differential with the us has widened somewhat, due to higher us interest rates resulting from tighter monetary policy. there has, however, been movement since june with respect to exchange rates. over the past six months, the swiss franc has depreciated against the euro by about 7 %. in addition, since the last monetary policy assessment in september, a mild weakening has occurred against the us dollar. the trade - weighted nominal exchange rate for the swiss franc is currently about 5 % lower than in june. the depreciation in real terms is roughly similar. the weakening of the swiss franc has contributed to reducing the overvaluation. however, the franc is still highly valued. what lies behind these exchange rate movements? in the first phase, from june to september, the swiss franc depreciated against the | 0.5 |
mario draghi : how to restore financial stability lecture by mr mario draghi, governor of the bank of italy and chairman of the financial stability forum, at the 5th bundesbank lecture, berlin - brandenburgische akademie der wissenschaften, berlin, 16 september 2008. * * * as this crisis hits its first anniversary, it has evolved into an even more complex combination of rising inflation, declining growth, tightening credit conditions, and widespread liquidity tensions pervading the global financial industry. banks have raised a significant amount of capital to partly offset writedowns and credit losses. but they are now moving into a phase where credit losses in the banking book will begin to rise. and banks are entering this phase with weakened balance sheets. alongside a rise in credit related losses, the outlook for bank profitability is poor. the aggregate amount of capital in the system is great enough, under reasonable scenarios, to prevent the system as a whole from falling below regulatory thresholds. but the distribution of that capital obviously matters. and, for larger banks, the capital levels demanded by the market have gone up in response to the greater uncertainty and reduced transparency about their balance sheets. we estimate that banks are likely to need to raise at least once again the amount of capital raised since the crisis began. there are various reasons why some banks will be struggling to reach those levels. that is especially the case for the banks that ran the debt - financed, highly leveraged and maturity mismatched business model that provided steady fee income over the last several years. now their profitability looks impaired, and their desired deleveraging is likely to be happening through a reduction of new lending. capital increases are especially difficult in a situation of deteriorating stock markets where falling equity prices nullify the still significant efforts undertaken to delever banks β balance sheets. this has spurred increasing recourse to hybrid capital instruments, but these may raise in the future concerns about the quality of the capital raised. let me finally observe that the situation of the banks in the euro area is so far better than the one we are witnessing in the us and in other jurisdictions. as the crisis unfolds policies are taking a variety of shapes that can be grouped within two broad categories : emergency and structural responses. until now, the first remained typically national since each crisis was unique to the financial structure of the country and so were the remedies. however, if the crisis were to become systemic β and the past weekend has shown just how | economy? could specific monetary policy measures adopted by the ecb weaken the transmission mechanism by negatively affecting banks β profits and capital accumulation and hence lower the incentives for banks to engage in lending activities? many factors are at work, and disentangling the impact of the app from that of other measures is of capital importance in informing the monetary policymakers β decisions. yet, it is no easy task ; and that is why solid, in - depth analysis, looking at these issues from different angles and with different tools, is surely needed. the first part of today β s workshop will provide several interesting papers which attempt at doing that. the second half will deal with another question that is being asked in the monetary policy debate, namely whether the current, extraordinarily expansionary monetary policy stance is inducing excessive risk - taking and thereby possibly igniting tomorrow β s financial crises. low interest rates and yields make investors inclined to search - for - yield and embark on riskier investment strategies. up to a point, this is not an unintended consequence of the current monetary policy measures, but actually part of the hoped - for transmission mechanism. portfolio rebalancing is a key component of the mechanism that is expected to transmit the app to the real economy. it is conceivable, however, that this may eventually go too far and the amount of risk - taking induced by the eurosystem β s monetary policy exceeds what is optimal and results in more costs than benefits. i do not think there is any evidence that this is happening so far at the aggregate level. there are localized tensions, particularly in the property market in certain member states ; these need to be tackled, and are being tackled, by macroprudential measures. opinions on the respective roles of monetary policy and macro prudential tools differ, as is perhaps natural given that macro - prudential policy is still in its infancy ; more research on these topics is therefore welcome. looking at today β s impressive collection of papers, i have no doubt that the workshop will go a long way towards providing us with answers to many of the questions i listed. i very much look forward to hearing about your findings and the outcome of your discussions. before the presentations begin, i would like to thank all those that contributed to this workshop, both from the banca d β italia and from other national central banks of escb or academia. i wish you all a most successful workshop, and a pleasant stay in rome and at the | 0.5 |
up to rs. 1 million to small farmers and micro - enterprises towards deprived sector lending has been made. 14. nepal has also developed institutional investors to mobilize resources through the channels other than the banking system. resource mobilized about rs. 500 billion by the non - bank financial institutions β employees provident fund, citizens investment trust and insurance companies β signals the investment capacity of the domestic institutional investors. however, it needs to be complemented by foreign institutional investment. 15. our capital market is still in the developmental phase. however, an increased interest among small investors shows the sign of the long - run growth prospect. nevertheless, increased foreign investment will be a catalyst in deepening and widening the market through the participation of institutional investors and diversification of instruments. ladies and gentlemen, 16. this is not to repeat that nepal needs to mobilize additional resources to develop much needed infrastructure for higher sustainable economic growth. the institutional framework and policy measures that we have designed provide business friendly environment and uphold the interest of the investors. i heartily welcome private sector and foreign investors to invest in nepal. this will contribute to the development of the nepalese economy and help investors to reap the maximum benefit on their investment. 17. nepal rastra bank is committed to promoting domestic investment as well as to facilitating foreign investors to invest, operate and repatriate through institutional and procedural arrangements. 18. last but not least, i take this opportunity to extend my sincere thanks to the organizers for organizing and distinguished guests for attending this event. i would like to thank you all for your participation in the summit and wish the foreign participants an enjoyable stay in kathmandu. thank you very much. | over the last three decades for the rural economies of this region, have been, to some extent, positively influenced by cictab. in this scenario, cictab has become very prominent for us as it conducts various training programs with special focus on cooperatives and rural development by providing a common platform to the agricultural and rural development institutions of its member countries. nepal rastra bank, as a member of cictab, would like to assure the centre that it will continue to support the centre β s objective of providing a common platform to the agricultural and rural development institutions of its member countries by imparting comprehensive and top quality training, seminars and workshops. ladies and gentlemen, looking over the program schedule i am happy to note that many topical and interesting issues are covered. i am confident that there will be a most active participation and exchange of ideas from the participants over the next five days, which will contribute positively to their respective institutions development. i also hope that all the participants, especially our foreign guests, will also have time to enjoy both the beauty and the flavor of nepalese culture. thank you very much and my best wishes for the successful conclusion of this program! | 0.5 |
indicators highlight slower expansion in the mexican economy, largely caused by global economic weakness. by next year, as the external environment improves, mexico β s economic activity is expected to post a healthier pace. also, in the medium term, structural reforms could enhance productivity. the financial volatility of the last few weeks has had significant implications for emerging markets. adjustments in mexico have been orderly. in the face of the possibility that uncertainty may continue, prudence should prevail on the part of creditors and debtors, and the authorities should remain alert in order to ensure that at all times financial markets operate normally. finally, an increase in annual inflation so far this year is due to negative supply shocks, reflected especially in the noncore component of the cpi. given the temporary nature of recent pressures, it is likely that inflation will soon resume a downward trend toward the 3 percent permanent target. bis central bankers β speeches | , global risk aversion has remained relatively tame since 2010. third, individual characteristics of different countries contribute to explaining why capital inflows have not been equal in all emerging economies. in particular, mexico β s attractiveness could involve factors such as the openness of the capital account, the free - floating exchange rate regime, the certainty of no discretionary intervention in the markets, moderate country risk, and positive prospects for structural reforms. 3 during the last few weeks, sentiment has changed in global financial markets. favorable u. s. economic data and various federal reserve officials β statements have fueled market and analysts β expectations for an imminent start to the tapering of quantitative easing in the united states. hence, the april employment report published in may approximately coincided with the beginning of a rising trend in long - term government bond rates in the united states and other nations. at the same time, the u. s. dollar has been appreciating with respect to many currencies. economic growth expectations for mexico in 2013 dropped from 3. 6 to 3. 0 percent between january and may 2013, while those for 2014 have remained at 4. 0 percent during the same period. see banco de mexico ( 2013 ), survey of private - sector economic analysts β expectations, may. two empirical analyses of factors that explain capital flows, including idiosyncratic factors, are ghosh, a. r., et al. ( 2012 ), β surges, β imf working paper, wp / 12 / 22, january ; and fratzscher, m. ( 2011 ), β capital flows, push versus pull factors and the global financial crisis, β ecb working paper series, no. 1364, july. bis central bankers β speeches the resulting volatility in global financial markets has brought about considerable increases in mexican government bond yields. for some maturities, the upward shift in the yield curve has offset the downward shifts seen in the first four months of the year. like other emergingmarket currencies, the peso has been depreciating against the dollar. adjustments in mexico β s financial markets have occurred in an orderly way. fx market volumes have continued to be high, bid - ask spreads have remained slim, and foreign holdings of peso - denominated bonds are still near record highs, although portfolio duration has been declining throughout the year. recent global financial volatility is a foretaste of what could happen when the process of u | 1 |
banking sectors. consolidation has also affected stock markets. for example, the three baltic stock markets recently merged with the scandinavian omx markets and use a common trading platform. finally, it is clear that in several new member states, further improvements in the legal frameworks and market infrastructures may be needed in order to establish more transparent and efficient financial markets. this also applies to the greater transparency of counterparties in financial transactions, which would undoubtedly promote the further integration of these countries β financial markets with those in the euro area. from this overview, it is evident that, despite the significant progress made in previous years, the convergence process of the financial structures of the new eu member states with those of the euro area is not yet complete. i will come back to this issue β and how we see the road ahead for the new member states β later. at this stage, allow me to address two issues that are very topical for both the latvian economy and several other new member states : strong credit growth and rapidly rising house prices. iii. credit growth let me start, on the question of credit markets, by pointing to three characteristic facts. first, dynamic credit growth to the private sector can be observed in a number of the new eu member states, well above the average rate in the euro area. the growth of credit to the private sector has been especially strong in the baltic countries and hungary, where it has reached annual rates of between 30 % and 50 % in recent years. in other countries, such as the czech republic and slovakia, the rate of credit growth to the private sector has been more moderate, but has picked up recently, while in poland it has slowed down considerably, following peaks reached around the turn of the decade. second, credit - to - gdp ratios in central and eastern european countries still remain well below the euro area level. third, credit expansion has, in most of these countries, been financed by both domestic and external sources. in the early stages of credit expansion, a rise in domestic savings, partly reflecting increased confidence in banking systems and the overall financial deepening of these economies, was a particularly important source of banks β financing. subsequently, as interest rates have declined and the propensity to consume has increased, banks have progressively relied more on external sources. looking at the sectoral breakdown of credit growth, it is fairly clear that the main driver of credit dynamics has been loans to households β largely in the form of mortgage lending. intense competition in this market segment has encouraged banks | , and the flow of loans in recent months has been strong. the monetary analysis has helped to support the necessary medium - term orientation of monetary policy in the face of the ongoing financial turmoil. from this perspective, the monetary analysis points to upside risks to price stability at longer horizons. moreover, a thorough assessment of the monetary counterparts suggests that, as yet, the availability of bank credit to households and non - financial corporations has not been significantly affected by the turmoil. to sum up, a cross - check of the outcome of the economic analysis with that of the monetary analysis clearly confirms the assessment that upside risks to price stability prevail over the medium term, in a context of very vigorous money and credit growth and the absence of significant constraints on bank loan supply up to now. in fact, we noted that risks to price stability over the medium term have increased further. the economic fundamentals of the euro area are sound, and incoming macroeconomic data continue to point to moderate but ongoing real gdp growth. against this background, the governing council is monitoring very closely all developments. it is in a state of heightened alertness. by acting in a firm and timely manner, we will prevent second - round effects and ensure that risks to price stability over the medium term do not materialise. securing a firm anchoring of medium and longterm inflation expectations in line with price stability is of the essence. regarding fiscal policy, the governing council welcomes the spring 2008 orientations for euro area fiscal policies agreed by the eurogroup ministers on 13 may 2008. many euro area governments still need to implement much more ambitious policies to ensure that their country - specific medium - term budgetary objectives are attained by 2010 at the latest, as agreed in berlin in april 2007. achieving and maintaining sound structural fiscal positions is imperative to create scope for the free working of automatic stabilisers in all euro area countries and will help to prepare for the budgetary costs of population ageing. the steady pursuit of prudent and efficient fiscal policies would also help to limit current inflationary pressures and would increase potential growth and employment. as regards structural reforms, the governing council reiterates its full support for all efforts to enhance competition, increase productivity and foster market flexibility. against the background of a marked increase in international food commodity prices, removing impediments to competition at the various stages of the food supply chain in the retail and distribution sectors would benefit european consumers through lower prices. the ongoing β health check β of the eu common | 0.5 |
among some european politicians, to develop certain critical technologies on european soil. tremendous effort has been put into developing european regulations to manage these and other digitalisation - related risks. so that european citizens and businesses can take full advantage of new technologies, safe in the knowledge that the risks are well managed. 1 / 2 bis - central bankers'speeches large digital service providers, such as cloud providers, are set to become subject to european oversight, for example. and supervision of crypto service providers is being expanded. however, developments are happening rapidly, and the challenge is to be able to reap the benefits of innovation while keeping out the bad stuff. of all innovations, generative artificial intelligence is undoubtedly the most exciting : with the emergence of incredibly capable generative models and dramatic advances in computing power, we might very well be on the verge of a new technological revolution. who knows soon we can all paint like rembrandt. also here, we must make sure to maintain a healthy balance between harnessing the benefits of innovation while mitigating the risks. when it comes to innovation, some regions, like the us, have traditionally focused more on the opportunities side, with a regulatory environment that's conducive to business innovation. we europeans tend to focus on the risks and call for regulation. but falling behind in adopting new innovations is a significant risk too. so i would call for a balanced approach, and warn against constraining ai - driven innovation too much but that doesn't relieve us of the obligation to monitor the risks that come with it. many of the potential risks of ai may seem new, but if you look beneath the surface, they are strikingly similar to traditional financial risks. risks that we are familiar with. we already have frameworks to assess concentration risk, third party dependence and interconnectedness. this is good news. of course, it's not a simple copy - paste exercise. we may see new forms of interconnectedness in the financial system. for example, autonomous trading agents may interact to create new dynamics in financial markets. and technology that can be used to paint like rembrandt also offers possibilities for creative fraud, from phishing to identity theft. so the nature of the risks may not be different, but the crooks are getting better. that means we are entering a new phase of the never - ending race between risk and risk management. but we are entering this race from a relatively good starting point. ai is not | end of my speech. for the future, i am optimistic. we have passed the turning point in the cycle. for this year, i expect growth to be 0. 7 %, rising further to 2 % in 2005. an important driving force is the global recovery, which will stimulate our exports, even though we have to regain competitiveness. nevertheless, the strength and sustainability of this recovery will to a large extent depend on the persistence and speed at which the reforms that have already been set in motion are pushed through. in particular, next to the substantial budgetary consolidation efforts, the continuation of wage moderation to foster price competitiveness is essential. the tripartite agreement that was reached last autumn to freeze nominal wage rises in the next two years is a positive development in this respect, as it clearly shows that the importance of wage moderation is now in the minds of both employers and employees. turning to the economy of the eurozone, it is clear that the slowdown has been less steep but more prolonged than in the us. in the us, economic growth deteriorated with 3. 5 percentage points from 2000 to a virtual standstill in 2001, after which it quickly regained speed with a growth rate of 2. 5 % in 2002. in the eurozone, the slowdown was much more gradual, with a fall in economic growth of 3 percentage points over a period of three years, from 2000 to 2003. this pattern of the slowdown - a gradual deceleration of growth, rather than a sharp fall in output - may have meant that the immediate pressure on corporations to adjust their balance sheets and labour force was less intense, delaying the adjustment process. high debt levels in comparison with those in earlier cycles may also have contributed to this relatively prolonged downturn. nevertheless, for this year, the economy of the eurozone is expected to grow with 1. 6 % and with 2. 4 % in 2005. like in the netherlands, this turnaround has been mainly driven by rebounding exports due to the recovery of global trade. in addition to the strengthening of external demand, domestic expenditures in the eurozone will take their part in the recovery. with respect to household spending, both short - term and long - term interest rates are at historical lows, which have eased debt servicing costs of households. of course, the fact that interest rates are so low, also raises the risk of renewed increases in the future, with possible adverse effects on households β debt profile. furthermore, although the appreciation | 0.5 |
from this symmetry that, since inflation has been below - target in recent years, fulfilment of the aim in the medium term may require it to be above the aim at some time in the future. consequently, the ecb governing council has announced that it stands ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner. against this background, we have tasked the relevant eurosystem committees with examining options, including ways to reinforce our forward guidance on policy rates and options for the size and composition of potential new net asset purchases. there is a possibility that durably low or even negative interest rates may have effects on financial stability and bank profitability. it is true that eurosystem estimates suggest that so far the positive effects, in terms of greater economic activity and improved credit quality, offset the adverse effects on banks β net income. but it is necessary to monitor this matter continuously in order to determine whether measures are needed to mitigate the adverse effects of low rates on the banking system β s intermediation capacity. the governing council has thus also requested that the eurosystem β s technical committees analyse a potential tiered system for reserve remuneration. it should be recalled that, in march, new quarterly longer - term financing operations were announced. these will begin to be implemented in september, under very favourable financing conditions, with the aim of maintaining the current low costs of bank funding and, therefore, of overall borrowing by households and firms. it is perhaps worth reiterating here that the ecb β s monetary policy has had very positive effects on euro area activity and inflation. in fact, by easing financial conditions and reducing financial market fragmentation, the ecb β s expansionary monetary policy has substantially contributed to the improvement in the euro area economy. at the same time, it has prevented the period of negative inflation rates experienced by the european economies further to the crisis - induced recession from turning into a deflationary spiral. specifically, according to some ecb papers8 and to in - house banco de espana estimates, it is believed the set of monetary policy measures adopted since mid - 2014 will have an see m. draghi ( 2019 ), β twenty years of the ecb β s monetary policy β, ecb forum on central banking, sintra, 18 june 2019. hammermann et al. ( 2019 ), β taking stock of the eurosystem β s asset purchase programme after the end of | various risk premiums rather than in short - term interest rates, which have little room to fall further. therefore, the bank decided to purchase through the program financial assets amounting to about 5 trillion yen β namely, japanese government securities and risk assets such as cp, corporate bonds, exchange - traded funds ( etfs ), and japan real estate investment trusts ( j - reits ) β and provide longer - term funds amounting to 30 trillion yen at a fixed rate of 0. 1 percent through the fixed - rate funds - supplying operation against pooled collateral. the aim of the asset purchases through the program is not to raise the prices of these assets by adjusting the supply and demand balance in the market. rather, the bank β s thinking behind the establishment of the program is that the provision of funds through the program will act as a catalyst in prompting a wider range of investors to purchase financial assets, reduce various risk premiums on these assets as a result of increased market transactions, and ultimately bring about positive effects on economic activity. the level of inflation that each policy board member understands, when conducting monetary policy, as being consistent with price stability over the medium to long term. the midpoints of most policy board members β β understanding β are around 1 percent. bis central bankers β speeches the bank has started purchasing assets for which necessary arrangements have been completed : on november 8, it purchased jgbs amounting to about 150 billion yen as its first purchase, and on november 9 it purchased treasury discount bills amounting to about 150 billion yen as its second purchase. bis central bankers β speeches | 0 |
[ former chair of the us federal reserve ben ] bernanke has a good answer to this issue of distorting the markets, which is to say that purchases by the central bank of government securities with different maturities have exactly the same impact as a change in maturities done by the treasury itself. the public sector always impacts the yield curve, one way or the other. the idea is that if the central bank uses an active policy to do so, then it β s to correct distortions that exist in financial markets and ensure that lending rates to businesses and households in the economy as a whole are at the right level to get to the level of activity that would be desirable. if there are rigidities and distortions in the private sector that do not engineer the smooth functioning of the economy, then public intervention is fully justified. it does not add up to manipulation because the reality is not perfect to start with. i β m just now thinking in very abstract terms ; this was never discussed at the ecb β s governing council. this is my personal take on possibilities ; it is not more than that. we didn β t start any discussion about the medium - term future of monetary policy, it β s too soon in europe to start thinking about that. but i β ll just say it β s a possibility and it can work. we could buy more bonds to enforce it β the 33 % 1 / 8 bis central bankers'speeches limit [ that the ecb has on buying all of the outstanding stock of a country β s government bonds ] is a self - binding decision by the governing council. that decision could be slightly changed, theoretically, of course. what about the use of the other non - standard measures? there is a view that some of the tools, such as the outright monetary transactions ( omt ) programme, are closely linked with the current ecb leadership and not as much with the ecb itself. it β s important to underline that the unconventional measures that we used β all of them are now part of the ecb toolkit. so in the future, if ever we face again stressful situations in the euro area, the ecb would have no excuse not to use such instruments to stabilise the situation. that i wanted to repeat : it would be virtually impossible, if such a stressful situation occurred again, for the ecb to ignore that these instruments are effective, legal and part of the toolkit. people are important of course, but | jean - claude trichet : reflections on the global financial system keynote speech by mr jean - claude trichet, president of the european central bank, at the 2007 25th anniversary iif annual membership meeting, washington dc, 20 october 2007. * i. * * introduction it is a great pleasure to be here on the occasion of the 25th anniversary iif annual membership meeting. during the last quarter of a century, the institute has proved to be both an important coordination forum for the international financial industry and a counterpart to international financial institutions and fora, making many valuable contributions to the international dialogue on the global financial system. back in 1983 when the institute was founded β in response to the international debt crisis β one of its key jobs was to provide its members with information about the policies and performance of borrowing countries. as time passed by, the range of the institute β s activities broadened and it has worked as well on such issues as global financial regulation. moreover, it played an active role during the last number of years in the debate about the international financial architecture and emerging market policy issues. celebrating today β s anniversary brings to mind not only the many policy issues that we discussed over the past 25 years but also the many colleagues and friends from all parts of the world whose professional careers are in various ways linked to the development of the international financial system and to the issues that the institute has been dealing with. i myself have interacted with the iif on many occasions, not only back in the 1980s when i was chairman of the paris club, but also thereafter in my capacity as governor of the banque de france and today as president of the european central bank. in my talk today, i will seize the opportunity of the 25th anniversary of the institute and share with you some thoughts on two broad issues that i deem particularly relevant. first, i will recall the past financial crises that have hit emerging market countries over the last two and a half decades and focus on the progress that has been achieved with regard to devising mechanisms for crisis prevention and crisis containment. second, i will take a closer look at the recent turmoil in financial markets and provide some preliminary reflections. ii. emerging market countries and their access to international financial markets the financial integration of countries into the global economy continues at a high pace. while advanced countries are the most financially integrated, emerging market countries have significantly increased their cross border asset and liabilities positions and hence improve their degree of integration. the tremendous benefits that are associated with this integration process | 0.5 |
an extension of the proprietary trading arms of major banks. there is, in fact, a continuum running from commercial banks to investment banks to hedge funds, and it is hard to see why some of this should be within the supervisory net and some without. this alone would argue for some degree of supervision - for example, limits on gearing - rather than just disclosure. the case becomes stronger when we take into account the fact that the new york fed has had to organise a support package for a large hedge fund on the grounds that its failure would have had systemic consequences ( both nationally and internationally ). if, like banks, they are important enough to have systemic consequences, it is hard to see why they should escape supervision of some form or another. i want to conclude by sympathising with you as bank supervisors because of the inherent difficulty of the task you face. to some extent, the biggest challenge is to bring the countries furthest behind world best practice up to standard, and the core principles are a very useful step in this direction. but as recent events have reminded us, even in the countries with the most developed systems of bank supervision, we still continue to be surprised by the capacity of the best and the brightest to take risks the magnitude of which even they do not understand. this makes the task extremely hard for bank supervisors - you all have to run very hard just to keep up with developments in markets, and perhaps, the nature of risk itself. | background that the core consumer price index is still registering a small decline in recent months, while the corporate goods price index is rising moderately. under the present circumstances, the bank of japan has two tasks to achieve simultaneously : first, put japan β s economy on a sustainable growth track by maximizing the new dynamism in our economy ; and second, end deflation entirely. this is my new year message to those who are particularly interested in japan β s economy. as i said a few minutes ago, i have come to this city to commemorate the 100th anniversary of our new york office. i have learned that japan society will also mark its 100th anniversary in two years, meaning boj new york office and japan society are almost the same age. actually, the general manager of our new york office 98 years ago - mr. eijiro ono - was involved in organizing japan society. with this in mind, please allow me, for the moment, to talk about the early days of both japan society and the bank of japan β s new york office, that is, the early 20th century. japan society came into being in 1907 to promote friendly relations between our two nations. many prominent leaders from both sides of the pacific ocean contributed to the establishment of this important forum. this was almost 50 years after japan had opened its doors to the western world, when commodore perry arrived on japan β s shores to seek diplomatic relations between our countries. japan society was formed when our bilateral relationship was becoming closer, but sometimes tense due to the vagaries of international geopolitics in those days. as is often said, there was a bit of ambivalence in us - japan relations. on the positive side, the united states was most helpful in guiding japan towards successful modernization. we especially owed a great deal to us assistance in the process of industrialization. trade linkages between the two countries were growing stronger year by year. at the same time, the downside of our deepening ties was emerging around the turn of the century. a rift appeared in parallel with the palpable increase in japan β s military power in the pacific and japan β s surprising victory over russia in 1905. set against this backdrop, it was natural for the united states to see japan as a rising power in asia, with the potential to challenge us primacy in this geo - politically complex region. japan society was born out of this delicate international context. it was expected to perform a dual function - that is, | 0 |
##pi on cdo equity principal protected notes lbo β d company real economy commercial paper conduit ( e. g. siv ) mezzanine bbbrated hel abs / cmbs or synthetic mezzanine ( often bbb - ) nim mortgages equity equity | . bank of thailand has experience in employing several macroprudential tools since 2002 to prevent financial instability that may stem from, for example, excessive credit card loans to sub - par debtors, excessive foreign exchange speculation, and a formation of real estate bubble. i would like to refer to another of our policies to maintain financial stability. to ensure capital flows and exchange rate stabilities, the bank of thailand uses a managed float on exchange rates. the policy allows the thai baht to adjust via market mechanism, helping to stabilize against volatile capital flows. it also allows flexibility for the bank of thailand to influence the exchange rate in extreme events in order to avoid excessive volatility. all the mentioned policies have helped to keep the current economy in good balance. today, capital flows, private sector balance sheets, as well as real estate values remain healthy, which should allow private spending to return with confidence and enable fast recovery. however, there are risks we must closely monitor over next year. as the u. s. economy continues to recover strongly, earlier timing of the u. s. interest rate normalization is anticipated, which could result in capital flow volatility. at the same time, household debt, at 83 % of income, is also a factor to be monitored with caution. we have now covered growth, price, and financial stability. the central bank aims to maintain all three facets of stability for continuity in order to support growth potential. with a promising recovery prospect, minding the future risks to financial stability and being equipped with stability tools tested and refined over time, the monetary policy committee will carefully weigh the tradeoff between short - term gains and longer - term risks and ensure that the economy will be provided with enough financial ease to recover sustainably to its potential. ladies and gentlemen, apart from the deviation from potential i mentioned earlier, the current economy shows symptoms that potential growth, which depends on labor, productivity and infrastructure development, may have reached its limit. at this stage of our discussion, let me refer to some prominent symptoms. thai labor supply has started to gradually decrease due to the trend of aging society. research has shown that increasing labor supply by increasing retirement age and reliance on foreign labor will not be sufficient. since we must accept the aging workforce trend, we must rely on increasing productivity and efficiency through structural changes to lift growth potential, a task which requires supply - side policies. thailand β s productivity growth has declined since the asian financial crisis due to the misall | 0 |
collaboration with commercial banks and other financial institutions, government agencies, other central banks, and most importantly, the public. we owe kenya a new beginning, a newly reborn and prosperous kenya, building an economy devoid of corruption. this is a call for each and every kenyan. the writer is the governor of the central bank of kenya | monetized. during the year, the national economic and social council developed a vision for kenya. vision 2030 seeks to transform kenya into a globally competitive middle - income country with a high quality of life by the year 2030. to realize this vision, the kenyan economy requires a sustained annual growth of 10 % during this period. this will require maximum contribution of each and every key sector of the economy, including the banking and financial sector. the banking and financial sector, for instance, is expected to increase the savings rates to 30 % of gdp which will be achieved by increasing bank deposits and increasing the pool of funds through reforms of the pension industry and the capital markets. this may require transformation of banking institutions into larger, stronger banks with attractive savings products and extension of credit referencing services. the insurance services sector will also require reforms to make the players stronger and able to support a larger economy. ladies and gentlemen : one of my objectives when i joined the central bank as governor this year, was to oversee an effective monetary policy that is consistent with the development agenda of the country and the development of an appropriate financial sector in which you play a key role. during the year, the central bank pursued a monetary policy designed to support economic growth projections of the economy, contain underlying inflation at below 5 %, and refine monetary policy operating procedures to enhance the efficiency of the monetary policy instruments. these developments have worked, but there are challenges on the inflation front brought about by the external shocks arising from increasing pass through effect of oil prices and sometimes domestic food prices. the monetary policy also facilitated adequate credit expansion to the private sector which grew by 15 % on average over the last 3 years. short term interest rates remained stable with a gradual upward trend in 2007, and are expected to continue to remain stable in the medium term on account of continued government commitment to fiscal discipline, inflation expectations anchored on continued low and stable underlying inflation and an independent monetary policy guaranteed by a flexible exchange rate. interest rate spreads also narrowed from 9. 4 % in january 2007 to 8. 5 % by september 2007. i wish to commend the banks for their effort in reducing the lending rates though we believe we can still do more to bring the spread to much lower levels. perhaps we will have time to share our survey and analytical results on factors sustaining large spreads in kenya. a challenge for us all β deposits have remained low and most of the time negative in real terms. this is not a good way to attract savings. let | 0.5 |
is estonia's utmost short - term objective. the adoption of the euro will ensure the stability of the money used in estonia and is extremely important for further reinforcement of the banking system and the investment climate. it can be said the clear perspective of joining the euro area is an absolutely necessary precondition at the national economy level for the permanent recovery of growth. declining inflation has created all the possibilities in estonia to meet the maastricht criteria by end - 2009, which makes it possible to join the euro area on 1 january 2011 at the latest. in this context and from the point of view of monetary and financial system stability, fiscal policy has two tasks in 2009. first of all it must be made sure that the current account deficit, which cannot be avoided in the prevailing economic environment, remains below 3 % of gdp both this year and in 2010. in order to achieve this, eesti pank is of the opinion that in addition to the steps taken in february, this year's fiscal deficit needs to be reduced by a further 6. 5 billion kroons. in addition to fiscal consolidation, it is important to ensure long - term fiscal sustainability. once the acute crisis is over, the first thing to do is to achieve fiscal balance. then it is necessary to restore the public sector's extensive fiscal reserves. the national budget strategy recently approved by the government creates a necessary macro framework according to which the budget should reach balance by 2011. eesti pank is of the opinion the new strategy is a timely and ambitious document which requires cooperation also at riigikogu level. taking into account that government expenditure as a ratio to gdp has soared, budget adjustment must be done primarily on the expenditure side. tax revenue increases may support the adjustment, but they should not play the main role. if only tax advances were used to finance costs at the current level, estonia's long - term economic growth would be imperilled. also, we support the principles of the current tax policy, according to which the share of indirect and pollution taxes would increase on account of direct taxes. i would like to emphasise once again that the measures taken over the past half a year in both the public and the private sector have improved estonia's ability to exit the crisis. this is confirmed by the fact that most of the rating agencies as well as the imf's recent mission to estonia have expressed positive assessments of estonia's economic outlooks. to support economic growth, it is | behind such new payment instruments. those relate, in particular, to the segment of person - to - person payments, or p2p transactions. i find it remarkable that cash dominates to such an extent when it comes to payments between individuals, such as in - home services and giving money to relatives, friends, churches or other charity organisations. our latest payments study suggests that 93 % of the value of all p2p transactions in euro was attributable to cash payments. 2 this may also reflect the still fragmented payments landscape in europe. to date, cash remains the one truly universal means of payment when it comes to p2p transactions in the euro area. but again, we have to see matters in perspective : the total amount of p2p cash transactions in euro is fairly small, amounting to about 4 % of all cash payments in the euro area. 3 4 cash as a unit of account 3 / 5 bis central bankers'speeches ladies and gentlemen, cash increases the diversity of payment instruments by offering several unique features : it is tactile and does not require any technical equipment. it is this haptic nature of cash which, in my view, is an important element of ensuring financial inclusion. cash as a means of payment is easily understood across the generational divide. to me, this is closely associated with the third core function of cash, which is serving as a unit of account. universally accepted currencies are not a new phenomenon : be it gold during the gold standard, the pound sterling during the industrial revolution or the us dollar to this day, all have served as major internationally accepted units of account. households value currencies they can count on and, more importantly, count with. there is arguably an important element of economic education underlying physical legal tender. we all have grown up playing board games, exchanging and counting paper money with our hands. cash bridges generations. when we at the deutsche bundesbank open our doors to the general public as part of our efforts to inform people about the tasks we perform within the eurosystem, the display of actual cash and gold at our stalls attracts visitors both young and old. these physical items serve as the first point of entry into the often abstract world of monetary policy. but, how is the increasingly widespread use of e - wallets and mobile payment apps impacting on households β financial literacy? are children still able to grasp the educational aspect of cash in an increasingly digitalised payments landscape? after all, there may | 0 |
case of sme bis central bankers β speeches borrowers are far lesser than that in case of other larger borrowers. hence, there is a strong case for providing greater credit to this business segment. here, i see a significant role for the cics in building an information base on smes and assisting banks in their credit decision making. i would urge the cics to take urgent steps to bridge this information void and help facilitate flow of credit to smes, which would provide an impetus to the overall economic growth environment. identity fraud β an emerging threat and role of the cics in combating it according to the norton cybercrime report 2011 more than two thirds of online adults ( 69 percent ) have been a victim of cybercrime in their lifetime, and every second 14 adults become a victim of cybercrime, resulting in more than one million cybercrime victims every day. the situation is equally alarming in india. fraud, especially in the banking domain, assumes great significance due to the associated reputational and monetary losses. incidence of frauds can severely dent the confidence in the financial system, particularly at a time when we are trying to use technology as the medium to bring more and more of the excluded masses into the formal financial system. fraudsters employ innovative ways of impersonating others using altered kyc documents. they also apply for credit at multiple banks at the same time by exploiting vulnerabilities in banks β systems and processes. alternately, fraudsters can also apply for credit from the same bank at multiple locations assuming different identities. while guidelines around kyc norms have been strengthened and the banks are being encouraged to provide unique customer ids at the institutional level, the credit bureaus have capabilities to play an important role in preventing such frauds by providing a holistic view of the individual and highlighting the different variations of id information, as provided to different credit providers. also, data sharing mechanism amongst banks can help in identifying serial fraudsters by picking up inter - temporal and inter - bank inconsistencies of application data to provide an early warning mechanism to identify potential risk cases. further, in a robust kyc system, banks could consider using multi - database checks on an individual β s identity at the time of underwriting that encompasses different identifier databases like uid, pan, voter id, passport, etc. this will help in rooting out many cases of identity frauds through fraudulent documentation. from a consumer β s perspective, cics hold | when the federal funds rate was comparatively high. the subsequent surge in capital flows in 2009, as the crisis was abating, largely reflects a rebound from the capital flow interruption during the crisis itself, though highly accommodative monetary policies in advanced economies doubtless also played a role. moreover, capital flows to emes started to ease after 2011, a period when the federal reserve continued to add accommodation and reduce yields through increases in its balance sheet, as shown in the right panel. and, more recently, capital flows to emes have picked up again despite the fact that the fed has been removing accommodation since 2015. if u. s. monetary policy is not the major determinant, what other factors have been driving eme capital flows? one prominent factor has been growth differentials between emes and advanced economies. in figure 5, the left panel shows that capital inflows to emes picked up post - crisis, in line with the widening of this growth differential, while the slowdown in inflows after 2011 coincides with its narrowing. another related determinant has been commodity prices, as shown in the right panel. the pickup in both global growth and commodity prices over the past couple of years explains a good part of the recent recovery of capital flows to emes. 5 see, for example, wheatley and garnham ( 2010 ) and rajan ( 2014 ). studies looking at the determinants of eme capital flows include chari and others ( 2017 ), clark and others ( 2016 ), bems and others ( 2016 ), koepke ( 2015 ), ahmed and zlate ( 2014 ), fratzscher ( 2012 ), and - 4monetary stimulus by the fed and other advanced - economy central banks played a relatively limited role in the surge of capital flows to emes in recent years. there is good reason to think that the normalization of monetary policies in advanced economies should continue to prove manageable for emes. fed policy normalization has proceeded without disruption to financial markets, and market participants β expectations for policy ( the red symbols in figure 6 ) seem reasonably well aligned with policymakers β expectations in the summary of economic projections ( the black dots ), suggesting that markets should not be surprised by our actions if the economy evolves in line with expectations. it also bears emphasizing that the emes themselves have made considerable progress in reducing vulnerabilities since the crisis - prone 1980s and 1990s. many | 0 |
also says that, cities outside bangkok are growing at a much faster rate, and some cities such as surat thani have more than doubled its population in ten years. urbanization results in increased purchasing power and fuels domestic demand. more infrastructure investments such as housing, electricity and transportation will be required. this is where the financial sector can contribute and benefit from the development. the trend towards regionalization poses a fourth challenge as well as an opportunity for the banking sector. with the commencement of the aec in 2015, competition will intensify, benefiting those prepared to pursue opportunities across borders. asean as a group has already agreed on its financial integration post - 2015 vision for 2025, and now is in the process of operationalizing it with the milestones and targets to be set in all areas including banking, capital market and, insurance. but this is another topic that i don β t think we will have time to cover today. the message that i want to stress is that banks need to plan ahead and invest more to meet these challenges. banks can no longer afford to focus on maximizing short - term returns at the expense of future growth and competitiveness. against this backdrop, you may wonder what β s the next milestone of our journey? bearing in mind these challenges, the third financial sector master plan will guide financial developments up to 2020. the milestone for the next stage of our journey, as the title says, is a more competitive, inclusive, connected and sustainable thai banking system. competitiveness, what do we mean when we say we want a more competitive banking system? how can we be more competitive and innovative? if our peers are driving the newest computerized hybrid cars, while we are driving a 10 - yearold car, we will be slower, less safe, and consume more fuel. thus, a possible alternative to keep up with our peers and ensure that traffic flows smoothly is to upgrade our vehicles to the latest reliable technology. likewise, for our banking system to be competitive, each bank should aim to increase its own efficiency. by promoting digitization, both for banks β own internal operations and for bis central bankers β speeches customers β experience, the cost for both parties would be lowered. additionally, we may set up and promote more usage of common utilities such as banknote handling centers or common point of sales ( pos ). from the policy perspective, standards and ecosystem should be developed to ensure compatibility, interoperability, security and confidence. moreover, competition in market | njuguna ndung β u : combating structural poverty amongst producers in africa remarks by prof njuguna ndung β u, governor of the central bank of kenya, at the launch and celebration of solidaridad β s achievement of iso 9001 β 2008 certification, nairobi, 20 march 2014. * * * the solidaridad eastern and central africa expertise centre ( secaec ), was officially established in september 2008 in nairobi, kenya with the vision to be a regional leader in combating structural poverty amongst producers in africa and promoting social and environmental sustainability. β this is what i term binding constraints in our economies. its mission is to facilitate the smallholder producers to produce commodities in an economically, environmentally and socially sustainable manner that ensures good market access, improved prices and high incomes for better quality of life. to achieve this, seceac is working in the eastern and central africa region, impacting over 400, 000 smallholder farmers in coffee, tea, livestock, horticulture and food security, cotton, gold and sugarcane. the 2008 world bank β s β agriculture for development report β recognized the enormous potential of agriculture in offering employment globally. seceac programs in kenya are also aligned to the achievement of vision 2030, which recognizes the agricultural sector as one of the key sectors within the economic pillars for the country β s economic growth. it envisages β a food - secure and prosperous nation β. regionally, the program targets to achieve six out of the eight millennium development goals targeting reduced poverty and hunger by half by the year 2015 ; promoting gender equality and empowering women through integrating gender issues in their projects, reducing child mortality, ensuring environmental sustainability and developing a global partnership for development. secaec programs on these value chains are currently valued at 16 million euros, targeting improvement of productivity and quality for better incomes, with the overall objective of improving the livelihood of the smallholder farmers in the region. in achieving its goals and mandate, indirectly secaec are contributing towards the economy of the region through foreign exchange, creation of employment and empowerment of women and youth through programs designed to address gender and youth disparity. within the region and internationally, secaec has established a network of experts and consultants in all the value chains, working with a wide range of collaborators including key government departments. in public private partnership projects ( ppp ), the organization values the role played by both public and private institutions. notable partnership in the region has been with | 0 |
one whose statute, rules and procedures expressly state its commitment to the principles of islamic shari β ah and to the banning of the receipt and payment of interest in any of its operations. as you are aware, the current regulatory regime does not permit financial institutions to engage in islamic banking. to close this gap, bank of uganda has proposed amendments to the financial institutions act, 2004 to permit the licensing of and transacting by financial institutions in islamic banking in uganda. the proposed amendments to the law were submitted to the finance minister for consideration by cabinet and subsequently parliament for enactment. this amendment will bring uganda in line with other eac member countries that have licensed islamic banking and finance. it will increase the depth, breadth and range of finance products bank customers can use to access banking services. let me conclude by wishing you once again happy celebrations. it is now my pleasure to invite hon ali kirunda kivejinja to address the congregation. god bless you all. asalaam aleikum, eid mubarak, eid mubarak, eid mubarak | , gtz / sida, for their assistance in the process of formulating the 5year financial markets development plan, as well as the consultants who facilitated the process. the major goals that the plan will seek to achieve are ; harmonisation of regulatory frameworks in the financial sector, infrastructure development, increase in investor base, deepening the financial market, capacity building, supporting regional integration, promotion of cost effective financial intermediation and promoting market information dissemination. the specific areas of emphasis will include ; to bring the unregulated market participants into the regulatory ambit. this will involve reforms in legal and regulatory frameworks as well as liberalisation of the pension sector, to foster competitive, long term financing. another challenging area that the plan is expected to address is extending financial infrastructure beyond the urban areas, so that the rural areas can also enjoy the benefits that financial markets offer. extending financial outreach will be enhanced by the introduction of new institutions, products, services and payment systems in the rural areas, to ensure that the rural population is enabled to save and to participate in investments in the financial markets. the bank of uganda is already contributing to this effort by licensing new banks, in order to introduce greater competition, with the hope that this will encourage the banks to extend their presence to the unbanked rural areas. i expect many other non - banking financial institutions such as insurance companies, microfinance institutions, securities exchange, etc. to follow suit. government will also be encouraged to divest its interests in the remaining parastatals in which it maintains ownership through public offerings in the stock exchange in order to widen the ownership of these institutions to the majority of ugandans. the other crucial aspect which the 5 - year financial markets development plan is expected to address, is financial literacy. it will be difficult to see through the various initiatives proposed in this plan, if the population remains financially illiterate. the fmdc, through its sub - committees, is expected to educate and sensitise the public about the various financial markets programmes, in order to make the ugandan financial market vibrant, so that ugandans can benefit from regional and global integration. in order to realise the objective of transforming and modernising the ugandan financial markets, i urge the fmdc and its subcommittees to rededicate and commit themselves to the achievement of the objectives enshrined in this plan. i realise that what lies ahead of us is no mean task, however, since we have already taken | 0.5 |
hard, but valuable, lessons from the current crisis that they are applying to their internal processes to assess capital adequacy. these lessons include the linkages between liquidity risk and capital adequacy, the dangers of latent risk concentrations, the value of rigorous stress testing, the importance of strong governance over their processes, and the importance of strong fundamental risk identification and risk measurement to the assessment of capital adequacy. perhaps one of the most important conclusions to be drawn is that all assessments of capital adequacy have elements of uncertainty because of their inherent assumptions, limitations, and shortcomings. addressing this uncertainty is one among several reasons that firms should retain substantial capital cushions. currently, we are conducting a horizontal assessment of internal processes that evaluate capital adequacy at the largest u. s. banking organizations, focusing in particular on how shortcomings in fundamental risk management and governance for these processes could impair firms'abilities to estimate capital needs. using findings from these reviews, we will work with firms over the next year to bring their processes into conformance with supervisory expectations. supervisors will use the information provided by firms about their processes as a factor β but by no means the only factor β in the supervisory assessment of the firms'overall capital levels. for instance, if a firm cannot demonstrate a strong ability to estimate capital needs, then supervisors will place less credence on the firm's own internal capital results and demand higher capital cushions, among other things. moreover, we have already required some firms to raise capital given their higher risk profiles. in general, we believe that if firms develop more - rigorous internal processes for assessing capital adequacy that capture all the risks facing those firms β including under stress scenarios β and maintain adequate capital based on those processes, they will be in a better position to weather financial and economic shocks and thereby perform their role in the credit intermediation process. we also are expanding our quantitative surveillance program for large, complex financial organizations to include supervisory information, firm - specific data analysis, and marketbased indicators to identify developing strains and imbalances that may affect multiple institutions, as well as emerging risks to specific firms. periodic scenario analyses across large firms will enhance our understanding of the potential impact of adverse changes in the operating environment on individual firms and on the system as a whole. this work will be performed by a multidisciplinary group composed of our economic and market researchers, supervisors, market operations specialists, | janet l yellen : economic outlook testimony by ms janet l yellen, chair of the board of governors of the federal reserve system, before the joint economic committee, us congress, washington dc, 3 december 2015. * * * chairman coats, ranking member maloney, and members of the committee, i appreciate the opportunity to testify before you today. in my remarks i will discuss the current economic outlook before turning to monetary policy. the economic outlook the u. s. economy has recovered substantially since the great recession. the unemployment rate, which peaked at 10 percent in october 2009, declined to 5 percent in october of this year. at that level, the unemployment rate is near the median of federal open market committee ( fomc ) participants β most recent estimates of its longer - run normal level. the economy has created about 13 million jobs since the low point for employment in early 2010, and total nonfarm payrolls are now almost 4 - 1 / 2 million higher than just prior to the recession. most recently, after a couple of months of relatively modest payroll growth, employers added an estimated 271, 000 jobs in october. this increase brought the average monthly gain since june to about 195, 000 β close to the monthly pace of around 210, 000 in the first half of the year and still sufficient to be consistent with continued improvement in the labor market. at the same time that the labor market has improved, u. s. economic output β as measured by inflation - adjusted gross domestic product ( gdp ), or real gdp β has increased at a moderate pace, on balance, during the expansion. over the first three quarters of this year, real gdp is currently estimated to have advanced at an annual rate of 2 - 1 / 4 percent, close to its average pace over the previous five years. many economic forecasters expect growth roughly along those same lines in the fourth quarter. growth this year has been held down by weak net exports, which have subtracted more than 1 / 2 percentage point, on average, from the annual rate of real gdp growth over the past three quarters. foreign economic growth has slowed, damping increases in u. s. exports, and the u. s. dollar has appreciated substantially since the middle of last year, making our exports more expensive and imported goods cheaper. by contrast, total real private domestic final purchases ( pdfp ) β which includes household spending, business fixed investment, and residential investment, and currently represents about 85 percent of aggregate spending β has | 0.5 |
supervisory practice of assessing planned distributions of dividends on a bank - by - bank basis. we opted to be prudent today to avoid having regrets tomorrow should overall economic conditions further deteriorate. the ecb is in good company. other institutions have joined the effort to keep the financial taps open for the real economy during this exceptional period. after the β quick fix β to the capital requirements regulation, the european commission recently adopted a capital markets recovery package to make it easier for capital markets to support the economic recovery. the proposal to amend the securitisation regulation is part of this package. it includes a recital stating that the requirements on direct risk retention, transparency and the resecuritisation ban are also prudential obligations and thus specifically entrusted to the competent authorities in charge of prudential supervision, implying that the ecb has an active supervisory role in these areas. this, in my view, is problematic. the ecb recognises its competence to supervise banks β adherence to some securitisation 1 / 2 bis central bankers'speeches obligations that are prudential in nature, such as the use of proper credit granting criteria for exposures to be securitised. however, the other tasks include the supervision of compliance with direct risk retention requirements, transparency requirements and the ban on resecuritisation. these tasks fall under the category of product supervision rather than prudential supervision. they ensure the alignment of interests between investors and originators, and between sponsors and original lenders. they allow investors to understand, assess and compare securitisation transactions. the ecb cannot take on these tasks because they go beyond its prudential supervision mandate. article 127 ( 6 ) of the treaty on the functioning of the european union and the ssm regulation clearly define these limitations. a simple recital cannot change these ; only a treaty change can. re - labelling financial product supervision tasks as prudential tasks won β t do the trick. what β s more, assigning financial product supervision to the ecb could result in conflicting responsibilities. in its role as prudential supervisor, the ecb generally wants as little risk as possible to remain with a bank acting as originator, so as to minimise arbitrage opportunities with the corresponding reduction of capital requirements. at the same time, the competent authority needs to ensure that the bank retains a material net economic interest under the risk retention obligation. this might be linked to the need to preserve proper credit | granting standards but might also create conflict in relation to the ecb β s objective as prudential supervisor. to conclude, i do not see the proposed conferral of tasks as being either a viable allocation of labour or legally tenable. extraordinary supervisory action is warranted in times of crisis. but the ecb cannot take on tasks that go beyond its prudential supervision mandate. 2 / 2 bis central bankers'speeches | 1 |
and f. ohnsorge. washington, d. c. : the world bank. 3 / 3 bis central bankers'speeches | this objective has already been achieved as the market rate is now moving in line with the bsp β s policy rate. in the long term, recalibrations and additions to the monetary policy tools will strengthen the bsp β s influence on the demand and supply of money. i am pleased to note that the recently enacted amendments to the bsp charter restores our authority to issue our own debt securities ( even during normal times ) which further enhances our monetary policy tool kit. further, we will continue to pursue the reduction of reserve requirements from the current 16 percent to single digit by 2023 to promote a more efficient financial system. this is part of the bsp β s broad financial sector reform agenda. we expect that all these will aid in the further development of philippine capital markets by fostering money market transactions and active liquidity management by philippine banks. indeed, the bsp β s monetary policy framework has been an effective tool in mitigating the risks emanating from here and abroad. however, we recognize that as the domestic and world economy evolve, all our tools need to be kept constantly appraised. we continually take measures to further enhance the implementation of our inflation targeting framework by improving our array of models, data, software, and the capability of our technical staff and modelers. we likewise ensure prudent exercise of judgement by using all relevant data in our policy decisions. moreover, we recognize the value of being able to communicate the basis of the bsp β s policy decisions in a manner that is easy for the public to understand. all these concepts, and more, will be the subject of this conference β s discussions in the next two days. we can rely on an eminent group of economists, who have joined us to present their work and examine issues concerning inflation dynamics and monetary policy. as central bankers and policymakers, we appreciate this effort to continuously expand our 2 / 3 bis central bankers'speeches understanding of inflation dynamics and its implications on monetary policy. this is especially so amid the current global economic environment that continues to shift with the ongoing policy uncertainties and structural changes. i wish you all a very fruitful conference and a pleasant stay in manila. 1 search excluded patents and citations, conducted on 24 july 2019. 2 2 based on the international monetary fund ( imf ) world economic outlook april 2019 database. 3 3 inflation in emerging and developing economies evolution, drivers, and policies, eds. j. ha, m. a. kose, | 1 |
have been gradually reducing the average size and holding period of our active positions in foreign reserve management, while increasing the frequency of trades. furthermore, we reinvest large bond redemptions by distributing purchases over an entire trading session. such issues, though highly technical, do have significant implications for the conduct of investment activity at major central banks. most of the remainder of this speech will be devoted to a couple of topics relating to the β long view β in central banks β investment : ( i ) sustainable finance and ( ii ) strategic asset allocation. the importance of the first issue was underlined during the long, lively discussion of this topic during the previous session. let me make one point clear from the outset. general policy matters are for governments rather than central banks ; in democracy, decisions about broad societal aims are best left to elected politicians. nevertheless, central banks have been increasingly indicating that they are taking environmental, social and governance ( esg ) risk factors more fully into account as investors, that is, in their and risk management strategies. 1 why? there are two reasons for doing so, both linked to the constraints i just mentioned. one is reputation : central banks β investment policies must be seen as beyond reproach. the second is that, as long - term investors, central banks need to take the long - term sustainability of their investments seriously into account. the discussion on sustainable finance often revolves around a perceived trade - off between β doing good β ( to the earth, or society at large ) and β doing well β ( for shareholders, or, in our case, the public as the ultimate β owner β of the bank ). while shareholder value is certainly not our main concern, this debate applies to a certain extent to central banks too. the concept of sustainability, however, appears to provide a link between doing good and doing well in the long run. recent experience has indeed shown that, so far, esg - compatible investment has not underperformed compared with unconstrained investment strategies. ( of course, past performance is no guide to future performance, as they say ; we need to keep alert to fashionable bias, and choose carefully. ) the bank of italy values sustainability in its asset allocation. 2 last year, we announced a new investment strategy that integrates esg profiles into the management of our direct euro - area equity portfolios. these portfolios total around β¬9 billion and include shares in about 140 listed companies. two esg criteria have been added to the | new nairu. economists have been surprised by the fact that the nairu has been continuously revised downwards. the supply of labour has increased more than expected, so there were reservoirs of labour. it could be migration or longer working hours. it is clear that if you believe that the degree of slack is higher, then the process of convergence to below, but close to, 2 % over the medium term would be drawn out. we should not draw implications for policy immediately but it shows you the richness of the discussion at a stage where the economy is booming and we don β t see very strong wage increases and little pass through to prices. however, we still see improvements in the path of inflation, so the bottom line is not bad at all. it means that the economy may have unexploited potential capacity. if slack is bigger, wouldn β t it mean that the path would be shallower? 1 / 4 bis central bankers'speeches well, other things being equal, it would be shallower. another explanation for low wage growth is that there is some backward looking behaviour in the wage - setting mechanism and in inflation expectations. for the time being i take an open view. monetary policy also plays a role. our asset purchases programme has a minimum horizon of end september, or beyond, if necessary, and in any case until we see a sustained adjustment in inflation. it is true that when we communicate about what happens beyond september, we want to have confirmation of data. things are going in the right direction but there are a number of uncertainties. so the message is patience, persistence and prudence. when do you need to communicate what happens beyond september? it can β t be on the very last day, but i argue that it shouldn β t be too early, either. there are not too many governing council meetings between now and then. can you see a scenario that you use the june projections to set up the decision and then take the actual decision in july? the projection exercise is always important. there are four per year and there will be one in june. it β s true that projections in general are useful to guide and structure the discussion. but i would caution against concluding that there is a pattern. we should not put too much weight on the projections. you mentioned earlier that market expects the first rate hike between the first and second quarters of next year. how comfortable with those expectations? the expectation implicit in the forward curve currently fluctuates around april and | 0 |
sharon donnery : navigating organisations through uncertainty and change remarks by ms sharon donnery, deputy governor of the central bank of ireland, at the central bank of ireland's campus, dublin, 15 february 2023. * * * a dhaoine uaisle, ta failte is cead romhaibh go leir go dti banc ceannais na heireann don ocaid seo annocht. go raibh maith agaibh as ucht an deis a thabhairt dom labhairt libh annocht, agus taim ag tnuth leis an gcuid eile den ocaid. it's a pleasure to welcome you to the central bank of ireland's campus for this event to discuss the important theme of " navigating organisations through uncertainty and change ". the theme of navigation seems apt for the environment which many organisations currently face. it was a theme i chose for my first major speech in my current role. in those remarks i outlined the bank's perspective on the need for the leaders of financial firms to chart a course through the prevailing uncertainty and complexity in the global economy. at the core of that leadership challenge is being able to balance the many competing demands business leaders face β to remain competitive and profitable, to meet the needs of customers, to comply with regulatory requirements, to maintain high standards of corporate governance, to keep up with digital trends, and to transform in order to be fit for the future. there are also leadership challenges for public leaders, including central bankers and regulators, and i will mention some of those also. in my comments today i will speak briefly about the context for the central bank's strategy and the leadership challenges we face, i will also address the themes and approaches in the strategy and how it sets us up to continue to deliver on our important mandate into the future. i will reflect on some current aspects of uncertainty and before i hand over i might share some brief personal thoughts on leadership in public organisations at times of volatility and change. the mission of the central bank of ireland is to serve the public interest by maintaining monetary and financial stability while ensuring that the financial system operates in the best interests of consumers and the wider economy. when putting together its current strategic plan, it did so in the context of : a statutory mandate which had expanded significantly in recent years ; increased organisational complexity ; a rapidly changing and growing financial sector ; changing consumer preferences | of the domestic financial system throughout this shock. more broadly, while market attention has focussed on banks in recent months, potential vulnerabilities in the non - bank sector have not gone away. liquidity mismatches, leverage and interconnectedness are key potential sources of vulnerability in non - bank financial intermediaries. the 2022 uk gilt market episode was a prominent example of the speed with which risks can crystallise in this sector. further progress is needed at a global level to strengthen resilience of non - bank financial intermediation. 1 / 3 bis - central bankers'speeches monetary policy is transmitting to the global real economy. in practice, this means higher borrowing costs for governments, households and businesses, tighter credit conditions for those looking to borrow, increasing rates on bank deposits, and ultimately some slowdown in economic activity so as to bring inflation back to target. domestically, despite the range of global risks i set out earlier, the irish economy has continued to surprise with its resilience. our domestic growth forecasts have improved relative to late last year, although of course we must remain mindful of the range of adverse outcomes that may materialise, as inflation continues to erode real incomes and businesses continue to face challenges related to high costs. rising interest rates have already had immediate effects in the commercial real estate market, and appear to be slowing the housing market in recent months. households and businesses are front and centre in our financial stability assessment. undoubtedly, many are experiencing challenges with the increase in the cost of living. however, at the system - wide level, lower levels of indebtedness, continued household income growth and robust employment remain a key source of strength. they are supporting mortgage repayment capacity, and are of course a key determinant of the revenues of local businesses. our assessment is that, if the economy continues to evolve in line with our expectations, we are likely to see only modest increases in financial stress among domestic borrowers, despite clear challenges for some groups of borrowers. turning to the domestic banks, higher levels of bank profitability are likely to continue under our central assumptions. of course there are tail risks that we must continue to factor in and be ready to address. however, the banking system has ample headroom above regulatory requirements in both capital and liquidity, with very high levels of cash reserves. all of these support the resilience of the sector. under this central outlook, we are therefore continuing - as | 0.5 |
philip r lane : the macroeconomic outlook, the housing and mortgage markets and tracker mortgage - related issues introductory statement by mr philip r lane, governor of the central bank of ireland, at the joint committee on finance, public expenditure and reform, and taoiseach, dublin, 10 may 2018. * * * chairman, committee members, i welcome the opportunity to meet with you this morning for our regular engagement. i am joined today by ed sibley, deputy governor for prudential regulation ; derville rowland, director general for financial conduct ; and helena mitchell, head of consumer protection supervision. i will first give an overview of the current economic environment and then address some of the specific issues you raised in my invitation. 1 this will include the tracker mortgage examination : we published our latest update on 25 april. the central bank is committed to serving the public by safeguarding stability and protecting consumers. we operate as β one bank, β recognising the operational effectiveness of deploying bank - wide resources in meeting our goals. for instance, our macroprudential mortgage measures contribute to both financial stability and consumer protection by guarding against overlending and over - borrowing. equally, our work to ensure that financial firms are prudentially sound is essential if these firms are to meet their obligations to consumers and investors. in these ways, consumer protection is embedded in all key aspects of our work, through close cooperation between our central banking, prudential regulation and financial conduct pillars. the macroeconomic outlook the irish economy is currently experiencing buoyant domestic activity and a strong international economy, which is driving a broad - based expansion in employment and an increase in earnings. our projections for the labour market indicate that ireland is heading towards full employment, although some extra capacity is possible through broader participation in the labour market. while the near - term outlook is positive, ireland faces substantial tail risks. these include β hard brexit β scenarios, protectionist pressures and shifts in the international tax regime that would effectively penalise small economies as a location for multinational production activity. in addition, a sudden shift towards tighter conditions in international financial markets is widely cited as a possible trigger of a contraction in international economic activity. it is important that policymakers are mindful of such vulnerabilities in order to ensure that ireland is resilient if any of these tail risks is triggered. irish housing market let me turn to the irish housing market. the increase in house prices in recent years in part reflects the | the ongoing work on the key role biodiversity plays in our economy is important in this regard. but we also need to realise that the status quo is not sustainable β and so big changes are required to our economy and our lives. st. brigid as a symbol for renewal of the land can again be an inspiration for us here. conclusion to conclude, it is more than 1, 500 years since brigid founded and headed a double monastery for men and women ; but it is little over a 100 years since women in ireland have had the equal right to vote. in the intervening years, progress on equality was not linear, and it was not smooth. but then when i think about this progress, the words of eavan boland spring to mind, in her poem " our future will become the past of other women ". 4 / 6 bis - central bankers'speeches boland writes of the suffragettes, and how " in the shadow of their past, they vote [ d ] in the light of what will be ", aptly capturing in this instance the torch of progress, being passed β being shone. and thinking of brigid's legacy, i wonder if she ever thought that that future she forged would become the past of other women, just like the suffragettes, just like the women who are breaking through the ceilings of today. as we think of the torch of progress, it is apt that brigid is represented on our coin today holding a torch β a flame. st. brigid's flame burns in this very building β as a beacon of hope, justice and peace for the world. given all of the challenges which we face, it is a symbol which is still very much needed today. finally, before i finish, i want to thank some of the people who've helped to organise this afternoon's event. i want to recognise the central bank's currency centre team for the fantastic work they do each year on the collector coin series ; our team that produced the coin and mary gregoriy for her beautiful design. i would like to acknowledge the ongoing work of the numismatic advisory panel who support the bank's collector coin programme. and finally, on behalf of the central bank, i'd like to again thank everybody here at the solas bhride centre for your hospitality and for hosting us today. it is a great honour to be with you all to celebrate this special occasion in kildare. go raibh mile maith agaibh | 0.5 |
##heating and price bubbles. newly available information may uncover further financial imbalances in these or other nations. the market perception that the federal reserve will soon start tapering asset purchases has resulted in significant reductions and heightened volatility for asset prices in emerging markets. given the complexity of what could be the overall exit strategies of the united states and other advanced nations, emerging economies necessarily face a highly uncertain external scenario. despite foreseeable adverse financial conditions, it is reasonable to expect that global portfolio adjustments may affect countries less severely if they enjoy stronger economic fundamentals. finally, emerging economies have different policy options at their disposal in the unwinding phase, especially to try to prevent and manage the surfacing of possible problems. the strengthening of the foundations of domestic financial stability and the implementation of structural reforms to enhance productivity growth and investment, have never been more important. for liquidity provision, the sound approach may be to follow bagehot β s advice : to only loan to solvent banks and against good collateral and at penalty interest rates. see bagehot, w. ( 1873 ), lombard street : a description of the money market, london. h. s. king. bis central bankers β speeches | , among other objectives, to influence market expectations and thereby reduce long - term real interest rates. other advanced economies have followed suit, employing similar features of monetary accommodation. qe is widely seen to support private spending and employment, while stable inflation expectations are maintained. the domestic transmission channels may encompass first, a rise in perceived consumer wealth through increases in asset prices ; second, the rebalancing of investor portfolios toward assets that are imperfect substitutes of those purchased by the fed, typically with higher risk - adjusted returns, thereby making funds cheaper across many productive areas ; and third, signaling that policy interest rates will remain low for an extended period of time, contributing further to the flattening of the yield curve. bis central bankers β speeches so far, the expansionary monetary policies in the united states and other advanced countries have been effective at normalizing the functioning of financial markets and, to a certain extent, still open to debate, firming the pace of the ongoing economic recovery. 1 while these benefits were important, there have been some costs and risks associated with the unusually lax monetary policies of advanced countries, among which the following stand out. first, negative real interest rates punish savings and reward investment, thereby implying a transfer of resources from the former activity to the latter. to counter this effect, savings institutions such as mutual and pension funds may seek higher returns in risky assets with price implications that may not be fully understood. second, extraordinarily benign financial conditions may have created an environment of over - leveraging and excess lending, potentially endangering the stability of the financial system. third, the size and composition of the asset purchases may have distorted resource allocation, postponing balance sheet adjustments and crowding out other financial - market players. fourth, the independence of monetary policy from fiscal policy may have been damaged. finally, central banks are navigating in uncharted waters and, hence, risks of higher inflation may emerge if eventual monetary unwinding is inadequate. 2 to different degrees, these costs and risks have impacted emerging economies. in particular, ample global liquidity and the search for yield translated into a financial boom for a variety of asset classes, including local government bonds, currencies, private - sector borrowing, stocks, and real estate. perhaps the most widespread and prolonged effect in emerging economies was the continuous down - shift in yield curves, in tandem with that of the united states, often more significant, pushing domestic interest rates for different maturities to all - | 1 |
satellite seminar on financial inclusion held in conjunction with the 61st world statistics congress opening remarks by mr. abdellatif jouahri governor of bank al - maghrib marrakech, july 14, 2017 β while data is important, the right data is essential β albert einstein honorable chair of the irving fisher committee, honorable governor of the beac, distinguished guests, ladies and gentlemen, it is with great pleasure that i welcome you to morocco on the occasion of this international seminar on financial inclusion, which will focus on data and their important role in developing policies and strategies that take into account on - the - ground realities and then measuring and assessing the impact of these policies. first of all, i would like to thank our partners, the irving fisher committee on central bank statistics and the center for latin american monetary studies for their valuable contribution to the organization of this event, held as usual on the sidelines of the 61st world statistics congress. the topic of our meeting further underscores the importance that central banks and international standardization bodies attach to financial inclusion. it is a subject that is of increasing interest to them, particularly with regard to its interactions with financial stability, resulting in hindering the policies put in place to develop access to and use of financial services. a sustainable and efficient financial inclusion requires a long - lasting balance between innovation and the safeguards that need to be developed in order to ensure the soundness of the financial sector. ladies and gentlemen, as you know, financial inclusion has become an important factor in economic efficiency and social equity, and international organizations have, for nearly a decade, underlined its importance and the need for public authorities to adopt national strategies for financial inclusion. the world bank considers financial inclusion as a key factor for poverty alleviation and has set itself the goal of achieving universal access to financial services by 2020. under this framework, it targets 25 priority countries, including morocco. to this end, it launched in 2012 the financial inclusion support framework ( fisf ), aligned with the maya declaration, to support the implementation of country commitments. for its part, the g20 has made financial inclusion one of its working themes, and in 2009 established an expert group who drew up the nine core principles for innovative financial inclusion. in 2010, the g20 launched the global partnership for financial inclusion, including all g20 countries and interested non - g20 countries. this partnership helps strengthen coordination and collaboration between the various national and international stakeholders through its three key implementing partners : the | see 12 u. s. c. Β§ 1820 ( d ). the amendment would raise this asset cap to $ 500 million, thereby potentially allowing approximately an additional 1, 100 institutions to qualify for an extended examination cycle. 6. permit the board to grant exceptions to the attribution rule concerning shares held by a trust for the benefit of a bank holding company or its shareholders or employees the amendment would allow the board, in appropriate circumstances, to waive the attribution rule in section 2 ( g ) ( 2 ) of the bank holding company act ( bhc act ). this attribution rule currently provides that, for purposes of the bhc act, a company is deemed in all circumstances to own or control any shares that are held by a trust ( such as an employee benefit plan ) for the benefit of the company or its shareholders or employees. the amendment would allow the board to waive the rule when, for example, the shares in question are held by a 401 ( k ) plan that is widely held by the bank holding company β s employees and the bank holding company does not have the ability to control the shares held by the plan. 7. modification of the cross - marketing restrictions applicable to merchant banking and insurance company investments amendment allows the depository institution subsidiaries of a financial holding company to engage in cross - marketing activities with portfolio companies that are held under the merchant banking authority in the gramm - leach - bliley act ( glb act ) to the same extent as such activities are currently permissible for portfolio companies held under the glb act β s insurance company investment authority. the amendment also would allow the depository institution subsidiaries of a financial holding company to engage in cross - marketing activities with a portfolio company held under either the merchant banking or insurance company investment authority if the financial holding company does not control the portfolio company. 8. allow insured banks to engage in interstate merger transactions with savings associations and trust companies the amendment would allow an insured bank to directly acquire, by merger, an insured savings association or uninsured trust company in a different home state without first converting the target savings association or trust company into an insured bank. as under current law, the insured bank would have to be the survivor of the merger. 9. authorize member banks to use pass - through reserve accounts amendment permits banks that are members of the federal reserve system to count as reserves the deposits in other banks that are β passed through β by those banks to the | 0 |
s. assets, including u. s. bonds. in summary, i have argued today for an international system based on the principles of flexible exchange rates, free capital mobility, and independent monetary policies, at least within the great majority of countries. important complementary elements include free trade ( though i have not discussed it today ) and the further development of the β soft β infrastructure - the legal, regulatory, fiscal, and financial frameworks that characterize advanced economies. the fundamental virtue of this system is its flexibility and adaptability, qualities that will become increasingly essential in a complex and interdependent world. | exchange rate movements, because of their influence on domestic prices. this behavior does not imply that exchange rate stabilization is an independent objective, however ; and should price stability and exchange rate stability come into conflict, it is the latter that should be jettisoned. in contrast to floating rates, fixed exchange rates - rather than being a mechanism for reducing macroeconomic instability - have often been a source of instability. historically, governments have often defended their fixed parity even after the overvaluation of the exchange rate became obvious, leading to losses of foreign exchange reserves, a balance of payments crisis, and difficult domestic adjustments. some observers have suggested that the solution to this problem is to tie the government β s hands even more forcefully by imposing a harder peg, by means of a currency board or dollarization for example. but market participants know that promises to maintain a fixed rate are almost never irrevocable, and so a speculative attack is always possible ( as argentina recently learned, for example ). another strategy for deterring speculative attacks on a fixed exchange rate is to build a β war chest β of foreign - currency reserves. to be effective in today β s world of highly mobile capital, the war chest may have to be sizable indeed ; and for countries with large government debts and high domestic interest rates, holding great quantities of low - yielding reserves can have serious fiscal consequences. in any case, strategies to increase the defensibility of the peg ignore the broader issue of the role of the exchange rate in macroeconomic adjustment. for an individual country, forcing adjustment to a mis - valued exchange rate through domestic price changes is likely to be far more difficult and costly than an adjustment occurring through exchange rate depreciation or appreciation. for the world as a whole, macroeconomic adjustment may likewise be impeded if economically important countries attempt to maintain pegs at levels that differ from those dictated by fundamentals. if fixed exchange rates bear such risks, what explains their continued existence? one traditional argument in favor of fixed exchange rates for developing countries focuses on their usefulness in so - called heterodox programs for overcoming high inflation. 8 according to this view, the advantage of fixing the exchange rate as one element of an anti - inflation program ( along with fiscal reforms and other policy changes ) is that fixing the rate is more visible, more credible, and easier to explain than a commitment to stabilizing prices directly. even if we grant a role for a fixed exchange rate in combating high inflation, however | 1 |
on returning inflation to our 2 percent objective. meeting our dual mandate also depends on maintaining financial stability. the fed β s commitment to both our dual mandate and financial stability encourages the international community to hold and use dollars. the wide use of the dollar globally can also pose financial stability challenges that can materially affect households, businesses, and markets. for that reason, the federal reserve has played a key role in promoting financial stability and supporting the use of dollars internationally through our liquidity facilities. the central bank liquidity swap lines provide foreign central banks with the capacity to deliver u. s. dollar funding to institutions in their jurisdictions. and the foreign and international monetary authorities ( fima ) repo facility allows approved fima account holders the option to temporarily exchange their u. s. treasury securities held by the federal reserve for u. s. dollars. these facilities serve as liquidity backstops so that holders of dollar assets and participants in dollar funding markets can be confident that strains will be eased when these markets come under stress. that assurance, in turn, mitigates the effect of such strains on the flow of credit to u. s. households and businesses. both facilities enhance the standing of the dollar as the dominant global currency. the swap lines were extensively used during the global financial crisis, the 2011 euro - area debt crisis, and the financial turmoil at the outset of the covid - 19 pandemic in 2020. the paper on central bank swap lines presented yesterday by gerardo ferrara, philippe mueller, ganesh viswanath - natraj, and junxuan wang provides novel micro - - 3level evidence on the usefulness of swap lines in providing cross - border liquidity to support the real economy. looking forward, rapid changes are taking place in the global monetary system that may affect the international role of the dollar in the future. most major economies already have or are in the process of developing instant, 24 / 7 payments. our own fednow service will be coming online in 2023. and in light of the tremendous growth in crypto - assets and stablecoins, the federal reserve is examining whether a u. s. central bank digital currency ( cbdc ) would improve on an already safe and efficient domestic payments system. as the fed β s white paper on this topic notes, a u. s. cbdc could also potentially help maintain the dollar β s international standing. 2 as we consider feedback from the paper, we will be thinking not just about the current | , such adjustment, properly handled, need not derail the global economy nor cloud the bright prospects that the united states and europe - linked by myriad ties of commerce, communications, culture, and political tradition - share. | 0.5 |
to higher interest rates and funding costs, there have not been signs of a further sharp contraction in credit from the stress earlier this year that would slow economic activity. though loan balance growth has slowed, banks have continued to increase lending to households and businesses. given the strong economic data and still elevated inflation, i supported the fomc's decision in july to further increase the target range for the federal funds rate. i also expect that additional rate increases will likely be needed to get inflation on a path down to the fomc's 2 percent target. 1 / 2 bis - central bankers'speeches the recent lower inflation reading was positive, but i will be looking for consistent evidence that inflation is on a meaningful path down toward our 2 percent goal as i consider further rate increases and how long the federal funds rate will need to remain at a restrictive level. i will also be watching for signs of slowing in consumer spending and signs that labor market conditions are loosening. it's important to reiterate that monetary policy is not on a preset course. my colleagues and i will make our decisions based on the incoming data and its implications for the economic outlook. we should remain willing to raise the federal funds rate at a future meeting if the incoming data indicate that progress on inflation has stalled. returning inflation to our 2 percent goal is necessary to achieve a sustainably strong labor market and economy. 1 the views expressed here are my own and not necessarily those of my colleagues on the federal open market committee or the board of governors. 2 / 2 bis - central bankers'speeches | michelle w bowman : brief remarks - economy and monetary policy brief remarks by ms michelle w bowman, member of the board of governors of the federal reserve system, at the 2023 ceo and senior management summit and annual meeting, sponsored by the kansas bankers association, colorado springs, colorado, 5 august 2023. * * * thank you for the invitation to join you again this year. 1 as a former kansas banker, it is always great to be with kansas bankers. i look forward to opportunities to learn about and discuss the issues affecting financial institutions and your communities, from supervision and regulation to how you and you customers are navigating the current economic and financial environment. before we turn to our conversation, i'll offer a few thoughts on the economy and monetary policy. as you likely know, at our most recent meeting in july, the federal open market committee ( fomc ) raised the target range for the federal funds rate by 25 basis points - to a range of 5 - 1 / 4 to 5 - 1 / 2 percent - and we continue to reduce the fed's securities holdings. since march 2022, the fomc has been tightening monetary policy as part of our ongoing effort to lower unacceptably high inflation. since then, we have seen some progress, and inflation has declined from last year's very high level. most recently, after more than six months of stubbornly high readings, the june consumer price index showed lower core inflation, a measure that excludes food and energy prices. while this development is a positive sign that monetary policy is contributing to lower inflation, both total and core inflation remain well above our 2 percent target. at the same time, the economy and the labor market have remained strong as the fomc has tightened monetary policy. real gross domestic product grew slightly more than 2 percent at an annual rate in the first half of the year, well above many forecasters'expectations. consumer spending has been robust, and the housing sector appears to be rebounding with accelerating growth in house prices and a pickup in new housing starts. the most recent employment report showed a strong labor market with low unemployment and solid job gains. the pace of job gains has slowed, which is a sign that labor market demand and supply are coming into better balance. but the demand for workers continues to exceed the supply of available job seekers, adding upward pressure on prices. the banking system continues to be strong and resilient. while banks have tightened lending standards in response | 1 |
about your role as insurance brokers in economic growth, as the remarkable economic gains that i have outlined above would not have been possible without your contribution. in my humble understanding insurance brokers are independent intermediaries who provide the link between clients and insurance companies. by performing this function, your firms are important economic agents acting in the best interest of clients by providing them with sound and impartial professional and practical advice regarding insurance services. the intermediary role that you play undoubtedly makes you critical in the growth of the zambian economy in general, and the insurance services sector in particular. the advice that you provide to your clients is important because it promotes a more competitive market within the insurance industry. this may includes an analysis of the most suitable firm, the various types of cover on the market and importantly a fair price for the given product. in some instances, you even go as far as carrying out surveys on various insurance products, negotiating prices of those products for your clients and presenting reports to insurance underwriters. ladies and gentlemen, with your contribution, and that of other stakeholders, zambia could easily achieve the national socio - economic goals in the medium to long - term. every economic unit needs the services of a booming insurance sector, through your brokerage, for them to contribute more to economic growth and development. in this regard, i wish to urge you to continue facilitating and promoting investments in the insurance sector. mr chairman, allow me to point out that, in order for you to contribute positively to the development of the insurance sector in the country, it is imperative that you carry out your work in an honest manner, maintaining the highest degree of integrity, only then can your firms become credible enough to attract business from the public and private firms operating in zambia. one of the most important attributes of a credible insurance broker is the ability to remit funds to insurance companies on time. as intermediaries between clients and insurance companies, you are entrusted with a heavy responsibility of looking after other people β s funds. clients pay premiums due to insurance companies through insurance brokers. to enhance credibility of your institutions and contribute to the growth of the insurance industry, i would like to urge you to ensure that you remit your clients funds to insurance companies on time and as agreed. delays in remitting funds may tempt you to put such funds to other uses which may lead to default and erosion of the integrity upon which your intermediary role is based. mr chairman, zambia has come | and development of our country by ; β’ opening more branches, especially among our rural communities ; β’ installing more atms ; β’ providing more loans that will increase the productivity of our economy ; and β’ encouraging more zambian to open bank accounts through provision of easily accessible and affordable products and services. these developments, ladies and gentlemen, will greatly contribute to the expansion of economic activities, which will have a positive bearing on poverty alleviation. i am pleased to observe standard chartered β s commitment to growth and reinvestment. however, you will all agree with me that those who have more should do more. i therefore look forward to seeing more from standard chartered bank zambia, as it is one of the leading banks in the country. mr chairman, let me conclude by thanking you for inviting me to officiate at this important event. it β s now my pleasure to officially open the new branch of standard chartered bank zambia at crossroads shopping mall. thank you. | 0.5 |
jarle bergo : monetary policy and cyclical developments speech by mr jarle bergo, deputy governor of norges bank ( central bank of norway ), at sparebanken sogn og fjordane, fΓΈrde, 18 october 2004. the text below may differ slightly from the actual presentation. the address is based on the assessments presented at norges bank β s press conference following the executive board β s monetary policy meeting on 22 september, inflation report 2 / 04 and on previous speeches. the references and the charts in pdf - format can also be found on the website of the norges bank. * * * price stability, in the sense of low and stable inflation, is the objective of monetary policy in a number of countries. historical experience from norway and other countries has shown that high inflation has resulted in unstable output and employment. in addition, a fall in the price level will often accompany a period of decline. the first inflation target was introduced in new zealand in 1990. canada followed in 1991, the uk in 1992, and sweden and australia in 1993. in norway, the government issued a regulation introducing an inflation target in 2001. monetary policy in euro area countries and switzerland is also aimed at price stability, even though this is not referred to as inflation targeting in these countries. inflation targeting has proved to be particularly appropriate in very open small and medium - sized economies. commodity exports play a particularly important role in several of the countries that were the first to introduce inflation targeting. current inflation is low, but our recent history shows that without a nominal anchor inflation was high and variable and that we did not achieve higher growth in exchange for inflation. an economic policy that fuels inflation does not generate higher economic growth. on the contrary, it paves the way for subsequent recession and unemployment. high and variable inflation usually accompanies instability in output and employment. but inflation should not be too low over time either. this is partly because the structure of the economy evolves over time. demand for labour with different qualifications changes. restructuring requires changes in real wages and relative wages. nominal wages do not readily fall. with some measure of inflation, real wages and relative wages can be changed without reducing nominal wages. some degree of inflation oils the economic machinery. in periods, it will be appropriate to stimulate the economy with low, or even negative, real interest rates. if inflation becomes entrenched at a very low level, the interest rate will be less effective as an instrument because it cannot be set | the infrastructure requirements of a growing indian economy. it is worth highlighting that outstanding bank credit to the infrastructure sector, which stood at rs. 72. 43 billion in 1999 β 2000, has increased steadily to rs. 7860. 45 bn in 2012 β 13, a compounded annual bis central bankers β speeches growth rate ( cagr ) of 43. 41 per cent over the last thirteen years ( table 1 ) against an overall cagr of bank finance to all industries at 20. 38 per cent during the same period. the share of bank finance to infrastructure in gross bank credit has increased from 1. 63 per cent in 2001 to 13. 37 per cent in 2013. between march 2008 and 2013 alone, banks β exposure to infrastructure has grown by more than 3 times. this apart, credit has also flown into infrastructure sector via nbfcs, mutual funds and capital markets, the source of bulk of which is bank finance. it may not, therefore, be correct to argue that lack of finance from banks has constrained the development of the infrastructure sector. 9. in fact, recognizing the importance of infrastructural development in the country, rbi has provided certain concessions / relaxations in lending to infrastructure sector, such as, enhancement in single / group borrower limits, permission to issue guarantees favoring other lending institutions in respect of infrastructure projects, asset classification benefits under restructuring guidelines and permission to extend finance for funding promoter β s equity, subject to certain conditions. in order to encourage lending by banks to the infrastructure sector, banks are permitted to finance spvs registered under the companies act, set up for financing infrastructure projects, after ensuring that these loans / investments are not used for financing the budget of state governments. 1 rbi, in a recent circular ( march 18, 2013 ), has allowed the debts due to the lenders in case of public - private partnership ( ppp ) projects to be considered as secured to the extent assured by the project authority in terms of the concession agreement, subject to certain conditions. impaired assets in infrastructure sector 10. the evidence, thus, clearly suggests that banks have been substantially financing infrastructure projects in the country notwithstanding the inadequate commercialization of projects due to regulatory, political and legal constraints and total absence or insufficiency of user charges in many sectors. of course, this has not been without a fair share of pain for them. the npas and the restructured assets in this segment have increased quite substantially of late. the gross npas and restructured | 0 |
7 per cent, while the forecast for 2012 has been reduced from 3. 9 per cent to 3. 6 per cent. the risks to this outlook are seen to be on the downside, mainly on account of risk to the global economy. the bank β s inflation forecast has been adjusted higher on a few occasions this year to take into account higher oil and food prices. at the last sitting of the mpc in september, the inflation forecast was left largely unchanged. it is expected that inflation could breach the upper end of the target range in the final quarter of 2011 and to peak in the first quarter of 2012 at around 6. 2 per cent, but then to return within the target range in the second quarter. in the final quarter of 2012, inflation is expected to ease to around 5. 5 per cent. the bank β s measure of core inflation shows a rising trend, peaking at around 5. 1 per cent in the second and third quarters of 2013. what is important for the bank is the trajectory of inflation and to what extent any breach of the target is sustained. our assumptions at this stage point to a temporary breach of the inflation target. however, there are a number of upside risks to the inflation outlook which require careful monitoring. the main upside risks continue to emanate from exogenous factors, as well as administered prices, and despite the easing in wage pressures this year, this could become a factor going forward. the stronger currency to some extent helped to contain inflationary pressures domestically, but more recently, the depreciation of the rand brought to the fore the potential upside risk emanating from a sharply weaker currency. to what extent one should be concerned about the recent depreciation in the rand exchange rate is a function of many factors, including whether it is short - term or longer - term in nature, the eventual magnitude of the depreciation, the pricing power of firms, the stickiness of prices, the history of inflation and the domestic content of traded goods. clearly, the mpc is having to deal with a delicate balance at present between the upside risks to inflation and the downside risks to growth. much is dependent on the unfolding global environment, in particular growth prospects in the us, and the sovereign debt crisis in the euro zone, whether or not this turns into a banking crisis and spills over to other areas of the world. should european leaders manage to avert a full - blown crisis, this will go a long way to | ΓΈystein olsen : the role of central banks β a norwegian perspective speech by mr ΓΈystein olsen, governor of norges bank ( central bank of norway ), at the official monetary and financial institutions forum ( omfif ), london, 1 november 2016. * * * the charts can be found at the central bank of norway β s website. introduction let me begin by thanking the omfif for the opportunity to speak to you today about the monetary policy regime in norway. like other central banks, the central bank of norway is facing new challenges in a post - crisis environment of persistently low interest rates and uncertainty. today i want to focus on how norges bank is responding to those challenges. inflation targeting was formally introduced as a framework for monetary policy in norway 15 years ago. as in other inflation - targeting countries, our inflation targeting regime has become more flexible over time. the operational target of monetary policy in norway is annual consumer price inflation of close to 2. 5 % over time. however, according to the mandate, interest rate setting should seek to achieve a reasonable balance between inflation and capacity utilisation. monetary policy should also be robust, taking uncertainty into account and seeking to avoid adverse outcomes. i will reurn to this topic in the following. the reasoning behind the policy rate decision taken by norges bank β s executive board is published in our monetary policy report. the evolution of inflation targeting in norway reflects the practical experience we have gained since it was introduced. the trade - offs have been challenging at times. in these past 15 years, the norwegian economy has been exposed to different types of shocks. the supply side has been influenced by increased labour immigration following eu enlargement in 2004. the legacies from the financial crisis have posed challenges that monetary policy has had to address. and not least, the norwegian economy has had to contend with wide fluctuations in the terms of trade. chart : performance inflation targeting has performed well over the past 15 years taken as a whole. when inflation targeting was introduced, inflation had already come down after years at an elevated level and has since been low and relatively stable. at the same time, monetary policy has helped to moderate fluctuations in the real economy. flexible inflation targeting has functioned well. the monetary policy framework has provided sufficient flexibility to address the shocks that have hit the economy. long - term interest rates have fallen chart : international interest rates in recent years, monetary policy has faced a new challenge in many countries. the interest rate level | 0 |
denny h kalyalya : expansion of zambia β s banking sector remarks by dr denny h kalyalya, deputy governor - operations of the bank of zambia ; at the official opening of bank of china β s new premises, lusaka, 9 december 2008. * * * β’ honourable minister of finance and national planning, dr. situmbeko musokotwane, mp ; β’ his excellency β the chinese ambassador to the republic of zambia ; mr. li qiangmin ; β’ managing director of the bank of china ( zambia ) limited ; mr du qiang ; β’ distinguished invited guests ; β’ ladies and gentlemen. i am greatly honoured for having been invited to speak on the occasion of the official opening ceremony of bank of china β s new premises. ladies and gentlemen as part of the on - going zambia - chinese relationship, the bank of china was established in 1997. since then the bank has recorded tremendous progress. distinguished invited guests during the past 8 years, the overall financial performance and condition of the banking sector has been satisfactory. the sector has continued to expand and we anticipate increased economic and investment activity in the period ahead. banks are expected to continue to provide the required level of finance to consolidate the economic gains registered so far. the bank has achieved tremendous growth since its inception in 1997. during the last eleven years, total assets have increased by 325 % to k507. 9 billion in october 2008 from k13. 8 billion in december 1997. regulatory capital increased by about 1, 000 % to k41. 9 billion in october 2008 from k3. 8 billion december 1997. similarly, the bank β s profitability has steadily increased over the years. the bank has been a good supporter of a number of economic activities in zambia, especially in the mining, textile, construction, banking and agriculture sectors. however, going forward, we wish to encourage the bank to invest more in loans and advances, which have remained low at 4 % of total assets as at end of october 2008 compared to the industry average of 45 %. ladies and gentlemen the new offices being commissioned today should enhance the bank β s service delivery to its customers. we therefore wish to encourage the bank to continue playing an active and effective role in stimulating economic activity through the provision of well structured financial products and services. thus, boost growth in key sectors of the economy as well as enhancing access to finance and encourage more indigenous zambians to establish relationships with the bank. it is our expectation | caleb m fundanga : achievements and accomplishments at the bank of zambia during the past forty years speech by dr caleb m fundanga, governor of the bank of zambia, at the 40th anniversary celebrations, lusaka, 5 - 6 august 2004. * * * chairperson, baroness lynda chalker of wallasey the guest of honour, his excellency, the president of the republic of zambia, mr levy patrick mwanawasa, state counsel honourable ministers honourable deputy ministers your excellencies members of the diplomatic corps honourable members of parliament present special guest, governor tito mboweni, governor reserve bank of south africa distinguished past governors of the bank of zambia senior government officials distinguished invited guests ladies and gentlemen on behalf of the bank of zambia and indeed on my own behalf, it is my singular honour and rare privilege to extend a warm welcome to you all as we commemorate the 40th anniversary of the establishment of the bank of zambia. i would also like to thank, his excellency, the president of the republic of zambia, for accepting our invitation to officiate at this special occasion. further, special thanks go to governor mboweni for accepting to deliver a key note speech and all foreign participants for coming. mr president may i mention that amidst this gathering are participants from sister central banks in the region that have come to celebrate this anniversary with us as well as zambians based outside the republic. mr president, ladies and gentlemen, this anniversary marks 40 years of dynamic transformations and achievements accomplished by the bank. some of the challenging issues that the bank has confronted in the past and likely to do so in the future form part of the selected topics of papers to be presented and discussed at this conference. this conference is therefore expected to provide a platform for sharing ideas required for practical solutions aimed at improving the bank β s deliverables. in doing so, however, we must be cognisant of global trends in central banking. madam chairperson, since its establishment in 1964, the bank of zambia has played an important role in the economy by formulating and implementing monetary, regulatory and supervisory policies in its quest for price stability. over this period, progress has been made towards the deepening of financial markets, specifically in the areas of monetary policy management, and the foreign exchange market. in addition, substantial improvements to the legislative and regulatory frameworks for banks and financial institutions have been attained. ladies and gentlemen, during the pre - liberalisation period from 1964 to 1991, monetary policy was largely characterised | 0.5 |
ago, the ports of nusantara were destinations for the spice trade to europe via india and the middle east. in this context, islamic finance can serve as a bridge that links the nusantara region to the capital surplus economies. already, our financial institutions are venturing to have a presence in the middle east and we welcome their presence in our financial system. this has now in fact resulted in the cross - pollination of talents and resources, giving rise to innovative products and services, creating depth and breadth to the respective financial markets. just as the straits of malacca served as an important maritime conduit for the nusantara region, malaysia and indonesia has the potential to serve as an important intermediary for mobilising capital to meet the requirements of the nusantara region, and to be a distribution centre for shariah compliant securities and to extend the regional islamic capital markets to other parts of the world. of importance will be our joint efforts to promote the standardisation of the islamic regulatory and compliance matters. in relation to this, malaysia and indonesia is already working jointly to promote research capabilities and the pool of talent and technical expertise in islamic finance. a critical success factor for the cross - border promotion of islamic finance is the harmonisation of the governing shariah frameworks between our jurisdictions. in this regard, indonesia's extensive history of scholarly achievement in the subject matter relevant to the principles of islamic finance can be leveraged upon for the benefit of the region. we are most hopeful for substantive convergence of interpretation and application of the shariah laws and guidelines for the region. the greater collaborative engagement between our respective scholars would indeed facilitate the process. ladies and gentlemen : the large gathering of senior representatives of the public and private sectors here today hints to the significant interest to capitalise on potential of the nusantara economies. the efforts of the private and public sectors in building a collaborative platform as a resilient base for a network of linkages to the wider world, with god's grace, insyallah, will contribute to advancing the nusantara agenda that would unleash the potential of the region for a greater shared prosperity. thank you. | will be increased complexity in identifying the risks which will in turn complicate the process of risk management. the increasingly integrated and liberalised markets will also expose our porous economies to greater external influences and to contagion risks. a higher level of vigilance is thus required to allow for pre - emptive policy measures in a timely manner. this will require adequate levels of cooperation among the regional regulators in addressing potentially contagion systemic risks and ensuring regional financial stability. the deepening of co - operation between the nusantara's monetary and regulatory authorities is thus a key factor in the development of a robust integrated platform. enhanced cooperation will promote greater resilience and reduce regional vulnerability to external developments. there are now various regional mechanisms in place to undertake regional surveillance, to facilitate the exchange of information, to enter into greater engagement on issues affecting the region and in developing regional financial markets. in addition, frameworks for enhanced regional risk management, crisis management and resolution are also being put in place. with greater financial integration, the region will be able to leverage on the advantages of economies of scale, innovation and more importantly place greater reliance on the cumulative strengths that resides within the region including our financial resources, skills and knowledge. it will also better position the region to collectively address emerging issues and challenges faced by the region taking into consideration the region's socio - economic context. ladies and gentlemen : while islamic finance is gaining global interest and acceptance, the world's most populated muslim region in the world, the new nusantara offers opportunities for the accelerated expansion of islamic finance. the intrinsic nature of islamic financial structures encourages stability. islamic principles require that the financial transaction be supported by genuine economic transactions. to further reinforce this, the governing shariah principles also serve as a built - in self - regulatory mechanism that insulate islamic instrument issuers from unproductive, speculative and unethical elements and thereby contributes to the stability of the financial system. historically, capital financing and investment flows into the nusantara region have generally been sourced from the developed financial markets. while we may see continued growth in short term capital inflows from these traditional sources, the more competitive global environment provides no assurance of the sustainability of such longer term investment flows. meanwhile, our own south east asian region and that of north asia and the middle east countries continue to have high surplus savings seeking opportunities for investment and new asset - classes for greater risk diversification and improved returns on their investments. hundreds of years | 1 |
in their respective fields of responsibility, continue to be essential in dealing with the current inflation shock and financial system imbalances. in the current challenging macro - financial environment, macroprudential buffers contribute to preserving and strengthening banking sector resilience. hence, i very much welcome that some national authorities β in close collaboration with the ecb β currently assess the extent to which there is merit in implementing additional macroprudential measures. the macroprudential policy response should consider the current near - term headwinds to economic growth since policy tightening should not result in an unintended tightening of credit conditions. interactions between monetary and macroprudential policy become even more pronounced in a monetary union where monetary policy, by definition, will be focusing on area - wide economic and financial conditions. in fact, macroprudential policy targeting imbalances building up at national level within the monetary union can help to achieve better policy outcomes in terms of price and financial stability. 1. an important example of such structural fiscal policy is the next generation eu ( ngeu ) programme, with a strong focus on the green transition comprising an expected β¬401 billion to be invested in euro area countries ( around 3. 3 % of 2021 euro area gdp ) over 2021 - 27, see also bakowski et al. ( 2022 ), " the economic impact of next generation eu : a euro area perspective " occasional paper series, no 291, european central bank. 2. this is the rate of interest where monetary policy is neither accommodative nor tightening and where the economy is operating at its potential output. 3. before the pandemic, the countercyclical capital buffer in the euro area accounted for only 0. 2 % of the capital stock. see also de guindos, l. ( 2019 ) " 3 / 4 bis - central bankers'speeches 3. macroprudential policy after the covid - 19 pandemic ", panel contribution at the banque de france / sciences po financial stability review conference " is macroprudential policy resilient to the pandemic? ", 1 march. 4. estimates for energy - related fiscal support by euro area countries were at 0. 8 % of gdp for 2022 in july this year and may further rise depending on global developments. see also european central bank ( 2022 ), economic bulletin, issue 5, box 7 : " euro area fiscal policy to the war in ukraine and its macro | ##economic impact ", footnote 3. 4 / 4 bis - central bankers'speeches | 1 |
15 ) ; β’ issuances are concentrated in the aa or above rating, largely by public sector entities and financial institutions β’ a majority of the issuances are concentrated in the 2 β 5 year tenor ; β’ limited / narrow investor base. investment mandates of institutional investors such as insurance companies, pension funds and provident funds do not permit large investment in corporate bonds ; β’ reissuance of bonds has not picked up ; β’ lack of functional trading platform with ccp facility like nds - om ( as available in government securities market ) impedes the growth of secondary market ; β’ market for credit risk protection instruments like cds has not yet developed ; β’ non - standardized stamp duties on corporate bonds across various states affects issuances. way forward 9. activating the corporate bond market will require a number of regulatory measures to address both the macro issues as well as the market micro - structure issues. while creating an efficient market infrastructure will create conditions for issuers and investors, the structural issues can be addressed over the longer term as the market evolves and the financial system gets more integrated with international markets. it would be convenient to look at the set of issues in a comprehensive manner. i would like to classify some of the possible measures in the β 7i β framework which i had talked about in one of my earlier speeches. bis central bankers β speeches issuer reissuance of bonds 10. corporates may be encouraged to re - issue existing bonds under the same isin code. this will augment market liquidity and potentially reduce the cost of borrowings. though sebi has recently allowed reissuances by the corporates, there has not been any reissue of bonds by any corporate. in order to encourage reissuances, there may be a need for some incentives in the form reduced documentation formalities, less issuance fees, etc. issuance of municipal bonds 11. an active corporate bond market would enable market for municipal bonds issued by the urban local bodies ( ulbs ). the potential for issuing municipal bonds assumes importance in the context of the proposal to set up 100 smart cities. however, the size of the municipal bond market in india is rather limited and is distributed over a few strong municipalities of ahmadabad, nasik, nagpur, etc. the possible reasons could be overlapping jurisdiction on municipal bodies leading to plethora of rules ; perceived lack of specialized project management support in ulbs ; non - transparent budgeting and accounting systems in many of the ulbs | of inflation coming back and growth slowing down do remain. the headwinds from geopolitical conflicts, geoeconomic fragmentation, commodity price volatility and climate change continue to blow. 4. during this entire period of great volatility, maintaining price and financial stability have posed difficult trade - offs, as evident β among others β from the banking sector turmoil in certain advanced economies in 2023. the challenge is always between doing too little or too late on the one hand ; and doing 3 chapter 2, world economic outlook, imf, october 2024. too much or too early on the other. reading the interplay between monetary policy actions and the developments in the financial sector as well as the evolving situation correctly, and timing the decisions are always challenging. central banks have by and large performed well this time around. 5. in this challenging global environment, let me highlight certain contradictions globally which we observe at the current juncture. first, government bond yields are rising even as many advanced economies have embarked on an easing path through rate cuts, underscoring the fact that treasury markets are influenced by a host of global and domestic factors that are much beyond mere policy adjustments. incidentally, even the us dollar is appreciating although the fed is cutting rates. second, undeterred by the strong us dollar and higher bond yields, prices of gold and oil - the two commodities that typically move in tandem - are showing sharp divergence. third, an interesting contrast is also emerging between rising geopolitical risks and financial market volatility. while geopolitical tensions have escalated steadily in recent years, financial markets have shown considerable resilience in the face of mounting uncertainties. fourth, global trade is projected to remain higher than the previous year 4 notwithstanding the sanctions, tariffs, import duties, rising cross - border restrictions and supply chain disruptions. fifth, the emerging market economies ( emes ) have shown greater resilience than advanced economies ( aes ) in the current phase. indian context 6. amidst these headwinds and contradictions, the indian economy is sailing through smoothly, powered by buffers like strong macro - economic fundamentals, stable financial system and resilient external sector. our endeavour has been to seize every opportunity to further strengthen our fundamentals through prudent and proactive policy approach. our prime focus has 4 world merchandise trade volume is projected to grow by 2. 7 per cent in 2024 and 3 per cent in 2025 as | 0.5 |
the lvr policy has informed each adjustment in its calibration. the good news is that declining risks have allowed us to ease the lvr restrictions, starting in 2017. the outlook for macroprudential policy we left the lvr policy unchanged in the may financial stability report, in order to monitor the effect of our recent easing and the recent fall in mortgage rates. looking ahead, we are comfortable with further easing in the lvr policy over time, but this is predicated on risks continuing to abate. specifically, we want to see household debt levels remaining stable relative to incomes, prudent lending standards from banks, and moderate house price inflation. if these conditions are met, we are inclined to continue easing the restrictions. in the long term, we face a choice between removing the lvr restrictions and maintaining a permissive setting. a full removal would of course eliminate any efficiency cost, and could be done alongside the deployment of a less intrusive tool if we are still worried about residual risks. but on the flip side a permanent lvr setting will continue to guard against the very risky forms of lending, and may better prepare the banking system to adapt to a more restrictive calibration if risks reemerge. the efficacy of a permanent lvr setting is an important policy question for future research. as you may know, the reserve bank has proposed a material increase to banks β capital requirements to increase the resilience of the financial system. the proposals include a more prominent role for the counter - cyclical buffer, providing more certainty that this buffer will be built prior to a downturn in the financial cycle, in order to support lending during a systemic crisis. 13 as a consequence, macroprudential tools, including the lvr restrictions, may need to be used less actively. that said, the counter cyclical buffer would be released during a systemic downturn to support lending. in contrast, it is unlikely that easing lvrs during a downturn would have the same benefit, as banks will be reluctant to undertake high - lvr lending when under stress. different tools are effective for addressing different risks, and there will still be a role for borrowerbased tools to more directly address risks associated with household debt. part 4 β conclusion in conclusion, financial stability is important for the wellbeing of new zealanders, and macroprudential policy is a key line of defence for safeguarding financial stability. baseline prudential tools ensure that potential threats | . the narrower dow index is less than 5 per cent below its all - time high. in japan, the prospect of a new political determination to deal with the problems which have beset that economy for more than a decade has improved sentiment, and the nikkei stock index is well up from the low point reached in the middle of march this year. in australia, it has been pointed out that the modest fall in gdp in the fourth quarter was mainly the result of a very sharp fall - off in the construction sector following the introduction of gst in mid - year, with most of the rest of the australian economy continuing to grow at an annual rate of around 4 per cent. although not too much should be made of it at this relatively early stage, consensus forecasts for our 14 major export markets suggest growth next year of 3. 6 per cent, well up from the 2. 3 per cent expected for the same markets this year. if we eased policy too much now, and that easing had its biggest effect next year, as we expect, we might find that policy would be stimulating the economy at the very time that the world economy was picking up. new zealand's export prices continue to hold up secondly, and contrary to much past experience, the slowdown in the world economy which has occurred to date has not had an obviously negative effect on the world prices of many of new zealand's exports. of course, the prices of some exports have been seriously affected. the world price of our seafood exports is well down over the last year for example. but many other prices have held up well, and that has been particularly true of major exports such as meat and dairy products ( both up by more than 22 per cent in world price terms in the 12 months to april ). in aggregate, the world price of new zealand's commodity exports rose almost 14 per cent in the year to april 2001, and almost 23 per cent over the two years to april 2001. this means that an important channel through which weakness in the world economy typically affects new zealand has so far, on this occasion, been blocked. the new zealand dollar is sheltering the economy from foreign chills thirdly, as we assess the impact of the relatively subdued world economy on the new zealand economy, and therefore on new zealand inflation, we have to assess also the impact which the new zealand exchange rate is having on the situation. if, as is possible, the world economy slows further, and if, as | 0.5 |
the price in the uk. bis central bankers β speeches technology played an important role in the take - off of singapore, cyprus, mauritius and other successful small economies by making business and government services more efficient. a concentrated focus on technological development will greatly facilitate business competitiveness in the region. in addition to business facilitation, regional governments could contribute to the resurgence of the private sector through disciplined management of the public finances. and this has many aspects. obviously, one important aspect is avoiding sizeable fiscal deficits so as not to crowd out the private sector and to contain public debt burdens. good public sector management also implies allocating sufficient resources to infrastructural development, education and health β areas that are critical for private sector development. in many cases, a business - friendly government expenditure policy could imply difficult socio - political trade - offs involving expenditures on subsidies and transfers. as i noted earlier, several countries in the region already have excessive debt burdens which sometimes force expenditure adjustments to fall disproportionately on critical public investment. in our university councils, we are at pains to underscore the importance of uwi as a regional university. regionalism is even more important in our economic sphere and deeper regional integration is absolutely critical for our economic survival. in delivering the william demas memorial lecture last month, the managing director of the world bank put her finger on this delicate issue as follows : β from my experience in africa, ( she said ), i appreciate very well the sensitivities around deeper integration. at first glance, it might well seem that whatever one country wins, another loses. free movement of people, for instance has created concerns in all regions that are seeking deeper integration. but regional integration is the only viable way to create scale for your economies. β we absolutely need to move beyond pious statements and seriously pursue what c. y thomas calls a model of β open regionalism β, based on an outward - looking market - oriented framework in which the private sector is expected to take the lead. in addition to the liberalization of trade in goods and services, this model involves the free movement of labour and capital, a regional strategic sectoral plan, the adoption of a harmonized investment code and the development of a regional capital market. greater integration along these lines could be a critical input in improving competitiveness. for example : labour mobility within the region has the potential to improve skill and wage arbitrage ; co - ordinated investment | government programmes. ( particularly, in view of the lumpiness of government investment projects ). this is what happened in the 1980s when oil prices declined from us $ 36 to us $ 15 per barrel, forcing government expenditures to be cut by 40 per cent, even after the government had recourse to foreign borrowing of about us $ 1 billion. many commentators have raised a very valid concern that, in the event of a secular decline in oil and gas prices, drawdowns for stabilization could consume the entire fund over time. to deal with this, the law sets a floor of us $ 1 billion beyond which no drawings can be made for stabilization purposes. a five - year review built into the legislation also allows this floor to be raised as the fund grows. inter - generational savings the major objective of the fund is top generate inter - generational transfers ( savings for the future ). this could be justified by the fact that government revenue from the exploitation of non - renewable resources differs from other tax revenue in that it partly represents a depletion of wealth, and that some of this wealth needs to be saved for fiscal sustainability and for inter - generational equity. essentially, what the hsf does is to convert depleting resources into a permanent source of income. by saving some of the oil revenues and investing it wisely, we may be able to : β’ β’ preserve the capital ( somewhat like having the oil and gas remain in the ground ) ; and β’ β’ live off the interest. thus, when the oil resources are depleted, the income from the fund would flow into the budget to preserve government expenditures. [ the idea is that the earnings from the fund would replace the energy taxes as oil and gas resources are depleted ]. of course this requires a critical mass of savings ( built up over a period ) to generate sufficiently large income flows. the question is sometimes raised : why not spend all the oil revenues on infrastructure to broaden productive capacity to serve future generations β in our case there is the argument of our limited implementation capacity which is already stretched. more broadly, tying public expenditure to available revenue invariably leads to some poor quality projects. so that β s the basic rationale behind the fund. how is the hsf supposed to work? as minister enill noted, 60 per cent of any excess revenues will be credited to the fund which will be invested in foreign assets and with a long - term focus. conversely, the government will be able to draw from the fund when actual | 0.5 |
it means using our skills and talents to make a positive difference in the world. to stay true to this value, it's essential to practice empathy and understanding. try to put yourself in other people's shoes and consider their perspectives. volunteer your time and resources to help those in need, and be a positive influence on those around you. remember that small acts of kindness can have a big impact on someone's life. how can we practise compassion in our daily lives? one way is to cultivate a growth mindset. instead of judging others or labelling them, try to see them as individuals with unique experiences and challenges. by approaching others with an open mind and heart, we can build empathy and understanding and make a positive impact on the world around us. 2 / 3 bis - central bankers'speeches building community lastly, this school has taught us the value of community. former south african president nelson mandela said, " no one is born hating another person because of the colour of his skin, or his background, or his religion. people must learn to hate, and if they can learn to hate, they can be taught to love, for love comes more naturally to the human heart than its opposite. " building community means reaching out to those around us, regardless of their background or beliefs. it means finding common ground and working towards a common goal. to stay true to this value, it's essential to stay connected with others and build strong relationships. find ways to support and encourage your peers, whether it's offering help, attending events, or simply being present. join clubs or organisations that align with your interests and passions, and get involved in community service projects that make a difference in the lives of others. building community also means being open to diverse perspectives and ideas. don't be afraid to engage in civil discourse with those who hold different views than your own. seek to understand their perspectives and find common ground where you can. by building bridges and connections with those around us, we can create a more inclusive and harmonious society. so, how can we stay connected to our community and build strong relationships? one way is to be present and engaged. attend events and activities, and participate in group discussions or projects. listen actively and ask questions, and be willing to share your own experiences and perspectives. another way to build community is to be vulnerable and authentic. don't be afraid to share your struggles and challenges with others, as it can help | build trust and empathy. be willing to support and encourage others in their own journeys, and be open to feedback and constructive criticism. in closing, i want to congratulate each of you. you have worked hard and you should be proud of your accomplishments. as you prepare to move on to the next stage of your life, whether it is promotion to a higher class or whether you left this institution to move to the next phase of your lives and are back here today to collect your prizes, let's remember the values and principles that have been instilled in us. let's continue the legacy of success by staying committed to hard work, integrity, compassion, and community. remember, you are capable of achieving great things! thank you, and best of luck on your future endeavours. 3 / 3 bis - central bankers'speeches | 1 |
the lender - of - the last resort. this unique combination of responsibilities for macroprudential regulation and microprudential supervision, together with an implicit mandate for systemic oversight has allowed the reserve bank to exploit the synergies across various dimensions. the micro - level information coming from supervision of individual institutions has been a valuable input for shaping the macro perspective. on the other hand, the broad understanding from bis central bankers β speeches macroprudential regulation has been effective in instituting prudential safeguards at the micro institution level. 48. financial stability is explicitly entering the objective function of central banks postcrisis. in the reserve bank though, we had all along pursued financial stability as an important objective. indeed, one of the main reasons the impact of the crisis on india has been blunted is because the reserve bank tightened the provisioning norms and risk weights for sub - sectors that experienced rapid credit growth in the years before the crisis such as real estate and consumer credit. 49. in india, there are other market regulators besides the reserve bank such as the securities and exchange board of india ( sebi ), the insurance regulatory and development authority ( irda ) and the pension funds regulatory and developmental authority ( pfrda ) who contribute to the building block for financial stability. nevertheless the reserve bank has played an apex role by tradition and by the fact that it regulates banks in a financial system that is bank - dominated. the channels of interconnection between banks and other financial sector entities are within the regulatory perimeter of the reserve bank. 50. though the indian financial system weathered the global financial crisis relatively unscathed, there was enhanced focus on the regulation of financial system in india too in the wake of the global financial crisis. while the post - crisis debate in most countries was on the reform of the regulatory architecture, and what responsibilities to entrust to the central bank, the focus in india was on coordination amongst regulators. with a view to establishing a body to institutionalise and strengthen the mechanism for maintaining financial stability, financial sector development and inter - regulatory coordination, in december 2010, the government constituted the financial stability and development council ( fsdc ) to be chaired by the finance minister. the fsdc is to be assisted by a sub - committee to be chaired by the governor, rbi. this sub - committee has replaced the erstwhile high level coordination committee on financial markets ( hlccfm ) under the chairmanship of governor, rbi. while | they have to give people the opportunity to make the most of globalisation and technological advances and offer them employment prospects. the framework of monetary union needs to be designed in such a way that actions and liability for their consequences are aligned. 4. the financial crisis has demonstrated just how dangerous it can be if regulation of the financial markets is insufficient and loses sight of the principle of liability. thanks to fundamental reforms, the global financial system is now more robust. given the many 12 / 13 bis central bankers'speeches possible causes of a crisis, a focus on individual agents and markets falls far too short of the mark. it is essential to increase the resilience of the financial system as a whole. this should stop a crisis from developing into a systemic problem and endangering the functioning of the entire financial system. it would be a mistake to turn back the clock on regulation. in his book β a short history of financial euphoria ", the harvard economist john kenneth galbraith, who died in 2006, lamented the β... extreme brevity of the financial memory, β adding that β in consequence, financial disaster is quickly forgotten. β he believed that the world of finance was one of the few fields of human endeavour in which history counted for so little. ten years on from the outbreak of the subprime crisis and with a decade of crisis behind us especially here in the euro area - i don β t think we can yet talk about the crisis having been forgotten ; most people β s memories are not that bad. but i see a certain danger that lessons learned from the crisis may be increasingly thrown to the winds. that makes it all the more important not to put the crisis to the back of our minds or postpone the necessary consequences. but you of all people, about to embark on your working lives - and maybe some of you will choose to work in the β world of money β β should take heed. maybe some of you know what mark twain said about young people. β we love the young, with their fresh ideas, just as long as these ideas are the same as ours. " thank you for your attention. i look forward to our discussions. 13 / 13 bis central bankers'speeches | 0 |
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